2019 Financial Goals – October Update
When it is obvious that the goals cannot be reached, don’t adjust the goals, adjust the action steps. – Confucius
And so we did…adjust. We needed to realize any 2019 financial goals.
Since our last goals update, that centered on spending tons of cash throughout the summer in support of getting established in our new condo, we adjusted our steps. We have since hunkered down. We’re on an improved course…
Thank goodness. It was an unsustainable spending pace.
New condo furnishings. New condo window treatments. New condo light fixtures.
Thankfully, no new patio furniture needed nor wanted at this time.
Good thing, otherwise, more expenses would totally squash all our 2019 goals.
2019 financial goals
Here is a recap of our goals for this year and why:
- Save for our 2020 TFSAs. This implies we’re going to try and save $12,000 this year in after-tax dollars for those contributions that open up in just over two months. Our TFSA contributions for 2019 are already maxed out with some of these favourite stocks of mine. Maxing out our TFSAs (similar to the Roth IRA in the U.S.) will provide some great tax-free income in semi-retirement.
- Completing the My Own Advisor $5 daily money challenge. I totally made up this money challenge for 2019, just for fun, but the results have been surprising. My money challenge was designed to help fund future international travel.
- Reduce our mortgage by $20,000 by the end of 2019. Why? Because debt is an anchor for us and by clearing our mortgage debt we’ll have significantly more cashflow to do other things.
- Max out my wife’s RRSP. Why? My RRSP is pretty much out of contribution room. We also believe in maxing out any available tax-deferred investment accounts before taxable investing – although we do have a non-registered account with Canadian dividend paying stocks. Also, with my RRSP room pretty much maxed out for the 2019 tax year (due to my “big bond” defined benefit pension plan) my wife has at least $20,000 in RRSP contribution room left. We would like nothing more than to have all our registered accounts (x2 TFSA and also x2 RRSP) full of contribution room within the next year.
Where are we at?
- Save for our 2020 TFSAs. In April I mentioned we managed to save up $1,200 or just 10% of our eventual goal. As of July, we had $4,800 saved up. Now, as of October, we have $6,900 saved. With just over two months to go, with many condo expenses done, I hope we can find some $5,000 to fund both TFSA accounts as of January 1, 2020. A public financial safety reminder to please consider using your TFSA beyond a savings account!!
There are many great things you can do with your Tax Free Savings Account here.
- Completing the My Own Advisor $5 daily money challenge. So far, so good. This goal was almost a layup though since we decided to automate the money transfers since January. With just $5 going out, or $35 per week automated to savings we haven’t missed the money at all. Amazingly, because of this simple automation hack, we’ve got almost $1,500 saved up so far this year.
Have you ever tried to automate just $5 per day?
We hope to use this money to fund some vacations in 2020.
This was our view from our Barbados condo using similar automatic savings last year:
- Reduce our mortgage by $20,000 by the end of 2019. Until our former house closed in June this past year, we were paying a mortgage to the tune of $820 via bi-weekly accelerated payments. When we took possession of our new condo in mid-June, it was not registered in our name. That means upon time of possession, we were essentially renting our unit to the condo builder as part of an interim close. Our “rent” payment for July and August (to cover the condo builder’s borrowing costs, to cover our condo fees until the condo is registered in our name) was almost $2,200 per month until the condo formally closed in late-August. While this was likely to occur, we weren’t really fully prepared to hand over nearly $4,400 in cash, quickly, among higher than anticipated new condo purchases. Lesson learned: be prepared for the unplanned.
On top of the rent, we had the aforementioned new furniture to buy (since the older, former house furniture did not fit in the condo space), new window treatments to pay for, and new light fixtures. All expenses came in higher than expected. Learned learned reminder #2: moving and getting established in a new home/condo is more expensive than you think.
As a result of our spending, our planned savings program (for the TFSAs in particular) took a major hit. In my head, these expenses felt like this:
Fortunately, we have since recouped some of those outlays by cutting back expenses in some other areas. Our downsized move to the condo has also started to yield some benefits:
- Using one less car (we only have one car now) has reduced our transportation expenses by $300 per month.
- Less house means less monthly utility charges and less insurance charges overall. A savings of another $250 per month.
Reducing unnecessary waste, ensuring your expenses align with your values, are good reasons to downsize.
Year to date, we have not reduced our mortgage anywhere near $20,000. It’s been closer to $10,000 on the mortgage principle so far or about $1,000 per month. Unless something magical happens, we will not realize this goal this year.
Life will go on.
Besides….this is definitive, easy answer to the mortgage paydown vs. investing debate.
That brings me to goal #4.
- Max out my wife’s RRSP. This was always going to be incredibly aggressive goal beyond the above. My wife has just a bit more than $20,000 left as part of her RRSP contribution room. Given where we were with financial goal #1 above earlier this year – there was little hope on this one. Based on steady monthly contributions going-forward however we might be in a position to achieve this goal in mid-2020.
Missing goals means you’re taking chances and life happens
We shouldn’t beat ourselves up. It’s been a big year of change and lots of expenses to tackle.
With just over two months to go, we’ve finally got ourselves organized and settled into the condo. It’s starting to feel like home even though some travel pictures need to go up on the wall still. A winter project…
On the positives, we’ve made some progress on my wife’s RRSP contribution room and we have some travel funds set aside for 2020. The mortgage debt will be killed with time.
Take the good with the bad. Move along.
I’ll let you know how we finish the year.
What financial goals did you set for yourself in 2019? What do you make of some of our missed goals? Let me know in a comment. I read every one.
It is very brave of you to post your annual financial goals and report back on progress; brave, but also wise, telling someone about your goals adds a whole new level of accountability! Documenting your progress is not only valuable to you but also your readers … they get to watch your progress and see that even you have some challenges along the way, as we all do. It is very important to recognize that straying from a goal is not failure so long as you recognize the adjustment necessary and make the adjustment. Few people, if anyone, travels to financial freedom in a straight line!
I did notice in the above conversation that there was some talk of delaying RRSP contributions in any given year so that you can take advantage of a higher tax bracket the following year (at least I think that is what the conversation was getting at). I just wanted to mention that, so long as a person has contribution room they can contribute up to that limit at any time, and then chose when to take the deduction. Just because a taxpayer makes an RRSP contribution in a given year does not mean they can’t save the deduction for when it is most advantageous to use (the Notice of Assessment tracks unused RRSP contributions available in future years). The contribution and the deduction are not linked in that fashion. The investments will earn returns in the RRSP and at the same time you have retained the ability to take the deduction as best suits your needs. This presumes you have the money to make the contribution in the first place and that you have contribution limit room, but if you do you do not need to wait to make the contribution simply because you want to take the deduction in a future year.
I have to have you on the site in 2020!
Brave, stupid, smart, dangerous….to post those goals (I dunno!) but yes, I learned a long time ago that making goals public and/or highly visible is a key to success. Any goal for that matter. Not just financial.
I also don’t see straying from a goal as failure, rather, an opportunity to make those adjustments and learn. I’m far from perfect and never will be.
Great point about RRSP contribution room but I suspect I’m in my highest earning years personally and so I prefer to max out my RRSP account now.
All the best,
Larry, because Mark mentioned about having you on his blog, I clicked on your name and saw that you’ve just released a book. It looks like a very interesting and practical read – I’m adding it to my reading list. Best of luck!
Hope to have an interview with Larry in early 2020. Stay tuned Bob!
Also, thanks for being a passionate reader of the site. Very much appreciated you sharing your thoughts on the site; sharing the site with others where you have.
Congrats on the new condo, Mark! Sounds like a future blog post there – 5 expenses to budget for when buying a new condo. Moving creates a lot of transition costs (as you know!) but those monthly savings will add up over years to come.
Thanks. It’s taken some time for some trades to come in and out of the place, updates; re-work but things are coming along!
I wrote about the condo move and why, and benefits of downsizing here:
How are things in your saving and investing world?
Hey Mark, thanks for asking! “Mr. Tea” and I have talked about downsizing out of Toronto someday. But we’ve got 2 in high school and 1 at Ryerson, plus 1 more entering high school in a few years. It’s hard to move them at this stage. And they’re all “adult-sized” humans so they take a lot of space! We have 2 rental apartments in the basement, so that’s nice income that keeps increasing every year, while the mortgage payment stays the same.
Adult-sized humans made me laugh. Kari, that’s a busy house!? Jeepers. Rental income is good, well done. We used to have a rental a few years ago but I figured owning REITs was better (less weird tenants to deal with….a wild story) so we have a bunch of shares in REITs that that spin off tax-free income (i.e., TFSAs).
Continued to success to you. While try and check out your site this weekend! Thanks for the social shares, happy to return the favour!
Hi Mark: I like the goal of using up all spare RRSP room, but I’m wondering if (because I don’t know your wife’s income) it makes sense to max out her RRSP all in one year vs just enough to bring her marginal tax rate down one step this year and each year thereafter? My wife has RRSP room, but no earnings (retired early), so, unless I’m missing something, I just have to accept that it’s one goal I won’t be achieving.
My wife makes good money, which is great, and I see your point.
My wife’s RRSP contribution room 10+ years ago was close to $50k. With her increases in salary over the years, although we’ve been trying to max out all contributions we haven’t done it. We might be close in 2020 if we can put down $10-15k this year by March 2020. That’s saving over $1,000 per month which is doable for us if we don’t spend our brains out. Take some discipline for sure and you have to live your life too 🙂
Ah, now that makes sense.
My wife had $4,5K room that we could have utilized, but it didn’t make sense in her last year of working because her marginal tax rate for that portion of her contribution room would have been in the same tax band that we predict she’ll be in during retirement. The money went into her TFSA instead.
In my case, when I turned my mind to ramping up our retirement savings, I had $70K RRSP room, but rather than use up the room ASAP, I spread it out over four years (including the additional years’ contribution room), $90K in all, but always only contributing at my top combined federal + provincial marginal tax rate of 43.4%. Again, once I’d brought the marginal rate down to the next lower tax band (37.9%), we directed our saving to the TFSAs.
That’s “4.5K room”. It’s a small amount, but it bugs me a little that it can’t now be used in any way that makes financial sense.
Ya, I suppose you could throw it into taxable investing?
I know for my wife and I we’re striving max out her RRSP in 2020. That would make her TFSA and RRSP both full for the first time in, forever. The RRSP-generated refund from 2019 tax year, returned in the spring of 2020, will go back into the RRSP to help max out the RRSP.
Spreading out RRSP contributions over years, when your MTR is high, is smart I believe since you can continually bring down your taxes owed as a high-income earner. I’m doing that.
Great progress on your goals! It is great to see that you are prioritizing enjoying life through travel as well as saving for the future. It is important to do somethings to make the now fun!
Thanks Laura. I like your site and mandate when it comes to “saving for success”. Gotta live now while having some fun along the way!
All the best,
Lifes a journey. Your doing great Mark. Moves are always hectic and can get expensive ( I know we had alot to fix here when we moved.)
Those are some good goals though. It definately would be nice to have our mortgage reduced or eliminated completely.
With due time.
keep it up Mark!
Life is a journey Rob and certainly not a straight line.
Goals are coming along albeit a slow year for these ones.
Ah well, keeps me honest!
Your goals and methods to get there are robust however don’t be afraid to reset those goals due to life’s circumstances. With regards to your 2020 TFSA, why don’t you transfer nonreg shares into TFSA? I plan on doing this as I will not have enough new funds to invest. I plan to transfer the shares with the lowest realized gain to minimize capital gains taxes and minimize my marginal tax bracket. I’m not sure if this is the wisest thing to do but I would rather do this than miss the opportunity to fund my TFSA.
I feel like a failure at times but I have to remind myself it was a big year of change…
I might do that but would like to avoid any selling if I can help since effectively that is what moving from non-reg. to TFSA will trigger.
Here are my previous thoughts on this subject:
Where I can though, for us, I like to invest inside the TFSA with fresh/new cash.
I really appreciate your site. I wish I had seen something like it years ago. I just want to say I think you’re doing great and don’t let life bother you. I have been married twice and I’m in a relationship now that seems to be very good. If you had told me my life would go this way I would have laughed at you.
Each time I tried to do the right things financially by putting money in to both RRSPs and paying off the mortgage as fast as we could. With each relationship I started off again with nothing and tried again. Am I where I would like to be? The answer is no but I’m still trying. Retirement is close and I may not have the opportunity to get to where I would like to be but I’ve never stopped trying. Life just has a way of challenging you.
Keep up the good work.
That’s the thing eh Terry – who knows what life might throw at you? I’m not where I “want to be” either, certainly made some mistakes in my life and far from perfect but I do try and lead a more balanced life every day. This blog is an enabler for that, since it helps me be accountable to me.
All the best to you and thanks for the inspirational comment!