2020 Financial Goals – May Update
Welcome to another goals update.
“You have to set goals that are almost out of reach. If you set a goal that is attainable without much work or thought, you are stuck with something below your true talent and potential.” —Steve Garvey
In that spirit, here is where we want to be in a few short years to start semi-retirement with:
- Own a $1 million investment portfolio. That portfolio value excludes any future workplace pensions and excludes any house equity, which brings me to major goal #2;
- Own our condo; no mortgage debt ever again!
How are we working towards these goals?
One month at a time really.
Despite getting oh so damn close to realizing goal #1 above before COVID-19 changed everything, goal #2 is actually coming along quite well.
As demonstrated in this post when I shared our latest financial independence update we’ve managed to kill off almost $10,000 on our mortgage over the last six months.
In ensuring our long-term goals align to what we value, this is what we are striving for in 2020:
- Kill debt more aggressively.
- Maximize contributions to next year’s TFSAs.
- Increase our travel fund.
May 2020 Updates
1. Kill debt more aggressively.
Since January 2020, we’ve increased our standard mortgage payments by $100 bi-weekly. We hope to continue this trend for the rest of this year.
Our mortgage is up for renewal in early 2021 which should be our final mortgage term – ever!
I’m tempted to lock into a 5-year fixed term in order to kill off the mortgage debt. (We’re currently in a 5-year variable rate mortgage paying just over 1.5%. While that is excellent, I simply don’t see rates staying down for the next five years.)
Thoughts readers? Would you stay variable or go fixed for this, my final mortgage term?
2. Maximize contributions to next year’s TFSAs.
Since Day 1, we’ve used this account as a retirement account and will do so, for the foreseeable future.
Although dividend cuts have recently occurred for a few stocks we hold inside these accounts (Inter Pipeline cut their dividend by a whopping 72%; H&R REIT cut their dividend by about 50%), we remain invested in these companies and we continue to DRIP more shares of each commission-free every month and quarter.
With 2020 TFSA contribution room now done, our focus has actually turned to funding 2021 contribution room. Estimates say that contribution room should be in the neighbourhood of $6,000 per account, or $12,000 total for us.
At the time of this post we’ve saved up about $2,000 for our 2021 TFSA contribution room. I’m confident if we maintain our automated savings for the rest of the year, we’ll realize this goal by December 1, 2020. That will put us in a ready-to-roll investing position as of January 1, 2021.
You can read how we invest inside our TFSAs and how that contributes to our dividend income journey here:
3. Increase our travel fund.
All work and no fun makes for a boring life! But now we can’t go anywhere?! Thanks a bunch COVID-19….
The view from our villa in Belize, just a few months ago.
Nonetheless, we’ll keep saving for our next long distance getaway even if there are no short-term plans to go anywhere at all. We have our eyes on Belize again in 2021 once some new sense of normalcy returns. I would also like to take a few side trips per se to New York City or overseas to visit friends.
Our 2020 goal is to establish a travel fund of about $5,000-$10,000 that we can draw down if the mood strikes to buy plane tickets at any time.
So far in 2020, only $1,500 has been set aside since we made a few condo purchases and other purchases earlier this year. With things largely back on track (automatic savings moved to a dedicated savings account for our travel fund) I’m confident we can have a few more thousand saved up by the end of this calendar year.
What about RRSPs?
Ya, great question!
Regarding the RRSP contributions, because we pay ourselves first (this is the better way to budget by the way) we’ve removed all the behavioural gaps that might prevent us from maxing out contributions to these accounts.
At the time of this post, my RRSP is out of contribution room.
As of next month, my wife will also be out of RRSP contribution room.
So, needless to say, RRSP savings are not really financial goals for us anymore. We’ve conditioned ourselves to maxing out these accounts rather quickly.
Goals in perspective
Health and happiness are far more important than money.
With COVID-19 still a challenge to navigate, for many of us, I’ve tried to put a higher emphasis on my physical and mental well-being. I figure there are consequences if I don’t!
When you distill it, our bodies and minds play essential roles in the accomplishment of our goals and our overall happiness. We should all strive to find and learn new ways to support our health and well-being.This way, we can not only accomplish what we set out to do but we can also enjoy the journey much more while doing it.
I look forward to sharing our progress on these goals and much more wealth-building content in between.
Got comments on our goals? Fire away! I read every comment on this site and I try to respond to as many as I can.