2020 Financial Goals
Another year, another round of goal setting!
I figure if you never have an end in mind you’ll never get to where you want to be.
For years on this site, I mean years, we’ve set financial goals to keep ourselves accountable. Overall, I think the process is working.
Is semi-retirement within reach?
With that monster 2019 market year now behind us (that nobody saw coming), that’s another reminder it’s impossible to predict what 2020 might hold. But with 2019 having been such an outstanding year for equities and dividend investors like myself, it’s a sign if we stick to our investing plan for the coming year we should be that much closer to realizing our passive dividend income goal and other goals that should kick-start semi-retirement.
To recap, here is where we want to be in a few short years to start semi-retirement:
- 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 week, then a month, then a few months at a time.
Little changes turn into massive improvements over time
I believe largely because we’ve been documenting our goals, tracking them, and making them transparent, a level of accountability has set in to make most of our goals each year a reality.
While big goal #1 above is now much closer thanks to generous 2019 stock returns, we have some work to do with goal #2. That means our priorities in 2020 should align to that accordingly.
This is what we came up with for our 2020 goals:
- Kill debt more aggressively.
- Maximize contributions to next year’s TFSAs.
- Increase our travel fund.
Kill debt more aggressively.
Based on a high volume of reader suggestions and requests, I’ve become a bit more transparent regarding our debt load.
At the time of this post, our mortgage balance is about $133,000. That debt is not going to go away anytime soon until we become more aggressive in tackling it.
So, throughout 2020, we will increase our standard mortgage payments by $100. This way, by the end of 2020, an additional $2,600 should be paid down directly on our mortgage principle.
We will also take any tax refund(s) we get in the spring of this year; after our RRSP contribution room is maxed out, and apply any tax refund to reduce our mortgage. For those thinking ahead to their tax refund, this is just one strategy we’ve used in the past as we strive for financial independence in the coming years.
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.
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. I’m confident if we can automate our savings, we’ll realize this goal in another 12 months.
Increase our travel fund.
All work and no fun makes for a boring life!
So, let’s travel more!
To do that, we believe having a dedicated travel fund will help us – so we’ll establish that as a specific goal for 2020.
Although it took us years to get there, we already have a modest emergency fund on retainer for the “what ifs” in life. Our fund has remained largely at this balance, plus or minus a few months, for the last 4 years now.
Although one might argue to escape cold, snowy, often ice-frozen Ottawa winters is a legitimate emergency (!), we prefer to fund travel separately. I think getting into the habit of automating our savings for upcoming travel will be a great way to fund this account to pay for flights, accommodations/villas in any sun or warmer climates a couple of times per year.
Our goal in 2020 is to establish a rolling travel fund of about $5,000-$10,000 we can draw from at any time.
To get there, we’ll set up automatic savings to a dedicated account, and transfer $500 at the 1st of every month. That should deliver a total of $6,000 by December 1, 2020. (Actually, we’ve already set-up our automatic transfers so the process is now fully underway…)
What about RRSPs? What about not taking on new debt?
Ya, great questions.
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 my RRSP. I’ve maxed out my RRSP contribution room for years now, 2020 should be no different thanks to small, automated, monthly contributions.
My wife however had tens of thousands of RRSP contribution room available to her in the past. But no longer. In fact, we made a massive dent in that RRSP contribution room in 2019. Now that 2020 is here, I’m confident with her automated, monthly contributions set-up in the amount they are, her RRSP will be maxed out with contribution room for the first time.
Because monthly RRSP contributions are automated and calculated to max out available contribution room, I figured this was low-hanging fruit that didn’t need to be an implicit 2020 goal. I will keep you posted if that changes.
In terms of taking on new debt? Well, our mortgage is plenty enough. I think you know based on goal #1 we want debt gone and don’t intend to incur any new debt.
Goals in perspective
Health and happiness are far more important than money. The latter is just a tool.
So beyond any 2020 financial goals, I will personally be putting a higher focus on health and time management for happiness. As I get older, I’ve come to realize what I should have known all along – while we’ve been very fortunate things might not always work out as planned. It’s important to have good physical and mental health to stay resilient in times of change. On that note, it is my hope through other improvement opportunities I can improve upon my general wellness to eventually enjoy the fruits of my hard-earned labour. It would be shame not to enjoy the semi-retirement plans we’ve been building towards due to poor health.
Ultimately, good health for you and me, and our families, is the best form of wealth.
On that note, best to you in 2020. I look forward to sharing our progress on these goals and much more wealth-building content in between.
Got comments on our goals? Changes we should make? Other things we should consider? Fire away! I read every comment on this site and I try to respond to as many as I can.