Back in January, I wrote down our personal finance and investing goals for 2011:
• Goal # 1 – Increase mortgage payments by $200 per month.
• Goal # 2 – Contribute $5,000 each to TFSAs.
• Goal # 3 – Optimize our RRSPs.
• Goal # 4 – Continue my full DRIP with Bank of Nova Scotia.
• Goal # 5 – Start my full DRIP with Fortis.
• Goal # 6 – Build up our emergency fund to $10,000.
In April, I provided you with an update on where we were at with our goals – some good progress was made actually. This year I posted our goals in “black and white” and for the world to see for two main reasons. One, writing things down keeps me/us honest. Two, I’ve shared them because I think it helps me/us be accountable. Even if goals are written and shared, sometimes it’s a struggle. Let’s see how we’re doing so far…
Goal # 1 – Increase mortgage payments by $200 per month
Might as well start with the best news, first. We’re on our way to accomplishing this goal! We’ve managed to maintain the $200 lump sum payments per month on our mortgage since January 2011 and we have no intentions of stopping them. If we keep this up, long-term through our mortgage amortization, we’ll be close to paying off our mortgage almost 4 years earlier! Check out how you can pay off your mortgage sooner by using this handy government calculator.
Goal # 2 – Contribute $5,000 each to TFSAs
Very early on this year, I maxed out my TFSA contribution for 2011. I now hold a few dividend-paying stocks in my TFSA like Husky, H & R REIT and Rogers. My plan over time is to transfer a few of my Canadian dividend-payers (from unregistered accounts) into my TFSA to shelter the dividends paid. On the not-so-great side, we were not able to max out our other TFSA yet. We were close, that was the plan but instead we made a detour this spring and installed a new metal roof with the funds intended for my wife’s TFSA. The roof was expensive, so until we pay off our line of credit, we won’t be contributing to either of our TFSAs going-forward. At least with this goal, we got halfway there 🙂
Goal # 3 – Optimize our RRSPs
Until I became My Own Advisor, I invested in high-fee mutual funds. I still can’t believe I did that! I’ve put those dark days behind me and now we’re invested in dirt-cheap ETFs like XIU, XBB and CLF in our RRSPs – and getting near market-returns because of it. To date in our RRSPs, we’ve only contributed enough money to hopefully off set paying paying any income taxes come tax time in 2012. If anything, we might get a tiny tax return which is fine by us. We optimize our RRSPs instead of maximizing them. So far, we’re on track to do just that in 2011.
Goal # 4 – Continue my full Dividend Reinvestment Plan (DRIP) with Bank of Nova Scotia
You might already know I love Canadian banks. They make money, lots of it, mainly from folks like us borrowing for houses, cars and lines of credit. So, I figure if I can’t beat ‘em and I might as well own ‘em. I own Bank of Nova Scotia (BNS) but unfortunately this is one stock I cannot run my synthetic DRIP with yet. This is because I don’t own enough BNS shares for the dividends paid each quarter to buy one full share. So, about a year ago, I started my full DRIP with their transfer agent to help me own more BNS shares, commission-free. Last year I managed to contribute at least $50 per month into BNS stock and this year I’m on track to do that again. Steady as she goes.
Goal # 5 – Start my full Dividend Reinvestment Plan (DRIP) with Fortis
I finally made my purchase of Fortis stock earlier this year and since that transaction, I’ve been making optional cash purchases commission-free using their transfer agent as well. Like Bank of Nova Scotia, I hope to increase my holdings in this Canadian dividend aristocrat throughout the rest of 2011.
Goal # 6 – Build up our emergency fund to $10,000
With a new home (we’ve been here for just over 6 months now), you know from your own “homemoaner” experiences that there are always known expenses like new appliances and window treatments, and lots of unknown expenses like a faulty air conditioner unit (yes, this happened to us). When we bought this house in the fall of 2010, we also knew a new roof would be required at some point. Unfortunately that “some point” came this spring after we saw the damage left by snow and ice on our old asphalt shingles. Being proactive instead of waiting for our roof to leak, we decided to get a new roof this April and settled on installing a steel metal roof. While we love the roof we didn’t feel the same about the price. Our steel metal roof was more than double the cost of a typical asphalt roof, but man, this thing is built to last. I’m convinced our metal roof will outlive us; it’s warranted for as long as the home stands. With all the steel metal roof benefits, paying for it isn’t one of them. Because of this not-so-sexy-infrastructure project we have no hope of meeting this goal this year – I’m waving the white flag right now. Instead of a healthy emergency fund (which we used to have) we now have a very unhealthy line of credit (LOC). I’ve never had one before and it’s annoying to carry. While borrowing rates are at record lows (which won’t last forever….) we’re working hard to save and pay off the LOC. Unfortunately we’re at least one year away from finishing those payments.
Well, that’s my summer update of our personal finance and investing goals for 2011. To recap, we’re well on our way to accomplishing at least half of them and regarding our emergency fund, we have no hope. Failing this last goal doesn’t sit well with me. We had great intentions but we’re going to fall woefully shorty. So, I’m torn on our progress. On one hand, we’re doing some good work paying down the mortgage and growing our dividend-income for tomorrow. On the other hand, we’re not putting down as much as we absolutely could on our LOC today. On top of that, we also want to live our lives and spend a little of what we make since life after all is about living – balance is important to us.
I’m sure you have some opinions to offer.
Are we being too loose with our debt repayment plans or is the balance fair?
As always, share your thoughts!