Over the last few months I’ve been thinking about what the short and long term goals of my money are. I’m now in a savings routine, I have an accessible emergency fund should anything go wrong, and by the end of the year I’ll have about $45,000 across my portfolios.
With that said I’m not saving for the sake of saving and so I’ve set a few financial goals for myself that I think are feasible. My calculations are also conservative based on me staying at my current income for the next 10 years.
Short Term Goal #1: Investment Property
I’m planning on purchasing an investment property with my SO in 2021 and this is what most of my current savings is going to be put towards next year. I feel better about putting some of my money into an asset that will appreciate over the coming years and hopefully become an income source for us.
Short Term Goal #2: Value Based Spending
There are things in this world that I just think are worth the spend and for me that is travel. Travel brings me a lot of joy and I wouldn’t delay those experiences for an earlier ‘retirement’. At least a portion of my trips are usually covered through my credit card points (I’ve been using the same card for years) and it has at times paid for full vacations. This year alone I’ve racked up almost $1000 in points that I can’t wait to use once it’s safe to travel again!
Long Term Goal #1: Pay off the Mortgage
A shared goal of my SO and I (after we purchase an investment property) is to pay off our mortgage. It’s our single largest expense and we’ve each committed to aim for 20-25k in lump sum payments per year; that additional 40-50k will let us pay off the mortgage much faster (about 7 years), while still allowing me to put money away for my next goal.
Long Term Goal #2: FIRE by 40
I’m a huge admirer of the FIRE movement and I don’t really understand all the criticism. I love what I do! I don’t know that I’ll have the desire to fully retire for a long time – I have to be working or adding value somewhere. But wouldn’t you want to have choice? The choice to work or not work, or to only take on the work that you’re incredibly passionate about because you can? I also really believe that if you are doing work because you love it and not because you’re tied to the paycheque, you show up more authentically. You might be more bold, more innovative and less afraid to do your work truthfully. That to me is my FIRE goal. To get to a place financially where I take work only because I want to and not because I have to, and where that money is just a bonus.
What are your financial goals?
Today is a very exciting day because I have officially made my final lump sum payment that will rid me of my student loan forever! I’m relieved it’s gone, embarrassed it took so long and thrilled to never see the acronym NSLSC (National Student Loans Service Centre) show up in my bank account ever again. For anyone curious, I graduated in 2013 with a Bachelor’s Degree in Commerce and about $35,000 in student loan debt. Technically, I could have paid off my remaining balance earlier this year but given that student loan payments in Canada were suspended with no interest accruing, I decided to take the opportunity to instead save for the short term and pay off the remainder of the loan right before payments restarted. I don’t regret this decision one bit, it allowed me to build up a substantial cushion of savings and had I lost my job during Covid I would have been very financially prepared.
I don’t know about anyone else but growing up I always heard people call student loan debt ‘”good debt” and because of this I just wasn’t in a rush to pay if off. I received grants every year in university that paid for my books and then some but never thought to save the additional for my inevitable growing loan. During the 6-month grace period after I graduated I didn’t make any payments because why would I? And even after that I only made the minimum payments (which to be fair, was still very high for what I was earning in my first job out of school). I thought it was normal for people to take 10 years to pay off their loans, it was fine because it was “good debt”, right? Wrong!
I understand why people refer to student loans as a good debt; it translates into a significant amount of value for most people and it’s an investment in your future. And I am proof! I am in the exact field that I went to school for, I seriously love my job and I make a comfortable living which I partially credit to my education. But at the same time, it’s dangerous to label any debt as good debt, especially when the average student in Ontario graduates with $28,000 in loans and a floating interest rate that can hover between 4-6%.
Now unfortunately, I don’t have a great story about how I successfully paid off my loan. I paid exactly what was required of me and nothing more for about 4 years after graduating. In 2018, staring down a balance that was still alarmingly high I decided it had to be gone by the time I turned 30. I started putting down semi-regular lump sum payments and then in 2020, I got a bonus that I used to wipe out most of it. Ta da!
My story is pretty irrelevant. You can’t bet on a bonus or a windfall to take care of your debt but luckily, mine did. Consider me a cautionary tale and prioritize paying off your debt- even the good debt. When interest builds on large amounts like student loans, your monthly payments barely make a dent and you end up paying so much more than the principal. If I could go back in time I would’ve made more sacrifices to pay off the loan sooner. But you live and you learn, and this should be a reminder that it is never too late to course-correct.