My Short and Long Term Financial Goals

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?

I Am Officially Debt Free!

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.

How I Cut My Expenses by $255 a Month

For the month of September I wanted to set a money goal for myself and I was inspired by two books – The Wealthy Barber Returns by David Chilton and The Millionaire Next Door by Thomas Stanley and William Danko. If there’s one thing I’ve learned this year it’s that if you don’t manage your expenses and spending, you’ll never have enough money no matter what you earn. My current monthly savings has bumped all the way up to 61% this year which is great! However, I wanted to see if I could take it even further and I decided to take another pass at my expenses and see if there were any items I could reduce further or eliminate totally this year. Here are the categories I was working with and in bold are the ones I targeted.

Food, Gas (non-existent), Donations, Subscriptions (Netflix + Prime), Car Insurance, Parking, Mortgage and Home Expenses, Phone

After everything, this exercise ended up saving me what will be a recurring $255 monthly! Here’s how I did it.

Car Insurance

You sort of get accustomed to your monthly payments when you’ve been with the same insurance provider for a while, but it’s worth taking an hour or two to call around and see what rates different companies are offering. I had a membership discount with my previous insurer that had ended this year in 2020 which caused my rate to go up slightly. I decided to call a few different insurance companies for competitive rates and ended up switching to the provider that we also have home insurance with. They even had a discount for the specific university I graduated from, which minimized my rate even further and resulted in me saving $80/mo.

Parking

If you live or work in downtown Toronto you know how expensive the parking is, but I’ve always had a trick to find more affordable parking: most churches in Toronto offer monthly parking for a much cheaper rate. You just have to reach out, see if they offer parking and if they do, ask to be put on the waiting list. My parking at the church by my office was $75/mo. which beat all the parking options in the area by a long shot. However, this month I decided to give up my spot and get put back on that waiting list. To be honest, this one was more a residual effect of finding out that we would be working from home for much longer than anyone had anticipated but either way, I’m looking forward to having that extra $75/mo. to save or invest.

Food and Restaurants

I’ve gotten so much better at grocery shopping and meal planning the last few months and I now set a monthly food budget and stick to it. This month I was able to cut down my food budget by $100 and there were a few things that contributed to being able to do this. We shop weekly for only what we need, this has resulted in a lot less waste on our part. We eat less meat; I’m not a vegetarian but I’ve never been a big meat eater and it’s made a huge difference. We shop at cheaper grocery stores, and lastly, meal planning has been a game changer. Out of pure curiosity I frequently break down the cost per meal of what we make to see how cost-effective it is and I have to say, it is strangely satisfying to find out that your meal works out to be $1.79 a portion.

If you’re at home wondering “why can’t I save more?” or worse, “I can’t save money!”; build a budget or just start by listing all of your expenses and tackling them one by one. I promise you that once you start, you will find so much joy in controlling your expenses and saving that it’ll become more of a habit or a competition for you.

7 Ways Covid Changed My Finances

There isn’t anyone who hasn’t reviewed and re-assessed their finances in one way or another since the Covid-19 pandemic hit in March. Like many others, when the pandemic hit in Toronto I had no idea what to make of it. Would I only be working at home for a few weeks? Would I lose my job entirely? At what point would we return to normal?

For the first month of quarantine, bored and stuck at home, I shopped online. Excessively. New clothes for summer (because you know, the virus would be over by then), expensive skincare products, the works. And in April, probably as a result of both Covid-related anxiety as well as seeing the amount I paid off on my credit card, it really hit me how loose I’d been with my finances. I had gotten to a point in my career where I was making more money than I needed and rather than thoughtfully plan out where that money was going, I was spending it. Here are some of the biggest changes I made.

I built a zero-based budget

The first thing I did to get a deeper sense of where everything was going was build a big, beautiful budget in Excel and download the Mint app to track my transactions by category. I knew all of my fixed costs (mortgage and car insurance) were set up as automatic and 10% of my pay was automatically deposited into a TFSA each month. I knew I spent too much money eating out, and I knew that my discretionary spending was probably a little high.

When all was said and done, I went from saving 10% of my paycheque each month to saving 61% just by cutting down my variable costs and also really taking a look at what was truly fixed vs variable in my budget.

I eat at home

It was no surprise that a ton of my money was going to takeout and dining out rather than groceries, and particularly when you’re busy at work and commute, it’s easy to fall into bad habits. Grabbing a coffee on your way to work, buying lunch for $10-15, getting home too late to cook so opting for delivery.

I slowly started to meal plan each week and put together much more disciplined grocery lists which meant less waste, my grocery bill was cut in half, and there was no scrounging around my kitchen trying to figure out what to eat. We still do takeout about twice a week but when we do, we opt for cheaper spots. I also looked at where we were shopping – did we really need to shop at the higher end grocery stores when the prices were significantly higher?

Since this shift, I’ve found myself not only enjoying cooking but also excited that I can plan healthier and more vegetarian meals. I also get weirdly excited seeing an empty fridge at the end of the week knowing that we don’t have to throw out any bad produce or excess food.

I curbed discretionary spending

Prior to my Covid online shopping bonanza I thought I was doing relatively well in this category, and truthfully it wasn’t terrible. I’ve never been the person who has to have the latest and greatest and I definitely don’t have a penchant for anything designer, cars, technology or other expensive things. But I was still spending a few hundred dollars a month on STUFF. I’d see something on Amazon and order it. I’d go into a store for cleanser and come out having spent $50. I started with the easy ones and cut out things I didn’t use frequently, like Disney+ and Amazon add-ons. And for everything I thought about buying, I also started to ask myself: do you actually need this? (spoiler, it’s no 95% of the time).

Living below my means was the key to being able to increase my savings significantly, and after a few months it started to become fun. Once I started to see the impact, I’d find new ways of challenging myself to save money and be even more frugal.

I started investing

As I started to see the impact on my savings, I got more and more interested in learning about investing. I had always participated in my employer options, but I had never opted to do anything outside of that.

I started doing research and fell down the rabbit hole reading, learning and watching videos and it became clear to me that to get to the number I want in retirement, even with the most consistent saving practices, I would have to invest.  

I’m no expert and would never claim to be so I started with a Wealthsimple TFSA, investing into a high growth portfolio made up of index funds and a low percentage of bonds. Over the last few months there have been ups and downs but overall, I’ve seen about a 5% return. As I learn more, I’m sure I’ll expand into different forms of investment but for now, keeping it simple!

I upped my donations

2020 has been an eye-opening year. The pandemic lifted the veil on inequality for women and BIPOC while exacerbating existing issues globally and it’s never been more clear that there are so many people and organizations that need help.

So, I increased my monthly donations to two organizations and throughout the year have prioritized and made room for charitable giving. While it’s a personal decision and totally based on what is affordable for you, I really believe that money should be shared and that even a small amount makes a difference. If you’ve been thinking about supporting a cause but aren’t sure which organization to support, do some research. Look for charities that are accountable, transparent and financially healthy, because this means the organization is more effective on their charitable mission.

I looked into different ways to diversify my income

Finding multiple streams of income has really been a priority for me this year, so that if anything happened with my job, I would have more money and something else to fall back on. This year I took on a part-time job for 6 weeks to help beef up my savings and I’ve been building a portfolio of freelance writing to be a contributor in spaces that I know well – mainly HR. I’ve frequently held multiple jobs; when I got my first corporate recruiting job out of school I opted to also work part-time as a phone sales rep for almost a year on top of my 9-5. For most of 2018 I had a creative side hustle, and during university there was a period where I worked 3 jobs – a phone sales representative, a DQ employee, and an Avon sales rep (I know). Aside from a side hustle, my partner and I have also been searching for an investment property that will eventually become a passive income source for us.

I became a huge personal finance nerd

This was unexpected but if it had not been for the pandemic, I don’t know that I would have found this passion so quickly. I have eaten up every piece of information and enjoyed learning from financial experts, following financial blogs and millennial finance accounts, better understanding the stock market and just overall learning new ways to achieve financial independence.

So while Covid has been an extremely strange period to navigate, it has positively changed the way that I think about money. And if and when things do resume and return to normal, I know that I won’t be able to slip back into my former ways.