Prioritizing your goals makes them easier to achieve.
Can you believe 2014 is already coming to a close? It seems like this year was over in the blink of an eye. 2014 has been a busy year to say the least. I landed a lot of well-paying freelance writing gigs, including perhaps my highest-profile job at Tangerine. I also dealt with the headache and stress of finding new tenants. If that wasn’t enough, I spent over $25,000 on home renovations. Here are some of my financial goals for 2015.
1. Pay off My Mortgage
In August 2012 when I bought my house I started with a massive mortgage of $255,000. Less than three years later, my outstanding mortgage balance is only $68,000. Through hard work and guerilla frugality (a term joined by Jonathan Chevreau), I’ve been able to pay down my mortgage quickly. My goal is to pay down my mortgage before Star Wars Episode VII: The Force Awakens debuts in theatres on December 18, 2015. I know it may sound like a silly goal, but it sure keeps me motivated!
2. Make the Maximum Contributions to My RRSP
Even though I’ve been aggressively paying down my mortgage, I’ve still managed to make the maximum contributions to my RRSP each year. Even though it probably makes sense to save my RRSP contribution room until future years when my salary is hopefully a lot higher, I didn’t want to fall behind and end up with five-figures of RRSP contribution room like my parents. Even though I have a defined benefit pension plan at work, I still should be able to contribute at least $5,000 to my RRSP in 2015.
3. Catch up on My TFSA Contributions
With my mortgage paid off, I plan to catch up on my TFSA contribution room. In 2015, I’ll have $36,500 of TFSA contribution room (including contribution room carried forward from previous years). Before I became a homeowner, I used my TFSA to save towards my down payment. After I bought my house, I’ve mainly used my TFSA as an emergency fund. With my mortgage paid off, I’ll make better use of my TFSA. I plan to buy low-fee TD e-Series funds in my TFSA to shelter my gains from the taxman.
4. Write a Personal Finance Book
With my mortgage paid off before age 31, I’d like to write a book about my journey towards financial independence. I’ve already done an outline for the book. My hope isn’t to get rich (because there’s a lot better ways to get rich than writing a book!), it’s to establish myself as an authoritative personal finance source and to help inspire others to follow in my footsteps.
5. Get Promoted at Work
In August 2015 I’ll celebrate my five year anniversary as a pension analyst at a global pension and benefits consulting firm. This year it’s my goal to get promoted to a senior analyst. I’ve expressed my interest in getting promoted and taken the initiative to take on greater responsibilities. Next year I’ll celebrate another milestone: my 30th birthday in February 2015. Getting promoted would be the icing on the cake!
6. Make More Media Appearances
2014 was quite a year for me. I appeared in the Financial Post twice and wrote an article for the Globe and Mail. I’d like to take my career a step further and build my profile by making a few TV appearances. So far I’ve only appeared on the Pattie Lovett-Reid Show. My ultimate goal is to make an appearance on CBC’s the Exchange with Amanda Lang. I’m a long-time viewer and know many guests, so it would be nice to finally be on the show.
What are your financial goals for 2015?
Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians, available now on Amazon and at Chapters, Indigo and major bookstores, and as an Audiobook on Amazon, Audible and iTunes.
Hi Sean,
Congratulations on your accomplishments, but I’m having trouble following the math. Could you please take a look and let me know if I’ve misunderstood something?
You’ve decreased your mortgage from $255K (as of August 2012) to $68K (I assume this is as of December 2014). This means you’ve paid off $187K in 28 months (an average of $6,679 per month).
In a fairly recent (June 2014) article, it says that you make “up to” $3,000 a month in extra principle payments on your mortgage (http://business.financialpost.com/2014/06/07/mortgage-free-in-canada/). That would reduce your mortgage by $3,000 * 28 = $84,000 (assuming you make the maximum payment each month since August 2012).
According to the article, you also make $3,400 in monthly “routine” payments, which is split between interest and principle. I’d estimate, generously, that half of that amount goes to your principle – so there’s further reduction of $1,700 * 28 = $47,600.
In total that means that your mortgage should have decreased by around $132K – that’s making generous assumptions that 1) you make your max payment every single month and 2) half of each routine payment goes to principle (quite unlikely in the first couple of years of your mortgage). Regardless, that leaves an extra $65K decrease in your mortgage unaccounted for. Even if we assume that you somehow have an interest-free mortgage (which you don’t – the article say the rate is 3.04%), and each dollar of your routine payments goes directly to the principle, your mortgage has decreased by a greater amount than your total payments.
My question is – what am I missing? Did you financial situation materially chance between when that article was published in June 2014, and if so, how? Is there some other source of income (which could be used to fund additional mortgage payments) that, for whatever reason, wasn’t disclosed in that article? I’m impressed by your accomplishments but I`m having trouble following the math.
Hi Timmy,
Thank you for leaving your comment. Please see comments below. Hopefully this clears everything up.
– Between my pre-payment privileges, I’m able to make pre-payments up to $70K per year. I max all of them out.
– I freelance a lot in my spare time. Most of the money is from freelancing and rental income.
– My regular mortgage payment is $800. About $700 of that is principal (not half).
This is as specific as I can get because I don’t feel comfortable writing my entire finances on the Internet to read.
Sean,
I submitted a response and I noticed that it’s been deleted. I’m assuming that was a computer glitch, so I’m submitting this again. Unfortunately I didn`t save my previous comment, so this will be slightly re-worded, but essentially the content was as follows:
In the June 2014 article that I linked, it says that you make up to $3,000 in extra mortgage payments each month. The article shows a balanced budget where your take-home pay equals your expenses and plus the $3K per month in extra mortgage payments. In other words, the budget that was published was balanced and internally consistent.
Just now, you told me that you’ve been making $70K per year in extra mortgage payments. I agree that the math works if you’re making $70K in extra paymetns per year – but the question becomes – how is that possible, given that your budget only has room for around $36K per year in mortgage repayments? This suggests you have an extra $34K in after-tax income, which translates to $50-55K in pre-tax income.
As I said previously, if that’s all consulting income, then good for you. It’s commendable to make that much money through entrepreneurship. That being said, as a financial journalist, you have an obligation to publish complete and accurate information. Help me understand how you’ve been making $70K in mortgage payments for the past 2+ years, when that recent article shows a balanced budget that can’t possibly support that level of debt repayment.
I appreciate your blog comments and feedback. I’m actually working on a book, so I’ll make sure the numbers make sense. Yes, I did actually earn about $50K in writing income last year. As I mentioned, I tend to be conservative with my freelance earnings. I hope you can understand that I’m not fully comfortable disclosing everything about my personal finances on the Internet for privacy reasons. I don’t want a cyber criminal to use it against me.
Please feel free to continue to comment on my blog, but please understand I’m not comfortable going into any further detail about my finances. Also your e-mail address does not work. Please use a valid email address next time.
Hi Sean,
I appreciate your response. My comments are intended to be helpful, not an attack.
From my perspective there still seems to be a difference. You made around $50K in freelance income last year – that’s great! But the budget already included $36K, so you’ve really only added an extra $14K, or around $9K after tax. The unreconciled difference is around four times that amount, as shown above. Since your consulting income is growing (correct me if I’m wrong), the difference would be even larger in the previous year.
I’m not asking for an answer now – I know it will take time to look into the details. That being said, I find it frustrating when financial experts decide to post all of their numbers, yet when people press for specifics or point out areas that are contradictory or unclear, they say they want to keep their information private. Nobody forced them to post their personal information in the first place. If information is posted, particularly if it`s being used to help that person earn freelance income, it should be complete and accurate.
In my opinion, that`s a critical step to validate the expert`s advice. If the expert can`t reconcile their increase in net worth to the budget/strategy they’re trying to sell, that suggests their numbers are fake, or there’s something that hasn’t been disclosed (ie they got a windfall due to inheritance, they’re not paying income tax on all of their income, etc). Again, to be clear, I’m not saying that’s the case with you – but there are legitimate questions that have been raised, and they deserve a response. When someone is getting paid for their expert advice, there shouldn’t be any holes in their data.
Sean, despite the tone of this post, I wish you success and I look forward to reading your book. But in order to prove that your strategies are realistic, attainable and sustainable, these discrepancies should be cleared up before the book is published.