The end of June is one of my favorite times of the year when I think about both my personal and business goals. I really like this time of the year because I take a moment to sit down and look what has happened in the first six months of the year and where I’m heading for the rest of the year. Sometimes it’s good news, sometimes it’s not. The important part is realizing what has been done and looking at what I can do to achieve my goals by the end of the year.
At the beginning of the year, the main goal was to take control of my finances. I’ve split this main goal into three specific tasks:
- Reducing my debt to less than $300K
- Opening an RESP for my children
- Making over $130K at my new job
Let’s see where I am after 6 months:
This is probably the biggest challenge I’m facing for 2012. The lowest I’ve been in terms of debt was in of April (read my April net worth statement) showing a debt of $315,276. Since then, my debt level has started to increase again. I’ve calculated my debt level for my June net worth statement (and including what is coming in terms of expenses for the next 2 weeks) and I will finish the month of June with a total debt of $324,000. You read it right, in the last 2 months, I’ve spent $9,000 more than I made… This is VERY bad!
The only thing one must do when you realize that you are overspending is to look at what happened since the beginning of the year. I’ve made 2 majors budgeting mistakes this year:
1- I thought I would spend $1,000 to $1,500 throughout the year for car maintenance. I’m now over $5,000 after 6 months!
2- I thought the pool expenses would be covered by a fat income tax return. I received only 2K in tax returns and the total budget for the pool exploded to $9,650.
When you add only these 2 expenses, we are at $14,650 spent Vs roughly $4,000 budgeted. So if I’m looking where the 9K went from April to May, I do have my answer and it’s not linked regular expenses. In all honesty, I didn’t think a pool would be that expensive. Here’s the detail (if you even consider having a pool!):
Pool: $6,100 (the pool, the heater, filter and all pool equipment)
Pool installation: $770 (this includes additional material for the pool, water (I have a well), and guys installing the pool)
Electric installation (for the filter and heater): $780
I thought I was going to receive a $5k-6K tax return and only got 2K in the end. In addition to that, I calculated roughly 6 to 7K for the pool in total instead of nearly 10K. This was a huge mistake on my part and I should have thought about it more seriously before entering into these crazy expenses.
With regards to what happened to my car… well… 40000 miles in 18 months might have been a little bit too much for it I guess. I hope the bleeding will stop as I want to keep this car until 2015 in order to save on car payments.
If I look at what I need to do in the next 6 months, this means that I need to pay off $4,000 in debts per month. I know it’s impossible. On the other hand, I should be able to drop the 324K close enough to 300K so I can use my year-end bonus (earned in November but paid in January) to get to 300K. At the end of the year, I should be able to use about $6,500 of my employer stocks to drop my debts too. I’ll be watching my expenses very carefully in the upcoming months!
I’m glad as I wanted to invest a total of $2,400 in the RESP (an investment account to pay for my kids tuition) in 2012 and the following years. As of July 3rd, the first investment of $200 will be contributed. At the end of the year, I’ll be at $1,000 (5 x $200) and I’ll only have $1,400 to dip into in order to match the $2,400 objective. At this pace, I should be able to build a $70,000 fund by the time my first guy will start to withdraw from this account. This will be more than enough to pay for university in Quebec for three kids!
I’ll be investing 25% in a preferred shares fund and 75% in index funds (Canadian, US and Small Cap). Since I won’t touch this fund for the next 14-15 years, I don’t mind if there are major swings in the account. I’m sure in 10 years, I’ll be making money!
As I am starting a new book, I don’t expect to earn a huge bonus this year. This is why I need to concentrate on my other sources of income to make over $130K. Overall, I seem to be in good shape to make about $110K before my year-end bonus. I will probably have to withdraw a little bit more from my online company and make a fat bonus in order to reach my goal. Then again, this will be a major challenge! It will all depends on how well the company is doing and if I can close a few big deals at work!
As you can see, things haven’t gone the way I expected so far this year. However, this doesn’t mean it’s too late for me to reach my goals. It just going to be darn hard to do it! The good news is that I’ve been able to cut a lot of recurring expenses this year:
- Gasoline (since I work 5 minutes away from home)
- Gym (I’ve built my own gym at home)
- Dining out (having a baby makes you stay at home and cook!)
I’ve also cut the vacation budget to $0 for this year. The pool is our vacation so I won’t be have to spend an extra $2,000 this summer for family vacation. In fact, if my cars are doing well, I don’t have any big expenses expected until… XMAS!
Let’s hope things get better and I can finally drop my debt level!
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