I really like the beginning of each year since I’ve started this blog. I’ve realized that I achieve more things in my life since I started authoring The Financial Blogger. And each year, I set very specific goals for the upcoming 12 months. For the past 2 years, I’ve made these goals “public” on this blog and I follow-up on them in June or July to see if I’m on track or not.
So far, I was able to achieve most of my personal goals. I am convinced it is because of the additional accountability I get by posting them and letting your know about it. For this, I have to thank you! I hate to lose and telling people that I have lost is even worse for me. I guess this is why I get so motivated to pursue my objectives!
For the past 2 years, most of my finance goals were oriented towards making more money. Only 4 years ago, I was making about $60,000 per year. I have broken the 6 figure income at the age of 28 (2 years ago) and crushed 2011 with over $176,000 in total income. While I’ve focused heavily on climbing the corporate ladder and finding a high paying position, I’ve also pushed my online company to produce some serious income (we went from $18,403 to $124,514 in 2010). This year is going to be different though.
I’m not going to focus on income creation.
I’m not going to focus on asset building.
What does this mean? Well, it’s quite simple. While I was able to multiply my income by 4 in the past 4 years, I’ve certainly multiplied my expenses by the same factor (if not more!). I bought a huge house, drive an expensive (gas consumption wise) sports car, ate at great restaurants and drank a lot of wine (lol!). So while my net worth has kept increasing (latest result with my bonus to come at the end of January!), it was mainly due to the growth of my assets and not from a decrease in my debts. And recently, this has started to bug me big time. This is why my goals are slightly different this year:
As of my November net worth statement, my debts total $343,070. To be honest, there will be about $25K-$30K paid on them by the end of January. So my goal will be roughly to pay over 13K in debts this year. This cannot really be seen as an aggressive objective per se (as it only means 1K per month), but considering the fact that I have constantly overspent for the past 2 years, I think it will be a important feat to reverse the trend and start paying back my stuff on a monthly basis. ‘Cause the problem lies right there: I’ve been dependant on the size of my annual bonus to pay off my debts for the past 3 years. I need to be able to pay for all my stuff with my bi-weekly pay check and just enjoy my bonus at the end of the year whatever it may be.
I’ve already taken some action to realize this objective:
- I won’t be working 1 hour away from my house anymore (more details to come about this project!)
- I reviewed my insurance policies a few months ago and saved $50/month for the same protection
- I reviewed my cable bill a few days ago and reduced it by $15/month
- I’ll be cooking more (since we are expecting our 3rd child in a month or so, I won’t go to the restaurant very often!)
I’ll also be more cautious about my spending and plan in advance. For example, we will install a pool this summer, but this will be paid for by my tax return which is already planned. Therefore, I won’t be counting on credit to pay for it!
William is now 6 and I haven’t setup an RESP for my kids yet… man I suck sometimes! This year, I want to not only open the RESP but put $2,400 in to it. This won’t happen until I get my finances under control but I will eventually setup the RESP and invest $200/month into it. I’ll obviously have to invest a lump sum to have it hit $2,400 for 2012 but it will be set for future years.
Since we get a 30% subsidy from the Government, this will make the sum of $3,120 per year. If I calculate that I will start withdrawing money from this account when William is 20, I will have the amount of $58,425 (or $49,455 in today’s dollar considering a 2.25% inflation rate) if I invest at 4%. Since a year in university cost about $5K in Quebec today, I will have enough to support my 3 kids going to University without any problems.
oh, and the only book you need if you want to setup a RESP for you kids is this one:
Huh? My goal is to pay off more debt and I aim for a lower income? What the…???? yeah… well this is also part of a bigger plan where I won’t be working downtown anymore. So on one hand, I’ll be saving a lot in the cost of transportation, but on the other, I’ll be making a lot less. Last year, while I made 176K, I got 64K in bonus. Therefore, the rest of my income totals $112K. I know I won’t be getting a similar bonus this year since I’m leaving downtown. This is why I aim to generate an excess of roughly 20K from my “base income”. This could come either from my bonus or my online company. Speaking of which, I’ll be back with my blogging goals for 2012 tomorrow.
Do you think I can do it? Man, I was depressed to see that I’ve increase my debts by 18K in 2011 instead of paying it down… I hope that this year, I will not only reach a “deficit 0” but also pay down for 13K of debts! Do you think it’s feasible, even with a smaller income? And what about you? Do you have any specifics goals for 2012? Anything you want to crush?
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