With a new baby on the way in a few weeks, I should maybe give an update on what has happened to us financially in the past six months or so, and give a few of my financial goals that I have for myself.
Goal #1: Put $25 per paycheque towards baby's RESP
This is a no-brainer. Right now I contribute $225 towards my TFSA each paycheque, so I will just chop $25 off this and put it into the RESP. Until I am financially comfortably able to retire (whether I do or not), it will stay at $25. Most financial books say for parents to take care of themselves before they take care of their kids and that's what I will do for now.
Goal #2: Every 1000 point gain on the TSX means 20% contribution into Bond Index
I need to get this into writing so that I have it. When the TSX gets to 14000, 20% of my TSX money will go into bonds (whatever the current value). When the TSX gets to 15000, another 20% of the TSX money will get transferred over. Let's say I have $10000 in TSX and $5000 in bonds, it will change to $8000 in TSX (20% reduction) and $7000 in bonds. All of my regular contributions will go to the TSX.
Goal #3: Increase my passive income
I re-read "Rich Dad, Poor Dad" over Christmas (come on...I'm about to become a father) and one of his statements was that you are wealthy when your passive income meets your expenses in a month (or a year or whatever). That is, if you have $2000 per month in expenses (food, mortgage, hydro, whatever), if you have $2000 per month coming in and you don't have to get off the couch, you are wealthy. This is my goal. So the question is how to get passive income. One of my friends has solar panels installed, and claims that a $30000 investment will net him $300 per month over the next 20 years. Another option for me is to take an RRSP loan out and then get a huge chunk of money back, increasing my net worth a lot. The problem is that there would be no passive income. The third option would be to start the "Smith Manouevre", which is to take a loan out for investments and then get the tax benefit for the interest paid. The passive income is your tax benefit, but I can't make it work in my head because the interest paid each month would obviously be higher than your tax benefit. The hope/dream would be that your investments would increase faster than the loan that you take out. I have some thinking to do about that.
Goal #4 - Take a vacation to Hawaii
Although she won't say it, I think that frugala was a bit disappointed that we didn't go someplace warm for our honeymoon (although the Ice Hotel in Quebec City was fabulous!). So we decided that when our collective net worth is $100,000 we will go on a holiday to Hawaii. She has family there so we may be able to stay more frugally than most people, but it is an expense for sure.
Goal #5 - Buy a new house
We will be moving in the near future (probably the next year or so), so I should probably be starting to save some money towards a bigger down payment. The current mortgage is dropping quite nicely for me, but probably the mortgage will be at least $100,000 more than it is now.
What I Have Accomplished
In the last bit, I have a Visa bill of $0, increased my investments and paid off one of my student loans (there is still one left). My cash flow is rising, which is why I am at decision time as far as what to do. Obviously with a baby there will be changes in all aspects of my life and maybe things will be tighter, but I set these goals for myself in September when I took the extra tutoring jobs. A big thanks to frugala who took over one of my loans (in exchange for me paying for most of the monthly bills and all the mortgage payments) that allowed me to get into the black much more easily.