I was reading some blogs I follow in the dividend-sphere and one of them had a post that I thought was interesting, it spoke to financial goals. One of the key concepts was the behavior gap. Figured it’d be good to formalize my goals for this year, as they have changed dramatically.
Pre-pandemic, I was saving to rent a basement suite. That plan has gone out the window as now I’m considering buying a house instead. Score!
My long-term goals:
- $1 million dollar investment portfolio (excluding workplace pension, home equity, etc.)
- Pay down my debt
- Own a house
Here’s the results from SunLife’s retirement savings calculator:
Looks like we’re exceeding our goals currently! That’s great! I’ll have to keep tabs on this every so often, but this makes me very happy.
What about my debt? If you’ve been following my net worth updates, you’ll know that I currently carry $32,000 of debt. Lately, I’ve been considering ways to refine my approach to paying down my debt.
Here’s my current end of month forecast, which is paid down by approximately $1500.
Debt: $30500
- LOC: $10000
- 0%-4m: $6600
- 0%-5y: $9000
- 0%-M: $2600
- 0%10m: $2300
I have a plan which will pay off $8900 by March 2021. This will leave me with $21,700 in debt, of which $11,300 will be tied to my name. This is important for me to keep track of as that $11,300 will be subtracted from whatever mortgage I wish to apply for.
My current plan will leave me with my debt looking like this by March 2021:
March 2021 – Forecasted Debt: $21700
- LOC: $11300
- 0%-5y: $7800
- 0%-M: $2600
The above is my current target goal.
If I maintain my current debt repayment past March, this is what my debt load should look like 9 months later:
January 2022 – Forecasted Debt: $8600
- 0%-5y: $6000
- 0%-M: $2600
That’s pretty exciting to think about. I’m still unsure of whether I want to be THAT aggressive with paying down my debt. If I juggle around my finances, I would instead be able to add an extra $900 or so a month in savings.
Here’s a sample scenario where I instead use minimum payments past March:
Post-March 2021 – Scenario: $21700
- LOC: $11300
- $226/month
- Paid Off: 5 Years
- Interest Paid: $1900
- 0%-5y: $7800
- $168/month
- Paid Off: 3.86 Years
- 0%-M: $2600
- $200/month
- Paid Off: 1.08 Years
Total / Month: $594
Using this scenario, I would save an extra $900 / month. After a year, that’d be an extra $10800.
After the first, when the 0%-M loan is paid off, I have a few options. I could use the snowball method and put that towards the LOC. There’s no point in steering that towards the 0%-5y loan as it carries no interest.
If I used the snowball method, here’s the scenario:
February 2022 – Scenario: $14000
- LOC: $8400
- $426/month
- Paid Off: 1.64 Years
- 0%-5y: $5600
- $168/month
- Paid Off: 3.86 Years
Total / Month: $594
I could also split the difference, with half of the money that was going to the 0%-M loan going towards the LOC and the other half going towards investments. Or I could I steer all of it towards investments.
Thoughts???
