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How We Juggle Competing Financial Goals

If your thirties are (or were) anything like mine, it can be a juggling act to try and balance all of your competing financial goals. We can’t afford to make the maximum contributions to each of our RRSPs, TFSAs, and the kids’ RESPs – let alone top-up our mortgage payments and still have money left over to, you know, live a little.

That means prioritizing our goals; deciding which ones get funded and which ones get left on the cutting room floor. It means striking the right balance between pleasing our present and future selves. It sometimes means spending instead of saving, or vice-versa.

Competing financial goals

Our competing financial goals

Financially savvy or not, we’re still a single-income household and need to make tough choices when it comes to our budget. We can’t max-out everything, so we pick the savings goals that are most important to us right now. For us that has meant making the maximum contribution to my RRSP and to the kids’ RESPs.

Sure, we could have funded one more savings goal, such as putting $5,000 onto the mortgage, or contributing that amount to one of our TFSAs. But that would have come at the expense of our summer vacation, which we look forward to and enjoy every year. Or at the expense of keeping an emergency fund, which, incidentally, came in handy when our hot-water tank died the night before we left on vacation. There’s a $350 service call I didn’t need, thankyouverymuch.

The good thing is that we continue chipping away at our goals. We don’t have to worry about my RRSP or the kids’ RESPs anymore because those contributions are automatic and have been for years. So what’s next?

We went through our list of big financial priorities and found that most have been taken care of. We already bought a new car and paid it off. Two years ago we developed the basement in our home and will have that loan paid off soon. We (okay, I) loosened up the purse strings and put more money towards our family vacation. Life is good.

Now we find ourselves with an extra $10,000 per year to start funding a new goal or two. Without any major expenses on the horizon it seems like a no-brainer to put the entire amount into our TFSAs. I say TFSA, and not extra mortgage payments, because with mortgage rates in the low 2 percent range I think it’s reasonable to assume we’ll get a better long-term rate of return investing in an ETF like VCN or VXC.

Final thoughts

It’s nice to put some of our major expenses behind us and start knocking off another savings goal. We’ll keep going down this path until we do manage to max out all of our savings opportunities.

That might be years away, but with a good financial plan, open lines of communication between spouses, and the right balance between the present and future, I have no doubt we’ll achieve financial freedom soon.

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4 Comments

  1. Michael James on August 5, 2016 at 6:45 am

    Your decision to save the $10,000 in a TFSA rather than pay down the mortgage may be the bet choice for you, but I think the analysis should go beyond today’s mortgage rates. The $10,000 left unpaid will grow with interest for the rest of the life of your mortgage. So, it is the blended interest rate over many years that matters, not just the 2% right now. There is obviously a lot of uncertainty in what this blended rate will be. But since you have the rest of your financial life in order, going with the TFSA is likely fine.

  2. My Own Advisor on August 5, 2016 at 7:49 am

    Personally I like the call of maxing out your TFSA(s), or working towards that, maxed out RRSPs and TFSAs over the mortgage. This is largely because my mortgage interest is under 2%.

    I’m biased though because this is what I’ve done – focused on maxing out RRSPs and TFSAs – get that money working first.

  3. Justin on August 5, 2016 at 12:29 pm

    Good call on the TFSA, the money is where you can get your hands on it in case another emergency repair comes up. We had a storm this week that “relocated” most of my shingles in the backyard. On the plus side out house now developed a nice waterfall feature in our main entrance…6 year old home… Thank goodness for insurance…

  4. Dividend Earner on August 18, 2016 at 8:44 am

    I also am not adding to my mortgage payments these days and rather invest the difference. The mortgage is in the number range that I can easily tackle if I wanted to. Based on that, it went down the priority ladder.

    I also got to the point where the home value (in Vancouver) is just outpacing the mortgage I have that selling and moving to a cheaper location where we have family would easily cover the mortgage. Bought the house for 500K and it’s selling for 1.2M now and my mortgage is a small fraction of the 500K.

    I focus on TFSA, RESP and then topping up RRSP as I have automated deposit for RRSP.

    Any trips or work around the house has the money up front. I made that switch a long time ago to always have the money up front.

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