I don’t know about you, but I’m all about goals. Could it be conditioning from work? Maybe it is. Even on weekends, I have to write to-do lists to clear my head and have the satisfaction of crossing things off.
Once retired, how many years of therapy will it take to get rid of this habit? All bets are off. 😂
My silly to-do lists aside, I still find it important to set small concrete goals in the pursuit of a bigger goal. On the path to FI, every action counts. In order to focus my efforts in 2021, I have established different precise goals. What better place to put them in writing than on my blog?
Then, at the end of 2021, I will be accountable to all of you, and not just to myself. Talk about extra accountability! 😉
How to Set Good Goals
To establish good, clear goals, you might have already heard of the SMART mnemonic acronym. Its indicators are as follows:
- A Specific goal should be simple to understand, clear and precise.
- A Measurable goal must be quantified and have a threshold to reach.
- An Attainable goal must be large enough, ambitious enough to be challenging and motivating, yet reasonable.
- A Realistic goal must be at a level where the challenge will be motivating, to avoid giving up.
- A Time-related goal should be time-bound, including a deadline.
Therefore, I decided to set my 2021 goals based on these indicators.
It seems appropriate to divide my goals into two categories: some goals are definitive, while others are hypothetical. The definitive ones depend mostly on me, my discipline and my will. The hypothetical ones depend on some external factors.
In 2021, I’d like to say it would be prudent to set my savings goal at $20,000. That is considering a good part of my cash flow will still be allocated to my car loan until November. Over the entire year, this level of savings would average $769 per paycheck (every two weeks).
On the other hand, I’m an overachiever, and I want to give myself $25,000 as a goal. That’s actually what I’ll have approximately saved by the end of 2020. That would be an average of $961 per paycheck. Although it seems rather difficult considering I start paying QPP again in January, there will be other possible cash flow that could compensate, such as a tax refund or a possible bonus in March, for example.
Also, maybe it’ll lead me to actively look for alternatives to increase my income. I gotta walk the talk, right?
Oh, that goal sure is definitive! Currently, with my payments increased to the maximum allowed by the bank, my car loan will be all paid back by November 2021. Specifically, my last payment would be on November 18, 2021. After that, I will be debt-free! Woohoo!
I will then be able to allocate that part of my budget directly to my savings (and that’ll help me reach my previous goal). 🙂
Do you know about House Sitting? People from all over the world are looking for house sitters to take care of their pets and home while they are away. There are many websites that facilitate contact between these people, such as Trusted House Sitter, Nomador, House Sitters Canada, etc. To have access, there is an annual fee that goes around $50-$150.
In order to travel inexpensively, I would like to give it a try. Ideally, I could start by trying it out in our province. Once the pandemic gives us some breathing room, I could go and take care of someone’s pets in Montreal, for example. That way I could see how I feel about the experiment. In addition, house sitters get rated on the website. That would allow me to start building a reputation, so to speak.
Afterwards, I could use this method to travel the world at almost zero lodging fees (besides the annual site fee) in exchange for taking care of pets. Useful, both before and during retirement. 🙂
Corrective Eye Surgery
This may seem like an unrelated goal, but it will be useful to me from a long-term financial standpoint.
I’ve been wearing glasses since age 14, and have almost always needed to change glasses every 2-3 years. Rather than having to plan for this expense once I retire, I could use my current insurance coverage to address this problem once and for all!
In fact, my insurance does not provide any amount for this specific surgery. However, I do have a Health Spending Account that provides $500 per year. I didn’t use the 2020 amount, which will be added to the 2021 amount. I will therefore have $1,000 that I can use to reimburse part of the surgery. 🙂
I also asked my insurer about the possibility of using the $500 from 2022 and 2023, if I take the 24-month interest-free financing offered by Lasik MD, for example. I am waiting for a call back. If it is possible, then it will be $2,000 covered by my Health Spending Account!
Afterwards, I won’t have to plan any more expenses for glasses or contact lenses.
By the way, if you have any recommendations or suggestions on the subject, don’t hesitate to share them with me. I’m only just shopping around at this point.
Of course, continuing to write articles for this blog is on my list. I don’t want to commit on how often I will post articles. Currently, I manage to publish once a week. However, once the pandemic is a thing of the past, maybe I’ll want to write a little less. 😉
On the other hand, I am committed to continuing my monthly reviews. I find it really important to share with you such concrete information, like my expense report or net worth.
Tracking my expenses and publishing them forces me to think about the relevance of every expense. Being accountable really motivates me to stay the course!
I plan to continue subscribing to new credit cards every 3 months in order to accumulate points, especially Air Miles and Aeroplan. In particular, I would like to reach 10,000 Air Miles by the end of 2021, for a possible trip to Disney World in 2022. For Aeroplan, I don’t have a fixed goal. I just want as many as possible in order to pay for future flights. 🙂
You may have noticed in my expense reports that I am currently renting my place. I’ve also already mentioned that I plan to take advantage of geographic arbitrage in retirement, i.e. living somewhere where the cost of living would be lower.
In fact, the easiest thing for me would be to buy my mother’s house. She and the rest of my extended family live in a very small village. I think it’d be ideal to keep roots in the province.
Besides, the house is appraised at $67,000. Can you imagine? A mortgage for a house like that would still be half of what I am currently paying for housing. That’s what geographic arbitration is all about. Yes, it still applies within our province. 🙂
Initially, I was considering this option for retirement. However, I’m now considering moving up the purchase date. The interest rates at historic lows and full-time teleworking (possibly even post-pandemic) are really starting to push me towards making a move in 2021.
Of course, if this is in the hypothetical category, it’s because I need to talk seriously about it with my mother first. We’ve talked about it in the past, but we didn’t bring it up recently. I’m going to have to put it back on the table. 🙂
No need to explain why this goal is hypothetical. I will therefore not quantify it. As soon as it is possible to do so, I want to travel as much as possible!
As far as the destination goes, I was supposed to spend two weeks in Hawaii in April 2020. That’ll be one of the first things I do, as soon as possible! Otherwise, I’m open to any opportunity. After all, I have to use my travel points. 🙂
Here, no matter what my savings rate is, if the return is bad, it could be unattainable. However, if the return is good, my projections give me hope of reaching what some people call Half FI, or 12.5 times my annual expenses! 🙂
My target annual expenses for retirement in 2020 dollars are estimated at $15,000. Adjusted for 2% inflation for 2021 give me $15,300. So Half FI would be :
15 300 * 12,5 = 191 250 $
Considering my current investments, my pension plan’s estimate value and my projected savings, I think this could be realistic. I can’t wait to see! 🙂
From Small Goals to Big Goals
The SMART method can be applied to all types of goals. I can apply it to my small goals for 2021 and subsequent years, as well as to my ultimate goal of achieving financial independence.
Remember that a smart goal must be specific, measurable, attainable, realistic and time-related. Let’s see what I can come up with :
My goal is to achieve financial independence and early retirement, i.e. no longer depend on a salary and be able to do what I want, when I want. To do this, I will need to save and invest more than 50% of my income in order to accumulate 25 times my annual expenses by my 35th birthday, at the latest, or in 2026.
I must admit that my projections are starting to make me believe that 2025 is even possible. Of course, it’s mostly based on the return I’ll get in the next five years. I could save 80% of my income, but if we fall into a bear market during those five years, it could definitely put a wrench in my plan. Therefore, 2026 is more realistic.
2021 Is Just Around the Corner!
I don’t know about you, but I can’t wait to turn the page on 2020. I’m optimistic and I sincerely think 2021 will be a good one! So let’s take the bull by the horns and think ahead about what we want to accomplish! However, I can assure you that you don’t need to be as neurotic as I am about setting your goals. Just do it whatever way you prefer. 🙂
Looking back over the years and thinking about my current goals, I find that the more time you give yourself to do something, the more time you take to do it. We’ve all seen this in school. No matter when we needed to hand in a paper, we always ended up handing it in at the last minute. Curious how a paper you had three months to do ended up taking precisely three months to do.
Abraham Lincoln explained the phenomenon well:
Give me six hours to chop down a tree and I will spend the first four sharpening the axe.
Yes, you shouldn’t set goals that are too difficult to avoid giving up, but you shouldn’t set goals that are too easy either. It takes a bit of a challenge to be motivating enough.
Have you set goals for next year? Don’t hesitate to let me know!