Posted by Tim Stobbs on December 6, 2007
With the end of the year looming on the horizon I’ve been wondering what to set as some goals in 2008. I was thinking of keeping it simple and just coming up with a dollar value to increase my net worth by, yet I realized I have a problem.
You see my wife will be taking a leave from her daycare after our second baby is born next spring. So rather than saving I will spend the next 12 months dipping into our savings and decreasing our net worth. Yet that shouldn’t matter entirely. My investments should still be making some cash and I will be making contributions to our retirement accounts regardless. So in the end I’ve picked a goal of increasing our net worth by $30,000 in 2008 or a 15% increase.
This should prove a very challenging goal for us. Here’s a breakdown of how I see use getting to it.
- Increase of house market value of 4%, which should get me around 40% of my goal. I’m not sure where the real estate market is going next around here but I’ve read a few different forecasts calling for double digits to continue. I’m going to assume they are wrong and shoot low. Also my home’s market value is a bit like an elephant in the room with my net worth, I can’t really ignore it even if I wanted to.
- Contributions to my work pension accounts (including company match). This should get me another 21% of my goal.
- Contributions to our RRSP accounts for another 8% of the goal. This is my minimum level, so if I have some extra cash I will likely increase this.
- Pay down the principle of the mortgage should give us another 20% of my goal.
- That leaves our investments returns to pick up the remainder (~11%) and offset our withdrawals from our savings.
I was originally thinking of shooting for a goal of $25,000, but then I decided to stretch myself a bit and see how far we can go. After all when I look back at my goals for 2007 I’m forced to conclude I was even close to challenging myself.
For your review these were my2007 goals and how we did:
1) Save $10,000 in 2007. This will include RRSP accounts, taxable account, and the pension plan.
I’ve easily made this goal. Year to date we have saved from my work pensions around $5000, my RRSP $1100, my wife’s RRSP $1100, and my wife’s taxable account around $4000 (Total = $11,200). Also that does not include the extra $1000 we put on the mortgage and the high interest saving account balance and I still have a month of savings left. Also these are just savings amounts, I haven’t included any investment returns in them.
2) Investigate other streams of income. I’m basically going to have a look at a possible small business or a rental property. I’m not entirely sure what, but I’m going to start devoting some of my time to looking at my options.
This was a bit of vague goal, but I did follow through on it. I looked at rental properties and other ideas for small businesses and in the end I rejected most of them. Why? I either lack the time or the money to do these well. So in the end I’m going to focus more on growing this blog in 2008 and see what income comes out of that.
3) Keep painting and other minor renovations to the house to boost its value by at least $10,000.
I did work on this goal. I’ve painted around 70% of the interior of the house and did a series of repairs/improvements to the house such as replacing a toilet and installing some new flooring in the front entryway. I just couldn’t have guessed the real estate market in Regina would explode like it did and make any renovations I did meaningless compared to the general market. Our house value shot up from around $200,000 this time last year to about $320,000 now. So again we easy made this goal.
The fact we met these goals fairly easily to me was an indication I wasn’t challenging myself enough. So that is why we are increasing the goal for 2008. Also the way this goal is structured, I can easily ignore the house value is I have to assess how we did on everything else.
So what do you think? And what are you going to try and do in 2008? Are you going to save for a trip, car, invest or buy a new house?