My Goals for 2018

Is it too early for New Year’s resolutions? Well, I’m going to tell you what mine are anyhow! I only recently came to the realization that early retirement was a real possibility for me. And I think that’s why I’m thinking about resolutions: because these resolutions will set me free even earlier!

My first resolution is to get my finances in order. I’m not talking about paying off debts: I don’t have any. I’m talking about being a little more organized when it comes to managing my money. I’ve always been good at saving money, but I’m also good at throwing money away by not strategizing.

About two years ago, I finally made the decision to move all of my money into dividend-paying stocks, and to DRIP everything. The problem is that I’ve always done all of my investing in a taxable account. A pretty bad decision, of course, because I’m losing money to taxes. I’ve just opened a Tax-Free Savings Account-better late than never! I still need to get some paperwork to the bank before the account is officially mine, but I’ll be taking care of that next week. Then I’ll move all of my REITs over.

I’m also going to start putting money into my RRSP again. It’s been years since I’ve touched my RRSP, but I’m going to have to put some money in this year in order to avoid getting hit on my taxes in April. My dividend income is up $6000 from last year, and I’ve taken about $7500 in capital gains. So I’m a little nervous about income tax time!

My second resolution is to continue downsizing and decluttering. My goal is not to be an extreme minimalist, although I do envy people who have so few possessions that they can fit them all into a couple of bags. But I want to get rid of things that I don’t need or don’t use. The hardest part will be getting rid of things that have sentimental value. The big challenge will be to part with my Cabbage Patch Kids. I got seven of them when I was a kid and they’ve always been the one thing I thought I’d always hang on to. But then I remember something that I’ve heard various people say at various times: we spend most of our lives accumulating stuff, and then we give it all away when we reach old age. Those dolls will all end up in someone else’s possession eventually, so it might as well happen now. And I have to remind myself that they really are nothing but cloth and stuffing!

My third resolution is to track my spending a little more, which I hope will help me decrease my spending. I used to track every penny I spent. It was especially good at helping me with my grocery budget. I quickly memorized all the regular prices for items, which meant that it was much easier to spot a deal. I go to grocery stores now and I have no idea if a store is overcharging or undercharging.

Tracking my spending will also show me how much I’m spending on unnecessary items. I went to the grocery store today and stayed out of the bakery, ice cream and junk food aisles. And I spent a few dollars less than I would normally spend. Imagine how much money I could save if I stayed out of those aisles every time I was in there. And how much that money would grow if I put it into dividend-paying stocks and let it compound!

So those are my three main goals for 2018: to track my spending, to organize my investments, and to get rid of things that I don’t need. The first two goals should help me bring my projected dividend income up to about $13,500 by the end of 2018. And the third goal should help me out mentally. Less physical clutter means less stress, which should mean less spending!

13 thoughts on “My Goals for 2018”

  1. Great Blog FMY. I like your portfolio which looks like mine — a little bit.

    Good luck on your journey.

    Yes, probably a good idea to use your TFSA and RRSP. Although I think it’s better to use the former.

    RRSP withdrawal will be taxed. Once you «retire» in five years… you might need the money.

    Mr D

    1. Thanks for your comment, Mr D! Yes, it looks like we have a lot of stocks in common. I don’t have any American stocks yet, but one day I’d like to buy JNJ. And as far as Canadian stocks go, I hope to buy CNR next year.

      I definitely prefer TFSAs to RRSPs. I’ll have to contribute to my RRSP this year to avoid paying too much on my income taxes. But that’s my own fault for holding all of my stocks in a taxable account. Once my TFSA is set up, I shouldn’t have to put too much into my RRSP in future.

      Thanks for stopping by!

  2. Wow over $10k of dividend income- that’s fanstastic!! Cabbage patch kids- I remember those! It’s definitely hard to part with things that have sentimental value 🙁

    1. Thanks! It’s taken a long time to get past the $10,000 mark but I think I should see some pretty nice compounding over the next few years.

      I think I’m ready to part with my Cabbage Patch Kids! There’s no point in keeping them boxed up when another little girl could be playing with them.

  3. Hi,

    Just discovered your blog. Your investment philosophy is exactly like mine, although you are way ahead of me in terms of received dividends per month 🙂

    Good luck in that final stretch before you are truly FIRE!

    Tall Investing

    1. Thanks! It’s taken years to get to this point, but it’s been worth it. It looks like you are making good progress too!

  4. FMY,
    Great goals! You don’t have a TFSA account yet and receive all these REITs dividends (who could be yours tax free and without the tax headeache???!!! Lol). Please open that account very fast! 🙂 CRA’s wallet is fat enough!

    I’d like to increase my stake in JNJ myself (only 6 shares). I missed the train because I felt it was too expensive at 50$ less than it is now lol…

    When I see you’re income I’m wondering if I shouldn’t max out my TFSA with high yielding canadian stocks only and then reinvest the cashflow into canadian dividend growth stocks with lower yields but higher dividend growth… that might help me reach my goal faster… or not. I already did some calculations about that strategy but can’t remember the results…

    1. I’m still working on getting the TSFA set up. I’ve sent in a copy of my passport, but they haven’t processed it yet. I’ll have to call them on Friday I guess!

      I keep hoping that the Canadian dollar will go up so that I can buy American stocks. But I might just have to buy them now and accept the fact that I’ll lose money on the exchange rate.

      I need the higher-yield REITs in order to reach my goal of retiring in five years. But maybe it would make more sense to cancel the DRIP on my REITs and put that money into dividend-growth stocks instead. I’m going to think about it.

      1. Hi FMY,
        If you compute some numbers you’ll probably realize that dividend growth is more important than current dividend and that a 3.5% initial yield withba 6-8% dividend growth rate outpace a 6%-7% yield with little to no dividend growth very fast! And the more the years are passing the more the difference in income is astonishing when you put your focus on dividend growth.
        But I understand your point. You need the income now!

        1. In the long run, I’d definitely do better with dividend growth stocks. It’s a little tricky for me because I want to reach my break-even point (where my dividend income equals my expenses) as soon as possible. I should be there in three years. At that point, I’ll start slowly pulling money out of my REITs and putting it into dividend-growth stocks. I’ve used the calculator over at Dividend Ladder and I think that strategy will be best for both my short-term and long-term goals.

  5. Although the TFSAs may be better than RRSPs, it generally still makes sense to use an RRSP. The benefit comes in three ways: 1) You pay no taxes up front, so you have more money to invest and receive dividends/other returns on on; 2) You pay no taxes on the dividends/other returns while they are accumulating, allowing you to benefit more from compounding; and 3) Most people withdraw their RRSPs in a lower bracket than they earn their money, thus saving taxes. #3 doesn’t apply to everyone, but at worst this is usually neutral for people. There may be rare cases where someone earns money in a low tax bracket and withdraws it at a higher tax bracket, but I think this is quite uncommon.

    As for the Cabbage Patch Kids, I totally get that! I recently did a big purge of my stuff, and I was faced with two Cabbage Patch kids that I had loved as a kid. I ended up giving one away and keeping my first one, and it is nice to know that there are some little kids out there who are enjoying my old toy. I will likely give away the other one two, but I’m pacing myself!

    1. RRSPs are definitely a handy tool when it comes to reducing income taxes! Once the holidays are over and I have more time, I’m going to open an iTRADE account in my RRSP. I think I can put up to $19,000 in it so I’ll probably transfer in a bunch of investments from my taxable account. I also have mutual funds in my RRSP, but I’ll pull all the money out of them and use that to buy dividend growth stocks.

      I have about 10 Cabbage Patch Kids and I’ve gotten rid of half of them! Every weekend I go through my storage space and find another bag or two of things to donate. I realized today that a couple of the dolls weren’t in good enough condition to donate, so I just threw them out. I gave another three to a thrift shop. Pacing yourself is a good idea when it comes to things with sentimental value. Lessen the emotional impact by only parting with one or two items at a time!

      1. Yes, it definitely lessens the emotional impact. For me, it’s also easier to get rid of some of the stuff knowing that I don’t have to get rid of all of the stuff. If I force myself to be too aggressive with minimalism, I’ll just give up and keep everything, which also isn’t good! Plus, once I’ve gotten rid of some stuff, I’ll often realize that I don’t miss it at all, and then I’ll go back a week or two later and get rid of more stuff.

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