Setting Goals and Life Plans: My Plan

 "Yes! Setting goals is AWESOME!"

Short-Term (within one year)

- pay off credit cards (2 down, 3 left)
- pay off student loan


Medium-Term (within 5 years)

- start education fund for kids
- pay off mortgage
- begin building new house
- pay off car loan (2 years)


Long-Term (longer than 5 years)

- retire (12-20 years)
- move house off-grid (10 years)
- start business (10 years)
- purchase rental property
- pay off new home (10 years)
- buy RV (10 years)


Using the snowball method to pay off debts I'm hoping to very quickly pay off debts.  2 credit cards down this year, 3 more to go.  The money saved from not paying credit cards will then go to my student loan and have that paid off by around the end of the year.

This will free up hundreds of dollars a month for my family some, of which we'll use to begin Registered Education Savings Plan (RESPs) for our kids.  The rest will get plowed into our mortgage and pay that off as quickly as we can.

We've been lucky with our mortgage (though "luck is 90% smarts") in that we've been able to pay it off pretty quickly.

In my opinion, 99% of the time it is always better to own a home rather than rent.  By owning you're building equity, improving your credit rating and increasing your net worth every month instead of your landlord's.

We started off with a small inexpensive "fixer-upper" house about 7 years ago.  The mortgage was cheaper than our rent and the time and we only paid $65 000 for it.  My wife and I withdrew money from our RRSPs for the down payment.

A little trick we used to "borrow" a down payment is to take out one of those low-interest "RRSP Catch-up" loans.  If you that money in your account for at least 6 months you're then elligible to withdrawn it under the government program, "First-Time Homebuyers Plan".

Normally your not allowed to borrow a down payment, but this method not only gets around that but it also gives you a tax break for it(the RRSP tax credit).

After about 4 years we sold the home for $78 000 and used the difference and equity to purchase a larger home.

The first smart thing we did was opt to pay our mortgage bi-weekly.  This helps cut down on interest faster because it only has two weeks to grow before the principle is reduced instead of one month.

This alone is estimated to reduce a 25 year mortgage by 7 years.

Secondly we picked a variable rate mortgage that is .5% below prime.  This means that over the last 2 years or so, as the Bank of Canada has reduced prime to deal with the economic problems, our mortgage rate has gone down and down.  We're now only paying 1.65% on our mortgage!

Variable rates aren't for everyone but if you're properly prepared  they can save you a lot of money because although the price may go up some time in the future, it's always lower than what you could get at a bank today.

Lastly, we stuck with  buying a home within our means.  I know a number of people my age who bought $300-400 000 "McMansions".  This is insane to me!  We paid $135 000 for our second home and with renovations and property value increases it was recently appraised at $160 00 only 3 years later.

Thanks to all this we're hoping to have the house paid off within 5 years.  We're planning to sell it for around $180 000, then using that money and a new mortgage to build a new super-energy efficient dream-home.  They money we saved from energy efficiencies will help us pay off this home within 5-10 years.

At least that's the plan...which is subject to change due to zombie attacks.

 "in which case this becomes the plan."

What's your plan?