2021 Goals For The Modern FImily

I’ve never really been one to set out yearly resolutions or goals but I thought hey why not so let’s see what I’ve come up with for 2021 and what will actually happen when we circle back at the end of the year.

2021 Goals

Here’s our current game plan for 2021:

• Slowly build back up our stash of cash over the next two years to have ~5 years of cash (which we should reach in 2022)
  • We currently have ~$60,000-65,000 in cash in our various checking/savings accounts with the plan to have $85,000-$100,000 by the time we FIRE.
  • We will drain this cash account by ~$30,000/year with our annual spending.  We will add to this account by $47,000/year from my after-tax base salary.  So a net add of $17,000/year.  The mortgage payments will mostly be offset by our rental income and the difference is accounted for in that $30,000 figure above.
  • If/when I take parental leave, this would obviously lower the amount of cash coming in.  We are estimating that we will receive about 50% of my monthly take home pay when on parental leave which is why we are putting 2022 as our goal for the full stash to be built up.
  • Bonus money this March will go towards ensuring all our registered accounts are maxed out (TFSA, Spousal RRSP, RESP).  We also are planning to buy ourselves a little treat as a way of celebrating the $1,000,000 mark in investments (see below).  Anything extra would be gravy to the cash cushion.  We are assuming $0 in bonus money at this point for March 2022.  I do not expect to have back to back years like our team had in 2020 – you never know but I like to budget for $0 and end up pleasantly surprised in March.  Plus if there is parental leave happening in 2021, my bonus will be lowered due to not being in the office for the full year.
  • Some acute readers may be thinking why only $85,000-$100,000 if you want 5 years stashed up?  That only comes out to $17,000-$25,000 which is less than your projected annual spend?  Sure is, but living in Canada we will be receiving quite a substantial amount of annual benefits once we FIRE.  Future post explaining all of that.  But yea it’s to the tune of $17,000/year to start.  Crazy!
• Max our TFSA, RESP, and RRSP accounts
  • We only have one TFSA open since I am a dual citizen – when will the US recognize the TFSA as a retirement account?!  We had to pull out $9,500 from our TFSA for the new home purchase and had that cash ready to re-contribute come January 1 since we had to wait until the next calendar year to do so.  I’m going a bit wild here and throwing our TFSA room into ARKG and ARKK.
  • Every January we aim to shuffle $2,500 into Finn’s RESP to get the 20% match from the government ($500).  Who doesn’t like an automatic 20% gain?!  And for those with RESPs, remember that the clock resets based off the calendar year (January 1) rather than your child’s birthday or the last time you contributed or anything like that.
  • We will contribute our full RRSP contribution into Nic’s Spousal RRSP to try to even out those accounts between the two of us since taxes on our withdrawals will be at the individual level.
• Take Parental Leave
  • We are hoping to welcome baby 2 to the gang in 2021.  If/when this pans out, I plan to take some parental leave off.  At first I thought I’d take the full 18 months off but with our work-life balance going so well with my part-time gig I may end up taking 6-9 months off and then return to work.
  • I didn’t take any leave when Finn was born (Nic took the full 18 months to never to return to work again) so this is something I’m personally really looking forward to.
  • Nic also had PPD (postpartum depression) with Finn and I really want to be a true support this go around to help prevent that from happening again, if possible.
• Reach the $1 million mark in our liquid investments (cash, stocks, and bonds)
  • Based of our Q4 2020 update, we had $979,139 in our portfolio leaving us $20,861 shy of crossing the $1,000,000 mark not including illiquid assets such as our home and cars.
  • We are quite confident we will cross this in Q1 thanks to a hefty bonus I am anticipating in March.
  • Based off the 4% “rule”, this would equate to a safe annual withdrawal of $40,000/year.
• Reach the $1.2 million mark between stocks and bonds only (not including cash, home, car)
  • This is my ultimate Fat FIRE goal, it likely will not happen in 2021 but one can dream.  We would have to see high double digit returns and with valuations where they currently are I don’t see this happening.  Fingers crossed we are able to reach this goal in 2022.
  • This would shift us from the conservative camp to the ultra conservative camp.
  • This means we would have 5 years of cash to live off of without having to withdraw a penny from our investments (although we would for tax optimization purposes only) + $1,200,000 invested and growing.
  • If our stock/bond portfolio grew at 4% annually, we’d be sitting at $1,465,000 in our portfolio when it finally came time to pull out of the markets 5 years after retiring.  Using the 4% “rule”, we’d be able to withdraw ~$58,000/year which is well above our projected annual spend.  Looking at a 3% withdrawal, that comes out to ~$44,000/year.
  • At 6% average annual returns we’re looking at 1,618,000 which is ~$64,000 annual withdrawals at 4% or ~$49,000 at 3%.
  • These figures do not take into account any additional benefits we would be receiving such as CCB which will significantly lower our withdrawal amount.  This would put us in the sub 2% and living large (to our standards).
  • Never did I think we would reach this point this quickly, but I truly do think this is a realistic 2022 goal.
• Set up a HELOC
  • After the headaches we went through trying to secure a mortgage on our new place last year because of our voluntarily reduced income, setting up a HELOC prior to leaving work will be a goal for this year.  Getting a new mortgage or HELOC will be nearly impossible once we have no/low earned income to report (even though our bank accounts state otherwise).  We have no plans of tapping into the HELOC, it is just there for backup for a true emergency if we need to access a large amount of cash at a low interest rate.
• Update our passwords!
  • I need to go through and make sure all our passwords are strong and unique and stored in a secure location.  We’ve heard of a few acquaintances getting some minor accounts hacked and it freaks me the eff out.
• Sort out my dual citizen mess
  • Oh what joy it is to be a dual citizen when it comes to taxes and investments!
  • Over the years since moving up to Canada I’ve had to learn about avoiding TFSAs and RESPs because I am a dual US/Can citizen.  I’ve had to fill out not only my Canadian taxes each year but also my US taxes (always to report a $0 which is so much fun).  I’ve had to submit extra paperwork such as FBAR and T1135 forms.  And now I’m learning/dealing with PFICs (passive foreign investment company), Form 8620, and Form 8938 – oh my!  What this means is as a dual citizen there are extra headaches if you hold US companies in a taxable account outside of the US in a non-USD denomination.  And where is this publicized and explained?  Not many places.  For anyone in the same boat, what this means, is that instead of holding something like VUN.TO in my taxable/margin account in Canada (an ETF that is held in CAD which tracks the US stock market) I should do Norbert’s Gambit, convert the CAD to USD, and then buy something like VTI instead (an ETF that is held in USD which tracks the US stock market).  Some holdings, just different currency denomination.  So silly if you ask me.
• Research Ark and Bitcoin
  • I’m truly fascinated by Cathie Wood and what she’s been able to do over at Ark Invest.  Their ETFs come with a relatively high fee (0.75% for the US funds and 1.70% for the Canada Emerge Ark ETFs) but their performance has been incredible in 2020.  Of course, past performance does not indicate future gains but I really love their focus on innovative and disruptive technology.  I’m leaning towards throwing some money into ARKK and ARKG via Norberts Gambit in our TFSA.
  • I also have been reading, listening to podcasts, and chatting with others over the past several months on crypto and bitcoin.  I still am very very weary of it’s security but the technology behind crypto is fascinating.  I have a lot of thoughts on this topic so rather than dig into it all here I decided to write a post on my thoughts on Bitcoin so stay tuned for that here shortly.
  • Overall, any investments in Ark and Bitcoin combined would be less than 5% of our overall investments.  We shall see if I do any of this.  Am I going through a mid-life crisis?!?!
• Paint the bedrooms in our house
  • Our new house has 3 bedrooms upstairs and 2 in the basement so we have 5 bedrooms to tackle here.  We went and picked out paint and bought the tape, rollers, brushes, etc. so we’re ready to roll and get ‘er done.
• Sand, stain, and seal the deck
  • Thankfully there were minimal big ticket items when we got the inspection report back when buying our new house.  One of those larger items was to sand and stain our deck.  Since we moved in mid-October and old man winter was soon approaching, we put this on our Spring/Summer 2021 to-do list.
• Read 30 books
  • Last year I read 52 books, which I’m proud of but likely will not reach going forward.  If I can read 30, I’ll be happy.  That comes out to 2.5/month.  It may end up being closer to 24 books (2/month), which I’m totally fine with as well.
• Buy a hot tub!
  • Last but definitely not least – as part of our reaching $1,000,000 in investments goal, we are celebrating by buying a hot tub!  We are looking for a SIMPLE hot tub without all the bells and whistles of fancy jets, fountains, lights, etc. – wish us luck ha.  Right now, we are leaning towards buying a Roto Spa and it will likely cost around $6,000-$7,000 when all is said and done.

That’s more than enough goals for one year!  Looking forward to circling back at the end of the year to see if I’m able to check all of these off.

What are some thing you’re looking to accomplish this year?  Do you set goals out at the beginning of each year?

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We believe in stacking up life hacks to keep your enjoyment levels to the max without depleting your bank account.  Here are some ways to further educate yourself and save thousands of dollars over your lifetime by making some simple adjustments:

• Investing Newbies: Check out our free Investing 101 Series.
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