This blog is all about my own personal finance journey to become financial independent. My ultimate financial goal is to become a self-made millionaire by December 31, 2024.
As Canadian immigrants from a financial-poor third world county, we won’t get any inheritances or financial support from our family.
In fact, I completed my university degrees using Canadian national student loans (called OSAP) and ended with over $56 000 debts along with two undergraduate degrees.
Recovering from a deep debt was a difficult task without any supports. After landed in a decent job, I had two choices – either pay my debts or accumulates assets and pay the debts later.
Financial experts usually advise to pay down debts first and invest later, but I decided to do differently and started invest in income-producing assets (aka dividend growth stocks) using debts.
I would say luck was on my side. Stocks were cheap and the interest rate was ultra-low. In addition, I bought a house using around $200K mortgage and also added more debts for investment purpose. In results, my debt level kept climbing over $330 000 in 2017 and it becomes over 5 times bigger than my initial student loan.
At the same time, my investment assets with a high quality dividend growth stocks also climbed over $200K.
By end 2017, I have over $520 000 assets (including our home) and over $327 000 debts. I like to keep building my assets values, at the same time I just wanted to control my debt growth.
Currently, I don’t have any idea to eliminate my debts completely. I just wanted to reduce to my debts in my comfort zone of less than $300 000. I am very comfortable with having less than $300 000 debts with my current income level.
I mentioned this many times in the past but ignored it, but this time is different. I am going to put this in my 2018 & 2019 goals, so I won’t miss it.
All I wanted to do is bring my debts to below $300k and then keep maintaining the range until I build a million dollar investment assets.
2018 Financial goals
I have been setting yearly financial goals each and every year for the last couple of years and sharing them publicly in this blog.
I noticed that when I share my goals and targets publicly, I am getting a powerful internal pressure, which forces me to think and take necessary actions to achieve the goals.
In the past, I’ve successfully accomplished some goals and failed in some other. Even though I failed few, I tried my best and reached somewhere close.
Also, I realized that predicting the net-worth gains for short-term is impossible. As a single family income earner, my net-worth gain is mainly depending on capital gains from my investments.
Therefore, I am going to set three financial goals for 2018, which are more predictable and can be controlled by me. I believe that my net-worth eventually move up in long-run if I keep building my dividend income while controlling my debts.
- Goal 1: Increase my estimated passive income (EPI) to $9600 by December 31, 2018
- Goal 2: Receive over $9000 dividend income for the year 2018 (by December 31, 2018)
- Goal 3: Reduce my debts to $315 000 or below.
It is $1200 higher than year 2017 goal. This can be reach easily if I can able increase my EPI at least $100 per month.
It is $1000 higher than year 2017 goal.
My debts was $327 100 by end of 2017. I just need to reduce at least $1000 per month.
If I can achieve these goals, then my 2019 goals will be $11 000 estimated passive income and bring down debts to $300 000 or below.
Check my progress and previous yearly goals in my financial goal page.
Hi FJ
Your effort and dedication in achieving your goal is something to be follow by many people.
I hope that you will be able to reach your goal.
Anyway, from my experience, I say that you have to be realistic as well. You have 7 more years to go and I will tell you the goal is reachable but you have to do a few changes as with the existing rate of increase no way to get there.
In 2009 we bought a house with borrowed money for downpayment, only one salary in our house, kids in school and 20000 to pay for my wife school.
Took us 3 years to sort everything out, make a balanced budget and start really looking to our future.
For 1 more year we looked to our opportunities, made a plan and start acting.
You might believe it or not, but in less then 5 years we reached our first million.
Here are my top 3 advices:
-Increase the amount of money saved. Adding 10000 per year x 8% x7 =96980… 10% of your goal.
This can be done mostly if you get a new job with better pay. It is important to work with a good team but all the time there are opportunities and good people are everywhere.
-Diversify your investments: buy a rental using your HELOC, buy a new house with a rental basement, find a private investment…
-Review the existing money sources and get them better: review stock investments, use the RRSP, TFSA, and non-registered account efficiently, get a better blog, review the cash/points back options, review your debts, educate yourself…
Good luck FJ. You can do it just improve whatever you do.
At the end of the day, “money” is a tool which has to be used proper and the rest is math…
Thank you so much Cris,
Your story is very inspiration – you took less than 5 years to reach your 1st million dollar. Thank you very much for sharing your advicess. All your advices are very valuable, and I will definitely take them and follow.
Last year, I looked at some rental properties to purchase, but I am little scared to handle all the landowners’ responsibilities. Also, it is little hard to get into private investments with my low net-worth. I will consider this in the future.
Thank you once again 🙂
Best regards
I just thought I’d comment again. I’m 53 and believe me I have seen some ups and downs in the stock market. We are currently on the doorstep of the third very large financial crisis in less than twenty years. Trillions of dollars of debt have been pumped into these financial markets to get this response and it’s taking larger and larger amounts of debt to keep this system going. It’s an unsustainable structure and when it pops your high quality dividend paying shares will go down a lot. At the bottom dividends get cut. I only say this to you because you are up to your eyebrows with big debt. The stock market doesn’t go up forever. Take a look at this.
http://longwavegroup.com/market/charts/_pdf/Kondratieff_Long_Wave_Cycle.pdf
Hello TT,
Thank you for stopping by and your valuable advise. I am kind of slowly realizing that I have to minimize my debts. It is one of my goal in 2018. I surely consider your advise and take a deep look at my debts level once again.
Thank you once again!
Best Regards,
Love the motivation buddy. I got a lot of financial duties at this very moment as well, and investing is nearly impossible. I also come from an immigrant family, being a first generation Canadian and the struggle is definitely real. I have been quite good at staying out of debt my entire life, with more credit cards than fingers on your hands. I maximize rewards with minimal to no cost and pay them off every month. This will help you with some of your common expenses like grocery. If you’re looking for some physical cash income, get the Tangerine Mastercard. Open a savings account with them and choose 3 categories to receive 2% cash back. The cash back is paid monthly and is directly deposited into your savings account. A 2% yield on your expenses isn’t too bad ya know (especially with no annual fee). I’d also recommend saving before you spend, and not the other way around. Your investment strategy is great, but your debt levels make me cringe. Stay on target, put aside $ 100 each month to be allocated to stocks, pay down your debt with the rest. Sometimes having a clear mind and less stress will keep you focused on your investment goals.
Best of luck
Hello Eric,
Thank you for stopping by and giving me a valuable advise.
I’ve never used my debts for luxury things, but I used them to build my wealth. To be honest, I don’t get stress because of my high debts. I think I am very used to it 🙂
Now I have a sizable portfolio with high quality dividend stocks and it can compound itself without new cash injection from me. So, I could turn my focus on debt reduction.
Cash back reward is a wonderful idea. I use Scotia Amex which yield 4% on our spending 🙂 and rewards can be used to pay down any expenses in Entertainments and travels.
Best Regards,
Solid set of goals. Debt is okay as long as it can be serviced. Will check in later.
Thank you Dividend Greek,
Best Regards,