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Defining Your Goals

Feeling low cause you're out of dough?
You and your honey need some more money?
It's not that tough to have enough.
You have to plan, and we know you can!

As you wander your way through life, you will realize that life is a series of choices. You will be required to make millions of choices in your lifetime. Some of them will be simple choices, such as what to wear, or what to have for dinner. These choices will have very little impact on your life, because there really isn't a wrong choice. Some other choices may be a little more difficult, such as what tires or television to buy. If you make the wrong choice here, you can either live with it, or remedy it without too much cost. Then there are the major decisions, such as buying a house, selecting investments, or choosing a career. Making a poor choice here could be difficult and expensive to remedy, and could cause friction, stress and other problems. In order to make the right decision the first time, research must be done, and this can be time-consuming. Knowing your goals can simplify your decision-making and reduce the number of decisions you have to make. This means you can have more free time, less stress, and less chance of making the wrong decision. We have made a conscious effort to reduce the number of decisions we have to make. We do this by setting goals, planning, and reviewing our progress. We use the KISS method - Keep It Simple Stupid, and it seems to work quite well.

As an example, we invest the majority of our investments in stocks, and in the beginning this required us to make a lot of decisions. We started off investing in mutual funds. We relied on our investment advisor to recommend the right funds, and we relied on the fund managers to make the right decisions for the funds. We didn't like having so little control over where our money was invested. Due to this, as well as the high MERs and front end loads, we went to a full service broker and started buying individual stocks. We also started trading call and put options. Using a full service brokerage didn't work out too well either, because if a broker phones, a decision has to be made. Do we sell the stock he recommends selling, and buy the stock he recommends buying? Do we buy a put option on a stock, or do we sell a put on a stock? Do we buy a call on a stock, or do we sell a call on a stock? Do we take his advice, or don't we? These are all decisions that have to be made, with little information other than the advice of the broker. Also, after many years of options trading (10+), we started analysing our results in more detail, and found that at best we were breaking even. Trading in options took up a lot of time, and required us to make a lot of decisions.

We now use a discount brokerage, do not trade in options, and do our own investment research. We buy stocks or exchange traded funds (ETFs) that we plan to hold forever. Thus, we simplified our life and eliminated a lot of decisions.

You can eliminate some major decisions by setting long term goals regarding your financial future. It's not as difficult as it sounds, because you don't have to plan your whole financial life at once. At the start, you have to set out your major goals. Knowing these goals will help you make the smaller decisions along the way. With some good planning, and good luck, you should be able to eliminate the majority of your financial decisions. The fewer the decisions you have to make, the happier you will be.

Not all your goals will be set in stone, and your priorities may change over the years. However, having goals and re-examining them occasionally is a basic part of the plan towards financial freedom. Your goals should include:

	Have an emergency fund.
	Buy a home (this is the only purchase you should make using non-tax-deductible debt).
	Pay off all your non-tax-deductible debt with an interest rate higher than 8%.
	Pay yourself first - if you have non-tax-deductible debts with over 8% interest, use your pay yourself first money to make extra payments on the debt.
	Invest in RRSPs, and TFSAs.
	Have the financial freedom to do what you want.

Your goals might include:

	If you have or plan to have children, ensure that the mortgage on your home will be paid off before your children enter university. This will free up funds for their education.
	Be better organized.
	Make life simpler.
	Save for a vehicle - see the Buying a Vehicle article on our Save Money page.
	Pay for your own education.
	Pay for your children's education.
	Save money to travel around the world.
	Quit your job.
	Take a sabbatical from your job.
	Take a lower-paying job that you like better.
	Start your own business.
	Retire early.
	Have enough money for full-time care should you become incapacitated, so you won't be a burden on your family.

Tax Tips:

Take your time and do your research before making a decision.

We know we are repeating ourselves, but these are very important:
- pay yourself first, and
- pay off your non-tax-deductible debt with interest over 8%!!

Nobody plans to fail - they just fail to plan!

Your financial plan should include the following steps:

Revised: October 26, 2023