“New Year’s Resolutions” is a post by Adina J, in which she outlines her financial goals for 2013.
I don’t believe in making New Year’s resolutions. If there is something I know I need to accomplish, I just start working on it rather than waiting for that magical “tomorrow” that never comes. And if it’s something I should probably do but really don’t want to, I try to be honest with myself and not even pretend that it’s going to get done. As a result, I don’t really get the point of New Year’s resolutions, or why some arbitrary date in the calendar serves as any kind of motivation for people.
“But Adina,” you will say, “this post is titled ‘New Year Resolutions – aren’t you being a hypocrite?” Well, technically, yes. I needed a catchy title. But, at the same time, no. These are the (financial) goals I need to accomplish in 2013, and at least two of them are tied, in one way or another, to the calendar.
Negotiate a Raise
My annual performance review and salary negotiation takes place at the beginning of the year, usually in January or February. For obvious reasons, I won’t get into a lot of detail about it, but I will say that I am planning to be a lot more bold about my “ask” than in past years. Naturally, I will be going in prepared. Sure, being confident enough to ask for what you want is a big part of a successful negotiation. But it’s equally (if not more) important to come prepared to justify why your employer should give you what you want. You could be the most talented, dedicated, productive employee in the history of the company, but if your proposal doesn’t make financial sense to your employer, you’re not likely to make any headway. And it goes without saying that you must come to the negotiating table with a good bargaining position. If last year you were not a particularly talented, dedicated, or productive employee, it may be too late for that part now; in that case, be prepared to justify your proposal even more.
It would be poor poker form to tip my hand as to the nitty gritty of my negotiation, but I promise to reflect on my strategy later. Stay tuned!
Open a Spousal RRSP
Based on current numbers, I earn about 60% more than my husband does. In absolute dollar terms, this is not an insignificant amount. In the last 6 months, we have been contributing an equal amount to our respective RRSPs ($1,000/month each), and plan to continue doing so in the future. Last year, this also made sense because my husband had some secondary income to off-set come tax time. But, going-forward, we would benefit much more if I were able to claim more of the tax deductions associated with our RRSP contributions. Enter the spousal RRSP.
I have only heard this retirement vehicle discussed in the context of single-income families, but as far as I can tell, there is no reason why we couldn’t also use it to our advantage. I have a fair bit of contribution room left over every year, because I’ve never been able to max out my RRSP in addition to all of our other savings goals (TFSAs, mortgage, short- and medium–term savings). It’s time to put that contribution room to some use. I will likely have to wait until I get my tax return documents in early spring, so I can figure out exactly how much contribution room I have, and how to best split up our monthly RRSP contributions. I will let you know if I run into any snags.
Increase Our Net Worth
This is a perennial goal, but I am adding it to the “official” list for the sake of accountability come next December. Given my income goal (see above), I was tempted to be bold in this category and aim for something like 30%. Then I crunched the numbers and realized just how much a 30% increase would mean in dollar terms, and reconsidered. As in all things, I operate on the “under-promise and over-deliver” basis when it comes to my financial affairs. So my official goal is 20% – an improvement over last year, but still realistic.
Cancel My High-Fee VISA
This goal is just a bit of house-keeping from last year. I finally saw the light, and got a MNBA Smartcash MasterCard — right before they dropped the cashback rate and thresholds brutally. And I got it too early to enjoy the $100 gift certificate deal from RateSupermarket. Sigh. On the plus side, I can now part ways with my $120/year Avion VISA, on which the points accumulate at a glacial pace. (To be fair, I’m still not in the habit of putting a ton of my purchases on credit cards unless I’m buying something online.) After getting the MasterCard, I stopped using the VISA and switched all my automatic bill payments. I’ve waited a while, first so that the balance would clear and then to make sure that all bill payments had been properly switched. I didn’t want any surprises later. After that, I called VISA to redeem all my points, and got $400 in gift cards — an awful “return” for about 3 years’ worth of purchases (somewhere in the region of $30K in total), especially after factoring in that massive annual fee. Once I had the gift cards in hand, I was ready to finally cancel the card … and promptly got caught up in the Christmas whirlwind. Between all the family get-togethers, blogger meet-ups (YOLO!), and a ferocious cold, this dropped off the list of priorities. Well, now it’s first on my to-do list for this week.
I am debating getting a secondary credit card in addition to my MasterCard, and throwing this out there for your suggestions: what are my best no-cost (or low-cost) options? (Editor Joe’s Note: while my #1 recommendation is the Scotia Momentum Visa Infinite, this card has a fee, and most of the great no-fee cards are MasterCards. I assume you want a Visa as a secondary card, in case a merchant doesn’t take MC, so I’m kind of at a loss for a recommendation.)
Shop for Clothes Only Second-Hand
While this is, technically, not a financial goal per se, it’s one that could have a measurable impact on my finances. Last year, most of my clothing purchases were second-hand, and the results were impressive: I spent around $2,000 less than the previous year. (To put things in perspective, I spent around $1,700 on clothing in 2012.) I was still able to replenish my wardrobe nicely, post-maternity leave, and not feel like a total bum around my well-heeled colleagues. In fact, the most compliments I received on a single garment were for a $17 dress I bought at Value Village.
So, for 2013, I am going to go one step further, and shop exclusively second-hand. Well, with one exception: accessories (including underwear, pantyhose, etc.). Given that I tend to spend the most money on accessories (hello, handbags!), this may seem like a cop-out. As a compromise, I have decided to only make essential accessory purchases and to cap my spending in this category at $40 per item. If all goes according to plan, my “fun money” account should finally start to see some accumulation this year. Is it too early to start planning how to spend it? Just kidding.