2021 is done and here we are for another year of working to build our wealth, so we become financially free and independent! And last year, I’ve set out 5 financial goals for myself as a revision / fix to the not so SMART financial goals I made up back in 2019.
I’m happy to report that I’ve accomplished 4 out of those 5 goals before 2021 ended. And in this article, I’m going to share updates on those goals, and what I’ve set for myself in 2022.
My 2022 Financial Goals
- Pay off Student Loans
In my 2021 goals, I initially set out to pay off 2 private loans I still had — Sallie Mae and College Avenue. Paying those two private loans were meant to be completed around February of 2022. And I’m happy to say that those 2 private student loans are now gone from my list. Plus, 2 more federal loans got paid off during that year. 4 student loans got paid off in 2021!
I have 2 federal loans left in EdFinancial — Group A and C (Check out Student Loan Update #28!) — with a combined amount of, as of my last update, $8,898.91.
My goal is to finish these two loans before the end of 2022, so I can double down on my other financial goals by next year. I’m already thinking of what I’m going to do when I fully pay my student loans off!
- Build Sinking Funds
I started building my sinking funds sometime in the middle of 2021, and I was obviously, late to the game. I started building a sinking fund for my PC upgrades and a travel sinking fund to use that year. I was able to save up some money for our Hawaii travel, but I ended up catching up on some other things such as our winter travel and holiday gifts.
I was not prepared for these expenses because I had little time to save and plan for them. Creating my sinking funds were quite spontaneous in 2021, so it wasn’t included in my goals. But now, that’s going to be different.Now that I recognize that problem, this is why I’ve added building sinking funds to my goal. There will be a gift fund for birthday and holiday gifts, a travel fund for any spontaneous travel, a car fund, and a fund for studio equipment.
- Build Roth IRA to $3,000
Last year, I started to build my Roth IRA because I felt that it was a necessary step towards building my retirement nest egg. I learned that IRAs are a great investment vehicle because your money could grow tax-free and the contributions you do could be taxable.
I started with $500 for my Roth IRA in TDAmeritrade and have consistently contributed $100 every month. I set a $1000 portfolio value goal for this one since I wasn’t sure yet of how it would come out to be. It was a conservative goal that proved to be the right move for me.
As of today, my IRA is now at $XXXX. And for 2022, I’m increasing my goal to get that value to $3,000. I’m also going to increase my contributions to $150 every month.
Even though that I’m going to be far behind the max contributions limits for this year, which is $6,000, I believe this is a great stepping stone for me to really grow my retirement account. It’s a manageable commitment that doesn’t make me dip into money that I’m setting aside for other things.
- Portfolio Value of $10,000 My dividend portfolio is one of the sources for my passive income ever since. I don’t take out any money from it at all. Instead I keep reinvesting them back, so I can grow my dividends every month. From $350 in dividends in 2020 to reaching $432 in dividends in 2021. That is the result of compound investing.
Right now, my portfolio sits at $XXXX, so it shouldn’t be a hard goal to achieve given that $200 will equate to $2,400 at the end of the year, plus the dividends I would receive from my portfolio, which will be definitely bigger than $430.
- Grow Active Income to $5,000 So this goal is a rollover from last year’s. Out of the 5 that I’ve set for 2021, this was the only goal that I failed to achieve. The highest I’ve achieved in 1 month was around $4,750, and from there, it dipped by $1,000. It got harder for me to bring it back up, so I am determined to hit that goal this year.
One thing I’m changing for this year though is that this is an income goal for my active work. Last year, I included all my revenue streams for this goal, and it still didn’t make the cut.
By solely focusing on growing my active income, I wouldn’t have to think about the other income streams since they are passive. My passive streams are growing by themselves, so why put attention there when there isn’t a need?
In 2021, I’ve been focused on growing my skill sets and improving my backend systems. Hopefully, the effort from all of that will pay off this year and increase my income from my agency.
But if there are other active income opportunities that I come by, then I will add that to the calculations for this goal.
- (Optional) Pay off Credit Card
For this year, I’m adding an optional goal. This goal may be worked on, accomplished or completely taken out of my list depending on how things go with my main goals.
This optional goal is simply paying off my credit card. I have a balance that I have been moving around for two years now. And as far as I can track it, it originated from purchases I made with my Discover card back in late 2019, early 2020.
I made two big purchases back then, which was an online course for my agency and the laptop that I currently use for work. Those two total to around $2500, and I’m still paying for them but only on small amounts every month.
Since then, I‘ve been taking advantage of 0% balance transfer offers from Wells Fargo and Chase, where it sits right now, and any credit card purchases I make, I pay with the exact amount per transaction. That way I can separate and still see how much I owe from that transaction. And as of today, I still have a leftover balance of around $1,300.
The only main reason I’m not including this as a main goal is because of my student loans. Once that debt is paid off, I would put my attention here. But for now, I pay $50 every month towards my credit card balance.
Final Thoughts
Those are the 5 goals I have set for 2022, with 1 optional goal reserved on the side. I am looking forward to working on these goals because I’ve been motivated by the progress I made last year.
2021 basically taught me that as long as you are consistent in working on your goals, you’re going to reach it. It might take some time, extra effort and a little bit of sacrifice, but it’s definitely worth it.
I’m more confident now in taking responsibility of handling my finances. And aside that, I’m more excited on what else I can achieve once I’ve set my sights on something.
Cheers!