2019 Financial Review – What a Year!

It’s time to officially close out 2019, one of the best years of my life. There were big changes, huge progress, and milestones. I turned 45, celebrated my 20th anniversary, and set a financial independence date for the first time ever. 

That paragraph alone is plenty. (cue cheesy sales voice) But wait there’s more! 

We downsized our home and improved our quality of life. I declared my first word of the year as part of trying to reverse my lifelong cynicism. I wrote more than 100 posts for this blog, had thousands of readers, learned a ton, and made new friends. 

Oh, and we nailed a bunch of financial goals.

I’m looking forward to making 2020 just as great (look at that optimism!) First though, let’s tie up 2019.

We set annual goals that we discuss monthly, measure quarterly, and reset yearly. This is the yearly round-up. I share for transparency, my own personal motivation, and to provide an example for those interested.

2019 Goals

Here are our goals for 2019:

We continue to refine our system, and I recently wrote about our three tiers for setting financial goals. This list above (with the exception of goal 7) is annual goals that we broke down separately into actions. You’ll see how we handle our medium and short term goals differently in 2020.

Here is the system we use to rate our goals at the end of each year: 

If you’re interested you can see how this shows up in our quarterly checks:

• 2019 Quarter 1
• 2019 Quarter 2
• 2019 Quarter 3

And of course, you’re now reading Quarter 4, aka the annual review!

Let’s see how we did.

GOAL REVIEW

GOAL 1

Access to two sets of retirement accounts is a great advantage educators have in the pursuit of financial independence. The 403b is the educator’s equivalent to the 401k. Educators rarely get a match though. (I’d love to hear from you if you do.)

We also have access to a 457b, a deferred compensation account. The 457b is FIRE magic because it can be withdrawn without penalty upon separation from employment.

Many educators have horrible options in these accounts. We are fortunate to have reasonable fee index options in ours, so we don’t need to choose between the 403b vs 457. Instead, we get to use both!

Each of us could contribute $19,000 to each in 2019. (The 2020 contribution limits have increased.)

$19,000 x 4 = $76,000.

We set-up automatic payroll withdrawals in January and hit this goal with our final payroll cycle of 2019. It was the first time ever we’d taken full advantage of these accounts. If only we’d known and acted on this years ago!

Even better though, TFI discovered her district offered one of the 403b catch-up provisions and she was eligible for an additional $3000. We jumped on it.

Our contributions go 75% into index funds and 25% into a bond fund.

Total contributions for the year – $79,000

Goal 1: Exceeded

GOAL 2

We are each eligible to contribute $6000 to our IRA accounts. 

Again, we exceed this one. We contributed $12,000 for the 2018 tax year in January, and an additional $12,000 for 2019 in August.

Our Roth are both in VTSAX.

Goal 2: Exceeded

GOAL 3

Now things get interesting! The original plan was to apply additional money to pay down our mortgage to eliminate it in 5 years. 

For the first three months of the year we followed the plan.  Then, we took an epic spring road trip. During that trip, we talked a lot about our future.

In particular, we talked about the house we had purchased during our lifestyle inflation phase. It was too large, costly to maintain, and difficult to leave unoccupied during extended travel. After listing out the pros and cons of downsizing, we decided to pull the trigger.

By July 2019, we’d sold, moved, and found a smaller place. We’re waiting to calculate 6 full months of data, but it appears we’ve cut our housing costs in half as a result.

So, I’m tempted to label this as exceeds. However, it’s more correctly unrated. The additional money we free up shows in other areas rather than here.

Goal 3: Not Rated

GOAL 4

Speaking of extra money, here it is! After drastically reducing our monthly housing costs, we put the additional money into taxable investments.

These go into a mix of VTSAX and Fidelity’s zero fee international fund. (FZILX.) We put $500 in automatically each month. Then, we sweep our accounts at the end of each payroll cycle and put the additional straight in.

The original plan was $9800. After downsizing, we stretched it to $24,000.

Goal 4: Exceeded

GOAL 5

During our financial review in 2018, we realized our giving had remained flat for years. That meant we were giving as much as we always had, but the percentage hadn’t increased with our income growth. 

Giving is an important part of our financial plan. We’d been neglecting it. We decided to intentionally increase our giving by 1% each year until it was at 10% of our income. This seemed like a good step between “wait until FI to give more” which some people adopt (and ESI Money challenges) and jumping immediately to 10%.

Instead, we’ll intentionally increase our giving and pursue FI simultaneously. But, we will give.

We’ve just calculated and in 2019 it hit 6%. That’s ahead of our target for the year. We’ll continue to push it in 2020.

Goal 5: Exceeded

GOAL 6

We failed at this one. We’d made good progress and were meal prepping for work days by March of 2019. Then, our routine shattered when we went into our downsizing process.

We never fully got it back. We still eat some prepped meals each week, but it is inconsistent. We haven’t yet figured out how to fit it into our new routines. 

It definitely saved us some money, but was so inconsistent it would be challenging to calculate. We used it enough to clearly see the potential financial, health, and lifestyle benefits.

So, we’ll roll this goal over into 2020. For 2019 though, it was only partially met.  Or failed if the metric is establishment of the habit.

Goal 6: Partially Met

GOAL 7

Looking back, this one shouldn’t have been it’s own goal. It’s a process step to help us learn how to maximize credit card rewards.

Last year, we used the Discover IT cashback to pay for holiday gifts. The first year double rewards are great and the extra categories work well for us. We’ll repeat this for 2020. There is still room to meet minimum spend on 1 – 2 other cards.

We have held one travel card (Alaska Airlines) for several years and use it consistently for the companion fair and extra points. Yet, we hadn’t really paid attention to getting extra rewards points and using them to reduce travel costs. (Travel is still our major spending leak.)

So, we decided to start learning more about travel rewards. I opened a Chase Sapphire Reserve, maxed out the minimum spend, got Global Entry, and used Priority Pass multiple times. We’ve got the points banked and ready for us.

We’ll definitely build on this in the coming year. We’ll place any credit cards rewards goals as part of short-term goals going forward, rather than annual goals.

Goal 7: Met

Net Worth Update

When we hit the 7-figure milestone, I did a few interviews with specifics of our net worth and allocation. Previously, and going forward, I keep the actual numbers a bit more general just for security purposes. I will still list specific numbers on the annual goals as you have seen.

Our net worth increased substantially both as an actual amount and as a percentage of our target. This was due to great market returns, substantial new contributions (listed above) and because we’ve adjusted our target net worth downward with the downsizing of our home.

As a result, we are now at 71.4% of our net worth target! We plan to hit 100% by July 2022.

2019 Summary

By any measure, 2019 was an amazing year. Three years ago, I couldn’t have envisioned where this financial journey would take us.

The search for financial independence has improved our lives considerably. It’s why I write at Educator FI – to hopefully help even a few others find FIOR. (Financial Independence Optional Retirement).

Thanks for a great 2019 – here’s to an even better 2020!