Welcome to the 2020 year-end edition of our net worth tracker. I’ll review our December net worth as usual, and then take a look at how 2020 treated us. I started tracking our net worth at the time this blog was started, which was the beginning of September 2019. I started by creating the Net Worth Baseline report. If you’re curious about my net worth prior to September 2019, check out My Net Worth Story.
You can view Previous Net Worth reports HERE.
Our December
December was a somewhat busy month for us. We did our normal work routine during the week (mostly), aside from Christmas week, and we had a few weekends that were filled with friends, family, and fun!
The first week of December last year was when my wife’s work Christmas party was. All of that was canceled for this year, and wasn’t replaced with anything. I enjoyed the party last year, but wasn’t really that disappointed. It seems more disappointing sitting here thinking about how we didn’t get to see or talk to anybody this year.
Let’s be a little more optimistic now. I’ve enjoyed Christmas shopping a lot more this year. I wish every year would be like this, but I know this year was the one and only where stores would be relatively empty. I anticipate stores being crowded like crazy for 2021 Christmas season.
Last year, we hosted the church party at our house. This year there just wasn’t a party. Instead, we did what my city calls Prairie Lights. It’s really cool, and I think just about any family with kids would enjoy. It’s a drive-thru display of Christmas lights, with different themes as you drive through the park.
I think I may make this a Christmas tradition. I did the same last year! Haha. I picked up some fancy root beer to drink during my week off.
December 2020 Net Worth
Here’s how December compares to last month:
December Account Breakdown
Let’s take a quick look at what happened in December.
Cash (+$4,599.02)
This is where our paychecks get deposited. All our income goes into this account, then gets transferred to the proper accounts as set by my budget. The trend continues that I do the net worth report before transferring money to the appropriate accounts.
We made about that same amount in December as we did in November. This what a slightly better than normal month looks like for us. The big increase in cash if from emptying out our Dependent Care FSA into our bank account.
Investment Cash (-$8,865.08)
All of our extra cash is transferred here and is considered part of our saving’s rate. This is where our leftover income went from November. This is cash we plan on using to invest in real estate in the near future (less than 5 years). It’s getting close to the point where we could afford some fixer uppers, but it’s still not enough to buy a house and have enough left over to renovate it.
Starting at the beginning of 2021 we will pause transferring money towards this account and instead fund our Roth IRAs until they are maxed out. We try to save as much money as we can. Our future selves will thank us.
The decrease in value this month is from transferring money into a 529. I’ve been slacking on getting this done, but finally did it because it had to be done before the end of the year. Now both the kids have fully funded college accounts, that will grow as they grow and hopefully be fairly substantial when they are ready to go to college.
Remaining Cash Accounts (Emergency and Sinking Funds) (+$907.89)
A few dollars less than last month’s increase. Nothing exciting here. Just the usual. The amount increased by about the same as last month since we’re just saving up for our property tax bill and HOA fees for when they are due in January. (This month! Yikes!) It didn’t increase by as much because the account where we have the money keeps dropping the interest rate. There’s the Federal Reserve to thank for that.
Retirement Accounts
401(k)s (+$7,779.65)
The markets did well and helped us out a good amount. The 401(k)s’ increases were partly due to our contributions throughout the month.
IRA (+$8,922.19)
Another reflection that the markets had a positive month. The IRAs are all invested in mutual funds, which reflect the stock market’s growth for October.
College Fund (+$17,099.22)
The college fund is invested just like the IRAs. We moved over $15,000 from our investment account in December, so that is the main reason for the big jump. The remainder of the increase is from investment growth.
Net Worth (+$12,280.13)
December was another excellent month for us, despite our high expenses. Our increase in net worth was half of what it was in November, yet I’m still very pleased with our increase. Shows how good of a month November was. I wasn’t sure how this month was going to turn out because of everything that happened, but it worked out well for us. Most of our increase in net worth was from investments. Our net worth increased by over 3%. Not the 6% from last month, but still feels good.
Accessible Net Worth (-$4,421.71)
This is the money we were able to put away, not including the tax-advantaged retirement accounts. Our income was great and our expenses were about average this month. Our accessible net worth decreased though because we moved accessible money to the 529 plan.
Liabilities
Status: None, as usual. They’re a burden, so I avoid them. The cars, the house, they’re all paid for. Student loans…never used them. Credit Card debt? I only use one, and it gets paid off every month, and often I’ll pay it off multiple times per month. Just depends on how many times I think about it.
Passive Income
September was a record month for dividend income. December was not a record dividend month, but was darn close. Only a few hundred off. I am happy to report a record annual dividend income though!
We made about 50% more than we did last year in dividend income! Woo Hoo! That puts about one quarter of the way to being financially independent based on our spending this year. Everyone says that it grows exponentially, so we’ll see how next year fares for us.
For now, we begin the dividend lull until March.
The interest rate in my savings account is super low, as can be expected. My money is barely making any money sitting in that “high-yield” account earning 0.4%.
Saving’s Rate
I track my savings rate in order to help keep my feet to the fire, so later I can be Gone on FIRE. As a bonus, you get a glimpse into my cash flow by looking at the income and expense rows.
Earlier this year I adjusted my savings rate goal to 50%, down from 60%. It seemed like 50% was a more attainable goal.
This month , we beat that 50% goal! Now if only it would bring the average up enough.
December was a normal paycheck month for us, but we received a bunch of money from the DCFSA, so that put us at over a 100% savings rate for the month.
Here’s how we did this month, and for the year. Sooooo close to reaching that 50% goal.
Income ($9,465.48)
Right now, our only source of active income is through our full-time jobs.
This is what a fairly normal income month looks like for us. That was a nice little boost.
Expenses (-$450.43)
Our expenses were well below average this month.
Here is a quick break down:
1) Home Escrow ($1060.00)
The normal amount we put aside every month.
2) Giving ($1,127.06)
The usual 10% we give every month.
3) Cost of living (-$1,132.39)
Previous Months: Nov: ($1,372.91), Oct: ($6,397.83), Sep: ($2,602.07), Aug: ($2,835.56), July: ($4,283.01), June: ($3,031.71), May: ($2,957.92), Apr: ($2,164.31), Mar: ($3,078.52), Feb: ($2,474.38), Jan: ($4,708.98), Dec: ($2,749.98), Nov: ($1,242.44)
Running Average: $2,745.47
This includes all our bills (Gas, Electric, Water, Internet, Phone), transportation, food, shopping, and daycare. Home insurance is paid for out of our Home Escrow savings account. As we had been planning, we drained our dependent care account at the end of the year in one lump sum. It was much less paper work for us, and a really nice way to end the year. It feels like getting a big bonus.
Our gasoline bills continued to stay pretty low. We have a pretty good idea of what it will cost each month now with my wife going back to work. We have started to enter the cold part of the year is over, so our water bills have decreased, and electric/gas bills have started to increase. The next few months is where our gas bill starts to go up as we heat the house. I’ve been doing a lot of that throughout December.
I expected we would have to finish paying the medical bills in December, but the saga continues. However, the end is in sight, and I think we will have it all wrapped up by the end of January. Hopefully starting a new year doesn’t confuse them too much.
I spent A LOT in december, but from from here on out till we get to next Chrstmas season, we will try and not spend too much. We always do, but I went a little crazy in December. Also, we’re just busy. We don’t have as much time to shop!
December 2020 Vs November 2020 Expenses
November and October were pretty similar in terms of our expenses, except the DCFSA wiped out all out expenses and more for December. October was all about paying them bills. There was a hiatus in November, and a few bills were resolved in December. Hopefully we will have a clean slate after January. It feels like I’ve been saying that every month now.
Goals Progress
Financial Goals
We met our target to fund our Roth IRA’s by the end of March.
We met our target to fund baby #2’s 529 plan early, having finished at the end of May.
We met our target to max out my 401(k)! We met this goal at the end of November.
The remaining two financial goals were year long goals. The year is over, so we now have the results!
Passive income exceeded $10,000 by almost 50%. This is the one I’m probably most excited about, because it’s an indicator of how close we are to retirement.
I did not actively do anything to increase my passive income, other than contribute to retirement accounts. Hopefully this is happening passively. As expected, we saw a good portion in March, and a personal best in April. and a new personal best AGAIN in September. Hopefully this trend continues into December. I’m fairly confident that we will beat the goal of having passive income grater than $10,000!
My goal of having a savings rate greater than 50% was very close, but we didn’t quiet make it after cash flowing a baby. I think we can hit 50% this upcoming year (2021), although the increased cost of daycare my offset not having to pay medical bills.
Blog Goal
No new updates this month.
I’ve made a few changes behind the scenes on where I want the direction of this blog to go. My goal was to provide more value to you, so I’ve made some changes in the way I’m going to style blog post in an effort to create post that are more relevant to you. Now I just have to start creating and publishing those posts. I didn’t do much in December.
Personal Goals
I caught up on my reading goal in August, but haven’t done much reading since then. I’ve read four books for the year. I enjoy reading, but I enjoy doing other things more, apparently. Haha. I’m still going to have a reading goal for 2021, but not 6 books. Maybe 3.
Body Fat is one goal I completely failed. My weight stayed steady in December, but my body fat definitely went up from all the candy, and fudge, and cookies I ate. That means I’m loosing muscle mass. I did start going to the gym again, and man am I out of shape. And I was sore for the next couple days.
December 2020 Roundup
The month of December was a another good one. It was nice staying home with just the immediately family on Christmas day. Also, we are so close to everyone getting vaccines and not having to wear these stupid masks!
Our cash flow is maintaining a positive direction, and the bills are nearly paid. Aside from a world-wide pandemic, life is pretty much normal. Even the pandemic shouldn’t last too long into 2021.
2020 Annual Results
I’ve had a full year of tracking all this data, now it’s time to share it! As I promised in last years annual report, I now have exciting (to me) stats, like our net worth increase for the year.
2019 Net Worth Increase Guestimate: $147,180.87
We ended 2019 with a net worth of approximately $365,787.79.
We ended 2019 with a net worth of approximately $512,968.66.
I’m still a little shocked when I see that difference. We saved about $53,000 of our take home pay, but $15,000 is not included in the net worth because we put it into the 529 plan.
That means we contributed about $37,000 savings from take home pay, and $36,000 from 401(k) and Roth IRA contributions. That’s about $73,000 we put in from our jobs, both before and after tax. The remainder, about $74,000, is all from market growth!
Wow! We made more from stock market growth than we did from our own contributions! This might be the first year that has happened for us, and a trend I hope continues. Although I know every year won’t be a positive one.
2019 Passive Income: $15,546.54
My goal was to have passive income over $10,000, so I’m really excited to see it at almost $15,000. It feels kinda scary to make the 2021 passive income goal $15,000, but I know that is the minimum I should target.
2020 Savings Rate: 48.5%
2019 Savings Rate: 57%
This is probably the one negative aspect for us in 2020 compared to 2019. I can’t be too pessimistic though, because the decreased savings rate was because we cash flowed having a baby.
2020 Expenses: $58,433.45
2019 Expenses: $47,676.12
YoY increase ($): $10,757.33
YoY increase (%): 23%
Cash flowing a baby is outright expensive, but there were other reasons also for the increased expenditure.
Here are some charts to help visualize our 2020 expenses, with a comparison to 2019 as well. In case you’re wondering why travel is negative, it’s because we had a pair of airline tickets refunded and we didn’t travel at all in 2020.
2020 Roundup
2020 was another great year for us despite. Our income ticked up slightly and both of us are still in jobs and workplaces that we both enjoy AND we were employed full-time through the year. This was the second full year of having to pay for daycare, but now we have to pay for two kids. It’s a big chunk of our budget, nice to know that it doesn’t eat up too much. At least not enough where it would be better for one of us to stay home.
Let’s take a look at how our expenses break down.
Housing: Home Escrow (22 %) & Utilities (7%)
Home Escrow continues to be the biggest slice of the pie. Texas has high property taxes. I expect that taxes and other minor home expenses will continue to be about a quarter or more of our annual expenses. I already know what our property tax bill looks like for 2021. Assuming taxes don’t have a substantial increase in 2022, this expense (our escrow savings) will remain about the same for next year.
We have a big house. Therefore, utilities cost a decent amount. We try to be conservative with our usage. Turning off lights and bundling up in blankets for the winter, but there’s only so much you can do. Previously I expected that utilities would hover around the same amount for the foreseeable future, but now I anticipate a slight increase because we have two kids we have to provide for and keep comfortable.
We really like our house and where we live. Also, we don’t want to move too much with the kids. We like the daycare and we live in a great school district. That said, we are always looking for a property with some land. We would like to have some space between our neighbors and ourselves.
We’ll see how that plays out over the next couple years.
Also, we would love to build our dream home one day. FIRE Goal!
Giving (19%)
It’s awesome to see that giving is our second highest “expense”. It’s a reflection of how good we have it and that we are being good stewards of what we have. Hopefully we can increase our giving for 2020.
Miscellaneous (11%)
This is the category where we put all out medical expenses. As you might expect, it’s a bit higher than previous years. However, this is a one off year and will be much lower. Also, it’s important to note that the high percentage in this category brought down the percentages in all the other categories.
Transportation (9%)
Last year I said, “As long as we are working, this is going to be a decent slice of the pie.” Well, I didn’t anticipate we would be working from home so much in 2020.
Last year I also said, “However, I don’t expect it to be this high every year. … I’m hopeful that this category will be 10% or less of our 2020 spending.” At least I got that part right! And I think that’s the more important part to get right. Haha.
Daycare (9%)
This is one category that I expect to be a higher percentage by the end of 2021. I’d be happy if it was only 9% nest year! Paying for two kids at day care is not cheap. I anticipate this will be somewhere between 15-20% of our annual spending.
All the other categories
The rest of our expenses combined are less than 25% of our total outgoing expenses, with shopping accounting for 13% of that. I think we are doing a decent job in these areas. We could do a little better in the shopping category, but I’m trying to balance savings with what the kids need. I’m still finding that balance. Otherwise, sure, we could trim a little here and there, but it wouldn’t really move the needle much for us.
FIRE Away!
Reminders:
- 2 big items not included in my net worth:
- House & Cars – Their value will be added to my net worth if and when I sell them.
- 2 accounts not included in net worth total (even though they’re listed):
- 529 – This is my baby’s money. Consider it her net worth summary.
- Home Escrow – This is Uncle Sam’s money. We don’t mess around with him.
- Total income only includes our active income, which is currently our full-time jobs.