We started with gleeful optimism. But just like that ride, we've gotta keep going forward.
Between moving to a new state and finding a job, last year seemed more like a roller coaster ride than this year did to be honest. Outside of finances, 2018 isn't very memorable from a month to month perspective. I just kept to my course and focused on stashing away as much money as possible, which is how I like it.
Accomplishments
Here are some of the things I set out to accomplish and succeeded in doing:- Front load my Roth IRA
- Max my employer-sponsored retirement account *
- Average $1,250 month savings outside retirement account(s) **
* When I started out the year, my employer (a nonprofit) offered a 403b, which I set to max. However, we were acquired half way through the year by a much larger (for profit) corporation and switched to a 401k. So I had to calculate a new contribution amount so I could reach my max ($18,500) split between both accounts. In the end, I managed to contribute a total of $18,440.
** Just prior to the start of each new year, I sit down and formulate a financial strategy. Last year I came up with a conservative, yet practical amount I wanted to save outside of my retirement contributions. This calculation took into account the amount I was able to save each month the prior year. I came up with $1,250 per month, which would give me an additional $15,000 in savings per year. From this calculation, I project what my annual net worth should be at the end of the year. Using this formula, my projected net worth at the end of 2018 was supposed to be $130,835. I was stoked to see that my final net worth ($142,429) surpassed my projection by $11,594. According to my contribution spread sheet, my average savings (excluding retirement savings) was $3,060 per month!
Comparison
Now let's take a look at my net worth on January 1, 2018 and compare it with the end of December:
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| 12/31/2017 Net Worth |
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| 12/30/2018 Net Worth |
At the end of 2017, my net worth was $93,135. I finished 2018 with a net worth of $142,429. A difference of $49,294! You can't see it right now, but I'm grinning ear to ear. I actually saw my net worth rise above 150k, but unfortunately, the market didn't let me enjoy it for long. Nonetheless, I think the gains I can report are quite impressive.
Let's recap some of the numbers. I front loaded my Roth IRA (max $5,500 for 2018). I contributed $18,440 toward my employer-sponsored retirement account(s) (max $18,500 for 2018). That accounts for $23,940 of the $49,294 net worth growth. So, I saved an additional $25,354 in after tax accounts.
Projection
Here is what I'm projecting for the end of 2019: a final net worth of $194,429.
I know that seems like an odd number, but let me explain how I arrived at it. Contribution amounts have gone up for 2019. IRAs have a new max of $6,000, which I plan to front load on 1/2/2019. 401k/403b have a max of $19,000. I've done some math to get as close to the max as I can; like within a few bucks, so we'll use the max. That's a total savings of $25,000.
Last year, I calculated a conservative savings goal of $1,250 per month, but learned in retrospect that I can easily surpass that. Based on last year's track record, I think it's safe to increase my monthly savings to $2,250, which brings us to an additional $27,000. $27k + $25k is $52k. Add that to my current net worth and that gives us the $194,429.
Again, that's being conservative since my average monthly savings outside of retirement contributions was $3,060. However, we all know shit happens, so I want to give myself a little wiggle room in case I have a month or two where I can't meet my savings goal. Hopefully, I can make up for it in other months where I surpass my goal. Also, looking at what I managed to save last year ($25,354), bumping it to $27k is actually ambitious. Let's not kid anyone; I had a great year of savings in 2018, but if the last month was any indication of the coming year, we may see further market declines. (This is another reason I tend to not count market gains when formulating my calculations/predictions.) I really hope I can meet my projection if not surpass it. I'd really like to slide across the $195k mark if not $200k, but I'm not gonna push my luck!
It feels really good to see that I not only went from a 5-digit net worth to a substantial 6-digit net worth. I'm in the boring middle as it's called, so I derive pleasure in my numbers where I can without lying to myself about what I've accomplished. My ultimate goal is to reach $625,000 ($25k/yr @ 4%), so I'm still a long way from relaxing. At 46 years old, I still have a lot of work to do before I can pull the plug on work.
In the meantime, I'll continue to focus on stashing away as much as possible to get closer and closer to my ultimate goal. Let's see what 2019 has in store.
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