As I reflect on 2019, the highlight reel in my mind prominently shows Scotland and Italy, two trips I enjoyed with my wife. Edinburgh and Milan were spectacular and I'm looking forward to more international excursion in the future. Financially, there isn't anything that stands out. At this stage, it seems like a mundane routine of just shifting money whenever I get paid and letting my 401k run on auto pilot.
Accomplishments
- Front load my Roth IRA
- Max employer-sponsored 401k
- Bring HYSAs up to 30k (15k in each account)
- Reach 200k net worth
I front loaded my IRA on January 2nd 2019, using money from my HYSA and then just back filled my savings. I set my 401k contributions to 20% to reach the 19k cap. However, due to an unforeseen bonus, I had to readjust my contributions so as not to go over the cap and get hit with taxes. It turns out I miscalculated and ended my contributions prematurely. I could've reduced then to get one more smaller contribution, but didn't. I contributed a total of $18,540.68. I missed maxing my 401k by $459.32. I succeeded at bringing both of my HYSAs to 15k each for a total cash position of 30k back in June and kept that balance for about a month and a half before withdrawing money to fund my international trip. I surpassed my year-end goal's net worth by 16.6k.
Comparison
Below are screenshots from Dec 2018 and Dec 2019 to illustrate my net worth growth:
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| 12/30/2018 Net worth |
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| 12/27/2019 Net worth |
Let's break down some of the numbers: I maxed my IRA early. That was $6,000. I contributed a total of $18,540.68 to my 401k and my employer contributed $3,121.33. This is a total of $27,662.01. According to my spreadsheet, I saved an additional $13,638 outside of my retirement accounts, which brings the total to $41,300.01. That's definitely within my original estimates of 30-50k. So that means my investments and savings grew by an outstanding $32,917.99.
I've heard over and over that there comes a point where your investments will return much more than you can contribute. I don't think I'm at that point, but getting near the cusp of it. I think they say that tilting point is between 250k and 300k depending on who you ask. I'm looking forward to see this kind of growth, but that also means your net worth can also swing wildly down, not just up.
Projection
Honestly, I haven't sat down and crunched numbers to come up with detailed expectations as I have in years past. The reason for that is I've got other things vying for my attention these day, namely international travel and just enjoying my free time learning new languages and other things. I figure as long as I can continue shifting money each paycheck into savings and investments while leaving my 401k on auto pilot, the rest will take care of itself. There's only so much I can control when it comes to my money. My 401k and Roth IRA have caps. All I can do is make sure I meet them or come as close as absolutely possible, which leaves how much I save paycheck to paycheck. I weigh each of those on a case by case basis. Some months will be great, allowing me to move the bulk of my paycheck into savings because I don't have many bills. Other months might be lean due to an unforeseen expense (god forbid!) or because I want to spend it on something I deem worthwhile, such as an international trip. That means I can set a goal for that discretionary money and strive to hit it. Once you view it from this perspective, it makes projecting much simpler.
Taking that into consideration, here's my projection in real time: my current net worth is $216,647. If I front load my Roth IRA, which I always do, that's 6k. The max I can contribute to my 401k this year is $19,500. A total of $25,500. That would bring my net worth to $242,147 and I'd like to at least get to 250k, but that means I would only need to save an additional $7,853 outside of retirement accounts. Based on past performance, I can easily do that provided there's no catastrophic event this year that would derail those plans. Additionally, I want to bring my HYSAs up to a total of 40k, 20k in each. This means I need to bring Ally up to 20k from the current $12,615, a difference of $7,385 (kind of looks like the number needed to reach 250k) and I need to bring my Am Ex up to 20k from its current balance of $13,644 (note: at the time of this post I'd already withdrawn money to front load my Roth IRA for 2020) for a difference of $6,356. Now if we add up the differences, we get $21,594. I think that's very doable barring anything catastrophic (always take into consideration something catastrophic happening!) but I think I can be a bit more aggressive. So let's shoot for a total of $27,500 on top of my retirement savings. This means my net worth by year's end should be somewhere in the neighborhood of $269,647. That doesn't take into account market fluctuations, but just all of my total contributions. It will definitely fluctuate with the market and getting the 401k cap dialed in is kind of difficult with my employer's broker.
Bonus
Looking back at when I seriously started keeping track of my finances (2016), I realize it's taken me 4 years to reach a net worth of $216,647. That's roughly saving 50k each year not accounting for market fluctuations. Honestly, I didn't get very serious about increasing my net worth until sometime in 2017, but we'll say four years. Here are the milestones and the dates I hit them:
- 05/17/2016 - 50k
- 01/17/2018 - 100k
- 12/02/2018 - 150k
- 10/21/2019 - 200k
Looking back at all the year end net worth's up to today, they are:
- 12/28/2016 - $78,296
- 12/31/2017 - $93,135
- 12/30/2018 - $142,429
- 12/27/2019 - $216,647
It's interesting to go back and look at the past performance, the trail I've already covered on the way to my destination. I'm definitely in a much better place than I was before I started pursuing financial independence. A lot of stress has been eliminated from my life now that I'm debt free, have my spending and savings under control, and have a substantial nest egg that's growing. Let's see what a new decade has in store.
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