Our 2018 Budget and Savings recap

Wow wow WOOOW!

2018 was one of the best years ever for our family but also for this little passion project turned business we call rich & REGULAR.  If you’re new here or want some context, it’s best to start with reading a few of our earlier posts.  We recommend starting with the following-

  1. Our 2018 budget and savings rate
  2. Our 2018 plan: how we’ll go from rich to RICHER
  3. Our Christmas letter | What it means to believe

Mmmk.  Now that you’re all caught up.  Let’s see how we did.

Overall, our plan was to keep things simple and to do what we’ve been doing over the past 5 years.  The only difference would’ve been that since we paid off our mortgage in 2017, our savings rate should’ve boosted significantly since our old mortgage payments would’ve been re-allocated to investments.

Well, in some cases we actually fell short of the goal and in other cases, we got much more than we bargained for. To make it all easier for you, we’ve created a report card so you can see clearly how we graded ourselves against what we said we would do.  Check it out below.

2018 Report Card

So let’s get the big one out of the way.  If  we’d done what we said we would do, we would’ve contributed approximately $62K into a variety of investment vehicles.  But a little thing called life happened and there were two major changes to our plan.  First, we decided to move into a new home way earlier than we originally thought we would.  The primary reason for this was because we underestimated how much space our son would need as he got older.

While we know this wasn’t a “need” in the strict sense of the word, the fact is, we found a deal we believed was worth jumping on so we opted to secure the lot and build our new home about a year earlier than we thought we would.  To make matters more interesting, Mr. r&R said enough was enough and quit his job mid year.  Because of this, we had to get creative and make some tradeoffs to secure the funds needed to close.

This all had an impact on our ability to achieve our savings goals in 2018.  However, we were still able to stash about $25K into our nest egg.  This was spread across our Traditional 401(k), 529 Plan and HSA contributions all of which are invested heavily in index funds. We still have time to make 2018 contributions through April 2019 though, so we’ll see how things shake out over the next few months. Overall, between Jan 1 and December 31, even with the the market acting a damn fool

our net worth increased by just under $80K.

Given the late dips in the stock market and a shady tenant situation, much of the increase is attributed to our pre-tax contributions/savings and real estate appreciation.

Are we happy about that?

Kinda sorta.  On one hand, it would’ve been nice for life to unfold exactly how we planned it on paper, but that’s not how life works.  Besides, if that actually happened, we don’t know that we would’ve experienced all of the other amazing things that happened in 2018.  In real life, cards were dealt that we had to take head on so we made the best decision we could with the information and resources we had at the time. Also, since this has become a standalone business, we had to spend more money than originally anticipated to support it’s growth.

Like we’ve always said, THIS is the hard part of personal finance.  The messy, irrational and emotionally driven stuff…not the numbers or  financial jargon.

Deciding to buy a home earlier than expected also meant we wouldn’t pay off our rental this year as planned.  Plan A was to pay off the rental, move out of our paid off home, convert the paid off home into our second rental and use both of the property’s rental income to subsidize the mortgage on our new home.

Plan A visual

If we did that as planned, approximately 70% of our new mortgage note would be covered by our rentals but now, it’s closer to 50% since we still have a note on one of two  rentals.  After, moving out in October, we were able to rent our old home at the initial asking rate and secured a tenant in mid-December.  Either way, we see this as a win because we’ve grown our net worth considerably, dramatically improved our quality of life and did it without having to fully bear the cost of a big a$$ note.  All without completely losing our $hit in the process.

What about insurance and legacy planning?

Honestly, this was the least fun of all goals for this year.  Like taxes, insurance is right up there with changing diapers and watching paint dry so honestly, there was only a flicker of fire burning inside of us to tackle this .  However, in Q4, shortly after we moved into our new home, we were able to roll in our auto, rental home coverage and new primary home coverage under Amica Insurance. This alone, saved us about $300 a month and we look forward to even more savings as we roll in a few of our other policies over the next few months.

Unfortunately, we didn’t get around to fully completing our legacy planning either which …is a little frustrating.  On one hand, there is a lingering bit of imposter syndrome because we feel we should be models of sound personal financial practice.  On the other hand, we’re hard-working active parents, investors and entrepreneurs with a never-ending to-do list so sometimes, you just can’t get $hit done when you want to.

As new parents, this year was hella humbling. We wrestled with our decision to provide our son with good and affordable daycare. The process was more emotional than we thought, but so far we have no regrets despite the hefty price tag.

But this year was also the first year we didn’t meet our ‘vacation goals’. We pride ourselves in having consistently taken the needed time to unplug from the grind but this year we fell short, and we’re feeling every bit of it .   Yes, we did take a few quick trips but to us, they weren’t true vacations.

We visited family in Texas, spent a day in NY filming a mini-documentary and hung out in Portland, OR for a few days as we filmed for the upcoming documentary, Playing with FIRE. We also spent a few days in Florida after FinCon. These getaways were great but they weren’t true unplugged trips and we’re feeling every bit of the grind now.  For the first time ever, we understood how having kids truly changes EVERYTHING.

Either way, in 2019, we’re committing to do better and are starting it out just right as featured speakers at Camp FI down in FL.  We’ll share more about our experience when we get back.

IG CampFi post
Visit http://www.campfi.org for details

So did we invest in ourselves?

Well, this is where we went in.  After Mr. r&R left his job, he spent a few weeks detoxing and hitting the gym.  He started chasing down a few leads for job opportunities coming close a few times but never quite getting an offer.  So after a few swings and misses, we both realized that the answer we were looking for was staring us in the face.

We’d invested so much time, talent, money and love into this site and the evidence of it’s viability was clear.  So in September, we officially decided to make this platform a business.  We invested in software, legal support, tools and we’re actively working on flushing out a full scale business plan for r&R.  If all goes well, 2019 will bring more income, further enabling us to build our wealth, break generational poverty and bring us one step closer to an early retirement.  Most importantly, we’ll make progress against our manifesto and help others along the way

So overall, while we fell short of our savings goal in 2018, we still grew our net worth considerably.  In the process, we walked away from a toxic situation, strengthened our family lives and expanded our humble real estate portfolio.  Lastly, we dipped our toes in the warm waters of entrepreneurship and are preparing to dive in headfirst going forward.

2018 was exhilarating, challenging and ahhmazing all at once and we’re excited to see what 2019 brings.  Hopefully you’ll stick around for the journey.

The best is yet to come.

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