Our 2019 financial plan – It’s a new day

Ahh yes, another year has come, another annual plan is in the books and another plan is born.  In the spirit of learning from the past, our annual plan and budget this year will be a lil different than prior years.

In 2018, one of the most critical lessons learned was the importance of time-bounding our goals and setting “tighter timeframes”. For us, that means instead of saying “next year we’re going to buy a new house”, we’ll say “next year we’ll close on a house by no later than XXXember 15“.  This isn’t a new or original concept.  In fact, setting SMART goals is something that we’ve done in our work-lives plenty of times.  It just so happens that even we forget to apply the basics of building an effective plan at home.

With that said, our goals for 2019 are “tighter” than they were in 2018 so we have that added bit of pressure to get it done in a reasonable and relevant timeframe.  But aside from sharpening our goal-setting, what also makes this year’s plan a little different is we’ll have business goals that are directly tied to our savings goals.

So for us, as entrepreneurs, we’re officially in “eat what you kill” mode.  This means, if our business doesn’t do well, then we won’t have the funds to meet our investment goals.  It’s exciting and nerve-wrecking at once but whether we get it done or not, we know it’s a new day and that tons of life -changing lessons await us.  So without further delay, below are our 2019 personal and business goals.

Personal Investment goals:

If this looks familiar, it’s because it is.  Much of what you see above is the playbook we’ve been running for years.  Simply put, we max out every tax-deferred account we can and strike a balance between doing that, earning more and minimizing taxes.  The key differences are the amounts we can contribute for 401(k) and IRA accounts have all increased for 2019.   If we do this, we will contribute +$59K to our nest egg.  However, if we actually achieve our stretch goals, we can add an additional $37K to that contribution.  If we earn even more, then our taxable brokerage account is the likely landing place.

The other big difference this year is our eligibility for a self employed/solo 401 (k) which is just like an employee sponsored plan, except for the self-employed.  Since  r&R is officially a business, this account is where we will park the profits, however large, small or infrequent.  But there’s another pretty big difference between the two plans—the contribution limits.

In an employee sponsored plan, we’re allowed to contribute $19K in 2019, an increase from $18,500 in 2018.    But since the US government really wants to encourage small business ownership, they allow you to stash up to $56K per year tax free in your solo/self-employed plan for 2019.  This is where our “stretch goal” funds would come from.

So in theory, if our business earned $75K this year and we maxed out our self-employed 401(k) contribution, [all things constant] we would pay taxes only on the remaining $19K.

You wanted to know how the rich get richer right?  Well this is one of the ways they we do it.

If you’re like us, then you’re likely seeing why we felt so comfortable with Mr. r&R walking away from his job.  After a while, it didn’t make sense to give as much time and energy as we were giving, only to have our savings potential capped and our income taxed at a fairly high effective rate.  Knowing that we could save almost 3X as much and expedite our timeline to FIRE by taking the self-employed route was a huge incentive and worthy of exploration.

You could say we’re tag-teaming this thing with Mrs. r&R holding us down in the short run while Mr. r&R builds the road to our future.  But wait, there’s more.  Here are our…

Business goals:

Between our rental properties and r&R, we’re officially owners of two small businesses. We’re not planning on raising rent this year so if all goes as planned, we’ll generate an average monthly net income of $1,375 from our rentals.  A good chunk of it will be set aside for future repairs and the remainder will go towards our current mortgage.  This funding approach for repairs isn’t ideal, as we noted in an earlier post, but it was a risk we were willing to take in 2018.  We’ll also put some protective measures in place [insurance and liability] to make sure we’re well protected in the long run.  We’re also committed to learning more this year so we’ll be a bit more active in local and online meetups like Ga REIA and Bigger Pockets than we have in the past.

While those goals are great, our plans for r&R are super-exciting for us.  Our revenue goal is the highest we’ve ever set and is a stretch goal vs. 2018.  While $50K is less than what we’ve earned at jobs in the past, the way we’ll earn it is what matters to us.  Secondly, knowing that the income generated here is aligned with our purpose and passion is incredibly motivating.  Let’s move on.

We’re also SUPER EXCITED about the upcoming release of Playing with FIRE, the documentary about the FIRE movement we’re featured in.  We don’t know much but there are talks of a multi-city viewing tour so we plan on attending several of the stops. We’re also backers of the film on kickstarter and got an exclusive opportunity to listen to the e-book before it was officially released.

Hearing Scott and Taylor’s journey to FI was amazing because it made us reflect on the emotional and challenging moments we’ve experienced on ours.  If you’re interested, you can purchase the book on Amazon today .  We highly recommend it.

We’ve gone to FinCon for the past two years and in 2019, we finally got smart by purchasing our tickets at the early bird discount for the following year.  We’re on the fence as to whether we’ll turn DC into a mini getaway or not but we’re definitely excited about attending, catching up with old friends and meeting new ones.  Hopefully the giant inflatable flamingo makes a return.

We also have some personal goals.  We know they’re not as buttoned up as we’d like them to be but we’re also not beating ourselves up about it.  Our goals are a common combination of lose weight, cook more at home, take 3 vacations, read more, do more community service and reduce the mindless scrolling on our phones.

We’re off to a great start so far having added daily meditations, reducing our consumption of alcohol, setting limits on our screentime, volunteering at the Atlanta Community Food Bank and indulging on Mr r&R’s favorite new thing— his Kamado Joe grill.

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Last but not least, we kicked off the year by scheduling our very first meetup.

We thought we’d get 3 people but made 10 our stretch goal.  Well, in less than 2 hours, we got 50 RSVPs to hang out, drink like an adult and talk schmoney with us.  We’re humbled by the amazing response and look forward to seeing some of you in a few weeks.  With that said, we are committed to doing more of these meetups this year.  We highly recommend signing up to our email list so you get first dibs on registering.  You can do that by entering your email below.  Til next time folks!