This is our final update of the year, and what a way to end it by adding an additional comma to our net worth for the first time! I know this is mostly a psychological milestone, but earlier in my life I could never have imagined reaching this type of milestone. Both of us are still amazed to be in this position and realize how fortunate we are and how close we are getting to being fully financial independent.
December was a very welcome month as it marked the end of an academic semester and more time with extended family. I was happy to completely shut off my email for a few weeks and spend some time in Florida to celebrate the end of 2019 and the beginning of 2020. Aside from everyone coming back with colds, it was a great month!
A few weeks ago I hit publish on a series of posts that opened up our income, savings, spending, and investment history in order to be completely transparent with how we reached our current net worth. It is still a little scary having these numbers on the internet for everyone to see, but you can read our rationale for doing so in the first post in the series.
Looking specifically at our progress in December we had quite a jump in our net worth. At the end of December our net worth grew to $1,010,980 with a large part of that increase coming from an approximately 2% gain in our portfolio. It is amazing to think how 1% or 2% can have such a huge impact on savings when they get to this level!
Looking at the changes in December from the previous month, our net worth is up, and we hit our savings goal for the year!. At the end of November, our net worth was $984,100 which means our net worth increase by $26,880 in one month! Over the last two months our net worth has grown by over $50,000, that is insane, and we know it is not sustainable.
We calculate our net worth by adding all of our pre-tax retirement accounts (403b, 457b, Traditional IRAs, and ORP), our after-tax retirement accounts (Roth IRAs), and our after-tax brokerage and savings accounts together. We also include real-estate equity (i.e. our home) discounted to a price we think we would be able to get after closing costs if we needed to sell the property as quickly as possible. After we add up all the assets above we subtract our current mortgage (our only debt) to arrive at our current net worth.
This month our income was $10,316 which was an increase of $2,743 from November. As I state each month, the variability in income is not uncommon since my spouse works for herself. This month some of her contracts ended and invoices were paid on time, which allowed us to put more into her retirement accounts and meet our yearly savings goal.
We calculate our income by taking our net income (after tax income) and adding back the amount that was withheld/saved in our retirement accounts, including the 6% of my salary contribution I get from my job in my ORP account (I mean technically it is income).
We spent $3,118 this month, which is again under our typical amount we budget to spend. While we celebrate Christmas and exchange gifts, we minimize physical gifts to our children and focus more on experiences and travel. This allowed us to escape a potentially huge amount of spending on gifts in the last two months of the year. I expect our January spending to return to a more normal level (for us) of around $5,000 – $6,000.
Our goal we set for 2019 was to save a minimum of $50,000 inside our retirement accounts, with maybe a little additional amount in our after-tax brokerage or savings account. We met our goal this year (barely) and saved $50,414 including the amount we saved this month (December) which was $7,198. To be honest I did not think we were going to reach our goal (and that would have been ok), but low spending and additional income allowed my wife to put additional savings into one of her IRA accounts.
Some Closing Thoughts
This past year brought a lot of changes, and some important advocacy work that will continue for the next several years. From a financial perspective we are doing well and are very fortunate and privileged to be in the position we are in. We are adapting to our kids being in two different schools (preschool and elementary scho0l), and have started to make plans for 2020 and beyond. In the next few weeks I will post our goals for 2020 once we finish our family planning meeting at the end of this week.
I am a little behind on our decluttering and belongings reduction effort (thanks to everyone being sick in our house this past week), but will have more updates on our progress next month. We have a lot of the process staged and ready, we just need the time to execute the project.
Finally, thank you to those of you who regularly visit our blog each month. We hope our story is one that adds diversity to the many voices in the personal finance space.