Whew! 2014 was a very full year. A lot happened that I didn’t plan on at the beginning of the year: my boyfriend moving in, job hunting, sharing Christmas, finding a new job, about to quit my job, and a big trip happening in early 2015.
This post has been delayed since I finally left my job. I now have a bit of a break until I start the new job next month. I’m really curious as to what will happen with my net worth in January and February!
1) My first priority in 2014 is to continue to develop my relationship with my boyfriend. Things are going great and I want to continue to prioritize that.
SUCCESS! If anyone remembers a haphazardly mentioned Operation Penguin from a monthly goal post this year, that was my boyfriend moving in. He’s moved in officially now, which is awesome. We have a ton of physical stuff to sort through from merging households still, but we’re in one place! We’ve also planned a big trip for early 2015, went on three trips in 2014, attended two weddings, and shared Christmas with my family this year.
2) Rock out at my new job. Without the high-paying job I have, I wouldn’t be able to accomplish any of my financial goals.
FAIL! I’m going to give this one a big red fail. The new job went great for oh, the first five months and then it just fell flat on its face. I couldn’t have predicted how this would go and then I ended up job hunting partway through the year, which was incredibly stressful. I’m really excited about the new job and it’ll be such a change that I’m feeling much more confident about it!
3) Max out all tax-advantaged accounts available to me. This means $17,500 to my 401(k), $5,500 to the Roth IRA on January 2nd from savings and $5,500 to a savings account to fund the 2015 Roth IRA.
SUCCESS! Woo! I accomplished this one 100%. I maxed out my 401(k) in July, thinking I was going to quit my job. I did make my full $5,500 Roth IRA contribution in January 2014. Mentally, $5,500 of my savings account is for my 2015 Roth IRA. It’s possible that my income might drop to the point that I can contribute directly in 2015, so I may end up waiting a bit to do the Roth IRA contribution. I haven’t fully decided yet. I may just wait until February. Who am I kidding, I’ll probably just do it January 2nd like I did last year.
4) Pay down the mortgage. I would like to get it under $91,284.28. That should keep me on track to paying it off by the end of 2015.
SUCCESS! This was a super vague goal and by its vagueness, I succeeded at it! I did pay down the mortgage, yes I did. I did not get it anywhere near $91,284.28, hah! It is currently sitting at $143,000, which represents it being half paid off. My savings account has about $20,000 extra in it, which will possibly go to the mortgage once I start the new job, so that would have put the mortgage at $123,000. If we weren’t taking this unplanned awesome trip, it would be down another $6,000 to $117,000. My bonuses were less than anticipated, accounting for another $7,000 in a higher mortgage balance, so $110,000 in the ideal scenario. That’s still ~$20,000 above my “goal”, but I was expecting to hit closer to $110,000 anyway.
5) Spend less than $39,000 for the year. If I can accomplish this, it would be my cheapest year since graduating from college! This would map out to 4.4 years of expenses saved up, which is about 17.6% of the way to FI if you count it as having 25x annual expenses saved up.
FAIL! Flat out fail. When all was said and done, I spent $48,000 this year, $9,000 or 23% above my spending goal. I’ll go into this in more detail in another post, but I definitely didn’t plan on all of this spending.
6) Overall, I’m anticipating a net worth increase of about $115,000 for the year to increase my net worth to about $465,000. (For reference, I expect my gross income in 2014 to be between $160,000 and $190,000.)
PASS! If you take out the increase in my condo’s value, my net worth went up by about $93,700 this year, $21,300 short of the above guess. My gross income ended up being just under $170,000, in the lower end of the range I listed above, which contributed to most of the lower net worth increase. The other contributing factor was of course the unexpected spending.
2014 by the numbers
- My gross W-2 income was just under $170,000, a drop of about $30,000 from 2013.
- I churned three credit cards, which gave me $1,940.42 in credit card rewards including the regular 2-5% cash back and taking out the $89 Barclaycard annual fee.
- My gross income was about 353% of my spending for the year (my average since college is 317%).
- I paid down the mortgage from $187,552.40 to $143,000, a difference of just under $45,000. That’s about 16% of the original mortgage balance, putting it at 50% paid off, and giving me just over 60% in equity.
- Adjusted the value of my condo in my net worth by about 26% based on how similar units are selling around me.
- Increased my net worth by $185,700 over the course of the year to $531,600.
- I spent about $48,000, an increase of about $3,270 from last year.
- I saved about $86,700, for an overall savings rate of about 68% and about 54% of my regular income.
- My investments were up about $5,200 for the year, which was a return of 3.42% according to XIRR.
- Increased my assets and paid down my mortgage such that my assets were I to liquidate all of my retirement accounts are worth more than the mortgage and I am only about $70,600 in already liquid funds away from being able to pay off the mortgage, a $64,600 improvement from 2013.
- Decreased the amount needed to save to be FI by $12,600 to $811,300, though I possibly added 2.56 years to my FI date? (Clearly this is still very much a moving target.)
- Buying my place is now only $2,307.96 more expensive than continuing to rent would have been, ignoring the increase in value of my condo. It will break even assuming purchase price in February 2015.
2014 in charts
My savings were split this year mostly between my Traditional 401(k), extra mortgage payments, and some cash savings in anticipation of changing jobs. Most of that cash savings will go to the mortgage in 2015.
I also had my highest net worth increase yet of $185,700, settling in at $531,600 at the end of the year. Things are moving along well! I really like the “Where in the world could I retire today?” game that Planting our Pennies have been playing. If I were to sell my condo and retire today, I could retire in Sofia, Bulgaria. I’m no longer stuck in India, which is pretty cool. I’m guessing that by some time in 2016, I should be able to retire in the lowest cost of living city in the United States or Canada on the Expatisan listing. I also have about 11 years of expenses saved at 2014 spending levels if you include my condo value or about 3.7 if you take the liquidated value of everything except the condo. This year, my expenses were about 9% of my end of year net worth. I’ve been noticing that the more money I have saved, the less motivated I am at work when I don’t like my job since that job looks more and more unnecessary as time goes on and my nest egg accumulates.
I finally paid the mortgage down to the 50% marker! I’m pretty excited for that one. I didn’t make nearly as much in extra payments as I did in 2013 (see $30,000 gross income drop). But I did manage to lower my monthly interest cost from $400 in December 2013 to $307 in December 2014 by paying down about $45,000 of the mortgage.
My investments had a lot more ups and downs in 2014 than ever before. My employer and I contributed just under $25,000. My 401(k) was over $100,000 at some point this year and my Roth IRA is definitely over $30,000 now. I also saw just over $3,000 in dividends across all of my accounts and I’m estimating to get close to $4,000 in 2015. My largest one month gain was $5,235 and my largest one month loss was $4,373.