Remember that time when I made paying off my mortgage my primary goal for 2015? Well, as you can tell, that hasn’t happened.
Also remember when I set out to spend $38,800 in 2015? That didn’t happen either.
2015 was however a pretty full year: I left my job of five years, took two months off unpaid including a month traveling with my boyfriend, applied to grad school, started a new job, got accepted into grad school, and started grad school. Most of these things I knew about at the beginning of the year, though I didn’t know if I’d get into grad school. The goals I set on the blog assumed I wouldn’t since I didn’t want to jinx it and tell you guys I’d applied. That fact clearly changed my 2015 a lot.
1) Enjoy living together! Have an awesome trip to NZ!
Success! This has definitely been good :) It was more of an adjustment than either of us anticipated, but mostly it’s pretty awesome!
2) Contribute the maximum to all tax-advantaged accounts available to me. This means $5,500 in a Backdoor Roth IRA, $18,000 in a pre-tax 401(k) and possibly some additional funds to the after-tax 401(k) and possibly my 2016 Roth IRA amount in a savings account ready to deploy in January. This will account for probably about 2/3 of my savings in 2015.
Success! I made my 2015 Backdoor Roth IRA contribution in January, maxed out my pre-tax 401(k) with $18,000, and maxed out my after-tax 401(k). As I predicted, this accounted for about 2/3 of my savings in 2015.
3) Learn the ropes at my new company and have an awesome first year!
Success! This is definitely going okay. I think I’ll be here another year at the very least.
4) Exercise for at least 45 minutes per day. My phone is really helpful at tracking this for me!
This has not gone very well. And once I switched to an iPhone, I couldn’t figure out to track “active time” per day anymore without having an Apple Watch. I think I probably only got down to around 25-30 minutes on average. This was definitely a more sedentary year than usual for me.
5) Go to the gym (or run) three times per week.
Fail! This one fell pretty flat. It became really hard with grad school and my priorities which I did stay on top of fell to: sleep, eat, work, and grad school.
6) Contribute enough to a Health Savings Account such that Out Of Pocket Maximum ~= Current HSA balance + Employer contribution + my contribution.
Success! I started out doing this and I ended up contributing the maximum (IRS maximum of $3,350 – my employer’s contribution = my contribution). So success!
7) Succeed at Operation Bayes – I’ll explain this later.
Success! I applied to grad school and got in! Woo! And did quite well on my first course :)
8) Spend under $40,000.
Hah. Fail. I came in somewhere around $48,000 of spending.
9) Save 70% of my net income monthly…and 100% of my bonuses. (Yay for a big raise that will allow me to save that much of my monthly income!)
Pass! It became difficult to track how much I saved of my net monthly income separate from my bonus income with the compensation structure at my new job. Overall, I saved 70% of my net income before grad school tuition withdrawals were accounted for or 61% after. This should even out in future years because a large portion of the withdrawals will be reimbursed, though there will be some income taxes to be paid.
10) Contribute the maximum that I can to the Employee Stock Purchase Plan.
Success! I mostly did this. One month I had too much go to my pre-tax 401(k) while I was frontloading it and missed out on a few dollars of ESPP contributions. I sold all of my ESPP purchases as soon as I could and then used the proceeds to fulfill other savings goals.
11) Pay down the mortgage with any funds that are leftover after 2), including the proceeds of 10).
I made zero extra mortgage payments in 2015. Its natural amortization lowered the mortgage balance to less than my annual base salary, which is quite exciting!
Even if I make no extra mortgage payments, the mortgage will pay itself down by about $9,000 in 2015. I’m becoming much less concerned about the mortgage with the smaller balance and the likelihood of the interest rate jumping up to 7.5% when it resets seeming less and less likely. Right now, if it were to reset today, it would likely reset to 3.25%, which would actually lower my required payment by ~$460/month and increase the January 2015 interest cost by about $89 or about 30%. [note: updated this paragraph with the numbers as of mid-December 2015.]
Overall, I’m anticipating a net worth increase of about $100,000 to $120,000 for the year to increase my net worth to $630,000 to $650,000. I expect my gross income to be somewhere between $140,000 and $150,000 in 2015.
My gross income fell smack in the middle of that range, so that prediction was good. My net worth prediction fell pretty flat though:
- I had calculated that my investments would go up by about 8%, for a return of about $13,000. Instead they fell, meaning that they ended up about $22,000 lower than I had expected.
- I had planned on adjusting my condo value by 3% to account for inflation. I decided not to do that since it’s hard to know what it’s worth exactly. I may end up adjusting it in 2016.
- I paid out of pocket for grad school and haven’t gotten all of the funds back from my employer.
- The above three points account for $45,000. They would have gotten me from my actual end of year net worth to the high end of my anticipated range, a $115,000 increase.
2015 by the numbers
- My gross W-2 income was about $150,000, a drop of about 12% from 2014 after a similar 14% drop from 2013->2014.
- My gross income was about 301% of my spending for the year (my average since college is 317%).
- I paid down the mortgage by $8,900 from $143,000 to $134,100. That’s about 3% of the original mortgage balance, putting it at about 53.1% paid off, which isn’t bad for only having owned the place for 3.5 years.
- Increased my net worth by $69,100 over the course of the year to $600,700.
- I spent about $49,687, a 3.4% increase over 2014’s spending.
- I saved about $74,400, for an overall savings rate of about 64% of my net income.
- My investments (~30% fixed income, 35% US stocks, 35% international stocks) were down about $5,500 for the year, which was a return of -2.56% 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 $41,600 in already liquid funds away from being able to pay off the mortgage, a $29,000 improvement from 2014.
- Decreased the amount needed to save to be FI by $28,000 to $783,300.
- Increased the years of savings in retirement accounts from 2.89 years to 3.66 years, an increase of 0.77 years.
- Buying my place is now about $8,800 cheaper than continuing to rent would have been, ignoring the increase in value.
2015 in charts
My savings was far more fragmented than in 2014. Contributions were split between: pre-tax 401(k), after-tax 401(k), tuition savings, Employee Stock Purchase Plan, regular mortgage payment principal, my 2015 Backdoor Roth IRA, and my Health Savings Account. I transferred a decent chunk from my general savings account to other goals such as my 2015 Backdoor Roth IRA, spending while unemployed or frontloading my retirement accounts, and my tuition savings account. I sold all of my ESPP purchases as soon as I could and used the funds to top up my general and tuition savings accounts.
I had my lowest net worth increase for the year since 2010 at $69,100, settling in at $600,700 at the end of the year.
To put things into perspective, above is a chart of my net worth growth since December 2009. I’ve increased it by about 20x in the last six years!
I really like the “Where in the world could I retire today?” game that Planting our Pennies have been playing. At the end of 2014 if I were to sell my condo and retire, I could have retired in Sofia, Bulgaria. I could now retire in Podgorica, Montenegro! 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. This year, my expenses were about 8.3% of my end of year net worth (down 0.7 percentage points from last year).
The 4% SWR on my investments is no longer near zero – I’ve been making some really great progress in this area in the last few years. I’m actually anticipating getting this figure up to $900/month by mid-2016, which is starting to become a pretty decent figure. With that, the vast majority of my fixed expenses will be covered (other than my mortgage) and it’s on to getting the discretionary expenses covered, which is pretty cool!
I made yet another chart recently which shows the “$ to FI” figure vs my net worth over time. It’s pretty cool to see them converging, which I expect to happen sometime in 2016. It’s cool to see that even though I feel like this number is a huge moving target, there is still progress being made. This chart also shows that at current spending levels, I’m probably about halfway to FI, which is pretty awesome.
I didn’t make any extra mortgage payments in 2015. The regular amortization still moved things along relatively well though thanks to the extra payments I’ve already made. If I had a normal 30 year mortgage and not a 5/1 ARM, then I would have 12.75 years left on the mortgage at this rate, which is pretty good considering that I bought my condo 3.5 years ago!
My investments had a lot more ups and downs in 2015 than ever before. My employer and I contributed just over $50,000, which is double the 2014 figure. My 401(k) was above $100,000 for most of 2015 and my Roth IRA thanks to the after-tax 401(k) contributions is now above $60,000 – it almost doubled this year. I also saw just over $4,000 in dividends across all of my accounts and I’m estimating to get close to $5,000 in 2016. My largest one month gain was $9,132 and my largest one month loss was $9,988.
As my investments have grown, the monthly gain/loss has increased significantly as you can see with this chart:
Here’s to a wealthful 2016!