Happy Monday, personal finance nerds!
This week we cross over the halfway mark for the year 2020. Oh man, what a crazy year it’s been so far.
When I sat down and wrote my 2020 money goals back in January, I had no clue about the poopstorm of events we were about to experience …
- One of the biggest stock market crashes in history
- Immediately followed by one of the biggest stock market recoveries in history
- More people out of work than there has ever been
- Governments printed trillions of dollars and handed out money to public companies, small businesses, and citizens in need
- Interest rates dropped to the lowest they’ve ever been
- Toilet paper somehow became worth more than gold
- Impeachment, drone attacks, a global pandemic, bushfires, and a whole bunch of other monumental world issues
And the year is only half over!
Time to review, reset, and pivot our goals!
A friend said to me recently, “This year is a complete write-off. I’m cancelling all my 2020 plans and goals and will just figure stuff out next year.”
While I can see why she feels that way, I disagree. I don’t want to wait until things “normalize” just to start planning my life. Plus, I think it’s important to continue pushing toward your goals no matter what challenges are thrown at you.
I’d rather be a guy with plans that fail than a guy with no plans at all. :)
So it’s time to revisit, revise, and maybe even remove some of my 2020 goals. Here’s a few money-related goals I started 2020 with, and some changes going forward …
*Quick note: Last year my wife and I realized that we had built up too much of an emergency fund. Since we weren’t working for most of 2018 and 2019, we were holding almost two years of living expenses in cash, just to be on the safe side. Going into 2020, we planned on returning to work and thought it’d be safe to move some of our cash savings into new investments and reduce our emergency cash amount.
1) Fund Roth IRAs (DONE in January)
My wife and I both have Roth IRA accounts that we plan to max out each year. Roths are relatively new accounts to us — we opened them in 2016 and have been adding to them for the past four years. This year we added the maximum of $6,000 to each of our accounts back in January.
2) Get a job, you lazy bum! (DONE)
Although this blogging gig is part-time (for now), I’m counting this goal as complete!
3) Set up a “gift to minors” account for my new nephew!
My brother and his wife had another baby! Woo hoo! This is nephew #4 for me :)
For each nephew (all four were born in the past five years), my wife and I have been setting up a Unified Gift to Minor Account with a $2,500 starting balance. This is a gift to each kid, not the parents. I will remain as the custodian of the account until the child turns 18, then it gets converted into a regular brokerage account under the child’s name and control.
My newest nephew was born a few months ago, but we haven’t set up the new gift account yet. If you’re interested in what a UGMA is and how it works, I can write up a future post on it all.
4) Giving stocks instead of birthday & Christmas gifts for 2020
Last year for Christmas I bought my dad some stocks, instead of buying him a physical present. I made it into a fun little game of choice, and J Money shared the story in a post here.
The stocks I bought are performing pretty well, serendipitously. And it’s giving me and my dad something fun to talk about regularly and watch grow over the years.
This got me thinking … Instead of buying birthday gifts for my family this year, I’m going to buy everyone shares in public companies. I’ve got five family members with birthdays between now and the end of the year, and then I’ll probably buy stocks instead of Christmas presents for people as well. I know, it’s kind of boring to get stocks as gifts … but I think my family will thank me later down the road!
5) Make $3k in travel rewards and cash-back programs
I’ve been playing around with travel hacking and testing new bank promotions that offer sign-up bonuses. So far I’ve earned $1,800 this year and hope to make more than $3k before the year is out!
6) Sell one of our cars
With me working from home and my wife biking to work every day, we no longer need two cars. We’ll keep the trusty Prius (good gas mileage for our road trips, etc) and plan to sell our Kia Soul.
This has actually been on our list since last year. But we’ve changed our mind a bunch of times and never made it a priority. Although both our cars are fully paid for, owning two is now pointless and registration/insurance is probably costing us more monthly than the odd Uber trip would cost if we needed to take one in a pinch.
Anyone want to buy a 2013 Kia Soul with ~45k miles?
7) A kid? Or maybe a couple kids?
This feels weird to talk about publicly … But hey, if we can talk about money and share intimate financial details online, we may as well share other life-changing personal events we’re experiencing.
My wife and I have decided to explore fostering, and possibly adopting, children. It’s been an ongoing discussion ever since we got married. We’d make excellent parents, have so much to give, and there are a ton of children out there in need of a loving home.
Because the L.A. family services department is closed to in-personal group meetings, we need to take orientation online and do web-based training courses. More to come on this — my wife and I are still at the beginning of the process. Scary stuff!
Goals we’ve already failed at or decided to give up on for 2020
1) Invest in a new real estate partnership, $25k (FAIL)
In early March, we partnered on a new real estate venture to buy an apartment complex with a bunch of other investors. Our agreed portion of the deal was $25k, which we wired off to escrow after signing all the paperwork.
But, lucky for us, the contract fell through shortly afterward and our money got refunded! This turned out to be a blessing because when the covid news started to roll out in March, we felt much safer having the cash on hand.
In hindsight, I should have moved the money immediately into our joint brokerage account and invested in the stock market during the March/April downturn. Shoulda, woulda, coulda … I was too nervous to make a spur-of-the-moment investment at the time, so this $25k is still sitting in cash waiting to be invested.
I haven’t set a replacement goal yet — input welcome on this!
2) Sell an investment property (Remove)
In January, we listed one of our investment properties for sale. I’ll admit this was more just to test the waters and see if we could get a decent price in a hot market.
We’ve since removed the listing because we realized:
- We don’t have a good plan to reinvest the proceeds. Selling one property only to buy another similar investment seems pointless.
- We only bought the place three years ago and should probably stick to our long-term buy and hold strategy. If it ain’t broke, don’t fix it.
3) Spend “less” on alcohol in 2020 (Remove)
We spent a total of $2,117 on alcohol in 2019 and set a goal to reduce this in 2020. It was a very general goal, no specific $ amount attached.
But, I’m realizing we probably won’t achieve this, and we’re OK with that. As of right now, we’ve spent $1,373 in alcohol so far this year. Oops.
Staying home and not going out to eat has been a big factor in this. We’ve only spent $122 on dining out this year! We’re saving a few dollars in one category and being a little lenient in another.
Plus, beer is fun. 🙂
4) Get health insurance, via work or third party (Remove)
My wife and I were considering getting health insurance this year but have now decided against it. Our original plan was for me to get a job that included health benefits, but this isn’t an option right now.
We’ve been living without insurance for the past two years and have found a bunch of local income-based health providers that offer very affordable care. Last year we had a few doctor visits (and even a small surgery) and paying out of pocket has worked out cheaper than the insurance policies we were quoted.
At this point we are happy remaining self insured and continuing to pay out-of-pocket when health issues arise. We’ll assess again at the end of the year.
How are your 2020 goals coming along? Found any hidden opportunities within the recent havoc?
- Transition to working from home?
- Learning to cook more and eat out less?
- Any newfound hobbies that could turn into side hustles?
- Were you able to invest additional money during the recent stock market dip?
- Have you blown your alcohol budget already too? Ha ha ;)
*Roller coaster pic by Matt Bowden!
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Joel, thanks for sharing your wins and losses for the year. Life is interesting but it sounds like you have been able to focus on what matters. I didn’t necessarily have a lot of goals going into the year, but I have used the pandemic to work on a new blog/website and research potential drop shipping businesses. I’m doing my best to turn everything that has happened into something positive.
Timias
Nice! We can’t control the bad stuff that happens around us, but we can control our *response* to it all. Sounds like you’re going to come out of this with new hobbies, skills, and ideas. So cool to hear and good luck with it all!
No offense, but I think it’s shortsighted to have NO health insurance at all. Things happen….even to 35-year-olds.
Gotta agree, and these are my real initials, by the way.
Everything sounded good (except maybe the alcohol bit, but I’m a recovering alcoholic so I’m seeing it through a different lens), and then I got to the “no health insurance” part and it was like that record scratch sound you hear in the movies. Please, Joel, reconsider this part. Otherwise, great job!
It’s not a light decision, believe me! We will re-consider constantly. We know that bad stuff can (and will) happen. Part of the choice is based on having the resources and plans to respond should it come to that. Health care is in our long term plans, just not our short term plans.
Good to hear. Thanks for responding, and best of luck to you!
I thought CA residents were required to have health insurance? Do you just pay the penalty on your taxes since you don’t have it?
Yep, that’s a new thing they just put in this year I believe. Penalty will have to be paid in my 2020 state return, unless we can get exempt for low income. It’s a monthly penalty, so if we’re covered for 1/2 the year we pay 1/2 the penalty.
No health insurance. Yikes! Last year, 2019, my friend was diagnosed, out of the blue, with breast cancer. Chemo, surgery, all kinds of doctor appointments, medications, etc. Thankfully, she was covered under a MN state plan, which has excellent coverage. If not, she’d be broke. Couldn’t work, so out of income for the year.
Please, please reconsider this decision! If you have lower income, then I assume you’d qualify for one of California’s plans (I’m not familiar with their choices). Having that peace of mind should something come up is worth far more than paying a penalty on your taxes. Your wife rides a bike. It only takes one bad situation to create an enormous nightmare, or ruin your life.
Thanks Carol! Sorry to hear about your friend and so glad she was covered for that horrible experience! We are looking at CA options :)
I have managed to save more money during the Covid-19 situation. We were just talking about it yesterday that it brought very little change to our world. We have not missed any work, only 113 cases in our county (we are now in 4th phase of opening), we got money from the government which we put into a few house repairs/upgrades and really do no shopping. I have had a few birthdays where a card and $ is given for a later date. My saved money is sitting in the savings account/emergency fund because I am not sure how soon this “new normal” is going away. It also doesn’t help with this be a CRAZY election year….yeah not feeling to secure.
Glad to hear you’re stashing the cash during this weird year! Our county is doing the opposite… LA is going back a phase – I think we opened up too early perhaps :(
Be Well ~
Goals Met/Opportunities:
(listing in case some of these ideas help others with things they may not have thought of. And it helps to recognize the “wins” amidst other losses.)
–used each child’s $500 stimulus (minus a tithe) to add to their college fund in addition to monthly contributions. TImed it decently and they’ve recovered to January levels.
–Made adjustments to max out our HSA this year for the first time (Husband and I are each on our own high deductible plan with employers willing to contribute a little to our HSAs. Had to do some math so that 4 sources of input into HSAs meets but doesn’t exceed the max. Trying to build up our HSA to be 2-3x our yearly OOP max.
–Invested excess HSA money and now have enough stashed to pay for braces for 2 kids in next 2-5 years. If we have low-cost health years, will have enough for the 3rd.
–Met goal of saving $10,750 in cash for a roof replacement thanks to no daycare costs since March, part of our stimulus, and diligent monthly savings.
–Adjusted daycare FLEX being withheld from paycheck so we didn’t lose it after daycare expenses went to $0 in March. Also adjusted tax withholdings since we won’t get as much of a tax break due to less daycare FLEX being withheld.
–Refinanced our 15-year mortgage to 2.5% without extending the life (kept same loan payoff date of 13 years from now). Paid cash for the closing costs of $1200.
–Kept a consistent max balance in our checking account to earn the 3.2% interest and put any extra savings in a high-yield savings.
–Gave several hundred dollars to local needs/families during Covid on top of our usual giving.
AWESOME!! These are wicked examples of making the most in a tough situation! Love the fact you are giving back, and teaching the kids about tithe.
This is awesome! Thank you for sharing. Your post has inspired us to look into refinancing. Quick question- i have never heard of keeping a consistent max balance to earn the 3.2% interest. Which bank are you with? And a high-yield savings would still be a bit low nowadays, right? Maybe 1%?
I’m also curious- how do you get your closing cost so low? I’ve just called and asked and all 3 companies I just called had closing costs of at least $4000. Thank you!
Hi,
I wonder how people around here gift stocks? I’d like to gift stocks or an investment account with a small balance to a kid graduating college (22yo).
What are the practical ways to do that?
Thanks,
Tali
Hi Tali! Pretty easy if they’re already over 18… If you already own the stocks or a small account, your brokerage firm has a process to transfer those positions over to another person (It will require them to set up their own brokerage account with their SSN, etc.). If they already have a brokerage account, you can transfer from your firm to theirs as a gift. Each brokerage firm has a different form and process to do it. Either way, you’ll need to involve them to accept the transfer.
One thing to note… Once you gift the stock, it is irrevocable. Meaning, the person you gift it to has control then to sell/trade/cash out whenever they want. Depending on your relationship with them (and if you envision this being a long term growth gift) perhaps consider keeping it in your name until you want to transfer it.
Thank you !
I love the idea of gifting stocks. I did something similar for one of my nephews. Also love your postings. You have a similar blog personality to J Money so the crossover was not jarring.
Also is it a Save the World thing for your choice to adopt? I have considered not having children and adopting because of over population (plus never wanting to ever go through a pregnancy). However, adoption is so bloody difficult. So many children needing to be adopted but the process is too complicated so I just never bothered.
Thanks Alicia! Yep, there are a ton of kids in this world that need a good home. Globally, and locally. I think there are pros and cons of any which way you expand your family. Skipping pregnancy sounds cool, but I’ve also heard women say it’s one of the highlights and such a beautiful experience in life. My wife has no preference, and we also have relatives who’s kids are already in the 3-4 year old range. Ideally, we could adopt kids that are similar ages, so they are the same age as their cousins and other kids close by.
So far the adoption (and foster) process for the county is overwhelming and scary. But, that doesn’t scare us off. If other people can figure it out, we can too. :)
But…. it’s a pandemic. Covid can cause strokes in people your age. Seriously – I have a friend who is 28 and had a stroke from the disease. And it can cause permanent organ damage. And no one knows what the long-term effects are. This seems like a seriously bad time to skip health insurance.
Yep, something we will need to constantly re-consider! Everybody is vulnerable :(
I was scheduled to take sort of a mini retirement just as shit hit the fan! Talk about timing. So looks like it’s on hold until this thing ends.
Yes, my time off after a decade in the corporate world was basically ruined. However, there was a huge upside. I invested a boat load in the stock market from March until today.
Yeah the market dip provided a wicked opportunity for those saving and investing. Just think about how much stronger of a position you’ll be in when you actually do take your mini retirement :)
How much are you asking for the car?
I think $7k is what we’ll ask online. We’ll be traveling a lot through July so probably will actually post in August. I found a new thing online through Kelly Blue Book where they’ll offer you cash for your car at a local dealership. My cash quote was ~$5,500 so that’s a cool option we can fall back on.
I almost never comment on blogs. But as a health care provider AND a woman who was diagnosed out of the blue with breast cancer at the age of 33, I also feel compelled to raise a red flag regarding your lack of health care insurance. A diagnosis of cancer, or a bout with COVID that lands you in the ICU could deplete your savings or worse, bankrupt you. And if you are diagnosed with a chronic illness and then the affordable care act goes away, you may have no protection for pre-existing conditions. The most inexpensive plan to cover major medical would be better than nothing. My two cents. Otherwise, I am a long time reader and have enjoyed your writing this month!
Thanks PR. I’m so sorry to hear about your cancer experience, and I really appreciate you commenting and sharing. Also, thank you for being a healthcare worker and your efforts in this crazy time!
If you are not going to have health insurance could you get a FSA or HSA with one or your employers? On your auto policy you should consider increasing your medical payments (usually covers those in your vehicle, if you a passenger in another vehicle or a pedestrian, verify with your insurance company) or it may be called PIP to a higher limit, and make sure you have Uninsured and Underinsured Motorist coverages’ this will go toward injuries in your vehicle, and these pay out primary. Some car insurance companies will let you put storage coverage on a vehicle, or lessen the usage, or both and that way if there was an emergency you can call and add the coverages you need for driving on the vehicle. I would agree with the others to reconsider health insurance even it is a high deductible. I used our Stimulus check to pad savings account, itching to pay off a vehicle, but holding off for emergencies. One of my teenagers is cooking more, which I am very thankful I hate cooking. If there a such thing as gaining the Covid 19 (aka 19lbs) I think I have. I need to watch what I eat, and don’t eat out of boredom and remind myself I can’t eat like my teenagers, haha.
Great points! I’ll check with my auto insurance on these options. Great tip! I think everyone’s gained weight staying at home :) You are not alone.
Great post Joel. Adoption seems like a pretty good route and it is great that you will be making a huge impact on someone else life! Kudos!
My net worth has grown a lot in the last six months but over Q3 I am going to be taking my foot off the gas a tiny bit to put some investment into personal development (although most of my money will still be going into Vanguard).
Best wishes!
Josh
Personal development is always a noble investment. One of the secrets of the truly wealthy :)
I don’t know about tracking alcohol spending… sometimes ignorance is bliss! haha good list though!
It’s kind of fun though… I used to set myself a HUGE alcohol budget (i really enjoy it, so why not) and would try to max out every dollar in it. I’ll have to share some figures in a future post :)
This the first column I’ve read since JMoney left. I can’t even imagine taking advice from someone who doesn’t buy health insurance. Although I suppose Mr. Money Mustache is also playing that game. Madness.
Yeah it seems I’ve got a higher risk tolerance than others. I’m certainly not opposed to health insurance, and we will eventually get it in the longer term, but it’s just not one of our short term goals rn. Any advice should be taken with a grain of salt for sure – even MMM’s!