2019 was a busy year for us, but that doesn’t mean that we stopped working towards our financial goals. That is the beauty of having a financial system in place, the amount of time that you have to spend on it once it is set up can be as much or as little as you have time for.
In 2019, we paid off our mortgage, Mrs. LOTT finished a master’s degree, and our savings rate was greater than 60%.
Mortgage
We own our home; we paid off the mortgage in 2019 and we wrote about it here. We are now a part of the small group of people our age that owns our home free and clear. Being debt-free is a large part of our strategy to achieve financial independence. Our housing cost of living is no longer our main expense.
Savings rate
Our savings rate goal this year was 65% and we were oh so close. Your personal savings rate will tell you more about your finances than anything else, see the savings rate post to learn how to calculate yours.
We have been keeping track of our savings rate since 2014 and over the last 5 years, it is now greater than 50%.
Net worth
Net worth is calculated using Mint.com. Since we are both working, we are in the accumulation phase of our lives right now. We are keeping track of the trend of net worth to know how the choices we make impact our financial goals. The chart below includes home equity. While owning our home is a big part of our current strategy, the money in the house isn’t liquid. Owning your own home reduces your living expenses, but it doesn’t generate passive income.
In 2019 we paid off the mortgage and pretty much every investment class went up. We started a 403(b) for Mrs. LOTT and we have started performing Roth IRA in-plan conversions in Mr. LOTT’s account (AKA the mega backdoor Roth IRA). We are in a bull market run of epic proportions, the run will end at some point, but it wasn’t in 2019.
Other investments
We are looking for other investments that will either provide some sort of periodic income or reduce long-term expenses. Like we wrote about in the escape plan, part of our plan is to build something.
Higher education
Mrs. LOTT completed a fully online M.S. program for Nursing Education in 2019 in two six month terms. The online degree was a two-year program but was self-paced so that motivated students could finish the degree in less time. Finishing a master’s degree in less than a year is no joke, night and weekend activities were replaced with school work. Other projects and activities were put on hold, including keeping this blog updated.
Higher education right now is the definition of buyer beware. Young people are taking on a tremendous amount of debt to get a degree that might not ever pay off. But for Mrs. LOTT there is a large difference in salary between a B.S. and an M.S. degree at the same employer for the same job. The pay off time due to the increased salary will be less than one year. The M.S. has not only made a difference in the current job it opens up more employment opportunities for the future. The higher salary means that we are closer to being able to live off the lower of our two incomes, a critical part of living on the tips.
Tools
Tools are a special category of other investments. A tool is something that can produce income or reduce expenses. We plan on investing in tools that last for a long time.
DEWALT DCS334B 20V Max Brushless Jig Saw
DEWALT 20V MAX XR Cordless Drill Combo Kit, Brushless, 5.0-Ah, 2-Tool (DCK299P2)
Power tool batteries do not last a long time, they will degrade and have to be replaced before the tool wears out. There is no guarantee that the portable power tools that you buy will last. That is the price that has to be paid for convenience.
We added lights to our garage shop, we should have done it years ago.
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