I am just going to mix in current commentary with prior year commentary.
2021: +$215,000 🤯
2020: We paid down the mortgage by $10,000, purchased a newer vehicle, and the rest was stock market contributions and gains.
2021: We paid down the mortgage by $20,000, cash/investments up $75,000, and the rest is real estate gains. I mentioned in a recent post that real estate values have been pretty stagnant since the recession but skyrocketed this year. My housing estimate is conservative and will probably bump up more next year.
We were helped along with a $20,000 cash gift this year. Thus the large mortgage payment.
2019: Today we could pay off our mortgage and still have $340,000 cash/investments. For the first time, we could do this with only cashing out about 1/2 our ROTH IRA and all of our taxable investments. It's the first time we could leave everything else intact (emergency fund, kids' college, rest of retirement, etc.). I am not tempted yet, but honestly, if I had an additional $50k in investments, we could pay off our mortgage AND leave six figures in our ROTH IRA. At that point, I would probably be tempted. Especially with just cashing out at a peak. Taking the money and running. I've always said there is a tipping point. I just have never been so close to the tipping point. If my stocks go up $100k next year, I wouldn't rule it out.
2020: Today we could pay off our mortgage and still have $430,000 cash/investments.
My stocks did not go up $100K, and we have college to figure out. If not for college literally starting this year, and being so close to our $500K retirement goal... I don't think the tipping point will be until the mortgage is under $100K; we just aren't quite there yet.
2021: Today we could pay off our mortgage and still have $530,000 cash/investments. (Roughly $515K retirement funds + $15K cash would remain).
We discussed at length due to potential windfall (and the stock market being so high). But college is the bigger priority at the moment. We have lots of dollars earmarked for college "just in case". Will hang on to that money for a few more years. (MM's college situation is pretty clear, but we still need to sort out DL's college situation. No idea...)
Again, the tipping point won't be until somewhere below $100K.
2020: We need our net worth to continue to increase (on average) $50k per year to reach our Financial Independence goal at age 50.
Estimate Net Worth Change for 2021:
Mortgage: Paydown $8,500
Retirement: Contribute $8,500
Home Appreciation: $45,000
TOTAL INCREASE: $62,000
Our net worth changes never look anything like our estimate (it's rare any asset class actually has an average year). But, I go through this exercise just to make sure my goal is realistic and doable.
Estimate Net Worth Change for 2022:
Mortgage: Paydown $15,000
Retirement: Contribute $20,000
Investment Gains: $20,000
TOTAL INCREASE: $55,000
More 2020 Commentary: We have 6 years left on our "financial independence" goal. We've started out so strong, that we have 6 years left to come up with $270,000. That is $45,000 per year net worth growth that we are aiming for. I think it's nice how it has worked out. We expect to be saving less and possibly drawing down assets as we pay for college over the next 6 years. $45,000 is a lower bar than we had been aiming for initially. I expect a major push of working hard and getting college done without any debt. But... I am also feeling a lot of, "exceeded goals in recent years, so can chill as we get through the next few years." The plan is to rely on our assets to do most of the work re: retirement and longer-term future. That will be the "chill" part.
2021: We did it!! We hit $1 Mil net worth. 🥳🙌🎉
According to the bottom of my sidebar, we've hit $545K of our $600K financial independence goal. This was a 10-year goal that we have almost hit in 5 years. (The goal was to add $600K to our net worth, doubling from $600K to $1.2 Mil).
It will be realistic to get there in 2022. Will see if the stock market and real estate market cooperates.
I am personally kind of happy that we didn't fully make that goal because I can just leave my sidebar as is. Basically, I am not going to mess with it. The new goal I am formulating in my mind (to memorialize next year) is probably going to be $800K total cash/investments, to hit financial independence goal. This presumes that we pull $200K equity from our home when we downsize. The old goal was $1 Mil + paid-for home. Which will basically remain our goal. But presuming that we pull $200K home equity to get there, will make this easier to measure while the real estate market is crazy.
Of course, if we did hit that "+$600K financial independence" goal this year or if we hit it next year, it is meaningless at this point. Our spending isn't going to be realistically $40K per year until our kids are self sufficient and our mortgage is paid off. Those are the two other hurdles we have to get past for financial independence. So I am personally not in any huge rush. Also, to be clear, it's just about not *having to* work and that independence. I have my absolute dream job at this point and MH misses more meaningful work and the identity that comes with that (but is still very held back by our needier child who has yet to get his driver's license yet). I am always kind of bemused how often people finish paying for college, get their house paid off, hit these big goals and then have big career gains. But I can see how that is probably how it is going to play out for MH and I. That seems to be the track we are ending up on.