I am finally setting my next bigger picture retirement goal.  It's been 3 years since we hit our $500K retirement goal.  I drafted this post in January (have been slow to publish) and so I'd say we took a 2.5 year breather re: retirement goals.  Wanted to let the stock market rebound, let college sort out, etc.  Real estate is still a mess.  I suppose we've decided that part is moot until we decide where we want to settle. 

A lot of my "meh" feelings about it has been the markets.  At current, the smaller homes in our neighborhood are selling for the same price as our larger home.  (This renders downsizing completely useless.  In addition to this, our property taxes and utilities would increase.  I would have been okay with that to pocket $200K, but makes no financial sense in the moment.)  I think that doubling our last retirement goal in 5 years was doable, but it was just kind of depressing while the market was down.  & of course, the housing thing was a compounding factor because if we can't cash out $200K to throw at retirement then that's $200K more we need to come up with.

In the meantime, we mostly figured out college for both our kids.  Still some financial unknowns but I think it's about 90% more clear than it was 2 years ago.

Ideally, I'd like to put less emphasis on retirement savings.  But the reality is it's just not efficient to lower retirement contributions.  After pondering for a couple of years and going more with the flow, I can see we won't change much.  Will continue to contribute to work retirement plans up to the match and will continue to max out IRAs.  Not sure how successful we will be with increasing IRA limits and two in college, but will keep trying.

That said, our $500K retirement goal (by 45) was a big stretch goal.  We are going to continue to hit things pretty hard, but...  I am no longer interested in the stretch goal being the priority.  

Note: Age 45 goal was 6x salary

So our new goal will be more realistic:

$1 Mil in retirement accounts by age 52.

This presumes 6 years and a 7% rate of return.

I do think that 'thinking it' is 90% of the battle, and I think is some of why I wrestled with setting a more conservative goal.  In the end, I am just setting both the realistic goal and the stretch goal.  The stretch goal is to hit $1 Mil by age 50.  The stretch goal is a stretch goal, but I do think it is possible.  I am doing my part to write it down and believe in it.  Mostly, I have other priorities and don't want to sacrifice too much for the stretch goal.

Along the same lines, I don't know how I will feel about catch up contributions when we turn 50.  My gut feeling is "meh".   The whole point of making retirement *the* priority in our 20s/30s is that we don't want to spend our 50s catching up.  But if I really think about it, I am less of a fan of our retirement work plans and have no plans to ever max out.   I do prefer self directed IRAs and I can see taking advantage of catch up space.  Which is just another $1K per year, each.  Once our kids fly the nest, I am sure that will be fine.

Other than that, our bigger plan is just to work less.  Our expenses should drop considerably when our kids fly the nest.  & so that may be a situation where we could max out everything (and do all the catch up contributions).  But the bigger plan in our 50s is to work less.  Not to save more.   More likely will be cutting back work hours and lowering retirement contributions.  

We turn 50 in 2026.   That will probably be a bit of a transition year where we pay the last of the college expenses.   

Our net worth increased by $90K in 2023.  This works out to $25K retirement contributions & a $65K increase in stocks.  I am depreciating our autos aggressively but that is offset by mortgage paydown.  Home values remain steady.

Re: my sidebar big picture goal, this leaves $30K to come up with in the next 3 years.  

I am looking it up and I have $32,000 of kids' gift money sitting in investments in our name (included in our net worth).  In addition to $38K I have loosely earmarked for college.  That's $70K we may be drawing down over the next 4 years.  So it may be more realistic that we need to come up with $100K (30K + 70K) over the next 3 years, to stay on track.  

Estimate Net Worth Change for 2024:

Mortgage: Paydown $10,000  <--Regular payments + $2,000

Retirement: Contribute $24,000

Investment Gains: $26,000  <---Investments doing the hard work for us

TOTAL INCREASE: $60,000

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.

I am just presuming that other savings/investing and college spending will mostly be a wash.  As I type this out, just wondering aloud if I should adjust this estimate downwards.  But as I think it through, 2024 will likely be a wash.  It's going to be a much bigger college hit in 2025 or 2026.

Edited to add:  Originally reported a $85K net worth gain but significantly underestimated my 401K gains in 2023.  Holy cow!  

Our net worth was up $75K for the year, last I looked.  Anything can happen...  I only track/document on the last day of every year, so will see where we end up.

I delight in these years when spending seems a little crazy but net worth surges ahead anyway.  We've probably had more years like this since our investment gains have outpaced our contributions.  Once we hit that tipping point.  

Looking closer, it is just retirement fund gains.  Everything else has been pretty stagnant.  Retirement is up $75K.  We contributed $25K and the gains were $50K.

Otherwise, didn't make much progress re: massive expenses this year.  

Our net worth decreased by $65K in 2022.  This works out to $15K cash spent (college, new mattress, MH's movie and film festivals, etc.) & a $50K decrease in stocks.  I am depreciating our autos aggressively but that is offset by mortgage paydown.  Home values remain steady.

Re: my sidebar big picture goal, this leaves $120K to come up with in the next 4 years.  Considering that our goal was to increase net worth by $60K every year...  We are still very on track.  What goes up, most come down.  We started out this goal with some prosperous years, and of course expect to have some down years.

I am looking it up and I have $35,000 of kids' gift money sitting in investments in our name (included in our net worth).  In addition to $40K I have loosely earmarked for college.  That's $75K we may be drawing down over the next 4 years.  So it may be more realistic that we need to come up with $195K (120K + 75K) over the next 4 years, to stay on track.  

Estimate Net Worth Change for 2023:

Mortgage: Paydown $10,000  <--Regular payments + $2,000

Retirement: Contribute $24,000

Investment Gains: $22,000  <---Investments doing the hard work for us

TOTAL INCREASE: $56,000

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.

Retirement gets a boost re: extra $1K we can contribute to IRAs in 2023 (new contribution limit), in addition to getting a raise boost.  We both do 9% to our 401K (with match), which will be a bigger dollar amount re: 2023 raises.

Overall, I am happy with things.  Our asset allocation is appropriate for our risk tolerance.  We were also able to keep our net worth at a solid seven figures.  

I am memorializing goals in my sidebar.  I kind of like the format I used last year, so will stick with that.

Pay cash for college ✔

$10K to Savings ✔

Final tally was $11,412.  The plan was to use this money to pay cash for college.  At the end of 2022 we had roughly -$0- cash plus emergency funds.  So that's about how it sorted out.  That we had just enough to cash flow college.

$2K to Investments ✔

Funded with snowflakes.

I topped off with $100 from MH's income, to make the full $2K.

9% Income to Work Retirement Plans ✔

MH and I both contribute the minimum for 401k match.  The 9% includes employer contributions.

$12,000 to IRAs 2022 ✔

Done.  We won't fund until we do our taxes and the year is over.  But we did end the year with an extra $12K set aside for IRAs.  This is mostly thanks to annual cash gift from in-laws.

Bonus Goal that wasn't in my sidebar:

Extra to Mortgage ✔

We threw my bonus and gift money ($8,000) to the mortgage to pay down the balance to $99,999.  Woohoo!

The $8,000 extra payment shaved off 1 year of payments and $4,600 interest.

Why $8,000?  I did want to hit the psychological milestone of being done with six figure debt.  But this also puts us down to a total of 32 years of mortgage on our current home.   While my bare minimum goal is to knock that down to 30 years, the recent big chunks will allow me to put the mortgage on the back burner during these college years.  I can whittle down the last two years with much smaller snowballs.  I guess my bigger goal is to not (feel the need to) throw bigger chunks to the mortgage for a while.  This goal was satisfying on many fronts.

This was just more of a hope or a wish, versus anything that we would have been able to achieve with our income.  It wasn't on my sidebar, accordingly.  

Edited to add:  We ended up funding only one IRA in 2022 ($6,000).  I used the other $6,000 for Invisalign for myself.  It was a rather last minute decision in early 2023.  I would have done this instead of the mortgage, if I had known sooner.  I wanted to reflect in goals, but as I type it out, the money was saved.  It was just redirected at the last minute. 

I am memorializing goals in my sidebar.  Unfortunately, this site is not allowing me to just cut and paste my sidebar goals.  So whatever, will just put some in another format and type it out.  

Pay cash for college ✔

In the end, MM(18) followed in his parents' footsteps and chose a public college that is impossible to beat from a cost/benefit standpoint.  I always say that about my alma mater but MM(18) has chosen a similar degree/route (at a different CA State college).

I suppose we didn't have any idea where he would end up last January, but we never considered any colleges that we'd have to go into debt over.  

$12K to Savings ✔

Final tally was $16,000.  The plan was to use this money to pay cash for college.  At the end of 2021 we had -$0- cash plus emergency funds.  So that's about how it sorted out.  That we had just enough to cash flow college (without tapping any prior years' savings/investments). 

We probably would have fared better on this goal (with unexpected unemployment funds and stimulus, etc.) but it was a really expensive medical year.  We basically saved $25,000 but spent $9,000 on medical, which nets out to $16K saved.

I hope this makes this our worst college year.  For future years we have all of MM(18)'s college costs saved (already) and this was a really one-off medical year.  

$2K to Investments ✔

Funded with snowflakes.

I had been feeling very "meh" about this goal.  Probably stopped throwing our snowflakes into investments once college started.  But I do count dividends and it was a really big dividend year.  That was enough to encourage me and I threw something like $250 of our windfall to top off this goal.

$1,200 to Mortgage ✔

I hit this goal with a lump sum at the beginning of the year.  

We then threw an extra $12,615 with the cash gift we received end of December.  

Why $12,615?  It was an even $20K mortgage paydown for the year and left just enough windfall to cover college expenses for the next 18 months.  

The $12,615 extra payment shaved off 2 years of payments and $9,500 interest.

9% Income to Work Retirement Plans ✔

MH and I both contribute the minimum for 401k match.  The 9% includes employer contributions.

$12,000 to IRAs 2021 ❌❓

Not sure on this one.  We sent $12K to mortgage instead.

I was very happy to get a redo.  We ended up doing 33% of my income to retirement in 2020 due to a nasty tax cliff.  Then unemployment was made tax-free retroactively and we didn't need this tax break at all.  No way I ever would have tied up so much money in 401K if I had known!  So I appreciate the redo.  Will average 21% to retirement both years, which is what is important.  Anything more than that...  Meh.  We are way too retirement heavy.

We also don't need the tax break for 2021.  Taxes ended up going way the other way in 2021.

To be re-evaluated in April.  I left it as a question mark because I just don't know.  Will see how things shake out the next 3 months.  We have until April 15th to lock in this decision.   (We are saving a lot, but MH's job is also very iffy re: pandemic surge).

Edited to add:

Also hit two longer term goals this year.  What a year!

**$500K+ in retirement funds (by age 45) ✔

**$1 Mil+ Net Worth ✔

Note:  I didn't have a timeline for the net worth goal, it's just a nice milestone.  Retirement goal was extremely aggressive when made.  I swear that "thinking it" is 99% of the battle when it comes to goals.  Not to underscore the planning and hard work, but the aggressive goals seem to work in the subconscious background and find a way to work.

I am just going to mix in current commentary with prior year commentary.

2020:  +$104,000

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.   

Blogaversary post from 5 years ago (well, some bits and pieces from that post):

We just happen to be on track to hit $1 Mil when our kids should be finishing up college. I am not comfortable dropping down from full-time work until I have a really clear picture of college plans. So I think it works out that those two goals will be hit around the same time. ($1 Mil will be plenty for us to retire on).

I expect that by 50 we will be financially independent. At that point we will just have to regroup. I am not planning to shift to part-time work the day I turn 50 or on the day my kid graduates college. But I think that is just the point in time where we will be running the retirement numbers and fine tuning the final plan. Retirement has been our only substantial financial goal since our kids were born, but in our 20s it was just so far away and nebulous. I think we are allowing that at age 50 it should be a lot more clear and turning into a much shorter term goal.

We also have to decide where on earth we want to live. We know we want to downsize and move. That's all we know. I suppose it depends where our kids and parents are at that time. It's important for us to be near family. I expect the "where" to impact our working/retirement plans in our 50s. 

Other than trying to save up as much as possible, the next 10 years seem pretty nebulous. I don't know that I know much of anything. I expect a lot of change. We've been really boring and stable since having kids, but when I look beyond their high school years we are pretty much open to anything. We don't know where we are going to live. Our kids aren't on any set college path yet. My job is very finite. MH still has no idea what he wants to do when he grows up. I have *no idea* where we will be in 10 years. I'd just like to be on very solid financial ground, and if we achieve that then the rest doesn't matter. The rest is whatever we want it to be.

Things have progressed pretty steadily.  I posted recently that we hit our "financial independence" number (or would likely hit the number this year), but it is kind of useless at this point with the real estate market.  We will need to revise our number upwards as real estate just gets more expensive.  The overall goal is $1 Mil + a paid-for home.   We can achieve this in the next 5 years.

The biggest thing that happened these past 5 years is that my job ended.  I hadn't searched for a job in 17 years and felt a lot of stress about it (I knew I would never stay once my employer retired).  But I knew my job was too good to leave early.  Hindsight 20/20, glad I held on to the bitter end.   I mean, until a reasonable bitter end.  It was difficult to find work/life balance I had become accustomed to and also was difficult to find anything near what I had been paid before.  But it ended up all falling into place.

With the job change, I was just very open to anything.  Mostly wanted to dip my toes to see if the grass was greener.  The grass is *way* greener.  I no longer work in tax, so I no longer work OT hours whatsoever.  I really wouldn't have been surprised if I went for a higher power higher paying job for a few years to get my kids through college (though otherwise so NOT me).  But I was able to find a much easier job with less hours, and I am happy with that shift at this point in my life.  The grass is *way* greener.  Overall compensation ended up the same, but hours/responsibilities decreased.  

We also figured out one half of the college equation.  MM(18) ended up going an extremely practical route, choosing a very low-cost public in-state college that will open up a lot of doors for him.  

DL(16), I have absolutely no clarity on that and will have to let that sort out over the next few years.  

I think the one surprise and big question mark at this point is the health of my family.  Not only is my parents' health declining rapidly (which is a possibility I hadn't thought much about, that they'd need so much help at this point in my life, as I expected in the short run that one could take care of the other).  Not only is that quickly changing, but my BIL has some mystery illness now.  I never expected my sister to still be alive, but with everyone else not doing well, it is for the first time crossing my mind that I might need to eventually be a caregiver for my sister.  I don't know the odds of that, but was nothing that had ever crossed my mind before.  I expect this "last 6 years of getting our kids through college and reaching financial independence" to become more challenging on this family/health front.  I don't know if I might have to take some time off work before crossing that finish line or how things will play out.

Goal Achieved:  $500,000 Retirement

I feel ridiculously "retirement poor".  Because we spend so little and need so little to retire comfortably.  

Because of this, I just felt so "meh" about fomulating the next retirement goal.  I started this post earlier but then walked away to give it some thought.  I decided I've had these feelings before.  We saved 75% of our income to get into a home (San Francisco) when just starting out.  After that, we saved 50% (all of MH's income) until we had kids.  After that we took a 5 year breather to have kids.   We eventually circled back and started to think about longer term goals.  Retirement was it.  It's just not that exciting.  Might have taken us a couple of years to get into a home and a couple of years to feel ready to prepare financiall to be home with kids.  But...  Retirement is more of a decades long slog. 

So I stepped away, thought about it, and decided my feelings were similar, today.  20 years ago, I think we were just feeling very financially comfortable and wanted to enjoy the fruits of that hard work.  This time around I am feeling very burned out.  2018 & 2019 were some terrible years for me.   It's similar, but also different.  I don't think I am going to start working half as much, while I get my kids through college.  😉

I decided that I don't want to make a goal and I am going to take a breather.  It will be very relative.  A relative breather.  We were saving 20%+ to retirement after MH lost his full-time job and we had our first child.  It will be same now (20%+ to retirement).  I think a lot of our "retirement poor" is just a side effect of financial and tax efficiency.  It doesn't make any sense whatsover to give up employer match or keep money in taxable accounts (that can be moved over to ROTHs).  And...  MH is looking for a full-time job.  Has absolutely nothing to do with money.  Is more about personal fulfillment.   This breather is more about taking a break from some longer-term goals.  We are also talking about investing in some non-financial things, taking some new risks. 

I am just going to leave the "$500K retirement at age 45" goal in my sidebar.  See what the market does, and where we are in another year.  See where we are at when we are 45.

I think we are going to give it 6-24 months.  In 6 months we should have a lot more clarity on the job front (MH).  If he does find a job, maybe we just buckle down and finish saving for retirement, get our home paid off.  I don't know.  What's relevant in 2 years is that DL(15) should be making his college decisions.  All of this is a lot of limbo to sort out.  So we might want not to expend too much energy on longer term plans until this stuff starts to sort out.  

This year is going to be expensive.  I am just trying to let it go and roll with it.  We are just talking about a lot of things.  This post is too long already, so will get to these things later.

Not related to our "taking a breather feelings" whatsoever, I later saw that our home had gone up 40% in value over night.  !!  We live in a city that everyone is moving to.  

It's...  depressing.  We got priced out of the city we grew up.  Apparently we are doing the same to our kids.  It makes it really impractical (too expensive) to downsize and stay here.  It's not all bad.  It makes it more practical to move closer to our parents, if they do need more help.  We are just along for the ride.  Not planning to get off this ride for another 2 years (when DL is done with high school).  I guess this is just more limbo getting thrown into the mix.  

Yeah, it's completely absurd.  We have bought in two completely absurd markets.  I...  Don't know what this is.  It's something that has never happened before.  I saw some home sold in our neighborhood for $750K last month.  I then saw Monday morning that there were people camping out and lining up for new townhomes ($1.2 Mil) in the Bay Area.  I mentioned to my boss (I work for a home builder) and he started showing me graphs of the current market.  He's just, "This has never happened before."  The housing inventory was already non-existent before the pandemic.  So that's the fuel and throw on the fire of everyone trying to move here.  I keep seeing articles that it's also impossible to find rentals here.  

{Home construction was not labeled "essential" in our state but was labeled "essential" in our region last March, which is why work has remain very unchanged for me}.

I share because it's probably pretty likely we have hit our "financial independence" goal, with this turn of events.  {Current net worth is $1.2 Mil}.  Which is of course meaningless.  Our "financial independence" goal was $1 mil plus a paid-for condo.  It's not $600K investments + $600K home equity.  (That $200K condo is now a $400K condo, with mega property taxes).  & it's made further moot by this not being a "financial independence" goal while still supporting kids and having a mortgage.  We have to cross these other things off our list first, before we can hit "financial independence" with $1 mil.

So...  I will work on re-formulating that goal.  Again, might just step away from that for a year or two and see where this roller coaster ride ends up.  I might not formulate a new goal for another year or two.  But off the top of my head, it might be $800K investments, as a new goal.  If we expect to cash out roughly $200K when we do sell this home (and downsize).  All of this can change so dramatically based on the stock and housing markets.  It may just be a goal that needs significant re-tweaking over time.  

Crazy Crazy Week(s)!

Things just went from 0 to 60.  Schools are opening back up (in person) this week.  We hosted guests for the first time in a year (St. Patty's Day dinner).  MH got jury duty.

& then College...

So far, we have ruled out the more expensive and more far away private colleges.  It's official that MM(17) will stay in state.  It's a super rough year on the college front, I already mentioned.  But the east coast college had 70% more applications that prior year(!) and dropped their acceptance rate from 8% to 4%.  Was a stretch anyway, but I think we are pretty shocked he didn't get into his #1 choice (LA college).  Have had some time to digest and move on.  Honestly?  We were supportive because MM was MM.  We were discussing *if* #1 college choice was $40K per year, we would make it work (with help from Grandparents).  He is extremely driven and he knows what he wants to study.  But...  Public school is so much better for *our* personalities.  Private school was so...  Complicated.  In the distance, in the cost of travel.  How MH couldn't work at all because it would just make it more expensive (he'd net nothing after increased college costs and taxes).  How we probably couldn't accept gifts, it would then be too prohibitively expensive.  I kept calling it "mushy gushy."  Public college is just so much more straightforward.  I literally wrote in my college comparison spreadsheet, "Unlimited Income and Assets!" for the public schools.  The cost won't drastically change if our personal circumstances change (for the better).

MM(17) is totally cool and fine.  He is not emotionally wrapped up in college choices.  Still has *no idea* which college he wants to go to and is a hard enough decision with just two college offers in hand. 

{Still waiting to hear back from one private college.  It's the least expensive and mushy gushy.}  

All remaining college options cost roughly the same.  One might be free tuition, the other might be free room and board.  But it all roughly comes out to comparable price (over 4 years) for all the options.  & the least expensive option has some other trade-offs.  Cost is removed as a deciding factor, for what's left.

This was my last post re: public college tuition.

Tuition and fees at our alma mater:  $31,000.  <---  That is total for 4 years (sticker price)

In addition, there is a state grant that I believe was $2K per year.  & MM is a kid who will get some scholarships.  I'd be surprised if we paid more than $15K?

In the end, the other State college is more expensive (full price is $40K; $10K x 4 years) but gave MM a substantial scholarship.  Our cost:  Probably $0.  It depends how the State Grant shakes out.  & he won't need a car there at all, which saves a lot of money.  So probably would be the most expensive school (of the schools he has been accepted to and we are waiting to hear back from), but they just leveled the playing field with a merit scholarship.  

It looks like college is probably going to be a small blip for us financially.  I am just going to enjoy that, for now.   😁 Am not going to bother worrying about any finer details until a college decision is actually made.  When the college decision is made, will work through all those finer details.  If MM needs a car, what we expect MM(17) to pay for, if we even touch his college funds (probably not), etc.  

Edited to add:  Don't have to buy MM a winter wardrobe, don't need to worry about travel/airfare costs, etc.  The cost savings are significant all around.

I feel like every time I look at the news, there's more money raining down on us.

{I am so glad I haven't contributed to 2020 IRAs yet, or filed our tax return.  We would have had to change/amend everything.}

It seems likely this is the first year (ever) that we will go on extension.  Our taxes are very simple.  But...  As much as I had come to abhor the ridiculousness and tradition of 12/31 retroactive tax changes (which made my life mostly impossible when I worked in tax).  Making tax changes March after the year is over, is just absurd.  😠 I hope it's a 'once in a lifetime' pandemic thing and doesn't become the new way of things. 

Mostly irritated because, we really really really could have used that extra $11,000 for college.  But I put it in my 401K to avoid a tax cliff (50% tax rate).  Nothing we can do about it.  That is something I can not change.  

{This commentary is in regards to retroactively making first $10K-ish of unemployment tax-free in 2020}.

I can revise this when new stimulus is finalized, but it looks like this is probably how things will shake out.

First $10,000-ish of unemployment will be tax free for 2020:  

Tax savings 2020:  +$1,700

Child Tax Credit changes:

Tax savings 2021: +$1,750?**

At the lease, $1,000 tax savings for DL (increased child tax credit)

**Oh boy, this one is going to get complicated.  If we don't file our 2020 tax return, we will get advanced child tax credits for MM that we won't have to pay back.  At this point, maybe we just file our tax return in September (final due date).  I will have to go through the math and figure this one out.  

Thankfully, they also made this credit more refundable.  I was already targeting -$0- Federal taxes in 2021.  This could mean that we literally pay -$0- in Federal taxes but the government pays us (negative tax rate).  We pulled this off during some of our early one-income/maternity no-income years.  Our tax rate hasn't been -0- or negative since our kids were babies.

Unemployment extension:

???

I did see the latest unemployment extension being thrown around is through Labor day, or when MH's job would most likely come back anyway.

I am not sure if MH will keep looking for work or will have the patience for unemployment red tape.  We will have to run through tax and college financial aid calculators to figure out if we are getting anything net net net (with extra income).  This will be better math once we have a college decision in hand.  Unemployment has already replaced two years of his income, for reference.  We may just be happy with that and done with this red tape mess.  

Stimulus:

+$5,600

This is the amount we will probably receive.  I've never seen any AGI cutoff discussed that would affect us. Our AGI was same 2019 and 2020 (based on current tax law) and so it doesn't matter which year they pull to base this stimulus off of.  Potential new tax law just lowers our AGI even further for 2020 (which wouldn't change anything).

I actually was holding off tax filing because technically MM(17) was not eligible for the last two stimulus amounts.  It sounds like he will be this round.  I wasn't going to volunteer that he has turned 17 last year, in case he wasn't eligible for this round either.  <---This is the reason we haven't filed our tax return yet.

Phew! Thank goodness we held off.  Now, I am going to wait for unemployment taxes to sort out.  I don't want to have to amend a tax return.

I do hope they can figure this out before April 15th.  (I mean, between finalizing the bill, and getting everything programmed with tax software and IRS.  It takes time to implement tax law changes).  I don't want to go on extension, and it would be nice to know how much we could put into Traditional IRAs before the April 15th deadline.  🙄  (Depends on our AGI).

Edited to add:  This was written before I read we could get some child tax credit for MM and not pay it back, if we do go on extension.  I guess extension it is.

Total unexpected monies:  $9,050

I guess that breaks down into $5,600 expected soon and $4,700 at the end of 2021.  Minus some advanced tax credits we may have to pay back in 2022. I can't adjust my withholding to pay negative tax (or even $0 tax), so I don't have any other way to advance these monies into 2021.  But I guess it works out nicely that the government wants to advance these tax credits, July through December of this year.

If MM goes the public school route (and lives in the dorms) then that is 1000% what I am going to do with this $9,050 basically falling from the sky.   We needed to roughly come up with $10K per year.  We are going to probably pay most of the dorm costs with his college fund and it sounds like the bajillion dollars in groceries we spend (for that kid) will equate to dorm food costs.  That leaves about $5,000 that I think is mostly hyper inflated expenses (that we would be more frugal about), things MM(17) covers already (like the cost of his car), and things we expect him to pay for (books, personal expenses).  <---- He also has very generous grandparents willing to help him fill up this $5,000 bucket.  

This is really rough, but is where our heads are at with public colleges:  We will get -0- financial aid**.  I never expected any financial aid for public in-state colleges, but it's official that the financial aid reward is: $0.  (I do not seriously consider student loans as a financial aid reward).

**We are technically eligible for some automatic State grants, which sound like they may be $2k per year (for public college).  Those will take forever to sort out, so I don't know.  We are putting this in the 'not counting our eggs, but will take more money falling from the sky' category.  I expect more details in October, if he chooses a public school.

No one in our family has ever lived in a dorm (and did not go away to college, for the most part).  Though MH and I both chose not to spend our 'college money' on college, and felt we needed that more for post college housing in the SF Bay Area.  We have kept that same mindset and never really expected to use this money for college.  It's extra complicated because MM's college money is gifted from grandparents.  Too many strings and weirdness, which is also some of why I just ignore it.  So... we discussed recently and agreed that pretty much his college fund would be spent on dorm costs.  If MM is going to live in the dorms, we won't be saving this chunk of change for him to use after college.  It will be up to him.  (We won't pay it forward, if he chooses a significantly more expensive college route).

I had a lightbulb moment.  I have to back up first though.  I've gotten a few well meaning comments (over the years, in this blog) that we need to be prepared to pay for college before college starts.  ??? (& to clarify, I mean like having to pay a semester ahead of make a down payment.  Though honestly, all I see is installment payment options, anyway. We are more "pre-pay as much as we can" personalities.  I think we'd pre-pay the semester rather than deal with the hassle of more frequent payments.  But I am also hyper aware that is not normal whatsoever).  Look, I entirely put myself through college.  I know how college works.  We also have never borrowed for anything (but our home).  You don't do that just flying by the seat of your pants.  I think people are confused.  We have never tied up a penny of our money 'specifically for college.'  This doesn't mean we have no money, no plan.   MM(17) can go to school pretty much anywhere he wants to go to school, and we intend to pay cash.

Hence my lightbulb moment.  As I think through how much these windfalls mean we pretty much will be spending $0 or our own income/savings this year.  It's... 1 year down and only 3 to go!?  It's kind of blowing my mind.

I just keep thinking, "6 more years..." and so it's kind of nice to realize that it may just be "5 more years..."  College is our last big mountain before financial independence.  

I think it's official that we hit $1 mil.  !!

It feels...  extremely anti-climactic and I don't feel at all like celebrating.  But... I think it's just that it took so long (a decade) to recover from the last recession and to get back to $500K after hitting it the first time.  It's not like we are in a sunshine and roses situation right now (the world as a whole).  So I think it's mostly hard for me to find much meaning in it.

I am sure just the overall state of things is not helping.  If we could plan some extravagant weekend away to celebrate, we might.

Will see how the year shakes out and if we can still boast $1 mil when we are in a more celebratory mood.

Then...  I noticed we hit another big goal!  This one I am more excited about.

I will back up a bit.  In 2014? we made a goal to have $500K in retirement funds by age 45.  This was a super aggressive goal.  What amazes me is that how often just thinking the goal is 90% of the battle.  It puts weight on it, you believe it is possible, your subconscious takes over.  Honestly, I didn't fully believe in this goal but I did think it was possible we could reach $450K retirement funds + $50K taxable investments (earmarked for retirement).  <---- It's this goal we have reached.  Currently $465k+$35K.  Because it was the combining of two amounts, I didn't even notice when we crossed the $500K mark.  

Since forming that goal in 2014: MH found a job, we received some substantial cash gifts and the market has been on an incredible bull run.  Surpassing this goal and making it early feels like sheer luck.  

I am not ready to check off this goal.  I have two more years to make the 'age 45' timeframe of this goal.  I now think it's plausible that we can literally hit $500K in retirement funds by then.  So will keep working towards that.

I am also reluctant to make any new goals while in college limbo.  It will be another couple of months before we have more clarity on the next 4 years.  

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I did take yesterday off from work. 

2020 was supposed to be my first year (in 20-ish years) without a busy tax season.  Then 2020 went to hell.  So...  We try again?

Dec/Jan will always be crazy.  I just needed a break.

MH and I went on a pretty light hike close to home.  It was *amazing*.  It was only 1 mile to a waterfall.  We walk about 2 miles every day, and so wasn't ready to just turn around and go home.  We kept walking past the waterfall.  It had rained like crazy the night before and was pretty muddy.  I told MH, "I just wish there was somewhere we could just sit and enjoy the view for a while," not expecting that to pan out.  Turned the corner and there was a picnic bench.  !!  The view was amazing so we just sat there for probably an hour.  

{This was not *the* view, but was a view from the hike}

I am just going to mix in current commentary with prior year commentary.

2019: +$105,000! Wow, what a year! My money worked harder than I did this year, for sure.

2020:  +$104,000

2019: We paid down the mortgage by $9,000 and the rest was stock market contributions and gains. 

2020:  We paid down the mortgage by $10,000, purchased a newer vehicle, and the rest was stock market contributions and gains.

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.  

2019: 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 2020:

Mortgage: Paydown $7,000

Investments: Contribute $4,000

Retirement: Contribute $21,000

Investment Returns: $18,000 (would need 4% gain)

TOTAL INCREASE: $50,000

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 2021:

Mortgage: Paydown $8,500

Retirement: Contribute $8,500

Home Appreciation: $45,000

TOTAL INCREASE: $62,000

I am confident that we will have a home appreciation adjustment in 2021.  I did not adjust in 2020, because we've only had one home sell in our immediate neighborhood, at higher price.  I will give it some time before I update my net worth records. 

I am not going to rely on any stock market gains in 2021, to meet our goal. 

Lower retirement contributions are more realistic as MM(17) starts college.

P.S. We will likely hit the $1 mil mark with our assets this year. Just $30k to go... That will be a very exciting milestone. 

2020: DONE!  & yes, it was very exciting!  🎈🥳🎈

Not quite there with the net worth, because have the mortgage offsetting our assets.

P.S.S. Good Riddance to 2019! I wish I was more optimistic about 2020, but it's shaping up to be very difficult. I can only hope for some space whatsoever to breathe and process anything that is happening.

2020: More of the same.  Honestly, 2020 was by far the easiest year for me, of last 3 years.  Phew!  But...  What I expected to be difficult in 2020 is dealing with our parents' mental declines.  That has all kind of been put on pause during the pandemic, which means just kicking the can down the road.  Which means... I expect a very high stress and challenging 2021.  So, I once again leave a trying year without much hope for the upcoming year.

Back to the net worth 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.

Edited to add:  Need +$25,000 to hit $1 Mil net worth in 2021!  Getting so close...

I will add this to my 2021 Financial Goals

Net worth hit $900K last week!  

The value of our home had stagnated for quite a while.  People are strongly favoring smaller homes.  But...  a house on the street behind ours just sold for $570K, or about +$70K more than I have our home valued at.  That seems to have knocked things loose from a very long stagnation.

For now, just going to hope to end the year with $900K+ net worth, and will leave our home valuation as is.  If some more homes sell in that range, I might bump things up to $950K (when I increase home value by $50K).  Probably a 2021 adjustment.

If I ever had a timeline goal for hitting $1 mil, I don't remember what it might have been.  But I'd say that age 45 is shaping up to be a realistic goal.  

I also came across some financial projections that I made a while ago.

In 2011 I did a 10-year financial projection.  I don't remember why, but I made two financial projections.  One of them presumed that we stopped saving.  I think I was just fascinated by the power of compounding.  Probably that, and just planning for a worst case scenario.

2021 projection (with savings): $800,000 Net Worth

2021 projection (stop saving) $470,000 Net Worth

In either scenario, we'd be in good shape. 

In 2014 I revised my projection.  It was a 2022 Projection, updated for my goal to have $500K in retirement by age 45.  I'd say that was an aggressive goal, but the stock market has humored us.

2022 projection (with savings): $880,000 Net Worth**

2022 projection (stop saving) $625,000 Net Worth

**I made a note on this projection that we would need to keep a $100K mortgage to meet the $500K retirement goal.  For now, retirement savings is the bigger financial priority.

The 2022 projection is fairly spot on.  Getting close on the retirement #s, but not quite there yet.  We've been able to exceed the 2022 net worth projection (in 2020) due to home values exceeding my conservative estimate.

I decided to do a new 10-year projection, out of curiosity:

2030 projection (with savings): $1.5 Mil Net Worth

2030 projection (stop saving) $1.2 Mil Net Worth

I just went with a more conservative investment return, and the first thing that popped out was $1 mil (retirement), which is my 'financial independence' goal.  What is fascinating about that was I think I kind of just didn't want to know, as we face college years and drawing down some assets.  In the end, current retirement contributions and a fairly conservative investment return should get us there.  The $1.5 mil figure above did include spending down assets for college.  It presumed that I just did the minimum 5% for 401K match and that we maxed out our IRAs ($12K per year).  That works out to about 22% of our income going to retirement; I personally do count employer match in our retirement contribution %.

$1.5 Mil projection = $1 Mil in retirement + $100K cash/investments + paid-for home (after downsize).

This was a reminder to really sit down and do the big picture math when we make those final college decisions.  It's probably a necessary step in making those decisions.  Is just not something I had done to this point.

I think mostly we already kind of know these things.  (But... doing the math is a still an important exercise).  I expect this is why I've been thinking that MH is probably going to just retire if his job is killed by the pandemic.  Is nothing we have discussed, but it just feels like it's time.  It's not like he would turn down an opportunity or a good full-time job.  But...  I just don't think we are really going to see the point of looking for another job. I should mention that I did not include MH's income in any of these projections.  It's more than just the stock market, the extra income has also helped us meet some more aggressive financial goals.