I went ahead and reviewed my net worth changes for 2019, just like I did at the end of 2018. Our net worth went up a lot more this time compared to last time. Which is exciting. But pretty much all of that increase was due to the stock market. In the grand scheme of things that seems good, because if I see significant gains in my investments, then I’m on track for being financially independent, right? Letting my money make more money for me?
So yes, the biggest increase in our net worth came from the gains in the stock market. And also from contributing to our 401ks and IRAs. When I logged into my 401k on December 31, 2019 (like the personal finance nerd that I am) it said my personal rate of return on that account was almost 26%. This is bonkers. It still slightly worries me seeing that growth because, hey, it could also have gone down 26%. Volatility makes me nervous, but we’ll stick with it and keep investing through the ups and the downs.
Let’s review all the money categories:
Total cash (checking and savings): went down. Which could be expected, since we made 3 big purchases and pulled money out of our “sinking funds” to do it. The good news about this drop (if you can call it good news) is that the drop in cash was $X thousand (keeping it a mystery) smaller than the amount we spent on the purchases. Translation? If we hadn’t made these big purchases (and we don’t plan on these same expenses any time soon), our cash would have increased by about $X thousand. (alternatively, we probably can put about that extra amount into retirement accounts next year) So, here’s hoping we don’t have too many big expenses in 2020!
Investments: went way up. We contributed to our HSA, 401ks, Roth IRAs, and 529s. Technically the 529s aren’t “ours” (they’ll go to our kids when they’re ready) but for now since they’re categorized as investments in Mint, we’re calling them that. We contributed the maximum allowed for our HSA. We contributed beyond getting the match but NOT maxing out 401k. I plan on increasing my percent contribution by the same percentage as whatever my next raise ends up being, so I won’t see much of a difference in my paycheck. We (kind of) maxed out our Roth IRAs (I think actually we both still need to contribute for 2019 (before tax day), but we contributed the max in 2019 for 2018). We put some money into both kids’ 529s but nowhere near the max. This is an area we need to re-evaluate, since at the rate we’re currently contributing, their accounts wont be super helpful when it come time for them to access the funds for school.
Car values: went up. Which is not surprising, since we bought a new car. But since we don’t actually intend on selling the car, and we plan on driving it for as long as it will let us, it’s kind of a silly number for us to pay attention to. My car has quite a few miles on it, but we’ll build up another sinking fund for when we eventually need to replace it. Hoping both cars give us a lot of years of safe driving!
Overall, we could be putting more money into our retirement accounts, but of course we have two quite large monthly bills. Living in a high cost of living (HCOL) area like we do, things end up being a lot more expensive (plus, you know, a bit of lifestyle inflation). Between our house and daycare, we spend A LOT.
In fact, a few weeks ago I tweeted out how much we spent on childcare in 2019:
Just reviewed the numbers: amount paid for childcare for our two kids in 2019: $45,841.80
— Stephanie (@StephTheBlogger) January 6, 2020
Yep. You read that right. Almost $46k for daycare last year. And it’s going to be similar again this year. We wont see a big decrease in childcare spending until our son moves up to the next age group at daycare, or when our daughter starts kindergarten at the local public school. So we probably won’t be maxing out our 401ks or paying extra on our mortgages until we have more wiggle room in our budget.
As a side note, that tweet generated A LOT of conversation. “Conversation” may be generous in some cases, as a lot of comments came with some pretty rude remarks about me and my choice to work rather than stay home with the kids. Many couldn’t believe daycare could cost that much. Also a lot of people seemed to think I was asking for advice? I was not.
Luckily, a lot of great people also came to my defense (and defended working parents, and working moms in particular). They helped point out plenty of benefits of daycare. And wrote about why they value daycare. Some even just shared how exhausting being with your kids can be.
If you’ve been reading my blog for awhile, you know that we thought very carefully about what our childcare would look like. Kids can end up costing quite a lot! So it was definitely frustrating hearing from strangers passing judgement on our decisions as if I was being selfish and uncaring about my kids. I love my kids so much it’s ridiculous!
Mortgage: Only slightly less since most of what we paid was interest and taxes (oh, the pains of those first few years of a 30-year mortgage!). I look forward to the days when our payments will go more towards principal than interest…
So, how do I feel about 2020? We’ll be making a few small changes, but honestly I don’t have big plans to change things. So much of my finances are on autopilot now, so we basically will keep on the same path for now. I know we’re doing well, which is quite a lucky situation to be in.
How did your 2019 go, moneywise? Or in other categories? What are your big plans for 2020?