Net Worth: January 2021

Welcome to my monthly net worth January 2021 edition.  Another month has come and gone, which indicates a need to review the changes in my net worth. For all of the new followers, welcome! I track my net worth monthly to see where I am in comparison to my annual short term goals.  Additionally, it is an opportunity to see my progress towards reaching my long-term goals.

January 2021 Personal Update

Before I jump into the details of my net worth in January 2021, I will share some personal updates.  What happened in the month of January for The Financial Engineer?  Well, after the holidays I realized we still did not receive our family portraits from the photographer.  This was about two months of waiting.  I reached out to her and discovered she did not receive payment.  Apparently, Venmo retracted my payment to her.  I assume my authorization was incorrect through the app.  As a result, we did not send out our family's annual holiday greeting card.  However, we saved money by not doing so.

We started the month off celebrating the New Year.  However, this year was different due to COVID.  We spent the evening watching an awkwardly positioned times square.  As such, the live performances had no audience in front of the stage.  Thank god we are leaving 2020 for good.  Like most, I did not leave that year without some additional wrinkles.  Not to mention, the booze bill increasing!

My oldest daughter turned five this month.  Undoubtedly, we celebrated in fashion.  The day was spent chasing each other with light sabers, as the theme was Star Wars.  Additionally, the celebration included the destruction of a piñata filled with candy. Apart from this, the cake was phenomenal. Chocolate cake with fresh strawberry filling in between the cake layers.

Our youngest is beginning to teeth.  If you have never witnessed such an event, you're lucky.  Let me paint you a picture with my words.  Envision your alarm's volume set to full blast, and going off every few hours throughout the night. Indeed, it is enough to make you age 5 years in about 2-3 months.

Like most, we established our annual financial plan.  I am dumping gas on my savings and investment rate this year.  It is still a goal to invest in a short term rental this year.  However, I will not force a less than favorable investment.  The numbers have to show an absolute money maker.  This year I plan to grow my net worth by $85,000!  Stay tuned into the website to see how I progress on this stretch goal.

This month was also a bit troublesome.  My mom was diagnosed with breast cancer.  Undoubtedly, this is a fluid situation.  There will be a lot of tests and evaluation the next month.  Nevertheless, she is being extremely positive throughout the situation.  We plan to support her with anything she needs throughout treatment.

January 2021 Professional Update:

Our office is extremely busy with various projects.  The lessons learned and network created from helping out another regional office is becoming useful.  It feels as if each week has a project submittal deadline. Accordingly, time has been reduced to focus on other obligations.  Nevertheless, I am still focusing on the goal to acquire property for short-term rentals.  I will soon share a post on the business model I am considering to form to own and manage the property.

With the increase in my working hours, comes a decrease in time spent on the side hustles.  Again, this month had almost no income from side hustles.  I would still not work side hustles, as there is a high in COVID cases.  It is even more important to stay healthy for my family.  The side hustle income is currently not worth catching the virus.  As such, the extra time will be focused on my family.

Now, lets dive into the details of my net worth for January 2021.

January 2021 Actual vs. Budget Spending:

This month's spending was similar to last month's.  Please note, each budget section (listed below) is based upon my salary.  It does not include any other income sources.  The thought is to save all other income 100%, and not include it in the annual budget.  As a reminder, I break out my budget into 3 categories:

1. Fixed Costs
2. Financial Goals
3. Flex Spending

Now, let's take a dive into the difference in fixed costs!

Fixed Costs:

The HSA contribution was slightly adjusted this month.  The typical contribution will be the same in February.  I am reevaluating how many bank accounts I have.  There will be additional accounts added this year to manage savings for all my single annual purchases.  For example, I will have a savings account for our annual recreation center fee.  These accounts will help me manage large, one time payments.  Subsequently, the budget spreadsheet will be adjusted to accommodate these accounts.

Without a doubt, I will max out my HSA this year.  I will also contribute more to my 401k.  Doing so will lower our AGI.  Furthermore, our tax obligation will decrease.

Next, let's dive into my Financial Goals.

Financial Goals:

Great increases to the children's 529 occurred in January.  This was fueled by an additional $70 contribution into the accounts.  I am currently contributing $140 / child each month.  With this contribution amount (and assumed 7% annual interest rate) each account should hold $60,000 in 18 years. However, it should be noted, the 529 accounts are not reflected in my net worth.  Curious to know why?  My net worth tracking page explains it all!

I did not reach my monthly saving goal for the short-term rental.  This was due to the reduction in the side hustles.  I anticipate my side hustles to remain slow for the remainder of the year.

As previously mentioned, I am adjusting my management style for liquid savings.  I will be placing large, one time payment savings into individual accounts.  These line items will continue to take a small portion of my income each month.  They will slowly build up throughout the year for the large costs.

Thank goodness I paid off the tires for my truck.  This did not come without a large payment to my credit card.  I tried to maintain a strong liquid cash position.  I did not use any of my emergency fund for the tires.  However, I will be contributing a little bit of my income each month to a car maintenance account I will open within the next few months.

Lastly, I will share the flex spending evaluation.

Flex Spending:

I always try to meet budget in my flex spending.  This section consists mostly of wants, and not needs.  My flex spending was obliterated by the photographer fees for our family photos.

Well, we did not only did I pay for the photographs, but we ate out way too much.  I always seem to struggle with meeting my eating out budget.  This budget is set at $150 every month.  I would like to meet this portion of the budget 9 out of 12 months this year.  It may seem pointless to not meet the budget every month, but I have to start somewhere.

The shopping budget was not met either.  This was due to the birthday celebration for my daughter.  I will gladly exceed the budget for my daughter's birthday, and not save as much.  I cannot forget my "why."

Let's wrap this month's overview up!

Overall January 2021 Net Worth:

Comparing January 2020 with January 2021's net worth is exciting.  The year-over-year growth was 44%.  This is decent growth.  Especially, when we were thrown into a recession from the pandemic.  The year of 2021 will set a new record in an increase to my net worth.  I have a record of growing my net worth by $70,000 in one year.  However, this year will break that record!

As always, I have continued to put money into the 401k and IRA accounts. I have focused more attention into the short term savings for the real estate investment. I am staying the course and resisting the emotional decision pressing me to reallocate the investments.  Who knows when or how the stock market correction will happen?  This is why I am not trying to time the market.

I have increased my annual contribution to my 401k to 11%.  I will also increase my contribution to my Roth from 2% to 4%.  The short-term real estate investment will hopefully become reality this year.

The Financial Engineer's January 2021 net worth is now roughly $172,577. The change was driven by a reduction in my debt, and increase in income from my engineering job.  My HSA grew by $120, respectively. The S&P 500 grew, and as such, so did my 401k.  Additionally, I made some individual stock purchases that grew by nearly 200%.  I know, I went against my nature and purchased individual stock.  This was out of character, however, I knew the company had huge growth potential.  It appears to be working out, so far.

Overall, I am extremely pleased with the massive increase in my net worth.  I will continue to learn about short-term rentals and metrics for the investment.  I will be ready for the perfect opportunity.  Again, it should be noted, the value in my daughter's 529 plans are not reflected in my net worth.

My January 2021 savings rate was 4%.  Contrary, my investment rate was 18%.

In Conclusion

I was fairly accurate with my prediction for January 2021.  Historically, a lot of my growth occurs in the last month of a given year and into the first quarter of the following year.  I anticipate February to show a large increase in my net worth as well.

How is your net worth looking?