2022 Personal Financial Report Card

[kgtest]

As I continue on the accumulation journey, I decided to reflect on 2022 in terms of how I would "grade/rate" our personal financial report cards for this year. Let's simplify it to how the Elementary School's would grade an early learner/student...so A (above average) C (Average) F/I (Needs Improvement)

I figure there are a few "categories" or factors that would impact our personal financial accumulation journey... Without further adieu:

Spending: C
Saving: A
Investing: A
Tax Planning: A
Health: C
Risk: C

OVERALL: B+

Lots of factors probably go into this simplified report card, but I will indulge a bit on why I graded the way I did.

Spending (C) - I feel like we did an average job at spending. There was room for improvement here, but not anything extraordinary, but also we didn't completely blow our budget. It was definitely a balancing act, and we spent mostly MORE on most categories of expenses, but we also dealt with record high inflation while keeping our own personal inflation rate below the national average. We replaced an aging vehicle which was our largest expense outside of our mortgage. I admit it probably wasn't a great time to buy a car, but we purchased with *mostly cash, and financed the rest with an interest rate prior to them rising quite high (2.1% apr on a 4yr term for ~20% of the total vehicle purchase price). We spent a lot of money on food this year, and a bit more on travel than we normally do. All of our core bills were more expensive than 2021 and we largely had little control over that. We spent a little more on kids activities, but less overall on total child care costs, diapers, formula as our littlest stopped the bottle, and is largely potty trained, with our middle child out of daycare now YES! A huge win, but we supplemented some of that with additional costs for kids activities and outings...which I feel was money well spent. Health care costs were similar to 2021 this year, with no major health incidents outside lots of COVID tests (that we got reimbursed through insurance, or obtained free tests through local school, state and federal programs). DW spent a little more on an additional mammogram because the Dr wanted to clear a concern, which turned out to just be something you can't risk. Nobody wants a late diagnosis of cancer so I think it was an unnecessarily avoidable additional expense. We traveled about the same amount as we did in 2021, but the cost of travel, airlines etc was all higher than it was last year. For all of the above reasons I give us a C and hope to improve to an A next year.

Saving (A) - We saved ~33% of our income and total dollars saved higher than another year, but we had less income to save with due to stimulus ending and me working 1 less job. In 2021 we had 5 income sources if you consider DW, my 2 companies I run, and the FTE job I had alongside the fifth source of stimulus money...but we actually saved a lot less at only 25% of our income (We remodeled our deck/yard/patio and paid a great deal more in taxes). This is why I rank us an A...but of course I would love to get to a point where I am saving 50% of our income without sacrificing our quality of life much. I think finding that balance is a WIP and I have some ideas on what to change in 2023...less eating out, more meals at home, finding better deals on travel, and generally shopping around and spending less on Wal-Mart/Target/Wal-Mart purchases. Overall I am pretty happy with the amount of money we saved.

Investing (A) - I had a lot to work with this year since we saved more than we typically do. DW and I maxed our Individual Roths, I maxed my Solo Roth 401k, DW maxed her 403b, I saved more in my Solo 401k than last year, we maxed our family HSA plan (and did not spend from it), contributed more to our kids 520s than ever in the past, and also put more money in our broker account than we ever have. We also made what I would consider largely good investment choices. We DCA'd throughout most of the year, and I contributed on some of the bigger dips, buying low with some accumulated cash when the markets pulled back in terms of relative 52 week lows. This wasn't really hard to do considering equities were basically down all year. We maintained our target AA and actually adjusted for what I would consider maybe a little more risk in terms of growth ETFs vs starting the year a little heavier than I thought appropriate with SmallCaps and MidCaps. I did a mega backdoor roth conversion since my business has a lot of losses this year. We sold our investment home at the peak of the housing market this year, to a largely cash buyer and still hold the record for identical and similar sized townhomes in that location that we sold in. I couldn't have asked for better timing there. One thing we did not do though is put that money into the market...but we are looking to do that right at the end of the year here after the FOMC meetings and earnings reports. I know I shouldn't try timing the market, but I feel there is another dip coming soon, sure I might not have hit the bottom but I am still buying at a discount from where the year started. The only thing I would have liked to have different was a positive return year, but I am still out-performing the Nasdaq by 5+% which is where I am heavily invested in. Tech hit us hard this year. Maybe I could have targeted energy or healthcare a bit more, but its not part of my Individual Investment Plan, which I largely stuck to this year. Virtual Pat on my back for this.

Tax Planning (A) - I have multiple S corps, and although I did invest a bit into the business and had to pay myself a salary, we are paying less in taxes this year on the dollar than we did last year. This is due to the many business trips, meals, and some special depreciation (along with all of our tax credits we will receive). The mega backdoor conversion from IRA to Roth will be a huge long-term win in terms of tax planning, and it was a great year to do it with so many losses against my two businesses. Sure we spent more money, but we also managed to capitalize on tax planning while doing this. We also created some future asset depreciation in our forthcoming tax years that I can take advantage of.

Health (C) - I look at this in two forms, mental and physical health. DW really gets an A for this, although she will admit her fitness plan took a hit, and she didn't go as hard as she did in 2021. I used to work out 2 hrs a day and was very physically fit, and right in the range of being healthy and not underweight or overweight. Now I am overweight, I haven't worked out as much, I have a bunch of excuses why and none of them are due to injury...so I really do call them excuses and bad ones at that. My mental health however was much better this year since I wasn't working so many jobs, I wasn't dealing with the loss of my sister and some other family issues and drama that were around in 2021. So although my physical health took a hit, my mental health improved. I just need to do a better job balancing it all in 2023 and recognize room for improvement here. I slept more this year than I have in years past. But I did also stop smoking weed last year, and continued on that journey the whole year here, and recognize my metabolism is changing a bit along with lifestyle changes and choices. I hope to compete in a 10k run, and get back my six pack and tone that I lost this year, while losing weight, and transforming fat into muscle. I slowly started getting back into this, recognizing there is room for improvement. I didn't eat as healthy this year as I typically have in years past either. I think I somewhat replaced one habit with another, eating a little more portion size and sugar, salt and carbs then I typically did. I am used to high protein and lean fats so I need to get back to that. No fast food in 2023! Less carbs, less bad fat, less sugar and salt.

Risk (C) - I put this as a C because I feel my health is at higher risk and our investments are at what I consider short term risk. I still have 10 yrs until FIRE but if I had to pull the plug this year we would face a serious SORR with such a high allocation of stocks, and our cash sitting on the side-lines not earning a return. Income potential seems to still be rising which is great. But I now have some expense risk with the kids growing older with weddings, schooling, activities etc that could really put a dent in retirement. I don't really mind all that, its why we had kids in the first place. If we real in our spending, and I start getting on track with healthier habits this risk easily moves to an A.

I am happy but motivated to move our needle into the A- grade from it's current B+. I think its always helpful to retrospect and reflect on where you came from, where you are, and where you are heading. Thanks for listening.

What is your "grade"??

[audreyh1]

You obviously still w*rk for a living, ha ha.

No annual reviews here, I’m (still) retired!

[tulak]

I’m still working and that’s too much effort for me too. [emoji2]

I’m trending well towards my goals and that’s good enough for me.

[Dtail]

In my 6th year of retirement, so as long as am healthy and solvent, then an A.

[GravitySucks]

Quote:

Originally Posted by audreyh1 You obviously still w*rk for a living, ha ha. No annual reviews here, I’m (still) retired!

After you finished the yearly revirw please submit next year's budget even though you don't know next year's projects yet.Never again.


Kgtest:
Thanks for sharing. Always good to consider how one is doing. Kids can be the wild card at your age. That only comes around once, sounds like you have a good balance.

[pacergal]

Kg--thanks for sharing your successes and struggles for the year. Keep plugging along and enjoy those kiddos each day--they grow up so fast while you are busy working and planning "the future".

In year 6 of retirement and I still remember the 5 years prior to my exit when I seriously started planning! Time speeds by faster than I can handle sometimes. Blessed and thankful for each day.

[Pellice]

Quote:

Originally Posted by Dtail In my 6th year of retirement, so as long as am healthy and solvent, then an A.

I like your approach! It's strange - I'm sweating the small stuff, redoing a budget each December, keeping strict track of expenditures. But I'm blase about the big picture, no report card on my overall investments, but just looking to make sure I'm where I should be on the curve of My Assets and Expenditures For Life.

Probably should reverse that approach, but feel that that period is over.

[FLSUnFIRE]

Just wondering why Spending and Saving are not correlated more closely; my mental math is Income=Saving-Spending. You mentioned income was less so that makes me even more curious. Sounds like you are doing very well! I'd give you the A- now.



Year's not over yet but I spent about 2900% of my earned income but I love my job now so I give myself an A.

[aja8888]

Quote:

Originally Posted by audreyh1 You obviously still w*rk for a living, ha ha. No annual reviews here, I’m (still) retired!

Yeah, I'm not going back to work either (had an S Corp for 20 years) and no ambition to write an annual review. It's bad enough that I track spending on a global basis.

The only thing I am working on is my golf game.

[rodi]

I remember the diapers/daycare years. A friend was complaining about how expensive teenagers (high school) were with their colorguard (drill team) type activities. I laughed so hard when I compared it to preschool (full time because it was at a daycare center) and diapers. She'd forgotten about those expenses. She was spending about $5k per year, and we were spending close to $16k year. Even when you factored in car insurance (her teens) we were still taking a bigger hit.

Congrats on graduating one from preschool.

[target2019]

Once you retire it should be all A's until it isn't.

Spending: Way up. I'll take an 'A' for that.
Saving: Checking account keeps expanding. Another 'A'.
Investing: Consolidating accounts for my heirs. Damn, I'm brilliant, and Ace this one.
Tax Planning: I have a cool 10-year summary sheet. We're jumping out of the 15%, but it ain't our fault. I did my best. A for ain't our fault.
Health: I'm 'F'ailing, but still playing the game - stage IV sounds like it won't end well. But that eventually happens to everyone.
Risk: Think of the turtle who slowly gets to the finish line. Yeah that's us, and we are 'A'mazing.

[foxfirev5]

Same way I looked at my kid's report cards. Bring up the C's, you know what you need to do.

[Dash man]

How much money would I get for each “A?”

[COcheesehead]

My annual review is a pass/fail.
2022 PASS!

[Dtail]

Quote:

Originally Posted by Pellice I like your approach! It's strange - I'm sweating the small stuff, redoing a budget each December, keeping strict track of expenditures. But I'm blase about the big picture, no report card on my overall investments, but just looking to make sure I'm where I should be on the curve of My Assets and Expenditures For Life. Probably should reverse that approach, but feel that that period is over.

Actually I do put together a budget each year and keep track of all expenses.
A big part of that is I like dealing with numbers and such.
However, I don't sweat the small stuff in terms of nervousness and will not specifically make an expense decision solely based on where the numbers stand vs. the budget.