Freed by 50

On the heels of a surprisingly successful 2020, I find myself firmly in what’s referred to as “the boring middle.” Strange as it sounds to say, I’m running out of things to do! Or at least, I’ve put everything that I can on autopilot, I’ve taken care of all the baby steps and some of the grown up steps to boot, and at this point I am turning my focus to some more abstract financial goals as well as some quality of life goals.

Minor goals for 2021

1- Hire a CPA – For almost ten years I’ve been using a friend as my accountant. He is a CPA, and he does practice regular accounting, but his primary business is medical billing and really all he does for me is prepare my taxes. I fear that my situation has gotten a little more complicated than he’s used to working with, and frankly, it made me uncomfortable to hand him my W2 last year. I’ve asked a friend in finance to provide me the contact information for the firm his family has used for decades and will be setting up an appointment in January.

2- Research the possibility of creating an S-Corp or LLC for my other blog – As I’ve mentioned before, I have a smart home blog that earns me a few thousand dollars a year in affiliate money. I usually just take the profits and funnel them into my regular monthly investments and forget about it. I think I’m missing an opportunity to get some good write off’s from the site, though, and would like to have the ability to leverage some of the advantages of being a small business owner available to me in 2021. I’ll have to spend a good amount of time figuring out if there are benefits to doing this, and if I can do it at all. Hopefully the CPA can help with this.

Major goals for 2021

1- Max out mega backdoor ROTH – As I mentioned in a previous post, in September of 2020 my company gave us the option to do what is also known as an in-plan ROTH conversion. There are so many benefits to this it’s staggering. First, since I was going to invest the money anyway, it makes all future gains tax free. Given that I plan to maximize my contribution (~$35k/year), 20 years from now this should be a massive amount of tax free money at my disposal. Second, it’s an automatic investment each pay period, which takes any of the hesitation I normally have when making regular contributions out of the equation and gives me the benefits of dollar cost averaging. Third, after five years, any principal invested is available for withdrawal with no penalties. Given that my emergency fund is only slightly higher than one year’s contributions, I would consider eliminating the need for an e-fund once this principal is available to me. I’m not saying I’d definitely do this, but that would allow me to invest my existing e-fund while still knowing I could fall back on converted ROTH principal with no tax implications if I had to. Finally, if I’m extremely well prepared for retirement and turn out to not need all of this converted money, I can leave it to my kids and they wont have to pay taxes on it either. This is one of my layup goals because I already set my contributions for 2021 and I just need to make sure I keep enough cash on hand to cover the shortfall in my paychecks.

2- It’s renovation season…again – After two years of major indoor renovations, I’m not anxious to start another. The upside is that we are finally turning our attention outdoors. Our pool shed has been slowly rotting away and is in dire need of replacement, and the patio in front of it needs repair and expansion. Since we decided to stay in this house for at least another 18 years, we also decided it’s worth it to spend the money to make it everything we want or need it to be. That said, this is the first somewhat impractical renovation we’ll be doing. While our kitchen and basement were to address livability issues, this is more for fun. More to come on this as we plan it out, but I’m budgeting $40-50k on this project.

3- Get my ass back in shape! – Over the last four years I’ve spent the majority of my energy growing and caring for my family, solidifying my family’s financial situation, and concentrating on my career. Along the way, I spent far too much time stress drinking and not nearly enough time taking care of myself. I know that with age comes a certain amount of change in body type, but I’m a solid 20 lbs above where I feel comfortable and I know I can easily get myself back to my proper weight. I’ve been working at this since November and I’m finally starting to see some progress. Hopefully I can keep this up until I reach my goals and beyond. Current weight ~210. Goal weight ~185.

4- Continue regular investment strategy – Although I’m maxing out my ESPP, 401k, and mega backdoor ROTH contributions, there is still money remaining and unaccounted for. We are regularly saving for the kids, we have a fully stocked emergency fund, and with the exception of the renovation mentioned above, it doesn’t look like we’re going to have a lot of opportunities in 2021 to spend on anything fun. So I plan to divert up to 90% of the remaining funds to my individual investment account and into VTI. This should be upwards of $50k.

Additional considerations for 2021

1- Refi? Again? Are you kidding me?! – This one may never happen. I just refinanced to a 20 year 3.125% mortgage in December of 2019 and halfway through 2020 send about $30k to the loan to bring it down to 17 years. At this point, it makes very little sense for me to try to refinance my mortgage again, even with 20 year rates available half a percentage point lower than my current rate, and 15 year loans down near 2%, the savings on refinancing again right now rather than just making another lump sum payment are negligible. However, rates keep falling. And if at some point rates on 15 year loans get below 1.9%, it would make sense for me to refinance again. I’m not going into 2021 hoping to refinance. I’m going to stick to my plan of deciding in August whether to send another large payment to the mortgage or just put it in the stock market. But this is on my radar.

2- Chill the F out! – My daughter just turned 4, my older son is 2.5, my youngest is 2 months old. My escape from them is to run a team of 14 people spread across 5 countries spanning India to California and many points in between, all working on high profile, medium to high stress projects. To say each day feels like an all out assault on my senses is a gross understatement.

I am lucky enough to be employed at a company that allows up to 12 weeks of paid paternity leave in the first year of a baby’s birth, and I’m taking all 12 weeks. I’ve already taken 4 and scheduled the other 8 spread out throughout 2021. I also get “unlimited within reason” vacation days, and plan to take at least 5 weeks. Since it’s unlikely we’ll get to go anywhere between the newborn and the pandemic, I’m hoping to spend a lot of time relaxing in our soon to be renovated back yard and spending some of that time engaged in hobbies.