Freed by 50

Here we are at the end of 2021 and boy has this been a slow year. Between the never ending backyard renovation, a major work project, and my kids making each day feel like a week, I feel like I’ve aged five years this year. So I’d like to take this opportunity to look back at the goals I set out for 2021 and see how I did.

Goals

• Hire a CPA – I got pretty lazy about this one. Although I had a good recommendation from a friend, I put in minimal effort. I called once, they didn’t get back to me, I let it go for too long and now I have to get this set up after the holidays.
• Research the possibility of creating an S-Corp or LLC for my other blog – After a lot of waffling I finally decided to plunk down $700 to create an LLC, not just for my blog but for possible upcoming ventures. I’m extremely hopeful that this will help produce some tax write-offs for 2021 since all I seem to have these days is $4900 in mortgage interest.
• Max out mega backdoor Roth – I did it! I did it! This one hurt a lot. My paychecks have been lower than they were at my first job out of college with all the money I have removed before the check gets to me. It was totally worth it, though since this money will now grow tax free forever. Unfortunately it looks like this will be the last year I’ll ever get to do this since Congress is set to eliminate the mega backdoor Roth forever.
• Complete backyard renovation – I’m honestly not sure if this will get completed in 2021. We are down to the last few steps, including paint and a small “pump house” for my pool equipment, but the contractor will be off for a few days and it will probably run into January. More on this below.
• Get back in shape – I lost 12 pounds! Although I diligently went through multiple workout programs in 2021 it wasn’t until I finally broke down and did a round of The Dukan Diet that I actually lost any weight. I also set a goal to be able to run a mile in under 8 minutes (my 23 year old self would laugh at me now) and I’m happy to report that a few weeks ago I hit 7:49…and then nearly vomited.
• Continue after tax investment strategy – Despite the renovation’s best efforts I did manage to contribute quite a bit of money to my after tax account. This is in addition to keeping my 401k, ESPP, and mega backdoor Roth maxed out.
• Refi? – Did this happen in 2021?! Holy shit this has been a long year. We completed this in April, which feels like it was several years ago. I now have around 13 years left on my mortgage at 2.625%.
• Chill out – Like this was ever going to happen. With no back yard to retreat to, and my kids needing constant attention and entertainment, plus the demands of my job, I think I may have developed an ulcer and lost a lot of hair.

On the whole I’d say I did very well meeting my 2021 goals. My SVP at work always says if you find you’re hitting all of your goals you need to set higher goals. I’m thinking I’ve been a little too easy on myself and need to set some tougher goals for 2022 (especially in the “get healthy” department).

I know I don’t generally talk about net worth here, and I still don’t put a lot of stock in it, but I did increase my net worth by about $254k this year. I crossed the “net worth millionaire” milestone several times in 2021 as the stock market whipsawed up and down throughout the year. If I can keep this up in 2022 I’ll be an actual millionaire (not including home equity) in mid-2022. That milestone I’ll actually celebrate.

I’m not planning any more renovations for 2022. I’m just sick of being under construction. The only thing left to renovate is my master bathroom and I can deal with banging my elbows against the wall in a stall shower for another year. As for my backyard, I expect it to be complete in just a couple of weeks. In all, we’ve replaced two decks totaling about 1000 sq ft of Trex decking, installed a 3000 sq ft patio around our existing pool along with a 9 ft tall by 5 ft wide outdoor fireplace, built a custom 140 sq ft “pool house” with a 5 ft stone bar and a 192 sq ft attached pergola, and built a small “pump house” for our pool equipment. This was the longest renovation I could imagine, beginning in March and still not complete in December. We had planned and saved for this for eight years, but the project still went over budget by almost $40k. If I ever do another project this size, I hope it’s for a custom built home.

It looks like the mega backdoor Roth is dead beginning next year, which really screws up my plans, but I’ll just have to beef up my post tax account until another option comes along. My company tells me they are considering a differed compensation plan to make up for the lost option. If so, I’ll take advantage of it for at least the next two years.

Finally, I’ve been watching a lot of Dave Ramsey lately. I haven’t really read anything of his since the early days of my journey when I adopted the first few baby steps. Dave is obviously a big fan of his own plan, and he advocates putting 15% of one’s gross pay into retirement once all debts other than mortgage are paid, next planning for college for any kids, and next paying off one’s mortgage. I’ve described my mortgage moves quite a bit here as I’ve progressed from a 30, to 20, to 13 year loan over eight years. I’m fairly happy with our situation, but there’s this nagging feeling knowing that I can potentially be mortgage free in three years if I concentrate on that instead of putting 100% of my money into investments.

This is something I may revisit mid-2022. In the event that we hit the one million milestone with our stock investments, I may shift gears and decide I no longer want a mortgage. It’s a three year commitment to sending once a year $60k lump sum payments to the loan, and I’m not sure I can keep that up in 2023 and 2024. I’ll have more insight into this in February of 2022 when my annual compensation review is complete.

Well, internet strangers, that’s my 2021 in review. Overall a truly exhausting year, but from a financial perspective very positive. How did you do in 2021?