I’ve been out of college in the working world for almost a decade now. In that time; I’ve had 3 different jobs, bought/sold 3 houses, gotten married, had 2 kids and became a landlord. Oh, all while running this site. It’s been interesting seeing the progression of setting, and achieving financial goals. Early on it was to build up an emergency fund, then it was get aggressive and pay off student loans, then save for a house, and of course all the while building up my retirement contribution amounts. It’s been really cool watching our hard work pay off, and seeing our overall financial standing improve, and seeing compound interest (i.e. reinvesting the dividends and interest) start working. Of course we’ve had setbacks; having my car stolen, having to move because of a terrible neighbor, and job frustrations for both Mrs. Money and I. All in all it’s been really cool seeing what we’ve accomplished in this first decade together. 

One thing that I have come to accept is that change will always be present in our lives. As much as I love routines and forming habits, things are always changing. One example is my Crossfit routine. Pre-kids I was always a 5:30pm workout guy. I’d scoot out of work around 5:05pm and head right to the gym. Post-kid I became a frequent visitor to the 6:30am class. Then when I changed to my current role, for a while I was having to do 5:30am (eek). Now I’m back to the 6:30am routine but know that the 5:30am class might be in my future. The same change applies to our finances, our finances are simply a reflection of what’s going on in our lives and where we are. My priorities have changed since I was a DINK (dual income no kids), same thing happened when I became a DIOK (dual income one kid) and now a DITK (dual income two kids) professional. Here’s where I’m currently at in terms of my priorities: 

Getting a lay of the land

I was commenting recently that it almost feels like I jumped into a pool and just started swimming as hard and as fast as I could (financially speaking). I gradually made my way up to 15% retirement contributions, built my emergency fund, saved for a house, paid off student loans, i.e. all the things I felt like I should be doing. However, I only had a vague sense of where I really wanted to end up (Rich? Retiring early? Able to retire at all?) but figured that as long as I kept my head down and followed the financial steps I knew to be true, that I’d be ok. 

Now that I’m a decade in, it feels like I’ve done a few laps and am taking a quick break, or coming up for air. I started asking questions around, “Am I doing enough?” “Have I made enough progress?” “Will I actually be able to achieve my vision of success that I have in my head?” I’ve not felt this way before. I was pretty sure (like 95%) sure that I was doing well, that I would be able to retire and that I was well on my way to financial freedom, but there was that 5% that wasn’t sure. I sat on that feeling for a while.

The company that I work for full-time (i.e. this site is just a side hustle) is amazing and they’re always rolling out new benefits. I saw one a few months ago that caught my eye – around financial wellbeing. I looked into this a bit and turns out it’s just an online set of tools where you pull all your financial information in, answer a few questions about your situation, and then it let’s you track progress over time. I’ve had the opportunity to use sites like them before (Mint or Personal Capital are two of the big names in that space) but have always passed. Often times I find they’re just advertising tools in disguise, and in a very Ron Swanson manner, I was opposed to letting companies have so much information about me. 

However, what was also intriguing was the ability to meet with a financial advisor as part of this service. This technology company partnered with an old-school financial advising group and offered free (i.e. my attention was peaked) sessions. At the advice from a colleague who said he found it helpful, I decided to give it a shot. If you’re a long-time reader of the site, this should shock you, as historically I’ve been very against financial advisors. I figured that all too often they’re insurance salespeople in disguise and the advice they’d give you can get for free – i.e. just buy index funds. However, this seemed different as a) it was free and b) they are advisors, not affiliated with any large insurance of financial group. 

I met with them a few weeks ago and as expected, I mostly just got gold stars as I was doing everything correctly. Emergency fund? Check. Budget? Check. Investing? Check. ESPP? Check. Saving 15% and/or maxing out 401(k)? Nearly check. I did however learn a few little tidbits and actually found it helpful. 

I’m glad I took the call as it’s nice to know that I’m on track overall and doing the right things! Now I can quietly but my head back down and keep swimming hard and fast! 

Focusing on maximizing tax benefits

One tidbit that partially came out of that financial advising session but also something I’d been thinking more about is how I should be better at maximizing tax benefits. In the past, I just would save 15% for retirement and then focus on other areas – like paying off student loans, saving for a house, or other general saving/investing goals that I had. Now that I’m a little more financially settled, I have decided that I should really be focusing on maximizing tax favored accounts.

The US government as an incentive to do smart and wise things like saving for your future has set in place tax breaks. I don’t love paying taxes but I don’t hate it, I enjoy living in the US and all that if offers, but if I can (legally) pay less, I’m all for it. The main tax favored account is a retirement account; the 401(k) and IRA (individual retirement account). Each year (assuming your under 50) you can set aside $19,500 in an employer sponsored retirement account, the 401(k). Outside of that, you can also (assuming you make less than the income caps of $125K as an individual or $199K as a married couple) contribute $6,000 to your individual retirement account. 

I historically have not maxed out either of those accounts (gasp). Like I said, I’d put away 15%ish and then focus on other things. At this point in my life, those other things aren’t as important, or they’re no longer on my radar. So, it’s my goal this year to max out my 401(k), and if possible, have Mrs. Money max out hers as well. Now this is not to say we’re not really saving for retirement, it’s just that we haven’t been savings as much as the IRS (internal revenue service…the tax people) allows. Historically I’d move some more of that money into savings, or a regular non-retirement brokerage account instead. I now see that the tax breaks will really add up over time, and so I should be, as best as I can, maxing out my retirement. 

Slow and steady growth (while maximizing smart returns) 

As noted in the first section, I feel good about where we are financially, after ‘coming up for air’ and doing a bit of a health check. I’d say I’m ‘on-track’ for my financial goals and so I’m just gonna keep doing what I’m doing.

One thing that I have been thinking a lot about is slow and steady growth. Traditionally the riskier an investment is, the more return you’ll get in return, but the riskier it is, the more likely you are to not get that return, or your investment money back. I’ve always said that your money should be working as hard as it can for you, but feel like I haven’t always lived up to that. It’s been a process but there’s still work to be done.

For example, early on as a young professional, I was paying an extra $1,000/month on our mortgage. My interest rate at the time was around 4% and I wanted to start chipping away at that large house debt. I did this for about a year until a reader called me out saying that if I really wanted my money to work as hard as it can, perhaps I shouldn’t be doing that and instead put it in the stock market. Historically, the stock market has returned about 8%/year, so my extra money would grow faster with an 8% yield instead of the 4% I was ‘getting’ by paying down the mortgage. Although I didn’t completely stop paying extra mortgage, I did slow it down and invest more. 

Later on in my career, I was not maxing out my Employee Stock Purchase Program (ESPP). Most companies that offer one cap you at 15% of your paycheck. The ESPP works by pulling out money each paycheck, and then (most likely) every 6 months, using that money to buy company stock. You often get a lookback (i.e. getting the lower price of the beginning or end of the 6 months) and then a 15% discount. Now that’s a pretty good deal as you’re essentially making a quick 15%+ return. Some companies make you hold it for a year before selling, others let you sell right away. Back then I didn’t feel financially able for a while to do 15%, but then even when I was able to, I wouldn’t. I didn’t want to put too many eggs in one basket so I held off. Then a colleague pointed out that you can sell that stock over the amount that you feel comfortable holding, so really even if I didn’t feel comfortable with that much company stock, I could still do 15%, and then quickly sell what I didn’t feel comfortable holding. In effect, I was leaving money on the table! 

In 2021 (and beyond), I’m really focused on having my money work hard for me. I’ve worked so hard to earn it, and I expect the same in return. I’m a lot more cognizant of trying to get the best return that I safely can, of course investing and saving within my comfort zone. I’m trying to leave less money ‘on the table’ and make sure I maximize all that I can earn! 

These are a few of the things that have been top of mind for me financially in 2021. I’m super thankful for the progress I’ve made, and want to keep pressing hard and making progress, now I’m just a little more focused and aware of the progress I’m making (or not making). I’m gonna keep working hard and trying to make sure that my money is too!