Making Money Moves in 2021
My wife and I are on a mission to pay down over $100,000 in Debt expenses while investing $100,000 in savings in 2021.
Yeah those are wild numbers for people who started their careers making $50,000 and $23,000 before taxes (respectively) back in 2012. But that’s a long story but one that paid off in dividends and long term education.
How the Journey Started
We are also started off with over $155,000 in debts which included my $120,000 in student loan debt, her $30,000 in undergrad debt and $5,000 in credit card debt.
Although we didn’t meet until November 2016, we were very familiar with the struggle and counting coins. Due to stress, my wife took a pay-cut dropping her to $35,000 while living in DMV. While due to money needs, I took a job for $64,000.
Suffice to say, we had to account for all the money coming in and out to survive.
Fast forward. As of November 2020, we got married and moved in together. Our salary income is about $190,000 since I’m bringing in $114,000 and she is bringing in $77,000 before tax. On top of that, she took on a second job making $40,000 contracting so you know the taxes will kick our ass later. However, we are bringing in a grand total of about $230,000 before taxes.
If I had to be honest, it’s a pip dream that can be reach in 14 months over 12 but it is worth a shot in the dark to dream big. The US added 675,000 new millionaires since 2018–2020. No obstacle is insurmountable.
Where will it all go in 2021?🤷
With all the home repairs on our primary 2/2 condo and the rental property out of state, as well as remain wedding cost, that’s about $86,000. Along with principal payments on the mortgages and TSP-loan repayment of $4k, that brings us up to $100,000 in debt payments in 12 months!
Almost 64% of it will be funnel through credit card payments. Yeah, it’s a lot but it will make it so much easy to move all that to mortgage payments starting 2022.
Where will all the savings and investments come from in 2021?
According to CNN Money, the average 30 year old has a net worth of around $𝟕,𝟎𝟎𝟎. We have to saved $60,000 automatically which would have put us way above average. How?
We follow the Net Max Financial Plan for Couples.
It ends up being $39,000 in both our 401ks, $12,000 in our ROTH IRAs with Fidelity, and about $3,000 in my Health Saving Account. That’s a total of $54,000 so far. The rest is a group investment account with our annual contributions set at $250/month for $3,000 a year. That portfolio is up to $600,000 by now. Our 401k provides us with matching contributions of 6% and 5% respectively so that’s another $10,000.
All of that puts us at $67,000 per year. The rest is all on how much we can push and pull from every month to toss in our after-tax brokerage account with M1 Finance. This means we need to invest on average $33,000 per year.
After 16 years, that $100,000 invested annually at the historical average of 8% would have grown to around $3,000,000. It’s crazy that it’s so easy to become a millionaire these days with the right strategy. Especially with portfolios netting over 250%.
How about the math with what we already have invested?
The starting amount as of May 2021 is $400,000. After 16 years, with $100,000 invested annually at the historical average of 8% would have grown to over $4,500,000.
Boom, instant multi-millionaire status achievedv. All we need now is a bit of patience while people chase Crypto and GameStop investment strategies.
With the path laid out what’s next to tackle?
In 2022, I’m putting out my next financial plan to pay down Home mortgages faster. The end goal is to be debt free by the time we retire early at age 55. This give us 16 years to invest (Circa 2036–2037).
This personal finance game has rules. If something has rules, there is a way to learn and beat the game over time. That’s all we are doing. No deep secrets that we don’t share.
It’s all available on the website, www.theneighborhoodfinanceguy.com
If you want me to do deeper dives in specifics aspects of personal finance, say something in the comments. Because Silence keeps more people poorer longer.
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