I think it’s pretty safe to say that 2020 was one of the worst years in recent memory. I can only hope that things start to normalize quickly during 2021. Despite 2020 being downright awful, the market did surprisingly well. My rental properties did pretty well this year too, considering the circumstances.
My 5th property is under contract at the moment, my “on or about” closing date was set for October originally. This deal has been nothing short of a nightmare and I still don’t have a closing date set. I imagine I’ll close sometime in January, but I’m done getting my hopes up. The property is a two unit, 3 bedrooms 1.5 baths on one side and 2 bedrooms 1 bath on the other side.
I’m currently waiting for a phone call on a single family property that I may be purchasing. I know the owner’s son pretty well. I’m still owner-occupying the first two unit property that I purchased so if this deal works out I’ll likely move into the single family and rent my unit. I’m pretty excited for the possibility.
2020 Passive Income – $19,078.49
Owner Occupied Rental – $8,475.00
Rental business – $8,400.00
Dividends – $2,005.11
Interest – $178.20
Other – $20.18
I like to calculate my FI (Financial Independence) ratio in two parts. The first part being passive income vs. necessary expenses. The second part being passive income vs. total expenses. The first calculation makes sense because I know that I could cut all of my unnecessary expenses if I had to, this is often referred to as “Lean FI.” The second calculation makes sense because this level of FI would require no changes to my every day life and I could continue living exactly as I am now. The purpose of these calculations is to determine how close to financial independence you are.
Passive Income vs. Necessary Expenses
$19,078.49 / $15,507.53 = 1.23 x 100 = 123%
This 123% means that I could have afforded all my necessary expenses for the year without needing to work. The 23% extra would have amounted to an extra $297.58 per month that I would have left over after all necessary expenses.
Passive Income vs. Total Expenses
$19,078.49 / $27,867.26 = .685 x 100 = 68.5%
This 68.5% means that I was about 31.5% away from being able to afford ALL of my expenses for the year without needing to work. This 31.5% amounts to $732.40 per month that I was lacking to afford all expenses without working.
This was a pretty great year for passive income. With the new property in the pipeline, I’d like to see $30,000 next year. If my expenses don’t increase too dramatically, my passive income may cover my total expenses next year. That would be quite the milestone for me.
Net Worth +52.31%
I’ve been tracking my net worth since 2016 and it’s both motivating and inspiring to see the progress I’ve made. A 52% net worth gain seems almost impossible. I’m pretty astonished with the amount that I’ve gained this year, being that it was a pandemic year and all. I’m certainly not complaining, but it does make me wonder how much longer the market will keep this trajectory.
I use Personal Capital to track my net worth. It’s phenomenal, honestly. I login almost daily to keep an eye on things. If you’re interested, use my link to sign-up here. (It’s free)
Total Amount Invested and Annual Savings Rate
I managed to invest $31,396 into the market during 2021. This is quite a big jump from 2019, but it is still short of my goal of $35,000. Maybe I’ll make it there next year. I’ve found that it’s extremely easy to invest money when it’s an automatic process. Trying to decide whether to invest more or save for another rental property is much more difficult, to me.
I managed to save 58.93% of my net income this year. This is a great metric to track as it really opens your eyes to what an expensive month or two can do to an entire year of savings. I’m pretty much maxed out on the amount that I can comfortably save. The annual increases in my savings rate are largely due to an annual raise at my job as well as saving money from side jobs.
Goals For 2021
Financial
- Invest $35,000
- Increase Net Worth by 18%
- Achieve a 60% Savings Rate
- 100% FI Ratio (Total Expenses)
Fitness
- Run 100 miles this year
- Bench press 325lbs (@ ~175lbs bodyweight)
- Squat 365lbs (@ ~175lbs bodyweight)
- Deadlift 455lbs (@ ~175lbs bodyweight)
Other
- Read 30 books
- Total of 2,000 blog subscribers
- Travel outside of New York
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Check out Personal Capital to track your net worth. It’s phenomenal, honestly. I login almost daily to keep an eye on things. If you want to check it out, use my link to sign-up here. (It’s free)
What I’m currently reading:
