Can you believe we're almost off of the wild roller coaster ride that is 2020? As the year draws to a close, I thought it would be useful to take a look at where we saved our money this year. I have the spend/expenses side covered elsewhere, but here's a look at how we saved our money. For purposes of this post, I'm considering mortgage pay down above & beyond our standard monthly payment to be "savings", although it's clearly an expense. It builds equity & net worth, & was an intentional spend.
We feel incredibly blessed that we were able to retain our employment during this time, and work from home safely. We know not everyone is in this position, and want to make the most of our assets & spend & live responsibly.
Here's how we did in 2020:
- Retirement. We fully maxed out both of our 401ks, including the additional amount as M is over 50. I also for the first time started a backdoor Roth savings (offered by my employer), at 5% of my salary.
- College savings. This wasn't a priority for the year, as the boys college accounts are in pretty good shape. In California, the option to attend a 2 year college & then transfer to a 4 year college is quite affordable. That's changed the landscape of our college saving plans a bit. But, we saved $5k this year, putting birthday & Christmas gifts into their account, plus they earned a bit & we require them to put a percentage of their earnings into their college savings.
- Health savings. We put in $7,100 this year, and didn't use much. We will both need to get some medical needs taken care of in 2021, but so far are spending much less than we are savings. We have a high deductible health care plan through our work.
- Other savings. Definitely not a priority in 2020. In fact, we moved money out of our savings to cover our remodel (it was originally intended to be used to pay down our mortgage). It was intentional, but our savings is lower in 2020 than 2019. Don't worry, we still have a very healthy emergency fund.
- Mortgage pay down. This was our top priority for 2020 & we paid down ~1/4 of our gross income into our mortgage (that's after our standard monthly payments). So, a pretty significant amount. We bought our house in 2017, and our goal is to be to the half way point on the mortgage in 2021. So far, real estate prices in the bay area near us have held steady/risen, but that could change given more flexibility in WFH due to COVID & tech companies adapting their policies. We are 78% of the way to the half way mark, as it stands right now.
I'd like to increase our % of cash savings, while to jeopardize retirement savings. We didn't put the $13,000 we could have in our Roth this year by July 15 because we just did not know what the whole year would look like and with expensive college tuition (even after her generous scholarships), and our son's industry being decimated, we felt we needed the cash available. hopefully for the next 3 years before our husband retires, we will get those deposits made, and save cash, but it will require belt tightening.
ReplyDeleteSounds like a great goal. We too struggled with priorities in the first half of the year, not knowing what the rest of 2020 would look like. It was certainly an unexpected year all around.
DeleteYou always get so mad at me when I make criticisms of your financial imperatives but - whatever! I still don't why, financially, you own a second house in Oregon that you hardly ever occupy. Much more savvy to sell it, pay off the entire mortgage on your home, and if you want to vacation in Oregon, rent a nice place. Roderick
ReplyDeleteI don't know that you've ever commented before & definitely don't remember getting "so mad" at you. Polite & respectful comments are always welcome.
DeleteA few reasons:
-The Oregon house would not touch our mortgage for our primary house - we live in Silicon Valley & they are nowhere near an apples to apples comparison
-We use the Oregon house as a home base when visiting family
-My entire family uses the vacation house as well
-We're not in need of the money & the house is paid off
2020 was not a good year for us financially. We lost major money in the shop, Hubs job at the high school was almost nothing. Plus we took on debt for the new house. But I still feel positive about the move. This year I will work to remedy this situation.
ReplyDeleteIt's a great goal for 2021, and I'm confident you can do it! You're always very motivated.
Delete2020 has been a great year for us in terms of income and savings. If we decide not to move, I think we will tackle our mortgage next.
ReplyDeleteThat's great to hear that 2020 was solid financial year for you!
DeleteMy biggest priority is beefing up our invested assets, followed by paying down our mortgage. We diverged from my intense saving and investing push this year to do some home maintenance projects which are good for quality of life and we were able to enjoy that recently, but we've never stopped saving. I'm hoping to hit another milestone in our invested assets soon but I don't think it'll happen in 2021. We'll do our best though!
ReplyDeleteWe made a similar pivot in 2020 with house projects, knowing we'd be at home for so much of the day during the year.
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