Everyone’s favorite time of the year is here, the end of 2020! The year that many will remember for awhile for good reasons (I hope) but maybe for some not-so-good reasons. Depending on your financial situation, 2020 could have made your finances stronger or it just felt like you were drowning without a life vest. Either way, goal setting is an important aspect to consider with your finances because when life throws you a 2,020 MPH curveball, you will at least have a plan to dodge it. Heck you might even smack that ball out of the park and dominate!
Alright, enough with the analogy. 2020 was no joke. There were many “what-if” events that took place and they could have decimated our goals but thankfully I felt that my family came out victorious. You see, the goals I set earlier in the year kept us on the “path”. When I created those goals, there was no talk about a potential virus that would singlehandedly change the world and flip it upside down. All I had were the goals I wrote down. So when 2020 decided to smack me in the face, my financial goals were the life vest I needed. Those are what helped us to get out of the possible turmoil that plagued so many in the world.
Could we have succeeded even without having goals? Sure. Anyone could but honestly, why chance it? If I aimlessly tackled last year head-on, I probably would have made some very poor decisions with money. That isn’t to say that I didn’t make some bad decisions, because I did. But those could have been way, way worse.
Now that we are in January 2021, it’s probably the best time (if not the most cliche) to set your goals for the year. By the way, you don’t have to wait until January to set a goal, you can set set them whenever you feel like. The best part is you can actually modify them intra-year too. We do it all the time.
My 2020 Goals Recap
I shared a few of these goals here on the blog but I never got around to actually listing them all. There were too many to list. But here are the important ones I accomplished last year.
- Transferred abroad for work. By luck and sheer determination, I was offered to work in Japan. A dream I had since 2012 when I first heard about the program. This big move afforded us to finish 2020 strong.
- Say goodbye to consumer debt. With tremendous effort from my family and a crystal clear motive, we erased over $37,000 of credit card debt. Definitely the highlight financial move of 2020.
- Both Roth IRAs fully funded! Wife and I funded these wonderful tax-free growth vehicles as of December 2020.
- 3-month emergency fund done. It isn’t a matter of if but when. Knowing we have at least a 3-month cushion eases my mind…a little. In 2021, I plan to build this up even more.
- Achieved a 30% savings rate. As a single income family, this was tough to complete. With that being said, we are pushing to increase it up to a 40% savings rate.
And here are the ones we didn’t complete…
- Max out my TSP account. This is the government’s version of a 401(k). With 2020 behind me now, this account will be getting some TLC in 2021.
- Set up a “Gifts” account for special holidays. For majority of the year, we had this under control. All the way up to December, that’s when it took a turn for the worse. We managed to spend close to $1,000 on Christmas gifts alone. Not my most proudest financial moment.
- Paid off HELOC. It wasn’t a complete surprise this didn’t get done considering all the other goals we did finish. But we have a goal to pay off close to 50% of our home equity line of credit in 2021.
Hindsight is 20/20 and that couldn’t ring more true now that 2020 really is behind us. With everything that happened this past year, there were quite a few unplanned events, good and bad, that made our finances stronger. Things like passing $480k in net worth, amassing $1M in assets, receiving a government stimulus check, tenants still paying rent, one of the most significant market drops only to rise to new heights, etc.
No one could have predicted a year like 2020. How did you do on your 2020 goals this past year?
My 2021 Goals
- Maxed out TSP contributions. For year 2021, government employees are able to contribute up to $19,500 which equates to $750 per pay period. Starting with the first pay check of 2021, $750 will automatically be deposited to my TSP account. Investing on auto-pilot!
- Paid off TSP loan. A few years back, I withdrew from my TSP account to pay for one of our rental properties. This has lingered long enough and will be gone by July 2021.
- R-O-T-H! Here’s to another year of maxing out not just one, but both of our Roth IRA accounts. Even though my wife is unemployed, we are still able to fund her Roth account. That’s huge for all you single income families out there.
- Maxed out HSA account. Thanks to MadFIentist, I learned about this triple tax savings account back in 2016. The will be the first year that I am going to fund it.
- Reduce the HELOC balance by $23,000. This line of credit is the only other debt we have besides our mortgages (one primary and three rentals) that I am really pushing to get rid of. Paying a conservative $800 every two weeks will get us $20,800. Guess I know what I’ll be doing with our stimulus check?
- Bump the savings rate to 40%. We closed out last year hovering around 30%. I predict with all the maxing out of investment accounts, we should exceed or at least meet this goal.
What are your 2021 goals?
Ever heard of the SMART concept to goal setting? It enables you to turn a plan or an idea into a concrete goal with a timeframe of when it will be completed.
The goals I listed aren’t specific which is ok with me. I have a running document that I’ll use to track when I plan to complete them. Other goals aren’t worked out yet.
Typically, people will set goals starting with the new year. But this doesn’t mean you aren’t able to modify your goals throughout the year with the changing tides. Remember 2020? Even if you decide mid-year that you want to add another goal to the list, no one is stopping you. You can even improvise the current goals you are trying to complete. If you received a work bonus or work less hours than last year, adjust your goals so they meet reality.
If you are still thinking about what goals to make, here is a quick list to get your financial brain thinking:
- Start an emergency fund
- Pay off all debt except the mortgage
- Save for a down payment
- Open a 529 plan
- Use your passion to start a side hustle
- Buy a car with all cash
- Start a sinking fund for vacations, holidays, family fun, etc
- Pay off the mortgage
- Buy a course, learn new skills, then monetize them
- Declutter and flip your items on eBay
- Become a virtual assistant
- Start a personal finance blog
- Work on improving your credit score
- Buy a rental property
- Achieve FI, quit your job, and live life on your own terms
What goals made it on your 2021 list?