My 2020 in review: Steps in the right direction

Are you all ready for this? It's one of my favorite days of the year! I just spent an hour entering data in Quicken, then another thirty minutes analyzing it. It's time to run some numbers.

How well did I do with my financial goals last year? Was I able to cut back on dining out? (Hint: There was a global pandemic. What do you think?) Did my net worth rise or fall? Let's take a look.

First, let's review where I was at the end of 2019.

Quite simply, I was a mess. Objectively, my life was good, but subjectively it was a disaster. My mental health was in shambles. Depression and anxiety were crippling me and truly affecting my relationships with other people. I felt like I was in the middle of a prolonged car crash.

The good news is that, for the most part, 2020 was much better from a personal perspective. Yes, I understand that 2020 sucked for a lot of people. And it was the most tumultuous year our country has seen in a generation. But for me, personally, the year was mostly good. I'll explain why this is in a bit, but first lets look at the Big Picture.

My Net Worth

Here's my end-of-year net worth from each of the past three years. (These numbers do not include the value of my business or this website.)

  • At the end of 2018, my net worth was $1,334,227 — a 15.2% decrease from 2017.
  • At the end of 2019, my net worth was $1,437,543 — a 7.7% increase from 2018.
  • At the end of 2020, my net worth was $1,373,233 — a 4.5% decrease from 2019.

Now, on paper a decrease of net worth amounting to $64,310 might seem scary. Maybe it's because I'm in a better mental space than last year, but it doesn't bother me. This may also be due to the fact that I realize most of that drop comes from Zillow's valuation of our home.

At the end of 2019, Zillow said our country cottage was worth $495,749. At the end of 2020, the home was valued at $437,127, which is a drop of $58,622.

Yes, I realize using Zillow to track our home value is…erratic. And it leads to fluctuations like this. Still, I feel like it's a solid enough source for home values, and it gives me some sort of number to go on.

That's one way of looking at it. But looked at another way, things are a little dicier. You see, I currently live off of my investments. Most of those investments are in retirement accounts, which I can't touch (unless I want a tax penalty) for another eight years. At the start of 2019, my regular taxable investment accounts contained $269,264. Today, they have $197,117. That there could also be my drop in net worth.

One thing is certain, though. That $197,117 isn't enough to get me to age 59-1/2 at my current level of spending. I need to spend less, earn more, or (preferably) both.

Now, let's look at some of the numbers in greater detail.

Note
I'm still tracking my money in Quicken 2007. I continue to try new money apps but none of them is as good as this clunky old program.

Having said that, I didn't track my spending from May 12th to October 1st last year. I wasn't spending anything, so I thought the process was pointless. (In retrospect, I wish I had continue to track the numbers because they would have made a good baseline.) Because of this break, I have no way to know exactly what I spent over the course of the entire year. But I do have complete numbers for the first quarter (mostly pre-COVID) and the last quarter.

Food Spending

A year ago, I declared that my financial goal for 2020 was to spend less on food. I'm pleased to report that I achieved this goal although I had some help from a global pandemic. The COVID crisis kept me (and most people) at home. Yes, we did eat out now and then, but it was rare. And it was outside, when possible.

Here's my food spending from 2020.

  • From January to March, I spent $1700.91 on food (or about $566.97 per month). Of this, $1189.28 ($396.42 per month) was on groceries and $498 ($166 per month) was on dining out.
  • From October to December, I spent $1751.26 on food (or about $583.75 per month). Of this, $1427.81 ($475.94 per month) was on groceries and $323.45 (107.82 per month) was on dinging out.) I should also note that the bulk of this food spending was in December ($663.32 on groceries, $92.00 on our only restaurant meal, and $755.62 total).

So, yay! I met my goal! My monthly food spending dropped from $1053.28 in 2019 to $575.36 in 2020. If I had tracked the stats during the middle of the year, that number would be even lower.

To put things into perspective, here's a tiny spreadsheet comparing my monthly food spending over the last four years. Numbers from 2019 are incomplete. And numbers from last year are for the first quarter and laster quarter combined. (Again, data is missing for the middle of the year.)

My food spending

That looks like some solid progress to me.

And you know what? I'm willing to bet that a big part of that drop in spending is because I drank less alcohol in 2020. Technically, I don't want my alcohol spending to appear as “food”. I have a separate category for booze. In reality, I'm lazy and I rarely separate beer and wine purchases from other grocery purchases. So, I think some of that drop in food spending is because I was drinking less.

Let's talk a little more about that.

Booze Spending

Perhaps the biggest win for me in 2020 — financially and otherwise — was my decreased dependence on alcohol.

I had two stints last year during which I was alcohol free: January 1st to mid-February, then Independence Day to Halloween. And since I “fell off the wagon” at the end of October, I've done fairly good about minimizing my alcohol intake. (I refuse to keep whiskey or wine in the house. If I'm truly craving a beer, I drive to the store to buy one. Or two. This policy has really helped me cut down on how much I consume.)

In 2019, I was spending roughly $200 each month on alcohol. In 2018, this was closer to $300 per month. Holy cats! In 2020, I spent zero on alcohol for half the year. During the six months I tracked my expenses last year, I spent a total of $227.07 on booze — $37.85 per month.

My marijuana expense was also down. Pot is cheaper than alcohol in the first place, but I was also trying to reduce my use of weed while I was trying to cut out alcohol. I spent maybe $20 a month on the stuff in 2020.

My current weight-loss status

As an added benefit, by cutting out alcohol I was better able to lose weight. I'm currently down more than 25 pounds since July. (I want to lose another five or ten pounds, then turn my attention to building strength once more.)

Best of all? My mental health improved! In September and October, after being alcohol-free for a few months, I was enjoying peak performance. I was happier and more productive than I have been in years. This benefit to reduced alcohol use is the best benefit of all and the one most likely to keep me away from the stuff.

Now, as I mentioned, I've resumed drinking some. I've had four beers in the past week, for instance (including New Year's). For now, I'm okay with this. My mental and physical health seem great at this level of consumption. But there's still a chance I'll opt to give up the stuff completely for an extended period of time. (I have a sticky note on my work computer with a question that Tom asked me in October: “What's the postive for you in using alcohol and pot?” Great question.)

Big Spending

The sorest spot in my budget over the past few years has been big expenses. In 2015, I spent $35,000 on an RV. In 2017, we sold the condo and bought this country cottage, then poured money into repairs and upgrades. In 2018, we spent more on remodeling.

Well, last year didn't have any major home expenses but I did replace my Mini Cooper, at long last.

At the end of June, I spent $40,000 on a 2019 Mini Countryman SE All4. This seemed like a good idea at the time. In retrospect, the purchase wasn't the smartest move. The car is fine — it's not great but it's not bad — and I enjoy driving it. I especially like that most of my driving is now electric (and that I'm averaging 53 miles per gallon.) But I don't drive often enough or value vehicles enough to justify having spent this much on a car.

I don't want to say this was a dumb move…but I think it was probably a dumb move.

Time will tell.

Looking ahead, 2021 should have zero large expenses. I hope. We've performed all of the repairs and upgrades we need to do on the house. (I say that, yet I'm worried about the foundation settling.) I just bought a car. My health is good. We have no big trips planned. Our food spending seems to be under control. I have high hopes that 2021 will, at long last, be a year without major outlays. Fingers crossed!

Final Thoughts

Honestly, nothing else about my spending worries me. There were a couple of categories that saw increases last year — books and movies — but this doesn't bother me. COVID has led me to read more and to watch more shows. These forms of entertainment are relatively inexpensive. All the same, I'll keep an eye out to be sure my book and movie spending doesn't become problematic.

Here are a couple of final thoughts after crunching the numbers.

  • My new electric hybrid is amazing when it comes to fuel costs. It has an electric range of roughly 16 miles. That doesn't seem like much, but it coveres 90% of my driving. I'm getting 53 miles per gallon overall. I last put gas in the tank on November 8th and it's still half full. (The downside is that it only gets about 23 mpg when using the combustion engine.) My fuel expense has dropped from $100/month to $20/month.
  • My spending on streaming services boomed at the end of 2020, but part of that is because I'm researching and writing a GRS article on the subject. Three TV-replacement services totals $200/month! But I only had those for one month. (And, in retrospect, I should have made them a business expense.)

The bottom line? Last year was pretty good for me. I'm certainly starting 2021 in a much better mental state than I started 2020. Things aren't perfect but are they ever? I have a good life, an amazing partner in Kim, and I'm currently enjoying the work I'm doing here at Get Rich Slowly and at my newly-revived personal site.

Looking ahead, I don't have any specific personal financial goals. I guess that I want to increase my income. To that end, I'll continue channeling my renewed focus on this website.

2020 was a mixed bag for the business side of Get Rich Slowly. The initial expenses in re-acquiring the site have been paid, so my costs were a lot lower last year. That said, so was revenue. The site earned something like $72,000 (before expenses) in 2019. In 2020, that fell to about $30,000.

Some of my colleagues make big bucks from their blogs. I don't. I'm okay with that, though, because I recognize that many of the decisions I make are deliberately reader-centric, which means I'm foregoing easy money. Still, it would be nice to boost revenue so that I could draw income from the work I do here. Let's see what that looks like going forward…

Okay, it's your turn. How was your 2020?

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Steveark
Steveark
6 months ago

It was a good year for us, in spite of the hardships faced by so many. Our net worth went up over $300K even though I earned less consulting than I had in any of the other five years since I retired, and significantly less than we spent. We traveled by car a lot, many thousands of miles, to hike, bushwhack, work, fish, off road, see our grown kids, get medical care and play team tennis. I replaced one of our three older cars with a newer one that is my dream ride. One daughter got married to a wonderful… Read more »

Jack
Jack
6 months ago

Hi JD,
Can you elaborate on how your net worth went down when the market went up? Did you basically spend more than the gains in the market?
jack

Jack
Jack
6 months ago

Also, how do you only have $200,000 in taxable accounts when you sold GRS for millions years ago and invested the money since? Even if you had to give your ex wife half, and pay taxes, you should still have at least $1 million in taxable investments no?

Financial Samurai
Financial Samurai
6 months ago
Reply to  J.D. Roth

Hi JD, Thanks for sharing. Sounds like you are undercounting your net worth as you did mention. Just add back the value of GRS or whatever you paid for it. Just because the value isn’t liquid doesn’t mean it’s not worth something. Also, didn’t you have a condominium? Since you sold that condominium, it’s just a transfer of value into your house. So it’s kind of like a wash as well. I would ignore the Housing estimate value. They are not reliable. Can you share the post you wrote on your $150,000 angel investing? It’s not a mistake unless they’ve… Read more »

Christy L Stevens
Christy L Stevens
6 months ago
Reply to  J.D. Roth

Can you say more about why you ought to be renting and that the purchase of the condo was a mistake?

Joe
Joe
6 months ago
Reply to  J.D. Roth

Can you refinance and get some cash out? The interest rate is still very low.

Janette
Janette
6 months ago
Reply to  J.D. Roth

First, I agree that you will probably not make up the money you have put into your house- but the house was/is a positive start over in your life. Saying that- it is very difficult to finance a house that is paid off. Believe me. I cannot get. a mortgage on my house—but I can get a home equity loan (at a much higher rate). I have learned, the hard way, to keep a small mortgage on our next house. You might consider searching for someone, anyone, who will give you a mortgage and then “renting” from yourself. My sister… Read more »

Treo
Treo
6 months ago

Yeah, I would be very curious to understand your rationale here better as well. I believe that angel investing can be a really great way to not only build potential wealth, but also to build relationships that eventually lead to passive income (board seats, consulting referrals, etc.). Having said that, you have to know what you are investing in, in other words, you need some domain expertise and you need to really vet the founders if you don’t already know them very well. My other recommendation would be to phase your angel investments. Don’t write $50-$100k checks in one shot,… Read more »

Liz
Liz
6 months ago

Congrats on cutting down on alcohol. I am finding it keeps me from sleeping as I have entered the 40s. Sleep vs alcohol? No question what I prefer!

Ivan
Ivan
6 months ago

Happy new year, J. D.! I am glad you are doing well. My year was generally good. Economically we had new expenses and less income. However, we are still managing and trying to get around that. Gas expense went down, food expense was about the same. Energy consumption went up. We stayed at home, going out only for supplies, doctor appointments, and barely to exercise within distance and time constraints to avoid health risks. Stress level went up, exercise was up also so it was a counterpart. Adaptation and isolation had to be part of our norms. While also using… Read more »

AB
AB
6 months ago

Two questions: Why $40K on a Mini to save $80/month on gas vs. a used Nissan Leaf or something similar? Is the Mini Cooper brand a status thing for you or…? You keep saying that you can’t tap your retirement account investments for another 8 years without penalty, but there are many ways around this, which are laid out in great detail by a number of personal finance bloggers. If I recall you believe you have a lower-than-average life expectancy based on family history, so it would make sense to start drawing down your retirement accounts using some of the… Read more »

RichardP
RichardP
6 months ago
Reply to  J.D. Roth

Definitely look at ways to tap the retirement accounts early. Before I retired, I researched it and, if I recall correctly, there were 14 different ways the IRS allowed you to avoid the penalty. The one I chose, which seems very versatile, is the SEPP method (Substantially Equal Periodic Payments). This method has three allowed calculation tactics. In the one I chose, you basically withdraw what would be the RMD amount based on the IRS tables for your current age. You MUST continue these withdrawals for either five years or until you reach 59-1/2; whichever comes LAST. You can start… Read more »

Max
Max
6 months ago

Thanks for sharing! I encourage you to sell that car and purchase a used battery electric vehicle such as the Chevy Bolt. They perform wonderfully, minimize human health impacts compared to gas vehicles (air quality and climate change), and can be found for less than $20,000. I just purchased one here, in Anchorage, for $15,000 with 30,000 miles. If most of your trips are short range, consider a used Nissan Leaf for perhaps $6,000.

Adam
Adam
6 months ago

Thank you for sharing all this with us, and big congratulations on your personal development in 2020! It’s so heartening to see the achievement on the things money can’t buy. Financially our household has rocked out. Net worth went from $719,931 to $907,705 and has since added $13k just over the last week. A bathroom reno in January was fortunately timed since we’ve all become so much more housebound. My wife and I are both introverts — between four walks a day and his regular antics our dog provides 90% of the socialization we’ve needed. We quarantined hard for two… Read more »

MSB
MSB
6 months ago

Hi JD. Interesting article–I continue to be amazed at your openness in sharing your financial details, and the thoughts that led to certain decisions. Our net worth ($2.3M –> $2.5M) is up 8.8% YoY due to increased value of home (+75K) and maxing out retirement savings opportunities (roth 401k + roth IRA’s + HSA’s). Not much stock/mutual fund increase as I converted our positions to largely cash on 11/9/16, and have basically (stupidly?) sat out of the stock market for mental health reasons–we locked in our gains of the previous 16 years, and didn’t want expose our retirement to the… Read more »

Joe
Joe
6 months ago

It’s good that you’re better mentally now. You need to be healthy to move forward. No more angel investing for me either. I learned that lesson in my 20s, thankfully. It took 3 bad investments with friends. Ugh!
Good luck with increasing your income. You might need to make some concession on GRS and learn to okay with it. IMO, most readers are okay with you making some money.
Oh, it was a good year for us overall. Our cash flow was tighter than usual, but it was still positive. Also, our net worth increased. I can’t complain.

Mr. 39 Months
Mr. 39 Months
6 months ago

Thanks for the update. The alcohol spend is a lot for me (I rarely drink) but I can see, with the price of booze nowadays, how you can spend $3,600/year on it. Congrats on reducing that.
2020 was a good year at 39Months, all things considered. we increased our net worth and stayed healthy.
Let’s hope 2021 is great!

Joanne
Joanne
6 months ago

JD,
Great summary and welcome to 2021! Hoping for a better year for all of us.
I’m writing here because I can’t get into anything on the Folded Space site. I’m one of those ‘five people’ (probably many more!) getting that Internal Server Error message when I try to read more of any article or even comment. So, I’m here to report a problem you already know about, but also to thank you for your plans of changing hosts for your site.
Keep up the good work! I love your writing and have been following you for years.
Joanne

Alicia
Alicia
6 months ago

HI JD,

What about the box factory? Are you still working there or volunteering your time free of charge or no? I’m glad you hit your goals for 2020 and hope you are staying safe. As for walk-ability and bike riding seems to be up during this pandemic maybe not during the winter where you stay but i know personally me in Hawaii who never used to go for walks started getting into the habit for 2020 though i stopped Oct to Dec.

Kristen
Kristen
6 months ago

Has income at the site dropped because of fewer visits? I’ve followed your blog since 2006 or 2007, but you’ve been posting so infrequently lately that I don’t check it very often anymore. I’d happily get back into the habit 🙂 I am also on my second Mini Cooper, though mine isn’t a hybrid, but I bought mine used and could not be happier with it. 2020 wasn’t a great year for us. We own a small business in an ‘essential’ industry, so we worked a lot and had no real time off. But I’m also thankful we were able… Read more »

David @ Filled With Money
David @ Filled With Money
6 months ago

We all appreciate the transparency with the numbers of an early retiree. it makes us see the bigger picture and not just everything will keep climbing upward with no end in sight. Appreciate the transparency and here’s to an even better 2021!

Jennifer
Jennifer
6 months ago

Hi JD, thank you for being transparent with your finance and your personal struggles (eg depression). Understand that you are living off your investment. Do you mind sharing your draw down strategy? Thanks

Jason
Jason
6 months ago

I’m curious when you mention that you can’t touch your retirement accounts for eight years until age 59-1/2: Is there a reason you aren’t choosing to take periodic payments on a regular distribution schedule to avoid the tax penalty but still get early access to the money? If it’s personal, no reason to answer, but if there’s an answer that would be helpful to GRS readers, please share! I’m hoping to retire not too far off from your (inferred) current age, but was counting on periodic payments as a part of that strategy. Otherwise, it makes me want to hang… Read more »

Angelica V Gonzalez
Angelica V Gonzalez
6 months ago

JD – love reading the blogs & comments, but is there a way to change the comment color from light gray to something a little bolder so I can read it better? Thanks!

Bret @ Hope to Prosper
Bret @ Hope to Prosper
5 months ago

Thankfully, 2020 was a great year for me. The stock market dove in March, but I didn’t panic and had my best year in the market ever. I still have my job, even though I was supposed to get laid-off on December 30th and a bunch of my coworkers are gone.
I hope 2021 is even half as good as 2020 was, minus the pandemic. At the very least, it will be an interesting year and likely a year of change, hopefully for the better.
I’m glad to see you are still posting away JD.

Brooklyn Money
Brooklyn Money
5 months ago

Thanks for being so transparent, JD. And congrats on the mental and physical health progress you made in 2020. I’ve been reading your blog on and off since the early days, so I’m happy to see you posting more. I also marvel at your ability to spend on things of value to you like the Mini Cooper. I am much more conservative with my spending and saving but I’m beginning to feel like I’ll never let myself quit my job because I’ll never feel like I have “enough.”