Yay, 2020 is over! We could all use a break from the drama. And the virus. But here in Colorado, life is still pretty good and I have much to look forward to in the new year. But, I’ll save that for another time. First, we must discuss 2020.
This is supposed to be a blog about personal finance and early retirement, so let’s start with money. From a financial perspective, our year was insane. The net-worth-o-meter increased $1,119,706.
During a pandemic.
In a time of massive political upheaval.
My first job paid me about $37,000 per year. Let’s do a little math:
$1,119,706 / $37,000 = 30.26
We made as much money as I would have made in 30 years of my normal job. For doing nothing.
I’m nothing special. I just mention these numbers to illustrate the power of compound interest. The bigger the snowball gets, the bigger the snowball gets. Save a little today and you’ll have a lot later.
Never forget this too:
It’s way better to let money work for you than to work for money.
Most of our gains were from a single stock (more on that in a moment), but if you’re a pure indexer, you had reason to be happy too. The S&P 500 returned an astounding 18.4%. And, this is why you should never, ever, ever, ever even think about trying to time markets.
To market time is a crime!
Well, not quite, but you’ll most likely be hurting yourself. Kinda like this:
Where The Gains Came From
Tesla started the year at around $100 and ended at $700, a gain of about $600,000. We don’t play the lottery, so we’re never going to win it. Tesla stock is the closest we’ll ever get to winning a lottery.
Back in 2012, I bought most of my Tesla stock for $5.78. It closed 2020 above $700. Those original shares are now a 15,000% return. Oof.
I could tell you I’m a stock savant, but that would be bullsh*t. The simple truth is that I got lucky. I was impressed with Elon Musk and his newest creation, the Model S, so I bought the stock. I could have never predicted the factors that propelled the stock to $700 (autonomy, mass production of cheaper models, a pickup truck, insurance, charging network, etc.). Pure luck.
This insane stock price growth will not continue at the same pace and its current valuation is exuberant, but I think Tesla has a bright future, so I’m holding on.
Always buy the company, never the stock.
Big Tech Stocks ($195,504)
Before I knew what an index fund was, I bought tech stocks. Tech companies had their moment during the pandemic and helped boost my portfolio:
- Amazon: $86,912
- Facebook: $82,600
- Google: $25,992
Again, I don’t think they’ll repeat this performance. The world will return to normal at some point and we’ll spend less time on our computers and more time outside. Also, I expect much of Big Tech to be regulated or even broken up soon.
So, Tesla and Big Tech accounted for $800,000 of our gains. The remaining $320,000 came from index funds, syndications deal payouts, Mindy’s side-hustle, the coworking space, and a $75,000 boost to our home value when we had it appraised for a cash-out refi.
Regarding that last one, we had paid cash for our home, but took out a mortgage when COVID reared its ugly spikes. We then invested the proceeds. How is this experiment going you ask? Pretty freaking well!
In case the spreadsheet above doesn’t make sense, here is the short version:
- Amount paid in mortgage interest: $6,344
- Gains from invested money: $96,306
- Gains if we had put it into VTSAX: $63,321
Leverage isn’t for everyone, but I just can’t pass up cheap debt.
Despite the pandemic, I managed to complete a load of house projects:
Bathroom ($1,000): I remodeled the smallest bathroom in the home (YouTube video here).
Deck/Pergola ($10,000): The cost would have been much more, but thankfully I ordered the wood at the end of February shortly before prices on building materials went nuts. I had fun with this project because I was able to solve two interesting problems:
- How do you build a curved deck? Especially difficult was bending the Trex for the picture frame finish (see second photo below).
- How do you build a pergola that spans 25 feet? The answer is aluminum I-beams.
Basement ($13,000): The is the single biggest project of our flip and most of the work is done, even if it looks like a disaster right now:
Windows/Sliding Doors ($17,000): This is the single most expensive project, partially because we went with fiberglass instead of vinyl. The fact that our home has large windows and three sliding doors didn’t help.
Random projects included:
- Loft for the kids
- Rocks for the yard
- Ceiling fans and new lighting in the bedrooms
- Whole house fan
I’m about to take a big break from home projects. They consumed my life and I want to focus on other projects in the new year.
Steps And Fitness
I managed to crank out over 6,643,630 steps which comes out to 18,151 per day.
This number is lower than it should be because my old Fitbit crapped out and it took a week to get a new one.
Most of these steps were the result of construction. This kept me very active which is just how I like my life.
I was talking to a neighbor a couple of years ago about luxury. She told me her definition of luxury was lying on a beach being served drinks all day. It’s nice to relax every once in a while, but I’m not a fan of that definition.
Here is how the dictionary defines it:
For me, luxury and comfort come from knowing that my body is in a state that allows me to do all of the things that I enjoy; building, hiking, biking, and creating. Health. I don’t ever want to stop moving. Self-sufficiency for as long as possible.
I wasn’t too good at first grade. And by “wasn’t too good,” I mean really bad. My lackluster performance eventually earned me a second tour of duty in the first grade.
During the first go-around, my teacher would award a student a gold star sicker if she/he did well on an assignment. I was slow, so I earned my first (and only) gold star many months after school started. To celebrate the accomplishment, my dad made me a gold star out of wood to hang in my bedroom. I still have it today:
My dad wasn’t a touchy-feely kind of person. His way of expressing himself was the gold star.
I hadn’t anticipated losing a parent at this point in my life. My dad was 72 when complications from an aortic dissection took him in July.
I’m happy that he was a great grandfather to my children and that they’re old enough to remember him.
Thanks for the star dad.
The asset I most value, aside from health, is interesting, diverse, and long-standing friends.-Warren Buffett
Pandemic life has been isolating. There are friends we haven’t seen since the beginning of 2020. With other friends, it just got awkward. Still others who had their lives changed by COVID decided to move to my hometown of Longmont. Some of it is strange. Some of it is surreal. Much of it sucks.
Some of the best parts of my 2020 were when I was able to get outside and see friends. I never thought my introverted self would be so happy to see other humans, but there you have it.
If you’re reading this, you made it through 2020. Congratulations!
Here’s to a happier and healthier 2021.
The way I see it, if you want the rainbow, you gotta put up with some rain.-Dolly Parton
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