Financial Update June 2020

Welcome to the latest financial update for the Millers. As of June 30, 2020, our investment portfolio has increased to $565,880.

When 2020 started who could’ve imagined the first six months of the year would look the way it does. We are in the middle of a health crisis. Close to 130,000 people have died due to complications. More than 40 million people filed for unemployment. We know wall street isn’t the economy. Nevertheless, the stock market was down 13% in March and down more than 20% for the first quarter of the year.

Helping several family members navigate the unemployment systems was a reminder of how broken the systems are for those who need help the most.  I couldn’t help but feel guilt in the midst of all this chaos. In the blog post about wealth guilt, I wrote about how I’ve struggled in the past with feeling guilty about being financially secure. I had to keep reminding myself that it was okay for me to be okay and focused on being grateful that I was.

Why talk about money now?

In the middle of all this chaos, if you are fortunate to still have a job, I want to be that friend who encourages you to take control of your finances! I share our financial updates as encouragement and inspiration for what you can accomplish.

A fellow financial blogger encouraged me to continue to write and share about personal finances. I didn’t feel inspired or motivated to produce personal finance content with everything going on in our country. However, I remembered that in 2008, smack dab in the middle of the recession, I started at a job that more than doubled my salary.

I moved cross country for this new job. I was moving from living with my dad to having an apartment of my own again. My expenses would increase but so was my pay. I had enough discretionary income to begin investing. The unfortunate thing is, I did not.

I wish I had known to contribute up to the match in my retirement account. If only I had known that Thrift Saving Plans defaulted to contributions to the G Fund until you chose an investment fund. The G Fund is nothing more a low volatility U.S. bond fund. If I would have started investing in 2008 when I started at the new gig, I would’ve been purchasing all through the stock market lows.

For a quick recap of our last financial update, we started the year with a balance in our investment portfolio of $517,917. Hitting the half-million-dollar mark was an accomplishment for us.  At the end of March, we watched as our portfolio plummeted by more than $100,000! Despite the rollercoaster ride the first half of the year has been, our investment portfolio is up.

Money Moves

We made a few money moves that we hadn’t anticipated making. In February, I opened a Marcus by Goldman Sachs certificate of deposit(CD) and deposited about half of our emergency fund. The $10,000 move into a CD, locked in an interest rate of 2.15% for 12 months. It was less than a month later when rates on CDs and high yield savings accounts dropped. Currently, the offer for new accounts is 1.10% APY.

One of our Roth accounts is fully funded. We are $600 shy from contributing the full $6,000 allowable amount. During the drop in the market, I was able to buy Vanguard Index Fund shares, VTSAX, at prices ranging from $54.49 – $68.84.  The same fund had reached an all-time at $83.79 just a few weeks prior.  $54.49 was the lowest price I have paid for VTSAX since beginning to invest in that fund in 2017.

In addition to maxing out one of the Roth IRAs, we also added about $10,710 to our after-tax brokerage accounts. Although I considered then quickly rejected it, we used money from a real estate investing savings account to invest instead of our emergency fund. We’ve been saving up to purchase a second rental property and instead used it to invest in the stock market.

I just want to emphasize here that you should NEVER use funds earmarked as an emergency fund to invest. Every account has a purpose and I am glad that I avoided falling into the trap. My dear friend Maria over at a Handful of Thoughts wrote about the importance of having a personal investment policy statement. If you don’t have one, consider it.

Taking advantage of some bank offers, we also made an additional $800 just by opening a new checking account. Check out Bankrate, where they share the best bank account bonuses being offered.

I also made $750 from a side hustle during this time in quarantine. Yay for additional income!

Progress to FIRE

Our employer-sponsored accounts are on track to meeting the contribution limit by the end of the year. The health savings account (HSA) is 86% funded. My employer contributes $5,00o during the first half of the year.  If you are not sure what an HSA is, please check out this blog post where I explain all the benefits of the health savings account. 

It’s incredible to think about our progress on the FIRE journey specifically during this time. According to the simplest of retirement calculators, if we contribute $5,000 for the next 60 months and have a growth rate of 7% our investments will grow to $1,162,873.

2020 Money Goals

Our investing goal for this year is to add an additional $80,000 of contributions to our portfolio. This would include the following:

• $39,000 in 401k/TSP/403b Contributions ($19,500 x 2)
• $14,000 in employer retirement contributions
• $7,000 HSA ($5k from employer + $2k from us)
• $12,000 Roth IRA contributions ($6,000 x 2)
• $8,000 to our taxable brokerage accounts

We’ve exceeded our goals for our taxable brokerage account already. It’s time to replenish the savings account for future real estate investing.

The importance of having an emergency fund has been reaffirmed during this time. We are incredibly fortunate that both my husband and I have remained healthy and employed during this time. Nevertheless, I didn’t feel completely safe with the amount in our emergency fund. Mr. Miller feels confident with having a six-month emergency fund. Since I’d feel more at peace with a larger emergency fund, we are increasing it.  I know it’s a lot but I’d rather feel secure than to be worried.

Has this crazy time in our world encouraged you to change things in your finances?

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