2015: Happy New Year!

Happy New Year everyone!  Whether you were out partying at the club, staying in with friends and loved ones, at church, or sleeping in early - I hope you all had a great night.  Like the last few years, me and my wife enjoyed a wonderful dinner and did the new year’s count down at our friend’s house with several of our closest friends. 

This was a very different New Year’s Eve party than those of the past.  For the first time, the party was made up of couples only, many of them married.  Several babies and kids were at the party, as well as a few pregnant women (including my wife!).  The times partying at a club and drinking too much are definitely behind us.  Seems like we are now part of the “boring” group – our single friends were out to different parties all night.    

As we look forward to an exciting new year, I also like to take the time to reflect on how 2014 went for us.  I mentioned last year that 2013 was the best year for us to date.  Well, 2014 kicked 2013’s ass.  This year has treated us even better.   

Promotions and salary increases

Both of us have enjoyed some promotions, salary increases, and bonuses this year.  Instead of using extra money to inflate our lifestyles, we have kept our conscious spending the same, and have been saving and investing any extra money that comes our way. 

We also continue to hustle on the side, and we have made an extra $28,663.42 worth of side income in the year 2014!  Side hustle income helps us travel for free, get almost anything we want on Amazon paid for with gift cards, and save a lot of extra money.  Who would say no to an extra $28,663.42 on top of their regular paychecks?  There is a limit to how much you can save, but there is no limit to how much you can earn on the side. 

Staying consistent with saving and investing
Staying consistent with saving and investing has definitely been the biggest win for us.  It can be difficult to take on a new habit, but after sticking with a new habit for a while, it now becomes a routine and a lifestyle change.  We continue to live in a badass frugal manner.  We cancelled our satellite television years ago with no regrets or desires to sign up in the future.

I’ve made no haircut appointments since my wife is my barber.  For the entire year, neither of us had any clothing dry cleaned, since we continue to use our garment steamer.  We continue to keep track of our finances together with the online sites clearcheckbook and mint.  Having a spouse or significant other with the same money mindset is one of the keys to building real wealth.           

In 2014, we definitely killed our electricity bill.  For the entire year, our electricity bill never went above $37.  Our highest energy bill was January of 2014, at a whopping $36.15.  The average rate for our monthly bill was only $24.20!  And this is for a 2400 square foot home with up to 4 people living in it at any given time.  The costs of keeping electricity running in our home totaled only $290.34 for 2014.  Compare that to the average electricity bill for a home in our city of $120 per month, or $1,440 a year and we are saving $1,149.66 a year on electricity!  This is without the use of solar panels or any government or city assistance.  We are lucky to live in beautiful Southern California, where the weather is very consistent and you do not need to run air conditioning most of the year.  Simple tricks such as: unplugging all unused appliances, using only energy efficient appliances, hang drying our clothing, and using electricity during non-peak energy rates goes a long way towards saving money.     

One of our biggest wins financially has been to finally max out my 401K annual contribution, which has been to invest $17,500 of pre tax dollars into my retirement account for the year 2014.  Don’t forget that this new year (2015), there is a new maximum contribution limit of $18,000 if you are age 50 or younger.  Since I get paid twice a month, I have set my 401K contributions to $750 per pay period.  The two of us also make sure we max out our Roth IRAs, which has a maximum contribution limit of $5,500 if you are aged 50 or younger.  When we have extra money, we put it into our taxable investment account.  Whether the stock market is up or down, we will continue to max out my 401K and our Roth IRAs.  Investing should be boring and consistent.  We never try to time the market and we follow the simple Bogleheads 3 fund portfolio.   

2014 was yet another good year for the stock market, which was up around 11%.  International stock markets were down slightly and not much happened with bonds.  We started January 2014 with total investment value of $81,300.  Here’s an update on our investments as we start 2015:

Our investments include money from our Roth IRAs, 401Ks, and taxable accounts.  Money in our checking and savings accounts are not investments and are not included.  The value of our home equity is also not included because our home is not an investment vehicle. 

For 2014, we’ve increased our investment balance by $61,314 with a combination of deposits and market returns.  We’ve come a long way from being saddled with credit card debt and negative net worth to steadily increasing our net worth on our way to our first million (our net worth has already surpassed $500K). 

There is never a guarantee that our investments will always continue to rapidly increase.  In fact, most likely there will be some type of market correction or crash in the stock market within the next decade.  We won’t be touching the money in our investment accounts for at least 10 years, and we will make regular contributions whenever we have money available, whether the market is down or up.  When the market crash happens, we’ll be able to buy more shares of domestic and international stocks on sale.  For a lot more thorough reading on stocks, blogger jlcollinsnh has a great list of well written and easy to understand articles here. 

Learning more about real estate
Real estate investing is something that I am slowly trying to read up and learn more about.  So far I am learning that it definitely takes a lot more work than simply investing in index funds and the stock market.  We are holding onto some cash in a separate savings account and hope to use it to purchase our first rental property this year.  We will not be touching our retirement account balances to fund any real estate investing we do.  I’ve been doing a lot of reading on the Bigger Pockets forum.  Adding real estate to our investments will hopefully be another way that we can keep diversified.  With real estate investing, you earn income in several ways.  Renters provide in monthly cash flow.  The property should increase in value over time, which will increase its equity.  Many business expenses, home depreciation and repairs provide tax write offs.  

    

Staying healthy
We have been consistently eating in for lunch and eating out a lot less for dinners.   We try to buy non-processed foods, and eat plenty of fruits and vegetables.  Eating in helps keep us healthy and fattens our savings.  I’m still trying to make bringing lunch to work a trend, but it hasn’t gained much traction over the last few years.  It still seems that those who make the lowest salaries seem to consistently eat out the most, and complain the most about “how hard it is to make ends meet.” 

With consistency, I start off almost every weekday morning waking up at 6a.m to take Abby for a walk and run.  On weekends, Abby won’t let us sleep past 7a.m, when she starts barking to wake us up.  I started this New Year’s Day with a 30-minute light jog / walk with Abby around our neighborhood.  

The chilly air felt great on my face and it felt good to know that I am starting the New Year off on a healthy note.  In the afternoon and evenings, my wife and I walk Abby together.  Whenever I need a break from reading or writing, and Abby is happy to join me on a spontaneous walk. 

Big year of travel
This past year, we have been lucky to travel to lots of different places and stay in different hotels, often for free with our credit card miles and points.  Using our miles and points to book free flights and hotel stays help us save money to spend on entertainment and food!

• We visited San Francisco, Sunnyvale and Monterey in February and stayed at the Country Inn & Suites hotel for free
• We flew to Portland in March to visit the in-laws
• We flew to Miami for one night and stayed at the Element hotel for free in April
• We took a free 7 day cruise on the Norwegian Epic to Jamaica and Mexico in April.  In Costa Maya, me and my friend went lionfish hunting We went to San Francisco in May with a free hotel stay at Four Points Sheraton
• My wife flew to Boston in August
• We went to Las Vegas in September
• We visited Honolulu, Tokyo, Taipei, Okinawa and then home on Cathay Pacific First Class in November
• We flew to Portland again in December to visit the in-laws

Unexpected incidents
While we did not suffer any “oh shit” moments with our finances this year, not everything panned out as expected. 

No more bike riding to work
We started out 2014 strong with a goal of bike riding to the office at least 2 times a week.  We made great progress for a while.  Biking made us feel so fit, invigorated and healthy.  Things were going great.

Everything changed for my wife one morning.  On her bike ride to work my wife got hit by a car with a distracted driver.  She was taken to the emergency room immediately and eventually recovered after undergoing physical therapy for 3 months.  For several months after my wife’s bike accident, I stubbornly continued to bike to the office.  After several bike riding snafus, a near accident, and a talk with my boss about bike riding safety, I officially stopped riding my bike to work in July of 2014.

Unemployment
At the beginning of the year and without warning, my wife’s previous company nearly collapsed, almost went bankrupt and then ended up laying off up to 50% of their entire staff.  My wife watched many of her coworkers get laid off weeks before she did, which mentally prepared her to also be let go. 

My wife received a severance package and also quickly applied for and was approved for unemployment benefits.  It didn’t take long for my wife to find a better job with a larger corporation, better benefits, and a happier work environment.  The severance package along with regular unemployment checks made the period of unemployment bearable.  Also, since our expenses are very minimal, the loss of one income was not a huge setback for us.  For families that depend on two full incomes just to get by, one layoff can be financially devastating.  Practicing frugality and having a large emergency fund of cash (6 months preferred) makes financial setbacks less debilitating.      

Abby
As many of you may know, the two of us adopted a shaggy puppy named Abby in May 2014.  

Abby at 6 months

We have not regretted our decision to adopt for one moment!  Owning a dog is a huge responsibility and requires a lot of commitment.   A pet is a member of the family and if you can’t be there to take care of your pet, you should not own one.  We have done our best to try to provide a healthy environment for Abby.

 

Abby today at 1 year

We still walk Abby 2-3 times a day without fail, often times more frequently. She is friendly to every dog and person we meet along our walking paths.  Abby does not bark or growl at anyone.  She doesn’t have any fear or apprehension around even the biggest of dogs.  Walking and running with Abby for 10-30 minutes at a time has been a great way for us to get some routine cardiovascular exercise.  Our walks provide a relaxing time to reflect on our thoughts. 

We are lucky to live 1.2 miles from a dog park and we try to take Abby to the park about 2 times a week.  She was able to quickly fit in amongst the other dogs, and plays nice with everyone.  While walking and jogging can be great exercise for us, Abby doesn’t get enough exercise this way.  At the dog park, she can run freely with the other dogs without being leashed.    While Abby is still a puppy (just turned 1 year old), she is already quickly becoming very sociable around other dogs and people.  As a terrier mix, Abby has so much energy to burn – constant walks, jogs, and dog park visits help meet her active demands.  Hopefully Abby will calm down a bit when the baby comes.

Plumbing water main leak
One day our toilet bowl kept leaking.  I called a few plumbers and ultimately went with one that was highly rated on yelp.  It turned out that the flange and gasket underneath our old toilet was broken and the plumber needed to completely rebuild some piping and install a new flange and gasket.  Since we were using the 30-year-old toilet that came with our house, we used this opportunity to buy a new high water efficiency one.  Hopefully this should help lower our water bill.  The cost of the toilet (which we paid for directly at Home Depot) was $150.12 and the plumber expenses (which included installation of new parts, removal and disposal of old toilet, and installation of new toilet) totaled $450.  We paid for these services from our Home Improvement bank account.

Abby gets an infection
A month ago out of the blue, Abby got a urinary tract infection (UTI).  We noticed this at the dog park when there was blood in her urine.  I called up the vet immediately and scheduled Abby for a same day visit.  Per a recommendation from a dog-loving friend of mine, I collected a sample of her urine from a zip lock bag and brought it to the vet for urine analysis.

The cost of the vet examination was $50.88, hazardous waste disposal was $4.78, Antibiotic injection in office was $47.93, oral antibiotic was $59.95, and urinalysis was $53.72 for a whopping total of $217.26.  While we do everything we can to make sure Abby is happy, fed healthy foods, and exercised regularly, she can still get infections.  We are there for Abby… and she is always there for us too!

Our high water bill
Our water bill continues to be high, even with the addition of low flow showerheads.  Our average monthly water bill comes out to $82.93, with our highest water bill at $102.74 and our lowest water bill at $65.37 (this month due to the rain).  This next year we will try to save more money on our water bill by buying more efficient toilets, taking shorter showers, and maybe even making use of rain water from a rain barrel (need to do more research on this). 

Jen’s pregnancy!
By far the biggest surprise of 2014 is my wife getting pregnant!

Already looking forward to what 2015 brings
This is now my fourth year blogging.  Thank you for all of your support along the way.  Thank you for your personal emails and comments.  This year, I aim to make more posts and share more details of our journey towards financial freedom.  This year, I wish you financial success, good health, and happiness!