You Can't Build Wealth Without $15k Losses in December

December was rough.

Well back to the intro, Lawrence Delva-Gonzalez, The Neighborhood Finance Guy writes about financial literacy topics which include but are not limited to Personal Finance, Better Budgeting, Tax Efficient Money Management, Steady Growth Investment strategies, Retirement tips, and Net Worth Tracking. The goal is to help you make effective decisions and set S.M.A.R.T+E.R. goals with your money.

The information is free but the struggle is not sold separately.

Table of Contents

Inflation, Bear Markets, and A Negative Santa Claus Rally in December

December 2022 was a wild month to end a very bad investment year. If you bought the dip, it kept dipping and settled around -20%.

The Bear Market is here. Although analysts are predicting that the US will narrowly avoid a recession, it won’t feel that way.

Prices are up and so are emotions. Be careful out there. People are on a short pandemic fuse. China might have unleashed a new variant when they decreased travel restrictions.

It might be a New Year, but it’s still the same confusion.

Sales and Holiday Revenues are up, however, most of it is due to credit card spending. Savings are down. While the same analysts are hoping that Europe will take a page from our consumerism and spend into their recession. See Exhibit #A below

All things considered, brace yourself.

Try not to scare yourself into putting all your money in bank savings account at 0.01%. A lot of great companies like Amazon, Google, Apple, and Microsoft are on sale. Down as much as 40%, translates to a solid buy in 2023. You will have to hold until late 2024 to see the wins.

Try not to stand flatfooted on this one, people are winning with investments.

A Million More Celebrations and Travel in December

While stocks are back to 2020 levels, everything else feels the same.

The White House tried as it may redress public concerns but failed again. Misinformation was allowed to spread for far too long and now we are paying the price.

With that said, we will once again set our eyes on a restart after the Fourth of July 2024. People are celebrating until the money runs out.

“Sit tight and Assess.” Just in case you are bored, feel free to implement the month-to-month financial plan that can help you get rich quickly.

Now Back to the December Breakdown

I have a grand total of two fans who read this so here we go. If you are new, this article showcases the TNFG monthly Net Worth Breakdown for December 2022. There are always usable financial nuggets and aha moments that might help you along the way.

Really Just Two Fans. Unfortunately, that’s true.

Stocks Decimated Our December Goals

Beyond tightening the war chest (again), my wife and I are plotting to buy a new EV car in 2023 and a Home in 2024. The only problem with that plan is that we love to spend. Mainly on Amazon and Travel. After looking at the numbers, we spent nearly $40,000 on Amazon $AMZN in the last 7yrs.

That’s a lot of boxes. We’d be richer if we invested but then we wouldn’t have all the stuff. We even purchased wet suits. While we don’t eat out a lot, our travel cost went up to $25,000 for 2022.

I brought that up to warn you guys that Instagram travel is expensive.

Either way, we hit $755,000 net worth – adding nearly $100,000 this year. This is enough for a victory lap but I’m kinda exhausted with the market ups and down.

Here’s the Quick Summary:

What Happens Next!

The world is changing post-COVID.

There is a rise in mental health issues and a slide back to poverty for a lot of people. The transition will be harder by May 2024. Until then, my family plans to keep our heads down, work out and plan for the next anniversary trip (December 2023). Got to escape when you can to decompress.

All in all -1.92% increase. The cash value growth is shy of $15,000. We will keep socking away money in the first QTR of 2023. However, our expectations have decreased in comparison to 2021.

Our Expenses for December 2022

Food Prices are not Excessive, I give up!

I’ve talked about price inflation for months. And now, it’s worth it. I foresee prices stabilizing down 20% but we have a new high that’s here to stay.

Our Food & Dining budget went from $500 (2019) to as high as $1,000. That’s a 60% increase from 2019. No matter how we slice it, this is likely the new normal.

We’ve been doing a lot of micro-shopping through Amazon for clothes and other things.

And we were hit with a huge AMEX Platinum annual fee of $695.

Since we are going to front-load our credit card for points, I expect to recoup the fees through cash-back rewards. For 2022, credit card companies paid us nearly $1,300.

The points game can be rewarding but you have to be extremely disciplined. The negative in Business Services is a good thing; that’s from our rental property income. Travel was expected since we were in Portugal and Spain.

We also paid the January mortgages in December for the extra tax break for 2022.

So Where was the December Wins? Losses?

In order; Debt Repayments; yep that’s it. An improvement of $334. Everything else was a giant L.

We hit our total debt repayment goal for the last 12 months. With extra mortgage principles, we hit $124,052 in repayments. Student loan forbearance is still in effect. This is the best time to work to pay off debts before they pop back up in September 2023.

I’ve saved as much as $30,000 by not paying my student loans and all those counts as payments under the Public Student Loan Forgiveness (PSLF).

Bumpy road for investments

Total December investment losses plummeted to $18,381. 2020-2021 was easy. 2022 was the learning curve. We contributed to the max in our 401ks, ROTH IRAs, and HSA.

Investing is definitely the missing piece to gaining wealth. Even when the market is down. If you need tips on how to set up a solid portfolio, read How to Build a Long-Term Investment Portfolio Earning 250%.

Savings held at $5,000. After a year of unexpected health crises, we had to up our Acid net/max EF. The net/max financial plan hasn’t failed us yet but it’s time to hedge our saving bets.

What can we honestly do better?

Food and Unexpected expenses

As stated early, we can’t control inflation, shipping costs, and global labor shortages. However, we can control food waste and our waistline. We can also slow down spending on unnecessary items. Travel is our vice so we aren’t cutting that. But we can acknowledge that it’s a luxury.

We closed out the year with over $750,000. That’s the highlight. Just +$250,000 to millionaire status.

What is the Next Step for Us?

Still working on e-Books or other items for the website

Beyond that here are our overarching goals for 2023:

Keeping our expenses where they should be. “So stop equating happiness and social acceptance based on the money you spend.“
Get to $75,000 in M1 Finance focusing on Growth and Dividend Income that generates at least $2,500 in passive income in 2022. Check out the portfolio in real time. If you like the platform and want to start investing, I have the $10 for $10 referral if you need it – https://m1.finance/SYdqDJ2SyADC.
Shooting for a sustained investment rate with the push for a $1 Million net worth in 1.5 Years. To help monitor your savings, cash flow, net worth, investments, retirement, and freer with Personal Capital! Sign up with my link & get a $20 Amazon gift card. *Terms apply. https://pcap.rocks/lawrencegonz

Disclosure: This post is brought to you by the Neighborhood Finance Guy. We highlight financial literacy information, resources, and more on your way to money management goals and personal wealth. Our goal is to help you make S.M.A.R.T.E.R decisions with our money. We do not give investment advice or encourage you to adopt a certain investment strategy. Your personal finance is up to you. If you take action based on one of our recommendations, we earned $200 as of 12.2022. We operate independently.

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