250k Reasons Why A Mid-Year Financial Review is So Powerful
If you have never done a mid-year review, you need to reconsider. I’m reminded of the old saying, that what isn’t measured doesn’t grow. When it comes to your household’s wealth, you owe it to yourself to grab the measuring tap.
Contrary to what the financial experts and Bloomberg pundits estimated, 2024 is shaping up to be a rebound season with more surprises than the first election debate. It’s been a surprisingly stellar Mid-year for investors and an absolute bloodbath for consumers. Those who were either heavily leveraged in tech late in 2022 or early 2023 when the industry was down 40%, are sitting high on the hog. Although there have been several global financial emergencies as we thread the needle around this Cocaine Bear Recession, there are still opportunities for big wins.
Time waits for no one and success doesn’t visit cowards. While that sounded harsh, this is the BIG lesson of 2024. You can no longer rely on playing it safe in the Bond market, or nabbing a 4% High-Interest Savings Account while the money market account in a brokerage is paying out 5.5%. The game has changed. You need to stay on your toes for the next chance. The second half of 2024 may be headed for an extra 6 percent market gain with a likelihood of a Federal Reserve rate cut in Q4.
As for the TNFG household, with no big anniversary trip for 2024, we are pushing to close with a $1 million investment portfolio. With renovation $30,000 in home renovation and $59,000 to contribute to our investments; this year is expensive. However, if we play our cards right, we have a great chance to retire sooner than expected.
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Mid-Year Wealth Up $250k. That’s Likely $NVDA!
For context, we knew that this was coming. Specifically, Financial news people knew it was coming. The Federal Reserve Chairman warned that they would likely raise interest rates 20 times and won’t pull back until they reach the target of 2 percent. This sustained high interest rate environment prompted job losses from 2022 and well into 2024. In the end, it cost north of 30 million layoffs of which nearly 600,000 came from the tech side (Layoffs.fyi).
Post jobs report, investors are betting on September but I’m guessing it’s closer to November 2024.
The current consensus is that Q3 will be a draw with hopeful growth in Q4 if the Feds hit their comfort zone. Americans are concerned about affordable homes, prices at the pump, and the grocery store. Many are placing the blame on the Biden-Harris Administration. The Truth, no president controls the market.
We are in a global economy with more and more consumers vying for American products. It means, “These are the new prices.”
During this period, our household net worth jumped +$250,000 (see above) with 34.43% growth from our investments. We are still dollar-cost-averaging (DCA) into quality companies while niching down. For new investors, there is renewed confidence going into 2024 with the mantra BUY LOW and hold for dear life (#HODL).
Investment Performance for the Year, So Far
As you can see above, our household portfolio performance is trending upward. Something that most didn’t predict. We were in a rock and a hard financial place. America is managing, as Nvidia hit a $3 trillion market cap in June and settled on a high of $140 per share.
TNFG’s overall portfolio continues to beat the S&P. Yet I still think for the average investor, a simple index ETF like $VOO can cut the mustard. To think, I started with a $500 rollover into my 401k in 2014 when I got to DC.
Our portfolio is around +$940k now (July 8), and the net/max financial plan is still the same (see breakdown below):
- Invest to match in the 401k,
- Pay down credit card debt aggressively,
- Increase 401k contributions until max (i.e. limit $23k for 2024),
- Invest in a Traditional IRA (i.e. limit $7k for 2024) and Health Savings Account (ie limit $4,150 for 2024),
- Get more money back during tax season,
- Reinvest some more in an after-tax for dividends and
- Enjoy life!
Emergencies Hit When You Least Expect Them
2024 hasn’t been all milk and honey, we are taking this as an opportunity to grow.
While we are paying upfront for travel, we were hit with additional medical costs. On top of that, we are paying over $1,000 per month on the (2023) car note and insurance. That one is more of a self-inflicted wound.
And finally, we need to fork over at least $30,000 to renovate the bathrooms and bedrooms in a bid to sell the primary in 2025. Money is flowing in and out. This is one of the reasons, we cut our fall trips. We will have our Austin (Texas) trip in August.
The Banff trip in June was nice, a great opportunity to see the outdoors.
The Exhaustive Waiting Game
So far, my wife and I feel strained as we wait for opportunities to open up so we can move back to Florida. To get here, we had to reduce our investment contribution goals for the first half and ramp up our debt repayment strategy.
We also took money from our savings to pay for credit card debt. Why? It helps reduce monthly interest fees. This also meant that we used a lot of points as well. Every bit counts in a financial emergency. We are bringing the savings to around $5,000 for the year with a plan to boost it back up to $25,000 by 2027.
Why?
Instead of opting to just be debt-free, we are building wealth at a quicker pace through cash flow management. To put it simply, we use every dollar that comes in as efficiently as possible. We don’t allow money to sit there picking up less than 5% ROI for the year.
In 2022, I posted that my family had an Emergency Plan versus Emergency Savings. Time tested this theory and the strategy held. From credit card points and HSA reimbursements, we were able to cover the cost. All with minimal direct impact on our overall wealth goals.
Disasters strike and unfortunately, they will strike again.
It’s unfair but like a hurricane, it doesn’t discriminate. Cut back on unnecessary expenses when times are great. And double down on getting an emergency savings plan. You never know when the next downturn will come. I have five friends going through an unemployment period. Be grateful the the current jobs you have, it’s tough on the unemployment side.
So What’s New for the Mid-Year? How’s the Cash Flow looking?
If you are new to my content, this blog post showcases the TNFG’s Semiannual Breakdown for 2024.
Like half time, it’s a great time for my wife and I to reflect. There are always usable financial nuggets and aha moments that might help you along the way. High prices outside should translate to spending more time indoors, for us. We are hoping that’s the case for your pockets as well.
It’s not all bad. This is still a great opportunity to build better habits. Check out TNFG’s Top 3 Best SMART+ER Goal books for inspiration.
One of the elements that has helped us the most is cash flow management. It’s not discussed enough in the financial literacy space online. (See below our inflow and outflow). Checking these can give you a better perspective on where your dollars are going and how effective they are.
Moving beyond Emergency and Survival Mode
I don’t like to play too close to the edge. So here’s TNFG’s game plan:
- Reach a total of $5,000 Bank Savings Goal in July 2024,
- Work with extended family for Wills and Estate Planning,
- Get a Term Life Insurance policy outside of work in 2025,
- Start re-stacking credit card rewards and miles (Big trips in 2025),
- Boost +$10,000 into the Savings Plan for 2026,
- And settle with an extra $15,000 in 2027
Our family goal is to float savings for emergencies, rental real estate coverage, and/or dry powder for investments. Either way, having $50,000 on the side seems like a lot but emergencies are costing more and more.
Rule of thumbs for savings:
- No more than 3x months of expenses. For example, if your average monthly expense is $3,000, you would need $9,000.
- For families, especially if you rely on one income, that’s 6x months.
- If you are considering starting a business and quitting. I would highly recommend 1 year of savings. The caveat is that you go leaner on expenses in a demo year to feel what it’s like first.
Even though the game is unfair, there are always rules. If there are rules, there is always a trick to the game. Hard and challenging times are par for the course. They will happen. To mitigate them, you have to stay vigilant and work towards better outcomes today.
Still on track to Being Consumer Debt Free by the end of 2024
Here’s the Mid-Year Wealth Summary:
The 1st Half of 2024 was unexpected; the second half will be turbulent. Investing ended up being the saving grace for this mid-year.
We closed at $1,365,944 with a pending $18,000 401k correction (glitch in the Empower app). Either way, our main goal is well on the way. We had $912,337 in our total investments, we will be adding $59,000 and hope to earn another $58,000 in capital gains. The $1M investment portfolio is just phase 1 of our early retirement or 1-year sabbatical goal.
In total, we saw an increase of 18.29% of $249,807.
The biggest risk remains with Putin’s Russia and China. Beyond that, we are holding our breath to see if the low inflation rate will be sustained through Q4 2024 (post-election cycle). Turns out the summer time and back to school are high spending months for families which will impact Q4.
Either way, you need to invest. Every millionaire’s portfolio starts with a dollar; might as well lean into it. Time to let your dollars do the heavy lifting. Well, I guess that’s all I can rattle off for now. In the end, you can gather a lot of knowledge, but you will still have to take action to see the changes in your life.
Next wealth-building steps to close out the year?
The mid-year review allows us to calibrate our mission for 2024, “Become investment millionaires and plan the next great trip.” After that, we will be more health-focused. I need to get back to the gym. Turns out my mind only focuses on one thing at a time. Beyond that here are our overarching goals til Year End:
- Keeping our expenses where they should be. All about, “Not equating happiness and social acceptance based on the money you spend.“
- Add $15,000 in M1 Finance focusing on Growth and Passive Income that generates at least $5,000 in dividends in 2024. 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. *Terms apply – https://m1.finance/SYdqDJ2SyADC.
- Shooting for a sustained investment rate with the push for a $2 Million net worth in 2 Years (by YE 2026). To help monitor your savings, cash flow, net worth, investments, retirement, and more FREE with Empower (formally Personal Capital)! Sign up with my link & get a $20 Amazon gift card. *Terms apply. https://pcap.rocks/lawrencegonz
- Plan 2025 travel season. Heading back to Europe to make up for the 2020 trip.
- $30k repairs on the primary to sell and move to another state.
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