7 Money Goals for 2020 to Make Us Rich: Year in Review

The year 2020 was the first year we actually put any money goals down on paper.

I know, I know.  NOT smart.  

Previously, we had the informal goals of paying tuition, increasing our savings, paying our mortgage on time, not going into debt and maxing out our Roth IRAs.  

But, for 2020 we decided to be more proactive.  

Here’s what our goals were at the start of the year:

1. Start using YNAB (You Need a Budget) to track every dollar and set up a budget.
2. Max out both Roth IRAs. 
3. Increase yearly 403(b) contributions from $14,000 to $16,500.
4. Pay down the mortgage on our rental property by paying monthly mortgage payments out of Mr. C’s paycheck and using all rents for principal reduction.
5. Stop feeling deprived and start living a little!  Fun money should be part of the budget too!
6. Start saving for a new car.
7. Set up and use an FSA (flexible spending account) to pay for all out-of-pocket medical expenses with pre-tax dollars.

Some of these were pretty easy, like maxing out our IRAs.  We always do that. 

What also should be easy? Fun money!  How easy is it to spend on fun!?!  (Actually, I can get REALLY stressed spending money on extras, so this was harder for me.)  

Throwing money at our rental’s mortgage wasn’t too bad either.  We were used to allocating money to bigger goals like buying a house, paying for renovations, or, yep, tuition.

Others were new and difficult.  

Budgeting like a maniac is no cakewalk, and getting used to an FSA wasn’t the easiest. 

Now that I have revealed what we had hoped to accomplish in the family finance department, it’s time for a reckoning.

What goals did we nail, what goals did we miss, and how can we get better?

Goal #1: Start using YNAB to track every dollar and set up a budget.

Verdict: Slipped up a bit at first, but ended strong.

For a couple who had never budgeted, I mean REALLY budgeted, this was a herculean task.  Because I am a lover of spreadsheets, I volunteered to get into the YNAB program and figure it out.  Hours of Youtube later, and I was still trying to make it work for us.  What categories should we have? How detailed should our categories be? How do you set it up off of last month’s income? I still haven’t figured everything out, but I have managed to get it to the point that it works for us.

The other issue of all this is how much to allocate to the categories.  Of course, this is where Mr. C and I had to work together and develop numbers we could both live with that matched our (okay, okay HIS) income.

I started in January, didn’t really get the YNAB program down until March, let things slide as COVID, lockdowns, work from home, and panic shopping loomed over us, and THEN finally got super, super consistent about it around summer.

Fortunately, we have been good as gold (almost) and tracked everything in a timely fashing since August.

I am also happy to report that after some adjustments, we have been staying within our budget pretty much since then.

So, yeah.  We ended well, but started pretty miserably.

We should be able to move forward on solid ground.

Goal #2: Max out both Roth IRAs. 

Verdict: Nailed (yawn).

Alright, we have been doing this for about six years now, so this is nothing new.  What we haven’t done in the past is consistently set aside $1,000 each month.  That was new for us.

Previously we would take large chunks of money, like tax returns, and contribute that way.  We figured it was probably better to take $1,000 each month and invest it right away to avoid investing huge chunks at once when the market might be high.  I don’t know how beneficial that is, but we did enjoy the consistency.

 Goal #3: Increase yearly 403(b) contributions from $14,000 to $16,500.

Verdict: Done (at the beginning of the new school year).

There’s nothing quite like knowing you aren’t contributing the maximum to your retirement accounts.  It’s a little unsettling. 

Maybe I’m the only one who thinks that way.  A quick google search tells me that only 13% of adults maxed out their 401(k) in the year 2017, according to Vanguard. I know Mr. C isn’t that worried about maxing out his 403(b).  So, as couples must, we compromised.  We took about half of his yearly raise and increased his 403(b) at the start of the school year.  So no, we won’t contribute the full $16,500 to his 403(b) in 2020, but his current monthly contributions would come to $16,500 if done for a full year.

That’s a win! 

Goal #4: Pay down the mortgage on our rental property by paying monthly mortgage payments out of Mr. C’s paycheck and using all rents for principal reduction.

Verdict: Nailed!!! And then some!

The rental we own used to be our primary residence.  We bought it for a bargain, fixed it up out of pocket, and ended up with a small mortgage when we moved. We always figured we could cover the mortgage fine if the house sat empty.  So, that’s what we decided to do in 2020: Cover the mortgage ourselves, and let the rent pay down the mortgage. 

If we had done just that, we should have been able to pay over $12,000 in principal throughout the year (a little lower than expected as we waived one month of rent during the lockdown in the spring since our tenant had his hours at work reduced).  After looking at the numbers, we realized that we were actually able to pay $21,804 in principal!  That’s over $9,000 beyond our goal. Super awesome, amazing, wonderful, etc.

How did we do it?  Basically, we set up our budget so that we were able to survive summer without Mr. C working (he ended up working), and our tax return and COVID stimulus check were extras.  $9,000 of this went to the mortgage.

Goal #5: Stop feeling deprived and start living a little!  Fun money should be part of the budget too!

Verdict: Better than ever!

We have never had a “fun money” fund.  EVER.  Oh, we still had some fun and spent some money.  But it is sooooo much better (read guilt-free and mostly stress-free) when you have purposefully assigned money to have fun with! 

We set up $100 every month for dates (and are saving a good amount of that toward an anniversary trip), we have funded a family fun account (plane tickets to Alaska for seven here we come!) and then there is the strange but beautiful “health incentive” category where we financially reward ourselves for healthy behavior. 

We didn’t spend that much money on fun in the grand scheme of things, but having money set aside has been something we have really enjoyed.

Goal #6: Start saving for a new car.

Verdict: Yes and No.

Both of our cars have over 100,000 miles on them.  One has over 165,000!  That was enough motivation for us to start saving.  Also on the horizon for the next school year is the possibility of commuting to our younger kids’ school with less than a minivan full.  We spend about $350 on gas each month during the school year, with much of than coming from the commute to school.  We decided to save for a sedan that would be much easier on gas.  

We set the monthly budget to include $300 towards a new car.  We held to this pretty well and also set aside a little more.

The good news is we did fund a total of $6,200 towards a new car.  However, this took a backseat when interest rates started falling. Instead of saving more for a car,  we funneled money toward the rental mortgage and decided to take on a car loan at a lower interest rate when we purchased one in December.

Going forward, the $300 will go towards the new car loan.

Goal #7: Set up and use an FSA (flexible spending account) to pay for all out-of-pocket medical expenses with pre-tax dollars.

Verdict: A work in progress.

We did set up an FSA account.  That was a first for us.  However, forgetting to use it has left us with a few hundred dollars in the account at the end of the year.  Thankfully, our plan gives us extra time to use the funds.  So, we need to get our eyeglasses a little early this next year to make sure we use it all up.

There is definitely a learning curve to using this.  We also need to look into how to get reimbursed for eligible items that we pay for independently.

I’m pretty confident that we can use this more efficiently next year.

2020 Is in the Books!

That’s it, folks!  A year has come and gone with some major financial wins (debt paydown was the biggest) with a few areas that need work on (looking at you, FSA).  

I always figure, if we are making progress, that is what matters.

Goodbye, 2020!