In 2018, we reached financial independence in spite of the craziness of the market in the last quarter. We also both stopped working in corporate America. 

Our Net Worth rose +7% and we hit F.I.R.E. 

And while 7% growth is kind of low, the market corrected between October and December.. ughhh 😔. At the end of September, our net worth was tracking up +15%! But that’s the market, there are ups and downs and you need to be in it for the long term. And 7% is definitely nothing to sneeze about.

We got serious about this journey June 2015 and in 3.5 years we were there. When I first calculated that number, I never thought it possible but real estate made it possible! We are free!!!! Free to pursue the things we enjoy. 

https://gph.is/2zNGbFq

So how did we do? After all this is a financial independence site. Most of the growth in our net worth in 2018 came from our real estate investments and cash in flows, bonus and RSUs. If you want to read how we got to F.I.R.E. and the strategies we used, read the post, Freedom from the daily grind.

Our Real Estate equity grew +24% in 2018, enabling financial independence 

In 2005, we had bought a townhouse in the suburbs of New York at the peak of the real estate market (ughhh) only to see the price crash well below what we paid. We lived in it till 2014. When we moved to California, we decided to rent it out. To this day, my SO thinks it was a terrible investment. We are currently in the process of selling this at a slightly lower price than we bought (not so smart on our part) so once that is done, I will analyze of whether it was or wasn’t a good investment by looking at the impact on our taxes and the impact of the renter paying our mortgage. While it’s value didn’t increase  (due to a really high HOA and at not so great schools in the area, an important lesson is selecting real estate), the house that we own in the Bay Area did. Its value grew 10% based on Zillow’s estimate, which I do think is inflated. And we also added more to our monthly mortgage payment so we could bring down the loan balance. As a result, our real estate equity increased 24% across both properties!!!! Wohoooo!

Our Tax-deferred accounts declined -8% in 2018

 Unfortunately I can’t say the same for our tax-deferred (IRA/401k) accounts. They decreased -8%. I really need to spend some time looking through the current allocation.

Our Taxable brokerage accounts grew 25% in 2018!!!

Our taxable brokerage accounts fared better growing 25% mainly driven by RSUs that vested and my bonus! Thank you Corporate America!

We cut our expenses, but not by much, in 2018

On the expense front, we reduced our expenses by 2% vs. 2017. But what is amazing is we managed to do so in spite of $16,000 in expenses for the New York townhouse. We had multiple unplanned expenses here… an unexpected HOA assessment, the need to engage a lawyer to evict our last tenant, who overstayed once the contract ended and the need to get the place ready to sell. I am excited that once we have the place sold, our outgoing cash flow will drop 30%!

Lessons Learned

On the work and personal front, I also learned a few lessons this year

1. Pace yourself, life is a marathon not a race. Take the time to care for yourself and your family or you will burn yourself out. When I took my last job, I jumped in 200%, often traveling internationally, commuting 2 hours a day, working 55+ hours per week, etc.. and after 2 years, I was pretty burned out and all I could think about was how could I get a break.
2. Invest the time to build relationships. Relationships are way more important than tasks. No matter how much you achieve, if you don’t have an army of people rooting for you, you can lose your success overnight. I am a goal oriented person and I stay pretty single-minded on what I am trying to accomplish. If there is one thing I could change, it would be to take on fewer things and spend more time getting to know people. 
3. Let go. Don’t try to control everything. This one is really hard for me, I’m a Type A planner so I like to control everything.

Plan for 2019

So all in all, I would conclude, it was a pretty good year and I still have a lot of room for growth, which is good cause I like to learn. I am glad that 2018 is over so I can begin working on my resolutions for 2019.

1. Be kinder, both to myself and others and focus on growing and nurturing my relationships
2. Focus on creating work I love (like looking after dogs)
3. Learn a new skill – woodworking or maybe focus on refreshing my digital marketing skills and building ecom skills 
4. Continue meditating but also add exercise to my morning routine. I have started doing this entering a free 8 week challenge at the gym!!
5. On the financial side, I would like to grow our net worth 10% by reinvesting the money from the sale of our NY real estate.

I would love to hear how you did in 2018 and what were some of the key things you learned. What do you want to accomplish in 2019?