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End of Year Review and Planning for 2021

We are finally nearing the end of 2020 (insert your favorite exclamation/expletive here)!

This has been such an unusual year in so many ways and it’s critical to get everything in order financially and mentally before the end of the year and have a plan to move forward into 2021 with some momentum to get after your goals. Here are some resources I think will help:

• For the first time in my life, I’m truly conducting an annual review and setting goals for the upcoming year. Stephen from our Foundation’s free FI 101 course, introduced me to Chris Guillebeau’s article on laying out annual goals that are specific and measurable with concrete action steps and it really appealed to me. I think you’ll find this method valuable:

• Our team put together an excellent Year-End Financial Checklist that I think is well worth your time. We always talk about taking action, and now’s the time to review some of the pillars of your financial life:

• Sean Mullaney, the FI Tax Guy, joined us on ChooseFI Episode 274 to discuss year-end tax moves for 2020 and what you need to consider before 12/31 and the April return deadline. Listen to this episode and check out his companion article:

• I’ve tabulated and saved my family’s net worth every quarter for the last decade, and it is one of the most clarifying exercises I undertake each year. If you use a free tool to do this electronically like Personal Capital, then this happens automatically, but it only takes me about 30 minutes each quarter to do this on Excel and with 12/31 coming up I wanted to send out a reminder to all of you to get started with this. List up all your assets (every account I have plus I include the market value of my home) and then subtract out all liabilities (loans, mortgage, credit cards, etc.) to arrive at your total net worth.

ChooseFI Community Taking Action This Week

• Jennifer said, “I just cut my doctor’s bill from $121 to $26 by simply calling their billing office and questioning the invoice. They explained that my insurance did not cover certain hearing or vision screening, so they offered me a $95 discount! I also switched my family over to Mint Mobile, essentially cutting my phone bill in half!”
• James said, “We are regrouping after my wife was laid off (after 6 months of furlough). However, I am so grateful we have had the privilege of working toward financial independence over the last few years. We are not immediately worried about cash flow because we have a large emergency fund and low expenses. My wife is also not rushing into her next opportunity and can make sure her next position will be a good fit. In addition, we moved my wife over to my HPHP insurance and are maxing out the Family HSA with $7,100 by the end of 2020! We intend to pay for health-related expenses out of pocket and to not touch our invested HSA funds until retirement.”
• Katie said, “We cashed in some of our rewards points (thanks to you guys for your free course about travel rewards!) on a getaway we’re taking. We got our round-trip flights (for three of us) and our car rental covered in full with our points, and found a very inexpensive Airbnb to stay that has a kitchen so we can limit our interactions and exposure even more during this weird season we’re all in. I’ve also budgeted all the other funds we’ll need for this trip already so it will be paid in full immediately – no new debt!”
• Neil said, “We sold our house several years ago and made a nice profit. Since then, the cash has just been wasting away in a low-interest bank account, while we procrastinated about what to do with it (admittedly a nice problem to have). Well, we finally got off of the fence and used it to max out our IRA and Roth IRA’s for the first time ever! Plus, there’s still enough left over to do the same thing again in January.”
• Jenny said, “I finally closed on the refinance of my mortgage last week (the process took almost 4 months). This one move will lower my monthly payments by almost $300 a month which means my FIRE number is also about $90k lower AND now I can use that extra money I’m not paying towards my mortgage every month to invest and get me to FI even faster.”