Welcome to another Dr. PayItBack monthly checkup! I use this space to remain accountable to our expenses and goals, track net worth and debt, and muse on what was done well and what can be improved.
Case and death numbers from COVID are dropping across the country, family members are getting vaccinated, and the days are lengthening and warming up. We got our latest utilization numbers at work and I’m running at 95% which is better than at any other point since I started as an attending; things feel busy and productive but not overwhelming. We’ve got multiple trips coming up over the next 3-4 months. It’s hard not to be optimistic about the future.
Budget/Cash Flow
I did a ‘bad’ thing. Over the past several months, I’ve been having a lot of conversations with college friends who are in the technology and finance space about cryptocurrency. Several these are folks who bought bitcoin when it was in the 3- and low 4-figure range and have held on, so they’ve obviously done quite well. They don’t seem to have much interest in trimming their positions, and they truly believe that at least Bitcoin will settle out around the mid 6-figures. These are not the crazy proselytizers you see on Twitter with 50% of their portfolio in crypto; they’re smart folks who I consider to be sober and thoughtful investors who just truly believe in their thesis.
I started having first thoughts of dipping my toes into the crypto space back in November, but I wanted to do it right and follow my investor policy statement. Bitcoin had risen 50% in the past month at that point and I know the dangers of performance chasing. So I waited three months before putting money into it, allocating 1% of my portfolio. Of course, this means that I bought in a week ago, top-ticking the peak perfectly. Since then I’m down about 25%. I’m adopting a 75-25 Bitcoin-Ethereum split as advocated by Gassem at MD on FI/RE who I know reads a ton and who has been pretty on point with this stuff. I will rebalance with contributions monthly, if it drops below 0.5% of my portfolio, or if it exceeds 5%.
I’m looking at this as more of an experiment than anything; if it ends up going to the moon, it will be great but not life-changing given my small allocation. If it goes to zero, there should be very little lost for the same reason, and it will serve as a nice cautionary tale to my audience here. As a rule I don’t generally invest in non-productive assets, but I’m willing to roll the dice in a small way in this case, especially since we are easily meeting all of our financial goals.
Okay! That out of the way, this month was notable for a big fat federal tax refund. We will end up paying a little of this back for state taxes next month, but still a nice cash infusion. I try to get our tax-withholding as close to correct as possible, but it’s a bit tricky given my large income and my wife’s business. No large or unusual expenses this month, and our spending was right at our recent average.
I’m continuing to increase our monthly contributions to the taxable account. I’m trying to get this number up to $6-7k per month for this year, and maybe as much as $10k per month in 2022…
PayItBack Progress
Rates remain at historic lows. Paying minimums. Rinse repeat.
Net Worth
February didn’t end up being quite as much of an up month as it looked like it was going to be — S&P was up about 2.75% on the month after being up as much as 6%. Our assets are almost up to $400,000 and net worth is closing in on a quarter of a million dollars. We should hopefully reach these figures in the next month or two.
Financial Independence
Being financially independent before 2030 would be pretty cool, but I’ll believe it when I see it.
Financial Goals for 2021
1) Max out 403b: $5,885 of $19,500 (30.2% done)
2) Max out backdoor Roth IRAs: $12,000 of $12,000 (100% done) ✅
3) Use taxable brokerage in addition to 1) and 2) to save $100,000 total for retirement: $7,000 of $68,500 (10.2% done)
4) Max out 529s for state tax benefit: $16,000 of $16,000 (100% done) ✅
5) Save 20% down payment for a $450,000 house: $54,942 of $90,000 (61.0% done)
6) Continue to pay minimums on student loans as long as rates remain <4%
7) Finalize estate documents
I was wondering if/when you would buy crypto. I also follow the 75/25% rule (Before I started school).
Again, thank you for your posts. I look forward to them! I am an MS1, so it is nice to see the possible financial future of my decade-long investment.
With your consistency and determination, I imagine FI will come sooner than you expect.
It’s already been a more wild ride than I’m used to! But hopefully keeping it rules-based will limit the downside. Thanks for reading and your comment.