2021 was a year of substantial financial growth for our family. While 2020 was a success story by any measure, despite the obvious obstacles, the past twelve months have been a different beast altogether. There was no milestone quite as concrete as reaching a net worth of zero last year, but 2021 saw my greatest annual income ever, the continued growth of my wife’s photography business, and — with mixed emotions — the sale proceeds of my late father’s house. This was all buoyed by blistering market returns as COVID vaccines rolled out and the country began to get back to normal.
When we increased our net worth by $275,000 last year, I called that amount ‘staggering’. While that fact remains, it has nevertheless been dwarfed by our gains in 2021. All told we achieved a gain of $437,000. Approximately $150,000 of this came from the sale of my father’s house, and $50,000 was my first annual bonus at work. This still leaves over $200,000 that came from saving/investing my base salary and paying off debt.
Whereas 2020 saw our cash holdings grow from nearly zero, 2021 was defined by much more stability. We slowly built up savings for a house downpayment and maintained an emergency fund, but otherwise I tried to keep stagnant cash to a minimum. I’ve held on to the end-of-the-year cash boluses mentioned above so that I can fund all of our tax-advantaged accounts on January 1st. And we’ll hopefully be deploying our downpayment in 2022. This has all resulted in a cash gain of $79,600.
As I expect to be the case for the rest of my career, the real gains came from contribution to and growth of our investments. Between our various accounts (403b, Roth IRAs, taxable brokerage, 529s, kids’ Roth IRAs) we contributed $239,000. With $61,200 in gains (or 20% of total) this amounts to a gain of $300,200.
Rather than a significant increase or decrease, our credit card usage in 2021 has been more a estimate to our living within our means. Every bill is paid within a month before interest is accrued. Furthermore, we’ve amassed almost $5,000 of value in various credit card point currencies, so we plan to travel for free for the foreseeable future.
Finally, our loans continued their slow march downward. Because of our rock-bottom interest rates, we made minimum payments until November when I decided to simplify our financial life by paying off my wife’s loans in their entirety. My refinanced student loan currently has an interest rate of 0.16%, and I have no plans to pay it off early unless this rises dramatically. In 2021 we cut our loan debt by $56,400, even without Joe Biden’s help.
In contrast to prior periods, our investments made up the vast majority of our net worth growth. If all goes as planned this trend will continue exponentially, to the point that this may be the last year where this visual breakdown makes sense.
I hope that you all have had your share of successes in 2021, and that 2022 is our best year yet!