2020 Financial Summary

Alright, it’s finally that time of year again in which I get to write my favorite post.  It’s the post I most look forward to each year because it shows me if all the work I have been doing throughout the year has paid off.  It tells me what I did well for the year financially and what I could improve on.

This is year 3 of this post and I finally feel like I have enough data to begin to see some trends in my finances.  I still can’t get over the spending data I have for the last 3 years.  For someone who doesn’t budget at all, the results are crazy. 

I love this post because I remember when I first started getting into financial independence, I would sit down at lunch during my first job and read other bloggers financial summaries.  I was amazed at where they were with their finances and I had no understanding of how they were able to do what they did. 

It was amazing and inspiring.  The blogs I read in those days were life changing for me and still provide me with the motivation to continue trying to help others feel the same. The best part is that I still read these blogs, not because I need to learn how any more but to continue to affirm that we all have made the right decision trying to break away from the chains of work to begin living our lives for ourselves.  

There is real power in that.  Power that has allowed me to take some risks and start some passion projects.  Passion projects that, like this blog, are great when they make money but don’t need to because I am doing them for my own enjoyment and growth.  And it’s the spreadsheets below that allow me the time and financial stability to take on these projects. 

As always, below is my exact financial picture. I don’t change the numbers or cover up my mistakes.  This is my raw spending and earning for the year of 2020. I know sharing personal information like this is frowned upon in our society but if just one person can see this data and make the changes in their life just like I did 3 years ago then it’s worth it.  Plus, I want to normalize talking about money since people let it run their lives yet refuse to talk about it. 

It’s not bragging. And there are no expectations to do things how I have done them.  It is simply to show you that it is possible to change your financial situation and the first thing you need to do to change yours is to track it.  

If I had to simplify my message in one sentence it would be: “Track your finances, increase your savings rate, and invest in low-cost index funds”.  

I promise that this will turn you into a Millionaire. 

So let’s see how we did in 2020:

Expenses

Expenses	$$/Month	Thoughts
Rent	$365	This is by far the lowest I have ever spent on rentwhich was reflected on my annual spending this year. It’s true that when you can cut the big three (housing, transportation, and food then the rest of saving is easy.
Loans	$300	Just slowly picking away at it
Groceries	$344	This definitely went up this year as began groceryshopping for two people. However, we also wereeating in much more so I think we still came outahead.
Dining/Drinking	$147	I was able to cut this number in half compared tolast year likely due to COVID. Our food spending intotal was nearly identical when combined. $490last year and $491 this year.
Auto	$375	I was able to cut this number $30+ dollars/mocompared to last year but it is still higher than Iwould like, but, cars are expensive and I still drivemuch more than normal for work. I plan to breakdown where my transportation money went to in afuture post.
Travel	$312	I was actually hoping to spend a little bit moretraveling this year. But like most things, COVIDchanged these plans. We were still able to travelmore than most but we kept our trips limited todriving distance, clinical rotations, and home.
Entertainment	$54	Down nearly 60% from last year which makes senseas most things were closed.
Gym	$20	My gym closed for 6 months this year so my gymexpenses were down this year. Thankfully, I wasstill able to workout at work during the week.
Shopping	$50	Down again from last year as I have only needed toadd a few things to my wardrobe not completelystart from scratch as I did last year. I also onlybuy clothes at outlet malls now.
Household	$82	Included here is all the costs associated withmaintaining a house. However, I removed gifts fromthis category and created its own section.
Gifts	$305
Licensure	$83	I recently began applying for my physical therapylicense in California and it is not cheap..This alsoincludes my license renewals in MN and AZ.
Blog	$15	Hosting, domain, and security costs.
Haircuts	$15	Saved a little on haircuts this year as my girlfriendattempted one cut and I began growing my hairout.
Healthcare	$8	Not including what I pay for health insurance as thatis taken directly from my paycheck each month. This is all out of pocket costs which this year onlyincludes and eye exam and a few cheap pairs ofglasses.
Savings	$5,103	This is just my savings from my take home pay. Thisdoes not include what I contributed to my 401k.
Savings with 401k	$6,082

Spending Review

This year I was able to tackle one of the big three (housing, transportation, and food) and drop my housing expenses from 7.5% to 4.3% this year.  I was able to do this by being very flexible in my living situations.  I realize this likely won’t be something I can maintain once I have a family, but for right now this really helped with my savings. 

I was able to cut my drinking/dining out bill this year as I had hoped but I increased my grocery bill in the process. Some of this is due to the fact that I am now buying groceries for two people to make sure I am pulling my weight in our relationship.  

I had a few big purchases this year otherwise I think I would have been able to keep my savings around 25-26 thousand this year.  However, even with these large purchases, I still was able to keep my spending in 2020 at almost the exact same value as both 2018 and 2019 which is crazy.

Year	Amount Spent
2018	$29,896
2019	$29,632
2020	$29,705

I promise I do not budget at all, yet at the end of each year I end up spending the exact amount of money.  Call it an internal financial compass I guess. 

The best part was that for another year I was able to spend guilt and anxiety free. 

Yes, I still wait to purchase things to determine if I actually need them, and yes I meal prep based on the deals for the week at the grocery store but I am able to do so because I want to and not because I am scared to spend money like I previously was. 

Some of this is due to the fact that I have grown as a person but some of it is also because I have my finances in order so I have the safety to do so out of choice and not necessity. 

Income

	Amount	Thoughts
Income (Take Home)	$88,295
Pre-Tax 401K Investments	$11,749	I previously thought I had maxed out my 401k butthis wasn’t true. I will have to update my goals. (link)
Income including 401k	$100,044	I did not think that I surpassed the 100k marker thisyear. I am shocked but this is why I calculate myfinances every year.
Total Spending	$29,705	That’s 3 years in a row within $250 buffer of moneyspent..
Savings	$70,339	$16,000 more than last year.
Savings Rate	70.31%	This is my first year cracking the 70% savings rate.This again was made possible by a higher earningyear since I didn’t save any extra money this year.
YTD Investment Returns	$45,318	As many of you know, the market his historic highsthis year.
ROI %	18.20%	This is a very raw ROI. I take last years net worthand add my savings from this year then divide by thisyears net worth. So in reality my ROI may be evenhigher on my investments as I have close to $15,000in my emergency/down payment on a house fund.
Networth	$241,067	$41,000 more than my goal I set at the beginningof last year.

Income Review

This was my first year since I started working in which I worked every week of the year. Normally, I take my month off between assignments but this year due to COVID and layoffs I decided to continue working through the year as contracts and work were becoming more sparse.  

As a result, I was able to increase my income to possibly the highest take home pay that I will earn in my lifetime.  It’s sad to think I may have peaked in my third full year of working but this is the reality for a PT. I’ll explain why in the taxable income section below.

Just like the end of last year, this higher income required some long daily commutes but the money and flexibility this job offered made it worth it.  I have since continued working at the same location but transitioned to a permanent position (until May), so my income has taken a fairly large dip to start 2021.

Side Bonus: I also haven’t worked a Friday in almost two years… so that will be hard to do again some day in the future. 

Taxable Income

So this is always where the life of a traveler gets fun.  People see my income/take home pay of around 88k and assume that I meant my base salary which for a third year PT is on the high end but still doable.  What they miss, is that that 88k is in fact my take home pay.  

This year my taxable income was actually around 40k.  Then when you throw in the standard deduction and an HSA, you realize that I only paid taxes on around 20 thousand dollars.  Which puts me in a 12% tax bracket.

For a salary PT to take home 88k while contributing nearly 12k to their 401k, they would need their base salary to be 140k…Which is not going to happen for a physical therapist unless they own their own practice.

The above math is why I urge every new grad to start their careers traveling. Get your debt paid off fast and begin your nest egg before you settle into a lower paying job once you are tied to one location.

Net Worth

Net Worth Review

You can finally see some exponential growth in my net worth.  I have been waiting for 3 years now for my chart to take off, and this was finally the first year where I saw the coveted hockey stick curve.   Everyone has said this growth begins to occur once you hit the 100k mark and this chart has finally begun to prove it to me. 

Most people like to talk about their winning stock investments but I will always stand with the slow, steady, and possibly boring approach using index funds. 95% of my portfolio is invested in one index fund, VTSAX, and I made $45,000 this year for doing absolutely nothing.  Investing is awesome.

Plans for 2021

My fluid plan for 2021 is to continue to work at my current location as a salary PT until my girlfriend finishes her school in May.  From there, the plan is to move to California for her to begin her career working at her family’s business.  I’m not overly excited for the massive change in cost of living but because I plan to continue my traveling PT career, I should be able to make up for this due to the generally higher income a traveler makes especially in California.

I am currently working on getting my California PT license which is the toughest license to get due to the multitude of hoops to jump through.  I’ll write up an article on how to optimize the process and possibly how to pass the law exam when I get time.   I have everything submitted now, so I am hoping I’ll receive my license near the end of March. 

Otherwise, I have been steadily increasing my travel reward points so we can eventually start some free travel once allowed. 

Conclusion

You by no means have to nerd out as much as I do with my custom spreadsheets but you should be tracking your finances to some extent.  

For everyone looking for an easy alternative to spreadsheets, I recommend Personal Capital.  It’s free, it’s concise and it gives you a complete picture of your finances in the palm of your hand.  It’s what I use on a day to day basis to check my finances.

Earn $20 for free when you sign up using this link: Free $20

As always, comment with any questions you may have.

-Zach

(Click here to view 2018 and 2019 financial summaries)