“Bye, 2022, it was nice seein’ ya. 2023, bring it!”
Mandi Woodruff, Brown Ambition Podcast, Episode 340
I wanted to start recording Mia’s and my financial accomplishments (and setbacks) to promote transparency and help fight the stigma against being open and honest about money. It’s also cool to be able to look back and see goals being met (or not).
Here are the Money Moves Mia and I Made in 2022
- Maxed Out Both of Our ROTH IRAs
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After paying all the personal debt from our investment property project in 2021, we resumed maxing out our ROTH IRAs (backdoor style like a boss). 2022 was the first full year of maxing out since 2009. It felt great to be all-in again.
- Continued to Contribute to Our Kid’s 529
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We also upped our monthly contributions to our kid’s 529 Educational Savings account to $400/month. It’s not as much as I like, but we’ll bump it in 2023 and even more after we pay off another round of debt (more on that below).
- Switched to a HSA and Maxed it Out
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In 2021 I learned about Health Savings Accounts (HSA) and how they are the best investment vehicle in existence. You contribute pre-tax money going in, it grows tax free and it’s tax free coming out if you use it for qualifying medical expenses. Starting Jan 1 2022, we switched our company’s health insurance plan to a HSA and deposited the difference for the now high-deductible amount into everyone’s account. We contributed the max to our HSA in 2022. I believe this is one of the most important money moves we made because paying for healthcare is going to be our biggest expense in retirement.
For more info on HSAs listen to Journey To Launch Episode 40
- Contributed Extra to our Mortgage Principal
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At the end of 2021 we refi’d our home mortgage from a 30 year to a 15 year at 1.99% ONE POINT NINE-NINE PERCENT! I get high every time I say that. In addition to the low rate, I also pay more towards the principal each month, essentially making it a 13 year mortgage. I want to not have a mortgage as soon a possible.
- Bought iBonds
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Series I savings bonds get their interest rate from the rate of inflation and inflation had been super high so the returns on iBonds have also been high. The rate is adjusted every 6 months. I bought iBonds at a rate of 9.26% then I bought some more at 6.89%. $2,000 in total. As time goes on, the interest rate will probably go down, but still be a super safe place to stash money, earning more than a High-Yield Savings Account. It’ll be a decent little cup of cash in 5 years when it matures.
- Swapped Mutual Funds for Lower Expense Ratio ETFs
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Mia and I have been saving for retirement for 25 years! For 24 of those years I mostly auto-invested in a few Mutual Funds. They have done well, but after looking a the expense ratios for those funds (~1.05%) vs. Exchange Traded Funds (~0.03%) I realized we probably lost a lot of $ during those 24 years to fees. So I sold the Mutual Funds and bought a few different ETFs.
- Rolled Over Some Assets From Our SIMPLE to ROTH IRAs While the Market is Low
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The market was in the toilet in 2022 and I figured with share prices low it was a good time to roll some shares over from our SIMPLE to our ROTH IRAs. Money contributed to a SIMPLE IRA is pre-tax, but when you withdraw it in retirement it’s taxable income. ROTH IRAs are the opposite, you contribute post-tax money that grows tax free and is tax free when you withdraw it in retirement. When you roll SIMPLE money over to a ROTH it’s also taxable income. But I can roll it over while it’s at a loss and then watch it grow back up again tax-free in our ROTHs. Yes!
- Started Building a T-Bill Ladder
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I was late in the game when it came to iBonds, but the podcasts I listen to say T-Bills are where we should be putting “safe” money at the moment. So I started building a T-Bill Ladder — You purchase 13 week T-Bills each month until you always have one maturing every 4 weeks.
Jennifer has a YouTube channel where she explains what a T-Bill ladder is and how to buy T-Bills. I love her videos and encourage you to check them out!
Money Bummers for 2022
2022 was not all money wins, there were some challenges too.
- Remember That House Fire?
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In June 2020 our dryer caught on fire (clean your dryer vents, everyone!) and we had to do a complete, down-to-the-studs rebuild of our house. 16 months later, we moved back to a beautiful, structurally sound, to-code (it was a horror show behind the walls) version of our house. We fixed what was broken and added new features. Understandably insurance did not pay for the extra bells and whistles we added and paying for it ourselves put us in about $35,000 of debt. Ugh, I hated being back to paying down debt again, but in my gut I knew it was temporary and worth it to have the house of our dreams.
At this point in time we have $19,300 left to pay off. It’s zero interest and will stay that way until July 2024. I’m confident we’ll pay it off by then.
- How About That Stock Market?
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In 2022 we all saw our investments go way down. Our retirement accounts went down by a couple $100K. It’s painful to watch, but I also know down markets = opportunity. I think back to 2008 when the stock market crashed and I bought a handful of Google shares when they were low. 15 years and a few splits later, those few shares are now 600 shares with a cost basis of $8 a share! It grew by 1,090%! I bought low for all of 2022. When things crawl back up again (which I am confident will happen by the time I’m 59.5) it’s going to grow bigger with more shares.
Goals for 2023
I think 2023 is going to be a chill year of diligently maxing out as much as we can while watching where the market goes. However, I do have some specific goals.
- Pay Off That House Rebuild Debt
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This is my most ambitious goal. $19,300 is a lot of money to pay down in a year, but I am going to try.
- Contribute More To Our Kid’s 529
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Our kid is a High School Junior right now which means she’s just a couple years from her post-high school life! I really really want her to avoid school debt so we want to help her however we can, and that doesn’t just mean financially. I want her to understand what school debt means for his future and maybe find alternative paths to college.
- Build Up Our Emergency Fund
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We’ve always contributed to our retirement accounts, but because we’ve spent so much time paying off debt, our savings not so much. I want to make a dent in building our emergency fund this year.
- Make a Budget!
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I don’t know why, but as financially responsible as we are, we have never made a budget for our credit card spending. Utilities, mortgage, insurance, savings, etc are all carefully tracked in a spreadsheet, but the stuff we buy on credit cards (groceries, eating out, buying shit on Amazon, etc) lives in chaos. We recently started weekly meal planning and it’s been eye-opening. When you plan your meals you have a smart grocery list vs. buying food with no plan. We spend less money, waste less food and eat out less as well. I know we can take this approach with our credit card spending too.
There you have it, our 2022 money moves! 2022 is in the bag and 2023 is a mystery. Will we have a full-on recession, will the market recover, will things stay pretty much the same? We shall see.