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Reflecting on 2020

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Even though the year 2020 still has a few days left I thought it would be a good time to look back over the year and reflect on how the year went. It was definitely an interesting year. The year started out with me still adjusting to my new job with a new work schedule. I had decided that this was going to be the year that I finally took control of my financial life. I decided to spend less, earn more, pay down debt, invest and stay invested.

I started using a budget this year, specifically a zero based budget. I went back over my bank statements from the year before so I could get an idea of what all of my expenses were so I could accurately make my budget. I found that I spent way more money at convenience stores, vending machines and fast food restaurants than I expected. Creating the budget helped me spend considerably less. I assigned each dollar I made to a specific expense. This helped to start saving more because I assigned money to go to savings. I have money assigned to go my high yield savings account and retirement account each month. Creating a budget was the most important step in taking control of finances by controlling my expenses.

I started earning more this year by opening up some additional income streams. One of these income streams was from high yield savings accounts. While this only produced $10 or so a month, it is still additional income. Another new income stream this year came from dividends. This income was reinvested into my retirement accounts which helped the accounts grow. The final income stream was from options trading. This money was also reinvested into the retirement accounts. These income streams do not amount to very much currently but I look forward to continuing to grow these income streams. In ten years I plan to have enough income coming in from these and additional income streams to be financially free.

This was also a good year for paying down debt. I was able to decrease the amount of debt I owe by over $19,000 this year. My debts other than my mortgage went from $63,900 to $49,700. `The balance on my mortgage decreased by just over $5,000. I still have a lot of debt to pay off but I am satisfied with the progress I made this year and look forward to improving on paying off debt in 2021.

My investments outperformed my expectations by a wide margin. At the start of the year I had very little saved for retirement. Toward the end of March I received the funds from my previous employers retirement plan in my IRA. I only expected to gain around 10% on the $69,000 I received. Boy, did I exceed that. I thought it would take me a few years to reach six figures in retirement savings rather than a few months. Because my main focus has been paying off debt I only contributed $470 to my IRA but have seen over $30,000 in gains. I was very fortunate to receive the funds from my previous employer when I did. This allowed me to start investing when the market was down and ride the recovery back up. For my first year investing I feel I did really well. I have learned a lot. I opened up a couple of new income streams in dividends and options premiums. I still have a lot to learn about investing and look forward to honing my investing skills in the years to come.

Overall, 2020 was a crazy year. I adjusted to working a new job with a different schedule. The pandemic hit which created a lot of uncertainty. I was fortunate to continue working the whole time while most businesses were closed. My net worth improved dramatically this year. At the time of this writing my net worth improved by $59,000 going from deep in the negative to positive. This first year of taking charge of my financial life exceeded my expectations and has me excited about continuing this journey.

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