January was a busy month. We have seen political unrest, a new administration inaugurated, the pandemic raged on even as vaccines were rolled out, retail investors taking on hedge funds and the stock market ended the month lower. Despite all of this going on this month I was able to stay calm and stick to my plan. So, another month has gone by so it is time for another update on my progress to financial freedom.
My spending this month was kept in check. My savings actually increase by about $800 this month due in part to I was able to spend less than expected. I plan to take some of this increased saving and use it to pay down debt next month.
This month I received $196.82 in dividends. Last January I received $.01 in dividends. This is a little misleading because the majority of retirement savings was not invested last January because I had to wait on the rollover of my retirement funds from a previous employer. The option premiums I received this month were $395.95. Last January I did not trade options. The combined total of dividends and option premiums was $592.77 which was reinvested into my IRA. This total was well below my goal of $1,000 a month in combined income from dividends and option premiums. I expected that I would miss my goal this month and the first few months of the year. As I reinvest this money I should be able to grow the amount of dividends and options premium I receive. I hope to make up for these shortfalls in the beginning of the year at the end of the year.
This month was a very good month in paying down debt. My total debt, including the mortgage, was $146,380 at the start of the month. At the end of the month it is $143,098. The total debt paid down this month was $3,282. My goal for the year is to pay down $25,000 in debt which works out to about $2,083 per month. So far I am off the a great start and well ahead of the pace in order to meet my goal.
My Traditional IRA wound up down about $1,000 for the month in overall value. My estimated annual income from dividends did increase from about $3,400 to almost $3,600. The annual income number is what I focus on. This is the number that will determine when I can retire. The overall value of the account will take care of itself over time.
The Roth IRA lost a couple of dollars this month. The estimated annual income from dividends is $9.
The 401k shows an increase in overall value but that was due to contributions. The rate of return for the month was negative. This account is mainly to preserve capital which it did. The S&P 500 was down about 1% for the month but my 401k was only down 0.15%.
The growth account did fairly well this month considering the sell off in the stock market at the end of the month.
You can see all of the holdings in this account here: https://m1.finance/yhahVyq_HLoE . This account is on M1 Finance. If you are interested in opening an account with M1 Finance my referral link is https://m1.finance/ktIiFeOI5zDr . M1 offers various promotions. The current promotion is for $30 for free after you fund your account until the end of February 2021. If you use the referral link above I will also get $30. Always check the current terms before signing up.
Overall I am happy with the results of the first month of the year. My debt is down. My net worth increased by about $3,000 to just over $19,000. While the overall value of my retirement accounts went down the cash flow increased which is the most important thing. Another month of staying on budget, paying down debt, saving and investing moves me closer to my ultimate goal of financial freedom.