As we close 2023, it’s time to reflect on the financial journey of the past year. Let’s dive into some key highlights and metrics.
Net Worth and Investments
Starting Point: I began the year with a net worth of $705,420 as tracked on The Numbers page in the Net Worth Tracker section for December 2022.
Year-End Achievement: By December 31st, 2023, my net worth had impressively grown to $936,096. This figure notably excludes the below three items:
I choose to exclude the estimated closing costs and taxes for the sale of my home. My long-term plan is to eventually sell the house and invest most of the equity in my brokerage account. If I buy another home in the future I plan to purchase in a much lower cost of living area closer to family.
Around $450,000 which I’ve set aside to cover living expenses for the first five years of early retirement.
Lastly, it excludes a long-term investment which I believe will return between $100k – $150k maturing in 2031.
My actual net worth including the above items is $1,537,000. However, because I’ll be living on the $450,000 for the first 5 years I’m estimating that when I need to access my other investments in 2030 or 2031 those investments will have grown to between $1,800,000 to $2,000,000. The investments and growth assumptions are all explained on The Numbers page of this website.
Investment Strategy: Continuing the strategy from 2022, I threw every dollar I could find at the market this year in an effort to take advantage of the downturn. Because of this focus, I exceeded my 2023 annual investment goal of $63,120 and invested a total of $111,900 in 2023. This aggressive investment strategy played a crucial role in offsetting the 5% decline in home equity and helped turbo charge the recovery in my investments as the market began to improve in 2023.
Market Performance: The significant gains in the market this year allowed me to recapture all losses from the downturn, underlining the resilience and long-term focus of my investment approach. I use the Empower app to track my portfolio which shows personal mixed investment growth in 2023 of 24.65%. For more information on my investment philosophy check out the Investor Policy Statement page.
The Plan: In my end of 2022 post I explained how the drop in the market resulted in my investments missing their originally planned target by $105,000. I’m happy to report the commitment to my investment philosophy has paid off and I’ve regained all losses, and then some. My December 2023 net worth now exceeds my original 2019 plan by $81,000.
Expenses and Lifestyle
Annual Expenses: My spending in 2023 totaled $83,797. This includes my mortgage, insurance, utilities, travel, and all other living expenses. I’m not a believer in extreme frugality so it wouldn’t surprise my close friends to learn that my largest expense was eating and drinking out. In 2023, $30,000 of my annual spending was at bars and restaurants which is also my most controllable expense. consequently, I feel very comfortable with my spending and believe I have plenty of room to cut in the future, if needed.
Lifestyle Considerations: The increased expenses this year reflect not just inflationary pressures but also a conscious decision to remove spending limits and better understand my natural spending habits as I approach early retirement.
Forward-Looking Statements
FIRE Goals: Assuming long-term annualized growth of around 7-8% on my investments, I am on track to reach my FIRE goal of $1.75M to $2.0M within the next 5-6 years when I need to tap my investments.
Conclusion
The journey of 2023 has been one of strategic investment and preparation for future life changes. The year’s challenges, particularly the decline in home equity, were more than offset by strong market performance and prudent financial management. As we look ahead, the focus remains on achieving financial independence and enjoying the journey along the way.
Here’s to a prosperous and fulfilling 2024! Cheers!
