Every year around this time I give you the reader an update on our yearly goals. So how are we doing during this Covid-19 2020 craziness? Are we meeting our Mid-Year 2020 goals?
Personally 2020 Has Been A Difficult Year
So first off I want to apologize to all our regular readers for not having a post last week. I attempted to communicate this change in plans via Twitter, but I am sure it did not make it to everyone.
2020 has been a rough year for the Full Time Finance household, at least when we talk about areas outside finance. This year multiple extended family members have decided now was the time to move on from this life. At least none of them were from Covid.
In addition other family members have had major life events. This has triggered myself to make some difficult decisions on our extended families behalf, especially in the last few weeks. As you can imagine working through these decisions and situations has not allowed me to spend the needed time to write you quality content.
Personal Impacts Plans, But Clarity is Still Lacking
Anyway some of those scenarios appear to be resolving, as such we will have this post, as an update to our plans. All of the above impacts are plans as well, but honestly I do not currently have clarity on how, as such for the time being we will leave them as the above footnote and proceed with our Covid inspired plans.
My Mid-Year 2020 Employment Situation
If you recall from our 2020 goals post, I expected a decline in variable income in 2020. Well, Covid19 made that expectation worse. Admitting my privilege I work for a company deemed essential, that is actually involved in the fight against Covid. So I have not lost my job or experienced any sort of base pay cut.
My employer instead cut all potential bonus pay in half, forced some vacation time to be used, and cuts to C-suite pay. I have plenty of vacation time to use thanks to being at my employer for 13 years, so the real impact to me was the bonus cut. Thankfully I expected variable pay to decline. My expectations will materialize.
The other area of variable pay is Restricted Stock Units. Currently my employer’s stock price is near an all time high. It’s not enough to make up for the bonus cut, and I question whether it will still be that high at payout time, but it might soften the variable income blow.
If you recall from past years our variable pay was 50% of my income. The year was already expected to sit closer to 20% variable pay. I wouldn’t be surprised if that number ends up being 10% in 2020.
My Wife’s Mid-Year 2020 Income
My wife’s business is also doing fairly well. Her industry is again deemed essential and plays into fighting Covid. As such as of June will have the same revenue she had for all of 2019. It is now becoming increasingly likely that our income will match 2019 thanks to her increased revenue. This was not the expectation back in January, and a positive outcome.
Foster Care Mid-Year 2020
Not much has changed in the Foster Care world. We still have the same little girl living with us. We are not at this time at the adoption stage and I still can’t speak to whether we will be. So no financial change here.
No Income Change Year to Year
Based on the above I don’t expect a significant income change from 2019. This is a welcome positive. One I am distinctly aware of our privilege, although I know we are not the only ones. But what about expenses?
Expenses Mid-Year 2020
Our goal to buy a travel trailer has been put on hold. Our planned vacations have all been canceled. Just because of the way Covid has limited these activities and others like child activities and eating out, our expenses have collapsed.
We already expected reduced expenses due to our recently paid off mortgage, but now the numbers are unrealistically low. Why did I choose that wording? Well I haven’t filled up a car gas tank in months (pro tip, buy fuel stabilizer and put it in your gas tank if you won’t be driving it. We’ve eaten out twice since the start of the pandemic. We’ve moved our food consumption to more secure local options like CSA or bulk charity food drives from the meat packing plants. Our bills are fractions of the pre Covid levels.
These things are not realistically sustainable In our normal life. They are driven by the broader situation. To that end I’ve essentially loosened up our budget reviews even further then normal. There is no financial reason to tightly control them, and spending a bit extra here and there should help to keep our community moving. I don’t really consider this a success so much as a fact of life under lockdown.
Speaking of keeping our community moving, our goal of 5% donations did not change going into 2020. Most of those donations historically have occurred in the latter half of the year as bonus’ and other things freed up cash flow. That is not the case in 2020.
We have been giving a sizable chunk of cash each month since the Covid situation began. Not enough to offset our reduction in expenditure, but enough to be measurable. Based on our current trajectory I would expect donations will come in nearer to 7% of income. A welcome positive in a world that needs this help!
Reminder, if your means allow, please donate now. So many people have lost their jobs, so many charities have been shut down, they need your help.
If you can’t tell by the above our savings rate has increased in 2020 considerably. Based on recent data from financial firms I am not alone. In general savings rates across the country have hit a record 33%. That’s good news individually as people may need those emergency funds. There is some aspect of economic concern given our consumption engine, but I believe in the short run this savings will benefit society since the economic engine was shutdown anyway. Here is hoping.
If you recall earlier in this pandemic I reported beginning to work towards a purchase of an investment/future retirement property. Most of our additional savings has been put into short term savings accounts to prepare for a down payment on such a property later in the year or early next year. We are nearly to the point of having a down payment of 20% on any property we would consider in our price range. So in general I would consider this a success.
Note most and all our not the same here. Our normal automatic savings continues to direct to the market at our same asset allocation.
We have not sold anything this year and our purchases have largely followed normal patterns since I don’t keep dry powder. As such depending on where you measure from our returns this year have been massive, but from a net worth perspective we have not returned to the highest point of the year yet.
I did not set a 2020 goal for returns due to concerns around declining bond market rates. It appears that was the right call as I have no idea how rates, the market, or even inflation will do going forward.
Credit Card Mid-Year 2020 Goals
We’ve actually processed through a fair number of credit cards so far this year. However obviously I haven’t used the points for travel. So far year to date we have obtained the United Mileage plus explorer card, the Marriott Bonvoy Boundless card, and the Bank of America premium rewards card.
In terms of points I indicated earlier in the pandemic I cashed out some of the travel rewards for fear of devaluation by the providers. To that end I used my Marriott points to collect $450 in Amazon gift cards. Not the best usage of points but 3 weeks later the same number of points were worth about half.
I used the United points to purchase a replacement Mac laptop which I am now writing on. Value about $900. Again not a great usage, but the same laptop now costs double the points so it was the right call.
I don’t know when I’ll get to use my points for flying or hotel stays again. These moves were a strategic way to lessen my exposure to any additional travel reward dilution. And dilution is the key word here. Very few airlines or Hotels eliminate their points programs even in bankruptcy. But they can and often do reduce the underlying value of the points often.
We have yet to apply the Bank of America points. However given this is a cash rewards program rather then a travel one, we will likely use the money for statement credit.
Given our reduced expenses it is touch and go whether we can hit bonus spending limits. As such I can see us sparingly executing more signup bonuses for the rest of the year. Still if the yard stick is travel expenses to credit card rewards we are currently +$1350 since we’ve done no travel this year.
Well our aforementioned lack of post yesterday knocks us off the consistent 1 post a week goal. As we’ve discussed before sometimes you just need to reset your goals mid cycle. That is what we will do here, resetting to one post a week for the remainder of our year 4 of blogging. Nothing else to add here, as I am still content with the activity and community of this site.
What’s Going On in Society
I struggled with whether to add this, leave it off, and even where to put it in this post. I am saddened by what is going on in this country with respect to race. Our hope is for positive criminal justice reform. I also pray for the safe conclusion with positive change for all parties involved.
These are not items I will be writing about regularly on this site. Simply put, my goal for writing here is to engage the community on topics I enjoy writing about. Our message and tone is much more lighthearted then would be a good fit for these topics. I will leave any messaging to drive change to those with bigger audiences and wider purposes then myself. But for those that care, rest assured myself and my family are acting in the background in a way to promote positive change.
How are you doing mid-year 2020?