A Detailed Breakdown of My 2020 Goals, and How I Plan to Get There

In this article, I want to show you a breakdown of my goals for 2020, and how I plan to achieve them. I've already stressed the importance of setting yearly goals, and breaking each month into smaller, easily achievable action items. Understanding your long-term goals can be just as important though. Once I understood my long-term goals, I was then able to break it down into yearly goals, to gain a better understanding of where I need to be by the time 2021 hits.

So looking ahead, what are my own goals for 2020? In order to define my annual goals, I need to have basic understanding of what my long-term goals are. In the past, I struggled to establish my own long term goals, and often found myself setting wildly unrealistic goals for some arbitrary date in the distant future, and I had no real path to achieve those goals. Now, I've developed a better outline of what I expect my path to look like on my way to my long-term goal of a net worth of $10 million by 2030. When looking at my own net worth, I don't include my student loan balance of $300,000. It was just too demoralizing to constantly see my net worth be negative hundreds of thousands of dollars, when I plan to have my loan balance forgiven after 20 years anyway. I include all other debt in my net worth calculation, just not the portion of student loans that qualify for forgiveness. 

I chose a net worth of $10 million, because that's about the net worth that's required to really feel completely financially free. I'm talking about the kind of freedom, where I can buy a house in Hawaii on a whim, or decide that I want to travel Europe for a few months, and not compromise financially. Your goal may be larger or smaller, but for me, $10 million should be more than enough. Using the common Financial-Independence-Retire-Early (FIRE) model of living off 3% of your net worth annually, $10 million would provide about $300,000 in gross income each year. Even if I had 60% of my net worth tied up in my 401k and other retirement accounts, and could only live off 3% of the remaining $4 million, I would still have a gross annual income of $120,000. That's plenty enough, especially when I will have an extra 40+ hours each week to continue to invest and develop additional income streams. 

Since my goal is to have a net worth of $10 million by 2030, I need to then work back to 2021, to see where I need my net worth to be at the end of this year in order to remain on track. I've charted exactly where my net worth needs to be each month for the next ten years in order to get to $10 million by 2030. According to the chart, I need my net worth to be at least $226,000 by January of 2021 in order to stay on track for my long term goal. My current net worth (without most student loans) is $132,767. So in 2020, I need to add at least $93,233 to my net worth. Like most people, I can't save up $93,233 in a year, so here's how I plan to get there. 

First, I will max out my 401k. The limit for 2020 is actually $19,500, and not $19,000, but I like to be conservative, and I don't like to risk going over, so I won't actually get to $19,500. I will also max out my HSA with $3,500. Like with the 401k, the HSA limits are actually $3,550, and not $3,500, but again, I will aim to hit $3,500 exactly, and be certain that I don't go over. I have $5,000 in small student loans, that will be paid off before I hit student loan forgiveness at 20 years, so I will pay those off this year. I have $13,000 in 0% interest credit card debt still from my wedding. The period of 0% interest expires in August, so I'll pay that off this year to avoid the 16% interest on that. On top of saving in my 401k and HSA, and paying down some debts, I should still be able to save an additional $8,000. I also expect to collect $6,000 in rental income after expenses throughout 2020. 

Lastly, and most importantly, I was able to get a completely renovated condo under contract that's way below market value. Like my 401k, I won't be able to capitalize on this value for several years, but my goal is to have a net worth of $10 million by 2030. That's far enough in the future that I'll be able to pull some equity out of this new home, and use it to invest again. Conservatively, the condo is worth anywhere from $350,000 to $360,000. I was able to get it under contract well below $300,000 and it's just been completely renovated. I don't like spending too much money on the home that I live in, and cutting the cost of rent or a mortgage is one of the best ways to save money quickly, but the equity play in this property, along with the ability to rent out our current condo that we just finished remodeling, made it too difficult to pass up.  

So that's a breakdown of my financial goals for 2020. I've laid out the entire plan to add over $114,000 to my net worth, which I continually track each month. It should be more than enough to keep me on pace for a net worth of $226,000 by January of 2021, and will go a long way in keeping me on pace for a net worth of $10 million ten years from now. This might seem like a lofty goal, but I started small in 2019 and worked my way up. This time last year, I was still dreaming of owning my first rental property. Once I took action, and had a solid foundation, the opportunities started coming faster than I could handle them.