Money Recap and Lessons Learned in 2020
Published (gregorian) (ornellember)
I’ve learned a lot about money on the Internet, so I’ll give back and share some (good and bad) financial decisions I made in 2020. For context, I started working in tech in September 2019, and at Disney in Nov 2019. Prior to that, from 2017 to 2019, my income had been 30-45k per year. It tripled when I moved into coding.
Disclaimer: I wish I made money from any of the companies I mentioned in this post, but I don’t, quite sadly. Also, this is a recap of my good and bad choices, not advice.
First off, some resources that informed my thinking and decision-making:
I started using Reddit to learn about money in 2018, specifically the subreddit r/financialindependence. I haven’t been on it so much lately; when it gets too serious and you catch yourself rolling your eyes a bit, check out r/fijerk.
I also have been using YNAB since 2017, and I’ve come to the conclusion that my life trajectory would have been pretty different without it. There’s a lot of valid arguments against budgets, and they usually come down to “counting pennies or forgoing Starbucks coffee won’t make you a millionaire,” which is 100% true. However, I do feel like having a full picture of my planning and spending has allowed me to strategize long-term and make good decisions, like guilt-free vacations.
In Jan 2020, I read Your Money or Your Life by Vicki Robin and Joe Dominguez, and have been obnoxiously recommending it to everyone since. I’d describe it as kind of a philosophical/practical book about the place of work and money in our lives. The first few chapters are basically about convincing you to rethink your spending and to think long-term, but don’t get annoyed if you already know that; later on there are really great insights. There’s free copies in audiobook and PDF form at the New York Public Library online app (why are libraries so underrated?)
Without further ado, the lowdown of what I did with my new money in 2020.
I’ve been using YNAB for about 3 years, but I wasn’t super on top of it the latter part of 2020, so it’s not as easy to track as previous year. However, I know I went from spending about $1.8k monthly in 2019 to about 2.4k, with my expenses rising in March 2020 when my partner and I moved from a one-bedroom to a two-bedroom apartment, which allowed us to have a separate workspace. I was lucky I was used to a fairly frugal lifestyle when I went into tech, so my expenses didn’t rise proportionally to my income. My biggest punctual expenses were, more or less in decreasing order: health expenses for myself and my dog, moving expenses, family help and visits, iPad Pro, office equipment.
From September 2019 to July 2020, paid off all my debt, which totaled about 43k, including 19k from my Income Sharing Agreement with the Grace Hopper Program. I paid it off mainly with my signing bonus and about 3k monthly afterwards. Paying off my debt had been the main reason I moved into the private sector and accepted my offer from Disney (aside from the exciting new product I’d be working on, of course.) Rationally, I could have spread out the repayment more, but it was a big mental relief and it freed me to think about savings and investments.
I had never invested prior to 2019, when I put in about $40 into a mobile stock trading app.
I first looked into exchange-traded funds (ETFs), which are basically a group of stocks, bonds and/or other assets that are bundled together and managed by a company, and are typically a lot less risky than individual stocks. Starting in February, I invested about $100 biweekly in Wealthfront, a robo-investor; I really like their UI and they allow you to link other investment accounts, so it’s a great way to have an overview of your portfolio. In June, I also started investing $200 biweekly in Ellevest, a woman-owned and led company; specifically Ellevest’s Impact Portfolio that focuses on sustainable and community-developing companies. Both ETFs have grown pretty steadily, I’m happy with that.
I almost maxed out my 401k (which means I put in about 3/4ths of the legal limit, which is $19,500), and I put almost nothing in savings. This, obviously, wasn’t a good decision: I was trying to think long-term, but ended up cash-strapped when unexpected health and housing expenses happened. In October, when I realized this, I stopped contributing to my 401k and that freed up some money to go into my checking account.
In July, I opened a Charles Schwab account. It took me about a month, because I was so intimidated, but I started dipping my toes in stocks. The first one I bought was two shares of Etsy. I bought a few tech stocks, mostly based on Twitter advice and my own experiences with the products (oh yeah, I also read One Up on Wall Street); they that ended up doing surprisingly well. This is a pretty small portfolio of around 3k. Unfortunately, I didn’t think to make it an IRA, so no tax advantages - I will open an IRA account in 2021.
I donated around $1500 to various nonprofits, mutual aid and crowdfunding. I have recurring donations to a few organizations, specifically tech-, knowledge and community-oriented nonprofits, and also made one fairly large donation to Beauty2TheStreetz, a great nonprofit led by Shirley Raines that provides help to the homeless population in LA. A good amount of my donations of money and time (I volunteer teach weekly for the awesome CodeNation) were matched by my employer.
This feels like less than I would have liked, and it was pretty haphazard, because I hadn’t set specific metrics. I’m setting a goal to donate 2% of my income in 2021, and I want to be more organized about it. I think I’ll give an update on this in about 6 months.
Now that I’ve bared, maybe not my soul, but my wallet, kind of, I just want to thank you for reading. I still often get hit by the enormity and absurdity of it all… I do hope that this is a helpful breakdown for at least one person. In the meantime as always you can hit me up on Twitter.