With the new baby here, I feel like I missed out on giving 2013 a proper send-off. Like Rachel Green more than 15 years ago, I need a little closure. It's time to take that annual look back and feel like I accomplished nothing (I'm kidding... I think).
There were quite a few things that made 2013 unique and memorable from my perspective. Let's dig right into them:
Event: The first full year of being a father - Our first Little Man was born in the last quarter of 2012. With maternity leave, and my wife in transition to a new job, we had a solid double-team press going on. This year, it was largely
meday care, but with me rounding out many of the other items.
Financial Impact: Very Large - I have to say that between the great rates at the military day care and relatives piling on toys and clothes, we didn't spend as much money as most people would. However, from a time management perspective, I've lost a few hours a day (which I wouldn't trade for the world) and there's a large opportunity cost to that.
Event: Settling into a new home - We started the year off living in a small hotel room after driving across the country with big dog and the aforementioned baby. It took a couple of months for our new home back on the East coast to be ready. After moving in, we had a series of home improvement tasks to attack.
Impact: Very Large - I can tell you one sure way to avoid financial freedom: Spend a boat-load of time chasing contractors to get work done... and then pay them a boat-load of dollars. While you are at it, kiss goodbye any potential gains that money would have gotten you if it were invested. Maybe if we sell the house sometime in the future we'll recoup some of that money.
Event: Real Estate Purchase - We looked for and found an investment property. We found it to be one of the best uses of some of our spare cash that we wanted to invest. We really wanted to lock in interest rates on a property that was already selling for 40% than it was in 2002. It took us a little longer to find a tenant than we hoped, but in the grand scheme of things a couple of months without a tenant isn't a problem.
Impact: Very Large - Here's why we went with an investment property vs. a REIT. The short answer is that it should provide $10,000 a year of inflation-protected income in 15 years when it is paid off. I'm really hoping that 52-year old Lazy Man thanks 37-year old man for giving him a $10,000 raise.
Event: New SUV - We used TrueCar and bought a new Acura MDX due to the expanding family. It is not a frugal SUV, but it we felt it was an area where we were getting a lot of value in relation to our needs (a 7-seater) and our comfort (provides a good deal of luxury). When I researched other luxury SUVs, it stood far apart from the rest.
Impact: Moderately Large - As I said, it's not cheap. In fact, it cost more than twice what we put down for the aforementioned investment property. At least we did get a good interest rate (around 1%) and spread it over a long time. We tend to drive our cars for a long time, so the hope is that we'll squeeze every ounce of value out it.
Event: Refinanced a property - I was able to complete a refinance that saved us about $300 a month.
Impact: Small - Compared to the rest this is small, but $3000 a year over 15 years sure adds up.
Event: The Death of Blogging - I haven't talked much about this one and I still need to tabulate the final number, but my income from blogging was about half of what it once was. That would be great if I was bringing in big bucks from blogging. I'm not. I'm not the only one seeing their income from blogging disappear... its true of just about every financial blogger I've talked with. (Admittedly I haven't done an exhaustive search.) If you look at the The Money Writers list of blogs in the skinny side bar you'll see 8 blogs... five of them are not actively updated today. My fellow money writers have moved on. I'm not going to put words in their mouths, but I bet if they were still making a viable income from it they'd still be at it.
Why is everyone's income from blogging down? Google, which is the source of much internet traffic has decided to support bigger brands. Let's say I write a story about hacking your credit score. Let's say that CNN writes about some criminals hacking into computer systems to steal some credit cards. If someone goes to Google and searches for "hack your credit" you are going to get CNN's article. A few years back, Google would likely preferred my article and I might have gained a reader. That simply isn't the case anymore.
Impact: Very Large - Having your income cut is a big deal. I'm working on this and part of the solution is to diversify my income sources. This is another reason behind the real estate purchase above. I'll cover this in more detail when I get to my 2014 goals.
It seems like everything had a very large impact. I was going to try to lower some of them, but then I said, "To hell with that. If they weren't very impactful, they wouldn't be big financial events."
As I'm finishing up this article, I realize that last year a similar one in a slightly different format: What You Can Learn from the 4 Events in 2012 That Changed my Financial Life. It touched on many of the same themes, the new baby, the move from California, even the purchase of a new car.
Having all these things going on eases my mind about that worrying last item, the blogging income. Surely no one wants to see their income drop. However, if you have the right trade-offs such as savings at home (the refinance), a solid plan going forward, and increased time with loved ones... it's manageable with another very good income.
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