Now that I’ve shared my 2020 review and 2021 outlook for stocks and real estate, I’d like to share my personal goals for 2021.
Given the circumstances, we made the most of our time in 2020. However, as each month goes by with no pandemic resolution, I’m slowly getting more frustrated about not being able to live my desired life.
I care about my family and the safety of my fellow citizens. This care is why we haven’t traveled or partied with others since March 2020. Even though the chances of getting the virus are low and the survival rate is high, we don’t want to contribute to the spread.
At the same time, we know we are in the back of the bus for getting a vaccine. Therefore, our patience must last until July 2021, at the earliest.
The first half of 2021 will be much like the second half of 2020. We must hold on!
Financial Samurai 2021 Personal Goals
Setting specific goals help make each year more meaningful. Without financial goals, it’s easy to wake up in 10 years and wonder where all our money went!
Without health goals, it’s also easy to find yourself looking and feeling like a completely different person in only one year.
Life is beautiful. But life is also a battle. Here are my 2021 personal goals and to-do list.
1) Guard and optimize my time.
By far, the most valuable asset is our time. The older we get, the more precious time becomes because we have less of it. Here’s what I plan to do to optimize my time:
- Wake up at
5 am4:30 am and get deep work done before 8 am. 8 am is about when my kids start the day. Have a hard stop at 8:30 am. Last year, I’d often keep writing until 9 am because there was always so much to say. I’ve updated the time to 30 minutes earlier to increase my chances of not getting interrupted when writing or recording a podcast. After 8:30 am, I will focus on spending time with the kids for two hours in the morning, two hours in the afternoon, and one hour in the evening.
- Stop responding to people who only ask for something and don’t bother to make some type of connection. The positive about having Financial Samurai is that I get to help strangers with their personal finances for free. The negative is that I’m constantly being asked to do things for people I do not know. I tried to help as many people individually as possible, but I’ve run out of energy. Hopefully, more people can utilize the FS Forum to get their questions answered.
- Match my correspondence time with the other party’s correspondence time. For example, if someone takes three days to respond, I’ll take three days to respond. If someone takes more than seven days to respond, stop responding. I tend to respond much quicker than average because if I don’t, I will forget.
- Turn off all electronics by 10 pm. Electronics really fries the brain.
2) Take things down a notch once vaccinated or taxes go up.
Because many leisurely options were shut down in 2020, I decided to focus more on Financial Samurai. Unfortunately, if you’re following safety guidelines, much of 2021 will be the same as 2020. Therefore, I plan to keep grinding until I either get vaccinated or taxes go up, whichever comes first.
Joe Biden has promised to raise taxes on those making more than $400,000 a year. Since I believe the ideal income for maximum happiness is about $200,000 per person and $350,000 for up to a family of four, it’s a waste of time trying to make more.
By the time I get vaccinated, it’ll likely be in 2H2021, at the earliest. Therefore, my goal is to make as much money in the first half of 2021 as possible. The more I can make, the more I can boost my passive income. Once I’m vaccinated, most of the world should be vaccinated. Then it’s go time for leisure and slow travel.
3) Live in Oahu for at least one month.
If my timeline is correct, I should be able to bring my family out to Oahu by October. We’ll rent a house near the beach for at least a month and catch up with my parents.
Given I usually see my parents for 1-2 weeks a year, staying in Oahu for at least one month will be like two years worth of visits.
While in Oahu, I’ll also catch up with my extended family. We’ll have our annual business board meeting with my dad, wife, and me. I’ll also pivot my writing towards more travel, lifestyle, Hawaii-living, and online entrepreneurship.
[I will return in 2H2021!]
4) Grow net worth by 20%
Since leaving my job in 2012, I’ve had a goal of growing my net worth by a modest 10% a year. At the time, my thought process was that any net worth growth beyond what I already had in 2012 is gravy.
However, if I truly believe the good times will continue in 2021, then I should be looking to grow my net worth as much as possible. The good times won’t last forever. And I think there’s a good chance the good times start fading in 2H2021 once corporations have to prove their earnings are rebounding by 25%+.
With 20% of my net worth in stocks and 40% of my net worth in real estate, I think these two components have a good chance of providing 10% out of the 20% net worth growth target. The remaining 10% will come from active income and luck.
A 40% return on my public investments in 2020 was a fluke. If there wasn’t a pandemic, big tech would not have been up so much. Instead, I’m expecting for a more normalized 8% return. For real estate, I expect my holdings to increase from a 3-4% return in 2020 to a 5-6% return in 2021. Due to leverage, the return will be more than double.
At this point in my financial journey, there is little chance of growing my net worth by 10% through active income. One, my wife and I don’t have jobs. Two, Financial Samurai is not big enough. But with some unforeseen luck, maybe something good will happen if I keep at it.
To put things in perspective, growing net worth by 20% in 2021 will be like growing net worth by over 110% in 2012. The power of compounding is huge.
5) Make an additional $10,000/month online to pay for living expenses.
Blogging has an active and a passive income component. The passive income component is any residual income that comes after a post is written. Active income comes from new posts and new business partnerships.
Now that I went into debt to buy a new house, I’ve got a new monthly mortgage to pay. By making an additional $10,000 a month online, I’ll be able to pay for my mortgage, new property taxes and health insurance.
I’ve never been really excited to make lots of money online because it felt too much like work. I’d rather just write about whatever is interesting at the moment and not think about how much an article can make.
By identifying a purpose to make additional online income, it will help me get more motivated. For example, I’ll tell myself that if I don’t make an additional $2,250 a month to pay for healthcare insurance, we’ll have to start working out and eating healthy again!
To put $10,000 a month online into perspective, I have the capacity to make an incremental $25,000 a month online. But I don’t want to because doing so would eat into family time. Further, my goal is to really take things down after July 4, 2021.
6) Try to homeschool for one more year.
I used to catch myself regularly praying for patience. After becoming a father, I also started regularly praying that my son grows more calm. It has been hard for me to listen to his crying and whining everyday since early 2017. Hopefully being a threenager does’t go much beyond his fourth birthday.
In addition to praying for my son, I also hope our daughter starts sleeping better in 2021. If so, my wife can sleep better at night. With more energy, my wife and I will be better able to homeschool our son, who turns four in the spring.
We don’t want to send our son back to preschool if there isn’t herd immunity by the fall of 2021. Not only is it nice to save $2,000 a month in tuition, it’s also nice to spend more time with him. It’s also great not to get sick from him!
[Lake Tahoe, right before the pandemic began]
At the same time, we reapplied to a mandarin immersion school in the fall. We find out if we get in for the August 2021 school year by March 2021. If we do get in, we have to put down a $3,000 non-refundable deposit. Then, my hopes of spending at least one month in Hawaii catching up with my parents fades. I would have to wait until winter break. Therefore, I’m hoping they defer us for one more year. I have a feeling they will.
It may sound obvious, but we’ve discovered that spending more time with our children is better for them than spending less time. The reason why parents are fine with spending less time with their young children is because taking care of them all day is exhausting. Parents like breaks. Hence, school.
7) Follow the separation of tasks.
When you have the internal mantra, if you can, you must, you risk being constantly stressed out. This mantra makes me want to do everything. It’s not healthy sometimes for relationships, work, business, and health.
The most important piece of advice from the book, The Courage To Be Disliked, is to follow the separation of tasks. If you start doing someone else’s task too often, you may start to feel miserable.
Because I generally do things faster than my wife, I tend to do more in the same amount of time. I also wake up earlier as well due my conditioning since 1999 of getting up before the markets. After a while, problems can arise.
But if I follow the separation of tasks, I’ll feel much better. For example, if I see the dishes are dirty, if this is her task, I need to resist the urge to clean. I need to be OK with dirty dishes piling up over night.
It’s important to recognize that everybody has a different motor. So long as the people we care about are trying their best, that’s what matters most.
8) Maintain the same body weight.
As I was updating some older posts, I came across this one from 2012 where I complained about the ideal body weight. Then I looked at the picture of my weight in the post and realized I’m basically still the same weight!
After 22 years of being roughly the same weight (+5 lbs since college), I’ve come to realize that having a weight loss goal is a waste of time. Nothing is really going to change or change for very long.
Therefore, I’m just going to have a goal of not gaining weight. 170 lbs will be my weight cap at 5′ 10.” I’m not ripped, but I feel and look healthy.
In terms of maintaining my mental health, I will achieve this through the separation of tasks, meditation three times a week, playing tennis or softball three times a week, relaxing in the hot tub three times a week, regularly taking naps after lunch, and more accurately estimating our passive income.
Mental health gets beaten up during times of financial insecurity. I know this because I was automatically waking up between 2:30 am – 4 am some mornings during the height of the pandemic. My mind was telling me I had to do more to protect my family. The less one sleeps, the more irritable one becomes. It’s a vicious cycle.
Instead, during the worst of the downturn, I should have done a deep dive review of our finances. If I ran through some worst-case scenarios, I would have realized things would be OK.
Volatility really negatively affects my mood. Which is one of the main reasons why I prefer owning real estate over stocks. I also enjoy locking up my money in private investments for many years so I can forget about the money and focus on other things.
9) Make sure my children are financially secure and emotionally safe.
As a parent, it is my responsibility to nurture them until they become independent adults. To do so requires being emotionally present. Once they become adults, I’m sure continued support will be necessary.
Therefore, the obvious first step is to not abandon them before they become adults. Sounds logical. However, if everyone followed this logic there would be no divorces after children. I’ve also got to maintain my health to increase my chances of being able to stick around.
The second step is to make sure my kids are financially secure in case I were to die prematurely. The pandemic has given us daily reminders that tomorrow is not guaranteed. Therefore, I will re-up my life insurance policy.
If you don’t have life insurance or need to re-up your life insurance policy, check out PolicyGenius. It’s the easiest way to get free, no-obligation quotes online. Make sure you get a long enough term to cover your kids through college.
The third step is properly manage their 529 plans, Roth IRAs, and custodial investment accounts. These accounts have the potential to grow to significant amounts over the next 20 years.
The final step is to keep Financial Samurai and our rental property portfolio going. Over time, I will teach my kids everything there is to learn about both businesses. These businesses are like insurance policies for a life filled with rejection.
10) Write a new book.
Ever since writing my first book in 2012 about how to negotiate a severance (updated), I’ve told myself I should write another book. But I keep slacking off because it’s much easier for me to write posts.
Since I’ve already done the self-publishing route, I’m going to try the traditional publishing route. I’d like to know what the experience is like. Who knows, it might even be a profitable endeavor.
20 years from now, it’ll be fun to look back at the pandemic and think about our accomplishments, rather than our failures.
11) Maintain my posting cadence
I will continue to publish 3X a week on average as I’ve done since 2009. I will also send out at least two newsletters a month. Quitting is not an option. Posting regularly is also good for mental health.
In the first half of the year, I’m going to focus on 60% fun / 40% business. Then once the second half rolls around, I’m going to shift the balance to 80% fun / 20% business.
I’m never going to go the 50% business route or greater because then Financial Samurai would feel too much like work. This would entirely defeat the purpose of leaving work behind in 2012!
One of Financial Samurai’s value proposition is that everything is written based off firsthand experience. Money is too important to be left up to pontification. I’m writing what I believe in. I’m then mobilizing my capital accordingly. Besides, I want things to be interesting around here.
12) Earn more than $300,000 in passive income
With a ~25% increase in net worth in 2020, I should be able to generate more than $300,000 in passive income in 2021. $300,000 – $350,000 is my ideal income range to take care of a family of four in San Francisco or Honolulu.
To do so will mostly take maintaining existing tenants and allocating new capital in income-producing assets. I cannot control corporate dividend payouts or what happens with my existing private real estate investments. If the economy double dips, then my passive income goal will be in jeopardy.
What I can control are my income, saving rate, and asset allocation. Although I’m still bullish on 2021, I will be focusing more on cash flow rather than capital appreciation.
At the end of the day, my main focus is on building as much passive income as possible so my wife and I can remain full-time parents.
2021 Will Be A Better Year
2020 was a mediocre year due to all the uncertainty. Yes, the financial gains were nice. But I’d much rather have more certainty and freedom.
Given we’ve gone through the worst of the pandemic, we’re now used to the uncertainty. From a lifestyle point of view, there’s mostly only upside.
For example, when the NBA started up again, I was thrilled! Being able to see my Warriors play again is a joy. The same thing goes for visiting museums and other things we haven’t seen or visited for months.
With more money and incrementally more fun things to do, 2021 could be one of the best years of our lives. But for the first half of the year, I think we should keep our heads down and build as large of a financial buffer as possible.
Let’s conquer the first half so that we may better enjoy the second half of the year!
Readers, what are some goals you have for 2021? Do you believe 2021 will be a great year?