What’s up wizards and witches!? Coming at ya live from quarantine!
If you’re new here, every month, I track and share my progress towards growing my net worth to roughly $1 million. What doesn’t happen every month? One of the craziest events in world history, which sent shock waves through the world economies, my portfolio, and all our of lives, too.
Let’s assess the damage…
Life Update: March 2020
I had to do a double take when I was putting this update together.
Apparently, my month started with my much anticipated guys’ ski trip to Salt Lake City, Utah.
I say apparently, because with everything that went down in March 2020, that ski trip feels like months, if not years ago.
My memory of the trip seems to exist in an alternate universe. A world where you can just hop on a plane, meet up with your buddies, and clink glasses while enjoying a world class ski resort? It sounds almost unbelievable. Especially while I sit here writing this in the total isolation of my home office, where I’m building on day 17 of home quarantine and nearly a week of state mandated shelter in place.
To be honest, I actually haven’t minded the quarantine. (My real life employer shut down our building midway through the month, and I’ve spent the rest of my days working out of my humble home office – a place that’s usually reserved as The Money Wizard world headquarters.)
A lot people seem to be really bent up about the quarantine. But if I’m being honest, I’ve actually kind of liked it!
I do feel bad for the small business affected by all this. And we could certainly focus on all the negatives for days, because there’s a lot.
But personally, I’m really trying to focus on the positives.
When else in history will we have a multi-week pause of real life?
If you can avoid the urge to binge watch netflix, it’s an unprecedented opportunity to catch up on to-do lists, work on your side hustle, and most importantly, stay healthy.
Since alone and outdoors is one of the best places you can be to combat the virus, one of my main entertainment sources has shifted to lots of runs outside. Plus walk after walk with The Money Pup, who’s not really sure what’s going on, but is pretty convinced he’s hit the jackpot with how often I’ve been home with him lately.
I’ve also gone full chef-it-up mode. Seems like every night, I’m devoting an hour or two to whipping up a dish that’s time intensive enough that I’d have avoided it in my busy, pre-quarantine life.
In a way, my days look pretty similar to how I imagined my ideal early retirement lifestyle. Who knew!?
Net Worth Update: March 2020 (hold me…)
This ain’t gonna be good. Since I’ve spent the last few days procrastinating and pretending I’m spending all of Bill Gates’ money, it’s probably time to just rip off the bandaid.
Let’s see what literally the worst start to a year in stock market history has done to my net worth:
My portfolio is now back to May 2019 levels. While it never feels good to get set back nearly a year in your investing journey, I was honestly expecting a lot worse…
And there is some silver lining to all this. Michael Batnik posted this great analysis that shows the more the market falls, the more money you’ll probably make.
As long as the portfolio doesn’t get completely decimated, which mine hasn’t so far, and you’re young enough to ride it out, market crashes can actually be huge blessings in disguise.
And my latest portfolio allocation:
For comparison, here’s my target allocation, back from when I pretty much called the current recession back in August: 😎
Cash: $11,763 (+$2,042)
The cash position keeps building as I keep living frugally. It’s times like these that the ability to live below your means really comes in handy, whether you’re using that cash to take advantage of falling stock prices or just building up some peace of mind.
Personally, I’m still working towards a 10% cash position. The market’s been brutal, but it still hasn’t hit the 35-40% drops indicative of a true recession, which would be enough to convince me to go a little cash lighter.
Brokerage: $137,869 ($15,051)
And I thought last month’s $10,000 drop was bad!
Here’s the thing though. The losses are only real if you sell.
And I ain’t selling…
401(k): $114,064 ($18,342)
It really helps ease the mental need to “take advantage” of the stock market knowing that my maxed out 401(k) continues to gobble up $2,000 of shares per month throughout this crash, which one day, whether that’s next week or next decade, will probably look like fantastic deals.
Roth IRA: $35,581 ($6,834)
After the monthly craziness, I did a mid-month analysis of my allocation and saw that the REITs in my Roth IRA were way over my 10% target.
So, I shifted $3,000 of my Roth IRA money, which was sitting in cash, towards International Stocks. (I went with VTIAX for the reasons I talked about in my new VTIAX vs. VFWAX post.)
I’m still over the 10% REIT target, so I may make another adjustment in April.
Rent Payable: $799 ($54)
Here in Minnesota, the weather’s finally getting nicer. FINALLY. Which also carries the bonus of cheaper utility bills.
For newer readers, I split a mortgage for a house in Minneapolis that my fiance bought for $180,000 a few years ago. This “rent” covers my half of the mortgage, utilities, taxes, expected maintenance, etc.
Credit Cards Payable: $3,190 ($1,540)
Ignore the incorrect red in the table above. The credit cards saw a nice, green drop-off when I paid off some of the pre-paid group ski trip expenses.
(As a reminder, this amount gets paid off each month. There’s nothing more wealth destroying than paying credit card interest.)
Let’s take a closer look with the detailed spending report:
Total March Spending: $3,153
I actually expected this to be lower given the quarantine lifestyle. But I’d also forgotten the ski trip was even in this century, so that explains a lot.
My fridge and panty are now so stocked they might start putting Walmart to shame.
Dining Out: $291
Since I’m in a good spot financially, I’ve done my best to help support some of my favorite local small businesses, who I’m sure are struggling with these brutal times.
Lady Money Wizard and I have kept up our once or twice a week “dining out” habit, except given the situation, that obviously means to-go orders.
It turns out that reading, writing, and playing board games is a whole lot cheaper than happy hour drinks, cross-town ubers, and sporting events.
House Expenses: $225
We’ve found ourselves making all sorts of little tweaks to the house. I guess this might be the cabin fever setting in…
While it was pretty easy to ignore the wall’s splotchy paint job for the past few years, now that we’re spending 24 hours a day in here, I found myself buying a few gallons of new paint, a new armchair for the living room, a shoe rack for the entryway, some new shelves, etc.
We snuck in a vet visit for The Money Pup, just before the lockdown. And then got our bi-annual reminder that vet visits are crazy expensive.
Entirely the cost of the 5 day ski trip before the world shut down. Followed by another reminder that ski trips are crazy expensive.
How are you holding up?
Hopefully you’re doing okay during these crazy times. And hopefully, you did a little better at taking advantage of this money saving quarantine opportunity than I did.
Next month, I’m looking forward to seeing how much cash I can save. (While still doing my best to support the local businesses, when possible.)
Stay safe out there!
PS – During these wild times, tracking your spending and monitoring your portfolio allocation is even more important than ever. Personal Capital still has your back there. It’s the best free tool I’ve seen to monitor your investments.