The Best Investment for 2018

I came across a great article the other day from HumbleDollar outlining the best investment you can make in 2018. Sorry, but it isn’t anything too exciting – it’s paying down debt. Specifically mortgage debt. Not that I needed any additional validation, but it’s nice to see this since we are planning on reducing our mortgage balance in 2018 by over $30k.

This year marks 9 years since we paid off our non-mortgage debt and at one point since then we had our mortgage balance as low as $85k with a line of sight to be mortgage free within a year.

OUR CURRENT MORTGAGE

In 2013, I took a new job and we moved to a new state. We had a good chunk of home equity built up and when we sold we took all the old equity and put it towards our new house, still borrowing $260k. Our house is larger than our last house, but more important (to us), we now live near the best public schools in the area (our last house was in a terrible school district, but our kids were small enough we didn’t really care).

Fast forward to today and 5 years into our 30-year mortgage we are 95 payments ahead of schedule (that’s like 8 years!). Our mortgage website has a cool calculator that shows how much time and interest we’ve saved assuming we only make minimum payments from here on out. You already know that that isn’t happening, so every month this view looks better and better.

Since 2013, my income has grown a lot, allowing us to put more and more towards the mortgage each year. Our first couple of years we had some expensive home repair projects, plus at the beginning of any mortgage it takes a while before it feels like you’re making any headway as the interest part of the payment is so high. But since about 2016 we have started to get into a groove and now the payoff is gaining some traction.

MORTGAGE PAYOFF

We’ve made some additional tweaks to our budget that will allow us to increase what we pay each month. I’ve also made some high-level assumptions about how the new tax law will change our take home pay. Our plan is to have all extra $ will go towards the mortgage. As of now, our current projection is that we will be mortgage free in 2022.

If we only ever paid the minimum, our interest payments would have totaled $173k over 30 years. Yuck. Paying $52k in interest is also lame, but way better. One of the biggest excuses you’ll hear for keeping a mortgage is for the tax deduction. With the new US tax law doubling the standard deduction, even fewer households will itemize deductions. Now mortgage interest will be deducted by even fewer households. Even more reason to get rid of this mortgage as soon as we can.

2017 Year in Review

The older I get, the quicker time seems to pass. Here we are at the end of another year. A lot has happened, but it still seems like yesterday when I shared some of my goals for 2017.

Tonight we’ll be going to bed before midnight (we did the countdown with the kids on London time). Before the year is officially over here in the US, here is a quick re-cap of how I did with 2017 goals.

2017 Intellectual Goal

Similar to previous years, I had set the goal of reading 52 books this year. I blew this goal away and completed 62 books in 2017. My reading is perhaps the largest impediment to me blogging more, so I may consider scaling back my reading at some point.

I did read mainly from my “to-read” list, but added a lot to the list so it didn’t really get shorter. My local library also started offering Hoopla, which I loved since it has a great selection of books already on my list. Sadly, it became too popular (expensive) so it has since been discontinued at our library.

In no particular order, some of the best books I read this year include:

1. The Undoing Project: A Friendship That Changed Our Minds – This was a great story about the pioneers of behavioral economics written by one of my favorite authors, Michael Lewis.

2.  1493: Uncovering the New World Columbus Created – Charles Mann: From the same author as 1491, this book detailed many of the secondary impacts of Columbus’ voyage on the globe and not just the American continent.

3. When to Rob a Bank – Steven Levitt and Stephen Dubner: From the creators of Freakonomics this is another compilation of fun experiments and research of everyday topics through the lens of economists.

4. Born a Crime: Stories from a South African Childhood – Trevor Noah: I’ve been very impressed with Trevor Noah as the new host of the Daily show and reading his history of his childhood was hilarious and sad.

5. Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase – Duff McDonald: I’ve always been impressed with Jamie Dimon but reading this helped me see even more things that he’s done behind the scenes that prove he’s the right guy for the job.

6.  Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley – Antonio Garcia Martinez: I like reading inside stories of companies from the viewpoint of a non-executive (this book was mainly about Facebook). Silicon Valley is a different world in many regards, and I’m glad I don’t work there despite the opportunity for obscene fortune.

7. Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires trying to Reinvent Money – Nathaniel Popper: I read this over the summer and afterward made a small ‘investment’ in crypto currencies (I since took out my initial investment but still have a position that is 3x my initial investment). This book is a good background on the history and use of bitcoin.

8. Work Rules!: Insights from Inside Google that will Transform the way you Live and Lead – Laszlo Bock: This one came recommended by several people at work and was written by a senior HR leader at Google. Although I don’t have the budget to do nearly as much for my employees as what Google offers, I have taken some of the learnings to heart and made some changes.  There are a lot of things you can do to show employees you value them short of gourmet catering 3x/day.

9. Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence – Jerry Kaplan: Artificial Intelligence has and will continue to change the modern workplace. This book raises some questions that need to be answered as this field continues to advance.

10. Pound Foolish: Exposing the Dark Side of the Personal Finance Industry – Helaine Olen: It shouldn’t surprise you that there are many so-called financial experts in the media who really don’t know what they are talking about. This book attempts to dethrone some of the more famous finance personalities. In some cases I felt she was spot on and in others she just had an ax to grind, but the overall message of being skeptical is wise.

2017 Career Goals

I was intentionally vague in describing my career goals, but I will say that I have been pleased with my career growth in 2017. It wasn’t my best year, but I learned a lot and helped my team grow. 2018 is shaping up to be a very challenging year but I have laid the foundation for 2018 success in 2017. I wasn’t planning on getting a new job or promotion in 2017 but did have an interview for a promotion recently. For a variety of reasons I doubt I’ll get the job, but the fact that I was considered even for an interview bodes well for future opportunities.

2017 Financial Goals

I set what felt like a lofty goal of reaching $700k net worth by the end of 2017. The Stock Market in 2017 performed much better than I had assumed. That and some other wins helped us reach this goal back in September. Our next big goal and milestone will be to reach $1M net worth and we are going to stretch to try and get there by 2020.

Other accomplishments for the year included welcoming our fourth child into the family, adding a stamp from Chile to my and my sons passports, and lots of travel within the US. I’m now up to 43 states visited and just have some hard-to-reach states left. We also found time to do home projects like adding a fence, new patio, and exterior paint.

We are still figuring out 2018 goals but they will likely be a continuation towards our longer term goals such as paying off the house, visiting new countries, and spending time with family.