Staying the course worked.
When I wrote my end-of-year update for 2022, I was feeling pressure due to the severe drawdowns in our assets. 2022 was a rough year in nearly every asset class, and we were not spared. However, the choice to begin using ETFs for much of our portfolio meant that I didn't make any catastrophic choices despite the drawdowns, and that change paid off in 2023.
In 2023, I made additional changes, which have further solidified my temperament. Namely, my eliminating debt and restarting IRA contributions, I've taken steps that will pay off for decades while taking off some of the pressure to nail stock picks.
Net Worth Update
At the end of December 2022, I wrote:
However, December was also the first time that our net worth was down in every metric that I track. There are four comparisons at the top of my spreadsheet: USD month over month, EUR month over month, USD year over year, and EUR year over year. For the first time, all of these metrics were negative.
The story was very different in 2023.
Our net worth rose in December to $167,897/€152,080, which is a month-over-month rise of 6.6%/5.15%, a quarter-over-quarter rise of 13.90%/9.16%, and a year-over-year rise of 34.11%/30.10%. This represents an all-time high for our accumulated wealth.
2023 Changes
Debt and IRA
The biggest change was the decision to close out the loan I'd taken and restart my IRA contributions. This was not taken lightly, though some triggers made 2023 the year. I've mentioned those triggers before, but I'll summarize:
- A family conversation made me feel like I was being pushed into choices that I didn't agree with.
- Looking for emotional support to say "no" to family members, I found Dave Ramsey episodes.
- He's anti-debt, and I was in debt, and - after analyzing my feelings - I realized how stressed I was about it.
- His book Baby Steps Millionaires reminded me that tax-advantaged accounts are powerful tools for wealth building.
Looking back, had I not sold anything to pay for the debt reduction, I'd have more money today. But how would 2023 have felt? I didn't like that monthly payment to the loan company. I felt like our budget was overly tight because of it. It was a negative in my mental life, and although I'd have more money now had I simply persisted, I don't think I'd be as happy.
I filled up our IRA contributions for 2022 and 2023 early in the year, which meant I'd have to do the more complicated tax filing using the Foreign Tax Credit. I managed that, and it's not so bad, but U.S. tax filing remains a major net negative in our lives. Every year it's a stressful frightening experience.
Small Business People
We've been active small business people here in Germany. My wife made great strides in 2023, acquiring new customers and increasing her income. She diversified away from a single high-volume, low-paying customer and negotiated higher rates from several new clients. It was impressive.
I have several small businesses, and while they aren't able to compete with my wife's for income, they have increased our bottom lines. One of them is still in its infancy and therefore unprofitable, but I believe that will change in 2024. The other is almost pure profit. The attention is give towards them is what I might have in the past directed towards stock picking. This new focus is much more productive and fun.
This year, we've modified our budget spreadsheet to account for these varied sources of business income.
2024 Expectations
I don't know what will happen. At the end of 2022, I didn't expect that a single conversation with my sibling would so disrupt me. I didn't think I'd seriously enter this new line of business. I thought I might leave my job, which I didn't.
I know there will be disruptions, and there will be surprises. At least I hope so. If I could completely plan year 2024, that would be outrageously boring.
Until next time. Happy new year, happy saving in 2024, and stay healthy.
