Posted in Personal finance

Welcoming Twenty – 20

Twenty20 cricket or Twenty-20 (often abbreviated to T20), is a shortened format of cricket. This is much shorter than previous forms of the game, and is closer to the timespan of other popular team sports. It was introduced to create a fast-paced game that would be attractive to spectators at the ground and viewers on television. https://en.wikipedia.org/wiki/Twenty20

The Pareto principle (also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity)[1][2] states that, for many events, roughly 80% of the effects come from 20% of the causes.

This year 2019 I started the-log-house.com and made a few important steps towards more clarity in my personal finances. It took less than 20% of my time weekly, and yet gave me 80% of the clarity I was looking for.

As I documented my thoughts, ideas and opinions on the blog posts, the likes and followers encouraged me to chug along. Thanks to all my followers and all those who liked or read my posts over the past year.

Next year 2020, I plan to make this blog less subjective and more actionable. Yes just like the Twenty-20 form of cricket described above.

One of the most liked posts in 2019 is all about action.

Five components of a personal finance system

Photo by Pixabay on Pexels.com

So what are the action items for 2020?

  • Got a year end hike and bonus. Invested 50% of the bonus, and will try to keep expenses the same as 2019.
    • This will increase the cash flow a little better, so that I can invest more.
  • Tweak the asset allocation among various classes – Equity, Bonds, Real Estate and Cash.
    • This may require some selloffs and aids in tax adjustments.
  • Get a better handle on tax planning this year.
  • Prioritize goals, analyze 2019 expenses and make a budget for 2020.
    • Simplify and automate investments. This is already the case for me, but the monthly amounts may need tweaking based on 2020 plan.
    • Save at least 20% of my gross income towards retirement.
  • Cash allocation
    • Maintain or improve the emergency fund.
    • Auto and home insurance paid off for 2020. Now start saving monthly for next renewals in Dec 2020.
    • Paid off property taxes. I don’t escrow but keep saving monthly portion in a savings account with interest.

How to wrap up 2019?

  • If you have been using YNAB, create the reports from it and analyze the total amount of expenses, investments, savings and taxes paid.
  • Start gathering the tax documents. For me, I have to prepare for Foreign asset reporting and it needs quite a complex paperwork, not to mention figuring out the estimated tax liability.
  • Update the net worth and wealth progress metrics. See this post if you are interested.
  • I redeem the credit card rewards at the end of the year.
    • Last year I got cash back.
    • This year I am getting myself a Bose speaker system, a DVD player (for my old DVD collection) and gifts for the kids. My credit-union-no-frills credit card gave me 1x point for each dollar spent. Not bad to reward my discipline.
  • Wipe out credit card debt. I pay off at the end of every month, and definitely want to enter 2020 with ZERO consumer debt.
  • Go on a vacation, hope you too have been saving up monthly for this goal.

HAVE A GREAT 2020 YEAR AHEAD.

  • Wish 20% of your efforts produce 80% of happiness and wealth.
  • Take action like the Twenty-20 form of cricket.
Photo by Jill Wellington on Pexels.com

Author:

I am a software engineer by profession and a personal finance enthusiast by passion. I read a lot and like to write about my experiences about applying what I read. One day I hope to positively impact a few lives by my positive thoughts about personal finance.

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