A Year of Setbacks

We are no longer partnered with the catering company. 50 junior is still in a daycare (couldn’t get a pre-K spot in school). I withdrew my retirement money!

It was almost Halloween last year; Thursday the 29th of October, 2014. I received a strange number on my cell phone. Of course, it was from a stranger. That stranger turned out to be a good Samaritan who called and told me that my dad had been in a hit-and-run accident and was on his way to the nearest hospital with a broken neck and possible broken ribs. My heart dropped as I listened to her and heard sirens from ambulance and police cars in the background. I asked if it was really my father and this could be a wrong number. It turned out, it was my dad and it wasn’t a wrong number.

We had 5 wedding cake orders during that week (we did wedding cakes on the side). There were a total of 10 cakes; 5 wedding cakes and 5 groom’s cakes. I held myself together and completed all the remaining cakes. Before I left town on Thursday night, I had informed the catering company that all orders were complete and were ready to be picked up & delivered and that I’d be gone for a few days to see my dad. There were no pending orders the week after.  I arrived at my parents’ house on Friday (which is 9 hours away) without sleeping. When I came back and were ready for orders. However, I learned that the catering company terminated our partnership. The good part was that we had time to spend as a family once again (since we didn’t have to do as many cakes as we used to). However, we significantly had fewer orders, in turn, significant less side hustle income. A total of 16 weddings for the remaining of the year, to be exact (compared to 5-7 weddings a week while we were partnering with the catering company last year).

Here is the third year of our FI journey…

Expenses

1. The first year lease of our rental house had ceased. Now, the lease contract became a month-to-month lease beginning in December of this year. A total of $6,420 in mortgage on the primary residence. A total of $4,944 in mortgage on the rental. And a total of $0 in utilities on the rental (used to be our primary residence) :).
2. 50 junior daycare cost, this is another setback for this year. He was eligible and supposed to be enrolled for a state-sponsored pre-K program this past Fall. However, with a limited opening at the public school in our county, he didn’t get a spot 🙁 We had to put him in a pre-K program at a daycare.  This was a significant expense. We would have saved $3,325 on daycare cost if he got his spot at the school. A total of $9,100; $175 a week for 52 weeks.
3. A commercial kitchen rental fee and all baking supplies cost. A total of $5,700; $3,000 in rent and $2,700 in supplies.

Saving and Investing

1. I just passed my work rating this year at work. So I got no raise, therefore no bonus; another setback emotionally and a bit financially.  I think this had something to do with my work absence. I not only used up all of my vacation time but I also used a lot of unpaid leave (to be able to have time to take care of my dad, not to mention all the court hearings related to his accident). When I was at work, I worked hard, but working hard is not always enough, at least in my experience.
2. This year, I also changed the way my retirement contribution deducted. Instead of making my contribution as a percentage of my salary, I have it deducted from my paycheck at a fixed amount. This way I know for sure that I won’t go over the IRS contribution limit!  A total of $17,520 went to a tax-deferred and a Roth equally. I almost maxed out the IRS contribution limit this year. I felt great even though I didn’t receive a good rating at work. Always pay yourself first. My employer matches dollar-to-dollar for the first 3% and half a dollar for the next 2%.
3. Mr. 50 has no work rating. However, he got a cost of living adjustment to his salary. It was a small amount but it was better than nothing. He also maxed out his retirement contribution this year (up to company contribution limit). Mr. 50 get a little to no matching from his employer.
4. I continued contributing to 50 junior’s college saving account at $100 monthly.
5. It was the first year we had a full year worth of Mr. 50’s salary. So earlier this year, I decided to increase our saving amount on our regular saving account, from $100 to $250 monthly. Yay! It felt great! This account serves as our emergency fund.
6. We continued doing the automatic saving transfer to our online saving account at $100 monthly.
7. Our cake business brought us $4,400 to our business checking account. This was actually a loss.

Net Worth

• Liabilities

1. The balance on the current house was $112,000 and NY house was $223,300. Yikes!
2. We owed $0 on credit cards. We’ve been paying off a balance each month for the past 2 months. I felt like I can now breathe!
3. My car loan was gone. We finally paid it off earlier this year. Yippee!
4. Mr. 50 car loan balance was $14,590 (we’ve been doubling our payment each month!) Keep it up!
5. Thank goodness, Mr. 50 and I never have student loans. A future post “How I went to graduate school debt free“.

Liabilities totaled at $349,890

• Asset

1. My old retirement balance from a former employer was $0. This was an emotional setback for me, again. I took out my retirement money. I was really no longer at my dream job (at least, I felt that I was still part of the company. This was because whenever I logged into my old retirement account and saw the company logo. I also had shares of company stock. I felt like I was still part of them… call me crazy) Why on earth did I do this?
2. My new retirement balance (from current employer) was $47,332.
3. Mr. 50’s retirement balance was $10,984.
4. 50 junior’s college saving account balance was $2,889.
5. My car was worth $7,700.
6. The online saving account balance was $732.
7. The regular saving account balance was $3,323.
8. Checking account balance was $2,612.
9. Business checking account balances at the end of the year was $0. We closed the account at the end of the year as we no longer need one. We had the balance transferred to the checking account.

Asset totaled at $75,572

• • 2015 Net Worth -$274,318

What I learned and what I want to accomplish next year

1. It was disappointing that our partnership with the catering company was terminated unexpectedly. During a few days that I was gone, they had contracted somebody else for their wedding cakes’ needs. It was unprofessional of them as we completed every order we had with them before I left and they terminated our business relationship just like that. It wasn’t that we didn’t fulfill their orders. Well, I learned that sometimes being too honest and being upfront with everything isn’t always good. People don’t want to hear what they don’t want to hear or don’t care if someone is dying. Imagine if I didn’t tell, they would never know, and everything would have been just fine (like nothing happened). I was really bummed out by the fact that we were rejected.
2. My cake photos were used by other local bakeries. I had to file a lawsuit against that bakery who used my wedding cake photos for their commercial uses without my knowledge. Basically, they stole my images from the internet and used them for their advertising purposes. We had to pay a legal fee. Time was also wasted.
3. This probably was a life lesson learned for me. I didn’t really know how to express this feeling. A friend of ours who also does a cake business is trying to compete with us. She would copy my cake styles, photography styles, or even a social media posting style. I didn’t realize the fact that she was copying us until it was so obvious that her cakes looked so much like ours. Whenever I posted our cake photos on social media, the next thing we saw was copy-cat version cakes on her social media with a similar posting description. How could this be coincidental? When we saw each other at our social gatherings, she never said a thing about our cakes or her cake business. I knew in my heart that she tried to out do us. Instead of helping and supporting each other, she chose to compete with us. Well, we are no longer friends. It hurts because you developed friendships with someone, you put a lot of time & energy into that relationship over the years and you received nothing but jealousy. I learned to let things go. There’s no point in being friends with her as there will always be downs.
4. I learned to never include your side hustle income as part of your main income. Treat it as an extra income and this cannot be counted toward any of your financial obligations. My mistake was that I thought I was able to rely on this side hustle income to pay for a new car. I was wrong. Our side hustle cake business was a short-lived. I learned and moved on. The only mistakes worth regretting are those we don’t learn from them.
5. I took out my retirement money (before the eligibility age, ouch!). We paid a hefty tax and will be paying the 10% early withdrawal penalty when we file our income tax return next year. Ouch! I decided to take out my retirement money (instead of keeping them there or having it transferred to the new account) because I wanted to pay off debt as soon as possible. I ended up getting $31,000 after paying all the taxes (check out our net worth report last year here). We did pay off all of our consumer debt. It’s almost always not a good idea to make an early withdrawal of your retirement.  I did it because the interest rates of credit cards were so insanely high, it made more sense to me to get rid of the debt at the moment even I had to use the retirement money.
6. I don’t count equity of our homes our net worth (yet). It is harder to convert into cash and its value fluctuates with the markets. The term is irrelevant to us right now. I’ll put the value of our home(s) as soon as we really own them (when we paid it off).  I know, I am very conservative here when it comes to putting home equity into the net worth.
7. Like Pliny, the Elder said, “The only certainty is that nothing is certain“. Last year, we were so sure that 50 junior would be enrolling in a pre-K program at a public school which in turn freeing up our cash flow.  Since there’s only one public primary school in our county, seats are limited. 50 junior didn’t get picked so he’s still going to a pre-K program at a private school (a daycare).
8. Our debt went down $49,135! We did pay off $18,135 on our own ($63,725 of last year consumer debt – $31,000 cash flow from my old retirement money = $32,725, $32,725 – $14,590 of this year consumer debt balance= $18,135). This averages over $1,500 per month in debt pay-off. Still, I’m not totally happy. I believe we can do better!
9. Our net worth went up $19,299 this year! Keep it up! We can do this 🙂
10. Okay, let’s see here. At the end of the year, we had about $6,000 in cash. It was significantly less than we had a year ago. I still didn’t feel good financially. We still have a car loan and too many houses (okay, just 2 houses and one is now rented. I felt like we had more than that).
11. Another setback, this wasn’t financially related. Our dog of 13 years has passed just before New Year’s Eve. It was an emotional setback for me. Her job on this planet was completed. Rest in peace, Kiwi. You are forever in our hearts.
12. Our NY house has been rented for a year! We didn’t have to worry about utility bills and the tenant helps pay the mortgage. YAY!
13. Next year, I’ll start tracking our household expenses. This way I’ll know for sure where we spend the most on and where we can cut back. How come didn’t I do this sooner? Better late than never!

“I believe that everything happens for a reason. People change so you can learn to let go,

things go wrong so you can appreciate them when they are right,

you believe lies so you eventually learn to trust no one but yourself,

and sometimes good things fall apart so the better thing can fall together.”

-Marilyn Monroe

The third year of our FI journey has passed. All setbacks set us back financially but we are not emotionally set back. I determined that we can get there.  What would you do differently if you were us? Are we on the right track? Did I just make a big mistake by making 401(k)  early withdrawal?

Would our FI journey be achievable with this much negative net worth?