Related: 2019 goals & Q1 update
At the start of 2018 I set a variety of goals for myself and posted quarterly updates on my progress. The rationale was that making my goals and progress public would keep me both motivated and accountable.
This did not turn out to be the case. I ended up failing to achieve almost all of my goals.
After some time to reflect, I believe this is because my goals were a bit too aspirational. I bit off more than I could chew. Some of the goals were just too difficult to achieve and some goals were more or less mutually exclusive. Looking back at my goal setting process in 2018 I realize that I was setting goals that were too ambitious, with the hope (dream?) that somehow writing my goals down would help them to manifest. Clearly this was not the case.
So, while I have many faults, one thing I can say about myself is that I learn from my mistakes, and I’ve definitely learned from my poor goal setting in 2018. My goals for 2019 are more achievable, better aligned with how I’d like my life to look, and better coordinated.
So without further ado, here the update on how I’m doing on my goals through the first half of the year:
Let’s break down the goals:
Financial
Goal 1: Generate passive income of more than $85,000 for the year
Last year the goal was to hit $70k in passive income (which we BARELY missed), so this is a 21.4% increase over last year. While that sounds like a huge increase, I think it’s achievable for a few reasons.
First, we’ve put some of our cash to work. We bought two additional rental properties (great for cash flow) and in June I bought a bit over $200k in stocks. These investments should really start paying off in the second half of the year.
Second, I expect to get a 6-7% return from organic growth – rental increases and dividend raises.
Third, our rental income was absolutely miserable last year. One of our properties was vacant for a few months AND needed thousands of dollars in repairs and upgrades to make it rentable. We’ve not experienced poor performance like that since we bought our first rental properties in 2012. A reversion to the mean would give us somewhere between $3k-$5k by itself.
Fourth, I expect that we’ll continue to save and invest money that I earn. If we are able to save $50k and receive a reasonable 3% yield we’ll pick up another $1,500 in passive income.
Q1 goal: $21,000
Q1 actual: $20,834
Q2 goal: $42,000
Q2 actual: $47,119
We are absolutely crushing our goal through the first half of the year! All of the possible positive developments I listed above have come true. We’ve invested more money, our real estate holdings are performing as expected, and we’ve received solid dividend raises.
Status: On track
Goal 2: Net worth of $5.64M
Our long-term goal is to grow our net worth by 8% per year with the plan for me to retire (or at least be financially independent) when our net worth hits $10M. We started 2019 with a net worth of $5.22, which means we should hit our $10M goal in just under 9 years.
To create the quarterly “check points” I just assumed a simple (non-compounding) 2% growth per quarter.
Q1 goal: $5.32M
Q1 actual: $5.64M
Q2 goal: $5.43M
Q2 actual: $5.76M
Well, this is a welcome surprise. By the end of the first quarter we had already hit our net worth goal for the year and our net worth continued to grow in Q2! A combination of a healthy stock market and solid income at work has allowed our net worth to grow by 10% in just 6 months.
The big question is whether or not we’ll be able to maintain this net worth at the end of 2019.
Status: On track
Goal 3: Investigate additional real estate investment(s)
This is a goal I’d set for 2018 and completely failed on. Frankly, this should take very little work – I just need to do some research into the crowdsourced real estate options and decide if I want to go down that path or if I want to buy some more single family homes as rentals.
I’ve done my initial research and I’ve decide that, at this time, I’m going to stay away from the crowdsourced real estate investments. The reality is that the business models have not yet been proven. All of these companies (RealtyShares, FundRise, etc.) were created after the Great Recession. None of them have been tested in adverse conditions.
In addition, I don’t understand why a solid real estate investor with a proven track record and a solid identified investment would go the crowdsourced route. That sort of investor would either pursue “traditional” funding through a bank or through a private investor. As far as I can tell, going the crowdsourced route means the investor is giving up at least a portion of the potential upside of their investment. That makes no sense to me. The whole point of borrowing to purchase real estate is that you get to capture all of the upside, while still having the ability to walk away from the loan (and property) if it comes to that.
The reality is that it appears to me that the people (and deals) getting funded on crowdsourced real estate sites are not “first tier” investments, but people or projects that can’t get funding the traditional way.
Q1 goal: Start research
Q1 actual: Research complete, rental properties identified
Q2 goal: Complete
Q2 actual: Complete
So, after doing quite a bit of research over the course of Q1, I decided that we’d stick to the traditional real estate investment route and purchase some additional properties.
I identified 2 properties in Texas and we closed on both of them in April.
Status: Complete!
Work
Goal 4: Income > $300,000
This is a reasonable goal, as our income (excluding the single large commission check I’ve received every 5 years) averages about $300,000/year. So, I just need to have an average year in 2019 to achieve this goal.
I’ve set the quarterly goals to be simple linear progression – I plan to earn 25% of my yearly income each quarter.
Q1 goal: $75,000
Q1 actual: $96,392
Q2 goal: $150,000
Q2 actual: $182,201
The first 6 months of the year have been great for my income. I’m well ahead of the pace needed to hit $300k for the year.
In addition, I have some solid deals in the pipeline for the second half of the year. At this point I think it’s pretty likely that we’ll hit this goal for the year.
Status: On track
Personal
Goal 5: Read 1.5 books per month
My goal in 2018 was to read 1 book per month, and I failed pretty miserably (I only read 4 books all year). Given that failure, why did I INCREASE my goal for 2019?
Simple – I read some great books at the end of 2018 and I remembered just how much I love sitting down and getting into a really good book. For the last few years I’ve kept a list on my phone of all the books that I wanted to read. Anytime I got a book recommendation from a friend I’d add it to the list. If I stumbled across a really positive book review I’d add that book to my list.
Unfortunately, I was adding books to my list but never reading any of them. So in early April I pulled up the webpage for our local library and went through the 65 books on my list to see which were available at the library. I was pleasantly surprised to learn that just over 40 of them could be checked out through the local library cooperative. I added all of those to a watch list at the library (making it dead easy to request any of the books).
So I put some books on hold, picked them up, put them on my nightstand, and something magical happened. At night, after the kids have been bathed/read to/put to bed, after the dishes are done, and after the mail has been sorted, I suddenly have a desire to sit down for a few hours and read rather than watch a movie or play on my iPad.
Looking at the list of books, about 80% of them are non-fiction (mostly books about finance/investing), and 20% are fiction or stories inspired by real life events.
How am I doing so far?
Q1 goal: 5
Q1 actual: 0
Q2 goal: 9
Q2 actual: 9
I’ve been reading a ton over the last 3 months. I’ve replaced about 80% of my TV watching with reading and I’m much happier as a result. I’m keeping a spreadsheet of all the books I read (I know, I’m such a nerd) as well as a few lessons or themes from each book. I’ll be creating a separate post about the books I’ve read.
I’ll have no problem hitting this goal this year.
Status: On track
Goal 6: Perform a muscle up
If you don’t know what a muscle up is, it’s basically a gymnastics movement that’s a combination of a pull-up with a dip. They can be performed on either a bar or using gymnastics rings. Here’s what a muscle up on a bar looks like:
And here’s what a muscle up on the rings look like:
Both of the above qualify as “strict” muscle ups. That is, there’s no body swing (or kip) used. Here’s an example of a kipping muscle up:
As you can probably guess, the kipping pull-ups are much easier than strict muscle ups.
For this goal I’m going to count any of the above muscle ups as a success.
I selected this goal because it’s a bodyweight exercise (which I’m generally good at because I’m on the skinny side), it looks impressive, and doing muscle ups is a great workout. In addition, it coordinates well with my goal of getting down to 10% body fat by the end of the year (lower body fat makes bodyweight exercises easier).
I expect that achieving this goal will require both strength work as well as skill work. You obviously need quite a bit of strength to perform a strict muscle up, whereas the kipping muscle up is much more about timing, coordination, and skill.
My plan to achieve this goal is to work on strength for the first half of the year, then start adding weekly muscle-up practice sessions for the second half of the year.
Q1 goal: Complete a pullup with bodyweight + 45 lbs
Q1 actual: Complete
Q2 goal: Complete a pullup with bodyweight + 90 lbs
Q2 actual: Complete a pullup with bodyweight + 75 lbs
The first step was easier than I thought it would be, but the second step has been harder. I haven’t done any weighted pull-ups since the end of last quarter (but I’ve been doing lots of bodyweight pull-ups) and my pull up strength didn’t increase quite as much as I thought it would.
This quarter I’ll need to continue working on pull-ups (both weighted and body weight) and continue working on the ring dips. By the way, if you’ve never tried ring dips – wow. They are substantially harder than regular bar dips.
Status: NOT on track
Goal 7: Do yoga once per week
Most of my workouts are either weightlifting or some sort of weightlifting/cardio combo (Crossfit-style workouts). While these workouts have kept me in pretty good shape, I still have some areas I need to work on.
Over the last 3-6 months I’ve been trying to get some more variety into my workout routine, so in December I hit a few yoga classes at our gym. The results were eye opening for me. After just 1 class it was clear to me that I have some major deficiencies in both flexibility and balance. I was clearly one of the least flexible people in the class, and any pose that required us to balance on one foot was very difficult for me.
To address these problems I’m going to try to get to a yoga class at least once a week, starting in Q2.
Q2 goal: 12
Q2 actual: 3
I’m obviously way behind my goal here. I enjoy doing yoga, but the distance from work and the times it’s offered (I can pretty much only make the lunchtime session) make it difficult. In addition, we were gone for most of 3 weeks.
That said, there’s no reason I can get to a yoga class at least once a week. I need to do better.
Status: NOT on track
Goal 8: Body fat of 10%
As I mentioned above, I’ve been pretty thin my whole life. When I was on the wrestling team as a freshman in high school I was 6’0″ and I wrested in the 119 lb weight class. Now I’m 6’4″ and bounce around between 185-190 lbs.
While I’m thin, I’m not super lean. Mostly that’s because for the last ~30 years of my life I’ve been trying to GAIN weight. It’s amazing what weightlifting combined with constantly easting past the point of being full can do – I’m 65 lbs heaver than I was in high school.
However, this constant push to gain weight means I’ve never really “dieted” or tried to get really lean. Last year I had the goal of getting down to 10% body fat, but I realized it was at odds with my strength goals so I effectively gave up on this goal and concentrated on the strength goal.
I started the year at 12.7% body fat, so I only need to drop 2.7% of my bodyweight in fat. Given a weight of 185 lbs, that’s almost exactly 5 lbs of fat.
In 2019 I’m going to really work on eating lots of vegetable and only eating until I’m full. Given my body type and metabolism, and combined with a bit more “cardio”, I suspect this will result in me dropping enough fat to get down to 10% by the end of the year.
Q1 goal: 12%
Q1 actual: 12.9%
Q2 goal: 11%
Q2 actual: 11.8%
I’m pretty happy with how Q2 went. I managed to lose about 1% of my weight in fat (that’s about 1.8 lbs) while getting stronger. I’ve been utilizing a combination of weightlifting, Crossfit style workouts, and riding my bike to work (10 miles each way), combined with really trying to get more strict about a low-carb and high-fat diet. I’d pretty amazing how a few small changes in diet can result in some pretty effortless body composition changes.
Status: NOT on track
Goal 9: Row 2,000 meters in 7 minutes and 20 seconds
In my opinion, rowing is the most awesome/awful cardio in the world. It works pretty much every muscle in your body, and it does so with no impact on your joints. I have a Concept 2, Model D, which uses a fan to provide resistance. This means that the harder you row, the more resistance you get. This makes the rowing machine perfect for sprints and interval work.
The Concept 2 Model D
Because rowing is such a good workout, and because it’s an exercise that fits well with my body type (I’m 6’4″, and being tall is a big advantage in rowing/crew), I’ve decided that I’m going to spend more time on the rowing machine this year. Of course, “more time” isn’t quantifiable, and I want to row with a specific but achievable goal in mind, so I’ve decided that I’m going to try to knock 20 seconds off my 2k rowing time (the 2k is the “standard” test for rowing).
I haven’t done a 2k time trial in a while, and my previous best was 7:47. That time is ok, but nothing special. My goal is to knock 27 seconds off that time and get down to 7:20 (with the possible goal of getting to 7:00 in 2020).
I like this goal because it dovetails nicely with some of the other physical goals (reducing body fat and being able to perform a muscle up).
Q1 goal: 7:38
Q1 actual: 7:35
Q1 goal: 7:30
Q1 actual: 7:28
I didn’t do a single 2K row from the start of Q2 until I did my test at the end of June, and yet I still managed to knock a full 7 seconds off my time!
However, if you’ve ever done a 2K row you know they can be brutal, and I was completely and totally wiped out by the end. As you can see from the screenshot above, my AVERAGE heart rate for the 2K row was 160 bpm. I maxed out at 175 bpm.
I’m especially happy with this progress because you have to work much harder for each additional second of improvement. For the first 500m I was rowing at a 1:49/500m pace and generated about 272 watts. For the second 500m I was rowing at a 1:50/500m pace and I generated 260 watts. So to go from a 1:50/500m pace to a 1:49/500m pace I had to generate 4.5% more power to get a 1% increases in pace.
This is why I think the goal of a 7:20 pace is so daunting. It will require me to generate substantially more power to knock 8 seconds off my current time.
Status: On track
Blog goals
Goal 10: Post 1.5x/week
In 2018 I’d set the goal of posting 2x/week and I didn’t even get close to achieving that goal. I just don’t have the time to write 2 quality blog posts per week.
In addition, my inspiration seems to come in waves. I’ll go through a period where I’m getting lots of good ideas (usually from conversations with clients or due to something I’ve read). I tend to work on lots of different articles at once (right now I have something like 30 articles in some stage of being written, from just a title to an outline to nearly done), but I don’t always do a good job of pushing any given article all the way to being complete.
So, my goal for 2019 is to work harder on staying motivated and carving out 30-60 minutes per day to work on an article. If I can do that, I think it’s reasonable to be able to publish 6 interesting articles per month.
Q1 goal: 18 articles
Q1 actual: 6 article
Q2 goal: 36 articles
Q2 actual: 15 articles
I’m way, way, way behind the pace I need to hit to hit the goal. At this point it might not be achievable.
Status: NOT on track
Conclusion
I’m pretty happy with my progress through the first half of the year. Of the 10 goals I’m on track for all 3 Financial Goals and my 1 Work goal. I’m on track for 3 of the 5 Personal Goals and I’m not on track for the single blog goal. Overall, 6/10 isn’t too bad.
Of the goals I’m not on track to hit, I think I can still hit the muscle-up goal and the body fat goal. The yoga goal will be tough (since I’m so far behind) and the blogging goal is almost insurmountable at this point.
Great post. I used the same format as you to keep track of my goals for 2019, and have been happy with it.
Regarding real estate, I agree with your assessment of crowd-sourced real investment models. Also, you said that you bought two additional properties in Texas. Is that where you live or are these remote investments? Residential or commercial? I have some residential investments; these are local and residential. Going forward, I want to investigate remote and commercial.
Thank you.
Unfortunately Santa Barbara is a tough place to find cash-flow positive real estate investments. From what I can tell, all investments in Santa Barbara are cash-flow negative, but the investors hope to make it up with capital gains when they sell.
The properties we purchased are in Houston, TX. I like Texas because it’s a good combination of a healthy and growing economy (leading to capital gains in the future), reasonable rent-to-value rates (meaning the properties provide reasonable cash flow), no state income taxes (so I don’t have to worry about filing a Texas return along with my California and Federal returns), and landlord friendly laws.
I’m very interesting in commercial real estate. The leases are longer, there are fewer tenant issues (because you’re dealing with businesses rather than individuals), and the cash flow is steady. However, you also need much larger initial investments, as commercial properties tend to be expensive.
How brutal is the property tax for your properties in Texas? I would suggest you purchase VNQ. A great REIT for commercial properties is STOR. I owned 12 rental properties (Las Vegas, Phoenix and Las Cruces) and was lucky enough to sell them all in late 2006. For me just owning a REIT type investment is a whole lot easier. Thank you.
Yes, the property tax bill for the properties is high.
I like REITs and have invested in a few over the years, but I consider our rental properties to serve a different function in our investment portfolio than equity investments (stocks and REITs). Our rental properties provide higher ongoing income and lower long-term capital gains.
Thank you for sharing your monthly updates as well as your recent goals. I have enjoyed your blog as my household net worth and income levels / progression as well as mindset are very close to yours. I am going to try using your model. My net worth goal is also $10 million and have 1.8x to go! I agree with your assessment of the real estate crowdsourcing space; I want to a ) diversify geographicallyout of expensive SF Bay area, b) shift to higher rental income as share of overall cap rate investment return ahead of next cyclical downturn, and b) avoid local property manager exploiting their information asymmetry to rob you risk. They seemed perfect, but after some digging I noticed a) some of the stale, less attractive or slightly odd deals in SF made it eventually onto these real estate crowdfunding sites, and b) all of them were founded after real estate / credit bubble 1.0. It spooked me, so now just waiting for the correction and keeping my liquidity in anticipation. Also, interested in finding local partners who if given an equity piece in lieu of a per fix model may be incentivized to not rip me off….
It’s really hard to get excited about any investment that hasn’t been through the full business cycle. I suspect that many of the crowdsourced real estate investments are not going to fare well during the next downturn.
I’m moving somewhat near you to Lompoc/Santa Maria. Do you know if the real estate market there is similar to Santa Barbara where it is cash flow negative, but there’s potential to make up for it from the sale in capital gains?
I would like to continue purchasing real estate as well but never done so remote. I was always fortunate enough to purchase local and see the property before submitting an offer.
Did you see your properties in TX before you purchased them? If not, how did you get a warm fuzzy about the property to purchase it without actually seeing it in person?
The real estate market in both Lompoc and Santa Maria is VERY different than in SB. Prices are significantly cheaper and the cap rates are much higher. I haven’t looked at the area closely, but I’m guessing that you could find properties that are cash-flow positive with a 25% down payment.
I did not see the properties in TX before we purchased them. However, I did have an independent inspection done by a licensed inspector and that helped assuage our concerns.
On your investment properties do you carry a mortgage on them or pay them off? What are your thoughts?
Also why do you invest in stocks vice VTSAX and VTIAX since both cover the entire globe?
We have mortgages on all of the properties except for 1 – we had to pay off one of our mortgages or we would have been over the Fannie Mae/Freddie Mac limit of 10 and would have needed a commercial loan or hard money loan for our 11th property.