Hello everybody, it's Sam and Sydney from Financial Samurai and we want to wish you a Happy New Year! Happy New Year! So in this episode, we just want to recap 2022 and also talk about our goals for 2023. So I thought maybe you should start first and share what are some things you really liked and disliked about 2022.

Well, I felt like 2022 was a tough year for the first six months. We were really, really focused on your book. And we were under a lot of pressure, a lot of stress. We wanted it to be a great success and we hadn't felt that amount of anxiety in a while.

And I think all of it paid off immensely. It was so exciting to see the whole process from start to finish. And when it finally came out, when you finally got to hold it in your hands the first time, how exciting was that? It was pretty exciting. Buy This, Not That started in 2020, early 2020.

And it was a way for me to say, well, screw the pandemic, screw suboptimal times. I'm going to make the most out of it. Which is something that I've really wanted to do. And what I've been doing, that's kind of been my mindset since I was a kid. When I sprained my ankle, I just say, screw you, ankle, I'm going to play anyway.

And long term, actually, that might not be a good idea. But that was that. Yeah, first half of the year was difficult. Did I feel anxious? I know. Yes, you did. I don't know if I felt anxious about the book editing process. No, that was my stress. Yeah, I was more anxious about the book marketing.

Because, you know, one of my goals in 2022 was to get on podcasts and do live TV interviews, which I actually did. And those live TV interviews, if you've never done them, which I'm assuming most have not, is the hardest and most stressful thing. Because you only have between one to maybe four minutes, probably only like two or three minutes to say something.

So you got to be succinct. You got to be precise. You can't stumble on your words. Yeah, there's no retakes. There's no retakes. So, you know, just interesting in marketing or having a conversation, doing a 30 minute or an hour long interview is so much easier than being put on the spot for one minute to three minutes.

The other thing I didn't realize about the first half of 2022 was how much time I spent dealing with my contractor to remodel our previous primary residence, which was a fixer that we bought in 2019. Yeah, that was so painful. Man, I just I just cannot ever remodel, do a gut remodel ever again.

It's so stressful. It's not worth it. And because it took so long and it cost more as usual, I think fully remodeled homes going forward are going to be more valuable. People are going to appreciate it more. People are going to pay up for them because it's just so hard to get permitting, to get approval.

Materials these days. Gosh. Yeah, materials boomed. Well, now then they busted everything. Well, labor costs are up as well. So if you can find a fully done house, I would look for that. I would not take on a remodel project unless you're in your 20s or 30s without children.

Or if you're only trying to do one room, which is still hard, but easier than trying to do an entire house. Yeah, I mean, one room. No problem. Just do some paint, change some fixtures. That's easy. But yeah, doing one kitchen, four bathrooms or however many. No, three bathrooms.

We did three bathrooms. We gutted the ground, added square footage. Yeah, it was a lot. But here's the thing, though, like all hard things, it it feels worth it at the end. You know, the good thing I have a saying, the good thing about hard work is that it's over and we get to reap the rewards for hopefully years and years to come.

Yeah. So what are some of your highlights and lowlights of last year? Well, besides the remodel and besides the release of the book, Buy This, Not That, which became a instant Wall Street Journal bestseller, pretty proud of that, was running in place with the wealth creation. It was kind of depressing.

Let's just be frank. Stock market closed down almost 20 percent, the S&P 500 down 20 percent, pretty much giving up all its gains in 2021. So I felt like I was running in molasses. 30 percent of our net worth was exposed to stocks, which is down 20 percent, which meant that our net worth declined by 6 percent.

Now, we ended up with a flat net worth only because of passive income savings and online income. So in other words, I think you can see that as a positive or negative. The first rule of financial independence is not lose money, because if you lose money, you lose time.

So this way, we didn't really lose time and we have all the time in the world because we don't have day jobs. But on the negative, it's basically we worked kind of for free. All the hours that I spent working on Financial Samurai, writing the book, editing the book, marketing was for nothing.

I don't say that. Let's just be frank. I think in finance, we got to be real. The only positive thing I did at the end of 2021 was reduce our asset allocation to stocks from 35 percent to 30 percent. Because 2021 was crazy and my long term asset allocation goal is to have 25 to 30 percent in stocks.

But I did experience something pretty great and that was health wise. So in spite, in spite of losing a lot of money in the stock market, my health improved. My shortness of breath issues cleared away and I also lost five pounds. So what this tells me is that I have the proper asset allocation and I'm satisfied with the money we have.

You know how some people, they say, oh yeah, we're good, we're good. But then, you know, maybe in the background, they're like working as hard as ever to make way more money. Or they say, you know, they feel no pain, but deep down, they feel tons of pain. So I think one of the things about our bodies is that it doesn't lie to us.

It's like an honest child that tells us the truth no matter what. It reflects how we are feeling stress wise and more. Yeah, I could see that. Another thing I'm really proud about is doing all this dad stuff. Yeah. Daddy moments. Our son graduated from preschool. So proud. We've got such a great picture of him graduating with his cap and gown.

And also teaching him how to ride a bike on November 13, 2022. After seven sessions, he finally did it. And the hardest thing was actually letting go. Oh. You know, I basically ran behind him holding his shoulders or holding his neck, hurting my back in the process. Nonstop, just running, running, running.

It's hard. I tried it too. I was like, "Well, I'm glad that you did most of the work." Yeah. But I made a commitment to do 16 sessions once a week for 16 weeks. By the end of the year, he would ride a bike and he did it. And his joy and the smile on his face was priceless.

I was there to capture that video. Yeah. So those are the moments where we just think, you know, money stuff is important. But so long as you have enough money to, you know, feel relatively comfortable, to do what you want, it's all this other stuff that is truly priceless.

Yeah. So how about you? What are some highlights of your 2022? Well, one thing that comes to mind is something that happened just a few weeks ago is we finally got my mom to come visit us. Oh, yeah. It took forever to convince her to come. Like she's been wanting to come for a long time and, you know, something would always come up, some excuse.

And then she finally decided that she wanted to come for Christmas. And so we started to plan out the trip. And then she changed her mind. She said, "Oh, I can't come." And then I convinced her to come again. And it was so much back and forth. And about four days before she was supposed to arrive, she said, "I can't come." And I had to pull out all the stops, convince her that she really needed to come.

And thank goodness she did. We had an amazing week with her. And then there were all the crazy flight cancellations that were happening on the East Coast like a day or two before she was supposed to fly home. And thankfully, everything went smoothly. She didn't have any delays. She got all the way back home safe.

So that was kind of a highlight, you know, the biggest highlight at the end of the year for me. Right. To get, you know, getting her out here to see the kids and us. Yeah, it had been three years. And before that, during Thanksgiving, I got my parents to come out.

Yeah. And so they hadn't come out in three years as well since our daughter was born. And so it was really good to see family. That's the one biggest downer about the pandemic is fear and uncertainty and distance from family. What else? Another one that comes to mind is we had some great family vacations, which reminds me that we paid off our vacation property mortgage.

Yeah. This was our Lake Tahoe vacation property mortgage we bought in 2007. Bad timing. It's been an albatross on my neck. But we got a good deal relative to 2006 prices. But then prices kept on going down. However, since our kids were born, we've been able to take them and fulfill our dream of having children enjoy the water slides and pool and so forth.

So paying down that mortgage. Yeah, we finally did. 15 years. There was about 50,000 left at the beginning of 2022. The mortgage rate was 4.25%, which was the highest mortgage we had out of our mortgages. But now it doesn't look that high, right? With average 30 year fixed at around 6.2%, maybe.

But it still feels great, folks, to pay off your mortgage. What's most interesting is our cash flow has gone way up. So the mortgage used to be $2,500 a month. And predominantly, most of it was paying off principal since we only had 50,000 left. And it's been 15 years.

But by paying it off, you, we now have 2,500 more a month in cash flow, which is, what is that, 30,000 a year. And also, weren't you tacking on automatic $1,000 a month to principal? Yeah, extra. So that's $3,500 a month in cash flow. And I'll talk about this in a future post.

Because this feels really good. It's not just paying off the mortgage. It's like, ah, we got all this cash flow to do what we want. We can reinvest that money. We could spend it. And so forth. So, yeah, you know, there's a whole debate on paying off your mortgage or not.

I follow the FSDARE method, basically allocating a certain percentage based on the interest rate. So if the interest rate is 4.25%, I would allocate 42.5%, so times that by 10, right, towards paying off debt and then the rest towards investing. But I've never regretted paying off a mortgage. Or paying down extra principal.

It just feels good. It just feels good, especially during times of uncertainty. So a lot of people poo-poo paying down debt, you know, let's say at the beginning of 2022. But if you pay down even 0% rate debt, you outperform the S&P 500 by 20% because that's how much the S&P 500 went down.

So something to think about for 2023 and beyond. Alright, so overall, I would give 2022 a B+. We didn't make any money, but we progressed in terms of our health and our family. What would you give 2022 in terms of a grade? For myself, probably like a B-, I felt like I didn't do as much as I wanted the second half of the year, but I felt really good about the first half.

Alright, so let's move on to 2023 goals. What are some goals you have for this year? Well, the first thing that comes to my mind is weight. I know you have a goal about weight. Mine is to shed a few pounds because I've been having a little bit of weight creep.

So what I'm going to do this year is get back into a regular exercise regimen. And thanks to you, I am now playing pickleball. You are a pickleball addict. I am a pickleball fanatic. So I'm hoping, I won't be playing as much as you, but I'm hoping to play about two times a week.

And if I'm not, to just do some hiking around to just keep myself active. How about you? Yeah, in terms of weight, I did finally lose that five pounds that I've been wanting to lose every year for the past five years. And it was also due to pickleball. And I don't have a weight loss goal.

I have a weight maintenance goal. At 45, it does feel a little bit harder to stay in shape. But I believe if I can play tennis and pickleball on average total four times a week and just eat in moderation, I should be able to stay at 168 pounds at 5'10", which is totally fine for me.

I can still fit in all my clothes from the past 15, 20 years. Although the ideal weight chart says I should be 151 to 163 pounds. I mean, if I want to apply to be a Bowflex man model, a fitness model, I guess. But this is not priority at my age.

I don't even know if a Bowflex model would weigh that little. I mean, people are really skinny. These models, these fitness models. I know several people who are 140 pounds at 5'10". Are you serious? Yeah, but like, you know, those cheapo. Very, very lean. Super lean, like all the actors and all that.

When you meet them in real life, you're like, "Wow, you are super skinny." It is really interesting. What else? What other goals do you have? I'll talk about another thing that comes to mind that you also spoke to as well is about parenting. We're trying to come to a more aligned parenting style, which I think you're going to write about in a future post, which will be a little bit of a teaser.

You're a more tough love parent. I'm a softer love parent. And sometimes it can create a little tension where we each feel like we're being a little too, you know, far on one end of the scale than the other. So I'm going to try and do some tweaking with my parenting tactics and see if I can do a better job there.

Yeah, you know, folks, I grew up kind of in a tough love environment. My parents were always working. If I fell, they didn't help me up. It was just the kind of grind on, grind on. And I see the benefit of tough love because if nobody helps you, you've got to figure out a way to help yourself.

And I just fear raising kids that end up staying at home dependent on us well into their 30s because I see adult sons, adult sons in our neighborhood right now, at least five of them still living at home with their parents. And the ages range from 26 to 34.

That is really worrying to me. And I think there's like this issue if you do deeper research on boys versus girls in academics, in, you know, building wealth, all that. And I have this fear. Do you think this is a rational fear? Well, I think it's rational based on what we're observing in the area.

I don't have the same level of anxiety that you do. And I think it's because we have different personalities and different responsibilities. But it's definitely something that we're going to look into further this year. So here's an example. Let's say our son slips and falls after being told five times to not run on wet cement or a sidewalk.

So he's crying and he's just reaching out to us. And I'll look at him and I'll say, "Embrace the pain. Be cognizant of the pain. If you did not want to feel pain, you would not have run." And this is a philosophy, you know, that I've had for years.

And then I read this book called The Courage to be Disliked. And it also has that same philosophy where it says, "If you want to basically," let's say, "If you want something, you're going to take action to get it. And if you don't want something, you're not going to take action to get it." I have this belief that everything is rational long term.

And we learn through pain. We learn through failure. We learn through misery. Because afterwards, everything gets that much easier. I'm laughing because sometimes you tell our son, "You like the pain, don't you?" when he falls down. Well, I'm trying to get into his head like, "Don't hit -- if you don't want to feel pain, don't do that." It's very rational.

But what do you say if he's crying? I won't say those same words. But I'll usually remind him that this is why we were telling you to slow down because it's slippery. Now do you see why you fell down? You were going too fast. And then I'll still, you know, ask him after I've kind of gotten that out, "Are you okay?

Do you need some ice?" No. No. No, nothing. What? I mean, it's so funny. We're talking right now. We're actually recording this in our car. And one of the adult sons is right behind us. He's got long, shaggy hair. He's checking into his house right now. It's like noon.

Like, "Why aren't you working, dude? Like, what's going on?" I have this great fear. And I think part of this fear is because I have to provide -- Unless he's secretly working from home. We don't know. No, I already talked to his father. He says he's lost. You know, he dropped out of school.

So did his daughter. I don't know what's going on. You tell me, folks. What is going on? Actually, I know what's going on. The world is crazy competitive. Yes. It is so competitive that I wish all our youth good luck, love, and harmony. Please take care of yourself. Please develop good relationships.

Because it's -- I feel scared. It's like having interview skills is one thing, but I feel like so many people can't even get to the interview stage with the amount of competition that there is for jobs. It's tough. It's tough. Like, any job you get is like winning the lottery.

And what I also realize is this. I truly realized this after publishing my book. There are lots of quality works out there. Quality people, quality employees, quality books, quality products. But only those that get lucky enough with the most amount of marketing budget and the most amount of attention get to the top.

Many, many thousands of people can replace the CEOs of great companies and still run them to the ground like they did in 2022. We are easily replaceable. And I know you furred your brow because I was kind of making a joke. What I'm saying is that there are CEOs in 2022 that got paid tens of millions of dollars, but they still saw their share prices go down 20 to 70%.

I can do that just as well as they can. What I'm saying is that you've got to be lucky. Not only do you have to be good, you've got to be lucky to be embraced, to be recognized, to get ahead in this world. And one of the reasons why I'm still focused on academics, good work ethic, building a rental property portfolio, and maintaining a small business is because just in case our kids don't get into a university because of their identity, don't get a job because they couldn't get a good university and they don't have the connections, we will be an insurance policy that hopefully is never needed to make them survive and get them out of the house.

What are the goals do you have for 2023? Well, for listeners here, you'll be pleased to know that I plan to record at least 30 more episodes in 2023. I think it's fun to connect with y'all and share new stories and bring in comment feedback. That's always great because it's about a community of financial samurai.

Also, did you know that the Financial Samurai podcast has now achieved over 1 million downloads? Oh my God, that's huge. Yeah, we started in about 2017 regularly, haven't been promoting it, haven't gotten any advertisers, try to get straight to the point. But yeah, we've got 1 million downloads as of early 2023.

Fantastic. So maybe we can, I don't know, grow to 1.5 million by the end of 2023. Generally, what happens is you build upon something for a while, for a while, and then eventually you see a hockey stick up and then that extra growth comes quicker. One of the challenges I had for 2022, because we were writing the book and doing the remodeling and raising kids, was would I have the motivation to continue to record without any advertisers?

And I have to say, I was totally motivated inherently to do so without any advertisement dollars. I recorded over 43 podcasts, maybe 45, and it was fun. Drop off our son at school, come to the driveway and record a 10 to 20 minute episode. And it worked. Yeah. But I will say for 2023, I want to take things down a notch.

I wrote before that I've been publishing three times a week since 2009. But that's not the reality. I've been publishing more than, more like four times a week since 2009 because I have a weekly newsletter that comes out every Sunday morning. And you can subscribe at financialsamurai.com/news so you don't miss a thing.

And because of this newsletter, I've had to often, actually every single weekend, work either Friday night, Saturday morning, or Sunday morning to write and edit it. And then I've got to send it to you or my dad to edit it. So that's not fun because I never get a weekend off.

Right. I have to really be inspired. And yeah, I was pretty inspired to write my newsletters. But I will admit about 15% of the time, I didn't want to write it at all. Yeah. But that's one of the things. When you set out public goals, you are held accountable.

You just want to do it and not let people down. So I'm trying to manage expectations for 2023. And maybe I'll just publish two times a week and a newsletter. So that's still three times a week. And if I'm still publishing a podcast, that's still a lot. It's kind of like anti-minimalism.

I noticed in the past, I would publish three times a week. I'm good. I was good. Then I would do three times a week plus a newsletter. And then three times a week plus a newsletter plus two podcasts. And then I would write a page because I needed to update some kind of factual page.

It adds up. It's like endless clutter. I wouldn't call it clutter. It's work. Yeah, it's endless work that just never stops when you have the ability to do what you want. So I'm a highly motivated person, so I just keep on going. But I need to throttle that back for happiness, sanity, and health.

Yeah. All right. Well, in conclusion, 2023 is all about going back to the early retirement lifestyle to lead a more simple, healthier, and happy life. In a bear market, which we are still in, it doesn't make sense to grind so hard because your return on effort is lower. The time to grind is during a bull market.

For example, can you imagine working 60 hours a week and then seeing your stock price decline by 50% in 2022? I mean, what a waste of time. That would piss me off. It's frustrating. So I really believe that when it's harder to make money, you shouldn't spend as much time making money.

You should actually spend more time cultivating the things that matter more than money, like your friends' experiences. Experiences and family. The opportunity cost of making money is lower, so you might as well spend that time enjoying life more. Yeah, I think that makes sense. All right, folks. Well, if you want to read all about our 2022 year in review and our goals for 2023, you can just check out the linked posts in the episode show notes.

And as always, we appreciate your positive reviews for the podcast and for my book, Buy This, Not That, at FinancialSamurai.com/BuyThisNotThat. And we'll talk to you folks later. Happy New Year!