Like most of you, getting through 2020 was difficult for Mrs. Nine to Thrive and myself: Janene’s hours were cut back at the hospital. All of us faced restrictions to our every day life. Businesses were forced to shutdown. Not to mention what happened in the political world (sigh).

I personally went into 2020 as a “temporary” employee at my company. I wasn’t guaranteed full time work or any benefits that you’d typically expect from a professional employer (health care, holidays, paid time off, etc). So you can imagine my feelings of uncertainty heading into the pandemic.

And then things really started getting bad in February and March. Our retirement portfolio plummeted by 33%. I watched helplessly as we lost over $100,000 in a little more than a month.

On top of that, in February, one of the tenants of our duplex informed us that he would no longer be able to afford rent. He moved out at the end of February, short on rent from the the previous two months. That unit remained vacant for the next three months.

Facing all these uncertainties, I began to question the future, our plan (would we ever be able to retire now?), and what we should do next. I was filled with fear which eventually led to doubts. Fearful about the future. Worried about Janene’s work cutting back her hours. Scared about about my work not being guaranteed. Unsure about our retirement plan.

But in times of turmoil, it’s easy to forget how blessed you truly are. Losing over $100,000 along with a tenant for almost half of the year was not easy to endure, but it wasn’t the end of the world. I still had a job, I still had a home, and I still had the love and support from friends and family. Not everyone is lucky enough to have these things, and for that I am truly thankful.

How to Survive a Stock Market Crash

It’s easy to let fear take over and drive our decisions: Should I go talk to her? What if she says no? Should I buy that house? What if the housing market crashes? Should I invest my money? What if I lose it all?

In the event of a stock market crash, like what happened in 2020, it’s easy to become fearful. People will sell their investments, thinking the stock market will nose dive even more. They then try and time the market and tell themselves they’ll get back in when things settle down.

The problem with this is: NOBODY CAN TIME THE MARKET. Not even you. So don’t try it!

What should you do instead? Change your fear based mindset into a mindset that’s based on optimism.

Should I go talk to her? Yes, that could be your future wife! Should I invest my money? Yes, someday you will reach financial independence!

So when the stock market plummets, this is what you should do: NOTHING! To quote the great JL Collins “The stock market always goes up”. Do not fret over the day to day happenings of the stock market. Even if you lose $100,000 like we did. History shows over the long run the stock market will always go up.

Doing More Than Nothing

If you do have cash reserves on hand, invest it! In March, I sent out this tweet asking people’s opinions on using a Home Equity Line of Credit (HELOC) to invest with.

I personally didn’t have any cash reserves on hand, but I was tempted to use my $69,000 HELOC to invest with. I ended up not doing it, but since sending out this tweet (3/29/20) to today (1/31/21), VTSAX (total market index mutual fund) has increased 52.9%. My $69,000 investment would have turned into $104,880!! Oh well…

Speaking of oh well’s…, I also sold our Tesla stock in 2018 before it went up over 1000% last year. UGH!

Tax Loss Harvesting

If you’re feeling real fancy and you have a taxable investment account, you can employ a technique called tax loss harvesting during a stock market crash.

Nerdy math tax example alert (you’ve been warned): Tax loss harvesting is a when you sell an investment that has lost value, and replace it with a reasonably similar investment.

In May, I sold some of my VTSAX (total market index fund) holdings, which had gone down in value since I purchased them, and exchanged them for VFIAX (S&P 500 index fund). For married couples filing jointly, you can take a loss of up to $3,000. If you’re in the 22% tax bracket, this can save you $660 on your taxes ($3,000*0.22 = $660).

Year End Review

So what did we do differently in 2020? Absolutely nothing! We didn’t let fear dictate our plan to reach financial independence.

In June, my employer decided to bring me on as a full time employee (woohoo!). Janene’s hours picked up again at the hospital, and we stayed true to coarse. We were able to max out our 401k and IRA accounts. And we’re sticking with our failsafe retirement plan (read more here).

By the end of the year, we were able to invest 46% of our combined salary. An all time high for us!

We continued to invest in total market and S&P 500 index mutual funds. In doing so, our retirement accounts saw an increase of 18% (even after being down 33% in March). And we’re still on track to retire by 40. Maybe even earlier!

Moving Forward into 2021 and Beyond

So what are we doing moving into 2021 and beyond? The exact same thing! Our goal is to invest around 45% of our total salary in 2021.

Check out Mr. Money Mustache’s Shockingly Simple Math post to see how your savings rate can affect your years to retirement. With a 45% savings rate, you can expect to be able to retire in about 19 years.

In 2021, I’m optimistic we’ll be able to get back to normal. Businesses will be able to open back up. People will be able start working again. And the economy will get back to where it was before the pandemic started.

For me personally, I have plans to dabble more in real estate in 2021 (wholesailing/refinancing/rentals) Hopefully more posts will come from this!

I’ve even picked up a woodworking side hustle. I’m planning to talk about this more in future posts as well!

So how did the pandemic affect you? Your investments? Your path to financial independence? Let me know by leaving a comment below!

167810cookie-check2020 Review: Reaching FIRE During a Pandemicyes