The years 2020 and 2021 completely altered my finances, and surprisingly not in a bad way. In April of 2020, I realised that the pandemic wasn’t going to be the quick fix everyone was banking on. I knew I wouldn’t just end up back in an office in a month, or even a year. So I got down to serious financial changes.
March 2020 seems like so long ago now, doesn’t it? It’s strange to think that it was only two years ago, simply because of the dramatic change in my financial situation since then.
At the beginning of 2020, I was living in Melbourne, Australia for a work project. When I left February 29th 2020, I thought I’d be back by May. But the COVID virus was declared a pandemic, and quite obviously, I was never able to go back since I last left.
Initially when the stock market took a beating, so did my investments. But then the economy started rebounding: a lot.
I’d always been good with money: good at saving it, good at spending it and good at investing it. When I saw stocks trading at what they were trading at in April 2020, I decided to put the entirety of my HYSA savings for a house, into the stock market. (To be noted, I did keep my Emergency Fund in my HYSA – that never changes)
This decision changed my life.
Yes, it could have been an absolutely terrible mistake.
I spent hours calculating the risks, and decided that despite my generally risky investor profile, I would stick to the companies I considered “safe”. The majority of this was bank stocks, as well as stocks from the industry I work in. I made over 40% gains when I sold the stocks and put my money back into my HYSA.
This was extremely risky. The market could have stayed down for months, even years. But ultimately I knew that I was willing to wait for a recovery.
My strategy overall was to:
- Put all of my money into my investing accounts
- Not invest all of the money right away
- Use the Dollar-Cost Averaging (DCA) method into the selection of stocks and indexes I selected
- Continue to invest over 75% of my income
- Use the DCA method bimonthly to buy more stocks and indexes
- Sell off enough to cover a downpayment on a potential home in Summer 2021
- Put the money back into a HYSA until I found the right property
I think what truly ended up making a big difference was living off of so little of my income. I decided to stop buying clothes all together (I wasn’t going anywhere, why would I need new lounge sets?). I almost completely eliminated my online shopping (I used to order so much off of Amazon that I sometimes forgot what I had bought when packages arrived).
At the same time as I drastically reduced my spending, I also started to find creative new ways to increase my income: dog walking, baking, and starting The Finance Diaries!
Increasing my income and reducing my expenses left me in a great financial position. I really didn’t need much to live off of, I learned to be even more frugal, and I truly appreciated and valued every dollar that came my way.
Admittedly, I was very lucky to work in an industry that has flourished over the last two years. Even though our bonuses and salary adjustments were cancelled over the last two years, I was fortunate to be in an industry where there weren’t really any layoffs or government shutdowns.
I know that not everyone had this same work situation, but the overall lesson can be applied to everyone.
I learned in the last two years, that if you focus and dedicate yourself to a goal, you can accomplish absolutely anything you want.