2022 in Numbers

I keep a lot of spreadsheets to track my income, expenses, savings, investments, wealth, and more. Here is my first time sharing the breakdown of how 2022 went for me on my journey towards financial independence. I will also share some backwards looking charts to show where I've come from. My savings rate dropped significantly in 2022 because my tax rate went through the roof. But even though my savings rate as a percentage dropped, it was my highest contribution year in terms of actual dollars.

Summary

I started freelancing in 2021, and 2022 was a great year for me. Who knows what 2023 holds. I have a very niche speciality in my field. I am compensated well for my time since there could be many months in between projects which is a huge risk for me.

• Net Profit - Freelancing: $217,000 (after deducting all of my business expenses)
• Taxes: ($87,000)
• Living Expenses: ($68,000)
• Investments in index ETFs: ($62,000)

Savings rate: 28%

Reflection
This is a disappointing savings rate to me as I want to be at 50% or higher. However 2023 will shape up better as I have moved to Italy and will experience a significant tax savings as a result (down from around 40% effective tax rate down to maybe 15%). Yet, I am still grateful for my high income and grateful that the actual dollars I was able to invest is the highest of any year so far.

Expenses breakdown

I moved to Italy in 2022 so there were some extraneous expenses like buying double health care policies (long story) and buying some household items for the new place.

• Housing (rent/mortgage): $23,700
• Condo fees: $950
• Utilities: $450
  • There was a government subsidy pushed out that I benefited from, my gas/electric/water would normally run me about $1,200 per year
• Groceries: $2,700
  • I hate cooking
• Restaurants/Cafes/Alcohol: $8,300
• Household: $2,300
  • This includes a cleaner that comes twice per month
• Self-care: $1,800
  • This includes gym memberships, skin care, makeup, therapy, etc.
• Insurance: $6,600
  • I got LASIK eye surgery which insurance didn't pay for, I took a big hit prepaying for a whole year of health care for my move to Italy, and I'm paying double for a few months until I get my Italian residence permit issued
• Internet: $600
• Phone: $500
• Hobbies: $1,700
• Pets: $2,000
  • This was about $1,000 over budget because my two cats are 15 years old now so needed a teeth cleaning and blood/urine tests
• Local Transporation: $1,200
  • Bicycle subscription, metro, tram, etc.
• Travel (excludes food): $9,700
• Other: $5,500
  • There was a 2 month period where I spent money refreshing my wardrobe, I had realized that my mental health had been nose diving and I rarely left my apartment because I simply didn't like the way I looked in the mirror. There was a realization I had gotten sloppy with my appearance and this was contributing to that feeling. I spent around $2,500 on some new clothes

Reflection
My target budget for expenses is $55,000 each year. I'm disappointed that my expenses skyrocketed however I knew this would happen with my move to Italy. I am also paying for an incredibly expensive apartment right now in Italy until my residence permit is finalized and then I can move to a smaller village and cut my housing in half. 

The historical progress charts

They say that the first $100,000 is the hardest and this is absolutely true. It can take you 7-10 years to reach $100,000 and then only 7 more years to reach $1M. 

This first graphic represents my net wealth by asset class through time. You can see that in 2022 I made some big changes including selling my rental house and suffering through a bear market. The drop off in my net wealth is both a factor of the bear market but also that I had to pay capital gains tax on the disposal of the house.

This second graphic represents the detail of my wealth through accumulation. The lines that are dotted ("Gross Income" and "Taxes") are non-cumulative so that's why they stay relatively flat. The "Cum. Gross Income" is meant to show the vast difference in time between my lifetime earnings and what I've been able to save. "Cum. Employer Matches" and "Cum. Contributions" together show you my basis in my wealth as this is what I've put in through time. So everything above that in the vertical columns is compounding interest and market growth.

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