The Mid-Year Check In - Meets All Expectations
Hey FAANG FIRE!
2023 is halfway finished. Have you finished your personal mid-cycle financial review? Are you meeting all expectations? Or do you need to put yourself on a performance improvement plan?
FAANG 2023 Mid-Cycle Recap
FAANG Stocks Soar
It would be impossible for me to talk about a mid-cycle financial review without starting with the ridiculous year to date performance across FAANG stocks. The 6 month returns have been wild.
Meta employees received their annual stock refreshers this year at a price of $184.07. The current value of their most recent vests alone are up nearly 56%.
A friendly reminder for those new to RSU compensation— stocks don’t normally just go up and to the right like this. This means that many of you reading this have seen your Total Compensation Surge. That makes it a great time to once again revisit your RSU diversification strategy.
While I personally no longer have any future META vests to look forward to, if I did I would continue my strategy of diversifying each vest regardless of price (and don’t cry for me, we still have my partners UBER RSUs that have appreciated only 70% YTD).
Talk about a whiplash from this time in 2022 when I declared “The Great Tech Salary Crash”.
FAANG Layoffs
All of this phenomenal stock performance is obviously dampened by the significant layoffs we saw in the first half of 2023, of which I personally was impacted.
Layoffs.fyi estimates 2023 has seen more than 200k layoffs, which doesn’t even count June. Visualized below by TechCrunch.
My Mid-Cycle Financial Performance
Dear Andre,
Based on your accomplishments and the impact you had in the first half of 2023, your performance rating is a Meets All Expectations.
I like to approach my financial reviews the same way I would approach my “Self Review” at work. I kick things off with a recap of overall Goals/Mission, 2023 Metric Impact, Progress Against 2023 Goals, Headwinds/Tailwinds, Forward Looking Thoughts. You can learn more about how I refined these goals for 2023 from my first post of the year where I outlined the 10 financial steps I was planning to take on my path to financial independence.
Recap of 2023 Goals/Mission Statement
I want to be able to Avocado FIRE in the next 5 years after hitting my “Enough” number of $3.3M in index funds, $600k housing fund, and $90k college fund. I want to achieve my goals while also ensuring that I also set up my daughter to have a future where she is able to contemplate ridiculous things like early retirement (if she chooses). I also really want to be living somewhere that I can see myself staying for the next 3 years.
Recap of 2023 Financial Contribution Goals
I set my goals based on financial contributions vs overall portfolio values. The overall portfolio value is one my my ultimate long-term goal metrics, but on a half to half basis it doesn’t make a good metric since it can move without me doing anything (in both directions). A good metric is one that is personally moveable while still laddering up to the overall goal. The amount of money I contribute on a per-account basis tends to be much more in my control. Here is a recap of the financial goals I set out for myself this year.
Progress to Date
Goals Hit:
$66k towards maxing out my Meta 401k + After Tax
$66k towards maxing out my partners Uber 401k + After Tax
Commentary: I front-loaded all 401k contributions to fully max-out in the first half.
Goals On-Track:
$19,000 into Backdoor Roth IRA (includes $6,000 for 2022 contribution limits)
Any Additional excess will go towards my taxable brokerage, 529 college savings, and moving fund
Commentary: Fully rolled my partners traditional ira into their workplace 401k to allow for 2023 backdoor roth contributions, I have not yet made the contributions but plan to. The catch-all excess contribution goal is mostly on track. It could potentially be moved to at risk but between severance payouts and RSU appreciation these are still mostly on track still for 2023.
Goals At-Risk
$20,000 into iBonds.
Commentary: iBonds are currently paying 4.3% after the most recent rate adjustments. The return has not been compelling enough for me. If I was still wanting a low-risk investment I would contribute more to my high interest savings account
2023 Metric Impact
During 2023 we have hit multiple all time net worth highs. I had not seen any all time highs since the first week of 2022. VTSAX, Vanguards Total Stock Market Index Fund, is still down 10% from all time highs. Meaning that the vast majority of the progress was a direct result from new money being added and invested.
Tailwinds
A tailwind is a wind that blow in the direction of travel that helps accelerate you towards your goal.
The significant tech increases highlighted in the first section added significant tailwinds. META’s RSU vests in February and May in addition to Uber’s Monthly vests + ESPP added significant tailwinds in the form of increased Total Compensation.
Headwinds
A headwind is a wind that blows directly in your face that slows the pace of progress against your goal.
Being laid off from Meta as part of the May layoffs would certainly qualify as a headwind. However, since the goal of this performance review is a retrospective of H1, the financial impacts from this headwind will only begin to potentially be realized in H2 onwards.
Forward Looking Thoughts
Financially H1 went exactly to plan. I was able to make every planned contribution thus far. There are multiple potential paths I could take for H2. The current state would have me no longer earning a W2 wage and leaning into being a stay at home parent.
Projecting out 2023 Total Compensation for the full calendar year shows that my personal Total Compensation will be down 26% vs the non-laid off scenario. The severance drastically dampens the blow but the loss of 2 RSU vests as META stock soars is the primarily cause of the gap.
The -26% drop in total compensation is only for my personal compensation and doesn’t include my partner. It assumes I earn $0 in additional W2 income.
I am extremely fortunate to have a partner that continues to have a well paying tech job. We have also never allowed our overall expenses to increase beyond what could be covered by only 1 of our salaries. In addition to that, my years of diligently saving are providing me with an extreme level of optionality to decide on a path forward without the financial element being the primary motivator.
Using your tech salary to buy yourself optionality is the entire reason I write this newsletter. This is the true magic behind reaching Financial Independence.
Now, if you would excuse me, I’ll be going to go back to the pier to try and catch me a halibut (one of my non-financial goals for H2).
-André
Love this update, but if I were laid off from a FAANG job, I’d never want to use the phrase “meets all expectations” again.