cmonkey's journal

[cmonkey]

Monthly Update, November 2015

Expenses/Savings & Remodel

November expenses rose a bit but mostly due to remodel expenses. I am still very happy with where we are for the year - a 74% savings rate for 2015. We stepped up our efforts and got a lot done particularly over the last couple of weeks including getting all my listed items from my last update done. We have 99% of the drywall up, the duct moved (it wasn't as bad as I thought), the soffits are built, all the ceiling lights are up and wired (its SO much brighter!) and I will be doing the window trim this week. Close to half of our expenses came from ordering our flooring for the two main rooms (so over half of the basement). It should arrive this week and will give us something to do for the first week of December. We will also be mudding all the drywall and sanding it smooth during December. I would like to take my time and make it really nice so if it takes the entire pre-holiday December, I'm ok with that. It gives our budget a break! The week of Christmas we will be out of town but will be back the last week of December and I will have the entire week off. I am making plans for the working on the bathroom and hope to get much accomplished.

Somehow our grocery expenses were a bit high this month, but I frankly wasn't trying to make an effort at reducing. In fact I didn't make an effort on anything to reduce, so I'm pretty happy with where we sat for normal expenses. Without the remodel we would have been at 82%. I can't wait to be done, mostly for this reason!

Normal Spend - $1070.23
Remodel Spend - $1536.57
Total Spend - $2606.80
Total Savings - $3376.24 ; 56%




Lending Club

Deposits - $476.47
FAI - $995.99 (+$53.11)
SWR - 111.75% (+8.75%)
Interest Earned - $110.21

NAR - 14.42% (+0.45%)
Total Charge Offs - 3

Dividend Fund

Deposits - $1317.21
Dividends Received - $36.25
FAI - $391.08 (+$52.00)


401K/SEPP

Deposits - $1582.56
FAI - $661(+$54)


Smaller increases this month due to smaller contributions (and no significant rise in the S&P 500 Index). Lending Club in particular was smaller because I made the contribution at the end of the month after we had spend money on the flooring. I wasn't planning to do this but realized I'd just like to get it bought. Also, our SWR moved up due to our TTM expense metric going up this month (which was expected).

I initiated a position in IBM this month. They have been trending into very valuable territory for a few years now and I decided to bite. I wanted to get out of the energy/industrial sector this month. December will see me dip back into it. Our YOC is now 4.75%

The DW also got into the world of dividend investing this month. She had wondered if any blue-chips from Minnesota pay dividends. So she bought some stock with a small bit of her business money in TGT (Target) on one of their down days. They have a decent yield and have good forecasts.

We also received our first dividends!

AT&T - $21.62
CAT - $14.63



Total FAI - $1998.07 (+$159.11)

Time to Bills Covered - 21 Months (-5)
Time to TTM Expenses Covered - 34 Months (-5)
Time to 3% LC - 60 Months

TTM Expenses - $13369.04 (+$791.24)

One note - I am not tracking projected income anymore. I have been changing things too much and just wasn't getting value from it anymore. I want to know where I actually am, not where I think I should be.

So close to 2k! Ah!

Some of you may have noticed I tweaked my FAI chart (again! I just can't help myself). I am positive this is the last major change I'm making for a while. I made a change based on the fact that at some point I will be withdrawing all of the income that Lending Club produces. Higher income means higher taxes for Lending Club income and I'd like to avoid that and diversify in the process. So at some future balance (250K?) I will begin withdrawing the interest each month and just put it elsewhere. I changed the FAI value to reflect the full withdrawal amount (expected 9% returns as apposed to a max of 7%) as potential income. This means that there was a pretty good increase in my reported FAI, but the actual increase was $159.11. This also means our actual income would be somewhere in the range of 22K/year when I am done working, which further accomplishes two things I want - enough money to fund our HSA every year and several thousand more to allow me to keep investing if I'd like.

My end-game goal has morphed over the past year but I have ultimately settled on accomplishing a 3% SWR for Lending Club. Achieving this goal will be driven by 2 things - increasing LC balance/income and also on the other end by increasing dividend income. IOW, we will use LC income to cover the gap between dividend income and our expenses. The amount that we need will be no more than 3% of our balance when entering retirement.

In reality, we will be FI in 34 months since that reflects our actual expenses. The time between 34 and 60 months is just extra time to give us more safety and freedom. If I feel like quitting anytime between those two points...I can! I love having that knowledge.

[Dave]

Sounds like another great month for you guys, good job! Especially exciting on the dividends .

I like your income strategy going forward. Watching your actual income and actual expenses converge will be very enjoyable.

[cmonkey]

@Dave, Thanks I agree it will be a convergence to remember!

Along the lines of my post about the drudge of working in an office setting, one of my co-workers was taken away by ambulance just about an hour ago because he was getting dizzy and having 'tingles'. Everyone knows its due to high levels stress but no ones wants to talk about it. It happened just as I finished up the details of my monthly update and it just exemplified in my mind why I'm doing this and why I won't think twice about pulling the plug when I get to where I want to be...even if its a higher SWR for LC. Life is short....work is long!

Chug on!

[spoonman]

You popped your dividend cherry! Haha, seriously congrats on getting those divies. Your bad month in the food department is better than my best one =).

Nice job securing shares of IBM. Their FCF is very healthy and those dividend increases will keep coming. Eventually the other company fundamentals will improve.

[cmonkey]

@spoonman, Ha! Well that's one way of putting it.

Thanks on IBM, I hadn't actually looked at their FCF. I had forgotten to mention I am using FastGraphs for most of my analysis mostly using the estimating tool looking at EPS/dividend payout ratios for the next few years and comparing them to previous years. IBM looks promising.

Does FastGraphs have FCF numbers? I looked around a bit and all I found was CFL.

[spoonman]

I subscribe to the basic version of FastGraphs, so I haven't seen an FCF option. I've seen Chuck Carnevale show FCF bar graphs in his articles, but I think that comes with a higher subscription. I've usually get my FCF info from other authors at Seeking Alpha.

[thrifty++]

74% savings rate YTD boom! Thats a great rate. The old three years retirement for one years work. Not far from FI which is a nice place to be.

[cmonkey]

@thrifty, Thanks I am pretty confident we can achieve higher starting in 2017 (after the remodel is done). Next year is up in the air but I'd like to stay at or above 70%. You'll notice starting in July our normal expenses plummeted/leveled out and average ~ 80%. December will see us near 95%.

[cmonkey]

So the DW strong armed me into learning to crochet tonight! She has been pushing for a while. I tried once last year but failed miserable. Tonight, something clicked and I churned out this small scarf in about 2 hours. It's not quite 2 feet long and about 5 inches wide. I still have some yarn left so it will probably get to about 3 feet I think. I had a lot of fun, I can see this turning into a relaxing hobby. I used a part of my brain I haven't touched in years.

[EdithKeeler]

That's some great crocheting! I love to crochet--it's very relaxing thing to do while watching TV or chatting with friends. Meditative.

[spoonman]

That's really cool.

I got into that when I was back in Junior High for a school project. It can be incredibly calming.

[vexed87]

So is it a sock or a scarf?

Nothings feels better than saying, "I did that."

[llorona]

Nice job on the crocheting!

When you get really good, you'll be able to make useful things like Elizabethan collars for your chickens.

[cmonkey]

So is it a sock or a scarf?

Nothings feels better than saying, "I did that."

It is a scarf, and it is over 3 feet right now. I still have some yarn left so I'll keep going on it. It matches the wool coat I picked up this weekend as well.

@llorona, Ha! I had considered a cap for our rooster as there was risk of frostbite, but he has been alright. The DW did make sweaters for our cats though, maybe I'll try for a bow or something.

[llorona]

That's hilarious!!! It's the funniest thing I've seen in a long time.

[spoonman]

LOL! That's awesome!

[FBeyer]

From now on, If people ask what EREs do, I'll just hotlink to this image.

[vexed87]

Homesteading Extreme...

[cmonkey]

Monthly Update, December 2015

TL;DR - 2015 was the best year either of us has ever had, financially and not.


Expenses/Savings

December was a great month. Expenses were in the normal range for 'normal' and much below for the remodel mostly because we were gone for a week and didn't do much in the week before and after simply due to other priorities. Income was VERY high due to receiving my yearly bonus. Bonus was near max for this year and we are extremely thankful. Because of that we exceeded our 2015 goal of having 20K between our two non-401k account by a lot. Coupled with our lowest expense level for the year and we had a stellar savings rate, putting away just shy of $15,000 for December! 2015 was also the lowest expense level we've ever had. 2014 was over 30K if I remember correctly. We accomplished 74% SR for 2015. Interestingly if we had not done any remodel work, SR would have been 80%. If we had whole-year spending that was equivalent to the past 6 months (since redoing how I track everything) our savings rate would have been 85%. Some goals to strive for in the years after our remodel.

December

Normal Spend - $895.27
Remodel Spend - $8.32
Total Spend - $903.59
Total Savings - $14642.76 ; 94%

2015

Normal Spend - $17779.64
Remodel Spend - $5091.68
Total Spend - $22871.32
Total Savings - $62283.40* ; 74%

* this includes payments on debt








Lending Club
FAI - $1493.89 (+$497.90)
SWR - 72.62% (+39.13%)

NAR - 14.54% (+0.12%)
Total Charge Offs - 4 (+1)

Dividend Fund
FAI - $652.36 (+$261.28)
Dividends Received - $26.99

401K/SEPP
FAI - $717 (+$56)


Lots of increases this month. Our FAI for Lending Club has topped $1,000. Also, I added an extra $1,000 to our dividend fund, taking the money from what I had termed our 'emergency fund'. I was inspired by an autoblog post back in December about using your credit card for an emergency fund once you have enough in investments to cover your credit card balance. We still have nearly 22K in a cash CD so we have not left cash entirely and will not do so.

We had 1 more charge off in Lending Club in December. I think we have 4 or 5 more that are positioned to charge off in the coming months. Our 'adjusted' NAR is in the predictable range of 10%-11%. No big surprises we are cruising right along.

I added CVX, ED, GPS, MDU & PG to our portfolio this month all in more or less equal amounts.


401K contributions were much higher due to the bonus, however, the company contributions were adjusted lower by 30-40% (conveniently right before bonus time) due to a tighter bottom line. 2016 will continue to see lower company contributions which will push off of FI date by about 1 month.




Total FAI - $2863.25 (+865.18)

Time to Bills Covered - 21 Months (+0)
Time to TTM Expenses Covered - 34 Months (+0)
Time to 3% LC - 60 Months (+0+

TTM Expenses - $13423.88 (+$54.84)

No real change on the timeline and our TTM increased only slightly.

Remodel

For the remodel we have all of the drywall up in our two main basement rooms and got a good chunk of the mudding done before break. We ran out of mud and were just too lazy to go get more. I still have one more round to make on it and then sanding. We will then be putting our flooring down, which we finally received after a couple of screwups. This past week I got started again and have done some work in the bathroom. I have the base built for the jacuzzi (it needs to sit 14 inches off the floor due to the positioning of our lowest drain opening). This was a major accomplishment due to the requirement of needing the base to be EXTREMELY stable. I took my time over a couple of days building it out of scrap plywood and 2X4. Getting it level required some stubbing in of 1 inch pieces followed by quite a bit of wood glue and shims. The end result is more stable than I imagined I could accomplish. It ain't goin' nowhere! Yesterday I started getting some of the framing done around the tub and will be finishing that this week. We finally decided on the tiling we want after spending about 5 hours looking around this past weekend and also picked up cement board, mortar and plumbing supplies. We also got our toilet purchased. Its a duel flush model (I'm excited* for that). We got everything at Menards and snagged their 11% off rebate deal.

One note - I forgot to mention that our sump pump has been running off and on due to all the rain we've had this past fall/winter and it has been working flawlessly! Up until last week that is. Thankfully I caught the problem right away and we didn't have any flooding but for some reason the pump started having issues pushing past the check valve I installed. There is about 5 feet of pipe above it but there shouldn't have been much weight on it. To temporarily relieve the issue I just drilled a small hole right above the valve to drain the water. It did the trick and its functioning again, but that's not ideal since over half a gallon of water gets let back into the basin each time it runs. Not a HUGE deal (it pumps out over 10 gallons each time it runs) but still. I have a feeling the pump was getting air locked despite have an anti-airlock hole built in and the weight of the water was just enough to cause it to lock. More investigation is warranted.

In any case, now I know how to rip the whole thing out and put it back in! Good skill to have.

* As excited as you can be for a toilet.

Eggs

I forgot to mentioned we got 152 eggs in November! We got 92 in December. Both of these are down from 214 in October so we have bottomed out! I am not tracking how much they cost me/how much I save because its become clear they cost more (financially) than I could ever recoup in food savings. Plus they give us a lot of untrackable things (manure, pleasure, etc...) so its not really worth it to do this anymore. Just know they ain't cheap!

2015 Review

I am not much for reminiscing but I thought I'd log some of the highlights for this year.

Financial

We started the year with 20K in home equity debt and about 14K in our investment accounts. We now have ZERO debt (forever) and have surpassed 52K in our investment accounts. Just over 30K of that is in Lending Club and our brokerage account. We started the year with 2K in Lending Club and didn't even have a brokerage account. So we put away ~$28K, starting from August 1. Hope to more than double this amount in 2016. Counting the 401K and we put away 38K. Not bad for 5 months! Looking forward, our 3 investment accounts should top 100K this year. That's my 'wing-it' goal because I'm not sure how much we'll spend for the remodel. SR goal is 60% and year end FAI goal is ~$4700.

I also started tracking our networth using Mint. We topped 200K in NW this year and are now sitting about $213K for everything (property, truck, cash, investments).

Non-Financial

I think the biggest change this year was deciding to ride the metro to work. It had the largest impact on overall life quality by lowering my stress levels significantly. We also started remodeling our house! I probably wouldn't have gotten so much done if I still had high stress. We successfully raised a batch of chicks and got our first eggs! I learned how to kill & butcher a chicken. I also learned how to crochet.

The DW also had a great year. She has a small crafting business and she made a lot more money this year than last. I believe she made somewhere in the range of 2K-3K which is pretty amazing.

Looking forward, some of the things I'm focusing on for 2016 include making 2016 the year of NOW. I have been practicing mindfulness for the past month or so and it has made life even more pleasant than it already was. To go along with this, I'm making an effort to stop thinking about investments so much. I have my strategy and I'm happy with it. I have a long list of stocks on my watch list. There isn't a lot left to do so its time to do other things with my creative energies. I'm think much more reading!

I'm also learning to recognize my own personal limits in terms of how much I can do at any one time (particularly with the remodel). Whereas I would work at things for 6-8+ hours and get super tired by the end, I have decided its best if I recognize my limit and stop working. Most of the time I would start making stupid mistakes and have to backtrack what I was doing, ultimately costing me more time than had I stopped working in the first place. 2016 will see me taking it a little easier and not rushing through things.

I have some health goals as well, but nothing really for exercise. If I end up exercising, great. If not that's fine too. I get in 1-2 miles of walking each day by walking to the bus and back and around the parking lot. Primarily I am focusing on eating a WD style diet where I eat one main meal in the evenings and fruit/nuts through the day. Christmas threw me way off and I'm getting back on now. I'm also going to make an effort to cook more ERE style, utilizing a lot of the ideas and recipes on the wiki page.

I am going to make it a goal to go for walks around our parking lot more while I'm in the office. Being back in my cubicle is exhausting after having so much free time!

For the remodel I have high level goals as completion dates arranged in temporal order -

Basement bedrooms - January 15
Basement bathroom - February 15
Basement stairs/hallway - April 1
Upstairs bathroom and 2 bedrooms gutted - April 15
Upstairs master bath/bed - July 15
Upstairs livingroom gutted - August 1
Upstair livingroom completed - October 1
Dining room/middle room completed - December 1
Whole House completed - January 1, 2017.

I am moderately confident we can achieve these goals. Most are pretty flexible and will likely merge together. The only 'concrete' goal I have is to get all the exterior wall (windows/doors) work done while the weather is warm.

The work itself doesn't take that long - its the tendency to do work in small bursts followed by long periods (a week or more) of not doing anything that is the problem! For example I could get an entire room drywalled in 1-2 days or the tub completely tiled in half a day, but I'll get distracted or fall into a 'well it doesn't take long so I'll just do more work later' trap.

We want to get the house completed before having children (in 2017!) due to all the contaminants that are going to be flying around in the air, not to mention the stress of having a new child around wouldn't be good for doing remodel work. Its going to be a busy year...wish me luck.

Happy New Year!

[cmonkey]

Here are some photos of our basement from when we bought the house in 2011. We hadn't even touched it yet. Needless to say, it was quite nasty.

This is where the wife's new craft room is. That corner is where the sump pump is now. On the right is our old gas furnace which we replaced with a geothermal system in 2014. You can sort of see in the photo how the wall on the left is bowed out. We ripped out all that old wood paneling (really gross stuff!) and found a block foundation nearly collapsing in. We had a company come in and put in geolock anchors. It cost around 8K to put in but now we have a stable foundation and it is warranted for life.




Where the other main room sits (henceforth known as the basement bedroom). This photo is actually a wall that was completely rotted out and falling apart. It partitioned off a sort of cold storage for food, although it was disgusting beyond measure so I'm not sure why anyone would store food there. The South Park poster came with the house and was quickly thrown in the trash.



Looking out from the craft room, standing where the sump pump is. That's our furnace. On the far left is a massive white column that was actually the chimney for the furnace and water heater (sitting next to it). It was a 2'x2' brick column covered in plaster and was a PAIN to get out. Sledgehammering for two days. On the bottom was about 6-8 inches of poured concrete which we got out with a jackhammer.

Also in this picture is a column of white brick sitting between the water heater and furnace. This was a support column that we took out and replaced with two floor jacks. They are much slimmer and so take up more room and are more sturdy.



Here is what qualified as the old basement bathroom. I'm pretty sure the local jail bathrooms were more cleanly. The walls were completely rotted out. Unbelievably people actually used this before we moved in.