Gilberto de Piento's Journal

Where are you and where are you going?
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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Mon Nov 02, 2015 9:19 pm

IlliniDave wrote:Seems like all your trends are good. The big change you should hopefully start to see is compounding of your savings (assuming you are getting some sort of return for it), which should start shaving years off.
Thanks! 80 is in a vanguard target date 2055 fund, 20 is in a vanguard us stock index, and 20 is in checking. I'm considering a house or I'd buy more stocks.

IlliniDave
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Re: Gilberto de Piento's Journal

Post by IlliniDave » Tue Nov 03, 2015 6:01 am

Gilberto de Piento wrote:
IlliniDave wrote:Seems like all your trends are good. The big change you should hopefully start to see is compounding of your savings (assuming you are getting some sort of return for it), which should start shaving years off.
Thanks! 80 is in a vanguard target date 2055 fund, 20 is in a vanguard us stock index, and 20 is in checking. I'm considering a house or I'd buy more stocks.
Sounds good to me. Though it could be a bumpy ride you should be positioned for pretty respectable growth in the long run if history is any indicator. I keep a similar amount in cash/cash equivalents just because I'm old fashioned and like having a traditional rainy day fund, despite the "drag".

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Wed Nov 25, 2015 11:17 am

For a while I've been curious what my projected date of financial independence would be if I included the compound interest from my investments in stocks. My existing projected years to FI is calculated by Akratic's spreadsheet. The existing projection works like this:
1. Calculate the savings required to support the current month's spending using a SWR of 4%.
2. Subtract actual savings from the required savings to arrive at the difference between actual and required.
3. Divide that difference by monthly savings * 12 to get projected years to FI.

My new projection includes the benefit of annual compound interest. I now have enough money saved that interest is starting to have an impact on my annual savings that rivals that of the money I'm earning and not spending. For example, I save about $20,000 per year out of my salary but the $130,000 I have saved multiplied by the rule of thumb 8% is $10,400 of additional earnings per year (in a historically average year).

Obviously assuming that the stock market will provide 8% from now until the time I retire is dangerous but I was still curious enough to run the numbers. The projected time to FI for the month of October 2015 was about 15 years when I calculated it with no compound interest. When I calculate it with interest compounded annually at 8% I get 8 years instead!

Here's a comparison between projected years to FI with and without compound interest:
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A better model would use a monte carlo method like firecalc but this seems like overkill.
Last edited by Gilberto de Piento on Wed Nov 25, 2015 2:40 pm, edited 1 time in total.

Ydobon
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Re: Gilberto de Piento's Journal

Post by Ydobon » Wed Nov 25, 2015 12:05 pm

Exciting stuff, but we should always be wary of counting our chickens before they hatch :)

I tried a spreadsheet experiment yesterday where I completed similar calculations, but using my natural/current yield as my SWR (my thinking was 'if my yield stands still, I could spend it all and not lose any capital').

It painted a similar picture (8.x years, as opposed to 15+).

On the gloomy side, my current yield is very high and will be hard to sustain. On the positive side, it's high because I'm working at keeping it high.

Let's be cautiously optimistic and see where we stand in another couple of years, eh?

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Wed Nov 25, 2015 10:29 pm

I'm always wary of chickens, both hatched and unhatched. Cautiously optimistic sounds like exactly the right way to play it. Best of luck to the both of us!

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Tue Dec 01, 2015 9:42 am

November 2015

Not a bad month. A good representation of the "new normal" since I set a goal of spending no more than $1800 and tracking each expense on paper. It would have been better but I realized I forgot to make donations to charity back at tax time.

Expenses
Alcohol & Bars 36.36
Business Services 17.98
Cash & ATM 20
Charity 159.94 (I realized I forgot to make annual donations back at tax time.)
Gas & Fuel 27.29
Groceries 273.08
Health & Fitness 24.11
Internet 23.29 (I'm including this differently now. It's $63.29 but I'm sharing it with two people who each pay $20.)
Mobile Phone 12.16
Mortgage & Rent 960
Pharmacy 30.09
Restaurants 34.82
Shopping 39.99
Sports 52.74
Trade Commissions 4
Total -FI 1715.85

Income
Paycheck 3282.27
Amazon 133.54
Google 130.22
Checking 22.23
Total +FI 3568.26

Savings $1852.41
% Spent 48%
% Saved 52%
SWR 16%
Years Remaining 14.2
Years Remaining with Interest 8


“It’s not enough to be busy; so are the ants. The question is: what are we busy about?”
Henry David Thoreau

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Fri Jan 01, 2016 2:01 pm

December 2015

December wasn't as good as other recent months. I spent more and earned less than I would have liked to. The costs were websites renewing for the year, a year worth of donations to charity, and Christmas gifts. Next year I'm going to shop early and on sale and make some things for Christmas. I'm also going to remember to make my charitable contributions at tax time as I usually do rather than forget.

The optimism has gone out of me lately. I think it's partially the gray winter weather but I'm also feeling trapped in the life I have. Recently I've been forced to accept the possibility that I'm getting old and inertia to stay on the easy path might be stronger than I am. I've never been good at making changes happen but there was a point there where I really thought I might do something different.

Income
Alcohol & Bars 15.8
Business Services 129.83 (websites renewed for the year)
Charity 195 (part of annual charity)
Gas & Fuel 35.96
Gift 253.72 (Christmas gifts)
Groceries 280.8 (Christmas)
Internet 23.29
Laundry 20
Mobile Phone 12.16
Mortgage & Rent 960
Restaurants 24.93
Shopping 52.19
Total -FI 1993.68

Income
Paycheck 1047.81
Amazon 130.56
Google 0 (For the first time in years I didn't meet the monthly $100 payout requirement. Google changed something and it hurt traffic to my best site.)
Checking 23.24
Gift 8.75
457b 3000 (to meet the contribution limit for the year)
Total +FI 3210.36

Savings $1216.68
% Spent 47%
% Saved 53%
SWR 18%
Years Remaining 20.3
SWR with IM Income 17%


"You might have to fight a battle more than once to win it."
Margaret Thatcher

Only one chart this month - the rest have gone haywire and I don't feel like fixing them right now.
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Last edited by Gilberto de Piento on Mon Feb 01, 2016 11:57 am, edited 1 time in total.

mxlr650
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Re: Gilberto de Piento's Journal

Post by mxlr650 » Mon Jan 04, 2016 1:02 am

GDP wrote:The optimism has gone out of me lately. I think it's partially the gray winter weather but I'm also feeling trapped in the life I have. Recently I've been forced to accept the possibility that I'm getting old and inertia to stay on the easy path might be stronger than I am. I've never been good at making changes happen but there was a point there where I really thought I might do something different.
the inertia is only bad if you like making changes because you set expectations on yourself from seeing others. If you have no issues waiting for 8 years to FI, it is no big deal really. In my case, i continued to work even though I was FI, and it's not like I feel like I am in a wonderland now that I am on a sabbatical. The gold standard for me is the level of engagement - be it work or outside.

i would rather be a older dude with life experience (AKA with strong pattern recognition skills) than a 20-something who is all theory (the types you come across in various forums)

Good luck!

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Mon Feb 01, 2016 12:27 pm

January 2016

I spent about $800 on an upcoming vacation. I haven't traveled much so it's worth it to me. Otherwise this would have been an excellent month with very low spending.

Income
Alcohol & Bars 39.01
Bills & Utilities 5
Business Services 40.06
Gas & Fuel 48.56
Gift 9.92
Groceries 167.7
Internet 63.29
Mobile Phone 12.23
Mortgage & Rent 960
Restaurants 50.06
Sports 20
Travel 780.81
Total -FI 2196.64

Income
Paycheck 2555.19
Amazon 41.91
Google 148.2
Checking 24.17
457b 1000
Total +FI 3769.47

Savings 1572.83
% Spent 58%
% Saved 42%
SWR 21%
SWR with IM Income 19%
Years Remaining 26.5
Years Remaining with Interest 11


“In any situation, the best thing you can do is the right thing; the next best thing you can do is the wrong thing; the worst thing you can do is nothing.”
Theodore Roosevelt

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Wed Mar 16, 2016 4:57 pm

February 2016

I went on vacation and, despite the costs for it being spread over three months, it's really messing up my finances. It was good to travel and was probably a once in a lifetime type deal but it still doesn't help with FIRE. Expect more in March. :?

Alcohol & Bars 16.29 (vacation)
Business Services 17.98
Clothing 255.04 (mostly new rain pants for vacation and biking to work)
Gas & Fuel 38.99
Gift 12.4
Groceries 217.28
Hotel 400.93 (vacation)
Internet 63.29
Laundry 20
Mobile Phone 12.23
Mortgage & Rent 960
Pharmacy 40.57 (vacation)
Public Transportation 60 (vacation)
Restaurants 85.74 (vacation)
Shopping 59.38 (vacation)
Taxes 61.98 (H&R Block)
Travel 377.67 (food, transportation, attraction entrance fees, visa, etc. for vacation)
Total -FI 2699.77

Paycheck 1280.98 (mostly a refund from HR investing $1000 over the 457b limit in 2015)
Amazon 82.4
Checking 26.49
457b 4000
Tax Refund 175
Total +FI 5389.87

Savings 2690.1
% Spent 50%
% Saved 50%
SWR 26%
Years Remaining 52.5
SWR with IM Income 25%


No time so charts and no quote this month. I also feel kind of down lately so I just don't feel like putting in extra effort.

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El Duderino
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Re: Gilberto de Piento's Journal

Post by El Duderino » Wed Mar 23, 2016 7:42 am

what's got you down man? bummed from the finish to the vacation? Where'd you go?

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Thu Mar 24, 2016 8:28 pm

what's got you down man? bummed from the finish to the vacation? Where'd you go?
Thanks for asking. I went to a few countries in Asia. I'd like to say more but I'm concerned about anonymity.

Partially I think I was down from the finish to the vacation. I was ready to go home but going back to normal life is kind of a downer. Also, I went to a place where I've never been before and it was interesting and fun and a good cultural experience but it there was never any magic. It's been a long time since I've felt any "wonder" and I miss it. Also, when I posted I was just coming to the realization that I spent about $2000 on a vacation. It never felt like I was spending that much but somehow it still really piled up.

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Thu Mar 24, 2016 8:39 pm

I went to a free financial advisor through the credit union recently. Actually a pair of them. The first walked through my spending with me. He was helpful but we didn't find much to get rid of. He was hunting for dinners out, car payments, etc. and was very skeptical that anyone could have a $12 phone bill. :)

The second advisor was more about investments. The problem is that she didn't understand the way that my tax deferred account can be used and also thought that vanguard adjusts index funds to account for how they predict the economy will do over the next year (this is against the basics of what an index fund is).

I think they would have been really helpful for someone with no idea where the money was going so I don't want to discourage anyone from an advisor, just be sure to do your own thinking.

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Fri Apr 01, 2016 8:33 am

March 2016

A three paycheck month plus the stock market improving offset the last of the vacation spending. There were also some car repairs. Still looking for a better car but being patient looking for the right war rig.

Hoping to get spending under the $1800 goal, maybe under $1500, next month. All this spending results in some ugly time to FI numbers.

Expenses
Auto & Transport 165.7 Had to fix something on the car. Thankfully it was easy work as car repairs go.
Business Services 17.98
Groceries 113.02 Very low spending but only due to half of food being categorized under "Travel."
Internet 63.29
Laundry 20
Mobile Phone 12.23
Mortgage & Rent 960
Shopping 9.8
Travel 988.38 I could break this out but its not worth the trouble.
Total -FI 2350.4

Income
Paycheck 275.72
Amazon 137.04
Google 130.85
Checking 0.77 Didn't have enough debits to earn the higher interest rate. I set up a reminder in my calendar to check this at the end of the month from now on so that I can buy some food or gas if needed to meet the requirement.
Gift 34.47
457b 6000 Boom!
Total +FI 6578.85

Savings 4228.45
% Spent 36%
% Saved 64%


SWR 20%
SWR with IM Income 18%
Years Remaining 31.4
Years Remaining Including Interest 12


"The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails."
William Arthur Ward

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Mon May 02, 2016 8:01 am

April 2016

Although the numbers are my worst ever I do have a few things to be positive about:
1. I bought a different car, which is mostly why the numbers are so bad. It was $4500 and I sold my old car for $1200 for a total cost of $3300. Over time this should save money (as well as provide transportation I can count on) by not requiring so many repairs and getting significantly better gas mileage. I considered breaking the car expense into two or three months to avoid having it make my calculations and charts go crazy but decided against it. I really need to get back to low spending so I'm including the entire price in April to get it behind me.

2. I received notification that my pension fund is up to $48,000 in it. I've been ignoring this since I can't access it until age 55 but given the size its becoming a part of my plan. I'm still not including it in my calculations though. If I could cash it out and invest it elsewhere I would.

3. I've been applying to jobs. I'm not sure if this will go anywhere but it's worth a try to find out what my market value is.

Expenses
Alcohol & Bars 11.59
Auto & Transport 3644.36 (car purchase, tax, title, license, etc.)
Auto Insurance 321.16 (this happened to fall into April)
Business Services 42.14
Clothing 35.91
Gas & Fuel 77.58
Groceries 185.66 (not bad!)
Health & Fitness 147.09 (getting back into a sport and needed gear)
Internet 63.29
Mobile Phone 12.25
Mortgage & Rent 960
Restaurants 18.41 (not bad!)
Trade Commissions 7
Total -FI 5526.44

Income
Paycheck 158.49
Amazon 135.38
Checking 19.67
Gift 8.75
457b 4000
Total +FI 4322.29

Savings -1204.15
% Spent 128% (if the Auto & Transport expenses are removed this is a respectable 56%)
% Saved -28%
SWR 35% (if the Auto & Transport expenses are removed this is a respectable 12%, my lowest ever)
Years Remaining -59
SWR with IM Income 34%

"The price of being a sheep is boredom. The price of being a wolf is loneliness. Choose one or the other with great care."
- Hugh MacLeod

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NickHalden
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Re: Gilberto de Piento's Journal

Post by NickHalden » Mon May 02, 2016 8:48 am

"The price of being a sheep is boredom. The price of being a wolf is loneliness. Choose one or the other with great care."
- Hugh MacLeod

Brilliant.

That car purchase killed your statistics but I suppose that is also part of FI-life. Perhaps you could work with a rolling average.

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Mon May 02, 2016 9:46 pm

I do calculate a rolling average but I like the feedback that a month at a time calculation gives me. A 12 month rolling average would give a more realistic view of what's going on but month by month causes me to work harder at making sure each month is a good one.

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Wed Jun 01, 2016 9:03 am

May 2016

Not bad by normal standards but not good enough either. I've really got to pull it together and get back down to $1500 - $1800 spending.

I did get a raise which will amount to about $252 per month - taxes. In a normal (non 457b, non three paycheck month) this puts my savings upper limit at 67%. Things would have to get Jacobean to hit that though.

Expenses
Alcohol & Bars 24.56
Auto & Transport 51.7 (repairs/maintenance on the new car)
Business Services 158.34 (domains renewed, have to spend money to make money)
Cash & ATM 140 (I'm not sure what this is. Cash & ATM is creeping up as a problem again, need to stop this.)
Charity 89.94
Gas & Fuel 122.08 (drove to a wedding)
Groceries 205.71 (not bad!)
Health & Fitness 51.7 (gym)
Internet 23.29 (sharing this with two other people)
Mobile Phone 12.25
Mortgage & Rent 960
Restaurants 7.91
Shopping 6.45
Sports 9.5
Travel 393 ($110 is passport renewal. The rest is wedding expenses and I'm not sure what else. Ugh.)
Total -FI $2256.43

Income
Paycheck 1753.74
Amazon 147.85
Google 155.17
Checking 16.47
Gift 120 (Not really a gift. I remember putting cash in the bank but I don't remember what from.)
457b 2062
Total +FI $4255.23

Savings $1998.8
% Spent 53%
% Saved 47%
SWR 18.9%
SWR with IM Income 16.4%
Years Remaining 27.6
Years Remaining Including Interest 11


Jim Bennett: "I've been up two and a half million dollars."
Frank: "What you got on you?"
Jim Bennett: "Nothing."
Frank: "What you put away?"
Jim Bennett: "Nothing."
Frank: "You get up two and a half million dollars, any asshole in the world knows what to do: you get a house with a 25 year roof, an indestructible Jap-economy shitbox, you put the rest into the system at three to five percent to pay your taxes and that's your base, get me? That's your fortress of fucking solitude. That puts you, for the rest of your life, at a level of fuck you. Somebody wants you to do something, fuck you. Boss pisses you off, fuck you! Own your house. Have a couple bucks in the bank. Don't drink. That's all I have to say to anybody on any social level. Did your grandfather take risks?"
Jim Bennett: "Yes."
Frank: "I guarantee he did it from a position of fuck you. A wise man's life is based around fuck you. The United States of America is based on fuck you. You're a king? You have an army? Greatest navy in the history of the world? Fuck you! Blow me. We'll fuck it up ourselves."
From The Gambler (2014) https://www.youtube.com/watch?v=xdfeXqHFmPI

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Last edited by Gilberto de Piento on Wed Jun 01, 2016 9:31 am, edited 1 time in total.

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El Duderino
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clarification

Post by El Duderino » Wed Jun 01, 2016 9:25 am

Hey Gilberto, it's nice to see your good progress, particularly on the consistently high % saved.

I had a couple of questions for ya because I like the charts you've got, but I'm not sure I really understand them. What formula are you using to come up with Theoretical Investment Income? Also, what does SWR with IM Income mean?

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Wed Jun 01, 2016 9:55 am

Thanks!

Most of the numbers I report are from the Akratic/M741 spreadsheet I downloaded when I first joined here.

Theoretical Investment Income is the total assets I can apply to early retirement (457b, checking, Vanguard) * 4.5% theoretical interest / 12 months per year.

For example this month: (assets * 4.5%) / 12 = ($143,202.72 * 0.045) / 12 = $537.01 per month in theoretical investment income.

SWR with IM income is my “safe” withdrawal rate if I subtract my actual internet marketing (google + amazon) income I received that month from my expenses before calculating SWR in the usual way with (expenses * 12) / total assets. The internet income is slowly sinking since I don’t work on it anymore so it’s probably not that relevant but I find it interesting to calculate.

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Tue Jul 05, 2016 10:44 pm

June 2016

An uneventful but solid month. Percent saved and SWR are looking decent again after a couple of rough months.

I managed to not need to buy any gas this month which is kind of cool. I thought this might be a record but it has happened before.

Expenses
Alcohol & Bars 23.18
Auto & Transport 166.36 (bought some low mileage wheels/tires/covers on craigslist to replace worn out tires)
Business Services 56.91
Cash & ATM 140 (some travelling, not sure what else. Need to get this back under control.)
Clothing 62.79 (unfortunately not everything can be found at the thrift store)
Gift 20
Groceries 178.66
Health & Fitness 51.7 (gym)
Internet 63.29 ($40 of this is covered by neighbors)
Laundry 20
Mobile Phone 12.25
Mortgage & Rent 960
Pharmacy 15.8
Total -FI $1770.94

Income
Paycheck 3349
Amazon 90.13
CafePress 71.56
Checking 17.75
457b 124
Total +FI $3652.44

Savings $1881.5
% Spent 48%
% Saved 52%
SWR 15%
SWR with IM Income 13%
Years Remaining 14.6
Years Remaining Including Interest 8


"People wish to be settled; only as far as they are unsettled is there any hope for them."
Ralph Waldo Emerson

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Thu Jul 21, 2016 8:02 am

I hit a net worth of $150,000 today! If you include my pension I'm at $200,000. I haven't been paying much attention to net worth since savings rate and SWR are more telling but it's still a fun milestone. :)

It took me eight years to get to $75,000 but only two and a half years to get to $150,000.

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Fri Jul 22, 2016 8:22 am

As an update to the previous post, I should say that I also paid off $75,000 worth of student loans during that first eight year period.

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Re: Gilberto de Piento's Journal

Post by cmonkey » Fri Jul 22, 2016 9:47 am

Nice job! Paying off debt is such a slow way to build net worth compared to investing. It'll get even quicker in the coming years.

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Gilberto de Piento
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Re: Gilberto de Piento's Journal

Post by Gilberto de Piento » Sat Jul 23, 2016 12:57 pm

Thanks! I'm really hoping the curve starts bending upward at some point.

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