OK. I have been fairly absent from these forums for the past three months as I've transitioned to the new job and new city. My circumstances are sufficiently changed to warrant a reset on my journal. You can rely on my old journal for back history, but herewith is the new deal,
I have been at my new job just a bit over three months. It is going exceptionally well. Doing the work of a prosecutor has once again brought me to extended moments of "flow". Overall, I am much happier with my current gig than I was with the latter days of the last one,
I am now living in the State of Jefferson:
http://en.wikipedia.org/wiki/Jefferson_(Pacific_state)
Some of you might have deduced that my former abode was in the city of Sacramento. In general, I preferred Sac to where I am now. But deeper reflection has led me to conclude that my current city has an adequate library, a decent Catholic parish, sufficiently stocked grocery options, and enough diversity to satisfy my curiosity seeking ways.
So, as I indicated before, the primary motivation for this move was to spike my pension. By returning to government service before 1/1/13, I have glommed onto an opportunity to increase my defined benefit pension from CalPERS by more than 100% when I start drawing benefits at 55.
Here is my new Expense profile. I have signed a 6 month lease that is abut half over. I am actively looking to by a house in the next two months, so circumstances could change soon.
Current gross monthly income: $7000
Max. contribution to 457 plan: $1917
Net after taxes & 457 deduction: $4088
January 2013 Expenses:
$672 Rent + Renter's Insurance (req'd) [I now live in a 550 sq. ft. 1BR/1BA unit in a well-kept older complex. Quiet neighbors make this an acceptable refuge.]
$138 Electricity, Sewer, Water [This is the first apartment in 30 years where I've had to pay for water and sewer. One more motivator to buy rather than rent.]
$110 Phone [I have succumbed to the ubiquity of the smartphone.]
$135 Truck (Insurance = $35; Gas = $80; Reg./AAA/Maint. = $20)
$0 Clothing [I refuse to have my shirt laundered & pressed @ $2 each.]
$694 Living Allowance [This includes $145 to renew my passport. Absent that expense, it equates to approx. $18 per day for food, alcohol, household, entertainment and misc. expenses.]
$95 Medical/Rx [Good news. The new job covers 100% of the insurance premium, and the co-pays are half of what I paid with the last job's plan. Bad news: I can't 125 the medical until one year on the job.]
Total Expenses: $1834
To Savings: $2254
Combined Savings & 457 Contribution: 59.5% of gross.
In a separate post later this week I'll show my current ERE capital. As a prelude, I'll just share that I rolled over $267K from my last job's 401(k) into a traditional IRA. This has been invested in a classical Permanent Portfolio [PP] equally divided between VTI for Stock, TLT for Long Bond, IAU for Gold, and a combination of SHY, SHV, I Bonds & an ING Saving Account for the Cash (obviously the last category is a bit schizophrenic).
With the dividends from 2012 and my $6500 contribution for 2013, I implemented a Dogs of the Dow portfolio tied to the 10 DoD stocks as of 1/9/13.
In general, my portfolio now generates modest upside (3-4%) and little to no downside despite the increased VIX of recent months. I believe I am well poised to retire at 54, when my pension-spiking move will be fully realized. At present, the only development that would sidetrack retirement at 54 is if I were appointed to the bench as a commissioner or a judge within the next two years. I am genuinely enjoying the challenges of the new job, but I do feel a bit isolated socially. Most of my work colleagues are a full generation younger than me, so hard to relate to outside of work; or compatriots in age but fully immersed in raising kids. Being a confirmed bachelor of 51 comes across as more odd here than it did in Sacramento. Nevertheless, the situation is nothing a good book and a well-planned meal can't remedy.
Maus 2.0
Maus
I do envy you the rush of a successful prosecution. .... it brings back memories. I think you made a smart move and if you keep saving at the rate you are going, your non CalPRES nest-egg will be even more impressive in 3 years' time.
I am still unsure why you would want to buy a house when you don't especially like the city you live in, unless you see a lot of upside when you sell (I remind you of the tax exemption for selling your residence - I believe it kicks in after 2 years).
All in all - awesome!
I do envy you the rush of a successful prosecution. .... it brings back memories. I think you made a smart move and if you keep saving at the rate you are going, your non CalPRES nest-egg will be even more impressive in 3 years' time.
I am still unsure why you would want to buy a house when you don't especially like the city you live in, unless you see a lot of upside when you sell (I remind you of the tax exemption for selling your residence - I believe it kicks in after 2 years).
All in all - awesome!
@J_
A judge gets to be a bit more nuanced in the application of legal scholarship, plus the base salary is $180K (USD) p.a.
A Commissioner handles minor cases such as traffic tickets and small civil claims (i.e. less than $5K), serves at thee pleasure of the majority of the judges, and receives 90% of their salary.
@sshwann
I'll check it out. Lately, I've divided my time between Jefferson Public Radio (one of the local NPR options) and a C+W station based out of Chico.
@GPMagnus
Buying a house serves a twofold objective: 1) diversification of my portfolio and 2) rents locally are much less reasonable relative to the median home price compared with Sacramento. Any place I buy will either have potential as a future rental property or some stickiness in price stability in the event that I ultimately decide not to retire here.
@Mo
Yes. Remember that I am 51 (not really a true EREista) so I get the base $17500 plus the $5500 catch-up p.a.
@DutchGirl
There is a lot of natural splendor to explore, so I'm working up some plans. I empathize with you. In the years just after university, I spent a summer in Europe. I'd love to go back and explore some of the places I spent only a day or two in then. I really enjoyed Amsterdam and Utrecht, if only briefly. I found the Dutch to be very friendly.
A judge gets to be a bit more nuanced in the application of legal scholarship, plus the base salary is $180K (USD) p.a.
A Commissioner handles minor cases such as traffic tickets and small civil claims (i.e. less than $5K), serves at thee pleasure of the majority of the judges, and receives 90% of their salary.
@sshwann
I'll check it out. Lately, I've divided my time between Jefferson Public Radio (one of the local NPR options) and a C+W station based out of Chico.
@GPMagnus
Buying a house serves a twofold objective: 1) diversification of my portfolio and 2) rents locally are much less reasonable relative to the median home price compared with Sacramento. Any place I buy will either have potential as a future rental property or some stickiness in price stability in the event that I ultimately decide not to retire here.
@Mo
Yes. Remember that I am 51 (not really a true EREista) so I get the base $17500 plus the $5500 catch-up p.a.
@DutchGirl
There is a lot of natural splendor to explore, so I'm working up some plans. I empathize with you. In the years just after university, I spent a summer in Europe. I'd love to go back and explore some of the places I spent only a day or two in then. I really enjoyed Amsterdam and Utrecht, if only briefly. I found the Dutch to be very friendly.
OK. ERE capital. When last I reported it was approximately $725K. viewtopic.php?t=1062#post-13712
As I have started a new chapter, I want to resume tracking this metric.
As of today (2-11-13), my ERE capital is $820,767.
The breakdown:
$268,200 Traditional IRA in classical Permanent Portfolio
$106,000 Taxable Acc't, primarily in large-cap dividend stocks
$61,375 Roth IRA, a mix of REITs and Dogs of the Dow
$15,200 I-bonds
$13,200 ING Savings @ 0.75%
$11,000 Checking @ 0.05%
$2000 457 Deferred Comp plan (34% S&P 500, 33% PIMCO short bond, 33% TIPs)
$140,325 NPV of CalPERS pension, discounted @ 10YR Note rate
$195,600 NPV of Soc. Security @62, same discount rate.
$7500 Loan to family member @ 0.0%
At a 3% SWR, I could anticipate over $2000 per month.
So, clearly I continue working for non-pecuniary reasons. I realize that the greatest challenge of the coming year is accepting that I have enough and re-orienting my ambitions.
Lent starts this Wednesday. It is traditionally a time of critical self-reflection for Catholics. I intend to focus more purposefully on why I am doing what I am doing and what alternatives might be more fruitful.
As I have started a new chapter, I want to resume tracking this metric.
As of today (2-11-13), my ERE capital is $820,767.
The breakdown:
$268,200 Traditional IRA in classical Permanent Portfolio
$106,000 Taxable Acc't, primarily in large-cap dividend stocks
$61,375 Roth IRA, a mix of REITs and Dogs of the Dow
$15,200 I-bonds
$13,200 ING Savings @ 0.75%
$11,000 Checking @ 0.05%
$2000 457 Deferred Comp plan (34% S&P 500, 33% PIMCO short bond, 33% TIPs)
$140,325 NPV of CalPERS pension, discounted @ 10YR Note rate
$195,600 NPV of Soc. Security @62, same discount rate.
$7500 Loan to family member @ 0.0%
At a 3% SWR, I could anticipate over $2000 per month.
So, clearly I continue working for non-pecuniary reasons. I realize that the greatest challenge of the coming year is accepting that I have enough and re-orienting my ambitions.
Lent starts this Wednesday. It is traditionally a time of critical self-reflection for Catholics. I intend to focus more purposefully on why I am doing what I am doing and what alternatives might be more fruitful.
It's always nice to see a fellow Catholic on here.
You might be interested in this philosophical writing that challenges the culture of consumption.
http://www.usccb.org/issues-and-action/ ... mption.cfm
You might be interested in this philosophical writing that challenges the culture of consumption.
http://www.usccb.org/issues-and-action/ ... mption.cfm
@BennKar
To calculate the NPV of my pension and my SS @ 62, I discount the anticipated annual cash flow from each (the pension starts @ 55) from my current age to 90 y.o. by the 10YR T-Note rate (1.95% on Monday, 2-11-13). I use this as the benchmark because it is the closest thing to a long-term guaranteed rate of return. The assumptions are fairly conservative.
@mpbaker
Thanks for the link. The fact that the article referenced the Church Fathers was a big plus for me. I try to model my life on the wisdom of the desert fathers of the early church.
I want to take the further opportunity to expand on my reasons for buying rather than renting. Currently, my annual salary is best compared to a quasi-bond that delivers a reliable annual coupon. Were I to leave employment, my portfolio would be overweight in stocks relative to the lost salary. Real estate, which has historically appreciated at or near the inflation rate, would substitute for salary as a counterweight to equities. And I accept the general idea that as I age, my portfolio should downshift from the more aggressive approach of a predominately stock-based plan to the more principle-preserving approach of holding cash and bonds.
To calculate the NPV of my pension and my SS @ 62, I discount the anticipated annual cash flow from each (the pension starts @ 55) from my current age to 90 y.o. by the 10YR T-Note rate (1.95% on Monday, 2-11-13). I use this as the benchmark because it is the closest thing to a long-term guaranteed rate of return. The assumptions are fairly conservative.
@mpbaker
Thanks for the link. The fact that the article referenced the Church Fathers was a big plus for me. I try to model my life on the wisdom of the desert fathers of the early church.
I want to take the further opportunity to expand on my reasons for buying rather than renting. Currently, my annual salary is best compared to a quasi-bond that delivers a reliable annual coupon. Were I to leave employment, my portfolio would be overweight in stocks relative to the lost salary. Real estate, which has historically appreciated at or near the inflation rate, would substitute for salary as a counterweight to equities. And I accept the general idea that as I age, my portfolio should downshift from the more aggressive approach of a predominately stock-based plan to the more principle-preserving approach of holding cash and bonds.