Gilberto de Piento's Journal

[Gilberto de Piento]

February 2014

OK, so things weren't quite as dire as the February 10th post made it seem. I ended up paying in about $1000 in taxes to the feds and getting $200 back from the state. Having to pay taxes is a good problem to have. The car is still off getting fixed and the hacked credit card was resolved, thanks to Visa and the credit union.

Somehow, despite the taxes this month I managed a slightly above normal savings rate of about 37%. If there was ever a month with nothing unusual I could hit 50%. I suppose that having something unusual is actually the usual and the reason why budgets never really work.

Expenses
Alcohol & Bars 9.72
Auto 98.45
Business Services 8.99
Cash & ATM 140
Doctor 15.47
Groceries 9.5
Gym 41.15
Hotel 22.08
Mortgage & Rent 940
Parking 18
Restaurants 36.93
Taxes 794.99
Television 47.46
Total -FI 2182.74

Income
Paycheck 3137.82
Amazon 120.33
Google 168.15
CD 15.87
Checking 6.95
Total +FI 3449.12

Savings: $1266.38
Net worth: $78,528.71
ERE assets (declared the 457b ERE based on my new understanding that it can be withdrawn with no penalty at any time so this is a big change from last month): $78,528.71
Monthly savings rate: 36.72%

I think something's off in my spreadsheet. It doesn't seem right that net worth increased by $4000 in the last month but I don't have time to look into it right now. If I had a free hour or two I would automate the whole thing.

I'm currently focusing my efforts on upgrading my job and location but that may take some time given that I seem to be in too small a niche. I either need to get a PhD (no more industrial learning for me) or broaden my skills (what I'm working on now) to move up. Until something changes I don't think these journals are going to change a whole lot.

Thanks for reading!

[Gilberto de Piento]

How do you keep the stoke for ERE going day to day?

I don't feel like I'm making much more progress towards ERE than I was a few months ago. I'm definitely still saving money but I haven't been making many new improvements. I might even be backsliding since it's not winter so there's more to do outside.

I've read almost every ERE related book I care to read. I spend a few minutes each day on this site, MMM and bogleheads. Back when I was trying to get out of debt I listened to a lot of Dave Ramsey but I don't think there are any ERE podcasts (there's a business idea for someone).

When I was working on my student loan I told all my friends about my progress and had "parties" at major milestones. People for the most part were supportive about escaping student loan debt but I haven't come across anyone in person who supports ERE. In fact, most people look at me like I have a third eye if it comes up, even amongst my friends who are generally not big spenders.

Any suggestions?

[C40]

There are (at least) two ERE podcasts:

1 - Mad Fientist (http://www.madfientist.com/podcast/)

2 - Radical Personal Finance (http://www.stitcher.com/podcast/joshua- ... -budgeting) (it looks like this link is missing the first 5 episodes)

They are both on iTunes. It appears both have stopped updating them. (edit - Mad Fientist is still making more)

Other things I do:
- Used a day counter for a while. I estimated the number of work days left to FI. I put the number on a dry erase board on my refrigerator and would reduce it by 1 each day when I got home from work. I'd still be doing this if I hadn't ruined the dry erase board when taking it off my fridge.
- Look at my charts.. Gives me reassurance that I'm making progress
- Daydream or plan about things I could do when ERE. (for a while I was doing research on Ecuador. That opens up the need of learning spanish)
- Dividend stock research
- Work on a hobby that is money-making

[freegan]

How do you keep the stoke for ERE going day to day?


Visualize what a perfect day would look like (guarantee it's not "commute to job, work, get home, sleep"

Then,
From Monday to Sunday, when you're at work ask yourself "what would I be doing if I didn't have to be here."
On Sunday when most of us are dreading work, think "If I was already FI, I wouldn't feel this dread of having to go into work."
On Saturday, think, "Wouldn't it be nice if all my days were Saturdays?"

Sounds silly but it really puts a fire in my belly.

[George the original one]

> How do you keep the stoke for ERE going day to day?

This is the year of capital expenditures in preparation to switch households, so contributions to savings are zilch. It means my investing skills have to be honed as sharp as I can make them since negative volatility in my stash will mean delaying the exit date.

Spending time at the retirement house reminds me how drama-free retirement will be. Especially compared to certain drama-queen coworkers! That time also tantalizes me with the opportunity to do as I wish, not having to serve anyone but my wife.

[Gilberto de Piento]

Thanks for the ideas!

@C40: I'll check out the podcasts. I like the idea of a countdown too, though my number is so far off it might not help right now. Maybe there is something similar I can do.

@freegan and George: It sounds like I need to get a job I can't stand! Right now I actually like my job. It's not challenging me much lately but I get to program and analyze data all day without a lot of BS as long as I get work done on time. I've been looking for a new job so maybe the next one will be horrible.

[robby152]

I like to do a family financial review once a month with the wife and specifically review the charts that show a progression of % completion towards our 3 main financial goals. It is very motivating when you can have months that show 6-10% improvement towards a goal, whatever it is. For me, those goals are having 1 year's expenses saved in cash, payoff all debt (all real estate for me) and replace all expenses with passive income. It can help to see your efforts are yielding fruit when you have a rough month and keeps the whole YMOYL 'life energy' tradeoff in the forefront of your mind (i.e. 'this month I wasted a lot of money and it resulted in only a 1% improvement in my goals...that stinks. Next month I am going to do better'). Nothing you aren't already doing, but a lot of this is just endurance in my opinion. But, the closer to the goal I get, the happier I am to trade in time for more progress, as I am closer and closer to actualization of the goal.

[Gilberto de Piento]

March 2014

This month was pretty average. Here's what happened:
1. I found out that I can withdraw from my 457b at any age without penalty. As a result I had $4000 withdrawn from my paychecks in order to fill the 457b as quickly as possible. I'd like to take as advantage of it as I can while I'm with my current employer. My savings rate looks better than it otherwise would be since the 457b dollars are tax free. Right now I'm living off the cash in my checking to get as much money in the 457b as possible.
2. My car was finally fixed. It needed a fuel pump for about $600.
3. I ended up buying "big groceries" twice this month because I didn't last month. My grocery bill is very high but this is offset by it being very low last month.
4. The shopping category is high. I replaced a few things that were falling apart (shower curtain, bath mat, sheets).
5. Cash & ATM is a lot higher than I'd like it to be. It's really a problem that I spend about $200 a month that I mostly can't account for. Is it all drinks? There was a $30 state park sticker. I tried writing it down but I didn't stick to it.
6. The restaurants category is high. I'm starting to notice a problem I need to watch out for at restaurants. My friends are mostly couples and I'm generally flying solo. At the end of dinner people usually put in one card per couple and have the waitstaff divide the bill evenly. Between this faulty math and the fact that I don't order more than one drink with dinner and don't order meat I'm usually subsidizing other people's meals. I appreciate being invited but if this happens a couple of times per month it adds up.
7. Net worth continues to move up. I still have hopes of hitting six figures this year.

Expenses
Alcohol & Bars 15.8
Auto & Transport 589.17
Business Services 17.98
Cash & ATM 210
Charity 10
Gas & Fuel 42.19
Groceries 384.45
Gym 41.15
Mortgage & Rent 940
Parking 6.4
Restaurants 155.38
Shopping 80.17
Television 47.46
Trade Commissions 4
Total -FI 2540.15

Income
Paycheck 198.94
Amazon 84.23
Google 120.29
CD 17.6
Checking 7.2
Gift 25
457b 4000
Total +FI 4453.26

Savings: $1913.11
Net Worth: $81,976.40

I still think something is off in the spreadsheet so the above might be a little weird. Thankfully the details aren't critical.

I'm still working on the long game of more income by increasing my skills:
"Men are anxious to improve their circumstances, but are unwilling to improve themselves; they therefore remain bound."
--James Allen

Thanks for reading!

[Gilberto de Piento]

Big Goal: Six Figure Net Worth This Year

OK, I've come to realize I need a goal, like what I had when I was paying down my student loan, to get me motivated to save more money. Looking at it in terms of percent saved and dollars saved per month isn't working. Here's what I came up with: I'm going to have a net worth of $100,000 by the end of 2014. Right now my net worth is approximately $82,000. That means I need to save $18,000 this year.

It's April 10th so I need to save about $18,000 / 8.66 = $2,079 per month. Looking back through my journal entries I've saved about $1200 per month. That's a huge difference that I'm not really sure I can make up but I'm going to try.

Obviously if the market tanks it won't happen and if the market soars it will be easy. Let's ignore that for now.

Mad Fientist
Side note: I listened to the first two episodes of the Mad Fientist podcast. It was interesting and I'm going to continue listening. If nothing else it was good to hear MMM and confirm my suspicions that he is a normal though successful human and not a self-promoting marketing genius.

Take money from CD or Vanguard?
I've been working on filling up my 457b to the $17,500 limit as soon as possible. In order to do this I've been withdrawing from my savings account so that I can put my entire paycheck into the 457b. My account is dangerously low so in order to keep up this strategy I need to either withdraw money from my 5 year CD which has about two years remaining at 2% and a penalty of 180 days interest lost (about $90) or withdraw from my taxable account at Vanguard (currently about $50 below the $10,000 I put into it). I'm leaning towards Vanguard on a day when it's even with what I put in. What do you think?

[C40]

March 2014

6. The restaurants category is high. I'm starting to notice a problem I need to watch out for at restaurants. My friends are mostly couples and I'm generally flying solo. At the end of dinner people usually put in one card per couple and have the waitstaff divide the bill evenly. Between this faulty math and the fact that I don't order more than one drink with dinner and don't order meat I'm usually subsidizing other people's meals. I appreciate being invited but if this happens a couple of times per month it adds up.

This is crazy... My initial reaction would be to say something like: "hey if I'm going to be subsidizing your dates like this, I'm gonna need the girlfriends to come over a night or two per month"

If they aren't close enough friends to say that to, maybe try this: when the bill comes, put cash on the table covering your meal and tip. The waiter can divide the remaining balance for the credit card users. Problem solved.

[RealPerson]

March 2014

6. The restaurants category is high. I'm starting to notice a problem I need to watch out for at restaurants. My friends are mostly couples and I'm generally flying solo. At the end of dinner people usually put in one card per couple and have the waitstaff divide the bill evenly. Between this faulty math and the fact that I don't order more than one drink with dinner and don't order meat I'm usually subsidizing other people's meals. I appreciate being invited but if this happens a couple of times per month it adds up.

This is crazy... My initial reaction would be to say something like: "hey if I'm going to be subsidizing your dates like this, I'm gonna need the girlfriends to come over a night or two per month"

If they aren't close enough friends to say that to, maybe try this: when the bill comes, put cash on the table covering your meal and tip. The waiter can divide the remaining balance for the credit card users. Problem solved.

+1. Although I am married we face the same problem with our friends ordering fancy wines and big steaks. When the bill comes we take it, add up our expenses, and put sufficient cash on the table to cover our food, tax and tip. The other couple often takes the cash and pays the entire bill by CC. The only drawback is I don't get miles and they get double.

I do wonder a little about those friends, because often our friends offer to pay for their extra expenses and that solves the problem also.

[Gilberto de Piento]

Thanks for all the replies!

This is crazy... My initial reaction would be to say something like: "hey if I'm going to be subsidizing your dates like this, I'm gonna need the girlfriends to come over a night or two per month"

If they aren't close enough friends to say that to, maybe try this: when the bill comes, put cash on the table covering your meal and tip. The waiter can divide the remaining balance for the credit card users. Problem solved.

@C40: That's hilarious, I laughed out loud. I agree that cash would solve the problem but I'm trying not to spend any cash right now because cash is a black hole where about $200 per month disappears. If I don't spend any cash I can figure out where it's going and control it. I feel guilty using the card because the credit card company is then taking a cut.

+1. Although I am married we face the same problem with our friends ordering fancy wines and big steaks. When the bill comes we take it, add up our expenses, and put sufficient cash on the table to cover our food, tax and tip. The other couple often takes the cash and pays the entire bill by CC. The only drawback is I don't get miles and they get double.

I do wonder a little about those friends, because often our friends offer to pay for their extra expenses and that solves the problem also.

@RealPerson: It's good to know that someone else has the same problem. My friends at least do acknowledge that I'm getting screwed and then say they will cover things next time or buy me drinks wherever we go next but it never happens. I think I'm going to keep using the card but have the waiter apply only my expenses to it. My friends will understand even if it means it takes slightly longer for the bill to get sorted out.

457b withdrawals, is that equal payments based on irs actuarial tables, because someone here pointed out the percentage was low, like <3% low.

@Toska: I'm not sure I understand your question about actuarial tables. Right now my contribution to my 457b is my entire paycheck because I can only put in what I make or less. I don't want to do less because I want to take as much advantage of the 457b as I can before I get a new job (if that ever happens).

I'm going to watch the Vanguard account next week and the next time it goes over $10,000 I'm withdrawing it. If it doesn't go over $10,000 I'll withdraw it on Friday.

[C40]

This may work for you, depending on how you track and review your spending:

If you carry a phone, you could keep track of your cash spending with the note utility on my phone. I keep a little note file like this:

APRIL:
Lunch date 15
Gas 38
Groceries 27

Then at the end of the month I enter them in my spreadsheet.

[mxlr650]

My friends at least do acknowledge that I'm getting screwed and then say they will cover things next time or buy me drinks wherever we go next but it never happens.

Do they say this every time? If so, then next time someone promises an future opportunity to do justice, you can declare "I will save you guys the trouble of buying drink in the future, and instead I will pay my share from now on". I would recommend cash like C40 mentioned since it keeps the math and the whole process simple.

I wouldn't consider someone as a friend if they pull this shit with me/DW – that would be the last time I would eat out with them. FWIW, for two of us, our monthly restaurant bill is more like $160 currently and we would like to move towards $120/month.

[Gilberto de Piento]

@Toska: For a long time I thought the 457b was the government version of a 401k - that's the way it was described at work. I found out recently that the 457b that I have access to is actually considered "deferred compensation" not a retirement plan. According to the administrators I can withdraw any amount at any time with no penalty (though I will have to pay tax on any withdrawal). I'd like to post a link to the 457b but I'm trying to stay anonymous here and it would reveal where I work.

[Myakka]

Big Goal: Six Figure Net Worth This Year

Take money from CD or Vanguard?
I've been working on filling up my 457b to the $17,500 limit as soon as possible. In order to do this I've been withdrawing from my savings account so that I can put my entire paycheck into the 457b. My account is dangerously low so in order to keep up this strategy I need to either withdraw money from my 5 year CD which has about two years remaining at 2% and a penalty of 180 days interest lost (about $90) or withdraw from my taxable account at Vanguard (currently about $50 below the $10,000 I put into it). I'm leaning towards Vanguard on a day when it's even with what I put in. What do you think?

Hi there Gilberto,

My opinion is that it is probably a bad idea to overextend to reach your goal. Filling up your 457b is a good idea, but somewhere there is a limit to what it makes sense to do in order to reach that goal. Do what you can, but don't kill yourself over it, if you know what I mean?

Probably, it would make better sense to make some more money somehow. Maybe do some more of those websites like you described above OR maybe see if there is someone out there who might pay you to make websites for them.

Good luck with everything,
Myakka

[Gilberto de Piento]

@Myakka: Thanks for your reply. I'm definitely not killing myself over it. I just need a goal to focus on. It's a good goal: within reach but a challenge.

I'm definitely working on making more money. I'm bored with my job anyway and I think I can make more, maybe a lot more, doing the same thing for a different organization (though I might have to give up some quality of life). I've been studying some topics where I think I'm lacking and looking for the right opportunity.

Unfortunately changing jobs is all wrapped up with moving to another state that I have always wanted to live in. I'm not one for making big changes so it's tough to make it happen.

[Gilberto de Piento]

Don't tell my true believer brothers and sisters over at Bogleheads but I successfully "timed the market" this morning. About three months ago I put $10,000 into VTSAX. Thankfully the account has been hovering around that amount. Yesterday it went above $10,000 to $10,097 so I cashed it out this morning for a 0.97% gain over three months.

I'm withdrawing the money from the taxable account because it will allow me to max out my 457b. I can't put the taxable account money directly into the 457b because I can only invest money there that comes out of my paycheck. I'll be living off the taxable account money for the next couple of months while all of my paycheck goes into the 457b. I won't do this again in the future - it's just a one time process to take advantage of my nontaxable space for the year. Now that I know that the 457b can be used for FIRE I'll max that out each year before making any other investments.

For those following the splitting meals with friends issue discussed in earlier posts, I went out with a group this week and was able to just pay for my own meal. I said that I needed only my purchases on my card with no further explanation and it was fine.

[BennKar]

@Toska: For a long time I thought the 457b was the government version of a 401k - that's the way it was described at work. I found out recently that the 457b that I have access to is actually considered "deferred compensation" not a retirement plan. According to the administrators I can withdraw any amount at any time with no penalty (though I will have to pay tax on any withdrawal). I'd like to post a link to the 457b but I'm trying to stay anonymous here and it would reveal where I work.

Not to derail this too much, but my understanding is/was that a 401k plan is usually considered "deferred compensation" as well (Also referred to as "defined contribution" plans). That's why you don't pay taxes on money going into a 401k as well as monies going into a 457b plan. AFAIK, the main difference between the two is the more restrictive rules regarding when you can access the money in the 401k plan without IRS penalties.

[saving-10-years]

Glad to hear that you have found a way to halt the cross-subsidy of your friends' entertainment budget.