Gilberto de Piento's Journal

Where are you and where are you going?
Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

I listened to a podcast about taxes last night just as background noise and it occurred to me that I haven't really done any thinking about taxes. Two things I need to do:
1. Account for taxes in my calculations for when I am financially independent. I will be further away from the goal line once I account for taxes since the necessary withdrawals will be in the 10% and 12% brackets except for any dividends. :(
2. Research if I should be investing differently or otherwise doing a better job of avoiding taxes. It seems very complicated since I don't have a very specific plan and I have a partner who is on a different path.

Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

March 2021

The good:
- Net worth (not just FIRE assets as shown in the chart below) is now over $0.6 million (note the use of millions - someone recommended that earlier in this journal and I like it :mrgreen: )
- Received a stimulus check and tax refunds from the government
- The stock market went wild again

The bad:
- I spend $324 repairing / maintaining my car
- I spent $600 on a touring bicycle. I definitely did not need this but it was something I wanted and one became available. It should hold its value well enough and I will probably sell some other bike stuff to offset part of the cost. #YOLO, aspirational purchase on this one. :roll:
- I paid for online tax prep twice

Despite my previous post I haven't looked into taxes yet. I fear that once I account for that in my planning I will be feeling far from FI again. Same for healthcare.

Haven't been able to find and purchase a "unicorn" car yet. Still looking. Need to check websites more often and move faster when one seems to meet my criteria but also be patient.

Expenses
Auto & Transport 324.41 (Parts to repair / maintain car, gas)
Auto Insurance 28.87
Bills & Utilities 149.26 (A little high)
Business Services 33.98
Charity 30
Entertainment 14.38
Fast Food 7.22
Groceries 322.75 (A little high)
Gym 46.95
Home Improvement 1.04
Mortgage & Rent 790.73
Restaurants 4.02
Sports 600 (Bought another bicycle)
Taxes 424.98 (200 is monthly property taxes. The rest is online tax prep by both HRBlock and TurboTax. See earlier posts.)
Total -FI 2778.56

Income
Paycheck 2664.28
Amazon 24.98
CafePress 26.18
Checking 2.62
Gift 100 (Payment for work)
457b 1500
Taxes 1812 (1400 is a federal stimulus payment, the rest is federal and state tax refund)
Total +FI 6130.06

Savings 3351.51
Savings wo 457b 1851.51

% Spent 45.3%
% Saved 54.7%

SWR 7.6%
SWR with Internet Income 7.4%

Years Remaining 13.3 (way up due to high monthly expenses)
Year Remaining with Interest 5


Any idiot can face a crisis - it's the day-to-day living that wears you out.
Anton Chekhov

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Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

It wasn’t burnout — we still had energy. It wasn’t depression — we didn’t feel hopeless. We just felt somewhat joyless and aimless. It turns out there’s a name for that: languishing.
https://www.nytimes.com/2021/04/19/well ... shing.html

El Duderino
Posts: 177
Joined: Mon Oct 27, 2014 12:24 pm

Re: Gilberto de Piento's Journal

Post by El Duderino »

Gilberto de Piento wrote:
Tue Apr 06, 2021 1:38 pm
The good:
- Net worth (not just FIRE assets as shown in the chart below) is now over $0.6 million (note the use of millions - someone recommended that earlier in this journal and I like it :mrgreen: )
Hey Gilberto, fantastic to see the progress you've made, kudos!

What's this stuff about a unicorn car? I am intrigued!

Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

El Duderino wrote:
Wed Apr 28, 2021 11:42 am
Hey Gilberto, fantastic to see the progress you've made, kudos!

What's this stuff about a unicorn car? I am intrigued!
Thanks, I appreciate it! "Unicorn" is just shorthand for something that is really difficult, probably impossible to find. A unicorn for me would be a car that has relatively low miles, is rust free, built within the last 10 years, able to haul a lot of stuff, doesn't get terrible gas mileage, and not very expensive (that's the tough part, it would be easy to go to a car dealer and buy a nice minivan for $20,000).

Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

April 2021

Spending was up a little due to a car problem, going to the doctor, and a lot of driving I couldn't avoid.

The market is still going crazy so the net worth is looking good. It's felt like a bubble for years but I'm just not thinking about it now. I'm not sure what else to do.

I'm still thinking about how to account for taxes in my calculations. Right now my time to retirement is optimistic because it doesn't account for taxes on part of the income I will need.

I decided I don't need to adjust my projections for the portion of my FIRE income that will come from a 401k. I can access that money with no penalty using one of various loopholes that people have worked out. I knew about this but hadn't researched it much before. It won't be as clean as being able to withdraw the money directly but at least I can get to it.

Expenses
Alcohol & Bars 41.52
Auto & Transport 157.72 (Car problem that thankfully was easily repaired)
Auto Insurance 28.87
Bills & Utilities 137.39
Business Services 52.15
Doctor 165
Entertainment 14.91
Fast Food 12.01
Gas & Fuel 130.62 (Unfortunately had to do a lot of driving)
Gift 21.43
Groceries 244.03
Gym 46.95
Home Improvement 14.2
Mortgage & Rent 790.73
Shopping 58.59
Taxes 200
Total -FI 2116.1

Income
Paycheck 2664.29
Checking 2.82
457b 1500
Total +FI 4167.11

Savings 2051.01
Savings wo 457b 551.01

% Spent 50.8%
% Saved 48.2%

SWR 5.6%
SWR with Internet Income 5.6%

Years Remaining 3.7
Years Remaining with Interest 2


Worrying is like praying for what you don’t want.
Anonymous

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not sure
Posts: 141
Joined: Fri Feb 05, 2021 2:34 pm

Re: Gilberto de Piento's Journal

Post by not sure »

some good reads on tax strategies in early retirement here:
https://www.madfientist.com/archives/

Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

not sure wrote:
Tue May 04, 2021 11:44 pm
some good reads on tax strategies in early retirement here:
https://www.madfientist.com/archives/
Thanks! I will check it out.

Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

May 2021

A good month for finances. Passed $450,000 in FIRE assets. Relatively low spending. Made a little unexpected money for helping someone with a project. Savings rate around 55%, SWR around 5%.

Doing some personal development. Word of the year is "focus." Trying to follow The ONE Thing book by focusing on the most important tasks. Having some success, not as disciplined as I should be. Not sure where to draw the line. Want to live life and have some fun but also have success at accomplishing my long term goals. Right now having very little fun and also not feeling like I am having much success.

Also trying to take care of my own problems and let other people sink or swim on their own: "Not my circus, not my monkeys."

Expenses
Alcohol & Bars 22.66
Auto Insurance 29.11
Bills & Utilities 125.69
Business Services 73.32 (Websites renewed)
Doctor 25
Entertainment 7
Fast Food 37.68 (Travelling)
Gas & Fuel 68.32 (Travelling)
Groceries 282.78
Gym 46.95
Health & Fitness 17.99
Home Improvement 11.74
Mortgage & Rent 790.73
Restaurants 22.39
Shopping 146.92 (Had to buy some household items)
Taxes 200
Total -FI 1908.26

Income
Paycheck 2664.28
Checking 2.83
Gift 322.5 (More of a payment for helping someone)
457b 1500
Total +FI 4489.61

Savings 2581.36
Savings wo 457b 1081.36

% Spent 42.5%
% Saved 57.5%

SWR 5.1%
SWR with Internet Income 5.1%

Years Remaining 1.7
Years Remaining with Interest 1


Practice isn't the thing you do once you're good. It's the thing you do that makes you good.
Malcolm Gladwell

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Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

June 2021

This entry is coming about a month and a half late. I had to dramatically narrow my focus for a little while and I intentionally let the financial calculations and journal slip temporarily.

I spent a lot this month but I think all of the big expenses were necessary to live the life I want / take care of my body. I bought a car and it cost me just over $8000 including taxes, license, etc. The used car market is really tough right now with high prices and few cars. I've been seriously looking for a year and finally found one that I wanted that I was also able to get ahold of before someone else beat me to it. After all that searching and spending more than I would have liked I still didn't get a perfect car or one im particularly excited about. It has low mileage though and is considered a reliable model. Very practical, no rust, good gas mileage. I'm excited about this since I haven't been doing road trips in recent years in part because I was concerned my car might break down in the middle of nowhere (I'm risk averse). Road trips are something I really miss and I feel like an important building block of my overall happiness is absent without them. There are other barriers but least the car won't be holding me back now. I already sold my old car but that happened in July so I'll cover the sale in next month's journal entry.

I also had some expensive doctor bills to work on an ongoing issue. My phone plan renewed for another year and there were some pricey "bills & utilities" I'd rather not get into.

Some of the calculations and charts below don't make sense for this month due to the very high spending.

Expenses
Auto & Transport 8163.67 (car, taxes, license, carfax, etc.)
Auto Insurance 29.11
Bills & Utilities 343.78 (part of this is an unusual expense that doesn't really fit anywhere - it best fit here.)
Business Services 33.98
Doctor 409.52 (doctor worked on an issue)
Entertainment 14.91
Fast Food 19.95
Gas & Fuel 62.35
Groceries 311.71
Gym 46.95
Home Improvement 205.48 (some house projects)
Home Insurance 28.04
Mobile Phone 250.92 (phone renewed for another year)
Mortgage & Rent 790.73
Pharmacy 20
Restaurants 17.94
Shopping 175.56 (miscellaneous necessary purchases)
Taxes 200
Total -FI 11124.56

Income
Paycheck 2615.74
Checking 1.65
Gift 322.5 (got paid to help someone with a project)
457b 1500

Total +FI 4439.89
Savings -6684.68
Savings wo 457b -8184.68

The percentages and numbers that usually appear here don't make any sense due to the high spending so I'm excluding them this month.

The purpose of computing is insight, not numbers.
Richard Hamming

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steveo73
Posts: 1733
Joined: Sat Jul 06, 2013 6:52 pm

Re: Gilberto de Piento's Journal

Post by steveo73 »

Some nice looking charts there.

Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

steveo73 wrote:
Thu Aug 12, 2021 10:46 pm
Some nice looking charts there.
Thanks SteveO!

Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

July 2021

July was another unusual month. It was a three paycheck month so I brought in about 50% more money than usual. I sold the old car for about $2000 and also had some other unexpected income. I also didn't spend a lot. The extra income and low spending resulted in some monthly numbers that look great! :o

Don't get too excited though as one month of exciting numbers doesn't mean I can quit my job. A record high 80% savings rate and a 4.4% SWR is fun anyway so I'm trying to celebrate it a little. The first chart with the blue, red, yellow, and green lines is probably the best thing to use to see how I'm really doing since it displays one year rolling expenses rather than one month expenses. That said, since last month's car purchase is included in the calculations that chart looks odd too! :lol: The finances are rolling along but the numbers and charts don't capture it very well right now. Some additional context and thinking is necessary to understand the situation.

Expenses
Auto & Transport 5 (ad to sell car on craigslist)
Auto Insurance 29.11 (monthly car insurance cost)
Bills & Utilities 165.79 (a little high due to air conditioning and higher water use)
Business Services 33.98
Entertainment 14.91 (two video streaming services, one has been cancelled now that we've watched everything of interest)
Fast Food 7.42
Gas & Fuel 27.58
Groceries 255.91
Gym 28.49
Home Improvement 27.83 (it never ends!)
Home Insurance 28.04
Mortgage & Rent 790.73
Pharmacy 12.13
Shopping 82.96 (miscellaneous purchases, this category is going to be higher than usual for awhile)
Taxes 200 (approximate monthly property taxes)
Total -FI 1709.85

Income

Paycheck 4078.26 (three paycheck month!)
Internet Ads 29.7
Checking 1.47
Gift 2475 (2200 is selling the old car, rest is actual gifts)
457b 2250 (three paycheck month)
Total +FI 8834.43 (much higher than normal income)

Savings 7124.58
Savings wo 457b 4874.58

% Spent 19.4%
% Saved 80.6% (record high savings rate)

SWR 4.4% (record low withdrawal rate due to low spending and record high FIRE assets)
SWR with Internet Income 4.3%

Years Remaining -0.4 (The spreadsheet is set to use 4.5% as SWR for this calculation so it thinks I am financially independent for this month so this number is weird. Maybe I will set it to 4% for consistency with the charts. I think 4.5% is how the spreadsheet was set when I copied it from another forum member, not something I decided to do.)
Years Remaining with Interest 0 (same thing for this number)


It is good to have money and the things that money can buy, but it's good too, to check up once in a while and make sure you haven't lost the things money can't buy.
George Lorimer

Note the spike in rolling expenses from last month's car purchase:
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El Duderino
Posts: 177
Joined: Mon Oct 27, 2014 12:24 pm

Re: Gilberto de Piento's Journal

Post by El Duderino »

Gilberto de Piento wrote:
Thu Apr 29, 2021 11:04 am
"Unicorn" is just shorthand for something that is really difficult, probably impossible to find.
Unicorn is right! I'd add to your list the condition that it doesn't have some inherent engineering flaw in the drivetrain or chassis that is a ticking time-bomb or something like that. Very tough to find from my experience as those sort of 'bullet-proof' cars often hold their value extremely well and engineering is sufficiently advanced that most vehicles are almost designed to have a finite lifespan.

So.... what did you end up getting? I'm super curious as I'm sure you did tons of research and analysis before making your decision.

El Duderino
Posts: 177
Joined: Mon Oct 27, 2014 12:24 pm

Re: Gilberto de Piento's Journal

Post by El Duderino »

steveo73 wrote:
Thu Aug 12, 2021 10:46 pm
Some nice looking charts there.
+1 Can you share how you did the 'rolling 12 months expense and withdrawal rates forecast' report specifically? How did you extrapolate the trend lines for the SWR?

Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

El Duderino wrote:
Thu Aug 19, 2021 12:06 pm
Unicorn is right! I'd add to your list the condition that it doesn't have some inherent engineering flaw in the drivetrain or chassis that is a ticking time-bomb or something like that. Very tough to find from my experience as those sort of 'bullet-proof' cars often hold their value extremely well and engineering is sufficiently advanced that most vehicles are almost designed to have a finite lifespan.

So.... what did you end up getting? I'm super curious as I'm sure you did tons of research and analysis before making your decision.
I wish I was comfortable talking about all sorts of things on this forum in great detail but I often have to leave out information because I'm worried about being outed in real life and it causing problems due to the way people behave regarding money. I just don't like people knowing my financial business because I have seen the way people act when they think they might be able to mooch some cash or are just resentful. The specific car I bought will have to remain unstated for this reason but it is similar to a Fit. I know you are a car guy and the story how I ended up with this specific car and how it worked out would make for a fun discussion so sorry about that.

The condition you suggested is a good one and something I was considering too. I didn't raise it to the level of requiring something with a strong reputation as bulletproof (Example: Ford 7.3L diesel) but I did try to avoid any model that had a common flaw. I have had some cars with fatal flaws that I had to deal with (low mileage GM 3400 intake fails and mixes coolant into the oil, low mileage Subaru 2.5L headgasket fails) and I feel like I avoided any problems like that. Any car can fail though so we will wait and see what happens. At least if I have to wrench on it I won't have to deal with rust.

Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

El Duderino wrote:
Thu Aug 19, 2021 12:09 pm
+1 Can you share how you did the 'rolling 12 months expense and withdrawal rates forecast' report specifically? How did you extrapolate the trend lines for the SWR?
Note that I got the concept for that chart from another journal here. I'd like to give them credit for their idea but I am not finding that journal right now.

I have a spreadsheet where each column is a month. In that spreadsheet are five rows that are part of this chart: date, rolling 12 month expenses, 5% withdrawal rate, 4% withdrawal rate, and 3% withdrawal rate. The sheet goes from 11/1/2013 to 9/1/2028 to capture my earliest data through the end of the 3% projected trendline. All five rows have values calculated through 8/1/2021. After that only the date and the rolling 12 month expenses values have been calculated and the other cells are blank. The rolling 12 month expenses values just repeat the most recent value after 8/8/2021 since we don't know what those values will be yet because it hasn't happened (that is why the blue line becomes a straight line after the most recent month). The red/yellow/green semitransparent lines are added by google sheets added by checking the trendline box in the chart editor. The values of these lines are not actually present in the spreadsheet. I have the trendlines set to polynomial since it seemed to produce a line that best matched the trend in the historical data.

I hope this description makes sense. It is just one way of creating a chart like this, there are tons of other tools to use and calculations to choose. If someone has a better idea please let me know, I'm happy to learn though I don't have much time to make changes to the spreadsheet now.

El Duderino
Posts: 177
Joined: Mon Oct 27, 2014 12:24 pm

forecasting

Post by El Duderino »

that explanation does make sense, thanks Gilberto.

Understood on the details, I totally get you on that too. Last thing we want to do here is make ourselves targets for scammers and sponges. Glad you found a new ride!

Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

August 2021

Another unusual month with high expenses. Hoping the financials settle down soon.

Expenses
Auto Insurance 67.02
Babysitter & Daycare 1387.5 (Three months paid ahead.)
Bills & Utilities 115.88
Business Services 33.98
Doctor 31.65
Entertainment 7
Fast Food 32.75
Gas & Fuel 33.22
Groceries 370.98 (Higher than I would like.)
Gym 28.49
Home Improvement 11.81
Home Insurance 28.04
Internet 45 (Need to sign up for a different service, should be able to upgrade to fiber for less than I am spending now but it is a hassle to swap. Also, this sometimes gets included in Bills & Utilities because Mint doesn't always classify it correctly and I don't catch it.)
Kids 510.65 (Assorted necessary purchases. Could probably do some of this cheaper but trying to maintain sanity. :lol: )
Mortgage & Rent 790.73
Restaurants 29.5
Taxes 200 (Monthly property taxes.)
Total -FI 3724.17

Income
Paycheck 2664.29
CafePress 26.47
Checking 1.54
457b 1500
Total +FI 4192.3

Savings 468.13
Savings wo 457b -1031.87

% Spent 88.8%
% Saved 11.2%

SWR 9.3%
SWR with Internet Income 9.3%

Years Remaining 56.5
Years Remaining with Interest 10


The things that come to those who wait are the things that are left behind by those that got there first.
Anonymous

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Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Gilberto de Piento's Journal

Post by Gilberto de Piento »

September 2021

A solid month with relatively low spending. The market is down slightly but the numbers still look good.

It definitely feels like fall now. The yard clean up tasks are in full swing. There is lots of dead plant material to clear away. In earlier years I've tried to compost it but there is just too much for the space I have. The leaves compost well but the woody material stays around forever and makes it impossible to stir the compost. I'm going to put the sticks out for the county to haul away when the truck comes around. It ends up composted that way too but I would really like my land to be self contained. I can't let the perfect be the enemy of the good because I only have so much time and energy to fight these things.

I'm always trying to walk the line between overhelping and letting people I care about flounder and collapse. Sometimes this means limiting my help, sometimes it means providing emotional and decision-making support only, sometimes it means thinking "not my circus, not my monkeys" as they punch a hole in the bottom of their own boat. Right now I am again spending a little too much time, energy, and thinking on what are really other people's problems. I need to rein myself in and let the chips fall where they may.

I have been refining some "guiding principles" that I look at every day. For example, I have one that says "Help yourself before helping others. Make people ask for help." Unfortunately so far I have been reviewing the guiding principles but not doing a very good job of following them.

Similarly, I have a list of big goals with steps I'm supposed to be accomplishing to get me to those goals. Unfortunately I have less time and energy than I've ever had as well as more repetitive tasks that don't work toward the goals than ever. I also just forget to actually work on the steps even though I look at the list every morning. I think the problem is that I look at the list and then have to do my day job so I forget about it by the time I am free. I should start to look at it every day after work instead.

I've been grasping at straws trying to make things easier and am halfheartedly considering a robot vacuum. They sometimes show up on craigslist barely used when they don't work out for other people. I suspect one also won't work out for me since they have some significant downsides like needing to be emptied every day, noisy, don't get into tight spaces, etc. Friends swear by them though as a way to keep things under control between sweeping. Probably a waste of time and money and definitely against the ethos of this forum but it keeps crossing my mind. :roll:

I need to start thinking about 529 plans. College prices are going up so fast :shock: the amount I'm going to have to save is going to really mess with my finances. College in general is a f'd up system and is only getting worse.

Expenses
Alcohol & Bars 35.85 (Stocked up on beer)
Auto & Transport 23.68 (Needed a part)
Auto Insurance 45.56
Bills & Utilities 118.39
Business Services 34.98
Charity 34.8 (Afghan refugees)
Doctor 34.48
Entertainment 7
Groceries 192.41 (Low)
Gym 28.49
Home Improvement 13.11
Home Insurance 28.04
Internet 45
Kids 112
Mortgage & Rent 790.73
Restaurants 45.28 (High)
Taxes 200
Total -FI 1789.77

Income
Paycheck 2615.74
Checking 1.19
457b 1500
Total +FI 4116.93

Savings 2327.17
Savings wo 457b 827.16

% Spent 43%
% Saved 57%

SWR 4.6%
SWR with Internet Income 4.6%

Years Remaining 2.1
Years Remaining with Interest 1


The reason we struggle with insecurity is because we compare our behind-the-scenes with everyone else's highlight reel.
Steven Furtick

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