the dude's diary

Where are you and where are you going?
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jennypenny
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Re: the dude's diary

Post by jennypenny » Tue Jul 19, 2016 1:50 pm

El Duderino wrote: So basically, I'll have finally accomplished Jacob's day 1 activity after years of being on this board -- getting a place where my effective rent is a couple hundred a month.
I've always found it funny that moving is jacob's 'day 1' activity, but it's usually the last thing people do after they've done everything else.

Congrats on the move!

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El Duderino
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Re: the dude's diary

Post by El Duderino » Wed Jul 20, 2016 3:41 pm

jennypenny wrote:Congrats on the move!
Thanks Jennypenny! I don't want to get too excited as the property inspection report is only going to arrive tomorrow and closing is ~6 weeks away, but it seems like a solid play for where I am right now. Thinking back to where I was in 2005 when I bought my first house, I feel heaps better about this purchase.

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El Duderino
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August '16 Update

Post by El Duderino » Mon Aug 01, 2016 8:09 pm

The house
Getting seriously excited about closing on this place now that it's just over a month out. I will need to get cranking on this loan paperwork and documentation and keep saving for the down payment. Rates are ridiculously low so it seems silly to not finance it, even though there will be closing costs and hassle. I'm super eager to get started working on all the big and little fixes this place so badly needs. Can't get too ahead of myself though, a plan will be needed or the costs will certainly spiral quickly. The house inspection report came back and, as expected, there are literally dozens of marginal and defective things that need fixing. Mostly small stuff like power outlets, drainage but there is some big stuff like main fuse panels that I'm going to have to suck it up and hire a professional to address.

Work
Relocation to the US has also come with a change to working on a different team. The deal was supposed to be that I'd get to close out my current book of work, but of course that deal got broken at the very first opportunity and now I find myself thrust in the front line of two very high profile projects. The workload is actually pretty daunting with a lot more travel and I'm not really satisfied with how my compensation got mapped over now that I've seen a few paychecks roll through. Time to kick a little ass, make myself indispensable and then, next year, when it's bonus season and performance review, renegotiate terms to a considerably more favorable level or walk. You know, play it from a position of 'fuck you'. :)

--Last month’s spending: $4,366 or 5.9% (of 01-Jul's invested assets on an annualized basis)
I counted my earnest money on the house contract as rent, along with some other housing-ish type costs
Image

-- Assets: $945K
Image

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cmonkey
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Re: the dude's diary

Post by cmonkey » Mon Aug 01, 2016 8:19 pm

Congrats on the new house. I hope it doesn't turn into as big of a time and money pit as mine has. ;)

I also love how you have your graph laid out, very clever!

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singvestor
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Re: the dude's diary

Post by singvestor » Tue Aug 02, 2016 2:43 am

Really pleased to see a majestic octopus inside the graph! :)

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El Duderino
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Re: the dude's diary

Post by El Duderino » Tue Aug 02, 2016 9:30 am

singvestor wrote:Really pleased to see a majestic octopus inside the graph! :)
Quite possibly my favorite creature. So creepy and cool at the same time. I'm sure it'll be TMI for some, but I got a tattoo of Hokusai's The Dream of the Fisherman's Wife done up in a cartoony style a few years ago and I fuckin love it.

Cmonkey, I really enjoy reading your journal of home improvements so in a way if it turns into something resembling that I won't be disappointed.

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El Duderino
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November '16 Update

Post by El Duderino » Mon Nov 07, 2016 1:45 pm

The house
Finally got my housing sorted to a level of ERE-ness. Purchase went through without a hitch and I'm now moved in to a massive, old house (1896 construction) with all the problems of a massive, old house that hasn't been particularly well maintained for the past 50 years. The frugal part of this arrangement is that since the house is considerably run down, I got it for what I think was a good price -- and -- it's divided into sections so there are two rental units so it's not just a spacious residence for myself, it's also producing income that further offsets the purchase price. The only bad news is that I've got projects, fixes and repairs coming out the yin-yang and also a shiny, new 10 year mortgage.

Cars
One of the best parts of moving back to the US has been infinitely more opportunity to tinker with cars. Over the past couple months I picked up a new project car, pretty much completed my other 'main' car to a state of finish that I'm fairly happy with, and just purchased a beater van to haul dirty and big stuff in for the houses. I'm particularly excited to get working on the project car which will be a 70 Opel GT converted to electric, but I've got lots of garage prep to do before that can begin.

Work
Work continues to be a series of urgent daily demands with a dense fog sitting behind it. I've been thinking about my work and career quite a lot. Last year I got my mind blown by the ribbon farm article about the Gervais principal and this year it's been reading the book Jacob recommended on the homepage, The Gamesman. I think there's quite a bit of overlap and it's just really given me some insights into decisions I've made in the past regarding my career and where it may go. I'm clearly a craftsman and my managers are gamesmen and jungle fighters. That explains quite a lot for me.

--Last month’s spending was a record, coming in at just 2.6% SWR. Because of the home purchase, I didn't have a house payment due which made a big difference. Otherwise, I think it would've been 4.6%, which is still great.

George the original one
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Re: the dude's diary

Post by George the original one » Mon Nov 07, 2016 3:27 pm

OK, one of the criteria for successful electric car conversions has always been battery storage space... where the heck are you gonna find space for the batteries in an Opel GT without compromising the range?!?

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El Duderino
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Re: the dude's diary

Post by El Duderino » Thu Jan 12, 2017 10:01 am

George the original one wrote:OK, one of the criteria for successful electric car conversions has always been battery storage space... where the heck are you gonna find space for the batteries in an Opel GT without compromising the range?!?
Hey George, do you know a lot about Opels? I haven't really found a lot of people who even know what it is, so that's cool if you do!

The obvious place to put the batteries are where the gas tank used to be over the rear differential and if needed, extending into the parcel shelf and space where rear seats would be on a full-size coupe. The reason I'm thinking this is going to be a good candidate for conversion is because it's so small and light (even lighter without the iron engine) that it won't take a huge powercell to get the 100 miles of range I'll be shooting for if I use a pack of lithium cells instead of the lead-acid type.

I'll create a build thread about this project here if people are interested.

halfmoon
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Re: the dude's diary

Post by halfmoon » Thu Jan 12, 2017 10:18 am

El Duderino wrote:I'll create a build thread about this project here if people are interested.
Count me interested. Per Google, there seem to be a number of people out there doing this conversion or thinking about it. Are you going to buy a kit or do it from scratch? Looks like these people http://opelev.com/ did a lovely conversion for $15,000. :shock: Surely there must be a cheaper route?

George the original one
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Re: the dude's diary

Post by George the original one » Thu Jan 12, 2017 4:57 pm

El Duderino wrote:Hey George, do you know a lot about Opels?
Not enough to be of help. I can probably dig up an article or two about them as project cars, though. Lithium batteries will definitely resolve the space issue; I was afraid you were looking at lead acid! If it helps, I know John Wayland and Marko Mongillo: http://www.plasmaboyracing.com/index.php and http://www.nedra.com/wayland.html
I'll create a build thread about this project here if people are interested.
Definitely create a thread!

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El Duderino
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Jan '17 Update

Post by El Duderino » Thu Jan 12, 2017 7:54 pm

Last few months
Have been a wild ride. I do enjoy keeping this journal up to date, but it just hasn't been feasible given the activity recently. I took the second half of November and went to Asia for a few weeks on holiday. Great trip and some much needed down time from the house work and job.

House
Getting moved into the place was a chore, mostly because of the additional cleaning I've had to do. The previous owners didn't really take great care of the home so I'm getting familiar with the surroundings gradually. Part of that is plotting out the house into Sketchup so that I can create a 3d model and use it for design, fab, materials estimation, visualization, you name it. I'd work on this place 24/7 if it weren't for the day job. A tenant moved out this week from one of the units so I can fix a few issues, clean the place up a bit and hopefully get a good tenant in there quickly.

Work
I got a mediocre rating for the year on my performance review. What I can't figure out is if that's because I'm overestimating my contribution and work effort or if I'm being underappreciated because I make it look too easy. When it comes down to it, it's probably a good thing if I don't get a raise or even a bonus this year because it'll just be further encouragement to cut the cord and do my own thing sooner than later.

Numbers
Charts are looking pretty good. My spend for the past few months from September has been less than 7% with two months under 5%. I inched over a million in net worth at the end of December, so that made the prosecco taste all the better at the NYE party. I'm still concerned it's not yet enough to comfortably retire on, though I did see a new interview recently with MMM where he said that when he retired, he 'only' had $600K invested and a paid for house.

Image

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C40
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Re: the dude's diary

Post by C40 » Thu Jan 12, 2017 8:22 pm

Yeah, that's a nice way to end the year - as a millionaire. You're so loaded! You might need to change your name to a different character from The Big Lebowski. Will it be "Big Lebowski", or maybe "Jackie Treehorn"?

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Dragline
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Re: the dude's diary

Post by Dragline » Thu Jan 12, 2017 9:29 pm

C40 wrote:Yeah, that's a nice way to end the year - as a millionaire. You're so loaded! You might need to change your name to a different character from The Big Lebowski. Will it be "Big Lebowski", or maybe "Jackie Treehorn"?
Or maybe: https://www.youtube.com/watch?v=l91ISfcuzDw :lol:

mxlr650
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Re: the dude's diary

Post by mxlr650 » Fri Jan 13, 2017 2:25 am

C40 wrote:Yeah, that's a nice way to end the year - as a millionaire. You're so loaded! You might need to change your name to a different character from The Big Lebowski. Will it be "Big Lebowski", or maybe "Jackie Treehorn"?
Karl Hungus?

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El Duderino
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Feb '17 Update

Post by El Duderino » Wed Feb 15, 2017 5:18 pm

Simplicity
In a continual drive to make life easier, I decided to finally shutter some accounts and attempt to converge on a simpler banking process. I was using 6 different institutions for checking and savings, 4 different credit cards and 5 debits cards and it was all a mixture of pounds and dollars. The spreadsheet was daunting (and still is). Over the next few months I hope to pare this down a bit more and rationalize things as much as possible. I actually think it was hurting my credit score a bit because when I applied for a car loan in Jan the score came back surprisingly low. Didn't prevent me from getting a decent rate and it'll be paid off today, but it was an eye opener.

House
This new place just keeps on getting better and better. The latest doings have included ripping down the rest of the kitchen ceiling and cleaning out the other half of the garage to make way for more self-awarded trophies with wheels. The demolition in one of the upstairs bathrooms will commence shortly. One real constraint is that I can only throw away a certain amount of waste materials each week as part of normal trash collection so taking out all the drop ceilings at once, for example, just isn't feasible, though it'd do me a great deal of good. I hate the Eagles' music and drop ceilings.

It seems it's going to take a bit longer to get one of these other units fixed up and into a rent-able state; an income stream that won't likely happen until April or May. Not wanting to half-ass it too much, instead I'll putter around and become susceptible to lots of indecision and planning. This is where the fallacy of overvaluing cost of repairs and undervaluing the foregone income comes to play. The upside is that the final product will be absolutely to spec.

Image

Investable Assets
The markets have been on an absolute rip, which would normally lead me to be fairly distrustful, but then I readthis article summing up 2016 and, despite the overwhelming pessimism, he's got some great points. The stuff about ZIRP and NIRP and how we may be moving to a cashless system in the name of fighting a new 'war on...' seems to be the trend. Maybe we're already so entrenched in using digits instead of hard currency and things like the derivatives markets are so large that it's already too late. I don't understand how holding gold is a great AA or even a hedge. Unless you've got a safe and the means to protect it of course but if it came to that (aka, WTSHTF) wouldn't things like non-perishable food and water be more valuable?

The other side of the numbers is that I had a decently low-spend January, coming in at 4.5% SWR. Re-classifying the principal on the mortgage as an 'investment' rather than putting it down to my 'rent' category definitely made a big difference, though it would have still been in the 4% realm.

There seems to be a lack of consensus as to how SWR is figured in this community, so permit me to explain how I do mine. Obviously, I sum up expenses over the month and multiply by 12 to give a yearly spend figure. The question is what to use as the denominator. Now, I just look at my invested assets (IA) rather than total assets or net worth. The major difference for me is that IA doesn't include the values of property owned, even if it's a rental property and not just a primary residence (even though my primary residence is rent earning). As a percent of net worth, which is really just IA + property value + cash on hand, my SWR is 2.7%.

Retiring
If I were reading this journal, I'd probably be thinking -- 'Wtf, Dude, why are you still working?' I read other people's journals and I see how they're counting down to the point when they can cut loose with admirable enthusiasm. Lots of fire in bellies.

Truth is, I'm shit-scared that something will happen and I'd have to admit I was wrong to leave work so early and I'd have to go back to a job and earn money. Going back after leaving is a lot harder because I'd no longer have the cushy job I've carefully engineered. So, I've decided to bear with it for a bit and determining the exit point is proving to be harder and harder as time goes on. There's just no burning platform. Yes, I'd definitely like to have a lot more free time to pursue romance, leisurely reading, train BJJ, play guitar and most likely spend loads of energy working on this old house and my cars (particularly the electric Opel project I've barely started). However, whenever I get serious about planning those things out, I realize just how much money that will take (mostly on the house and car side of things) and it gets scary. Also, I like to travel and I haven't worked out a budget that would allow me to travel as I do currently and still be _safely_ retired. Basically, I don't know if I trust myself enough to operate on a budget and when you add in the volatility of markets and uncertainty of returns or catastrophe, I get worried. As a very risk averse person, I'm certainly being overcautious here. My hard stop is that I will not be 40 and still working so that gives me 2.5 years more of asset accumulation. By that point I hope to have a moving average SWR of <3% with a mountain of dry powder on reserve.

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Gilberto de Piento
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Re: the dude's diary

Post by Gilberto de Piento » Wed Feb 15, 2017 10:32 pm

However you calculate the SWR you are doing great. I don't blame you for staying at it a little longer. Things feel unstable right now.

As a side note, does everyone here do BJJ? There's a place down the street from me, maybe I should try it. I already have too many athletic hobbies though.

Jason
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Re: the dude's diary

Post by Jason » Thu Feb 16, 2017 8:50 am

Great job.

Very inspiring.

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El Duderino
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Re: the dude's diary

Post by El Duderino » Fri Mar 31, 2017 11:12 am

Gilberto de Piento wrote:
Wed Feb 15, 2017 10:32 pm
There's a place down the street from me, maybe I should try it.
Do it! Really good bang for the buck fitness. I didn't realize it's possible to have too many athletic hobbies, you must be doing well!
Jason wrote: Great job.
Thanks man!

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El Duderino
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May '17 Update

Post by El Duderino » Thu May 04, 2017 6:15 pm

It's been a while since my last update, so this one may be a biggie. Strap it on and brace yourself or run for cover.

The Dude's Deal
I've found a new favorite game and I'm calling it 'the deal'. The whole thing is based on some fuzzy math that I did a few years back.

For every dollar you have invested, you can spend a hundredth of one cent per day. $100 = $.01; $10,000 invested = $1 per day. It roughly correlates to a continually compounded 3.5% SWR. The reason it's interesting to see this on a daily basis is because that's where spend control starts, day by day, just like counting calories.

The game starts with figuring up invested assets at the beginning of a month and divide by 10,000. That gives an indication of how many dollars (euros/RMB/bhat) a day one gets to spend. Let's call that the allocation. Then, track everything spent each day, subtracting each amount from the running total. Every day, the allocation is earned and goes as a positive to the running total. If too much is spent, then you go into negative numbers until caught up. Simple, right?

Okay, maybe I'm the only one who likes figuring numbers in their head like this, but on this board, I think probably not.

Right now I'm +18.11 and if I don't spend any money this evening, I'll be at +118.11 tomorrow morning. I was down to -500 at one point because I had to fork out some money for insurance and a wedding gift. It took a while to recover from that, but those are very infrequent occurrences after all.

So far, it's proving helpful to curb my spendiness because I know with great certainty if I'm running ahead or behind. I've only been using it since April 15th, so I'm not going to be posting stellar numbers for last month, but they would've been much worse without this system in place so I'm excited for next month to come around. Plus, it encourages saving up a surplus for an item so that there isn't any guilt or buyer's remorse for money spent on worthwhile things.

The really nice thing about this is that while still in the wealth accumulation phase, one is not actually drawing down from the investment account, rather using it as a gauge for what a realistic level of spending could be. If you can adjust to that level of spend, it should prove out your readiness to quit the day job. And, after one has left, it provide an automatic way to moderate spending down or up according to how your portfolio is doing.

The Numbers
Looking pretty decent. Last month's SWR would've been 4.9% of net worth or 7.1% of invested assets.
Image

Wheaton Level
Jacob posted this somewhere and it really got me thinking. I've highlighted where I think I fit, though I do acknowledge it's meant to be a level thing, not a pickem list.
Image

Electric Opel GT Project
Haven't even really started this. More to come, but here's what it looks like not, just sitting in the garage taking up valuable space that could be used for a meth lab.
Image

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Fish
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Re: May '17 Update

Post by Fish » Sat May 06, 2017 1:00 am

El Duderino wrote:
Thu May 04, 2017 6:15 pm
For every dollar you have invested, you can spend a hundredth of one cent per day. $100 = $.01; $10,000 invested = $1 per day. It roughly correlates to a continually compounded 3.5% SWR. The reason it's interesting to see this on a daily basis is because that's where spend control starts, day by day, just like counting calories.
Thanks for sharing this. I really like this concept as it makes daily expenses more meaningful even with high NW. I've played a variation of this game where I first subtract off fixed expenses (property taxes, insurance, utilities) and the remainder becomes the daily budget for variable expenses (food, entertainment). You can also encourage paid work by allowing earned income to increase the budget after subtracting off a portion to meet a target savings rate. And the budget doesn't even need to be based on actual NW, it could be target FIRE spending or some similar goal.

Then I saw what you did with the Wheaton table... :shock: :? It's just a matter of time before it's printed on t-shirts, posters and toilet paper.

SustainableHappiness
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Re: the dude's diary

Post by SustainableHappiness » Mon May 08, 2017 9:07 am

Cool graphs, car and charts. I drank many white Russians this weekend. Ended up running out of Kahlua and drinking vodka and chocolate milk...so classy, so dude.

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El Duderino
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Re: May '17 Update

Post by El Duderino » Mon May 08, 2017 5:43 pm

Fish wrote:
Sat May 06, 2017 1:00 am
I really like this concept as it makes daily expenses more meaningful even with high NW. I've played a variation of this game where I first subtract off fixed expenses (property taxes, insurance, utilities) and the remainder becomes the daily budget for variable expenses (food, entertainment). You can also encourage paid work by allowing earned income to increase the budget after subtracting off a portion to meet a target savings rate. And the budget doesn't even need to be based on actual NW, it could be target FIRE spending or some similar goal.
Good point! I'm now basing mine off just the investment portfolio, less the fixed expense overhead. Will be interesting to see what May's spend comes in at.

@ SustainableHappiness: Doesn't sound half bad to me, when you're in a pinch, that is. Certainly no worse than Yoohoo with rum.

SustainableHappiness
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Re: the dude's diary

Post by SustainableHappiness » Tue May 09, 2017 6:12 am

Hmmm... Yoohoo has yet to make it up to the Great North Canadia. I will have to look for it the next time I am in the states! Keep on rockin'.

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El Duderino
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June '17 Update

Post by El Duderino » Thu Jun 01, 2017 6:09 pm

Per Diem
https://www.youtube.com/watch?v=fXcIZFeYivQ

The Dude's Deal is trucking along quite nicely! My spending was a record low last month and instead of being absolute deprivation like it could've been (hello, January), it was actually kinda fun counting my dollars each day. I ended the month up by over $180 but I did cheat and create a separate category for house improvement expenses (more on that later). My effective SWR ended up being just 4.71% with the house expenses thrown in and a superb 3.1% if those are left out. Really happy with how this is turning out so far and the best part is that it'll scale and could be applicable to pretty much anyone at this stage in their FI life.

The Numbers
As above, looking pretty cherry. Last month's SWR would've been 3.3% of net worth or 2.1% of nw if the house expenses are excluded.
Image

Madison
Stuff fixed up around the rental property #2 this month includes the following:
  • removed ridiculously gaudy paneling and painted a few walls in the entryway and living room
  • installed fluorescent lighting in the garage
  • removed a bunch of junk from flat 3, which is vacant currently, awaiting repairs to the kitchen and bathroom
  • dug most of a 40 foot trench that will help out with the garage and house water seepage issues
  • additional areas of the lawn seeded
  • 2/3 of the way through tree trimming (probably the biggest job of all, next to the trench)
  • remainder of the garage is cleanswept
My big dilemma right now is whether to be patient and work through the exterior fixes like the gutters and grading around the garage and house, then hit the kitchen/bathroom renovations - or - bring in a contractor to do some of the renovation work straight away. The income from the unit renting would more than justify the cost of the repairs, but if I wait, then I get the experience and save heaps of $$$ at the expense of losing a few months of rent. Right now, I'm getting quotes from contractors and deciding the extent of the work to be performed and materials needed. The dude is a lazy man, so paying somebody to do it is appealing, but he's also a frugal sumbitch so it hurts to pay another person to do a simple enough job.

Electric Opel GT Project
No progress, unless you count dropping a hammer on the rear quarter panel while hanging lights in the garage, which is, technically, negative progress.

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