the dude's diary

Where are you and where are you going?
cmonkey
Posts: 1790
Joined: Mon Apr 21, 2014 11:56 am

Re: the dude's diary

Post by cmonkey »

Wow you are quite a bit farther than I am with accumulation. You say you saw 30K melt away did you mean 300K ?? I see you posted over 800K in assets last month but now its under 600K?

If so that is a tremendous drop.

El Duderino
Posts: 169
Joined: Mon Oct 27, 2014 12:24 pm

Re: the dude's diary

Post by El Duderino »

Perhaps I need to make this less confusing because sometimes I trip myself up too.

Investment assets are pretty much just stocks and bonds and will fluctuate quite a lot, which is why I'm not terribly bothered about the 30K drop in value lately. The overall asset category I list at the middle of each month includes things like real estate and any cash on hand so that's just hovering around 800 now. I do a breakdown for the assets mid month so I can see allocation, not that I adjust anything on this basis really. The orange, blue and purple categories are stocks and bonds, just different tax liabilities across each of them.

If NW dropped by 25% in a month I would probably have thrown a hissy fit.

El Duderino
Posts: 169
Joined: Mon Oct 27, 2014 12:24 pm

Mid-Sep '15 Update

Post by El Duderino »

A big part of finding money to invest and save is finding fulfillment in stuff to do that doesn’t directly or indirectly cost a hell of a lot of money.
I have, unwisely, spent far too much time and money on my vehicles, making them faster, louder and generally more exciting to drive and immensely unreliable. I’d conservatively estimate that 25,000 has gone into performance parts (yes, that’s just parts) over the years, which is really sad when I think about how much of that came out of my pocket when I wasn’t earning a lot of money at all. At least half of it happened when I was still in university, meaning that by now it would have had at least 10 years of compound growth. Ah well, coulda/shoulda thinking might be interesting to indulge in for a bit, but it’s not very productive.

The preceding paragraph is an admittedly flimsy excuse for what will show next month as about $1,100 in expenses related to fixing up a car that I bought in 2012 as a project. I originally bought two cars from a friend out of a mixture of boredom and fulfilling an itch to own a tuner car after a 5 year hiatus from the scene. Somehow convincing myself that my intentions were good and valid, two completely non-functional cars were purchased as a group deal and since then I’ve been slowly but surely putting them right. It’s taught me a lot about being patient because often I’ll have to wait 6 months before I get to work on anything so I have to bide my time carefully and plan accordingly. I sold the first car in July 2013, which isn’t bad considering I had to pull the motor, get it rebuilt and stick it back in while putting the heavily modded car back to stock OEM condition as much as possible. That was hard graft for a very slim profit of just a couple hundred dollars. The second car was a great deal more troublesome and only just this July was driven on the street after being on blocks for a solid 10 years. That one I’m keeping for now, having sold my old primary car last August in anticipation of the project car being completed much earlier.

Anywhoo, the numbers for this month aren’t great, but I’m proud of my spending figure. With the cost of an international flight and the above, my September spending won't be anything to brag about.

Mid-Sep '15:
--Assets: $ 800,618 (-32,821) :|
I wanted to change up the view for my asset breakdown so I can see the fluctuations across different categories over time. Unfortunately, I didn’t track my current account balance like this until April and I don’t want to go back and figure it out retroactively.
Breakdown:
Image


--August Spending: $ 3,954 (-916) :D
Breakdown:
Image

steveo73
Posts: 1271
Joined: Sat Jul 06, 2013 6:52 pm

Re: Mid-Aug '15 Update

Post by steveo73 »

El Duderino wrote:Cheers Dave! Feels great to have that weight off. The final letter from the company saying that they recognize the payoff has been received, so it's official like a ref's whistle.
This is great. I can't wait till I am in this position.
El Duderino wrote:It may seem like I've got this financial stuff under control folks, but that isn’t always the case. Poor decisions tend to make my spending border-line out of control. First, there's the reluctance to say no when a friend propositions something, anything. For example, in July I got roped into a heck of a lot more golf than I wanted out of obligation to go out and do stuff while on vacation. I enjoy golf, but paying hundreds in greens fees to play quality courses way beyond my skill level is most definitely more for the benefit of the others in the party. That's a dangerous game to play, I know.

The second weakness is because I just love tinkering with cars, even when there’s nothing really wrong with them. Now, this could be a useful thing because there isn’t too much that can go wrong with a car that I can’t fix, and I’ve profited in the past from buying busted up junk and turning it into serviceable, decent transportation. More often though, it results in me buying hot-rod parts to push the performance of a car – right to the point where something breaks and needs replacing. All for the thrill of driving near the limit about 2% of the time while almost always sacrificing comfort, reliability, and utility the other 98% of the time. I keep telling myself that at some point I’m going to get to a stage where I consider a car complete and it won’t need to be fussed with any more, but that seems more an aspiration than a realistic goal at times. I've owned many cars over the years and I've yet to have one that I didn't think could be improved upon in some way.
I think saving money can be tough because of situations like this.
El Duderino wrote:A big part of finding money to invest and save is finding fulfillment in stuff to do that doesn’t directly or indirectly cost a hell of a lot of money.
This solves the problem though doesn't it.

Maybe this is a tough question but when do you intend to retire. If your WR is close to 6% will you wait until you get to 4% ? What is your plan ?

El Duderino
Posts: 169
Joined: Mon Oct 27, 2014 12:24 pm

Re: Mid-Aug '15 Update

Post by El Duderino »

steveo73 wrote: I can't wait till I am in this position.

Maybe this is a tough question but when do you intend to retire. If your WR is close to 6% will you wait until you get to 4% ? What is your plan ?
Man, you're right there with me on this! January is right around the corner.

Since I'll be drawing for a long time, I'm shooting for a 3.3% WR, but it's hard for me to figure when I'd get there exactly for the following reasons:

1. My long term position on this rental property is uncertain. The problem with being a landlord is one property is too many and a dozen is too few.
2. Post-FI expenses will almost certainly decrease, but how much is hard to say because I haven't decided what to do. So many possibilities for my xNTJ brain to consider.

steveo73
Posts: 1271
Joined: Sat Jul 06, 2013 6:52 pm

Re: the dude's diary

Post by steveo73 »

Dude (top name too),

I have no interest in rental properties mainly because I'm too lazy. Why do you think post FI expenses will decrease and is it worth focussing on that. I also think that my post FI expenses will decrease but I have 3 kids. I figure I'm FI when I reach a WR of 5% however I will probably ensure I also have 5 years living expenses post that point prior to retiring. So no draw downs in the first 5 years.

El Duderino
Posts: 169
Joined: Mon Oct 27, 2014 12:24 pm

Re: the dude's diary

Post by El Duderino »

When the switch is made, my rent and transportation costs will drop massively, because I will no longer be location-bound by work. I might miss living in London a bit because it's a cool city and there's a lot to do, but I will gladly leave behind the inflated rents and will no longer need the expensive flights to visit friends and family for holidays and big events.

For me, it's not worth it to focus too much on what my post-FI expenses will be, because I could just about convince myself of a wide range of budgets based on a needs/wants analysis and some assumptions about my interests generating some future revenue. Instead, I've got my 430 plan and I should be able to get there in about 14 months, so I'm being patient and staying the course. Biggest task in front of me now is building up my emergency fund and also having a nice chunk of change for year 1 expenses.

In your situation, with dependents, 5 years living expenses seems quite safe, though 5% WR seems kinda high. What happened to the 3% target you talked about from your MMM post? You're in a unique situation too because you'll have so much equity in your home.

steveo73
Posts: 1271
Joined: Sat Jul 06, 2013 6:52 pm

Re: the dude's diary

Post by steveo73 »

El Duderino wrote:In your situation, with dependents, 5 years living expenses seems quite safe, though 5% WR seems kinda high. What happened to the 3% target you talked about from your MMM post? You're in a unique situation too because you'll have so much equity in your home.
I think 5% is okay for me due to the following factors:-

1. We have 3 kids now. We shouldn't be supporting them forever and costs tend to go down over time.
2. Our house must be worth 1 million dollars. We could sell and downsize although I think for this to really make sense we would have to go and live somewhere outside of Sydney. If we choose to stay in Sydney we are better off staying where we are.
3. I am not including any inheritance or social security. I think that we will definitely get some money here.
4. My wife or myself may work part time for a period of time. As you state I am also looking to have 5 years of living expenses on top of a 5% WR. I think that this approach really should make if fairly safe for us. We already have say 2 years of living expenses not saved up but available in paid leave.

I would love to get to a theoretical 3% but that would mean getting to say a million outside of our house and minimising expenses from where we are at right now. It could be done but I don't see the point as I'd be working too long. I really don't like work at the moment.

How will you be working if you aren't in London ? Can you still work as much and therefore save as much ?

El Duderino
Posts: 169
Joined: Mon Oct 27, 2014 12:24 pm

October '15 Update

Post by El Duderino »

In the midst of a bunch of bad numbers that are largely out of my control, when perhaps I'll just to focus on the positive things. My 12 month rolling average WR has come down to 5.95%. This is despite overspending on merch over the last month and even though investment assets (the denominator) were falling in value with the stock portfolio and forex fluctuations.

The annoying thing is that I do have the funds and intent to buy more securities, but the low dollar to pound exchange rates means that I can't get the funds into the right accounts to execute the transaction without giving away too much in the trade. Ah well, patience is a virtue and I'll should still hit my 30K investment target for 2015 with ease. I've put in $22,500 already, so I'm right on plan entering into Q4.

October '15:
--contribution to investment assets: 4,076
--investment assets: 567,465
--annualized spending as % of assets: 8.35%
--12 month rolling average WR: 5.95%

El Duderino
Posts: 169
Joined: Mon Oct 27, 2014 12:24 pm

Mid-Oct '15 Update

Post by El Duderino »

This update has been delayed by about a week due to travel and being distracted by having fun on vacation. Still ran the numbers on the 15th, just wanted to wait until my trip was complete before making the post.

Got some quality wrench-time in over the past two weeks, and the project vehicle I've been working on for the past two years is running better than ever. Really happy with the results on it and the progress made during the trip back home. It's not exactly a budget mobile, as last month’s expenses will show, but I'm pretty satisfied currently with the compromises I've made in getting on the road. The biggest fixes I made on this last round of improvements were to sort out the issue with the brake booster, get the ECU mapped and, best of all, it's got cruise control and a quiet, variable chamber exhaust so it doesn't drone terribly at speed. Much more livable now.

In an earlier post, I mistakenly said I'm shooting for a 3.3% WR target, but the figure is actually 3.5% and my 'four 30' plan is closer to 3.3. That means for my target annual budget of 30K, I'll need 857,000 in investment assets (currently this is at 600K) and if I figure in the 12K per year I clear from rental income, I need just 514K, which I suppose means I technically have enough now. There are a number of things that are preventing me from giving the job the old two finger salute (or one finger if you prefer). I'll list them, because I like making lists.

1. A flat contract until April of next year. I won't be able to achieve a 3.5% WR with that kind of high housing expense.
2. Current account balance is hovering around 20K. This needs to be 30K with another 30K set aside for expenses during the first year.
3. Need to devise a reasonable disbursement strategy for adaptive spending limits during my neverending trip.
4. Downselect decision on what exactly to do after leaving the 9-5 is still pending. A sailing or hiking adventure are topping the list currently.

--Mid-Oct '15 Assets: $ 819,558 (+19K) :)
Breakdown:
Image

--September Spending: $ 5,755 (+1,800) :oops:
Breakdown:
Image

El Duderino
Posts: 169
Joined: Mon Oct 27, 2014 12:24 pm

November '15 Update

Post by El Duderino »

Because the pound to dollar exchange rate isn't so great right now, there hasn't been any investment over the past month. Good thing is that I can wait it out pretty much indefinitely and cherry pick a rate I like. It's fluctuated quite a bit over the past couple months and I check it almost daily when it's close to my threshold, as it is now.

November '15:
--last months' contribution to investment assets: Zip, zero, zilch
--current investment assets: 614,780
--last months spending (annualized) as % of assets: 7.14%
--12 month rolling average WR: 6.15%

steveo73
Posts: 1271
Joined: Sat Jul 06, 2013 6:52 pm

Re: the dude's diary

Post by steveo73 »

Dude - how long till you think you get this happening ?
El Duderino wrote:Biggest task in front of me now is building up my emergency fund and also having a nice chunk of change for year 1 expenses.
The big question is if you get that cash pile stashed away will you RE ?

I also have a target to have a cash pile sitting there for the start of RE. I personally prefer that to immediately drawing down on assets.

El Duderino
Posts: 169
Joined: Mon Oct 27, 2014 12:24 pm

q&a

Post by El Duderino »

steveo73 wrote:Dude - how long till you think you get this happening ?
Right now, I'm forecasting that by end of next year, everything will come together. Being completely debt free, the snowball will start to really accumulate quickly as I build up reserves and investments. Obviously, ERE types don't save for long enough that the compounding effect really benefits us. There just isn't enough time in the market to experience that compounding benefit.
steveo73 wrote:The big question is if you get that cash pile stashed away will you RE ?
HELL YES! Having a healthy reserve should really ease anxieties of letting go of a paycheck, even in a down market, should that situation occur. I’ll probably apply a modified form of the 95% rule to regulate disbursements, using 3.5 as the SWR rather than 4 just to play it extra-safe.

steveo73
Posts: 1271
Joined: Sat Jul 06, 2013 6:52 pm

Re: the dude's diary

Post by steveo73 »

Sounds good.

El Duderino
Posts: 169
Joined: Mon Oct 27, 2014 12:24 pm

Mid-Nov '15 Update

Post by El Duderino »

Beating the latte factor.
My employer has a subsidized cafeteria that is convenient and good value. A latte is £1.10 ($1.65) whereas the same drink at a cafe just meters away would be around £3 ($4.50). Way back when, I'd only get a latte as a special treat, though that slipped to the point where I was getting about one per day, with the 10th being free with a stamp card. Other times, I would use the coffee and tea dispenser machines spread throughout the building to stay caffeinated, though the taste was something between cut-rate freeze dried drip coffee and boiled shoe leather—not the sort of thing you want to wake up in the morning to. Recently, those machines, which were using these little sachets for tea and coffee, have been replaced with a better version that actually grinds the beans fresh as you get each cup. Problem solved. Thank you, Corporation.

Confession for buying overly expensive shit.
October was yet another month of expenses over 4K and November will also be a high spending month. October got messed up when I decided to take a friend up on an offer and take a city weekend trip to Paris. This was a last minute invite, so you know those Eurostar train tickets were running a premium. We Airbnb'd it so the accommodations weren't too bad, and food and entertainment was also pretty reasonable, considering. It went off the rails for me when I purchased some jeans I had been coveting for a while. It has now been two weeks and I'm still processing my decision, but in the spirit of honesty, (this is the dude's diary, is it not?) it needed to be recorded.

How I feel about my progress over the past couple of months.
Expenses have gone up substantially since I moved out of the flatshare and got a single dude domicile—totally expected and completely avoidable. Spending has also gone up on things that are actually counter to FIRE stuff, like tinsel and glitter for the car, designer jeans and I’ve even pre-committed to some heavy discretionary costs next year (holiday ski trips, kart racing series) that could manifest in a spend of around $4,500/month throughout 2016. Investment accounts are largely stagnating as the markets do their thing and I’ve been building up sterling rather than adding stocks due to the exchange rate. On the other hand, I’ve cleared the mortgage and despite all the evidence to the contrary, I know in my heart that I could unplug from it all right now and be fine because when it comes down to it, the dude is a simple man and it really doesn’t take that much money to abide, after all. To conclude a paragraph without a point, if I was dissatisfied with my work situation I’d be more concerned about all this.

--Mid-Nov '15 Assets: $ 813,360
Breakdown:
Image

--October Spending: $ 4,866
Breakdown:
Image

El Duderino
Posts: 169
Joined: Mon Oct 27, 2014 12:24 pm

money thoughts

Post by El Duderino »

I came across someone saying 'there's an infinity of money out there' and it really struck a chord somewhere. I guess when considering it from a fiat currency and immeasurable sum perspective, it's true. Like, who could sum up all the worth and value and equity and then would you subtract the debt or who knows what the equation is. So, it probably could be a true statement. Since I think it's true, it helps me think about money more in the YMOYL life-energy sense. Probably more so than their exercise to work out your real $/hour, though that is depressingly effective as well.

Also, I was listening to this excellent podcast (free, whee!) and this guy, James Otteson, was going on about socialism/capitalism and it was a pretty interesting take on the subject in a new book he's written and all the sudden, the host, Russ Roberts, an economist, and James, who's probably also professor and economist, since it's one of those kind of podcasts, start talking about how perhaps one of the traps -- I'll call it a trap since it kind of reminds me of the dark ecology tech trap that was intriguing -- of capitalism is that perhaps it fools people into thinking that money is the goal when in fact, that's not really what Adam Smith had intended or really should be concluded, it's a thought trap that needs to be overcome and they agreed that education is a solution. Fuckin' a man, educate people about how to use capital wisely, what a concept!

El Duderino
Posts: 169
Joined: Mon Oct 27, 2014 12:24 pm

December '15 Update

Post by El Duderino »

Being in a slump.
Since paying off my mortgage, maybe some of the intensity and focus that I previously had in eliminating debt has faded. There just isn't that same big, near term goal ahead. It was kind of anti-climactic in that there was no fanfare, and I never really celebrated at all, mostly because I couldn't really think of an appropriate thing to do. Also, dealing with this mortgage servicing company has left me frustrated and drained. I think they're still holding on to over 1K of my money that they erroneously required me to pay and I can't get a meaningful response from them -- I keep getting passive-aggressive customer service reps at their call center who insist they know nothing and I must deal with their corporate office via mail requests which are never acknowledged or responded to.

The overriding issue is probably the lack of a s.m.a.r.t. goal for the near future. I read this book last year and one of the parts I really liked was how people will plateau for a period and the ones who ultimately achieve mastery are the ones who find something enjoyable about the journey and persist, even when it feels like they’re not making progress. Maybe that time is now for the dude, so I’ll just keep on keeping on.

Spending more.
November expenses were quite high, however, most of it was due to a number of things just timing to all occur in November, December flights and car tires being the two biggest, and those jeans from Paris...well that was entirely avoidable.

Looking ahead.
Lots of fun stuff ahead the next few months, from ski trips to time with friends and family, so I'm very excited for all that. Especially getting into 2016 because it's my promised year to cut loose and start the Neverending Trip. Just knowing that I'm just around a year away from it is thrilling and a little scary because it represents significant, lasting change. In preparation for the good things to come I'm going to keep up on my guitar practice and have also started to work through some French lessons as learning another language has always been one of my bucket list items. Since visiting Paris, it's rekindled my desire and since I'll visit in February for skiing, it's a great chance to prep and maybe even use a few words to get around like a real local yokel.

December '15:
--last months' contribution to investment assets: again, nada
--current investment assets: 613,863
--last month’s spending (annualized) as % of assets: 9.16% :shock:
--12 month rolling average WR: 6.50% :(

El Duderino
Posts: 169
Joined: Mon Oct 27, 2014 12:24 pm

Mid-Dec '15 Update

Post by El Duderino »

Bitcoin
For some reason, bitcoins are going up in price quite a bit. I haven't been paying any attention to the prices of these things, which kinda suggests to me that I should just sell now and get out of it.

On being home for the holidays.
A book about being zen said that spending time with your parents can be a great test of yourself. I'd add siblings to that list. Tough to break out of those deep-seated relationship dynamics.

Close call.
Took the car, which I've decided to dub 'the Dreadnought' because of this wide-hipped body kit that I was obliged to put on it, on a trip this past week, and not surprisingly, a problem surfaced. After a five hour drive, the alternator had almost managed to liberate itself from the engine and was being held on by just the serpentine belt and a single bolt. It was actually worse than that because the main post had also broken off, so there was no connection between the alternator and the battery. Luckily, I was able to use a friend's garage, to do the work and the weather wasn't horrible. After removal, the alternator was tested and it checked out just fine so all it cost me was about 5 hours of wrench time and a couple bucks in fasteners.

--Mid-Dec '15 Assets: $ 811,372
Breakdown:
Image

--November Spending: $ 6,460
Breakdown:
Image

Gilberto de Piento
Posts: 1388
Joined: Tue Nov 12, 2013 10:23 pm

Re: the dude's diary

Post by Gilberto de Piento »

I don't think you've said what kind of car it is. I'm guessing a Supra based on the details you've provided. No need to confirm/deny, just wanted to throw it out there. :)

El Duderino
Posts: 169
Joined: Mon Oct 27, 2014 12:24 pm

Re: the dude's diary

Post by El Duderino »

Gilberto de Piento wrote:I don't think you've said what kind of car it is. I'm guessing a Supra based on the details you've provided. No need to confirm/deny, just wanted to throw it out there. :)
Good guess Gilberto. I do love me some sexy Supras. A sleek mk IV, along with a RX-7 (FD naturally) and a cherished NSX would certainly find their way into my dream garage.

This particular pile of parts happens to be an Evo, so I'm down on displacement to the cars above, but who cares when you've got traction.

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