Giskard's Journal - slingin code to reach FI

[giskard]

Hey Giskard -- my wife and I have Minneapolis on our short list of places to move in the next year or two. Can you expound a little more on the pros and cons, from your perspective? If there are any pros, haha.

I'd be working in technology sales, DW as an executive assistant, if that matters. No kids.

Sure yah no problem. I moved here for work and I am staying here for work and business opportunities after. The pros are that economy is super strong, low unemployment, and ton of fortune 500s here, pretty strong tech scene. Good airport, and fairly central. Actually has public transport that is good. Bike lanes everywhere. My idea was that this is a great town to be a software consultant in and make a home base, and I think this is still true.

Another pro is that for basically being a large city with all of the benefits of that, it is not that expensive. Real estate is affordable to regular people unlike in many large cities. The city is amazing in the summer, stuff to do every weekend and beautiful. The con is that you are still in the Midwest and all of the BS that comes with that.

The downside is that it literally snowed 1.5 feet the last weekend in April. Traffic is always terrible because they squeeze road work into the summer months OR it is winter and the roads are snowy.

Another huge downside in this state is taxes. If you are a high income earner you will be taxed a lot. Every type of tax is high, this is blue state. Minneapolis is also liberal to the point of being annoying. I am pretty socially liberal but sometimes I turn on MPR (Minnesota public radio) and just turn it of because the ridiculous stuff they discuss. Like aggressively talking about "check your privilege" stuff and how white men are terrible, ect. Honestly, I am a white male and I find it all pretty alienating and disturbing but Idk I guess that is happening everywhere that is very liberal.

[Smashter]

Thanks for all the details. I can deal with a bad winter and off-putting politics, so it's sounding really good to me right now.

[giskard]

10/23/2018 Quick update

OK a lot changed in the 6 months or whatever since I last updated this. I switched from being an employee to being a contractor. I started working from home. I started brainstorming new business ideas. Made a lot then lost a lot in stocks. I have a pretty regular and serious girlfriend now.

Why don't I just go over my current financial situation?

Total current net worth: 433K
Stocks: 204K
IRA: 162k
Cash: ~$20k

Monthly Income (September): $11,051
Monthly Expenditures: ~$3,000

Monthly Expense breakdown:

• Health Insurance: $300

• Mortgage: $750

• HOA: $255

• Electricity: $22

• Car insurance: $65

• Condo insurance: $20

• Internet: $35

• Cell Phone: $25

• Food: ~$400 a month (I am eating a heavy bulking diet)

• Hobbies / road trips / gas: $1200 (did some climbing / hiking trips + got gear)

Updates on lifting / weight gaining:
current weight: 162 lbs
Deadlift: 250lbs
Squat: 210 lbs
Bench press: 165 lbs.

I am pretty OK with these numbers. Obviously would like to see increases here across the board, but that is what goals are for!


Extra thoughts..

In general I am making a lot more money than I used to, however I am spending more. I have to buy my own health insurance, and I feel free now to go buy nice merino wool clothing for camping and climbing, and splurge on rock climbing gear. But at the same time because I am making more, I am actually still saving much more.

Hopefully I will get this out of my system in a month or two, but this month... I already bought more climbing gear and clothing (!). I can rationalize it and say it will last a very long time and can be resold for almost the same amount, but the same cannot be said for the expensive outdoor clothing. But this winter I am going to make the most of the harsh Minnesota winters, so I am OK with buying nice wool clothes for outdoor trips.

FI Progress

I feel like I am in a sustainable spot now. I really like working from home. I get more work done, and have more time to do the things I want too. That, and I like contracting, both for the pay and flexibility. I figure if I contract another year or two, and then cut down my hours a whole lot that will be my plan to finish FI. At that point I would either continue to work fewer hours or a while, or stop altogether and work on starting some small software business. Just depends on how things go. Right now though, I am laying the ground work for that transition to happen very very soon.

[prognastat]

Nice progress, without the hobby spending the rest of your spending puts you at about 84% savings rate so as long as it does come down a bit the savings should go really fast.

Good job on keeping up the exercise too.

[giskard]

Nice progress, without the hobby spending the rest of your spending puts you at about 84% savings rate so as long as it does come down a bit the savings should go really fast.

Good job on keeping up the exercise too.

Thanks! Yeah that is really good once you do the math. My goal is usually to hit 75% and I only really feel like I failed when I get below 50% savings rate.

In the short term to me a 50% savings rate is this: for every day I work It means I buy a day of no work. I can feel happy about that trade at a basic level.

[prognastat]

Well depending on the growth of your portfolio you're getting more than 1 for 1 even at 50%.

[giskard]

Updates 1/24/2019

So In December the market fell a lot and I think I lost about forty thousand dollars on paper. This month I gained back about 20k of that. The phrase "emotional rollercoaster" comes to mind, which honestly I think I have just started on: 2019 will probably be worse. As I write this today my net worth stands at about 460k on paper. But now I like to think of that as a plus or minus 20 percent approximation, because honestly any given month of the year, it probably could be.

I am a contractor now and only get paid hours I work. So having taken time of in November and December, it really impacted my income. In October I made in 17k, and in December I only make 10k. This month I will make about 9k. Some of that is also due to starting 401k contributions, but still, it is very choppy!

I did buy a condo in June because it was cheaper than renting and I thought it would be fun to fix it up a bit, and it would give me a good excuse to buy tools, and learn things and have projects in the winter. Well, all of that is coming true now. I would like to start by telling everyone that getting smooth seams when dry-walling is harder than I would have expected. Actually perhaps all finish work is harder than I expected.

Long term, I do expect that one of the ways I live off of assets will be through real-estate. So, at 29, I am happy to start getting a better understanding of construction, repairs, remodeling, and real estate in general. Before I started this current contract I am on (and ended up working 40 to 50 hours a week) I was even considering getting a broker's license. But I think for now it makes sense to continue to learn about construction and repairs. Ultimately, for me, it is a bit hard to really understand a problem or domain deeply unless I have some skin in the game, and now I do.


Some stats for December 2018
income: $10429
spending: $3141
month end net worth: 434k
weight: 170lbs
deadlift pr: 260lbs


Recent stock purchases (mostly influenced by recent volatility):
- various vanguard ETFs
- BlackRock
- Taiwan Semiconductor
- Apple
- Morgan Stanley
- Lazard
- Phillip Morris
- Goldcorp - they have a buyout offer so this is merger arb
- FNMA, FMCC - new head of FHFA is causing speculation here.

[Viktor K]

Glad to have you back. No need to be embarrassed <3

[prognastat]

Well welcome back, no need to feel embarrassed though. I would say it was for the most part an interesting discussion with a large variety of opinions and experience even if it did turn somewhat contentious.

Congrats on still trending up in NW despite recent volatility.

How have things been on the health side of things?

[giskard]

How have things been on the health side of things?

Eh, not bad, still working out very often. Recently just hit about 170lbs, and I think I basically bulked up and reached my goal weight now. Happy to move into maintenance mode for the most part. One obvious side effect of bulking up by about 35lbs over the past year is that I am now worse at climbing than before! I suppose the next goal is to continue to build strength while staying the same weight!

[prognastat]

Good to hear. I'm surprised it negatively affected your climbing ability, I guess after a certain point there are diminishing returns for having more muscle when you have to drag that weight up too.

[giskard]

Good to hear. I'm surprised it negatively affected your climbing ability, I guess after a certain point there are diminishing returns for having more muscle when you have to drag that weight up too.

Yeah I started to notice it a lot! Some things got easier, but mostly it got harder! But some of that is also a side effect of lifting weights a lot: if you are always recovering from lifting weights, you are never at 100% for climbing.

[giskard]

Finally hit 500k

So today after getting a paycheck and some stock market gains my net worth closed out the day at 502k. It is super crazy to think that I started with a negative net worth out of college 7 years ago in 2012 and got to 1/2 a million in that time. I am 29 now, so I spent most of 20s grinding away at work and school, but now it gives me a lot of flexibility for my 30s.

I remember when I originally calculated this I was shooting for 450k and I had expenses of about 1500 a month. Well, my base expenses now (with health insurance) are about 2000 to 2500 a month, which with the 4% rule requires capital of 750k. So that kinda, sucks, but if I work another year or two I can probably get there if I save 100k a year. I do have a mortgage now, I am doing some renovations on that property so that changes the calculus a bit.

Either way, I am in a good spot and I can cut back working as much as I want. As it turns out though, right now I have a great contract I am working on and I want to keep at it. My savings rate is basically somewhere between 60% and 75% now so that means even if I cut back working to just cover my monthly expenses (which would be super cool as a contractor), that would mean I end up working very little, meanwhile my investments would continue to grow.

With only modest gains (6% a year) and modest contributions to savings (25k), it would be possible to make it to 750k in about 4 years. So that is also a cool thing to realize. After this current contract I hope to do something like just work winters, or some arrangement. But time will tell I suppose I have been saying that since 250k, but I just kept making more money at work every year so It seemed stupid to slow down.

Taxes

I filed taxes recently and it turns out I had gross income of 160k last year. Well do you know that you only need to pay Social Security tax on the first $128,400? So I overpaid on my taxes a lot apparently. I was also doing research and found that the first 39k of qualified dividends or long term capital gains are not taxed at the federal level, which is very interesting. So, basically it seems that things could be pretty easy once I start to rely more on just investment income.

Personal Life

Personally, I have a hard time in the winter, but this year I threw myself into work a lot. I try to read a lot of books and cook a lot. Working from home has been nice with all the snow but also a bit isolating. I'm planning to move in with the gf soon (she is moving in here) which I am both excited for a scared about. I also have been thinking of buying a DSLR (again) to have more creative outlets.

I am basically a stock picker, but I invest about 50% in ETFs as well. I don't believe efficient market theory is true in the strong form, but I hedge my bets with index fund allocation. These last two years have been incredibly volatile for me in the market, but I have seen some incredible gains and incredible losses.

I am up 200% on some bets I have made on various technology and financial companies. But I am also down 30% or 40% on many risky small cap investments and Chinese ADRs. The emotional rollercoaster of being down 40k one month up 40k the next has been hard at times and it will keep getting harder. But I am getting better at it.

I read a lot about investing and I really do try to follow the rule of "let the winners run and cut the losers short", and it is emotionally difficult to follow both parts of that rule. It is hard to see a 200% gain and just let it ride. It is hard to re-evaluate and take a big loss and sell when you know the story has fundamentally changed the right call is to sell and move on.

[prognastat]

Congrats on hitting 500k. How does it feel being in the home stretch?

[giskard]

Congrats on hitting 500k. How does it feel being in the home stretch?

Feels super good! Every day I work feels more optional and less of a requirement.

[TopHatFox]

No wonders FIRE is full of coders...160K income at 29, goddamn, that’s a looooot. your annual expenses are almost my salary O.O

———

curious, now that you have the half a mil, is your life (finally) better? In other words, is dating easier, can you travel when you want, can you focus on whatever you want at the time? Is it easier to live in different places? Is life better at 30 than 22?

[Stahlmann]

...

[ItsALongStory]

i recall reading that after $70k gross the marginal happiness gains are generally offset by the added stress typically found with higher paying jobs.

Being in the 6figure club myself, I can attest to the fact that it doesn't necessarily make me any happier. Could be because I am not seeing a material impact on my day to day since all of my incremental gains are just going straight to investments/retirement stash anyway.

[2Birds1Stone]

Congrats on the $500k mark. While it's an arbitrary round number for most of us, it's so cool to hit that milestone. *knock on wood* I should join you by December.

I noticed no impact to happiness or ability to "live life to the fullest" earning $100k vs. $50k, the investments just grew more rapidly at the former.

THF, any decent B2B sales job will have you earning $100k+ in 12-18 months of "ramp up" time. So you don't need to become a software engineer or go through tremendous amounts of schooling for this sort of income.

[Jason]

No wonders FIRE is full of coders...160K income at 29, goddamn, that’s a looooot. your annual expenses are almost my salary O.O

———

Finally, someone who understands this whole ERE thing less me.