akratic's ERE journal

Where are you and where are you going?
akratic
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Post by akratic »

@palmera, Topshop. It's a London brand that recently opened a store in Chicago.
My girlfriend wanted to go, and when I discovered that their shirts actually fit me, I bought ten of them on sale. They're t-shirts though, that's all I wear, but they're the nicest t-shirts I've found. They're this one in ten different colors.
When I say this is the most stylish I've ever been, keep in mind how low the bar is considering that I'm a computer programmer from MIT...


dragoncar
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Post by dragoncar »

Checking account -- I just signed up for Ally (internet bank). Full refunds for all ATM fees, free checks, decent rates. I signed up for an 8-month no-penalty CD at around 1%. I like it so far, but I was also considering ING Direct (slightly higher interest rate) and Schwab (no international ATM fees -- I don't go overseas enough to make this worth it). There's a pretty good rundown here: http://money.cnn.com/galleries/2011/pf/ ... index.html
Google - I've been using Google Finance for everyday tracking, and the last few weeks it's been very spotty -- quotes not updating (0% all day), and today the percentages are including two days worth of movement. I never thought I'd have to use Yahoo to get around Google issues :-(
Kindle - I've almost decided to pull the trigger. I'm just considering whether the holidays will bring a lower price.
Beans - I have the same problem. Amy's Kitchen has the best canned lentils, and it doesn't look like anything too crazy is in the ingredient list. But mine don't quite come out as good. Jacob, how does finishing it with the lid off help?


akratic
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Post by akratic »

November 2011

== Unusual Expenses ==
- $69 for a new cell phone

- $136 for a flight to California for Christmas
This was my 3rd lowest expense month in the past two years, and my assets are building up, so this is a new net worth record.
== Job ==
Working hard, happy.
== Diet ==
Failing badly. I'm going to make another push for the warrior diet over the holidays, perhaps that will help.
== Books ==
Pure relaxation reading. Burning through the top 10 sci-fi book list. Pleasantly surprised by how thoughtful Hyperion was.
== TODO ==
- set up SIMPLE IRA and perhaps a safe deposit box

- more gold, less cash
My first goal of 25x expenses is in sight. December will probably be a step backwards though.


m741
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Post by m741 »

I'm glad you're enjoying your job -- and things seem to be going well for you!
What science fiction books have you enjoyed recently? I've gotten away from reading SF and wanted to jump back in. Personally I enjoy Niven, Zelazny, Asimov, Stross.


akratic
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Post by akratic »

@m741,
I was trying to find the sci-fi list that I was using, but I can't find it. In the process though I found this list, which is even better! And I found a dystopia list there too, and a bunch of other ones as well. This is great!
I've read the top 10, and probably 1/3 of 11-100 list (all the Asimov, Card, Heinlein and Vonnegut). I recently read all four Hyperion books, which I loved. And forever war, which I didn't like. And now I'm rereading the Hitchhiker's Guide to the Galaxy for what must be at least the fifth time. I think I'm so challenged at work right now that all I want to do at home is relax... which is new for me.
I'm excited to have found this listopia part of good reads! I have a hard time finding books to read. Perhaps after finishing the sci-fi list and the dystopia list I'll do the books that everyone should read at least once
I like lists. I've been working on the IMDb top 250 for years, and I'm at 207/250 now.


akratic
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Post by akratic »

December 2011

== Unusual Expenses ==
- $342 for xmas gifts

- $76 for four months of cell phone

- $64 for a nice sweater for the company xmas party
Because of the holidays this was the worst month in a while in terms of expenses.
== Assets ==
Both the stock options from the sale of the first company I worked for and an end of year bonus came in this month. I'm feeling quite rich. I'd probably have hit 25 years of net worth if the expenses this month weren't so high.
== Next Steps ==
I have no intention of quitting my job in 2012 (enjoying it too much these days), so my goal for the next year will be to add a safety margin to my ERE situation, perhaps going from a ~4% SWR to a ~3% SWR. It's kind of surprising how many dollars it will take to get from 4% to 3%.
In 2012 I intend to do less engineering at my job and more trading. This will mean less guaranteed income, but more upside if trading goes well.
I have a bunch of cash from the stock and bonus mentioned above, which I need to distribute amongst the PP. This is easy except for gold. I'll probably try an online dealer this time, as I don't want to pay the Illinois 11% state income tax on it.
I also need to pick out another dividend stock or two. The 10 dividend stocks I picked in August have crushed the equity indexes. Out of the 10 individual stocks I bought, my best pick was GRMN which is up 33.29% plus dividends, and my worst pick was PCG which is up 0.71% plus dividends. In contrast, the equity indexes are a little under break even since then. I'm assuming I got lucky, although this result does have me itching to go from a 90% PP and 10% VP to a 85% PP and 15% VP.
Now that ERE is within reach, I also plan to kill off one of my income streams. It is a website that will probably make me around $4k in 2012, $3k in 2013, and $2k in 2014. I hate it though. I hate checking my email every day for it. I hate when things go wrong with it, and I have to fix them. If I had an extra $9k I would trade it in exchange for not having to do this business anymore. And I do have an extra $9k, and I'm going to "spend" it by letting myself kill the business. This income stream proved to be a good learning exercise, but terrible from the life energy perspective. I tried to save the situation at the end of last year by firing 70% of the customers, but it's still not worth it.


palmera
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Post by palmera »

nice shirts! and you went to MIT! and you're pretty much at FI.
awesomeness all around.


akratic
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Post by akratic »

I'm reevaluating my investments.
The PP did well for me in 2011, but the dividend stocks I picked in my VP did even better.
I'm thinking about going from a 90% PP and 10% VP to a 80% PP and 20% VP. I still really like the PP, but I also really like consistent cash dividends, as well as the illusion of control I get with dividend stocks, the feeling that I "earned" the extra return by picking stocks better than the next guy. (I'm well aware that this feeling is almost certainly purely imaginary, and is indeed the reason market participants consitently underperform indexes... and yet one year of good performance and suddenly I too am under it's spell?... hmmm...)
I'll continue to abide by the PP rules of not rebalancing PP money into the VP. So far I'm doing the opposite, since the VP is outperforming the PP. I won't be taking any money out of the PP either for this change. I'll just be diverting more of my bonus to the VP than I would otherwise.
If I eventually get burned by this dividend stock stuff, I'll just cut back and go more PP. I have enough money to take some more risk though, for now. And I'm diversifying my dividend stocks as much as I can (across sectors). I think 20% is the biggest my VP will ever get though. 20% is a nice round number, to go with the rest of the PP components that are now also 20% each.
At the same time as all this, I'm trying to figure out safety deposit boxes so that I have a better place to put physical gold coins. It's surprisingly difficult. There's little information online, so I have to visit banks in person. I went to four banks yesterday and still haven't got a safety deposit box.
After I figure out the safety deposit box thing, I'll need to choose an online gold dealer. I paid the full in-store spread last time I bought gold coins, but I want to avoid it this time.
I was excited to see the new i bond and ee bond limits yesterday. I moved $20k total of cash into them yesterday, maxing out my 2012 contribution limits. I also moved $5k into a traditional IRA for my 2012 allowance.
The big thing I need to do though is pick 10 more dividend stocks. I have 10 that I already like. With 10 more I will have 20 total. Each will be 1% of my total portfolio.
Here's my current targets:

Cash: 18%

Gold: 22%

Bonds: 22%

Equities: 18%

VP (Dividend Stocks): 20%
Really I'm shooting for 20-20-20-20-20, but a few other factors are in play.

1) I put 75% of my salary into the 401k until it gets capped out early in the year, so rigging Equities with slightly less to start is the only way to keep them around ~20%

2) I'm targetting slightly less than 20% cash because so much cash gets dropped into my account every month (relative to my net worth) and it takes me a few months between doing anything with my investments
If you have any dividend stocks that you're excited about, I'm all ears.
I was talking to my friend yesterday about asset allocations, equity correlations, roth vs traditonal, i/ee bonds, 72(t) rules, etc., and I was surprised to see all the stuff I've learned over the past two years. I basically have the full skillset of a financial planner now. I'm not interested in doing that as a career, but I can help out my friends with it.


jacob
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Post by jacob »

Part of the reason dividend stocks are currently doing better is yield chasing because the bonds have risen so much. As more and more people get into equity yield the remaining dividend payers which still pays decently will get worse and worse in terms of quality. Think of it as a "dividend trap" (the equivalent of a value trap). Resist the temptation. I don't think holding cash is a bad idea at all, currently.
(A dividend stream is nice, but I'd wait to buy it until Shiller P/E is significantly back under 20 to buy it.)


George the original one
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Post by George the original one »

As jacob wrote, I'm trying to figure out my next move and cash is looking, well, like a solid choice for now. I'll be writing more in my leveraged income experiment about this, but the short answer is that I don't have any solid candidates today. Well, except for OHI, but I already have too much of it.


sky
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Post by sky »


Hoplite
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Post by Hoplite »

For short term cash, I'm looking at JPMorgan Chase one year non-callable bonds at a 5.75% yield. Always some risk, but the yield is high enough to justify IMO.


akratic
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Post by akratic »

You guys are right, of course.
It's true that http://multpl.com was giving me fits, but at the same time I speculate that bond rates will remain low for at least another year.
But yeah, PE 21 is a strange time to start biasing equities. I'll wait for PE 18 or PE 15.
I'll stay the course. Thanks for keeping me in check!


George the original one
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Post by George the original one »

If you do feel compelled to buy something, LMT is looking acceptable.


akratic
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Post by akratic »

2011 successes:

- net worth from 12 years to 24 years

- cooked dinner at home six nights a week

- finally invested my savings, and my choices did well
2011 failures:

- I'm fat and out of shape now

- I was hoping to do better at work than I did

- 5 of my 10 closest friends in Chicago moved away
2012 goals:

- lose 20 lbs of fat

- net worth from 24 years to 32 years

- develop a profitable algorithmic trade at work


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C40
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Post by C40 »

Man, that is a huge net worth victory. An increase of 12 years of expenses in 12 months!! Incredible! Nice work Akratic. Do you know how much of that gain was from adding to savings vs reducing expenses? I'm guessing you didn't have a huge reduction of expenses because your expenses looked pretty low back in 2010.
A question on one of your "Failures" -- why do you have your friends moving away as a failure? I'm guessing you didn't drive them away or anything, right? Seems a bit out of your control to count as a failure. (I'm guessing that was just the cleanest place in the post to put it?)


akratic
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Post by akratic »

== net worth ==
My 2010 expenses averaged ~$1400/mo. That's good, but not extremely good. Especially when we have people like jacob at ~$500-600/mo or bigato at ~$300/mo. My girlfriend doesn't even follow blogs or forums or anything and she's easily under $1000/mo.
Speaking of my girlfriend, her moving to Chicago in 2011 really helped me make cuts from the 2010 level. Her move saved me $200/mo in travel expenses alone! (Travel went from $272.68/mo in 2010 to $75.50/mo in 2011) Plus I got to split a 1BR with her instead of living with roommates. Plus she cuts my hair for free, etc. She's even more frugal than I am, which I am very grateful for.
All that said, it is true that the main reason things are progressing so quickly for me is my big bad six figure "software engineer in finance" income.
...
I'm not sure how much more I'll be able to cut from my 2011 expenses though. There's not much fat left. My girlfriend and I are starting to talk about moving to another country eventually, after we get sick of Chicago. That would help a lot with cutting expenses further; in fact, it's pretty much the only way I can really think of to get my expenses significantly lower.
I have been making some sacrifices that I'll probably stop making after I reach FI. In other words, assuming I get to 33 years of net worth and I still want to keep my job, I'll probably start consciously increasing my spending such that I always have 33 years of net worth, but my expenses and quality of life rise.
== friends ==
I get what you're saying about it not really being my fault that many of my friends moved away. But here, let me give you an example:
I believe my investing choices of PP + dividend stocks are the best choices for me, given all this research and risk tolerances and yadda yadda. But suppose they do terribly and lose 10% in 2012.
You can be certain that I would list that as a 2012 failure. But it wouldn't be my fault or anything. I did the best I could, choosing the best investment vehicles I could find, but it still might turn out bad for me, and I would still consider it a failure.
That's kind of what happened with my friends here. It's not my fault that they left, but it's still my failure? Does that make any sense?
That said, in some ways this actually is partially my doing, because I tend to be drawn to adventurous/travel-oriented/ambitious/weird people. Thus it shouldn't be all that surprising to see them pursue their dreams and leave on big adventures. Here's where they went: Ecuador to teach english, Washington DC to work at the White House, Colorado for a girlfriend, St Louis to get married, and Missouri to work on a sustainable farm. All good reasons to leave Chicago! And I'm happy for all of them. Totally sucks for me though.
The real puzzle for me right now though is whether this was all worth it. It takes me a lot of work to find people to be friends with and to develop the friendships. I would rather just come home and read or browse the internet. But because I believe friends are important, I do all kinds of things I don't want to do. To meet friends when I first moved here, I went to meetup.com events, I organized couchsurfing.org events, I joined co-ed sports teams (three of them!), I organized board game nights at work, etc. I don't actually like doing *any* of this stuff. But I did it anyway to make friends.
And then keeping the friends involved a bunch of other stuff I don't like, such as going to bars to celebrate important events with them, going to dinner parties, calling people on the phone, going to weddings, helping friends deal with crisis after crisis, etc.
Part of me thinks I should develop 5 new friendships to replace the 5 that I lost. But the other part is tired of all the effort that friends take. To be honest, I'm not even sure that all this effort to develop friendships has been worth it. It would be so much easier to just hang out with my girlfriend most nights, see my closest 2-3 friends once a week or so, and spend the rest of my time alone doing things that I enjoy.
I've read a lot of psychology about which things actually make people happy, and one of the big take-aways was the importance of close relationships. I do believe that close personal relationships are one of the most important factors for most people to be happy. But I also know that I'm weird, and maybe this standard advice about needing friends doesn't apply to me.


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C40
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Post by C40 »

Good points. I was starting to wonder after I posted if maybe the type of friends you had made were very likely to be leaving (5 people out of 10 moving in one year is WAY more than normal).
I guess it does make sense to count that as a failure. Your goal was to make (close?) friendships. You put a whole lot of work into it, and you don't have as many friends now as your work could've made you. Still, 5 close friends is not bad. And if you have enough friends to say something like '10 closest friends', you must have a lot of friends in my book.
I'd also agree very strongly that it's the close relationships that matter. Did you make so many friends in order to have a significant pool of potential very close/ long term friendships?


akratic
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Post by akratic »

Yeah, exactly. When social interaction is as draining as it is for me, you need to focus your social energy on what counts, which is close, long-term friendships. People that you can count on when you need help, people that can count on you, people that would help you move, etc.
Part of what happened this year was a kind of critical mass thing. Four of the people who left all knew each other and were part of the same group. Once a couple of them left, the others had less reason to stay.
Another problem in 2011 was/is a falling out with one of the 5 friends that's still here. He's not really living up to my expectations. This really leaves me with 4 out of 10.
But you know what? 4 is plenty. Even 3 would be plenty.
I went on this big mission to develop close friendships mostly because I thought I should, because of all the studies saying that's what made people happy. I'm still pretty happy with only a few close friends though, which is why I'm tempted to just stop trying.


LiquidSapphire
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Post by LiquidSapphire »

Hey akratic-

I'm very introverted so I completely relate to what you're saying about friends. I've also moved around, a LOT, so I also get how hard it is to make new ones.
Definitely it is important to have relationships outside of your GF but I think, if you're comfortable with 2-3 relationships outside of her, then that is just fine. In fact, that is right about my personal comfort level, because to me, a friend is someone who I'm really close with and I see at least every 1-2 weeks. 10 people, GEEZ, I'd have no time to myself! 2-5 sounds just right.
Nothing wrong with just taking it easy and mourning your loss. If you feel like you are bored and/or lonely later, maybe you and one of your remaining friends can take up another activity to make new friends again. Until then, just keep on smilin' :)


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