Randy's Journal

[Randy]

Okay, I think I've collected enough of a plan to start a journal. I'm nervous to be posting my thoughts and plans on a public forum, but I think it will hopefully help with accountability and I'd like to be part of this community.

Background
I'm a girl in my early 20s with a job in engineering. (I realized a little belatedly that choosing the name Randy would imply that I was a boy, but it's been my nickname for a while so I didn't give it a second thought. Sorry if this causes confusion.) I was lucky and graduated with little debt, which I paid off in the first year of employment. I'm from North Carolina and plan on returning in July to work there for the foreseeable future. Currently I am doing a graduate program with my company which involves moving every 6 months to a different location to try a new job. This has been great for learning, but currently I'm burned out on traveling and am looking forward to setting down some more permanent roots. Right now I live in a small town in Germany about an hour away from Cologne.

ERE factors:
- No debt
- Company is currently paying housing expenses (sadly this will end in July)
- Rough savings rate of 60% for last year
For the sake of simplicity I calculate my savings rates from take home pay, so this doesn't include my insurance costs and contributions to 401k.

March 2018 savings rate of 83%, net worth 44k

Despite the high savings rate in March, I am actually a little disappointed in this. My company is paying for my housing, and food in Germany is much cheaper than what I pay in the US, so I was hoping I could do better. My main splurge expense is $25 on weekly rock climbing. I also host some visiting friends/family occasionally and do some traveling with them, so this eats into my savings rate as well. I'm in the early stages of the accumulation phase, so I'm evaluating my typical purchases to see what I can improve on. Obviously my numbers game will change when I actually have to start paying housing costs in a few months, but I'm hoping that better spending habits will offset this change and I can maintain high savings rates.

As for what to do with my money, for now I've stuck it in a high yield savings account while I learn. Right now I'm thinking I will put maybe 60% into an investment portfolio and keep use the other 40% for real estate. For the investment portfolio, I'm leaning toward the golden butterfly outlined on portfoliocharts.com. It seems like a robust portfolio that I can basically ignore until the yearly rebalancing, which suits me. I am much more interested in real estate, because it seems like fun. My BF has recently moved into a fixer-upper which will give me the chance to cut my teeth on home repair. If my hunch is right and I enjoy it, I will probably try my hand at flipping houses or becoming a landlord. I've really only seen real estate investing mentioned in passing on the forums here. Maybe I'm missing the posts, or everyone goes to biggerpockets for this. I've looked at biggerpockets and all of the articles seem so click-bait-y (5 Things EVERY Flipper Needs to Know!!) But I think it will be a good resource once I get better at sifting through their info.

I haven't even looked at how many years it might take me to reach FI. I want to get better at tracking my spending and what I consider needs before I do any projecting.

I welcome any comments/thoughts/criticisms and am excited to start documenting my progress!

[Gilberto de Piento]

It sounds like you are doing great!

Are you getting any available 401k match from your company? Are you maxing out your 401k (not saying you should, just asking)? I include 401k contributions in my savings rate calculations since I could choose to do something else with the money, unlike pension contributions.

Is $25 a week the going rate for climbing where you are at? Is that for a gym membership only? I know it can vary but $100 a month would typically cover a family membership to a high end gym in the US.

[Kriegsspiel]

I think the articles on BP have really taken a dive, there is almost never useful information in them. I've listened to a lot of the podcasts and they tend to have some good info (especially the earlier ones), in addition to being entertaining.

[RFS]

Firstly, great job on starting a journal. It will definitely help with accountability. There's nothing like not buying something because you're afraid to tell the ERE forums.

The value from BP is in specific contributors. Ben Leybovich writes thought-provoking stuff constantly. For the Warren Buffet-esque real estate fundamentals, I recommend Chad Carson and Scott Trench.

[Randy]

I'm contributing 10% of each paycheck to my 401k with 4.5% matched by my company. I'm leaving it out of my savings rate because the contribution is automatic and I never really "see" the money. Right now I'm considering the 401k untouchable until I reach the age for withdrawing without penalty. I think it's 59 1/2? Far enough away to feel like I'll never actually get there. When I'm closer to that age, I'll include it in my net worth.

Thanks for the feedback on BP. I'll look into Ben Leybovich and other authors. Also the podcasts, although I can never seem to find the right time for listening to them.

[Randy]

Okay, April is not looking great for the financials so far. My mom and aunt came to visit me so I of course spent some time being their tour guide. I was able to convince my them to indulge in some meals at my apartment rather than eating out (they actually found Lidl to be very exciting), but we also splurged one night and stayed in a fancy hotel. I wasn't worried about the cost of it (one night split between three people) until my mom also insisted on eating at the fancy hotel restaurant... "fine dining" is never worth it to me. My aunt bought a glass of wine for 9 euro.. we later found a whole bottle of the same wine for 9 euro. But it's hard to say no to family and my mom was thrilled with the night, so I'll stop being cranky about it.

My own consumerist sins were buying a toy for my boyfriend's baby niece that I probably could have bought on amazon for 1/3 of the price, and getting a necklace for myself.

So what I've learned: It hard for me to not spend money on loved ones, and sometimes I like pretty things.

After this visit, my expenses for April are already about equal to what I spent in all of March. I think hopefully I can coast and stretch the money my mom/aunt owed me to last the rest of the month.

[Randy]

April 2018 Savings rate 71%, net worth 48k

All in all, not as bad as I thought it'd be considering there are some travel/vacation expenses in there for May as well.

I'm finding the way I think about money is still changing. When I first really started looking at expenses in Feb/March I found that it was the first time I've ever really, REALLY, wanted my money since I started working. It seemed different now that it felt like it was buying my future freedom rather than paying for indulgences for now. While this was good for motivation, I think I went a little too far and stressed myself out. Now the pendulum is swinging back, and I think I can relax a little.

On the work front I'll be transitioning out of my training program soon and into my permanent position, giving me a chance to negotiate for a better salary. I'm interested to see how that goes, as when I was first offered the job I didn't negotiate at all. I've also been asked twice by separate people "Where do you see yourself in 5 years?" and I didn't really have an answer because my immediate thought was "hopefully negotiating a part time job or retiring" and I think they were more expecting the answer of "managing team x or project y." It also made me wonder why they were asking me in particular.. Do they think I have potential? Do I come off as being aimless in my career goals? Were they just curious? Whatever the reason, I need to think of a decent answer to this question.

With the transition, I will also be moving from Germany back to my home state of NC. Housing costs will be cheap, as I'm moving in with the BF and he only wants me to cover food costs and half of the utilities. I told him this meant that I'll be trying to reduce our food bill as much as possible and tried to assure him that this doesn't mean we'll only be eating rice and beans. (He generally accepts my drive to FI, but he also thinks I'm a little crazy. I think he has to see it to believe it). I will also mentally set aside some money in case he changes his mind and lets me help with the mortgage.

Looking ahead, May included some vacation expenses in Switzerland, not the cheapest country to travel in, but it was definitely worth it. June will be a similar situation with another vacation to Switzerland. I may also make a trip to Poland to visit some new friends if I have the time.

[2Birds1Stone]

Where in Poland would you be visiting? I highly recommend it regardless

[Randy]

I was invited to Wroclaw, and would really like the chance to go if I can squeeze it in a long weekend. I have to admit I really don't know much about Poland, except that I am terrible at Polish pronunciation

[Randy]

On the investing side of things, I’ve just been sitting on my cash so far. This is something I still have to learn about, but every time I start reading I think about how much more fun it would be to watch paint dry.

I’ve made a practice portfolio on yahoo finance just to get myself familiar with what it might feel like to have money in the stock market. Let’s just say it’s really driven home the point that all that really matters is your purchase/entry point and your selling/exit point in the market. This also raised some questions about ideal rebalancing schedules. I’m leaning toward quarterly rebalancing by shoring up weaker investments with the cash saved from that quarter. Hopefully this would help avoid having to sell and deal with capital gains tax. But how much does this really matter? How much of a difference does it make if I rebalance yearly vs quarterly vs every paycheck?

Topics I want to understand further include investing for dividends as passive income rather than the buy and hold (and eventually sell) strategy and tax sheltered retirement accounts. I don’t include my 401k in my net worth because the money feels untouchable until I’m 59.5 and I’m not quite sure how much of my income I should direct towards it. Maybe in the distant future after I answer those questions, I’ll have enough discipline to dive into stock market behavior and indicators. It would be nice to have a little more depth of understanding to the market other than “it’s up/down.”

[Gilberto de Piento]

I don't know enough to say for sure but I really don't think rebalancing every paycheck is needed. I've never heard of it. There may be research on annual vs. quarterly if they are both common. I suspect it doesn't really matter.

The bogleheads forum has a lot on rebalancing but the forum also leans very hard toward indexing so may not apply.

[2Birds1Stone]

You shouldn't have to rebalance in the accumulation phase, just shift your asset allocation through new investments.

If your target is 75% stocks and 25% bonds, and stocks take a dip, buy 100% stocks till you're back to your desired AA.

[TheRedHare]

Hi Randy,

Sounds like you're off to a great start. I noticed you mentioning BiggerPockets, and would definitely agree with you on how click-baity their articles are - they weren't like that 6 years ago when I first started reading their site. As far as real estate investing goes, I would read some of this guys comments about the topic: http://jlcollinsnh.com/2013/05/29/why-y ... nvestment/ I don't think buying or fixing up a house is dumb, but it's good to know what you're really getting into. I hate how people just make real estate investing as a fail safe idea. Anyway, keep up the good work.

[Randy]

Thanks for the feedback guys. @TheRedHare, I've read JLCollins book The Simple Path to wealth, it was actually the first book I read on personal finance. I'm kind of surprised he's so anti-house, I'll give his ideas a look when I'm closer to considering the question of buying a house.

So I'll be wrapping up my training program in about a month, and with this I've finally received my offer for my job back in NC: 5k salary boost, and 5k relocation expense. I would get to pocket the relocation money since my only expense would be about two tanks of gas driving my things from my parents house to my BFs house. With this transition, the company will stop paying for my housing, which looking at taxes and doing some rough math, they've spent about 15k on. So really the company would be saving 10k per year on me with this transition (save 15k on housing, but spend 5k more for my salary). I'm going to ask for another 5k in salary and another week of vacation. I'm currently at 10 days per year, but I've been cheating the system a little bit and taking some time between my 6 month placements. This seems reasonable to me, but I've never really negotiated before so we'll see how it goes. I've sent out some feelers for advice from my network. Any advice from you guys is also welcome My main questions are: do I overshoot when I say what I want, assuming we'll meet in the middle? Or should I be straight up and say what I want and stick to it? I don't want to come off as greedy, but does that even really matter? Especially if I only stay at the company for 5 years compared to the lifetime they might be hoping for. I'm pretty confident in my negotiating position, they need me a lot more than I need them.

This also led me down the path of a familiar existential crisis whenever I think too hard about the future. I really have no idea what I want to do and I think this might be the product of living most of my life on autopilot following the usual plan and making choices that would lead to easy success. Get good grades, go to college, get a relatively high paying job, then ???? Taking steps toward becoming FI is really the first thing I've done that's felt like me really taking control. But I have no idea what my plan looks like once I am FI. I've played with lots of ideas - most of them for semi ERE. I could maybe negotiate to scale back my job to two days a week, or take a job as a technician. Or leave my field entirely and try out other part time jobs, some that I think would be fun: yoga instructor, bartender, working at an ice cream parlor, working on a cruise ship, trying my hand at starting a 3d printing service shop. Maybe I shouldn't even wait until I'm fully FI before leaving my 9-5. I'm also occasionally struck by the strong desire to run away to a new place which makes me wonder if I should try some sort of slow traveling. I thought my rotational program would take care of this desire, but it turns out it kind of sucks when you have to work 40 hours a week and don't have the option to go where you want. And then there's the question of kids, which I still haven't answered. Basically I know I'm keeping all of my options open, but I have no idea which one I want to choose. The problem reminds me of the quote from Sylvia Plath

"I saw my life branching out before me like the green fig tree in the story. From the tip of every branch, like a fat purple fig, a wonderful future beckoned and winked. One fig was a husband and a happy home and children, and another fig was a famous poet and another fig was a brilliant professor, and another fig was Ee Gee, the amazing editor, and another fig was Europe and Africa and South America, and another fig was Constantin and Socrates and Attila and a pack of other lovers with queer names and offbeat professions, and another fig was an Olympic lady crew champion, and beyond and above these figs were many more figs I couldn't quite make out. I saw myself sitting in the crotch of this fig tree, starving to death, just because I couldn't make up my mind which of the figs I would choose. I wanted each and every one of them, but choosing one meant losing all the rest, and, as I sat there, unable to decide, the figs began to wrinkle and go black, and, one by one, they plopped to the ground at my feet."

Is it a cliche to mention that quote? I don't know. But it wouldn't be a cliche if there wasn't some truth in it.

[Randy]

Time for the May wrap up already? I probably should have included that in my last post.
May savings rate of 76%, net worth is just a hair away from 50k.

Not bad for a month where I spent 3 days in Switzerland on vacation. This month I will spend another week there on vacation, I'm sure it won't be cheap. Still negotiating my job offer, they don't want to budge on base pay or official vacation time, but there's a slim chance of a sign on bonus which wouldn't be a bad consolation prize.

I still have no idea what I want to do, but I'm less verbose and less bothered by that right now. I have a long time to figure it out.

[Viktor K]

A little late, but I enjoyed this long, but entertaining read when considering salary negotiating:

https://www.kalzumeus.com/2012/01/23/sa ... gotiation/

Disclaimer: I have not tried it

[Randy]

Thanks Viktor, that was a good read. Made me feel a little less guilty about asking for more. I’m surprised at how much the negotiations have blown up actually, something like three different levels of HR are arguing about it. I thought the person who sent the offer would be more prepared for some negotiating.

[Randy]

Been drifting away from the forums lately, but that doesn't mean I'm drifting away from ERE mentality/lifestyle.

Was able to negotiate a 5k sign on bonus, combined with my 5k relocation bonus that I pocketed, I made an extra 10k with my transition from Germany to NC (it's good to be home). I was also rear ended, which was unfortunate for my car and stress levels, but ended up being a net positive for my wallet after the insurance pay out and buying used replacement parts.

My spending has certainly seen an uptick with some mostly automotive moving costs (had to register the car, pay taxes, do a couple repairs), paying for internet, half utilities, and the grocery bill for two rather than one. As per the agreement with the BF, I handle the groceries and he handles the mortgage. Not exactly fair in my eyes, but it's what he wants and he knows that I'm happy to pitch in if he changes his mind. But I knew all this was coming and I'm still seeing about an 85% savings rate. Granted my income was ridiculous in July because of the bonuses mentioned above, so maybe I shouldn't be patting myself on the back for that. Now my net worth is sitting around 70k and I'm slowly getting over the mental barrier of putting some of this money in an investment portfolio and actually making it work for me.