Barlotti in Boston II

Where are you and where are you going?
Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

August 2014 expenses -- edited on Sept 2 2014

Post by Barlotti »

I've decided to refurbish an old entry to track my August 2014 expenses.

I spent about $2,917 this month. I feel good because it's less than I spent last month, but am mindful that I need to halve my spending if I want to be FI in 7 to 8 years.

mortgage $1,127
dining $432
household $384
auto $183
utilities $170
clothing (cosmetics) $148
groceries $129
health & fitness $94
entertainment $80
bank fee $67
miscellaneous expenses $57
home repair $20
medical $20
pets $6

In accordance with YMOYL, I am going to comment on what spending was worth my life energy and what spending was not.

First, the spending I regret. My spending on eating out was high even though I spent about $90 treating friends to lunch and don't regret doing so. I spent too much in the "auto" category, and specifically on parking. The health & fitness spending was on massage and related tips -- cancelling membership in October. My entertainment spending was too high, mostly on Amazon on demand videos. I spent about $33 on cigarettes under miscellaneous expenses -- haven't smoked in 3 weeks. $67 in credit card finance charges. This is a total waste. I've transferred about $3.5K in credit card debt to another credit card with 0% APR on balance transfers until September 2015. I'll pay the debt down every month until it's gone.

Second, the spending I feel good about. The mortgage is worth it. This should come down by $50 next month because my PMI will be cancelled (yay!). The $90 treating my friends to lunch -- worth it. Spending $148 on summer cosmetics -- worth it. $6 on my pet -- worth it.
Last edited by Barlotti on Tue Sep 02, 2014 10:37 am, edited 1 time in total.

Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

Net worth calculation for September 3 2014

Post by Barlotti »

I'm refurbishing another old journal post. Using it for my September net worth calculation. I've been writing a lot lately, and want to streamline my journal a little.

Assets
home 188,000
investments 87,961
pension 3,292
checking 1,132
subtotal 280,385

Liabilities
mortgage 141,477
heloan 14,308
credit card debt 3,811
subtotal 159,596

net worth 120,789

My net worth has increased $6,642 since last month. I saved $2,800 after tax and $544 pre-tax this month to reach a savings rate of about 66%. I transferred my credit card debt to a 12 month 0% APR credit card, which I will pay down monthly.

Last night, I started using Morningstar portfolio tracker.

I've been walking a couple miles from where I work along Boston's harborwalk to a redline T station. It's a beautiful walk. Today, I found a nice stretch by the Intercontinental hotel and also the Children's museum.

And I made myself what turns out to be a nice meal from stuff lying around. Penne pasta with tuna, mayo, mustard, red pepper, and shredded cabbage. I love cabbage. Cheap, versatile, and keeps well.

I'm going to see how long I can go without spending more than $2 per day on my comestibles. I've got plenty of staples, rice, flour, quinoa, beans, lentils, canned diced tomatoes. I just need to buy myself some veg now and then.

Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

Net worth calculation for October and September expenses

Post by Barlotti »

Well folks, the month went by in a hurry, and I just didn't get around to calculating my net worth. Here goes...

Assets
home 188,000
investments 85,529
pension 3,292
checking 750
subtotal 277,571

Liabilities
mortgage 140,040
heloan 14,205
credit card debt 5,150
subtotal 159,395

net worth 118,176

My net worth decreased by 2,613. Mildly depressing. There are good months and bad months.

Here's my spending for the month of September
Household (including condo fee) $382
Vacation and travel $346
Dining $339
Auto $205
Charity/Donations $125
Groceries $101
Utilities $68
Health and fitness $59
Entertainment $48
Bank fee $42
Misc. $22
Pets $20
Medical $13

Total spent $1775
Last edited by Barlotti on Tue Nov 04, 2014 9:12 pm, edited 1 time in total.

Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

Net worth calculation for November and October expenses

Post by Barlotti »

Assets
home 188,000
investments 89,694
pension 3,292
checking 785
subtotal 281,771

Liabilities
mortgage 140,040
heloan 14,050
credit card debt 4,090
subtotal 158,180

net worth 123,591

My net worth increased by 5,415. I added $2K to "investments" outside of my 403b. The rest of the increase was due to stock market gains and 403b contributions.

Here are October expenses
mortgage $2,851
auto $399
dining $289
groceries $163
household $82
health & fitness $59
cash $53
gifts $39
misc $37
vacation/travel $37
entertainment $34
bank fee $26
work related $10

total expenses $4082

Well, the spending I regret is on parking in the "auto" category. Last year, I spent about $34,910. This year, I seem to have spent $38,850 already. Something's not adding up in terms of the numbers that ye olde personal finance software is giving me, but I think it's safe to say, I'm not meeting my savings goals. I really should be able to live very, very comfortably on $30,000 per year. I should make that my goal for 2015. I'm just not good at extreme savings, and I haven't figured out my psychology on this point.

Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

The millionaire next door

Post by Barlotti »

I've been listening to "The Millionaire Next Door" on youtube, and although I feel like I know way too much about the car buying habits of millionaires, I really appreciate the break down of who is a good saver and who is not.

The metric involves taking your annual salary and multiplying it by one-tenth your age to get your denominator. Then, you take your actual net worth and divide it by your denominator. If the resulting number is 0.5 or less, you're a UAW (or an under accumulator of wealth). If the resulting number is between 0.5 and 2, you're an AAW (or an average accumulator of wealth). If the resulting number is greater than 2, you're a PAW, the elusive positive accumulator of wealth.

I did the calculation based on my current income, and the result was disheartening. $123,591 divided by 330,600 is 0.37 and this definitely puts me in the UAW category.

But I don't think this is a great representation of my savings ability considering that I've made less than $25K annually (sometimes far less) for about 10 of the 16 years I've been "working". My average annual salary over the past 16 years has been about $41,750 and if I use that in my figuring, I should take my net worth of $123,591 and divide it by $158,650, giving me 0.78. I figure this puts me in the AAW category, if not now, than in the next year.

In my view, PAWs are prodigious. Averaging an income of about $42K annually for the past 16 years, I would need about $317K saved now to qualify as PAW. That's astounding to me even though having perused this blog, I'm no stranger to extreme savings. It will take me at least five more years to reach PAW!

Based on what I've gleaned from the audiobook so far, here's what I've got going for me.
My mortgage was less than two times my pre-tax income.
I don't care about status symbols.
I'm not into "stuff".
I'm frugal-ish. (Or is it that I'm frugalicious?...)

Gilberto de Piento
Posts: 1942
Joined: Tue Nov 12, 2013 10:23 pm

Re: Barlotti in Boston II

Post by Gilberto de Piento »

I think the formula you described is overly simplistic. Two issues I see are that it doesn't take into account the time you've been working or your progression in salary.

For example, I've had a real job only since age 26 since I was getting an education before that. The formula says I'm an underaccumulator since 102,000/(0.1 * 70,000 * 34) = 0.43. In order to be a positive accumulator I would have to have saved 476,000 since 476,000(0.1 * 70,000 * 34) = 2. This would be 59,500 per year in the eight years I've actually worked, or 85% of my income, and this still doesn't account for the problem that I haven't always made 70,000 per year.

I haven't read the book so maybe they discussed these issues.

bottlerocks
Posts: 85
Joined: Mon Jul 14, 2014 1:51 pm
Location: Magicant (WalkScore: Pajamas)

Re: Barlotti in Boston II

Post by bottlerocks »

That formula definitely does not suit younger people or people whose salaries have recently increased. I would have had to accumulated >$457600 to be an overaccumlator, which is >$100000/year since I've been in the workforce, which is over twice what my average net salary has been. 457600/(0.1*88,000*26) = 2.

However, if my salary stayed flat over the next 10 years, 633600/(0.1*88,000*36) = 2 seems much more reasonable to me, maybe undershooting just a bit. Substituting average net in for current salary seems like it could be more meaningful for young and/or fluctuating careers.

jacob
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Re: Barlotti in Boston II

Post by jacob »

No they didn't discuss it. Basically, the rule is just a crude rule of thumb. It doesn't work if you just started in your career or if your salary is still growing exponentially or if your salary just dropped substantially.

If you think about how their equation works, it basically makes you a PAW if you've had a savings rate of 20%(*) for most of your working life under the assumption that you've been working most of your life (that is, you're an old person) and that your wealth has grown as fast as your salary increases. IOW, in the long run, the requirements to become a PAW are fairly easy by ERE standards.

(*) That's a lot by normal person standards.

Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

Re: Barlotti in Boston II

Post by Barlotti »

@Gilberto and bottlerocks: Glad I'm not alone.
@Jacob: Perhaps by ERE standards, getting to PAW in a short period of time is easier than getting to PAW over a long period of time? Depends on how a person feels about their income-generating work, and their lifestyle.

***************************************************************************
I was thinking of flying to Seattle next week in order to attend a long-time friend's first ever book signing for the first book in a series. She's gotten some good reviews from the Library Journal and Publisher's Weekly, and my book blogger friend who read an advance copy says it's well written. The first book in her next series is being published by St. Martin's Press in hardback next year.

And then I remembered my savings goal...

I could consider this situation in a few different lights. One view is that I'm sacrificing an enjoyable life experience (seeing my friend at her first book signing) to reach a certain number that's in my head. But that feels uncomfortably Scrooge-ish to me. Another view is that I didn't plan well enough, or exhibit enough self-control to be able to both attend the book signing and reach that certain number in my head (which can also be classed as an enjoyable life experience). Somehow, this view seems a bit more... constructive.

In the end, I probably won't go to Seattle for another reason -- I'm ridiculously busy at work and spending $400 on airfare and over ten hours in the air for a weekend trip just doesn't seem worthwhile. But I've gotten a good reminder of the value of spending and saving with intention. Perhaps if I'd thought about a Seattle mini-vacation in October, it would have been easier not to drive and park so much.

Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

A paean to home

Post by Barlotti »

Small though it is,
it's mine,
and welcomes me with margarene colored walls and knocked about table and catworn sofa.

Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

December net worth and November spending

Post by Barlotti »

I must be getting old. I'm having trouble adjusting to the new look of ERE journals.

Assets
home 188,000
investments 91,857
pension 3,292
bank accounts 5,022
subtotal 288,171

Liabilities
mortgage 139,689
heloan 13,943
credit card debt 7,350
subtotal 160,982

net worth 127,189

My net worth increased by 3,598. I'm carrying credit card balance on a 0% APR credit card. I'm keeping about $5,500 in cash to fund a kitchen remodel. Now if I can get ahold of the contractor who has visited my home twice, but is otherwise hard to reach. Grah.

Here are November expenses
mortgage $0
auto $419
dining $364
groceries $207
household $790
health & fitness $59
utilities $104
gifts $189
vacation travel $61
medical $36
charity donations $20
entertainment $126
bank fee $2
work related $13
misc $35
pets $11
clothing $2

Total spent $2,456

Spent too much on my car, as usual. But that $419 includes a new car battery and an oil change. Excluding these expenses, I spent a couple hundred on insurance, gas, and parking, which is much better than last month. I also spent a lot eating out, but that includes $100 for Thanksgiving dinner (I treated a friend to a nice meal). I've also spent a lot on gifts, but this includes a baby shower, and buying 10 copies of a friend's recently published book.

I coulda spent less, but I feel OK about my spending. Other than money spent on parking, I feel OK about my spending, generally. You know, life is good.

I bought a Christmas sweater (a cool, wool, Nepalese sweater) and a pair of brand new coach shoes at this consignment shop in New Hampshire. I think they undercharged me. I shoulda paid $21, but they seem to have charged me $2. Dude, that store looked hard up. I'm thinking of calling them up and asking them to charge an additional $19.

Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

Over $100K invested

Post by Barlotti »

I transferred about $4K to my brokerage account last night, and with my pension, I have over $100K invested.

Update on Dec. 16: As soon as it came, it went. Due to market fluctuations, I no longer have over $100K invested, but that's OK. I logged onto Vanguard to place some limit orders on ETFs. If the market falls any more, I'll get a good deal on shares of Vanguard Materials and Telcom ETFs.

I calculated my savings rate for 2014 -- about 50%, which is better than the 41% of 2013.
Last edited by Barlotti on Thu Jan 01, 2015 11:53 pm, edited 1 time in total.

Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

Happy new year and best wishes for 2015

Post by Barlotti »

Happy 2015 to all of you!

And to quote Suze Orman: people first, then money, then things. I love my family and friends and want to strive this year to provide those I love (and even those I don't) with comfort and care.

NET WORTH $131,402

condo $188,000
403b $57,503
Roth $19,998
after tax $18,573
checking $5,833
pension $4,000 (conservative estimate)
ASSETS $293,907

mortgage $139,689
heloan $13,943
cc1 $211
cc2 $1,373
cc3 $7,289
LIABILITIES $162,505

My net worth has increased about $4,213 since last month.

NEW YEAR NET WORTH REVIEW
In the way of the year in review, my net worth has increased by $44K in the last year. My investments have increased by about $42.5K.

NEW YEAR SPENDING REVIEW
And in the way of reviewing my spending for 2014, here goes. I spent about $42,309 in 2014, up from $39,144 in 2013. My monthly spending averaged about $3,525 this year. In the following list, I include only subcategories where I spent over $500 because all other subcategories combined was less than $1K.

mortgage $15,171
auto $6,424
condo fee $4,119
dining $4,119
groceries $1,672
utilities $1,463
entertainment $1,360
household $1,238
home repair $1,230
cash $962
health and fitness $1,230
clothing $667
vacation $660
misc exp $594
gifts $554

As per YMOYL, I'm going to comment on how I feel about my spending this year, but I'll keep my comments to the big five items because they have most impact. I feel good about the $15,171 that I spent on my mortgage and the $4,119 that I spent on the condo fee. I feel deep satisfaction in owning a home, and it's a better deal than renting, even from the cash flow perspective.

I feel neutral about my spending on groceries and dining out. I take pleasure in dining, so I'm not going to think too much about these expenses for now.

I think I spend too much on my car, and this category warrants further examination.
parking $2,528
repairs and upkeep $2,342
gas and fees $793
insurance $761

I can reasonably reduce parking expenses. Most of these expenses are due to driving into work. It's an ongoing psychological battle that I don't really "get" because taking public transportation is easier and more pleasant. It's clear that I have a deeply ingrained conviction that driving is a treat, even though it's actually pretty stressful in the Boston area.

REVISITING 2014 RESOLUTIONS
I made three resolutions last year.
1. Max out 403b and Roth contributions. Achieved.
2. Save at least 50% of my gross annual salary. I netted $51,856 and saved $15,740 not including my 403b and $33,240 including my 403b. I think my original intent was to save about $25K outside of my 403b, but in the interest of feeling good, I'm going to say I achieved this resolution.
3. Renovate my bathroom. Failed.

MY 2015 RESOLUTIONS
As they say, "keep it simple stupid".
I want to invest $35K this year. I reached $100K invested in December of 2014, and I'd like to have $200K invested two years from now, and I think investing $35K this year will help the $200K goal along. I recently turned 39. I'd love to reach the $200K milestone while still "40".

I really want to be a Prodigious Accumulator of Wealth (or PAW) as defined in The Millionaire Next Door. I don't think I'll get there until I'm 45.

Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

Poverty

Post by Barlotti »

I read an interesting book by the Dalai Lama, "How to Practice: The Way to a Meaningful Life". In it, the Dalai Lama talks about three areas of development: compassion, concentration, and wisdom. I was intrigued especially by his discussion of wisdom, which I vaguely comprehended to be a deep understanding of the interdependence of everything based on an understanding of reality. Like, I said, I only vaguely comprehended what wisdom is, but what I took away was: you can have a meaningful and deeply satisfying life by seeing "self" for what it is, and understanding that your suffering is indistinguishable from, and insignificant compared to, the suffering of all other living things. Or to say it simply, feeling genuine compassion for other beings feels good.

And then, I watched a movie about Mother Teresa, and read a biography of her, and she had a simple message. Her message was that to be unloved, uncared for, and unwanted is the deepest suffering a human being can experience and that loving and caring for another human being is to love and care for Jesus because that human being is Jesus. I'm no expert, but I think it's consistent with the Dalai Lama's teaching.

What really makes people happy is love and compassion. Giving it, and receiving it. Sex, drugs, and rock and roll doesn't cut it. Neither does a Bentley or a 10,000 square foot house.

There's a greater goal in living simply than reaching FI. It's about taking only what I need so I leave some for others. It feels "right" and good, and is probably something I learned in kindergarten and then forgot.

Generation-X
Posts: 50
Joined: Mon May 06, 2013 4:43 am

Re: Barlotti in Boston II

Post by Generation-X »

That reminds me of Boy Scout Rule: "Always leave the campground cleaner than you found it."
Which was a practical example for the kids, to "Leave this world a little better than you found it."

From Wiki: In his final letter to the Scouts, Baden-Powell wrote:

... I have had a most happy life and I want each one of you to have a happy life too. I believe that God put us in this jolly world to be happy and enjoy life. Happiness does not come from being rich, nor merely being successful in your career, nor by self-indulgence. One step towards happiness is to make yourself healthy and strong while you are a boy, so that you can be useful and so you can enjoy life when you are a man. Nature study will show you how full of beautiful and wonderful things God has made the world for you to enjoy. Be contented with what you have got and make the best of it. Look on the bright side of things instead of the gloomy one. But the real way to get happiness is by giving out happiness to other people. Try and leave this world a little better than you found it and when your turn comes to die, you can die happy in feeling that at any rate you have not wasted your time but have done your best. 'Be Prepared' in this way, to live happy and to die happy — stick to your Scout Promise always — even after you have ceased to be a boy — and God help you to do it.
ʘ

Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

Pension and sundry

Post by Barlotti »

@GenX, I like that metaphor of leaving the campground cleaner than you found it.

I am waiting with baited breath for the end of January. For when the month ends, 70% of my pay will go to my 403b. For the next few months, I'll be living slim to get most of the way to the $18K permitted by the IRS. I try not to obsess about saving, but I do enjoy it so, and as I wrote a couple entries back, I'm dyeeeing to be a Prodigious Accumulator of Wealth.

This morning, I checked my pension doc, which only recently came available, and found that I have about $7K in my pension. Between the pension gain and the 403b, I should break $150K net worth in no time. I'd like to take this opportunity to remind my future self to CELEBRATE. I don't often celebrate and when I do, it's brief, but celebration is important. It will be April by my accounting and I see that The Central Square Theater will be performing a play called The Edge of Peace, the last in a trilogy inspired by oral traditions gathered by the Works Progress Administration. Maybe I'll go see that. Or maybe I'll take Patriots Day off and cheer on the marathoners. I ran the Boston marathon once and felt such melding with the crowd. When the Boston marathon was bombed, I cried at least once a day for about a week because I couldn't understand how anyone could do that to such open-heartedness, generosity and glee. I still cry when I think about the bombings, which you would know if you were here 'cause I'm a weepy mess all of a sudden.

I'm reading this fantastic book called "West with the Night" by Beryl Markham. You see, I generally don't like reading so when I like a book, it means something. To me. I have discovered through our dearly departed Ms. Markham that I enjoy lyrical writing. When the phrases are like music, with rhythm and shape, I enjoy reading!

Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

February net worth summary

Post by Barlotti »

condo $188,000
403b $63,354
Roth $22,730
after tax $16,430
checking $753
pension $7,000 (conservative estimate)
ASSETS $298,267

mortgage $138,942
heloan $13,682
cc1 $303
cc2 $383
cc3 $6,799
LIABILITIES $160,109

NET WORTH $138,158

My net worth has increased about $6,700 from last month. It's not that great considering that I put $5K into my 403b and my discovery that my pension is worth about $7K. I'm feeling frustrated with my job.

There's this new man in my life and I really like him. What can I say, the hormones are talking loud and clear.

leeholsen
Posts: 325
Joined: Tue Apr 16, 2013 6:38 pm

Re: Barlotti in Boston II

Post by leeholsen »

don't worry about that setback, almost everyone had it last month. at the rate youre increasing overall, months like January will not stop you.

pooablo
Posts: 241
Joined: Sat Aug 20, 2011 4:32 am

Re: Barlotti in Boston II

Post by pooablo »

Ah, the love bug! It hits you when you least expect it. :) I've been happily dating a guy for the past 9 months. Good work on the savings too. :)

Barlotti
Posts: 172
Joined: Sat Dec 10, 2011 7:58 am

Re: Barlotti in Boston II

Post by Barlotti »

@leeholsen, thanks for the words of encouragement! I am so looking forward to FI.
@pooablo, congrats! I only hope my guy and I last that long. I'm very fond of him, but have some "anxiety around intimacy", to quote a friend.

condo $188K
403b $70K
Roth $23.7K
after tax $15.4K
checking $2K
pension $7K
ASSETS $306.7K

mortgage $138.6K
Heloan $13.6K
cc1 $0.4K
cc2 $0.6K
cc3 $6.6K
LIABILITIES $159.8K

Net Worth $146.3K
My net worth increased about $8.1K in the last month. My investments, including my pension, are at about $116K. My goal for the year is to reach about $150K in investments, so I have about $34K to go. Fingers crossed.

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