Gilberto de Piento's Journal

[Gilberto de Piento]

November 2017

This month spending was OK but not as good as it could have been. I need to mentally reset my goal amount of spending down from $1500 to $1300 since some of my fixed costs like rent are down. I don't want to start feeling like I have an extra $200 per month to spend on unnecessary expenses.

I transferred $25,000 out of checking into a CD in order to earn more interest and also psychologically set that money aside for a house downpayment. I need a few thousand more and I will be able to transfer another $25,000 for a total downpayment of $50,000. I don't want to spend more than $200,000 on a house so that should be enough for a downpayment, fees, etc.

After my house downpayment is complete I'm going to stop saving for a house and start investing outside of my 457b again. I'm not sure exactly where this will go but I'm thinking about it. I'm trying to work up the courage to do something more risky and possibly lucrative than index funds, like individual stocks.

Expenses
Alcohol & Bars 36.25 (Thanksgiving added to this)
Auto Insurance 229.71 (Every six months)
Bills & Utilities 28.23
Business Services 17.98
Charity 60
Groceries 308.02 (Thanksgiving added to this)
Gym 39.04
Home Improvement 6.57
Internet 21.10
Laundry 20
Mobile Phone 16.17
Mortgage & Rent 740
Parking 38 (Another parking ticket )
Restaurants 11
Shopping 49 (Expense for professional credential)
Sports 65.56 (Had to get some gear repaired)
Travel 54.50 (Part of flight for Christmas)
Total -FI 1741.13

Income
Paycheck 2454.97
Amazon 102.7
CafePress 30.71
Checking 18.22
457b 1384.6
Total +FI 3991.2

Savings 2250.07
% Spent 43.6%
% Saved 56.4%
SWR 8.9%
SWR with Internet Income 8.2%
Years Remaining 10.1
Years Remaining with Interest 5

All men should strive to learn before they die, what they are running from, and to, and why.
James Thurber

[Gilberto de Piento]

December 2017

I expected December to have high spending due to the holidays but things went off the rails even more than I anticipated. Early in the month I felt free to make a few purchases and I also contributed to some charities. Unfortunately later I was caught off guard by some unexpected expenses and also made some purchases that I probably could have avoided but gave in on instead.

I spent about $350 on Christmas gifts this year. If I shop throughout the year and get deals and/or make gifts I might be able to reduce this. I'm going to try to spend less on Christmas in 2018.

Expenses
Alcohol & Bars 61.04 (had guests)
Bills & Utilities 14.8
Business Services 141.83 (annual website registration renewal)
Cash & ATM 10
Charity 97.38 (made some donations, though I should have waited for a month with lower spending)
Clothing 23.99 (bought a sweater, it's cold)
Gas & Fuel 26.33 (not bad!)
Gift 328.91 (Christmas spending went as planned but it adds up. Next year I'm going to try to buy things on sale or make gifts.)
Groceries 338.75 (had guests)
Gym 39.04
Internet 21.1
Mobile Phone 16.49
Mortgage & Rent 740
Parking 5
Restaurants 40.71 (some difficult to avoid restaurant spending due to the holidays)
Shopping 84 ($50 is for an industry certification I'm working through)
Sports 339.66 (bike needed a new wheel, replaced failing rain jacket, bought a used hiking backpack, replaced broken bike headlight after trying to repair it)
Travel 18.5
Total -FI $2347.53

Income
Paycheck 2454.95
Amazon 31.75
Checking 8.4
Gift 210
457b 1384.6
Total +FI $4089.7

Savings $1742.17
Spent 57%
Saved 43%
SWR 12%
SWR with Internet Income 12%
Years Remaining 25
Years Remaining with Interest 9

"I think making mistakes and discovering them for yourself is of great value, but to have someone else to point out your mistakes is a shortcut of the process."
Shelby Foote

[Gilberto de Piento]

I hit $240,000 net worth today.

Ignore the big bumps, Mint is crazy sometimes.

[Gilberto de Piento]

Three goals for the near future:
1. In January spend no money on anything that isn't "necessary" to make up for depraved December. Rent, utilities, food, gas, recurring bills are necessary.
2. Save the remaining $1,500 to get to $50,000 in house down payment savings by the end of February.
3. Get to $250,000 net worth by the end of April (assuming the market doesn't tank since that is out of my control).

[Gilberto de Piento]

It's halfway through January and the spending freeze is working. I'm just north of $1000 now (0.143 JCB). Not fighting for every dollar but keeping my eye on the ball. It's fun to have a goal.

[Gilberto de Piento]

I hit $250,000 today. In November I hit $230,000, January $240,000, and I'm now at $250,000 and it's not yet February. Anyone remember the phrase "irrational exuberance?" Maybe I should get around to reading that book. I keep waiting for the bottom to fall out.

It's actually not such a good thing for me as I would prefer to be buying "cheaper" stocks rather than "overvalued" stocks, whatever "cheaper" and "overvalued" really mean.

Ignore the big bumps, Mint is cray-cray sometimes.

[cmonkey]

Congrats on a quarter million!

Even if a large drop is coming, it could go up another 30% before dropping 20% and then you'd still be up 10% if you buy now. Irrational exuberance tends to go on longer than anyone thinks it will. I have been having these thoughts since mid-2015 when I started buying stock. Look where we are now. 2 years from now we'll probably be higher. So I just cherry pick some of the better looking stocks.

[Gilberto de Piento]

Thanks! I didn't even think about it as a quarter million until you pointed it out.

I'm not considering doing anything different other than maybe diversifying more. I just want to acknowledge that it could blow up so I am not surprised when it does.

I suppose I am just a product of my era. I started my career in 2006 and the great recession hit two years later. I didn't have much money in the market at that time but the drop in the market and the lack of jobs convinced me to never count my chickens before they've hatched.

[classical_Liberal]

...

[Gilberto de Piento]

You're officially rich once net worth is counted as fractions of a million rather than in hundreds of thousands. Congrats!

I like that you have a level head on your shoulders. Celebrate the fact that even though everything is massively overvalued at the moment you still are miles ahead in the game. Well done.

Thanks guys! I'm really excited to be making progress.

[Gilberto de Piento]

January 2018

Early in January I posted some goals. I worked hard and got lucky and met all of them early!

1. In January spend no money on anything that isn't "necessary" to make up for depraved December. Rent, utilities, food, gas, recurring bills are necessary. I’m sure there is still spending to cut but I had a really good January! See below.
2. Save the remaining $1,500 to get to $50,000 in house down payment savings by the end of February. I made it to $50,000 a couple of days ago!
3. Get to $250,000 net worth by the end of April (assuming the market doesn't tank since that is out of my control). I got to $250,000 on the 23rd.

How did January work out? Excellent! I only spent $1255.99, beating the previous record low by about $300. This resulted in a record low SWR of 6.0% and a savings rate of 70.3% (the best ever for a two paycheck, normal income month). This isn’t going to happen every month but it shows what's possible! Look how close the red spending line and the orange theoretical income line are in the first chart below!

Expenses
Bills & Utilities 21.24
Business Services 27.98
Gas & Fuel 30.7
Groceries 271.44 (A little high)
Gym 39.04
Internet 21.1
Laundry 20
Mobile Phone 18.37
Mortgage & Rent 740
Restaurants 12.12
Shopping 49 (For a certification I’m working on)
Sports 5
Total -FI 1255.99

Income
Paycheck 2459
Amazon 80.39
Google 158.13
Checking 9.61
Gift 140 (Not a gift – I think I sold something but I just can’t remember what)
457b 1384.6
Total +FI 4231.73

Savings 2975.74
% Spent 29.7%
% Saved 70.3%
SWR 6.0%
SWR with Internet Income 4.9%
Years Remaining 2.9
Years Remaining with Interest 2

The electric light did not come from the continuous improvement of candles.
Oren Harari

[Gilberto de Piento]

New goal: finish the professional certification I'm working on (sorry, don't want to say what this is) by the end of February so I don't have to pay for any more time to work on it. I don't have complete control over this as I am dependent on someone else taking time to grade my work but I'm to get my work finished as soon as possible.

[Gilberto de Piento]

I made more money in 2017 and didn't pay any taxes on it during the year. The HRBlock website is estimating that I owe about $3800 in taxes, plus an underpayment penalty of $77 due to $10,000 or so in extra income. I'm still waiting for one more form for my taxes to be final but that form will only make the problem worse.

I've got to do some more looking into the issue because the amount I am estimated to owe seems like more than what I would have expected just by taking the extra money I've earned and multiplying it my marginal rate of 25%. I don't really understand taxes though.

I may take it to a tax preparer to make sure I'm not making a mistake. The HRBlock website is not giving me as much confidence as it has in the past - it seems like they've made a lot of changes to it.

[jennypenny]

Can you still enter your info for free on TurboTax? (it used to be that you didn't pay anything until it was time to file) That would be a way to check numbers between two different programs.

Have you updated your HR file? There were changes included in the Debt bill a couple of weeks ago. Have they included them? I'd check.

[Gilberto de Piento]

Can you still enter your info for free on TurboTax? (it used to be that you didn't pay anything until it was time to file) That would be a way to check numbers between two different programs.

Thanks for the advice! First I went to HRBlock in person but they wanted $350 to start on my taxes and they weren't sure how much it would end up costing. I then tried TurboTax (which I liked a lot more than HRBlock due to the explanations they provide as you go) and got basically the same results. Just to make sure it was right I ended up paying an extra $60 for a CPA from TurboTax to go through my taxes with me online. He verified that my taxes were done properly and saved me about $1000 using deductions I wasn't taking (home office type expenses).

The reason why I owed so much more than my extra earnings multiplied by my marginal rate is because the extra income was from a contract job so there were no taxes taken out of it. It turns out for income like this I have to pay not only my marginal tax rate of 25% but also another ~15% due to the self employment tax. Self employment tax covers social security and medicare. It's definitely discouraging to have to pay that much on any extra earnings.

Have you updated your HR file? There were changes included in the Debt bill a couple of weeks ago. Have they included them? I'd check.

Based on the W4 thread I started I've adjusted my allowances from 2 to 1. I have no idea why they were set to 2 but it has been that way for many years. That should keep me from owing on taxes unless I have more extra income in which case I will pay as I go.

[Gilberto de Piento]

February 2018

I paid taxes on last year's extra income (see previous posts on the taxes) and bought plane tickets and some other items for an upcoming vacation. I spent more than I brought in so things are not looking good this month. If you take out the taxes it was a normal month.

Expenses
Alcohol & Bars 18.83
Auto & Transport 83.96 (Auto registration)
Bills & Utilities 18.14 (electricity bill)
Business Services 27.98
Charity 50
Clothing 11.24 (used shirt from eBay)
Gas & Fuel 30.66 (one tank of gas, not bad!)
Gift 6.32
Groceries 197.54 (not bad)
Gym 39.04
Internet 21.1
Laundry 20
Mobile Phone 19.9
Mortgage & Rent 740
Restaurants 90 (too high but was not really possible to avoid)
Sports 178.46 (had to replace some consumables)
Taxes 3065.97 (paid taxes on my extra income last year, see previous posts)
Travel 383 (plane tickets for vacation)
Total -FI 5002.14

Income
Paycheck 2529.8
Amazon 48.86
CafePress 88.25 (nice)
Checking 9.04
457b 1384.6
Total +FI 4060.55

Savings -941.59 (spent all income and more so the numbers are weird here)
% Spent 123% (spent all income and more)
% Saved -23% (spent all income and more)
SWR 25%
SWR with Internet Income 24%

You only lose what you cling to.
Gautama Buddha

[Gilberto de Piento]

New goal: finish the professional certification I'm working on (sorry, don't want to say what this is) by the end of February so I don't have to pay for any more time to work on it. I don't have complete control over this as I am dependent on someone else taking time to grade my work but I'm to get my work finished as soon as possible.

I got this done and avoided having to pay again in March. For whatever reason the organization doesn't seem to have billed me for February either.

Next goal?

[Gilberto de Piento]

I got a raise, about $1500 a year. Not bad.

[Gilberto de Piento]

New goal: earn $100 from internet marketing every month. My sites still earn money but since I haven't touched them in a long time the earnings are slowly creeping downward. Starting in 2016 I've had the occasional month that earns less than $100. I'm going to start by giving all my old sites a tune up and then see what work makes the most sense to do.



I'd really like to get this source producing even more money ($300 per month? $500?) since obviously it is additional income but also because it is good to have an income stream that is disconnected from work and investments. If I give it a shot I'm going to ease back into it and see if I can find the willpower and luck to make it work. I think a key component might be setting aside some time to work every day that is absolutely inviolable, even if it is not a lot of actual hours. Also, when I first got into IM it was fun and exciting. Now it is just work like my day job. I have to accept that and push on.

[simplex]

Your internet income looks quite dependable in relation to the amount of work you put into it. Congratulations.