I tire of gold and trinkets: MidwestCoder's Journal

Where are you and where are you going?
MidwestCoder
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by MidwestCoder »

A couple of money saving thoughts:

DW lowered cell phone bill by $30 by removing the insurance from two phones. One phone is too cheap to insure and the other is an iPhone 10 which would be expensive to replace but is already over a year old. We'll just take our chances. $100 copay anyway if we used insurance. We are still paying another $70/mo for "device charges" which is the 0% loan for buying a phone through Verizon. I am not sure when that ends, but when I have to get a new phone I'm getting something CHEAP.

Talked about shutting down the cabin next year to save ourselves $50-80/mo in propane costs during winter months. May also save some electric.

We also talked about cancelling DirectTV but decided we'd have to stop being sports fans altogether or we'd end up going to the bar and watching the games, which would be a lot more money than NFL sunday ticket. It sure would be nice to cancel DirectTV as with the NFL package its about $115/mo. The only other option for watching NFL games at home is illegal streams which are full of ads and are low quality. So I guess we keep DirectTV for now, fully knowing it might push back retirement by 6 months! ($34,500 asset returning 4% to generate 115/mo) Probably more due to compounding.

UPDATE: after writing this post I looked into it, and I determined we could suspend direct tv and only pay $7/mo. So I did that for the next 6 months saving me $450. We actually pay $47 (programming inclu $40/mo promo) + $35 equipment charge. This doesn't count $300/yr for NFL. When suspended we only pay $7/mo instead of $82/mo. We'll see if we get used to not having it, maybe we'll change the suspension into a cancellation if we decide we don't need NFL.

Hristo Botev
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by Hristo Botev »

MidwestCoder wrote:
Fri Feb 14, 2020 10:48 am
We also talked about cancelling DirectTV but decided we'd have to stop being sports fans altogether or we'd end up going to the bar and watching the games, which would be a lot more money than NFL sunday ticket.
No advice, just an anecdote. When DW and I were in grad school we thought we were being really frugal by not having cable. Instead, we would spend every Saturday at the bar from about noon (when my crappy college team usually played) until usually about halfway through the 8:00 game (when DW's much better college team usually played). Needless to say, we didn't save any money. Now, we still don't have cable, but we also don't watch as much college football, and the only NFL we watch is our local team, which is on broadcast (antenna). But for soccer (MLS and World Cups) and baseball, we tend to just do a streaming service for the 2-3 months out of the year that we want to watch.

That said, I lost it this year when the college football national championship game was on ESPN and not ABC. I really wanted to watch that game, but I didn't realize until it was too late that we had to have a streaming service to watch it. All of this cable/streaming nonsense is infuriating, and it just makes me want to tune out permanently.

MidwestCoder
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by MidwestCoder »

Yes indeed the NFL is a total rip! Sadly we are both avid fans of two different out of state teams. I'd love an NFL only streaming option that didn't force me to also have DirectTV.

Hristo: How did you and your wife quit becoming fans, was it tough?

I'm all in on the NFL. I even watch other games that are not my team, usually because I have a fantasy football related reason. Maybe this is one guilty pleasure I keep. Suspending DirectTV for 6 months out of the year will at least lessen the impact. Not very ERE that is for sure.

Hristo Botev
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by Hristo Botev »

For college football, our losing interest (mostly) was a combination of: (a) DW's team getting bad (she was always a bigger college football fan than me, in part because she just went to a better football school); (b) me getting more interested in watching our local NFL team (I didn't grow up with a local NFL team, and was never really a fan until after grad school); and (c) both of us falling in love with soccer, when we got an MLS team in town a few years ago (and when our kids started playing league soccer). So it wasn't tough, because we really just moved on to other sports. That said, in our house our kids know that the only thing they can ALWAYS turn on the TV, without having to ask permission from us first, is sports (really, any sport). There's so much crap on TV aimed at kids, and so sports seems to be the last vestige for people like DW and me who aren't cool with our kids' minds people filled full of society's junk via the TV. But honestly, sometimes we need them to just leave us alone so we can get ready in the morning, or get dinner/dishes/laundry done. And the TV can be very helpful for that. Anyway, my point is that in our house, we don't think too much about signing up for a streaming service for a month or two when the seasons for soccer or baseball (or college football) are hot. During the off/slow seasons, my kids are still at an age where they can be entertained for hours just watching Patrick Mahomes' highlights, or Messi/Ronaldo highlights, or whatever on YouTube.

Hristo Botev
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by Hristo Botev »

I should also add that, during college football season, our Saturdays are now full with escorting our kids to/from various sporting events, so the days (when we were kid-less, and when they were babies/toddlers) of devoting most of the day to watching the games is long gone. And that's a good thing, honestly, because what a waste. It goes to Jacob's point about living life as a participant/doer; and not as a spectator.

Scott 2
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by Scott 2 »

That was going to be my question. How many hours a year are you spending watching NFL? My hesitation wouldn't be just the price, but the opportunity cost of burning premium free time watching someone else live.

I'd rather funnel that direct TV money into doing something. Attend a couple special games, enjoy a monthly game with friends, etc.

MidwestCoder
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by MidwestCoder »

Scott 2 wrote:
Fri Feb 14, 2020 6:50 pm
That was going to be my question. How many hours a year are you spending watching NFL? My hesitation wouldn't be just the price, but the opportunity cost of burning premium free time watching someone else live.

I'd rather funnel that direct TV money into doing something. Attend a couple special games, enjoy a monthly game with friends, etc.
Hours a year? I'd guess about 60 to 100 hours. Part of it is watching my team, the other part watching my wife's team (her team is like my 2nd team) and the rest is related to fantasy football.

MidwestCoder
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by MidwestCoder »

Today I made a small money saving step. I unplugged our old garage fridge from the 1980s after reading that it probably cost $150/year to run (local util rate per kwh is roughly 11 cents). That sucker used at least 1500kwh (versus 350-400kwh for my modern fridge in the kitchen), and maybe more considering it had a bad seal and sometimes I'd go to the garage to find it wide open. I moved all the soda and beer (all we had in there) into our fridge in the house with a little organizing. Well not all of it, just about half, I figure I'll just transfer warm soda from the garage to the kitchen fridge whenever I run low.

Related, I emptied the old food out of my chest freezer, and moved a few items (pizza mostly) from the unplugged garage fridge into it. I read that garage chest freezer costs about $30/year to run, so that seems like a worthy appliance to keep using. I'm going to try to make a point of using the garage chest freezer from now on.

MidwestCoder
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by MidwestCoder »

Thought about my work anxiety today. Read a quote from Epicurus in one of my philosophy books. I forget the exact quote but the gist of it was that anxiety is caused by wanting something that you have no control of. In my case, wanting to keep my job even though I have no control if I get laid off. Or fear of looking like I don't know what I'm doing, etc. So I made a decision to really try to be more fearless in all aspects of my life. Too much worry, it needs to end.

MidwestCoder
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Four Month Update

Post by MidwestCoder »

DISCLAIMER: My sympathies to anyone suffering during these tough times. I am fully aware that I am a better position financially than most people in the US. I am not tooting my own here, this is just a thought exercise, I would like to retire at age 55, I am currently 44. Please do not take anything I write here as some sort of brag because it is not.

Haven't added to the journal in four months. Wow have things changed with the world. Luckily my wife and I had started buckling down on our spending a few months before the pandemic took off, which has led to increased peace of mind and less anxiety then would have otherwise been the case.

Speaking of anxiety, the work anxiety I mentioned previously is much reduced. I used to get nervous before my daily meeting and during crunch time when I had deadlines, sweating, etc. That's basically gone now and I credit that exercising more. I've been running 3/week for the last two months, walking every morning also, and occasionally playing tennis and hiking. To anyone with anxiety I can't recommend enough, to just increase your exercise levels.

We have done a pretty good job putting money in our emergency fund, probably averaging 3-4k a month since January. We continually debate putting some of that money towards the 95k in student loans, but have held off until we have 6 months of expenses saved.

Some things we saved money on:
Two expensive vacations to National Parks we cancelled due to the pandemic, saving roughly 10k.
For son's college for room and board, we got a credit of I think 3k for next year (pandemic related).
Son's classes will be online next year so we'll save 10-12k on room and board expenses and they will all be online classes now.
We have continued to spend roughly $800/mo LESS than last year on dining out, a trend that started in January.
We've bought less crap on Amazon and constantly have "no spend March" or "no spend for last two weeks of this month" type challenges.

Jobs:
Wife and I are still gainfully employed and feel very lucky. We are in the real estate and software industry, both of which haven't been hit very much by the pandemic. WE ARE LUCKY, and appreciate it and fully realize how fortunate we are. We make roughly 250k-300k before tax, much of which is bonus related (real estate). We know that's a lot of money and don't want to fritter it away, retiring at 55 or earlier should be well within reach. We may choose to work longer (especially her) we'll see.

Finance wise here is an update, not much change except increasing emergency fund from 20k to 43k.

Assets:
230k house
90k cabin
10k or so for two older cars (2013 civic, and 2009 jetta wagon)
275k in an IRA (DOWN from 290k in Feb)
163k in 401ks (UP from 150k in Feb)
78k in two Roth IRAs (DOWN from 80k in Feb)
43k savings (UP FROM 20k in Feb)

Total assets (minus deferred taxes to be paid on 401k and IRA)
So about 889k (880k in Feb)

Liabilities:
95k Student Loan (98k in Feb)
64k mortgage, guess (66k in Feb)

Net Worth (rough):
730k, but likely more like 580k or so if you count the deferred taxes I'll pay in the future on 401k and IRA money.


FUTURE GOALS:

We want to pay off that 95k in student loans as the next priority. Good news is between the 43k we have saved (8k or so will go to Son's college next year), and my wife's expected bonus in Jan 2021 of 60-80k we might be able to pay it off! We'll have to decide when the time comes how badly we want to deplete our emergency fund. We are very excited to possibly only have our mortgage left (62k by then probably) to pay.

We think we can be debt free completely by Jan 2022 (18 months from now). After that time the money we used to pay debt will go straight into investing. We already max out our 401ks and my HSA, but at that point the extra money will go into a brokerage account put into various investments. We also will direct some of it into real estate investments, of which my wife has good knowledge of being a realtor.

INVESTING:

I was only partially invested in stocks when the crash happened in March 2020. As the market fell I kept buying more. When the bottom hit, I thought stocks looked somewhat cheap so at that point I was 90% stocks. As the market rose I sold in phases. Now I have only 15-20% stocks as I consider the US markets to be quite rich, especially considering further fallout from the pandemic economically. I own a lot of VGSH (short term treasury ETF, quite safe), BND (diversified bond ETF), GLD (Gold ETF), and VWO (Emerging Markets ETF, because foreign stocks are much cheaper than US). I have bought and sold a few stocks, here and there, swing trades I guess you could call them, but only with a very limited percentage of my funds. I missed out on some big gains because I played things pretty conservatively, that's OK. For instance I had a large position in Amazon, but after a 15% gain I sold, turns out I could have made almost 100%. Still, I am a value investor and I refuse to own something that I know is overvalued (looking at you TESLA).

I will stay lightweight stocks for the time being. The chance of another crash feel high to me, but of course nobody can predict what is going to happen. I am OK if I miss out on some gains.

Again I am not a "dividend growth" investor like most of you guys because there is no benefit to it for me, given that all my stocks are in tax exempt or tax deferred accounts, and since we are still working we do not need a passive income stream. What matters most to me is growth of my principal, if dividends achieve that, then fine, but I don't focus on dividend stocks. I may switch to more of a focus on dividend stocks when I retire and need an income stream. I also might do it for tax purposes in my brokerage account which I'll open in Jan 2022 (once debt is paid off).

EDIT: The assets above are missing 17k that we have in an HSA.
Last edited by MidwestCoder on Fri Jul 17, 2020 3:27 pm, edited 2 times in total.

MidwestCoder
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by MidwestCoder »

Scott 2 wrote:
Tue Feb 04, 2020 9:28 pm
Have you looked at using an aggregation tool like Personal Capital or Mint to track your spending?

Personal capital gets the transactions to you within a day or two, and it can be accessed via a phone app. It offers a powerful feedback loop.

You can also do some nice looking retirement projections, which could be more appealing to your wife than an excel spreadsheet.
I did sign up for BrightPlan and linked all my accounts. It has been somewhat useful, not as much as I hoped. Some of the accounts I haven't linked yet. My wife is good at updating a spreadsheet, almost weekly, so we track the spending quite carefully (these days). I almost prefer the manual spreadsheet approach, she does too. Nice to have BrightPlan as a backup though.

Scott 2
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by Scott 2 »

It sounds like you've found a good pattern, which is all that really matters.

I've gotten way too lazy to manually track, that's where the tool helps with my spending. For behavior modification, I like the budgeting widget specifically:

https://www.personalcapital.com/blog/wp ... 68x476.png

ThriftyRob
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by ThriftyRob »

I appreciate your update and like you, I've found that physical exercise is a great antidote to anxiety.

How much does the interest on your student loans and mortgage cost you each year? What would be the cashflow gain by paying them off from your savings?

Your ratio of net worth to pre-tax income is between 2.4 and 3. How do you feel about that?

It must be pretty scary having your son incurring student costs before you and your wife have paid off your loans!

MidwestCoder
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by MidwestCoder »

ThriftyRob wrote:
Fri Jul 17, 2020 3:25 am
How much does the interest on your student loans and mortgage cost you each year? What would be the cashflow gain by paying them off from your savings?

Your ratio of net worth to pre-tax income is between 2.4 and 3. How do you feel about that?

It must be pretty scary having your son incurring student costs before you and your wife have paid off your loans!
The mortgage interest is very low, around 2.8%. The student loans around 4.75%. We are saving a little more in the emergency fund thanks to the pandemic. By waiting until Jan 2021 to pay it off (rather than say, sending say $30k from savings to it now) we pay about $600-800 more in interest total. Hrmm, that's more than I thought, might consider paying a little of that early.

As for the ratio of net worth to income, being 2.4 to 3, I'm not sure how to feel about it. What is considered a good number?

Yeah it is unfortunate we are paying my son's school and paying my wife's student loans at the same time, not too worried about it though as I think we'll be done with the student loan very soon.

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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by jacob »

MidwestCoder wrote:
Fri Jul 17, 2020 8:16 am
As for the ratio of net worth to income, being 2.4 to 3, I'm not sure how to feel about it. What is considered a good number?
In the Millionaire Next Door, Stanley/Danko distinguishes between "Under Accumulators of Wealth", "Average Accumulators of Wealth", and "Prodigious Accumulator of Wealth".

It's a simple rule that is easy to critique. You calculate your number as (your age*total income*0.1). If your NW is more than twice that you're a PAW and if you have less than half, you're a UAW, otherwise, you're an AAW.

MidwestCoder
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by MidwestCoder »

ThriftyRob wrote:
Fri Jul 17, 2020 3:25 am
How much does the interest on your student loans and mortgage cost you each year? What would be the cashflow gain by paying them off from your savings?
Update on the student loans. We had a 19k loan at 6.8% (several loans are lumped into the "95k student loan" I mentioned) so we just paid that off today from savings. 4.75% I guess was just the average interest rate, but some loans had higher, some lower, according to my wife. She wasn't really clear on that to me earlier or I think we might have made different decisions. Anyway, good news is paying that 19k loan off 6 months early saves us about $600 in interest, and we still have 25k in savings, so I feel really good about that. Thanks for having me take a second look ThriftyRob!

As for the cashflow gain on this, I am not sure, we always pay at least $800/mo even if the min payment is less.

EDIT: Wife saw two additional small loans at 6.8% (The loan processor makes it difficult to see the interest rates, what a surprise!), amounting to about $3200. We paid those off too. Savings down to $21500'ish now, but I am ok with that. Student loans now under 75k.

ThriftyRob
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by ThriftyRob »

Well done! In my book, it's almost always worth netting off outstanding debt with savings (unless you are guaranteed a higher yield by staying invested funded by the debt). I'm really pleased my challenge has prompted you to drill down into the detail of your loans.

As for your asset to income ratio, @Jacob has provided the assessment criteria. It struck me that your NW could be much higher for your joint income. The next challenge is assessing how much accumulated junk you have (the spend isn't sunk in your vehicles) and working out what you can dispose of for cash. Using that formula for my age, income and NW, the number is 10.

MidwestCoder
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by MidwestCoder »

Thanks ThriftyRob, I'll have to dig up that formula to see where we stand. We were in bad shape financially 15 years ago and have been digging ever since. Back then at one point we had only 100k income, 75k in CC debt, perhaps 120k in student loans, and the mortgage was around 125k. We may also have had a car loan of 10k or so. Meanwhile we probably only had about 100k in retirement opposed to the over 500k we have now.

Perhaps that NW to income is a good indicator of retirement readiness, I'll have to look, if it was in the book I've already forgotten it as I haven't read it since Feb.

MidwestCoder
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Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by MidwestCoder »

Murphy’s Law, the very day I paid off 22k of the student loan from savings my air conditioner died. Such irony, but I am sure the 21k we have remaining will still be plenty to fix it, so not a big deal.

Edit: Only cost 180 to fix, so no big deal.

MidwestCoder
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Joined: Mon Jan 27, 2020 11:05 pm

Re: I tire of gold and trinkets: MidwestCoder's Journal

Post by MidwestCoder »

Chipping away at that student loan. Got it down to 72k or so. Amazingly due to variable income being better than expected we should have that paid off by Feb 2021! After that the only debt we will have is 60k on the house. Very excited to be soon debt free. We continue to spend very little on dining out and trinkets, only about $100 for dining out in August. Last year we would often spend $1000 in a single month.

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