Pemulis' journal

[pemulis]

December 2013.

Another exciting month. This month I paid all of my bills with passive income(!), and got a large bonus. Neither one is likely to occur again anytime soon! Cryptocurrencies were still riding high after falling a bit off from November. I see no reason to part my holdings now especially now with all the SV Venture Capital going into it and the recent Overstock/Zynga news. I hope I make it to FI a bit earlier with their help but even if they go to zero the ride is fun and I didn't buy in for much.

Some side businesses are producing real income now, not just revenue. Passive income is building though it may be spotty for a while.

2014 Goal:
Make it to 100k net worth!

I'm not going to do details anymore just posting charts, about which I must make two notes:
1. Libreoffice screws up the dates? The last date should be "1/30/14".
2. We are halfway through January so the "1/30/14" date is a prediction.

[spoonman]

I've enjoyed reading your journal, thanks for sharing your experiences with us. Oh, and I like that fact that you don't have the word "safe" in front of "withdrawal rate" =).

I see that you bought MSFT and KMI last month, have you considered TGT? It's well valued right now, especially after all the bad rep from their credit card security issues.

[pemulis]

I've enjoyed reading your journal, thanks for sharing your experiences with us. Oh, and I like that fact that you don't have the word "safe" in front of "withdrawal rate" =).

I see that you bought MSFT and KMI last month, have you considered TGT? It's well valued right now, especially after all the bad rep from their credit card security issues.

Yep I am watching TGT, I think I will be a good long term play soon. I think it has a bit farther to fall though after all the banks (inevitably) start suing and then settling with Target! Recently I got some CHL based on the AAPL deal. And I picked up some UL also.

I am currently looking at: JPM, SO, KO, O, WFC, AFL, TGT, KMB, MCD and SJM.

[pemulis]

Feb 2014.

Interesting stats:
-forty-two dollars of dividend income this month.
-One job interview
-One wild house party attended.
-One bar-hopping experience during a wild blizzard.
-Two apps published to iTunes store.
-One web dev + hosting consulting business started.


Graphics:
(including next 2 months projections based on current savings rate)

[pemulis]

Did a lot things over the past few months. Quit my old job and got a new one at a software company that is growing rapidly. Lots of excitement at the new job! Learning a lot of things very quickly so I'm thinking this was a good career move. I was just stagnating at the old job.

My lease was up on my apartment so I'm actually living back at home for a months now. But lately I'm thinking I will live here a few more months and save up a down payment to buy a duplex. I think with a duplex I could attain FI sooner and with the leverage I can make significantly more money off the deal than on equity markets alone. I am also thinking that investing a little in real estate and investing a little in equity markets will give me a lower risk profile than blue chip equities alone.

I also opened a Vanguard account and am buying primarily VYM, VIG, VXUS for the yield. Although I will stop this soon because I need about 15k to 20k for the down-payment on the duplex.

I am on track to hit 100k net worth very soon if all goes well.

Some Stats:

-Net worth: 85K
-Dividends last month: $190
-$450 dollars from freelancing last month.
-Averaged 20 miles riding per week.


Goals:

-Read some books on real estate investing.
-Research some areas I want to buy a duplex in.
-Convert some bitcoins into real estate in 2014.

[pemulis]

Reflections

Been doing this for about 1 year now! My net worth is around 89k and I have a better job and I have fairly regular freelance work these days. Also I am biking a lot and eating better so overall the ERE philosophy has been very good to me.

Re-reading Jacob's book and thinking more about optimization I decided to move into an even cheaper place but in a nicer part of town and came to an arrangement with my landlord to do some maintenance work (I hope to learn some things). I have the option to take the bus or ride my bike from here and this part of town has bike lanes everywhere!

Overall I really am glad I found this community, Jacob's book, this forum and everyone here that has been nice and helpful too. I really enjoy reading the success stories but also when people screw up and learn from it. You guys are awesome!

I think I had ~30K this time last year and now I have about 90 or so! That is way better than I would have figured but I have been pretty frugal, I gotta say.


Notes on current situation:
I am using a $10/month cell phone and don't regret it.
I am starting to use the bus.
I am eating lentils (they are actually not bad despite the jokes).
I have streamlined the way I do freelance work. I think the customers like this too.
I am starting to build a very simple accounts payable SAAS app in the vein of "Appointments Reminder" by the Kalzumeus guy due to my experiences hassling with invoices. Anybody want to invest?


Thoughts about the future

Now that I know probably what my lowest possible cost of living is and how much freelance work I need to pull in to maintain a simple lifestyle I am very confident I can take a break from the day-job without being fully FI and still cover expenses with one or two small jobs per month. My goal has always been to own my own business (which, sure technically I already do) but also make the same money from it as a day job with less total hours. I don't know if the less hours part is possible but at least I know investment income can make things easier.

The question is when to stop? I know I *may* be fine now but I am still having fun working and learning from my co-workers and projects at work. I know 200k would be a much safer number in case of a long drought or just the general comfort of being able to take a break for a month here and there. 200k is two years away perhaps if all goes well? Maybe in 4 years I can hit 300k and be in an even safer position. But it definitely gives me some pause. If I know I can pull in my monthly expenses freelancing and I have 5 years of expenses in liquid assets what is the point? I like working and making money way too much to just stop. But is 10 years expenses enough? I don't know but I think I like what I'm doing for now. And what if I decide to go back to graduate school later? I suppose the best route is to stay the course. I'll revisit this train of thought in 6 months perhaps...

[Nomini]

Taking and interest in ERE/FI doesn't mean you have to pursue either in their "pure" sense. A hybrid solution may well be optimal for a lot of people, so I wouldn't say you necessarily have to be FI before you give up the day job...although obviously you may as well keep your options open and keep earning whilst you're still considering your options.

I am personally keen to simply cut down hours without being FI and continue with some of my more expensive interests that way, so I don't think I am en route to a pure FI myself.

[pemulis]

@Nomini, sounds like a good situation. Working 2 or 3 days a week would be a fine trade-off I think. I also love to experiment with new things and sometimes it costs money I suppose. Although Jacob did some cool things like learning to sail for free. Maybe it doesn't matter either way if you are clever enough.

[Barlotti]

You rock Pemulis.

[pemulis]

@Barlotti, no you rock!

[pemulis]

Update #12 - December 2014

Happy December everyone. I just hit the 100k mark! I have been doing this since Aug of 2013 and I started with about a 30k net worth. My goal is relatively ambitious: 145k net worth by Jan 1st 2016. I figure I will have 18k from 401k, 5K from my business in a Simple 401k from 2014, and I can save an additional 20k to 25k on top of that.


Job situation

I was offered a job with much better benefits (9% 401k match, 10k paid education) and a very slightly higher salary. I don't know if I will go for it but I made a counter-offer. My hesitations toward this are derived from the fact that I have only been at my current job for 7 months and that this employer essentially hires programmers out for staff augmentation although they do some in house projects and direct consulting as well. I am afraid I will have to drive too much and get stuck with terrible contracts. On the other hand I could end up with a lot of projects at P&G and it would be pretty great and the awesome 401k would boost progress on my FI goals.

So I am at a crossroads now with jobs. I don't particularly like my current job by the way. I find working at a startup exhausting due to the constant dysfunction, heavy workload and ever-changing goals due to sales selling shit that simply doesn't exist. There seems to be a lot of very pointless debate about implementations and languages (and not nearly enough about architecture) but I think this is because a lot of the staff is pretty young an inexperienced (myself included obviously). I think I will never work at another startup again unless I have a serious equity stake and am doing it for fun.

I spent a lot of time considering this offer. I think that I would actually enjoy working at somewhere like Accenture a whole lot and this place would be a good stepping-stone for that. Consulting at that level would a great experience my long term business goals (growing my own consulting business to be specific).


My Business

I cleared something like 9k with my partner this year. I think for 2015 the goal will be 15 to 20K and I think we can hit it if we work to land some more projects. I will be depositing all of these earnings tax-free into a simple 401K or an SEP IRA. I have not talked with my accountant yet but that is the plan.


Long Term Financials

Long term I am looking to have close to 150k by EOY 2016, 200K by EOY 2017 and 250K by EOY 2018. I think that by then I will be able to quit the day-job and focus on my business entirely. For my business my goal is to have a big enough client base and enough referrals coming in that I can count on pulling in at least 30k a year in projects. Couple that income with a 4% SWR of $833 per month and I would have decent enough cash flow overall to not have to worry about lean times too much and I could be my own boss with plenty of time left over for my own projects.


Long Term Education

It is a pretty common to not see any programmers older than about 35 at a lot of companies (well at least from my experience). From what I have heard and read older people in IT usually seem to go into management or switch careers. My feeling is that for my own long term goals and lack of a CS degree getting an MBA is probably the best track for me. I will need to take the GRE or GMAT at some point and actually getting an MBA is another story. Where will I get an MBA part time while I am working? How can I get one from an institution that is decently reputable (i.e. not University of Phoenix), reasonably cheaply (or have company pay) and in a reasonable amount of time? I don't know but I will be looking for answers over the next few years.

I think another option is going for an MS in CS or do an MIS. If I am FI in a reasonable amount of time though, it is it worth it? I like working a lot but I also don't like to get stuck doing the same thing for a long period of time. Getting a Masters in something would certainly pigeon-hole me more.

[pemulis]

Update #13 - April 2015

Things have changed a lot recently. I switched jobs, got a pay raise, switched apartments (closer to work), and now I bike to work almost everyday unless there is rain. I am paying a bit more for rent but eating out not at all almost and not paying bus fare so that is a wash pretty much.

I ended up turning down the job offer I got in December and held out until the end of February for a better offer at a company I felt more comfortable with. I realized I was making an emotional decision and I feel much happier now about having waited it out. I really like where I am now even though it was a bit of a culture shock at first. I didn't have to be in at 8 am and tuck my shirt in and sit through two-hour meetings and HR Training at my old job but the structure is good for me I suppose.

Net Worth:

I think I am north of 120k now. I had some luck with savings, and I took some money out of my business earnings and dumped it into a Solo 401k. The market has been kind to some of my holdings recently (AAPL, GE, CHL to name a few) so that has helped things along for me as well. I had a lot of expenses recently including putting down a deposit on an apartment, paying car insurance and doing some repairs on my car so the month of April will pretty much be a wash for me. I also need to find a better/newer road bike. Despite that I am working on the longer term goals of putting myself in a low cost lifestyle (low-car, cooking 100% of my meals) and am really making a lot of progress.

Stress

I feel much less stressed at my new job. I noticed I am not wanting to drink and go out nearly as much. I just don't feel the need to go out and blow off steam quite so much now that I am leaving at 5pm and my company is more organized and professional. I really think working at the startup was a good experience but I would never do it again it. I will be getting over the burnout for months...


Next few months goals:

I want to focus on really cementing my low-car lifestyle. I will be tempted really soon to give up my car, but I need to think about it more. I want to try to accumulate something like 12k in cash. I usually keep my cash buffer pretty low but I want to get that a bit higher. I will admit I am trying to time the market a little bit but I think my net worth grows I want to keep at least 10% in cash. I also want to shift most of my new contributions more into index funds rather than individual stock. I feel that I need to have a large core of my portfolio be anchored to the indexes because I don't have the time to really do research on too many individual companies.

[message]

Thanks for your journal, read it all in 1 go!
Very impressive I must say, hope you can keep it up

Like how you changed your habits around so easy, yet you seem to enjoy it so much more.
That gives me much hope that my personal changes will give me the same joy and returns as they did with yours

Thanks again!

[pemulis]

Pemulis, it sounds like you are doing an excellent job. Your net worth is growing at a steady clip, and you find ways to get new skills all the time. Wonderful work. Thanks for sharing it in your journal.

Thanks! I wish it would go faster but I know I just have to keep at it slow and steady. You are right though, by then end of the journey I will have gained so many skills. I have learned a lot already focusing on FI. I have learned to cook so many new meals!

It is worth it for anyone to focus on FI for a few years just for the outlook it gives you and things you must necessarily pick up if you want to make real progress.

[pemulis]

Thanks for your journal, read it all in 1 go!
Very impressive I must say, hope you can keep it up

Like how you changed your habits around so easy, yet you seem to enjoy it so much more.
That gives me much hope that my personal changes will give me the same joy and returns as they did with yours

Thanks again!

Thanks! I hope so too. I'm pretty new at this compared to so many on this forum, I have to keep reminding myself that whenever I think things are not going fast enough.

Change is good! But it can be overwhelming too but if I can do it you can do it!

[pemulis]

Update #14 - June 2015 summary -

It has been about a couple of months since last post so here goes. My net worth is somewhere in area 130k now. I have been making some progress in the savings department via not driving much, packing my lunch everyday and never paying for parking. I also have a new apartment with a couple of roommates that are old friends.


Living arrangements.

Living with two messy, irresponsible (well, in my opinion but certainly objectively in many ways) constantly-partying extroverts has been fantastically challenging for me. I am pretty damn unhappy with the situation but I know that I am growing somewhat as a person by having to deal with the issues that arise due to sharing living space with clashing personalities. I like classical music and a clean kitchen and reading a decent book while they enjoy getting stoned and having people over and playing loud music. The struggle is what keeps contentment from setting in. And I do not want to be content with my life the way it is - working for the man and doing the bidding of middle managers. So I am dealing with it. For now.


Hobbies

I am spending a lot of time road biking lately. I recently rode 100 km in one day as part of a special event but I have easily been averaging 100 miles per week when it is not raining. I enjoy the feeling of going very fast on two wheels under my own power and I am in great physical shape these days. I am starting to buy more gear and it is getting a bit expensive though so I will need to watch myself a bit.

I went through and refactored an old web-app I wrote about 2 years ago and my progress as an engineer in terms of code quality, organization and proper use of design-patterns appears to have been rapid. That is to say I think my old work was trash and I am embarrassed just reading it. I would love to be able to do this again two years from now and say the same thing about my current work.


Work

I am getting a lot more freelance work lately. I have even been bidding on some larger jobs but I have encountered some resistance too. Clients that won't go for my rate, clients that want to dispute invoices and very needy clients that expect things done immediately with unclear directions. I spend a lot of time managing clients and figuring out how to get people to do what I want how I want.


Overall

I feel like I am making a lot of slow methodical improvement at life in general and focusing on FI has really augmented that. The biking is keeping me healthy (and saving money), the cooking is keeping me from getting bored (and saving money), the roommate situation is forcing me to grow socially and confront a lot of uncomfortable situations (and saving money) and the freelance work is helping to prepare myself for my post office-job life (and making me a little bit of money). At this point I feel like I just need to iterate, crank up the volume, cope with the stresses and trust in the process. Process over goals, I mean to say.

[pemulis]

Update #15, AUG 30 2015

Damn, what an intense week. Monday started off with a 1000 point drop in the Dow but by Friday the broad market had mostly recovered. Overall China's inflated market took an enormous hit and so did all emerging market economies based on commodities. Oil keeps falling, and I bet we are going to see a lot of bankruptcy soon.

Oil was under $40 a Barrel

I have to say that again - WTI CRUDE DROPPED BELOW $40! We are back up to $45 now, but how and the hell could world events have converged in such a swift maelstrom to make this happen? What is the lesson to learn from this? OPEC is insane? All commodities are risky? Any business based on commodities is risky? Of all commodities I would have thought crude would be the most stable at this particular juncture in time. If anything 1 year ago (with the unrest in the Arab world) I would have told you oil had upside!


My Net Worth fell by $8,000 this month

This is first month my net worth has fallen in more than a year. Holy crap. I even saved at least $3,000 this month, if not more. I won't deny I'm a little excited the markets had a pullback. I purchased some JNJ for $91 a share this week, haven't been able to do that for a while! I picked up a bunch of ETFs on the cheap as well. Over the next few months my dividend income probably will increase (will BP, COP, CVX cut their dividends ?) but damn it looks nasty on my net worth spreadsheet, which by the way shows I'm back down $128,000 and much less in cash than last month.


Will the markets fall more, will the fed raise interest rates?

I hope somewhat masochistically that both of these events occur- the result of which may allow me to pluck some cheap securities at the expense of a large paper loss. As long as the companies I own do not bankrupt themselves any temporary fall in prices is favorable for long-term returns.


Recent Books

• The Three Body Problem
• Zero To One
• Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future
• The Martian
• Average is Over
• Nexus (Ramez Naam)
• Effective Programming (Jeff Atwood)

I'm interested to hear your opinions!