A 401K Story

When I started my first full-time job and was offered entry into the company’s 401K retirement savings program, I immediately diverted 10% of my salary.  At that time, my annual salary was an amount that today’s 20-somethings would consider below the poverty line.  I was coming from an upbringing where my parents had no savings, let alone retirement savings, and I was highly motivated to not repeat the mistakes I witnessed.  It did not occur to me that others did not feel this way.

Now that I am in the middle (or hopefully later) years of my working life, I have tried to evangelize the importance of retirement planning to the younger workers in my company.  I recently had a conversation with a 24-year old co-worker about this.  I made a flippant comment acknowledging that they had obviously opened their 401K retirement savings account upon hiring.  This person did all but laugh at me.  They commented that they couldn’t afford to save.  This person and I were close, so they had shared certain details of their income and expenses with me.  I knew that this person’s salary was more than double what mine was when I began investing in my 401K.  I understand that many years have passed between these two events but regardless, all numbers are relative.  

When I continued to harp of the need to start a retirement savings plan, this co-worker asked me to help them better understand their finances and find a way that they could afford such a savings plan.

My first approach was to try to explain the tax advantages of such a savings plan.  I asked them if they could afford $100 per month.  They explained that they could not.  I then tried to draw on the white-board to show that $100 per month diverted to a 401K was only approximately $65 out of their monthly pay.  Since our company pays twice per month, this was less than $35 per pay check.  They acknowledged that this was definitely more affordable but that they still didn’t think they could afford it.

They then went on to explain that their take home pay was approximately $2,600 per month.  Of that amount, $700 went to rent, $700 went to student loan payments, $400 went to a car payment, $110 went to monthly subscriptions and the rest went to utilities, lunches, happy hours and other general spending.

We agreed to tackle this from the highest monthly responsibility.  The first was $700 per month in rent.  This person had a smaller apartment that was shared with a roommate.  I asked if they could add a third person and therefore split the rent 3-ways instead of two.  They didn’t not feel comfortable with even considering this option.  I asked if they could move back in with parents for a year or two in order to get a financial foundation set.  They were not even willing to consider this option either.  They felt that they were an adult and should not have to live with parents.  I did not push.

Next, we looked at student loan payments.  While this person knew they paid approximately $700 per month on various loans, they were not aware of the overall balances or interest rates associated with those loans.  They simply knew the monthly payment requirement and assumed that this payment would always be part of their monthly budget.  I tried to encourage them to research these loans and talk to someone who is an expert in student loans to see if there were opportunities to refinance or consolidate those loans to ensure that this obligation was being repaid in the most efficient way possible.  My co-worker agreed to do so but there was a slight roll of the eyes as they agreed to this.

We next discussed their car payment.  This person was driving an economy car, not a luxury model and felt that by doing so, they were being fiscally responsible.  However, they purchased car new and carried a sizable debt on the vehicle.  Their monthly payment was $400 per month and they owed a total of almost $23,000 on the vehicle.  By doing a quick search on Kelly Blue Book, we learned that the value of the vehicle was a little more than $15,000.  My co-worker simply wrote this off as “unfair” instead of acknowledging that perhaps they had made a bad decision on purchasing a vehicle in such a fashion.  Once again, they simply focused on the monthly payment, rather than the overall financials.  I explored the option of selling the car, paying off the remaining loan and buying a lesser vehicle for all cash.  I quickly learned that this was not something they would be willing to consider.  Again, a comment about being an adult came out.

The last spending category that we explored was subscriptions.  This person was spending $60 per month on a monthly subscription that sent new clothes each month.  In addition to the $60 per month paid for the subscription, if you decide to keep any of the clothing sent, you can purchase it at a discount.  They also spend $40 per month on a service that sends dog treats and toys.  Lastly, there was $10 per month spent on Netflix.   We finally found an area that I felt even the stubborn adult could not deny could be trimmed.  Well, I was wrong.  This person dug in their heels and refused to even consider that these subscriptions were expensive and unnecessary.  

My first reaction at this point was to be exasperated.  I simply could not understand someone who put a higher amount of value on shipped dog toys than their own future.  I quickly realized that this person was having trouble putting value on retirement savings because it was just so far away for them.  They felt that there would be so much time between today and retirement that they could wait to get started.  They will make more money in the future and can start saving later.  Once I realized this stark difference in mindset, I tried to approach this conversation in a different way.  I took one item—the dog toy subscription—and asked them to cancel the subscription but still put that $40 per month aside in an envelope.  I asked them to commit to this for 3-months.  I told them to continue to spend that money on their pet.  I explained that this would be even better than the subscription since they would handpick the treats and toys that their pet received.  They were skeptical but agreed to this.  

After three months, we spoke again and they acknowledged that while they did go shopping the first month and purchased treats and toys for their pet, they had not done so since.  Even during the first month, they admitted that they did not spend the full $40 on these items.  They were now ready to commit these funds to starting a 401K account.  I then revisited the tax discussion and showed them that $40 in after-tax money was the rough equivalent of $60 per month in pre-tax money.  They agreed to set up a 401K account and divert $60 per month into this account.  The last thing I asked of my co-worker was to revisit this conversation after 6 months to see if they have suffered monthly and decide if the amount needed to be adjusted.  While I phrased it as a safety net, hinting that we could adjust the amount downward, my real intent is to show how little they even noticed the money being diverted and at that point we could discuss increasing the amount.

My biggest takeaway from this whole encounter was that you cannot force others to think or feel a certain way.  My firm belief in retirement savings comes from the whole of my life experiences and those are going to be different from everyone else’s.  However, I do truly believe that such a thing is more important to your future than making sure you rush to “grow up” and fall directly into the lifestyle inflation traps that most of us have fallen into… getting into a housing situation that we cannot comfortably afford or buying more car than we need or can afford.  In order to help others, you must meet them on their own terms and perhaps more importantly, you must realize that sometimes others will have to make their own mistakes before they understand that they are in fact mistakes.  After all, I only know these things because I made (and continue to make) those mistakes.

2019 Goals- One Month Check-Up

As the calendar turned to 2019, I listed my goals for the upcoming year.  Now that the first month is coming to a close, I thought it would make sense to do a check-up and see how I am doing on my goals so far.  I tried to break down a few of my goals into smaller, more achievable chunks that would be easier to track along the way so this would be a good time to see if I am on track.  If I am behind, I will need to alter my behavior and play catch-up.  If I am on track or even ahead of the game, I can analyze whether it would make sense to alter my goals upward and shoot for something higher than I originally thought.

1. Keep Weight under 235 (see above for incremental goals):

I further broke this goal down to say that I hoped to be down to 240 by February 1st and then 235 by March 1st before remaining in that range the remainder of the year.  As of this morning, the evil scale spit out a number of 241.5.  This is a bit short of my goal, but I do have to admit that I have not been as dedicated as I should have been.  Just in the past week, I have caught a bug of some sort and have not been exercising as I normally do.  Since today is not February 1st yet, I am not officially behind schedule but regardless, it is a signal that I need to buckle down and re-dedicate myself.  

2. Max my 401K contributions:

Based on my current withdrawal percentage, I am on track to max out my 401K again this year.  The allowable amount was increased in 2019 to $19,000 from last year’s $18,500.  Even with this increase, my percentage will max this out at some point in the 4th quarter of 2019.

3. Fully Fund Wife’s ROTH IRA (Stretch Goal:  Fully Fund my ROTH IRA as well):

I have no yet contributed to either ROTH IRA. 

4. Read at least 24 Books & Listen to at least 24 audio books:

As of this writing, I have completed 3 books and 4 audio books.  If this pace continues, I should reach 36 books and 48 audio books, which would destroy my goal.  While my pace is way ahead of schedule, I will leave my goal where it is until a few more months of data collection.  I have noticed that my reading can come in waves.  If this faster pace holds for another month or two, I will adjust my goal upward.

5. Re-read “The Millionaire Fastlane” by MJ DeMarco & “Set for Life” by Scott Trench:

I have not yet re-read either of these books.  Last year, I targeted two previous books for a re-read and had to rush at the end of the year to meet this goal.  My plan for this year is to read this years target books earlier in the year so I do not fall into this same predicament.

6. Get Vanguard Taxable Investment Account over $55k

At present, my Vanguard account has a total value of:  $44,520.10.  I have upped my regular bi-weekly auto-savings from $525 to $550 so I will be adding approximately $1,100 more per month.  That contribution alone should help me to reach my goal.  However, the market is the market so being on track to hit that goal does not guarantee that it will happen.  

7. Pay Credit Cards in full each month:

Thus far, I have paid both credit cards in full each month of 2019.

8. Get HELOC Balance under $30K:

The current balance on my HELOC is: $34,270.93.  I have been paying a low amount on this debt monthly as I work to build a robust emergency fund.  Now that my emergency fund is nearing full funding, I plan to increase my payments on the HELOC debt so later in the year, this balance should be paid down at a faster pace than it has been thus far.

9. Continue to Blog weekly:

So far, I have maintained a weekly publishing schedule.  I plan to continue this pace and possible even add to this with additional irregular posts about topics that I find interesting and would like to write about.

10. Earn additional $100 per month in income through various side hustles:

In January 2019, I was able to “find” an additional $200.  Most of this, $150, came in the form of credit card points.  My primary credit card offers reward points.  I have not yet researched more robust credit card rewards and that is something that I plan to do in the future but I did check the website for my current card and realized that I had accumulated a nice amount of points.  In reviewing the options on what I could do with those points, I decided to cash them in for Amazon gift cards.  I had enough points for 3 $50 gift cards.  The remaining $50 came in another Amazon gift card that I received as a redemption from Swagbucks.com.   This is a site where users can answer surveys or watch videos, among other tasks, to earn rewards points.  I had accumulated enough points to redeem for a $50 Amazon gift card.  If anyone would like to check out Swagbucks, you can do so by following this link:  http://www.swagbucks.com/refer/tomfalz.  (NOTE: This link is a referral link and if you use the link and use the site, I may receive some small reward for any activity you have)

Adventures in Real Estate

I have gotten a few requests to discuss my real estate investing.  It is a very robust topic and not one that I can capture in a single blog post but today I will talk about my first real estate purchase.  If this is well received, I can discuss other purchases or stories from my experiences with this subject in the future.

I have always had a fascination with Real Estate.  It probably took hold with my first home purchase.  I was living in New York and the real estate market was going through one of the occasional irrational periods.  My fiancé and I started searching for our newlywed home.  I was working in New York City and living on Long Island.  For those not from the area, this meant a LONG day.  I would leave my house around 5am, commute for two hours to work, work a full day, then commute back home.  I would arrive home by around 8pm, eat a quick dinner and then basically go to bed and be ready to do it all again.  With this schedule, it was not easy to fit a house search into my weekdays.  

My fiancé had a more traditional schedule at the time.  She was working and going to school, but both were located in close proximity to where she lived so her days fit closer into the normal schedule.  So, the system we devised was that she would go see many houses and determine those that were worth seeing.  We would then schedule showings on the weekends and her and I would go to those together.  We would usually end our day at a diner or restaurant and discuss the various properties that we saw.  I call this a system because it was something that lasted almost a full year.  We probably looked at over 100 houses.  The typical house sale at that time consisted on a one-day listing followed by multiple offers, all above the asking price.  Sellers got lazy and would not even prep their houses for sale, they would just put a sign out and see what happened.  There was one day that we pulled up in front of our 8th or 10th house in a single day, took one look and both said at the same time “move on.”  We were getting discouraged and considered giving up.  We talked about all our options including living with one of our parents, renting an apartment, etc.

My soon to be father-in-law was a police detective and this caused him to be out and about quite a bit.  He came across a house that was for sale by owner.  He brought my fiancé to see it and later that night, the two of them told me about it.  There was plenty wrong with this house.  Mostly it was that it had a very awkward layout and the current owners had a very eclectic (read STRANGE) style and made some interesting décor decisions.  My partner did not think it was a good option and did not want to even bring me to see it.  Since we had been looking for so long and had looked at so many houses, I said “what the heck?  What is one more house to look at?”  

We went to see the house and while she saw all the flaws, somehow all I could see were the possibilities.  I walked the awkward floor plan with my soon to be father in law and started saying things like “we could knock down this wall and open things up” or “we can take these trees down for more curb appeal.”  Anyone who knows me might laugh at this since I am NOT usually a glass is half full type.  Also, casually throwing out somewhat major construction ideas is also comical since I could not pick a hammer out of a lineup.  But once the three of us put our heads together about what the house COULD be, we decided to move forward.  

Being for sale by the owner was considered a positive but I found this not to be the case.  As I alluded to above, the sellers sort of marched to the beat of their own drummer so having an advisor on their side might have made for a quicker and smoother transaction but I had a realtor to work with that was a seasoned veteran and a family friend, so we were coached through the process very well.  It came down to price at that point.  Having made many offers over the past year, only to lose out to higher ones, you would think that I would throw caution to the wind and make sure I got this house at all costs.  This is not the case.  Although I had no experience negotiating on houses (or anything else at that time), I had a number in my mind that I was not going to cross.  Once we laid all cards on the table, us and the sellers were $3,000 apart and neither of us would budge.  After some time of playing chicken with one another, I had a personal conversation with the seller, and he asked me the most important question in this transaction.  He asked, “if this is the house you really want, are you willing to lose it over $3,000?”  I quickly realized that I was simply trying to “win” the negotiation and that $3,000 over a 30-year mortgage was really not going to make much of a difference at all.  I agreed to the price and we became homeowners.

We put in quite a bit of work that make that house our home.  This included some of those fairly significant construction projects I mentioned.  We depleted just about all our savings and called in every favor in the book but at the end of it all, we had replaced the roof, all windows, paved the driveway, updated landscaping and updated the electric.  The house was perfect for us.  We lived there for almost three years before my job took us out of that area and we had to sell the house.  The housing boom had continued through those three years and we wound up selling that house for a 63% premium over the purchase price.  

The profit was great, but I think the part that solidified my love of real estate was the fact that we were able to take an ugly duckling of a house and turn it into a beautiful home that a newly married couple was able to enjoy.   At that point I was hooked and knew that not only would my next home search going to incorporate the lessons I learned during this process but that I would also use these experiences to learn as much as I could about real estate as an investment vehicle.

Monthly Update – December 2018

Now that I have all documentation necessary to review December’s finances, it is time to report on how I did.  Going into this post, I am somewhat nervous since December includes various holidays and those seem to always include additional spending, whether on gifts, supplies for parties, or any other holiday related things.  Additionally, as I noted in a previous post, my discipline surrounding my spending has been wavering as the calendar turned toward the end of the year.  I have committed to get back on track in 2019, but this review will show just how bad I may have set myself back in December.

As mentioned last month, as I post my monthly numbers, I will look backward and display a total of a 3-month window so I can keep focused on the trend as well as the overall numbers.  Last month, I listed entries for September, October and November.  Now that I am adding December numbers, September’s numbers will drop off.  If you want to see a long timeline of these numbers, you can look back at previous posts.

On to the numbers:

Category:Oct. 2018Nov. 2018Dec. 2018
Total Monthly Gross Pay:100%100%100%
Taxes Withheld:17.25%20.69%15.96%
Other Withholdings:5.00%5.53%3.82%
401K Withholdings:11.99%1.06%0%
Diverted to Investment Account:6.75%4.92%27.14%
Diverted to Savings Account:22.52%0%24.34%

In analyzing the numbers, there are a few things of note.  First and foremost is that my spending was not as out of control as I feared.  As a percentage of overall income, it actually dropped.  The drop was quite significant when compared to November.  Perhaps the feared over-spending on holidays was realized in November instead of my fear of it hitting in December.  

Another item of note was the very high percentage I was able to divert to savings and investment account.  Part of this was attributable to some additional income I was able to realize in the month of December.  This came in the form of a distribution from rental real estate.  I was able to move that distribution directly to savings.  Additionally, since I budget based on two paydays per month and the fact that November contained three paydays, I had additional unbudgeted monies sitting in my checking account going into December and was able to divert a nice amount of this to my investment account. 

 The challenge will be to keep a sufficiently high savings rate in the coming months when I cannot rely on unbudgeted paychecks or additional side income.  However, with the calendar turning to 2019, I will now begin contributing to my company-sponsored 401K account again so that will help me in my quest.

How were your numbers for the month?  Did the holidays get the best of you?  How are you challenging yourself in the new year?

What I am consuming… (December 2018)

This is a continuation of a monthly theme where I document what media I am currently consuming.  In addition to sharing books, articles, and podcasts that some may not be aware of, it will help keep me honest and ensure that I continue to consume more and more information myself.  Here is this month’s entry.

What am I reading?

In December I read The Next Millionaire Next Door by Thomas J. Stanley and Sarah Stanley Fallaw.  Sarah Fallaw is Thomas Stanley’s daughter and she has taken on the challenge of continuing Dr. Stanley’s lifelong work on analyzing the wealthy and their habits.  This book was billed as a follow up to the 1996 book The Millionaire Next Door by Thomas Stanley and William Danko.  The original was an excellent, well-written book that laid out success habits of a sampling of wealthy households.  This book was eye-opening in that it revealed that the trappings of the rich that we usually associate with wealth is a bit of fool’s gold.  Things such as flashy cars, large houses, boats, etc. are usually an indication of someone with a high income, but these items do not translate to someone with a hit net worth.  In fact, the exact opposite is typically the case.  I found the original book to be excellent and easy to read.  With that in mind, as soon as I heard of this follow-up, I jumped at the chance to read it.  I must report that I was extremely disappointed.  I recently finished the book but throughout the read often considered not even bothering.  The writing comes across as more of a research paper than a narrative.  Dr. Fallaw does not have the engaging style of writing that led her father to sell millions of copies of his books.  There is no real new information offered in the book either.  Lastly, it is littered with charts and graphs and I found each of these to be extremely confusing and poorly laid out.  I found that by the end, I would simply give these charts a cursory glance and move on rather than spend the time to try to dissect them and try to fully understand them.  If this book catches your eye, I would recommend that you pick up the original instead.  I would suggest you take a pass on this installment in the series.  I would give this book 2-stars out of 5 and only that high because of the depth of the research that obviously went into the book.  Unfortunately, that research did not produce a compelling read.

What am I listening to?

A podcast that I been listening to is Martinis and Your Money hosted by Shannon McLay.  The host spent the first chapter of her life in Finance before changing course and creating her own business, The Financial Gym.  This business is designed to be financial coaching that is more accessible than the traditional sales-based firms that have net worth minimums.  The business appears to be a wonderful idea and the clients appear to be getting great value.  In additional to building this business, the founder created a podcast.  I was initially attracted to the podcast because of the name.  I am quite a big fan of both martinis AND money, so I gave it a shot.  I have gone back to the very first episode and listened to the entire backlog.  The overall tone of the podcast has shifted over time to keep pace with various changes in the hosts life.  My enjoyment of this podcast has also ebbed and flowed over time.  My favorite part of this podcast is a monthly “Happy Hour” where the host brings on three other personal finance personalities for a round table discussion of various topics.    These episodes tend to be very fun.  You get several different perspectives on the same topic and you feel like you are eavesdropping on a conversation between friends.  There are times during this podcast where I disagree, and even get frustrated with the host.  This usually comes when the host makes assumptions or plays on stereo-types.  These tend to deal with gender roles.  While I understand that her feelings are rooted in her own personal experiences working in an industry that tends to be more male dominated, I feel that as a podcast host, she should try harder to play topics more neutrally.  Almost every time that she makes one of these assumptions, I find that her stereotype does not fit my personal thoughts on that topic.  This has caused me to consider whether or not to continue listening to this podcast.  Ultimately, I have decided to still listen to this point and just understand that her opinions are hers and I try to focus on the financial content.  If you interested in personal finance and like that content delivered in a lighter, fun-filled manner, I would recommend this one.  

What am I watching?

Some time ago, my family made the decision to eliminate traditional cable television.  We subscribe to Netflix and Amazon Prime and we added Sling TV as well.  This changed our viewing habits to be more focused on finding content on-demand when we want to see something in particular.  An unsuspected consequence of this change was that our overall consumption of television has decreased dramatically.  It used to be a given that each evening, we would put on the television and run through our DVR list of recorded shows.  Presently, we still regularly turn on the tv each evening, but I have noticed that this usually serves as background noise while we do other things.  Most evenings, we will have the tv on while my wife reads on the couch and I work or play on my computer.  With all that being said, our current viewing has led to shorter form comedies.  These days, it seems that you cannot turn on a television without encountering re-runs of The Big Bang Theory.  This is one that we thoroughly enjoy lately.  The humor is “smart” and I find that I can enjoy just about every episode.   This is a show that even my kids enjoy.  However, there are quite a few sexual jokes and innuendos so proceed with caution if your children are going to view.  Luckily we have seen most episodes so we usually know when something inappropriate is coming and can either turn it off beforehand or send the kids out of the room for that episode.

My Experiences with F@&# You Money

If you have read The Simple Path to Wealth by J.L. Collins, you are familiar with the term F-U Money.  This is an amount of money that you have accumulated in savings that gives you a level of security that would allow you to say “F-U” to your employer and move on to do something on your own terms.  While this initially sounds very aggressive, I took this to be more of a defensive move in that, if your working employment came to an end suddenly or if circumstances changed in a way that you were no longer happy with your situation, this nest egg would give  you the security to say “no” to those changes or to survive your unemployment period long enough to scrutinize future job prospects, rather than have to panic-accept the first opportunity that presents itself.  While this post is specific to F-U Money, this approach is the main reason that I am pursuing Financial Independence overall.  I don’t see myself as someone who will retire in the traditional sense and sit on a beach or play golf until my dying days.  My pursuit of FI is to allow me to pursue work or activities that interest me and not worry about the paycheck attached to them.  These may be volunteer opportunities or even paid work where the pay is not at a level that can sustain my lifestyle on its own.

When I first encountered the concept of F-U Money, my immediate reaction was to think back to a time when I had what I consider to be this amount and had a need to put this concept into action.  This came in 2009.  I had a nicely paying position that ended abruptly.  I immediately panicked and went through all of the emotional challenges that such a scary event brings about.  Once I settled down, I did a quick analysis of my financial situation and realized that I had enough money in savings and short-term investments that I would be safe for an adequate period of time.  As you know 2009 was not a particularly robust time for the US Job Markets.  At this time, I searched for full-time work but also began considering switching careers and going into consulting.  This was not a position of comfort for someone like myself as I am very structured and liked knowing the exact details of when, where from and how much each of my paychecks would be.  The search for consulting jobs was more fruitful than the search for full time work.  I jumped into this line of work and this started a 2-year period of inconsistent paychecks.  During this period, I was working as an independent consultant, trying to find my own projects.  This two-year period was very difficult financially, but I was able to stay afloat using my savings… my version of FU Money.   I consider the end of that bleak period to be when I caught on with a consulting firm and began getting more steady work.  I was still an independent contractor and therefore the paychecks were not as consistent as I would have liked but I was regularly engaged and have been for the past seven or eight years.  A few years back, this same firm asked me to come on full-time and I am still with them to this day.

While my FU Money helped me get through this very tough financial time, I still had a very negative view of this concept.  It was always attached, in my mind, to a negative life event.  Fast forward to my current situation and those feelings will be put to the test again.  While I am a consultant and that career brings with it some uncertainty, I have been very fortunate.  Not only have I been with the same consulting firm for several years, as mentioned above, but I have also been with the same client for much of that time.  This client is in the public sector and through the world of election politics, my time here may be coming to an end soon.  This creates quite a bit of uncertainty in the world of someone who is not only budgeting the next month but the next 25 years of their life.  At my salary level, once this contract ends, if there is not another project lined up almost immediately, my firm may no longer be able to carry me either.  This has led to much analysis of my personal financial situation and discussions with my wife about what is next and how we will endure should these events play themselves out in this way.  This soul searching has led me to revisit the concept of FU money over and over.  While I don’t have a fully funded emergency fund; at least not funded to a level that I am targeting, I do have some money put aside for this purpose.  I have also put money into a taxable investment account and invested this in index funds.  This money is accessible should I need it.  Combine that with the fact that I have steadfastly paid down all debt outside of my mortgage and home equity line of credit and I am not in a dire position.  

While my situation is not ideal, I am confident that I can weather the storm.  Although the length of such a storm will negatively impact my future plans, at least I can go to sleep at night knowing that I can take care of my family.  

So, while the person who coined the phrase FU Money, may have had a more offense-minded move in mind when they considered themselves to have reached this milestone, I tend to view this more defensively and it works just as well.  To me, this is the absolute beauty of pursuing Financial Independence.  It gives you options!

2019 Goals

I recently posted an accounting of how I fared with my 2018 Resolutions / Goals.  With the calendar about to turn over to the new year, I wanted to publicly post my Goals for 2019.  I have decided to call these my goals rather than resolutions.  Resolutions sound more about changes you wish to make for the upcoming year while Goals, to me, sounds more like lasting life changes.  It may be word games, but it is something I wanted to point out.

Another thing I have decided to do for this coming year, is to have my family participate as well.  I won’t publicly display their goals here, but the game plan is to have each person in the family come up with a list of personal growth goals for the year, write them down and then we can revisit those periodically to see how we are each doing and hold each other accountable.  

So, onto my 2019 Goals.  

In 2018, I mentioned a few items where I failed to reach my goal.  I will start with those items in 2019.  My weight is a big one, as it is for many people at this time of year.  I lost some of the discipline that allowed me to lose a significant amount of weight.  I saw my diet slowly but steadily go away from a lower carb, healthier list of foods.  I allowed my sweet tooth to reintroduce itself and this is something I plan on addressing in the coming year.  I am currently nearing 250 pounds, so my goal is to get this back in check.  I plan on doing this in a tiered approach to help me track this and hopefully hold myself accountable.  My goal is to get my weight under 240 by February 1st.  Then continue along this path and lose an additional 5 pounds by March 1st.  At that point, would like to hold my weight in that range (below 235) for the rest of the year.  I plan to weigh myself and document it on the first of each month.

The other goal that I failed to reach in 2018 was improving my taxable investment account to over $50K.  On December 5th, I documented that I had only reached $38k in that account in 2018.  In the three weeks since that post, the account has dropped an additional $4k to $34k.  We are currently in a bearish market so that decline is despite continuing my bi-weekly contributions automatically.  I intend to continue my bi-weekly contributions, currently $525 every other Friday.  This will account for an additional $13,650.  I hope to increase the automatic contributions as well as I continue to find small, incremental savings each month.  But simply taking the additional contributions that are currently planned, that should bring the account to over $47K.  My goal for 2019 will be to find those small, incremental monthly savings as well as finding additional “one-time” contributions throughout the year.  Keeping those goals in mind, but still accounting for market conditions being outside of my control, I would like the end balance to reach at least $55k by the end of the year. 

One new goal for this year is to focus on reducing one of my remaining debt instruments.  This is my Home Equity Line of Credit.  I currently have a balance on this of a little over $37K.  My goal for 2019 is to increase my monthly payments whenever I can comfortably do so and bring that balance below $30,000 by the end of the year.  

The remainder of my goals are similar to last year’s successful goals, so they don’t necessarily warrant discussion.  Below is the full list.1. Keep Weight under 235 (see above for incremental goals)

  1. Keep Weight under 235 (see above for incremental goals)

2. Max my 401K contributions

3. Fully Fund Wife’s ROTH IRA (Stretch Goal:  Fully Fund my ROTH IRA as well)

4. Read at least 24 Books & Listen to at least 24 audio books

5. Re-read “The Millionaire Fastlane” by MJ DeMarco & “Set for Life” by Scott Trench

6. Get Vanguard Taxable Investment Account over $55k

7. Pay Credit Cards in full each month

8. Get HELOC Balance under $30K

9. Continue to Blog weekly

10. Earn additional $100 per month in income through various side hustles

So, there you have it.  Those are my goals for the coming year.  If I follow goal #9 and continue to blog through the year, I will report on my progress near the end of 2019.  Feel free to list some of your goals in the comments and perhaps we can work to hold each other accountable.  Thanks for everyone that has read this blog, I truly appreciate all (both, haha) of you!  Happy 2019!!

Christmas on a Budget

It is that time of year again.  The holidays.  Whether you celebrate Hanukah, Christmas or any other holiday at this time of year, one thing is the same…. Your budget is at risk.  Growing up, Christmas gifts were measured by height in that you stacked all the boxes and see just how high they were that year.  We got many, many, many gifts.  Earlier this week, I heard a question on a radio show asking what the best gift was that you have ever received as a child.  Sadly, with all those gifts, no one item even stuck out in my memory.  I had several memories of gifts that missed the mark as these have become the stuff of legend in my family but as for that one big game-changing gift, I drew blanks.  

My wife and I have done a very good job of managing our kids’ expectations regarding gift giving.  We get a small handful of gifts but almost each one is something meaningful and hopefully memorable.  

Funny story… one year my parents visited on Christmas.  When the kids FINALLY went to bed on Christmas eve, we stealthily grabbed all the presents from their hiding spots and placed them under the tree.  My parents went to their car where they had hidden the gifts that they bought for our family.  When we looked at the different wrappings, we noticed that the grandparents out-gifted Mom, Dad and Santa combined by a crazy margin.  To avoid any questions, we quickly replaced several gift tags to say that several of the gifts from the grandparents were now from Santa Claus.  My first reaction was guilt, wondering if perhaps we didn’t get the children enough.  I often have that same feeling when I hear stories of what their friends received.  I quickly let those feelings pass and realized that my children have never wanted for anything.  The excitement opening each and every gift has been genuine, and I never got the sense that they were jealous of what others received.  

So, back to the present…. This year more than most, I have finances on my mind.  Partially due to this blog but more so due to the changes I have made in the past year or so.  As the season approached, I did a few things to minimize the sizable impact to our December budget.  I started to order a few gifts awhile ago in order to spread the spending just a bit.  We knew the large gifts that we wanted to get for each kid, so we planned ahead and budgeted for those larger expenditures.  All of that combined to give me a pretty good feeling about the budget this year.  

Well, I totally miscalculated.  It appears that the gifts are not the only budget buster.  As we approach the holiday, we have gone to countless holiday parties, lunches, friend get-togethers, etc.  Each of those has its own costs attached to it.  Whether that is a cash bar, meeting at a restaurant or grabbing those “little” gifts for the people you are meeting.  All-in-all, I am at least conscious of this and doing my best to lessen the impact but overall, these are expenses that I will definitely need to plan better for in the future.  Some things I plan on doing to counter this are: Having a drink or two at home before going out to minimize the bar tab, having a snack at home before going out to minimize the food tab, and planning experiences that we would already do with other families instead of getting together at a restaurant.    

What are your thoughts on how to minimize expenses at this time of year?  Do you think my ideas make sense or am I simply being a scrooge?  Let’s discuss it in the comments section.  

Also, I would like to wish each and every one of you a HAPPY HOLIDAY and want to say thank you for reading.  

Monthly Update- November 2018

Last month I did a rough calculation of my savings rate.  It came to a little over 40%.  This has not been something that I have religiously calculated but realize that it is something that I should follow more closely.  As such, I am going to experiment with updating it publicly on a monthly basis on this forum.  I figure this will help to hold me accountable.

The reason this comes to mind at this moment is that I have recently had a sense that my numbers were skewing in the wrong direction.  I have felt this simply by viewing my credit card spending.  I have made strong progress this year by diverting a decent chunk of money each month to a savings account in addition to my automated money moves into my taxable investment account.  I have noticed that in the past few months I have not been in a position to divert this additional money since my credit card spending has dramatically increased so I have used that money to pay my credit cards off in full each month.

In analyzing the reasons for this increased spending, the obvious culprit appeared to be that we wer nearing the Christmas holiday and we have done some shopping.  Rather than simply embrace this assumption, I decided to do some quick analysis of spending.  Over the past year or two, I have closely analyzed my spending, and this was the main tenet in my recent financial successes.  However, I have gotten away from this analysis in recent months.

I decided to chart my numbers for the past three months—September, October and November—since September was the month that I had previously analyzed for the post What is Your Number?

Here is that analysis:

Category:Sept 2018Oct 2018Nov 2018
Total Monthly Gross Pay:100%100%100%
Taxes Withheld:22.59%17.25%20.69%
Other Withholdings:5.05%5.00%5.53%
401K Withholdings:12.00%11.99%1.06%
Diverted to Investment Account:6.75%6.75%4.92%
Diverted to Savings Account:22.52%22.52%0%

There are a few obvious items that stand out for the recent month.  First is that my 401K contribution is dramatically down from previous months.  This is due to me maxing out that account for the 2018 year.  In my post I Maxed My 401K, I explained that the goal would be to continue to capture the monthly amount that had previously been diverted to 401K into a savings vehicle.  Sadly, I have not done that thus far.  Additionally, we can see that the 22+% I had been able to divert to savings in previous months has disappeared.  This was due to the credit card payments.

So, this analysis proved the feeling that something was amiss this month.  This led me to attack the credit card statements.  As mentioned above, I assumed holiday shopping would be the obvious culprit.  While there was certainly quite a bit of holiday shopping evident on the credit card statements, the main culprit was FOOD.  There were several entries for grocery stores and even more for restaurants.  Our grocery spending is properly planned and budgeted so these frequent entries were strange to see.  These purchases averaged $30-$40 so these were obviously not weekly grocery trips.  These were convenience purchases.  This is something that my family will need to address and make sure we are more deliberate with our grocery spending.  The largest item on the credit card statement were restaurants.  I lump all eating out into this category so this would include fast food restaurants, date-night sit down restaurants and nights out at a bar in this grouping.  The fast food restaurants are fairly easy to explain.  I have gotten away from the diet I have followed over the past year or so and as such, I have gotten lazy and allowed myself to eat at fast food restaurants.  I have often justified this with the usual “I deserve a treat” type rationale.  This type of thinking has certainly hit my waistline negatively but this analysis has shown me that it has also hit my pocketbook as well.  Perhaps this awakening will give me the push I need to regain the discipline to eat healthier.  I listed the sit down restaurants as “date-night” items because in this case, that is what they were.  There was one entry for a dinner with my whole family and a few for nights out just me and my wife.  These entries were in fact treats and saying I deserve them is not an excuse in this case.  They presented quality time for my family to be together and I will gladly spend that money, even if it means working a little harder to cut back in other areas.  Last and certainly not least, is my casual dining/drinking spending.  This category has skyrocketed in recent months.  This is the area that I will need to focus on the most if I am going to control my spending, not to mention that this also leads to weight gain as well.  I have a regular weekly “guys night” which tends to be somewhat pricey.  But as I mentioned, this is regular so I can budget for this.  I can certainly work to make this a little less pricey but I wouldn’t want to cut it out altogether.  The other, less frequent items are where I really need to buckle down.  My plan for these is to try to plan ahead and use cash when I am in those situations.  This will force that spending to be much more deliberate and obvious.  Even on the occasions when I spend a little more than is comfortable, I will immediately feel the pinch and use that to readjust and alter my focus.  

I think that I will work on publishing a monthly account of my savings as I did here.  If you think this is a worthwhile exercise, feel free to play along and post your savings rate in the comments each month.

Time to be Held Accountable

We are quickly coming up on that time of year when we turn the calendars over from one year to the next.  For some reason, we usually use this time of year to turn over a new leaf as well.  Last year at this time was a culmination of sorts for me of getting more disciplined.  I had just completed a year where I began to focus on my health and lost almost 50 pounds.  Combine that with my newly found financial discipline and I decided to actually make some real New Years Resolutions.  I decided to put some goals that were realistic and others that I would consider “stretch goals.”  Another thing I decided to do was write these goals down and keep them in a place that I would encounter often.  I decided to put this list on a piece of paper that I kept in the folder where I kept my monthly expense documents.

In the beginning of the year, I was doing a strong job of reviewing all of my finances month to month.  I would categorize and analyze each and every expense.  Keeping my resolution list in the folder where those documents lived seemed like a great way to keep them in the forefront of my mind.  Unfortunately, some of the discipline that I was so proud of seemed to leave me mid-year and I have gotten away from that ruthless monthly analysis.  The downstream impact of this has been that I have not looked at my resolution list in quite some time either.  Today, the list popped into my head and before I dug it out and reviewed it, I decided to do so publicly via this blog since one of the primary reasons for starting this blog was to keep my self accountable to my goals.

Here is my list of Resolutions for 2018:

  1. 1. Keep weight under 235 pounds (FAILED)
  2. 2. Re-Read “Your Money or Your Life” and “A Simple Path to Wealth” (COMPLETE)
  3. 3. Read at least 15 books (later amended to say Read at least 15 books and Listen to at least 15 Audiobooks) (COMPLETE)
  4. 4. Increase personal investment account to $50,000 (FAILED)
  5. 5. Max out 401K (COMPLETE)
  6. 6. Max out Roth IRA (TBD)
  7. 7. Max out Wife’s Roth IRA (COMPLETE)
  8. 8. Start blogging regularly (COMPLETE)
  9. 9. Pay off Auto Loan (COMPLETE)
  10. 10. Pay Credit Card balances in full each month (COMPLETE- with exception of one month)

Considering that I haven’t looked at this list in a while and have not paid much attention to it, I was dreading this accounting.  However, I think overall, I did a pretty good job of achieving my goals.

As for the failures, well, I came close.  My weight was kept pretty steady under 230 pounds most of the year.  However, in the summer, we went on a cruise and the temptations were just too great.  Since coming back from the cruise, I have had a rough time finding my motivation and have allowed my weight to creep slight above my goal.  I will be certain to include a weight goal in my resolution list for next year and push myself to get back to my daily routine.  The additional failure listed was my personal investment account.  At the end of the year, my total was approximately $28,000.  My goal included the regular scheduled movement of money which would account for an additional $13,000 and then a bump from there to account for any additional money I would be able to squeeze out of our monthly expenses and divert to this account.  This did not quite work out as my spending has increased somewhat over the second half of the year.  Again, I would blame this on my relaxing of discipline.  Couple that with turbulent markets the past few months and the account currently sits at approximately $38,000.  This is well short of my goal.

In summary, I hit a large percentage of my goals for the year, but I cannot help but be disappointed in the misses.  Especially since I can blame my own behaviors on both failures.  I will use this as motivation to double down in the coming year and ensure that I renew the vigor with which I attack these goals.  Stay tuned for a future post around the new year where I will lay out my Resolutions/goals for the coming year.