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!