What I am consuming… (April 2019)

Here is the latest installment of my discussion on the various media items I am consuming.  

What am I reading?

I continue to mix and match my Fiction and Non-Fiction reading.  I have recently been enjoying several Fiction series and find those as a nice outlet to the everyday grind.  I have, however, also continued to sprinkle in Non-Fiction books that I encounter through various blogs, podcasts or recommendations from people that I respect.  This month’s entry is one of those Non-Fiction books.  I recently completed a book that has been on my list for quite some time.  That book is Grit: The Power of Passion and Perseverance by Angela Duckworth.  This is a book that comes up quite often in interviews that I have either read or listened to.  The idea of Grit is not a new one, but the author does a very good job of showing how such “stick-to-it” principles are often what separate success from failure.  While reading this book, I could not help but analyze the teachings through the lens of a coach.  I have personally coached various youth sports teams and have often marveled at the characteristics that prove one participant to be more successful, even when faced with obvious differing levels of talent.  This book helped put those things into perspective.  My own son has had mixed results as a youth wrestler.  He gets very frustrated when he does not have success, but I have also noticed that his interests are wide and varied and while he wants to excel at whatever task he is performing at the moment, that drive does not often carry over beyond the event itself.  He doesn’t seem to have the Grit to put in the extra work and motivate himself when not being pushed by a coach.  I have designed programs for him with exercises and drills that he can perform outside of the structured season, but I have not yet been able to find a program that he will stick with consistently.  When he reaches an age where a book such as this may be appropriate for his reading level, I may have to have him read it and see if it has any impact on his Grit level.  

What am I listening to?

As I mentioned last month, my podcast list is quite long and needs to be trimmed a bit.  With this in mind, this month I am highlighting one that I believe I will be trimming and discuss some of the reasons why.  One podcast that I have listened to for a while is Journey to Launch hosted by Jamila Souffrant.  

I first heard of this podcast after the host was a guest on ChooseFI, another podcast that I listen to regularly.  I enjoyed Jamila’s enthusiasm and felt that her background as a certified financial education instructor offered a different perspective on the usual personal finance topics.  I quickly went to the beginning and have listened to every episode she has produced.  I enjoyed the content and especially her story of trying to build up this blogging and podcasting business on the side while still working a full-time job and raising a family.  Her spirit is hard to ignore.  Not too long ago, she decided to go all-in on her side business and left full-time employment.  This was done at a time when her side business was gaining some momentum.  At roughly this same time, however, she seems to have found her voice as a representative of a certain community.   In particular she has a strong focus on promoting the stories of Women and Women of Color in particular.  Her podcasts have veered more and more away from specific personal finance advice and more toward celebrating members of this particular community.  I applaud this and understand that direction but as I am not a member of this particular community, this podcast doesn’t seem to meet my needs any longer.  I have continued to subscribe and listen in hopes that it would revert to its roots but at this point, I think I am going to pull the plug.  I may check back in at a later date to see if things have changed.  

Podcasting (and blogging) is a personal endeavor.  A mentor once told me that even though there are many different outlets promoting similar content, your particular voice may speak to someone in a way that others will not.  At this point, Jamila’s voice is not quite connecting with me.

What am I watching?

I do not watch much television at all these days.  With an extremely busy work schedule followed up by taxiing two very active kids around every evening, there just isn’t much time.  I found that once we actually sat down and turned on the television, we would simply default to re-runs of older sitcoms.  With this in mind, recently I went about searching for a new show.  The entry criteria are that I had to find a show that was at least in it’s second season.  I have been burned by investing in a new show only to have it cancelled … (I am still salty about Studio 60 on the Sunset Strip being cancelled).  Doing a quick search of the various streaming options I have; I came across Scorpion.  This was a show that sounded interesting to me when it first came out, but I never watched it and never really thought much about it after that.  Then recently, I listened to an interview of Walter O’Brien on the The Tim Ferris Show podcast.  Walter O’Brien is a real-life genius who runs a company called Scorpion Computer services, which the show is based on.  The interview was excellent and piqued my interest so when I came upon the show, I decided to give it a shot.  To date, I have only watched a few episodes of the first season, but I am really enjoying it.  I recommend that readers give both the Tim Ferris interview and the show itself a shot.

As always, let me know what you are reading, listening to or watching in the comments.  It gives me great ideas on things to add to my future consumption list.  I would love to hear from you.

Fantasy Sports: Waste of Money or Side-Hustle?

That title is meant to produce a smile.  I don’t actually think that fantasy sports can be a legitimate side-hustle for most people, but I was led to this topic based on my past few monthly budget reviews.  In each of the past two months, I had entries for fantasy sports winnings.  These were payouts collected from my two fantasy football leagues.  The payouts also included pre-payment for each of my two fantasy baseball leagues that I am in.  This observation made me recall a conversation I had with a good friend and constant reader Mark (shout out, M-).  

When I first began the financial independence journey, I took it very seriously.  I started to eliminate expenses that were unnecessary, and the momentum became very obvious and this process of questioning everything I spent money on because quite addictive.  During this process we came upon the time of year when one of my fantasy seasons was about to kick off.  Since the initial outlay for my leagues is somewhat sizable, it led me to question whether or not I should continue to play fantasy sports.  When I broached the subject with Mark, the response was something along the lines of “… why would you quit, you keep winning…?”  While this was an oversimplification and a generalization, it did lead to further discussion about the fact that over the past few years, I have managed to come out ahead on my overall fantasy sports leagues.  For each sport that I play, at least one of the leagues has multiple avenues to earn money.  It isn’t simply the person with the best record who takes home the loot.  For example, in one league I am in, the top point scorer for each week wins a small prize.  String together a few weekly winners and you can earn enough to pay your entry fee.  There are additional prizes for overall leaders in points, playoff seed, best individual players and a few others.  By keeping each of these prizes in mind, I have been able to manipulate my team to the point where I have managed to maximize my investment.  

One example of this is in one of my fantasy baseball leagues.  It is an auction style league with keepers.  In this type of league, you bid on players and the winning bid becomes their “salary.”  Then you can keep a certain number of players from year to year, but their salary has escalation clauses.  About three years ago, my team was muddling along.  I had a roster filled with veterans and they were not performing well.  I came to this realization early enough in the season to understand that I was not going to vie for the playoffs.  I decided at that point to start building for the future.  I scoured the rosters of likely contenders and identified several young, cheap players that they would likely not be using much in the current year but who had tremendous upside. I then crafted a few trades that sent my few marketable players that would help them in their run to the playoffs and in exchange received a few players that I considered “scratch-off tickets.”  

Since this is a personal finance blog, I won’t go too inside baseball here but in a nutshell I would up with a few very impressive young players that were very desirable to all players in the league.  Once the season ends, there is generally a scramble to maximize the value of the number of keepers that are allowed.   At the time of this anecdote, we were able to keep up to 7 players.  I used some of these young studs as the anchors in trades that landed me several superstar players while keeping my overall team salary at a reasonable level.  This approach has allowed me to put together a team that has scored several weekly points prizes, made the playoffs each year since those deals and be among the league leaders in total points each year.  

So, just to bring things back to personal finance and perhaps answer the question asked in the title, below are the details of the most recent season in one of my fantasy football leagues (I chose football since the data is the freshest).

Entry Fee: ($175)

Weekly Top Points (2 weekly wins): $40

#1 Seed in Playoffs: $150

#2 in Overall Points: $130

League Champ: $280

Total Net Winnings: $425

Monthly Update – March 2019

As I mentioned last week, I am once again a little behind schedule on this post but here is my analysis of my monthly income and expenses for March 2019.  As per usual, below I have listed a running three month look for comparative purposes.  Since I missed this update for February, the three-month look reflects that.

First, here are the numbers:

Category: Dec 2018 Jan 2019 March 2019
Total Monthly Gross Pay: 100% 100% 100%
Taxes Withheld: 15.96% 23.02% 23.02%
Other Withholdings: 3.82% 4.85% 4.85%
401K Withholdings: 0% 12% 12%
Diverted to Investments Account: 27.14% 36.2% 7.4%
Diverted to Savings Account: 24.34% 0% 22.52%

The numbers that jump off the page at me start with percentage diverted to Investments.   This figure has dropped dramatically since January and I think that this may just be a timing thing.  The final pay period of the month of March fell at the very end of the month so the automatic diversion of funds to my investment account occurred after the turn of the calendar.  This should be picked up in next month’s review.  Additionally, I was able to divert a sizable percentage to Savings account.  At this time of year, I pilfered my savings account to invest in our ROTH IRA accounts.  This money was paid out of savings accounts / emergency fund money and I was able to divert $3500 later in the month back into my savings account to begin to replenish the emergency fund.  

I am beginning to investigate whether I can increase my 401K contribution percentage as well as increasing the amount that I divert automatically to my taxable investment account.  Those decisions will be put on hold until I can fully replenish my emergency savings.  Working in consulting can cause period of risk between projects where my income may not be very secure so the impetus to have a strong emergency fund is always there.  My goal is to have this account cover at least 5 months of spending.  Once I have this account fully replenished, I will strongly consider upping my bi-weekly contributions to Vanguard from $550 to $600.  Additionally, I will consider upping my 401K Contribution percentage from 12% to 13%.  Once those changes happen, I will report that in a future post.

2019 Goals- Three Month Check-Up

I noticed that I have fallen behind on some of the monthly items that I have committed to writing.  In particular, I need to add an entry for a check-up on my 2019 goals as well as a monthly budget review.  The budget review is more pressing as I believe I even missed a month for that series, but I have decided to do the goal check-up first as it requires less work on my part.  I will work on the budget review for the month of March soon and get that posted.  In the meantime, below is a look at the goals that I had setup for myself for 2019 and a snapshot of where I stand on progress for those goals.  

  1. Keep Weight under 235:

I am glad that this is the first goal on the list, and I am forced to dive right into this one.  In short, I have thus far FAILED miserably on this goal.  I started the year strong and was able to close in on 240 towards the end of January but since then I have allowed my weight to fluctuate dramatically.  I continue to exercise daily, waking at 5am each morning to get a 3-mile walk in.  I also use the stairs as often as possible throughout the workday.  I also continue to drink plenty of water.  Where I have fallen off is diet.  I have had way too many “cheat days.”  I guess you can’t really call them cheat days when they outnumber the good days.  I need to re-dedicate myself and buckle down.  I hope to have better news to report in my next update.  As of this morning I tipped the scales at 241.5.  

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):

After a meeting with my financial planner, I executed the transaction to fully fund my wife’s ROTH IRA.  Since she does not have a traditional IRA, I was able to move the necessary money into an unused Traditional IRA and then perform a backdoor ROTH conversion.  As I have mentioned previously, I was unsure if the income rules for contributing to a ROTH would be met so we decided to execute the investment in this manner.  As for my own account, we decided to wait until consulting with our accountant on our yearly tax returns.  Since that was completed recently, we got the green light from the accountant to contribute to my ROTH IRA as well.  This too was executed recently.  This is the first time in several years that I have contributed to my ROTH IRA and it feels pretty good.  To be clear, my lack of investment has not had anything to do with concern over the income rules, it was merely laziness and lack of prioritizing this type of investment.  Now that I am back to contributing to this account, I hope to continue to do so going forward.

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

This goal is very much ahead of schedule.  In the first quarter of the year I have read 13 books and listened to 12 audio books.  I continue to read/listen to a mixture of Fiction and Non-Fiction and have found this balance to help keep my interest in reading very high.  Generally, when I am reading a Fiction book, I will offset this by listening to a Non-Fiction book on audio.  Currently I am reading Gods of Mars by Edgar Rice Burroughs and listening to Grit by Angela Duckworth.  So, depending on the mood I am in, I can gravitate to either the fun Fiction storytelling or opt for the self-improvement of the Non-Fiction book.  I would love to hear from the readers what they are reading currently as this helps give me ideas for future reads.   

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

I have still not begun a re-read of either of these titles.  However, I have decided to pick up one of them as soon as I finish the book that I am currently reading.  

6. Get Vanguard Taxable Investment Account over $55k

As of this writing, my Vanguard account sits at $51,451.89 so I am very much ahead of schedule on this goal.  I continue my regular bi-weekly automated transfers to this account.  I have supplemented this by moving over additional monies as I have earned them.  This has come from sources such as Fantasy Sports winnings, selling household items, Swagbucks and other sources.  Each time I have a few of these items, I move the money and execute a transfer to Vanguard.  It has amazed me how quickly these little transfers can add up.

7. Pay Credit Cards in full each month:

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

8. Get HELOC Balance under $30K:

The current balance on my HELOC is: $30,317.76.  This balance is up slightly since my last update even though I have continued to make monthly payments.  I guess this is a signal that my monthly payments are not big enough.  I have fallen off on my goal of paying as much as I can each month to this debt.  This is due to the fact that I have had higher than normal credit card spending, and other expenses arise.  I have continued to be committed to paying the credit cards in full each month so even though spending has been higher than I would like, I have still been able to pay them off each month and not incur any interest charges.  In addition to the credit cards, we have had some one-time expenses in the past month.  In particular, my son had his tonsils removed and this led to some medical bills.  

9. Continue to Blog weekly:

So far, I have maintained a weekly publishing schedule.  I have not been as organized as I would like and each week the publish date seems to sneak up on me.  My workload has picked up lately and that has taken some of my attention, but I would like to return to being much more organized and having a few articles drafted to choose from each week.  I am working on a productivity hack to help me with this goal.  I am working to block off some time each a few days per week to focus on the blog—whether it is writing, researching, coming up with topic ideas, etc.   

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

For March I was able to exceed this goal once again.  For March, we were able to generate an additional $380.00.  The details of that extra money are below.

  • ¬ Swagbucks.com:  $75
  • ¬ MyPoints.com:  $50
  • ¬ Sell Used Items:  $30
  • ¬ Fantasy Football winnings:  $225

The largest entry in each of the past two months have come from Fantasy Sports winnings.  I currently play in 2 Fantasy Football leagues and 2 Fantasy Baseball leagues.  Obviously, I cannot count on winning money in those leagues each season, but those little boosts have certainly helped me achieve this particular goal the past few months.

My Entry into Real Estate Investing

I have teased in the past about my experiences with Real Estate Investing.  This has played a large role in my financial life and seems to be the topic about which most readers send questions.  This post is my attempt to give background and details of what led to my first real estate investment. 

As a child, we rented our home and that is all that I knew.  My first eye opening moment came when my older sister got married and began looking for her first home.  Her and her husband found a modest 3-bedroom, 1-bathroom Ranch in a good neighborhood.  The house had a nice yard and was perfect for their new family.  However, what caught my attention were the financials.  They were able to only put 3% down and their mortgage payments came to approximately $1500 per month.  At the time I was living with my parents but several of my friends were renting apartments or renting homes with roommates.  On average they were each paying between $500 and $800 per month.  I quickly realized that if I were to buy a house and recruit two fiends to live with me, I could minimize or even eliminate my own housings costs.  This idea seemed like a no-brainer and I quickly followed up the realization by doing… NOTHING.  I simply acknowledged it as a smart idea but didn’t take action.  

Fast forward a few years and I moved to the Midwest.  I bought a home and did not consider getting roommates or house-hacking in any way.  I bought the biggest house that I could afford and started on my path of “adulting.”  However, I stayed engaged with our Realtor who helped us find our home.  She was a real estate investor and I had shared with her my interest in this topic.  I picked her brain at every opportunity and would often call her to take me to see potential investment properties.  After many of these jaunts, I called her one day with a property to view.  She quickly responded with a “NO.”  I was shocked.  I asked, “what do you mean, NO?”  She said that she didn’t believe I was ever going to buy an investment property and that I simply enjoyed looking at them.  This was a punch in the gut, and I had to analyze my behavior and realize that she was right.  I was looking but not taking any action.  I was over-analyzing ever potential deal to the point of analysis-paralysis.  

With this realization in the back of my mind, I was visiting a friend’s parents in a nearby city.  They lived on a quaint private road that led to a large lake.  The houses were cute little bungalows.  Their parents lived at the end of the street and on the way to their driveway, we encountered a small house with a for sale sign in the front yard.  Our friend’s mom was involved in real estate and during conversation we quickly asked her thoughts on the house we passed.  She gave us some background that the owner moved into assisted living and her two young sons stayed behind.  They let bills get behind and eventually the bank foreclosed on the property.  We had her make a few phone calls and we learned that the house had an asking price of $35,000.  I looked at my friend and snorted at that price.  At the time both he and I were driving cars that cost more than that amount.  We sort of shrugged and said, “wanna be landlords?”  We agreed to investigate it.  We decided that I would handle the financing and I quickly called a friend who was a mortgage broker.  The approval process moved very quickly, and we were all set to close on our first investment property.  As the days leading up to the scheduled closing approached, I was chasing the bank to get us the final documentation and confirm that we were on track to close.  This was a frustrating experience as their follow up was not what I was used to.  Finally, the night before closing, I was panic-calling every contact I had at the bank.  I finally connected with someone in underwriting and they flippantly informed me that the bank decided not to fund the transaction.  This had never once come up in discussion that this was even a possibility, so I was completely caught off guard.  When I pressed, I learned that the deal was so small that there was very limited upside for the bank, and they viewed the deal as being too risky for their tastes.  This was a very large bank that I had done business with for several years, so this line of thinking came as a shock to me.  (NOTE:  What I did not know at the time was that this was in 2008 and the real estate market was in a severe bubble that was on the brink of popping.)  

I had a decision to make.  Do I back out of the deal and lose the money I had put down or do I figure out a way to push through?  With my previous realtors’ words bouncing around my head, I decided to push through.  I had a Home Equity Line of Credit on my home and decided to use that to purchase the rental property in full.  I had to be careful since that line of credit was how I planned on funding the necessary repairs on the house as well.  My quick calculations showed that I would be able to cover both, but just barely.

So, when the time came, I purchased the house for $25,000.  We then worked very hard to get the property rehabbed and ready to rent out.  As first-time real estate investors we may have over-improved a house that we projected as a rental but most of the repairs and improvements were necessary.  The overall bill on repairs and improvements came to approximately $30,000.  We had been carrying the house during the rehab period and incurred costs there as well but for the sake of easy math, I consider my all-in costs to be $55,000.  At that point, I reengaged with a lender and we agreed to a mortgage of $55,000.  This was well below market value and presented a situation where the bank no longer felt the property was a risk.  Upon closing, we received all our initial funding back and were able to rent the property quickly for a monthly amount that paid the mortgage and other necessary costs while leaving just a little extra as a cushion.  

I have now owned that property for over 10 years, and I have learned quite a few lessons.  Based on this transaction, I have learned that I need to leave myself a larger cushion in my calculations.  I did not account for vacancies and other normal costs that creep up on any property.  The real estate market in that city has been stagnant during this time and the home’s value has decreased somewhat, limiting our options and exit strategies.  It is regularly rented but there always seem to be things that pop up that skew the financials into negative territory.  Another lesson learned is that I am not best suited to manage a rental property from a distance.  This house is approximately 2 hours away from my home and this does not allow for fast reaction times when self-managing.  I have since added a property manager for this property and that has further eroded the financials.  

Overall, I would consider this investment as a negative.  However, at the time, it stoked my interest in real estate investing so even though it was a bad experience, I did not allow it to sour me on the idea.  The low investment cost also allowed me to make mistakes and learn lessons at a reduced cost.  At present, this house is rented and running fairly smoothly.  I would still love to unload this house and continue to watch the market closely to determine the right exit strategy.  The main reason I would like to unload this is that I am at a point where I am trying to simplify my holdings and this property does not fit the overall investment strategy that I would like for my future.

As several readers has specifically asked for stories about my real estate investing, I am sure there will be many questions in response to this post.  Feel free to leave them in the comments and I will do my best to get those answers to you.

What I am consuming… (March 2019)

Here is the latest installment of my discussion on the various media items I am consuming.  Some of you might note that my last entry in this series came in January.  Yes, I missed a month on this.  I have a few series that I have been writing about that have a monthly component and that just doesn’t leave much room to include everything that I want to write about unless I start to publish more frequently.  This is something I am strongly considering but since I am currently working full time and raising two very busy children and managing my rental real estate investments, I will proceed with caution on any ideas to increase my publishing schedule.  So, for now, please accept my apology for missing a month in this series.  

What am I reading?

See the source image

Last installment I mentioned that I have been enjoying Fiction more than usual lately.  I have become engrossed in the John Rain series of books.  I am still enjoying this character and this series.  However, in the past month I have also been reading non-fiction again as well.  The non-fiction book that I have enjoyed the most in the past month was Belichick:  The Making of the Greatest Football Coach of All Time by Ian O’Connor.  I really enjoyed this book.  It details Belichick’s journey as an over-achieving prep football player through his path as an unknown assistant coach.  There is quite a bit of discussion about this relationship with Bill Parcells and the success that they had together and then their ultimate break-up and Belichick’s roller coaster ride as the head coach of the Cleveland Browns and then his path to resurrect his career after that perceived failure.  I think this book had a little bit of everything.  As a sports fan, I enjoyed the peek behind the NFL coaching curtain.  I found that the book worked just as well for someone who is interested in business and management.  

What am I listening to?

See the source image

I have found that my podcast list is quite long and perhaps needs to be trimmed a bit.  With this in mind, I have paid much attention to what I am listening to and ensuring that I find value in each podcast that I commit my time to.  There are quite a few podcasts that I am no longer enjoying for various reasons and I have begun to pare my list down.  One podcast that I have reviewed and decided to keep on my list is The Money Nerds hosted by Whitney Hansen.  This is a pretty light and easy listening podcast on the topic of personal finance.  There is typically a mid-week podcast of anywhere from 30 minutes to one hour followed up by a Friday entry called “Five Tip Friday” which is a short-form episode that gives 5 tips on a specific topic for the week.  Whitney Hansen has tremendous energy and that is contagious.  She does not try to promote herself as a guru or expert in the space, but simply discusses her journey in becoming more responsible with her finances.  She explores most of the standard fare in this space—spending, saving, investing, side hustles, etc.—but she does so in a very approachable way.  I come away from each episode feeling more like I was having a conversation with a friend rather than feeling like I was sitting in a classroom being lectured to.  I think it is worth a listen, especially for folks on the beginning of their journey.

What am I watching?

Lately, I have found myself attracted to stand-up comedy specials.  This began when my daughter introduced me to John Mulaney.  We enjoyed his specials as a family, and this led me to search for other stand-ups that were family friendly.  Lately we have watched various specials from comedians such as Jim Gaffigan and Kevin James.  This has led to some fun family time.  I have always enjoyed stand-up specials with one of my favorites being Bill Burr.  I have also re-watched several of his specials, but this is when we have time for adult-only viewing as his material and language is not what I would consider appropriate for my children.  If you have not given a stand-up special a chance before, or haven’t done so in a while, I highly encourage it.  I have found that in this era of video on demand, there are many more outlets competing for content and as such, there are many more opportunities for comics to put out specials.  

See the source image

What are you consuming these days?  I am always curious to hear what others are reading, listening to or watching.  It gives me great ideas on things to add to my future consumption list.  Let me know in the comments!

Should You Pay Off Your Mortgage?

A quick trip through the personal finance universe will lead to many contradictory articles discussing whether you should pay off your mortgage early.  Some argue that you cannot be truly financially independent if you still have a large debt hanging over your head.  Others argue that the low interest rates coupled with tax write-offs built in to carrying a mortgage have their own benefits that outweigh having one last debt.  I am not interested in joining the argument on one side or the other.  All I can do it discuss my own intentions and desires.  My feelings on personal finance are that there are no hard and fast rules that can be applied to everyone equally.  It is called “personal” finance for a reason.  Each person much come to their own conclusions as to what is the best option for them.

Over the past few years, I have vigorously attacked consumer debts that I had accumulated before taking control of my finances.  I started by paying off high-interest credit card debt as quickly as I could.  I then turned my attention to a car loan and took care of that much more quickly than I expected.  

Each time I set my sights on tackling a new debt, I approached it in a similar fashion.  I reviewed my current budget to determine the amount that I could apply to this debt.  Using that information, I crafted a payoff plan.  Then I fought any urges to stray from that plan.  Additionally, I looked for any additional monies in the budget or monies I could make outside of my normal budget and applied that to the debt as well.  I found that this activity was somewhat addictive and took on a momentum all its own and the result in each case was the ability to pay off each debt ahead of the planned schedule.

At present, the only debt I have left is housing debt.  This includes my primary mortgage and a home equity line of credit (HELOC).  I have started to attack the HELOC first in the manner described above.  I have found that this time around, the momentum is slow to come.  I have made the scheduled payments each month but when it has come to additional monies, I have not been applying those to this debt as regularly as I had with the credit cards or car loan.  When I have been able to come up with additional money, I have diverted it to my taxable investment account.  I am not sure why I have made these decisions, but I must guess that it is psychology at play.  Psychology similar to the arguments mentioned in the opening to this article.  Perhaps subconsciously I have had this argument as to which is more important or the better use to money.  This realization has led me to seek out information on this topic and brought my own decision making to the forefront of my consciousness.  It has forced to me ask myself where I fall on the “To Pay or not To Pay” spectrum.

As I mentioned, I am currently carrying two housing debts.  While they are against the same property, I consider them as separate and am attacking them as such.  My current plan is to pay off the HELOC first.  During the accelerated payoff period, I will pay my normal monthly mortgage payment on my primary note.  Just to feel like I am doing more, I have added an additional $100 to my monthly payment each of the past 3 months to apply to principal.  It is not a large amount but it is also one that doesn’t bust my budget so I hope to continue that additional payment until the time when I can turn all my attention to this note.

I did set a goal for 2019 of reducing my balance of the HELOC by a certain amount.  After reviewing my progress in last week’s article, I realized that only two months into the new year I have nearly hit this goal.  Obviously, my goal was not aggressive enough.  So as of today, I am adding a “stretch goal” component to that item.  I had previously said that my goal for 2019 was to get the balance of that debt under $30,000.  Now that I have almost reached that amount, I will now attempt to get that balance under $20,000 by years end.  This may be a little too aggressive but after veering too conservatively originally, I will try to push myself in the other direction.  With 10 months remaining in 2019, this works out to a net reduction of approximately $1000 per month.  I believe I have achieved this without any dramatic changes to my budget and without any negative impact on my current savings and investing plans.

With that goal being attacked, I will then attempt to pay the debt in full by the end of 2020.  At that point, I will turn my attention to my primary mortgage.  I have a strong desire to retire “early” but at present I don’t know what that looks like.  When I started on this path, I superficially threw out the target of 10 years.  That was 2 years ago.  I have not yet figured out exactly if that is the date I should be targeting.  I have not fully worked out the financial or emotional details of that type of decision.  But at this point in time, I can safely say that my current plan is to pay off all debts—including my mortgage—before I pull the trigger on retirement.  

I fully understand the arguments on both sides of this discussion.  I believe each have merit.  But for my personal situation and based on my personal mental make-up, I think the comfort of knowing that I am debt free will far outweigh any additional financial gains I can make by keeping a management debt load and using that money for alternative investments.

Where do you fall on this spectrum?  Will you pay off your mortgage sooner rather than later?  I would love to hear from you.

2019 Goals- Two Month Check-Up

In order to keep myself accountable, I will continue to perform a monthly check-up on my published goals for 2019.  Now that February has come and gone, it is time for the next review.  Here is where I stand, for better or for worse.

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

I broke this goal down in the first few months of the year to make it slightly more achievable.  My goal was to get my weight down to 240 by end of January, then down further to under 235 by end of February.  From that point, it is my goal to maintain that weight level for the rest of the year.  Unfortunately, I have failed in this goal so far.  I was close to hitting the January milestone but have not come close in February.  In fact, I have slipped slightly.  As of this morning I tipped the scales at 243.  I continue to exercise regularly and drink plenty of water.  However, my eating habits have slipped tremendously.  I have blamed this on the number of snacks and junk food available at the office but to be perfectly honest, those things have always been present.  I have just done a poor job with the willpower to say no to these items.  I need to buckle down further and get back to the habits that allowed me to drop almost 50 pounds previously.

  1. 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.

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

The primary goal of maxing out my wife’s ROTH IRA has been completed.  In January I met with my financial planner and we discussed and then executed this move.  The reason we moved forward with my wife’s and not mine is because we are unsure if we are eligible to contribute to ROTH accounts.  Since my wife only has a ROTH account and not a traditional IRA, we are able to fund a newly set up traditional IRA for her and then do what is called a back-door ROTH conversion.  Since I have a traditional IRA as well as a ROTH, a similar move would be more complicated since we would only be able to move a portion of the traditional monies over in the back-door conversion and if that needed to be reversed for any reason, it could get quite complicated.  I am meeting with my accountant this week to review taxes for 2018 and one thing I will be anxious to learn is whether I can contribute to the ROTH.

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

This goal is very much ahead of schedule.  In the first 2 months of the year I have read 8 books and listened to 9 audio books.  I have found my interest in reading to be increased lately and have found myself grabbing a book in the evenings rather than reaching for the TV remote.  If this pace can continue, I will shatter my stated reading/listening goals.  I think a big reason for the increased interest in reading is simply that I have found things I am quite interested in.  This has come in the form of both Fiction and Non-Fiction books.  On the Fiction front, I was recommended a new series of books by a friend and constant reader, Pete (shout out Pete!).  I gave the series a shot and really liked the first book.  I quickly read the second book in the series and I currently have the third book checked out of the library and will begin that as soon as I complete the book I am reading.  As for Non-Fiction, two bloggers that I enjoy have recently released books.  I was bombarded with information on each since they went on what seemed like EVERY podcast I listen to promoting their books.  Regardless, I gave each a try and found them to be very interesting and quick reads.  The first was Financial Freedom by Grant Sabatier, author of the blog https://millennialmoney.com/blog/ and the second is Work Optional by Tanja Hester, author of https://ournextlife.com/.  I have enjoyed each of these and found the writers to be very approachable and easy-to-read. 

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

I have still not picked up either of these books for a re-read yet.  I have each sitting on my night stand and will work them into the mix soon.

  1. 6. Get Vanguard Taxable Investment Account over $55k

At present, my Vanguard account has a total value of $48,479.39.  I continue with my automatic bi-weekly investments.  Additionally, I have been using various apps to make a little extra money on the side.  I discuss this in more detail below, but I mention it here because I have set each up to pay out in PayPal gift cards.  Once I receive the award, I transfer the money from PayPal into my checking account and then immediately send that money to my taxable investment account.  This adds a little extra to my investment account each month on top of the regular transfers.  Based on the current balance, I feel confident that I will hit my goal.  

  1. 7. Pay Credit Cards in full each month:

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

  1. 8. Get HELOC Balance under $30K:

The current balance on my HELOC is: $30,176.39.  I am super close to meeting my goal and we are only two months into the year.  Perhaps my target was not very aggressive, but it was based on the previous pace that I was paying this debt down.  However, by tracking this as a 2019 goal, I have put more focus on this item, and I have been able to “find” extra money to pay on this account.  This goal list has had a strong impact in this area in more than one way.  By tracking my goals so closely, I have put focus on my credit card spending.  I have been able to keep that in check as of late.  Since fewer of my dollars were going to pay off credit card debt each month, I have been able to divert those extra dollars to paying extra on my HELOC.  I will continue to attack this debt and my even go as far as revising this debt goal to keep myself pushing on this.

  1. 9. Continue to Blog weekly:

So far, I have maintained a weekly publishing schedule.  Last month, I mentioned possibly writing more often.  I continue to consider this option.  This post is an example of a few items that I had committed to produce monthly.  Since I have been writing posts about my media consumption monthly along with updates on my goals and finances, that does leave much time for other types of posts in a weekly publishing schedule.  My work and family schedules are quite busy so I am unsure if I can commit to a more frequent publishing schedule, but it is something that I am considering.  Let me know if you would like to see more posts.  

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

Last month I mentioned my use of the website Swagbucks.com.  Mentioning it here led me to double down on my efforts to fully utilize this site.  I also learned through a friend that there are other similar sites.  I have since tried a few and found one that I have enjoyed.  It is called MyPoints.com.  I find I am able to use this in the same way as SwagBucks.  I open each of these up and can review videos, etc. while I watch television or do other mindless tasks.  It can be time consuming if it is something that you sit and focus on but by doing it in the background while doing other tasks, I find that it is quite easy to accumulate points.  As I mentioned above, I have set up these sites to pay out in PayPal gift cards which I then send to my investment account.

 For February, I was able to make a total of $338.72 from various sources, including the above.  Here is a breakdown of the ways I was able to do this.

  • Swagbucks.com:  $50
  • MyPoints.com:  $25
  • Sell Books at Half Price Books:  $6.40
  • Sell Used Items:  $50
  • Fantasy Football winnings:  $207.32

Monthly Update – January 2019

I am a little behind schedule on this post but here is my analysis of my monthly income and expenses for January 2019.  As per usual, below I have listed a running three month look for comparative purposes.

First, here are the numbers:

Category: Nov 2018 Dec 2018 Jan 2019
Total Monthly Gross Pay: 100% 100% 100%
Taxes Withheld: 20.69% 15.96% 23.02%
Other Withholdings: 5.53% 3.82% 4.85%
401K Withholdings: 1.06% 0% 12%
Diverted to Investments Account: 4.92% 27.14% 36.2%
Diverted to Savings Account: 0% 24.34% 0%

So, looking at this month’s numbers, there are a few things for discussion.  First are the taxes withheld jumping from the previous month.  This is due to the fact that the calendar turned to a new year and therefore, I must contribute to Social Security withholdings once again.  This contribution has a maximum value per year and once you hit that, money is no longer diverted to this fund for the remainder of the year.  Late last year I hit that limit and therefore in December I did not have these monies removed from my paycheck.

Also, of note is the jump of 401K withholdings.  Once again, last year I was able to max out my 401K contribution.  This occurred in early November.  That can be seen by looking at this line above.  In November I had a small contribution that topped of that contribution for the year and then in December there were no contributions.  Now that we are into a new year, those contributions start back up again.  At present I am contributing 12%, but I will look for opportunity to increase this in small increments any time that I think I can do so without impacting my monthly budget.

Lastly, I was able to divert quite a bit to investments this past month.  I have regular automated contributions that are scheduled to occur on the same day as I receive my paycheck.  I was contributing $525 per pay period to start December but by the time of the second period, I had moved that up to $550.  I will continue to look for opportunities to increase this amount anytime I can permanently eliminate a recurring expense to ensure that I can lock in those savings for the long term.  In addition to my regular automated contributions, I found I had more cash in my checking account than I needed for my regular budgeted expenses.  I took advantage of this by diverting that additional money to my taxable investment account.  I am working on creating a more comprehensive budget and once I get to that, this type of situation will be eliminated since my plan is to use a zero-sum budget where every dollar is accounted for.  At present, while I do “budget” for most of my monthly expenses, I still feel that I am mostly reactive and increase payments to savings or investing vehicles based on the balance in my checking account.  In the future I plan to be much more deliberate to ensure that I can capture all savings and ensure that each dollar is put to the best use.

Addressing the Internet Trolls

It never ceases to amaze me how negative folks can be.  Especially on the internet where you can hide behind anonymity or you write something outrageous just to ensure clicks to your site.  As an avid consumer of personal finance information, I have come across many of these people, whether in the comments or their own sites.  Today I would like to address of few of the bigger ones that I have seen.  I would have to turn in my personal finance blogger membership card if I didn’t weigh in on these topics (haha).

Topic #1- Suze Orman’s take on Financial Independence

You cannot call yourself a consumer of personal finance information without having come across the controversy stirred up by an interview on Paula Pant’s Afford Anything podcast with the self-proclaimed matriarch of personal finance, Suze Orman.  Ms. Orman has made a career of giving personal finance guidance and advice.  Her style is to be in your face and bombastic.  Therefore, I was a little surprised to see people get so up in arms about her comments surrounding her hatred for the financial independence community.  I consider myself a small part of this community and I heard the comments and my initial reaction was …. “meh.”  First, Suze Orman is in the business of being extreme and over-the-top, which she was here.  Second, she lives a current lifestyle that is VERY different than most in this community.  She made a statement that you cannot retire without at least $10 million saved up.  Well, since the FI community views FI or retirement readiness through a lens of math, namely that you need 25 X your current expenses, then why would it be such a stretch to believe that Suze needed such a high figure to reach her version of FI?  I think the problem lay in the fact that she has a large audience and people in this community fear that her communicating such a thing would be detrimental to the FI movement.  My take on this is…. “So, What?”  Suze has her audience.  They are not necessarily part of the FI community.  Allow her to preach to her followers in any way that she wishes.  Secondly, if she didn’t find value in the FI community, she would not have come on a podcast that is firmly a part of the FI community in order to push her latest book.  Finally, she was also smart enough to recognize that her comments were not met well in our community and has since backtracked

Topic #2- The “Latte Factor”

Another topic that seems to get much ink (can you call it ink if it is all electronic?) is people weighing in on David Bach’s overall premise that has been dubbed the “Latte Factor.”  The concept is that you can dramatically change your financial situation if you cut out that daily latte.  Personal finance bloggers across the internet seem to take this quite literally and love to criticize this idea or say that it simply won’t get the job done.  My take is that the “Latte Factor” is not about saving that $3.00 per day, but it is about the behavior surrounding that.  If you can ween yourself off the daily coffee purchase by making coffee at home, then that is a behavioral change that will be replicated across other aspects of your life.  I can’t understand why people are ready and willing to discount all of Bach’s writings based on the fact that they simply don’t see the impact of saving such a small amount.  There is no silver bullet that will automatically change your financial life short of winning the lottery.  I think the “Latte Factor” is a vital mental shift required to change anyone’s situation.  If that coffee brings you tremendous joy and satisfaction, then go ahead and keep on buying it.  But even that decision has embraced the “Latte Factor” since you viewed it through the lens of weighing its value against its cost.

Topic #3- Dave Ramsey

The third topic that seems to be a requirement for personal finance bloggers to attack is the Dave Ramsey method.  This one is somewhat tricky since most PF bloggers will go out of their way to talk up Dave Ramsey and his work in helping millions of people get out of debt but they also all seem to have an obsessive need to bash one aspect of Dave’s teachings.  This is Dave’s assumption that followers of his path can earn 12% returns annually on mutual fund investing.  Personally, I disagree with this assumption myself.  I tend to have a much more conservative approach to projections and tend to go lower.  The same people who bash Dave’s assumptions of 12% with go on to use a number themselves in the 7-8% range.  Even that is a guess rooted in that person’s experiences and personal thoughts.  All these figures are assumptions, they are not set in stone.  Dave’s numbers come from his experiences and beliefs.  Honestly, if you were to follow all of Dave Ramsey’s famous Baby Steps and get out of debt, stay out of debt and set up investments, the performance on those investments will dictate how you behave in the future.  Dave is not someone advocating for an extremely early retirement where your investment returns may impact your ability to support yourself for many decades.  At the point where followers will be impacted by their investment returns, they have already educated themselves and cleaned up their personal financial picture and therefore should be in a better place to self-manage their finances whether the projections play themselves out according to someone else’s ideas.

These are just a few of the common trolling topics that I constantly come across as I dive deeper into personal finance content.  I am sure there are other topics that impact each of you as well.  Feel free to discuss them in the comments.  I would love to hear from you.