Where we are on Kids

We are in our mid 30s and we’re thinking of kids. In many ways, it’s looking like writing a paper a day before it’s due.

This is the year to have one if we want one, my wife tells me.

I’m not sure about next year, she says.

She would know. She’s a neonatal nurse.

But I’m not sure why we need kids.

I know we’d be incredible parents, if that’s reason alone. The kid’d have a great childhood, and if she’d be anything like her mother (I’d like a girl), she’d be pretty cool, and incredibly good looking (everyone sort of is thesedays). May be that’s reason enough.

I’m hesitant. I’ve been unsure for months. For one, my parents haven’t really put any pressure on me. They did, on my brothers, and they gave them four grand children.

I’m sure they haven’t forgotten me? But I don’t want to ask them.

I think of my friends who have kids. Two of my more recent friends do, two each. They’ve followed the typical template – get great education (phds), work work, marry well (phds), keep working, then kids (two at least, bang, bang), keep working, retire at sixty, play with grand kids.

Now that doesn’t look too bad. May be a little tiring just thinking through it. And if you’re impressed by their phds, don’t. It’s like choosing the most difficult route to climb a mountain when we (the FIRE tribe) know better.

But that’s coming from someone who does not have those credentials (so sometimes disgruntled). And who’s to say what experiences we’re after. It’s the journey, they say, and the sweat is always more uplifting, more lightening. Comfort and growth don’t go together says Ginni Rometty, and she must know.

But she has no kids.

Of my classmates from high school, only five have kids. A few aren’t even married. We’re all in our 30s. Surely they know what they’re doing. They’re all incredibly smart. The girls, in particular. All of them.

I think of my cousins. And some of them aren’t married either.

Surely I’d be okay.

When we’re old, I’ll look after you, I’d tell them.

In that, I’ll call on you, I clarify.

You do the same. Can we make a pact?, I’d tell them.

Please sign here.

We’re of one blood. Or close enough. We’ll even move to New York (or Toronto). New old folks in cold cities. Now that’d be something. I tell my wife she must start preparing.

Can you learn to start enjoying hot tea?

On our drive to the mall yesterday, my wife asked about adopting in the future. We’d always spoken of it, but this felt like an alternative.

I felt a sense of relief.

I’m not sure if I’m being fair. My wife deserves everything that she wants. If she’d push me just a little harder, cry, make a scene, beat me – may be that’ll strike some sense.

Or may be not – I’m not sure.

Porto Update – Q3 2018

We are a two income household. We try to live on my income and save my wife’s income.

We’re looking to max our individual retirement accounts for the first time this year. We maxed our Roth accounts early this year, and will max our 401K next month. In all fairness, this is only the third year where one of us have had a 401k account.

We make average salaries (we are a regular office dweller and a nurse, in a fairly expensive city). So meeting all expenses on one salary is not feasible every month. We also make generous gifts to our families.

Setting a savings goal at the beginning of the year has helped us stay in line. We’ve completed 80% of our goal so far and are likely to surpass it by year end.

We plan to continue funding half of our investable income into our emergency reserves (VMMXX) and the other half in VTSAX (and VYM). We want to “always be investing“, while also ensuring we don’t have to sell those should the economy turn south.

We also want our emergency fund as a down payment on a rental property if, when the economy turns, we’re both holding on to our jobs (and are relatively comfortable) and property prices fall.

Our Stock to Bond split remains unchanged at an aggressive 80% to 10% of our net worth. Almost all our funds are now in low cost index funds – see Vanguard and Betterment allocations below.

Jeff, the Millionaire Custodian

Jeff’s obviously frugal, but the guy’s bright in the best of ways – rooted to the ground, and fully aware of where he stands and where he can be. Jeff confirms the basic FI tenets – always be investing, in low cost index funds, keep them there especially in the worst of time and be true to yourself and to the world. 

Listen to the him speak on the Millionaire Unveiled podcast.

Another similarly admirable guy is Ronald Read.

Bullshit Jobs (I’m yet to climb my mountain)

This one’s wonderful – NPR’s Hidden Brain on BullShit jobs

May be why we have open offices, and hypocritical (of me) to post it on a Tuesday morning. But I actually wrote this yesterday 🙂

I’m all for efficiency – and I’m learning to space my work a bit. Weather it does anyone any good in the office (of the regular kind) is a purely subjective matter. Suffice to listen first, then act on it. Best to be efficient but refrain from burning down.

It looks like you have bandwidth this week – may or may not be a good thing coming from my manager this morning.

What do you say?

While I’m (sort of) settled now, my take was this once:

A new bout of existential crisis
amidst my labor
that is not entirely misplaced
nor entirely misguided
treads slowly still.

A reformation is overdue,
no, not doctrinally –
but to accept and surrender
may be the truth.

Or not –

I’m yet to climb my mountain.

Seriously, Amundsen –

My themes these last few days have been rather serious –

Passion
Akira Kurosawa’s Seven Samurai
Aging
Dr. Una Kroll

I came across Ernest Shackleton last week. I spent the entire weekend reading on the heroic age of Antarctic Exploration. And how incredibly they lived – then Roald Amundsen and Robert Scott. Their struggles, and that of their forgotten men, their will to plow through enormous obstacles, and their losses unmask of our own inherent, often hidden strength to traverse our personal journeys – to FI.

Our introspection never end.

On the parking lot of our remote library sits a solitary truck with its driver nowhere to be seen. A beautiful older woman browses through books on a Monday morning. My socially affluent friends on Facebook jump on beaches and travel to places like Azerbaijan on their weekends. The wife of a childhood friend abandons him for a smarter guy.

We make our strides towards FI. It is a wonderful diversion while we’re at it – call it Karma, instant Karma. No rebirth required.

On a more serious note, an unexamined life is not worth living. I’ve decided to examine my life on Saturday mornings, and focus on implementation on other days.

Fire in the belly

A small town could steal a life. Dennis is a small town man. He’s lived in one all his life. He’s been to Florida a few times. New York is just a day away, but he hasn’t really felt a need to see it. He tells me that he’s never been on a plane.

Dennis is a good man. He takes care of over two hundred units. Mine is one. He works all the time, gets no holidays or insurance from his work. He tells me he paid over six thousand dollars the last time he went to a hospital. That he took a beating on that one.

I ask him why he isn’t the property manager. I’m not good with numbers, he tells me. I suspect he never had fire in his belly. He’s never needed it. He’s hustled all his life, uncomplainingly. I guess he didn’t think it was a big deal. I guess he just didn’t see it all. A small town can do that.

I’ve never had great fire in my belly myself. I am efficient in my ways. And there were things (and there still can be) –

“With the things you could do, you won’t but you might
The potential you’ll be that you’ll never see
The promises you’ll only make” (Between the Bars, Elliott Smith)

I feel a small speck of some fire lately – in a light sort of way. I hope that I have the hustle for it.

You see, – I’m an idea man, a story man, a man with a song,
on Whitechapel, the hero turns the light switch a 150 times
I have my own creations –
I check my locks and gas – should they move, but how?
spit, lightly, 4 sets of 11s when I pass a cross on the road
a good 3 set needed, but I do the 4th to back the first 3, just in case
I kiss my wife 4 sets of 11s as well

I can do without these –
You see, I’m a steady man, an incisive man, a man with a mind.

This is what I have

Exhibiting FI qualities, by circumstance and design, circa winter 2012.

Remember that not getting what you want is sometimes a wonderful stroke of luck – Dalai Lama.

******

This is what I have

On a hard floor lifted by air
a sock here, a sock there
and three bananas on a red bag

In the freezer,
frozen noodles and dumplings
a fist of bok choy and two large red onions
and thank god for the frozen gyozas
and eggs and cheese and coffee
and a loaf of bread and oranges, if only someone would peal them I’d eat them.

In a rather large closet (the largest I’ve ever had)
stands a wicked, full length mirror that makes me look real sleek
a bottle of complete multi-vitamins,
more noodles,
three formal shirts, three formal pants,
t-shirts, towels and more socks
an oversized jacket, two sweaters
two tight jeans, and a new yellow corduroy pant I got yesterday to wear this Friday –
and hopefully when I see the girl, whenever that happens, where ever
O’ destiny, please intervene – and make it a lovely girl please – lovely eyes, slender fingers and all
a heart of gold, real friendly and happy to complement my sometimes somber fallings
A pair of boots, three times more expensive than the most expensive I ever bought before I bought it –
my old and faithful tennis shoes, and the converse I never thought I’d wear
one never knows what one may, will,

And the laptop and the iphone that have been the best of friends
my light in the dark –

And of course, the mind that is in two roads,
one in bhakti, devotional surrender,
the other in fighting through it all, no submission.
There’s victory either way
and how wonderful is that
that I have a choice,
that wisdom and experience is a blessing
and my scars only end up looking edgy
and real sexy.

everyday life must do

I made this list a few years ago. Here’s where these stand today:

  1. No podcast at work: I listen all day. They keep me in line with all that’s there, or was, and stirs the mind. I’ll list my favorites on a separate post soon. Some of the FI podcasts I like are here.

  2. Low carb, greens, fibers: I love greens – cooked, not raw. But I need to get better at it. You see, I really, really like meat.

  3. Calculus, Modelling, stir the mind, Betsy is an old programmer for god’s sake: This one’s ongoing. The idea is to stir the mind and to keep learning. I’m keen on becoming better at working with data. I’ve sort of started learning Pandas on Python.

  4. Put phone away at work: This one’s easy. I don’t have any social media apps on my phone. My phone is for podcasts, messaging my wife and talking to my parents.

  5. Read – no more fiction: I’ve read seven books this year. I’ll list them on a separate post. I spend much more time reading online – some FI blogs I follow are here.

  6. Listen to one good song everyday – get inspired: This gets me nostalgic, and I think of all that could’ve happened.

  7. Sing a few times a week, to cleanse the internals: I don’t play the guitar often enough. I’d love to get better. I finger pick.

  8. Run, run, run – sweat it out – feel light, the skin must glow again: I used to be athletic. I haven’t played any sports in two years – partly because we moved to Denver and we had other things to do. I do not have any excuses now. I bought a rowing machine last year that I need to start using. I rowed for a half hour this morning, and will row a half hour everyday.

  9. Smile, thank you, please, everyone, absolutely no bars, but restrain and take it slow and steady: This is inherent. I intend to be good in all ways. I read sometime back that you are what you are at 40. So if you’re a grumpy man at 40, that stays for life. I’m still a few years away, but I’d like to take a happy man forward.

  10. Sleep deep, enough and a little more: I need to work on this. I’m usually in bed by 10, but I watch YouTube on my IPad to sleep. I’m replacing that with podcasts starting today.

  11. talk clearly, cleanly, slowly enough – express, express: I’m a sucker of folks that barely speak, and gifted with silence in return so that they’re heard. Now that’s respect (and power).

  12. a paragraph every night to clean the soul, unburden and go lightly to bed: I should start writing everyday. To think one can (if one ever could) and to actually be able to are different. I need to keep practicing.

  13. finance, other plans, lay it out and patiently move forward: Yes, this one’s done – hense gofi.

And now these:

There’s a lot I want to do.

Get the gruff – but the love handles need to go first.

Write, but my days of melancholy have vanished.

Ditto for my songs.

And Sports.

Be awesome at work – everything seems to be possible.

All to bring out the magic that a mind is. 

“I am a true laborer: I earn that I eat, get that I wear, owe no man hate, envy no man’s happiness, glad of other’s good” – Shakespeare.

Random Quotes

Some random quotes saved as draft many years back. 

  1. Edna O’Brien: I think by nature I am lonely, in that I wouldn’t be a writer if I were not lonely. I think most writers [are], if you read their letters and sometimes read some of their lives. I’m not recommending it, but I know one has to be — to remain writing, not just to start as a writer, to remain faithful to it — one has to live so much of one’s life alone. And reflective. Certain people, I think, are kind of born lonely. I can tell lonely people when I see them, and I’m very often drawn to them, because I feel that they might have some secret to tell me.
  2. A hindu poet on Struggle: For one to see heaven, one must die oneself. 
  3. Einstein: A quiet and modest life brings more joy than a pursuit of success bound with constant unrest.
  4. A BBC Podcast: Inspiration comes from knowledge.
  5. Newspaper article: His thoughts and actions were one.
  6. An aunt: You don’t want to climb a mountain if you’re not going to reach the top.
  7. Ahmet Rasim: The beauty of a landscape resides in its melancholy.
  8. A friend – we must remain true to our values regardless of where society goes.
  9. Nature of Existence: A Chinese guy: Happiness comes from Hard Work.
  10. Kahlin Gibran: The deeper that sorrow carves into your being, the more joy you can contain.
  11. T.S Eliott: Poetry is not a turning loose of emotion, but an escape from emotion; it is not the expression of personality, but an escape from personality. But, of course, only those who have personality and emotions know what it means to want to escape from these things.
  12. Humboldt: I am more and more convinced that our happiness or unhappiness depends far more on the way we meet the events of life, than on the nature of those events themselves.
  13. HG Wells: I can’t bank on religion. God has no thighs and no life. When one calls to him in the silence of the night he doesn’t turn over and say, “what’s the trouble, Dear?”
  14. Florence Nightingale: To-day I am 30 – the age Christ began his mission. Now no more childish things. No more love. No more marriage. Now Lord let me think only of Thy Will, what Thou willest me to do.
  15. Epicurus’s idea of “the good life“: It is impossible to live a pleasant life without living wisely and honorably and justly, and it is impossible to live wisely and honorably and justly without living pleasantly.
  16. Robertson Davis: A happy childhood has spoiled many a promising life.
  17. A friend: Where does the faith come from, he asked … From events that seem life shattering, but a boon in retrospect
  18. Dalai Lama: Remember that not getting what you want is sometimes a wonderful stroke of luck.
  19. Maya Angelou: There is no greater agony then bearing an untold story inside you.
  20. Kahlil Gibran: Out of suffering have emerged the strongest souls; the most massive characters are seared with scars.
  21. Unknown: You’ll waste a lot less time worrying about what others think of you if only you realized how seldom they do.
  22. Albert Camus: To be happy one must not be too concerned with the opinion of others. One should pursue one’s goals single-mindedly, with a quiet confidence, without thinking of others.
  23. Unilever: Humility to create awe
  24. Our Idiot Brother: I like to think that if you put your trust out there; if you really give people the benefit of the doubt, see their best intentions, people will rise to the occasion.

Porto Update – Q2 2018

Our stocks to bonds split stands at an aggressive 81% to 11%. We started an emergency fund (VMMXX) late in the quarter. We will continue building it up until it equals a few months our expenses. This has temporarily halted our non-retirement investments. We continue to contribute towards our 401K and should max those by year end. We maxed out our Roth accounts a few months back.

Our expenses continue to be quite high to my liking. There’s not much we can do to cut cost, other than moving someplace cheaper. That is unlikely at the moment.  

Uber’s not for me

I drove Uber for a few days last year – just for kicks, and quickly realized my time was better spent elsewhere.

I drove for 8 hours, spread across 4 days and made $151. Shockingly, only 3 of the 17 riders tipped.  The tippers included a nice lady from New Mexico, a younger woman from Connecticut, and a young accountant from Ohio. Non tippers included seemingly well to do professionals – two consultants in suits, start up guys, hipsters, and IT consultants.

I’m not sure if Uber makes any sense for drivers who use their personal cars. 

Porto Update – Q1 2018

Asset Allocation, Q1 2018  (as of Apr 18)

The spread between our taxable and tax-adv accounts currently stand at 61% and 39% respectively. Since we will not be accessing our tax-adv accounts until later in life, we are comfortable with this mix at the moment.

Our stocks to bonds split stands at a moderately aggressive 83% to 12%.

We hold a few stocks in our Merrill Lynch Edge account, which we mean to liquidate over time. We recently filed our taxes, and took the opportunity to liquidate some of it to pay our taxes. We’ll probably do the same next year.

We also had replace some appliances (washer, dryer, refrigerator) which were all over 12 years old.

Our 401K accounts hold target dated funds (2040 and 2045) even though we’re looking to “retire” a lot earlier. Since we will not be using it until we’re 60 +, we  figure it’s best to keep it stock heavy. I’ll be 58 in 2040, so this is actually not quite as aggressive. My wife, of course, has decided to always be thirty.

We have a tendency to move spare funds to one of our investment accounts. So our emergency funds are almost zero. Then again, smarter folks have agreed.

 

Asset Allocation, 2017 – Year End Update

Our allocation was passive (and automated) through the year. We did not max our 401(k) and Roth contributions. But we managed to save all of Mrs. Gofi’s income. We plan to continue living on one income.

We use Personal Capital to track our personal finance. According to Personal Capital, our investments gained 19.46% in 2017 – this is in tandem with the S&P 500 which gained 19.42%. Our stock/bond split currently sits at an aggressive 83% to 12%.

 

 

Conversations with Mrs. Gofi

Do you want to go the mall tomorrow?

Sure, it’s been a while.

Great, it’ll be fun. But lets not buy anything.

I know. Next time don’t say it before we go.

(We actually don’t keep it too tight. Just in case you’re curious, out clothing expenses are included in HomeExp. We averaged $434 a month this year, which isn’t too shabby I say. That included a refrigerator, a washer and a dryer.)

***

My sisters are visiting us over thanksgiving.
How long are they staying with us?
Three days.
Can they sleep on the floor?

***

I’d like to set aside some money for when I go out with my sisters, she tells me.
That, sexy girl, has to come out of the 2% we’ve allocated for recreation. You can probably go out a few times. Choose wisely.
Can you take them to the Chinese buffet?

***

Would you do this if you had a million dollars?, asked my wife as she came home from work this morning.
Yes I would, I tell her. I’m staring my the spreadsheet.
How about ten million?
Yes, I would.
I’m going to sleep now, you incorrigible boy.

 

The Alternatives –

 

My wife had a conference call with her sisters a few days back. Someone they know had recently made good on Bitcoin and was celebrating in Hawaii.

We could’ve been in Hawaii, she tells me.

We could’ve paid off the house.

Looking back, I’m not sure if missing the bull was all that bad. If I had struck gold when I was younger, I would probably not have been what I am today.

I would not know who my true folks are –

I’m wiser today. My resolutions (on people and events) stand on firmer ground today. A few things are important to me. Those are honest and must be met.

That said, we reached our financial goal for this year earlier this month, and we want to walk with the times (we don’t want to be left behind – which, by the way, was also the reason why I joined the lottery pool in my last job).

This is our gold rush – We’re mining on CoinBase and Bittrex.

The need for relevance killed Gatsby, not love –

I read of Huntington Hartford of the now defunct A&P supermarket this weekend. Leading me to Hartford was an article that implied how inheritance and windfalls generally make less overall good to the inheritor (and by extension to the world) than to those who’ve accumulated their wealth over a long period of time. The grind and toil are necessary if anything is to become of the wealth.

My personal observation and experience confirms this. I’ll start with a disclaimer: I am an Asian. I have many relatives who went to the most expensive international schools, then to colleges paid for by their parents, all while living an Instagram lifestyle in houses paid for by their parents.

“A happy childhood has spoiled many a promising life” (Robertson Davis) that by the time they come to their senses (a full thirty, sometimes forty years later), there’s a supposed shame and embarrassment of starting at an entry level position. That the first step must be taken to reach the second is missed on them.

Contrast that to my Tibetan neighbor – thirty-two, registered nurse, owner of a nice townhome (on a fifteen-year plan, 20% down), but also a refugee, who shielded his younger sister from bullets while on their escape to India through the Himalayas. Once a yak-herd, he entered his first classroom at thirteen, and is now an accomplished nurse.

He defined himself in humbler ways than did my privileged relatives who had a “sense of entitlement”, and so prospered over time. His younger sister, he ensured, also became a registered nurse.

All that aside, the guy’s pretty hip – drives a Subaru. He recently left for India to see his mother after nearly twenty years.

Theirs is a confirmation that the American dream is alive. Why the same can’t be true for everyone else most certainly has to do with the different ways we live and the perspectives we keep. “The most massive characters are seared with scars,” said Gibran – talking of people much like the Americans that saw through the great depression and made successes of themselves.

I grew up in one “Asian” country that does not do working while in school – and you wouldn’t be in school if you were poor. There’s a clear class distinction. Over the years, the internet has drastically changed perspectives, and made the world more homogeneous – but the idea of waitressing is still frowned upon. There’s a family name to uphold.

Just the other day, I wrote about my $35 wedding, and my mother’s insistence on a “real” wedding. I do not blame her – it is difficult for her, especially since my parents are still part of a community where the Joneses must be beaten, in more glitter.

This is how marriages in my community has evolved in my lifetime – the first wedding I remember was my uncles. I was about ten. There was (and still is) a reception hall in town where everyone got married. Weddings were a communal event. Every wedding had the same people, and the same food. The same men got drunk. 

That changed when few marriages moved to hotels, and to five-star hotels. The precedence was set. Now everyone who’s anyone marries in a five-star hotel. Often times weddings are held on separate days, for the different sets of guests – the subtle placement is not missed on any of the guests.

I left my community for college many years ago. The years and the distance has steered me towards ways that made sense to me.

They no longer call on us – my mother speaks of an uncle, who for years circled around my parents.

Money dictates – she tells me. I feel for my parents, once prosperous, now decent, but on lower rungs to their peers – financially middle class, socially upper middle.

Sensing that it bothered me, she adds: These don’t bother us. You remain humble and steadfast. These will change as well.

I believe my mother’s calm conviction, and I sleep well that night. My parents are wise to realize they shouldn’t be bothered. I want my parents to be immune even to inconsequential prangs like these. I want my parents to be relevant, even in the superficial ways I don’t adhere to.

For myself, I try to cultivate my belief that there is more to life than my relevance in my community. Our pursuit of FI helps our cause – our true calling is to the greater good of more than ourselves, in our own small ways. That will define who we are, and our relevance in the truest.

In the end, the need for relevance killed Gatsby, not love. 

Our $35 wedding needs more telling –

My sisters are visiting us over thanksgiving.

How long are they staying with us?

Three days.

Can they sleep on the floor?

**

Earlier this week, we documented our $72 K savings goal for next year. Our plan is to max our retirement accounts early, then hit our taxable accounts. We’ll be on a tight budget, but we feel equipped for it.

Then just the other day, I came across Mustard Seed Money‘s post on the average American’s top 10 financial goals based on a recent NerdWallet study. The NerdWallet study found that most people (71% of those surveyed, across income levels, age and gender) regret how they have managed their money. 89% have one or more of the following financial goals (in bold below). Taking the cue from the list, I wanted to check how they stack up for us (and how we’ve dealt with them).

The goals (% of Americans saving for the goal) and our position:

Saving for a wedding (8%)

We never did. We married in court, for $35 – a college friend and two sisters-in-law witnessed and signed. They paid for a dinner at Johnny Carino. I even worked a half day before we married. My mother pestered me for a year – for a “real” wedding. A few folks called, messaged and sent us money. They now get a yearly card from us. One uncle (whose story needs telling) sent us $500 Canadian, just about his weeks’ pay. We intend to give it back when his daughter marries, with whatever the money gains and compounds in the time.

A $35 wedding is perhaps the best way to filter the people you should have in your life. The rest can be an afterthought, for when you’re feeling particularly kind. 

An average American wedding in 2014 was $31,213. This insanity is universal – an Indian Colleague spent $60,000 when he married two years back. The Chinese are also going berserk, as the BBC points out here, here and here. A Sudanese man was about 20 cows behind on payments for his wedding.

Saving to have children (8%)

We do not have any children. We all have our own reasons for why we want or not want children – a beyond belief episode explored this issue a few months back. That said, one of our motivations for pursuing FI is so that we can adopt two children later. FI will allow us to dedicate ourselves to them, and to our other noble pursuits.

Starting a Business (10%)

Does a rental property count? We want to invest in a rental property when the Denver market cools down. The numbers do not work in our favor at the moment.

Buying a Home (23%) 

We bought our first home this year. We put 25% down and went slightly over our initial budget. It is just the right size and structure for us. The neighborhood’s not bad either.

a suburban feel in a city

Buying/Leasing a Car (27%)

Our beloved Honda Fit has given us so much and asked for so little.  We’ve traversed much of the country (baring the northwest), criss-crossing it twice (DC to SF, and back) and even venturing into Canada once. The beloved has averaged about 10k miles a year, and currently sits on 70k. She should continue running for a long time. We use public transportation for our daily commute.

Starting/increasing retirement contributions (28%) & Saving more in general (53%)

The generally recommended 10% – 15% savings will give you a retirement when you’re 65. Retiring earlier requires a more aggressive approach. Dave Ramsey’s investment calculator can help you determine how your savings will grow based on what you intend to save.

We live on one income and save the other. That, if the market remains steady, should allow us to be FI in ten years. We are not frugal, but we live within our means.

We have not maxed our retirement accounts so far, but we intend to next year.

Saving for Vacation (31%)

Vacations are great, and we’re looking to do that to perpetuity after we reach our FI. For now, we’ve allocated 2% of our gross pay towards our recreational expenses that includes eating out, movies, vacation and the likes. We have a few trips planned for next year – and those will have to stay within the allocated fund.

While the 2% seems low (and it is), we actually travel quite a bit. We feel we’re better traveled than most people we know.

Not accumulating any/more debt (42%) & Paying down debt (58%)

We live within our means. We do need an emergency stash, which we intend to build up next year. We carry two credit cards, but pay them off almost immediately. So I’m not sure if we’re using our credit cards the right way.

We have a thirty-year mortgage, but we intend to pay it off in twenty. Refinancing to a fifteen year is an option we want to explore next year.

For all the rest, I’d create a budget. The money map is a fun exercise to trim away the fat.

The GIST

Living ordinarily is key – we certainly do not feel we miss out on anything. Learning to love where we are in life and what we have, if those do not come naturally to you, is critical to a happy life.

My Money Map, Sir!

Would you do this if you had a million dollars?, asked my wife as she came home from work this morning.

Yes I would, I tell her.

How about ten million?

Yes, I would.

I’m going to sleep now, you incorrigible boy.

But this, the official money map chain gang, is a wonderful exercise. Thank you Apathy Ends and  Budget on a Stick. And thank you Good Life. Better for pointing me to PowerPoint – at last some good use.

So here’s mine – the money map – someday to be worth something.

And following the customary tradition that is now 34 links strong –

The Official Money Map Chain Gang:
Anchors: Apathy EndsBudget on a Stick
#1: The Luxe Strategist
#2: Adventure Rich
#3: Minafi
#4: Othalafehu
#5: The Frugal Gene
#6: Working Optional
#7: Our Financial Path
#8: Atypical Life
#9: Eccentric Rich Uncle
#10: Cantankerous Life
#11: The Retirement Manifesto
#12: Debts to Riches
#13: Need2Save
#14: Money Metagame
#15: CYinnovations
#16: I Dream of FIRE
#17: Stupid Debt
#18: Spills Spot
#19: Making Your Money Matter
#20: Life Zemplified
#21: Trail to FI
#22: The Lady in the Black
#23: Smile & Conquer
#24: Her Money Moves
#25: Full Time Finance
#26: Abandoned Cubicle
#27: Freedom is Groovy
#28: Millennial Money Diaries
#29: All About Balance
#30: A Journey to FI
#31: Present Value Finance
#32: [HaltCatchFire]
#33: Good Life. Better.
#34: gofi

 

Middle Class or Middle Income*

A surge of articles on “middle class” hit my Feedly yesterday. I grew up in a middle class family, without quite knowing what it was. My father made sure I had everything I needed – but that was probably because I didn’t ask for much. I remember asking my Economics teacher back in high school what it meant to be middle class. What I actually wanted was a number – that threshold where you left middle class and entered upper class or upper middle class at least.

Being of any particular class, of course, has nothing to do with being happy. My parents are certainly happier today, in their restricted budget, than they were when they were working and had disposable money. The happiest being in the world is a monk. But to the rest of us, the average beings, the true utility of belonging to any class is completely comparative (and irrelevant).

This Washington Post calculator and the Pew Research Center posits my wife and I in the upper income tier.

<Caption: I like them a lot – how quickly flippant, you say>

In reality, we are town home dwellers living among single family ones that cost a half million and more. I don’t feel particularly middle class when my long serving Honda Fit parks next to any of the other cars in the neighborhood. My neighbors include a retired teacher and a registered nurse who is also a single mother of two excitable boys.

I think we’re mixing middle class with middle income. And perhaps why the Pew Research cites “upper income tier” (not middle class) on the article about determining if you’re middle class.

One of my heroes is Ronald Read. For as much as is known about him, I find him refreshing and philosophic in infinite melancholic ways – more on that on later posts.

The middle class, the Pew Research Center posits, is the spectrum between 2/3 of the median HH income and twice the HH median. Using the median annual household income in the U.S. which was $56,516 in 2015, the middle class spectrum for the year was $37,677 to $113,032.

Anything higher, which I suspect is the bracket most FI seekers fall under, would place you in the “upper income tier”.

Your working salary, though, is short lived and temperamental to the market, the self, and a whole host of external forces. Just about the only way FI works is if our salaries are reinforced with the way we live, our outlook and an honest goal. How long we sustain these determine whether or not we succeed.

There are a few practical things we’ve done (but previously shared by a hundred others). Before I list, please note: We are not hippies. We lean both left and right, to choose the best of all worlds, usually for the best of more than just us.

First off, marry well. Choose wisely – a frugal, employable spouse. My wife and I live on one income. We married in court for $12. I took a half day off. While we’re still not maximizing our 401k, we are saving over 50% of our gross pay – significantly higher than the national savings rate that, depending on the source, hovers anywhere from 5% to 15%.

We don’t do Whole foods, and Trader Joes is awesome.

Choose a degree that pays. If that’s done and not done well, choose a job that pays. I’ve worked with people from all educational background and attainment. If you don’t have the degree, get the experience.

I’d like to say Never Settle. But I’ve sort of settled into a semi-stress free job, where I dream of someday working for Google without the fear of loosing the job.

Save and invest, wisely. For us, the less sophisticated majority and somewhat young, the most potent vehicle are time (start early, start young), maximizing all available tax-advantaged retirement plans, than some more. Our portolio is here, if you’re keen.

Where you live will greatly impact your savings. Our housing expense quadrupled after we moved to CO (from KY). Magnify Money lists ten top places to live for six figure households. Cities in Tennessee loom large (I once interviewed for a small company in Chattanooga – but didn’t get the job). Avoid the usual suspects (SF, DC, Honolulu, and  Boston that make the converse list) – especially if you’re flipping burgers – I’ve never understand why as is evidenced by this and this).

Find alternate sources of income, best if completely passive. I’m trying my luck with this site, but there’s a lot to learn.

In gist: Status is irrelevant, avoid the coasts, save and invest, find passive means, never settle, get that degree (and job), marry well and be humble (in reverse order) – those, my friend, should make you FI.

And finally, just for kicks: a million is more or less what most people aim for (after which they get insecure and postpone). But if you were good with a million, the 4% today places you at:  

 

*The title is adopted from this Pew Research article that is a more thorough write up on the middle class.

Minimalism, in a few things 

Our lifestyle shapes our financials. We like our space light and airy. Our room is all space and a mattress. Welcome to our Crib!

Our clothes dry in the sun. We’ll slip those in the dryer now that winter’s near.

For vacuuming, we use this. Fellow readers, if you can show me how I can become an affiliate on this or anything else, please. It is great on the carpet, and not so much on the hardwood floor. But our homes 65% carpet, and our primordial broom can sweep away anything on the wood.

We run the dishwasher and the AC occasionally (to ensure that they are working). We hand wash everything. The fans become redundant when the windows are half open in the summers.

Frugality?

We have “normal” expenses.

We bought a town home this year. We upgraded from a one bedroom in Kentucky to a two bedroom now. We pay four times more now than we did in Kentucky.

We travel – weekend getaways and week-long ones. We’ve traversed the country, length and breadth. Our beloved Honda Fit now runs only on weekends and when public transportation is absent.  She’s logged 70k miles since 2011, and is good for more than a decade. She is (with my old guitar and my recently retired I-Phone 4) my dearest attachment – companions of my dark days.

We eat out once or twice a week. We always share the drink. On proposing that she and her husband do the same, an older colleague working overtime retaliated with absolute amazement: “But I want my own drink”.

When seriously starved, the China Gardens and the India Palaces make for better deals. If at MacDonalds, a dollar is all you need.

But we cook. We cook every day. My wife takes the leftovers to work. I did carrots for a year (so much so that one colleague “replied all” to team lunch email that said “gofi, you are not a rabbit”). I’ve since progressed to Oat Meals (for ~$3 for a box of 8 packets, and with 2 packets/lunch => $0.75/lunch). My wife prefers home meals and I just want a light lunch (so I can dinner like a pig).

Because we cook, we’re now able to dish out a few high quality meals, that when plated properly look all the more desirable (should there a need to impress).

note to self <insert better pic – that steak>

I fight my greatest battles in the mornings – three Starbucks scattered strategically on my way to office. I’m not a sucker I tell myself. I count my days and walk on. The mediocre coffee in my office is good enough.

We buy what we need. We have everything we need.

The public transportation is great for getting to work. I enjoy people gazing, imagining what they do and how they live. It is a wonderful diversion and is the fastest hour of my day. I remind myself to be grateful for all the wonderful things I have, that I smile, and remain humble.

The light rail to work stops at the Union Station. I refuse the free mall rides to office and walk instead. A mile to and a mile back make my 2 miles a day exercise.  On most evenings, my wife and I walk the extensive network of walking paths that run through our neighborhood, and the sight of good looking people (in Thule and Patagonia) is always mentally  rewarding. Please keep consuming. We’ve added a Rowing Machine for the winter, and for my lungs and stiff bones.

I should end now. It’s 10:20 PM. Please comment. If nothing else, let me know how your dog is doing.

CAGR Calculation

There’s a lot to learn from a poor portfolio. With no aptitude or the time to play the market, my best move was to move away from it*. I’ve since migrated to Betterment and Vanguard to much healthier results (more on that on a later post).

Of late, I’ve been thinking about liquidating this portfolio to fund my Vanguard account. CHL looks mediocre at first glace, but the 17.26% overall return does not include dividends.

With that said, CAGR (compound annual growth rate) = [(Selling Value (include dividends) / Purchase Value)^(1/number of years)] – 1. And if you’d rather use a CAGR Calculator.

Overall Return 32.59%
CAGR 7.31%

While a 7.31% (for sept, 2017, I took the average of all previous dividends) annualized return is still not on par with my mutual fund returns, I’m inclined to continue holding on to it.

*Redfin is the one exception. I made a wild speculation. I’ve actually used Redfin and like it a lot. What I didn’t know (and still don’t) is why the trade took four days to settle.