Another month, another update. A few random comments.
Good Reads/Listens/Watches
- An interesting Bogleheads thread about life lessons (link).
- The collective wisdom of this particular group of internet strangers never ceases to amaze me.
- Rick Ferri interviews Larry Swedroe (link).
- Larry came to visit my campus seven years ago. About five of us finance faculty met with Larry for about an hour during which he gave us a hard sale of his services at Buckingham Wealth Partners.
- But the podcast isn’t selling anything and seems pretty coherent. I don’t think I learned anything, but I enjoyed it nonetheless.
Life
- We saw Ben Rector in concert. Our friends attended the concert for the headliner but were convinced Ben Rector was the better performer. If you get a chance to see him, I’d highly recommend it:
- We also saw Brian Regan. The last time I saw him perform was almost two decades ago in SLC.
- Speaking of purchasing tickets, I’ve learned you can reliably bypass the absurd Ticketmaster surcharges by purchasing directly from the venue’s box office (either in-person or on the phone). Our friends paid 2x the price that we did for Ben Rector because of stupid Ticketmaster surcharges. We’ve successfully bypassed these Ticketmaster surcharges for Ben Rector, Brian Regan, and the Lion King over the last two months saving us a bunch of money in the process.
- A colleague recently told me about a nation-wide golfing program called Youth on Course. It costs $25/yr per kid to join and it enables kids to golf for $5/round at thousands of courses in the US, including many top-tier courses (such as Half Moon Bay, CA (normally > $200)). My boys used it twice this past month, saving 50% at the local par 3 course. I plan on taking them dozens of times this coming summer. Too bad it took me so long to learn about this program. Course directory here.
- An EF3 tornado ripped through the outskirts of town. I was climbing at the time and when the alarms came, six of us crammed in the women’s restroom for an hour. We got to know each other pretty well. It felt like we were reenacting The Breakfast Club. I even disclosed my love of Costco and marginal tax rates.
- The wife of my friend who died by suicide (3.5 years ago) lost her battle with cancer at the age of 40, leaving their four young boys (aged 8-17) orphans. Fortunately, the boys will be living with their aunt and uncle in a stable environment. It’s hard to comprehend the unimaginable tragedy of the situation. Another friend went under the knife for kidney cancer last month at the age of 40. Another friend just learned his wife has terminal cancer at the age of 40. Mrs FP’s college friend was murdered by her husband seven years ago at the age of 35. Mrs FP was friends with both the husband and wife, and I knew them both superficially. A family member is dealing with debilitating chronic pain leaving them unable to leave the house or function independently.
- Life can be impossibly cruel but it can also be incomprehensibly beautiful. What a paradox…
- For decades I thought I was invincible. However, after hitting 40 and seeing so many of our friends die young, I think my invincibility delusion has been shattered. I’m increasingly cognizant that we’re hurtling through space in a repeated game of cosmic craps. Sometimes the cosmic dice roll favorably, endowing the lucky recipient with health, companionship, and a bit of financial success. Other times, the cosmic dice roll unfavorably, ending in premature death, loneliness, or suffering. Thus far, I’ve been the recipient of many favorable rolls of the cosmic dice, but nobody stays lucky forever.
- I’m unsure the lesson to be learned here, other than to try to savor each (pain-free) day above ground.
- My buddy just posted a YT video of our trip to Peru (which we visited a little less than 2 years ago). The YT video did a great job preserving the memory and capturing what made it so special. Watching the video makes me want to be better at recording and compiling videos, but I hate video editing more than I dislike losing memories. The solution: bring my buddy on all trips until I’m dead.
- What a great group of guys to hang out with over the years on these backpacking trips!!! You can’t make old friends, so nurture the relationships that you have! I’ve known these guys for 25 years (since I was 17)….
- This particular group of friends had largely fallen out of touch for about a decade post-undergrad, but the annual summer backpacking tradition has rekindled our friendship. The trip is something the entire group prioritizes each year. Every time we get together, we essentially break the space-time continuum and transport ourselves to the dorms in 1999 and have the times of our lives hanging out together.
- If anything, our position of increasing financial security is encouraging me to make as many lifelong memories I can while my body is still capable.
- For those wanting to replicate our trip, I’d highly recommend it. Here’s the guide service & itinerary (link).
- What a great group of guys to hang out with over the years on these backpacking trips!!! You can’t make old friends, so nurture the relationships that you have! I’ve known these guys for 25 years (since I was 17)….
If you enjoyed the video, please give my buddy some “like” love for his fledgling YT channel. Perhaps it will inspire him to do more of these videos for subsequent adventures of ours like the upcoming Denali trip.
Dodging tornados in the women’s bathroom of the bouldering gym. The EF3 tornado missed us by a handful of miles. Photo credit Sam from the bouldering gym.
Golfing with the boys. They love it.
We did water rockets a few more times in April. FC5 did it for his birthday party. Another time we brought family friends to a park. The kids love it. Most of the fun comes from trying to track down and catch the falling rocket before it hits the ground. FC1 and FC2 rejoice in a joint catch of a rocket.
Post Brian Regan selfie.
FC1 post-race with her track coach/math teacher.
The man, the myth, the legend.
This Month’s Finances
I succumbed to some pretty intense FOMO and hopped on the 3% Robinhood IRA transfer bandwagon. It was pretty painless and we pocketed a little over $5k (tax-free Roth money) from these shenanigans. While I loathe everything about Robinhood, apparently I loathe them less than $5k…. I’ll move the money out at the earliest opportunity.
Speaking of shenanigans, I’m also chasing $750 of (taxable) bonus money from Merrill by (re)transferring $200k to my empty Merrill Edge account to re-qualify for the platinum honors status (since publishing this post it’s now a $1,000 bonus). I’m also considering this $2.5k (taxable) WF bonus (link), but have not followed up in-branch after my online application was denied for some reason.
On the Merrill front, I think I’ve converged on the following equilibrium. 1.) Transfer $$$ in to Merrill around my preferred rewards renewal date to renew my 75% multiplier for another year. Collect a bonus for doing so (e.g. $750 this year), opening up a (redundant) brokerage account if required. 2.) Transfer $$$ out of Merrill once Platinum Honors is renewed for another year (e.g. 3-month rolling balance >= $100k) and promotional period ends for bonus (e.g. 90-day hold for current $750 bonus). Rinse & repeat annually. Clearing out the $$$ from Merrill annually opens up the door for downstream transfer-in bonuses.
My BoA Platinum Honors renewal date is April of each year, but there is a two-month grace period which puts the deadline at end of June to get the rolling three-month average balance back above $100k.
- The good:
- Still employed.
- 403b & 457 are filled. Next is HSA, remaining Roth, 529, then brokerage.
- $5,350 in tax-free Roth money from Robinhood (classified as “interest” in income statement and a pseudo Roth contribution in the statement of cash flows).
- The bad/abnormal:
- $4,934 in prop tax payments. Second due in Aug.
- $1,208 in Home “Maintenance” Expenses:
- $540 for annual fertilizer. I know I should do it myself, but I’m inept and lazy.
- $418 for a truckload of mulch. Hadn’t done this for 3 years. We were overdue.
- $250 in HoA expenses.
- $695 in hotels for this summer.
- I thought that booking directly with hotels would code as a 5.25% “online” purchase just like Airbnb/VRBO/Expedia do, but I was wrong. I will never recover financially or emotionally from this $24.33 mistake (=$695*(5.25%-1.75%)).
Footnotes:
- Fidelity unambiguously has the best HSA on the market. $0 admin fees + cheap investment options (e.g. FZROX, FZILX, FSKAX, etc).
- I lazily approximate home value as my historical purchase price.
- I have a 15Y mortgage which results in much larger principal payments than a 30Y mortgage. Since principal payments are simply transfers from one pocket (assets) to another (debt reduction), I treat such cash flows as savings.
- ~$0 cell phones described here.
- All expenditures at Costco & Walmart are classified as “Food at home” for simplicity (even if it’s laundry detergent, clothing, medicine, toys, etc).
- Nobody knows the perfect asset allocation. Just pick one and run with it. Use a target date retirement fund as a benchmark if you want some guidance (link). If you prefer to DIY (as I do), then a three-fund portfolio is great (link).
- My low portfolio expense ratio is the primary reason why I don’t hold target-date funds, which have expense ratios anywhere from 0.16% to 1%. I can achieve a much lower expense ratio on my own, and it’s trivially easy to manage. Further, a DIY portfolio allows one to tax-loss-harvest more easily. Lastly, a DIY portfolio can help avoid the dreaded cap gains distributions caused by a fund-of-funds (e.g. Vanguard Target funds in Dec 2021).
- ETF’s are slightly more annoying to hold relative to index funds. With ETF’s, you must deal with bid-ask spreads
as well as the inability to buy partial shares(Fidelity now offers fractional shares). With a simple index fund, you don’t have to deal with either of these issues. Bogleheads discussion here (link). - I hold VTSAX in my taxable brokerage account because its tax efficiency (no cap gains distributions thanks to its patented technique).
- CA’s 529 plan has the lowest expense ratio US equity index fund of any in the US (link). I’d have 100% of our 529 money there if not for the state tax deduction we receive in our own state.
- My Collective Investment Trust (CIT) version of Vanguard’s Total Int’l Stock Index has a 0.059% expense ratio, yet produces 0.15% of “tax alpha” due to reduced foreign tax withholdings. Vanguard implemented this change around 2019. Therefore, I report the effective expense ratio of negative 0.091% for this holding (=0.059%-0.15%). The “tax alpha” shows up in the performance differential in the fact sheets here (CIT vs MF) and is more thoroughly explained here. Unfortunately, this 0.15% of “tax alpha” is not available in the mutual fund version.
Disclaimer: This site is for entertainment purposes only, as disclosed here: https://frugalprofessor.com/disclaimers/.
Memento mori.
Reading into ancient philosophy and spirituality texts feels to be helpful for me as I age; tons of wisdom passed down from various cultural view points and if you’re not 100% bought in, you can sort pick and choose what you apply along your journey .
Life is a weird interplay of dynamics, for sure. It’s a shame so many in modernity don’t get outside much to enjoy the natural beauty (and live in urban environments where nature is often lacking!) and get on a fast track due to cultural norms to what seems like a miserable creeping death from obesity related health complications.
Memento mori indeed.
I realize I’m not alone in questioning how to process both the cruelty and beauty of life, and that I should certainly rely more on the wisdom of those over the millennia. This month was just a bit painful and eye-opening.
By the way, I finally got a hold of a copy of the audiobook Outlive from the library on your recommendation. I’m about a third through it and enjoying it, though I don’t pretend to understand much when he gets deep into the weeds (particularly when listening while bike commuting / jogging the dog). I just got through the atherosclerosis section which made me want to get scanned. I haven’t gotten there in this book yet, but I’ve heard him in other platforms, and I buy into the premise of building up a reservoir of fitness (muscles mass + VO2 max) over one’s life as a defense against the inevitable downward physical decline with age.
Kind of weird being on this side of life…
“I’m unsure the lesson to be learned here, other than to try to savor each (pain-free) day above ground.”
I agree, yet it’s hard to do (at least for me). There are endless stories and bits of advice out there encouraging us along those lines but it’s hard to internalize and act on daily or perhaps even regularly. One example of such advice, one I used to have printed out and posted on my cubicle when I was younger, is “The Station” by Robert Hastings.
I agree the savoring is much easier said than done. The majority of my time is not spent savoring, but rather trying to juggle the demands of life and survive (i.e. not drop the ball).
I just read “the station” quote. I liked it, especially the concluding paragraph: So, stop pacing the aisles and counting the miles. Instead, climb more mountains, eat more ice cream, go barefoot oftener, swim more rivers, watch more sunsets, laugh more and cry less. Life must be lived as we go along. The station will come soon enough.
Here’s to hoping I can follow that advice….
.
Berkshire this year?
Leaning towards “yes.” It’ll be a lot different without Charlie there. I’m sure they’ll honor him. I don’t want to miss it.
Weird indeed, but the alternative (to getting old) isn’t very attractive…. I never thought about that idea much, despite the fact an AD whom worked out in our Universities athletics facility over the same time as me mentioned it every week or so, until one of my good friends from college was murdered mindlessly a handful of years after we graduated… the next time he mentioned it after one of us probably whined about being sore or tired or something hurting due to age, it struck a chord I’ll never forget (RIP Steve). Sounds like you’ve been through the ringer a bit, but remember the Buddha said long ago Life is suffering, and without valleys the peaks wouldn’t be as high or joyable, and hopefully the way you’ve built your life, in general, is lived more in the peaks than depths.
That book is still sitting on top of my shelf, waiting to get opened beyond the intro (I usually read them when I get them).. I like to think my summer/fall reading will include it plus Dr. Gabbie Lyons book on protein/longevity and maybe Thinking Fast/Slow as well… I’ve got a whole shelf and pile on top of my book shelf dedicated to books I want to read… it’s my ramit sethi habit thing, I don’t buy every book the instant I think I want to read it, but I have a stupid book amazon wish list and whenever they do buy 2 get 1 free promos I dig deep to see if ones I’m still really curious about are included
I remind myself often that getting older (and slower and creakier) is indeed better than the alternative.
Good luck getting through those books. Sounds like a good list!
Hey Prof
I recently learnt that vanguard gives option to select cost basis of funds -default is avg cost, but there is SpecID (https://www.bogleheads.org/wiki/Specific_identification_of_shares) , min tax etc. Each comes with pros and cons. Eg specid gives most flexibility, but apparently can be cumbersome to manage esp with dividend reinvestments etc. Your thoughts?
I’m 100% in the SpecID camp. I can see no advantages whatsoever with the other approaches — only disadvantages.
Managing tax lots takes me 0 min/year to sort through. When I want liquidity from my brokerage account, I simply sort by purchase price and easily liquidate what I want. I love the complete control that I have over what kind of capital gains (or losses) I incur.
SpecID also helps facilitate tax loss harvesting.
Wow! FC1 is such a cool kid! You should talk about her more often!!
“Bob,” you sound suspiciously like a child of mine in disguise….
Nah I think you should talk about FC2. She seems like the coolest of your children BY FAR. Obviously the favorite frugal child.
Also shout out to Amy because she loves your blog
I’ve been meaning to post a comment since your 2022 State of the Blog post. I’ve found your writing incredibly valuable.
As a fellow optimizer and Excel nerd, I struggle to know at what point diminishing marginal returns make additional optimization ‘not worth the hassle.’ I’ve implemented your BoA strategy, your Google voice strategy, and am moving an old HSA to Fidelity. I moved to Robinhood before you, but it was validating to hear you took advantage despite our mutual distrust of Robinhood.
But I’m starting to feel like there isn’t much optimization left besides chasing checking account sign up bonuses. Seeing how someone who’s a bit ahead of me in life and looks at the world the same way I do decides to ignore some of those smaller (~$200) optimizations is freeing. The whole point of Bogleheads style investment is to not have to spend a lot of time managing your money.
I’m glad you’re deciding to ‘loosen the purse strings’ and take advantage of opportunities to make memories with your family. I’m trying to mentally shift gears to not optimizing everything financially. Seeing you make similar decisions encourages me that I’m not making bad financial decisions.
Thank you.
(Btw, you really should get the Shop Your Way MasterCard. It’s worth the trouble.)
Kyle,
Thanks for the comment.
I’m definitely converging on the following equilibrium as far as bonus chasing. I simply compute the after-tax dollars per hour earned by the shenanigans. Realistically, I think the Robinhood shennanigans will have taken something like 4 hours to orchestrate all-in. We’re netting over $5k tax-free. So that’s an equivalent of $1,250/hr tax-free, or about $1,800/hr equivalent pre-tax at a 30% marginal tax rate. Bonuses always take a deceptive amount of time to orchestrate, so it’s easy to underestimate the time and mental clutter associated with each one.
Like you, most promotions below $500 aren’t worth my time. At $1k, I start to get a little interested. At a few thousand, they are usually worth the effort. These days, checking account (or most CC) bonuses don’t get me interested, but brokerage bonuses seem to be pretty lucrative. Move $250k from broker A to broker B, collect a $2.5k bonus (taxable), netting $1.75k after-tax, leave for 90 days. Rinse, repeat. Probably a few hours of effort yielding an attractive after-tax dollars per hour.
As far as overall life optimization, you’ve reached the same conclusion as me. Once the appropriate systems are set up (e.g. google voice, credit cards, autopilot of investing, etc), there really isn’t anything left to optimize. At this point, we’re simply enjoying the fruits of our labors for life. Not a bad outcome, but kind of weird/unsettling for the relentless optimizer to conclude that they have nothing left to do.
The loosening of the purse strings is a logical response to realizing: 1.) I’m increasingly likely to run out of life before money, and life appears to be running out pretty fast especially relative to many in my peer group who have drawn unlucky rolls of the comic dice (and even if I continue to produce lucky rolls of the cosmic dice, life is still passing at an alarming pace), 2.) my kids are almost “launching” into adulthood and leaving for college, and 3.) despite the financial (and other) dysfunction of my current university, at least I have tenure so a lot would have to go wrong for me to lose my job.
Thanks for continuing to shame me into the Shop Your Way MasterCard. I think you have successfully convinced me this time. I’ll apply now.
Thanks for the monthly update…losing loved ones really puts things into perspective.
I know the answer is “Yes”, but I want to ask anyway: Have you kept track of all the different bonuses you’ve gotten in the last year?
Would be nice if you could put together a post with a list of these, and also where you usually find them…something similar to the BofA CC strategy post.
I classify all bonuses as “interest” income. CC rewards are untaxed but bank bonuses are. We hold so little in cash that you can interpret any “interest” income in the income statement as credit card / bonus income.
Including the RH bonus, it looks like we’ve cleared about $10k in bonuses over the trailing 12 months. Excluding it, we’ve cleared about half that in credit card rewards.
Over the life of the blog (~8 years), it looks like we’ve cleared $38k in these shenanigans.
It adds up, but it’s not life changing money. More of a well-paying hobby.
@FP, I guess I convinced you to take advantage of the RH 3% deal. I received my bonus within 2 business days, which is nice because you can immediately invest is rather than having to wait. I also want to say given your large medical expenses you haven’t taken advantage of Chase Ink Cash (No annual fee, 5% on office supply stores). You get a better value with a Chase Sapphire Preferred or Ink Preferred, but 5% (up to $25k annually per card) on the Visa/MC gift cards from OD/Staples (with frequent sales) would seem to boost your spend over the 2.625% on medical/insurance currently.
You were certainly one of many factors which contributed to the FOMO and my eventual caving to the RH deal. Thanks (so far)….
On the Chase front, I appreciate the recommendations. We indeed spend a boatload on our 2.625% card. A lot on healthcare (orthodontia, doctors, drugs, etc), but also property tax and utilities. I suppose the annual financial upside to the complexity is easily computed as Y = X * (5%-2.625%), where X is the amount of 2.625% spend per year. I’ll give it some thought. I think I’m at a fairly good equilibrium of CC benefits vs complexity right now, but if there is a material upside then I’d contemplate introducing more complexity….
You can redeem Chase points for 1c each all the time if you want to keep it simple, of course you then have to keep track of all of your gift cards.
I would not want to deal with paying property taxes with a bunch of $200 gift cards. For property taxes, I usually prefer a cash back debit card as the fees are usually fixed with a debit at $2.95-$3.95. If you have, say $6000/year in property tax, that would be $60-$3.95 = $56.05, which is probably a better return than you currently get, but less than what you would get with Chase Ink Cash, but 30, $200 gift cards is not what I have time for.
Thanks for the suggestions!
Tagging along on this conversation, I am hearing about this “Shop Your Way MasterCard” card for the first time. I see it pays out 5% for the top category – gas and 3% for grocery+restaurants. If someone has the BofA CCR setup already, is there any benefit of having this?
Jeremy is the expert on that card. Hopefully he chimes in.
Edit: Just found this: https://www.bogleheads.org/forum/viewtopic.php?t=192008&start=7200#p7857814
Following your lead on the WF premier checking bonus. Currently thinking of capturing the WF bonus, then the Merrill Edge bonus (if still available after the WF 90 days), and then Tastytrade’s bonus (https://info.tastytrade.com/tasty-offer?) which expires on 12/31/2024. The downside to TT is they require you to keep the initial funds with them for 12 months. I am not sure how that will work with the BoA rewards renewal period…
Such a weird incentive system. Move $250k to WF for $2.5k, then Merrill for $1k (just increased https://www.merrilledge.com/offers/pr1000), then TT for $3k for a combined bonus of $6.5k (=2.6% return on the $250k). Too bad it’s taxable.
It’s almost too lucrative of a game to not play. I’ve been out of the game for years but I’m finally (re)seeing the light…
I have a colleague who has done both WF and TT. She said both went fine.
I need to think about how the new Vanguard fee changes affect my participation in the game. Maybe I finally convert to ETFs and jump ship from the sinking Vanguard and perpetually play the bonus hopping game. Seems sort of exhausting/annoying, but lucrative.
The big benefit of the Sears cards are the offers they give out that frequently amount to 10% or more. Sign up bonus is okay, not great. Not a bad option for gas at 5%
To clarify, that nets you 15% cash back on certain categories like gas (5% baseline + 10% bonus), provided you meet the minimum spend for the 10% bonus. Not a bad option.
I thought this video did a good job explaining some perks: https://www.youtube.com/watch?v=lCSgdflJPzI
Basically that