Financial Update – Aug 2019

Another month, another update. A few random comments.

Good Reads/Listens/Watches

  • MyMoneyBlog on safe withdrawal rates & mortality (link).
    • Seeing that grey “you’re dead” portion of the engaging data plots is pretty startling. GoCurryCracker posted about this some time ago (link).
  • A Reddit user reports that Fidelity has streamlined (i.e. automated) the mega-backdoor Roth (link).
    • This seems like a big deal…which reminds me I need to keep trying to convince my HR to let me do this.
  • These two Humans of New York posts made me smile (firstsecond).
  • WSJ investigative study concludes that the vast majority of people are under-utilizing the broadband internet they pay for (link).
    • NO CRAP SHERLOCK!
    • Competing articles that the WSJ could have written instead:
      • All BMW drivers consistently drive less than the 150mph top speed. We are still investigating the root cause of this strange phenomenon.
      • People with huge houses (almost all of us) consistently underutilize most of the square footage of their homes. Most of us hoard unused crap for decades, letting it accumulate in closets, garages, and basements. When those places fill up, we pay for storage units to store even more of our unused crap.
      • People with $100/month cell phone plans may be (almost) just as well served with $1/month plans if they changed their behavior ever so slightly (like turning on Wifi and/or putting down those time-suck devices for a few hours/day).
      • Driving yourself to work in a 3-ton, 7-passenger SUV is less energy efficient than biking yourself on a 25 pound frame.
    • The article reminds me of how ludicrous we’ve all become. Most of us assume that we need 1gbps internet because….why not pay for the best option?
    • Joey at Money & Megabytes had a similar rant this month (link).
  • WSJ article on the importance of outdoor playtime for kids, which is at risk due to increased demands of standardized testing and teaching for the test. The article indicates that Finland’s opposite to the U.S. system (fewer tests + more outdoor time), leading to improved student outcomes (link).
    • Those Nordic/Scandinavian countries seem to be doing a lot of things right.

 

Life

  • FC5 started full-day kindergarten which means that all 5 are now in school. We’ve reached the next frontier in our parenting journey….
    • Waking a growing 5-year-old child up from a deep sleep at 7am to get ready for school pains my soul. On the second day of school, when we tried to drag him out of bed he complained “I didn’t want to be waked up!” Truer words have never been spoken, my friend. I didn’t quite have the heart to tell him “sorry buddy…this is your reality for the next 60 years of life!!!!”
  • My frugal bro, who is as close to a minimalist as I personally know, stopped by our home on his move across the country. All of his earthly possessions fit in a small SUV. I was incredibly jealous of his unencumbered existence. When I asked Mrs FP if we could follow suit and throw away everything we owned, she shut me down. Bummer.
  • The kids, particularly FC1, have contracted a multi-year-long case of “puppy-wanting-fever.” The illness is bad enough that Mrs FP, who generally dislikes and fears all animals (even the cutest bunny we pet-sat in the past), has succumbed. She thinks the dog will help our kids since several struggle with anxiety. I spent many a night up until 2-3am researching different breeds. After much deliberation, we decided to get a dog in about 6 weeks (the deposit has already been paid).
    • Heaven help us….
    • You know those friends you have who tell you they’re about to name their unborn child something horrific and you feel a moral obligation to correct their grievous mistake before it’s too late? Or is that just me? In any regard, I almost feel that the disclosing of the about-to-purchase-a-dog thing puts me in a similar situation, potentially eliciting a bunch of don’t-buy-a-dog-you-crazy-idiot comments. While I’ll gladly read such comments and am open to learning how our conclusion is irrational, it will probably cause an identity crisis costing me tens of hours of sleep. So please offer such comments knowing that you’re about to tell me my unborn child’s name is a horrific mistake.
      • I’m aware that the purchase of the dog is going to push our FI date back a decade or two…
  • A couple years back FC1 & FC2 inherited our perfectly functioning (but Tello incompatible) Moto g3’s when we upgraded phones to the Moto g4. Our daughters use them to listen to Pandora, listen to audiobooks, take pictures, and read ebooks. Since our oldest is in middle school, she also uses the phone (on wifi) to text friends & coordinate meet ups. Fast forward to about a year ago, FC1 drops the phone and severely shatters the screen. When she asked for a replacement, I told her she could do it with her own money. At this point she decided that her shattered screen wasn’t too big of a deal and continued to use it in that condition for almost a year. Eventually the thing degrades to the point that it is unusable. I spent a while on the internet trying to figure out a suitable replacement for her. The Moto g6 is on clearance at Costco for $150, but that seemed a bit rich and far beyond what she needed (not to mention that that phone shatters easier than any phone we’ve ever owned as Mrs FP can attest). What I eventually converged on was buying a heavily subsidized prepaid smart phone with the intent to never activate it. As far as I can tell, there are no downsides to doing so other than the fact that it can’t be activated on other networks (such as Tello/RedPocket). However, FC1 can still text & call through the google voice & hangouts apps when connected to Wifi, which is what we intended to do for her anyway.
    • Sorry for the incoherent rant, but I thought it was worth passing along after spending some time thinking about it. $30-$40 can get you an extremely functional wifi phone, audio book player, music player, camera, etc. for your kid even if you never pay a penny for cell service. FC1 purchased this Samsung Galaxy J3 Orbit. We use this Norton app to limit internet functionality for our kids (link).
  • We had to cut down three 50ft beautiful ash trees in our front yard due to the emerald ash borer, which is decimating ash trees across the continent. It pained my soul. We’re losing a fourth in a matter of months, but the city is responsible for removing that one.
  • Mrs FP and I both set up checking accounts at HSBC to get the free money. The process was pretty frustrating, but I’m hoping the (taxable) $1.5k arrives as expected in a few months.
    • Banking with non-Fidelity websites makes me really appreciate how good of a setup the Fidelity banking is.
  • At a recent family reunion my aunt told me that one of my cousins was making more money as an Instagram “influencer” than any of the rest of us cousins (combined?).
    • I HEREBY DECLARE MYSELF AN INSTAGRAM “INFLUENCER”!!!!
    • A recent Bogleheads thread has reminded me that blogs are dead. Maybe I’ll start a YouTube channel in which I livestream the eating of leftovers for lunch or buying $5.00 clearance items at Costco to fill my entire wardrobe. Further, maybe I’d even livestream the 10 minutes/year I spend buying index funds and prioritizing tax-advantaged buckets first.
      • I can’t imagine anything more entertaining than watching someone not spending money so that their investment accounts can grow.


7th, 5th, 3rd, 2nd, and 0th grades. We started a tradition of taking pictures the evening before school starts to minimize the stress. It’s a good tradition.

 


My wife sent me this Public Service Announcement. It made me smile.

 

For those unfamiliar with homeownership, this is what it’s like. A random green bug hops on a plane/boat from Asia to unexpectedly kick you in the groin and deplete your bank account while leaving your home uglier in the process.

This month’s finances

  • The good:
    • No catastrophes.
  • The bad/abnormal:
    • $3,775 in property taxes (for the 2nd half of the year) <insert dry heave sound>.
    • $288 for drum & xylophone set for FC2. She is in 5th grade band this year and elected percussion as her instrument of choice. The first time she played it in the house I wanted to chuck it into the trash. I’m unsure how this will end….
    • $106 for mattress for FC2 and $43 bed frame for FC3.
      • A few months back FC3 & FC5 thought it would be a fun idea to turn their beds/mattresses into a slides and destroyed one of their frames in the process.
        • It was a lot easier to be frugal before having five children whose goal in life is to constantly destroy things.
    • $32.10 diagnostic fee to lawnmower repair guy who determined that our 3Y old mower was broken beyond repair and that it needed to be discarded. I’m not convinced that was money or time well spent.
      • A recurring theme in my life is that we break anything that is breakable.
        • Consistent with this, my preference would be to not own anything breakable (such as only owning index funds, for example).
    • $171.54 for a 60V 5Ah battery-powered replacement lawnmower (normally $400 but got on clearance). The battery (with 3hr recharge time) died with 20% of the lawn uncut, falling well short of the advertised as a 60 minute run time. Bummer. The lack of deafening noise was a plus, though.
    • I went crazy and splurged on three overpriced $9 Costa Vida burritos while on the backpacking trip. First was the day before backpacking upon arrival to SLC. Second was upon returning to civilization from backpacking trip to Evanston, WY. Third was compensation for my brother who I exploited as a free Uber driver. This is about 500% higher than my typical personal eating out budget.
    • $700 for removal of three Ash trees <insert kick to the groin sound, despite the fact that it could have been much worse>.
      • A family friend is an arborist. He and his wife volunteered to cut down three of our Ash tress. We rented a horrifyingly large & loud wood chipper for a few hundred dollars and paid them a couple hundred dollars as a small (yet surely insufficient) token of appreciation for their time. The guy cut down the trees in 2 hours while the three of us (his wife, me, and my wife) tossed the remnants into the wood chipper to be mulched up. Despite working in constant fear that I would accidentally recreate the wood-chipper scene from the movie Fargo, it went miraculously well.
      • It’s amazing how much of a difference the generosity of others can make – far in excess of the monetary value of the services provided; it’s nice to have friends who are willing to help you out.
        • I’ve offered to help them out with investing/tax stuff before but have been turned down because they have an AUM financial planner looking(?) out for them.

Full version is downloadable here (link).

 

Footnotes:

  1. Fidelity unambiguously has the best HSA on the market. $0 admin fees + $0 expense ratio funds.
  2. I lazily approximate home value as my historical purchase price.
  3. 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.
  4. ~$0 cell phones described here.
  5. All expenditures at Costco & Walmart are classified as “Food at home” for simplicity (even if it’s laundry detergent, clothing, medicine, toys, etc).
  6. 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).
  7. 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 due to Admiral shares, etc. And it’s not hard. Plus, a DIY portfolio allows one to tax-loss-harvest more easily.
  8. 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. With a simple index fund, you don’t have to deal with either of these issues. Bogleheads discussion here (link).
  9. I continue to own VTSAX rather than FZROX and in my taxable brokerage account because it is more tax efficient due to lower capital gains distributions. Bogleheads discussion here (link).
  10. The one blight in my expense ratio analysis is my 529 plan. The underlying Vanguard fund is almost free to hold (0.02%), but the high administrative fees bring the total cost of holding the fund to 0.29%. I abhor fees and would likely avoid 529 plans if I didn’t get to deduct up to $10k of contributions per year on my state return, saving myself $700/year in state income taxes.
  11. CA’s 529 plan has the lowest expense ratio US equity index fund of any in the US (link). I’d have 100% of my money here if not for the state tax deduction I receive in my own state.
  12. I own one share of Berkshire Hathaway (B Class) for the sole purpose of getting 4 free tickets/year to Berkshire’s annual meeting.
  13. I bought 100 shares MoviePass for $0.0127/share to be able to tell my students that I held a stock that went to zero. So far, the stock price stubbornly remains above zero.

Disclaimer: This site is for entertainment purposes only, as disclosed here: https://frugalprofessor.com/disclaimers/

5 thoughts on “Financial Update – Aug 2019”

  1. FP: Your decision to purchase a dog is irrational…financially speaking. More so than you can know or appreciate on the front end. Generally, bigger dog = more cost. Getting a (good) dog is like buying a home: If you knew up front how much it would truly cost, you wouldn’t do it. But once you have one, you don’t ever want to go back.

    We acquired a (insert name of favorite well tempered purebred here) in 2008. Santa brought her (clearly i would not have made such an irrational financial decision), and between her taking the #1 spot on the Christmas list and deposit being paid, and her being picked up during the first week of January, I lost my job.
    She is now 10+ years old, an integral part of the family. We love her, she loves us. She’s the only one in the family who thinks I run the show: now that our youngest child is 14, she is the only one who regularly greets me at the front door at the end of the day to convince me i’m the best thing that has ever happened to her or this world. My wife says its a good thing that I am the dog’s favorite person, or I might really resent the money… While its not always fun to walk her in the snow/cold/rain/heat/dark-before-bedtime (pick your least favorite conditions), I will probably live a little longer (because of the physical and emotional benefits of walking her)
    Bumps (costs) along the way have included 1) a torn ACL which required surgical repair 2) an ingested silicone muffin cup which was a byproduct of her hurriedly swallowing whole the muffin and cup stolen from atop of the kitchen counter 3) hot spots under her heavy coat of fur during the summer 4) ear infections 5) later in life, a larger quantity of medications and supplements than anyone else in the family, through granted none of the humans in our household is in the equivalent of their eighth decade from measuring in dog years. Rough costs for the above: 1) $2,000 surgery performed by a rural veterinarian three hours from home, after getting a $4.5k – $5k estimate close to home. We blew the veterinary tourism “savings” on a little ski vacation for the family while she had her surgery and post-op recovery 2) $2,500 ($400 in vet administered meds attempting to get her to heave it up; when that failed, the remainder to surgically remove the muffin cup. We immediately threw away our remaining non-stick silicon muffin cups and are happy to deal with future muffins sticking to the pans in which they’re baked) 3) no significant cost, just time to clean and medicate them repeatedly 4) same 5) about $50+ a month.
    I’m embarrassed to admit we also have her groomed every four to six weeks. Since you will not allow this frivolous spending on your family’s future dog, I don’t feel the need to suffer further embarrassment by disclosing the price.

    Enjoy your future family dog. Truly. We would choose the same again.

    And despite a Bogle thread saying blogs are dead, i do look forward to reading your posts, and share salient or especially funny parts with my wife. Please keep up the good work.

    Reply
    • Rob C,

      Thanks for sharing your experiences on dog ownership. It indeed sounds like it’s a completely financially irrational, yet perfectly rational decision since the benefits far outweigh the costs.

      I chuckled when you shared that your dog is the only person in the household who thinks you’re the boss. I can relate to that on a personal level (sans the dog thinking I’m the boss).

      I hadn’t ever considered medical tourism for a pet, but this is bloody brilliant! Living in the midwest, there are plenty of rural communities within a short drive. When the time comes, I’ll be sure to keep this in mind as the inevitable emergency trip to the vet comes up.

      I’m glad you find parts of the blog amusing. I’ll try to keep at it.

      Reply
  2. Hey Prof! I’m unfortunately one of those that has a $90 phone plan (for 2) and far too expensive wifi package. Could you please share any personal insight, resources or favorite blog posts that can help me shave these costs down? My wife’s iPhone is non-negotiable. Thanks!

    Reply

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