Financial Update – Aug 2023

Another month, another update. A few random comments.

Good Reads/Listens/Watches

• I really liked the Quarterback series, but I’m a sucker for sports documentaries (link).
  • It’s hard not to like Kirk Cousins after watching that show.
  • Relatedly, I learned about Hard Knocks this month. It is also pretty entertaining (link).

 

Life

• School started again for the kids. Summer flew by. Grades: 11, 9, 7, 6, 4.
• The Blue Angels came to town. It was a blast and brought back great memories of seeing them as a kid at Moffett Field, CA and also while living in Seattle early in my career. I don’t think there is a prettier setting for watching them than Lake Washington.
• I went back to WY for another backpacking trip with my undergrad buddies. We did 37 miles over 3 days (link).
  • Luckily the mosquitoes were much less troublesome than my prior trip. (Obvious) Lesson learned: avoid WY in early July.
  • We were hit by a nasty thunderstorm in the late afternoon of our second day.  Luckily we had already set up our tents and took shelter inside for an hour before emerging to eat dinner.
• This is my first blog post written entirely on a Mac. In prior posts, I still had to do one or two operations on a PC (the Excel => MS Paint PNG export and my masterful MS Paint anonymization edits). But I’ve finally learned how to do everything I need on a Mac. I was a long-time Mac skeptic (primarily due to the historical price gouging), but I now see the light. Especially with the net ~$400 price tag with education discount for the mac mini (link). I can see this being a permanent change; good riddance to Windows.
  • A few protips for those migrating from Windows:
    • When using a non-Apple mouse, use this program to enable smooth scrolling (link).
    • Since MacOS has pretty lousy native split-screen support, use this program (link).
  • The learning curve was a bit rough to me since I was so entrenched in my Windows ways, but I’m glad I stuck with it.
  • I’ll unambiguously be buying my kids Apple laptops for college.
• About a year ago, I purchased Darn Tough wool socks for my backpacking adventures after dutifully wearing Kirkland Signature wool socks for ~15 years (who can say no to a 6-pack of wool socks purchased on clearance for $6.97?). While I initially thought they’d be my hiking socks only, I’ve happily worn them daily for a year and will never go back to cotton or cheap wool socks. They are painfully expensive, but can sometimes be purchased for ~ $10/pair on sale.  They are life changing and worth every penny. They apparently have a lifetime warranty as well but I have yet to take them up on this offer.
  • Slickdeals Query.
  • The number of product offerings is pretty overwhelming, but I find the lightweight hiker sock to be the perfect weight for 99% of the year (basically anything < 100°F). I do everything in these socks.
    • Quarter height (link).
    • No-show version (link).
  • I found the sizing to be tricky. My size 12 foot was between sizes but feels much better in the XL than the L. Assuming my experience generalizes, I’d say size up when you’re between sizes.
  • A month or two back I picked up 15 more pair from an REI sale, partly in preparation for our family’s backpacking trip, but partly because I wanted to help my family see the light. Mrs FP and a few kids are now sock snobs and will only wear wool socks now.

  Walmart Wrangler pants + Solomon Speedcross 5 shoes + Hurley lightweight sun hoodie.

 

This Month’s Finances

• The good:
  • Still employed.
• The bad/abnormal:
  • $4,631 in property taxes (2nd half of 2022 tax bill).
  • Our 7-year-old LG washing machine gave up the ghost. We paid $91 for a repairmen to come over to our house and diagnose the problem as unfixable. In hindsight, maybe I should have assumed as much and saved the $91? I never know how to handle these situations and always seem to guess incorrectly. The replacement was $965. In the interim, we spent $12 on laundromats. Good riddance to laundromats.
  • Our Sienna somehow developed a fuel leak, slowly dripping gas into our garage. Luckily nothing exploded. $400 fix.
  • $157 in vet bills (vaccinations, vet consult for itchy dog, drugs for itchy dog).

 

Footnotes:

1. Fidelity unambiguously has the best HSA on the market. $0 admin fees + cheap investment options (e.g. FZROX, FZILX, FSKAX, etc).
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). If you prefer to DIY (as I do), then a three-fund portfolio is great (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, 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).
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 (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).
9. I hold VTSAX in my taxable brokerage account because its tax efficiency (no cap gains distributions thanks to its patented technique).
10. 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.
11. 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.

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