Financial Update – June 2020

Another month, another update. A few random comments.

Good Reads/Listens/Watches

• Some interesting discussion on racism in the US:
  • Trevor Noah (20 min video)
  • John Oliver (33 min video)
  • Tulsa Massacre (9 min video)
  • Ted Radio Hour interview with scholar Clint Smith
    (52 min audio)
• All Around Champion
  • 11-part TV series in which they gathered 10 top ranked athletes aged 13-15 from a variety of sports (wakeboarding, skateboarding, horesback riding, gymnastics, diving, swimming, kayaking, etc). The expert child in the particular sport coached the remaining kids on how to preform their sport. A guest coach, who was often times an olympic medalist, would assist in the coaching. After 2 days of training the remaining kids would compete in the sport.
  • Our kids loved it. The parents did too.
  • We watched it for free on BYU TV’s roku app.
• I’m slowly coming to the conclusion that Youtube is the future of streaming entertainment, easily surpassing network television and maybe even paid streaming platforms (Netflix/Hulu/etc). Here’s a list of Youtube channels I follow:
  •  Climbing/Outdoor:
    • Adam Ondra
      • Best climber in the world. Super high production value.
    • Mediocre Ameature
      • Some dudes based out of Orem UT who do some pretty adventurous stuff.
    • Beau Miles
      • A really adventurous Australian dude who documents his crazy adventures.
    • How Not to Highline
      • A dude who tests climbing gear to failure.
  • Exploring Alternatives
    • Really high production value channel that interviews people living alternative lifestyles (i.e. those not living in McMansions).
  • Last Week Tonight
    • John Oliver is brilliant.
  • Mark Rober
    • Former NASA/Apple mechanical engineer who makes videos about extreme science experiments. He graduated from my undergrad ME program about a year ahead of me.
  • Rob Greenfield
    • Earth loving hippie dude who I find to be pretty entertaining and educational.
  • Flying:
    • Mike Patey
      • A mechanical savant based out of Spanish Fork UT who custom builds small planes for fun. He dumped $1M into his former plane which he crashed on takeoff in a severe crosswind about a year ago.
    • SoCal Flying Monkey
      • A father of two based out of LA who got a pilot’s license and takes his family on fun excursions. It makes me irrationally want to buy a plane. A colleague of mine did this. I thought he was crazy until I watched this channel.
    • Trent Palmer
      • A professional drone pilot based out of Carson City NV who flies planes for fun.
  • Kid stuff:
    • Jelle’s Marble Runs
      • Pretty intricate marble racing with hilarious commentary. My kids love this channel. I first learned about this channel through John Oliver when he announced that This Week Tonight was becoming their first sponsor.
    • Dude Perfect
      • Five dudes from Texas who produce hilarious content for kids. I resented them for about a year because I was envious of their jobs, but I’ve grown past that. I’ve proposed some brothers in law to start a channel called “brother in law perfect” but nobody has taken me up on the offer and quit their day jobs yet.

Life

• I took a quick trip to Tetons/Yellowstone with my frugal bro.
  • Our first night we arrived at Gros Ventre campground at 8:30pm to find it full, forcing us to boondock in the National Forest East of the park near Shadow Mountain while racing the setting sun. Driving up the mountain my minivan bottomed out a couple of times while off-roading and I almost got stuck in mud. I have an irrational desire to purchase Tesla’s (hideously ugly but super practical and reasonably well priced) Cybertruck and this trip reinforced my desire to do so.
• While on vacation I mentioned the merits of Xfinity mobile to a family member. He is paying $300/month for several devices on AT&T’s network, so I thought he’d express some interest by lowering his bill by 96% to $12/month (he’s an existing Comcast customer). He expressed zero interest and changed the subject really quickly, reminding me why I shouldn’t talk to people about this stuff in real life, particularly family members (even those in serious financial need).
• I had a few discussions with family members about real estate. Real estate markets seem irrationally frothy to me, but perhaps the frothiness is rational given the record low interest rates. The same argument could be made for stock valuations right now. Given the alternative of investing in treasuries for 1.4% for 30Y, perhaps “reaching for yield” in stocks is rationally driving stock prices up. I continue to play the 40-50Y long game with my investments, dollar cost averaging in the most tax-efficient manner I can and ignoring the short term noise along the way.
• Our university continues to gear up for in-person classes in the fall. Given how poorly we’ve contained the virus upon reopening, I remain skeptical that this semester will end well. Like many schools, ours is planning on ending early so that students aren’t going home for Thanksgiving and coming back to campus.
  • Many older faculty are (rationally) terrified to return to campus given their risk profile.
• My frugal bro and I went on a 25 mile bike ride out of Park City resort called Park City Epic. My brother’s GPS said we gained a total of 5k of elevation, most of which was over the first 10 miles. Our morale was pretty good for the first 7 miles or so but we quickly fatigued and the ride became a never-ending slog for two middle aged (and out of shape) men. I love mountain biking; after the initial bike investment the marginal cost is about zero. Same with climbing, backpacking, etc. Mercifully I didn’t go over the handlebars despite a few close calls on the more technical terrain.
• A friend of ours took us out on a speed boat on a lake by our home. Our kids had a blast. It led to an existential crisis in which I questioned the rationality of every one of my life choices including my self-imposed semi-extreme(ish) frugality. The resolution of this mini existential crisis is TBD…

 

Hike in Tetons.

 

Biking in Tetons.


Near old Faithful.

 

Bison are not small. We saw about a hundred of them, two bears, two wolves, a bunch of elk and deer. 

Park City bike ride of doom. Taken around mile 7 before we gave up hope.


Park City bike ride of doom. On top of Park City overlooking Brighton/Solitude. Utah is not ugly.

“Trump rides an eBike” sticker found on trial post on Park City bike ride of doom. It made me laugh; there is such a stigma with eBike riders among the non eBiking community. I only saw one eBike rider on our ride but I was envious!

This Month’s Finances

• The good:
  • No catastrophes.
  • Still employed…
  • Including home equity (which seems to be somewhat controversial among the Boglehead community), we (re)joined the two comma club this month. We celebrated by going to Red Robin and using a free birthday burger coupon Mrs FP had. In a former life, I would drive to Red Robin and wait in the car while Mrs FP would eat her free burger by herself. I’m proud to say that I’ve outgrown that stage of life. Including my meal and tip it came to $15 or so. While financially painful and surely artery clogging, it was a fun memory. Mrs FP ordered an impossible burger, which indistinguishable from real beef for my unsophisticated pallet. I predict that meat-free products will dominate the market in 15Y once the economies of scale are in place. If true, perhaps we’ll eventually view our current animal agricultural practices as barbaric (not to mention environmentally catastrophic). The founder of Impossible Foods was interviewed by Guy Raz on How I Built This a few weeks ago (link). It’s worth a listen; the guy is truly inspiring. He gave up a tenured faculty position at Stanford (with huge financial risk) to pursue his dream of saving the planet by making animal agriculture obsolete.
  • Our lagged 12 month spending is trailing downwards. If I remove the catastrophic (and irreversible despite my begging the kids to pawn off the dog) financial mistake of buying a dog, we’d be very close to hitting the completely arbitrary goal of $45k of non-medical spend for the year. We’re spending less thanks to Coronavirus (no gym memberships, no kid sports camps, etc). It’s been nice.
• The bad/abnormal:
  • $678 in drugs/copays.
    • The silver lining is we’re just about at our deductible. Consequently we’ll be front-loading all the remaining healthcare consumption we can over the next 6 months.
    • A brother in law just got a job after a long slog in grad school. I helped him choose between his insurance options. After looking at his options, I realized how good I have it with my current employer.
    • I can see the appeal of emigrating to a country with nationalized healthcare (Canada, etc) for an early retirement. I’ve seen the Bogleheads discuss this periodically and it appears to be quite the arbitrage; accrue wealth in the relatively low-tax US with poor social supports then move to a high tax country with rich social supports. It’s my understanding that Canada prevents this arbitrage by requiring those who immigrate to have employment. But what’s preventing someone from quitting after a couple years of work and proceeding to ride the gravy train?
      • The counterargument to the above is that Obamacare gives the early retiree free healthcare through subsidies (or Medicaid if below 138% FPL), so you can essentially accomplish that arbitrage domestically if you keep your income low enough.

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). 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 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.

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