Financial Update – Mar 2019

Another month, another update. A few random comments.

Good Reads/Listens/Watches

• Walden on Wheels (link).
  • Ken Ilgunas is an incredibly engaging and hilarious writer. This book is a memoir of his college years in which he accrued $32k of student loans for a worthless degree then clawed his way out of debt through a series of odd jobs spanning several years. After getting “back to broke”, he proceeded to earn a master’s degree from Duke without going back into debt. To do so, he kept his living expenses at rock bottom by living in a van for several years.
    • I want all of my students to read this book.
• GoCurryCracker on our impending deaths and how we ought not to obsess about running out of money (link).
  • Another morbid post (just like MyMoneyBlog’s mentioned last month) to help align my priorities!
  • His argument is that, in the end, we’re all dead with certainty.
  • My takeaway is that we should do our best to save, but once we have a reasonable amount (i.e. 25-33X expenditures), we shouldn’t fret needlessly about the risk of running out of money. It is far more likely we’ll be dead before our money runs out.
    • The last chart of the post is a painfully clear reminder of that.
• 70 minute interview with Steve Jobs (link). Enjoyed having it on in the background as I did chores.
  • My favorite part of the interview was near the end where he reamed Microsoft for making such uninspiring products.
• Michael (who I met at last year’s Berkshire Hathaway ChooseFI meetup) & Ellen from UncommonDream moved from Ft Collins, CO to Costa Rica (link).
  • They are planning on staying there for at least a year. 
  • I would love for my children to have the experience of living abroad and learning a new language and culture, but the older they get the less convinced I am that we could pull something like this off.
• Mad Fientist interviews Carl Newport (link).
• Tom Turcich, the man literally walking around the world with his dog, on discomfort (link).
  • His Instagram feed is great.
• Perspectives on “forced minimalism” from a physician who lost his home in a fire (link).
  • Found his blog via this great instructional post on making backdoor Roth contributions at Fidelity (link).

Life

• After maxing out the $2,500 on our two BoA cash rewards cards, I applied for our third BoA cash rewards card (a “save the tigers” version this time), increasing our quarterly 5.25% rewards to $7,500.
  • I’m kicking myself for not getting the card when it had a $200*1.75=$350 signup bonus a few months ago (it’s only $150*1 currently), but at the time I didn’t realize how nearly all of our spending (i.e. primarily Costco) could easily transition towards the new 5.25% “online” category. Oh well.
  • I spent about five minutes of thought questioning the rationality of this (as opposed to signing up for another card with a higher signup bonus, consistent with the pump-and-dump strategy), but decided against it. The new card will provide us up to 10k*(5.25%-2.625%)=$262.50 extra in rewards per year in perpetuity (or until BoA inevitably changes the terms of the card). Plus, the banking relationship is already established with BoA so the new card is zero effort to manage in terms of new logins, payment methods, etc.
• Purchased a new mattress. Think I overpaid, but it has changed Mrs FP’s life. Thanks to those who provided input last month.
  • Prior to replacing the old mattress, I awoke from a dream in which I was experiencing severe back pain only to realize that in real life I was experiencing back pain. Good riddance to the old mattress!
• JustWatch has stopped supporting IMDB filtering, so I’ve transitioned to ReelGood (link) which is a perfect substitute to the old version of JustWatch.
• Continued to pester the head of HR of the university into allowing the mega-backdoor Roth via the 403b. I believe I’m gaining some traction. Hopefully the stars align, our policy changes, and I can stuff an extra $37k/year ($56k – $19k) into a Roth (quadrupling the total annual Roth savings from $12k (base IRA x 2) to $49k (=12k+37k)).
  • Good writeups on the mega-backdoor Roth from:
    • The Finance Buff
    • The Mad Fientist
• Took the Amtrak train to meet up Mrs FP and the kids, who left several days before me, on spring break. Travelling by train was about 1/5 the cost of flying (mainly because I live outside of a major hub; normally it’s priced similarly to air travel). I biked to the train station at midnight (it was 1.5 hrs late) in a dense fog, took the train overnight, then Ubered to my final destination. It’s amazing how far you can travel via bike + train + uber for < $100.
• My sedan wouldn’t start (ironically, I was intending to drop it off at the dealer to take care of an airbag recall I had been putting off). Naturally, I tested the battery but it came back good. Stumped, I ended up having it towed. I was quoted $85 for a two mile tow. I called up Geico and asked if they could help. At the time of the call, I did not have tow insurance (i.e. “Emergency Roadside Assistance”) at Geico, but they explained that if I paid $6 every 6 months that I would qualify for it. When I asked if I could get it and immediately use it, they said “yes.” Since I was so deep into my billing cycle, I only had to pay $1.50 for the remaining few weeks of my policy before it renews. I’m unsure why Geico is so lenient with this policy….it seems ripe for abuse. Why carry the emergency roadside assistance at all if you can simply call and ask to have it added when you need it?
  • The cause of the dead vehicle was diagnosed by the dealer as a failed serpentine belt, a belt which I myself had installed almost 4 years ago when I replaced my water pump as a grad student. Apparently, I didn’t install it very well (too much slack) because they are supposed to have a service life much longer than 4 years (especially given the extremely low mileage we put on the car).
    • Lesson learned: DIY repairs are great at saving money until they aren’t.
      • Reminds me of the failed garage door repair a few years back. I highly discourage DIYing that one!
      • After hearing of the failed serpentine belt, Mrs FP kindly suggested that we tone down our DIY repairs so we don’t kill ourselves (reminding me of the garage door incident). I’m mostly in support of this new strategy but I’ll continue doing basic stuff myself (oil change, filter change, etc).
• Received a tentative property valuation from the county for 2019. It was valued $43k higher that last year. Armed with a spreadsheet analysis, I appealed this valuation at the county assessor’s office, my second consecutive year doing so. They responded (probably unrelatedly) by increasing my valuation an additional $6k. Apparently I’m a poor negotiator. The net result is that my property taxes are slated to go up by roughly $1k more next year.
  • Death and taxes……
• My FICO score hit a perfect 850 for the first time in my life, which is a bad sign because it means I’ve failed to fully exploit the pump-and-dump credit card signup bonus game. This Boglehead earned in excess of $2k in free travel over the last 6 months by doing so (link). Time is scarce right now and travelling with a family of 7 is challenging, but once the kids are gone I could easily see myself seriously getting into this game.
• Several kids had influenza. One more surgery. We were the living dead this month. Good riddance March!

 

Despite almost having a panic attack by being surrounded by other people’s discarded junk, I had a fun time taking FC1 & FC2 to the thrift store and being silly.

Did some ice skating with the kids. Had a blast. Clearly, the years spent on roller blades in the early 90s paid off….. Speaking of…..

Note to childhood FP from 37-year-old-man future FP: Enjoy the hair while it lasts…it will VERY shortly go downhill from here (in stark contrast to your frugal bro….oh the unfairness of life!). Also, while we’re on the topic of passing wisdom down to my former self 1.) buy Google, Amazon, and Apple, 2.) it’s not socially acceptable to wear sweatpants in high school….you may want to rethink that strategy, and 3.) I hate to burst your bubble, but you don’t end up making it to the NBA or NFL….you may want to work on a viable plan B.

 

Underpass flooded entirely & iced over. Studded snow tires held up great. Winter weather is a lazy excuse to not hop on a bike.

When Mrs FP left me home alone for spring break, I turned the heat off. After several days living without heat, 50°F was as low as it got. Heat is overrated. Multiple layers + beanie are underrated.

Mrs FP took the kids for bad Mexican food at Casabonita, a bucket list item for anyone passing through Denver.

“Cyclone bomb” in Denver.

FC1 & FC4 rocking the 100 year old mechanical player piano.

$40 well spent at a Denver Nickelcade ($4 admission*7 + $2 nickles*5  (+ $2 due to replace tear-inducing misplaced/stolen bag of nickles)). It brought back very fond memories of my childhood Nickelcade in San Jose, CA. RIP.

 

Gotta love the Denver Museum of Nature & Science. Free admission (again) thanks to our reciprocal membership at a random museum in Rhode Island (link). FC4 and I did a science experiment to prove that that fruity pebbles have more sugar than cheerios.

Glorious, glorious, glorious, glorious, glorious spring is here!!!!!!!!!!!!!

One of my favorite earthly possessions is this kite reel purchased in Chile 2 decades ago. When I lived in Chile, they were big into fighter kites. The kite string is embedded with pulverized glass. When winds were good there could be a hundred kites in the air at the same time, each of which trying to cut the other kites down (YouTube link). I can’t tell you how many times I would slice my finger during those battles. Flying kites is magical and I’m unsure why these kite reels haven’t caught on in the US.

Hilarious advertisement in WSJ. Fantastic article, BTW. Worth reading online.

Time to start pumping and dumping…..

This month’s finances

• The good:
  • No catastrophes.
  • Performed my first backdoor Roth at Fidelity.
    • I found the process at Fidelity to be slightly less straightforward than at Vanguard, though this tutorial explained how to do so (link).
    • Since I use Fidelity as my primary checking/savings account now, the funding of IRA account was instantaneous. Really nice.
• The bad/abnormal:
  • $1,573 on mattress & frame.
  • $438 on medical bills (another $5k is due next month….).
  • $300 body glove inflatable paddle board from Costco; our second. We love our first and use it weekly in the summer at lake days.
  • $216 car repair.
  • Extra gas to travel to Denver, much of which is showing up as “groceries” since we now pay via Costco cash card.

Full version is downloadable here (link).

Footnotes:

1. I lazily approximate home value as my historical purchase price.
2. 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.
3. ~$0 cell phones described here.
4. All expenditures at Costco & Walmart are classified as “Food at home” for simplicity (even if it’s laundry detergent, clothing, medicine, toys, etc).
5. 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).
6. 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.
7. 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).
8. 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).
9. 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.
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 my money here if not for the state tax deduction I receive in my own state.
11. I own one share of Berkshire Hathaway (B Class) for the sole purpose of getting 4 free tickets/year to Berkshire’s annual meeting.
12. 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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