Another month, another update. A few random comments.
- GoCurryCracker on the NYT Trump tax exposé (link).
- The Daily (NYT) podcast episode with the authors of the NYT investigation (link).
- Bogleheads on Investing podcast episode with author Morgan Housel (link).
- My Octupus Teacher (link).
- The Dangerz, the inspirational full-time van-dwellers turned full-time sailors, recommended it on their Instagram feed so I had to check it out.
- It’s a documentary about a man who falls in love with a wild octopus in Cape Town, South Africa. It’s basically a cross between Planet Earth and a romance movie. My whole family enjoyed it, though I felt slightly uncomfortable with the cross-species love story.
- Surfwise (link).
- A documentary about a Stanford-trained physician who has a midlife crisis, quits his job, becomes obsessed with surfing, and raises 9 kids in a camper-van while training them to be surfing phenoms.
- It had a lot of similarities to the fictional film Captain Fantastic (link).
- It’s available for free (with commercials) at a few sites as shown on the ReelGood link.
- My family has started watching Season 2 of All Around Champion (link).
- It’s a great family show.
- Steven Levitt, the Chicago economist best known for Freakonomics, has a new podcast called People I Mostly Admire that I really like (link).
- Levitt has always been my favorite part of the Freakonomics enterprise.
- Speaking of Freakonomics, Dubner has a podcast with Angela Duckworth that I enjoy called No Stupid Questions (link).
- Planet Money (link) and PBS Frontline (link) on the failure of plastic recycling.
- This related Rob Greenfield video is great as well (link). I like Rob a lot.
- Hidden Brain podcast on how the fee-for-service healthcare model is broken. Shankar interviews Vivian Lee, Harvard/Duke trained radiologist with an impressive resume (CEO of University of Utah Health, Dean of University of Utah’s Medical School, President of Google healthcare venture Verily).
- Vivian also has a book that’s worth checking out if you’re interested in that kind of thing (link).
- How I Built This podcast episodes:
- Planet Money podcast on the controversy surrounding Apple’s app store (link).
- NYT infographic on migration across state lines (link).
- GoodRx went public a week ago and now has a market cap of $22B (Barron’s article).
- Holy crap!
- My claim to fame is that the CEO emailed me after somehow coming across my rambling, incoherent GoodRx articles (link1, link2).
- I remain confused at how they make money. The Barron’s article says “GoodRx makes money every time a customer uses one of its codes to fill a prescription at more than 70,000 U.S. pharmacies.” Why do drug companies reward GoodRx for allowing consumers to buy drugs at up to ~50% less than they could using their traditional insurance?
- Comparing their business to Groupon, Groupon is indeed compensated while giving consumers discounts. However, this strikes me as a different since Groupon helps direct these discretionary dollars towards businesses. In that sense, Groupon is just an alternative marketing channel, where the discounts + Groupon commissions are just the cost of acquiring customers.
- Since drug expenditures are largely non-discretionary, I’d imagine that consumers are going to buy the drugs with our without GoodRx (i.e. via their insurance). If true, why would drug companies pay GoodRx for these referrals for drugs that were doing to be purchased at a higher price anyway?
- We ended up closing on a 2.25% 15Y refi with Better.com and $1,299 lender credits. The total closing costs (A + B + C + E – Lender Credits) came out to a net credit of $421. From start to finish, the process took about 2 weeks. Better was unbelievably slick to work with; they have a great website. For those still considering a refinance, my recommended sequencing strategy is documented here.
- If you’re trying to hit the Dec 1 deadline, you should still have time. Lenders might already be pricing the 0.5% fee into the refi costs, but I’ve read on Bogleheads that Better will refund the fee if you close in time.
- I’ve started playing frisbee golf regularly with a group of friends every Saturday morning. It is an unbelievably fun sport that I was first introduced to 20 years ago during undergrad. It’s like real golf – but free and way more fun. The fall weather has been unbelievably spectacular so I also convinced the family to go a few times.
- There are likely several courses near you. Google “frisbee golf courses near me” to learn where.
- Something like this $20/person starter set is all you’d need to get started. Over the 20 years I’ve played the game, I don’t think I’ve ever lost a disk (though I’ve had to go swimming a few times to retrieve them, including several times this past month).
- Speaking of the currently beautiful fall weather, it reminds me of the saying “A broken clock is right twice a day.”
- The midwest is too cold in the winter and too hot in the summer, but twice a year during the all-too-quick transition from one extreme to the other, it is a really enjoyable place to live.
- I bought an almost-brand-new ebike on Craigslist. I rode it to campus at an average speed of 25mph and didn’t break a sweat (the bike tops out at 35mph if you really pedal hard). It felt like cheating and I missed the endorphins from doing a hard ride. I think I’m going to sell it.
- It was a moderately cheap midlife crisis — significantly cheaper than a Tesla.
Made me Smile
- Compilation of wives pranking their husbands with the Monday Night Football theme music before football came back in real life (link).
- It’s like watching Pavlov’s dogs.
The only way Mrs FP could get FC4 to come with us on our frisbee golfing excursion was to allow her to listen to an audiobook. Parenting irrational little people (including a teenager now!?!?!?) is the biggest challenge I’ve faced in life.
Beautiful fall weather.
Unsuccessfully trying to block FC3’s three-point attempt.
While biking to campus, I saw the Ghostbusters Car (the Ectomobile). If the Weinermobile was an omen last month, seeing the Ectomobile this month is surely a double-omen.
The midlife crisis — a poor-man’s Tesla — that wasn’t meant to be.
This Month’s Finances
- The good:
- Still employed…
- The bad/abnormal:
- $1.5k on ebike that I’ll end up selling.
- $117 on teaching certificate fees (fingerprinting, transcripts, etc) so Mrs FP can substitute teach.
Full version is downloadable here (link).
- Fidelity unambiguously has the best HSA on the market. $0 admin fees + $0 expense ratio funds.
- 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 due to Admiral shares, etc. And it’s not hard. Plus, a DIY portfolio allows one to tax-loss-harvest more easily.
- 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).
- 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).
- 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.
- 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.
- I own one share of Berkshire Hathaway (B Class) for the sole purpose of getting 4 free tickets/year to Berkshire’s annual meeting.
- 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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12 thoughts on “Financial Update – Sep 2020”
Wow. Never lost a disc in 20 years!!! Maybe I play more often or harder/brushier courses, but I tend to loose (and find) a few discs every couple of weeks. Disc Golf has to be one of the cheapest sports to get into. Maybe we should rename it frugal golf? I’m amazed at the number of free (or nearly free) courses across the country. The courses aren’t huge environmental drain like ball golf either.
I had a similar pang of guilt when I bought my used Larry vs Harry Bullitt cargo bike. Set me back $2,000 on craigslist. However, here I am 3 years later thinking it might be one of the best financial decisions I’ve made. I’ve carried countless cargo loads of Costco hauls, manure for the garden, my kid, etc…
Do you think the e-bike will result in you biking more? If so, it could be a savings long-term. Especially if you trick it out with a solid trailer like the ones at Bike’s at work.
Not losing a disc in 20 years is a perhaps slight exaggeration. For example, I don’t recall what happened to the driver I bought 20 years ago during undergrad. However, I can account for pretty much any other disc I’ve purchased. I’m a fan of the two-disc system: a driver (Innova Champion Boss) and a putter. I don’t understand the point of midrange discs because I can chuck my putter a long way. It is really rewarding to often beat my friends who carry 20 disks with the dedicated disc golf bags.
I agree about the environmental consequences of real-golf. I grew up working on a golf course and still play it a few times a year, but it’s a huge time- and money-suck that ruins the environment.
I just googled your cargo bike. Wow that’s an awesome and crazy bike! I’m glad it’s working out for you!
We have a simple pull-behind bike trailer for Costco runs (it’s only about 0.3 miles away from us). It’s probably 10 years old and falling apart, but is still getting the job done. Here’s a picture of it in action: https://frugalprofessor.com/wp-content/uploads/2020/10/costco-run.jpg
I pretty much bike everywhere so the ebike certainly isn’t going to get me on the trail any more. I mostly bought it for speed and to counteract the 20mph headwinds (in both directions, it seems) that prevail in my state. Further, on days where I rock climb on campus, there isn’t much left in the energy tank to get me the 7.5 miles home. Upon riding it, though, I found I oddly missed the suffering. I may still hold onto it for my kids as an alternative to schlepping them across town, but my inclination as of now is to make them ride a normal bike like I did growing up. After all, I ended up okay after peddling myself around on human power for almost 40 years……
Kudos to you for being able to navigate with all of that Costco goodness in your trailer. I used to have a similar setup, but had a bad experience that actually spurred the cargo bike purchase. Every time I’d stop at a red light, my bike would tip over from the weight of the load and the one-wheeled trailer. By the time I’d get the bike upright again and maneuver myself back to the handlebars, the light would be red again. ha.
Maybe I should have tried a two-wheeled trailer first, but the craigslist gods had different plans. We also had a baby due at the time and I had this crazy notion that I would be able to bike my wife and baby the 1.2 miles home from the hospital. long story short, although my wife walked to the hospital when in labor, they wouldn’t let us leave without knowing that we had a car seat and car ride home. Ironically, the bike is statistically safer, but you have to choose your battles…
The fact that you planned to bike your wife and newborn from the hospital in your cargo bike is one of the more awesome things I’ve ever read. It seems like we were both cut from the same cloth!!!!
In full disclosure, my wife and I usually both bike to Costco. This was a particularly heavy load so I carried the pizza and hamburger buns in one hand and Mrs FP took the trailer.
I can only recall one time where we had to take two trips (again, not a big deal when we live 0.3 miles away). I can’t remember if we bought toilet paper + paper towels that day, but it was a large load.
That’s a good question on GoodRX. A bit out of my wheel house, but something that needs to be explored. I will ask our pharmacy director about it. What did the CEO have to say? .
Pretty explosive net worth growth, keep it up, you are making me jealous. And slightly motivated. And maybe even a little competitive. It is probably about time for us to move again for another large salary jump, but work stress has been low this year and I have my autonomy. I suppose that is something I am willing to pay for in the mean time. COLA adjustments are out of 2021, but I think they are holding our premiums flat.
Thanks for asking your pharmacy director. I had a call scheduled with the CEO in January but I was sidelined with a horrific case of influenza and I never got around to rescheduling the call. I’m definitely missing something because it frankly doesn’t make sense.
Thanks for the congrats. Not shown, of course, is the 7 years of grad school living below the poverty line. But I’m really grateful for my job and the fact that we’re in a somewhat low cost of living area (especially if you ignore the oppressive tax burden).
The trick, of course, is to continually strive to live like a poor college student once the money starts coming in. Aside from a few irreversible decisions of questionable financial soundness (5 kids, dog), we do our best to stretch those precious pennies that pass through our hands.
That is the trick. We live in a rural area area with a low cost of living as well. I have a decent income at this point in my career (particularly for the area), but my wife does not. Taxes are far from oppressive in the “live free or die state”, unless you buy to much house. Renting a modest house seems to be the way to go. We are also not getting taxed by the state on our dividends, just yet.
Mrs. Max OOP paid our neighboring state approximately $800 to use a freaking road to access her school so she could teach. Since she taught remotely most of this year, I plan on not paying that in 2020.
Keep up the good work, professor.
$800 for access to a road is crazy! I haven’t had much experience with toll roads in my day.
Our family loves disc golf. We got started when we lived in Seattle and it’s amazing how many courses you can find. As for losing discs, I agree it’s pretty uncommon. Our discs still have our (now defunct) Seattle phone number from nearly 10 years ago. I haven’t bothered to update it because we have yet to lose one. I probably should, just in case 🙂
I almost lost a disc the other day for the first time, which prompted me to put my phone numbers on my discs for the first time in my life.
I just placed an order for $75 of discs; I’m getting really into it. I love to compete. Another favorite sport is racquetball, but I haven’t played that since leaving grad school. What an incredibly fun sport that is, particularly if you have a partner who can push you.
Related to Good Rx questions. A key item I think you are forgetting about are rebates paid to the insurance companies directly. These rebates are generally huge and calculated based on the volume of medications purchased by members of the insurance co. So from the pharma co perspective they are just issuing the rebate to the consumer instead of the insurer. It also gives them an advantage that they can get consumers to use their medications that they would normally miss out on because their drug isn’t preferred on their formulary. Keep in mind that consumers in some cases are doing the insurer a favor because services purchased outside of insurance won’t count towards deductibles and out of pocket max. But if you are not going to meet your deductible or are on a copay plan this is a great tool.
I appreciate you taking the time to explain this to me. I’m completely ignorant when it comes to how pharma + rebates work, but I find your explanation to be completely rational.
With the benefit of hindsight, ten months after my first (and very positive) GoodRx experience that saved me $400 or so, I regret the transaction. With the benefit of hindsight in which I realize that I’ve blown through my deductible + OOP max for the year, I now know that every penny spent on GoodRx was a penny thrown down the trash. In other words, ex-ante it was a prudent choice (under the assumption that we wouldn’t hit our deductible/OOP max), though ex-post it was a mistake.
Speaking of healthcare economics, my doctor just prescribed a $6k/year nose spray to me for allergies/sinus stuff. The manufacture will cover $1k/year (my responsibility), with the remining $5k/year left to the university (e.g. the taxpayer/student) to pay. It’s asinine; particularly when there is a $20/year alternative (generic Flonase) available at Costco. In all aspects of life, but particularly in healthcare, it’s far too easy to spend other people’s money. It’s no surprise that healthcare spending is 18% of GDP.