Financial Update – Sept 2024

Another month, another update. A few random comments.

Good Reads/Listens/Watches

  • I enjoyed this Costco Connection article on their operations (link).

Life

  • For years, I would bike our unfrugal dog about 4 miles a day to give her some exercise. However, in preparation for the triathlon this past summer, I started running her the ~4 mi/day instead. Even though the triathlon is behind us, I’ve stuck with the running routine and am kind of addicted. I still hate running more than anything, but I feel really good after doing it so it is becoming slightly less arduous. My resting heart rate has dropped ~10-15 beats per minute with the regular running and is now in the 40s, which surprised me because I was always reasonably active before.
  • I watched and schlepped the kids to various activities, which is becoming a semi full-time job:
    • FC1: cross country / band / choir
    • FC2: show choir / band / choir
    • FC3: flag football / soccer / cross country / ninja / band
    • FC4: band / choir
    • FC5: flag football / orchestra
  • I continue to play around with ChatGPT and am enjoying it immensely. Because I’m cheap, I let my premium membership lapse, but my good friend assures me that it’s worth the investment (he said chatgpt 4o-1 blew his mind). Perhaps I’ll reinstate it? Is anyone else using it regularly? If so, what for? Are you paying for it?


My backpacking buddies mock me mercilessly for the “sad oatmeal,” which I’ve been eating daily for ~20 years. This month, I made my sad oatmeal even sadder by drowning it in a bland green smoothie. Ingredients for those who want to replicate my sadness. Baseline oatmeal: oats, frozen berries, milled flax, chia seeds, and walnuts. Green smoothie: chard/spinach/kale mix, banana, water (frozen mangoes if feeling indulgent).


My new “green” mix at Costco. Not sure the ratio, but baby chard, spinach, and kale are listed in descending order on the ingredient list. The “baby” helps it taste a little less like death.


The apple orchard we went to for a U-Pick had some raspberry bushes that we grazed on. Visiting apple orchards in the fall is one of my favorite things to do.

blank
FC3 joined the 8th grade soccer team as goalie. He had a good time.

blankFC3 followed in the footsteps of his sister FC1 by joining the cross-country team. I can’t quite put my finger on why FC2 passed on the sufferfest….

 

This Month’s Finances

I’ve grown less skeptical of the Shop Your Way Mastercard, the card whose existence I’m not supposed to acknowledge. Sufficiently less skeptical that Mrs FP got the card this month.

  • The good:
    • Still employed.
    • We’ve officially owned our Tesla for 12 months, which means the purchase has fallen off our rolling 12-month expenditure chart. It looks like we spent $89k over the last year (188% the federal poverty level for a family of 7).
      • I’ll eventually write a blog post about it. In summary, I don’t foresee myself ever purchasing another gas car in my life. I don’t think I’m delusional, nor do I have particularly strong allegiances to Tesla. EVs just make sense. If Rivian survives, I could see that being our next car purchase—hopefully a decade or more from now.
  • The bad/abnormal:
    • Not much.

blank blank

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. ETFs are slightly more inconvenient to hold relative to index funds. With ETFs, 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 (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 ~0.11% of “tax alpha” due to reduced foreign tax withholdings. Vanguard implemented this change around 2019. Therefore, I report the effective expense ratio of negative 0.053% for this holding (=0.059%-0.11%). 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 ~0.11% of “tax alpha” is not available in the mutual fund version.

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

25 thoughts on “Financial Update – Sept 2024”

    • Basically an alternative to Google. And a personal assistant.

      My jokes that I’m falling in love with ChatGPT. She hasn’t seen the movie “Her” yet, and I have advised her not to!

      It proof reads my blog posts to find dumb typos. It helps me debug code when I’m doing research. I have yet to use it to aid in teaching prep (construction of HWs, Exams, Slides, Syllabus, etc), but my good friend does and swears by it.

      If used correctly, it seems like the ultimate productivity hack.

      I’m curious to hear how others are using it.

      Reply
  1. If you hate running, you may be going too fast… Have you considered running in the middle of zone 2 most days and going harder once a week? (Speaking as someone who tried this this summer after years of running finding it a huge change for the better)

    Reply
    • That’s a good suggestion. I’m probably guilty of running too fast. I should probably incorporate interval training into my running as well, but I’m pretty ignorant on the topic. Perhaps that’s my next question for ChatGPT!

      I ditched my smartwatch a long time ago so I’m flying in the dark on heart rate zones during workouts. Most of my family have smartwatches though, so perhaps I’ll borrow one the next time I run to see where I stand.

      Reply
    • What made me initially skeptical:
      * Affiliation with defunct retailer
      * Hardly anything written about it online
      * Pretty crummy website
      * Weird second website to redeem points
      * Pretty crummy baseline rewards
      * “I’ve fallen and I can’t get up” advertisements on the last page of credit card statement

      Some offers that made me overlook my skepticism:
      * $207.50 in gift cards (walmart or amazon) in exchange for $750 online purchases last month.
      * 15% statement credit for $1k of grocery, gas, and restaurant spend.

      I’m willing to tolerate some weirdness for 15%-28% cash (or gift card) back.

      Reply
  2. You convinced me. They approved me for $5k which is pretty low compared to my other issues. I have EX frozen (most issuers pull that in my state) and they happily just pulled EQ.

    I guess I won’t be under 5/24 for another 6 months or whatever. Oh well.

    We’ll see if I get any offers after initially doing the $1500 for $225. I assume you didn’t get any offers during the initial bonus promo. That would be quite the double dip.

    Reply
    • Good luck with the card. I was underwhelmed at first. Then the offers started coming.

      I didn’t have any offers during my initial bonus period, but perhaps they would have come had I waited?

      Reply
  3. if you really want to go down the rabbit hole, check out “training for the uphill athlete“ from your library. A heart rate monitor is useful, but not totally necessary, you can just go with a pace where you can speak conversationally comfortably. I have found ChatGPT and Claude to give somewhat generic, but generally decent advice on training.

    Reply
  4. It’s literally a workout plan that doesn’t necessarily feel like you are incorporating a specific time to the workout. He encourages working out throughout the day and even thinks it may be better as your muscles are fresher.

    Start by testing your push up max and pull up max. Then subtract 4 from this number which will be your reps per set. Then, shoot for doing 10 sets total per week…then 11…then 12…up to 15. Break up the per day any way you want.

    One of my days.
    -wake up and do a push up set(1) before brushing teeth. When coming home from work pull car in driveway and do a pull up set on outdoor pull up bar I attached to side of house ( purchased and constructed with pipes purchased at Ace Hardware). Later on in evening while taking garbage out complete another set of pull ups. Sometime in the evening complete another push up set. Every other day I will do some sort of squats or lunges maybe 50-100 depending. Also most nights try and get some sort of walk with a podcast in for 5k -10k steps.

    Keep in mind 2 years ago I was able to do exactly 0 pull ups. I had to progress to doing one using assistance. Now, I can do 11.

    Really doesn’t feel like I am working out yet I feel great and have been building muscle.

    Reply
    • Sounds like a pretty simple and brilliant plan.

      Thanks to my climbing, I can probably do ~15 pullups when fresh and ~30(?) pushups. I’ve been doing some weight training lately but feel like I’ve plateaued. Maybe I’m doing something wrong or maybe I’m an over-the-hill middle-aged man.

      I’m really appreciate your feedback by your suggestion and will look into it further…

      Reply
  5. Also kboges has a community on his website. I’m really not into social media at all but I enjoy reading and participating there and bogleheads.

    Reply
  6. I have a question about front loading your 401(k): both my employer and my wife’s employer offer a good 401(k) match. How is this contribution handled if we front load our contribution next year? Does it just lag (but award the same amount)? Or would it just not award any match for months in which we were no longer contributing?

    Reply
    • It’s a lot easier without the match implications.

      My 403b & 457 have no match, so it is easy to front-load. No thinking required. I take the IRS limits and divide by 3 or 4 to get it filled whenever I want.

      With the 401k, you are correct to have concerns about losing the match. If you were to front-load your 401k up to the IRS limits, you’d forfeit the match afterwards.

      There’s an algebra equation to be had here. Let’s call the IRS limit Z. Let’s say the employee contribution is X. Let’s say the employer contribution is Y. The shortfall, S, would be computed as S = Z – X – Y. This is the amount you’d be able to accelerate earlier in the year. The problem with this calculation is if you get an unexpected bonus/pay bump, then it would screw up your estimates and lead to forfeiture of your match.

      Reply

Leave a Reply