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November Wrap-Up

December 5, 2019

Net Worth and Money News

Hooray!  We finally received confirmation from T’s university that his tenure case was approved!  The promotion came with a modest raise retroactive to July, and a slightly better raise retroactive to October.  (I don’t understand these timelines, but whatever.)  The overall raise was bigger than anticipated since we didn’t anticipate much at all. I had not been factoring in the back pay at all.  We haven’t received the retroactive raise, nor have we seen the raise on the latest pay stub, so we will have one final influx of cash this month or next month.

We’ve maxed out our usual retirement accounts, including backdoor Roth IRAs (but not megabackdoor Roth IRAs).  I opened a 529 for LO as a place to house any cash gifts and funded it with $1,000.  Despite a megabackdoor Roth (in service of college savings) being next item on our list of financial priorities, we plan to do a mortgage prepayment instead. The mortgage is a bottomless pit, always hungry for more, and there are reasons to continue to chip away when we can.   Even if I can’t keep up with the $25k/year prepayments we did initially. (Also, it was pretty depressing to compute how many years of $25k/year prepayments we would need in order to be mortgage free.)

Our net worth is up about a half a percent for the month, and we didn’t quite hit a 20% net worth increase for the year (comparing early December last year to early December this year).  Still, we made fantastic progress, mostly thanks to the crazy bull market continuing to do its bull market thing.

Spending Bullets (excluding childcare, mortgage, property taxes and car/home insurance – because I want to):

Monthly spend (excluding some major categories as noted above): $4,364.  This is the highest of the year, due to the combination of house projects, an iPhone replacement, and a car seat purchase.

Highest single transaction that hasn’t been featured in a previous 2019 month:
$492.78 for an iPhone 8 to replace my iPhone SE with a cracked screen.  I will eventually get a $50 gift card due to the Black Friday “sale” at Apple.  This narrowly beat out a few other high ticket items, like insulation from Home Depot, mulch from the landscaping store, and a new convertible car seat for LO.

Smallest single transaction:
$2.29 at the grocery store.  I forgot to buy something and ran back in for it.

Most annoying expense:
 $493.78 for the iPhone, because that is a lot of money.

Expense that brought the most joy or utility:
 A bill for negative $5.62 for utilities, since PG&E gave us a $100 credit to try to appease us for shutting off our power a few times.

Donations (for accountability): $0 this month, but I’ve rolled the funds into December.

House Projects

T put away the patio furniture for the season and did a little more landscaping prep to prepare for the rains.

T also bought about $450 worth of insulation, and installed it under the floors of two bedrooms. We have a crawl space, and the hardwood floors were uninsulated. This has already made a huge difference in the ability of the bedrooms to retain heat overnight, allowing us to keep the thermostat a bit lower.  (Baby can’t use blankets yet, so there is a limit to how cold we can go, based on the warmth of her sleep sack.)  Extending this project to the living area is under consideration, although the walls in the living area are uninsulated, and we have a lot more old windows that lose heat.

We’ve also opened up discussion of all of the projects that we said we’d consider after tenure. Most expensively, we’ll almost surely do the roof in 2020.  Painting the exterior is on the list, as are window replacements.  This all won’t get done in 2020 (we’ll probably wait a few years for the windows), but it will get done.  Less expensively, we could  address our entry way situation with some built in options, and figure out a way to make our back patio (currently flagstone) a more useful outdoor play area for LO.

Work

Oh, I don’t really want to talk about this.  November was not great.  We had a big review that went fine… but I worry the value of it wasn’t as high as it could have been. I don’t feel confident in the work that I produced for it.  This is a terrible feeling! On top of that, I had visitors and took a couple days off this month. Then I was sick, and took a day off and was running at less than 100% for a couple more days.  There were holidays. Overall, it wasn’t great in terms of getting things done.

Other life stuff

My parents visited for a long weekend, which was really great for me and for LO.  My dad is semi-retired from his career as an electrician, which means he is working ~6 months each year.  My mom has two more years before retirement in order to be eligible for federal retiree healthcare at her current rates. She’s supposedly part time, but has been working essentially a full time schedule since she is a nurse and can easily pick up hours.

Thanksgiving was quiet, but nice.  We didn’t cook turkey and we (somewhat reluctantly) turned down invitations in order to have some quiet time as a family after having houseguests shortly before.  Having 4 days off together was perfect.

This is random, but we implemented a new chore protocol where we alternate days of responsibility for cleaning up the kitchen and dishes after dinner. My motivation for requesting this system was that this must be done every day, and cannot be procrastinated without having to wake up to a mess. It’s a small change, but I’m extremely happy with this system.

LO is doing so well.  She is walking all over and is the happiest little toddler.  She had a phase where there was quite a bit of crying (likely teething related), but she’s been super content lately, and is so fun to play with. She’s also starting to play with the dog a little (in a supervised and appropriate manner), which is very cute. The dog is really good with her and rarely knocks her over as he runs by.

 

Questions about plastic and waste

December 4, 2019

If a person wants to regularly drink carbonated water, what is the way to do that that impacts the environment the least?

The options to consider are 1) Soda Stream or similar method of making it yourself. Involves cost of the machine and regular purchase of the refills.  Counter space is another con, but not environment related  2) Aluminum cans  3) Glass bottles 4) Plastic bottles.  All bottles would of course go into recycling.

Can I reduce the amount of micro plastics I consume?  My dad freaked me out by sharing an article that stated we consume about a credit cards worth of plastic every week. This might be an upper estimate, but the fact is, we are consuming a lot of micro plastic, and a lot if it is coming in our water.  (Tea bags can be a huge culprit too!) I haven’t yet determined if any standard water faucet filters reduce this. I briefly considered installing a reverse osmosis filter, but then learned they create 3 gallons of waste water for every gallon of drinking water, and that simply is not acceptable.

Can I reduce the amount of plastic waste we generate from consumables?  A lot of this is toiletries. Should I return to bar soap?  How do we handle shampoo/conditioner?  I’m not really willing to do shampoo bars (tried it), but this brand with eco-friendly packaging I found (and can buy locally) is ~30/bottle, and that seems ridiculous.  Then there are cleaning products.  I switched to boxed dishwasher powder and probably can do the same for laundry soap (is it really better since it is lined with some sort of wax?).  I avoid buying new plastic toys for LO (there are plenty used available if there is something that I want that is plastic, which has a bonus of being easy to sanitize).  Reading zero waste blogs has shown me just how far this could be taken, and it is overwhelming – but taking small steps is important.

What can be done on a more global scale? Some days, I’m just keeping my head above water and I make choices that aren’t environmentally friendly because those choices make my life easier, and any single choice seems small. But it does all add up. What are some ways I can make a bigger impact?

Thoughts on FIRE

November 20, 2019

Financial Independence seems close enough that it feels possible, yet far enough to feel out of reach.

The fact that we still need income in our late 30s shouldn’t be surprising or frustrating. (But it is!) It is a luxury and privilege to even consider being able to thrive without an income. That is a goal most people work their entire lives to achieve.  But, I want it now.

Despite not being a superfan in general, I occasionally navigate to the classic Mr. Money Mustache post The Shockingly Simple Math of Financial Independence and look at this chart.  Somehow, it surprises me on an intuitive level that if you save 50% of your income, you need to work for 17 years to achieve financial independence. It feels like it should be faster, because 50% seems significant, and 17 years seems like a very long time.

Besides the fact the 50% doesn’t get you there as fast as it seems like it should, these timelines are ballpark estimates.  Any savings rates I calculate serve as fine metrics to monitor trends in our income and spending, but it isn’t real math until I sit down and do more careful calculations to properly consider health care, taxes, and many other details I gloss over in the name of simplicity. Then there is the variability of the market and so many other assumptions. We wouldn’t do anything differently based on more detailed calculations, so I don’t bother with it.  (Then again, I also ignore the mortgage principal, so maybe errors cancel out.)  Calculating progress to FI is skewed as well, as we (probably) sit on top of a market peak, with a recession sometime in the future.

It isn’t that I want to quit my job today. There are so many great and cool things about my job. It is more that I depend on my job to enable this really nice life I have, and I don’t like that.  If my job ends, my next step is unclear. (This is also some imposter syndrome, like EVENTUALLY someone will realize I have no idea what I’m doing!) At the most basic level, I would search for similar work within a reasonable commuting distance, and see how that goes. That will probably work out, pending economic conditions, but it can’t be as nice as this job (especially with the commute).  I don’t have a back up plan if I can’t turn up something suitable.  As someone who likes contingencies for contingencies, I’m gunning for FIRE to be my backup plan.  But we aren’t there yet, nor will we be there in the next handful of years. That frustrates me,  even if my frustration is ridiculous. We can swing life on a single income (save childcare), which is huge… but not quite enough.

So, this is just impatience with the middle years slog, and I probably need to shift my attitude back away from this and back towards more near term plans.  More to come on this soon!

Spending: What has changed in 11 years?

November 10, 2019

I stumbled across my 2008 budget and was marveling at how careful I was with my money just after I moved to California.  I was trying to get my 401k savings up, while also saving in my Roth IRA, building and emergency fund, paying down my student loan, and (in the next year) paying for a wedding.

I decided to compare my spending then with our spending today.  I adjusted the 2008 budget to 2019 dollars using this not-super-legit-looking-but close-enough website to compute a 19.25% inflation increase.  Then I took our spending projections for this year and, since my 2008 budget was just me, divided 2019 spending by two.

Ta da!

Screen Shot 2019-11-07 at 11.11.00 AM

Most of the major increases in spending are brand new categories, namely childcare, but also other baby costs and pet and donations.  We spend a lot more on both groceries and restaurants.  On the other hand, I no longer am trying to build up cash or pay down a student loan, so those categories dropped out.  My car expenses appear lower because we still have one car for two people.  I guess I’m ignoring the parking fee paycheck deduction, because I am bad about carefully including paycheck deductions in my budgets.

I was surprised to note that my housing costs aren’t wildly different – the “divide by two” thing is significant.  In 2008 I was living alone.  Once we moved in together, I paid $1,100 in 2019 dollars for my portion of a one bedroom apartment. That may be a more appropriate comparison point.  Still, we now have a house.  That includes modest housing projects that we did this year, but wouldn’t cover a new roof or anything major.

The big thing that has changed between 2008 and now is what happens outside of this budget.  In 2008, that budget was basically it.  I had some fluctuating percentage saved into a 401k (8-15%, always pushing it as high as I could stomach), but I essentially had no cash savings outside of what is listed (E-fund, Roth, car), plus what I could save from my two “extra paychecks” (paid bi-weekly).   In 2019, there is a lot going on after the budget & spending. There is a significant amount of money auto-deposited into various investments before we ever see it. There is more money left over after the spending, which is deployed to more savings, or to large but infrequent expenses like a car or a major home project.

Anyone else want to play this game?  How has your budget/spending changed in the past 10 years? Here is a slightly older post showing how our net worth changed, too!

October Wrap-up

November 9, 2019

Net Worth and Money News

We got the remainder of T’s summer salary.  I also got a modest retroactive raise.  Lots of income this month!  Our net worth increased about 3.5% this month, and we just might get a 20% increase for the year if we are lucky.

Spending Bullets (excluding childcare, mortgage, property taxes and car/home insurance – because I want to):

Monthly spend (excluding some major categories as noted above): $3,007

Highest single transaction that hasn’t been featured in a previous 2019 month:
$501.27, which was T’s purchase of a new coffee grinder. This is not something would have spent so much on, but he is the coffee snob in our house. When we discussed, I said something like “If you really want to / think it is worth it… it is up to you.” I did veto (for now) his desired espresso machine upgrade.

Smallest single transaction:
$6.54 for a used book for LO.  She also got a bunch of free books at a public library sale, where a friend gifted me use of half of her paper grocery bag space, which we were allowed to fill for a few dollars.

Most annoying expense:
 Hmm, maybe bags of ice to deal with the power outages?  That was uncool.

Expense that brought the most joy or utility:
 $78 for a joint birthday lunch. Honestly, the food was disappointing and we won’t be going back. Still, it was nice to take a minute to celebrate together, even if we had to do it during daycare hours.

Donations (for accountability): $25 to my nephew’s school fundraiser, $75 to DonorChoose (more needy schools than my nephew’s), and $50 to Revanche’s fundraiser.

House Projects

T cleaned the gutters in prep for fire / rain season.  It probably has to be done again before there is any serious rain, since the high winds blew more debris onto our roof.  I don’t think there was much else here this month, just general upkeep.

Work

Work is busy, and probably only going to get busier.  It is early stages on my new project, and I’m still trying to get smart enough, and I hope I’ll get there.

Other life stuff

Estate planning: The lawyer hasn’t got back to us?  Ugh.  I’m inclined to direct him (or other lawyer) to set us up with a basic trust that specifies guardianship and financial arrangements for LO, then do more research and revisit / update in the future. This leaves the onus on the surviving spouse to protect any assets, and I’m pretty comfortable with that. I’d rather do that than put unnecessary strings on the money that would complicate the surviving spouses life.  Also, we need want to slightly increase the life insurance policies we have on both of us.  My goal is for it to be enough to push the surviving spouse most of the rest of the way to FI, which mostly means enough to pay off the mortgage.

Power outages: We were impacted by the widespread power shut offs in California twice, although merely inconvenienced rather than any serious issues. Grocery stores near by had ice the whole time, so the fridge contents survived in a regular cooler. For the freezer, we moved the meat and other high value (and dense) items to a standalone chest freezer.  That freezer was packed with frozen water bottles/jugs & frozen breast milk. Everything was still frozen solid, but we probably can only tolerate ~2 days of that.  We did lose some minor freezer contents.

Our cell service fails when the power goes out, losing the ability to receive evacuation notices via our usual methods. Our neighborhood also has some basic protocols in place, and I think we’ll be buying some two way radios and a NOAA radio.  More on disaster and outage prep to come.

LO had to come into our bed one night when the power was out, because we  couldn’t keep her warm enough in her crib alone – especially since she still uses sleep sacks instead of blankets. Her daycare remained open & with power, but both of our work places closed due to outages. We were asked to work from home if we could. The first time it happened, we took the dog hiking. The second time, we both were too busy, so found some coffee shops to work in.

Setting up our estate planning

October 17, 2019

We have made some progress on our estate planning!  The first meeting with a lawyer is complete.  We came out with more questions than answers, but I hope we’ll be able to get this sorted out soon.

The easiest piece to set up is the “what happens if both of us die” part. Everything goes in trust to LO, and she is taken in by our designated caretakers.  We considered the pros and cons of having the trustee and the guardian be different people, and opted to make them the same. We chose a second person to take in our dog, and designated a small sum of money for his care.

The tricker piece has been trying to figure out how to set things up such that LO is protected if only one of us passes.  The default arrangement the lawyer posited was that everything goes to the surviving spouse. Our house and our non-retirement assets are placed in the trust, and retirement accounts, since they avoid probate anyway, pass directly to the surviving spouse.

I asked about an A/C trust such that LO would be included.  Then we got confused.  We have relatively few non-retirement assets, aside from our house.  We have so much room to save in tax advantaged accounts that we haven’t needed to build up outside investment accounts.  So, almost all of our non-house assets pass directly to the surviving spouse, and only the house is split between spouse and LO under an A/C trust.

But do we actually want LO to have ownership of half the house?  Not really.  The surviving spouse still will have to live there, or at least, live somewhere. What use is half a house to LO, if it isn’t liquidated? The lawyer offered a clause that would delay LO’s inheritance of half the house until the house was sold, and only T or I could determine when it was sold.  That seemed a little better, but still could box in the surviving spouse in terms of living arrangements.

Backing up, how much of the retirement and house do we actually want to designate for LO versus for the surviving spouse?  At least half of my retirement accounts should rightfully go to T.  I suppose the other half could go to LO, assuming it would also be used by T for her benefit until she turns 18 years old. But really, if T were to need any of “my” retirement savings for his retirement, I want him to have it!  Plus, there are tax benefits to having retirement accounts go to a spouse versus a child.  (But maybe those are mostly estate tax benefits, which we don’t expect to impact us.)

The situation we are trying to protect against is one where the surviving spouse remarries, and later passes away.  We don’t want LO’s rightful share of any assets to be diluted, or even lost entirely, to a future spouse and/or a future spouses children.  We can assume that the surviving spouse could handle this appropriately in a prenup and/or their own estate planning, but it seems prudent to try to set up some protection now now. On the other hand, a poorly set up trust can cause a lot of problems.

Basically what I want is:

  • T gets the house, no questions asked.  LO needs no entitlement to our primary residence.
  • Everything else I own goes to T at first.  He can spend it to benefit LO and himself until he retires.
  • If T remarries, he can continue to spend to benefit himself and his future spouse, and of course, benefit LO.
  • When he passes, any remaining assets go to LO. The future spouse shouldn’t have access to these funds. But, I suppose the future spouse could inherit the house….  Or at least live there until she passes, then LO gets it.  I wouldn’t want to kick a (presumable old) lady out of her home when her spouse has died, just because I have put much of my own money into it before I died.

The 3rd and 4th bullets are not simple!  The third bullet allows for use “my” assets before any “unrestricted” assets, minimizing those that will eventually pass to LO instead of future spouse.  I think we are looking for a QTIP trust, but I need to look into this further.  Maybe a “C” trust is indeed a QTIP?

(Note – we are using our legal insurance for this, and I’m not convinced that we have the right lawyer.  I would have hoped for a little more guidance on this during our visit.)

So, how are your estate plans set up in the case that just one of you passes?  Do you leave it to the surviving spouse to be sure to protect the children in case of remarriage?  Or do you have legal protections in place?  Also, do you think (minor or adult) children should be entitled to anything directly when one parent passes, or should it remain with the surviving parent?  Is there an Estate Planning for Dummies book I need to read?

September Wrap-up

October 15, 2019

Net Worth and Money News

T’s summer salary was still not fully resolved in September, despite being told that it would be. He is still missing about $8k, which they have promised will arrive soon.  Irritating, but not a catastrophe.

Our net worth creeped up another percent or so.

Monthly savings rates aren’t sensible for how our expenses and income fall out, but we appear to be on track for about a 50% savings rate this year, better if I include regular mortgage principle.  I made it confusing by setting us up for a large-ish tax refund again. This wasn’t on purpose. T’s summer salary makes it harder to predict withholdings.  This savings rate is pretty much what I anticipated it would be with a kid in daycare, which is a very satisfying result.  I can predict the future!

Spending Bullets (excluding childcare, mortgage, property taxes and car/home insurance – because I want to):

Monthly spend (excluding some major categories as noted above): $3,007
Highest single transaction that hasn’t been featured in a previous 2019 month: $121.80, which was our power/gas bill for the month. This is a bit high for a summer month, but I didn’t find an obvious culprit. We are temporarily running an extra freezer, so maybe that has something to do with it?
Smallest single transaction: $0.69 at Target. I had to exchange some gifted baby clothes for proper sizes.  I also grabbed a few groceries, and came out the door for less than a dollar.  Score!
Most annoying expense: Nothing this month.  Or maybe it was my non-expense. I completely failed to send gifts for the two September birthday’s on time, my dad and my nephew. This is a recurring thing, I’m always late on these, and I really just can’t convince myself to prioritize it.
Expense that brought the most joy or utility: $250.18 for a Nugget for LO.  Yeah, I know, this is ridiculous.  Still, it seemed like it will have a longer useful life compared to the small kids chair I was considering, and it fits well in her room.
Donations (for accountability): $200 total to Donors Choose and ALS (supporting a coworker’s fundraiser).

Our monthly grocery spend was kind of absurd again, and I’m not sure why, and if I should do anything about it….

House Projects

T added some flashing to the deck that should have been there all along, preventing future rot/damage.  He also scraped and repainted the trim on the exterior windows.  There also was some basic maintenance yard work.

Work

My new project is started to kick into gear, and I am BUSY.  The project is fun, although I’m struggling to be smart enough to do my job. Some of the technical details are a in a slightly new area for me, and I feel out of my depth.  But, I’m sure I’ll be able to come up to speed – I just have to keep at it.

My “merit” raise is 4%, beating inflation at least.  I need to figure out, with my manager, when the best time to submit my paperwork for a promotional raise.

We’re still waiting on the result of T’s tenure case, which is due any day now – but could still be months. We’re optimistic about the outcome, but we don’t know until we know.

Other life stuff

We finally set the lawyer appointment, and are hoping to make enough progress on our estate planning / will / trust that we can forgo the legal insurance plan next year.

Not much else to share here!  More to come next month!