Sunday, December 30, 2018

November 2018 Net Worth Update - Up to $851k

November was a big month for us in terms of progress towards our financial goals and had a slight recovery from losses in the market last month. The biggest change we made was to cash in some of our investments and throw the entire amount against our mortgage. We weren’t able to pay it off, but accelerated our payoff by more than a year had we stuck to our previous plan. 

Here’s how things now look for us:


Nothing too exciting here. I expect our cash balance to hover here until I get my annual bonus in a few weeks and we decide whether to boost our cash or put it all towards our mortgage. 


Despite what the monthly change looks like, our investment accounts did go up in November. During the month, we cashed out around $53k of investments and put it all towards our mortgage. Our overall allocation stayed about the same since what we sold was  roughly the same allocation as everything else. This wasn’t really a market timing attempt, but December’s market is making it look like good timing. 


I can’t tell you how exciting it is for me to see our mortgage drop below $100k. We still won’t be able to completely pay it off until 2020 but that’s more than a year sooner than what we had been thinking. 

Our mortgage balance went down by $57k in November; $53k from moving money from our investment accounts, $3k from our normal monthly payment, and $1k that we were able to add to our normal payment from our other cash flows. Moving money from our investment accounts is something we’d considered in the past, but decided to do after talking it through during our Thanksgiving road trip to visit family. This brings our total principal reduction in 2018 to just over $99k with our new expected payoff in 2020.

Friday, December 14, 2018

The bigger your emergency fund, the fewer your emergencies

A few weeks ago my parents were in town, allowing us to go on a rare date without kids. We weren't gone for very long, but it was long enough that my parents somehow broke our microwave beyond repair. They said it just started sparking and smoking, so they turned it off and waited until we got back. 

That microwave had already exceeded life expectancy (the sticker said it was made in 1996!) so it’s not anyone’s fault, but we immediately had an unplanned expense. For a few years now we've tossed the idea around of getting all new appliances but have always delayed since everything still works and some pieces would be very expensive to replace (double wall ovens are awesome, but not cheap). 

Ultimately we decided to only replace the microwave and were able to find a much better unit that still matched our other appliances and only cost around $200. I picked it up from the store and my wife installed it (the usual distribution of labor in our household), so we only had to struggle without a microwave for a single day.

As I've reflected on this 'emergency purchase', it has struck me how little it bothered me. We had plenty of money in the bank to cover a new microwave and could have paid cash for all new appliances had we felt the need to upgrade them all at once. 

We keep an emergency fund of cash for situations like this, but didn’t actually have to dip into it for this. The frequency of unplanned ‘emergencies’ isn’t truly any different if you have a big emergency fund or not. But having a nice cash cushion sure does make it so unplanned expenses have to be much larger to really be considered an emergency.

Tuesday, November 27, 2018

October 2018 Net Worth Update - We lost the equivalent of a new car ¯\_(ツ)_/¯

October is typically the busiest month of the year for me at work. The good news is I was too busy to even really worry or know much about what the stock market was doing. The even better news is when I did see the aftermath it didn't emotionally affect me or cause me to want to deviate from our plan. Our net worth declined by $25k to $836k.


Our cash balance crept up yet again and is almost to the point where we'll quit adding to it and use any additional extra to go towards our mortgage. I also got a raise in October and we've already got a plan for the additional income to direct the extra money towards our goals instead of lifestyle inflation. We're now earning a whopping 2% on our savings so the monthly interest payments are actually noticeable.


October was a doozy in the investment department. We didn’t change anything with our allocations or contributions and managed to see our investment balance decline by nearly $35k. My first years' salary when I graduated college was only $35k so this is probably the biggest dollar amount we've ever lost in a single month. From a percentage loss perspective though, this wasn't nearly as bad as some of the losses we saw in 2008. 

An interesting observation I've had over the years has been how my personal definition of a 'big' gain or loss has evolved. I still remember getting excited the first time I saw our accounts increase by over $100 in a single day. Now, we see swings over $1,000 pretty much every day. In October we even had one day where we 'lost' more than $10,000. 


I love seeing our mortgage balance go down each month. With my new pay raise, we increased the amount we're paying towards the mortgage by $200, so we should see our balance go down by ~$3k each month. We are still on track to have the house paid off in 2021 and are exploring ways to make that happen even faster. If it weren't for our mortgage balance going down and our estimated home value going up, our paper losses for the month would have been much worse.

Because we're so focused on paying off the house, we haven't done many huge home projects in a while but have plans to redo our master bathroom and kitchen. Until the house is paid off though, I find it hard to justify these projects since the current bathroom and kitchen are perfectly adequate.

Saturday, November 3, 2018

September 2018 Net Worth - up to $860k

In September, we reached another all-time-high net worth, growing another $7k to $860,846


Our cash balance stayed pretty flat again as expected. Mrs DIY$ took a trip towards the end of the month leaving me home alone with all the kids for a weekend, but It ended up being a really inexpensive trip since we travel hacked her flight and the the rest of her trip cost about the same as it would have if she were home. 

We’re still shooting to get this closer to $25k, but it will be a few more months before we’re there. I’m getting a raise in October and we’ll allocate some of it to build up savings.


Our investments went up, but not by much more than what we added during the month. I still haven’t switched to have more of the zero cost index funds but do plan to do so at some point. 

One of the components in our investments category is our HSA. By the end of this year, we’ll have enough in our HSA to cover more than our annual out-of-pocket maximum, so are considering stopping additional contributions and shifting to even larger extra principal payments on our mortgage. My employer will still add to my HSA, but we just don’t think we need to since it is now large enough to cover any medical emergency we could have. 


September was the last month before we are increase what we pay as our new normal mortgage payment. We’re so close to dropping below $150k, and while that’s still a lot it feels like an exciting milestone.

Not too long ago, our upstairs air conditioner went out and we had to get a new blower motor. Several hundred dollars later, we were back in business. Fast forward a few weeks when I was putting one of my kids to bed and noticed his bedroom floor was wet. He swore he hadn’t spilled anything, and just as I was about to call him out for lying I noticed that the ceiling was dripping. Oops. 

I went into the attic and found that the air conditioner drip tray had filled up and was overflowing into the ceiling. I used the shop-vac to suck up all the water and threw out the insulation and tried to trouble shoot. I couldn’t figure it out, so we had the same company come out that had just fixed the unit to see if it was because they disconnected something and they determined that it was just a clogged drain. They didn’t charge us for fixing the clog, but it’s all fixed now and all we had to do was repaint the ceiling. Oh, the joys of homeownership. 

Tuesday, September 18, 2018

August 2018 Net Worth Update - up to $854k

August was another great month for the DIY$ household net worth. We didn’t do anything out of the ordinary, but thanks for a continued strong market and disciplined mortgage payoff, our net worth increased by $18k to $853,952


Our cash balance crept up as I figured it would since we didn’t have any trips or large bills pop up in the month. With kids back in school, it should be easier to keep boosting our cash balance for the rest of the year since we don’t travel as much during the school year. 


Our investment balances went up in-line with the markets since we are invested primarily in index funds that track the market. One big change that I did make in August though, was to switch some of our investments into some of the new Fidelity 0% expense ratio index funds. 

We were already in index funds tracking that had very low expense ratios, but every 0.01% we save is $10 per $100k per year. We now have nearly $200k shifted from IVV with an expense ratio of 0.07% to the zero cost index funds and will continue to move over more in the coming months. That amounts to around $140/year in lower expenses for practically the same investment.  

The only reason we haven’t switched 100% immediately is since that we are mostly in ETF’s and since I can’t time the sell and the buy exactly at the same time/price I do it when I can watch the market at the close and sell the ETF when the last part of the trading day is not very volatile since mutual funds can only be bought at the market closing price.


Have I mentioned before how much I hate having a mortgage? Not so bad to sell our house and live somewhere significantly smaller/cheaper, but certainly enough that I am ok making significant extra principal payments each month instead of using that cash for other things I might want to buy.

We're on track this year to pay down our mortgage by nearly $45k and should have it completely paid off in about 3 years. Some months are harder than others to pay as much extra as we do, but we also make a conscious effort to not allow this aggressive goal to limit our ability to live life. We travel quite frequently and try to introduce our kids to the world. Our home is much larger than the one either of us grew up in, and none of our kids have to share a bedroom. We have a great life but still, make plenty of trade-offs. Many things we currently forego are only on hold until our house paid off.

Sunday, August 19, 2018

July 2018 Net Worth Update - (+$27k to $836k)

July was a great month in many ways. We were able to fit some travel in to visit both sides of our family and let the kids spend quality time with their cousins. Despite a few cross country flights and an unexpected hotel stay, we were able to boost our net worth by nearly $27k to $835,913.


January and July are the months where we pay our auto insurance, and since we also had a bit of travel thrown in, our cash balance dipped below $20k. We want to build this back up, but may not see significant progress until September or October. 

In July we spent a couple of weeks on a planned trip visiting family. My wife and kids went for two weeks and I went for the second week. This trip wasn’t extremely expensive, but since we have 4 kids and have to rent minivans or SUVs our rental car expenses can get pricey. Although this trip was planned, often our travel expenses are made spontaneously and we don’t really have a firm budget for travel every month, it just eats into the amount we’re able to save. July was a perfect example of how this happens. 

At the beginning of the July, I learned that a cousin of mine who lives far away and who I hadn’t seen in years was going to be visiting another cousin only a few hours drive away and that a bunch of other family members were also going to be there. At the last minute we decided to join in the weekend festivities and ended up spending a few hundred dollars between hotels, gas, and unplanned eating out in two days. It was totally worth it, and since I don’t have too many cousins it isn’t likely something that will happen again for a while. 


In July we made another big mortgage payment, reducing our outstanding balance by over $2,700. I’m really excited for the day that our mortgage is completely paid off and we continue to push to pay as much extra as we can. We could easily dial this back for a short while and bump up our cash, but a slightly below optimal cash balance is less dire to me than losing traction on our aggressive payoff schedule. I’m getting a raise near the end of the year and we’ll use a good chunk of that raise to increase what we’re paying towards the house to further accelerate our payoff. If we were to quit paying extra, we are currently 135 months ahead of schedule on our 30 year mortgage after paying for roughly 5 years. 

Our house price estimate feels accurate, and home sales are going quick in our area again. We really like our neighborhood and apparently we’re not the only ones. One of our neighbors put their house up for sale recently and we learned are only moving one street over (they decided they’d rather purchase a larger home in the same neighborhood versus doing a huge addition to their home).


I have someone who works for me who swears the next downturn in the market is right around the corner and is going to be really bad. I just have to smile and nod and then ask why he isn’t managing money if he’s so sure (his only evidence is his gut). Everyone has an opinion, the most dangerous ones are those that come from pursuasive people who have fully convinced themselves of something. 

July marked yet another month of us not making changes to our investment portfolio. Even if this guy is right, we have no plans of making huge adjustments to our portfolio as long as our long-term goals remain unchanged. A downturn becomes a buying opportunity, but not one that I’ll attempt to time by selling at the top and to buy at the bottom. I’ve seen enough people lose that game to know I don’t even want to play.

Monday, July 30, 2018

Retirement Q&A Sessions

In the past month, I've been approached by 3 different individuals or groups (family and co-workers) asking for some personal finance advice. Most of the requests came somewhat out of the blue, but it was interesting to me to realize that to some people I have become a trusted resource for this information. I had the chance to speak with each of these groups and was surprised to hear some of the same questions pop up, so I wanted to share those questions as well as my answers.

1. You have a great interest rate on your house (3.75%) - why pay it off when you could do better in the market? Isn't that what smart investors do?

As part of my retirement plan, I am attempting to save 25-30x my annual expenses. By eliminating my mortgage payment, I drastically reduce the amount I'll need to be able to retire. If I were only paying my minimum mortgage payment of ~$1,200/mo (principal and interest) and planned to keep that amount throughout retirement, I would need an additional ~$400k before I could retire. 

I also foresee a day when I might want to start an entrepreneurial venture and having extremely low fixed costs makes that feel more palatable. I know that I would never feel comfortable leaving a high paying job while maintaining large fixed expenses so paying off the house at least gives me the option to take other measured risks. 

Lastly, the problem with trying to 'make the spread' between debt and an investment is twofold. First, that only works over a long period of time and ignores the volatility that could wipe you out entirely. If this were such a good idea, why don't you trade stocks on margin? Same thing, right? Second, in corporate finance models for NPV or WACC, one of the underlying assumptions is that the corporate entity exists in perpetuity. Since I don't plan on having an income in perpetuity, I shouldn't use the same models lest I inadvertently extend my working years beyond my desired retirement date. 

Other ways of building wealth could possibly work, but the approach I'm taking with my mortgage always works. 

2. I know everyone says that I can't time the market but hypothetically if I could, what types of investments could I use to avoid downturns in stocks?

I shouldn't be surprised to be asked this so much, but I still am. After nearly going blue in the face explaining how it is impossible to successfully time the market, multiple people came back with a response along the lines of: 
"That's nice, and I get what you're trying to say. But I really think this time is different. I can't really explain why, but I just feel like I'll be able to tell before the next downturn happens, since I've read a couple of books about the 2008 crash, or have a different perspective than most people, or ..."
When faced with someone who can't be convinced of their own naivete, the best that I can do is to have them answer a few questions (which they generally hadn't thought of before), then recommend they read Simple Wealth, Inevitable Wealth

One of the main arguments I have with this question is this:

- If you sell and go into cash, when will you get back into the market? If you are relying on your gut for signals to buy and sell, you will more than likely not feel right getting back into the market until after the market is higher than it was when you sold out. Sitting in cash while others around you are 'losing' is like being wrapped in a warm blanket. It's very comfortable, but that same comfort can also smother your returns as you lose purchasing power to inflation or the inability to ever get back into the market. 

If none of that works, we'll just have to agree to disagree.  

3. Should I be investing in Roth or Traditional 401k?

Even though I am personally investing in a traditional pre-tax 401k right now, I suggest using Roth in nearly all situations. The reason I'm not doing Roth right now is to maximize my take-home pay for the short-term while we finish paying off our house. Once we're done with that goal (less than three years from now), we'll switch back to Roth and increase our contributions and even do some additional Roth conversions. 

For me, this argument really boils down to having more money in retirement. Given the choice between $1M in Traditional IRA's and $1M in Roth IRA's, the Roth is the obvious choice. Sure, you have to pay the taxes early but once I'm done paying off my home, the only thing left for me to do is to build wealth. The more I can contribute or convert to Roth IRA's the more I'll have in retirement. 

Since my plan is to max out all retirement savings accounts possible after my home is paid off, by choosing the Roth option, I am effectively saving more towards retirement. If I invest $18,500 today, it will grow to the same amount whether it is in a Roth or a Traditional, but if it's Roth I get to keep it all versus having an unknown percentage as 'phantom money' that will be taxes due. Our own human nature is such that when we look at account balances of $100k we think 'Hey, I've got $100k' whether it is Roth or Traditional. In reality the only way $100k in a retirement account is actually $100k is if it is in a Roth.


Overall, it was fun to have these chats as it's a topic I'm passionate about and something I genuinely want people to do well in. Hopefully, those who seek me out will at least glean a little from our talks, but it would be really awesome (and entirely possible) if it changes their course in a larger way. 

Monday, July 23, 2018

June 2018 Net Worth Update - Up to $809k

June was a pretty quiet month for us. We didn’t travel anywhere and also didn't do any major home repairs (just a little bit of paint). With the kids out of school, it has been nice to just spend time together. Financially we continued our normal cadence of investing and paying extra on our mortgage, allowing our net worth to increase to $809,000


In June, our cash balance crept up over $21k. The majority of this is in a savings account where we like to keep at least $20k. I also net out our cash with credit card balances since we pay them in full every month.  


In June we made another big mortgage payment, reducing our outstanding balance by over $2,700. We should be completely done paying off the mortgage within 3 years, and to stay motivated I try to celebrate the small wins like when we hit new increments of $10k, $25k, or $50k. Homes in our neighborhood are now selling for well over $500k, so the estimate here feels conservative.


Our investments have not changed, shocker right? I met with some co-workers recently and compared investing styles and returns and they were surprised that even though I spend much less time than many of them on researching investments and trading, our returns are very similar (in some cases, mine were better). 

I have a demanding job and rarely have time during market hours to focus on my portfolio. Since I don’t want to delegate portfolio management, a passive investing approach works best. I’ve used many different trading strategies but so far have not yet found a positive correlation between returns and the time I spend managing my accounts. 

Thursday, July 5, 2018

May 2018 Net Worth Update

May was a great month in many different ways. We went on a long-awaited European cruise from Barcelona to Venice, I finished reading 11 books (!), and our net worth increased by over $22k to $801,743.


Our cash balance in May was pretty flat, which was a little surprising considering that this included our hotels in Europe and all our food/souvenirs. Most of our trip was on a cruise ship and those expenses we paid way before May, but we still spent more than a normal month. We don't have any expensive trips planned for a while, so shouldn't have any problems keeping our cash in the $20-25k range.


We continue to make big extra payments on our mortgage and knocked another $2,700 off the balance in May. This was roughly $2,000 more than the minimum payment, so we're still on track to have the house paid off in 2021. The extra payments we make are manageable in our budget, but can be a stretch during some of our more expensive months. Some similar houses in our neighborhood have been selling for over $500k, so this house value sounds reasonable even though the jump in home price from one month earlier looks big.


Talking about our investments sometimes feels like a bit of a broken record. Yet again, we are sticking to our plan. Why fix something that isn't broken though, right? I add regularly to my 401k, which remains 100% invested in stocks. Our other investments are nearly 100% stocks, with small amounts in bonds and REITs. More than 99% of our investments are in retirement accounts that won't be touched for over 10 years and we are comfortable with the volatility that comes with stocks. 

Monday, June 25, 2018

In Praise of Simple Entertainment

We recently had some houseguests and while getting to know each other the typical conversation topics emerged of what each of our families do for fun and the types of vacations we enjoy.

I think I gagged a little when, after some slight complaining about not earning/having enough money, the father told us how great of a deal they got by spending just over $5,000 to take their kids to Disney.

Don’t get me wrong, I don’t mind spending money on vacations (heck, we just got back from over a week in Europe!). But where I do have a problem is when people spend so much on vacation or other entertainment that it limits their ability to achieve any financial goals beyond keeping afloat, and when there is such an obvious contradiction between their words (“life is so hard”, “bills”) and actions (“I love Disney”).

On top of that, what ever happened to simple forms of entertainment? It seems like I am increasingly in the minority of not indulging in frequent costly entertainment for myself or my kids. If we don’t go to an amusement park every week of the summer (or at all), we’ll be fine. To a 5-year-old, playing in the backyard sprinkler is just as enjoyable as going to a waterpark.

Our lives are by no means devoid of entertainment, but we do try to keep our day-to-day lives simple. In no particular order, here are some of the simple things that we do for entertainment:


Last year we added a backyard playground and fence, and some of our kids are old enough to just send outside by themselves. They make great sidewalk chalk art, play ball, and climb all over a play set we recently got from a neighbor whose kids outgrew it.

I know several parents who feel the need to constantly take their kids to play at places that cost money like those indoor trampoline parks, amusement parks, or arcades. What I’ve learned is that if I take my kids places like that often, it’s no longer special and becomes harder for them to appreciate more simple forms of entertainment like playing at home. If they never have the opportunity to be bored and to practice using their imagination, paid entertainment can be something of a dependency, always looking for the next thing.


Our neighborhood HOA dues include access to a neighborhood pool, tennis courts, playgrounds, and more. Of course, we pay around $700 per year for this, but we have to pay that whether or not we use it. We aren’t there every day, but we get our money’s worth. Even if you don’t have a neighborhood with something similar, communities have parks, splash pads, and many other things that we all pay for in some way like through property taxes or rent.


Every so often, I’ll pick up a 500 piece jigsaw puzzle from the dollar store. When the weather outside  is gross and we need to stay inside, working on a puzzle as a family is a great way to spend time together.

While on vacation a few years ago, we brought home a small chess set for my son as a souvenir. He has really enjoyed playing with that small set, so on a more recent trip we brought him home a much nicer set. In addition to chess, we play a few different board and card games together (Phase 10 anyone?).


Most Saturday mornings, you can find me with some or all of my kids out for a a trip to the library. I’ve mentioned here before that I read a lot, and most of what I read I get from the library. So far, we’ve done pretty good at instilling a love of reading in our children. I’m sure it doesn’t hurt that I pay my son for every book he finishes, but I never have to force any of my kids to read. I’d probably post here more often if I read less, but that’s a topic for another day.

That’s just a few quick ideas that come to mind, and honestly this is how much of our free time is spent. It’s a mindset that has to consciously sought to not automatically associate entertainment with costly activities. If you have additional ideas, I’d love to hear them.

Wednesday, June 6, 2018

April 2018 Net Worth Update

Back from the declines of March, April saw our net worth snap back to $779,035. Here's how it broke down:


Our cash balance went down a bit in April partially from an extra big payment against our mortgage, and also some unexpected travel due to a death in the family. I consider time with family a priority and consider ourselves blessed that we don't have to decide attending family events and money.


In April, we had planned to make another large charitable donation but chose instead to put those funds towards our mortgage. Charitable giving is still a large part of our budget since we tithe 10% of our income to our church. Until our house is paid off, we have decided to defer other large donations that we have been making to our colleges.

Each month we have 'gems' that we move from one jar to the other to help our kids have a visual representation of our progress in paying off our house. Each gem represents $1,000 and we make it a family event when we move from one to the other.


My mantra for our investments is "Stick to the Plan". It's not exciting, especially when I report out on it monthly, but the progress speaks for itself. We continue to add money from each paycheck and continue to be invested almost 100% in equities. Between market growth and our own contributions, we are up over $70k from the same time last year. Nearly all of our investments are tied up in retirement accounts, which will change once we have the house paid off.

Monday, April 23, 2018

March 2018 Net Worth Update - First Monthly Decrease in a While

March was the first decrease in our net worth since October 2016. I’ve been wondering when we’d see a pullback in the market, and we’ve finally seen something. Our net worth in March decreased by nearly $9k to $770,723.


Our cash balance went down a bit in March, largely due to some pre-planned charitable donations. We’re happy with that cash in the ~$20-25k range, so don’t have any concerns with this decline. If we ever need to beef up our cash, we could easily dial back how much extra we pay on the mortgage and it will build up pretty quickly. 


Speaking of our mortgage, we were able to whittle away another $2,675 this month against our mortgage. That meant we paid more than $2,000 more than our minimum payment. We’re targeting 2021 for paying off the mortgage, so will need to keep making some aggressive payments to stay on schedule.

According to Zillow, our home value declined slightly this month, but still is in a range that feels right for what I’ve seen with other homes in the neighborhood. In our neighborhood, homes seem to sell quickly and for top dollar when they have already been updated, but when a lot of work is required to get them updated they tend to sit for a while unless priced appropriately.


There were no major changes to our portfolio this month. Dollar cost averaging into our 401k allowed us to purchase at some slightly lower prices, and we continue to stay the course of being fully invested, primarily in equities. Although the market did go down in March, I wouldn’t classify this as a ‘bad’ month. A few people may have been spooked, but overall investor confidence still seems quite high.

The majority of our investing is done in tax advantaged accounts, but I keep a small balance in a non-retirement brokerage account where I’ve been slowly building up positions in some REITs. As much as we love real estate, it is unlikely that we’ll become landlords other than through owning REITs. These give us the benefits of regular income and near immediate liquidity, but without the risk and hassle of dealing directly with tenants. This account is pretty small right now (~$1k), but will be beefed up significantly once we’re done paying off the house. Until then, paying off the house is our number one financial goal.

Monday, March 19, 2018

February 2018 Net Worth Update

February 2018 Net Worth Update

Despite the stock market having a rough month (about time!), February was actually a really good month for us in net worth growth. We ended the month at $779k, up $11k for the month.


Our cash increased quite a bit in February primarily just from getting my annual bonus. It will come down a bit in March, but we are now at a spot we feel more comfortable in terms of our emergency fund. We also used this month to make an extra large mortgage payment and finish paying for an upcoming cruise.

Overall, there really isn't much exciting here. I do find it interesting that I don't even think of our emergency fund as available cash. Since we keep our savings account at a separate institution than our checking account, it doesn't ever cross my mind that we can use it since most of the time we've been fortunate to handle any emergencies out of our normal cash flow. I'm not purposefully trying to trick myself, but simply having the accounts separate does create a false sense of scarcity that may stop me from making unnecessary purchases as we focus on other goals. 


Just like anyone who was in the market last month, we took a decent hit. We actually added quite a bit to the market and still ended up down over $10k. The good news here is that we didn't sell anything, and actually lucked out that some of our larger purchases were near the lows of the month. Our allocation is still nearly 100% in stocks and that is not changing.

While it was never a large portion of our holdings, I did finally get bored with Bitcoin and sold it near the end of February (at just over $9,500/BTC, still up more than 2x from my initial purchase). Apparently, I wasn't the only one as BTC prices have been struggling the past few weeks. 


As you can see above, we wrote a big check towards our mortgage last month. Sadly, we can't do that every month, but our new norm for 2018 will be to pay around $2,000 over our minimum each month. In terms of home improvement projects, we are painting one of the last rooms that we haven't painted yet and are planning some yard projects in the coming months. 

Our new neighbors moved in and I was reminded how much money we are able to avoid spending simply by doing home improvement projects ourselves. Before moving in, they had the entire inside of the house painted. I don't know exactly what they paid, but based on a few data points I have (what other similar sized houses in the area cost), they easily spent $5k just for the interior. While it took us a lot longer, we've painted the entire interior and exterior of our house for around $2k. 

We're off to a great start to the year and on track to hit our financial goals.

Sunday, March 4, 2018

Book Review - Overhaul: An Insiders Account of the Obama Administration’s Emergency Rescue of the Auto Industry

I recently finished reading Overhaul: An Insiders Account of the Obama Administration’s Emergency Rescue of the Auto Industry and really enjoyed it. This one has been sitting on my ‘to-read’ shelf for years and I finally got around to it thinking I was just going to ‘check the box’ but not really learn anything new since I’ve already read so many books about this crazy time in the market. Boy was I wrong. 

Many of the books I’ve read about the bailouts really focused on things like bank bailouts, bankruptcies, near-collapses, and TARP. The months post-Lehman collapse tend to get less attention, but that’s when the auto companies were on the brink of bankruptcy. I remember very well the drama of these enormous companies petitioning Congress for bailouts, and the daily uncertainty of whether or not the Government would allow them to actually declare bankruptcy. 

This book was a great insight into a lot of pieces I either didn’t remember or never knew about the auto bailouts. Did you know that in an attempt to save cash, GM actually turned off the escalators in their HQ? Spoiler alert: it didn’t work. I was also surprised to read that GM proposed selling their HQ in downtown Detroit and moving to a less expensive location. The government actually blocked the move saying that was one step too far and would cause irreparable damage to the city of Detroit and was only a drop in the bucket compared to the total problems GM was facing. 

This account also confirmed my long-held belief that GM leadership had no clue what they were doing. I’ve never met any of the main characters in the story but have met people in the finance departments of the big 3 and was never as impressed with those at GM. During and after this bailout, I vowed to never own a GM product and I don’t see that changing.

Several years ago, I also read The Reckoning by David Halberstam which issued a warning to US automakers that they were at risk of getting caught asleep at the wheel while the Japanese auto companies took over. It took a while, but right at 20 years after this book was written, US automakers were facing this reckoning for many of the exact reasons he warned of. 

Even if you’ve already read a lot about the 2008 financial crisis, Overhaul is worth checking out. 

Friday, February 2, 2018

January 2018 Net Worth Update

January sure started the new year with a bang for our net worth. We ended the month at $768,059, up nearly $25k making it our third best month ever. Here’s how it all went down:


Our cash went down a bit this month but January tends to be an expensive month for us so this wasn’t entirely unexpected. We paid our semi-annual auto-insurance, booked a beach condo for an upcoming trip, and also hit up the best clearance clothes shopping of the year. We’ve known our cash levels would hover here for a bit and should have it rebuilt in February to where we want it to be longer term.


Nothing too exciting here - still loving my Lexus and even managed to squeeze three kids in car seats in the back this month. While we were out, I took it in for an oil change and definitely felt like more of a target for an up sell compared to when I showed up in my old Corolla. Had I just let them do their thing, I would have paid at least double.


Sorry kids, this was the last month I’ll be adding to your 529s for a while. We’ve decided to redirect what we were saving to college to go towards the mortgage. We’ve always paid extra, and this will allow us to do even more. This single change accelerated our expected payoff by a few months, and we feel that we’ll still have plenty of time to save for college since we’ll have the house paid off before our oldest is even in middle school.

In the meantime, we’ll keep it invested 100% in equities and let it ride.


The market had a great start to the year, but honestly I am starting to hope for things to go down a bit or at least stay flat. It’s not that I mind buying in a higher prices each month, but really that this constant steady increase is setting inappropriate expectations for many investors. I’m not worried about me. I made it through 2008 on the front lines of the financial services industry and experienced things that can’t be learned from books. I’ve also got several years before I’ll actually be using my investments to live on and I’ve got a wife/partner that is very good at separating emotion from investments.

Who am I worried for? How about the guy who just started investing 8 years ago? Since he started, the market has done nothing but increase. Sure we’re had some scares with Greece, or the Fiscal Cliff, or Brexit, etc. But nothing really that has drawn the market down by 10%+ for long enough to really get scary. This guy thinks he’s a genius!

He’s probably got a Robinhood account and they fuel the fire by advertising things like “Mastered Stocks? Now try Options”. As if figuring out to buy and sell stocks on your phone in a bull market is all you’ll ever need to know to make money (As a former Registered Options Principal, I don’t even want to think about the compliance nightmare they’ve got coming).

Or how about the retirees who for years have been looking for safe, low-risk returns and have historically avoided stocks. Since interest rates have been so low for long and stocks have been rising so much for so long, they may have stepped further and further away from an asset allocation they’d be comfortable with during more volatile times.  

I digress. At least this first week in February we’ve seen a little bit of volatility and actually some down days. January market returns were over 5%, which boosted our investments balance by $24k. We’ll continue to do our thing by investing regularly and staying allocated close to 100% equities.  

The only change we’ve really made to our investments is that we changed my 401k contributions to now be going in as pre-tax contributions. We’re still putting the same amount in, but this increases our take-home pay, allowing us to pay even more towards our mortgage. Do you see a trend developing here? 


We knocked down our mortgage balance by $1,800 this month and will be able to do at least this much each month in 2018. As mentioned earlier we’ve made some changes that will allow us to further increase what we pay towards the house and are making mortgage payoff our top priority. We aren’t doing so at the expense of contributing to retirement or going on vacations, but will be scaling down some home improvement projects and other areas of savings/investing (see 529s).

We also now have these jars in our living room where we’ll all see them regularly. Each glass rock represents $1,000 of our mortgage and whenever we make a payment we’ll be able to move rocks from the left to the right. Only 185 rocks left, but this helps us get the kids involved and to visualize our progress.

January was great and I’m excited to see what the year has in store for us.

Friday, January 19, 2018

The Best Investment for 2018

I came across a great article the other day from HumbleDollar outlining the best investment you can make in 2018. Sorry, but it isn't anything too exciting - it's paying down debt. Specifically mortgage debt. Not that I needed any additional validation, but it’s nice to see this since we are planning on reducing our mortgage balance in 2018 by over $30k.

This year marks 9 years since we paid off our non-mortgage debt and at one point since then we had our mortgage balance as low as $85k with a line of sight to be mortgage free within a year.


In 2013, I took a new job and we moved to a new state. We had a good chunk of home equity built up and when we sold we took all the old equity and put it towards our new house, still borrowing $260k. Our house is larger than our last house, but more important (to us), we now live near the best public schools in the area (our last house was in a terrible school district, but our kids were small enough we didn't really care).

Fast forward to today and 5 years into our 30-year mortgage we are 95 payments ahead of schedule (that's like 8 years!). Our mortgage website has a cool calculator that shows how much time and interest we've saved assuming we only make minimum payments from here on out. You already know that that isn't happening, so every month this view looks better and better.

Since 2013, my income has grown a lot, allowing us to put more and more towards the mortgage each year. Our first couple of years we had some expensive home repair projects, plus at the beginning of any mortgage it takes a while before it feels like you’re making any headway as the interest part of the payment is so high. But since about 2016 we have started to get into a groove and now the payoff is gaining some traction.


We’ve made some additional tweaks to our budget that will allow us to increase what we pay each month. I've also made some high-level assumptions about how the new tax law will change our take home pay. Our plan is to have all extra $ will go towards the mortgage. As of now, our current projection is that we will be mortgage free in 2022.

If we only ever paid the minimum, our interest payments would have totaled $173k over 30 years. Yuck. Paying $52k in interest is also lame, but way better. One of the biggest excuses you’ll hear for keeping a mortgage is for the tax deduction. With the new US tax law doubling the standard deduction, even fewer households will itemize deductions. Now mortgage interest will be deducted by even fewer households. Even more reason to get rid of this mortgage as soon as we can.

Wednesday, January 3, 2018

December 2017 Net Worth Update

December 2017 marked the first time ever that the stock market had positive returns every single month of a year. I’m thankful for the impact the market has had on our net worth this year.

Nevertheless, let this serve as a reminder that the high returns and low volatility we’ve been experiencing are unusual and shouldn’t be expected to persist.

What will 2018 returns look like? Your guess is as good as mine, but so far we’re off to a positive start.


Our net worth increased in every area this month, ending the year at $743,422, up $12k from last month and up $137k from this time last year.


Despite buying several last minute Christmas gifts and traveling for the holidays, our cash balance went up by more then $1k. For our trip, we drove and didn’t need to get a hotel so it was a pretty inexpensive trip. We’re still focused on increasing cash but don’t expect it to be where we want until February. That’s when I’ll be getting my annual bonus which we’ll use to boost our cash and make a really big mortgage payment.

Our Christmas gifts for the kids were actually quite simple. We make a concerted effort to keep our kids expectations low, so even though they only got a couple gifts each, they were thrilled. They got some LEGO sets I got on sale, a new DVD player for the car, and some other things that were thoughtful and unique to their interests. Things like clothes we always just buy when they need them regardless of Christmas or birthday timing so gifts from us are usually things in the ‘want’ bucket.

Side note - we have always tried to make sure our kids know we will never lie to them. This means we don’t do things like Elf on the Shelf, Tooth Fairy, Easter Bunny, or even Santa Claus. Despite our best efforts, they got pretty heavy doses of Santa at school and it has really been confusing to the kids of who to believe. Doh!


The S&P 500 returned 0.98% in December, which explains most of our returns. We also continued to add to our investments from normal payroll deductions. All of my retirement contributions are going in as Roth contributions so at least I know that portion is 100% ours.

I had a small holding in some crypto-currencies, but when some of them tripled in under a week in December, I cashed some out. I still have a small position, but have taken out more than my initial investments and am only playing with the house money. It’s been fun to watch, but it definitely looks and feels like a bubble.

My personal rule of thumb is that I don’t invest more than 1% of our investable assets in speculative trades. This would include things like options, individual stocks, and most certainly Bitcoin/crypto-currencies. I know I could be missing out on a huge opportunity here, but it’s not worth risking a painful loss to play with more than 1%.


We continue to build home equity, and made an extra principal payment yet again. Starting in January, we’ll be increasing the amount we pay even further. We reduced our mortgage balance by over $22k in 2017 and are planning on even greater reductions in 2018.

I have been trying to get a good estimate on the impact of the new tax bill on our household and it looks like we could see as much as $4-5k in lower taxes next year. If and when we start to see the increase in our take-home pay, it will likely all go straight towards the mortgage.

Most of our home improvement projects are on hold until spring, when we plan to replace the grass in our front yard. We’ve tried several different things to get the grass to look good but have decided we finally need to bite the bullet and start from scratch with new sod.

There are a few big home projects we’d like to take on, but as of now are thinking they may be 2019 projects. The big ones would be to remodel our kitchen and master bathroom. Neither are terrible as-is and both would be extensive and expensive even doing most of the work ourselves. For 2018, we’re also keeping our eyes out for some good deals on a few specific furniture items and hoping that none of our A/C or furnace units die.


There isn’t much to report on our vehicles other than that I really love driving my new car. I knew that upgrading from a Corolla to a Lexus would be an improvement, but I wasn’t expecting the change to be so drastic. I’m not sure if that means my old car was that bad, if the new car is that great, or some combination.

I can’t explain why KBB has our car values going up this month, but the total value still is reasonable and not a large percentage of our assets.

529 College Savings

We are now including our 529s in our net worth, but there really isn’t much to talk about here. We’re adding $200/mo and allocating it 100% to stock mutual funds. Our current savings rate is not enough to fully fund all our kids’ college, but we aren’t planning on covering all of their expenses anyways.

I’ve toyed with the idea of stopping these contributions and paying down the mortgage even faster, but this really wouldn’t make that big of a change in our timeline. We’ll have more than 7 mortgage-free years before our first child starts college and that should be plenty of time to further pile up our savings.

Thanks for checking in. I’m looking forward to what 2018 brings.