Tuesday, December 24, 2019

November 2019 Net Worth Update and New Goals Beyond $1 Million

November was another great month in the DIY$ household for net worth growth. We finished the month up $28k to $1,030,781. It was only last month that we passed the threshold into millionaire status and it has lead me to reflect on what we've done to reach this milestone. 

I've also turned my thoughts to 'what's next'? The next obvious goalpost is to have a paid off house, but we'll be checking that off in just a couple of months so we'll need something else to work towards pretty soon. 

First - here's what happened in November:

In November, the majority of our net worth gains came from our investment balances, since we continue to stay invested primarily in index funds and the S&P 500 returned 3.4% in November. We also got a nice bump from home price appreciation and an extra large mortgage payment. As expected, our cash balance went down since we paid our annual property tax bill, but we're still above our self-imposed $20k minimum, so nothing to be concerned about. 

With our house payoff in sight, we've set up to do a few things differently in 2020. 
  1. Switching 401k contributions back to Roth. For the past two years or so, my 401k contributions have been pre-tax to maximize my take home pay and put the difference towards the mortgage. Starting in 2020, we'll go back to contributions being Roth. 
  2. Resuming 529 contributions. We paused contributions a while back to accelerate mortgage payoff and now will go back to adding a few hundred dollars each month. We also now have a separate account set up for each kid (previously we just had one that we were planning on changing beneficiaries between the kids) and will be adding only to the new accounts for now. We still haven't settled on how much support to give each child in college, but want to have a decent amount earmarked for each.
  3. Adding to non-retirement investments. The majority of our investments are currently within retirement accounts that aren't accessible until 59 1/2 years old. We are planning to retire prior to age 59 1/2 so will need some non-retirement assets to bridge us until then, and there are other investments we'd like to do in the next few years that can't be done in retirement accounts. We won't be increasing our 401k contribution since we're already getting the full employer match. We're starting with $1k/month and will re-evaluate after a few months.
  4. Making some large purchases that have been on hold. We have around $20k worth of things we'd like to purchase, but have been waiting to pay off the house first. We won't buy them all right away, but will start actively shopping for them and buy when the price is right. 
  5. Start large home renovations. For the past few years, our home projects have been relatively small and inexpensive. Early next year, we'll be taking our master bathroom down to the studs and transforming it to what we've always wanted. We'll be doing most of the work ourselves, but still will probably spend >$10k. 
  6. Taking the kids on a big trip. We travel a lot with the kids, but it's usually just to visit family. It's been a few years since we've taken the kids on a big international trip, so they'll be joining us for a European cruise next year as a celebration for paying off the house.  
Reaching two major goals at roughly the same time ($1M net worth and paid off house), I'm trying to find the next thing to set my sights on for motivations. Here is what I've come up with for new longer-term goals:
  • $1M Net worth excluding primary residence/cars/529s. This should be achievable in ~3 years barring any major market corrections. 
  • 25x non-discretionary expenses saved in liquid assets. Our investments are currently just under 8 times our annual non-discretionary expenses. This will increase automatically when our largest fixed expense goes away, but this is really the metric that determines our level of financial freedom and ability to retire. I'll be tracking this more closely in the future. At our current level of spending, we would need ~$1.6M.
  • Liquid net worth of $3M. If you ask me today, this is the amount at which we'd feel comfortable considering retirement. My job keeps getting better in terms of pay and perks, so my desire to retire as soon as possible has waned.

Monday, November 25, 2019

October 2019 Net Worth Update - Millionaire Edition

For a while now, I've been wondering what would happen first, paying off our home or reaching millionaire status. Well, now we know. We haven't quite paid off the mortgage, but have now reached millionaire status! 

Right at the end of the month, our net worth crept barely over the $1M threshold to end at $1,002,357. This doesn't really change anything in terms of how we live our lives, but it was a fun milestone to reach. 


We're continuing to build up our cash in anticipating of a big property tax bill due next month. Once that's behind us it will hover for a bit until we pay off the house a few months from now. 

The market continues to rally even with signs of weakness in the economy and we continue riding the wave. Through October, the S&P 500 is up more than 21%, and 2% just just in October.  

Now that all the major brokerage firms are also offering $0 for trades, I've begun the process of selling my positions at Robinhood and moving the funds to a new trading account I opened at the same firm that holds our much larger accounts. I'll have this done by year end so I don't have to worry about getting another 1099 from Robinhood in 2021 since they are always the last of my 1099's to be issued.

Our household rule is that I keep ~1% of our portfolio in a trading account where I have free reign to make more speculative investments, but that percentage has declined as our larger accounts have grown and we haven't been making additional contributions to the trading account. I previously held it at Robinhood because the trades I've made have been relatively small (under $1,000), so $5-8 commissions were prohibitive. Post house payoff, we'll likely beef this balance up more.


Between our extra large mortgage payment and minimal home price appreciation, we added about $5k to our net worth between our house and mortgage. Although we're getting very close to being able to pay off the house by draining our cash, we're planning to wait just a little longer so we can keep our cash reserves still over $20k at all times. 

Without a mortgage our need for an emergency fund will actually go down but we are planning to stay at $20k since we also will need extra cash to cover some big home renovation projects that will be starting in the Spring.

Tuesday, October 22, 2019

September 2019 Net Worth Update - Another All-time high

September was another great month for our net worth, which grew by over $22k to $982,369. It's hard to believe that we're basically one good month away from achieving millionaire status. I think it may set in once we are mortgage free, because until then we don't see a lot of accumulation of assets outside of our retirement accounts and home equity.


Our cash balance jumped in September, but partially because we closed out our mortgage escrow account. The account had accumulated around $3k which we had never included in our numbers before. Now we've got that cash, but we'll also be writing a big check in a few months to pay property taxes. Sadly, our county charges a 2.5% processing fee for paying taxes with a credit card, otherwise I'd consider using our credit card to get 2% cash back.

The market continues to march forward and we continue to go up in lockstep. The S&P 500 was up almost 1.7%, and we saw those increases plus our normal monthly contributions. 
We haven't made any changes to our investment holdings or strategy. 


We sent the same amount to our mortgage that we were planning to, but since they had already closed our escrow account, the payment went further towards principal than normal. We have enough cash to pay our tax bill, but may dial our payments down a bit in the next couple of months to not deplete our cash too badly when that bill comes.

Our home value also crept up again this month, so the increase to our net worth associated with our house was just over $10k. If our house were paid off, half of that increase would have been in liquid assets, which I’m really looking forward to. We’re now targeting just 4 more months to be mortgage free.

Our home related expenses were under $200 this month as we took care of some curtains, and bought some trim that will be installed over the next few weeks. Our big home remodeling projects will start next year, but we'll give ourselves a few months to relax and build up cash before we start tearing down walls. 

Tuesday, September 17, 2019

August 2019 Net Worth Update

Another new month brings another new all-time high net worth for the DIY$ household. We continue to march towards $1M mark and a paid off house, closing the month with a net worth of $960,099. 


As expected, our cash balance bumped up a bit in August. Hovering between $20-25k is our sweet spot for now. There are times when I feel it should be higher since we do spend a lot, but if we really had to live on a shoestring budget this could easily last us three months and probably as long as six months. Once we pay off the house, this amount will definitely be adequate.

I also got a raise that goes into effect in October, but we've already allocated the increase to go towards our mortgage for the next few months, so it shouldn't really impact our cash balance.


We haven't made any changes to our investment holdings or strategy. Since the market was down, so were our accounts. Our year-to-date returns are still quite good, but even in a bull market it's good for the market to take a breather every once in a while.  


We're back to making extra large mortgage payments and were able to knock another $3,300 off our balance. After this month, we're now targeting complete mortgage payoff in 6 more months. If you're doing the math, 6 * $3,300 is much less than $40k, so clearly this plan does assume that the rest will come from my annual bonus.

Our home value also popped up a bit this month. One thing that I'm sure helps is that homes in our neighborhood are now consistently selling for over $500k, with several close to $600k. Our neighborhood is mid-range priced for the area and homes still are moving pretty quickly. Less expensive neighborhoods are still very much in a sellers market, but the more expensive neighborhoods nearby with homes priced between $800K and $2M have been selling a lot slower. 

We had very few home related expenses in August, but that's only because we did a lot of work ourselves with tools or materials that we already had. This month that meant breaking out the pressure washer and cleaning off the driveway. Living in a heavily wooded area contributes to needing to this every so often and it takes 10-12 hours to do it right. I'm not sure how much it would cost if we hired it out but it's a very simple and satisfying job. 

I haven't kept track of all the money we've saved by doing work ourselves, but it would easily add up to tens of thousands of dollars over the past six years in this house. 

Monday, September 16, 2019

Sage Career Advice

One of my favorite college professors was a retired investment banker. He had spent his career as an ex-pat throughout Asia and built up an 8 figure net worth before 'retiring' (to be a part-time professor) at 50. I looked up to him and occasionally went to him for career advice even after I was not taking classes from him.

While I was in my last year of college, I accepted a job to work as a financial advisor at an insurance company. My short time at that company is worthy of a separate discussion, but something from the experience has stuck with me over the years.

After I accepted the position, I went to meet with this professor to tell him the good news. He congratulated me and then had just a few questions about the job. The one that stuck with me was:
"What is the average age and tenure of the people in your office?"
Although he didn't say it, looking back I can tell that he would have steered me clear of this job had I asked him about it first. He knew several things that I didn't know at the time. First, insurance companies churn through new hires. Most people who join these companies quickly flame out once they exhaust their lists of friends and family to sell crappy annuities or high commission mutual funds to. In this regard, I also became a statistic, only lasting about 3 months before taking my licenses to a discount broker.

Second, companies need new employees to be able to continue growing. When I was hired, I was one of the only 'new' people at the office and I rarely saw people with less than a couple of years. If I was paying attention, this should have been a red flag. Naive little me was probably only thinking how cool it was to be in a grown-up job in a grown-up office (I even could order business cards if I wanted to pay for them!). What I should have asked myself was "Why weren't any of my classmates considering working here or somewhere similar?" or "How many people has my cubicle neighbor seen come and go in his 2 years here?"

My current employer hires thousands of new people each year and still has several people with 30+ years at the company. I just hit 6 years and 75% of the people hired with me into our department are still with the company.  I'm not planning on leaving anytime soon, but rest assured when that time comes, I'll have a lot of questions about the company, culture, and employee demographics before joining another company.

Tuesday, August 13, 2019

July 2019 Net Worth Update

Financially speaking, July was a pretty good month in the DIY$ household. We had one of our most expensive months ever, but still managed to grow our net worth to a new all-time high of $955,950. 


Our cash balance went down a bit this month but is still above our preferred minimum of $20k. We'll be recovering over the next few months since a lot of this was due to one-time expenses such as summer travel, rental cars, expensive yard work, and semi-annual insurance payments.


Our investment portfolios continue plugging along, primarily in low-cost index funds. There should be more to report here once we pay off the house. Until then, we're contributing enough to my 401k to get my employer match and not really investing outside of retirement accounts. 


Since we had so many other demands on our cash last month, we weren't able to make as big of a mortgage payment as we've been doing, but still paid nearly $1,000 more than our minimum payment. Our home value is back up to where it was a few months ago before a house was sold at a really low price and threw off the online estimates at Zillow.

Last spring we got some new sod for an area of our front yard that had gotten overgrown with weeds and where the actual grass had all died. We got 4 pallets and laid it ourselves in a single afternoon/evening. Last month, we got 4 more pallets for the rest of the front yard and parts of the back yard that needed and spent our Friday evening laying it ourselves. 

As far as yard work goes, laying sod has got to be one of the most straightforward jobs. It's definitely hard work, but I never really considered hiring out that part of the job since it's something I can do myself. Coincidentally, our neighbors got sod professionally laid the same week that ours was delivered and I was really curious how much we were saving by subjecting ourselves to such hard work. 

As we were laying the sod they talked to us and without even having to ask, they let us know what they paid. It made the pain worth it to know that what ended up taking us only 4 hours to do, would have cost us $500 for someone else to do. I'm still young enough that for $60/hour I'll do the work most every time.  

Tuesday, July 30, 2019

Book Review - The Sellout by Charlie Gasparino

I’ve probably read several dozen books about the Great Financial Crisis, and just now got around to reading ‘The Sellout’ by Charlie Gasparino and really enjoyed the approach he took in telling the story.

If you were glued to CNBC for much of 2008-09 like I was (it was on all day in the lobby of my office so I could often hear it all day long whether I wanted to or not), you may recognize Charlie Gasparino. He is a reporter on CNBC often known for being the first to break major news, and was on TV a lot as the crisis unfolded given his deep connections throughout the finance industry.

A lot of other financial crisis books focus on the authors play-by-play point of view (like Hank Paulsen’s ‘On the Brink’), or that of a single company (check out ‘A Colossal Failure of Common Sense’ focusing on Lehman Brothers or 'House of Cards' for Bear Stearns). The Sellout takes a slightly different approach from any book I’ve read on the topic.

Given the authors' long tenure covering Wall Street, he already had relationships with a lot of the key players and knows them well. The CEO of Bear Stearns even reached out to him in the midst of the crisis. This unique perspective allowed the narrative in the book to start long before the crisis started and to tell the stories that lead to the CEO’s of the various firms rising to the helm of the different companies.

Personally, I think that some of the most interesting stories were those of Bear Stearns and Merrill Lynch and it was interesting to learn how interrelated they were. Since the story goes back so far, you get a good sense of how the decisions made as their last CEO's rose to the top contributed to their ultimate downfall. A key takeaway for me was that leverage is a two-edged sword, and company leaders ignore or underestimate that risk to their own peril.

If you really want to dive deep into the demise of a single company there are better books out there. This one is just right if you want to know just enough detail to know what happened leading up to and in the financial crisis and why it happened, in a style that is engaging and doesn't drag on.

Monday, July 15, 2019

June 2019 Net Worth Update

June 2019 was a great example of why you shouldn’t react to short term declines in the stock market. After having one of our personal worst months ever, we had one of our best months ever. In June, our Net worth grew by over $42k to $937,191.


We spent half of the month of June either on vacation as a family or separated so I could work while the rest of the family continued to visit family. Our summer trips are fairly inexpensive as we usually stay with family. The one travel expense we haven’t been able to avoid paying a lot for is rental cars. Since our family requires 6 seatbelts, we’ve rented a lot of SUV’s and minivans (which always makes me thankful we don’t own a minivan).

In addition to some travel in June, we also put down a deposit on a cruise we are planning for next year with the kids after we pay off the house. With all that, we managed to keep our cash at about the same amount as the previous month.


Most retail investors don’t look at their investment balances very often, and usually look at just quarterly statements. If the quarter had ended after May when the stock market lost over 6% in a single month, I bet there would be a lot of calls from 401k customers to “get me into something better”. Not having a financial advisor to talk people out of making big emotional mistakes could mean that people sold out of the market after seeing May’s losses, and then missed out on June’s even larger gains of 6.89%.

We didn’t do anything silly after May, so were able to see our investment balances grow by $31k, our second largest monthly gains. Our largest monthly investment gains were in January of this year when our investments grew by $33k right after some big down months, a pattern we saw repeat now just a few months later.

As I expected, our home value continues to increase back to where Zillow had it just a few months ago. The really exciting thing about our house now is that we now have >90% equity in our home! The end is in sight, as we knocked another $3k off of our mortgage balance.

As I’ve mentioned before, this summer is going to be pretty expensive for us, so we may temporarily slow down on the mortgage payoff, but still should be able to pay it all off in the 1st quarter of 2020. Although most anything is on the table for sharing on this site, we still haven’t decided if we’ll share from other accounts with our real names when we pay off the house.      


Wednesday, July 10, 2019

Dealing with Golden Handcuffs

Golden Handcuffs refer to financial circumstances that keep someone tied to a career or employer when they might otherwise prefer to move on. I’ve never had a lavish executive pay package, but have still faced a small version of this dilemma and have put a lot of thought into it. It is a form of privilege to even have to worry about it, but one that I think many will face when considering retirement (early or otherwise) or other types of career changes.

While I was pursuing an MBA, I was blessed to grow my career as a financial advisor to the point where my income was greater than that of the typical newly minted MBA ($100-120k/yr at the time). When I started my degree I was making considerably less than $100k and had my sights on a post MBA career change into corporate finance. In order to avoid student loans, I took five years to complete my degree, which in turn gave time for my income to grow to substantially over $100k.

As I approached the end of my degree, I was faced with a real dilemma. If I took a job like the ones I had wanted a few years earlier, I would have to take a pay cut of more than $50k/yr. If I chose to remain in my same job/career, the income would continue to be great but I would lose a critical opportunity point where it would make sense to pivot out of the financial services industry.  

Ultimately, we did decide take a much lower paying job that has since given me opportunities and a career path that wouldn’t have been possible without making the change. My current income has also surpassed the higher paying job I left. Had we not made several deliberate decisions in our lifestyle and mindset though, the decision to leave would have been much more difficult and things may not have turned out the way they did. 

As our income grew, we didn’t allow our lifestyle to also creep up. 

A well-timed promotion blessed me with a near doubling of my income potential right at the time when my wife began staying home with our firstborn. While a great opportunity, the guaranteed portion of my pay actually slightly decreased. From day one, we made the decision to treat any of the additional variable income as a bonus and to use it to strengthen our base. Once we had a comfortable cash reserve, we began regularly making 4x or 5x our normal minimum mortgage payment such that by the time I graduated and quit my job, we were within 6 months of paying off that house.

Don’t kid yourself that you can’t make a similar income elsewhere

I took a pay cut because I was changing to a different career field, but had I wanted to leave and stay in the same industry I’m sure I would have been able to make similar income at another company. My golden handcuffs were mostly in my head...since I had never made that much money before it was hard to fathom being able to replicate it elsewhere.

Over the years, what I have learned is that switching companies can be quite lucrative and if they want you bad enough, they may even make you whole for whatever you have to leave on the table to join. I’ve seen several 6-figure cash signing bonuses, and often see folks who join a company externally do so at a higher level of pay, position, or both than if they had grown their career to that same point internally. 

Long-term incentives will always be there - Don’t count it until it’s actually yours

I recently got placed into a bonus pool where I will receive company stock grants each year that vest over multiple years. Unlike 401k match money that becomes 100% mine after I reached a specific tenure with the company, each stock grant I receive has it’s own time to vest before it will actually be ‘mine’. To prevent this from becoming golden handcuffs, we’re treating this like a bonus and will only include the vested portion in our net worth calculations. This will help to not ‘anchor’ myself on a number that at some point may become large enough to cloud my judgment.

Don’t get me wrong, I’m planning to stick with my current employer for a while, but it will be because each day I get to do work that I enjoy, with people I enjoy being around, that stimulates my mind, and that is part of a larger mission that aligns with my values. Oh, and the pay is nice too.

Tuesday, July 9, 2019

Book Review - Q&A by Vikas Swarup

I recently finished reading “Q&A” by Vikas Swarup and enjoyed it enough to mention it here. This book was the inspiration for the movie ‘Slumdog Millionaire’. Although I’ve never seen the movie, I generally find that books are better than their movie adaptations.

If you aren’t familiar with the book or the movie, the premise behind the story is that a young man in India is arrested after winning an award show ‘Who Wants to Win a Billion?” on suspicion of cheating. The show producers can’t imagine how it is possible that a poor waiter from a poor neighborhood could have known the answers to the questions they asked him, and the book narrates the life stories where he coincidentally learned the minutiae necessary to answer the questions they asked. The format was also engaging since each of the 12 questions are accompanied by a short story that is standalone, yet integrated to the rest of the story.

Whenever I read stories like this, I’m also reminded of the stark differences between the life experience of living in a developed country vs developing countries. I have spent some time living outside the US in third world countries, but haven’t yet been to Asia. This time has shaped my worldview to some degree and it helps me to recognize my privilege. If you haven’t had and don’t plan on having the opportunity to live abroad, reading stories like this can help give you a glimpse into the lives that so many millions live as their reality throughout the world (minus the winning a billion rupees part).   

Monday, June 10, 2019

May 2019 Net Worth Update - 2nd worst month ever

Just like anyone else who stayed invested through May 2019, our net worth took a few steps back. The S&P 500 was down more than 6.5% and our net worth went down by almost $28k to $894,975. 


On a percentage basis, our investment account didn’t go down as much as the market overall. Rather than any savvy strategies, this is only because we made additional contributions during the month. Nearly all our investments continue to be in index funds, split between US and international stocks and no bonds.

This decline wasn’t quite as big as we saw in December 2018, when we had our biggest monthly loss from a dollar perspective. Our December losses are in the rear view mirror since we remained invested and even with May’s decline our accounts are all quite a bit higher than they were at the beginning of the year, even adjusted for contributions.  


Over the past two months, online estimates have dropped our home value by ~$25k. Since a lot of what online home value estimators use in their formulas is the same as a home appraiser, I won’t override it. However, I do think it will revert back relatively soon.

We had someone in the neighborhood sell their house to Opendoor.com, a company that makes all cash offers, then quickly resells your house. The company hopes to make a profit because they don’t pay top dollar for their inventory (enticing sellers with all-cash offers and little hassle), but meanwhile that’s the most recent house that has sold in our neighborhood so it brings down the estimate for other homes. A few houses similar to ours have since sold for $550k+ so if I am right, our home value will jump up once those sales are included in the formula.

We again made an extra large payment towards principal and knocked our mortgage balance below $50k. We have an expensive summer coming up so will dial it down just a bit while staying on track to pay it off entirely within the next year.


We managed to keep our cash balance pretty constant for the month despite having several out of the ordinary things come up. No one thing really stood out as individually large, but collectively came up to almost $1,000 (new ceiling fan, kids summer camp enrollments, car battery, etc). Over the next few months, we’ll have to continue balancing our desire to pay off the mortgage quickly with the goal of maintaining a cash balance over $20k. 


Sunday, June 2, 2019

Career Advice For New Grads

College graduation season is upon us and lots of new graduates are about to start their careers. As part of my job, I am heavily involved in campus recruiting for Finance jobs at my Fortune 500 employer. This gives me the opportunity to give a lot of advice and feedback to new and prospective candidates.  My advice has evolved over the years, but following it has served me well in corporate Finance. I am sharing it here for anyone who may benefit from it. So, in no particular order, here are some points of unsolicited career advice:
  1. From the outset of your career, live on a “college student budget” as long as possible. In college, I could live on $12-15k/year not counting tuition. When you all of the sudden start making $50k, $60k, or more, it will be tempting to immediately go out and buy a new car or rent a luxury condo. Technically you may be able to afford these things, but if you give in to every indulgence, you won’t be able to take advantage of the biggest tool you have in building wealth: your income.
    • Your life and goals will be different 3 years from today. The more you save between now and then, the more options you’ll have. Don’t be that person who goes into 6-figure debt for an MBA because you didn’t save anything in the years you work in between.
    • Don’t deprive yourself so much that you don’t enjoy life. Everything is a balance.
  2. Your personal brand is more important than anything that gets written up in performance reviews. When hiring managers want to know about you for potential promotions, they pick up the phone or shoot an e-mail to your boss. Rarely will anyone ever look at your performance reviews. Pay close attention to the way you may be perceived, especially to those individuals a few levels higher than you in the organization. But, no one likes a brown noser. Remember again the importance of balance.
  3. Find a mentor. This doesn’t have to be formal, but find someone higher in the organization that isn’t in your same reporting hierarchy than you can use to help navigate corporate culture and career. I’ve had several of these relationships in my career that have been helpful in receiving promotions and a >100% increase in pay over the past 6 years. I have found that most people are happy to help or mentor, but the mentee has to be the one showing the initiative to maintain the relationship. 
  4. Understand your organization’s career paths and pay standards. If you’re in an environment where you can ask for a raise any time, prove your worth and go get that money! If your employer is more old-school (like mine) and primarily gives corporate-wide pay increases annually or when an individual gets promoted, set your expectations appropriately. Hopefully you know somewhat the way your company operates prior to joining (we are very upfront about this). Don’t allow yourself to be taken advantage of, but also don’t get impatient and start asking for a raise after X months when you were told when you got hired that you’d be eligible for a raise after Y months. Expressing a sense of entitlement damages your brand which will hurt you much more in the long term.
  5. In some work environments, speed is valued over precision. In others, precision is more important. Learn the preference of your leadership and know that it may differ depending on the deliverable. As a financial advisor, getting a quick answer that was in the ballpark was usually adequate. In corporate finance I have had to retrain myself to focus on accuracy, and on being ok with analysis taking a little longer.
  6. They say that there is no such thing as a dumb question. Good questions show your interest in a topic, your desire to learn something at a deeper level. While you’re new you may be able to get away with asking questions about things you really should know already, but be careful asking the same question multiple times. If after a few months you are asking the same types of questions, you get a reputation for not paying attention. 
  7. If you work a lot with data, you may inherit some models or code that someone else built. While it’s ok to rely on someone elses work in this situation, you need to spend some time understanding how your models work to the point of being able to rebuild them. You’ll often find ways to improve them and will stave off future disaster, since you will ultimately be responsible to fix the models if they break.
As you get further along in your career, there are different things to pay attention to, like the importance of working at or being connected to headquarters. But get these foundational things nailed down in the first year on the job and you’ll have a great head start. 

Wednesday, May 22, 2019

April 2019 Net Worth Update - Up to $922k

We continue to make progress towards 7-figure net worth, and in April we got a little bit closer.


Every month we seem to have some out of the ordinary expenses, but do our best to spread them to future months as best we can. In April, that included a new kitchen mixer and small new TV. Even so, we were able to keep our cash balance relatively flat for the month. Our goal is to have $20-25k in cash until our house is paid off. 


The S&P 500 was up nearly 4% for April and our investments moved in lockstep. We haven't changed our allocation or contribution amounts, but did finally get the hospital bills from February and paid them from the HSA account included in this bucket. 
Now that Fidelity offers zero cost index funds with no minimum, we also started investment accounts for each of our kids using the money they had saved. Previously they had been saving in the 'bank of Dad', a spreadsheet I had been maintaining and paying them 1% monthly interest. 
We got our kids a book to learn about investing called How to turn $100 into $1,000,000 and my oldest kid read it. Even though he seemed to understand the concept of compound interest, I wasn't quite sure he really got it until one day he came up and asked "Dad, can you show me how the companies that we own little pieces of are doing?" Naturally, it was a proud moment for me and shortly thereafter we helped him open his own investment account. I don't count the kids accounts in our balances here, but my son has a goal to get to $100 by the end of the summer. 


I can see the light at the end of the tunnel.We are on track to have the house paid off in 10 more payments, and any additional money we get goes towards that goal. While we've been making extra payments, we're not going so extreme that we deprive ourselves, only forgoing things things we feel can wait. $1,000 trip to Paris? Count me in. $20,000 bathroom remodel? That’s going to have to wait (but definitely is going to happen). Since my raise kicked in for April paychecks, we increased the amount we paid towards our mortgage to not fall into much lifestyle creep. I get paid twice a month and we have been using one paycheck for our mortgage payment and the other paycheck for everything else. We have some travel plans coming up that might have us dial down our extra payments, but we’ll still be paying ~3x the minimum.

Friday, May 17, 2019

America - We have a problem. And it’s sitting in our driveways

On a recent date with my wife, she commented that she is driving one of the oldest cars in the neighborhood. She didn’t say this from the perspective of wanting an upgrade, more of an observation about the affluence of the area that we live in (or at least the appearance of it).

At 12 years old and 150,000 miles, her Expedition has certainly been around a while, but “old” isn’t the first thing that pops into my mind when I look at it. What I think of is how great it is to have a reliable vehicle with no car payment.

A recent headline shared that the average car payment in the US is now $551 over 69 months. With average household income just over $60k/yr, that means many households have more than 10% of their entire income going towards a car payment. Many people don't even keep their cars for 69 months, resigning themselves to having a car payment as long as they live.

Over the past several years, we've been fortunate to see our net worth grow quite quickly. While a relatively high income has certainly helped, just as important has been the way in which we've controlled our expenses. Behind housing, transportation related expense is often the next largest, but by not having car payments our transportation related costs have been a fairly small percentage of total income.

I've seen some pretty crazy justifications for car loans, but nothing will convince me that it's a good idea for me. Like the friend who couldn't afford a new set of tires, so instead just traded in her vehicle for a brand new one since the monthly payment would be less than 4 new tires. Seriously.

Or how about my coworker who brings in more than $200k per year and complains about still having student loans 12 years after graduation. Might it have something to do with having 3 car loans, and a self-proclaimed inability to keep a car more than 50,000 miles? Hope you like the Mercedes, buddy.

Earlier in our financial journey (2006 and 2007), we borrowed $20k and $14k for vehicles. While we had car payments it seemed that we were only treading water financially, despite having a household income of around $100k. In 2008 we sold the more expensive of the two, opting to be a one car household, and payed off the remaining car in February of 2009. We haven't had a car payment in over 10 years, and in that time have purchased 3 cars, all with cash.

With that background, here are some of the top reasons I love living without a car payment:

1. Lower Monthly Recurring Expenses - seems obvious, but it's freeing to be able to keep more of each of my paychecks and to not be playing catch up for purchases already made. Your income is the fastest way to build wealth, if you're able to actually save/invest it.

2. Option to Pay for Collision Insurance - since no one has a lien on my vehicles, I can choose whether to pay for collision insurance (often a very expensive addition) or not. If I had a loan, I wouldn't have that choice. We keep collision on my Lexus since I drive it more often and I don't want to run the risk of using up our cash to replace it if something happened. My wife's vehicle is only driven ~5,000 miles per year and has a low replacement value, so we save several hundred dollars per year waiving collision insurance.

3. Unlimited Miles - Although my wife doesn't drive much, I drive around 20,000 miles per year. The typical car lease includes only 10,000 to 15,000 annual miles before they charge you more per mile. I have friends who rent cars for road trips since it ends up being cheaper than paying for extra miles on their lease. We used to do a lot of fairly long road trips, and never once had to think about whether we had enough miles.

4. Easier to Budget for Repairs - even though cars tend to be more reliable today than they were 20+ years ago, things still break every once in a while. If you're paying a car payment, it's sometimes difficult to have the extra expense beyond the car payment itself.

5. I'll Never be Upside Down - It's been reported that as many as 1/3 of new car purchases include a trade-in with negative equity rolled into the new purchase. With people not keeping their cars long enough to even get equity in their vehicle they are further committing themselves to having a car payment for their entire lives. If I don't have a car loan, I'll never have to worry whether I'm upside down.

Wednesday, April 17, 2019

March 2019 Net Worth Update - Up to $916k

March was another strong month of net worth gains for the DIY$ household. With the S&P 500 up 1.79% and a hefty mortgage payment, we were able to add $12,578 to our net worth, bringing the total up to $916,553.


We had a lot of different expensive things come up in March so I was pleasantly surprised to see our cash balance only drop by $360. In addition to our trip to Paris, we bought a new dishwasher after our old started leaking, and a couple new tires for my car. 

Another exciting thing that happened in March is that I received a promotion I've been working towards for some time now. This comes with a pretty hefty pay bump that will help our cash situation once we get through our current #1 financial goal of paying off our house.


Our investment balances continue to be allocated primarily to US stocks and we made no changes in the month. We still haven’t seen all the bills for a hospital visit in February, which will be paid from our HSA that we include in this balance.


We knocked $3,200 off of our mortgage balance in March and our home value continues to hover just under $500k. My new paycheck amount went into effect mid-month, so we are waiting until April to bump up our standard payment since any extra income we get is going towards our mortgage. We have now officially paid enough that we have saved 239 payments, nearly 20 years off of our 30-year mortgage!

A house down the street from us just sold for over $550k and for the first time in a while there are no homes for sale in either our neighborhood or some of the other similar neighborhoods nearby. This is good sign and gives me comfort that the estimate from Zillow is in the ballpark.

When we finally pay off the house, we have promised our kids that they will get to go on a cruise with us (our last few cruises they were left with other family members). We keep a jar of 'gems' in the living room where each gem represents $1,000 of outstanding mortgage balance. As we make payments, the kids get the help move 'gems' from one jar to the next, and we've now reached the point where there aren't a lot of gems left to move. Naturally, the kids have begun to ask about a cruise, so we've started looking into options.

Barely any gems left...

Wednesday, April 3, 2019

Paris for under $1,000

One thing to know about the DIY$ household, is that we love to travel and see new places and things. Each year we try to have at least one big trip with the whole family and one trip without kids. This past month, we were lucky to be able to take a trip without kids to visit Paris.

After the trip as we began reviewing our expenses, I was surprised to see how inexpensive the trip was. Take a look at the details:

That's right - our trip to Paris was less than $1,000. Obviously one glaring omission is the cost of flights (we didn't swim there).  I'm excluding though since we travel-hacked the flights and didn't have any direct cash costs. Were it not for that, our costs for the trip would have been much more (and we may have felt the need to stay longer than the 3 nights we did). The point is though, that traveling abroad really doesn't have to be that expensive. We've spent just as much or more on trips within the U.S. that weren't nearly as memorable.


I originally wanted to use Hotel points for this trip, but we had to use the last of our hotel points over Christmas. This ended up being better though since any of the Marriott properties we could have redeemed at had high redemption costs and weren’t located near where we wanted to be. We ended up staying at a hotel we found on Booking.com for the 3 nights we were there. The hotel was only ~$150 per night and was nicer than places I've paid >$200/night for in the U.S.

Our flight landed in the morning and we were able to drop off our things at the hotel before heading out to explore the city. The location was great (1 block from the Louvre, 1 block from bus/train station, and right near several bakeries/restaurants), allowing us to have a home base for days where we needed a break from all the walking.


I was surprised to see how little we spent on food, but it’s also not surprising since food isn’t the highlight of a trip for us. It helps that I really enjoy bakeries and street vendor food, both of which are pretty cheap (Nutella Crepes...mmm). We also like trying hole-in-the-wall places that appear popular with locals and even found a really good Indian restaurant. 

The fancy, expensive restaurants that take 3 hours to eat a meal that doesn’t even sound very good just aren’t my thing so we went with options that were more to our liking. It was nice that I never really thought about what food cost, we just ate what we wanted, when we wanted, and it ended up being pretty cheap. 


This is the real reason we went to Paris. We love seeing old buildings and art and Paris has a lot of that to offer. On this trip, we paid for admission to pretty much everywhere we could except for going up the Eiffel Tower (the timing didn’t work out and I don’t care for heights) and still only spent $134. In addition to the Eiffel tower, we were able to see Versaille, the Louvre, Sainte Chapelle, Notre Dame, and Palais Garnier

Of all the places we paid to get into the most expensive entry fee was around 20 Euro, which is pretty incredible considering that there are elevator rides in NYC that cost twice that. We packed about as much as we could have in the short time we had, but will definitely have to go back again since we only had time for the main attractions.


When we travel internationally, I love being able to use the City Mapper app. Paris has great public transit, and the app helped make sure we didn't take a wrong turn or get on the wrong train. Our most expensive train ride was from the airport, but once we got into the city we were able to walk or take the bus most anywhere we wanted to go. 

My passport is about to expire and I took a little pride in seeing the customs agent having to search for a blank spot. Some places we've visited in Europe have been over-rated, but Paris I think is fairly-rated. It lives up to the hype and I'm sure we'll be there again. It's worth always remembering that with some careful planning, visiting Europe doesn't have to be all that expensive.

Saturday, March 23, 2019

February 2019 Net Worth Update - Up over $900k

February was a great month for us financially. We got our taxes filed and refund received, and also received an annual bonus that was a bit larger than the previous year. Combine that with good stock market performance, and our net worth jumped up by over $45k to $903,975. This is the best monthly increase we’ve seen since we started trying monthly, and a close 2nd for highest income month ever. My first years salary after college was less than $40k and now we’ve made more than that in a single month. Compounding sure is a beautiful thing.


Thanks to an annual bonus and our tax refund coming quickly, we had a lot of cash come in the door this month. Rather than using this to boost our cash reserves we chose to keep our cash balance relatively flat to where it has been for a while now. It’s only up a little bit since we also had a trip to Paris planned for early March so needed some extra cash for parts of the trip that hadn’t already been paid for.


The S&P 500 earned nearly 3% in February. Add that to our larger than normal 401k contributions in February because of my annual bonus and our investment accounts grew by 5% for the month. 

Also included in this total is our HSA account, which will be tapped in March for some withdrawals as we had one of our kids visit the ER in February and haven’t yet seen all the bills. Everyone is healthy now and the plan is to pay for the visit from funds in the HSA. We keep enough in the HSA to cover our annual out-of-pocket maximum, but will need to replenish the account for next year.


Nearly all of our cash flow went towards paying down our mortgage and we’re down to just $60k. We won’t be able to make any huge payments like that again this year, but we will be able to get very close to paying it off by the end of the year since we are paying down at least $3k per month in normal months. No major home repairs or projects in February, but I expect we will have a few as we get into spring. Our major (expensive) projects are on hold until the house is paid off, but that milestone is within sight.

Thursday, February 28, 2019

January 2019 Net Worth Update - Up to $858k

January was a great start to the new year for the DIY$ household net worth. The market recovered from the slump it took in 4Q and we ended up growing out net worth by $35k up to $858,726. This isn't our best month ever from a monthly increase or total net worth, but it's close for both.


Our cash balance stayed relatively flat, but still is in the range that we're comfortable with. As much as I'd like to see this higher, it's high enough that I don't worry, and I'd much rather have extra cash going towards our mortgage. 


Just like anyone who remained invested throughout January, our investments performed really well. Our allocation is still nearly 100% equities with an approximate 80/20 domestic/international split. Our gain of 8.7% was primarily market driven as we only added our normal monthly amount from 401k contributions. 


Our mortgage payment is around $1,800/mo but we are currently making payments of $4,000. After interest, taxes, and insurance this allowed us to knock another $3k off of our mortgage balance and get the balance down to just $85k. We paid off about $100k in 2018 but sadly won't be able to make the same level of reduction in 2019. We do expect to be able to get it fully paid off in 2020 and I find myself day-dreaming about making that final payment.

Tuesday, February 19, 2019

Reader Question - Pay off debt by refinancing mortgage?

I was recently asked the following question:

Over the past two years with a $120k income, I’ve paid off $40k in debt and still have $90k in credit card, student loan, and car loans left to pay off. I’ve recently gotten more serious about debt payoff and should be able to pay off the remaining $90k in the next 12-18 months as I get married and combine finances with my fiancĂ©. I also have $120k in home equity that I’m considered cashing out through a refinance to just be done with debt. Should I refinance my home to pay off debt?

Here was my response:

Short answer: No, I don’t think you should do this.

First off, great job buckling down and getting serious about paying off debt. Your previous rate of paying off $20k/yr was pretty slow considering your income. Paying off debt in one fell swoop feels nice, but in this instance all you’d be doing is moving the debt not actually paying it off. Given your lack of debt payoff intensity to this point, I’m also not sure you won’t go back into debt again once you feel like you’re debt free (even though you’re not).

Another reason I don’t like this idea is that you’re putting your house at a greater risk of foreclosure by increasing your payment, and reducing your equity. I’m not saying that will happen, but if you default on your credit cards, there is no collateral for the banks to go after. Likewise, if your car got repossessed that’s better than not having a place to sleep. Student loans have an advantage too in that if you die, the outstanding balance is forgiven. If your student loans shifted to your mortgage, that’s like giving away a free life insurance policy.

12-18 months really isn’t that long of a time to be completely debt free, I would just make sure that you have good discussions with your fiancĂ© to make sure you’re on the same page with this financial plan. This has the potential for a lot of backfiring if not properly communicated. After paying off debts, you’ll be shocked at how quickly you’re able to build wealth with such a high joint income and no payments. Having financial goals to work towards together makes for a great foundation in a new marriage.

Monday, January 21, 2019

December 2018 Net Worth Update - Rough Ending to a Good Year

December was an ugly month in the market, and our portfolio (primarily comprised of index funds) was not immune. We lost all of Novembers gains and more, ending the year with a net worth of $823,046.

Looking back to the overall change for the year, things were pretty good. Our net worth grew by nearly $80k, primarily due to aggressive principal reductions on our mortgage and moderate appreciation in home value. 


Our cash balance crept up again in December. We had a relatively simple Christmas, including a trip to visit family and attend a wedding. We were able to use up the last of our Marriott rewards points for a free 4 night hotel stay, so the travel part was pretty inexpensive. 

Excluding travel, we spent less than $1,000 on Christmas gifts and everyone was very pleased. I didn’t realize until after we had put all the gifts together but most of the kids gifts were books and Legos, mutual favorites of parents and kids in our home. 


Our investments were down quite a bit in December and slightly negative for the year. We withdrew ~$50k towards the end of the year to put towards our mortgage and added ~$25k throughout the year which is roughly what we lost. Our investments are still >90% in equity index funds, with a mix of US and International.  


Nothing too outside of the ordinary in December. We crossed below the $90k threshold on our mortgage balance and continue to be aggressive on future payment plans. We have a lot of big DIY home projects we’d like to do but are put on hold for the next year or two while we knock out the last of the remaining mortgage. 

In 2018, our home repairs included 2 HVAC blower replacements (different units), 1 new microwave, 3 pallets of sod, a new garage door system, and a new garbage disposal. In total we spent just under $5k on home repair/maintenance, which was actually down $5k from the previous year. For 2019, it won’t be $0, but there are definitely some big projects planned for 2020 and beyond. 

Tuesday, January 8, 2019

Damage from poor maintenance isn't your insurance's fault

If your car engine dies because you didn't change the oil, should your car insurance step in a fix your engine? Of course not. Then why would homeowners insurance be any different?

Like many neighborhoods these days, ours has a neighborhood Facebook page. The most common uses are for announcing activities, alerting neighbors of suspicious activity, giving away things, or recommendations for various services. 

A recent thread started out right up my alley, with someone asking for help on how to handle a simple home repair and a picture. In this case, a couple of small tiles fall off the wall in their shower and it looked like they had a little bit of mold under where the tiles were. Nothing too serious, and to be expected in a ~20-year-old home, especially without proper maintenance. 

We have a similar shower and it was pretty clear that this and any further damage could be avoided by simply installing a bead of 100% silicone at the base of the shower pan where it meets the tile instead of relying on grout. Whenever anyone steps into the shower pan, it bounces imperceptibly. This slight movement is absorbed by silicone, but grout will crack and allow openings for water to seep in, causing damage over time. 

We shared some quick tips on how to repair (both quick fix or more thorough instructions) and felt good about helping someone out. What blew me away were the other comments that came after. No fewer than 5 other commenters saw the picture and immediately said to call their insurance to submit a claim. Really?!? 

A DIY repair for this issue would be under $100 and complete in just a few hours. Even if you hired it out, it's cheaper than your typical $1,000 deductible on homeowners insurance. This also begs the question -- "If your home is damaged due to poor maintenance, should that really be part of your insurance coverage?

I think this scenario speaks to a few things that are concerning to me: 

  1. Personal responsibility. Part of the job of being a homeowner is to take care of your property. If you don't, guess what? Stuff breaks, and it’s your fault. 

  2. Financial responsibility. You've probably read that most Americans couldn't handle an unplanned $400 expense, or that 25% of all households making over $150,000/yr are still living paycheck to paycheck. Despite being a slightly more expensive neighborhood that I thought would price out folks that couldn't afford small repairs, we're clearly not immune to this same behavior. If we have that many people saying they would call their insurance for a minor home repair, there’s a possibility that some of them would do so because they don't have the cash for a repair.

  3. It blows me away how little people are willing to even attempt to do themselves. Sure, its easy to just have ‘your guy’ take care of things like home repairs, yard work, housecleaning, etc. but this reliance on others really adds up. I once read a rule of thumb that for each major task you outsource from your life, you should have $75,000 in annual income for it to make sense. I’m not sure if this is exactly the right way to think about it, but it rings true that outsourcing comes at a cost.