Led by continued increases in the stock market, our net worth hit another all-time high in the month of August, ending the month at $1,149,900.
Sunday, September 20, 2020
Saturday, August 29, 2020
Monday, August 10, 2020
Tuesday, July 28, 2020
Sunday, July 12, 2020
So apparently I read 8 books in the month of June. Some were pretty quick reads, but I really didn't think I had read so much in the month. That puts my at 47 books finished so far this year, purposefully slower than last years' pace. Here are the books I read, ranked from best to worst.
1. Untamed - Glennon Doyle
3. A Falcon Flies - Wilbur Smith
4. Big Bets Gone Bad: Derivatives and Bankruptcy in Orange County, the Largest Municipal Failure in U.S. History - Philippe Jorion
"Don't Invest in Anything You Don't Understand"
5. Humans of New York: Stories - Brandon Stanton
7. The Players Ball - David Kushner
8. The Art of Loading Brush: New Agrarian Writings - Wendell Berry
Wednesday, June 24, 2020
Phantom Money:Years ago, I met with a couple in their late 60's who lived in a part of the country hit very hard by the housing crash. Due to a series of sub-optimal decisions and unfortunate timing, they found themselves trying to sell a house that was worth about $100k less than what they owed on it.
Too Much Tax Deferral:
Lessons Learned and Our Strategy:
Thursday, June 11, 2020
Sunday, June 7, 2020
A lot of non-fiction books I find to be too long, but this one was just right. It got to the point and didn't add too much fluff, and gave a few things to think about. I am not an entrepreneur, but do see the appeal and this definitely gives some things to think about. His main thing is to discourage young graduates from joining consulting firms or 'big law' in favor of startups where they'll have much more latitude to implement things they've learned and make decisions that actually drive the success of the enterprise.
I'm personally not a big fan of the 'chew them up and spit them out' culture of the major consulting firms and am dubious about the training they provide, so it's definitely something to consider. Say what your want about Andrew Yang's politics and his failed attempt to run for president, this was a good read if you are one who dispenses career advice to high school and/or college students.
If you've ever been to the Biltmore or seen the mansions in Newport Rhode Island you may have wondered what type of vast wealth was required to build those massive homes. This is a great read to see how that wealth was both accumulated, and subsequently squandered. I didn't know, but within 5 years of the Biltmore opening it's doors, the owner was essentially broke.
Also interesting, the land around the countries largest privately owned house (over 175,000 square feet!) is now just a small fraction of the acreage originally purchased to be part of the estate. I have not illusions that my wealth will ever reach 'Vanderbilt' proportions, there are still takeaways for the importance of instilling work ethic and drive in the next generation.
Another surprising takeaway was that compared to some of the wealth that exists today the numbers didn't seem that big when compared to some of the wealthiest Americans today. In fact, Warren Buffett, Bill Gates and Jeff Bezos each have more than 10 times the net worth of the peak Vanderbilt family wealth adjusted for inflation.
This one was good, but not as good as Dare to Lead. The concepts have some similarities and are worth thinking through, but Dare to Lead definitely seemed much more relevant to my life at the time that I read it than this one did at this time. I'll keep reading Brene Brown and listening to her podcast, but if I'm going to recommend a book of hers it would be Dare to Lead over this one. Your results may vary, so definitely give it a read if the subtitle seems relevant.
4. Glory Lost and Found: How Delta Climbed from Despair to Dominance in the Post 9/11 Era - Seth Kaplan and Jay Shabat
I never would have guessed that Airlines would have been in such dire straits financially when I got around to reading this book that was recommended to me a few years ago. It was only a coincidence that I started to read this while Airlines were seeking government loans and seeing passenger volumes down by more than 90% as a result of COVID-19 restrictions.
While I typically enjoy a good corporate biography, this one read more like a history of airline mergers and acquisitions, and inside baseball about new route strategies. It was interesting, but I would have liked it more if it had focused more on things that happened inside the company at levels much lower than the C-Suite.
5. King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone - David Carey and John E. Morris
Similar to the previous book, this one had a lot of play-by-play of private equity deals over the years, but didn't have as much of a specific 'crisis' like 9/11 and airlines that they had to overcome. Blackstone now has over $500 billion in assets under management which in an of itself is a lesson in the power of compound interest, and the power of strong past performance being a good indicator for future inflows of cash and ability to raise capital for the next fund.
Years ago, I read The Bonfire of the Vanities and loved it. The story integrated Wall Street Culture, wealth inequality, and racial tensions in a way that had me hooked to the end. I mentioned this to someone a while ago and was persuaded to read more from Tom Wolfe so picked this one up from the library.
This book focuses on the college experience of Charlotte Simmons, a brilliant girl accepted into an elite university from a small town in Appalachia. The story also dives into problems with student athletes, NCAA corruption, fraternity culture, and wealth inequality all from the lens of characters embodying extremes. There were a lot of parts that I could have done without, but the story really made me think about a lot of things and reiterate that I really have a lot to teach my kids before they go to college. Thankfully I have plenty of time for that, and am not opposed to them living at home and commuting to a nearby college/university for their first year or two.
Monday, May 18, 2020
Monday, May 4, 2020
My workload has leveled off, but we've also been doing a major bathroom renovation so I haven't filled up all of this new found time reading like I would have in the past. During the month of April, I completed 6 books, listed below with the best ones listed first.
#1 Becoming - Michelle ObamaIt's still early in the year, but I think this one is likely the best book I will read this year. I loved the way that this gave her view of events surrounding President Obama's life leading up to and during the presidency. It isn't really a book about Barack Obama, but it's hard not to have him be a central figure. It's actually unfortunate because Michelle Obama is such an impressive individual on her own and being married to a former President causes her to be in his shadow. This is a must read, regardless of your political beliefs.
#2 Grant - Ron ChernowI love a good biography and the fact that this one was written by Ron Chernow was an automatic endorsement for me to add it to my shelf. This was a really long read but really had to be in order to fully capture so many interesting details. Whenever I think of Grant, I just think of Civil War General turned President and how that seems like a natural progression. I didn't really know much more than that. What I wasn't expecting to learn was how much he still had to fight to keep reconstruction efforts ongoing long after the fighting ended Civil War after the fighting was done.
Here's another interesting tidbit. Have you ever heard of the Alabama Claims? Basically the US sued the UK because Confederate ships were built in UK shipyards, helping extend the length of the Civil War. I thought I had read a lot about the Civil War, but had never really read about this. Likely because it happened years after the fighting had stopped. Grant played a critical role in these negotiations.
#3 All the Devils are Here: The Hidden History of the Financial Crisis - Bethany McLeanI'll read just about anything written about the 2008-09 financial crisis and this one was very good as a standalone if you're looking for a good overview of how we got ourselves in that mess. This one focused more on the people, companies, and events that got markets to the point they were at in 2008-09, but didn't get into as much of the bailouts or response. I don't know that I necessarily got much new from it, but that's because I've already read dozens of other books on the same topic. It was very well written, and I regard the author highly and have more of her writing on my shelf. It's always interesting to see how different people connect the dots with the same events, so I'll keep reading books about the financial crisis until we start getting books about the COVID-19 crisis.
#4 Tom Clancy Code of Honor - Marc CameronGenerally I don't like when authors allow someone else to use their name to write stories with their characters, but I've enjoyed Marc Cameron's Tom Clancy series enough that I try to read them all (I'm not a fan of the Tom Clancy Op Center, or Splinter Cell books as they feel more like I'm reading my way through a video game level). There are more than 25 Jack Ryan/John Clark books out there and while this one was good, I would recommend going back closer to the beginning (chronologically or by published date) to get to know the characters more if you haven't already.
#5 A Framework for Understanding Poverty - Ruby PayneA while back I helped a friend out with a tank of gas and offered some financial coaching. The gift of gas was accepted, but the offer for coaching was not. It later came to my attention that another mutual friend had been helping this person with financial coaching and that several other friends have also been asked for money by this individual. We're still friends, and that's all good, but someone else recommended this book to me to help understand how people living in poverty think differently about money. What may seem like a completely irrational decision to me, may make more sense when looking at their circumstances differently. This is a quick read, so worth picking up if you're interested in learning more.
#6 A Short History of Drunkenness - Mark ForsythLike the title suggests, this was a quick and entertaining read, all about drunkenness. I've enjoyed reading more about Prohibition or other events, and this one was basically just about getting drunk and the different was in which various cultures and societies have done so over time. It won't take long to read, and you're bound to learn a bit of trivia that could be fun to share at the next happy hour.
I expect I may read a bit more in May, but 6 books in a month I feel pretty good about. I added a few more titles to my shelf this month, but am always on the lookout for good recommendations. If you have any, please send them my way.
Tuesday, April 28, 2020
When choosing which type of account to use when investing for retirement, companies will often provide an incentive to do so by matching employee contributions to the company sponsored 401(k). We've been fortunate to have had employers with some very good matching programs and have always taken full advantage of the match.
While searching for jobs coming out of college, whether the company had a good 401(k) honestly wasn't that big of a factor for me in evaluating a job offer. I mainly just wanted to get a job, and frankly was just lucky that the job I got had a much better retirement savings plan that other companies that friends and family members work for.
The young me wouldn't have thought to ask for details about a 401(k) program before joining a company, but now I would never accept a job offer without knowing all the details about the company 401(k). At the end of the day, I know that I'll always contribute enough to get the match - so it's really part of my compensation. I don't know anyone who would accept a job not knowing the salary, and this is all part of that discussion.
Growing up my parents were either self-employed or worked for small businesses, so I wasn't as familiar with things like 401(k) matching programs. What I've learned as I've now worked for a few large companies is that finding a good match isn't as hard as I would have thought. Where it can be difficult though, is if you work for a small company as it is harder for them to offer costly perks
You can go to sites out like Brightscope to search for a company to get high-level stats on their 401(k) program, but it won't get you the specifics of the match. To give a sense for what we've seen throughout our careers, here are some details on plans we have participated in:
|Company||Employee Contribution||Company Match||Company Contribution|
As you can see, we've been fortunate to always have a company match at least equal to what we put in. I've seen friends with as low as 25% match up to 4% (i.e. if he put in 4%, the company would put in 1%), and some with no matching whatsoever. We've never had a match less than dollar for dollar, and in all but one instance have had our company put money into our 401(k) even if we didn't put in anything.
Recently there have been companies making headlines for eliminating their 401k matching programs during the COVID-19 pandemic. Make no mistake, this is a pay cut. It may not feel like it right away, but it is. Hopefully these things come back quickly. If this does happen to you, go see what this does to your long-term retirement plan using something like the free tools on Personal Capital. At least half of our portfolio is directly attributable to 401(k) matching, so cutting this would have huge long-term consequences.
If you happen to find yourself looking for a new job, be sure to know the details of the 401(k) program and factor that into your total compensation when evaluating an offer.
Friday, April 10, 2020
Now with the house paid off, our next financial goal is to get our liquid net worth up to $1M. We've got a long way to go, but this new view for our household balance sheet breaks up our assets slightly differently to help me better see how we're tracking towards that goal. Here's a run-down of the different areas:
While I have had a few years of my 401k contributions being pre-tax, over time we have done more Roth contributions than not. But because employer 401k contributions can't go in as Roth even when my own contributions are going in as Roth, we have ended up with more money in pre-tax accounts than after-tax accounts with the majority being the accumulation of years of generous employer matching contributions and the associated growth of those assets (with one short exception, every employer we've had has provided an employer match greater than 100% of our contribution).
We have a long term investment account where we are investing in index funds, and another account designated as my trading account where I trade individual stocks. I'd like to be able to trade more actively, but my job doesn't allow me much time during the day to keep track of markets.
COLLEGE SAVINGS / 529s
HOUSE / CARS
Sunday, April 5, 2020
I have gotten to the point that if a book truly isn't good, I don't finish it. So the fact that I finished all 7 of these is a sort of recommendation for any of them. There are, however, some that were better than others and I've broken them out below.
My Best 3 Books of the Month:Young Money: Inside the Hidden World of Wall Street's Post-Crash Recruits - Kevin Roose.
Where are the Customers Yachts?: Or a Good Hard Look at Wall Street - Fred Schwed Jr
Written back in 1940 yet remarkably still applicable, this book takes shots at Wall Street banks, the ways they make money, and the relationships they have with their customers. I enjoyed it and it was a fairly quick read.
The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution - Gregory Zuckerman
This was a fascinating view into one of the most successful hedge funds that you've probably never heard of (their flagship Medallion fund had 30 year average annual return from 1988-2018 was a whopping 39% after fees!). One part that repeatedly stood out to me is how the personalities in the book differ so much from the stereotypical trader and align with engineers, coders, or mathematicians. If you're looking for a more 'Wall Street' book, check out 'The Greatest Trade Ever', by the same author.
Other books I also read in March:The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters - Gregory Zuckerman.
I didn't realize until I was going through this that I had actually read two books from the same author in the same month. Coincidentally I also happened to be reading this book when oil prices plummeted to their lowest point in years. When I first saw the drop in oil prices, my mind immediately went back to an article I read that caused me to want to learn more about the players in fracking and having now read this book, it further reinforces my belief that we're likely to see a lot of bankruptcies in the fracking space.
How Full is Your Bucket - Tom Rath
This was a really quick read and gave me a few things to think about but wasn't exactly life changing. I tend to be a pretty upbeat person already, and this caused me to think about how my attitude influences others. This is especially important in the workplace right now during uncertain economic times, and I have to try especially hard to brighten anyone else's day since my entire team is working from home 100% and has been for the last few weeks.
We Were the Lucky Ones - Georgia Hunter
This book follows various peoples lives and stories throughout the horrors of WWII, all based on true stories. I've read many similar accounts, and each one causes me to be thankful to live in the time and place that I do and to do my part to not allow the mistakes of prior generations to repeat.
Conquistador: Hernan Cortes, King Montezuma, and the Last Stand of the Aztecs - Buddy Levy
This one came recommended from a friend living in Latin America and dove into details of the Conquistadors I never knew about, but also hadn't ever thought about.
I welcome any recommendations you might have as I am plowing through my 'to-read' shelf and always need to be adding new titles.
Thursday, March 26, 2020
Our cash balance is up to a much more comfortable level now, especially now that the house mortgage is paid off. Our fixed monthly expenses are down by quite a bit, so what was once a ~5 month emergency fund all of the sudden became a ~9 month emergency fund. As of the end of February, storm clouds appeared to be brewing for my job and the economy as a whole, so we're comfortable not deploying this cash right away.
HOUSE / MORTGAGE
Monday, February 24, 2020
I've been at the same company now for almost 7 years and have received progressively larger bonuses each year. Most of those years, we've taken pretty much the entire bonus and used it to pay down our mortgage. We're very fortunate to have a high income, but at the same time I also know co-workers who make as much or more than me who are nowhere near paying off their homes.
When the direct deposit hit, I had all the information ready to get the wire transfer out and within about an hour of getting the deposit I had sent the wire to our mortgage company for the last and final payment. You could say I was a little excited. The next day, we celebrated by taking a long weekend family trip to one of our favorite spots just a few hours drive away.
We have had a mortgage payment pretty much consistently for the past 13 years on three separate houses. We've become so accustomed to making monthly payments that it still doesn't seem real that we'll never have to make another mortgage payment. I'm really looking forward to the first paycheck I get in March that won't have to go straight towards the mortgage, maybe then it will seem real.
Saturday, February 22, 2020
CASHThe only somewhat concerning change in January was our cash balance dropping below $20k. I'm not super concerned since I'm getting a bonus in February that will fill it back up, and this is only because we had to make final payments towards a vacation we have planned for later in the year with the kids.
HOUSE / MORTGAGE
OTHERIn other news, I had to make a trip to India in January for work. It was my first time to that part of the world and I really enjoyed my time there. The long flights and time away from family weren't fun but did help me complete 10 books in the month of January, starting the year well ahead of my standard goal of 52 books per year.
The best books I read last month were:
Shoe Dog by Phil Knight. This is the story of Nike as told by the founder. It's a fascinating story, and one thing that really blew me away how many times the company teetered on the edge of insolvency despite massive annual sales growth.
Talking to Strangers by Malcolm Gladwell. I've read every book Malcolm Gladwell has published and this one was a different topic from his other books but was still the same well crafted narrative style I enjoy. Among other things it talks about the snap judgments we make interpreting body language of strangers and how to identify internal unconscious bias, something we'd all do well to root out.
Saturday, February 8, 2020
- I know we've been putting a lot of money towards paying off the house, but seeing that it was $65k in a single year was little surprising. We'll have it completely paid off soon, and it's crazy to think that we could increase our other investments/savings at that rate once the mortgage is done.
- Once the house is paid off, I'll be viewing our net worth slightly differently. The plan is to look at our liquid assets separately from our other assets (house, cars, etc) as we focus on the next goal of reaching $1M in liquid assets.
- Our cash balance is creeping lower and will get even lower before it jumps back up at bonus time. I would much rather be in a position where I am waiting for a bonus to replenish my cash than to need the bonus to pay off consumer debt. When I was a financial advisor, we were paid quarterly bonuses and some co-workers would consistently rack up credit card debt each quarter, relying on their bonus to dig out of the hole they dug.
- 2020 is off to a good start for our finances, but not without uncertainty similar to any other year. Our spending habits are mostly the same, but we do have some celebratory spending planned shortly after paying off the house.
- Most of what I've put on this site has been 'money stuff', and not very much 'DIY'. This year we'll be starting a pretty major DIY project at our house and I plan to document more of that.