Look out for the “End of Year” status reports – version 2020!


Well, its that time of year, the end-of the old year, beginning of the new. What we can look forward to over the next 30 days is a list of the performance of various FI bloggers, and their goals for the new year. Some insights on how their investment strategies worked out, what frugal tips worked (and which ones didn’t), what travels they made, etc. Get ready for it!

While some might look down on this, or find it boring, I actually enjoy seeing the information shared by our community. I always try to take away 1-2 things from each annual review, and try to integrate some of them into my plans for the new year. I also write about my wins & losses, and what I’m planning for the next year. It could be “navel gazing” but it helps me work out my objectives and what lessons I learned. So here goes…..

We’ll start the series of blog posts off with how I did with my goals for 2019.

Financial Goals: Like most folks in 2019, we hit this “out of the park”

  • Save $80K in my tax-defered, Roth and regular investment accounts. Score A. The final total was a little over $86K, which is less than last year, but I cut back on money to my deferred account at work.  
  •  Increase dividend income to over $27K, so it covers 37% of a sample $72K/year standard of living (roughly what we are living right now). Grade A. Dividends were $29,406, or over 40%.
  • Beat new worth growth rate of 7% (I’ve averaged 6.1% over the last ten years). Grade A. Net Worth grew 20.1% to a little over $1.7M (only $300K of which is our home).

Business Goals

  • Begin attending regular meetings of my local Real Estate association. Grade F. Made decision at start of year to discontinue this.
  • Double the number of blog visitors in 2018. Grade F. Had 6,267 in 2018, and hit about the same number in 2019. Thanks to everyone who came & read, and especially those who commented. Going to (hopefully) do some more interesting writing in 2020.
  • Write/publish a book on finance. Grade F. Made almost no progress on this (only finished the outline). Need to start researching areas of the story. I’d like to make some progress on this in 2020.


  • Increase weight lifted by 10%. Grade A: Increased my weight lifted by 16.7% in 2019. I’ve hit a “wall” right now, and haven’t pushed up for several months now.
  • Average 3 hours of Cardio per week. Grade D. Life has made it difficult to hit the “3 hours per week goal” but I was able to hit about 2 hours fairly consistently.
  • Take part in one long bike ride (80+ miles). Grade F. Did not do
  • Backpack over 100 miles on AT. Grade C. Did around 80 miles. Its getting difficult to do this, because I’ve done just about all the hiking I can do in a half-day’s drive, so weekend trips are just about out. Probably will “walk down” the goal for 2020.
  • Reduce weight by 20 lbs. Grade F. Actually gained a couple of pounds from Jan 2019. Really need to work on this (like so many others New Year’s resolutions for 2020).
  • Read at least one book a month. Grade A. Again, really loving hitting this goal. The reading keeps me off the computer and from watching TV as much as I used to. Did 21 books in 2019. Already close to finishing one in Jan 2020.


  • Visit a National Park. Grade A. Hit one during trip to North Carolina (Smoky Mtn. National Park). Plans for doing three in California in 2020.
  • Visit family in Tennessee, New York and Vermont. Grade A. Saw family all over the place, though not as much in NY as I might have liked.
  • Week at the beach: Spent a week there with Mrs. 39 Months and had a great time. First time we ever really took a week off at the great New Jersey beaches. Going to repeat this with family in 2020.
  • Visit Asheville NC: Grade A. Had a good time, and Mrs. 39 Months enjoyed the Dulcimer festival while we were there.
  • Visit Ellis Island. Grade F. Did not visit
  • Go on an International Trip. Grade F. Didn’t travel internationally in 2019.

Like most folks, 2019 was a great year financially, really setting us up for FI. It was a mixed bag for Personal and travel goals. We did get a lot of things done, and I have some new ideas for business goals for 2020 that excite me. I’m very happy with how the year worked out. Hopefully you can all say the same!

Mr. 39 Months

Correction Coming? Timing the Market in 2020

I have written several times about the potential of timing the market, using a variety of methods. My favorite approach would be the one Ben Stein and Phil DeMuth came up with after the dot.Com blowup in 2000. I even went back and charted how I would have done if I had followed their advice since I had graduated (back in 1986 – yep, I’m an old man).

For a lot of folks, the giant returns of 2019 were a godsend after having suffered a downturn in 2018. It helped plump back up everyone’s retirement accounts and personal savings, and better place them for retiring early. Yet now there is that nagging fear that we’ll have a correction, and we will lose all those wonderful gains that we had. This also raises the specter of “sequence of return risk,” where you retire right as the market tanks (or stays flat for a decade+). So what is a person to do?

I looked at my “market timing” stats for 2019 and 2020 and here is what they said:

  1. Price (Current price of S&P500 vs 15 year trend): Jan 2019: No to stocks, Jan 2020: No to stocks
  2. P/E Ratio (Current S&P 500 P/E ratio vs 15-year trend): Jan 2019: Yes to stocks, Jan 2020: No to stocks
  3. Dividend yield of S&P500 vs 15-year average: Jan 2019: Yes to stocks, Jan 2020: No to stocks
  4. Earnings of S&P500 vs. AAA corporate bond (stock earnings “yield” vs. yield of AAA bonds): Jan 2019: Yes to stocks, Jan 2020: Yes to stocks

So in Jan 2019, 3 of the 4 indicators said to purchase stocks, while in Jan 2020, 3 of the 4 are saying invest in bonds. Looks to me like stocks aren’t set up to do great in 2020.

Now remember, these timing stats did not say to sell your stocks/bonds, they just say that for that period, you just concentrate your new purchases on the appropriate category.

As I’ve stated before, I’m a firm believer in the “buy and hold” strategy, keeping with your market allocation, and rebalancing regularly (for me every 6 months) in order to keep your allocation within your guidelines. While some folks may have enjoyed higher returns over a set period of time, this method has met my objectives and allowed me to grow my net worth significantly.

So will there be a correction in 2020? In almost every election year, the market has done OK (with the exception of 2008, when it melted down spectacularly). However, I’ve been growing my net worth at an average of 6.1% per year for the last 14 years – and based on that I would need my investments to lose 9.5% in 2020 in order to maintain that 6.1% growth rate. Take of that, what you will.

My thought is that 2020 will be a “net 0” year, with limited gains in the market. Stocks are overpriced if you look at the metrics above, so it will take them some time for the profits to catch up with the price. My intention is to “stick with the plan” of investing regularly, keeping my allocation, and rebalancing.

What are you plans for 2020?

Mr. 39 Months

Dividend/Income Account Update

I wrote in July about the performance of my dividend/income account, the one that I have setup in my father’s stretch IRA. The concept was to see what I could do with an income-oriented account (dividends, etc.). Could we get the growth and income necessary to meet our retirement goals, and how did it do in comparison to the Vanguard account I had with the simple allocation?

The base allocation for the income account was 25% dividend paying stocks, 25% REITs (paying good dividends) and 50% Bonds. This was all based on the information in the book “Yes, you can be an income investor” by Ben Stein.

For the year, the account returned a healthy 3.51% dividend return, and growth of around 9.7%. Not too shabby! However, this is in comparison to my Vanguard IRA account, which had a 2.86% dividend, and a 16.51% growth rate. Obviously, the Vanguard account, with its higher weighting of stocks (52.5% stocks, 17.5% REITs, 30% bonds) did better in 2019.

One of the things I noticed, however, was that the income account didn’t drop as precipitously as the Vanguard account in the bear market of 2018. How have the two different accounts done over the last three years?

The Vanguard numbers are a little “screwy” as I have had to add back in the $90K of Roth-IRA conversions that I did in 2018 and 2019, and the Stretch IRA I have to take about $5K out each year for tax purposes. I’ve adjusted the totals and percentages to reflect this.

For comparison, I did the math for if you had invested $1000K in 2016, what would that be at the end of 2019. As of Jan 1, 2020, the Stretch IRA would have $1,232, while the Vanguard account would have $1,321 – the Vanguard account’s return was better. It wasn’t like that at the end of 2018, due to the stock drop.

My intention is to continue to keep the money in my father’s stretch IRA oriented on income, as a learning tool. Should be interesting.

Mr. 39 Months

Previous Updates:

Excellent Post at the Retirement Manifesto on your beginning of the year financial moves

Pretty much parallels what I do each year in the first day or two. Excellent checklist!

Retirement Manifesto: A step-by-step guide-to-your-annual-financial-update


  • Update Net Worth Statement
  • Update investments/capture current asset allocation
  • Determine portfolio rebalancing actions
  • If retired, update your bucket strategy (how much in cash bucket, how much in 5-8 year bucket, how much in long-term bucket)
  • Update your spending from the previous year
  • Determine your spending goals/limits for the new year

WOW! Just WOW! Investment update for Jan 2020

I think I speak for everyone when I say – Wow.

The year 2019 will go down as one of the best years for most people in terms of their investments. The S&P 500 (everyone’s standard for judging US stock performance) went from $2,607.39 to $3,235.14 (Jan 1 to Jan 1) – a 24.0% increase. Tack on the 1.77% dividend yield and you were seriously kicking butt, as long as you just left it in the market in an Index Fund! Hopefully the readers here didn’t panic in Dec 2018 and sell their stocks.

I’ve been an index investor for most of my investing life. Whenever I have dabbled in individual stock pickings, I mostly got my head handed to me. So here I stay. My allocations tend to be broader than just your typical “dump it all into the S&P 500”

Retirement Accounts: Remember, my allocation for these is:

  • 30% Bond Index Fund
  • 17.5% S&P500 Index Fund
  • 17.5% International Index Fund
  • 17.5% Small Cap Index Fund
  • 17.5% REIT Index Fund

My company 401K/Deferred account doesn’t have a REIT option, so I’m 25% for the other 4 categories.

I set up my father’s inherited IRA to see how it would perform if it was concentrated on creating income (i.e. dividends). My allocation for that was:

Dividend Income Account: Allocation:

  • 25% Dividend Stocks
  • 25% REITs
  • 50% Bond Index Funds

Finally, my “fun money” post-tax account is primarily setup for value investing, with a mix of USAA and Vanguard index accounts.

Value Account: Allocation

  • 12% PAWZ ETF (it invests in pet related companies, a vanity play on my part)
  • 44% USAA Market Index (my brokerage is USAA)
  • 44% in Vanguard Value Index fund

So how did they perform for the year?  Here are all my portfolio items (not weighted)

Name Symbol Capital Gain % Dividend % Total Return
TRowe Price S&P 500 PREIX 28.5% 1.8% 30.2%
Extended Equity Market Index PEXMX 22.0% 1.0% 23.0%
International Equity Index PIEQX 17.7% 2.6% 20.3%
Real Estate TRREX 3.7% 2.5% 6.2%
US Bond Enhanced Index PBDIX 5.2% 2.9% 8.1%
Vanguard Bond Index Fund VBTLX 5.7% 5.24% 11.0%
Vanguard 500 Index Fund VFIAX 28.8% 1.85% 30.7%
Vanguard REIT Index Fund VGSLX 24.5% 3.31% 27.8%
Vanguard Small-Cap Index Fund VSMAX 25.5% 1.38% 26.9%
Vanguard Int’l Index Fund VGTSX 17.7% 2.98% 20.7%
Vanguad Welesley Income Fund VWINX 11.8% 0.95% 12.8%
Eagle Small Cap growth   18.7% 0.00% 18.7%
Vanguard 500 Index Fund   28.8% 1.74% 30.6%
Vanguard Total International Index   17.7% 2.08% 19.8%
Vanguard total bond Mkt   5.7% 2.52% 8.3%
Eagle Small Cap growth   18.7% 0.00% 18.7%
Vanguard 500 Index Fund   28.8% 1.74% 30.6%
Vanguard Total International Index   17.7% 2.08% 19.8%
Lord Abbot Total Return   6.2% 2.71% 8.9%
Chevron Corp CVX 10.8% 3.9% 14.7%
Cisco CSCO 10.7% 2.9% 13.6%
Healthcare Realty Trust HR 17.3% 3.6% 20.9%
Ishares Preferred PFF 9.8% 4.9% 14.7%
Realty Income Corp O 16.8% 3.7% 20.5%
Service Properties TR SVC 1.9% 8.8% 10.7%
UMH Properties Inc UMH 32.9% 4.6% 37.4%
Verizon VZ 9.2% 3.9% 13.2%
Vanguard Total Bond Index VBTLX 5.7% 2.5% 8.3%
Vanguard Int-term Bond index VBILX 7.2% 2.5% 9.7%
USAA Extended Market Index USMIX 24.0% 1.3% 25.2%
Vanguard Value Index VVIAX 22.5% 2.6% 25.1%

As you can see, no real negative items in the bunch. While the bonds and REITs didn’t light the world on fire, the other stocks really jumped off. The bonds and REITs  will help balance the portfolio out when the stocks have a correction (and we all know a correction is long overdue here).

Overall, I was up 20.1% for the year, which definitely exceeded my expectations. Even with all the bonds and REITs, the overall performance was excellent.

Mr. 39 Months

Another step in research for TKD woodworking – shipping costs?

I’ve gone through and determined most of the bills of material for the items I hope to sell. This will establish my base costs to produce (labor, materials, gross margin). One of the other costs, though, is shipping – getting the items to the customer.

For that, I’ve got a variety of ways I could ship product (Parcel with UPS or Fed-Ex, the US Post office, etc.). One of the interesting design features that most folks don’t pay attention to is how manufacturers size items and build packaging so that the items can be shipped as efficiently as possible, with the lowest cost. In my primary job, its fascinating to see companies change the thickness of their cardboard by hundredths of an inch, just to shave off a little cost and weight, or design something so that it is 23-3/16” long in the package (because if its 23-1/4” long, UPS will charge them more).

Most of my items are going to be fairly small, but still, it doesn’t hurt to determine potential costs and benefits of sizing something correctly.

I went to the US post office and checked the costs of their flat rate postage boxes. These you can pick up at the post office, and they will charge you for the box and shipping once you ship something out – just one flat rate. The costs and dimensions of the items are:

No Type Size Cost Length Width Height
1 US Postal Flat Rate Small $7.90 8  5/8 5  3/8 1  5/8
2 US Postal Flat Rate Medium $14.35 11      8  1/2 5  1/2
3 US Postal Flat Rate Medium – flat $14.35 13  5/8 11  7/8 3  3/8
4 US Postal Flat Rate Large $19.95 12      12      5  1/2
5 US Postal Flat Rate Large – flat $19.95 23 11/16 11  3/4 3     

As you can see, the difference in a ¼” can raise your costs significantly. I’ll need to check the rates of other providers to see if I need to adjust my designs. Right now, only one of my items can fit in the small. I need to see what I can do to keep my other designs in the “medium” area.

Just part of the analysis one needs to do when planning to produce items and sell online (or via catalogs or direct mail).

Mr. 39 Months

Bill of Materials

In a previous company, I was a manager of the packaging and manufacturing department for a small auto parts manufacturing/warehouse operation. A key part of that was managing the work flow through 20 different machines, with all their requisite parts, labor and quality standards. Managing all of that can be very complicated, and while software can assist with the scheduling, you still have to have the human interface to plan, shift work, and understand what the software is telling you to do (and make changes when necessary). I actually went back to school to get training in this with APICS (the American Production and Inventory Control Society).

A key aspect of managing the workflow and the inventory was the BOM (Bill of Materials) and Process Flow Diagram. With these, the operators were able to understand all the parts that went into the finished item (the bill of materials) and how to put it together. For every part produced, you needed to have both of these documents, and as you made improvements in the process (something good companies do to keep ahead), you updated the documents.

As I look at pursuing my side hustle, I’ve listed the items that I think I will start with, but now I have to determine how to build the items, what materials are necessary, and what those items might cost. Its only with this information (and an idea of the time/labor to build) that I can come close to identifying how to price my materials.

Here is an example – the tea box I just built for Mrs. 39 Months for Christmas.

I worked through the materials I was going to need to build the item:

Description L W T
Cherry 48      6      1     
Maple 30      8      1     
Poplar 12      6        1/2
Poplar 60      4        1/2

I then had to work out a “cut list” for the final dimensions for each of the parts:

Description Qty L W T Material
Front & Back Pieces 2 13-1/2″ 4-5/8″ 1/2″ Cherry
Side Pieces 2 6-1/2″ 4-5/8″ 1/2″ Cherry
Top Panel 1 12-1/2″ 6″ 1/2″ Mahogany
Bottom Panel 1 12-1/2″ 6″ 1/2″ Poplar
Bottom tray front & back 4 6-1/8″ 3-1/4″ 1/4″ Poplar
Bottom Tray Sides 4 5-7/16″ 3-1/4″ 1/4″ Poplar
Bottom Tray Center pc 2 5-7/16″ 3″ 1/4″ Poplar
Tray bottoms 2 5-7/8″ 5-3/16″ 1/4″ Poplar

Finally, I had to work out the process to build the item:

  1. Joint/Plane/rip/crosscut side, top & bottom pieces
  2. Cut side & back pieces into large blocks to “wrap” the grain around
  3. Cut grooves for the top & bottom – 1/8” (router or tablesaw?) into front, back & side pieces
  4. Cut groove in top piece
  5. Clean up grooves with 1/8” chisel, so bottoms are flat
  6. Cut rabbet in bottom piece with dado set
  7. Crosscut side, front & back pieces to final length
  8. Cut the 45 degree angles in front & side pieces
    • Start from side for grain match
    • Cut first 45-degree for each
    • Put measure on stop block to cut 2nd 45 degree
  9. Dry fit front, back, sides, top & bottom
  10. Sand all pieces (100/180/220)
  11. Glue up bot with painters tape on all four corners, then clamp up after checking for square.
  12. Use bandsaw to make cut for lid
  13. Sand off machine marks
  14. Layout hinge mortises and cut (see FWW article on this)
  15. Shellac finish
  16. Steel wool
  17. Wax over the top

Armed with this information, I can at least try to price out what the materials will cost to build (wood, hardware, finish, etc.)

From there it will be time to determine the labor needed to build – but since that can be affected by the quantity you are building at one time (and thus being able to do the same step for multiple items, saving time). This will be based on the “Economic Order Quantity,” a manufacturing term which considers proposed inventory levels, expected sales, etc. to identify the optimum amount you want to produce at a time. We will handle that in a future email.

So the planning goes on. I’ve been watching some YouTube videos on pricing and marketing your projects. Continuing in the “research” phase of TKD Woodworking.

Move info later. Thanks for all the suggestions!

Mr. 39 Months

Starting Something New

As part of my plan to transition to FI, and to pursue what I want to versus working the rat race, I’ve decided to start working on my side hustles and researching to eventually move into a different field. As many folks have stated in their FIRE journey’s, its not that they want to stop working, its that they want to work in something that they love. That is what I’m going to do, and I’ll try and chart some of my progress here.

One of the areas I want to work at is in starting up and running a business, even a small, side-hustle one. My thought is to start in a small one centered around one of my favorite hobbies, woodworking. My plan would be to make items for sale at craft fairs and online. I also wanted to go through some of the thoughts and work here, including the numbers, so people could get an idea of the process (and offer advice & counsel on what I’m doing, if it fits them).

In reading through the book Street Smarts, written by two individuals who have helped guide entrepreneurs for decades, the first question they ask at the beginning of potential entrepreneurs is “why do you want to create and build this business?” Along those lines, I laid out the reasons why I wanted to start up this business:

  1. Learn how to work business numbers and run a business by them (P&L statements, Expenses, budgets, Capital spending, etc.)
  2. Improve my woodworking skills
  3. Learn to develop website
  4. Develop my marketing skills

Adding/improving these skills would help me move onto the next business I was planning on moving to (more on that at a later date). So what steps do I think I need to start with here?

  • Create a list of potential items I could make and sell, both online and at craft fairs
  • Determine material costs for those items
  • Determine Tools/Jigs necessary to build those items
  • Determine time in would take to manufacture those items

From that, I would at least have some idea of my material costs, and be better able to build a budget. My list of potential items to start is:

  • Photo Holder
  • Picture Frame
  • Cutting Board
  • Tea box
  • Fast boxes
  • Shaker carry box
  • Campaign collapsible bookshelf
  • Craftsman bookshelf

So the next step for me is to work out the other three items for each piece I want to produce. We’ll see how it goes.

Mr. 39 Months