Saturday Linkage

Oct 17, 2020

  1. Goals vs. Systems (Scott Adams); In his book, he details how his ability to create systems in his life has benefited him much greater than setting goals.
  2. The wrong way to think about debt (White coat investor); Goes through some of the arguments to have debt in this low-interest environment.
  3. Recycling meets reality (knowable Magazine); Problems with recycling – the real costs and issues
  4. Retirement Simulator (MinaFi); Another MonteCarlo simulator you can use to compare your plans.
  5. Five Questions for your next Net Worth Update (Banker on Fire). Good questions to ask yourself.
  6. How much it costs to live in every state for 30 years, ranked. (My Money Wizard)
  7. How much money should you have saved for retirement (The irrelevant investor). Suggested amounts, by age.
  8. Four Minute Tour of 193 SF house in the heart of Tokyo (You Tube)
  9. Does Working from home work for you? (Monevator); Interesting discussion in the age of Covid.
  10. You paid off your Mortgage, now what? (A wealth of common sense); The next thing to do with that mortgage payment, once its all paid off.
  11. Reconciling three retirement goals (Financial Samurai); 25x expensies, 20x income, 0.5% withdrawal

Dividend Account results – 3rd Qtr 2020

Sorry I didn’t post over the weekend. Went backpacking up in New Hampshire, where it dropped down to 32 degrees with a 15 mph wind blowing. Made the hike a little more “exciting” than I wanted.

As noted back in April, I altered my Dividend/Income account to reduce the bond allocation to 0, and increased the dividend stocks and REITS to a 50/50 split. The idea was to increase my dividend yield, as bonds had been performing poorly for the 3+ years that I had been using them. With Interest rates the way they appear to be, I don’t see bonds performing that well in the near future.

The first quarter was somewhat successful (an 18.7% increase in dividend $) but a real bust as far as value (I dropped almost 30% in value) due to the market volatility. Yield was up to 6.13%, but this was primarily due to a drop in the underlying value of the investments. For the second quarter, the investments recovered somewhat, and my yield dropped won to 4.67%. The actual $ amount of dividends for 2020 vs. 2019 was just about even.

For the third quarter, the value of the underlying investments has gone up about 2% (still not where they were at the beginning of the year) and the dividend payments are only 3% higher than the same period last year. A slight improvement.

stockDetailsInvestment valueYieldDividend
CATCaterpillar$7,457.502.76%$51.50
CVXChevron$3,600.007.17%$64.50
CSCOCisco Systems$5,908.503.66%$54.00
DOWDow$4,705.005.95%$70.00
XOMExxon Mobil$3,433.0010.14%$87.00
HRHealthcare Realty$15,060.003.98%$150.00
IBMInternational Business Machines$6,084.005.36%$81.50
PFFiShares$12,029.005.39%$162.04
PFEPfizer$5,505.004.14%$57.00
ORealty Income Corp (REIT)$12,150.004.61%$140.10
SVCServices PPTYS TR$4,770.000.50%$6.00
MMM3M Company$6,407.003.67%$58.80
UMHUMH Properties$14,894.005.32%$198.00
VZVerizon$5,949.004.14%$61.50
WBAWalgreens$3,592.005.21%$46.75
$111,544.004.62%$1,288.69

Again, if I was using the account to live off the dividends, I could “let it ride” and let the investments build back up, while spending the dividends. I believe the “jury is still out” on whether the shift to stocks & REITS was a good decision or not. With the current US Fed and its interest rates, I don’t think Bonds will be a good return any time soon – unless you are willing to go into some very risky bonds. If I had additional capital, I might invest more here, as I think these dividend stocks are undervalued.

Let’s see how the 4th quarter goes.

Mr. 39 Months

Quarterly Update on Goals – Oct 2020

Well, it’s early October, and while I’m down for the year in my investments, I still think I’ll end the year OK, maybe a little up. I think there is a lot of uncertainty in the market right now re: the US elections, and that will all be sorted out int he next 30 days. Once that is done, hopefully we will continue moving forward.

The Chinese Corona Virus is still around, still causing issues, but I’m also hopeful that its affects on the economy will continue to recede. We will see.

My Goals for 2020 (some financial, some not):

Finance:

  • Save $28K in tax-advantaged accounts – 401K, and Roth IRA.  Grade A. Saved $3.5K in our 401Ks for the 3rd qtr, bringing my 401K total to $11.2K. Plan to put my $14K bonus into the Roth in 4th Qtr once I know my tax status.
  • Save $41K in regular accounts (compared to $5K in 2019). Grade A. We’ve saved $43K for the year. Remaining money goes into paying for the Roth IRA.
  • Increase dividend income from all accounts to $27K/year (compared to 29K in 2019). Grade C. Dividends are down for the year in the major accounts/mutual funds. Was only able to put $5.8K in for 3rd qtr, which leaves me at $17.6K for the year. Unless 4th qtr is a “gang buster” dividend time, I won’t hit it.
  • Passive income covers 30% of base living expenses in retirement, estimated at $78K per year (previously, I was using $72K, but after meetings with our finance guy and Mrs. 39 Months, the budget ended up being $78K).  Grade A. Currently running at 30.1%. My long-term goal is to get my dividend/passive income up to where it covers over 100% of my expected retirement living expenses, so my investments can continue to grow.
  • Beat net worth growth rate of 6% (it was +20.1% in 2019 with the stock market run up). Grade D. Like most folks, my Net Worth hasn’t moved much. While I’m down in my investments for the year, since I continue to dollar-cost-average in, my net worth is up 2.4% – but unless the market really turns, I don’t think I’ll hit my historical 6% this year.

Business:

  • While not getting a membership, I wanted to attend six (6) of my local real estate investors association meetings this year. Grade A. My local real estate group has had free online meetings, at least 2X a month, and I’ve attended eight already. Going to continue to do this, and I’ll probably join permanently in2021.
  • Double the number of blog visitors in 2020. Last year it was a little over 6,000. I want to get at least 12,000 this year, so I need to put myself out there more (i.e. comment) and write interesting topics. My thanks to everyone who stopped by, and I try to return the favor, and comment as well. Grade F. Not seeing a real jump on this – If anything, it’s a bit of a drop. Need to get out in the community more.
  • Create TKD Woodworking (my side-hustle name) with an LLC, website, finance tracking, etc. Sort of a trial method for running businesses. Grade B. Incorporated it, built 5 products, established a website (basic one) and began selling on Etsy. Due to the Virus, haven’t been able to do any trade shows. Still, coming along.
  • Make $1,000 in sales (not necessarily profit) on items with TKD woodworking. Grade F. Haven’t sold anything yet.
  • Write/publish a book on finance.  I wrote one for new graduates in 2017, but I have identified an area of the community which hasn’t been served as well in the past. Hopefully I can assist with something here.  I’ve got the first five chapters outlined/partially done, but still have a ways to go. Grade F. With all this extra time, you’d think I could make progress on this. A little lazy I guess.

Personal:

  • Increase weight lifted by 10% from 2019. Was able to exceed this in 2019, need to continue to push it. Grade F. Jumped up about 7% in 1st qtr, but haven’t been lifting due to the Chinese Corona Virus. In September, I went to the online training system called Gynmastic bodies. Looking to get better with that since I can’t go to the gym now.
  • Average 2 hours of cardio per week, which is about what I’m doing now. Grade A. Walking daily, so hitting this.
  • Backpack over 90 miles on AT (did around 80 miles in 2019). The trail that I haven’t hiked is getting further and further away, making it impossible to do weekend trips. Going to get harder. Did 40 miles in August, have 18 miles this month and another 30 scheduled for November. Grade B.
  • Continue volunteering at Pennsbury Manor at their joiner’s shop (woodworking). Really enjoyed this. Incomplete. Site is closed down
  • Reduce weight by 20 lbs. from Jan 2019 (lost 2 lbs. in 2019). Again, I want to get in better shape as I get closer to financial independence. Grade C. I’m down 8 lbs in first 3 quarters, but still have a long way to go, and the virus is keeping me from eating as healthy as I’d like.
  • Read at least one book a month. I surpassed this goal in 2018, and re-learned the joy of reading. Grade A. Seventeen (17) books so far and I really enjoy it.

Travel:

  • Visit three national parks (that is the plan, right now). Grade F. No vacations this year.
  • Visit family in Tennessee, Vermont and New York. Family is very important to me. One of the things I am looking forward to with financial independence is the opportunity to visit family more often. Need to get up to see my brother in Vermont. Grade B. Visited Vermont and Tennessee. Just need to see family in New York now.
  • Take a week at the shore and just relax with family. Currently planned for July, but we’ll see how many family members can come. Grade F. Cancelled.
  • Visit Ellis Island. Still want to do this – its so close. As 50% Czech from immigrant great grandparents from the turn of the century, I believe they went through there, and I want to see it. Grade F. Cancelled.

How did your third quarter go this year?

Mr. 39 Months.

Saturday Linkage

Oct 3, 2020

  1. Weekly Travel Update – Appeal of cash back cards (travel miles 101): With the Covid virus, cash-back card bonuses are getting another look
  2. How the Federal Reserve decisions affect your finances (Simple Dollar): A ot of folks still don’t understand the effects the Fed has on their daily lives.
  3. What is financial literacy and why its important (my tipid tips); We should be teaching this stuff in high school.
  4. The opposite of the latte factor (four pillar freedom); Instead of trying to cut $5/day out of your expenses, why not trying to earn an extra $5/day?
  5. Exploring is better than traveling (budget life list); what is the difference, and why is it important?
  6. How to Prep for a natural disaster (get rich slowly); Its hurricane season!
  7. How to make money playing video games (think save retire): seriously?
  8. Six most common retirement mistakes (retirement manifesto); Some of these are obvious, some not-so-much
  9. Five unusual reasons to love self-employment (retire by 40); I think the flexibility would be the big one for me
  10. The 2020 outdoors east coast owners rally (reflections around the campfire); cute story about the little-show that could in the age of Covid.
  11. All the president’s tax men (go curry cracker); creative tax strategies in the 21st century.

Investment Update Oct 2020 – September was not good to me

What a year it’s been! Like everyone else, it’s been a crazy year. Markets up/Markets way down/Markets way up/Markets down. It’s enough to drive someone to drink – or to drink more!

I was reading an article which was showing the various stock indices for each country, and apparently just about every other countries stock market (Britain, Germany, China, etc.) haven’t gotten back to their pre-2008 numbers, and most haven’t gotten back to their pre-dot.com (1999) numbers. Heck, Japan hasn’t even gotten back to their 1989 numbers!

So the US stock market is a bit of an anomaly here. The fed has pumped a lot of money into the system, and this has resulted in the market staying up. By keeping interest rates low, folks have nowhere else to put their money but the market (bonds, CDs, etc. – who are you kidding). At some point in time, it’s going to drop worse than in March 2020.

What to do? Get ready for it, both physically and physiologically. Pay off debt, so that isn’t hanging around. Get your spending within reasonable levels, so if you have to cut back, you can. If you have short-term needs (within the next 5 years) get that money out of the market and into bonds/treasuries/CDs. Be ready to suddenly lose 20%+ of your stock money – and don’t immediately go out and sell everything. What you leave in the market should be money you won’t need for the next 5+ years.

For September, we ended up losing about -2.52%, and it was broadly “across the board.”

So our allocation is as follows, as of July 2020:

Retirement Accounts: Remember, my allocation for these is:

  • 20% Bond Index Fund
  • 20% S&P500 Index Fund
  • 20% International Index Fund
  • 20% Small Cap Index Fund
  • 20% REIT Index Fund

My 401K doesn’t have REIT option, so it’s just 25% for each.

S&P was down -4%, International -2.4%, Small Cap down -3.2% and REITS down -3.6%. Bonds were up +0.4% (one of the reasons to have them).

My dividend account new allocation (as of Jan 2020) was:

  • 50% Dividend Stocks
  • 50% REITs

The dividend paying stocks varied, but most were down. Overall, the account was down -3.0%. My value account with Vanguard was down -3.0%, so it was in line with most of the stock losses.

So September pushed us back into negative numbers for the year (-1.82%). I’m assuming we’ll gain some/all of that back for the year, and end 2020 about where we started.

Hope everyone is healthy and your Sept turns our well!

Mr. 39 Months

Saturday Linkage

Sep 26, 2020

  1. 29 Psychological tricks to make you buy more (visual capitalist): sneaky marketers!
  2. Abundance mindset is more than money (money the wright way); Good article on how to feel abundant no matter what your net worth
  3. What are sunk costs and when to ignore them (women who money); Often we continue with a decision even though its not working out, because we have “sunk” time/energy/money into it. When do you walk away?
  4. How financial Aps get you to spend more (wired); Aps like Robinhood can have a very “dark side”
  5. Financial “rules of thumb” and when to break them (Kiplingers)
  6. Seems so Easy (humble dollar); The rules for managing your money is easy, but actually doing the steps is very hard
  7. Stop starting and start finishing (5 am Joel); the perils of multitasking
  8. Here’s why I love RV Parky (Route to retire); Ever wonder where you are going to park your RV on a cross-country trip? This Ap will help! https://www.routetoretire.com/hwil-rv-parky/
  9. How much money should you have saved for retirement? (The irrelevant investor); Rough levels you should have staged for each age of your life.
  10. No Judgement zone: Credit card churning (budget life list); There is risk in this strategy. If you are in control of it, itc an be rewarding – but you need to stay in control!
  11. Creative Grocery Shopping Tips to save money (my tipid tips)

New Product for TKD Woodworking

Well, part of a company’s marketing and sales effort is the development of new products to sell. I’ve got five products selling on Etsy at this point, and wanted to expand this by offering a nice hinged wood box, perfect for keeping items in. Its called “Tery’s Tea Box” because it was made for my wife, and used to store her various tea samples in. Its made with Cherry and Mahogany, with a Poplar tray.

Like I discussed before, in preparation for this, I had to determine bill-of-materials, assembly process, and Economic Order Quantity. I then had to time myself during the construction to determine labor hours. With all this information, I price my labor ($20/hr) and then I am able to determine a price per unit. Throwing in overhead costs, I can arrive at a final price per piece.

This particular item needed $44.40 in materials (the high-quality Brusso hinges are $28.80 for each box), and took 2.6 hours @$20/hr. With a 40% overhead, this works out to:

  • Materials: $44.40
  • Labor: $52.00
  • Overhead@40%: $38.56
  • Total Sales price: $134.96

Note that this does not include shipping costs.

Again, one of the primary purposes of TKD Woodworking is for me to do the paperwork and calculations, so I can better understand how to run the business. I just had to do my taxes for September, which luckily were $0, because I haven’t sold anything yet. I can see that being difficult in the future.

So far, its been an eye opening experience, and I have enjoyed (somewhat) the process.

Stay Healthy!

Mr. 39 Months

Saturday Linkage

Sep 20, 2020

Sorry its a day late. Went backpacking this weekend and just got back.

  1. Why does the stock market go up? (Four pillar freedom):
  2. 7 Ways to develop better money habits (life and finances);
  3. It doesn’t pay to be a jerk at work (CNN): In the military, we understood this, and always “paid into the ‘favor bank’”
  4. How to get and maintain and 800 FICO score (Financial Pilgrimage);
  5. Roth 401K withdrawals (Fitax guy): Some of the complications of withdrawing or transferring Roth 401Ks
  6. I am so over productivity porn (bitches get riches); there does seem to be an overabundance of this.
  7. Kicking yourself when you are winning (Mr. Tako escapes); For so many of us, we tend to focus on our failures and errors, rather than patting ourselves on the back for our wins.
  8. Back from the brink of financial oblivion (the escape artist); interesting interview where someone did a lot of work to repair his life.
  9. Should I increase my credit limit? (Half banked); Everyone will typically say “no” to start, but he lays out the benefits and problems with increasing your debt limit. Good read.
  10. There’s still no such thing as a free lunch (financial bodyguard); One of the biggest “pet peeves” I have is when someone talks about getting or giving away something for free (especially the government!). Someone is paying for it, no matter what – and its probably you!

Well that was easy…..

As some of you know, we take a portion of our money each month and put it into a “charity fund” that we use to make charitable contributions every year. We use to track this when we itemized deductions on our taxes, but with the tax act of 2017, itemizing didn’t work anymore for us (we had paid off our mortgage, so we reached the point where itemization didn’t reach our base deduction in the tax code).

Still, like a lot of folks who give to charity, we continued, even though we don’t get a tax deduction for it. Right now we are only at about 5% of our after-tax for charity (vs. the biblical 1/10th) but we increase it every year.

I got in the mail an offer from Mariott for a rewards card with no annual fee, with 50,000 points if you get the card and charge $1,000 in the first 3 months. This isn’t hard for a lot of folks (groceries, etc.) so I chose to sign up, with the intention, like most travel hackers, of getting the points, paying off the card immediately, and then not using it again.

With the Covid, we’ve been extending our charity to various groups early, rather than waiting till the holidays (like we have in the past). We’ve given several times to our local food bank and the Salvation Army. In this circumstance, we chose to send $1,000 to various charities in September, rather than wait. By doing it by credit card (and eating any fees that were charged for doing so) we were able to get the charity money to folks that needed it, and get our 50,000 points for Mariott (several nights stay). Win/Win all the way around.

Now if only they would lift these travel restrictions so we could use them…..

Mr. 39 Months.

Saturday Linkage

9/12/2020

  1. Can the 60/40 portfolio still work (A wealth of Common Sense); Good analysis on this traditional allocation and its potential future.
  2. The Best Friend Investors never heard of (evidence investor); Interesting story of how poor/corrupt 401K administrators were finally held accountable
  3. Eight Secrets to a Fairly Fulfilled life (Guardian);
  4. Five things you can do with an old 401K (Physician on fire):
  5. The Work from Home backlash is upon us (A Wealth of common sense); Time to go back to the office….