Author: Norm (page 1 of 13)

Who Needs a DRIP Fund?

The first stock I ever bought was after my junior year of college. I was 20 years old and had a job as a bookkeeper for an old lady who had a tiny tax return and apartment rental business. I say “tiny” because she had about two tax clients and one apartment. Basically, she had been a big shot in the business world in the 60’s, had her own thriving business for a while, scaled that down to almost nothing, but still liked to have a bookkeeper around. (I think because she didn’t know how to use the computer) Mostly I was tracking her own personal expenses.

It was an odd job. I worked only a few hours a week, and a lot of that was spent listening to her tell stories about her life, past and present. She had a great mind for finance, and I picked up some useful advice that I probably changed my life. For one, I learned how to use Quicken, and I saw the benefits of tracking your expenses. I started tracking my own expenses right after that, and I’m still using the same copy of Quicken today.

The biggest takeaway might’ve been when she said, “Do you know what compound interest is? It’s the greatest thing in the world!” She owned some shares of IBM stock, and had seemingly owned them since the beginning of time. Over the years, she said she would buy sometimes, or sell some other times. But always, always the dividends were re-invested in more IBM stock. She told me about DRIP (Dividend Re-Investment Plan) funds, which we never learned about in school, as a good way for someone young like me to get involved buying stocks.

So I did. I opened a DRIP at the beginning of my senior year with Coca-Cola. Only the oldest, reliably dividend-paying companies seemed to offer DRIP funds, and Coca-Cola seemed like a more fun company to invest in than IBM or Exxon-Mobil or what have you. Plus, I figured that no matter what fads or technologies come along, people will always need something to drink, and whatever you want to drink, Coke will sell it to you.

Computershare is their DRIP fund administrator. So I bought the minimum required (probably $25 worth) through them and started automatically investing $10 a month, every month on the 15th. Fifteen years later, I’m still investing in a monthly basis. The only thing that’s changed is that I’m investing $75 a month instead of $10.

It’s worth about $8,500 now, which doesn’t sound like much considering I’ve been at this for fifteen years. Those financial tips you hear like “by just saving $10 a month, you can start a retirement fund!” are fibs. You need to do more than that. Luckily, the Coca-Cola holding is just a small percentage of our investments.

Who needs a DRIP fund?

Well, I’m thinking of officially ending our DRIP fund, in a way. Computershare charges fees for re-investing dividends and investing monthly. They charge $2 per automatic investment, plus 3 cents per share, and 5% for each dividend re-invested. Their website sucks, and it’s a minor annoyance that the Coca-Cola holdings are separate from everything else we have. (See Is Vanguard Getting Too Big?)

Aside from that, Comptuershare is a bastard if you try to sell shares. I don’t think they’re alone among DRIP fund administrators in this respect. They punish you for leaving. It costs $15 or $25 to sell shares, plus 12 cents per share. So it would probably cost us about $50 just to completely sell our position. And that cost will only increase as our position increases. So better to move out sooner rather than later, right?

If I move everything to Vanguard, re-investing dividends would be free, but new investments would cost $7 every time. That’s more than what Computershare charges. So I’m thinking of continuing to invest in Coca-Cola only once per quarter, instead of once a month, purchasing $225 every time (three months worth of $75 investments).

I’m not sure how much the exchange will cost (I’ve read conflicting reports), but it would be cost less and be less risky than selling and attempting to re-buy it at the same price.

Anyone else have, or used to have, a DRIP fund?

 

Ridinkulous Quarterly Expenses: Q2 2017

Hi, Ridinkuloids! I hope you had a great quarter full of wise financial decision-making. We did better this quarter than last quarter in terms of spending, mostly because we had no property tax or home insurance bills come due. That said, our expenses were not as low as I would’ve hoped. Like I mentioned last quarter, we had to put down one of our rabbits, Cornelius. The credit cards for all of his exams and treatment came due this quarter. It took many visits to figure out what was wrong with him, and just to keep him going.

Our pet medical expenses also included a dental cleaning for Maeby! This requires her to be knocked out cold because, although she’s a chill dog, she won’t allow anyone near her mouth. So in order for her to keep her notoriously bad greyhound teeth in tact, she periodically has to go in for that procedure.

In good pet news, though, we adopted a new bunny. Her name is Freya and here’s a picture of her relaxing in the gym.

 

Total Expenses: $10,424.14
Avg Per Month: $3,474.71

Excluding Debt Payments
Total Expenses: $8,340.40
Avg Per Month: $2,780.13

Savings Rate: 55.3%

Summary

Quarterly Total Monthly Average
Serious Stuff  $2,167.66 $722.55
Food $2,405.33 $801.78
Transportation $1,015.44 $338.48
Utilities $590.75 $196.92
Fun Stuff $1,243.59 $414.53
Pets $2,396.32 $798.88
Miscellaneous $605.05 $201.68

 

DIY lounge chair

Details

Serious Stuff :

Quarterly Total Monthly Average
Mortgage $2,083.74 $694.58
Home Insurance $0.00 $0.00
Property Taxes $0.00 $0.00
Medical $0.00 $0.00
Home Maintenance – DIY $83.92 $27.97

Just the normal mortgage payments this month, although I’m planning on making extra payments again starting next month! The DIY expenses were mostly for building a lounge chair in the backyard, which we’ve been enjoying on the weekends. (Plans here)

Sometimes we eat out

Food:

Quarterly Total Monthly Average
Groceries $1,441.86 $480.62
Wine & Beer $73.05 $24.35
Dining Out $715.82 $238.61
Takeout Food $174.60 $58.20
Total Food $2,405.33 $801.78

Massive food expense this month! We way overspent dining out. With Marge going on a trip to Vegas, several trips out with friends, and visiting the grand opening of a new branch of our favorite restaurant (now dangerously close to home) we will definitely end up far ahead of 2016’s total dining expense. Grocery expense was also $500 more than last quarter, and I’m not even sure how! I am proud of making those DIY bagels, though.

 

Transportation:

Quarterly Total Month Average
Auto Maintenance/Other  $149.25 $49.75
Gas $165.19 $55.06
Car Insurance $601.00 $200.33
Parking $0.00 $0.00
Bus Tickets $100.00 $33.33
Total Transportation $1,015.44 $338.48

Well if it wasn’t for that damn insurance, transportation cost would be almost nothing! Just AAA membership, new wiper blades, tolls, registration, and some gas. Plus my usual bus tickets since I usually take the bus to work.

 

Utilities:

Quarterly Total Monthly Average
Cable $119.97 $39.99
Electric $145.94 $48.65
Gas $197.72 $65.91
Telephone $29.96 $9.99
Water  & Sewer $97.16 $32.39
Total Utilities $590.75 $196.92

Cooler months mean less spent on gas heat. And once we fixed the toilet, the water bill went back down under a hundred dollars a quarter. We just received our new internet bill, and the price is going from $39.99 to $44.99 since Spectrum just bought our company Time Warner Cable. Hey, I thought corporate consolidations were supposed to save us money! Ha ha ha ha ha!!

Green Animals Topiary Garden

Fun Stuff:

Quarterly Total Monthly Average
Entertainment $203.73 $67.91
Recreation $155.68 $51.89
Travel $884.18 $294.73
Total Fun Stuff $1,243.59 $414.53

Entertainment includes Netflix, Hulu, New York Times online, a few albums, and a month subscription to Tunnelbear (shhh!) so we could watch the Eurovision Song Contest live. For Travel, we paid for our hotels in St. Kitts and Nevis later this year, and bought our Megabus tickets to Toronto for the CNE!

Maeby enjoying the beach in Eastham, Cape Cod

Pets:

Quarterly Total Monthly Average
Boarding $89.90 $29.97
Food $192.42 $64.14
Medical $1,953.04 $651.01
Other $160.96 $64.14
Total Pet $2,396.32 $798.77

Like I said, those pet medical bills are a killer.

 

Miscellaneous:

Quarterly Total Monthly Average
Cash $80.00 $26.67
Charity $164.00 $54.67
Clothing $82.72 $27.57
Gifts Given $57.41 $19.14
Home $135.14 $45.05
Personal Care $79.27 $26.42
Postage $6.51 $2.17
Total Miscellaneous $605.05 $201.68

Very good so far this year on clothing expense. We’ve hardy bought anything. No need to institute a clothes shopping ban! Just replace things when they need to be replaced. I assimilated into the borg joined the club and got a FitBit, which is included in home expense. No need to buy a new one at an exorbitant price, though. I got mine for $20 on eBay.

Goal Progress

Total 2017 Spending of $30,000 (excluding debt payments): 

  • Spent so far: $19,661.52
  • On track to spend: $39,323.04

Not doing so well here. Those unexpected expenses always get in the way. We can only spend just over $10,000 for the rest of the year and still come in under $30,000.

 

Savings Rate of 65%: 

  • Savings Rate this quarter: 55%
  • Savings Rate so far this year: 46.1%

Falling short again! It always sucks to miss this goal, but then I remember that the average personal savings rate in the U.S. is about 5%. Our method for calculating our savings rate is shown here.

 

Max Out 457 Plan and Roth IRAs

  • Goals: $18,000 in 457 Plan / $5,500 in each Roth IRA
  • Saved so far: $8,888.92 in 457 Plan / $2,000 in each Roth IRA

We’re on track to max all of these out. We’ve even started to contribute to Marge’s terrible 401(k). The mutual fund choices may be awful, but we desperately need to reduce our tax bill. We simply make too much money! So even though the fees on the 401(k) are bad, the effects of the tax hit now would be marginally worse, so we are contributing to the 401(k), but not maxing out. Those vultures are not going to get all of our money!

 

Read 24 Books

  • Read so far: 10

Behind schedule! I read Your Money Or Your Life, the sort of ur-text for the modern early retirement movement. I should really write a review of it, since I have thoughts on it. But then I also read Grimm’s Household Stories, and I probably have MORE thoughts on that! I mean, I’m all about improving your financial know-how, but Grimm’s fairy tales are just so unbelievably bizarre, I think it would be good for everyone to get lost in its weirdness, so I have to recommend that.

 

Years of Savings:

This magical calculation demonstrates how far we could get if we kept living every month like this quarter.  We take our investable assets and divide them by our monthly expenses above. The number to shoot for is 25, because at that level of savings, you could afford to live forever on your stash. According to our monthly average expenses (excluding debt payments) and our investable assets, we have…

9.45 years of savings

Retirement Location Possibility!

If we take that number of years of savings above, and divide by 25, we can figure out where in the world we could afford to retire right now by dividing another country’s cost of living  price index by our own cost of living. I used Rochester, NY, for our own cost of living since it is the closest city to us on Expatistan’s index and is very comparable price-wise.

Our International Retirement Cost of Living Number is….

65

According to Expatistan’s index, that means we can retire… Chisinau, Moldova! I don’t know anything about this place, but a Google search’s second result is Is It Worth It To Visit Chisinau, Moldova where the author calls Moldova the most boring country in Europe. Work on your SEO game, Moldova!

How Much Money Can You Make With StepBet? (Part 2)

So a few weeks ago I let you in on an app Marge started using called StepBet. This is a fitness challenge app that syncs with your FitBit and encourages you to make your walking goals by taking your money if you fail! You pay $40 into the pot, and at the end, everyone who hasn’t failed out splits the remaining money from all the losers. In other words, their loss is your gain.

Naturally, I was wondering what kind of return you would get on your $40 investment, and what kind of cut exactly StepBet takes. Well, now that the six week game is over, I can tell you how much she made.

What do you get?

On an initial investment of $40, she got back $46.55.


On one hand, that’s $6.55 for six weeks worth of work, if keeping on top of your walking every day counts as “work” for you. Not a ton of money, but what can you expect? Anyway, six dollars is six dollars.

On the other hand, if you’re walking a lot anyway, that’s an annualized return of 142%! Sounds so much better that way, right? I mean, it almost meets the definition of passive income, if you walk a lot. But if something fails, or you miss two days in a week, you would have a 100% loss on your hands.

What does StepBet get?

The game started out with 1,192 players, and almost 300 failed before the six weeks were up.  If you were to divide that total pot of $47,720 over the remaining 897 players, they would each get $53.20 back. But that’s not what we got… StepBet has some convoluted rules about the payout amount, but by giving each of the 897 remaining players back $46.55, we know that the total paid back was $41,755.

That means StepBet took nearly $6,000 as their “cut” from this one game. Keep in mind, groups of people are starting up new games constantly, and big games like this, I think, start weekly. Not a bad gig. Maybe instead of walking so much, we should all be inventing apps!

It is intriguing. I may even try it myself sometime. See, I also just bought myself a Fitbit. And in keeping with our frugal philosophy (Marge got hers as a gift), I bought mine used. I have a whole entry coming up on the insane discount you get when you buy electronics secondhand.

Have you ever done a fitness challenge where money was involved?

 

Is Vanguard Getting Too Big?

I hope everyone had a great weekend. Here at Ridinkulous HQ, it was Eurovision weekend, of course. We had some friends over so we could introduce the Eurovision madness to others. Maybe you’ve heard, but the Muppety man with the huge suit from Portugal won the contest. He was very good, but this year we were a Moldova house. After all, it featured the return of the Epic Sax Guy. They came in third place!

Then when the sun was shining (and Eurovision wasn’t on) I worked outside on a DIY lounge chair. During the warmer months, all I want to do is sit outside and read. Right now all we have is some patio table chairs. But I want to stretch my legs out, so I figured a lounge chair would increase my leisure comfort about 50%. But lounge chairs are expensive! So I found plans online and made that my new project. I had a lot of the wood on hand already, so it should be pretty cheap, and hopefully very comfy.

Now for the actual financial part of our post…

If you read any personal finance blogs, including this one, you know Vanguard pretty well. They are the dominant name when it comes to broadly-diversified low-cost investing.

They provide cheap, easy access to the stock market as a whole. It’s a no-brainer to use them, since we know that the average active investment mutual fund will underperform a passive investment fund, especially after accounting for the fees.

I had been hearing recently about how passive investing has really taken off. That even your average, middle class investor understands that this is the way to go. But it wasn’t until reading an article in the New York Times that I realized just how dominant Vanguard has become. (We shell out $7.50 a month for a Times online subscription, but it’s worth using one of your precious ten free articles a month on this)

Continue reading

How Much Money Can You Make With StepBet? (Part 1)

Like so many other people, a few years ago Marge got a FitBit for Christmas. Fitness trackers were suddenly taking off and she immediately got obsessed with beating her friends’ daily step goals inside the app. Really, it was bad. Like, pacing-around-the-kitchen-at-10PM bad.

Her obsession has tapered off since then, but she’s of course kept up with her 10,000 step daily goal in order to be more Amish. But her obsession has grown anew when her friend told us about an app she’d been using called StepBet.

According to their website, StepBet is a “fitness game that motivates you to be more active.” Players basically put their money on the line as encouragement to get themselves moving. If you don’t hit your targets, you lose the money, and it gets paid out to everyone who does complete their goals. You can imagine where my interest comes in.

How much money can you make with StepBet?

The way it works is you basically pay in $40 to the pot. Each game lasts six weeks, although the first week is a “practice week” and no one gets eliminated, so there are five competitive weeks. The app calculates for you an Active Day step count goal and a Stretch Day goal based on your prior activity.

You have to hit four Active Day goals and two Stretch Day goals each week, with one day left over for “rest.” If you miss any of your goals, you’re eliminated. But as long as you keep completing your goals, your app displays how many players started the game, and how many of these foes you have vanquished!

There are risks, though. Besides getting lazy, I imagine the biggest one is something going wrong with the technology. What if your FitBit doesn’t sync to your phone, or your app crashes, or it doesn’t connect to the website? Or what if you get injured and can’t walk as much? Apparently they have “referees” to deal with this, but I would still be worried about losing my money through no fault of my own.

Marge joined a game at the beginning of last week. Here’s her progress screen as of Saturday:

Her normal goal is almost 11,000 steps a day, and her stretch goal is over 13,000 steps. That’s a lot of steps. But as you can see, she goes far beyond the stretch goal, so I wouldn’t bet against her. The real question is how much money will she make in the end? Here’s what the game’s stats look like as of Saturday:

The total pot is $48,160, with 1,204 players putting in $40 each. As you can see, 41 players had already been eliminated by Saturday. Weaklings!

So if we divide the remaining pot among the 1,163 players, they should get $41.41 back each. That is, if StepBet itself didn’t take a cut. Aye, that’s the rub. According to their website, StepBet “retains 25% of the gross pot to pay Referees, transaction fees, game hosts, and administrative support.”

The website’s FAQ also says StepBet “has a No Lose Guarantee so that you’ll never lose money if you reach your goal. If the StepBet challenge has an unusually high percentage of winners, we will forfeit our portion of the pot to ensure that all winners get their money back.” That sounds to me like you might not get any more than $40 back even if 25% of the contestants are eliminated.

If I’m following them correctly, their take from this contest would be $12,040 (25% of $48,160). That leaves $36,120 for everyone else. So if anywhere from 903 to 1,163 contestants remain, divide the $36,120 among the winners, they would get less than $40. StepBet would forgo a bit of their fee in order to get the winners up to $40. The only way you get more than $40 is if there are fewer than 903 winners.

How exactly will it pan out and how much will it pay out? We’ll have to see in about four weeks. Although I would think the outcome of this contest should be indicative of StepBet contests on the whole. 1,200 contestants is a good sample size, so it should demonstrate what the average drop out rate is. Then we can figure out what the rate of return is on this most odd of financial instruments. Even a couple dollars would be a good return on $40 over five weeks.

Anyone else put your money on the line with StepBet?

Ridinkulous Quarterly Expenses – Q1 2017

Well it’s time for our quarterly expense wrap-up. The first quarter of 2017 here at Ridinkulous headquarters held some serious highs and lows. Among the highs, we got to spend ten days in Thailand seeing the sights, eating great food and relaxing on the beach. Later, Marge went on a trip to Vegas and I did some hiking around the Hudson Valley. I competed in a cooking contest, and celebrated my birthday by buying a bunch of smoked meats at the Polish deli.

Our low point came two weeks ago when we had to make the extremely difficult decision to put down one of our pet rabbits, Cornelius. I could write a macabre but potentially useful entry about what happened, the associated expenses, and how we made the decision, but not today. Send your well wishes to his brother, Klaus, who is living alone now. We hope to get him a buddy sometime soon.

Cornelius (left) and Klaus

Total Expenses: $13,404.86
Avg Per Month: $4,468.29

Without Debt Payments
Total Expenses: $11,321.12
Avg Per Month: $3,773.71

Savings Rate: 37.7%

Serious Stuff :

Quarterly Total Monthly Average
Mortgage $2,083.74 $694.58
Home Insurance $985.00 Annual
Property Taxes $2,584.62 Annual
Medical $77.01 $25.67
Home Maintenance – DIY $2.14 $0.71

A couple big ticket items jacked up our spending this quarter: Home insurance and most of our property taxes. Well at least that’s $3,500 in non-debt spending that won’t show up next quarter!

Food:

Quarterly Total Monthly Average
Groceries $911.86 $303.95
Wine & Beer $73.25 $24.42
Dining Out $219.54 $73.18
Takeout Food $254.71 $84.90
Total Food $1,459.36 $486.45

We did pretty good on food this quarter. Less than $500 per month! Last year we averaged over $600 per month. We ate a lot of great, cheap food in Thailand for ten days in January. And I experimented making new foods at home. I made a couple semi-successful loaves of bread. I got America’s Test Kitchen’s Bread Illustrated for Christmas and I want to learn how to bake real bread this year. Still, nothing’s turned out perfect (not risen enough, crumbly texture) but I’m learning.

I also made takoyaki (fried octopus balls, left) for the first time in that fancy pan, which was another Christmas gift. And I competed in a mac-and-cheese contest that Marge has competed in twice. I was also unable to bring home the gold. I was definitely cheated.

Our cars during the March 14 snowstorm

Transportation:

Quarterly Total Month Average
Gas $174.58 $58.19
Car Insurance Not  this quarter Bi-Annual
Bus Tickets  $100.00 $33.33
Total Transportation $274.58  $91.53

Holy moley, that’s a good transportation bill! Both of our work was cancelled during the great March 14 snowstorm. Transportation Savings! We spent under $60 a month on gas this quarter, and the only other expense was my bus pass. We averaged $286 a month last year, so $91/mo is great, but it won’t last when the car insurance bill hits.

 

Utilities:

Quarterly Total Monthly Average
Cable $119.97 $39.99
Electric $150.75 $50.25
Gas $339.83 $113.28
Telephone $44.08 $14.69
Water  & Sewer $373.83 $124.61

WATER FAIL! Our boring water bill suddenly got a lot less boring this quarter!  It spiked to 3x more than normal!

This happened once to my parents when they moved to a new house. There was a sudden spike in the water bill, and they thought it just had to do with shower having multiple showerheads. It turned out to be a leak in the main between the road and the house! Luckily they had insurance to cover this repair. So immediately, my mind turned to this and I was sure we had a leak outside, because I was sure there were no leaks inside the house. The water main goes under our brand new patio and shed, so my mind was racing with nightmare repair scenarios.

The handle in question

I called the water department and they sent someone out immediately, not with tools, but with computer printouts. Have I told you I like my city? The printouts showed a huge spike in our water usage, but only while we were on our vacation. The gears clicked into place. The woman who watches our rabbits used the toilet and left it running. Unless you nudge the handle up, it can remain down. And it was running when we came back from Thailand. I didn’t think much of it at the time, but it had been running for ten days. Well, did you know a running toilet uses 120 gallons an hour, or 3,000 gallons day?? You know now! And it’s all due to a faulty handle. (I fixed it)

 

Koh Kood, Thailand. Enjoyed this in January, paid for previously

Fun Stuff:

Quarterly Total Monthly Average
Entertainment $195.84 $65.28
Recreation $28.28 $9.43
Travel $2,040.52 $680.17

Entertainment was mostly Netflix and Hulu subscriptions, a few albums that I bought, and the $35 Oscar festival pass.

Travel expense is artificially inflated. We paid for a rental on Cape Cod over Memorial Day for $1,075, but we’re getting $400 of that back as a deposit, plus another few hundred from the other couple staying with us. Travel also includes $210 for our next round-trip flight: St Kitts and Nevis! We paid using Lufthansa frequent flyer miles, so that is just the cost of fees and taxes. We’re going after Thanksgiving.

Maeby hiking the Hudson Valley

Pets:

Quarterly Total Monthly Average
Boarding $514.50 $171.50
Food $225.86 $75.29
Dog License $12.50 Annual
Total Pet $752.86  $250.95

Pet expense was extraordinary because of Maeby’s boarding expense while we were in Thailand, and also because of the rabbit sitter. That cost us $25 and $18 a night respectively.

 

Miscellaneous:

Quarterly Total Monthly Average
Charity $117.00 $39.00
Clothing $89.23 $29.74
Gifts Given $1,127.53 $375.84
Home $244.29 $81.43
Personal Care $271.29 $90.43
Postage $43.11 $14.37

Home expense included a new (to me) camera bought on Ebay for $91. That is offset by the $41 I sold my old (identical) camera for. The old one had a scratch on the lens I was getting sick of, and I wanted to get rid of it for Thailand.

Also, I Marge and I each bought used Amazon Kindles on Ebay. I bought an older model for $10 just to try out the “ebook lifestyle” and I like it a lot. I still prefer using Paperback Swap for books because I can keep them for as long as I want, where the ebooks I get from the library get returned automatically after a few weeks. House expense also includes our Christmas tree and a brand new snow shovel, replacing one we bought for $10 ten years ago!

Gifts Given is last year’s Christmas bill.

 

Goal Progress

Total 2017 non-debt spending of $30,000: 

  • Spent so far: $11,321.12
  • On track to spend: $45,284.48

Ouch! Our first quarter is always hard because of the property taxes and home insurance. I fully expect to not meet this goal this year anyway, but that doesn’t mean we can’t try!

 

Savings Rate of 65%: 

  • Savings Rate so far: 37.7%

Gonna have to do better than that! Our method for calculating our savings rate is shown here.

 

Max Out 457 Plan and Roth IRAs

  • Goals: $18,000 in 457 Plan / $5,500 in each Roth IRA
  • Saved so far: $4,200 in 457 Plan / $750 in each Roth IRA

This shouldn’t be any problem. Marge’s 401(k) plan is still not worth investing in, so I will probably save that extra money as cash at Vanguard, wait for a stock price “correction,” and then invest it.

 

Read 24 Books

  • Read so far: 5

Will have to pick up the pace on this a bit. My favorite book was Alan Partridge’s Nomad, but that’s a bit of an acquired taste. You might enjoy The Skies Belong To Us: Love and Terror In The Golden Age of Hijacking, a book about the airplane hijacking craze of the 70’s. It’s a fun one.

 

Years of Savings:

This magical calculation demonstrates how far we could get if we kept living every month like this ones listed above.  We take our investable assets and divide them by our monthly expenses above. The number to shoot for is 25, because at that level of savings, you could afford to live forever on your money stash. According to our monthly average non-debt expenses and our investable assets, we have…

6.42 years of savings

Retirement Location Possibility!

If we take that number of years of savings above, and divide by 25, we can figure out where in the world we could afford to retire right now by dividing another country’s cost of living  price index by our own cost of living. I used Hartford, CT, for our own cost of living since it is the closest city to us on Expatistan’s index and is comparable price-wise.

Our International Retirement Cost of Living Number is….

47

According to Expatistan’s index, that means we can retire… nowhere!

CDs Ladders for Emergency Savings… And Beyond!

Hey everyone. Exciting news today. We’ll be talking about CDs (Certificates of Deposit) and how I’m thinking about using them!

We haven’t owned any CDs for probably ten years. It was one of the first investments I made after graduating from college. Back then, you could get a one-year CD that paid over five percent! After the bottom fell out of the economy, the rates dropped like so many bricks, and they weren’t worth bothering with. Besides, we had more important things to put our money towards, like buying a house and investing for our retirement.

Today, we basically hold most of our financial assets in retirement accounts, whether it’s my 457 Plan, Marge’s traditional IRA, her 401(k), or our Roth IRAs. Then we have some taxable investments, which is the Vanguard Wellington Fund and some individually held stocks. Then there is the Cash Equivalents, which is the Vanguard Prime Money Market Mutual Fund (MMMF). And then there’s Lending Club.

The MMMF (Cash Equivalents) functions as our emergency fund. It includes 8 months of expenses, plus some savings for our rental property, our tenants’ security deposits, plus more to pay big bills like property taxes and home insurance. So there’s a lot of cash in there.

Our taxable investments  are the Wellington Fund and some individual stocks. They spin off some fun dividends and capital gains, and although that can be annoying at tax time, it’s not a ton more income that we have to report. I always look forward to the Wellington Fund’s year end distributions and call it our Christmas present.

I have started winding down our Lending Club investments. About a year ago, the default rate on my portfolio started going up. So for the last six months, I’ve been taking withdrawing our payments and putting them in Vanguard instead of reinvesting in more Lending Club loans.

CDs Instead of Stocks?

So I’ve got some cash in Vanguard to use, and I was hoping to use it to buy some stocks. The problem is, are there no good stocks to buy these days? I have a wishlist of companies, mostly your standard blue chip corporations. I don’t pay much attention to the stock market, but I know people have been saying it’s overpriced.

Here are some stocks I’d consider

Stock Price Dividend Yield
Bank of Nova Scotia (BNS) $58.14 3.93%
Proctor & Gamble (PG) $90.57 2.96%
Microsoft (MSFT) $64.98 2.40%
McDonald’s (MCD) $129.34 2.91%
Archer Daniels Midland (ADM) $45.58 2.81%
3M (MMM) $191.51 2.45%

We already own the first three, and I would add more shares of them. All of those dividend yields aren’t bad. But considering how highly those stocks are priced historically, I don’t know… Here’s a chart of the last 25 years in the S&P 500:

There’s the 90’s buildup, the 2000 crash, the 2008 crash, and the gains during the Obama years, and then the buildup after the Trump election. Does anyone else get nervous looking at that very last bit? I’m no Seeking Alpha nerd, so anyone who knows better, please speak up. To me, it seems like we’re bound for a downturn. Or a correction as they’re euphemistically called.

We’re still doing our usual retirement account investments, of course. As Vanguard says, you should stay the course and not react to market fluctuations. (This is usually followed by a silent “Praise Bogle.”) But I’m thinking of holding off on any more after-tax investments and putting that money into CDs instead.

Here’s Vanguard’s current CDs on offer:

Timeframe Rate
1 month 0.70%
3 months 0.90%
6 months 0.95%
9 months 1.00%
12 months 1.10%
18 months 1.50%
24 months 1.60%
36 months 1.85%
60 months 2.40%

Basically I’m thinking of parking some cash in a CD for 12 or 18 months, and once those mature, buying stock after a potential price correction? I guess this is a version of “playing the market,” which I’m not supposed to do (praise Bogle). But an 18 month CD pays 1.5%, which is almost as much as some of those stocks, and it doesn’t have the downturn risk.

The flipside is that CDs don’t have the upside potential of stocks. And though the stocks don’t pay huge dividends, the economy could keep improving and those prices could keep increasing. But like I said, most of our savings does go to stocks in our retirement accounts, so we would still catch any more upside there. What do you think using some CDs as temporary parking?

Laddered CDs for an Emergency Fund

While I was researching these CDs, I came across the concept of laddered CDs. Again, this is probably a concept I was aware of back when we did own CDs. Laddering CDs is a way to get CD returns in your emergency fund without having to potentially break a large CD and incur a penalty (usually some months’ worth of interest).

Bogleheads goes into depth on it, but basically to ladder CDs, you put the total amount you want invested across multiple CDs, so that one of them is always coming due within the next few months, or year at most.

So say you have $25,000 you wanted to invest. Vanguard’s 2.40% rate on their five-year CD is very appealing to you. Instead of investing it all for five years, you would split it up. You could put $5,000 into five different CDs, each lasting a different duration from one to five years. After one year, your first CD comes due. You re-invest that in a five-year CD. The next year, your two-year CD comes due, and you re-invest that in another five-year CD.

After five years, all of your money is invested at the five-year CD rate, yet it is broken up into discrete $5,000 blocks, so if you need it, you only need to break one CD (hopefully). And you are earning the difference the five-year CD rate (2.40%) instead of something like the one-year rate (1.10%).

I’m thinking of doing this for our emergency savings, but more conservatively than five years. I would max out at 18 months, and break it down into six CDs, maturing every three months. There is a big jump between the 12 month and 18 month CD rates, and they don’t increase much beyond that.

Vanguard’s Prime MMMF is paying more than it has over the past five years, but is still at 0.56% right now. With $25,000 invested, the MMMF pays $140 a year, but the 18 month CD pays $375. No one’s getting rich on that difference, but it seems like a risk-free way to make a few extra hundred dollars a year.

Have any thoughts on laddering CDs for an emergency fund?

How Much Did Our Trip to Thailand Cost?

Marge and I recently got back our latest luxurious international vacation, and I’m gobsmacked at how little it cost. We flew to the opposite side of the world, ate delicious food, saw incredible sights, and stayed at a beachfront resort on crystal clear waters. And with just some frequent flyer miles to help us out, we paid less than $1,000 for the whole thing.

We wanted to visit Thailand because it seemed like everyone who goes comes back raving about it. We were not disappointed. We spent three nights in Chiang Mai, four nights on Koh Kood, and two nights in Bangkok.

Chiang Mai is a city of Buddhist temples up north. You can live well here very cheaply. And I suppose that “secret” is out, because it was crawling with ex-pats. We saw older white guys who obviously had decided to leave everything behind and live here permanently long ago. On the other hand, Koh Kood is an island near Cambodia that is just starting to see its first tourists.

For currency conversion, I used the exchange rate from of 35 baht to 1 USD from late January 2017.

Total Cost: $887.91

Flights

Flying over the north pole

2 Tickets Retail Cost Miles Used Our Cost
Cathay Pacific, Business, JFK to Thailand, Round Trip $10,192 220,000 American Miles $223

We’ve flown Cathay Pacific’s business class once, from Vancouver to JFK as a free one-way attached to our Switzerland trip, and it was fantastic, so we were immensely looking forward to this. Yes, we were really looking forward to a 15 hour flight from JFK to Hong Kong. The business class cabin was nearly empty on the flight out. The food was ridiculously good. Between the flight there and the flight back, I watched Shin Godzilla, Weiner, Spotlight, and a bunch of episodes of Flight of the Conchords. Continue reading

Norm’s $35 Oscar Movie Roundup

Long time readers might know that I am a movie buff.  My first two jobs were at movie theaters. In high school, I’d take old movies out from the library, and I’d do things like go to see a movie by myself, then sneak into a second one immediately after. The things that have slowed my movie viewing these past few years is a lack of time and the cost. Enter the Oscar film festival pass!

For $35, you got a pass to see every Best Picture-nominated movie over ten days. There’s nine Best Picture nominees this year, so that’s less than $4 a movie! That’s an incredible deal, especially since these are all supposed to be great movies. And the stars aligned, dear readers. Over Presidents Day weekend, I had scheduled two extra vacation days which I was going to otherwise lose, and Marge was going to be out of town on a trip to Las Vegas. So with all the time in the world, yes, I saw every last movie. Here’s my rankings.

9. Hidden Figures
About three black women working at NASA in the Mercury program. Honestly, this one was too much of a crowd-pleaser for my liking. Just not my thing. You pretty much know exactly what you’re going to get. People actually applauded at the end of this one. The actors were great, but the film suffers from A Beautiful Mind-ism/Good Will Hunting-ism. That’s where we’re supposed to be in awe of a character’s knowledge because of how many numbers and complicated words they know or can put on a blackboard. So many scenes where one of the women will be writing a huge equation you don’t understand, and it’s inevitably followed by some snarky remark from a white guy or some reaction shot. I prefer a movie with smart characters that simplify it enough so that you can follow along over the two hours (see #3) instead of closing you off.
Also, if you do like the film, make sure you don’t read about the historical inaccuracies, unless you like to be disappointed. The best scenes and major conflicts didn’t really happen.
Key Scene: When John Glenn’s capsule is coming back from orbit, and cars are pulled over to the side of the road to watch the sky. Did that really happen? Could people really see anything? I don’t know.
Key Quote: “Here at NASA, we all pee the same color.” Continue reading

Cheapskate Analysis: What’s The Cheapest Morning Joe?

Did you know that, in the Dark Ages, people survived without Facetime? And Siri? And whatever WhatsApp is? Can you imagine a world without the 100 calorie count packages of Chips Ahoy, where you would have to count cookies yourself? Sometimes change is good. But other times, change is bullshit. New things that people don’t really need are marketed hard to convince people that they do need them.

This bugs me.

Recently one of those things that’s been bugging me is Keurig coffeemakers. Single serving coffee makers have existed for a while, but at some point in the past few years, Keurigs jumped the line separating workplace/bed & breakfast amenities from household appliances.

Coffeemakers like this make sense when you have many people with varied tastes, like and office or hotel. But it really took some gall to assume that this product was suitable for the home. Somehow, it took off, and here we are today. Even the inventor of Keurig cups says they’re expensive and wasteful.

Let’s find out just how wasteful Keurigs are, and what the cheapest morning beverage actually is.

Keurig

The cost of Keurig coffee

Continue reading

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