What to do with RSU

Have a Plan

With another segment of my Restricted Stock grant vesting on December 1st, I thought it would be a good topic to cover.  Before we dive in, I want to emphasize the importance of having a plan for extra income before it arrives.

Too often do we get caught up in the excitement of a bonus or windfall and if we haven’t planned carefully, the money seems to vanish overnight.  I’ve been guilty of this in the past.  It’s very easy to lose track of where it goes.

Due to my current debt circumstances, I want most of the extra to be applied to that.  I think it’s still important to get a little morale boost too, but we’ll be conservative with it.  In this case, I will be applying 80% toward outstanding debt, 15% will go to our investment account, and the remaining 5% will be used for play.

By the Numbers

The expected net income at sale will be around $3300.  This puts ~%2600 towards debt which will clear the outstanding Vet bill.  That gives us around $500 to add to our investments.  The remaining $165 will most likely go towards a nice dinner out with my wife.  With this plan, I can feel good about spending a little on enjoyment knowing that I put most of it to work for me.

Tax Implications

With my current grant, a number of shares will be sold at vesting to cover taxes on the gain.  I plan to sell the day it vest, so I don’t anticipate an additional tax burden.  My ESPP behaves differently and I will cover that in a future post (probably in January when that is up next).

Portfolio Management

Some people hold onto their RSU shares as an investment.  There are pros and cons to this approach.  My portfolio is small enough that the shares would be a larger percentage of my holdings that I want in any one security.  I like to keep each position to less than 1% of my overall holding (including all 401k, IRA, and Individual accounts).  This reduces the risk that any position would have a large impact on my Net Worth.

Since I’m still in debt reduction mode, that’s all intellectual exercise at this point.  It’s much more important to me to use the value to pay down liabilities than it is to hold on to the assets.




Down Time

Challenge Behind / Challenge Ahead

The past three weeks have been a bit more challenging and slightly stressful on the full-time job front.  Accelerated schedules, scope creep, and incorrect assumptions about readiness of key systems are the highlights.  Don’t get me wrong, I’m well compensated for what I do and this is part of the job, but I need some down time soon to re-balance and decompress.

The good news is that the holidays are coming and that will lead to some time off to spend with family and friends.  Unfortunately, I’ve got several weeks of travel upcoming as well.  I don’t mind the travel, but I don’t really get to enjoy the places I go since I’m working.

One of the tings I look forward to most about achieving financial freedom would be spending my time on pursuits of my choice instead of the pursuits of the company which employs me.  That work is intellectually and financially rewarding, but it’s not always deeply satisfying on the canoe dock level.

Other Pursuits

There are several things I enjoy in life when I get the opportunity.  You will probably see posts about some of these topics from time to time.  I don’t want to be all business around here.

If you read the intro post to the blog (I should do an About Me page…), then you may have realized that I enjoy the outdoors.  My family and I try to get out and go hiking often when the weather permits (and sometimes when it doesn’t).  Finding new places to explore is always exciting.  Some day we hope to complete the Appalachian Trail even if we have to do it in sections.

I also have a somewhat green thumb and try to do a garden every year.  I think one of next year’s goals will be to increase the size of the garden and can as much produce as we can for the off season.  Along with the garden, I have also been dabbling in cultivating bonsai trees.  It’s a fascinating hobby that I’ve started to take a bit more seriously in the past couple of years.  One of these days I hope to have a few specimen worthy of showing.

Finally, I am a hobby brewer and certified beer judge.  Brewing quality beer at home and being able to explore the wide variety of styles available has gone from hobby to serious passion for me.  My garage looks like a miniature production brewery.  Friends and family don’t seem to mind the by-product either.  Since our second child was born, I haven’t had as much time for this.  There will be more time as he gets a little more self-sufficient.

Lazy Sunday

Today, however, has been a lay around the house day.  The weather is dreary and drippy.  We went to a friend’s wedding last night and some of us are moving a bit slow this morning.  The children have watched entirely too much Netflix, but sometimes that’s just how it goes.

I’d love it if the sun would peek out and we could get out for a stroll.



Drawing a Picture – Part 2

The next part of the picture is just as important, if not more so, as the balance sheet.  It wasn’t until early this year that the concept really clicked with me.  Sure, I had used a budget for years but this put things in a new perspective.

Cash Flow

The cash flow statement is the simple picture of the amount of money moving in to your finances (income) versus the amount moving out (expenses).

First we list our income for the month with one type or source per line and add them up.  That gives us Gross Income.

Then we take all of our expenses and list them with one category or source per line and add them.

Finally we subtract the expenses total from gross income and we arrive at our Net Income for the month.  If this number is negative, it means we spent more money than we made.  Warning!  If the number is positive, then we’ve made money for the month.  If we have positive cash flow we should look at how we’re going to put the surplus to work.

Always have a plan for allocating surplus cash.  Otherwise, it can disappear.  For example, right now my plan is to put any surplus cash to work paying down outstanding debt.

A Note on Credit Cards

It can be especially easy to spend more than you make with credit cards.  They’re easily available and credit limits can creep up beyond what you can handle.

Before I looked at my cash flow, I didn’t realize that I was falling farther into the whole because I was always able to make more than my minimum payment each month.  What I wasn’t seeing was the fact that I put more on the card that month than I paid.  Floating along like this for five or six years with regular credit limit raises led to quite a deep hole.  At the worst of it, I think we had around $28k on cards.  All generating interest!

Looking at the Categories

Now that I look at all of my expenses each month by category, it’s much easier for me to see what I can do to improve my situation.  I can now see if we’re spending too much and where we need to cut back.  Of course, some expenses are fixed.  I actually break my expense list down into two sections: fixed expenses (mortgage, loans) and variable expenses (groceries, restaurants, fuel).

The Canvas

I like to use spreadsheets for most of these tasks.  Google Sheets is awesome because it lets me access my data from anywhere without having to install software.  There are also some handy Sheet Templates for budgets and cash flow.  You could also track your cash flow with online tools such as Personal Capital or Mint.

Good luck and keep an eye on those expenses!





October 2015 Progress


October came and went without any major unplanned expenses.  It felt good to see my weekly Personal Capital report showing a nice smooth expense chart and approximately $4900 lower spending than the last month (which is what I expected without the car and vet bills from last month).

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We do have an outstanding balance remaining for the vet bill so the Goal for debt reduction is off track.  I expect to pay it off with an RSU that is vesting on Dec.1.  More than likely I will pay a little interest on this since the bill is due before the stock vests.  Based on my calculations it will be around $50 which is less than it would cost to transfer the balance to my Chase Slate card.

Current Goal Status:
  • Reduce overall outstanding debt (including mortgage) by 10%.
    1. At the end of October, overall debt reduction is 7.77%.  This dropped from 8.69% last month due to the outstanding vet bill.  Year-end projection is currently 8.87% if we don’t clear that bill.
  • Make contributions to investments (taxable and retirement) of 10% of salary.
    1. Combined saving in investment accounts dropped to 10.06% from 10.71% last month.  I made a withdrawal of $900 from a taxable investment account to cover the truck bill.
    2. Unless we need to withdraw more to cover an unexpected expense, this goal is still on track.
  • Eliminate any monthly interest payments due to credit cards.
    1. We maintained $0 in credit card interest in Oct. for a seven month streak.
    2. Of the $3200 balance increase from veterinary surgery, ~$2400 remains on the card.  We will be able to reduce this a bit more before the bill is due on Nov. 19th.  As I mentioned earlier, we may pay a bit of interest on this.

Total expenses for October fell to $6969 which was the lowest of the year.  Net cash flow was positive at $2028!

Dining out and entertainment/alcohol expenses were both second to lowest for this month.  I am continuing my commitment to cut back in those areas for the remainder of the year but may make an exception for the holiday season.

Getting closer.  Cheers!