Opting Outside – Black Friday Hike to DeSoto Falls

November 30, 2016 cb3 Leave a comment

It’s That Time of the Year

The media and my inbox light up like a Christmas Tree with a constant stream of promotions and sales ads. It’s a time of celebration with family as well as the lure of amazing deals. I’m very lucky in the fact that I can safely ignore most of the Mayhem and spend my time outside with the family.

I read an interesting post from Penny at shepicksuppennies.com that reminds me to balance any criticism I may have otherwise had regarding those that participate in Black Friday. I do realize that I am operating from a position of privilege in being able to ignore it.

With that said, we took the opportunity to hike to DeSoto Falls in North Georgia.

The Location

As I mentioned in my post Friday Thoughts – Pre-Holiday 2016 Edition, portions of N. Georgia, W. North Carolina, and E. Tennessee have had issues with wildfires. We wanted to get up into the mountains but needed to pick an area that would be relatively free from the side effects of those fires.

We chose the DeSoto Falls area for a couple of reasons. First, it’s just a little over an hour from the house. I didn’t want the children to spend more time riding in the car than hiking. Second, it’s a short enough hike that the children can handle it but long enough (around 2 miles round trip) that the adults will get something out of it. Finally, it’s close to Dahlonega where we can stop in for dinner when we’re through and enjoy a little mountain town action (even if it was a little over-touristy that evening).

The Hike

It turned out to be a beautiful afternoon for getting outside and hiking. The weather was warm enough that we really didn’t need jackets. We started out on the quarter mile hike to the lower waterfall first.

On the way up, I was trying to use one of those gestures to start the camera on my phone and ended up throwing it on the ground. That’s the first time I’ve ever cracked the screen on a device and luckily it’s only a single crack along the bottom.

Unfortunately, there wasn’t much to see at the lower falls due to the conditions. It was barely a trickle.

The hike to the upper took a little longer since it’s a three quarter mile trail. The youngest started complaining about his legs being tired with less than a tenth of a mile left before we got there. He made it OK and enjoyed being silly for some family photos. Interestingly enough, after having a snack we didn’t hear any complaints on the way back to the car.

The Effects of Drought

The Southeast US has been very short on rainfall the past couple of months. In our area, we hadn’t had rain in 66 days until yesterday (Thank You Nature!). The effects of the drought were immediately obvious when we arrived at the lower falls.

When we got home, I compared photos from our last trip in May, 2014. You can see the difference.

Pre-Drought — Lower DeSoto Falls – May, 2014

Here is a shot of the upper falls from 2014

A Little Bit of Peace

Despite the low water levels, we were able to get out and enjoy the day. The area wasn’t too crowded and I was able to capture a little bit of waterfall video. The sound of falling water is always meditative for me. Good for the soul.

Cheers!

-cb3

Expenses, Hiking, Mortgage, Movies

Friday Thoughts – Thanksgiving 2016

November 25, 2016 cb3 Leave a comment

And We Were Thankful

Yesterday was Thanksgiving in the US. Today, I’m not going to spend a lot of time writing but I wanted to take a minute to talk about some of the things for which I am thankful. Today, we’re going to continue the tradition of not participating in Black Friday and #OptOutside.

For Family

My brother was able to fly in from Kansas again this year to spend the extended weekend and celebrate. After dinner yesterday, my wife took the children over to a neighbor’s house for an evening playdate and wine time.

Uncle P and I were able to resurrect and old Thanksgiving tradition and hit an evening movie. Dr. Strange was everything I had expected. Marvel Studios nailed it again.

I am Thankful.

For Yhprum’s Law

Sometimes things work out better than expected. As I mentioned previously, we have some repairs that need to be done to the house. It’s going to be expensive (~$10k). We decided that the best way to fund this operation was through an equity line since I will be able to pay it off in Feb.

As part of the application for the loan, an appraisal was done on the house. Based on the increase in value, I realized that my LTV had now dropped below 80%. I immediately called the credit union and requested a cancellation of PMI! Seven months early! Balance has been restored.

I am Thankful.

For the Trail

Today, we’re going to get out and go hiking. I’m still not sure where we’ll go. We have to take a look at the trails we like and the Air Quality Index for the area. Even if we just end up at the local city park, it will be worth it to be outdoors for a bit.

It looks like the weather will be beautiful today.

I am Thankful.

Get Outside!

I hope everyone has a rewarding day if you have the day off. Get out and enjoy nature if you can. What kind of places do you enjoy?

Cheers!

-cb3

Goals, Life, Retirement

Friday Thoughts – Pre-Holiday 2016 Edition

November 18, 2016 cb3 Leave a comment

Longing to Hike

I’m going to ramble over a couple of topics again this Friday. Cabin fever does that to a person.

In case you haven’t heard, the southeast has been having a wildfire problem the last couple of weeks. I was really hoping to get out and hit some trails over the holidays but the air quality in most of the region is terrible right now due to the smoke. We need rain!

The weather is almost perfect Fall weather. Cool in the morning and evening, but not cold. Warm during the day but not hot. It would be really nice to be able to get outside.

Off-by-One Errors

Yesterday I got a pleasant little surprise based on a couple of threads in the Rockstar Finance Forums. One of the discussions is on the topic of savings rate. I’ve talked about mine in several of my progress updates and goals, but someone brought up something I hadn’t considered. Should I count my 401k Employer match as savings?

It occurred to me that I wasn’t even tracking that as part of my cash flow spreadsheet! I had been blindly taking the information that comes on my pay statements and copy/pasting into the sheet. I quickly went to the 401k login and parsed through the statements to get each months match amount. I had saved almost twice what I thought I had in the 401k. Bonus!

(I do realize the money was there all along, it’s just nice to actually see it)

Now, after adding in a row for this and adjusting the values, I noticed that my savings percentage went down for the year. Wait, what?! It turns out, that I had an error in my spreadsheet where I tallied the Investment column and the formula started one row lower than it should have. I haven’t been counting my 401k as part of my savings total since I started the sheet last year! Doh! Double Bonus.

With the addition of employer match and the correction in the sheet formula, I am now happliy sitting on a savings rate over 20% for the year so far. That’s up from the 13% that I had previously calculated.

I’m going to go back and re-factor the 2015 results as well as re-visiting the retirement calculator.

Upcoming RSU

At the beginning of December, I will be getting the second to last distribution from my signing bonus RSU grant. The last bit will come in June of next year which basically means that I will be taking a small pay cut next year unless something new comes in to replace it.

It’s not a very large grant, but since I am still basically new to building wealth the shares would represent about 2.5% of my overall investment portfolio. The plan is to sell them at vesting and re-allocate the capital in other areas like so:

20% to Savings Account
20% to my IRA
20% to Mrs. CB3’s IRA
20% to 529 plan
20% to Charitable donations

Considering that I am currently on track to beat my financial goals for the year, I think it’s important to give back. Yes, I could accelerate my plans a smidge more and gain an extra percentage point toward a goal but in light of recent events I believe there are organizations that can use all the help we can give.

Here are the candidates that I am considering for support:

I’m sure we’ll think of more, but those are my top five right now. I’m also going to see if there’s a way to do it through my employer to get a matching gift.

Also, like I mentioned previously, we will get the kids involved in this. I want to have them research what charities are available based on their interests and see which one they would like to support.

Travel

It seems like this time of year I always start to get the feeling that I’m ready to take it easy for a bit at home while I have the time. Since I travel some for work, the idea of not having anywhere to be is really appealing.

Of course, with two children in tow this never really works out the way I hope. There are grandparents and extended family to consider and all of those family events that are ‘tradition’. <Sigh>.

Thanksgiving is pretty well locked in with no major road trips. My brother is coming into town so that will be good. Christmas on the other hand always ends up with us loading the car after lunch and heading off for a two hour drive and several days away.

Don’t get me wrong, it will be enjoyable once it’s happening and I know the children will be creating memories. One of these days everyone is coming to us!

Gift Giving/Receiving

Speaking of Christmas, we’ve been putting some thought into gifts again this year. I really like the idea of reducing the amount of stuff that the children receive. We’ve never really gone crazy, but with three separate grandparent units and a gift exchange at the large family dinner it can add up.

Something you want, something you need, something you wear, and something you read…

This appeals to me. I think for parental gifts this will do nicely. I’ve already talked to my parents and they are on board to make contributions to the children’s 529 savings. I still need to have conversations with the others.

I, myself, would just really like about a week worth of sleep at a cabin in the mountains with no connectivity. Yeah, that’d do.

Meals

Lastly, I want to talk a bit about food. I may go off the rails a bit for Thanksgiving (Heretic! But seriously, the oldest child won’t even touch turkey). It’s true that we cook a pretty mean turkey around here but this year I’m craving a dish that I had while I was in Ireland this time last year.

That’s right, lamb shank. This was probably the most amazing meal I had while I was there. Many thanks to the Blair’s Inn. I emailed them earlier in the week and they were gracious enough to send me some tips on preparing this dish. I’m really looking forward to it (and a few pints)!

I hope that everyone gets to have a good meal with family or close friends at the table over the holidays. I also hope that we can all put recent politics aside for a bit while we have that meal. If you have to talk about something, bring up money!

I’ll be back next week with another spreadsheet post (relevant since I just fixed one).

Cheers!

-cb3

Life, Relationships, Stocks

Friday Thoughts – Election Week 2016

November 11, 2016 cb3 2 Comments

What a Week

Well this has definitely been a draining week for a lot of reasons. I’m currently sitting in a coffee shop sipping a $6 coffee and trying to compose my thoughts. Yeah, I went there. Spent the money and it feels good. I just had to get out of the house today and break the routine. Work from home productivity hit a low this week and it was time to shake things up.

Here’s where we are…

The Election

Honestly, this didn’t go the way I expected in the front of my brain, but in a way the back of my head knew it would. Let me explain. My current life is that of a tech worker for a silicon valley company. It’s a very intellectual world and influences the way I view the world. I’ve read lot of posts about echo chambers and confirmation bias and I can say I think it’s true. I’m guilty.

This hasn’t always been my life though. I grew up (junior high/high school) in rural East Tennessee. I still know some of the people there even though I don’t see them often. I’ve heard how the financial crisis impacted them. I know why they’re angry and I get it. It sucks.

The real challenge that has caused the most emotion is the negative fallout from this election (and it’s on both sides). A lot of very negative things were said during the process and my fear is that there are groups of people that now feel validated and empowered because of this rhetoric. We live in the South. I know it’s been hiding in the woodwork and now I’m afraid it won’t hide but maybe getting it out in the open will help us heal it.

We have to listen. We must ask how we can help make things better. My wife’s first reaction was to say we needed to move out of the country. That’s something that we’ve talked about doing anyway for a while, but I don’t want to do it for this reason. Running away doesn’t help anyone.

The Market

I watched the futures quotes the night of the election. I’m not going to lie, that was scary too. The S&P hit it’s limit down for after hours trading. The next day everything was sunshine and lollipops. I can’t predict the future but I can stick to my plan. My timeframe is not this week or next. I’m in this game for years. While it’s also true that I dabble in trading as well as investing, 99.5% of my assets are in my investing accounts. One of these days I’ll post about that too, but let’s just say I’ve managed the risk by limiting what I play with personally.

I know it can be scary to see large down days or stretches of decline, but remember the best lesson you can learn is to plan your investments and then invest according to your plan. The market will reward that over the long time and will punish the emotional response.

Going Forward

Like Pop said in Luke Cage, ‘Always forward, never back’. Let’s work on that together. I’m going to be looking for ways I can help. It’s time to be more involved in the community and it starts with me.

For now, let’s all breathe and listen.

Peace

-cb3

Goals, Mortgage, Personal Finance, Retirement, Strategy

Forks in the Financial Path

November 7, 2016 cb3 2 Comments

Deciding What’s Next (Financially)

Over the past couple of month’s I’ve been mulling over a couple of ideas in regards to the next steps of my financial plan and pursuit of Financial Independence (and possibly Retire Early). Now that we’re down to a single debt with our mortgage, I need to re-analyze our current state and adjust some of the sliders. Our Next Life had an excellent post about how their goals changed over the course of implementing their plan. For me, debt removal was a goal, but not necessarily the goal post.

Hopefully over the course of this post, I can take a look at the current goals as well as the new goals that I’m considering and discuss what I need to adjust to accomplish them.

Here’s where we were…

Debt payoff

When I started really tracking my debt situation at then end of 2014, we had accumulated around $230,000 in total liabilities. That was a combination of mortgage, student loans, personal loans, and credit card debt. Once upon a time, I thought this was pretty reasonable although my perspective may have been skewed due to working with so many folks in the SF Bay area.

Luckily I came to my senses and realized I needed to do something about it. My original plan was to shoot for 10% of the total per year. 2015 was a success and we eliminated a little over that with a 10.65% reduction. This year, I needed to target 15% of the remaining balance to stay on track. I’ve closed every balance but the mortgage an we’re on target for a 17.73% drop this year! That’s a little over $60k worth of debt gone in two short years.

Taking those items off of the balance sheet gives me around $30k of free cash flow next year (assuming no major life changes) that I need to reallocate. I just need to figure out where to send it.

Here are the things I’m considering…

Home Repairs

This one is inevitable when you own a home. Eventually, something is going to require a larger sum of money to repair. It’s really annoying, because it came up just after making all of this super progress. Chalk one up to Murphy.

The good news is that I can handle the cost of the project. I’ve got to get some siding repaired (ours is cedar), exterior paint done, and some deck repairs done. There’s also some cabinetry repair in the kitchen as well as some drywall repair and interior paint touch-up.

The bad news is that the work on the exterior really needs to be done now, but the cash won’t be available until Feb of next year. I’m going to solve this with a Home Equity Line of Credit with the knowledge that I will be able to re-pay that in a few months. This will keep the interest payments to a minimum.

That eats up between $10-15k. Annoying but necessary.

Investment Contributions

In order to make a decision about investment contributions, I need to understand where I am and what my goals are. Ideally, I’d like to be FI by the time I’m 50. That gives me eight years to build (I turn 42 this week). That’s the goal, but where do I stand?

If I look at the statistics for the average American, I see that folks in my age group have a mean savings of around $63000. Woohoo! I have a little over $170k depending on where the market happens to land today. That’s almost three times as much as my peers, but it doesn’t give me the warm fuzzies since I don’t want to wait until 65 to retire.

I need to do a really thorough analysis of what a FIRE life would look like for me. I’ve seen several examples on other blogs and need to take the time for it. For now, I’m just going to plug in to one of the simple retirement calculators that one can find through Google.

It was hard to find one that actually let me put in the exact numbers I needed as in how much income I need post retirement (60% of my salary is still too much). Schwab has a tool that let’s me do just that so that’s where I started.

My current spending per year (that isn’t debt payment) is around 55% of my gross income. That’s around $85,000 for a family of 4. I’m planning to reduce that to $65,000 per year which is much more reasonable (this will also free up more cash flow as we move in that direction). With my current yearly contributions of $21k and planned retirement age of 50, I’m told I have a shortfall of $762,500. Shit! That’s a lot of money to conjure in the next 8 years. Obviously some adjustments are in order. If I adjust the contributions up to $44k and add an additional four years to make my retirement at 54, then I can get it to the point where I have a surplus.

Now, this isn’t exactly ideal and the tool does make some assumptions about life expectancy, investment gains, and inflation but as a basic starting point it gets the point across.

New goal: Save at least $44,000 (that’s $23k of my cash surplus next year) per year going forward!

Diving Into Rental Property

I’ve also been thinking a lot about my asset allocation and how it’s almost all in the stock/bond market right now (If I don’t count my home as an asset). I’ve been including the house in the Net Worth calculation, but don’t really consider it an asset since it doesn’t generate income and I would still take a loss if I sold now considering loan + interest.

It’s not high priority by any stretch, but I know that I could put together the funds to purchase a smaller rental and get started in that market. I’m currently in research mode on this topic and trying to learn as much as possible before pulling the trigger.

Stay tuned.

Additional Mortgage Payments

This is apparently a hotly debated topic. Many argue that if interest rates on the loan are low and the market is favorable then money is better allocated towards investments. Money spent towards extra mortgage payments also ties up capital in an illiquid asset. Depending on one’s financial health, liquidity may or may not be a concern.

The other side of the coin that I see is the amount of money that I’m spending on interest. With a somewhat reasonable rate on a 30 year fixed loan of 5.25%, I would end up spending an additional 96% of my original loan value on interest! That basically doubles what I’ve paid for the house. Insane!

So far, I’ve managed to get a little bit ahead on the loan. Over the entire duration, I’ve been spending a little over $6 towards the principal. Since I paid the car and personal loan off this fall, I’ve used some of the extra cash flow and made almost a full payment extra toward principal (~$1250).

Now, the neat thing about this is when I look at an amortization table for my loan. With just this little bit extra, I have cut ten months from the loan as well as around $2000 worth of total interest. That’s OK, but not great.

Now, if I can maintain the extra $500/month towards principal then things get really interesting. My projected payoff date would move from Oct. 2039 to Dec. 2028 shaving eleven years off the life of the loan! That also reduces the total interest paid to 66% of the original loan amount. That would only take $6000 of my free cash flow to accomlish. Sweet!

College Savings

The last topic is also somewhat of a debate (not as hotly debated though). We both agree that we want to provide for our children’s education. The debatable part is how much and to what limit.

We both come from slightly different educational paths but are both college graduates. My degree took me through four different schools and I sampled both public and private as well as four year university and two year community college. Her path consisted of two degrees; one from a private university and one from a public university.

My current leaning is to do my best to fund an education from an in-state public school. Ideally, they can get some credits at a two year school and then move to the bigger school to complete their degree focus. I have 9-10 years for the first and 13-14 for the second to work on it and I’m estimating around $15k/year which would take $60k for each child under ideal conditions. I know this is probably going to go up, but I have to start somewhere.

Not counting for investment gains and assuming I’m starting from scratch, I need to put away $6000 per year for the first child and $4600 for the second. We will also be asking grandparents to contribute to this goal going forward.

Which Way to Head

Well, what would you do? I’ve obviously come up with more options that the $30k worth of cash flow that I’m freeing up next year. I’m also assuming that nothing major happens anytime soon to cause a large unexpected expense. It’s a lot to think about.

Cheers!

-cb3

Put a little bit towards each or focus on one area more than others? Let me know your thoughts.

Life, Relationships

Friday Thoughts – Dinner with a Friend

November 1, 2016 cb3 Leave a comment

Catching Up

The other night (last Thursday to be precise), I took the opportunity to catch up with an old friend for dinner. This was out of the ordinary for me for a couple of reasons. I’m not usually one to take time away from family operations on a week night, but I needed it and when it was all said and done I’m glad I did. It was also a good opportunity to hit one of my favorite brewpubs down in the city that I rarely make time to visit.

She was in town for a business conference. In the sixteen years since we were in college together, we lost touch for the majority and have managed to catch up a handful of times in the past couple of years. Her husband and I were friends through the campus theater and we all spent a lot of time hanging out together outside of class. I was always closer to her on a personal level, so it was easy to catch back up on everything that’s been happening in our lives.

We covered a variety of topics over the course of the evening. Marriage, kids, jobs, personal finance, politics, and social issues were all present. There may have even been a tangent about beer in there somewhere. When dinner was over, I drove home and kept thinking about some of the things we discussed. Here are a few of the things that are lingering in my thoughts:

Kids

This was an interesting discussion. While my friend and her husband are a couple of years younger than I am, they have a son that is a senior in high school. My oldest is nine and the youngest is five. It feels like I’m ages away from experiencing the things that thet currently have happening in the child department.

She has had to manage college searches and high school dating drama. My biggest challenge is getting the oldest to eat and actually do her homework for more than five minutes.

I did listen intently and file away a lot of her experience for later. I’m sure at least some bit of it will come in handy. It’s still strange to talk to someone that is younger and know that they are farther along in some aspect of life. They’re going to be empty nesters next year. I’ve got over a decade bfore that happens!

Finance

We didn’t discuss numbers, but it felt good to be able to go into a discussion about finance with a person that I view as ‘having it together’. She and her husband both make good salaries in Tech and the only debt they’ve ever carried has been the mortgage and occasional car payment. They invest and are building for the future. Three years ago I wouldn’t have been able to even broach the topic.

Now the thing that struck me the most is that I’ve been doing this on a single income. My wife left work six years ago for mental health reasons (being a teacher and having a family takes a lot out of you). I supported her in that move and also in her eventual choice of career change from educator to part-time naturalist.

The thing is, though, I can’t help but imagine what life would be like if we were bother contributing to the FIRE goal. On a not so positive note, I’m reminded that I’m the only one working toward my goal and this is due both to necessity and my own choice.

Marriage / Relationships

This is a really tough topic for me to write about regarding my thoughts. Things have not been going well lately. Don’t get me wrong, there’s no hostility or negativity but we’re just not working together as partners anymore. I’m basically in a situation where I have more of a roommate that is in the business of raising two children with me. However, when it comes to life outside the children, we’re basically heading down separate paths.

I don’t want you guys to think that this is something new or that it’s something I take likely. Over the course of our ten year marriage, we’ve had our share of struggles as well as good times. We’ve both worked very hard at times to keep it together and continue to build. Unfortunately, when one half of the partnership has been down for so long it starts to take a toll.

Being able to talk to my friend about some of what’s been happening was extremely helpful and provided a much needed outside perspective on the situation. Hearing what it’s like to have a more balanced partnership instead of one where one half is always sacrificing to care for the other was a conflicted wake up call. It made me realize that is what I want. I could, maybe, someday have that. Maybe I don’t have to keep sacrificing my needs for the greater good.

Like I said, it’s a tough topic. I don’t have any answers right now and I’m not sure I will for a while. I struggle with it most days. Honestly, it’s why I haven’t been writing as much. It’s hard to be inspired when this is the relevant topic at hand, but this is my current truth and that’s part of what this blog is supposed to be about.

The Past / The Future

We also took some time to reminisce about the days back in college. It seems like so long ago in some ways. I look at the person I was then and realize what I long way I have some. Going from student to summer camp counselor to IT professional it seems like I’ve lived three different lives. I wouldn’t trade it for anything.

Where I head from here is the open question. Which path will lead to the best outcome for everyone involved? Can I still consider a plan to early retirement with the challenges ahead? I’m not sure. I do know that for now, I’ll keep doing what I’ve been doing and attempt to improve every day.

That’s all we can ever really do, is it not?

Cheers,

-cb3