Shame

By Josh October 31, 2018

The Merriam-Webster dictionary defines shame as a painful emotion caused by consciousness of guilt, shortcoming, or impropriety. Synonyms include humiliation, regret, disgrace, odium and reproach.

I think we are all guilty of feeling shame sometimes. Some of us feel it more than others. I often feel like I live my life in shame. A lack of self-esteem and/or pride in my accomplishments makes me feel unworthy. As a 35-year-old man, I’m ashamed to admit that I’ve never really dated or the really shameful truth that I’m a virgin. [Isn’t that crazy? If I were a female, it might be seen as a symbol of purity, but as a guy, it makes me feel like a total loser, incapable of finding any woman to love me.]

Other people might feel shame for their lack of educational attainment, or their debt. Some people are shamed by their friends or family for the choices they’ve made in their life, perhaps especially if their family is religious. People are dis-communicated for having a child out of wedlock or for coming out as lesbian, gay or bisexual.

SNL Church Lady via Giphy

Popular culture has turned it into a joke, of sorts. The walk of shame is when someone is caught wearing the same clothes the following day after a night of an unplanned sexual encounter. The Urban Dictionary definition describes the walk of shame as “when someone leaves the home of a sexual escapade (quite possibly with someone you met the night before) in the morning; hair sticking out in all directions, lines on your face, and missing at least one article of clothing.”

Shame is also a weapon to be wielded against your detractors. To shame (v) someone can mean to best them in a competition, to disgrace them, or to cause them to feel guilty. Shame is an invisible force, with so much power to strike to the core of a person and make them feel unworthy of even the smallest appreciation from others.

Via GIPHY

Feeling shame can affect the way we live our lives, and especially how we spend our money. A lot of people would never be caught dead wearing store brand sneakers or workout clothes, so they pay 5x as much for the Nike, Under Armor, Adidas, or Lululemon version of the same thing. A 3-year-old Toyota Camry costs 1/3 of the sticker price of a new BMW (and will definitely be cheaper to maintain and probably will last longer), but there’s nothing sexy about rolling out of the dealership in a 2015 Camry with 45,000 miles on it. People will pay-up for an extra bedroom or for a specific school district (even when they don’t have kids) for the feeling of prestige that owning a 4-bedroom house in THE school district gives to them, meanwhile they pay much higher property taxes on top of the much higher sales price (financed for 30 years).

So, what can we do about these feelings of shame, inadequacy, and self-doubt? How can we fend off the urges to spend more for something showier that will cost more money in the short-term and possibly the long-term? By taking pride in your unique accomplishments and your path that led you to where you are today. Respecting yourself and knowing that there’s no one else like you in the whole wide world. Honoring yourself by following your own journey, not by trying to keep up with the Joneses or meeting the unrealistic expectations of others. Making conscious decisions about your present and your future, then mapping out or reverse-engineering a strategy to get you there. It will be much more fruitful than taking a backseat in your own life and watching in shame as everyone else seems to pass you by.

I think we should feel a modicum of shame when we make rash decisions or act foolishly, but we can take pride and feel honor by putting our best foot forward and making thoughtful, honest decisions in our daily lives.

WTF is a Middleton

By Josh October 23, 2018

Yesterday, an awesome new curation site went live called The Money Middletons. You may be asking yourself, “WTF is a Middleton” and you would be right!

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Stephonee from PoorerThanYou created this site, along with Emilie from WiseMindMoney, to help answer the questions like “what is Middle Class” and “how do I succeed as a middle-income earner?”

Depending on your household size and the area in which you live, you might identify as Middle Class or the highlighted term “Middleton.” Generally speaking, I think it means folks within 80% to 200% of the area median income, although a younger Josh would have said 80%-140% because those were the terms required by the grant application that I was successful in achieving in 2014 for my underwater mortgage.

Frankly, I identify as a Middleton as a single, mid-30s male working a professional job in local government. I grew up the oldest of two kids in a solidly Middle-Class family (dad worked 6 days a week in a factory, and mom worked in the office of a construction company). Middle Class is all I’ve ever known, even if I aspire to one day rise into the Upper Middle Class or opt out of the class system entirely by becoming an Early Retiree.

I was the first in my family to go to college, and I graduated in 2005. I was fortunate to “only” have $15,000 in student loans due to a combination of local scholarships I was awarded from my rural hometown community, working summers through college and an on-campus part-time job all 4 years, and I lived on campus for 4 years (which allowed me to lock in year 2 and year 4 room & board rates at year 1 and year 3 prices, respectively).

After college, I struck out on my own, leaving the comforts of the only area I had ever lived, East Central Indiana, for the warm, sunny climate (and better job prospects!) of Southwest Florida. When I was a kid, my family would vacation here almost every year since I was in 5th grade, and I did an internship between my Junior and Senior years of college down here, as well. I knew this was a great place for me to get started in my career (city planning) and make something of myself that wasn’t possible in my little hometown of 5,000 people.

I bought a house at the ripe old age of 23, and you can read about that whole ordeal here.

While the house may have been a huge mistake for me the past decade, it is also what has allowed me to make huge strides in my net worth and financial security. Think about it – I effectively locked in 2006 living expenses for 30 years. The number one reason my savings rate is north of 50% as a single person is because my living expenses are literally half of what my next-door neighbor is paying in rent (these are identical townhouses). The delta between my mortgage payments and their rent payments is almost enough to max out a 401k every year, and they are paying Post-Tax dollars for rent, while I am contributing Pre-Tax dollars to my 457, so that allows me to get even further ahead of where I’d be as a renter in this market.

I still don’t make a ton of money, and that is expected when you work in local government. I made $15.68/hour when I bought this townhouse in 2006. I got up to $20 an hour in the last month of 2011 when I started with a local Town government. By 2014 I started working in State government and made $22/hour for the first couple years, and $27/hour by the time I left in May 2018. With all of my knowledge and experience, I was able to negotiate my highest salary to date ($31/hour) when I started 5 months ago. While it feels great to be earning nearly twice as much as I did 12.5 years ago, I know I cannot allow lifestyle inflation to eat up a large chunk of the increase, or I will never get ahead.

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When I got the raise from $22 to $27 last year, that was the point where I made myself max out my 457 plan for the first time, in addition to my Traditional IRA contributions. 90% of my raise went straight into Future Josh’s wallet in the form of this deferred compensation plan. When I started this new job a few months ago, the Payroll office made me sign and initial multiple times that I was “absolutely sure” I wanted that much taken out of my bi-weekly paychecks, but I needed it to be high so that I could hit the maximum of $18,500 for 2018. Apparently, I’m a money unicorn when it comes to that step with my employer?

I still have money struggles, most recently when I needed 4 new tires (hello new commute) and my water heater went kaput the same weekend. Due to being a natural saver, I had money squirreled away in different places, and I didn’t have to take on any debt to pay for those abrupt expenses (although you can bet your sweet bippy that I put them on credit cards to earn travel miles/points!) 😊

Deanna from Ms. Fiology has a thought-provoking post about whether single people should plan for their future Financial Independence as a single person or if we should include a future spouse and potential children. While I do love kids, and would someday loved to be married, I’m currently putting those thoughts in the realm of improbable, but not impossible. I definitely consider myself a single Middleton for the foreseeable future. And I think that’s a great place to be!

I love the personal finance and FIRE community! I know I would not be where I am financially today without the excellent content and some of the advanced techniques and strategies that are covered by prominent bloggers and podcasters in this community. But I also see that there is a gap in financial content for those who are just starting out, or who may even be afraid to start out, based on current stock market prices, turbulent politics, and debts incurred trying to make ends meet. It is my sincere hope that The Money Middletons is able to curate the best in financial content that can help to fill a void in financial and debt payoff coverage to help a new set of Middletons achieve a little more financial peace in their lives. That’s what this community has done for me, and I hope I can be some small part in showing the way for the next batch, even if it’s just to point out some of the really stupid things I have done, so they can avoid those mistakes themselves.

Would you believe it – FinCon edition

By Josh October 3, 2018

Yesterday, I put a post on Twitter asking people “Which of these events actually happened at #FinCon18 ??”

If you are a literal person like I am, you read the answer in #4, but it didn’t stop 43% of voters from choosing one of the first 3 options.

So here’s the backstory on all of them:

  1. Before the Plutus Awards, Piggy and Kitty from Bitches Get Riches were having drinks in the Headwaters Lounge with J.D. Roth and Tanja Hester. I joined them, as an internet friend to the 3 ladies, and a new acquaintance to J.D. (we met two days earlier). After a while, J.D. reached out to Pete (Mr. Money Mustache) to see if he wanted to join and meet the Bitches Get Riches, and he joined us a little while later. J.D. had another meeting scheduled (he literally had about 40 on his must-attend schedule, plus others penciled in) so he took off. A few other bloggers joined, but pretty quickly everyone realized that Plutus Awards started soon and most ran off to grab a bite for dinner before the ceremony, including MMM. In his haste to head to dinner, he neglected to pay the bill for his beer and the beer of his girlfriend. At this point, it was just me and Piggy & Kitty, so I scooped up the bill and paid for Pete’s beer. I’ve certainly learned more than $20 in knowledge from his site over the years. No big deal.
  2. Instead of attending the closing party on Saturday night, a group of about 7 of us started out in the pool, and as the night wore on, upwards of 40 FinCon people joined us. But early in the night, I watched Jonathan from ChooseFI do a lap of the pool doing Butterfly, and a little while later he and Brad raced a lap of Freestyle. Being a competitive person, I was looking to get into a race myself. I was an excellent swimmer in my younger days, but I definitely don’t have the athlete “look” nowadays at 6’5″ and 300+ lbs. So we raced, and Jonathan was out to an early lead, but Butterfly is a stroke necessitating endurance and good technique. I kept by his side for half of the pool, then slowly crept up and passed him, using only 4 breaths for the approximately 35-40 yard pool.
  3. Putting details from those two stories together, I’m a 6’5″ 300+ lb guy, and friends with the increasingly popular Bitches Get Riches. After the self-proclaimed “humble Bitches” (read their blog, they actually use that term) won TWO Plutus Awards on Friday night, I served as a bodyguard of sorts. I carries the spoils of their victory (backpacks full of goodies, trophies and drink tickets) while watching out for guys who were trying to get too close or who wouldn’t leave them alone.
  4. All of the above are true stories.

Join me next year in DC to see what kind of hijinks go on at FinCon19! No really, buy your tickets now because the pre-sale pricing ends Thursday October 4th at midnight, and prices will never be this low again. (www.finconexpo.com/fc19)

Takeaways from FinCon18

By Josh October 1, 2018

Along with half of the Twittersphere, I just returned home from Orlando where I attended FinCon 2018. FinCon is an annual conference for money nerds of all kinds, from bloggers and podcasters, to financial advisors, companies and media. And then there’s people like me, that do not fit neatly into one of those categories, but couldn’t pass up the opportunity to meet with other personal finance enthusiasts for 4 days (and nights) of presentations and panels on our favorite financial topics.

I purchased my ticket last year on the day that FinCon 2017 (in Dallas) ended. And this year I followed suit and bought my FinCon 2019 for Washington, DC next September 4-7. But what did I get out of the conference that made it a Must-Attend for 11 months from now?

#1 – A vote of confidence in who I am

As I mentioned before, I don’t feel like I am a blogger, and I’m definitely not a podcaster, financial advisor, vendor, etc. But I am an enthusiast, having read personal finance and FIRE content online for the past 6-7 years. I routinely comment, like and share other people’s articles. I participate in conversations on Twitter. I subscribe to email lists from several of my favorite bloggers and take a few minutes to write a reply when they provide something that speaks to me.

So even though I may not be a “content creator” in the way that so many of the FinCon attendees are, I got positive affirmation from literally DOZENS of people that I was meeting for the first time in real life. I would walk up to someone I “know from the internet”, introduce myself, and would get a reaction bordering on a ‘tween meeting Taylor Swift. Ok, maybe not quite that excited, but it sure was a boost to this “nobody’s” confidence to know that people knew who I am, liked me, and appreciated my efforts in the community, even if I’m not on a consistent posting schedule and don’t have a large blog audience.

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Feeling the FinCon love on Twitter

#2 – Killed my imposter syndrome

After getting that confidence boost I talked about above, I didn’t have to self-identify as a kinda-sorta-wishy-washy blogger anymore. I was Josh, personal finance enthusiast, who happens to write sometimes on his site to share stories about my personal investing failures, among other topics. Everyone seems to share all of the wonderful things that are going on in their lives, and the investments that allow them to reach financial independence and/or retire early.

But it wasn’t just that confidence boost that ended my imposter syndrome. I had conversations with all different levels of personal finance and FIRE personalities. Some are wildly famous in this community, and still feel Imposter Syndrome. Instead of thinking “this person has been writing for 20+ years and still feels like an imposter sometimes” and holding onto my insecurities, I flipped that coin and shed the feeling altogether. Because I’m not a guy trying to break into the personal finance scene as a famous blogger/writer/book author, I can embrace the role I hold in this community as a favored cheerleader of my friends. I can speak My Truth without worrying how others will see me, because the people who matter already told me they love what I put out into this community.

#3 – Encouraged me to get back home and get to work

So I just admitted that I’m not trying to be a big blogger or content producer, but I am finally resolved to put my voice into this space and hopefully continue to cover content that hasn’t been said 1000 times.

And speaking of putting my voice into the space, I recorded my first podcast interview on Friday, while in the pool, so that was definitely something outside of my comfort zone. Pete, from DoYouEvenBlog, was interviewing several of us first-time attendees and bloggers a chance to do our first podcast interviews. Pushed by Penny, which is a recurring theme around here, I gave an awkward interview answering 3 questions that Pete posed to us. The awkwardness came from my inability to put into words what was my #1 takeaway from my first FinCon. After a few seconds that felt like at least a minute, I babbled on and gave an answer so that I could move on to the third and final question. But at least now I’ve got that first interview under my belt (I didn’t literally wear a belt in the pool, BTW), and the next one won’t be so bad.

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#4 – I made the best damn friends a guy could ever have (this part is really long)

Since I’m a spreadsheet geek, I spent some time ahead of the conference to type into Google Sheets the names and Twitter handles of around 50 people I really hoped to meet. I knew it was far-fetched that all of them would be in Orlando, but I set out to try and turn those names into IRL friends and contacts.

Within my first few steps into the Rosen Shingle Creek hotel, I saw famous personal finance people such as Carl and Mindy from 1500 Days, PT who founded FinCon, and Brad Barrett from ChooseFI/Richmond Savers/TravelMiles101. I checked into the hotel, had a quick chat with Brad about “It’s weird to hear your voice right now because I was just listening to your episode with TheRideshareGuy on the way up here” and then shared an elevator with PT.

The next morning, I saw Brad and Jonathan walking around the hotel, and joined them to find coffee. I had already been to the hotel 3 years ago for a conference in my line of work, so I became their unofficial tour guide for the next hour and a half. Since they are celebrities in our online community, they tend to draw a crowd; which on Wednesday morning included JD Roth from Get Rich Slowly and John from ESI Money and Rockstar Finance. Down the hallway, USAA was hosting their DigitalMillEx session, and during a break in the session, out walked Doug “Nords” Nordman from The-Military-Guide, Gwen from Fiery Millennials and Fire Drill Podcast, and Tanja Hester from Our Next Life/The Fairer Cents Podcast/author of Work Optional/Founder of Cents Positive. Gwen came flying out of nowhere and nearly tackled JD with a huge hug, and Tanja followed suit. I was standing next to JD at the time, so I said Tanja’s name and waved, which caused her to come running at me with another huge hug. That’s also when I met Felicity from Fetching Financial Freedom, Matt Lane from Optimize Your Life and Karsten (Big ERN) from Early Retirement Now. After a little while, I decided I should head back to my hotel room to get cleaned up and ready to check into the conference at noon, but while I was walking through the massive convention space, I saw a tall brunette that I knew immediately must be Jillian Johnsrud from Montana Money Adventures. I think she figured out who I was even faster than I recognized her, because she increased her pace faster than I could, and she gave me yet another huge hug (I’m her self-proclaimed favorite person on Twitter).

Back in the hotel portion of the property, I saw Deanna from Ms. Fiology talking to Jim from Route to Retire, so I introduced myself and chatted for a bit. Then Robin from Side Jams came and met up with Deanna, so we grabbed some waters from the coffee shop and sat down to chat for about a half hour. I ran into Mr. Jamie Griffin in the hallway, and he looks 100% like his avatar.

Continuing with Wednesday activities, I checked in and wandered aimlessly, hoping to find more people I knew from Twitter. I had changed into my “Reaching Dollar” tshirt that I had printed specifically for the conference, which was a reuse of the logo that Military Dollar created in support of their respective entries in last January’s Rockstar Rumble. Military Dollar shared the original logo with me, so that I could surprise Erin from Reaching for FI with a tshirt with their logo. When Erin saw my shirt, her reaction was priceless. I hadn’t even met her yet, but I was already wearing her logo. I let her know I had two more printed for her and Military Dollar to wear later on at the conference.

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Drew from GuyonFire was in that conversation, too. I also met Emilie from Wise Mind Money and Stephanie from Poorer Than You, who will be launching Money Middletons together in about 3 weeks.

After a little while, I ran into Liz from Chief Mom Officer and we decided to check out some of the on-site dining options for lunch. After lunch, I met the fantastic ladies behind Women Who Money and Women’s Money Talk, Vicki Cook from Make Smarter Decisions and Amy from LifeZemplified. Later on, I met Laura from Everyday By The Lake, also a part of WWM.

I flipped through Instagram and saw that Champagne & Capital Gains (“Annie Ray”) was in the area between the hotel and the convention area, so I messaged her that I would like to meet, and she said she thought she saw me walk past her a little earlier. After chatting for a little bit, I headed back to the conference area to attend the first-timers session, and I ran into Krystel from All She Saves and Jenny & Jimmy from Living Life Loving Us before the opening Keynote. I saw Allea Grumert from Ask Allea and Duett walking towards the Keynote, but I wasn’t sure if I was going to attend. I stood in the back of the room for a little while, when I got a Twitter DM from one-half of the dynamic duo known as Bitches Get Riches. Kitty had arrived earlier in the day, while Piggy was stranded in NYC with a delayed flight. I sat with Kitty for a while and we teased Piggy that we had already met, and sent a selfie together to make her super jealous 😊

After the Keynote, a group of us headed off-site for a belated birthday party for Stephanie at Uncle Julio’s. If you haven’t heard of Uncle Julio’s, you need to stop reading this right now and do a Google search for their Chocolate Piñata. I sat at one end of the table with Andrew from Shift Upwards, and nearby Military Dollar and Erin, plus Kitty and Piggy arrived about halfway through the 3.5 hours it took for our meal. I got to meet Lisa from The Give and Get, and she commented on my shirt, which is the same one from my Twitter profile picture (I wore it on purpose). I also met the wonderful Miriam Joy, Ruby, and Jenny from Good Life Better. I felt so bad that I didn’t get to meet everyone at the other end of our 25-person table.

On Thursday, I volunteered again for 4 hours at the registration desk/standing around giving directions. As I was standing in the hallway, I got messages from Penny at ShePicksUpPennies, but since she is an anonymous blogger, I had the most difficult time finding her. I actually had seen her around the halls a little bit, but I was never able to see her nametag, so I didn’t really consider that it might be my Twitter bestie. Once she figured out who I was, she came up to me and I stumbled back a few steps, unwilling to believe I had finally met the wonderful Penny! I continued giving directions to people, and I actually met up with 3 more people in my area of Southwest Florida, including The Money Twins and Colleen Kelly. I met Vicki Cook’s other half, Jeff, and chatted with him quite a bit.

After my volunteer shift, I learned that some folks were out by the pool, so I joined Penny, the Women Who Money, and Chris from Apathy Ends for a couple drinks. I also met Abigail from ipickuppennies while enjoying my drinks.

On Friday, I really got to meet people in the pool, including Chelsea from Mama Fish Saves, and her husband Papa Fish Saves (Jeremiah) was there too. Pete from Do You Even Blog was busy even while relaxing in the pool, recording us first-time podcast guests.

And with apologies to everyone else involved, I am sure I am leaving out a whole bunch of people that I met in the past week. I spent quite a few separate times with Tori Dunlap from Tomorrow Ideas and Victori Media. I finally met Carmen from Make Real Cents, who had the huge accomplishment of paying off her debt on Friday of FinCon!! We’re pictured here the following day:

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I met the duo behind Financial Panther (Kevin and Thomas), Chelsea and Lauren from The Financial Diet, and Denis and Katie from Chain of Wealth. I met Cody Berman from Fly To FI and FireBelowZero Podcast. I met Adam from Minafi, Laurie from The Three Year Experiment, Olivia from Birds of a FIRE, and Lily from The Frugal Gene.

I had a beer with Jordan from DiverseFI and I had a beer with Pete from Mr. Money Mustache before the Plutus Awards (which my friends freaking killed! S/O to Penny, Liz, Des, Tanja, Brad & Jonathan, Amy, and more!). Had a nice chat with Craig from Retire Before Dad right then, too. I met Jim Wang from Wallet Hacks and Brandon from the Mad Fientist, both of whom remembered me from past email conversations we’d had because I’m signed up for their email lists. I met Erik from The Mastermind Within and Simple Minded Millennial podcast, and J from Millennial Boss and Fire Drill Podcast. Justin from Saving Sherpa and I chatted about his 1.8 million Hilton Honors points.

I finally got to meet Taylor formerly of The Freedom From Money, and she was as sweet as I always suspected. I met Nick True and Andrew from Family Money Plan. And I finally met Bianca from Miss Mazuma, and her guy Stephen from CampFI. I met Stefanie O’Connell, J-Money, Coach Carson, Paula Pant, Paulette Perhach, Leif from Physician on Fire, Modern Suzy, Keith from The Wealthy Accountant, Gerry from Millionaire Educator and so many more. And now I can’t wait to go back to FinCon in DC so I can meet even more and catch up with my new old friends!!

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Penny stocks. Don’t even go there!

By Josh  August 23, 2018

There comes a time in every new investor’s life when they become disenchanted by the “boring” returns of blue-chip stocks and government bonds. Sure, those are known for modest growth potential and steady dividend payments (income), but they are boring! They are what your grandpa invests in! I want to do something cool, and get rich quick!!

Enter Penny Stocks.

Penny stocks have an air of mystery about them. As the name implies, these are companies whose share prices trade in the pennies or fractions of pennies, compared to one share of Apple which is now $215 per share or Amazon which is $1900+. That’s a pretty high barrier to entry for a novice investor. The problem is, buying just a few shares of a no-name company doesn’t get you anywhere, so the novice will still throw a good chunk of change at a penny stock and wind up with thousands of shares of these companies.

I had a couple modest successes with penny stocks, and some utter failures! One company that you might remember seeing on TV commercials and sponsoring your favorite sports team (they literally had ads on hockey rinks, baseball stadiums, and agreements with several NFL teams) was “SpongeTech”. This was an innovative idea, where you would buy a normal-looking sponge for your household or automotive cleaning needs, but the soapy stuff was already inside the sponge! As they say – just add water! Well the idea may have seemed real, but the company wasn’t. I initially bought shares around 4.3c each, about 12 thousand shares for $500. Then the price dropped to around 3.5 cents a share, so I doubled down. Now I’m holding about 25 thousand shares of this “company” with a cool product, and with major endorsement deals all around pro sports. I was going to ride this rocketship “to the moon” (which is something all Penny stocks are supposedly going to do…)

The stock eventually took off. 3-4 cents suddenly became 7 cents. Then 12. Around 15cents per share I started selling some of my shares, to recoup my initial investment. But this thing just kept going and going, so I threw all of my money back into SPNG and was hoping to swing for the fences. I was going to place a limit sell order for 25c per share on a big lot of my holdings, and one day during my lunch hour it breezed past 25 and was at 27 cents per share! I had a public hearing that afternoon, so I wasn’t able to keep tabs on the action, but I had an excitement inside me to see if we would hit 30 cents per share by the time the hearing was over.

And that’s when my first major penny stock went bust. I entered my meeting at 27 cents per share (and holding about $15k in stock of a worthless company), and I left the meeting with about $4k in stock, in said worthless company. My heart sank, I had a lump in my throat, all of the cliche things that mean someone is having a bad day, happened to me that afternoon. I was freaking out! I *lost* $11,000 in one 2-hour meeting. And the stock would continue to bounce around, trailing ever lower as time went on. It turns out the CEO was a fraud, constantly offering up more shares, diluting existing shareholders so he could continue to fund his lavish lifestyle. SPNG eventually got de-listed and traded on Over The Counter (OTC) exchanges as SPNGQ (trust me when I say a Q in the stock ticker is bad, unless you’re invested in QQQ – the ETF that tracks the Nasdaq 100).

Meanwhile, given my early success with SpongeTech, I was constantly looking for another possible big winner. I grew up in Indiana, so when I found an Indiana-based company, I probably gave them more credence than I should have, because Hoosiers are known for being trustworthy, hard-working, honest folks. Environmental Enzymes Solutions (EESO) sold “green” cleaning products before that was a cool idea. They sold these chemical concoctions in gallon jugs, not anything that would look cool on store shelves, so they were going more for commercial and industrial cleaning companies.

What piqued my interest on EESO was a press release that said a South Korean company had offered to buy the company for 10 cents per share. Well, at the time I read that article, EESO was trading for 2 cents per share! I loaded up my proverbial truck and waited for word that the company would accept the South Korean offer. This was an easy opportunity to earn 5x my original investment!!! But as time went on, the share price dipped, so I bought more. Then it fell some more, and I bought some more. Eventually I could buy about 40,000 shares for a dollar, and I owned nearly ten million shares. Well the company was continually diluting and selling more shares. The buyout offer, if it was ever real at all, was for BEFORE the dilution started, so there was never any chance of receiving 5x my initial buy-in.

My EESO experience taught me two great lessons: Do your homework, and Beware of the Pump & Dump. Pump & Dump is slang for a news article or press release being sent out to pump up the share price with some exciting news about the company or stock, meanwhile earlier investors (who bought cheaply or just want to sell their stock) wait for the inevitable run-up from this press release, then dump their shares into the open market.

I bought some other penny stocks that were biopharma companies waiting on the coveted FDA approvals of Phase 3 clinical trial results (that would never come), in which case the share price would go up between 10x and 50x. Others were upstart (not startup) bank stocks, which was a pretty dumb moved while 465 banks were closed by the FDIC between 2008-2012.

All-in-all, it was a good education on the way individual stock trading works, but it was an expensive lesson for me at the time. Most of this happened in early 2009, when the stock market was just reversing and heading back up at the start of the current bull market. If I had bought undervalued REAL companies at that time, many of my investments would be up 10x or more, assuming I held them to present day. I pretty quickly got out of my fascination with turning a fast profit, and I actually got out of all individual stock investments a year later.

It wasn’t until I took Bridget Casey’s Six Figure Stock Portfolio course in 2017 that I bought another individual stock, as I attempted to earn some extra side income in the form of stock dividends. I’m an Index Fund investor for 99% of my invested funds, and will probably remain that way for a looooong time. But seriously, if you have any interest in investing in individual companies, or just want to understand investing better, hit up Bridget’s course and save yourself the THOUSANDS of dollars I spent on my penny stock investing fiasco. It will pay for itself hundreds of times over, in the long run. Even for index fund investors like myself, you will better understand asset allocations and having a plan as your portfolio grows.

David Bach’s Latte Factor

By Josh  August 21, 2018

I’ve been quiet around here for a few weeks, because I wasn’t really sure how to put some of my ideas to words. Instead, I just read 3 books in the past 7 days, including The Automatic Millionaire by David Bach, The Richest Man in Babylon by George S. Clason, and a work of fiction by a writer in our PF community, Enemies of Peace by MK Williams.

Each of these books got me thinking about various personal finance topics, but the one that stood out to me first was David Bach’s book, and the concept of “The Latte Factor” (TLF). A lot of people have written a lot about TLF and have come down strongly on one side or the other of the argument. TLF isn’t really about some expensive daily cup of coffee at all… it can be anything in your daily life that costs real dollars and that are a recurring expense.

I’m just a simple guy, and I don’t even drink coffee, so I always had trouble believing in TLF. I would wonder, “How could people spend their money so foolishly that they end up broke before the next paycheck?” Surely I don’t have any TLF in my own life…

For many years, I’ve used the “Anti-Budget” that Paula Pant talks about on her blog Afford Anything. Basically, the gist is to save your intended savings rate off the top (Pay Yourself First) so that you are not tempted to spend it on anything, neither on needs nor wants. By doing this, you are meeting your savings goals and not having to worry so much whether you spend extra on dining out, or on entertainment, as long as you instinctively cut back in other areas.

That’s all well and good, and my Anti-Budget has allowed me to save ~50% of my salary for the past few years, sometimes more, sometimes a little less. But I never really stopped to contemplate the things that I was spending the other HALF of my income on, on an annual basis. So even though I have never, and will never, spend $5/day on a latte or other coffee-based beverage, I have my own little spending demons that add up to significant sums of money.

I don’t spend $5 a day on lattes, but in the past 12 months I have spent $936.80 on pizza. That’s $3.50 per day, on average.

I don’t buy overpriced coffee beverages, but I’ve spent $2,078 in the past 12 months on a stupid bundle of TV, Internet and landline phone(?!!!!) from Comcast/Xfinity. That’s $5.70 a day right there, more than TLF!

I would never be so stupid to pay that much for a morning pick-me-up, but I’ve spent $917 in the past 12 months on annual fees for 6 separate credit cards! While I do still experience more value from each of these cards than the annual fee they charge, perhaps I should look into cutting a few to save myself a few hundred dollars per year in WASTED money. That $917 is $2.50 per day, every day, over the course of a year.

So just with these three examples, I’ve spent $11 per day, 365 times, and what did I get? Crappy TV and internet service (which I don’t even use 90% of my life: sleep, work, travel, etc), a bigger waistline from too much pizza intake, and wallet stuffed with credit cards.

But that’s only $11… that doesn’t really set me back too much, does it? That’s a hair over $4,000 per year! Let’s assume I stop this wasteful spending and put it into my trusty Vanguard VTSAX index fund. Compounding at 7% per year, I’ll have $24.6k in 5 years, $59k in 10 years, $175k in 20 years, and a staggering $404k in 30 years, when I hit age 65. Those little habits that only total $11 a day will have really added up to a big amount of money by the time I hit a standard retirement age. Should I keep eating take-out pizza, being overcharged for cable by Comcast, and paying for the benefit of carrying credit cards? Sure, maybe in small doses, but not at the expense of $11 per day, every day, for the rest of my life!

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I actually started this post to write about a $5 bill on the ground. It’s right on the sidewalk between your car and the front door to your job. It’s there every day, and it’s yours to pick up and keep, if you want it! Every Monday, Tuesday, Wednesday, Thursday, and Friday, plus for some reason, it is there on Saturday and Sunday too, whether you go in to work or not. Given this example, I think most of us would stop, stoop down and scoop up the $5 bill every day without giving it much of a second thought. Who keeps leaving this perfectly good money on the ground? What a waste! But we don’t think about our own wasteful spending habits, the ones that drain $5 or more from our wallets/purses/accounts every. damn. day. That $5 bill is yours to keep, as long as you don’t spend it mindlessly at Starbucks or wherever your particular TLF is spent.

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So if you want to drink your daily latte, drink the damn latte. Hell, I know the annual Pumpkin Spice Latte comes out this weekend, and as a shareholder of both Starbucks and Keurig/Dr. Pepper, I welcome the seasonal uptick in hot beverage purchases. Just know that those little indulgences add up… just like the main characters in MK Williams’ book Enemies of Peace (which is seriously so good, you guys should read it… it has a wonderful story-line about the path to FIRE vs. consumerism).

My horrible house journey, 2006-present

By Josh August 9, 2018 (Warning, post is over 3,600 words)

Sometimes, I feel like a broken record. Pause that, rewind a bit…

As a total FIRE enthusiast and fledgling member of the PF blogging world, I am a member of several private Facebook groups and regularly chime in on posts where overly-excited real estate investors/hopefuls talk about the can’t-lose opportunities available only through real estate investment. They spew crap like “only 3% down and then someone else pays off your mortgage for the next 15 or 30 years” OR the infamous “the house will appreciate, so I can sell it in a few years and pocket the difference.” Inevitably, I have to post a quick paragraph about my own “can’t lose” opportunity that blew up in my face shortly after buying in 2006, and which I am still working on recovering from to this day…

Here’s that story:
I graduated from college in the Midwest, and quickly moved to Southwest Florida to start my career in Urban Planning. I just “knew” that working in local government and knowing about all of the development approvals that were in the pipeline would help me select the perfect house, in the perfect up-and-coming neighborhood, with plenty of upside potential that just about every Joe Schmoe on the street would have no idea was just around the corner. Like most people starting out, I got my first apartment and took in a roommate that I knew from the prior summer when we were both summer interns for the same office that I would work for again in my first big-boy job. As most of you know, “knowing” someone and living with them are two totally different things. I’d had some bad roommates in college, but this guy was the worst of the worst. Because this is a money blog, I’ll just share that he never once paid his share of our common bills on time, and by the time I left, he still owed me a sum of more than $700 (it had been nearly $2,000 at the high point). So I was in a hurry to get out of that living arrangement and buy something of my own.

Luckily for me, the father-in-law of one of my co-workers was a real estate agent. He was a nice guy, but I felt like he was pretty lazy in trying to help me find something in my budget. We looked at a few condos in old-people golfing communities, but I didn’t want to live on top of someone or have someone else live on top of me, so those were nixed pretty quickly. There was one townhouse complex that was promising, except that it listed 2 bathrooms, which was *technically* true, if you didn’t mind the two bathrooms being joined by a common bathtub! (I swear I’m not making that up!!)

My mom spent most of her free time perusing the internet, and would send me promising listings to check out from the County’s planning and zoning perspective. Finally, she found a newly-renovated 2 bedroom, 2.5 bathroom townhouse in a golf course development. The course had recently been shut down to be the centerpiece of a major redevelopment project: Par-72 championship golf course, three 30-story condo towers, enhanced marina, bowling alley, restaurants, retail, office, etc. The townhouse backed up to the woods, which were slated to remain as a preserved open space piece for the overall development. This was the end-unit of the 10-unit townhouse, so it would feel like a duplex, since I would only share 1 wall with my neighbor. After researching the neighborhood redevelopment plans, I saw dollar signs. This was an opportunity to get in on the ground floor of a HUGE up-and-coming part of the area, only a 10-minute drive to Downtown Fort Myers, and situated in the unincorporated part of the County, which meant lower property taxes than nearby cities, and lower water & sewer bills, too. I jumped at the opportunity!

Front door of Josh's house
My first house, as pictured in 2015

All was well for a while after I moved in back in April 2006. The housing market was softening, but I bought my place for $10,000 below the appraised value, so I felt like I had $10k in equity from Day 1. Unfortunately, I didn’t realize I would have less and less equity every day for the next 4 years. The overall economy in Southwest Florida is based upon two things: Tourism & Construction. Being highly-leveraged against any two industries is a precarious situation, but those two in particular are VERY cyclical and the inevitable bust came and absolutely crushed this area. By January 2008, my office had already seen such a slowdown that it became necessary to start laying off approximately 30 people at a time, from a high of 400-ish employees, so that’s 7.5% at the beginning. As the local economy took a beating, layoffs were happening all over, and people were starting to really hurt. The excesses of The Boom (HELOCs to buy fancy cars, boats, jewelry, vacations) were coming back with a vengeance, and people started losing their homes to foreclosure. Lee County Florida was #1 or #2 in the Nation for foreclosures for several years, going back and forth with Las Vegas Nevada.

Due to the pain in the economy, some people started getting desperate. Residential burglaries were on the rise, and I became a victim of a group of burglars on a Tuesday morning in August (in broad daylight). They stole my 50″ DLP TV (this was 2008, mind you), my Playstation 2 and all of the games, DVD player, sodas and alcohol, basically anything of value in my house. They put the chain-type lock on the front door and escaped out the back, leaving the back slider wide open and the A/C blasting all day, just wasting electricity on top of having robbed me blind.

I came home from work, but not until after stopping at the grocery store because it was on my way home. I pulled up and noticed something didn’t seem right, because the vertical blinds were flipped the opposite way from normal, indicating someone was trying to look out, and then I tried the front door and found the chain would not allow me entry into my own house. I dropped all of my groceries on the ground and ran to the back door, when an empty feeling in my gut… I knew something very bad had gone on inside.

I called the Sheriff’s office, and more than an hour later a dopey, young deputy arrived. He took my statement and a couple pictures, spread the fingerprinting dust all over the place and stuck clear packaging tape on anyplace he thought he saw fingerprints. Talk about a waste of time and causing another big mess!

Nothing was ever retrieved, the authorities had no leads, and I was only partly made-whole by the insurance company. Unfortunately, I had only recently increased my homeowners insurance deductible from $1,000 to $2,500 on my home that was now assessed for $47,210, so I got a check for around $8k, when I had lost over $10k in valuables (to a 25 year-old guy).

For YEARS after that break-in, which happened 10 years ago this week (8/5/2008), I would walk through my front door every day and think “what did they take this time?” even though no burglars have ever come back. I had a fright this afternoon when I walked home and saw the kitchen lights turned on, but apparently I forgot to turn them off in the morning, which I NEVER do… crisis averted.

But burglaries happen, and I’m not unique in that circumstance. The next thing to happen was my job was no longer safe, and by July 1, 2009, I was let-go from my first job. But since my degree and all of my relevant experience was in City Planning, and there were no jobs available in my field, I had to pack up and head back to the Midwest, where I at least had some hope of finding a job. I knew that I could either stay with my parents or rent a room from my sister, who had bought a house with her then-fiance just a couple months after I lost my job. But for 7 months, I searched and searched, and did not find any employer willing to hire me because they didn’t think my Florida experience was going to be very helpful for planning in Indiana or Ohio.

Then, by stroke of luck, I ran into a man I used to know through the local skating rink. He and his wife actually owned the skating rink, and I was pretty much a “rink rat” growing up, since it was a whopping 1/4 mile from my parents house, I would go there all the time. Well he was no longer the skating rink owner, but he owned a business in the neighboring town that worked on Grants administration for small communities and small companies all around the state of Indiana. He was looking for someone with a good head on their shoulders, an eye for attention to detail, and willing to help relieve some of the less-technical workload off of his plate so he could maintain quality work for his customers. The job would only pay $11/hour, but that was more than unemployment was paying me, and I had a 4-digit per month mortgage to pay on a house in Florida that I wasn’t even able to live in anymore.

Luckily, living with mom and dad wasn’t so bad, and we knew this would all be temporary. Of course temporary just means “not permanent” and neither was this job. As time went on, the Grants administration world grew very competitive, fighting over every last dollar of Stimulus money and FEMA disaster recovery money that was announced. Applications were flying in from all corners of the state, and fewer and fewer of our applications actually got funded. We worked on a commission basis, so if the projects didn’t get funded, we didn’t get paid! That doesn’t work well for very long, so my stint was up after 18 months and I found myself back in unemployment.

After a few months of searching, with no luck, I encouraged my parents to take a vacation down to Florida to check on my house, pack up a few things that I thought maybe I needed if I was going to stay in Indiana for quite a while, and just have a relaxing week in Florida as the weather started to get cooler in the Fall. I sent an email to one of my old co-workers to see if they still had their old standing lunch plans at a favorite sandwich shop on Thursdays at noon. It turns out, they did, and he was happy to hear I was in town and wanted to catch up with some of the guys. After lunch, he invited me back into the old office to say hello to everyone that remained, and I took him up on that offer, even though I was still quite upset with some people for the way it all had ended. (They accused me of day-trading and “excessive use of internet” so they could fire me instead of a lay-off).

The tour of the office was complete with the awkwardness that you could imagine after nearly 2.5 years away from the place that fired me without cause. But it was nice to see some familiar faces, and I even had one big surprise. The big boss lady (Director of the whole Department) came running out of her office with a printout of a job description and she exclaimed “Josh! Josh! You have to apply for this job!” It definitely caught me by surprise, because I never thought she liked me. Turns out, the job was pretty much the same one I had previously held at the County, but for a local small Town that we used to serve when I was working at the County. I went down to the small local government building the next day and applied on the spot, during my vacation.

I went back to Indiana, with only a glimmer of hope that this job might actually come through for me. I already knew the area, knew the Town’s Land Development Code, and knew a couple of the people I might be working with, but I knew things were still pretty tough for City Planners in the area, and there might be more-qualified people than me applying for the job. I did get a phone interview (which was nice for them to arrange, since I was 1,100 miles away), but I didn’t hear anything for more than 5 weeks after the interview. I reached out to my contact in the department, and she had a talk with the Director. He called and asked if I could come back for a second interview, which was tough to arrange since I was the aforementioned 1,100 miles away. But the call was on a Monday, and I asked him to give me Tuesday to pack, Wednesday and Thursday to drive down, and I would show up Friday afternoon for a face-to-face interview. The interview went OK, but the Director knew he had me backed into a corner, so he low-balled me an offer more than 10% lower than we had previously discussed, and I accepted the job on the spot.

For weeks before this job offer came through, I had contemplated walking away from my house and letting the credit union foreclose on me. I didn’t think there was any chance in the world of me getting another job in my field in Fort Myers, and suddenly I was back and would be working in a beach community that my family used to visit for Spring Break nearly every year since I was in 5th grade. It was only because of my house that I was even coming back to Fort Myers for that vacation to begin with, and it led me to the lunch, with led me to the job posting, which led me to the job offer. Things were starting to turn around!

…Except for the value of my home. This was late 2011, more than 5.5 years after I bought it, and the assessed value was down to $27,841. That’s all well and good when the property tax bill comes, but it’s really terrible when you paid nearly 7 times that much to buy it, and are 6-figures underwater on your mortgage. At this point, the golf course was not in playing shape for more than 6 years, and the promising development had been held up by FAA permits for the aforementioned 30-story condo towers that were directly in the flight path of the local municipal airport ALTERNATE runway. The developers eventually lost the property back to the bank for a $94 million foreclosure, and all of us neighbors were left living on an overgrown critter haven instead of a lush golf course with attendant high-end amenities that we expected.

One day a couple years later, I received a phone call from my uncle, who is a barber in Central Florida. Since he is a barber, he always has the TV turned on and he overheard a news story about a grant program that the Florida Department of Housing was offering to distressed homeowners that had not previously been eligible for the federal relief programs such as HARP and HAMP. The rules were pretty strict, but it sounded like I might be the perfect candidate, which would award me a $50,000 grant to be paid directly towards the principal on my mortgage, to help reduce my monthly mortgage payments and help me get back on my feet faster from the housing debacle. It was called the Florida Hardest Hit Fund – Principal Reduction Program. Sounds good to me, so I raced to complete my paperwork.

The terms of the program are blurry in my head, but were something along the lines of: had to have purchased before 2008, be your primary residence, had to have never had a late or missing mortgage payment, and had to make less than 140% of the area median wage. Finally, I had a reason to be thankful for being a low-paid government employee, and I could use my new Grant application skills for personal gain! As soon as the grant application window opened, I submitted my completed application on the first try, and the attorney in charge of processing the applications commended me on the excellent work I put into preparing the paperwork. There was a monetary limit of around $300M on the amount in grants that would be awarded, but the earliest applicants were going to have first crack at the upper limit of $50,000 each to be considered a $10,000 per year forgivable loan. I was awarded the full $50k, which went straight to my mortgage company. They then “recast” my loan, meaning my monthly mortgage payments went down, by nearly $350 per month! I would be saving a couple hundred a month in interest payments, but also paying less towards the principal for the rest of the loan. If I sold my house in the intervening 5 years, I would owe a pro-rated amount back to the Florida Department of Housing, $10k for each year remaining on the original 5-year window. At the time of this writing, I am 6 months away from having the full $50,000 forgiven, and then I don’t have to worry about any kind of potential claw-back of that money.

In February of 2016, which is supposed to be our DRY season in Southwest Florida, we had some heavy rains that caused a weak spot in my roof to collapse through to the floor of my spare bedroom closet. It caused quite a mess, and I hope to get a couple pictures posted below, but they are disgusting. Luckily, the Property Owners Association takes care of exterior maintenance, but I was responsible for the indoor repairs to the closet ceiling, carpet and shelving.

Since I live in Southwest Florida, every summer I have the great fear of having a hurricane or tropical storm damage my house. Unfortunately, due to its age (constructed in 1981), it does not meet the more stringent Florida Building Code standards that were enacted in the early 1990s after Hurricane Andrew decimated Homestead (Miami) in August 1992. We have really only had 1 close-call in this area since I bought in April 2006, and that was Hurricane Irma in September 2017, which set a record as the longest-lived Category 5 hurricane in Atlantic Basin history, before making landfall in the Florida Keys and taking a swipe South-to-North through the Florida peninsula. Fortunately, the track of the storm was east of my area, which meant that my community was on the “weak” side of the storm. My house was spared of the 15-foot storm surge that was predicted with a more westerly track, and the home itself faced no wind damage from the North-to-South winds on the west side of the storm. The only major loss we faced was our community apartment-style mailbox was knocked down, landing in my parking spot, had I not moved into a job in Emergency Management that required that I be stationed in an Emergency Operations Center for the duration of the storm event (and several days before and after).

The only other major debacle I have faced with this house is a recurring infestation of bees! Over 10,000 bees have been found in my attic on multiple occasions over the past 12 years. We have tried multiple “professionals” to try and fix the problem; everything from beekeepers, to pest control and exterminators, but apparently they never get the Queen, and the worker bees always come back. I went up into the attic one time to find the hive had become a swirling vortex of bees, tucked up into the soffit and measuring at least 8 feet long! This is not going to be an easy problem to fix, and it is still ongoing at this time.

For all of the reasons listed through this rambling story, between all of the things that can go wrong, and even the things that went right because my journey through life prepared me for future steps, I still consider this the worst investment of my life. I paid $175,000 for this 1,260 square foot townhouse (1,180 under air conditioning), and Zillow says it is worth $128,082 today. So I have lived in this house for the better part of 12.5 years (for this purpose I am including the 2.5 years I moved back to Indiana but was still making mortgage payments), was GIVEN $50,000 (which technically brings my purchase price down to $125,000), and I have BARELY BROKEN EVEN in 1.25 decades of home ownership! This stuff is not for the faint of heart, or for uninformed young investors looking to make a quick buck.

Things appear to be looking up again, with a new developer involved with the golf course/marina project from 12 years ago. This time, the plans call for the woods behind my house to be removed and the golf course re-configured to bring the golf course right behind my house. Instead of being across the street from the golf course, my house will be on Hole #1, near the tee box of Hole #2. The project is planned to have a 543-room hotel, 1,200 multi-family units (800 in two 20-story condos), the marina will expand to 200 wet slips and 200 dry slips, 55,000 sq. ft. of office, ~25,000 sq. ft. each of retail and restaurant, a spa facility, and more! I think this will finally bring the property value back to what I had planned before I purchased my home, as developers will be looking to buy some of these older properties and redevelop them for luxury homes on the revamped golf course. They are still in the planning phase, waiting for a zoning hearing to make this redevelopment possible. Then come the permits and literally years of construction, but I can’t wait!

Wish me luck that this time is different!

FinCon t-shirt ideas

By Josh August 1, 2018

In only 8 weeks, I will be joining 2,000+ of my best internet friends in Orlando at the Rosen Shingle Creek, site of #FinCon18. FinCon is an annual gathering of self-proclaimed Money Nerds, and I cannot wait to attend for the first time this September 26-29th. I was stoked to hear that it is going to be in Orlando this year, since I live about 3 hours away from the conference hotel and will simply drive up after work on Tuesday to attend the conference for the rest of the week. No flights required!

One of the non-money topics that I have heard about (besides evening gatherings around craft beers), is that there are a lot of free t-shirts to be had, and/or cool t-shirts that attendees have made. I do not have a brand or much in the way of design skills, but I have a few ideas for t-shirts that I am going to have printed and will wear during the conference next month! Besides, I am 99.9% certain that nobody will have t-shirts printed in my size, so if I want to participate, I’m going to BYOT (bring your own t-shirt)

ILOVEVTSAX

Pictured above is my first t-shirt idea. It’s not really that “I Love Vermont Sax” but rather “I love VT SAX” better known as Vanguard Total Stock Market Index (Admiral shares)

My 2nd t-shirt idea was a secret, and I printed a couple of them to give as gifts to Military Dollar and Erin from ReachingforFI, pictured below wearing their shirts and sporting emoji faces:

DoMSGF0W0AATApf.jpg large

I don’t know that this will evolve into any kind of side hustle, but I do love the idea of trying to come up with ideas and seeing how I can make them work. Any ideas for FinCon t-shirt ideas for #FinCon19 in Washington DC are welcomed…

Impending doom!

By Josh July 31, 2018

If you’ve seen almost any headlines lately (and for the last 8 years, amirite?) the next big stock market pullback is just around the corner. Liz from Chief Mom Officer shared a headline recently that Morgan Stanley was predicting the biggest stock-market selloff in months! (insert scary music) Nobody should be afraid of a pullback that is the biggest when measured in Days/Weeks/Months…

With all of the gloom and doom in the news media, the links inevitably get shared across social media. These dark thoughts creep into our mind, and fear begins to set in. For those who are more risk averse, these feelings of impending doom may cause them to scale back their stocks and put more investable assets into bonds or cash-equivalents like a money market account.

I’m here to tell you, that’s the exact WRONG thing to do, just like trying to time the market.

First off, if you are reading my blog (thank you, thank you!), you are most likely in the wealth accumulation phase of your life. Due to your age and remaining years in the workforce, you should be heavily tilted towards stocks, rather than in “safe” assets like bonds and cash. Most of us can agree that cash is actually not a safe asset, since it is guaranteed to lose value due to inflation. Then what about bonds?

My problem with bonds is that the young investor investing in bonds is locking in a lower rate of return for the perception of additional safety from turbulent stock prices. When stocks run up double-digit percentages, bonds are earning a few percentage points. That’s 70% under-performance, if we’re talking 10% vs. 3%. And we all know that stocks go up over the long term, so why the fear of short-term losses with a portfolio heavily invested in stocks? Young investors should be giddy about lower prices, as long as they’re still putting money to work through workplace retirement plans, IRAs, HSAs and brokerages via dollar cost averaging. Who doesn’t love to buy their favorite things on sale?

So beware of the click-bait headlines, the talking heads shouting on TV, and the viral news stories. A successful portfolio has a well thought-out plan for the inevitable scenarios when stock prices do fall. A successful investor will stick with the plan, or make minor adjustments to their strategy given a changing marketplace. Chasing safety is just as bad as chasing performance, and in fact can do long-term damage to your portfolio advancement by causing you to lose years of compounded market gains during the accumulation phase of your investing career.

If you’re an older investor, it may make sense to have an allocation in bonds and cash-equivalents, but I hope you aren’t using the old “100 minus your age” allocation. That rule of thumb may have been appropriate in decades-past, but bonds used to return a solid 5% on average, and CDs used to return 8-12% in the late 1980s. Now, with rising interest rates, which means bond prices are falling, you’re lucky if you have a positive return on bonds at all. I hope you will consider adjusting the “rule” to 120 minus your age, or similar.

Fabled PF guru JL Collins has been early-retired for quite a few years now, and his portfolio remains at 75% VTSAX (stock index fund) and 25% VBTLX (bond index fund). If you look at the results of the Trinity Study, the 75/25 allocation yields one of the top overall returns, and yet provides a modicum of safety during downturns to smooth the ride.

Tracking every penny coming into my life

By Josh July 28, 2018

Ever since J. Money used to write about his “Challenge Everything” mindset/challenge/fund a few years ago, I have been meaning to do something similar and cut out all sorts of frivolous/wasteful spending in my life. But since I’m the ultimate lazy, single dude, I have definitely not completed that task yet. I did take away from his series that small amounts of money really add up! Sometimes that money comes in the form of unexpected sums from an insurance rebate, found money on the ground, selling a few items that are just sitting around your house, or in many Millennials’ cases, a side hustle.

Confession: Starting on January 1, 2016, I began tracking every penny, nickel, dime, quarter, and dollar that came into my life from every source OUTSIDE of my day-job paycheck. The results have blown my freaking mind!

First, the amount of money that must have passed through my hands, without “knowing it” in past years would have added up to a tidy sum. In 2016, my first year of tracking this, the total amount was over $17,000!! In 2017, that number ballooned to OVER $33,000!! So far in 2018 (7 months, more or less), I’m sitting at over $13,700, and I’ve cut WAAAAAY back on my side hustle.

Secondly, knowing that it has come into my life gives me a reason to put a purpose to where it goes. In the past, any extra money had a habit of disappearing on a new video game, DVD, some other technology, or one year I went back and tallied up nearly $3,600 in golf course greens fees <– same year, I put $0 in either my Roth or Traditional IRA. YIKES! Now I actually realize that I was paid back $3,430.97 in travel reimbursement/per diem for work travel in 2016, so I can apply those funds towards my IRA (I mean, that’s what I DID in 2016, and I maxed it out!)

Third, I don’t take any of this money for granted. When money is easy-come, easy-go (You’re welcome for planting Bohemian Rhapsody into your head), it’s very easy to think that another unexpected windfall is just around the corner to bail you out of a stupid spending decision. Now I have the empirical evidence to show me that this money has come into my life, and I better have something to show for it, or at least a very cool memory and story to tell!

I think at this point, I should just post a chart to show all of the money that has come into my life (again, outside of my day job paycheck) over the past 31 months:

chart(1)

The amounts that stick out the most both came in 2017. First, I spent a lot of time concentrating on my Uber side hustle in 2017, because in August 2017 I bought my new-to-me Toyota Camry Hybrid, and I wanted to pay that sucker off as quickly as possible. In all, it took me 86 days to kill the car loan. The second (and larger) big spike was from selling nearly $10,000 of physical silver bullion that I had purchased over the years of 2012-2016, all the while the spot price of silver was falling, from around $35 down to under $14 per ounce.

Interesting or odd payments that fell into the Miscellaneous category:

$31.74 – My one and only paid blog article in 2016 (after PayPal fees)

$41 – total of 3 secret shopper tasks I completed.

$25 as a gift from a total stranger that I helped to save Christmas for her husband. Backstory, she lived in Colorado, but was purchasing a puppy for her husband as a Christmas gift. Unfortunately, the puppy was born in Indiana, so she was paying the breeder for the purchase and transport (airline) cost of getting the puppy to her in Colorado – or so she thought. Apparently, there’s more than just 1 Josh Overmyer, and his email address has some numbers mixed in with his name. Well my email doesn’t have those numbers, so when she sent me over $1,300 for a puppy that I had no idea I had 😉 I politely declined the PayPal payment, and sought to help her figure out what was going on, how to get the money refunded to her checking account, and overall just being a totally good guy, like I was raised to be in the Hoosier Hospitality state of Indiana. She was so thankful that I wasn’t an opportunist and ran off with her money, she sent me an unsolicited $25 as a thanks. This may be the best $25 I ever received… you don’t really expect people to appreciate you for just doing the right thing.

$41.05 – I received a $20 free play certificate from a local casino, and I put that voucher into the slot machine and punched a button for about 15 minutes, then cashed out my winnings of a whopping 205% hehe

$21.75 for selling old DVDs online.

Nearly $100 in iBotta rebates before I quit using the app.

And my bank bonuses and Tradelines payments round out the more exciting random money amounts of the past couple years. Bank account interest payments, though, have not added much to the bottom line ($147 or an average of less than $5/month).

Lending club withdrawals include both principal repayment and interest that I collected on my 366 loans.

Overall, I think this exercise was a major success, and I plan to continue tracking these sources of extra windfalls in my life, no matter how big or small.