Financial Update – Feb 2019

Another month, another update. A few random comments.

Good Reads/Listens/Watches

• About Time (link).
  • I really enjoyed this movie. I had never heard of it before. Found via Justwatch.
• Won’t You Be My Neighbor (link).
  • Awesome documentary about Mr. Rogers. Worth watching.
  • Others I’ve talked to think the movie is too slow. I’m convinced that millennials do not have the attention span to sit through this movie.
• Fyre (link).
  
  • A few years back, I vaguely remember hearing about a music festival on a Caribbean island featuring Blink 182, a band which brings back fond memories of my freshman year of college.
  • It turns out that the festival never materialized and was a complete scam.
  • The documentary really highlights the power (and stupidity) of social media, “influencers” (a term I heretofore vow to never use again for the rest of my life), and branding.
  • The movie is really a microcosm of social media. It seems to me that social media is most often used in the following manner: 1.) To trick others into thinking that you are richer/happier/having more fun than you really are. 2.) To fool yourself into thinking that you are inadequate because you are not as rich/happy/having as much fun as others.
    • The brilliance of Fyre was that it successfully preyed on the inadequacies created by social media. The tragedy of Fyre is that it was an utter scam.
    • The documentary made me hate social media, marketing, and branding even more (a tall order since I already loathe these things).
• My Money Blog on mortality (link).
  • It’s morbid to think about, but there is a fairly high chance we’ll be dead in 20 years and a 100% chance we’ll be dead in 20 years + a few more. The takeaway for me is to be proactive in how I design the remaining years on earth.
    • For me, this involves continuing to optimize my finances to give me the freedom to accomplish what I want. If I get hit by a bus tomorrow, naysayers will say that I’ve squirreled away for years for nothing. The reality is that I don’t feel deprived today. Further, the decades of squirreling away will provide a larger nest egg for the surviving members of my family, so I really don’t see a downside to it.
      • I think the biggest superpower we all can achieve in life is to learn to be happy on less. It’s win-win-win-win-win. Better for our bank accounts, our stress levels, our happiness, the environment, etc.
• Bogleheads on Investing Podcast (link).
  • It’s pretty good for people who like geeking out about index funds & investing.
  • If you don’t care to geek out about index funds, I wouldn’t recommend the podcast.
  • Bogle was interviewed in the inaugural episode a few months before his death. It’s worth listening to.
• I discovered Bill Gates’ blog the other day via his interesting AMA on Reddit. Here’s his latest post (link). Definitely worthy of adding to the RSS feed. I love reading his thoughts about the world and about his efforts to improve the lives of billions.
• Thoughts on trade-offs (money vs life experiences) from Thoughts from Inside the Box (Google employee who famously lives in moving truck in google parking lot) (link).
• Mr Money Mustached on Fictional Cyclocroft Biking Town & Reality (link).
• The Finance Buff on healthcare (link).
• Free Solo won an Oscar for best documentary. I still like Dawn Wall better. Both are worth watching.
• Fritz (from Retirement Manifsto) on Einstein’s Theory of Happiness (link).
• Econtalk podcast on the placebo effect (link).
  • I need to start taking sugar pills to trick my body into being healthier, smarter, etc.
• This Humans of New York post made me laugh (link).
  • I can painfully relate to his social ineptitude which pretty much summarizes my courtship of Mrs Frugal Professor.
• WSJ opinion piece highlighting the increasing obsolescence of the way medicine is practiced (link).
  • I don’t agree with the author’s conclusions, but there are some interesting points he makes.

Life

• My kids participated in a sterilized version of Valentine’s day at school in which no candy was exchanged. The same sterilization occurs for other holidays. Halloween? No candy, costumes, or parties.
  • In my humble opinion, Valentine’s day should be cancelled (for kids) if there is no candy involved. My kids disagreed and insisted on giving out overpriced valentines anyway. It was a source of heated debate in our house this month; a debate which I lost handily.
  • No candy at Valentine’s day reminds me of this “no dairy” Brian Regan skit (link).
    • “And no more happiness”
• It was really, really cold. It has snowed a lot. We are on the verge of losing our sanity.
  • FOR THE LOVE OF ALL THINGS HOLY, I PRAY THAT SPRING COMES SOON!!!!!!!!
• Mrs Frugal Professor has been complaining a lot lately about body aches. After a lot of troubleshooting, she is attributing these pains in part to our 14 year old mattress. After hours of research and testing, she converged on a $3500 “Purple 4” mattress. It pains my soul to write the words “$3500” and “mattress” in the same sentence, but laying on that thing in a store felt like laying on a cloud. Seeing the pain that this non-frugal purchase would have inflicted on me, my wife took pity on me and accepted my proposal to purchase a $500 mattress from Costco instead. So we picked it up, put it on the roof of our minivan, then held on to it as we drove it home (0.25 miles) at 5mph in around 0°F weather. Suffice it to say that our (gloved) hands were cold after that ordeal. Fortunately, the mattress made it home safely. Unfortunately, my wife thought that it felt like sleeping on concrete so we were forced to take it back (still unopened in the plastic). So that’s where the mattress saga stands today.
  • The horror of a $3500 mattress purchase perhaps making it onto this frugality blog has disciplined us to look further into alternative solutions.
    • I think we may be converging on this $700 foam mattress from Costco (link)….

I noticed a faculty member had this on their laptop during a meeting. If you’re a math nerd, you may appreciate it. The minute or two I spent deciphering it were of the most productive uses of time I’ve ever spent in a meeting in my life.

Depressing daily forecast as you start your morning bike commute.

 

Even more depressing 10-day forecast….. It’s amazing how warm 20°F feels after several weeks straight of 0°ish weather. I took my son on a bike ride to Costco the evening of the 27th. It was close to zero degrees outside. It turned out to be a mistake. Hopefully my son isn’t emotionally scarred for life….

The pedestrian underpass flooded & froze over. The studded snow tires are working.

 

This is what happens when our kids are cooped up all winter long; WE ARE LOSING OUR SANITY!!!!

 

This month’s finances

• The good:
  • No catastrophes.
• The bad/abnormal:
  • The 5.25% cash back at Costco is working well (via Costco Cash Cards), but we have an inventory of about $500 in unused cards, leading to the false impression that we’ve spent too much on groceries this month.
    • Going forward, given that our gas spending will now happen via Costco Cash cards, I’ll lose the ability to track future Costco gas spending. It will now be lumped into grocery spending. I don’t care enough about that to fix it. Same thing for our many Costco pizzas per month.
  • $437 in allergy shot payments.

Full version is downloadable here (link).

Footnotes:

1. I lazily approximate home value as my historical purchase price.
2. I have a 15Y mortgage which results in much larger principal payments than a 30Y mortgage. Since principal payments are simply transfers from one pocket (assets) to another (debt reduction), I treat such cash flows as savings.
3. ~$0 cell phones described here.
4. All expenditures at Costco & Walmart are classified as “Food at home” for simplicity (even if it’s laundry detergent, clothing, medicine, toys, etc).
5. Nobody knows the perfect asset allocation. Just pick one and run with it. Use a target date retirement fund as a benchmark if you want some guidance (link).
6. My low portfolio expense ratio is the primary reason why I don’t hold target-date funds, which have expense ratios anywhere from 0.16% to 1%. I can achieve a much lower expense ratio on my own due to Admiral shares, etc. And it’s not hard. Plus, a DIY portfolio allows one to tax-loss-harvest more easily.
7. ETF’s are slightly more annoying to hold relative to index funds. With ETF’s, you must deal with bid-ask spreads as well as the inability to buy partial shares. With a simple index fund, you don’t have to deal with either of these issues. Bogleheads discussion here (link).
8. I continue to own VTSAX rather than FZROX and in my taxable brokerage account because it is more tax efficient due to lower capital gains distributions. Bogleheads discussion here (link).
9. The one blight in my expense ratio analysis is my 529 plan. The underlying Vanguard fund is almost free to hold (0.02%), but the high administrative fees bring the total cost of holding the fund to 0.29%. I abhor fees and would likely avoid 529 plans if I didn’t get to deduct up to $10k of contributions per year on my state return, saving myself $700/year in state income taxes.
10. CA’s 529 plan has the lowest expense ratio US equity index fund of any in the US. I’d have 100% of my money here if not for the state tax deduction I receive in my own state.
11. I own one share of Berkshire Hathaway (B Class) for the sole purpose of getting 4 free tickets/year to Berkshire’s annual meeting.
12. I bought 100 shares MoviePass for $0.0127/share to be able to tell my students that I held a stock that went to zero. So far, the stock price stubbornly remains above zero.

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