First Stock Purchase: Coca-Cola (KO)
Coca Cola It's official! I have purchased my first stock ever! After going over all the fine advice offered in my last post (thanks so much, guys), I've decided to go with 10 shares of Coca-Cola Company. Honestly, it was a huge help reading the Coca Cola (KO) Dividend Stock Analysis post from Div4Son. While I'm getting my own analysis sheets going, it definitely helps to have friends! Jason from Islands of Investing also gave me a great link to dig into PE ratio to remove some of the mystery from that term, so I also appreciated that. Oh, and to give a few details, I bought just 10 shares of KO at 41.1599 ($411.60). Combined with the $7 trading fee, it cost me $418.60. Man, I can see how that starts to add up. Still, it's better than the $20/trade I'd have to pay with Vanguard after the honeymoon period is over. What an exciting day! And, of course, it went way more smoothly than I thought it would. Now I'm looking into what to purchase next, but apparently there are only certain hours where trades can happen (I tried buying some Union Pacific stock as well). I'll wait to see what the price looks like in the morning and perhaps give that a shot then. Thanks for all the help, guys. I'll update once I figure out what to buy next! Update: After buying 5 shares each of UNP, WMT and MMM (in that order), I just created a Portfolio page like all you fancy people!
June 2015 Net Worth Update
Happy Fourth of July! June has come and gone in a flash and with my little free time on this holiday weekend, I wanted to take the chance to update you on my net worth. While things went up significantly this month, I know I can't expect increases like this for the rest of the year, but it's still fun to see them on an upward trend! June 2015 Net Worth: $432,866.16 Here's the net worth statement for this month: 2015-06 Net Worth As you can see in the image above, that's a total increase from last month of $10,823.90, or a 2.5% increase from last month's $422,042.26. Also, the Emergency Fund is shown at $50,000, which probably won't be increasing from this point as I consider that goal complete! Instead, you'll hopefully start seeing increases in the Vanguard SEP IRA and after that, other yet-to-be-determined accounts that may or may not be taxable. We'll find out soon. As soon as I figure that out, I'll be writing posts to keep you all updated. So, the reason my May net worth percentage change was so big was due in part to our tax refund. This month, however, I was still able to stash over $10k away and I'm pretty damned proud of that. Another thing you'll notice is that the home mortgage amount dipped below $500,000, which is an amazing feeling! I mean, it's still quite a mountain to climb but it feels like we've reached the first base camp. Slow and steady gets you to the top of Mount Everest. On the other hand, my taxable brokerage accounts decreased due to the dip at the end of the month, but I just saw it as an opportunity to move more money into VTSAX (in the Vanguard SEP IRA), so no problem there. As always, I'm in it for the long haul. Overall, June was a great month in terms of overall net worth. Next month probably won't be as great, but as long as I make forward steps, that's what counts. Thanks for stopping by!
Emergency Fund Update - 100%
I don't care if it's cheesy. I'm using it.
I don’t care if it’s cheesy. I’m using it.
I just checked my Emergency Fund and as of today, I have surpassed my goal!!! You know, I’ve said it before, but I honestly didn’t know if I’d ever reach this goal. It’s the most I’ve ever saved for anything, ever that didn’t involve buying something tangible. In the beginning, it felt the same as trying out a new diet. Every time I’ve done that, there’s this sinking feeling I’ve gotten that I won’t hit my target weight and I imagine that’s the little devil on my shoulder who likes to mock me for past failures. Today, however, that devil gets the cone of shame. In your face, little mocking demon. I will personally celebrate this moment tonight, maybe with a nice glass of wine. And what else? Uh-oh. I feel a Warren Buffet quote coming on.
Someone is sitting in the shade today because someone planted a tree a long time ago. — Warren Buffett
I know that one gets used a lot, but it’s a personal favorite. And so true. And so ends my first major financial goal, hopefully the first of many. Next comes my incursion into actual investing. As you know, I’ve been deciding on what I should do, given the fact that I’m going to be heading into a lower-paying position for a while. I was planning on getting into taxable investing right up front, but I think the smarter thing to do is to maximize my SEP IRA investing while I can. So in addition to the huge chunk of change I sent over to my E-fund, as I mentioned in a recent post, I also bought up some additional shares of VTSAX during the latest market drop. I’ll probably do this a couple more times before I’m temporarily relegated to a lower paycheck. On to further adventures!
A Series of Somewhat Interesting Facts
Do you ever check how much interest, dividends and passive income you earn on a daily basis? Ever since I started on my Financial Enlightenment, I've been keeping track of my interest and dividends. I've been tracking a lot of things actually (gotta love spreadsheets). I figure the more I keep track of things, the more aware I'll be of my financial situation at any given moment. This kind of awareness helps in little ways, like when my wife asks me questions about how much we have here and there. Interestingly enough, I started out this year earning about $0.35/day passively (Hey, don't judge me. We all have to start somewhere.). As of the end of this month, I'm earning about $2.60/day. There are still some numbers that need to come in, but here's the chart that corresponds with the growth of that number: Daily Interest Graph as of June 29, 2015   And here's the chart which corresponds with the annual projections based on those numbers as multiplied for the year: Annual Projected Interest as of June 30, 2015 You know, at this rate, it's almost to the point where I'll earn over $1,000/year without doing anything. That's a pretty excellent achievement on the path to making about 60 - 100X that amount. It's basically like step one has been completed, which leads me to my next interesting fact.

Today, I Invested More

My monthly paycheck finally cleared, so I decided to do two things before I send money elsewhere. One, I started the transfer that will effectively complete my Emergency Fund goal of $50,000, so look out for the post on that achievement. Second, I moved another $2,500 into VTSAX. Coincidentally, the price dropped today -- from $53.06 Friday to $51.93, so I'm not sure how much that will impact my total investment but if it works out, great. If not, I'm in it for the long haul so it doesn't matter in the big scheme of things. What's important is that I'm not trying to time the market. Also, I'm trying to maximize how much I put into my SEP IRA before I transition into a salaried position. Hopefully that just means more daily accrued interest and more in dividends. Oh, right, and I also just learned VTSAX pays dividends (thank you Dividend Life!).

Interesting Possibilities

Now that these milestones are being hit, I am starting to consider what to do next. Admittedly, part of what I've been considering is reducing my six month E-fund down to three, and investing the rest. I won't do anything drastic, of course, but that doesn't mean I haven't toyed with the idea of putting that $25k somewhere to generate higher returns overall. It won't do much to my net worth, but it would, for example, certainly help the interest rate if I put that much in VTSAX. Right now, the E-fund is earning 1% sitting in Ally, when it could be earning much more in the long run. That would probably push me closer to $2,000/year! But what if I invested it in something else? A friend of mine is thinking about investing in a franchise, which would be built in a nearby location I think is perfect. The overall start-up cost? Around $250,000. It just so happens that I could put in for 10% of that. Another friend has become a decent property manager, having purchased his fifth duplex and successfully renting all but one of the units, which he lives in himself. I'm actually set to talk to him about this very thing this week, so I'm excited about that. In this area, I don't think $25k will get me into a duplex, but it will at least give me a target number to shoot for. I'm also keeping an eye on some Flippa web "properties" for potential investments. It seems like $25k could get me somewhere in the neighborhood of $1,000 - 1500/month in passive income. The trick is finding sites that aren't in an irreversible (without a ton of work) decline. And let's face it, in a lot of areas, I am green. I'm still watching though. Lastly, I have started the gears turning on a side business that could turn out to be pretty big. You never know.  
$1,000,000 in Lifetime Earnings
Last night, I was going over some expenses to determine what is a “nice to have” and what is a “need to have.” Doing this on a fairly regular basis has become cathartic in the same way that clearing your desk is. It’s minimalism applied to expenses, which serves to remove distractions and get down to the essential. Of course, none of the monthly expenses I have are actually essential, but I mean necessary to continue saving at rate less than dismal. Staring at the spreadsheet of expenses, I started to wonder a few things:
  • How much money I’ve made in my entire career.
  • How much money has gone to stuff I no longer use or never used more than a few times.
  • How much money I could have saved had I not spent it on those things.
So, immediately, I searched for my salary history and found that it was missing the past few jobs. Being that I’m getting paid a lot more, it made sense that the most recent work years would amount to the biggest spike in income. After looking up the various amounts and filling them in, I was astounded to find out that I’ve crossed the million dollar mark in lifetime earnings.
Two comma club .. sort of.
For some of you, this may not mean much. And for others, it might seem unreal. I was in the latter group. If you’ve read about my story, you’ll know that I grew up in a house where we didn’t want for things, but we weren’t exactly rolling in dough. The thought of reaching a million dollars was so far off. As I’ve mentioned before, my brother and I marveled at $1,000 when we held it in our hands. I honestly never thought I’d reach a million bucks before I was either old or dead, and yet, here it is. Next came the easy part. To figure out how much money I’ve spent on stuff I no longer use or never used more than a few times, I could go into some crazy detail or I could just subtract my net worth to figure that number out. Conveniently, I started tracking that number not too long ago, so it wasn’t too difficult to find. $1,000,000 – $422,000 = $578,000 Granted, a big part of that $422,000 is equity on my mortgage. I could easily include that, but it’s not something I earned through income, so let’s strip it away. $422,000 – $256,000 = $166,000 Adding in the depreciation of both vehicles, I would bump that up to $175,000. So our new number is something like this: $1,000,000 – $175,000 = $825,000
Credit: Ingram Pinn (I think)
Credit: Ingram Pinn (I think)
There, that’s more like it. I’ve been working since I was 17, so that means for the last 15 years of work, I only have 17.5% to show for it. In other words, I have let nearly 83% of my income slip like sand through my fingers. True, a lot of that has gone to things like rent, utilities, school — for myself and for the kids –, fuel, vacations but also to eating out (A LOT), asset depreciation and general frivolousness with my income. So it’s not like I’d be a millionaire right now had I just buckled down a bit, but my point is that I’d be a lot closer. I figure that if I’d had a modest average savings rate of 15% for that entire time, it would have come out to an extra $100,000 during that time. Ultimately, it comes down to this: for all the time I’ve traded in for money, what do I have to show for it? Yes, I understand that I’m effectively complaining about having so little when I obviously have a lot. But it doesn’t hurt to stop and look back for some perspective. I don’t want to hold my former self accountable too much, because I was ignorant. Things could have gone much worse for a person ignorant of finance. Not that I’m Buffett at this point or anything, but I’ve come a long way. In fact, this post is more about the next million than about the previous one. The real question at the heart of this post is: now that I know, how much of that next million will I use to become financially independent? And where past meets present, I now understand that even that 15% is hard to maintain when the future starts looking a little difficult. It’s hard to take income volatility into account when you’re making these numbers up. And 15% isn’t even a good savings rate. I’d rather be saving at 40-50%, or more. But when it’s not in the cards, it’s not in the cards. Even if I only save 15% of the next million, that will still be another $150,000 tacked onto my net worth. And while I won’t be financially independent by that point given my current spending habits, I will be that much closer to early retirement. And, as I’ve maintained, I will continue to push through that earnings gap to make up the difference. Be it through my main source of income or some side hustle, I’m determined to stay focused on that one goal.
May 2015 Net Worth Update
Happy Friday! So while I'm giving regular updates on my Emergency Fund, after reading a few blogs, I figured I could give monthly updates on my net worth as a way to show my progress on the road to Financial Independence. I figured I might as well start with where I left off last month. May 2015 Net Worth: $422,042.26 Just to catch you up, I started the year off with $379,290.29 for a total increase (so far) of $42,751.97! Here's my first net worth statement: 2015-05 Net Worth You'll notice a few things here. For one, my Emergency Fund jumped up from $30,000.00 to over $35,000.00, which is a significant jump and represented reaching 70% of the way to $50,000.00. After this month, you should start seeing bigger increases on the Taxable Brokerage Account  line. Still, there was an increase of $227.35 in that area. Not too bad considering I don't touch it. The home value is based on the Zillow "Zestimate," which Mint uses. I realize this may be over or under, depending on the market, but for the sake of projections and updates, I'm just going to go with it. On the other side of things, my mortgage has gone from about $560,000 when it started, to hovering just at the $500,000 mark today. Still a long road ahead, but we're making progress. Overall, there was a change of +4.93% in net worth. A big part of that was probably the tax refund we got, which came out to $8,688.00. Personally, I don't like how much of my worth is tied up in the real estate market, but from what I gather, it all counts. I suppose I'll be more on board with the notion once we start investing in more real estate. For now, it just seems like these numbers could plummet with the market and get cut in half. But such is the nature of the beast. That wraps up the month of May. I plan to release an update like this once a month while keeping the corresponding number updated in the sidebar. I've been seeing that in a lot of blogs and I love it for some reason. Until next time.
Emergency Fund Update - 90%
Hey guys, As of this morning, I have hit the 90% mark and it feels amazing! Though I must say it's less amazing, however, than hitting the first 10%. I suppose there's some psychology behind the idea of throwing money on a small pile as opposed to throwing money on a big pile -- the former probably feels far more rewarding. Regardless, the bigger number -- 100% -- is what I'm after and to be this close to it really does feel great. And just to clarify, it has been no easy feat. I am really moving things around to hit that target because I am determined and focused. For those of you paying attention, my last Emergency Fund Update post had me at 80%, so it's really incredible to me that I'd be able to increment 10% at a time. To put things in perspective, the amount I'm saving each time is more than I used to make in two months when I was younger. Just insane. Moving forward, I am trying to see what I can do to make that last stretch and finally hit 100%. The gears are already turning. Because, you see, I intend on hitting that goal before the month is over, but it is not yet immediately clear how I will get there. What inspired me to hustle this month is a few things, but also remembering this important quote:
Don't save what is left after spending; spend what is left after saving. -- Warren Buffett
Ha! This seems laughably obvious, yet in practice is counterintuitive. I love when things can be put so succinctly, yet have such an impact. One thing is clear -- you can bet when I hit 100%, I will be celebrating that milestone. That marks the end of one journey and the beginning of another. The achievement of my first huge goal and the beginning of actually investing. You get the idea.
Emergency Fund Update - 80%
Today marks an extremely important milestone for me: my emergency fund is officially 80% filled! In other words, I have $10k to go before the fund reaches 100%, and I'd really like to get there before the end of the month, so you know what this means. Extreme Savings Mode: activated. Once that's filled, it's time to start investing. In mutual funds. Bonds. And more recently, Dividend Growth Stocks. Oh my. I don't have more to report than that, but I was pretty excited about it. Thanks! FM
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