December 9, 2019
On Money
Income
Our primary income comes from our full time jobs. We have minimal income from an investment property (saved for future repairs ) and investing in dividend stocks (reinvested). We earn money on the side to supplement our main incomes. We get a bit of income from Swagbucks and cash back sites (Ebates, Mr.Rebates). Some posts have affiliate links that pay a micro-commission to keep the blog running and I’ve added a way to support the blog in the sidebar to the right!
Our long term goal is to replace our day job income with passive income before my health prevents me from working because I know from my Mom’s experience that relying on disability is incredibly tough or near impossible here in CA.
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Dividend income. We received $545.98 in dividends this month. Our year to date net dividends are $3,609.38.
Drips of money. I made $9 from a User Interview, woo! I’m 74% of the way to my next $25 Target gift card from Bing, almost woo! We also sold an old shirt on Poshmark, netting $2. Wheee!
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December 6, 2019
1. JB was treated to a movie at the theater, and we ran into quite a few of zir classmates (boys and girls alike, boy is that movie popular) which was bonus excitement for zir. I hardly remember the first movie but Frozen 2 was really quite entertaining.
2. With some help, I made a few jars of my “liquid gold” to give away to friends who I never know what to give in return for their food gifts. This is the only thing they’ve ever requested and I make this soup stock once a year, if that.
3. We hosted a mini Friendsgiving the day after Thanksgiving. A couple of friends who didn’t make a turkey came over and dined on our set aside turkey. It was perfect and then we wound up the night talking about emergency preparedness and what we still need. I broke out our water filter for the first time in 8 years, and we figured out how to put it together. We also may do disaster preparedness practice runs together – Emergency Food Fridays, anyone? I have been pushing PiC to do this because I want us to be totally prepared for emergencies and disasters. *Totally prepared = where it’s muscle memory and not us fumbling around trying to figure out how to arrange the basics: lights, clean water, heating up food safely indoors, staying warm, etc.
4. I deeply appreciate my warm sweatpants that fit. I could live in these. I have to fight the urge to go buy five more as an overreaction to many years of ill fitting clothes. Is this just me? Anytime I find something I like, I want one more in case I can’t find it again but I also wear things until their doom (usually at least 5 years, more like 8-10) by which point it’s possible my taste or standards may have changed so why not let it go and find a new thing?
This may be a deeply ingrained reflex from my pre-tailoring things to fit and pre-Petite sizes era. Back then, nothing ever really fit and if it did I wasn’t likely to get lucky again in that clothing group. I was always going about in oversized and poor fitting clothes.
5. While I tackled a page long To Do list on Sunday, with JB’s help at times, PiC cleaned the sink, vacuumed, did all the laundry, changed the sheets for our guest room to prepare for our next house guest and cooked dinner. I was so focused on all the things I needed to get done that I didn’t quite realize what he was doing the whole time. Naturally, I appreciate him like you wouldn’t believe.
6. I was in charge of ordering a ton of alcohol gifts for the family. I started my order over the weekend and happened across two stackable promotions to get 2 bottles of whisky plus a mini, 12 bottles of wine, and a whole case of beer for $187. Note to self, plan ahead. Next year’s supply of alcohol to serve guests and for gifts – buy on Cyber Monday!
7. I tried adding a half cup of baking soda to the wash drum + vinegar in the fabric softener dish for JB’s funny smelling sheets, and PiC’s workout clothes, and they don’t smell terrible anymore! Huzzah!
8. How is it Thursday already?? (Right now as I type this.) JB and I both went to the dentist and got our teeth cleaned and is there anything more dentally satisfying than a professional cleaning?? I love how clean our teeth are and I’m loaded up on advice for how to take better care of our teeth and gums. I have some gum recession 😭😭 and I’m more afraid of dental recession than a financial one these days. So, brushing and flossing diligently, as we’ve been doing, but I have to wear my night guard every night now.
:: How was your week?
December 5, 2019
Being in a constant state of rage can wreck you slowly (or quickly). I should know, after the past 20 years which included my financially abusive family and two terribly toxic workplaces spanning 7 years of my career, and today’s world. I like these action items for doing things to combat the rage and alleviate the stress. It’s a simple list but I still need the reminders when my dander gets up. I’ve also done a lot of work to remove toxic people from our lives, to simplify, to induce calm and it’s made a huge difference.
I was just thinking about my comment over at Abby’s about how emergencies piled up when I was low income – it was always one thing after another. Then I realized that’s still true today. We just had a family situation that cost nearly $3000 to take care of. No sooner had I calculated those costs, we had another incident that cost $1300 to start fixing and is going to cost another $400+, at least. We can bear those costs because I aggressively save but by golly, having less than $10,000 in savings in the face of this level of costs would make me physically ill.
On principle I would like Nicole Cliffe because she’s a rich person who advocates for paying people a fair wage and none of that nonsense about stiffing them because “we’re like family” but she’s also an entertaining writer so I read her gift guide mainly for her writing. Except it turns out, it’s also got really neat stuff. Why did I doubt her? I don’t usually buy kids toys but I will make exceptions for good ones.
A SpEd teacher shared this with me. They work really hard to teach and advocate for their students but it’s rough. (more…)
December 2, 2019
Dollar cost VERSUS lump sum
For traditional retirement savings, I’ve always been a dollar cost averaging investor. I fully believe in automating my savings and investing.
I do NOT believe in automating my bills because I don’t trust those companies any further than I can throw them. Look away and they’re tacking on extra unauthorized charges! And even the decent companies can make mistakes. And I can make mistakes that need to be rectified before the bill is closed out. So no automated bill pay for me but I am all over automating the money that goes back into our pockets!
Sadly, despite my honed and stellar money skills, I’ve never once had enough disposable income to max out an employer sponsored 401K plan. Not even close, not even within shouting distance of halfway close. Worse, my employer hasn’t offered a retirement plan for years and probably won’t for years. Finally accepting this reality, in the summer of 2018 I buckled down on making up for lost time.
For the first six months, I spread out the transactions.
After 13 transactions, I decided to give lump sum investing a try. It’s viscerally satisfying, I get nervous about regular contributions when I’m trying to keep our cash buffer healthy in case of market crashes *cough* hoarder! *cough* market timer! *cough*. I’m also curious about how that would work since I’ve never done it before.
There are also two practical, non-emotional, components to this. I could be contributing monthly but I don’t want to have to account for these withdrawals in my monthly cash flow. For later, not that I’ve done a lot of thinking about this, I want to reduce the number of lots we have to sell off.
I switched to hoarding cash to make a few big deposits in the year the way I do for our IRAs to keep things simpler.
Here’s what I noticed:
For our IRAs, I love it. This was somewhat accidental but I’ve fallen into the habit of saving cash the year before. In the first week of January, barring any complications, I max out both IRAs. Done and done. I only think about it again the rest of the year when I’m pulling together the next year’s contributions.
For our brokerage: In the first six months I became hyperaware of price movement. It shouldn’t matter but I was. In the run up to making a big quarterly deposit, I keep checking the price: VTSAX, VTBLX, VTIAX. I couldn’t shut off my urge to find the best deal! I lost all perspective. That’s annoying.
I really wished that I could just set a buy price and forget it.
After a full year, my hyperawareness calmed down a bit but not because I came to my senses. It was because I decided that with the recession still looming, my gut wants to hold on to the cash and buy in a really significant dip to make our cash go further. My VTSAX purchases have ranged from one delightful low of $59/share up to $71/share and I’d like a lot more of the lower share price thanks.
Tax efficiency: gain and loss harvesting
I’ve been feeling guilty over not engaging more fully in making our portfolio tax efficient. One of the ways I felt like I should be addressing our portfolio is using tax loss and tax gain harvesting. At the risk of sounding immodest, I had no use for tax loss harvesting because in our individual stocks portfolio, all of our stocks were winners between 2008-2017. Since, I buy and hold, the minor ups and downs of the stocks were of little interest to me. I’m only interested in the long term prospects!
I finally made a bad buy in 2017. I bought GE at $30 per share, realized that I didn’t have faith in the company over the long term, and decided that I’d rather lock in the loss than ride it out. That was my first tax loss harvesting and it was clumsily done. I exercised the sale at the end of 2017 so the sale didn’t even register until 2018! Whoops.
My lot sold at $17.59 per share and I used that loss to offset our taxes in 2018. The stock is sitting around $8-9 per share right now and maybe it’ll come up 4-5 years from now but I only buy and hold companies that I fundamentally believe in, so I’m ok with locking in that loss when I did. Who knows. I’m not a stock wizard, I’ve only done as well as I have because we’ve had an incredible bull market, but I’ve got to have some kind of rational blueprint for buying and selling.
That brings us to tax gain harvesting. I’ve vaguely had this sense that I was failing at advanced investing because I have never felt comfortable with the concept and harvesting but after chatting about it with money blogger friends a bit and doing more digging, it does actually seem like it’s not a tool we need right now.
If I’m understanding this correctly:
- Only long term capital gains tax would apply since I hold shares forever.
- We are married filing jointly, so our LTCG tax in 2019 is 15%.
- We’ve also been subject to the net investment income tax (a 3.8% surtax that applies to income from investments) in the past, when we sold property.
- In 2019, our LTCG tax only drops to 0% if our income drops below $78,750.
At the moment, I don’t see any benefit to our harvesting gains because we’d be paying the 15% capital gains tax and possibly an additional 3.8% surtax depending on the timing just for the privilege of resetting our basis. That’s really expensive for no real gain. I don’t expect to sell these stocks for income until we’re not making W-2 income, so even if we are still in the 15% cap gains bracket, we’d certainly be making less income than we are now. Holding off means we can avoid the additional surtax. Though we would arguably be more able to foot the tax bill now, it’s not necessary and we would assume
:: How do you invest? Are you using tax harvesting in any meaningful way?
