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February 1st, 2022 paycheck

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A lot going on here.

I’m moving the weekend before the first and decided to post on January 29 because not much will change by the first.

In 2021 I started using Wave as my primary accounting platform after my fallout with Intuit. Because of my consolidated approach to categorizing transactions I identified areas where I should adjust saving and spending. Let’s focus on the saving piece as mentioned in the previouspaycheck.

Because of the minimal categories I saw which expenses were more of a one-off for 2021 something to minimize in 2022. Subtracting the one-off expenses from the total expenses, I was able to adjust my projected retirement needs in Personal Capital, which caused the estimated success rate to go from 78 percent back to 98 percent probability of success; at least until the most recent dip, which qualifies as a correction or, possibly, a bear market.

Personal Capital uses the You Index™️, which looks at the accounts I have synced with them. When I go to Portfolio Charts and plug in the Mark 1 portfolio asset allocation, that portfolio outranks the comparative portfolios available.

The ability to see income versus expenses reenforces the notion of budgeting as a means of tracking (not restricting) spending to establish the total cost of lifestyle number. Further, I’m appreciating the idea of looking at a net worth statement each year proposed by Brian and Bo from The Money Guy Show (and others in the financial planning space).

Over time, the upper bands for both debt and cash should decrease. This is because the maximum is based on a percentage of the portfolio’s value. As the value increases, the maximums should decrease; 1 percent of 100 USD is a lot different than 1 percent of 10,000 USD. In other words, my spending won’t change much, however, as a percentage of the portfolio, it’ll be less.

Closing things up since last time

Section titled Closing things up since last time

Health Savings Account

Section titled Health Savings Account

The transfer from HealthSavings Administrators went through for my HSA. I lost roughly 2 USD from the original contribution and I’m okay with that.

The primary purpose of the move was to get away from HealthSavings Administrators. Further, the price I’m buying in at is lower than when initially bought in, so, it should come out in the wash.

Too much cash

Section titled Too much cash

The HSA transfer completed dropped my cash holdings a bit as I immediately bought the extended market fund in the HSA. Further, I contributed the maximum for 2022 to the HSA.

I received my W2 and it looks like I’m safe to finish contributing to the Roth IRA for 2021, and I did.

I emptied the cash padding in the M1 Finance settlement account and preemptively purchased the pies there; so, with the next paycheck I’m hoping to bring the settlement account back to where it is normally and proceed as usual.

On the Monday before getting paid, the market was down again; more like it was staying level for what I carry. I took my cash down a bit further to put a bit more into the taxable account.

This has inspired me to adjust workflow and processes a bit to remove more emotion from the equation; not possible and more on that later.

Taxes

Section titled Taxes

Documents should start becoming available soon. I keep forgetting there’s a standard deduction, which reduces my taxable income. Standard deduction is important to remember because of the Roth IRA income limits restricting contributions.

Credit cards

Section titled Credit cards

All but one of my credit cards is a cash rewards card.

I cashed out my primary card, which had about 200 USD in points available, and put the money in the savings account of my secondary institution. This money will help to purchase the new mattress when we move.

I updated the investment policy to account for the operation of the credit card reward points.

Site updates

Section titled Site updates

Updated the visualization for the portfolio at the beginning of these entries.

Decided against the image approach I initially considered; I still have the chart in the spreadsheet.

Hope you enjoy the visualization and I was pretty happy with it from a web development perspective because I kept the same markup and, because it’s built with a template using the same data, all the previous pages were automatically updated; this isn’t particularly new or exciting as it’s been a part of web development for years, but it’s sometimes the little things that bring the most joy.

I increased the maximum allowed for debt to 1 percent because I pay for most things with credit cards and rarely are they paid off prior to publishing, despite being paid off each paycheck.

FI experiments

Section titled FI experiments

Details are in the January 15th, 2022 paycheck.

The hypothesis is when the Mark 0.0 mix is down, it’ll be down more than the others. Further, when the Mark 0.0 is up, the others will be up and not too far behind the Mark 0.0. We will track the change since the previous paycheck as well as the change since we started tracking January 2022.

The market

Section titled The market

This is the first long-running correction I’ve been through, or at least that I’ve been aware of. As anticipated I’m not freaking out or considering selling, which I’m taking as a good sign. With that said, my risk tolerance and perceived risk capacity has me going the opposite direction and probably a bit too quickly, so, I’m setting up some guidelines and guardrails for myself on building and deploying cash reserves.

In short, always dollar cost average each paycheck to reach the targets set for the various accounts. If cash is beyond the bands and I’m not saving for a larger purchase, go ahead and increase investment purchases. Every three months or so since the last purchase using reserves and on a paycheck day, take half of the reserves and increase investment purchase. If there’s a dip in the market, cash reserves may be used to purchase out of cycle compared to the two aforementioned events; with constraints.

More details available in the paycheck-to-paycheck main page.

I’ve heard multiple parties in the investment space say that, counterintuitive as it might be, one of the best things that could happen to you when you start investing is a crash. There are two reasons they often give:

  1. You’ll get it out of the way with less on the line.
  2. You’ll be able to purchase everything on sale compared to the most probable future outcome; it will be higher value later.

And, here we are, almost exactly one year in since I started investing and it appears we’re in at least a bear market.

My earlier frustrations about holding so much cash waiting for the outcome with the IRS had that money burning a hole in my pocket. Add to that the Health SavingsAdministrators thing and I was chomping at the bit, so to speak. Unfortunately, that means, like some others, I might have bought the dip a bit heavy too early.

I’ve heard this said by a few others, “I don’t have cash left to continue buying the dip.” Initially I was aware a dip was happening but that’s not why I wanted to buy in; I wanted get money moved so I wouldn’t be thinking about it anymore. However, as the dip kept getting deeper, I found myself wishing I had those cash reserves back.

Emotions got the better of me; not on the fear side, but the greedy side.

I still believe those purchases will serve me well given the time horizons. The front-loaded HSA is 30 years out, representing the highest lump sum purchases. The others were somewhat more spread out over the month. With that said, I wanted a way to keep that from happening again.

Believe the updated approach will help curb that in the future; only time will tell.

There’s also something, I keep forgetting, which is that the portfolio is heavier in small-cap stocks than the total stock market funds, therefore, it has a tendency to fall faster and deeper while rebounding higher and faster (sometimes).

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