March 15th, 2022 paycheck
- Debt (hold)
- current: 0.1
- min: 0
- max: 1
- Cash (hold)
- current: 7.2
- min: 5
- max: 10
- Low correlation (hold)
- current: 1
- min: 0
- max: 1
- Negative correlation (hold)
- current: 0.9
- min: 0
- max: 1
- US equities - small (hold)
- current: 30.6
- min: 24
- max: 35
- US equities - mid (hold)
- current: 25.7
- min: 24
- max: 35
- US equities - large (hold)
- current: 33.6
- min: 24
- max: 35
Reduced 401k allocation to 12 percent. A bonus check came in with the previous check and there’s still quite a bit of 2022 left. In the future I’ll probably start around 15 percent instead of 17; presuming I maintain the same or similar salary.
Updated the January 15th paycheck entry regarding the HSA. In short:
So, the federal contribution limit divided by the number of months I was enrolled in a qualified health plan gives me my actual annual contribution limit.￼
Still not sure what’s going on with the IRS. However, I’ve decided to bring in an accountant this year to double-check all the things.
The income tax for Kentucky was taken out of this check, while not devastating on a per paycheck basis, I’m still estimating around 5,000 USD per year between base pay and bonuses.
Which brings us to the rub: possible pay cut.
Like I said in the February 15th 2022 paycheck my employer adjusts pay based on physical address. The back office work has hit the point where I can see the proposed, adjusted salary. It’s a drop of 3 percent for base pay and bonuses.
So, my maximum gross pay would drop 3 percent and my net pay drops by about 5 percent. Estimated inflation is up 7 percent. And my bills at the moment are roughly the same.
My manager and I are making the case for the amounts to be adjusted. Like I said before, we’ll see how this goes.
Shut ’er downSection titled Shut ’er down
Decided to close my Uphold account, which means selling my BATs. I’m also pretty sure I’ll shutdown the M1 Finance account.
This tax season along with the continued interaction with the IRS has me really wanting to simplify and consolidate things. A practice I think of as pruning the trees; trying these various investment providers and approaches was growth and exploration mode—now I want to find tight and sustainable—anyone should be able to come in and take over, if needed.
A while back I grabbed the Brave browser. It interested me mainly because the premise is users getting reimbursed for their attention; a concept similar to (and possibly inspired by) the work and ideas of Jaron Lanier. The browser does a good job blocking ads (and optionally showing Brave ads) and, if you sign up for Brave Rewards you earn a crypto token called BAT. The BAT can be exchanged in various ways using a crypto wallet and exchange. The exchange I used is Uphold. When exchanging BAT for USD, it’s just like selling almost anything that can go up or down in value, which means there’s a tax form involved.
With the summary of how I got to having an account with Uphold out of the way, I’m shutting down my account and no longer actively or passively participating in the earning or exchanging of BAT.
When I moved I updated my address with all the institutions in my world. They all went as you might expect, until I got to Uphold. I couldn’t update the state through the online form.
Emailed support, who put me through a digitized verification process, which included driver’s license and selfie authentication; which may or may not be security theater or something out of a conspiracy theory, but who knows. Anyway, once verified they asked me to send PII in the form of updated identification, utility bill, or rental agreement via unencrypted email.
The idea of privacy online is pretty much a fantasy. However, after the hoops I jumped through verifying myself, you’re telling me you (or I) can’t just fill out a quick form online to change the state? Further, if it were the same state, I could change the address.
I updated insurance policies, payroll, three bank accounts in as many states, and other financial and non-financial accounts without having to do the identification plus selfie verification and none of them required sending documentation and, if they did, it wasn’t as an attachment using standard email protocols. The combination of “security is in our DNA” and “send us documentation that has more than your new address via email” broke my brain; the first quote being direct the second is a paraphrase.
So, quick opportunity cost check, I decided to close the account, stop using Brave, and stop looking at BAT integrations. One less thing to concern myself with each tax season. (I do admit, it was nice getting a little something for surfing the internet and I’ll see if I can find an ad blocker as good as the Brave browser.)
The choice to shutdown M1 Finance is a bit more straightforward; just one less vendor and tax form to worry about.
I appreciate the M1 Finance platform. I don’t appreciate some of the marketing aspects of the company; I said it was okay to send notifications on my phone to see what they’d be and every notification has been a product promotion, meanwhile, when my tax documents were ready, no notification via phone or email (at least I don’t think I got an email).
This raises the question of where to move those investments.
Right now I’m leaning toward Fidelity though I’d prefer Vanguard. Fidelity has my 401k and HSA while Vanguard has my IRAs and main taxable brokerage account.
The reason I started the M1 Finance account is that I could easily earmark chunks of value while minimizing the number of underlying investments.
I have four pies:
- van life,
- insurance deductibles, and
- the FI experiments.
Each pie holds the same 9 underlying investments. M1 Finance made it so I didn’t have to do any math; just throw money in a pie and go. I’m not sure the overhead cost is worth it now though and the longer I wait, the greater the burden of closing the account; tax liabilities and whatnot.
So, I need to make the decision soon and I’m preparing for the possibility by updating the spreadsheet I’m using (more on that later).
Outside of spreadsheet tracking, I could open a separate taxable brokerage account for each fund, but I’m appreciating the idea of a minimal number of accounts and sub-accounts. Further, there should come a point where almost everything is under one roof; Vanguard. Two things hold me back from doing it now:
- The main bit is Vanguard doesn’t offer dollar-based investing (or fractional shares) for non-mutual fund vehicles; specifically ETFs.
- My long-term treasuries and real estate investment trusts need to hit a value of 3,000 USD before I can buy into the mutual fund version at Vanguard, which offer fractional shares.
Arguably, mutual funds are going the way of the dodo and ETFs are their replacement. However, the only way to do fractional shares at Vanguard is using their mutual funds; note, this isn’t the same as investing in Vanguard by purchasing their ETFs elsewhere using fractional shares—like M1 Finance or Fidelity. Further, trading non-Vanguard ETFs at Vanguard is possible and commission free (as long as trades are done online), however, the trade must be done at the full share price of the holding; again, not fractional. Even trading Vanguard ETFs at Vanguard is the same way, so, at least they’re consistently applying the rule.
The marketSection titled The market
Equities are still down compared to their 52 week high. The FI experiments with risk parity asset allocations continue proving themselves. It’s interesting to look at my net worth over the last year.
For the first few months of 2021 it was a steady upward climb. Meanwhile, 2022 is basically a plateau. Given I do believe the market will go up eventually and long before I’ll need to exchange things for cash, this is a pretty good opportunity and I’m taking advantage while I can; buying the dip.
Looking at the portfolio for the last 90 days I’m tracking closer to the total stock market. Looking at the last year though, I definitely under performed; something we chalked up to holding all that cash for the IRS, which ended up being unnecessary.
The spreadsheetSection titled The spreadsheet
I’ve simplified the spreadsheet I use.
Apple Numbers has the ability to add multiple tables to the same sheet and I’m using that capability pretty shamelessly. I’m not concerned with aesthetics at the moment as I want to make sure it’s functional.
There’s a graph showing the allocation of my portfolio for the major asset classes, which is handy as a summary view. Below that is a multi-section table.
Paycheck tableSection titled Paycheck table
The top section has the Coast FI numbers along with the target age for each. I’ve set up conditional highlighting rules for each Coast FI number. If I hit the net worth target by the time I reach the given age, it should go green.
The next section shows the target cost basis for each tax bucket by the end of the 10 years I’m planning for. This shows me roughly how much I should be putting in each bucket per paycheck.
The next section is what I use to quickly rough out the planned distributions for each check. The layout was inspired by the book and resources from Profit First. I enter the inflows in the upper rows and there are percentages and ranges for each account; row. I increase and decrease amounts until I’ve distributed roughly 100 percent of the inflows to the other accounts. The ranges are generated primarily by the next section along with the credit card balances in some of the other tables.
The last section of the table has my known, recurring expenses. I’ve separated the expenses into 3 categories: base, utility, and convenience. I appreciate this strategy because if I need to cut spending, the first things to go will be the conveniences. If I need to cut more, I might be able to manipulate the ones in the utility category. If I need to cut more, well, that’s getting pretty serious and I probably need outside help.
When I get paid, I fill out this table real quick to lay in the initial plan. Then I go to Wave and do the dry-run by shifting the money around. Once, I’ve done that, I sign into the accounts and actually move the money. Once I actually move the money, I update the account tables.
Account tablesSection titled Account tables
Multiple tables representing each institution and account; Vanguard has 3 separate tables, for example, because there are three different tax buckets.
I sign into the various account apps and update the spreadsheet values for each account as they appear in the app—not accounting for money “in flight” that hasn’t altered the value of the account; this is why the debt number is greater than 0 and cash is a bit higher than it really is—the credit cards haven’t been paid in full by the time I post; or, they have and new charges have posted.
Once I’ve updated the account tables, the data entry is complete, except for what I do to get the numbers for these posts (more on that later). From here, I have a few more tables that automatically consolidate the data entered here.
Consolidation tablesSection titled Consolidation tables
These tables consolidate the numbers for each account table puts them in tables based on tax bucket; essentially creating tax bucket portfolios.
Each row is a holding in the tax bucket; regardless of whether the account is with Vanguard, Fidelity, M1 Finance, a credit union, or somewhere else.
Each holding has a target percentage within the sub-portfolio. I take the balance of the bucket multiplied by the percentage for each holding to get a target USD amount. The last column in the table has the current USD value for the holding.
If the current value is less than the target value, the table tells me to try and add more to that holding. If the current value is greater than the target value, the table tells me to leave it alone.
The last table in this group consolidates each holding regardless of tax bucket; the overall portfolio. If I were to rebalance the portfolio, these tables would show me what to buy and sell.
(M1 Finance has automated rebalancing, which is fine, but I don’t plan to rebalance that often. I’m also planning to move away from M1 Finance anyway.)
Because I’m in accumulation mode and part of my plan includes preparing money to be invested, these tables also help me decide where to put those funds. (As of this writing, most of the investing money I set aside has been going into the extended market fund, however, it appears that could start to change…the table shows me that.)
One more stop before I have the information to update the graph and numbers for one of these posts.
Asset allocation tablesSection titled Asset allocation tables
This is how I derive the numbers you see at the top of these posts (and update the graph mentioned earlier).
I have a table that takes each cash account, index fund, ETF, and so on and calculates what percentage it’s occupying compared to my total financial net worth. This table is set up to be exported as a CSV file and imported into the backtest tool of Portfolio Visualizer.
I analyze the portfolio and enter the percent in stocks into another table along with the percent of small-, mid-, and large-cap. Those percentages feed into another table, which is used to update the graph and gives me the numbers for the opening of these posts.
This last step is only necessary because I’m not charting the actual holdings within the portfolio. I’m charting more generic asset classes, like alternatives and small-cap equities. Tracking this way helps keep me stay grounded because I don’t feel tied into a specific holding or vehicle and I can choose different equities if I want just as long as I maintain the allocation for the asset class.
Miscellaneous tablesSection titled Miscellaneous tables
The last three tables are there to help me track current and historical data not directly related to my net worth.
The first table is related to the 401k. I track how much is contributed based on the percent I’ve set and the total contributed for the year. I adjust the number of paychecks I have remaining for the year with each contribution and this table tells me how likely I am to get close to the annual contribution limit in order to maximize my employer’s contribution.
The second table is mainly for those times during the year where I put in extra. It looks at the value of each index fund and ETF. I enter the current value, the 52 week high, and the 52 week low. I derive the average from those two numbers and get a percent difference for the current value compared to the high, low, and average. Because I’m in accumulation mode, if a particular holding is down, I’ll put the money toward that, which means I’m buying low (at least compared to the value of the holding itself over the last 52 weeks, without consideration for the asset allocation of my portfolio).
The third table is similar to the second only it tracks things based on what I actually paid for each holding on a given day. So, the low and high here is the lowest I paid since I started tracking.
While it may not seem like it, the time spent on data entry is greatly decreased compared to what it used to be and I’m feeling pretty good about it at the moment. Further, the amount of information and feedback that’s been automated and now available has greatly increased. I’m considering automating further but now we’re starting to get into actual software development.
FI experimentsSection 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.
- Mark 0
- current: 39.72
- previous: 42.7
- change: -6.98 percent
- since started tracking: -16.75 percent
- Mark 0.2
- current: 36.84
- previous: 39.49
- change: -6.71 percent
- since started tracking: -15.95 percent
- Mark 0.4
- current: 37.19
- previous: 39.7
- change: -6.32 percent
- since started tracking: -14.97 percent
- Mark 0.6
- current: 37.69
- previous: 39.99
- change: -5.75 percent
- since started tracking: -13.44 percent
- Mark 0.8
- current: 38.55
- previous: 40.52
- change: -4.86 percent
- since started tracking: -11.09 percent
- Mark 1
- current: 42.56
- previous: 44.33
- change: -3.99 percent
- since started tracking: -9.2 percent
- Mark 1.1
- current: 42.5
- previous: 44.24
- change: -3.93 percent
- since started tracking: -9.11 percent
- Mark 1.2
- current: 42.51
- previous: 44.22
- change: -3.87 percent
- since started tracking: -9.03 percent