August 1st, 2024 paycheck

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The elephant in the room is I think the portfolio allocation is dialed in a bit more, which means the numbers have changed. More on that below.

I did my first sale from the main taxable brokerage account. Technically, my first sale period.

I say “technically” because earlier this year I sold everything in my M1 account because of how they decided to roll out charging everyone for their services. I don’t count this as a sale so much as the closing of an account.

Here’s what happened:

  1. Short-term assets dropped below the 3 percent minimum.
  2. I subtracted the percent of short-term assets from the short-term asset target; 6 - 2.8 = 3.2.
  3. I multiplied the value of the portfolio by that percent to get the amount I should convert to short-term assets.
  4. I found the ETF with the most gains while also being higher than the other ETFs in the portfolio.
  5. I placed 3 limit orders; 1 at 1 percent higher than previous day’s close, 1 at 2.5 percent higher, and 1 at 5 percent higher. Each limit order is set to expire in 60 days. The first order was 15 percent of the target withdrawal, the second was 35, and the third was 50.

The day I put in the orders, the value of all the ETFs fell. Therefore, nothing sold. The desired behavior because we want to avoid selling at a loss, and avoiding market orders helps us do that. Had I sold based solely on a dollar amount, regardless of per share value, they would have sold for less compared to the anchor I wanted (the closing price of the previous day).

I think it was the next day that the order for 1 percent above sold. I don’t know if that sale alone would have brought short-term assets to the minimum in the portfolio, but it did give me almost another month of burn rate.

A couple of days later, the order for 2.5 above sold. This is what brought short-term assets back up to the minimum while simultaneously giving me over 3 months of burn rate. That one was interesting because the day started out pretty much flatlined. There was a sharp rally at the end of the day, causing the order to execute. Then it went back down to finish out the otherwise flatlined day.

The 5 percent above limit order has not sold, as of this writing; not surprising.

I’m glad I started with the sales experiment in the Traditional IRA.

Speaking of which, I have 6 sell orders in for the extended market ETF in both the Traditional and Roth IRAs to continue moving away from the extended market account.

In general, and in theory, at my current burn rate, if I see 1 percent returns (appreciation plus dividends) every month I would be at a steady state indefinitely. However, between inflation and mainly volatility that’s absolutely not possible. So, we’ll keep pressing on downsizing and income streams.

Downsizing

Section titled Downsizing

Getting back into the swing of things after the trip is proving difficult.

Selling the manual treadmill via Craigslist. It’s summer, so I’m sure demand will be low. But I’ll reduce the price a couple of times before just throwing it away.

Becca is making room for me to move my stuff from the office to the main room.

This past Friday we drove around neighborhoods where some potential apartments were located to narrow the field a bit more.

We have three tight areas picked out. We’ll go, park, and walk some of them for the next round of narrowing down. I’ll also schedule some appointments at some of the corporate apartment complexes, as they’re more likely to have availability by the time we’re ready to go compared to the houses turned apartments in one of the areas.

Income streams

Section titled Income streams

Time (Mastering the Mundane) moved up a price tier. The audiobook is available in more places, but not everywhere I thought it’d be. I’ll reach out to Scribl to see what I’m missing (in terms of audience, paperwork, or understanding). I’m going to be releasing the print edition using Blurb, who uses Ingram Spark for distribution; after trying to use Ingram Spark directly, I’d rather someone else deal with that.

I also on-boarded two coaching and mentoring clients one focused on time and the other focused on money. The former canceled their appointment and I haven’t heard from them since (no shade, it happens), and the latter has scheduled the first session under our coaching agreement, so we’ll see how that goes.

When it comes to seeking employment, I’m still sitting back a bit while things continue cooling down.

At the end of last year a lot of folks I know got laid off or took a substantial pay cut. These are people I know directly, indirectly, or just on social media both in my profession and adjacent to it.

Some of them pivoted to different professions and industries, others finally retired, and some changed their focus within the industry (becoming trainers, for example).

Beyond making the time to get back to being me, not being in hot pursuit of employment also gives those in a bit more dire straits to get back in there and maybe do their own lifestyle evaluation with at least one less person to compete against.

All that to say, not comfortable saying I’m financially independent yet, but I’m also not scrambling and losing sleep over not having a job for the first time in my adult life.

Asset allocation

Section titled Asset allocation

From a high-level, nothing’s changed.

I’m still using The Universal Portfolio with a 6 percent allocation to short-term assets (mainly cash) and 94 percent allocation to growth assets (thinking about changing the name there).

Im still emphasizing value over growth equities. However, I’m less concerned about the size from a premium perspective as some research apparently indicates the value premium is the bigger deal. Having said that, I’m not leaning into small and value for a premium, I’m doing it mainly because it’s part of my financial character, it just so happens there’s often a premium.

The other change is I’ve decided to keep the multi-factor fund indefinitely.

I’m moving out of the extended market fund and the alternative small-cap fund.

That said, I’m not in a rush.

The assets, for the most part, have a high correlation, so moving things around is mainly for simplicity purposes; going from 6 ETFs to 4. That said, there is enough variation and volatility day-to-day that being not doing the re-allocation all at once is entertaining, if not beneficial. For example, when the first set of extended market sell orders went through everything was up, and because of the way I buy things, when that money got moved into the small-cap value fund, the price was less than when I sold the extended market shares.

Anyhoo.

I also dollar-cost averaged into this allocation, and I’d like to see what it feels like to dollar-cost average into a different one, while “drawing down,” or “decumulating” (not in my preferred dictionary yet), or withdrawal, or whatever.

I put those terms in air quotes deliberately. And it’s because the terms imply that the value is going down, the portfolio will eventually reach 0, or both. However, after almost a year of spending from the portfolio, the value (as of today) is greater than when I started.

I’m going to marinate on that to try and find a term better suited to the situation. I’m just paying bills I have using the assets at my disposal.