June 15th, 2021 paycheck
No bonus this time. The Income account started at a 0 balance. That means I can get a look at the baseline and minimums without too many other things pulling on my attention.
To reach the 1,271 USD minimum to the Invest account, I'll need to drop the distribution to the Profit account by 1 percent and increase the distribution to the Invest account by 1 percent.
I realized I did the quarterly transfer from the Profit account a month early. Those should be done on the first of January, April, July, and October. I got a bit ahead of myself. No big deal and can’t go back, just something to remember moving forward.
I still have a portion of my check going to the Equipment Pass-through account. This should be the last paycheck where I need 250 USD to the Desktop account. I was planning on a 2021 iMac around July. I’m thinking I’ll wait to see if the rumored M1X Mac mini turns out to be true. Even if it’s not, I’ll probably go with a Mac mini instead of the iMac. I have too much gear that’s suited to a Mac mini setup and can continue to wait for improved designs and hardware despite the 2021 iMac being the first I thought was worth the drawbacks of an all-in-one computer.
Moving forward, I'll reduce the amount going to the Desktop account to around 17 USD per paycheck. The money already saved will go to a desktop purchase in 2021, any remaining will go straight to the Invest account. I plan to keep the desktop for at least 5 years. By saving 17 USD each paycheck I should have enough saved in that time to replace it. If the 2021 desktop is still satisfactory by 2026, I'll stop sending money to the Desktop account and add it to the Income account; same with the phone (iPhone) and portable (MacBook Pro).
Regardless, the 233 USD not going to the desktop account will go to the income account, which means I might be able to increase the amount going to the employer sponsored pre-tax retirement account — possibly reaching the 722 USD per paycheck maximum.
Being paid biweekly
This paycheck is odd because It came in so close to the first of the month. The next one will also come in really close to the fifteenth.
I don’t want the funds waiting around in the Income account for 11 days though.
I’ll put 51.75 to the Invest account, 1 percent to the Profit account, 2 percent to the Tax account, 23 percent to the Runway account, and 22.25 percent to the Operating Expense account.
I’ll pay off the credit cards and other bills and do it again around the actual fifteenth of the month. This should make my paycheck on the eighteenth closer to the consistent amount moving forward.
I’m doing some web development work as a 1099. This will bring in some extra income and will need to be split a bit differently to account for taxes.
I’m thinking 1 percent still goes to the Profit account, 15 percent to the Tax account (self-employment tax rate), 100 USD to the Invest account to be moved to the M1 Finance portfolio, the rest has been put into the Operating Expenses account.
Note: These percents are based on the total amount paid, not the total amount received. There were merchant fees for processing payment that were taken out.
M1 Finance portfolio
I use an M1 Finance pie for insurance deductibles. It needs to carry a few thousand altogether at any given time. Right now I’m partially playing around with it. It has two categories of investments. Of course, it’s an experiment and probably is worth explaining.
It’s a pie of pies.
One slice is a pie I call Future Earth. It’ll carry global equities and bonds, including the United States. Right now it mainly carries the ETF equivalent of VEXAX.
The other slices are variations on the same theme. (This is where the nesting gets hard to explain.) I choose an individual company’s stock. The companies are ones I purchase from regularly or have purchased regularly in the past and would continue to do so if the need arose. I create a pie with a single slice made of that single equity. Then I create a pie made of one or more of those equity pies; if the company didn’t pay dividends since the last time I created one of the “Brand” pies, it doesn’t get added. My goal is that each Brand pie yields an estimated 4 percent or more in dividends. I create one of these Brand pies each quarter.
I’ve been considering how to rotate them since I started the investment operations and I think I figured it out. This is my first go and will take a few years to test in practice. Let’s start with percentages.
I’m building up to have 10 Brand slices at 1 percent each. The Future Earth slice will build up to being 11 percent. The Brand slice for the current quarter will take the remaining percent (capping out at 79 percent). At the end of the current quarter, the oldest Brand slice will be sold; if it has gained in value. Once sold, it will be removed from the pie. The current quarter (the one ending) will have its percentage reduced to 1 percent. A new Brand slice will take its place. 15 percent of the equity from the sale will be moved to the Tax account while the rest will be used to buy back into the portfolio.
The theory might sound strange. Each Brand slice is built to be a high percentage of the overall pie. When the Brand slice has its target reduced to 1 percent, there is a gap between the target and current percent. Through regular contributions, by the time the value reaches the target, it should be time to sell that pie. Those funds are then redistributed amongst the other slices; helping the current Brand slice to increase in its overall percentage while the others "cool down."
M1 Finance has said they try and perform sales in a tax-advantaged way, emphasizing long-term capital gains as opposed to short-term. The aforementioned should help guarantee that is the case.
This rotation method should replicate the self-cleansing nature of index funds. If a company starts paying dividends or increases the dividend they pay out, their percentage in the pie could go up. If they lower the dividend payout or go out of business their percentage of the pie could go down. As new companies rise and I start using them, they could end up in the pie. The Future Earth pie helps shore up the volatility of the individual equities I choose.
It's a buy-and-hold-forever strategy unless I stop purchasing products and services from the companies, they stop paying dividends, they leave the exchange, or some combination.
I’m thinking of going back to the Mac Mini setup I had around 2011 instead of going with the iMac.
I’d still get rid of the Apple TV and my 32” television set, so, consolidation still happening.
Here’s the rationale components.
First, I purchased a keyboard in 2020. The ZSA Moonlander. I appreciate the keyboard a great deal even though I’m still getting used to it. A keyboard comes with the iMac and the only added benefit I’d probably use is the Touch ID.
Second, I purchased a space gray Magic Trackpad in 2020. It works well and is positioned between the two keyboard halves. One of the peripheral options for the iMac is a trackpad. I don’t want the Magic Mouse and input devices are required peripherals with the purchase of the iMac. At which point I’d have a new Magic Trackpad that wouldn’t be used.
Third, I purchased a 24 inch monitor in 2020. It uses and HDMI connection. The iMac doesn't have an HDMI connection and I'm not sure I want to have a dual monitor setup; after years of having only a laptop, I'm good and can work around limited real estate. With the monitor and the mini without the keyboard and extra trackpad, I don't think the volume of the desktop setup would be much greater than the iMac by itself.
Fourth, from a workflow perspective, one of the reasons I want to have a standalone desktop again is to let it run all the time and check email in the background to apply the presorting rules I've established in Apple Mail. The iMac is not required for this functionality, technically I could probably do it with my email provider but it's more convenient to establish the rules in Apple Mail. Therefore, I only need a machined that can run Apple Mail in the background and check my mail all the time.
Fifth, from a production perspective, I'm looking to no longer need to plug my laptop into the port hub I have when I want to do work at my desk. I like the laptop for portability and I also appreciate having a permanent setup that's easy to start up at my desktop.
Miscellaneous: I like the idea of being able to have my laptop open, off to the side with its own setup. There's about a 1,000 USD difference in price, which I can put toward the Invest account; it's already saved up. As odd as it might sound, from a personal branding consideration, the pink could work, but a full red version would blend in better. There's a rumor that there will be a redesign of the mini for 2021 and it will be released around WWDC 2021.
In short, in 2020 I spent a lot of money updating the studio and sunk cost fallacy be damned, the new iMac should come with a few more enhancements and my current equipment should be a bit more worn before I chuck that aside and get the new iMac.
At least that's where my brain is at right now.
One of the things I like about having to save up for a purchase is it can help curb impulse purchases. Granted, it also requires discipline to not just throw down using a credit card; for me, using deposit certificates with a rollover date in the future helps here.