From 72e83eeb4f62c5227c45853ee50f95b20bd292e4 Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Thu, 30 Dec 2021 14:46:34 -0600 Subject: [PATCH 01/16] Update content.md --- .../20220101/content.md | 80 +++++++++---------- 1 file changed, 39 insertions(+), 41 deletions(-) diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md index 0c95a557..1c7518d2 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md @@ -23,7 +23,7 @@ And, here we go... The [.IRS](United States Internal Revenue Service) sent me a letter notifying me that they would like 90 more days. The date the letter was issued was on the ninetieth day from the previous letter. So, yeah, not sure I’m going to continue holding this much cash; more below. -The request to transfer my [.HSA](Health Savings Account) from HealthSavings Administrators was not completed within the three to five weeks. When I called HealthSavings Administrators they explained that they’ve been having issues processing electronic requests and I should request my preferred provider fax the documents. What a cluster fuck this experience has been; more below. With that said, I hit the maximum contribution for the HSA with the paycheck on the seventeenth; therefore, can't make another contribution with this check. +The request to transfer my [.HSA](Health Savings Account) from HealthSavings Administrators was not completed within the three to five weeks. When I called HealthSavings Administrators they explained that they’ve been having issues processing electronic requests and I should request my preferred provider fax the documents. What a cluster fuck this experience has been; more below. With that said, I hit the maximum contribution for the HSA with the paycheck on the seventeenth; therefore, can't make another contribution with this check. Found out I actually didn’t go over the contribution limit for the year on the 401k. It appears like I did because of the difference between the calendar year and the tax year. The first contribution in 2021 was made against the 2020 tax year. So, maxed out 401k for the first time. I hit the maximum with the paycheck on the seventeenth as well, so, this check is a bit larger than I’m used to compared to the rest of the year. @@ -31,23 +31,23 @@ We’re planning on moving. I used some of the cash I’ve had lying around to p ## Venting -The following is venting frustrations, not trying to throw anyone under the bus as it were. My experiences are not presented as indicative of the experience for all. I don't believe there is malicious intent or anything like, but this was the impact these experiences had on me. I also accept my contributions to the experiences. +The following is venting frustrations, not trying to throw anyone under the bus as it were. My experiences are not presented as indicative of the experience for all. I don't believe there is malicious intent or anything like that, but this was the impact these experiences had on me. I also accept my contributions to the experiences. -Early in 2021 I had a serious falling out with [Intuit](https://www.intuit.com). For my business accounting I was on a paid plan and for personal accounting I was on the free plan. When I have direct questions about something I prefer to talk to a human and ask the direct questions instead of getting overwhelmed trying to read and search forums and documentation. At the time, however, only paid accounts were permitted to call customer service and speak to an agent. Eventually the frustration of getting the issue resolved overwhelmed me and I told Intuit something along the following: +Early in 2021 I had a serious falling out with [Intuit](https://www.intuit.com). For my business accounting I was on a paid plan and for personal accounting I was on the free plan. When I have direct questions about something I prefer to talk to a human and ask the direct questions instead of getting overwhelmed trying to read and search forums and documentation. At the time, however, only paid accounts were permitted to call (or chat with) customer service and speak to an agent. Eventually the frustration of getting the issue resolved overwhelmed me and I told Intuit something along the following: -> If you can't provide the same level and style of customer service to all customers, including those on the free account, then maybe you shouldn't have the free account. Please cancel and remove all of my information from your records. +> If you can't provide the same level and style of customer service to all customers, including those on the free account, then you shouldn't have the free account. Please cancel and remove all my information from your records. -I invoked language from from various consumer protection acts including [.GDPR](General Data Protection Regulation) (despite not living in Europe) and [.CCPA](California Consumer Protection Act) (despite not living in California). Eventually we managed to cancel 8fold's status as an authorized Quickbooks dealer, a couple of business accounts, and about three or four personal accounts; I said: +I invoked language from from various consumer protection acts including [.GDPR](General Data Protection Regulation) (despite not living in Europe) and [.CCPA](California Consumer Protection Act) (despite not living in California). Eventually we managed to cancel 8fold's status as an authorized Quickbooks dealer, along with a couple of business accounts, and about three or four personal accounts; I said: -> I'm not feeling comfortable with this relationship anymore and I would like you to forget I exist. I don't want to phone calls or emails. While I can afford to pay, people who can't afford to pay deserve the same quality of customer service as everyone else. +> I'm not feeling comfortable with this relationship anymore and I would like you to forget I exist. I don't want to receive phone calls or emails. While I can afford to pay, people who can't afford to pay deserve the same quality of service as everyone else. -Oddly enough, customer retention called me the very next day. Which puts me in an awkward position because I believe feedback is important, however, I also stated my boundaries. I remember telling the agent something like: +Oddly enough, customer retention called me the next day. Which puts me in an awkward position because I believe feedback is important, however, I also stated my boundaries; no calls or emails. I remember telling the agent something like: > Please understand this isn't about you, this is about Intuit. I used to work in a call center and I understand how it can be. With that said, what part of 'don't initiate contact with me by any means' was unclear? Which brings us to the IRS. -For years I had used Intuit to file my taxes. When I was looking through my records I realized I didn't have copies of a few of my tax returns. I wasn't about to try and call Intuit or sign in to any of my accounts, which I was (and am) pretty sure have not been deleted despite me requesting Intuit do so. +For years I used Intuit to file my taxes. When I was looking through my records I realized I didn't have copies of a few of my tax returns. I wasn't about to try and call Intuit or sign in to any of my accounts, which I was (and am) pretty sure have not been deleted despite me requesting Intuit do so. Enter [IRS Form 4506](https://www.irs.gov/forms-pubs/about-form-4506). You can request up to 8 past returns for 43 [.USD](United States Dollars) each. I went ahead and ordered from 2020 back to 2012 whether I had that return in my files or not. @@ -57,7 +57,7 @@ I neglected to send and reference an [IRS 1099-R Form](https://www.irs.gov/pub/i Contacted an accountant who was kind enough to explain things to me. Contacted the bank and asked them to update the form to specifically say zero; they did. Took all of that along with other letters stating that the distribution is not taxable income and faxed it all to the IRS. I believe I was given 30 days from the time stamped on the letter to respond; that's a pretty good sense of urgency and I think it did it within 10 days. Received a letter saying the IRS would respond within 90 days. -Two days after the ninetieth day I received another letter date stamped on the ninetieth day informing me that it would taking longer than normal and that the IRS was extending their own deadline by another 90 days. At this point, between the time and money spent by myself and the IRS, we've probably exceeded the payment I submitted with the 4506. +Two days after the ninetieth day I received another letter date stamped on the ninetieth day informing me that it would taking longer than normal and that the IRS was extending their own deadline by another 90 days. At this point, between the time and money spent by myself and the IRS, we've probably exceeded the payment I submitted with the 4506 and whatever the proposed owed taxes and fees would be. Figuring not to have much say in the matter, I guess I'll just keep holding all this cash, which is causing me to no longer be tracking with market fluctuations; frustrating. (See previous entries for more details on that.) @@ -71,23 +71,21 @@ My employer doesn't offer a match for HSA contributions and the provider they wo Enter [HealthSavings Administrators](https://healthsavings.com). -I liked them from the word go. They had the index funds I wanted. They partnered with a brokerage firm I trust and use. They didn't feel like a big-box-bank. And, I could even call them and get someone on the phone if I had a question. Opened an account almost immediately. +I like them from the word go. They had the funds I wanted. They partnered with a brokerage firm I trust and use. They did feel like a big-box-bank. And, I could even call them and get someone on the phone if I had a question. Opened an account almost immediately. -Then I got a message from Bank of America saying my HSA with them had some money in it; I was shocked. I called Bank of America and HealthSavings Administrators to see how I could get the money at Bank of America moved to HealthSavings Administrators. I thought I had the right of it. +Then I got a message from Bank of America saying that my HSA account with them still had some money in it; I was shocked. I called up Bank of America and HealthSavings Administrators to see how I could get the money at Bank of America moved to HealthSavings Administrators. I thought I had the right of it. -I went to Bank of America and grabbed their form. I filled it out. As part of the comments I explicitly stated: +I went to Bank of America and grabbed their form. I will it out. As part of the comments I explicitly stated: -> Transferring FROM Bank of America TO HealthSavings Administrators. +> Transferring from Bank of America to HealthSavings Administrators. -There's a glitch in the financial services industry. I can write a check on Monday, have it hit my account on Tuesday, and rack up five different fees in a matter of seconds if funds aren't available. Further, I can submit a transfer from my bank to a brokerage account on Monday, have it taken out of my bank on Tuesday, and invested at the end of the same day. However, most other things will take at least a month. +There's a glitch in the financial services industry. I can write a check on Monday, have it hit my account on Tuesday, and rack up five different fees in a matter of seconds. Further, I can submit a transfer from my bank to a brokerage account on Monday, have it hit taken out of my bank on Tuesday, and invested at the end of the same day. However, most other things will take at least a month. Anyhoo. -I got paid and went to contribute to my HSA one day. Come to find out, I had no money and my account was being closed down at my request. Apparently, what I was actually supposed to do was get a form from HealthSavings Administrators to send to Bank of America, not the other way around. I explained to the HealthSavings Administrators that it wasn't a dealbreaker because I was the idiot, however, it would have been nice if they would have looked at the form and realized that they were about to do the exact opposite of what was in the comment field. I had a similar conversation with Bank of America. +I got paid and went to contribute to my HSA one day. Come to find out, I had no money and my account was being closed down at my request. Apparently, what I was actually supposed to do was get a form from HealthSavings Administrators to send to Bank of America, not the other way around. I explained to the HealthSavings Administrators that it wasn't a dealbreaker because I was the idiot, however, it would have been nice if they would have looked at the form and realized that they were about to do the exact opposite of what was in the comment field. I also had a conversation with Bank of America as well. -The agent assured me it was taken care of. My account would be reopened. My contributions would be put back and the money from Bank of America would be transferred. Two weeks later, went to make a contribution, come to find out it wasn't actually resolved; in fact, it hadn't even been started. I ended up on the line with the same agent who gave me the assurances during the previous call. - -We finally did get it resolved. My account was open with HealthSavings Administrators and closed with Bank of America. +The agent assured me it was taken care of. Two weeks later, went to make a contribution, come to find out it wasn't actually resolved, but we finally did get it resolved. My account was open with HealthSavings Administrators and closed with Bank of America. Strike one. @@ -95,7 +93,7 @@ Then I got hit with a fee from HealthSavings Administrators and I honestly wasn' Strike two. -Then I got hit with another fee. I called again and explained the situation and how I had called and asked if there were any other fees. I also explained that while I wasn't living in squalor for most of my life, I had spent much of my life in a position of subsistence and I had just gotten out of debt and was trying to prepare for a different life and relationship with money. Further, all of this wasn't making me feel very good. Believe the direct quote was: +Then I got hit with another fee. I called again and explained the situation and how I had called and asked if there were any other fees. I also explained that while I wasn't living in squalor for most of my life, I had spent much of my life in a position of subsistence and I had just gotten out of debt and was trying to prepare for a different and all of this wasn't making me feel very good. Believe the direct quote was: > I no longer feel like I can trust you with my money. @@ -103,13 +101,13 @@ Strike three. Opened an HSA brokerage account with someone else and started shoveling money over there. Waited for value of the account with HealthSavings Administrators to hit a point where I could cover the cost of the check they would cut for closing my account. -Quick aside: It is the twenty-first century. Paper-trail doesn't mean actual paper anymore. I get free checks from my credit unions all the time. Even if it's a cashier's check I can get it for free. Again, when it comes to the financial services industry when I'm doing something that's in the interest of the institution, seems like it can happen in a matter of a day or two, if not in seconds. However, if I'm doing something that maybe isn't in their best interest, it takes weeks and there are fees. So frustrating. +Quick aside: It is the twenty-first century. Paper-trail doesn't mean actual paper anymore. I get free checks from bank all the time. Even if it's a cashier's check I can get it for free. Again, when it comes to the financial services industry when I'm doing something that's in the interest of the institution, seems like it can happen in a matter of a day or two, if not in seconds. However, if I'm doing something that maybe isn't in their best interest, it takes weeks and there are fees. So frustrating. -Moving on. +Moving on. -The value reached roughly that point where it was my initial deposits (cost basis) plus the cost of the check. I sold the index fund investment and converted everything to cash; thereby, increasing the total amount of cash in my overall portfolio. I went to my other HSA provider and filled out their online form, which they would submit to HealthSavings Administrators. When I talked with the agent from the HSA provider I plan on keeping for now, they said it could take three to five weeks. +The value reached roughly that point and sold the fund investments and converted everything to cash. I went to my other HSA provider and filled out their online form, which they would submit to HealthSavings Administrators. When I talked with the agent from the HSA provider I plan on keeping for now, they said it could take three to five weeks. -Fast-forward four weeks, basically the last week of 2021 I called my HSA provider to check status, nothing. Called HealthSavings Administrators who said: +Fast-forward four weeks, basically the last week of 2021 I called my HSA provider to check status, nothing. Call HealthSavings Administrators who said: > Oh, yeah. I know we're having problems processing their forms electronically. What you need to do is contact them and have them fax or mail us the request. @@ -119,17 +117,17 @@ Five or six interactions depending on how you're counting. Four or five of them I didn't let that anger and frustration boil over onto the agent. I also didn't know how much was just "being poor" baggage and how much might be frustrations with other people (like the IRS), so, I just said: -> Is there a way to escalate this call along with my service history to someone? This hasn't been a good experience for me (interacting with HealthSavings Administrators as a company). And I've gone from saying 'don't use them' if someone asks me if I have thoughts about you to putting my experience out for general consumption (this post). +> Is there a way to escalate this call along with my service history to someone? This hasn't been a good experience for me. And I've gone from saying 'don't do it' if someone asks me directly how I feel about you, to putting my experience and how I feel out there in general. -What I would've said if the agent wasn't both polite and contrite: +What I would have said if the agent wasn't both polite and contrite: -> It's my money. It feels like you're holding it hostage. I feel like you, as the company, don't know what you're doing from a backend, paperwork perspective. While I hope this isn't indicative for all customers, every time I've called in after opening the account, something has been broken. +> It's my money. It feels like you're holding it hostage. I feel like you, as the company, don't know what you're doing. While I hope this isn't indicative for all customers, every time I've called in after opening the account, something has been broken. -The agent was nice enough to give me an email address and a fax number (yep, fax machines are still a thing). I contacted the HSA provider I want to keep and explained the situation. They told me it could take a day or two to submit the fax because they're backed up. I waited a day or two and emailed the HealthSavings Administrators agent to see how it's going; almost 48 hours later, no response (not even an, "I'm out on vacation"). +The agent was nice enough to give me an email address and a fax number (yep, fax machines are still a thing). I contacted the HSA provider I want to keep and explained the situation. They told me it could take a day or two because they're backed up. I waited a day or two and emailed the HealthSavings Administrators agent to see how it's going; almost 48 hours later, no response (not even an, "I'm out on vacation"). -Woke up this morning to check the account. It showed I was locked out. Called to figure out why, it's because the process had already started; of course, it may take 4 to 6 weeks to complete but possibly only two because the process already started. +Woke up this morning to check the account. It showed I was locked out. Called to figure out why, it's because the process had already started; of course, it may take 4 to 6 weeks to complete but possibly only two because the process already started. -Now I don't have access to the account online; so, calling again to figure out how they plan to handle tax documents. I've asked that they send the tax documents both regular mail and email. +Now I don't have access to the account online; so, calling again to figure out how they plan to handle tax documents. I've asked that they send them both regular mail and email. ## Assets @@ -149,11 +147,11 @@ For me, use-assets aren't investments, I'm using them. They have utility in my l That's the big one for me; use-assets aren't investments, they have more value to me as what they are, not what I can sell them for. Now for some of the smaller ones, in no particular order. -I appreciate the advice from [The Money Guy Show](https://www.moneyguy.com) when they say owning a home is a long-term consideration. If you're not looking to be there for at least five years, it may be better to have the flexibility afforded by renting housing and not owning. I tend to move every 2 or 3 years. Sometimes it's just from one city to another, but I don't see myself setting up roots, so to speak. +I appreciate the advice from [The Money Guy Show](https://www.moneyguy.com) when they say owning a home a long-term consideration. If you're not looking to be there for at least five years, it may be better to have the flexibility afforded by renting housing and not owning. I tend to move every 2 or 3 years. Sometimes it's just from one city to another, but I don't see myself setting up roots, so to speak. I don't like tinkering or maintenance activities. Generally speaking, I don't modify the places I live in; rarely even painting the walls (or hanging things on them to be honest). So, restrictions in this regard don't typically affect my happiness or experience in a place. I've also never had a landlord deny me the request to do something. Some maintenance falls into the total cost of ownership conversation for another time but to hit on it briefly, if the washing machine needs replaced, I don't typically pay for that. New toilets? Not me. Dishwasher goes out? Not it. Exterior needs painting? Not me either. Some people enjoy theses things, I'm not one of them. -This one might be a bit more controversial; I like being or knowing who owns the thing I'm using. Ultimately, the federal, state, and local governments own the homes we live in and the land they're on. If you don't pay property taxes, the house and lot will be taken from you. If you don't pay the fees of the Home Owner's Association (if there is one), bad things can happen, up to and including being removed from the community (sounds like eviction from a rental). If you don't pay the mortgage, the bank will seize the house. I can definitively say I own my cellular phone; I can't do that with larger assets like a home or car. With renting an apartment or home I know the landlord. I delegate a lot of responsibility to them so I don't have to think about it or spend my time doing it. (And, just to be clear, I have a lot of say in who I choose as a landlord, so, as long as I don't choose Scrooge, it's been pretty okay.) +This one might be a bit more controversial; I like being or knowing who owns the thing I'm using. Ultimately, the federal, state, and local governments own the homes we live in and the land they're on. If you don't pay property taxes, the house and lot will be taken from you. If you don't pay the fees of the Home Owner's Association (if there is one), bad things can happen, up to and including being removed from the community (sounds like eviction from a rental). If you don't pay the mortgage, the bank will cease the house. I can definitively say I own my cellular phone; I can't do that with larger assets like a home or car. With renting an apartment or home I know the landlord. I delegate a lot of responsibility to them so I don't have to think about it or spend my time doing it. (And, just to be clear, I have a lot of say in who I choose as a landlord, so, as long as I don't choose Scrooge, it's been pretty okay.) ## FI experiments @@ -172,7 +170,7 @@ These portfolios don't have contributions made to them regularly. They also don' - Mark 0.4: - Current: 43.74 USD - Previous: 43.74 USD - - Change: 0 USD + - Change: 0 USD - Mark 0.6: - Current: 43.54 USD - Previous: 43.54 USD @@ -199,7 +197,7 @@ These portfolios don't have contributions made to them regularly. They also don' 2021 was mainly about: - setting up forever relationships, -- major purchases (resetting), and +- major purchases (resetting), and - settling in on numbers. ### Forever relationships @@ -212,25 +210,25 @@ That's why I tend to have multiple providers. My primary financial institution has been my primary institution for almost 30 years. The president recently retired. I'm keeping an eye open for changes that might result to make sure they will continue to be my forever institution. -My secondary financial institution is new, however, I believe if things go pear-shaped with my primary then I'll be able to easily convert the secondary to being my primary. +My secondary financial institution is new, however, I believe it things go pear-shaped with my primary then I'll be able to easily convert the secondary to being my primary. -My tertiary financial institution has been with me for almost 20 years. They handle my insurance policies as well. +My tertiary financial institution has been with me for almost 20 years. They handle my insurance policies as well. -My primary credit card is with the secondary institution. My secondary credit card is through Apple and I've been using their other products and services for over a decade. My tertiary credit card is with the tertiary financial institution. My quaternary credit card is with my primary institution. +My primary credit card is with the secondary institution. My secondary credit card is through Apple and I've been using their other products and services for over a decade. My tertiary credit card is with the tertiary financial institution. My quaternary credit card with my primary institution. My business account is with the secondary institution as well. I'm looking to transfer the business credit card to them and close out the one I currently have; mainly because it's not with what I consider a forever-institution. -I'm satisfied with my primary, secondary, and tertiary brokerage providers; however, they're all new to me, so, that could change at any moment. I've had a chance to interact with their customer service multiple times and have had no issues. My Roth [.Individual Retirement Account](IRA) was with my tertiary institution, however, I wasn't satisfied with the folks they sold that portion of their business to and I transferred those funds to my primary broker. Funny enough, the transfer of my IRA was done electronically, only took a few days, and a couple of phone calls. I was lucky enough to discover a Traditional IRA as well, which was rolled into the primary broker. +I'm satisfied with my primary, secondary, and tertiary brokerage providers; however, they're all new to me, so, that could change at any moment. I've had a chance to interact with their customer service multiple times and have had no issues. My Roth [.Individual Retirement Account](IRA) was with my tertiary institution, however, I wasn't satisfied with the folks they transferred it to and transferred it to my primary broker. I was lucky enough to discover a Traditional IRA as well, which was rolled into the primary broker. -The HSA provider problem is being resolved. And I dissolved my relationship on that score. +The HSA provider institution problem is being resolved. And I dissolved my relationship on that score. Dropped Intuit like a bad habit and shifted to various financial tools and providers I think I can stick with, including [Wave](https://www.waveapps.com) as the accounting replacement. While there are some issues, they're not nearly to the degree I was having with Intuit products; reminding me that just because it's popular or "professional" doesn't mean it's worth the investment (monetary or emotional). ### Major purchases -Because I'm looking to reduce spending and increase savings I went ahead and purchased a lot of items during the year. New clothes, electronics, household items, and so on. +Because I'm looking to reduce spending and increase savings I went ahead and purchased a lot of items during the year. New clothes, electronics, household items, and so on. -This gave me a chance to look at average useful life and set up my paycheck distributions in such a way that when I need to replace those items, I'll already have the funds available. +This gave me a chance to look at average useful life and set up my distributions in such a way that when I need to replace them later, I'll already have the funds available. ### Settling in on numbers @@ -238,4 +236,4 @@ I'm appreciating the lightweight approach to categorizing expenses I've settled For example, I really need to cut down on eating out. Next to housing-related expenses, eating out is my next highest; followed closely by purchasing regular food. -Because of the aforementioned throughout this entry, 2021 will hopefully be an anomaly and 2022 will see more consistency and fall off in certain areas. For example, earlier this year I spent the money to buy into a lifetime membership to an organization. That was over 1,000 USD. That made membership fees my fourth highest category. So, basically, housing, dining, food, then memberships in that order. That's out of the ordinary and shouldn't be the case moving forward. +Because of the aforementioned throughout this entry, 2021 will hopefully be an anomaly and 2022 will see more consistency and fall off in certain areas. For example, earlier this year I spent the money to buy into a lifetime membership to an organization. That was over 1,000 USD. That made membership fees my fourth highest category. So, basically, housing, dining, food, then memberships. That's out of the ordinary and shouldn't be the case moving forward. \ No newline at end of file From ce1bd63b61fa26f4f4fc003dbd9159fb59eb7213 Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Thu, 30 Dec 2021 21:10:22 -0600 Subject: [PATCH 02/16] update --- .../_20220115/content.md | 16 ++++++++++++++++ 1 file changed, 16 insertions(+) diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md index 8b388a56..d0a8c7fe 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md @@ -36,6 +36,22 @@ Brokerage accounts, retirement accounts, personal and business accounts, and so During 2021, I didn't get much traction on putting these together because that wasn't really the focus for that year. +## Retirement accounts + +Contribution limits for some retirement accounts this year have gone up. 1,000 [.United States Dollars](USD) [for the 401k](https://www.irs.gov/newsroom/irs-announces-401k-limit-increases-to-20500). Only 50 USD [for the [.Health Savings Account](HSA)](https://www.fool.com/retirement/plans/hsa/contribution-limits/). No change for the Roth [Individual Retirement Account](IRA). + +The income limits for being able to contribute the full amount to a Roth IRA [has also gone up](https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022) 4,000 USD [compared to 2021](https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2021). The math to figure out the amount you can contribute if you fall into the reduced amount level still seems confusing as hell. If I find myself getting close to that amount, I’ll probably just ask for an insane raise that would push out of qualifying even after maxing out contributions to other vehicles. + +I’m setting 401k contributions to 17 percent. When I called Fidelity that was the percent they said would get me close over the course of my paychecks without counting bonuses. 15 percent was my estimate based on the 19,500 USD contribution limit and seemed to be a decent sweet spot for the net paycheck amount. It also helps ensure I get the full employer match as my plan doesn’t offer a [true-up provision](https://www.forbes.com/sites/ashleaebeling/2017/05/26/beware-these-401k-match-traps/?sh=714f64c391c6I’ve heard debate whether it’s better). + +Research seems to indicate that lump-sum investing could beat out dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). Given the time scale I’m looking at is 10 years—around 20 years given what I’m driving toward—and I’m not worried about a 20 year depression at this point, I’m thinking I’ll lump-sum my Roth IRA contribution for 2022. In 2021 I maxed out early in the year, which meant I could take advantage of the dips later in the year. This year, I have the too much cash problem and converting quickly seems beneficial. That’s presuming the [.Internal Revenue Service](IRS) determines I don’t owe a mess-ton of money. + +Depending on the verdict from the IRS, I may do lump-sum with the HSA. + +Basically, I’m thinking 2022 will be the lump-sum investing year for the Roth IRA and HSA. + +Given the last year, it appears there’s a dip in the middle of each month, which is when I’ll plan to do the lump-sum contributions; most likely around the time I file taxes. I’ll continue dollar cost averaging into the taxable accounts. + ## FI experiments I started multiple portfolios as a single deposit experiment as a sort of control group for the plan going from now until becoming financially independent. From 997d2be763795b8345958350e96354b53f78a090 Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Thu, 30 Dec 2021 21:23:00 -0600 Subject: [PATCH 03/16] update --- .../_20220115/content.md | 12 ++++++++++++ 1 file changed, 12 insertions(+) diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md index d0a8c7fe..49f17dd7 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md @@ -52,6 +52,18 @@ Basically, I’m thinking 2022 will be the lump-sum investing year for the Roth Given the last year, it appears there’s a dip in the middle of each month, which is when I’ll plan to do the lump-sum contributions; most likely around the time I file taxes. I’ll continue dollar cost averaging into the taxable accounts. +## Too much cash + +When I was still getting back to broke, I never thought I’d say I had too much cash. When I first started tracking things via [Personal Capital](https://www.personalcapital.com), the retirement planning feature had roughly a 98 percent success rate—now it shows 78 percent. + +Three things happened during the drop in success probability. The first is I started holding all this cash. The second is a serious dip in the market. The third is the continued change toward my target allocation. + +I’m discounting the impact of the allocation for now because the success probability didn’t change while I was moving toward the allocation; the drop seemed to happen almost over night. + +That leaves the dip in the market and the cash. Unfortunately, the market is recovering just fine and every standard portfolio provided by Personal Capital is outperforming mine by a few percentage points whereas before they were all within a couple of percentage points. + +With that as the rationale, I’m blaming holding so much cash as the issue and will be doing what I can to rectify the situation with a quickness while still allowing for the possibility the IRS will find I owe money somehow or someway. + ## FI experiments I started multiple portfolios as a single deposit experiment as a sort of control group for the plan going from now until becoming financially independent. From 6ff7e018e8ae1ee453463aabbc8e817fdc1bb949 Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Fri, 31 Dec 2021 08:16:31 -0600 Subject: [PATCH 04/16] update --- .../_20220115/content.md | 20 +++++++++---------- 1 file changed, 9 insertions(+), 11 deletions(-) diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md index 49f17dd7..4b032ac4 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md @@ -28,33 +28,31 @@ fi-experiments: When my net worth was in the negative, I wasn't too worried about legacy and documenting things; probably not the wisest course of action. My finances would be pretty easy for anyone to deal with and close out my business with the living. Now though, it's more complex. -Brokerage accounts, retirement accounts, personal and business accounts, and so on. After looking around for solutions to help automate this process, I came across three things: +Brokerage accounts, retirement accounts, personal and business accounts, and so on. After looking around for solutions to help automate and digitize this process, I came across three things: -1. [Family Emergency Binder](https://smartmoneymamas.com/ice-binder/): This is the one I actually purchased to get a feel but, if you do a search you can find a lot of resources along this line. +1. [Family Emergency Binder](https://smartmoneymamas.com/ice-binder/): This is the one I actually purchased to get a feel but, if you do a search, you can find a lot of resources along this line. 2. [FidSafe](https://www.fidsafe.com): An as of now free place to store documents and grant access to those documents via encrypted cloud storage. 3. [Living Together by NOLO](https://www.nolo.com/legal-encyclopedia/living-together): Becca and I have no plans to get married, however, this can be problematic in the United States (not sure about elsewhere) when it comes to hospital stays and decision making on behalf of each other. -During 2021, I didn't get much traction on putting these together because that wasn't really the focus for that year. +During 2021, I didn't get much traction on putting legacy documents together because that wasn't [the focus for that year](https://joshbruce.com/finances/building-wealth-paycheck-to-paycheck/20220101/). ## Retirement accounts Contribution limits for some retirement accounts this year have gone up. 1,000 [.United States Dollars](USD) [for the 401k](https://www.irs.gov/newsroom/irs-announces-401k-limit-increases-to-20500). Only 50 USD [for the [.Health Savings Account](HSA)](https://www.fool.com/retirement/plans/hsa/contribution-limits/). No change for the Roth [Individual Retirement Account](IRA). -The income limits for being able to contribute the full amount to a Roth IRA [has also gone up](https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022) 4,000 USD [compared to 2021](https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2021). The math to figure out the amount you can contribute if you fall into the reduced amount level still seems confusing as hell. If I find myself getting close to that amount, I’ll probably just ask for an insane raise that would push out of qualifying even after maxing out contributions to other vehicles. +The income limits for being able to contribute the full amount to a Roth IRA [has also gone up](https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022) 4,000 USD [compared to 2021](https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2021). The math to figure out the amount you can contribute if you fall into the reduced amount level still seems confusing as hell. If I find myself getting close to that amount, I’ll probably just ask for an insane raise that would push me out of qualifying even after maxing out contributions to other vehicles. I’m setting 401k contributions to 17 percent. When I called Fidelity that was the percent they said would get me close over the course of my paychecks without counting bonuses. 15 percent was my estimate based on the 19,500 USD contribution limit and seemed to be a decent sweet spot for the net paycheck amount. It also helps ensure I get the full employer match as my plan doesn’t offer a [true-up provision](https://www.forbes.com/sites/ashleaebeling/2017/05/26/beware-these-401k-match-traps/?sh=714f64c391c6I’ve heard debate whether it’s better). -Research seems to indicate that lump-sum investing could beat out dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). Given the time scale I’m looking at is 10 years—around 20 years given what I’m driving toward—and I’m not worried about a 20 year depression at this point, I’m thinking I’ll lump-sum my Roth IRA contribution for 2022. In 2021 I maxed out early in the year, which meant I could take advantage of the dips later in the year. This year, I have the too much cash problem and converting quickly seems beneficial. That’s presuming the [.Internal Revenue Service](IRS) determines I don’t owe a mess-ton of money. +Research seems to indicate lump-sum investing could beat dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). I’m thinking I’ll go ahead and lump-sum the Roth IRA and HSA this year. Not because of higher potential returns (I can’t predict the market) but because it will shift this heavy cash position into something long-term and higher historical returns. -Depending on the verdict from the IRS, I may do lump-sum with the HSA. +Given the last year, it appears there’s a dip in the middle of each month, which is when I’ll plan to do the lump-sum contributions; most likely around the time I file taxes. I’ll continue dollar cost averaging into other accounts. -Basically, I’m thinking 2022 will be the lump-sum investing year for the Roth IRA and HSA. - -Given the last year, it appears there’s a dip in the middle of each month, which is when I’ll plan to do the lump-sum contributions; most likely around the time I file taxes. I’ll continue dollar cost averaging into the taxable accounts. +Hopefully, the [.Internal Revenue Service](IRS) doesn’t extend their estimate again and finds in my favor. ## Too much cash -When I was still getting back to broke, I never thought I’d say I had too much cash. When I first started tracking things via [Personal Capital](https://www.personalcapital.com), the retirement planning feature had roughly a 98 percent success rate—now it shows 78 percent. +When I was getting back to broke, I never thought I’d say I had too much cash. When I first started tracking things via [Personal Capital](https://www.personalcapital.com), the retirement planning feature had roughly a 98 percent success rate—now it shows 78 percent. Three things happened during the drop in success probability. The first is I started holding all this cash. The second is a serious dip in the market. The third is the continued change toward my target allocation. @@ -72,6 +70,6 @@ The Mark 0.0 portfolio holds the 100 percent stock index fund split. The smaller The Mark 1.0 portfolio holds a risk-parity style portfolio split between 50 percent 100 percent stock index fund (see Mark 0.0), 25 percent in negative correlation (long-term treasuries), 13 percent gold, 6 percent commodities, and 3 percent in both United States and international real estate. -The portfolio between Mark 0.0 and 1.0 start introducing the other components by reducing the amount allocated to the equities. The 1.1 and 1.2 introduce a different commodities setup. Specifically, I different fund at either 6 percent or the entire 13 percent. +The portfolios between Mark 0.0 and 1.0 start introducing the other components by reducing the amount allocated to the equities. The 1.1 and 1.2 introduce a different commodities setup. Specifically, a different commodities fund at either 6 percent or the entire 13 percent. {!! fi-experiments !!} From d05a3536ca191fcec4d6adcde4448ea9d77142b2 Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Fri, 31 Dec 2021 11:34:38 -0600 Subject: [PATCH 05/16] Update content.md --- .../20220101/content.md | 86 ++++++++++--------- 1 file changed, 45 insertions(+), 41 deletions(-) diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md index 1c7518d2..bd4e5d2b 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md @@ -51,63 +51,67 @@ For years I used Intuit to file my taxes. When I was looking through my records Enter [IRS Form 4506](https://www.irs.gov/forms-pubs/about-form-4506). You can request up to 8 past returns for 43 [.USD](United States Dollars) each. I went ahead and ordered from 2020 back to 2012 whether I had that return in my files or not. -A few months later I received the note from the IRS saying I had unreported, taxable income from my mother's death and that I owed taxes for that plus fees and penalties; the amount was almost 15,000 USD. The impact here being that my request spurred what, for me, feels like an audit, but is probably more aptly described as a review. +A few months later I received the note from the IRS saying I had unreported, taxable income from my mother's death and that I owed taxes for that plus fees and penalties; the amount was almost 15,000 USD. The impact here being that my request for returns spurred what, for me, feels like an audit, but is probably more aptly described as a review. -I neglected to send and reference an [IRS 1099-R Form](https://www.irs.gov/pub/irs-pdf/f1099r_21.pdf) with my 2020 taxes; my fault. However, the bank where the annuity came from did send a copy of the form in. Box 2a, the one specifying how much of the distribution is taxable, was left blank. Under normal circumstances, blank means zero on tax forms. However, in this particular case it was apparently read as "all of it." +I neglected to send and reference an [IRS 1099-R Form](https://www.irs.gov/pub/irs-pdf/f1099r_21.pdf) with my 2020 taxes; my fault. However, the bank where the annuity came from did send a copy of the form to the IRS. Box 2a, the one specifying how much of the distribution is taxable, was left blank. Under normal circumstances, blank means zero on tax forms. However, in this particular case it was apparently read as "all of it." -Contacted an accountant who was kind enough to explain things to me. Contacted the bank and asked them to update the form to specifically say zero; they did. Took all of that along with other letters stating that the distribution is not taxable income and faxed it all to the IRS. I believe I was given 30 days from the time stamped on the letter to respond; that's a pretty good sense of urgency and I think it did it within 10 days. Received a letter saying the IRS would respond within 90 days. +Contacted an accountant who was kind enough to explain things to me (without charge). Contacted the bank and asked them to update the form to specifically say zero; they did. Took all of that along with other letters stating the distribution is not taxable income and faxed them to the IRS. I believe I was given 30 days from the time stamped on the first letter to respond; that's a pretty good sense of urgency and I think I did it within 10 days. -Two days after the ninetieth day I received another letter date stamped on the ninetieth day informing me that it would taking longer than normal and that the IRS was extending their own deadline by another 90 days. At this point, between the time and money spent by myself and the IRS, we've probably exceeded the payment I submitted with the 4506 and whatever the proposed owed taxes and fees would be. +Received a letter saying the IRS would respond within 90 days. -Figuring not to have much say in the matter, I guess I'll just keep holding all this cash, which is causing me to no longer be tracking with market fluctuations; frustrating. (See previous entries for more details on that.) +Two days after the ninetieth day I received another letter date stamped on the ninetieth day informing me that it was taking longer than normal and the IRS was extending their own deadline by another 90 days; so, I get 30 days, they're taking up to six months. At this point, between the time and money spent by myself and the IRS, we've probably exceeded the payment I submitted with the 4506 and whatever the proposed owed taxes and fees would be. -Speaking of trying to sever ties with folks, a few years ago I started an HSA with Bank of America. When I got laid off, I couldn't continue making contributions and the account started getting feed for inactivity. I took it as a learning experience and wrote the account off as being feed out of existence and would do better due diligence in the future. I suppose I could have closed out the account, but that would have meant figuring out the tax thing related to early withdrawal of non-medial-related funds and I decided there wasn't enough money in the account to bother. When I rejoined the same employer a year later I don't think they offered an HSA plan. I was pretty livid with Bank of America but, again, just chalked it up as a learning experience. +Figuring not to have much say in the matter, I guess I'll keep holding all this cash, which is causing me to no longer be tracking with market fluctuations; frustrating. (See previous entries for more details on that.) -I signed up for an HSA with my current employer, however, for some reason no contributions were going toward it and I wasn't paying enough attention to realize it. (When I was in debt I didn't pay a lot of attention to my finances, for better and for worse.) +Speaking of trying to sever ties with folks, a few years ago I started an HSA with Bank of America. When I got laid off, I couldn't continue making contributions and the account started getting feed for inactivity. I took it as a learning experience and wrote the account off as being feed out of existence and would do better due diligence in the future. I suppose I could've closed the account, but that would mean figuring out the tax thing related to early withdrawal of non-medial-related funds and I decided there wasn't enough money in the account to bother. When I rejoined the same employer a year later I don't think they offered an HSA plan. I was pretty livid with Bank of America but, again, just chalked it up as a learning experience. -In 2021 I decided I would change that. +I signed up for an HSA with my current employer, however, for some reason no contributions were going toward it for the past two years and I wasn't paying enough attention to realize it. (When I was in debt I didn't pay a lot of attention to my finances, for better and for worse.) -My employer doesn't offer a match for HSA contributions and the provider they work with didn't have any funds I was remotely interested in. So, the only positives with using my employer's provider would be the fees are covered and I would receive the tax deduction with each paycheck instead of having to do it as part of my tax filing at the end of the year. So, I decided to go ahead and do it on my own through a provider I chose. +In 2021 I decided to change that. + +My employer doesn't offer a match for HSA contributions and the provider they work with didn't have any index funds I was remotely interested in. So, the only positives with using my employer's provider would be the fees are covered and I would receive the tax deduction with each paycheck instead of having to do it as part of my tax filing at the end of the year. So, I decided to go ahead and do it on my own through a provider I chose. Enter [HealthSavings Administrators](https://healthsavings.com). -I like them from the word go. They had the funds I wanted. They partnered with a brokerage firm I trust and use. They did feel like a big-box-bank. And, I could even call them and get someone on the phone if I had a question. Opened an account almost immediately. +I liked them from the word go. They had the index funds I wanted. They partnered with a brokerage firm I trust and use. They didn't feel like a big-box-bank. And, I could even call them and get someone on the phone if I had a question. Opened an account almost immediately. -Then I got a message from Bank of America saying that my HSA account with them still had some money in it; I was shocked. I called up Bank of America and HealthSavings Administrators to see how I could get the money at Bank of America moved to HealthSavings Administrators. I thought I had the right of it. +Then I got a message from Bank of America saying my HSA with them had some money in it; I was shocked. I called Bank of America and HealthSavings Administrators to see how I could get the money at Bank of America moved to HealthSavings Administrators. I thought I had the right of it. -I went to Bank of America and grabbed their form. I will it out. As part of the comments I explicitly stated: +I went to Bank of America and grabbed their form. I filled it out. As part of the comments I explicitly stated: -> Transferring from Bank of America to HealthSavings Administrators. +> Transferring FROM Bank of America TO HealthSavings Administrators. -There's a glitch in the financial services industry. I can write a check on Monday, have it hit my account on Tuesday, and rack up five different fees in a matter of seconds. Further, I can submit a transfer from my bank to a brokerage account on Monday, have it hit taken out of my bank on Tuesday, and invested at the end of the same day. However, most other things will take at least a month. +Quick aside: There's a glitch in the financial services industry. I can write a check on Monday, have it hit my account on Tuesday, and rack up five different fees in a matter of seconds if funds aren't available. Further, I can submit a transfer from my bank to a brokerage account on Monday, have it taken out of my bank on Tuesday, and invested by the end of the same day. (Finally, I can request a loan or credit card and start spending that money usually within a few hours.) However, most other things will take at least a month. Anyhoo. -I got paid and went to contribute to my HSA one day. Come to find out, I had no money and my account was being closed down at my request. Apparently, what I was actually supposed to do was get a form from HealthSavings Administrators to send to Bank of America, not the other way around. I explained to the HealthSavings Administrators that it wasn't a dealbreaker because I was the idiot, however, it would have been nice if they would have looked at the form and realized that they were about to do the exact opposite of what was in the comment field. I also had a conversation with Bank of America as well. +I got paid and went to contribute to my HSA one day. Come to find out, I had no money and my account was being closed at my request. Apparently, what I was supposed to do was get a form from HealthSavings Administrators to send to Bank of America, not the other way around. I explained to the HealthSavings Administrators that it wasn't a dealbreaker because I was the idiot, however, it would have been nice if they would have looked at the form and realized they were about to do the exact opposite of what was in the comment field. I had a similar conversation with Bank of America. + +The agent assured me it was taken care of. My account would be reopened. My contributions would be put back and the money from Bank of America would be transferred. Two weeks later, went to make a contribution, come to find out it wasn't resolved; in fact, it hadn't even been started. I ended up on the line with the same agent who gave me the assurances during the previous call. -The agent assured me it was taken care of. Two weeks later, went to make a contribution, come to find out it wasn't actually resolved, but we finally did get it resolved. My account was open with HealthSavings Administrators and closed with Bank of America. +We finally did get it resolved. My account was open with HealthSavings Administrators and closed with Bank of America. Strike one. -Then I got hit with a fee from HealthSavings Administrators and I honestly wasn't expecting it. Called them up. They explained. I asked if there were any other fees I should be aware of. They said, no. And I said, okay, it's not a dealbreaker. +Then I got hit with a fee from HealthSavings Administrators and I honestly wasn't expecting it despite it being a fee listed in their documents. Called them up. They explained. I asked if there were any other fees I should be aware of. They said, no. And I said, okay, it's not a dealbreaker. Strike two. -Then I got hit with another fee. I called again and explained the situation and how I had called and asked if there were any other fees. I also explained that while I wasn't living in squalor for most of my life, I had spent much of my life in a position of subsistence and I had just gotten out of debt and was trying to prepare for a different and all of this wasn't making me feel very good. Believe the direct quote was: +Then I got hit with another fee. I called again and explained the situation and how I called before and asked if there were any other fees. I explained while I wasn't living in squalor for most my life, I spent much of my life in a position of subsistence and I had just gotten out of debt and was trying to prepare for a different life and relationship with money. Further, all of this wasn't making me feel very good. Believe the direct quote was: -> I no longer feel like I can trust you with my money. +> I come from a long line of subsistence farmers and ranchers who instilled a deep skepticism of bankers. I no longer feel I can trust you with my money. Strike three. Opened an HSA brokerage account with someone else and started shoveling money over there. Waited for value of the account with HealthSavings Administrators to hit a point where I could cover the cost of the check they would cut for closing my account. -Quick aside: It is the twenty-first century. Paper-trail doesn't mean actual paper anymore. I get free checks from bank all the time. Even if it's a cashier's check I can get it for free. Again, when it comes to the financial services industry when I'm doing something that's in the interest of the institution, seems like it can happen in a matter of a day or two, if not in seconds. However, if I'm doing something that maybe isn't in their best interest, it takes weeks and there are fees. So frustrating. +Quick aside: It is the twenty-first century. Paper-trail doesn't mean actual paper anymore. I get free checks from my credit unions all the time. Even if it's a cashier's check I can get it for free. Again, when it comes to the financial services industry when I'm doing something that's in the interest of the institution, seems like it can happen in a matter of a day or two, if not in seconds. However, if I'm doing something that maybe isn't in their best interest, it takes weeks and there are fees. So frustrating. -Moving on. +Moving on. -The value reached roughly that point and sold the fund investments and converted everything to cash. I went to my other HSA provider and filled out their online form, which they would submit to HealthSavings Administrators. When I talked with the agent from the HSA provider I plan on keeping for now, they said it could take three to five weeks. +The value reached roughly that point where it was my initial deposits (cost basis) plus the cost of the check. I sold the index fund investment and converted everything to cash; thereby, increasing the total amount of cash in my overall portfolio. I went to my other HSA provider and filled out their online form, which they would submit to HealthSavings Administrators. When I talked with the agent from the HSA provider I plan on keeping for now, they said it could take three to five weeks. -Fast-forward four weeks, basically the last week of 2021 I called my HSA provider to check status, nothing. Call HealthSavings Administrators who said: +Fast-forward four weeks, basically the last week of 2021 I called my HSA provider to check status, nothing. Called HealthSavings Administrators who said: > Oh, yeah. I know we're having problems processing their forms electronically. What you need to do is contact them and have them fax or mail us the request. @@ -117,17 +121,17 @@ Five or six interactions depending on how you're counting. Four or five of them I didn't let that anger and frustration boil over onto the agent. I also didn't know how much was just "being poor" baggage and how much might be frustrations with other people (like the IRS), so, I just said: -> Is there a way to escalate this call along with my service history to someone? This hasn't been a good experience for me. And I've gone from saying 'don't do it' if someone asks me directly how I feel about you, to putting my experience and how I feel out there in general. +> Is there a way to escalate this call along with my service history to someone? This hasn't been a good experience for me (interacting with HealthSavings Administrators as a company). And I've gone from saying 'don't use them' if someone asks me if I have thoughts about you to putting my experience out for general consumption (this post). -What I would have said if the agent wasn't both polite and contrite: +What I would've said if the agent wasn't both polite and contrite: -> It's my money. It feels like you're holding it hostage. I feel like you, as the company, don't know what you're doing. While I hope this isn't indicative for all customers, every time I've called in after opening the account, something has been broken. +> It's my money. It feels like you're holding it hostage. I feel like you, as the company, don't know what you're doing from a backend, paperwork perspective. While I hope this isn't indicative for all customers, every time I've called in after opening the account, something has been broken. -The agent was nice enough to give me an email address and a fax number (yep, fax machines are still a thing). I contacted the HSA provider I want to keep and explained the situation. They told me it could take a day or two because they're backed up. I waited a day or two and emailed the HealthSavings Administrators agent to see how it's going; almost 48 hours later, no response (not even an, "I'm out on vacation"). +The agent was nice enough to give me an email address and a fax number (yep, fax machines are still a thing). I contacted the HSA provider I want to keep and explained the situation. They told me it could take a day or two to submit the fax because they're backed up. I waited a day or two and emailed the HealthSavings Administrators agent to see how it's going; almost 48 hours later, no response (not even an, "I'm out on vacation"). -Woke up this morning to check the account. It showed I was locked out. Called to figure out why, it's because the process had already started; of course, it may take 4 to 6 weeks to complete but possibly only two because the process already started. +Woke up this morning to check the account. It showed I was locked out. Called to figure out why, it's because the process had already started; of course, it may take 4 to 6 weeks to complete but possibly only two because the process already started. -Now I don't have access to the account online; so, calling again to figure out how they plan to handle tax documents. I've asked that they send them both regular mail and email. +Now I don't have access to the account online; so, calling again to figure out how they plan to handle tax documents. I've asked that they send the tax documents both regular mail and email. ## Assets @@ -147,11 +151,11 @@ For me, use-assets aren't investments, I'm using them. They have utility in my l That's the big one for me; use-assets aren't investments, they have more value to me as what they are, not what I can sell them for. Now for some of the smaller ones, in no particular order. -I appreciate the advice from [The Money Guy Show](https://www.moneyguy.com) when they say owning a home a long-term consideration. If you're not looking to be there for at least five years, it may be better to have the flexibility afforded by renting housing and not owning. I tend to move every 2 or 3 years. Sometimes it's just from one city to another, but I don't see myself setting up roots, so to speak. +I appreciate the advice from [The Money Guy Show](https://www.moneyguy.com) when they say owning a home is a long-term consideration. If you're not looking to be there for at least five years, it may be better to have the flexibility afforded by renting housing and not owning. I tend to move every 2 or 3 years. Sometimes it's just from one city to another, but I don't see myself setting up roots, so to speak. I don't like tinkering or maintenance activities. Generally speaking, I don't modify the places I live in; rarely even painting the walls (or hanging things on them to be honest). So, restrictions in this regard don't typically affect my happiness or experience in a place. I've also never had a landlord deny me the request to do something. Some maintenance falls into the total cost of ownership conversation for another time but to hit on it briefly, if the washing machine needs replaced, I don't typically pay for that. New toilets? Not me. Dishwasher goes out? Not it. Exterior needs painting? Not me either. Some people enjoy theses things, I'm not one of them. -This one might be a bit more controversial; I like being or knowing who owns the thing I'm using. Ultimately, the federal, state, and local governments own the homes we live in and the land they're on. If you don't pay property taxes, the house and lot will be taken from you. If you don't pay the fees of the Home Owner's Association (if there is one), bad things can happen, up to and including being removed from the community (sounds like eviction from a rental). If you don't pay the mortgage, the bank will cease the house. I can definitively say I own my cellular phone; I can't do that with larger assets like a home or car. With renting an apartment or home I know the landlord. I delegate a lot of responsibility to them so I don't have to think about it or spend my time doing it. (And, just to be clear, I have a lot of say in who I choose as a landlord, so, as long as I don't choose Scrooge, it's been pretty okay.) +This one might be a bit more controversial; I like being or knowing who owns the thing I'm using. Ultimately, the federal, state, and local governments own the homes we live in and the land they're on. If you don't pay property taxes, the house and lot will be taken from you. If you don't pay the fees of the Home Owner's Association (if there is one), bad things can happen, up to and including being removed from the community (sounds like eviction from a rental). If you don't pay the mortgage, the bank will seize the house. I can definitively say I own my cellular phone; I can't do that with larger assets like a home or car. With renting an apartment or home I know the landlord. I delegate a lot of responsibility to them so I don't have to think about it or spend my time doing it. (And, just to be clear, I have a lot of say in who I choose as a landlord, so, as long as I don't choose Scrooge, it's been pretty okay.) ## FI experiments @@ -170,7 +174,7 @@ These portfolios don't have contributions made to them regularly. They also don' - Mark 0.4: - Current: 43.74 USD - Previous: 43.74 USD - - Change: 0 USD + - Change: 0 USD - Mark 0.6: - Current: 43.54 USD - Previous: 43.54 USD @@ -197,7 +201,7 @@ These portfolios don't have contributions made to them regularly. They also don' 2021 was mainly about: - setting up forever relationships, -- major purchases (resetting), and +- major purchases (resetting), and - settling in on numbers. ### Forever relationships @@ -210,25 +214,25 @@ That's why I tend to have multiple providers. My primary financial institution has been my primary institution for almost 30 years. The president recently retired. I'm keeping an eye open for changes that might result to make sure they will continue to be my forever institution. -My secondary financial institution is new, however, I believe it things go pear-shaped with my primary then I'll be able to easily convert the secondary to being my primary. +My secondary financial institution is new, however, I believe if things go pear-shaped with my primary then I'll be able to easily convert the secondary to being my primary. -My tertiary financial institution has been with me for almost 20 years. They handle my insurance policies as well. +My tertiary financial institution has been with me for almost 20 years. They handle my insurance policies as well. -My primary credit card is with the secondary institution. My secondary credit card is through Apple and I've been using their other products and services for over a decade. My tertiary credit card is with the tertiary financial institution. My quaternary credit card with my primary institution. +My primary credit card is with the secondary institution. My secondary credit card is through Apple and I've been using their other products and services for over a decade. My tertiary credit card is with the tertiary financial institution. My quaternary credit card is with my primary institution. My business account is with the secondary institution as well. I'm looking to transfer the business credit card to them and close out the one I currently have; mainly because it's not with what I consider a forever-institution. -I'm satisfied with my primary, secondary, and tertiary brokerage providers; however, they're all new to me, so, that could change at any moment. I've had a chance to interact with their customer service multiple times and have had no issues. My Roth [.Individual Retirement Account](IRA) was with my tertiary institution, however, I wasn't satisfied with the folks they transferred it to and transferred it to my primary broker. I was lucky enough to discover a Traditional IRA as well, which was rolled into the primary broker. +I'm satisfied with my primary, secondary, and tertiary brokerage providers; however, they're all new to me, so, that could change at any moment. I've had a chance to interact with their customer service multiple times and have had no issues. My Roth [.Individual Retirement Account](IRA) was with my tertiary institution, however, I wasn't satisfied with the folks they sold that portion of their business to and I transferred those funds to my primary broker. Funny enough, the transfer of my IRA was done electronically, only took a few days, and a couple of phone calls. I was lucky enough to discover a Traditional IRA as well, which was rolled into the primary broker. -The HSA provider institution problem is being resolved. And I dissolved my relationship on that score. +The HSA provider problem is being resolved. And I dissolved my relationship on that score. Dropped Intuit like a bad habit and shifted to various financial tools and providers I think I can stick with, including [Wave](https://www.waveapps.com) as the accounting replacement. While there are some issues, they're not nearly to the degree I was having with Intuit products; reminding me that just because it's popular or "professional" doesn't mean it's worth the investment (monetary or emotional). ### Major purchases -Because I'm looking to reduce spending and increase savings I went ahead and purchased a lot of items during the year. New clothes, electronics, household items, and so on. +Because I'm looking to reduce spending and increase savings I went ahead and purchased a lot of items during the year. New clothes, electronics, household items, and so on. -This gave me a chance to look at average useful life and set up my distributions in such a way that when I need to replace them later, I'll already have the funds available. +This gave me a chance to look at average useful life and set up my paycheck distributions in such a way that when I need to replace those items, I'll already have the funds available. ### Settling in on numbers @@ -236,4 +240,4 @@ I'm appreciating the lightweight approach to categorizing expenses I've settled For example, I really need to cut down on eating out. Next to housing-related expenses, eating out is my next highest; followed closely by purchasing regular food. -Because of the aforementioned throughout this entry, 2021 will hopefully be an anomaly and 2022 will see more consistency and fall off in certain areas. For example, earlier this year I spent the money to buy into a lifetime membership to an organization. That was over 1,000 USD. That made membership fees my fourth highest category. So, basically, housing, dining, food, then memberships. That's out of the ordinary and shouldn't be the case moving forward. \ No newline at end of file +Because of the aforementioned throughout this entry, 2021 will hopefully be an anomaly and 2022 will see more consistency and fall off in certain areas. For example, earlier this year I spent the money to buy into a lifetime membership to an organization. That was over 1,000 USD. That made membership fees my fourth highest category. So, basically, housing, dining, food, then memberships in that order. That's out of the ordinary and shouldn't be the case moving forward. From 8b94b98050b92915b0a94a3bb38967e15f2d3d57 Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Sat, 1 Jan 2022 09:37:51 -0600 Subject: [PATCH 06/16] update --- .../_20220115/content.md | 12 ++++++++---- 1 file changed, 8 insertions(+), 4 deletions(-) diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md index 4b032ac4..de03ebf5 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md @@ -26,7 +26,7 @@ fi-experiments: {!! data !!} -When my net worth was in the negative, I wasn't too worried about legacy and documenting things; probably not the wisest course of action. My finances would be pretty easy for anyone to deal with and close out my business with the living. Now though, it's more complex. +When my net worth was negative, I wasn't too worried about legacy and documenting things; probably not the wisest course of action. My finances would be pretty easy for anyone to deal with and close out my business with the living. Now though, it's more complex. Brokerage accounts, retirement accounts, personal and business accounts, and so on. After looking around for solutions to help automate and digitize this process, I came across three things: @@ -34,7 +34,7 @@ Brokerage accounts, retirement accounts, personal and business accounts, and so 2. [FidSafe](https://www.fidsafe.com): An as of now free place to store documents and grant access to those documents via encrypted cloud storage. 3. [Living Together by NOLO](https://www.nolo.com/legal-encyclopedia/living-together): Becca and I have no plans to get married, however, this can be problematic in the United States (not sure about elsewhere) when it comes to hospital stays and decision making on behalf of each other. -During 2021, I didn't get much traction on putting legacy documents together because that wasn't [the focus for that year](https://joshbruce.com/finances/building-wealth-paycheck-to-paycheck/20220101/). +During 2021, I didn't get much traction on putting legacy documents together because that wasn't [the focus for that year](https://joshbruce.com/finances/building-wealth-paycheck-to-paycheck/20220101/). Hoping 2022 wil be different. ## Retirement accounts @@ -42,9 +42,13 @@ Contribution limits for some retirement accounts this year have gone up. 1,000 [ The income limits for being able to contribute the full amount to a Roth IRA [has also gone up](https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022) 4,000 USD [compared to 2021](https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2021). The math to figure out the amount you can contribute if you fall into the reduced amount level still seems confusing as hell. If I find myself getting close to that amount, I’ll probably just ask for an insane raise that would push me out of qualifying even after maxing out contributions to other vehicles. -I’m setting 401k contributions to 17 percent. When I called Fidelity that was the percent they said would get me close over the course of my paychecks without counting bonuses. 15 percent was my estimate based on the 19,500 USD contribution limit and seemed to be a decent sweet spot for the net paycheck amount. It also helps ensure I get the full employer match as my plan doesn’t offer a [true-up provision](https://www.forbes.com/sites/ashleaebeling/2017/05/26/beware-these-401k-match-traps/?sh=714f64c391c6I’ve heard debate whether it’s better). +I’m setting 401k contributions to 17 percent. -Research seems to indicate lump-sum investing could beat dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). I’m thinking I’ll go ahead and lump-sum the Roth IRA and HSA this year. Not because of higher potential returns (I can’t predict the market) but because it will shift this heavy cash position into something long-term and higher historical returns. +When I called Fidelity that was the percent they said would get me close over the course of my paychecks without counting bonuses. 15 percent was my estimate based on the 19,500 USD contribution limit and seemed to be a decent sweet spot for the net paycheck amount; less than 15 percent and tax benefit isn't apparent. It also helps ensure I get the full employer match as my plan doesn’t offer a [true-up provision](https://www.forbes.com/sites/ashleaebeling/2017/05/26/beware-these-401k-match-traps/?sh=714f64c391c6). + +I’m going to lump-sum into the HSA and Roth IRA at the beginning of the year; not because of returns but because I’m sitting on all that cash. + +Research seems to indicate lump-sum investing could beat dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). Given the last year, it appears there’s a dip in the middle of each month, which is when I’ll plan to do the lump-sum contributions; most likely around the time I file taxes. I’ll continue dollar cost averaging into other accounts. From ec726fd08d0ba5e2010eddc39ed609e2d582752b Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Sat, 1 Jan 2022 09:38:40 -0600 Subject: [PATCH 07/16] display dateblock --- content/public/finances/total-cost-of-ownership/content.md | 2 ++ 1 file changed, 2 insertions(+) diff --git a/content/public/finances/total-cost-of-ownership/content.md b/content/public/finances/total-cost-of-ownership/content.md index 8ee5c72d..614e899f 100644 --- a/content/public/finances/total-cost-of-ownership/content.md +++ b/content/public/finances/total-cost-of-ownership/content.md @@ -5,6 +5,8 @@ created: 20211220 # Total cost of ownership +{!! dateblock !!} + For a long time now I've been trying to consider total cost of ownership when I acquire things. The first time I started paying attention was when I was thinking about why people buy homes and whether I thought it would be right for me. I decided it wouldn't be right for me, at least for now—and since the mid-nineties. In short, thinking this way is why I have the saying: It's your dime or your time, but nothing's ever free. From a53aab5301cb72e0c4eb0874953a919ee16b2351 Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Fri, 7 Jan 2022 20:48:34 -0600 Subject: [PATCH 08/16] update: 20210101 paycheck --- .../20220101/content.md | 92 +++++++++++-------- 1 file changed, 55 insertions(+), 37 deletions(-) diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md index bd4e5d2b..11faba27 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md @@ -17,15 +17,15 @@ data: {!! data !!} -December was a three check month for me. So, I was paid on the seventeenth and again on the thirtieth; a day early because of the new year holiday observation. Therefore, this paycheck is actually two and there’s basically a full paycheck’s worth of money in transit. +December was a three check month. I was paid on the seventeenth and the thirtieth; a day early because of observation the new year holiday. Therefore, for this post, there are two paychecks and there’s basically a full paycheck’s worth of money in transit. And, here we go... -The [.IRS](United States Internal Revenue Service) sent me a letter notifying me that they would like 90 more days. The date the letter was issued was on the ninetieth day from the previous letter. So, yeah, not sure I’m going to continue holding this much cash; more below. +The [.United States Internal Revenue Service](IRS) sent me a letter notifying me they would like 90 more days. The date the letter was issued was on the ninetieth day from the previous letter. So, yeah, not sure I’m going to continue holding this much cash; more below. -The request to transfer my [.HSA](Health Savings Account) from HealthSavings Administrators was not completed within the three to five weeks. When I called HealthSavings Administrators they explained that they’ve been having issues processing electronic requests and I should request my preferred provider fax the documents. What a cluster fuck this experience has been; more below. With that said, I hit the maximum contribution for the HSA with the paycheck on the seventeenth; therefore, can't make another contribution with this check. +The request to transfer my [.Health Savings Account](HSA) from HealthSavings Administrators wasn’t completed within the three to five weeks. When I called HealthSavings Administrators they explained they’ve been having issues processing electronic requests and I should request my preferred provider fax the documents. What a cluster fuck this experience has been; more below. With that said, I hit the maximum contribution for the HSA with the paycheck on the seventeenth; therefore, can't make another contribution with this check. -Found out I actually didn’t go over the contribution limit for the year on the 401k. It appears like I did because of the difference between the calendar year and the tax year. The first contribution in 2021 was made against the 2020 tax year. So, maxed out 401k for the first time. I hit the maximum with the paycheck on the seventeenth as well, so, this check is a bit larger than I’m used to compared to the rest of the year. +Found out I actually didn’t go over the contribution limit for the year on the 401k. It appears like I did because of the difference between the calendar year and the tax year. The first contribution in 2021 was made against the 2020 tax year. So, maxed out my 401k for the first time. I hit the maximum with the paycheck on the seventeenth as well, so, the check on the thirtieth is a bit larger than I’m used to compared to the rest of the year. We’re planning on moving. I used some of the cash I’ve had lying around to pay the deposit and first month’s rent. When Becca and I talked about how we’d go about this move we decided I’d take on the full burden of the new place while she did the same for the current place. Therefore, I won’t be paying rent in either place until March; deposit is January rent in current place and first month’s rent is February. @@ -33,39 +33,49 @@ We’re planning on moving. I used some of the cash I’ve had lying around to p The following is venting frustrations, not trying to throw anyone under the bus as it were. My experiences are not presented as indicative of the experience for all. I don't believe there is malicious intent or anything like that, but this was the impact these experiences had on me. I also accept my contributions to the experiences. -Early in 2021 I had a serious falling out with [Intuit](https://www.intuit.com). For my business accounting I was on a paid plan and for personal accounting I was on the free plan. When I have direct questions about something I prefer to talk to a human and ask the direct questions instead of getting overwhelmed trying to read and search forums and documentation. At the time, however, only paid accounts were permitted to call (or chat with) customer service and speak to an agent. Eventually the frustration of getting the issue resolved overwhelmed me and I told Intuit something along the following: +Early in 2021 I had a serious falling out with [Intuit](https://www.intuit.com). -> If you can't provide the same level and style of customer service to all customers, including those on the free account, then you shouldn't have the free account. Please cancel and remove all my information from your records. +My business account was a paid plan and we were an authorized dealer. For personal accounting I was on a free plan. -I invoked language from from various consumer protection acts including [.GDPR](General Data Protection Regulation) (despite not living in Europe) and [.CCPA](California Consumer Protection Act) (despite not living in California). Eventually we managed to cancel 8fold's status as an authorized Quickbooks dealer, along with a couple of business accounts, and about three or four personal accounts; I said: +When I have direct questions about something I prefer to talk to a human by phone and ask direct questions instead of getting overwhelmed trying to read and search forums and documentation. At the time, however, only paid accounts were permitted to call (or chat with) customer service. Eventually the frustration of getting the issue resolved overwhelmed me and I told Intuit something along the following: -> I'm not feeling comfortable with this relationship anymore and I would like you to forget I exist. I don't want to receive phone calls or emails. While I can afford to pay, people who can't afford to pay deserve the same quality of service as everyone else. +> If you can't provide the same level and style of customer service to all customers, including those on the free account, then you shouldn't have the free account. Please cancel my accounts and remove all my information from your records. + +I invoked language from various consumer protection acts including [.General Data Protection Regulation](GDPR) (despite not living in Europe) and [.California Consumer Protection Act](CCPA) (despite not living in California). Eventually we managed to cancel 8fold's status as an authorized Quickbooks dealer, along with a couple of business accounts, and about three or four personal accounts; I said: + +> I'm not feeling comfortable with this relationship anymore and I would like you to forget I exist. I don't want to receive phone calls or emails. While I can afford to pay, people who can't afford to pay deserve the same quality of service as those who can, or, the free account should be removed. Oddly enough, customer retention called me the next day. Which puts me in an awkward position because I believe feedback is important, however, I also stated my boundaries; no calls or emails. I remember telling the agent something like: > Please understand this isn't about you, this is about Intuit. I used to work in a call center and I understand how it can be. With that said, what part of 'don't initiate contact with me by any means' was unclear? +I did give them feedback despite that being the conversation opening. + Which brings us to the IRS. -For years I used Intuit to file my taxes. When I was looking through my records I realized I didn't have copies of a few of my tax returns. I wasn't about to try and call Intuit or sign in to any of my accounts, which I was (and am) pretty sure have not been deleted despite me requesting Intuit do so. +For years I used Intuit to file my taxes. When I was looking through my records I realized I didn't have copies for a few of my tax returns. I wasn't about to try and call Intuit or sign in to any of my accounts, which I was (and am) sure have not been deleted despite me requesting Intuit delete them (and I still receive emails occasionally). -Enter [IRS Form 4506](https://www.irs.gov/forms-pubs/about-form-4506). You can request up to 8 past returns for 43 [.USD](United States Dollars) each. I went ahead and ordered from 2020 back to 2012 whether I had that return in my files or not. +Enter [IRS Form 4506](https://www.irs.gov/forms-pubs/about-form-4506). You can request up to 8 past returns for 43 [.United States Dollars](USD) each. I went ahead and ordered from 2020 back to 2012 whether I had that return in my files or not. -A few months later I received the note from the IRS saying I had unreported, taxable income from my mother's death and that I owed taxes for that plus fees and penalties; the amount was almost 15,000 USD. The impact here being that my request for returns spurred what, for me, feels like an audit, but is probably more aptly described as a review. +A few months later I received the note from the IRS saying I had substantial unreported, taxable income from my mother's death and owed taxes on it plus fees and penalties; the amount was almost 15,000 USD. The impact here being my request for returns spurred what, for me, feels like an audit, but is probably more aptly described as a review. I neglected to send and reference an [IRS 1099-R Form](https://www.irs.gov/pub/irs-pdf/f1099r_21.pdf) with my 2020 taxes; my fault. However, the bank where the annuity came from did send a copy of the form to the IRS. Box 2a, the one specifying how much of the distribution is taxable, was left blank. Under normal circumstances, blank means zero on tax forms. However, in this particular case it was apparently read as "all of it." -Contacted an accountant who was kind enough to explain things to me (without charge). Contacted the bank and asked them to update the form to specifically say zero; they did. Took all of that along with other letters stating the distribution is not taxable income and faxed them to the IRS. I believe I was given 30 days from the time stamped on the first letter to respond; that's a pretty good sense of urgency and I think I did it within 10 days. +Contacted an accountant who was kind enough to explain things to me (without charge). Contacted the bank and asked them to update the form to specifically say zero; they did. Took all of those documents along with other letters stating the distribution is not taxable income and faxed them to the IRS. I believe I was given 30 days from the time stamped on the first letter to respond; that's a pretty good sense of urgency and I think I did it within 10 days. Received a letter saying the IRS would respond within 90 days. -Two days after the ninetieth day I received another letter date stamped on the ninetieth day informing me that it was taking longer than normal and the IRS was extending their own deadline by another 90 days; so, I get 30 days, they're taking up to six months. At this point, between the time and money spent by myself and the IRS, we've probably exceeded the payment I submitted with the 4506 and whatever the proposed owed taxes and fees would be. +Two days after the ninetieth day I received another letter date stamped on the ninetieth day informing me it was taking longer than normal and the IRS was extending their own deadline by another 90 days; so, I get 30 days, they're taking up to six months. At this point, between the time and money spent by myself and the IRS, we've probably exceeded the payment I submitted with the 4506 and whatever the proposed owed taxes and fees would be. Figuring not to have much say in the matter, I guess I'll keep holding all this cash, which is causing me to no longer be tracking with market fluctuations; frustrating. (See previous entries for more details on that.) -Speaking of trying to sever ties with folks, a few years ago I started an HSA with Bank of America. When I got laid off, I couldn't continue making contributions and the account started getting feed for inactivity. I took it as a learning experience and wrote the account off as being feed out of existence and would do better due diligence in the future. I suppose I could've closed the account, but that would mean figuring out the tax thing related to early withdrawal of non-medial-related funds and I decided there wasn't enough money in the account to bother. When I rejoined the same employer a year later I don't think they offered an HSA plan. I was pretty livid with Bank of America but, again, just chalked it up as a learning experience. +Speaking of trying to sever ties with folks, a few years ago I started an HSA with Bank of America. When I got laid off, I couldn't continue making contributions and the account started getting feed for inactivity along with administration fees. + +I took it as a learning experience and wrote the account off as being feed out of existence and would do better due diligence in the future. I suppose I could've closed the account, but that would mean figuring out the tax thing related to early withdrawal of non-medical-related funds and I decided there wasn't enough money in the account to bother. + +When I rejoined the same employer a year later I don't think they offered an HSA plan. I was pretty livid with Bank of America but, again, just chalked it up as a learning experience. -I signed up for an HSA with my current employer, however, for some reason no contributions were going toward it for the past two years and I wasn't paying enough attention to realize it. (When I was in debt I didn't pay a lot of attention to my finances, for better and for worse.) +I signed up for an HSA with my current employer. For some reason no contributions were going toward it for the past two years and I wasn't paying enough attention to realize it. (When I was in debt I didn't pay a lot of attention to my finances, for better and for worse.) In 2021 I decided to change that. @@ -81,11 +91,13 @@ I went to Bank of America and grabbed their form. I filled it out. As part of th > Transferring FROM Bank of America TO HealthSavings Administrators. -Quick aside: There's a glitch in the financial services industry. I can write a check on Monday, have it hit my account on Tuesday, and rack up five different fees in a matter of seconds if funds aren't available. Further, I can submit a transfer from my bank to a brokerage account on Monday, have it taken out of my bank on Tuesday, and invested by the end of the same day. (Finally, I can request a loan or credit card and start spending that money usually within a few hours.) However, most other things will take at least a month. +Quick aside: There's a glitch in the financial services industry. We can write a check on Monday, have it hit the account on Tuesday, and rack up five different fees in a matter of seconds if funds aren't available. Further, I can submit a transfer from my bank to a brokerage account on Monday, have it taken out of my bank on Tuesday, and invested by the end of the same day. (Finally, I can request a loan or credit card and start spending that money usually within a few hours.) However, most other things will take at least a month. Anyhoo. -I got paid and went to contribute to my HSA one day. Come to find out, I had no money and my account was being closed at my request. Apparently, what I was supposed to do was get a form from HealthSavings Administrators to send to Bank of America, not the other way around. I explained to the HealthSavings Administrators that it wasn't a dealbreaker because I was the idiot, however, it would have been nice if they would have looked at the form and realized they were about to do the exact opposite of what was in the comment field. I had a similar conversation with Bank of America. +I got paid and went to contribute to my HSA one day. Come to find out, I had no money and my account was being closed at my request. + +Apparently, what I was supposed to do was get a form from HealthSavings Administrators to send to Bank of America, not the other way around. I explained to the HealthSavings Administrators that it wasn't a dealbreaker because I was the idiot, however, it would have been nice if they would have looked at the form and realized they were about to do the exact opposite of what was in the comment field. I had a similar conversation with Bank of America. The agent assured me it was taken care of. My account would be reopened. My contributions would be put back and the money from Bank of America would be transferred. Two weeks later, went to make a contribution, come to find out it wasn't resolved; in fact, it hadn't even been started. I ended up on the line with the same agent who gave me the assurances during the previous call. @@ -97,19 +109,23 @@ Then I got hit with a fee from HealthSavings Administrators and I honestly wasn' Strike two. -Then I got hit with another fee. I called again and explained the situation and how I called before and asked if there were any other fees. I explained while I wasn't living in squalor for most my life, I spent much of my life in a position of subsistence and I had just gotten out of debt and was trying to prepare for a different life and relationship with money. Further, all of this wasn't making me feel very good. Believe the direct quote was: +Then I got hit with another, higher fee. + +I called again and explained the situation and how I called before and asked if there were any other fees. I explained while I wasn't living in squalor for most my life, I spent much of my life in a position of subsistence and I had just gotten out of debt and was trying to prepare for a different life and relationship with money. Further, all of this wasn't making me feel very good. Believe the direct quote was: > I come from a long line of subsistence farmers and ranchers who instilled a deep skepticism of bankers. I no longer feel I can trust you with my money. Strike three. -Opened an HSA brokerage account with someone else and started shoveling money over there. Waited for value of the account with HealthSavings Administrators to hit a point where I could cover the cost of the check they would cut for closing my account. +Opened an HSA brokerage account with someone else and started shoveling money over there. I was waiting for the value of the account with HealthSavings Administrators to hit a point where I could cover the cost of the check they would cut for closing my account. -Quick aside: It is the twenty-first century. Paper-trail doesn't mean actual paper anymore. I get free checks from my credit unions all the time. Even if it's a cashier's check I can get it for free. Again, when it comes to the financial services industry when I'm doing something that's in the interest of the institution, seems like it can happen in a matter of a day or two, if not in seconds. However, if I'm doing something that maybe isn't in their best interest, it takes weeks and there are fees. So frustrating. +Quick aside: It is the twenty-first century. Paper-trail doesn't mean actual paper anymore. I get free checks from my credit unions all the time. Even if it's a cashier's check I can get it for free. And, it’s the twenty-first century, why a check? Especially when the accounts have both a routing and a transaction-enabled account number? Again, when it comes to the financial services industry when I'm doing something that's in the interest of the institution, seems like it can happen in a matter of a day or two, if not seconds. However, if I'm doing something that maybe isn't in their best interest, it takes weeks (or months) and there are fees. So frustrating. Moving on. -The value reached roughly that point where it was my initial deposits (cost basis) plus the cost of the check. I sold the index fund investment and converted everything to cash; thereby, increasing the total amount of cash in my overall portfolio. I went to my other HSA provider and filled out their online form, which they would submit to HealthSavings Administrators. When I talked with the agent from the HSA provider I plan on keeping for now, they said it could take three to five weeks. +It took until roughly November when the market value was the total of my cash deposits plus the 25 USD for the check. + +I sold the index fund investment converting everything to cash; thereby, increasing the total amount of cash in my overall portfolio. I went to my other HSA provider and filled out their online form, which they would submit to HealthSavings Administrators electronically. When I talked with the agent from the HSA provider I plan on keeping for now, they said it could take three to five weeks. Fast-forward four weeks, basically the last week of 2021 I called my HSA provider to check status, nothing. Called HealthSavings Administrators who said: @@ -119,7 +135,7 @@ Strike four and fuck you. Five or six interactions depending on how you're counting. Four or five of them have been pleasant from an agent perspective and completely incorrect from a customer perspective. -I didn't let that anger and frustration boil over onto the agent. I also didn't know how much was just "being poor" baggage and how much might be frustrations with other people (like the IRS), so, I just said: +I didn't let that anger and frustration boil over onto the agent. I also didn't know how much was just "born poor" baggage and how much might be frustrations with other people (like the IRS), so, I just said: > Is there a way to escalate this call along with my service history to someone? This hasn't been a good experience for me (interacting with HealthSavings Administrators as a company). And I've gone from saying 'don't use them' if someone asks me if I have thoughts about you to putting my experience out for general consumption (this post). @@ -129,9 +145,9 @@ What I would've said if the agent wasn't both polite and contrite: The agent was nice enough to give me an email address and a fax number (yep, fax machines are still a thing). I contacted the HSA provider I want to keep and explained the situation. They told me it could take a day or two to submit the fax because they're backed up. I waited a day or two and emailed the HealthSavings Administrators agent to see how it's going; almost 48 hours later, no response (not even an, "I'm out on vacation"). -Woke up this morning to check the account. It showed I was locked out. Called to figure out why, it's because the process had already started; of course, it may take 4 to 6 weeks to complete but possibly only two because the process already started. +Woke up this morning to check the account. It showed I was locked out. Called to figure out why, and was told it's because the process had already started; of course, it may take 4 to 6 weeks to complete but possibly only two because the process already started. -Now I don't have access to the account online; so, calling again to figure out how they plan to handle tax documents. I've asked that they send the tax documents both regular mail and email. +Now I don't have access to the account online; so, called again to figure out how they plan to handle tax documents. I've asked that they send the tax documents both regular mail and email. ## Assets @@ -147,13 +163,13 @@ So, beyond the concept of total cost of ownership, why do I rent? [One of my favorite videos](https://youtu.be/q9Golcxjpi8) on the subject does a good job of going over general research-based pros, cons, and considerations. I'll mainly be looking at what I consider the cons for me and my lifestyle; let's begin. -For me, use-assets aren't investments, I'm using them. They have utility in my life other than financial. If I redeem the cash value for the asset, I lose the utility of that particular asset. This often means I will spend some, if not all, of the money redeemed from the sale of the asset to purchase a different, similar asset. While the home contributes to my net worth on the accounting ledger, there is such a thing as being house rich and retirement poor. I could take out a mortgage to "get the equity" in the home out, however, I now have a loan to pay off with interest and there may be fees involved in the financing of the home. Selling a home can take multiple weeks to accomplish and there are typically fees involved; relatively illiquid. Compare this to withdrawing cash from an account or selling investment shares, which are usually available in less than 7 days. Finally, on the topic of "traditional" investment vehicles, they have no other utility beyond being a holder of value. Sure, they may lose value (capital loss), but the same is true of real estate; see [The Great Recession](https://en.wikipedia.org/wiki/Great_Recession) and [The Housing Bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble). What makes houses odd in terms of use-assets is that they tend to go up in value while other use-assets depreciate—unless held for excessively long periods of time; see [Jay Leno's car collection](https://youtu.be/2rpbkPLkNms) estimated at a fair market value of over [150 million [.USD](United States Dollars)](https://www.hotcars.com/most-expensive-cars-in-jay-lenos-car-collection/). With that said, humans tend to favor simple math when it comes to these sorts of things. I paid 5 USD for this and sold it for 10 USD; I made 5 USD, which doesn't include any taxes, fees, maintenance during ownership, and so on (all the [total cost of ownership](/finances/total-cost-of-ownership) things). +For me, use-assets aren't investments, I'm using them. They have utility in my life other than financial. If I redeem the cash value for the asset, I lose the utility of that particular asset. This often means I will spend some, if not all, of the money redeemed from the sale of the asset to purchase a different, similar asset. While the home contributes to my net worth on the accounting ledger, there is such a thing as being house rich and retirement poor. I could take out a mortgage to "get the equity" in the home out, however, I now have a loan to pay off with interest and there may be fees involved in the financing of the home. Selling a home can take multiple weeks to accomplish and there are typically fees involved; relatively illiquid. Compare this to withdrawing cash from an account or selling investment shares, which are usually available in less than 7 days. Finally, on the topic of "traditional" investment vehicles, they have no other utility beyond being a holder of value. Sure, they may lose value (capital loss), but the same is true of real estate; see [The Great Recession](https://en.wikipedia.org/wiki/Great_Recession) and [The Housing Bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble). What makes houses odd in terms of use-assets is that they tend to go up in value while other use-assets depreciate—unless held for excessively long periods of time; see [Jay Leno's car collection](https://youtu.be/2rpbkPLkNms) estimated at a fair market value of over [150 million USD](https://www.hotcars.com/most-expensive-cars-in-jay-lenos-car-collection/). With that said, humans tend to favor simple math when it comes to these sorts of things. I paid 5 USD for this and sold it for 10 USD; I made 5 USD, which doesn't include any taxes, fees, maintenance during ownership, and so on (all the [total cost of ownership](/finances/total-cost-of-ownership) things). That's the big one for me; use-assets aren't investments, they have more value to me as what they are, not what I can sell them for. Now for some of the smaller ones, in no particular order. I appreciate the advice from [The Money Guy Show](https://www.moneyguy.com) when they say owning a home is a long-term consideration. If you're not looking to be there for at least five years, it may be better to have the flexibility afforded by renting housing and not owning. I tend to move every 2 or 3 years. Sometimes it's just from one city to another, but I don't see myself setting up roots, so to speak. -I don't like tinkering or maintenance activities. Generally speaking, I don't modify the places I live in; rarely even painting the walls (or hanging things on them to be honest). So, restrictions in this regard don't typically affect my happiness or experience in a place. I've also never had a landlord deny me the request to do something. Some maintenance falls into the total cost of ownership conversation for another time but to hit on it briefly, if the washing machine needs replaced, I don't typically pay for that. New toilets? Not me. Dishwasher goes out? Not it. Exterior needs painting? Not me either. Some people enjoy theses things, I'm not one of them. +I don't like tinkering or maintenance activities. Generally speaking, I don't modify the places I live in; rarely even painting the walls (or hanging things on them to be honest). So, restrictions in this regard don't typically affect my happiness or experience in a place. I've also never had a landlord deny me the request to do something. Some maintenance falls into the total cost of ownership conversation for another time but to hit on it briefly, if the washing machine needs replaced, I don't typically pay for that. New toilets? Not me. Dishwasher goes out? Not it. Exterior needs painting? Not me either. Yard work (in most cases)? Not me. Some people honestly enjoy these things, I'm not one of them. This one might be a bit more controversial; I like being or knowing who owns the thing I'm using. Ultimately, the federal, state, and local governments own the homes we live in and the land they're on. If you don't pay property taxes, the house and lot will be taken from you. If you don't pay the fees of the Home Owner's Association (if there is one), bad things can happen, up to and including being removed from the community (sounds like eviction from a rental). If you don't pay the mortgage, the bank will seize the house. I can definitively say I own my cellular phone; I can't do that with larger assets like a home or car. With renting an apartment or home I know the landlord. I delegate a lot of responsibility to them so I don't have to think about it or spend my time doing it. (And, just to be clear, I have a lot of say in who I choose as a landlord, so, as long as I don't choose Scrooge, it's been pretty okay.) @@ -161,7 +177,7 @@ This one might be a bit more controversial; I like being or knowing who owns the I'm going to start tracking the paycheck-to-paycheck changes in the FI experimental portfolios. -These portfolios don't have contributions made to them regularly. They also don't have withdrawals taken from them. The purpose is primarily to confirm that fluctuations have the desired result. The Mark 0.0 portfolio should be the most volatile while the Mark 1.0 portfolio should not dip as far down as the Mark 0.0 while keeping decent pace when going up. +These portfolios don't have contributions made to them regularly. They also don't have withdrawals taken from them. The purpose is primarily to confirm that fluctuations have the desired result. The Mark 0.0 portfolio should be the most volatile while the Mark 1.0 portfolio should not dip as far as the Mark 0.0 while keeping decent pace when going up. - Mark 0.0: - Current: 47.71 USD @@ -212,17 +228,19 @@ When it comes to finances I always recommend finding what I call forever-institu That's why I tend to have multiple providers. -My primary financial institution has been my primary institution for almost 30 years. The president recently retired. I'm keeping an eye open for changes that might result to make sure they will continue to be my forever institution. +My primary financial institution has been my primary institution for almost 30 years. The president recently retired. I'm keeping an eye open for negative changes that could result. + +My secondary financial institution is new, however, I believe if things go pear-shaped with my primary I'll be able to easily convert the secondary to being my primary. -My secondary financial institution is new, however, I believe if things go pear-shaped with my primary then I'll be able to easily convert the secondary to being my primary. +My tertiary financial institution has been with me for almost 20 years. They mainly handle my insurance policies. -My tertiary financial institution has been with me for almost 20 years. They handle my insurance policies as well. +My primary credit card is with the secondary institution. My secondary card is through Apple and I've been using their other products and services for over a decade. My tertiary credit card is with the tertiary financial institution. My quaternary credit card is with my primary institution. -My primary credit card is with the secondary institution. My secondary credit card is through Apple and I've been using their other products and services for over a decade. My tertiary credit card is with the tertiary financial institution. My quaternary credit card is with my primary institution. +My business account is with the secondary institution as well. I'm looking to transfer the business credit card to them and close out the one I currently have; mainly because the card isn’t with what I consider a forever-institution. -My business account is with the secondary institution as well. I'm looking to transfer the business credit card to them and close out the one I currently have; mainly because it's not with what I consider a forever-institution. +I'm satisfied with my primary, secondary, and tertiary brokerage providers; however, they're all new to me, so, that could change at any moment. I've had a chance to interact with their customer service multiple times and have had no issues. -I'm satisfied with my primary, secondary, and tertiary brokerage providers; however, they're all new to me, so, that could change at any moment. I've had a chance to interact with their customer service multiple times and have had no issues. My Roth [.Individual Retirement Account](IRA) was with my tertiary institution, however, I wasn't satisfied with the folks they sold that portion of their business to and I transferred those funds to my primary broker. Funny enough, the transfer of my IRA was done electronically, only took a few days, and a couple of phone calls. I was lucky enough to discover a Traditional IRA as well, which was rolled into the primary broker. +My Roth [.Individual Retirement Account](IRA) was with my tertiary institution, however, I wasn't satisfied with the folks they sold that portion of their business to and I transferred those funds to my primary broker. Funny enough, the transfer of my IRA was done electronically, only took a few days, and a couple of phone calls. I was lucky enough to discover a Traditional IRA as well, which was rolled into the primary broker. The HSA provider problem is being resolved. And I dissolved my relationship on that score. @@ -230,14 +248,14 @@ Dropped Intuit like a bad habit and shifted to various financial tools and provi ### Major purchases -Because I'm looking to reduce spending and increase savings I went ahead and purchased a lot of items during the year. New clothes, electronics, household items, and so on. +I’m looking to increase time in the market. So, I want to be able to run lean for a long time, which means I went ahead and did a lot of spending. New clothes, electronics, household items, and so on. -This gave me a chance to look at average useful life and set up my paycheck distributions in such a way that when I need to replace those items, I'll already have the funds available. +This gave me a chance to look at average useful life and set up my paycheck distributions in such a way that when I need to replace those items, I'll already have the funds available and it shouldn’t happen all at once. ### Settling in on numbers -I'm appreciating the lightweight approach to categorizing expenses I've settled on. It's giving me the insights I think are helpful. +I'm appreciating the lightweight approach I’m using for categorizing expenses. It's giving me the insights I think are helpful. For example, I really need to cut down on eating out. Next to housing-related expenses, eating out is my next highest; followed closely by purchasing regular food. -Because of the aforementioned throughout this entry, 2021 will hopefully be an anomaly and 2022 will see more consistency and fall off in certain areas. For example, earlier this year I spent the money to buy into a lifetime membership to an organization. That was over 1,000 USD. That made membership fees my fourth highest category. So, basically, housing, dining, food, then memberships in that order. That's out of the ordinary and shouldn't be the case moving forward. +Because of the aforementioned throughout this entry, 2021 will hopefully be an anomaly and 2022 will see more consistency and fall off in certain areas. For example, earlier this year I spent the money to buy into a lifetime membership to an organization. That was just over 1,000 USD. That made membership fees my fourth highest category. So, basically, housing, dining, groceries, then memberships in that order. That's out of the ordinary and shouldn't be the case moving forward. From 5e81e90683ae732223a65a66c0f0a91012e14cc8 Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Sat, 8 Jan 2022 10:31:27 -0600 Subject: [PATCH 09/16] Update content.md --- .../_20220115/content.md | 36 ++++++++++++++++--- 1 file changed, 32 insertions(+), 4 deletions(-) diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md index de03ebf5..e5b5608e 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md @@ -42,17 +42,41 @@ Contribution limits for some retirement accounts this year have gone up. 1,000 [ The income limits for being able to contribute the full amount to a Roth IRA [has also gone up](https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022) 4,000 USD [compared to 2021](https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2021). The math to figure out the amount you can contribute if you fall into the reduced amount level still seems confusing as hell. If I find myself getting close to that amount, I’ll probably just ask for an insane raise that would push me out of qualifying even after maxing out contributions to other vehicles. +Research seems to indicate lump-sum investing could beat dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). + +Given the last year, it appears there’s a dip in the middle of each month, which is when I’ll plan to do the lump-sum contributions; most likely around the time I file taxes. I’ll continue dollar cost averaging into other accounts. + +Hopefully, the [.Internal Revenue Service](IRS) doesn’t extend their estimate again and finds in my favor. + +### 401k + I’m setting 401k contributions to 17 percent. When I called Fidelity that was the percent they said would get me close over the course of my paychecks without counting bonuses. 15 percent was my estimate based on the 19,500 USD contribution limit and seemed to be a decent sweet spot for the net paycheck amount; less than 15 percent and tax benefit isn't apparent. It also helps ensure I get the full employer match as my plan doesn’t offer a [true-up provision](https://www.forbes.com/sites/ashleaebeling/2017/05/26/beware-these-401k-match-traps/?sh=714f64c391c6). -I’m going to lump-sum into the HSA and Roth IRA at the beginning of the year; not because of returns but because I’m sitting on all that cash. +### HSA -Research seems to indicate lump-sum investing could beat dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). +As I understand it, [HSA contributions](https://healthsavings.com/about-hsas/contributions/) can be front-loaded, back-loaded, or staggered. Last-year, I staggered, which is to say contributed on a regular basis throughout the year up to the limit. Back-loading means I could contribute for the previous tax year up to the filing date. This time, in an effort to reduce my cash position I decided to front-load the contribution; contributing the full amount for the year. -Given the last year, it appears there’s a dip in the middle of each month, which is when I’ll plan to do the lump-sum contributions; most likely around the time I file taxes. I’ll continue dollar cost averaging into other accounts. +The market and my portfolios are down at the moment and I want to take advantage of that dip as much as possible. (I also moved the padding money in my M1 Finance account to the three Pies there.) -Hopefully, the [.Internal Revenue Service](IRS) doesn’t extend their estimate again and finds in my favor. +### Roth IRA + +I'm not sure I will front-load the Roth IRA. + +I have various income streams now and I'm not sure what that could mean for my ability to contribute the full amount. + +The modified adjusted gross income limit for the full amount in 2022 is 125,000 USD. Between HSA and 401k contributions I should be okay. + +With that said, the other revenue streams might be increasing. 8fold is pretty consistent and we don't have a lot in the way of expenses. Book sales still happen occasionally coupled with other contract work. And I'm looking to start promoting and selling my artwork this year. + +Therefore, I'm starting to think I'd rather be safe than sorry. Basically, I would start back-loading the Roth IRA. Building up to 6,000 USD at least throughout 2022 and seeing what I can contribute when I file taxes during 2023. It's almost a hybrid of what I was thinking of doing this year; if I didn't have all this cash sitting around. + +What I was planning to do this year was to start contributing to the Roth IRA after filing taxes for 2021. So, from roughly April of 2022 I would start contributing which would mean I would not have contributed the full amount by the end of 2022 and could do the math in 2023 to see if I could max it out or would need to shift to putting the money in the Traditional IRA or taxable account. + +### Traditional IRA + +The initial deposit I did from the transfer is still doing its thing. ## Too much cash @@ -66,6 +90,10 @@ That leaves the dip in the market and the cash. Unfortunately, the market is rec With that as the rationale, I’m blaming holding so much cash as the issue and will be doing what I can to rectify the situation with a quickness while still allowing for the possibility the IRS will find I owe money somehow or someway. +## Taxes + +Given the tax-related situation that's happening right now I'm planning to create a list of all the folks I may receive tax-related forms from as a sort of checklist. + ## FI experiments I started multiple portfolios as a single deposit experiment as a sort of control group for the plan going from now until becoming financially independent. From 47bace0e56cf9d9e47ddb102d695c34ddaf536b8 Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Sat, 8 Jan 2022 11:02:36 -0600 Subject: [PATCH 10/16] preparing: 20220115 paycheck --- .../_20220115/content.md | 30 +++++++++++-------- 1 file changed, 18 insertions(+), 12 deletions(-) diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md index e5b5608e..d237265c 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md @@ -26,7 +26,7 @@ fi-experiments: {!! data !!} -When my net worth was negative, I wasn't too worried about legacy and documenting things; probably not the wisest course of action. My finances would be pretty easy for anyone to deal with and close out my business with the living. Now though, it's more complex. +When my net worth was negative, I wasn't too worried about legacy and documenting things; probably not the wisest course of action. My finances would be pretty easy for anyone to deal with and close out my business with the living. Now it's more complex. Brokerage accounts, retirement accounts, personal and business accounts, and so on. After looking around for solutions to help automate and digitize this process, I came across three things: @@ -34,25 +34,31 @@ Brokerage accounts, retirement accounts, personal and business accounts, and so 2. [FidSafe](https://www.fidsafe.com): An as of now free place to store documents and grant access to those documents via encrypted cloud storage. 3. [Living Together by NOLO](https://www.nolo.com/legal-encyclopedia/living-together): Becca and I have no plans to get married, however, this can be problematic in the United States (not sure about elsewhere) when it comes to hospital stays and decision making on behalf of each other. -During 2021, I didn't get much traction on putting legacy documents together because that wasn't [the focus for that year](https://joshbruce.com/finances/building-wealth-paycheck-to-paycheck/20220101/). Hoping 2022 wil be different. +During 2021, I didn't get much traction on putting legacy documents together because that wasn't [the focus for that year](https://joshbruce.com/finances/building-wealth-paycheck-to-paycheck/20220101/). Hoping 2022 will be different. ## Retirement accounts -Contribution limits for some retirement accounts this year have gone up. 1,000 [.United States Dollars](USD) [for the 401k](https://www.irs.gov/newsroom/irs-announces-401k-limit-increases-to-20500). Only 50 USD [for the [.Health Savings Account](HSA)](https://www.fool.com/retirement/plans/hsa/contribution-limits/). No change for the Roth [Individual Retirement Account](IRA). +Contribution limits for some retirement accounts have gone up for 2022. -The income limits for being able to contribute the full amount to a Roth IRA [has also gone up](https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022) 4,000 USD [compared to 2021](https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2021). The math to figure out the amount you can contribute if you fall into the reduced amount level still seems confusing as hell. If I find myself getting close to that amount, I’ll probably just ask for an insane raise that would push me out of qualifying even after maxing out contributions to other vehicles. +- 1,000 [.United States Dollars](USD) [for the 401k](https://www.irs.gov/newsroom/irs-announces-401k-limit-increases-to-20500). +- Only 50 USD [for the [.Health Savings Account](HSA)](https://www.fool.com/retirement/plans/hsa/contribution-limits/). +- No change for the Roth [Individual Retirement Account](IRA). -Research seems to indicate lump-sum investing could beat dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). +The income limits for contributing the full amount to a Roth IRA [has gone up](https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022) 4,000 USD [compared to 2021](https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2021). -Given the last year, it appears there’s a dip in the middle of each month, which is when I’ll plan to do the lump-sum contributions; most likely around the time I file taxes. I’ll continue dollar cost averaging into other accounts. +The math to figure out the amount you can contribute if you fall into the reduced amount level still seems confusing as hell. If I find myself getting close to that amount, I’ll probably just ask for an insane raise that would push me out of qualifying even after maxing out contributions to other vehicles. -Hopefully, the [.Internal Revenue Service](IRS) doesn’t extend their estimate again and finds in my favor. +Historical research indicates lump-sum investing could beat dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). + +If personal history over 2021 is any indication, there’s usually a dip in the middle of the month. This is when I should do the lump-sum deposits to reduce this cash drag. + +Hopefully, the [.United States Internal Revenue Service](IRS) doesn’t extend their estimate again and finds in my favor. ### 401k I’m setting 401k contributions to 17 percent. -When I called Fidelity that was the percent they said would get me close over the course of my paychecks without counting bonuses. 15 percent was my estimate based on the 19,500 USD contribution limit and seemed to be a decent sweet spot for the net paycheck amount; less than 15 percent and tax benefit isn't apparent. It also helps ensure I get the full employer match as my plan doesn’t offer a [true-up provision](https://www.forbes.com/sites/ashleaebeling/2017/05/26/beware-these-401k-match-traps/?sh=714f64c391c6). +When I called Fidelity that was the percent they said would get me close over the course of my paychecks without counting bonuses. 15 percent was my estimate based on the 19,500 USD contribution limit and seemed to be a decent sweet spot for the net paycheck amount; less than 15 percent and tax benefit isn't as apparent. It also helps ensure I get the full employer match as my plan doesn’t offer a [true-up provision](https://www.forbes.com/sites/ashleaebeling/2017/05/26/beware-these-401k-match-traps/?sh=714f64c391c6). ### HSA @@ -62,11 +68,11 @@ The market and my portfolios are down at the moment and I want to take advantage ### Roth IRA -I'm not sure I will front-load the Roth IRA. +I'm not sure I’ll front-load the Roth IRA. -I have various income streams now and I'm not sure what that could mean for my ability to contribute the full amount. +I have multiple income streams and I'm not sure what that could mean for my ability to contribute the full amount in the future. -The modified adjusted gross income limit for the full amount in 2022 is 125,000 USD. Between HSA and 401k contributions I should be okay. +The modified adjusted gross income limit for the full amount in 2022 is 125,000 USD. Between HSA and 401k contributions I should be more than okay. With that said, the other revenue streams might be increasing. 8fold is pretty consistent and we don't have a lot in the way of expenses. Book sales still happen occasionally coupled with other contract work. And I'm looking to start promoting and selling my artwork this year. @@ -86,7 +92,7 @@ Three things happened during the drop in success probability. The first is I sta I’m discounting the impact of the allocation for now because the success probability didn’t change while I was moving toward the allocation; the drop seemed to happen almost over night. -That leaves the dip in the market and the cash. Unfortunately, the market is recovering just fine and every standard portfolio provided by Personal Capital is outperforming mine by a few percentage points whereas before they were all within a couple of percentage points. +That leaves the dip in the market and the cash. Watching the ups and downs over the last couple of months, my total portfolio is no longer tracking as closely as it once did. Now it’s a difference of a few percentage points. Initially it was only a couple. With that as the rationale, I’m blaming holding so much cash as the issue and will be doing what I can to rectify the situation with a quickness while still allowing for the possibility the IRS will find I owe money somehow or someway. From fed58b480418aaaa9d2bd31c9240a0241ce9c40b Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Mon, 10 Jan 2022 15:43:21 -0600 Subject: [PATCH 11/16] Update content.md --- .../building-wealth-paycheck-to-paycheck/_20220115/content.md | 4 ++++ 1 file changed, 4 insertions(+) diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md index d237265c..b0b3b454 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md @@ -96,6 +96,10 @@ That leaves the dip in the market and the cash. Watching the ups and downs over With that as the rationale, I’m blaming holding so much cash as the issue and will be doing what I can to rectify the situation with a quickness while still allowing for the possibility the IRS will find I owe money somehow or someway. +With that said, I decided to throw some of the cash into the extended market fund in my taxable brokerage account. This should cause the fair market value of each holding to be within the bands at the highest level; buying the dip (compared to highest fair market value to date), as it were. + +My insurance deductibles pie has also hit the target value. I plan to start an emergency fund pie as well. The target value for the emergency fund pie will be roughly 3 to 6 months and use either the Mark 1.1 or 1.2 setups. I'll also continue holding 3 to 6 months worth of cash as runway. + ## Taxes Given the tax-related situation that's happening right now I'm planning to create a list of all the folks I may receive tax-related forms from as a sort of checklist. From 7501e614d59ccaa4e13fec2b814e6e808eea94d4 Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Tue, 11 Jan 2022 11:09:13 -0600 Subject: [PATCH 12/16] Update content.md --- .../20220101/content.md | 36 +++++++++---------- 1 file changed, 18 insertions(+), 18 deletions(-) diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md index 11faba27..0fcd7dea 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/20220101/content.md @@ -23,7 +23,7 @@ And, here we go... The [.United States Internal Revenue Service](IRS) sent me a letter notifying me they would like 90 more days. The date the letter was issued was on the ninetieth day from the previous letter. So, yeah, not sure I’m going to continue holding this much cash; more below. -The request to transfer my [.Health Savings Account](HSA) from HealthSavings Administrators wasn’t completed within the three to five weeks. When I called HealthSavings Administrators they explained they’ve been having issues processing electronic requests and I should request my preferred provider fax the documents. What a cluster fuck this experience has been; more below. With that said, I hit the maximum contribution for the HSA with the paycheck on the seventeenth; therefore, can't make another contribution with this check. +The request to transfer my [.Health Savings Account](HSA) from HealthSavings Administrators wasn’t completed within the three to five weeks. When I called HealthSavings Administrators they explained they’ve been having issues processing electronic requests and I should request my preferred provider fax the documents. What a cluster fuck this experience has been; more below. With that said, I hit the maximum contribution for the HSA with the paycheck on the seventeenth; therefore, can't make another contribution with this check. Found out I actually didn’t go over the contribution limit for the year on the 401k. It appears like I did because of the difference between the calendar year and the tax year. The first contribution in 2021 was made against the 2020 tax year. So, maxed out my 401k for the first time. I hit the maximum with the paycheck on the seventeenth as well, so, the check on the thirtieth is a bit larger than I’m used to compared to the rest of the year. @@ -33,9 +33,9 @@ We’re planning on moving. I used some of the cash I’ve had lying around to p The following is venting frustrations, not trying to throw anyone under the bus as it were. My experiences are not presented as indicative of the experience for all. I don't believe there is malicious intent or anything like that, but this was the impact these experiences had on me. I also accept my contributions to the experiences. -Early in 2021 I had a serious falling out with [Intuit](https://www.intuit.com). +Early in 2021 I had a serious falling out with [Intuit](https://www.intuit.com). -My business account was a paid plan and we were an authorized dealer. For personal accounting I was on a free plan. +My business account was a paid plan and we were an authorized dealer. For personal accounting I was on a free plan. When I have direct questions about something I prefer to talk to a human by phone and ask direct questions instead of getting overwhelmed trying to read and search forums and documentation. At the time, however, only paid accounts were permitted to call (or chat with) customer service. Eventually the frustration of getting the issue resolved overwhelmed me and I told Intuit something along the following: @@ -61,7 +61,7 @@ A few months later I received the note from the IRS saying I had substantial unr I neglected to send and reference an [IRS 1099-R Form](https://www.irs.gov/pub/irs-pdf/f1099r_21.pdf) with my 2020 taxes; my fault. However, the bank where the annuity came from did send a copy of the form to the IRS. Box 2a, the one specifying how much of the distribution is taxable, was left blank. Under normal circumstances, blank means zero on tax forms. However, in this particular case it was apparently read as "all of it." -Contacted an accountant who was kind enough to explain things to me (without charge). Contacted the bank and asked them to update the form to specifically say zero; they did. Took all of those documents along with other letters stating the distribution is not taxable income and faxed them to the IRS. I believe I was given 30 days from the time stamped on the first letter to respond; that's a pretty good sense of urgency and I think I did it within 10 days. +Contacted an accountant who was kind enough to explain things to me (without charge). Contacted the bank and asked them to update the form to specifically say zero; they did. Took all of those documents along with other letters stating the distribution is not taxable income and faxed them to the IRS. I believe I was given 30 days from the time stamped on the first letter to respond; that's a pretty good sense of urgency and I think I did it within 10 days. Received a letter saying the IRS would respond within 90 days. @@ -69,9 +69,9 @@ Two days after the ninetieth day I received another letter date stamped on the n Figuring not to have much say in the matter, I guess I'll keep holding all this cash, which is causing me to no longer be tracking with market fluctuations; frustrating. (See previous entries for more details on that.) -Speaking of trying to sever ties with folks, a few years ago I started an HSA with Bank of America. When I got laid off, I couldn't continue making contributions and the account started getting feed for inactivity along with administration fees. +Speaking of trying to sever ties with folks, a few years ago I started an HSA with Bank of America. When I got laid off, I couldn't continue making contributions and the account started getting feed for inactivity along with administration fees. -I took it as a learning experience and wrote the account off as being feed out of existence and would do better due diligence in the future. I suppose I could've closed the account, but that would mean figuring out the tax thing related to early withdrawal of non-medical-related funds and I decided there wasn't enough money in the account to bother. +I took it as a learning experience and wrote the account off as being feed out of existence and would do better due diligence in the future. I suppose I could've closed the account, but that would mean figuring out the tax thing related to early withdrawal of non-medical-related funds and I decided there wasn't enough money in the account to bother. When I rejoined the same employer a year later I don't think they offered an HSA plan. I was pretty livid with Bank of America but, again, just chalked it up as a learning experience. @@ -95,7 +95,7 @@ Quick aside: There's a glitch in the financial services industry. We can write a Anyhoo. -I got paid and went to contribute to my HSA one day. Come to find out, I had no money and my account was being closed at my request. +I got paid and went to contribute to my HSA one day. Come to find out, I had no money and my account was being closed at my request. Apparently, what I was supposed to do was get a form from HealthSavings Administrators to send to Bank of America, not the other way around. I explained to the HealthSavings Administrators that it wasn't a dealbreaker because I was the idiot, however, it would have been nice if they would have looked at the form and realized they were about to do the exact opposite of what was in the comment field. I had a similar conversation with Bank of America. @@ -109,7 +109,7 @@ Then I got hit with a fee from HealthSavings Administrators and I honestly wasn' Strike two. -Then I got hit with another, higher fee. +Then I got hit with another, higher fee. I called again and explained the situation and how I called before and asked if there were any other fees. I explained while I wasn't living in squalor for most my life, I spent much of my life in a position of subsistence and I had just gotten out of debt and was trying to prepare for a different life and relationship with money. Further, all of this wasn't making me feel very good. Believe the direct quote was: @@ -123,7 +123,7 @@ Quick aside: It is the twenty-first century. Paper-trail doesn't mean actual pap Moving on. -It took until roughly November when the market value was the total of my cash deposits plus the 25 USD for the check. +It took until roughly November when the market value was the total of my cash deposits plus the 25 USD for the check. I sold the index fund investment converting everything to cash; thereby, increasing the total amount of cash in my overall portfolio. I went to my other HSA provider and filled out their online form, which they would submit to HealthSavings Administrators electronically. When I talked with the agent from the HSA provider I plan on keeping for now, they said it could take three to five weeks. @@ -182,35 +182,35 @@ These portfolios don't have contributions made to them regularly. They also don' - Mark 0.0: - Current: 47.71 USD - Previous: 47.71 USD - - Change: 0 USD + - Change: 0 percent - Mark 0.2: - Current: 43.83 USD - Previous: 43.83 USD - - Change: 0 USD + - Change: 0 percent - Mark 0.4: - Current: 43.74 USD - Previous: 43.74 USD - - Change: 0 USD + - Change: 0 percent - Mark 0.6: - Current: 43.54 USD - Previous: 43.54 USD - - Change: 0 USD + - Change: 0 percent - Mark 0.8: - Current: 43.36 USD - Previous: 43.36 USD - - Change: 0 USD + - Change: 0 percent - Mark 1.0: - Current: 46.87 USD - Previous: 46.87 USD - - Change: 0 USD + - Change: 0 percent - Mark 1.1: - Current: 46.76 USD - Previous: 46.76 USD - - Change: 0 USD + - Change: 0 percent - Mark 1.2: - Current: 46.73 USD - Previous: 46.73 USD - - Change: 0 USD + - Change: 0 percent ## End or year reflections @@ -238,7 +238,7 @@ My primary credit card is with the secondary institution. My secondary card is t My business account is with the secondary institution as well. I'm looking to transfer the business credit card to them and close out the one I currently have; mainly because the card isn’t with what I consider a forever-institution. -I'm satisfied with my primary, secondary, and tertiary brokerage providers; however, they're all new to me, so, that could change at any moment. I've had a chance to interact with their customer service multiple times and have had no issues. +I'm satisfied with my primary, secondary, and tertiary brokerage providers; however, they're all new to me, so, that could change at any moment. I've had a chance to interact with their customer service multiple times and have had no issues. My Roth [.Individual Retirement Account](IRA) was with my tertiary institution, however, I wasn't satisfied with the folks they sold that portion of their business to and I transferred those funds to my primary broker. Funny enough, the transfer of my IRA was done electronically, only took a few days, and a couple of phone calls. I was lucky enough to discover a Traditional IRA as well, which was rolled into the primary broker. From 9918aafca1367a526581ccfe78568bf3b26e5fc9 Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Tue, 11 Jan 2022 11:20:17 -0600 Subject: [PATCH 13/16] update: FI experiments display --- .../_20220115/content.md | 43 +++---- .../_20220201/content.md | 117 ++++++++++++++++++ .../src/DocumentComponents/FiExperiments.php | 12 +- 3 files changed, 147 insertions(+), 25 deletions(-) create mode 100644 content/public/finances/building-wealth-paycheck-to-paycheck/_20220201/content.md diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md index b0b3b454..7b2d2c06 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md @@ -10,14 +10,15 @@ data: - [US equities - mid, 24, 35, 22.5] - [US equities - large, 24, 35, 37.9] fi-experiments: -- [0.0, 47.71, 47.71, 47.71] -- [0.2, 43.83, 43.83, 43.83] -- [0.4, 43.74, 43.74, 43.74] -- [0.6, 43.54, 43.54, 43.54] -- [0.8, 43.36, 43.36, 43.36] -- [1.0, 46.87, 46.87, 46.87] -- [1.1, 46.76, 46.76, 46.76] -- [1.2, 46.73, 46.73, 46.73] +# label, current, previous, start +- [0.0, 45.87, 47.71, 47.71] +- [0.2, 42.22, 43.83, 43.83] +- [0.4, 42.19, 43.74, 43.74] +- [0.6, 42.12, 43.54, 43.54] +- [0.8, 42.12, 43.36, 43.36] +- [1.0, 45.66, 46.87, 46.87] +- [1.1, 45.54, 46.76, 46.76] +- [1.2, 45.52, 46.73, 46.73] --- # January 15th, 2022 paycheck @@ -26,7 +27,7 @@ fi-experiments: {!! data !!} -When my net worth was negative, I wasn't too worried about legacy and documenting things; probably not the wisest course of action. My finances would be pretty easy for anyone to deal with and close out my business with the living. Now it's more complex. +When my net worth was negative, I wasn't too worried about legacy and documenting things; probably not the wisest course of action. My finances would be pretty easy for anyone to deal with and close out my business with the living. Now it's more complex. Brokerage accounts, retirement accounts, personal and business accounts, and so on. After looking around for solutions to help automate and digitize this process, I came across three things: @@ -36,19 +37,19 @@ Brokerage accounts, retirement accounts, personal and business accounts, and so During 2021, I didn't get much traction on putting legacy documents together because that wasn't [the focus for that year](https://joshbruce.com/finances/building-wealth-paycheck-to-paycheck/20220101/). Hoping 2022 will be different. -## Retirement accounts +## Retirement accounts -Contribution limits for some retirement accounts have gone up for 2022. +Contribution limits for some retirement accounts have gone up for 2022. -- 1,000 [.United States Dollars](USD) [for the 401k](https://www.irs.gov/newsroom/irs-announces-401k-limit-increases-to-20500). -- Only 50 USD [for the [.Health Savings Account](HSA)](https://www.fool.com/retirement/plans/hsa/contribution-limits/). +- 1,000 [.United States Dollars](USD) [for the 401k](https://www.irs.gov/newsroom/irs-announces-401k-limit-increases-to-20500). +- Only 50 USD [for the [.Health Savings Account](HSA)](https://www.fool.com/retirement/plans/hsa/contribution-limits/). - No change for the Roth [Individual Retirement Account](IRA). -The income limits for contributing the full amount to a Roth IRA [has gone up](https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022) 4,000 USD [compared to 2021](https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2021). +The income limits for contributing the full amount to a Roth IRA [has gone up](https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022) 4,000 USD [compared to 2021](https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2021). -The math to figure out the amount you can contribute if you fall into the reduced amount level still seems confusing as hell. If I find myself getting close to that amount, I’ll probably just ask for an insane raise that would push me out of qualifying even after maxing out contributions to other vehicles. +The math to figure out the amount you can contribute if you fall into the reduced amount level still seems confusing as hell. If I find myself getting close to that amount, I’ll probably just ask for an insane raise that would push me out of qualifying even after maxing out contributions to other vehicles. -Historical research indicates lump-sum investing could beat dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). +Historical research indicates lump-sum investing could beat dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). If personal history over 2021 is any indication, there’s usually a dip in the middle of the month. This is when I should do the lump-sum deposits to reduce this cash drag. @@ -56,7 +57,7 @@ Hopefully, the [.United States Internal Revenue Service](IRS) doesn’t extend t ### 401k -I’m setting 401k contributions to 17 percent. +I’m setting 401k contributions to 17 percent. When I called Fidelity that was the percent they said would get me close over the course of my paychecks without counting bonuses. 15 percent was my estimate based on the 19,500 USD contribution limit and seemed to be a decent sweet spot for the net paycheck amount; less than 15 percent and tax benefit isn't as apparent. It also helps ensure I get the full employer match as my plan doesn’t offer a [true-up provision](https://www.forbes.com/sites/ashleaebeling/2017/05/26/beware-these-401k-match-traps/?sh=714f64c391c6). @@ -68,7 +69,7 @@ The market and my portfolios are down at the moment and I want to take advantage ### Roth IRA -I'm not sure I’ll front-load the Roth IRA. +I'm not sure I’ll front-load the Roth IRA. I have multiple income streams and I'm not sure what that could mean for my ability to contribute the full amount in the future. @@ -88,7 +89,7 @@ The initial deposit I did from the transfer is still doing its thing. When I was getting back to broke, I never thought I’d say I had too much cash. When I first started tracking things via [Personal Capital](https://www.personalcapital.com), the retirement planning feature had roughly a 98 percent success rate—now it shows 78 percent. -Three things happened during the drop in success probability. The first is I started holding all this cash. The second is a serious dip in the market. The third is the continued change toward my target allocation. +Three things happened during the drop in success probability. The first is I started holding all this cash. The second is a serious dip in the market. The third is the continued change toward my target allocation. I’m discounting the impact of the allocation for now because the success probability didn’t change while I was moving toward the allocation; the drop seemed to happen almost over night. @@ -96,7 +97,7 @@ That leaves the dip in the market and the cash. Watching the ups and downs over With that as the rationale, I’m blaming holding so much cash as the issue and will be doing what I can to rectify the situation with a quickness while still allowing for the possibility the IRS will find I owe money somehow or someway. -With that said, I decided to throw some of the cash into the extended market fund in my taxable brokerage account. This should cause the fair market value of each holding to be within the bands at the highest level; buying the dip (compared to highest fair market value to date), as it were. +With that said, I decided to throw some of the cash into the extended market fund in my taxable brokerage account. This should cause the fair market value of each holding to be within the bands at the highest level; buying the dip (compared to highest fair market value to date), as it were. My insurance deductibles pie has also hit the target value. I plan to start an emergency fund pie as well. The target value for the emergency fund pie will be roughly 3 to 6 months and use either the Mark 1.1 or 1.2 setups. I'll also continue holding 3 to 6 months worth of cash as runway. @@ -106,7 +107,7 @@ Given the tax-related situation that's happening right now I'm planning to creat ## FI experiments -I started multiple portfolios as a single deposit experiment as a sort of control group for the plan going from now until becoming financially independent. +I started multiple portfolios as a single deposit experiment as a sort of control group for the plan going from now until becoming financially independent. The Mark 0.0 portfolio holds the 100 percent stock index fund split. The smaller split is 34 percent in a total stock market fund, which favors large-cap growth. The larger split is 66 percent in a total stock market fund (billed as "extended market"), which favors small- and mid-cap equities. This combination results in a roughly even distribution between small-, mid-, and large-cap stocks. This is in keeping with the [investment policy](/finances/investment-policy/) and the [macro-allocation](/finances/#principles) and time-in, not timing the market principles. diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220201/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220201/content.md new file mode 100644 index 00000000..b0b3b454 --- /dev/null +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220201/content.md @@ -0,0 +1,117 @@ +--- +title: January 15th, 2022 paycheck +created: 20220115 +data: +- [Debt, 0, 0, 0.6] +- [Cash, 5, 10, 15.8] +- [Low correlation, 0, 1, 0.7] +- [Negative correlation, 0, 1, 0.6] +- [US equities - small, 24, 35, 22] +- [US equities - mid, 24, 35, 22.5] +- [US equities - large, 24, 35, 37.9] +fi-experiments: +- [0.0, 47.71, 47.71, 47.71] +- [0.2, 43.83, 43.83, 43.83] +- [0.4, 43.74, 43.74, 43.74] +- [0.6, 43.54, 43.54, 43.54] +- [0.8, 43.36, 43.36, 43.36] +- [1.0, 46.87, 46.87, 46.87] +- [1.1, 46.76, 46.76, 46.76] +- [1.2, 46.73, 46.73, 46.73] +--- + +# January 15th, 2022 paycheck + +{!! dateblock !!} + +{!! data !!} + +When my net worth was negative, I wasn't too worried about legacy and documenting things; probably not the wisest course of action. My finances would be pretty easy for anyone to deal with and close out my business with the living. Now it's more complex. + +Brokerage accounts, retirement accounts, personal and business accounts, and so on. After looking around for solutions to help automate and digitize this process, I came across three things: + +1. [Family Emergency Binder](https://smartmoneymamas.com/ice-binder/): This is the one I actually purchased to get a feel but, if you do a search, you can find a lot of resources along this line. +2. [FidSafe](https://www.fidsafe.com): An as of now free place to store documents and grant access to those documents via encrypted cloud storage. +3. [Living Together by NOLO](https://www.nolo.com/legal-encyclopedia/living-together): Becca and I have no plans to get married, however, this can be problematic in the United States (not sure about elsewhere) when it comes to hospital stays and decision making on behalf of each other. + +During 2021, I didn't get much traction on putting legacy documents together because that wasn't [the focus for that year](https://joshbruce.com/finances/building-wealth-paycheck-to-paycheck/20220101/). Hoping 2022 will be different. + +## Retirement accounts + +Contribution limits for some retirement accounts have gone up for 2022. + +- 1,000 [.United States Dollars](USD) [for the 401k](https://www.irs.gov/newsroom/irs-announces-401k-limit-increases-to-20500). +- Only 50 USD [for the [.Health Savings Account](HSA)](https://www.fool.com/retirement/plans/hsa/contribution-limits/). +- No change for the Roth [Individual Retirement Account](IRA). + +The income limits for contributing the full amount to a Roth IRA [has gone up](https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022) 4,000 USD [compared to 2021](https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2021). + +The math to figure out the amount you can contribute if you fall into the reduced amount level still seems confusing as hell. If I find myself getting close to that amount, I’ll probably just ask for an insane raise that would push me out of qualifying even after maxing out contributions to other vehicles. + +Historical research indicates lump-sum investing could beat dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). + +If personal history over 2021 is any indication, there’s usually a dip in the middle of the month. This is when I should do the lump-sum deposits to reduce this cash drag. + +Hopefully, the [.United States Internal Revenue Service](IRS) doesn’t extend their estimate again and finds in my favor. + +### 401k + +I’m setting 401k contributions to 17 percent. + +When I called Fidelity that was the percent they said would get me close over the course of my paychecks without counting bonuses. 15 percent was my estimate based on the 19,500 USD contribution limit and seemed to be a decent sweet spot for the net paycheck amount; less than 15 percent and tax benefit isn't as apparent. It also helps ensure I get the full employer match as my plan doesn’t offer a [true-up provision](https://www.forbes.com/sites/ashleaebeling/2017/05/26/beware-these-401k-match-traps/?sh=714f64c391c6). + +### HSA + +As I understand it, [HSA contributions](https://healthsavings.com/about-hsas/contributions/) can be front-loaded, back-loaded, or staggered. Last-year, I staggered, which is to say contributed on a regular basis throughout the year up to the limit. Back-loading means I could contribute for the previous tax year up to the filing date. This time, in an effort to reduce my cash position I decided to front-load the contribution; contributing the full amount for the year. + +The market and my portfolios are down at the moment and I want to take advantage of that dip as much as possible. (I also moved the padding money in my M1 Finance account to the three Pies there.) + +### Roth IRA + +I'm not sure I’ll front-load the Roth IRA. + +I have multiple income streams and I'm not sure what that could mean for my ability to contribute the full amount in the future. + +The modified adjusted gross income limit for the full amount in 2022 is 125,000 USD. Between HSA and 401k contributions I should be more than okay. + +With that said, the other revenue streams might be increasing. 8fold is pretty consistent and we don't have a lot in the way of expenses. Book sales still happen occasionally coupled with other contract work. And I'm looking to start promoting and selling my artwork this year. + +Therefore, I'm starting to think I'd rather be safe than sorry. Basically, I would start back-loading the Roth IRA. Building up to 6,000 USD at least throughout 2022 and seeing what I can contribute when I file taxes during 2023. It's almost a hybrid of what I was thinking of doing this year; if I didn't have all this cash sitting around. + +What I was planning to do this year was to start contributing to the Roth IRA after filing taxes for 2021. So, from roughly April of 2022 I would start contributing which would mean I would not have contributed the full amount by the end of 2022 and could do the math in 2023 to see if I could max it out or would need to shift to putting the money in the Traditional IRA or taxable account. + +### Traditional IRA + +The initial deposit I did from the transfer is still doing its thing. + +## Too much cash + +When I was getting back to broke, I never thought I’d say I had too much cash. When I first started tracking things via [Personal Capital](https://www.personalcapital.com), the retirement planning feature had roughly a 98 percent success rate—now it shows 78 percent. + +Three things happened during the drop in success probability. The first is I started holding all this cash. The second is a serious dip in the market. The third is the continued change toward my target allocation. + +I’m discounting the impact of the allocation for now because the success probability didn’t change while I was moving toward the allocation; the drop seemed to happen almost over night. + +That leaves the dip in the market and the cash. Watching the ups and downs over the last couple of months, my total portfolio is no longer tracking as closely as it once did. Now it’s a difference of a few percentage points. Initially it was only a couple. + +With that as the rationale, I’m blaming holding so much cash as the issue and will be doing what I can to rectify the situation with a quickness while still allowing for the possibility the IRS will find I owe money somehow or someway. + +With that said, I decided to throw some of the cash into the extended market fund in my taxable brokerage account. This should cause the fair market value of each holding to be within the bands at the highest level; buying the dip (compared to highest fair market value to date), as it were. + +My insurance deductibles pie has also hit the target value. I plan to start an emergency fund pie as well. The target value for the emergency fund pie will be roughly 3 to 6 months and use either the Mark 1.1 or 1.2 setups. I'll also continue holding 3 to 6 months worth of cash as runway. + +## Taxes + +Given the tax-related situation that's happening right now I'm planning to create a list of all the folks I may receive tax-related forms from as a sort of checklist. + +## FI experiments + +I started multiple portfolios as a single deposit experiment as a sort of control group for the plan going from now until becoming financially independent. + +The Mark 0.0 portfolio holds the 100 percent stock index fund split. The smaller split is 34 percent in a total stock market fund, which favors large-cap growth. The larger split is 66 percent in a total stock market fund (billed as "extended market"), which favors small- and mid-cap equities. This combination results in a roughly even distribution between small-, mid-, and large-cap stocks. This is in keeping with the [investment policy](/finances/investment-policy/) and the [macro-allocation](/finances/#principles) and time-in, not timing the market principles. + +The Mark 1.0 portfolio holds a risk-parity style portfolio split between 50 percent 100 percent stock index fund (see Mark 0.0), 25 percent in negative correlation (long-term treasuries), 13 percent gold, 6 percent commodities, and 3 percent in both United States and international real estate. + +The portfolios between Mark 0.0 and 1.0 start introducing the other components by reducing the amount allocated to the equities. The 1.1 and 1.2 introduce a different commodities setup. Specifically, a different commodities fund at either 6 percent or the entire 13 percent. + +{!! fi-experiments !!} diff --git a/site-dynamic-php/src/DocumentComponents/FiExperiments.php b/site-dynamic-php/src/DocumentComponents/FiExperiments.php index 1ad16e2f..7816eedf 100644 --- a/site-dynamic-php/src/DocumentComponents/FiExperiments.php +++ b/site-dynamic-php/src/DocumentComponents/FiExperiments.php @@ -17,7 +17,9 @@ public static function create(PlainTextFile $file): string $listHeadings = []; foreach ($data as $row) { list($label, $current, $previous, $start) = $row; - $change = $current - $previous; + $previousChange = round((($current - $previous)/$previous)*100, 2); + $startChange = round((($current - $start)/$start)*100, 2); + $listHeadings[] = Element::li( 'Mark ' . $label, @@ -34,12 +36,14 @@ public static function create(PlainTextFile $file): string Element::li( 'change', ': ', - $change + $previousChange, + ' percent' ), Element::li( - 'start', + 'since started tracking', ': ', - $start + $startChange, + ' percent' ) ) ); From 71d923c7ee82a8881a417a5abcc749fd03748757 Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Wed, 12 Jan 2022 19:46:06 -0600 Subject: [PATCH 14/16] update: 20220115 --- .../_20220115/content.md | 10 ++++++++-- 1 file changed, 8 insertions(+), 2 deletions(-) diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md index 7b2d2c06..8df0be45 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md @@ -53,7 +53,7 @@ Historical research indicates lump-sum investing could beat dollar cost averagin If personal history over 2021 is any indication, there’s usually a dip in the middle of the month. This is when I should do the lump-sum deposits to reduce this cash drag. -Hopefully, the [.United States Internal Revenue Service](IRS) doesn’t extend their estimate again and finds in my favor. +The [.United States Internal Revenue Service](IRS) responded. They accepted that the bulk of my inheritance wasn’t taxable income. With that said, there was some interest income earned and I did owe taxes and fees on that amount. A little over 100 USD is a lot better than a few thousand. Luckily, times like these are what the [Taxes account](/finances/budgeting) is for. I transferred the money from the Taxes account to the Expenses account, wrote a check, and sent it certified mail. ### 401k @@ -61,6 +61,8 @@ I’m setting 401k contributions to 17 percent. When I called Fidelity that was the percent they said would get me close over the course of my paychecks without counting bonuses. 15 percent was my estimate based on the 19,500 USD contribution limit and seemed to be a decent sweet spot for the net paycheck amount; less than 15 percent and tax benefit isn't as apparent. It also helps ensure I get the full employer match as my plan doesn’t offer a [true-up provision](https://www.forbes.com/sites/ashleaebeling/2017/05/26/beware-these-401k-match-traps/?sh=714f64c391c6). +I use three funds at the moment; a small-, a mid-, and large-cap. Looking at my portfolio holistically, I’ve increased the percentage of my contribution that goes to the small-cap with the remaining going to the mid; 80-20, respectively. + ### HSA As I understand it, [HSA contributions](https://healthsavings.com/about-hsas/contributions/) can be front-loaded, back-loaded, or staggered. Last-year, I staggered, which is to say contributed on a regular basis throughout the year up to the limit. Back-loading means I could contribute for the previous tax year up to the filing date. This time, in an effort to reduce my cash position I decided to front-load the contribution; contributing the full amount for the year. @@ -99,12 +101,16 @@ With that as the rationale, I’m blaming holding so much cash as the issue and With that said, I decided to throw some of the cash into the extended market fund in my taxable brokerage account. This should cause the fair market value of each holding to be within the bands at the highest level; buying the dip (compared to highest fair market value to date), as it were. -My insurance deductibles pie has also hit the target value. I plan to start an emergency fund pie as well. The target value for the emergency fund pie will be roughly 3 to 6 months and use either the Mark 1.1 or 1.2 setups. I'll also continue holding 3 to 6 months worth of cash as runway. +My insurance deductibles pie has also hit the target value. I plan to start an emergency fund pie as well. The target value for the emergency fund pie will be roughly 3 to 6 months and use either the Mark 1.1 or 1.2 setups. I’m hoping to bring my cash balance to be closer to only one month. + +Over the year, that will increase as I save for a bulk deposit to potentially go to the Roth IRA. ## Taxes Given the tax-related situation that's happening right now I'm planning to create a list of all the folks I may receive tax-related forms from as a sort of checklist. +The schedule for most documents is by the end of February, all tax documents should be available. + ## FI experiments I started multiple portfolios as a single deposit experiment as a sort of control group for the plan going from now until becoming financially independent. From 03c6922e7a6624727a6c86104445a06dc37cee5e Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Fri, 14 Jan 2022 09:04:42 -0600 Subject: [PATCH 15/16] publish: 20220115 paycheck --- .../20220115/content.md | 138 ++++++++++++++++++ .../_20220115/content.md | 118 --------------- content/public/finances/content.md | 3 +- 3 files changed, 140 insertions(+), 119 deletions(-) create mode 100644 content/public/finances/building-wealth-paycheck-to-paycheck/20220115/content.md delete mode 100644 content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/20220115/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/20220115/content.md new file mode 100644 index 00000000..f7de3db0 --- /dev/null +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/20220115/content.md @@ -0,0 +1,138 @@ +--- +title: January 15th, 2022 paycheck +created: 20220115 +data: +- [Debt, 0, 0, 0.5] +- [Cash, 5, 10, 11.1] +- [Low correlation, 0, 1, 0.8] +- [Negative correlation, 0, 1, 0.8] +- [US equities - small, 24, 35, 24.6] +- [US equities - mid, 24, 35, 24.4] +- [US equities - large, 24, 35, 37.4] +fi-experiments: +# label, current, previous, start +- [0.0, 45.19, 47.71, 47.71] +- [0.2, 41.68, 43.83, 43.83] +- [0.4, 41.73, 43.74, 43.74] +- [0.6, 41.75, 43.54, 43.54] +- [0.8, 41.84, 43.36, 43.36] +- [1.0, 45.45, 46.87, 46.87] +- [1.1, 45.35, 46.76, 46.76] +- [1.2, 45.32, 46.73, 46.73] +--- + +# January 15th, 2022 paycheck + +{!! dateblock !!} + +{!! data !!} + +When my net worth was negative, I wasn't too worried about legacy and documenting things; probably not the wisest course of action. My finances would be pretty easy for anyone to deal with and close out my business with the living. Now it's more complex. + +Brokerage accounts, retirement accounts, personal and business accounts, and so on. After looking around for solutions to help automate and digitize this process, I came across three things: + +1. [Family Emergency Binder](https://smartmoneymamas.com/ice-binder/): This is the one I actually purchased to get a feel but, if you do a search, you can find a lot of resources along this line. +2. [FidSafe](https://www.fidsafe.com): An as of now free place to store documents and grant access to those documents via encrypted cloud storage. +3. [Living Together by NOLO](https://www.nolo.com/legal-encyclopedia/living-together): Becca and I have no plans to get married, however, this can be problematic in the United States (not sure about elsewhere) when it comes to hospital stays and decision making on behalf of each other. + +During 2021, I didn't get much traction on putting legacy documents together because that wasn't [the focus for that year](https://joshbruce.com/finances/building-wealth-paycheck-to-paycheck/20220101/). Hoping 2022 will be different. + +## Retirement accounts + +Contribution limits for some retirement accounts up for 2022. + +- 1,000 [.United States Dollars](USD) [for the 401k](https://www.irs.gov/newsroom/irs-announces-401k-limit-increases-to-20500). +- Only 50 USD [for the [.Health Savings Account](HSA)](https://www.fool.com/retirement/plans/hsa/contribution-limits/). +- No change for the Roth [.Individual Retirement Account](IRA). + +The income limits for contributing the full amount to a Roth [Individual Retirement Account](IRA) [has gone up](https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022) 4,000 USD [compared to 2021](https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2021). + +If you fall into the reduced amount level due to income there's still a fair bit of math that's needed. It's still confusing as well. + +Historical research indicates lump-sum investing could beat dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). + +If personal history over 2021 is any indication, there’s usually a dip in the middle of the month. This is when I should do the lump-sum deposits to reduce this cash drag. + +### 401k + +I’m setting 401k contributions to 17 percent. + +Fidelity did a calculation and determined that, without bonuses, this percentage would get me to roughly 20,500 USD over the year, which means I should receive the full employer match (or really close) as the plan doesn't have a [true-up provision](https://www.forbes.com/sites/ashleaebeling/2017/05/26/beware-these-401k-match-traps/?sh=714f64c391c6). The 15 percent I had estimated was based on the 19,500 USD contribution limit. + +### HSA + +As I understand it, [HSA contributions](https://healthsavings.com/about-hsas/contributions/) can be front-loaded, back-loaded, or staggered. Last-year, I staggered, which is to say I contributed on a regular basis throughout the year up to the limit (dollar cost averaging). Back-loading means I could contribute for the previous tax year up to the filing date. This time, in an effort to reduce [my cash position](#too-much-cash) I decided to front-load the contribution; contributing the full amount for the year. + +The market and my portfolios are down at the moment and I want to take advantage of that dip as much as possible as early as possible; [time in the market outweighing timing the market](/finances/#values). + +### Roth IRA + +Decided to shift to back-loading the Roth IRA. + +While my base income from the day-job doesn't cause me to fall into the reduced contribution window, I do plan in starting to sell various products. + +With the regular income; increased, taxable income (dividends); revenue generated by 8fold; and the possibility of income from selling products, I'd rather be safe than sorry. + +The modified adjusted gross income limit for the full amount in 2022 is 125,000 USD. Between HSA and 401k contributions I should be okay. + +Doing a straight back-load is something of a hybrid for what I had been considering before. The plan before 2022 was to wait to start contributing for 2022 until I had paid my taxes. Then contribute about 500 USD per month, which would mean I would still have a gap at the beginning of the year and could lump-sum the difference if I qualified. And, if I only qualified for the reduced amount then I could adjust. Trying to the get the benefits of dollar cost averaging and lump-sum investing seems like a level of complexity that's not really worth it. + +### Traditional IRA + +The initial deposit I did from the transfer is still doing its thing. + +## Too much cash + +I never thought I'd say I had too much cash; especially given my history with money in general and previous negative net worth specifically. Now, I'm starting to see how the concept of too much cash could work. + +When I initially set up [Personal Capital](https://www.personalcapital.com), the retirement planning feature had roughly a 98 percent success probability. Over the last few months it dropped to 78 percent. Three happened that could have contributed to the reduced success probability: + +1. holding cash, +2. decent dip in the equities market, and +3. continuing to balance the portfolio through contributions. + +I'm discounting the impact from balancing into the portfolio because as I was moving toward the allocation prior to the other two events the success probability didn't seem to be dropping. + +Watching the ups and downs in the market and my overall portfolio, I don't seem to be tracking as closely with the total stock market index (the benchmark I use). When dips happen it seems that small- and mid-cap stocks are hit first; a leading indicator of a possible dip in the large-cap stocks. Given I'm balancing into a more even distribution across small-, mid-, and large-cap stocks, I could see this having an impact as the difference between my portfolio and the benchmark has gone from a couple of percentage points difference to a few points difference over the last couple of month. + +When I backtest the portfolio through [Portfolio Visualizer](https://www.portfoliovisualizer.com/backtest-portfolio) though, it still shows the difference being nominal; lower than holding the total stock market, but higher than holding just the extended market. (The [macro-allocation principle](/finances/#principles) seems to still be holding true.) I also appreciate having the two separated index funds because it helps me buy low; especially at the beginning of my journey. If the extended market fund is less than the total market fund compared to the percentage they should be when I do my contribution, then I buy the extended market and vice versa. If I were drawing down on the portfolio, I would sell whatever was up in comparison; thereby, buying low and selling high. + +With that in mind, I think the main factor in the low performance over the last couple of months was holding so much cash. + +Which brings us to the [.Internal Revenue Service](IRS) and how I dramatically decreased my cash position. + +## Taxes + +I've never had issues with the IRS in the past. I've also never received so many taxable income forms before either. As such, as part of the legacy planning, I'm looking to add what tax forms I should expect to receive from various service providers I use. + +Back to reducing my cash position. + +When the IRS said they were extending their deadline for a resolution, I started reducing my cash position: + +1. I front-loaded the maximum contribution to the HSA. I would have started holding back the 150 USD per paycheck until the resolution. +2. I took the padding cash in my M1 Finance account and bought into the various pies. I would have continued contributing to the pies until the IRS came back with a resolution. +3. I took half of what was in my savings account and bought the extended market index fund. + +This got me close to the maximum (what you see above). + +The IRS got back to me and found somewhat in my favor. I didn't owe for the inheritance itself, however, there was taxable, interest income that I did owe for. This reduced the amount owed from thousands of dollars to a little over a hundred. I put the check in the mail on the twelfth. + +When I actually got paid, I did a pretty hard reset on cash. I'm not sure what the percentage will be once everything settles; we'll see with the next paycheck. + +(Hopefully this also means I'll be receiving the returns for the past years I asked for from the IRS.) + +## FI experiments + +I started multiple portfolios as a single deposit, control group to experiment with my portfolio plan going from now until becoming financially independent. + +The Mark 0.0 portfolio holds the 100 percent stock index fund split. The smaller split is 34 percent in a total stock market fund, which favors large-cap growth. The larger split is 66 percent in a total stock market fund (billed as "extended market"), which favors small- and mid-cap equities. This combination results in a roughly even distribution between small-, mid-, and large-cap stocks. This is in keeping with the [investment policy](/finances/investment-policy/) and the [macro-allocation](/finances/#principles) and [time in over timing the market principles]((/finances/#values). + +The Mark 1.0 portfolio holds a risk-parity style portfolio split between 50 percent 100 percent stock index fund (see Mark 0.0), 25 percent in negative correlation (long-term treasuries), and 25 percent in alternatives (13 percent gold, 6 percent commodities, and 3 percent in both United States and international real estate). + +The portfolios between Mark 0.0 and 1.0 start introducing the other components by reducing the amount allocated to the equities. The 1.1 and 1.2 introduce a different commodities setup. Specifically, a different commodities fund at either 6 percent or the entire 13 percent. + +The hypothesis is that when the Mark 0.0 mix is down, it will 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. + +For this paycheck the Mark 0 is down just over 5 percent, however, the Mark 1 mixes are only down 3 percent. + +{!! fi-experiments !!} diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md deleted file mode 100644 index 7b2d2c06..00000000 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/_20220115/content.md +++ /dev/null @@ -1,118 +0,0 @@ ---- -title: January 15th, 2022 paycheck -created: 20220115 -data: -- [Debt, 0, 0, 0.6] -- [Cash, 5, 10, 15.8] -- [Low correlation, 0, 1, 0.7] -- [Negative correlation, 0, 1, 0.6] -- [US equities - small, 24, 35, 22] -- [US equities - mid, 24, 35, 22.5] -- [US equities - large, 24, 35, 37.9] -fi-experiments: -# label, current, previous, start -- [0.0, 45.87, 47.71, 47.71] -- [0.2, 42.22, 43.83, 43.83] -- [0.4, 42.19, 43.74, 43.74] -- [0.6, 42.12, 43.54, 43.54] -- [0.8, 42.12, 43.36, 43.36] -- [1.0, 45.66, 46.87, 46.87] -- [1.1, 45.54, 46.76, 46.76] -- [1.2, 45.52, 46.73, 46.73] ---- - -# January 15th, 2022 paycheck - -{!! dateblock !!} - -{!! data !!} - -When my net worth was negative, I wasn't too worried about legacy and documenting things; probably not the wisest course of action. My finances would be pretty easy for anyone to deal with and close out my business with the living. Now it's more complex. - -Brokerage accounts, retirement accounts, personal and business accounts, and so on. After looking around for solutions to help automate and digitize this process, I came across three things: - -1. [Family Emergency Binder](https://smartmoneymamas.com/ice-binder/): This is the one I actually purchased to get a feel but, if you do a search, you can find a lot of resources along this line. -2. [FidSafe](https://www.fidsafe.com): An as of now free place to store documents and grant access to those documents via encrypted cloud storage. -3. [Living Together by NOLO](https://www.nolo.com/legal-encyclopedia/living-together): Becca and I have no plans to get married, however, this can be problematic in the United States (not sure about elsewhere) when it comes to hospital stays and decision making on behalf of each other. - -During 2021, I didn't get much traction on putting legacy documents together because that wasn't [the focus for that year](https://joshbruce.com/finances/building-wealth-paycheck-to-paycheck/20220101/). Hoping 2022 will be different. - -## Retirement accounts - -Contribution limits for some retirement accounts have gone up for 2022. - -- 1,000 [.United States Dollars](USD) [for the 401k](https://www.irs.gov/newsroom/irs-announces-401k-limit-increases-to-20500). -- Only 50 USD [for the [.Health Savings Account](HSA)](https://www.fool.com/retirement/plans/hsa/contribution-limits/). -- No change for the Roth [Individual Retirement Account](IRA). - -The income limits for contributing the full amount to a Roth IRA [has gone up](https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022) 4,000 USD [compared to 2021](https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2021). - -The math to figure out the amount you can contribute if you fall into the reduced amount level still seems confusing as hell. If I find myself getting close to that amount, I’ll probably just ask for an insane raise that would push me out of qualifying even after maxing out contributions to other vehicles. - -Historical research indicates lump-sum investing could beat dollar cost averaging by 2.3 percent in returns, however, increases the potential for losses; as summarized in [this Forbes article](https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=5d861c917c50). - -If personal history over 2021 is any indication, there’s usually a dip in the middle of the month. This is when I should do the lump-sum deposits to reduce this cash drag. - -Hopefully, the [.United States Internal Revenue Service](IRS) doesn’t extend their estimate again and finds in my favor. - -### 401k - -I’m setting 401k contributions to 17 percent. - -When I called Fidelity that was the percent they said would get me close over the course of my paychecks without counting bonuses. 15 percent was my estimate based on the 19,500 USD contribution limit and seemed to be a decent sweet spot for the net paycheck amount; less than 15 percent and tax benefit isn't as apparent. It also helps ensure I get the full employer match as my plan doesn’t offer a [true-up provision](https://www.forbes.com/sites/ashleaebeling/2017/05/26/beware-these-401k-match-traps/?sh=714f64c391c6). - -### HSA - -As I understand it, [HSA contributions](https://healthsavings.com/about-hsas/contributions/) can be front-loaded, back-loaded, or staggered. Last-year, I staggered, which is to say contributed on a regular basis throughout the year up to the limit. Back-loading means I could contribute for the previous tax year up to the filing date. This time, in an effort to reduce my cash position I decided to front-load the contribution; contributing the full amount for the year. - -The market and my portfolios are down at the moment and I want to take advantage of that dip as much as possible. (I also moved the padding money in my M1 Finance account to the three Pies there.) - -### Roth IRA - -I'm not sure I’ll front-load the Roth IRA. - -I have multiple income streams and I'm not sure what that could mean for my ability to contribute the full amount in the future. - -The modified adjusted gross income limit for the full amount in 2022 is 125,000 USD. Between HSA and 401k contributions I should be more than okay. - -With that said, the other revenue streams might be increasing. 8fold is pretty consistent and we don't have a lot in the way of expenses. Book sales still happen occasionally coupled with other contract work. And I'm looking to start promoting and selling my artwork this year. - -Therefore, I'm starting to think I'd rather be safe than sorry. Basically, I would start back-loading the Roth IRA. Building up to 6,000 USD at least throughout 2022 and seeing what I can contribute when I file taxes during 2023. It's almost a hybrid of what I was thinking of doing this year; if I didn't have all this cash sitting around. - -What I was planning to do this year was to start contributing to the Roth IRA after filing taxes for 2021. So, from roughly April of 2022 I would start contributing which would mean I would not have contributed the full amount by the end of 2022 and could do the math in 2023 to see if I could max it out or would need to shift to putting the money in the Traditional IRA or taxable account. - -### Traditional IRA - -The initial deposit I did from the transfer is still doing its thing. - -## Too much cash - -When I was getting back to broke, I never thought I’d say I had too much cash. When I first started tracking things via [Personal Capital](https://www.personalcapital.com), the retirement planning feature had roughly a 98 percent success rate—now it shows 78 percent. - -Three things happened during the drop in success probability. The first is I started holding all this cash. The second is a serious dip in the market. The third is the continued change toward my target allocation. - -I’m discounting the impact of the allocation for now because the success probability didn’t change while I was moving toward the allocation; the drop seemed to happen almost over night. - -That leaves the dip in the market and the cash. Watching the ups and downs over the last couple of months, my total portfolio is no longer tracking as closely as it once did. Now it’s a difference of a few percentage points. Initially it was only a couple. - -With that as the rationale, I’m blaming holding so much cash as the issue and will be doing what I can to rectify the situation with a quickness while still allowing for the possibility the IRS will find I owe money somehow or someway. - -With that said, I decided to throw some of the cash into the extended market fund in my taxable brokerage account. This should cause the fair market value of each holding to be within the bands at the highest level; buying the dip (compared to highest fair market value to date), as it were. - -My insurance deductibles pie has also hit the target value. I plan to start an emergency fund pie as well. The target value for the emergency fund pie will be roughly 3 to 6 months and use either the Mark 1.1 or 1.2 setups. I'll also continue holding 3 to 6 months worth of cash as runway. - -## Taxes - -Given the tax-related situation that's happening right now I'm planning to create a list of all the folks I may receive tax-related forms from as a sort of checklist. - -## FI experiments - -I started multiple portfolios as a single deposit experiment as a sort of control group for the plan going from now until becoming financially independent. - -The Mark 0.0 portfolio holds the 100 percent stock index fund split. The smaller split is 34 percent in a total stock market fund, which favors large-cap growth. The larger split is 66 percent in a total stock market fund (billed as "extended market"), which favors small- and mid-cap equities. This combination results in a roughly even distribution between small-, mid-, and large-cap stocks. This is in keeping with the [investment policy](/finances/investment-policy/) and the [macro-allocation](/finances/#principles) and time-in, not timing the market principles. - -The Mark 1.0 portfolio holds a risk-parity style portfolio split between 50 percent 100 percent stock index fund (see Mark 0.0), 25 percent in negative correlation (long-term treasuries), 13 percent gold, 6 percent commodities, and 3 percent in both United States and international real estate. - -The portfolios between Mark 0.0 and 1.0 start introducing the other components by reducing the amount allocated to the equities. The 1.1 and 1.2 introduce a different commodities setup. Specifically, a different commodities fund at either 6 percent or the entire 13 percent. - -{!! fi-experiments !!} diff --git a/content/public/finances/content.md b/content/public/finances/content.md index de8e65e2..6d754cb0 100644 --- a/content/public/finances/content.md +++ b/content/public/finances/content.md @@ -27,7 +27,7 @@ The following sections begin with my personal values, principles, practices, and 6. Index funds over managed funds. 7. Index funds over individual stocks and bonds. 8. Small, local businesses over - - large, miltinational businesses over + - large, multinational businesses over - local governments over - state governments over - federal governments. @@ -35,6 +35,7 @@ The following sections begin with my personal values, principles, practices, and - privately held over - publicly traded. 10. Equities (ownership) over bonds (lending). +11. Time in the market over timing the market. ## Principles From cb0f4f37c082339a587185f997806b11775f8acf Mon Sep 17 00:00:00 2001 From: Josh Bruce Date: Fri, 14 Jan 2022 09:13:36 -0600 Subject: [PATCH 16/16] refactor: Extract method for calculating FI experiments --- .../20220115/content.md | 2 +- .../src/DocumentComponents/FiExperiments.php | 16 +++++++++++++--- site-dynamic-php/tests/FileSystem/FinderTest.php | 2 +- 3 files changed, 15 insertions(+), 5 deletions(-) diff --git a/content/public/finances/building-wealth-paycheck-to-paycheck/20220115/content.md b/content/public/finances/building-wealth-paycheck-to-paycheck/20220115/content.md index f7de3db0..a74dc8de 100644 --- a/content/public/finances/building-wealth-paycheck-to-paycheck/20220115/content.md +++ b/content/public/finances/building-wealth-paycheck-to-paycheck/20220115/content.md @@ -131,7 +131,7 @@ The Mark 1.0 portfolio holds a risk-parity style portfolio split between 50 perc The portfolios between Mark 0.0 and 1.0 start introducing the other components by reducing the amount allocated to the equities. The 1.1 and 1.2 introduce a different commodities setup. Specifically, a different commodities fund at either 6 percent or the entire 13 percent. -The hypothesis is that when the Mark 0.0 mix is down, it will 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. +The hypothesis is that when the Mark 0.0 mix is down, it will 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. For this paycheck the Mark 0 is down just over 5 percent, however, the Mark 1 mixes are only down 3 percent. diff --git a/site-dynamic-php/src/DocumentComponents/FiExperiments.php b/site-dynamic-php/src/DocumentComponents/FiExperiments.php index 7816eedf..6cbf61d5 100644 --- a/site-dynamic-php/src/DocumentComponents/FiExperiments.php +++ b/site-dynamic-php/src/DocumentComponents/FiExperiments.php @@ -17,9 +17,8 @@ public static function create(PlainTextFile $file): string $listHeadings = []; foreach ($data as $row) { list($label, $current, $previous, $start) = $row; - $previousChange = round((($current - $previous)/$previous)*100, 2); - $startChange = round((($current - $start)/$start)*100, 2); - + $previousChange = self::calculateChangeBetween($current, $previous); + $startChange = self::calculateChangeBetween($current, $start); $listHeadings[] = Element::li( 'Mark ' . $label, @@ -55,4 +54,15 @@ public static function create(PlainTextFile $file): string } return Element::ul(...$listHeadings)->build(); } + + private static function calculateChangeBetween( + float $first, + float $second + ): float { + $difference = $first - $second; + $decimal = $difference / $second; + $percent = $decimal * 100; + + return round($percent, 2); + } } diff --git a/site-dynamic-php/tests/FileSystem/FinderTest.php b/site-dynamic-php/tests/FileSystem/FinderTest.php index 1393d8c0..8f9af023 100644 --- a/site-dynamic-php/tests/FileSystem/FinderTest.php +++ b/site-dynamic-php/tests/FileSystem/FinderTest.php @@ -12,7 +12,7 @@ final class FinderTest extends LiveContentTestCase { - private const PUBLISHED_COUNT = 47; + private const PUBLISHED_COUNT = 48; private const DRAFT_COUNT = 11;