Hitch Hikers Guide to Ultimate Investing

This is the ultimate guide to investing.  I have discovered the secret to fulfilling your goals and living the life you want to live.

• Step one stand up and walk into the bathroom.  
• Step two look at the person looking back at you and introduce yourself. This person you are looking at is you. Yes you are your worst enemy when it comes to investing.
• Step three make an agreement with that person in the mirror that next time the market goes down and someone gives you a hot stock tip you will walk into that bathroom and tell that person no. Surprising they will agree with you and tell you no.  😜

I know it is silly, but you can really be your worst enemy to your investments. The point of that exercise is to get to know yourself.  The better you know that person in the mirror the better you will be able to stick the course.

Most people’s core does not change from when they were young to adulthood.  Investing is as much about emotion as it is about knowledge.  I mentioned the above as reflection on one’s self to help understand your short falls.   At my core I am a conservative person I like to hedge by bets.  A perfect example to this is how I played video games when I was younger.  I played games like StarCraft of War Craft II they are RTS games.  The object of the game is to build a base and destroy your opponent’s base before they destroy yours.  The way I played was to build a big enough base with a strong defense and build an army that would overwhelm my opponents defenses.  A very safe approach.  The aggressive approach would be to avoid building defense and build your offense quickly to catch your opponent off guard.  A very aggressive approach.  In short know yourself. This is very important to know about yourself. If you invest against your nature it will not go well and you will constantly makes changes.    If you are a conservative person and you invest aggressively i.e 100% stocks 0% bond when the market goes down you will be checking you phone all the time and will probably sell at the low then buy back at the rebound high.  If you are an aggressive investor, but feel you should be well balanced with bond and invest say 60/40 stock/bond you will always feel like you missed out and probably will keep buying and selling.

I follow the Boglehead/Buffet/FI philosophy which is stick to index funds that capture the stock market and invest for the long term.  I prefer to stick to the 3 fund portfolio for diversification reasons.  I don't invest in individual stock much anymore when I do it is the buy and hold forever. The three fund portfolio is allocation in index funds of  US Total Stock Market, US Bonds, and International.

I will now change your life.  Invest in indexed mutual funds either Total Stock market or S&P 500 100%-60% then bond 0-40%.  If you are aggressive with a long time until FI/retirement then go closer to the 100%, otherwise I think a good bond % allocation is your age - 10. Jake Bogle says you should have bond allocation equal to your age.  I believe that maybe fine for over 60, but for the FI road it is very conservative.   All you need to do it put money in these funds and keep putting money in and ignore everything else.  Don't look at the performance just keep adding.  Then one day in the distant future it will be a whole bunch of money and you will feel like a genius.

The market will fall and the market will go up. It will feel like a roll coaster.  If you know yourself you can stop yourself from making the mistake of buying that hot stock or bitcoin or selling because the world is coming to and end.

Good luck and enjoy the ride.

Deciding on Health Insurance pay now or later

It's that time of year to decide if I try to save money on monthly health cost and roll the dice that we have a healthy year or higher premium with less out of pocket max.

It's a no brainier to go with a plan the has a Health Savings Account (HSA).  For the first time this year I have a chose between two plans. 

First what is a plan that has an HSA. First off the plan has to meet certain criteria to be eligible for HSA contributions. It needs to be a high deductible than a traditional insurance plan (year 2020 - min 1,400 for individual and 2,800 for families, Max single 6,900 and family 13,800) and also your employer has enable the plan to be eligible for being a high deductible plan (HDHP).  Some benefits are that the monthly premium is usually lower, but you pay more health care costs yourself before the insurance company starts to pay its share (your deductible). 

Why an HSA?
An HSA allows you to pay for certain medical expenses with money free from federal taxes.  HSA contributions are tax free going in, tax free growth, and tax free going out as long as you use on qualifying medical expenses.  For 2019 max is 3,500 single 7,000 family and next year 3,600/7,200

I've been dumb for many years and just learned of the magic of an HSA last year.  My family of four is healthy, but the kids are in school so lots of germs. Most of our doctors visits are wellness and sore throats. I would say we spend maybe a few thousand on medical a year.  I know many people may need the money they contribute for medical expense in their HSA. I'm planning on using it as another retirement account.  I'm keeping track of all medical expense in a spreed sheet with date of visit and cost.  That way in the future when I need the money for an emergency or for retirement I can reimburse my old medical expenses.  Win win for me.

My wife and I currently work for the same company so are benefits are the same.  Depending on the plan it is sometimes cheaper to have our own insurance vs whole family.  I'm currently trying to decide if I should be on my own plan because one I don't really get sick and two as a male if I do get sick I would rather die then go to the doctor (😷). Obviously not really true, but it is true enough for most guys until they get above 40.  Probably a reason women seem to live longer. Anyway if I get my own plan the wife and kids will overall have a lower max out-of-pocket even though the now combined out-of-pocket is slightly more then if we all had the same plan.  Really it only saves us about $200 off the yearly cost of the plan it would be more for the plan deductibles.  

Who knows I have about two weeks to decide how healthy we will be next year.  I will try my best to try to play this scam that is health insurance.  

Good luck and let your choices forever be in your favor.  

Insure your life to protect your legacy

One of the hardest things to do when your young is to think about when and if you will die. Let face it death is undefeated.

On the path to financial independence we are always looking for ways to optimize spending and make purposeful purchases.  It can be difficult to make a purchase that may provide peace of mind for you and security for your family in the future.

I'm currently in the process of getting Term Life insurance for myself and my wife.  My work provides life insurance one times my annual salary as well as optional additional term life.  This is pretty typical for most large W2 companies.  On my path to FI I still need security for my family until I reach my number to FI. Once I reach FI it will act as life insurance for my family.

Honestly the life insurance stuff is confusing and so many different ways to go.  I'm not going to go into Term vs Whole life.  Usually most people say go Term and Whole life is not worth it and board line a scam.  Their are sites that compare allot of different companies.  This is a great place to start, but if you know some people in the insurance game just ask them questions on what they recommend.  I decided to go with a 15 year with about 10 times my annual salary. This is around the usual recommendations most sites and people tend to go with.  This works for the FI community once you start your path, because it can cover the path to FI as well as give a buffer.

The last thing to think about its a Will.  If you are trying to protect your family encase of your untimely demise you want to make sure everything you have goes to the right place and is used the way you intended.  It is important it goes where you want and the state doesn't get to decide.

A Will is a very difficult thing to do.  Trying to figure out all the different ways you could get hurt or die and all the different situations that follow. 

Best of luck on these grownup decisions.

A dollar a day guide to retirement

I was walking the dog the other day listening to pod casts and letting my mind wonder.

Do you remember those old infomercials that you could fund a kid in some other country for just $1 a day and it will fix their entire life.  That is for a good cause, but if I invested in myself for a $1 a day.

If you invest $1 a day for 67 years with an annual 8% return you end up $955,209k. So over the course of your pre-retirement life you invested ~$24,455 and it magically becomes $955k before taxes. Damn.  I know their is leap years.

Lets say to retire you need one million dollars how much do you need to invest each day to reach it. If you invest 2 dollars a day you will have a million at 59 and $3 puts your at 54. Obviously you can't start saving for yourself at birth, but it does show you a little bit goes along way no matter when you start.

Advice to a sibling

Here is some general advice I passed to my sister when she start her first job.

• Have a checking account - only keep enough to pay bills with a little buffer so you wont overdraft.
• Put the rest into a saving account - look at online ones.  I use FNBODirect because the interest rate is much high then most banks and a great company. Another option is a money market account
• just remember if you need to take money out it take 3-4 days
• You should not have any accounts putting money into or taking money out of this except your one checking account.  This will help protect it.
• This is your emergency funds should be 6 months of expenses the rest you should invest
• Once you have a good buffer in your savings account 10k-20k  consider investing into stocks or mutual funds. 
• If you want to try stocks create an account from E-Trade, Fidelity, or TD Ameritrade they are all pretty equal. I would suggest a small amount. Something if you lose it you wont mind to much. I started by picking well know companies like Visa, Apple, Berkshire Hathaway, lulu, and other companies I used and I know or can guess how they are making money.
• The other and better option is index mutual funds. These are less risky then stocks with about 6-15% return.  The thing about these they are long turn investments that compound and grow. This is very smart to do. Every two weeks I put $100 directly from my checking account into this
• Vanguard mutual funds - https://investor.vanguard.com/mutual-funds/
• Get VTI or VTSAX - to own all of the US stock market
• Fidelity is another option because of 0 cost index funds
• I only started to do this a few years ago and I feel like I really missed out not doing this earlier.
• Never carry a balance on Credit Cards
• If you have a balance stop everything and pay them off. Don't do anything else until they are paid off.
• You should have at least two cards to build your credit. I know this isn't popular with Dave Ramsey, but everyone needs to have a good credit score at some point.
• Chase Reward cards are good
• You should check your credit report at least a couple of times a year to make sure nothing unexplained is on it.
• I don't know if your job does pension, 401k, 457,or 403b if they do a match; max it out to get the most out of the maxing. Free money is always the best money.
• If they don't do anything consider investing in Roth IRAs or Traditional IRAs
• these will help on taxes and save on retirement. 
• If you want you can track your spending through MINT.com or personal capital

That should get you started on the right foot.  Good luck.

Travel Rewards Part 2

Progress on Travel Rewards.  We start the journey with the Chase Sapphire Preferred. My wife and I are alternating cards to maximize the rewards and spread out the spending.  It was retaliative easy the past few months hitting that $3k spending to get the bonuses.  We opened the account around car insurance, car registration and the kids birthdays.  That being said we knocked out our first cards and probably the best of the award cards.  Benefits are great and the flexibility of the Ultimate Reward points with the reward partners are awesome.  

Know what do we go from here?  Who knows.  I can't seem to find any good direction on the next card of a Chase Gauntlet. The only thing I can find is to get the Sapphire card then get another Chase card.  OK, so to figure this our we talk about what we want to do next year for vacation.   We have a big anniversary coming up. Do we go somewhere for that? It's the kids first summer vacation something for that? Or just visit family? Since most of our possible trips will involve flying and staying in a hotel we decided to go with a hotel card.  Our flight miles will be covered by the Chase Ultimate Rewards we got so far.  We decided to go with the Marriott card mostly because they seemed to have good reward redemption, free stay reward each year, and they have hotels were we may travel.  We probably wont do the same card for my wife. She already has a high status with Hilton because of her work travel and we don't really see a benefit to having two of the same hotel cards since we only need one room.  

The only issue I am worried about $5k spending in the next 3 months is going to be tough.  The only big spending coming is ski season and paying for the kids ski lessons.  Christmas is coming, but we usually don't spend that much on the holiday.  Wish me luck.  

Enjoy life one moment at a time

Many people think to have a family moment you need to spend money.  Disney, movies, traveling, sports.  The list goes on and on.  There is a time and place for these. It is important to know that you can have your adventure in your own backyard.

Today I had a wonderful day with my family.  We woke up and drove 30 mins. to a local dog park. Spent a hour walking the park and watching our dog swim in the lake.  Went home had leftovers for lunch and spent the afternoon building Legos and playing games.   Then before dinner we jumped on our bikes and rode to our local park.

Their is so much you can do that doesn't cost a cent or at least almost nothing.  I bet in your local town their is at least 3 things going on that cost nothing.  Art shows, Zoo, festivals, nature hikes, bike rides. Honestly there tons going on.  Facebook.local or your local cities web-page is a great resource.
Look up at the stars and just go out and see something new. Or just enjoy the balloons.

Simple food hacks .. eat good, eat well, try it all

Early on when I left school I realized if I was going to spend my hard earned money on food I should buy things that were good for me.  The thing was I didn't really like to cook and it was just me.  My meals usually consisted of rice, frozen veggies, and a protein like shrimp, chicken, or steak.

Obviously life changed and I got married had kids and lets just say my diet changed.  My wife and I don't eat out much, but when we do we like to try new things.

We are not much of deal seekers and what we do is simple.  We share. If something looks really good we order one main course and one appetizer.  Or if the menu looks really good we order 3 appetizers and use it like our own little sampler.  Appetizers are usually half as much as a main dishes and usually are great to share.

When we are on vacation eating out is a huge expense for us.  What we do to reduce this expense is hit the local store when we arrive buy food for lunches and breakfast.  That way we can pack lunches and don't have to stop the fun to find a restaurant.  This is great to due when you go on hikes or new places.  Plus breakfast food is so cheap and restaurants usually charge 10x the actual cost of the good. It is a no brainier to just have a cup of yogurt.

Cooking in bulk with the Instant Pot and Air Fryer really helps reduce the cost of meals.  I am trying to make it a goal that we spend $2 a meal per person. We are currently around $2.8 per a meal.
I know some people don't like leftovers.  That I don't get. If you are one of those people you need to work on making better meals😁. My wife makes amazing meals that I want to have everyday.

Ways to inspire yourself and keep a skinny waist are to use cookbooks like Cook Yourself Thin.  I love these cookbooks.  Amazingly simple meals and a great way to get bonus points with the spouse by making them a gourmet meal.

Bon Appetit