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It is currently Wed Sep 02, 2015 7:30 pm




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 Post subject: avocados
PostPosted: Mon Dec 22, 2014 7:27 pm 

Joined: Wed Jun 11, 2014 5:33 pm
Posts: 157
Posted our expenses in June 2014 (I'll add Dec 2014 in next post):

Annual Expenses (July 2013-June 2014):
Mortgage: $93,500 ($1.65M 30yr loan @ 4.0%)
Down payment on home for parents: $80,000
Home Repair & Improvements: $55,000
Prop. Tax: $30,000
Travel: $14,500
Charity: $8,000 (much lower this year due to home buy)
Home Services: $6,500 (gardening, pool, cleaning)
Eating Out: $6,500
Groceries: $6,000
Ed Loan: $6,000 ($50K @ 3.0%)
Insurance: $5,800 (homes, auto, umbrella)
Utilities: $3,600 (thank you California)
Phone & Internet: $3,200
Auto (Gas, Parking, Maintenance): $2,000
Public Transportation: $1,800
Shopping: $2,000
Entertainment: $1,600
Total: ~$320,000


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 Post subject: Re: avocados
PostPosted: Mon Dec 22, 2014 7:31 pm 

Joined: Wed Jun 11, 2014 5:33 pm
Posts: 157
As of Dec 2014 (6 month expenses annualized for comparison)
Mortgage: $93,500
Parent's condo: $15,600
Home Repair & Improvements: $11,500
Home Services: $6,500
Prop. Tax: $32,500
Travel: $5,800
Charity: $20,000
Eating Out: $7,300
Groceries: $5,800
Ed Loan: $6,000
Insurance: $7,800 (added to insurance)
Utilities: $4,800
Phone & Internet: $3,500
Auto: $4,000 (new car)
Shopping: $2,400
Entertainment: $2,800
Total: ~$226,000

Liabilities:
Home Loans: $1.97M
Ed Loan: $48K
Car Loan: $27K (0% int)

Assets:
Very Liquid (cash): $330K
Somewhat Liquid (stocks, et al): $1,300K
Somewhat Illiquid (real estate): $3,500K
Mostly Illiquid (retirement accts): $770K
Very Illiquid (private equity): no difference


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 Post subject: Re: avocados
PostPosted: Mon Dec 29, 2014 12:38 am 

Joined: Wed Jun 11, 2014 5:33 pm
Posts: 157
Although 2014 was a good year for the market, for the avocados, it was more about repositioning - we did a lot to diversify, taking pretty substantial charges to do so, and ended the year fairly flat.

Hopefully, we'll get back on track in 2015. A lot of different things are on the horizon for next year, and we could easily end up either much better off or much worse off.

Long term goal - financial independence (be able to cover expenses with non-wage income). Don't really have a timeline for this, nor does either of us expect to stop working once (if) it's achieved. It would be nice, though, to be able to post in the "success stories" forum.

2015 financial goals:
  • Save $80K of wage income (not including tax-deferred contributions).
  • Bring eating out expenditures (less avocados for the avocados!) back down to earlier $6K/yr levels.
  • Post semi-yearly updates on this forum to track progress.


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 Post subject: Re: avocados
PostPosted: Tue Mar 31, 2015 7:44 pm 

Joined: Wed Jun 11, 2014 5:33 pm
Posts: 157
Q1 2015 Expenses
Code:
Mortgage.......$33,600..($11,200/m)
Property Tax...$16,200...($2,700/m annualized)
Home Services...$2,100.....($700/m)
Transportation..$1,800.....($600/m)
Student Loan....$1,500.....($500/m)
Groceries.......$1,400.....($466/m)
Eating Out......$1,200.....($400/m)
Utilities.......$1,000.....($333/m)
Pets..............$650.....($215/m)
Phone.............$525.....($175/m)
Shopping..........$450.....($150/m)
Internet..........$300.....($100/m)
Entertainment.....$225......($75/m)
Other.............$100......($33/m)
Total..........$52,000..($17,600/m)

Q1 net worth: +7.5%. (Edit: reduced from +9.75% by eliminating unsubstantiated zillow valuations.)

Line item for insurance is zero due to carry-over from the previous quarter. Pet spending was a bit higher than normal due to some one-time costs. I'm jubilant about reining in how much we ate out :P. Savings are good, though we'll probably blow a chunk of it on a planned home remodel later this year :(.

I think it's completely wacky that over 80% of our expenses are on housing costs. If we were to downsize, we'd eliminate that, whatever we would be spending on home improvement, $700/m on home services, and probably around $150/m on utilities. Our annual expenses would go from $250K+ to $35K!


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 Post subject: Re: avocados
PostPosted: Thu Apr 02, 2015 2:08 pm 

Joined: Wed Jun 11, 2014 5:33 pm
Posts: 157
I discovered fireCalc yesterday. It's an interesting take on the retirement calculator that can be as simple as inputting three numbers: your current portfolio value, your planned withdrawal rate, and years that it needs to last, and simulates that using historical market returns for all of the N-year periods over the last 120 or so years.

It helped confirm something we already knew: if we move out of our current area we'd be fi/re with room to spare (100% success). If we tried to fi/re in our current location, however, we would fail 100% of the time!

What fireCalc helped us determine is a target number for fi/re in 10 years (with 100% success) while staying put (our preference). To hit our target, we'd have to average 8% returns/$120K annual contribution (or 9%/$85K or 10%/$55K). I think that none of these scenarios are actually likely for inverse reasons (8% returns are reasonable, but $120K annual savings is difficult, while on the flip side 10% returns are improbable, but $55K savings is reasonable).

This doesn't factor in any liquidity events, which are also just somewhat unlikely (but not extremely so).

What we have now is a target and a guide to let us know how we're doing. As of right now, we're at 0%. It'll be interesting to see if we can move the needle over the next several years!


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 Post subject: Re: avocados
PostPosted: Thu Apr 09, 2015 1:39 pm 

Joined: Wed Jun 11, 2014 5:33 pm
Posts: 157
Our water bill for last month was $105 for 14 CCF. We'll definitely be looking to conserve in the coming months. Ay California!


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 Post subject: Re: avocados
PostPosted: Tue Jun 30, 2015 4:35 pm 

Joined: Wed Jun 11, 2014 5:33 pm
Posts: 157
Q2 2015
Code:
................Quarterly....Monthly
Mortgage..........$21,500.....$7,166
Transportation.....$2,000.......$666
Eating Out.........$1,750.......$583
Groceries..........$1,700.......$566
Home Services......$1,600.......$533
Student Loan.......$1,500.......$500
Pets.................$900.......$300
Utilities............$900.......$300
Insurance............$800.......$266
Phone and inet.......$800.......$266
Entertainment........$200........$66
Other................$250........$83
Total (non tax)...$33,900....$11,300

More than the usual amount of guests and entertaining contributed to higher than normal food bills.

The end-of-quarter drama of Grisis (are we really using Hollywood gossip rag nomenclature for international finances now?) has been a drag on our portfolio. Combined with a ~$250K tax bill, it's no surprise that we're -2.6% for the quarter. Could've been worse, and all things considered, it was a pretty calm three months with no major decision making (financial or otherwise) on our part.


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 Post subject: Re: avocados
PostPosted: Wed Jul 01, 2015 3:51 am 

Joined: Fri Mar 14, 2014 4:10 am
Posts: 275
Ouch at the mortgage. But in relation your other expenses seem to be okay so it's just that one beast you have to contend with. At least you will definitely feel the difference if you pay it off while you're still there. It would be like a $7k raise/ month....can't even imagine. When I pay my mortgage off I'll get a whopping $353.91 extra in my pocket lol. Doesn't really motivate me. And another sympathy ouchy for the tax bill. Mo' money mo' problems I guess. Though it looks like your overall picture is great.


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 Post subject: Re: avocados
PostPosted: Wed Jul 01, 2015 4:44 pm 

Joined: Wed Jun 11, 2014 5:33 pm
Posts: 157
Thanks LMoot, that tax payment was the second largest payment (of any sort) we'd ever made in our lives! Surprisingly didn't mind it all that much - we knew it was coming and planned adequately for it. In my opinion, paying taxes is simply the price of a civilized society, and I'd gladly support higher if it meant more comprehensive and better public services.

I think the mindset regarding house as an investment vs. a consumption item by necessity has to be different in the SF Bay Area vs. the rest of the country. We rationalize the giant house payment as an investment in order to make it more palatable. Whether or not that's rational is debatable, of course. However:

  • Residential prices in our area have appreciated at around 10%/year for the last 30 years (past performance not indicative of future success).
  • Prices dropped 10% from Oct 2007 to Mar 2009 vs the 56% drop for the S&P 500 over the same period. (They've gone up 85% since Oct 2007 vs 36% for the S&P).
  • The Silicon Valley seems to be in a virtuous cycle where over 50% of the country's VC funding is going towards local companies, resulting in over 75% of the country's IPO wealth creation.
  • "Luxury" real estate in an extremely supply-constrained locale is an indirect investment in these companies.

Maybe we're just lying to ourselves :)


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 Post subject: Re: avocados
PostPosted: Wed Jul 08, 2015 10:49 am 

Joined: Wed Jun 11, 2014 5:33 pm
Posts: 157
Was playing some more with firecalc, comparing fi/re scenarios if we paid off our house now vs. not. Paying off the house would save us a huge amount of expenses but would lower our investments by a corresponding amount.

Without payoff:

Image

(about 15% chance of success)

With payoff:

Image

(0% chance of success)

This isn't unexpected, because 1) mortgage interest is substantially less than historical market returns and 2) our property tax is still godawfully high. So much fun!


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 Post subject: Re: avocados
PostPosted: Sun Aug 02, 2015 7:30 pm 

Joined: Fri Mar 14, 2014 4:10 am
Posts: 275
wow, I have a feeling that chart would show little percent change in my situation since my balance is so much smaller. But I've never tried to calculate the pay off/ hold off scenarios (though I've read much about others' personal calculations).

If you're actively investing then I can definitely see how that could outperform paying off the mortgage. And so true about taxes/insurance taking out some of the taste of paying off the mortgage! Nearly 50% of my PITI are taxes and insurance. Hopefully CA has similar property tax laws in place that FL has. Taxes on primaries cannot be raised more than 3%/yr, no matter how much the value of the home increases.

[quote]Florida voters approved a state constitutional amendment in 1992 to “cap” or limit increases in the assessed value of homestead-exempt property to 3% per year or the amount of increase in the consumer price index (CPI), whichever is lower. [quote]

It became an issue, especially in Miami, because no matter how much they lowered prices, sellers were unable move inventory due to the amount of the taxes....which sometimes exceeded the mortgage.


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 Post subject: Re: avocados
PostPosted: Mon Aug 03, 2015 1:00 pm 

Joined: Wed Jun 11, 2014 5:33 pm
Posts: 157
Yes, CA limits property tax increases to the lower of 2% per year or CPI (though improvements are assessed at current market value). You can even exchange your low tax rate basis to a new property in the same county.

It has its downsides though, as it highly incentivizes people who otherwise might move to not do so, which severely constraints supply.

Current CA property tax is "only" 1% of the assessed value (at the state level, local governments can add to this, so the typical rate is usually around 1.25%). Even at that, the vast bulk of CA tax revenue comes from property tax as opposed to income tax.


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