Church of FI – 2018 Asset Allocation and January expense reports

We own bonds!

I took the opportunity last week to simultaneously buy into the stock market and re-allocate my assets.

I have been contemplating acquiring a greater bond position since I have been reading Tony Robbins Money: Master the Game.

Note: I am making progress on my book goals (3/8)!

For the past 13 years, I have contributed ~50% of my income to high-risk investments; primarily equities. This approach has worked well, especially since I increased my contributions through the recession of 2008/2009 and beyond.

As I approach early retirement, my risk tolerance has decreased and my desire to preserve wealth has increased.

Even so, I still have a need and desire for growth. I have settled on an 80/20 stock to bond (& cash) allocation. My timing could have been better seeing how we are in what seems to be a market correction.

After market gains of over 20% in 2017, I still view the conversion to 20% bonds as a good move, despite the market drop in February. Additionally we are still buying over $6,000 in stocks every month. If we are lucky, this “correction” will take a few months to recover, enabling us to buy more stocks “on sale”.

Going forward, I plan to stick with this allocation as part of our long-term strategy.

After FIRE, the bond and cash allocation will serve as an alternative to withdrawing from our principal. I plan to keep at least 3 years of living expenses in this security bucket.

Although asset allocation is very important for financial strength, diversification of assets is also essential. I primarily invest in the low-cost index funds for the total stock and bond market. As a result, diversification is automatically built in as the losers get absorbed by the winners.

However, we also own rental property and a business asset that provides additional income (with the potential to earn more).

These are the elements that give our total portfolio strength. We are not “recession-proof”, but with the greater bond position and diverse asset classes, we now have flexibility on how we “create income” when we need it in 1-3 years.

 

Expense Reports

I have collected quite a list of blogs that publish their monthly expenses. A “New*” next to a blog indicates that it is a new addition to the Church of FI, not a new blog necessarily. Some of these blogs combine their net worth and expense reports. I like to compare my spending to these reports and try to improve where I can. Here is the lowdown on January (published in February).

 

The Jolly Ledger

Root of Good

Northern Expenditure

Bayalis is the Answer

Retire by 40

Frugalwoods

Mr. Tako Escapes

Financially Alert

Dividends Down Under (Savings Update)

Frugal Momster (expense report)

Fiery Millennials

I Retired Young

Chronicles of a Father with Cents

Done by Forty

Gen Y Finance Guy

Enough time to

The FIREstarter

The Three Year Experiment

Minimalist in the City

Financial Serenity Blog

Kiwi and Keweenaw

BrokeGIRLrich

Turning Point Money

Reaching for FI

MoneyBabe

Atypical Life

Tight Fisted Miser

FI Heroes

Money Scrap

Montana Money Adventures

The Origami Life

Frugal Professor

 

All Church of FI articles are archived under Featured Links on the Church of FI page!

 

 

 

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The Big Scratch – February 2018 Net Worth Report

One of my foremost personal goals this year is to achieve a higher level of fitness. I live a sedentary life….really sedentary. I commute 3 hours per day, and then sit in an office chair in front of a computer for 10 hours. In the evenings, I have just enough time (about 1.5 hours) to eat dinner with my family, take a shower and read before bed.

Note: We only take showers every other night, so sometimes we play a quick game like dominos or mancala or watch TV for 30 minutes.

I have made up excuse after excuse why I can’t get in shape now, before FIRE. Some center around an old personal injury, so the type of exercise I do is limited (no high impact stuff like running). Most of these excuses center around time, and that is a real thing. This year, I am determined to make it a priority.

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The Ledger – January 2018 Expense Report

January was quite the month! We overspent our budget but these expenses were planned.

The largest expenses were a quarterly trip to Costco and a mini-vacation to Pagosa Springs.

The Costco trip costs, on average, $500-$600 every three months. I stock up on items like dried goods, oils, butter, bacon, dog food, and toilet paper. I make a list, and I stick to it! I also eat like this while I am there. This might explain the weight gain.

Costco pizza 620 calories; frozen yogurt 390 calories; Worth it!

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The Year Behind and Year Ahead

That’s me, day after day with the same brick wall. OLY?

The New Year has rung in a severe case of One-Less-Year syndrome as opposed to the One-More-Year syndrome that seems to afflict many as they approach their FIRE target. Mine has manifested itself by questioning, how much passive income I really need, how much active income I intend to make after FIRE, and most of all, what I need my life to be right now.

Some things feel as if they can’t wait, like let’s just get on with my 2nd Act already. Most mornings, I wake with the feeling that I am not living the life I was intended to live. But here I remain, because I struggle to get a true picture of what I want my future to be.

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Church of FI – Feng Shui and December expense reports

This weekend I rearranged my office and shredded a contractor bag full of unnecessary documents.

Now that everything is electronic, it seems pointless to keep every last shred of paper, but somehow this is still a relic of my pre-computer days. I have electric bills going back to 2004!

I also can’t seem to let go of my old college notebooks. I even found some high school notebook! I admit, it is fun to go through them and see how teenage JL used to think. Apparently, two of my great aspirations at age 15 were to be either a woman’s restroom attendant at the Oklahoma City State Fair or an eccentric old lady. True story.

Somehow, I just can’t get rid of these gems. Mr. JL is just as bad. He has book after book on all his former educations and professions, even though he hasn’t practiced any of it in years.

Maybe someday we will be interested in that old stuff again. We are not ready to completely unload.

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The Big Scratch – January 2018 Net Worth Report

Wow, look at that chart! We had a great year financially, and the result was an increase in net worth of $178,000 since the beginning of the year 2017. This type of growth is due in part to our stock market holdings increasing by over 20% (in line with the S&P 500) in combination with a net savings rate of over 69%. This report represents the end-of-year net worth for 2017.

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The Ledger – December 2017 Expense Report

I am still on Holiday break, a sweet 27 days long this year. Somehow, I am very busy. I have no idea how I will have time to go back to work.

This week so far, we have been to two hot springs, made a quarterly trip to Costco (will appear in January’s ledger), made soap, gone for walks, done the laundry and grocery shopping, and caught up on my favorite shows.

This morning, we made our first bastardized version of bulletproof coffee (BPC).

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Financial Book Goals 2018

For the past three years, I have been reading  personal finance books along with hundreds of FIRE blogs. So far I have read The Millionaire Next Door, Your Money or your Life, The Simple Path to Wealth, and Smart Women Finish Rich.

Although not an extensive list by any means, these books have helped confirm the foundation of my financial plan, have taught me the basic concepts of investing and given me a good perspective on spending needs.

In 2018, I aim to expand my reading list to personal finance books that expand on living your best life in addition to being money conscientious. Rockstar Finance has compiled a book directory that has good reading for people at all stages of finance.

These are my picks for 2018:

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Church of FI – November Expense Reports

Apparently, I horded a large amount of my vacation time this year, so I’m taking the rest of the year off. This counts weekends and regular days off, of course, but as I write this I am relaxing and not thinking about work for 27 straight days!

Twenty-seven days! That’s nearly a month! We will be doing some traveling for Christmas, but I will also spend a few weeks at home.

This month I bought a 20-punch pass to a local hot springs, so I might take Little Miss to the springs a few times. Maybe we will get ambitious and try snow-shoeing or cross-country skiing. Will my house get cleaned? Probably not, even though it desperately needs it!

Mainly, I am hoping to rejuvenate. By the end of work, I was pretty worn down. I wasn’t sleeping well and always had a low-grade headache. I just need a break. A long break.

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The Big Scratch – December 2017 Net Worth Report

One month left in the year! We surpassed our year-end net worth goals in September, but the market is still producing significant gains so our net worth continues to surpass expectations.

The end of December is always a busy travel time for us. As usual, we will be visiting great friends and family, and ending the trip with a few days at Pagosa Springs to soak in the sulfur hot springs and eat really amazing food.

I have one day left at work this year and will not return until January 10th! Hopefully I will return refreshed and motivated for the tasks I have assigned myself in 2018.

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