Friday, January 8, 2016

My Single Income Household Budget

So here we are! Our baby is now a little over seven months old and our household is in the groove of operating on a single income as my wife goes off to work and I am daddy day care. And I have to admit I don’t miss the extra disposable income one bit. As a quick recap my wife and I are debt free (myself since 2009, my wife since 2012) and we have amassed to this point a portfolio worth a little south of half a million dollars. So we’ve decided to take our foot off the gas pedal income and savings wise to have one of us home with our child for a few years. We came to the conclusion that I would stay home chiefly because of my wife’s super awesome health insurance offered through her employer. Currently she carries a family policy with a low deductible and pays no monthly premiums, it’s all covered by her employer.

So for us it was a no brainer that  I would stay home with our little one. But just how exactly do we make it work on one income, in a major metropolis in the US? To start I have to tip my hat to our debt free journey. I doubt we could have pulled the single income household off if we still had monthly debt payments. At its peak our student loan debt totaled $80,000 and between the two of us our monthly payments were right around $1,200 a month. With that kind of debt and monthly payment hanging over our heads there was no way I could envision us having a child AND going to a single income.

So with our household debt having been cleared collectively four years ago, having spent the time since our debt elimination pouring extra income to building a six month emergency fund and funneling as much as we could to retirement and non-retirement investment accounts, we felt confident at this time to drop to a single income and ultimately lose our excess disposable income for this period of our lives.

At the onset I will say that my wife continues to max out her Roth 401k match with her employer, so in that sense we are still contributing to our retirement accounts in at least some form. And to spare you the agonizing details of our full blown budget I have only included the major categories and percentages that comprise our monthly budget so the total does not equal out to 100%, as this is merely an overview snapshot. So here it is, a quick look at the major nuts and bolts of our budget.

  • 31% Rent
  • 26% Entertainment and groceries
  • 10% Give
  • 9% Travel
  • 8% ESA and diaper service
  • 8% Brokerage

For starters we put together before the start of every month a zero based budget that starts with our expected take home pay and ends with that number being dwindled down to zero. Again, these are some of our major categories and the percentages allotted do not equal to 100. At first glance obviously monthly living expenses in the form of rent, going out and groceries take up more than half of our monthly budget. We also are continuing to tithe, save specifically for ongoing travel as well as into our taxable brokerage account. It is also a priority for us to use a sinking fund to both max out annual Education Savings Account contributions (annual max of $2,000 as of this year) and to pay for cloth diaper delivery and cleaning service for our little one. For posterity purposes I will say that the missing percentages are scattered amongst non medical insurance premiums, saving for clothing, utilities and blow money. So what I have listed are the heavy hitters of our budget.

Overall I am happy with our planning and implementation. In the months leading up to us formally shifting to a single income household we did practice living on this type of budget before my paychecks stopped coming. We were surprised to find that aside from cutting the amounts that we saved and invested, that we were kind of already were living off of one income when we had two. Although the details of who paid what expense were split between my wife and I, numerically speaking we had been for years living off one income and saving and investing the other. So thankfully this shift has been a seamless one for us. And even pulling back to look at it now, knowing what we used to bring, I really don’t miss the extra income at all. Having this time with my son is something that does not have a price tag on it in my book and I am forever grateful and thankful to my wife for helping get to this scenario where I could stay home with our little guy. It still amazes me that this was not the plan, but here we are and I could not be any happier than I am now.

Friday, January 1, 2016

My New Year: 2016

I honestly can’t remember the last time I was a little sad to see a year come and go. 2015 turned out to be an amazing year for my wife and I. The biggest reason for that was the birth of our son, and that he was able to witness (albeit from the perspective of a baby that couldn‘t hold his head up) our beloved Chicago Blackhawks win a Stanley Cup on home ice! During the course of 2015 I changed from a married husband, to an expectant father to a father who knew very little about what he was doing in the realm of trying to take care of a baby, to a competent stay at home dad. And it’s amazing for me to look back on all this and wish it to never change.

I love taking care of my son. I love holding him, feeding him, changing him and doing all of the things that you do with babies. And with a new year comes more growth and development in my little one. As he already has been in a lot of ways already, he will eventually make the full transition from baby to toddler and in a lot of regards will not be as dependent on me later this year as he is today. And that fact is a very bittersweet pill to swallow. I have loved every second of being his dad. Even when I get frustrated, tired and flat out exhausted, the best thing I have done with my life is to help bring this little guy into the world.

2015 for me was a moment in time that I wish I could freeze forever. And I’m sure that 2016 is going to bring its own victories, changes and developments. But for the first time that I can remember, I was actually sad to see a year end. So here I am, a SAHD (we seriously need to find a new acronym for that, it is hardly sad) with a whole new year in front of me.

Obviously our net worth is marching closer than it has ever been to the half million mark. I do expect to see significant growth in the overall market due to 2016 being an Olympic and US Presidential election year, and that a lot of sectors in 2015 were flat and even in the red for some. It will be interesting to see if this time next year whether we’ll get the less than 40k  in growth and contributions needed to hit the half million mark in our portfolio.

We have our plan in place and are more than ready to tackle the new year with our single income household budget. Being home I have enjoyed meal planning and having dinner ready by the time my wife hits the door, and of course there’s that fringe benefit of spending the entire day with my son, which I must say is second to none. I’m looking forward on the home front to add some new recipes and meals to my weekly repertoire and see my son continue to grow and develop.

So while I’m a bit saddened at the anticipation of my baby no longer being my baby, I’m happy and excited to see what this new year will bring. Especially now that I’m settled into the role of a SAHD and can throw my focus into my family and not whether I will attempt a balancing act between work and family. So I want to wish all of you a Happy New Year and all of the best in 2016!

Friday, December 11, 2015

My Self Enforced Gag Order

Streaky, non-existent and absent. These are just a few of the words that can be used to describe this blog over the last few years. And now I am finally ready (and not under a watchful eye) to pick this little blog back up with regular postings.

But what happened?

This piece of the story goes back a few years and needs some background. I work in finance, specifically in operations for large, and when I say large I really mean behemoth, global financial institutions. After several years of service at a US based firm, I left for a certain Swiss one that may or may not have three keys ;) Now based on the type of work that I do and certain industry intel that I am privy too, it is perfectly understandable that in this line of work certain restrictions and monitoring of employees needs to be in effect to prevent insider trading. To be in line with regulations and internal standards, my then new employer required me to report any non-retirement investment accounts to their firm, allow them access to monitor my account for activity and sign off on quarterly affirmations that state I was not engaging in insider trading.

But with so employees across the US, let alone the world, my employer at my time of hire, required me to also move my non-retirement investment account to one of a select list of approved firms. Thankfully my account in question was already at a firm on their approved list, so when the job offer came through I happily signed away.

Fast forward a year into my employment and the rules changed. Now I was required to report all investment accounts within my household, including those of my wife, to my employer and transition these accounts to a single approved firm: theirs.

Surely, I thought, there would be a discount offered to employees. There was no discount. The decree would mean that I would move our brokerage account, my traditional IRA (rollover of 401k from previous employer), my ROTH IRA, my wife’s ROTH IRA, my son’s ESA and a few ESAs that we have setup for nephews and nieces, from a provider that charged 0 fees to one that would begin charging monthly fees for the pleasure of doing forced business with them.

Needless to say I was not happy about the situation. I appealed to HR stating my investment portfolio consisted of open-ended mutual funds, I do not own and have never owned single stocks, and I have only bought, never sold any funds. Surely they would grant me an exception based on my plain Jane investments. They did not, and between you and I, they could not have cared any less about my personal scenario.

So I began interviewing at other firms and quickly learned that this policy my employer implemented, of forcing employees to (financially) buy from the company store was not the norm. I received several offers from other potential employers, along with sign off from their compliance departments, that I could work for their firms without needing to consolidate my portfolio (based solely on my holdings and transaction activity) to their firm.

I was ready to jump ship at the drop of a hat but my wife really helped me see the light. At that time we were trying for what would become our first born. And my better half reminded me that, depending on the timeline, if I left, even to a large company that was legally obligated to provide FMLA, there was a chance that my tenure would not qualify me for taking leave.

So I was faced with a question: what’s more important, spending time with my baby or paying fees on my investment accounts? Needless to say I sought out the third alternative because I absolutely hate the thought of paying unnecessary fees, especially on my investments. In the end of this delightful dilemma I did not move any accounts to my employer and my wife and I (may or may not have done some account title) maneuvering (while not incurring any tax implications or penalties) and stayed in compliance with their revised policy. But I had one loose end, this blog.

What if my employer came across this blog while I was employed for them and read about investment accounts that I may or may not have trading authority/access to, that are not on file and held at their firm? So instead of rocking the boat I stopped complaining about the policy change to my managers and HR, I may have or may not have changed some wording on our account titles, I stopped writing new entries on this blog, I kept my head down and I shut up.

But thankfully this has only been for a short period of time as now I can bring my head back up and continue my musings on this blog, oh, and maybe or maybe not rename some account titles :)

Wednesday, December 9, 2015

My Epic New Chapter

After what has felt like an eternity I feel like I can finally breathe! And believe me I mean that in every sense of the word. My son is six months old, my wife’s maternity leave has came and went and my leave offered through my employer (16 unpaid weeks) has now expired. And after pouring through the details, crunching the numbers, praying, having discussions and envisioning scenarios, we have decided that I will leave the work force to stay at home with our baby.

This was a decision that I certainly did not even remotely consider when we were in the labor and delivery room the night he was born nor when my paternity leave started. I thought the little guy would wear me out, break me down and have me looking forward to the day I could leave him with a nanny or drop him off at day care and retire back to my cubicle of solitude for some peace and quiet. But a funny thing happened. The feelings of despair that I expected to hit during the marathon that is taking care of a baby, the feelings of when can I get back to my work life, the feelings of when can we get back to the automated savings machine that was our double income household, NEVER…ONCE…HIT….ME

I absolutely love taking care of my son 24 hours a day. This is the kind of work day that I am glad doesn’t end. Yes it’s tiring, yes my back hurts a lot more than even when I used to get to the gym four days a week, yes I take naps with him because I can get just as tired as a six month old, but I love it and I wouldn’t trade this experience for anything in the world. And that includes getting back to the five day 50+ hour a week work week and double income household.

Getting here was not easy though and it took a ton of blood, sweat, tears, overtime and side jobs to get to this point for both myself and my wife several years ago. Together we had paid off $80,000 in student loans, have our emergency fund intact and saved and built a portfolio of nearly half a million dollars as we are sitting in our (very) early 30’s. So the question we ultimately came back to after our son was born was why? Why did we go through all of that sacrifice, follow Dave Ramsey’s advice to a perfect T and live and save like no one else? Did we do it to enjoy an early retirement well before we’re eligible for social (in)security? Did we do it to pass on a legacy of debt free living to our children and our children’s children? Is it too soon to be reaping what we’ve sowed? Is this the right time to take our foot off the gas pedal or are we doing long term harm to our financial well being by going to a single income even for a short period of time?

For a lot of these questions, truthfully we don’t have the perfect answers yet. But what we do know is that we love having our son home and one of us here with him, and after expenses (plus a fancy new tax bracket and withholding changes), on a single income, we would still have some disposable income left over! Sure, it’s not the multi-thousand that we used to have, but it would work. It would work in that we could meet our financial obligations, my wife would still max out her 401k for the match, give our tithe, max out savings for our little one’s ESA and still have disposable income left over to give, save and spend.

I think for me, the clincher was thinking about myself at 80, and looking back on this new chapter of my life called parenthood, and wondering what that 80 year old me would have looked back on and thought. Would that old guy have wanted a few more years in his early 30’s to accumulate wealth or time with his newborn son? And when I put it into that context, after looking at the hard numbers of whether we could make the new numbers work on our monthly budget, the choice was pretty easy, of course I want to stay home with my son.

Though cliché, I think the advice that I heard time and time again while my wife was pregnant rings true, that having a baby changes everything. At this point in my life wealth accumulation has taken a back seat for time. It’s a trade off that three months ago I did not think I would make until I was at least 60 years old. And yes I’m happy to have the freedom to continue writing this blog and sharing my experiences, and I will certainly get into more detail on that statement very soon!

Sunday, April 12, 2015

My Book Review: "Manhood" by Terry Crews

Funny, poignant, heartfelt and touching. These are not the adjectives I expected to walk away with before I began reading Terry Crews’ “Manhood.” Seemingly on a whim my wife picked up this book for me about a month or so ago and I let it sit on the shelf for some time. I knew of Terry Crews as an actor and beyond that not much else. Crews’ book is an amazing read and admittedly once I started I couldn’t put it down.

Crews walks us through his life, from being born in Flint, Michigan, to growing up with an alcoholic and abusive father, to his path walking on at a college football program to being a journeyman in the NFL, to his humble beginnings in Hollywood and beyond. Crews walks the reader through all of the ups and downs of his life and he had me engaged and wanting to read more and more with each page.

I especially wish a book like this had been written (and that I would have had the foresight to read) when I was a teenager. This is because Crews goes beyond making this book an informative biography. He gives an in depth and poignant looks at some of the most incredible issues that plague so many of our lives. From cyclical generational abuse to the pains, struggles and complications of addiction, Terry Crews was unbelievably profound and as I said before, I could not put this book down.

I’ll come back to my point in the last paragraph that I wish I had read a book like this when I was a teenager. This is because Crews is, on the surface, what most men point to as an alpha male. From his physicality to his presence walking into a room, through every step of his life it seemed as if determination and gusto carried him to success. And beneath it all addiction was the slowly boiling pot of water that nearly destroyed his life every step of the way.

Previous versions of myself would hang onto the fact that I wish I had read something like this earlier in life, so that I could see a voice, an advocate, a symbol, of someone in Crews’ position standing up to challenge the cultural expectations of masculinity, and that I wish I had a role model like that when I was growing up. But at this stage in my life I am grateful that his voice talking about these issues exists at all. Mainly because it goes beyond an alpha male standing up saying “I have feelings too.” This book was about a man of God admitting that successful paths in life are not even close to being well manicured and carved trails. Crews explored on a personal level the devastating impacts that generational abuse can capture and destroy the lives they are apart of, but that they don’t have to continue on to the next generation, and that abuse can stop and end with the person in the mirror.

He talks about forgiveness, faith, love, pain and everything in between. Words written in this raving review pale in comparison to the messages Terry Crews explored and provided insight into for, “Manhood.” And I for one, believe that every male that can, should read this book for the awesome perspective Crews gives about what it means to be a male in our society. I for one am thankful that Crews wrote this book and I hope he has many more planned in the pipeline.

Tuesday, April 7, 2015

My Quarter End: Q1 2015

Now this feels pretty good, being back in the groove and writing about another thrilling quarter end. So let’s go through a few of the technical numbers and then dive into the details. As of March 31st, 2015 my household net worth stands at $441,437.20 and my mutual funds have been earning an average annualized return of 17%.

Having not reported my net worth since the end of 2013, and to see the first quarter of 2015 start off with an increase of almost one hundred and ten thousand dollars absolutely humbles me and collectively blows my mind. You see, since finding out we were pregnant last fall we re-prioritized a lot of our financial goals and tactics. The biggest of which was increasing our cash positions through our emergency fund and creating a baby account.

Our baby account was made to provide a little cushion for our upcoming bundle of joy. We wanted to be able to make any baby related purchases such as clothes, bedding, cloth diaper service and allthingsyouapparentlyneedforababythatihadnoclueievenneeded without skipping a beat. Thankfully our years of living on a budget and working together through our finances prepped us to seamlessly put a target number on our goal, squeeze a few current month budgets by coming under in categories like groceries and entertainment, and before we knew it our baby account was fully funded.

So we've spent the better part of this current year funneling our disposable income into our taxable brokerage account. All the while we have continued to max out our employers’ matches through our 401ks. To me all of this, especially since 2013, has been slow and steady and to be perfectly honest since I had gone on an extended hiatus from writing this blog, I didn't really compare or even look at the quarterly numbers during 2014.

So I’m left wondering what made us leap over $100k in just a handful of quarters? In truth, half came from an increased of appraised value from the piece of real estate I own in name in California, and the other half from increased contributions and growth from our mutual fund investments.

To me the last year was pretty much clockwork. We continued to live debt free, regularly invested in our assortment of mutual funds, beefed up our cash savings accounts and watched every dollar through our monthly budgets so that not even a penny would slip by us.

I actually feel kind of crazy writing this. There were no magic tricks, no salary increases that bumped us a tax bracket, no wild and crazy bonuses and no secrets of investing that only a financial analyst has top secret access to. We've simply been slow and steady telling each and every penny where to go each and every paycheck….THAT’S…..IT!!

For this quarterly review I will hold off on making any market predictions or a financial summary of the state of the US. Primarily because I want to have time to gather up some awesome Yellen jokes, but mainly because, and I know this may be sacrilegious for a finance blogger to write, but simply put, I just haven’t been paying attention.

I know, I know, how can a guy who works in finance, and who (is getting back into) writing a personal financial blog not pay attention to the overall health of the global economy and the US market? To be frank, I just haven’t. Day and in day out I do my very best at work, and lately, especially over the last few months, I have been living, breathing and LOVING the idea of becoming a dad. My wife and I have completed a month of birthing classes and are ramping up our home exercises in preparation for the due date. Everything, financially speaking, is on cruise control. We have our monthly budgets for the rest of 2015 filled out, and while we expect variables to hit us and our best laid plans to always be fluid given the volatility of having a new family member (and that I will take 4 months of unpaid leave from work, more on that later), I feel like we have our financial ducks in a row and can concentrate fully and solely on this new chapter called parenthood that our lives will be turning to in just a few months. So it’s great to be back writing and I can’t wait to share more as 2015 unfolds.  

Monday, April 6, 2015

My Return

461 days….

That’s how long it has taken me to realize how much of an asshole I have been for not continuing to write in this blog. It’s definitely not been for lack of thoughts or a shortage of topics. The truth is I let a few miniscule circumstances and technicalities open the door for my laziness to step up to the forefront and take over the joy I received day in and day out from this blog.

Well that is no more…

It blows my mind that it has been almost a year and a half since my last entry. So much life has happened, there have been so many changes and yet so much remains the same. I am still working in the financial industry and loving Chicago. My wife and I are still living the debt free life as we celebrated our fifth wedding anniversary late last month. And our mutual fund investments are continuing to outpace my expectations.

As for the changes, well, there’s been quite a few after nearly a year and a half, but there really is only one change that takes the cake and stands out above all the rest. In less than two months, I will become more than just a (sporadic) blogger and (self proclaimed) personal financial wizard. (Hopefully) By the end of May, I will become a father as my wife and I will welcome our first baby to our little family. Here’s a picture of our little one that will hopefully make you go AWWWWW!

Now we are holding back the gender of our baby from family and friends. Clothing wise we want tons of vibrant and bright colors that are gender neutral from our loved ones, so that if baby number two ends up being a different gender, then the hand me downs would be just fine to pass from one child to the next. (You see me working there?!)

Needless to say I am excited and unbelievably stoked for this next phase of life. I’ll dive more into this and many other topics in later posts, but for now I wanted to share that I missed you all, I’m sorry for being an asshole, and I hope you still find the musings of this semi-astute North Sider, at the very least interesting. Oh, and to a very awesome reader of my peculiar musings out in Charlotte, thank you for giving me just what I needed at just the right time :)