July turned out to be a pretty standard month for us. We spent July 4th at a friend’s house, spent one Sunday exploring a state park, installed the bike rack hitch on our car, and spent quite a bit of time piecing through items we are planning to donate or give to family.
MrsLiveFree added new pieces to her Etsy shop and has been updating photos of previous listings. She built a light box in order to better stage the pieces. It has been very helpful as her sales have picked up a bit following these improvements.
I did have some OT, but my salary remains consistent. I drove for Uber and Lyft far less than I have in previous months as there really hasn’t been much incentive to drive. The trip rates in New Jersey are pretty horrible for drivers, so there is not much incentive to drive unless there are surges or bonus zones.
We sold a few items on the Facebook Marketplace: yogurt maker, ice cream maker. We have a few more items we will be listing in August.
There were two large discretionary expenditures in July: my Novara Mazama and a used Burly Bee that we purchased from the Facebook Marketplace. I’m still not sold on the bike and I am likely going to return it in the coming weeks.
The bi-annual review of my company Employee Stock Purchase (ESPP) took place in July. We also hit a savings goal allowing us to move around some funds.
During the first half of 2017, I was funding my 401(k) to 10% until we reached our target reserve of a 6 month emergency fund. Now that we have this, I have dialed up my 401(k) to 20% Before-Tax from the previous allocation of 5% Before-Tax; 5% Roth 401(k). I will have to scale this back before the end of the year so that I don’t exceed the annual maximum but it will get us to that goal.
In this same process, I increased my ESPP contributions from 1% to 5%. In hindsight, this is higher than I should have placed it (2% was likely the sweet spot) and I will re-adjust when the next enrollment period is open. The ESPP is a great vehicle depending on your company and its financial strength. My company offers a 15% discount on the lowest cost of the stock (first day of contribution period, or last day). The total gain since we first enrolled is 59%. While I am happy to see consistent growth, I really don’t want this asset to exceed 5% of our overall portfolio.
|Accounts||2017 1H||2017 2H|
The majority of our non-401(k) retirement accounts are currently held at Betterment. We have been considering moving these accounts out of Betterment following their fee modifications earlier this year. I also haven’t really been fond of their weighting in international stocks. It has indeed performed well over the past few years but it just doesn’t seem like the right option moving forward. I have actually been using the weighting in my 401(k) to counter-balance Betterment up until now but there are more streamlined approaches to take going forward. We are determining whether we should move these assets to Charles Schwab or Fidelity where we would implement the Boglehead 3-fund.
Below is the asset allocation according to Personal Capital:
The other pressing issue we need to make a near-term decision on is related to our cash on hand. Ten percent of the cash serves as our 6-month safety net and held in CDs yielding 3 percent. Not great, but at least they are beating inflation rates.
The remaining 12% is sitting in a “high” yield savings account waiting to be deployed. The three options we are considering include:
- Maxing out traditional IRAs now and placing the balance of the remaining funds in our HSA
- Maxing out our HSA (we are having baby #2 before the end of the year), and placing the remaining funds in our taxable account
- Holding it in cash as we look for rental income opportunities
|401(k) – Mr||48%|
|Roth IRA – Mr||4%|
|Roth IRA – Mrs||14%|
|SEP IRA – Mrs||2%|
Mad Lab FI Tracker
According to the Mad Fientist’s Lab, our FI date is April 2041. That’s 23 years 9 months from now and I would be 52. While still early by most standards, it is not early enough to meet our manifesto goals! Much of this is skewed due to living in a high cost-of-living (HCOL) area. We are looking to cut this figure in half and relocating to a region with a lower cost of living in the long term should significantly improve this.
What are your thoughts on how we should deploy our additional cash? Leave a comment below.