eight month update (feb 2018)

Spending: Living expenses for the month came to $2238. This is $535 under the 2018 monthly targeted amount of $2773. Our spending is 8.1% under budget for the month, now 8.1% under for the year. We generated $1491 of income this month from my wife's part-time fun job at the library, sales on ebay, and some of my old book royalties. Our investment withdrawal was $747 this month, thus our pro-rated, annually-adjusted withdrawal rate is 0.81% for the month, 0.81% for the year, and 2.19% since retirement. Without the additional income stream, our pro-rated, annually-adjusted withdrawal rate would have been 2.42% for the month, 2.42% for the year, and 3.44% since retirement.

Investments: The portfolio went from $1,109,284 to $1,156,382 (a 4.25% increase for the month), which dropped down to a new total of (drum-roll) $1,155,635 after paying the bills. This is a 12.7% increase from the original starting balance of $1,025,772, even after withdrawals of $14,739 for living expenses over eight months. Since retirement, capital income from the investment portfolio has produced the equivalent of a full-time employee generating $104.28/hr of labor income. VTSAX (62% AA) went up 5.3% this month (5.3% up for the year); VFWAX (21% AA) went up 5.7% (5.7% up for the year); VWLUX (17% AA) went down 1.6% (down 1.6% for the year).

Reflections: Our previous best month for the portfolio was 11/2017 with a 1.99% return. 1/2018 shattered that mark with a 4.25% return (and was actually well above 6% before this week’s correction). We made more money in the first three weeks of January than I ever made in any six-month period as a pharmacist. I have come to accept that the market is in insanely frothy territory, but I will sail obliviously forward with it. I am very thankful that, two years ago, I took the consensus view here of asset allocation and moved from 50/50 stocks/bonds to 80/20. Spending has returned to normal since the lump sum expenses that tend to cluster in December are now behind us. We had no big purchases this month for me to make excuses around, which is a first since retirement. There were just some small things like two family dinners, amazon prime renewal, and two large electric bills.

Experiences: I strained the flexor hallucis brevis in my right foot on 1/4, which caused me to miss over two weeks of marathon training. Who knew such a thing existed? I wasted a lot of time on the computer the first few days after that doing nothing productive. I also came to terms with the fact that I am isolated. My friends have work, school, and children to occupy their time. I have none of those. I have nothing but time. I have no desire to join social groups and meet new people just for the sake of meeting new people because I honestly do not care for most people. My wife is on the other end of ninety-nine percent of my conversations. I did not anticipate what this would feel like. I am not fishing for advice or sympathy; I am just writing what is on my mind. While down with injury, I spent seventy hours creating an astronomy timeline display for the museum where I volunteer. Instead of learning about how the universe formed, it focuses on the order in which we learned about certain aspects of the universe and updates our understandings as you move forward through time. We started Game of Thrones (in season four now). I started running again on 1/22 and began playing the Nintendo Gamecube games that I purchased over a decade ago and never touched. I also made a gratitude list recently. It is ridiculously long. Reading it makes me feel ashamed when I find myself worrying over trivial matters. I think this is a good exercise for everyone to do. Finally, I did my taxes yesterday, which will get a special section this month…

Taxes: I anticipated breaking even, but I will be getting an unexpected refund of $5000. This is a breakdown of what happened. First, there is some absurd thing called a Retirement Savings Contributors Credit of $2000 to help low-income people such as myself save for retirement (which I clearly could not do on my own without this much-needed help). Second, I forgot that my income would be low enough this year to recharacterize my $5500 IRA contribution from Traditional to Roth. Third, I forgot that I had $3000 in capital gains losses from bond sales that carried over from the previous year. Fourth, I spent some time converting a hobby over to a business last year, which I figured would be a smart move since I’ll have more time on my hands (many of the startup costs can be immediately deducted). Fifth, there is a cap on how much of the excess premium tax credit one has to return on ACA subsidy payments. I anticipated having to pay a lot more back because I made the mistake of getting the most expensive plan that the subsidies would cover fully at 100% FPL. If I had it to do again, I would have chosen a cheaper plan since there was no way I could have got our MAGI down to 100% FPL with five months of employment. In short, we ended up paying less than $100 in taxes despite earning over $73,000. How to eliminate $73k in income: $18k 401(k) contribution, $3k business startup, $3k capital loss carryover, $11k IRA contributions, $2k student loan interest, $13k standard deduction, and $8k exemptions leave $15k in taxable income (and $1k owed in taxes). $1k taxes + $1.5k ACA excess payment negated almost entirely by $2k Retirement Savings Contributors Credit and $400 in foreign tax credit. Net taxes: less than $100.

Upcoming: On February 3, I will be going for 1:25-1:28 in my half marathon. No real goal, but a top ten finish (out of 500-600) would be nice. I finished 98th when I pulled myself off of the couch in 2013. My personal record of 1:27:57 should fall easily unless something goes wrong. After the race, more Gamecube, more Game of Thrones, and more running. I will continue volunteering at the museum, and I have plans to volunteer in the campaign for a local House race. She doesn’t have a prayer of winning, but that’s not the point. I’ll also be doing whatever the fuck I want.