online banking gave me a panic attack: my money story

I didn’t exactly burst onto the success train after college graduation.

In fact, I feel like we can safely say that didn’t happen.

It was summer of 2010 and I was leaving a prestigious school and a well laid-out path for the next leg of my journey into adulthood. I wasn’t sure whether I was ready or not, but either way i was going. I had been hearing rumblings about the financial crisis and that the job market wasn’t going to be easy, but I figured that the fancy name on my degree was going to more than make up for it.

Bring it on world.

‘Successful’ College Grad Living at home. AKA: here’s where I sound like the Milennial that all the baby boomers like to bash.

So I moved back home for what I was hoping would be a couple of months and started the job search. It wasn’t easy. but I also had no idea what i wanted to do when i ‘grew up’… I had a broken up college experience: two years at the local university, and then two years at the larger fancier school. I ended up with an economics degree, but also with no real desire to work in economics. My college was financed with a couple small merit scholarships and student loans, and graduated with about 45k worth of debt.

2010 ended up being one of the worst times to ever be a fresh college graduate. I think a year or so after i was out of school, I remember reading an article about 50% of the Class of 2010 was either unemployed or underemployed, and though right out of school, I wasn’t unemployed, I definitely remained under employed for a couple years.

Bank Teller Job. Aka:  here take all this money, don’t ask me about how much is in my accounts tho 🙁

That fall was rough for me, and even though I didn’t really know it at the time, some of those early rejections found me diving into a bit of a depression. I took a job as a bank teller, and was excited to move into that environment. I was excited to learn about money and start making some. A couple months into it, we received a new manager, and that manager started drastically reducing my hours and soon i found myself making barely enough to pay my student loan payment every month.

And that’s when I first started carrying a credit card balance.

I didn’t want to change my lifestyle. My depression was stopping me from making sound decision both with my money, but also with how i was spending my time outside of work. I was addicted to a video game, and also grossly overweight, which caused me to eat WAY more than i should have.

That credit card balance slowly started to grow.

Local Sales Guy aka: plez buy all my products!

In fall of 2013, I left the bank to take a sales job at a local business. They were excited to have me come in because I was going to be their first outside sales representative. Things were starting to go well for me, but a mistake made by our order fulfillment caused the entire office staff to need to be laid off in order to make payroll for the production floor.

When I found myself without a job, I felt pretty burned by sales. The message I internalized was: If you had been a good enough sales rep, you wouldn’t have ever been fired. While I was out looking for work, I continued to spend the same amount of money on video games, on huge meals, and on various things. Oh yeah, I’m still living at home at this point.

That credit card balance was really growing now.

The job search wasn’t very fruitful. I had 6 months of benefit, but I was using the time to see if i could get a freelance business to support me. I had been learning HTML and CSS and WordPress development during the course of the previous couple years, and I wanted to see if i could make that into a career. But it didn’t work.

Meanwhile, i’m avoiding going on the banking website, because even though my checking account was remaining around the same, my credit card was creeping closer and closer to the limit, and I didn’t want to get the card declined at all, I always made my payments… but they were always small payments. I was the bank’s best friend. and they made a lot of money on my interest. However, I remember very clearly one day logging into the online banking and nearly having a panic attack because I didn’t want to see what all was going on with my money.

I was a wreck.

One day, in the mail, I received a letter from the bank congratulating me on my good credit card behavior and that they had extended my credit limit. I know that seems like a ridiculous thing to the FIRE community, but that was GOOD news to me in the current state i was in.

Blue Collar aka: you WILL eat your humble pie and you will LIKE IT

In the fall of 2014, I had run out of unemployment benefit, and my checkbook was running out of money. Doing the web design thing wasn’t working. Getting another job in an office wasn’t working. So I finally decided to eat my slice of humble pie, and started working a job in a factory.

Honestly,  swallowing my pride and taking a job that was ‘beneath me’ was the best thing that ever happened to me.

My coworkers weren’t exactly America’s Finest, but I wasn’t automatically better than everybody else.

I started losing a lot of weight (by fall of 2015, I had probably lost 100 pounds).

I started getting my finances in order and started using a budget for the first time.

In summer of 2015, i was able to buy my first house (also the first time I moved out my parents house since college… I was 27. thanks mom and dad, I owe you)

My side hustle as a web designer had started to gain some momentum too. I think the old adage of “if you want to get something done, ask a busy person to do it” really applied here.

The rest is history, really. It’s the story I’m living now.

I rebuilt from that factory job, I started getting really busy with websites. I finally quit the factory job in the spring of 2017 to go full-time building websites. My credit card was paid off in 2017… only to have the balance shoot back up this last year because I didn’t prepare well for taxes this last spring… I think that’s a post for later.

My money story is turning around, and I have my sights set on a big goal: financial independence. I’m not 100% on the right track yet, but I’m on my way.  That’s what this blog is about: Learning how to earn more. Learning how to spend less. And learning what do with the difference.  View my first wall chart report here.

I hope you’ll follow along on the journey.

October Wall Chart Report

In August, as I reported an earlier post, I started reading Your Money or Your Life, by Vicki Robin, and I intend on sharing my monthly updates with this. So here’s my wall chart report for October.

In Your Money or Your Life, Vicki Robin outlines a step by step program to repeat on your way to financial independence. One of those steps is simply tracking your income and expenses and then recording the two numbers on the same graph that you hang on the wall so that you can see it over and over. I live in a house with roommates. I haven’t fully decided where I will post this, but it’s my intention to start the chart officially today.

I’m currently working as a self employed contractor for a large organization, so I definitely have a seemingly large income this month, and I’m hoping that it’s a trend that I can continue in the coming months.  I plan on investing my time on building out a social media agency as well as really dive into some GaryVee-inspired garage sale  and craigslist flipping.

The numbers:

Income: $10,078.05

Spending: $2365.80

Margin: $7,712.25

One note on October’s margin number. I generated these numbers using a report from my budgeting software that i’ve been low-key obsessed with over the last month, YNAB. I’m not immediately able to send 7700 dollars over to a vanguard account…  There’s taxes to account for, there’s house repairs to save for, and there are debts to begin to pay down.

I will look to writer further about the impact of using a budgeting app and the way it’s affecting my financial behaviors. However, one thing worth mentioning today is that tracking my income/expenses has become a daily activity for me. I actually look forward to opening up the app and organizing the transactions!

This blog is still new to me, and I’m still developing what a set of posts will look like in a given month. But, the wall chart will be a great way to keep things open and transparent.

 

Introducing The Investment Study

Welcome to the Margin Studies blog, and specifically the Margin Studies Investment Study.

Over the last few years, I’ve begun to take a bigger interest in personal finance….  This blog is a result of that! Ultimately everything you read and listen to ends up saying nearly the same thing.

Spend less than you make.

But what do you do with the difference? What do you do with the margin?That’s where there seems to be a pretty big disconnect between the different voices in the community.  You hear people investing in stocks, real estate, businesses, cryptocurrency, designer dogs, luxury sofas? … Ok maybe there aren’t a huge number of dog and furniture investment advocates on the internet, but there are many different things you can do with your money!

Stock investing is something I’ve been learning more and more about over the last few years, and that’s what I want to really dive into. If you’re looking to invest your money in equities (stocks and bonds and all of that other thing you might select in a 401k), what’s the smartest way to do that?

I don’t really have the answers, but i’m nerdy enough to decide to create some different pictures and willing to track their progress as time goes on.

heres to the up and up

Introducing the Margin Studies Investment Study

Before I really dive into this, lets just say this: I’m not telling you what to do with your money here. I’m not a certified financial planner. I’m not licensed to sell securities. I might even be dead wrong with some of my assumptions or models here.

I want to create a set of five portfolios that, together, we can watch as the market changes over the coming years.

This afternoon, I looked up a number of asset allocations that I’ll introduce in a moment, and for each of these allocations, I recorded an ETF that would model the assets required in each allocation.

A couple of things to note during the course of the investment study

  • I have started each portfolio with a starting balance of $10,000.
  • Each portfolio is made up of ETFs that are readily available, however aren’t necessarily from the list of commission free ETFs that my service offers.
  • Every two months, on the 1st of the month, I’ll dive into each portfolio, rebalance if it’s necessary, and then hop on the Margin Studies blog to report how each are doing.
  • Kanye West is a genius.

… 🙂 anyway, where were we? … Oh yeah!

The chosen few…. The Investment Study portfolios.

Portfolio number 1: The Ivy League Portfolio

This portfolio is based on the David Swenson Portfolio found in Tony Robbin’s Money: Master the Game. I remember reading the book and being pretty intrigued by this portfolio and it’s track record over the years. David Swenson is the chief investment officer at Yale, while he’s been at Yale, he’s grown their endowment from 1 billion to 28 billion. That’s pretty incredible. Maybe his wisdom can help us in our own investments?

The Ivy League Portfolio

30%: US Stocks — VTI
15%: International Stocks — VEA
5%:  Emerging Markets — VWO
20%: Real Estate — VNQ
15%: Intermediate Term Bonds — IEF
15%: Treasury Inflation-Protected Securities — TIP

 

Portfolio number 2: The Midwest Portfolio

This portfolio is based on Ray Dalio’s All Weather Portfolio found in Tony Robbin’s Money: Master the Game. Ray Dalio is the founder of one of the largest investment firms in the country — Bridgewater Associates. This portfolio at first glance seems pretty strange, with a diverse mix of assets, but it’s hard to argue with somebody who almost certainly knows more about this than me. Also, i’ve decided to call this the Midwest portfolio because we in the Midwest seem to get any kind of weather you could think of. So we’re prepared…. just like this portfolio is supposed to be. I’m exited to see where this portfolio stacks up during the course of the investment study.

The Midwest Portfolio

30%: US Stocks — VTI
40%: Long Term Bonds — TLT
15%: Intermediate Term Bonds — IEF
7.5%: Gold — IAU
7.5%: Commodities — DBC

 

Portfolio number 3: The Risky Robots

This portfolio is based on the asset allocation that a robot advisor suggested for me when I set up an IRA account with them a couple years ago. They took a brief assessment of my risk tolerance and financial goals and came up with this portfolio. I’m still not completely sold on Robo-Advisors, but if you’re a believer in the investment portfolio theories that Tony Robbins based Money Master the Game on, it’s hard to argue with how easy these Robo-Advisors make diversifying your money… you deposit money in, and they take care of the rest.

The Risky Robots 

21%: US Stocks — VTI
18%: International Stocks — VEA
22%: Emerging Market Stocks — VWO
13%: Dividend Stocks — VIG
16%: Real Estate — VNQ
5%: Corporate Bonds — VCIT
5%: Emerging Market Bonds — PCY

Portfolio number 4: The Simple Path

This portfolio is based pretty much the holy grail of the FIRE( Financial Independence / Retire Early ) movement. Jim Collins, in his stock series, lays out a very compelling argument to adopt this strategy. The portfolio is Simple. 100% of the portfolio in VTSAX (or the VTI etf equivalent, as I’m using here.) Your money will go up and down according to the market, but that in the long run, the market always goes up, so as long as you’re willing to endure the ride, this is both the simplest place for your money. Jim argues that this is also perhaps the most sound investment for the “Wealth Accumulation Phase” of your career. I’ll also add, that as I’ve been setting this up, i LOVED how simple it was to calculate out this  piece of the Investment Study

The Simple Path

100%: US Stocks — VTI
…  and a nod of approval from seemingly all of the other bloggers in this space.

 

Portfolio number 5: The Smoother Path?

This portfolio is based on Jim Collin’s Simple Path to wealth, but to be the portfolio to be used when you’ve reached your ‘Wealth Preservation’ phase of life: for when you need to smooth out the ride a little. One common investment principle you’ll hear get tossed around is to invest your age in Bonds, and then the rest in stocks. However, from what I can see right now, this might be outdated advice — largely because bonds no longer really offer any significant growth opportunity, these arguers suggested that today, you’re better off increasing the amount invested in the market to (120 minus your age) in stocks, and then the rest in bonds. I decided that this would be the Smoother Path to Wealth Portfolio here in the investment study. Oh… and I’m 31 as of today (November 2018).

The Smoother Path

89%: US Stocks — VTI
11%: Long Term Bonds — IEF

… Phew. There’s a lot to this!

The Investment Study as it stands today:

Current Score Card for the investment study.... we're currently all tied up!
Riveting.

When it is time to rebalance these portfolios over the coming months, I’ll update you on what is needed to buy and sell for each of these portfolios to remain close to their intended allocations. But ultimately the importance of this study isn’t the amount of VTI a certain portfolio holds, but how each portfolio performs at building and maintaining wealth in the coming months and years.

So what do you think? I’d love to hear your thoughts on the way I have things set up, or what assumptions I should make.

 

Currently in month 1 of Your Money or Your Life

Last year, I read Your Money or Your Life, after hearing the book recommended by so many people in the FIRE Community over and over and over. I read through it quick, had a couple friends borrow the book, and I’ve started the process of tracking spending two or three times, but ultimately always ended up losing steam, and then losing progress.

I was recently talking with a friend who was wondering what he should do with some of his retirement money, and I recommended The Simple Path to Wealth by JL Collins. His blog was one that my aunt pointed me to about a year ago, and I love the way he lays out a simple path. I wanted to buy him the book so that he can read it himself, and while I was making that purchase, I added the updated Your Money or Your Life book to the cart.

It’s been good to step back into that process.

I’m 18 days into my real Financial Independence journey. My official start day was August 23, 2018. I have a long way to go, but I’m confident that by walking through the process of Vicki Robin’s book, that I will get there.

I will make an official post about what this margin studies blog in an upcoming post, but I expect that monthly checkins on the last month’s income / expense tabulations will become part of this blog’s DNA. I’m excited to get rolling on this, although, I know that it’s not all sunshine and rainbows, that there will be some hard truth revealed about my habits and preferences, and about what I’ll need to sacrifice in order to make a fast run at Financial independence.

Lets go for it.

 

If you ran your life like you ran a business, would your performance review go well?

4 years ago, the simple act of visiting chase.com to see my account balances was enough to bring on a panic attack.

How much closer to my credit limit would I be?

How much more had I spent?

What will happen when I see that my account has gone over the limit, my credit card canceled, and my credit rating tank?

What will my friends think when the server comes back to the table and says that my card has been declined?

… None of these things ever happened.

Because I always paid some sort of payment on time, the bank loved me, and continued to extend my credit limit further and further out, allow my anxiety to drop down to a normal human’s level, and my comfort zone was re-established.

Plenty has changed, yet in some capacity there’s still that guy inside that’s pretty crappy with his money. 4 years later, I’ve been gainfully employed, bought a house, lost a lot of weight, and had a side business grow to the point of sustaining me enough that the side business became the business. I’ve technically been self employed just under 8 months, however my good money habits I had established during the course of my digging out of my credit card crisis largely disappeared as I began exploring working for myself.

This year is a lot about fresh starts, do overs, and brighter tomorrows. About figuring out exactly what money is going in, where money is getting spent, and wisely using the difference.

Sounds exactly like how a business is run, right?

My current finances? I’m a Needs Improvement.

I had used a software called ynab (You Need a Budget) to establish a budget back in 2015 as I began to finally live like a responsible adult. Over the last two years, I’ve struggled to keep my spreadsheets current, spending hours on a saturday morning at a local coffee shop every few months trying desperately to repair something that I had let break.

Self employment and the constant juggling of client expectations, proposals and invoices seems to have masked my need to keep the numbers straight in moments where the numbers are more important than ever. I quit my job the moment client work started to get in the way of my previous job. I wasn’t making as much as my day job at the time, but it was time to take the plunge!

I was combining a lower income, with a higher degree of carelessness about money.

So over the course of the last few weeks, I decided that the previous CFO of the business of me was failing. And it was time to put somebody new in charge…. me!

Businesses ultimately look at 3 things.

  1. What money is coming in. (My Income)
  2. What money are we spending. (My Spending)
  3. What do we do with the extra. (The Margin)

I’m looking to start measuring and improving each of those things. And obviously it starts with budgeting and tracking all spending.

At the end of January, I’m going to take all of my spending, and categorize each transaction, and create a brand new self employed budget, hoping to carve out dollar amounts for giving, for saving, as well as for necessary expenses.

  1. My Income.

I want to expand my business, but also start two new income streams.

2. My Spending

Everything is under a microscope for these next couple months (I need to survive tax time 🙁 )

3. The Margin

I have two huge objectives with my margin for the first part of 2018: save up to survive tax time and also get back to not living paycheck to paycheck.