Summer Break, links to old money posts

Nicole and Maggie discuss budgeting

Some early popular money posts

The Money tag

#1 used to have a mortgage

Do you have any favorite money posts?  Any money questions for Ask the Grumpies?

On being rich (high income) again after a stint of unemployment

Prior to DH’s last unemployment spell, I was feeling uncomfortable about having so much income.  I felt guilt because I was one of the “haves” (I probably still feel this, and it’s probably a good thing for me!  So don’t talk me out of it with conservative talking points), but also I had this odd sense that I should be looking for things to spend money on.  Money felt meaningless and valueless and there was no reason NOT to just order that $80 bottle of olive oil, or two even, no reason not to put money on the nicest AirBNB available for the trip we never ended up taking etc.  The only thing keeping me from buying all the pens (and I did buy a lot) was the knowledge that they might dry up before getting used!

Then DH got unemployed for several months and we were living on just my income.  We lived comfortably, but mainly because we didn’t have any big expenditures due to luck (being between appliance breakdowns) and the pandemic returning all our travel moneys and preventing us from spending on any new travel or fancy camps or expensive daytrips to the city or even eating out much.  (I still bought pens.)  It sort of felt like we were back to normal, but with more masks, hand sanitizer, and stationery.

Now we’re back to making more money than we’ve ever made and more than I ever dreamed of and somehow money has meaning and I’m not just buying all the things. But also I’m not freaking out when our water heaters end up costing almost twice as much as they were supposed to.  It’s just money and we have money.  But also, when it cost $1K+ for DH and the kids to see family from the closest city airport this summer, we decided it was worth the extra 30 min drive to the closest airport to save $500.  Was that a good decision?  I don’t know!  I refuse to feel either guilty or superior about it.  It seemed like a reasonable tradeoff at the time– 30 min plus a small amount of gas and car depreciation to save $500.

Several of the extremely wealthy and high income (white male) economists I know are also pretty frugal.  They spend money when it’s worthwhile but they also take advantage of sales and bargain down in situations where you can bargain.  I’m not sure it’s rational to do that when your consulting rate is $500/hr, but, they seem to think it is.

I’m not sure what caused the change in me.  Maybe it was just time.  But also I think having experienced via his last unemployment spell the knowledge that this high income really isn’t forever.  DH’s current job is a start-up and it may end if it runs out of runway.  Maybe it’s the knowledge that DC1 will be starting college soon and we’ll have to cash flow some of it if zie ends up at one of hir top choices.  (If zie ends up at the state flagship I don’t know what will happen to all those savings– $228K as of this writing, down from a high of $275K(!)– but I’m sure we will figure something out.)

So what am I doing while we wait for another shoe to drop?  Mostly I’ve been putting regular money into the stock market– a little bit more than my take-home pay each month most (but not all) months in order to get down our precautionary savings to what we actually need as precautionary savings should DH suddenly lose his job at the beginning of an unpaid summer (or, alternatively, I rage quit).  We’re down to that number now, so there will be less funneling money into the markets next year.  Having that money put away also helps the feeling of being artificially middle-class.

We’re still living well, and we’re still in a situation where rising grocery costs just means we shift to buying more luxury goods (that suddenly cost the same as non-luxury products that used to be much less expensive) and we’re still able to not sweat unexpected costs or even stupid money mistakes.  But our money situation no longer feels quite so surreal or consumerist.

How are you feeling about your income vs. spending with rising prices and loosened pandemic restrictions?

More travel stuff

  • I’d forgotten quite how much planning has to go into a non-conference trip.  DH has been handling most of it, which I appreciate.  (Oddly, I like planning things for DH and family when I’m not going, but it loses all its luster when I’m going too… so I have done a lot of planning for DH’s extended family vacations even when I’m not there too, but DH does the planning for joint trips.)
  • All told, train tickets are coming to just over $1K for the four of us for all of our city-to-city trips.  Planning these and buying them was surprisingly easy using Rail Europe (I wish the US had this!).  We looked into getting a pass thing which basically means you get discounted reservations for trips, but the money didn’t work out, so we stuck with buying them individually.
  • We will still need to get within-city transportation, but it looks like most of our needs can be met with light rail + walking and we can avoid buses, taxis, rental cars, ubers, etc., which is good because it sounds like traffic is horrific in a couple of places we’ll be needing to travel, at least according to Reddit.
  • We decided to keep our regular cell-phone plan with Ting.  People recommend Google FI or getting European sim cards or a number of other complicated things.  After running the numbers, if we’re not careful and keep our usage to what it normally is, the most we’ll cost is still well under $500, whereas the other options all have upfront costs and huge potential hassle costs.  If we are careful, by which I mean, we download maps while still in the US, we turn off cell for the most part while traveling (except when apart or for emergencies), we keep DC1’s cellphone at home, we turn off the ability to receive pictures etc. it should be much less than the other options, but we still have the ability to spend money if we’re separated or somehow get lost somewhere we don’t have maps for etc.  (The reported wifi at our various hotels varies according to Trip Advisor, with some places being great and some places not so much.)
  • We don’t have an atm card for our local credit union.  It looks like our Wells Fargo account charges $5/use plus whatever foreign ATM fees charge (we don’t have premier checking and would need to add another 8K to the account to get it).  I don’t even have an ATM card, so I opened up a Capital One checking account which has no fees other than what the ATM itself charges.  I already have a credit card and savings with Capital One, so I just shifted some savings over. Hopefully the card will get here before we leave.  Even if we end up going with Wells Fargo it would be nice to have a back-up ATM card just in case.  As an added bonus, it looks like if I transfer $250 over twice from our etrade accounts in the next some amount of time that we’ll get a $250 bonus for opening the account.  We’ll see though.  (It wants direct deposit, but what counts as a direct deposit varies.)
  • The only day we can go to the Museo D’Orsey is a free day.  I hope we can get in and I hope we don’t get Covid!  We plan to go super early.
  • We got our tickets to the Louvre!  We’re not actually that excited about it (compared to everything else we’re doing) except we feel like we should get a glance at the Mona Lisa because that’s what one does on one’s first visit to Paris.
  • We haven’t gotten tickets to places in the other cities.  I’m thinking we’ll just play it by ear.  I am really excited about a museum where one of my favorite painters used to live.
  • We’re bringing candied pecans as hostess gifts for my second cousins.  I hope that’s not ridiculous, bringing candied nuts to Europe, but pecans seem like a Southern US thing.  (Though DH initially bought some overpriced not as good candied pecans imported from Spain when I didn’t specify on the grocery list that I wanted the local variety.  So it’s not like Europe doesn’t have them.  But we will not be bringing those as hostess gifts.)
  • DH and the kids will be visiting his parents in the rural midwest while I’m at one of my conferences.  They’ve decided to fly.  We were able to get 3 round-trip tickets for ~$500 by flying out of a city that’s somewhat farther away than our normal city.  This is less than half of what our normal city would cost AND has better times (DH’s parents don’t have to pick them up at the airport at 11pm!)
  • Sadly, the flight days to get those tickets mean that I’ll be home alone on DC1’s birthday while zie is at the grandparents.  Zie doesn’t seem broken up about it and we talked about maybe giving hir our presents before I leave for the conference.
  • After three years of nothing, it feels like an insane amount of travel, but really, it’s just one more trip than usual for the family in the summer since I usually have conference travel and DH and the kids usually (in pre-pandemic times) visit his family while I’m at one of the conferences.  We used to do more kids tagging along to conferences with me back when it was easier to take them out of preschool or private school (public school really doesn’t want them missing days).

And more major appliances are breaking…

Our 12 year water heaters lasted 15 years, so I shouldn’t complain.  But they are expensive to replace!

So we bought two more 12 year water heaters from home depot ($1750) and called the plumbers in.

The plumbers opened up the boxes … and the water heaters were severely dinged and damaged, both the “jacket” and a bunch of the valve things.  Not usable.  (The boxes were super dinged up, and I watched one of the guys open the second water heater so definitely no shady business on the part of the plumber.)

So, since our garage water heater was literally dripping, we made the executive decision to let the plumbers sell us some not as good/more expensive water heaters ($3100, but also they didn’t charge for the installation itself, so that must have been built into the price) by the same company (Rheem) that they had in stock (6 year water heater plus 4 year additional warranty and replacement valves = 10 year warranty).  Not necessarily the best decision, but that’s what happens when you are in an emergency situation and DH is making the decision from an airport on his way to a conference and if you weren’t living with DH to do all this stuff you would be renting.  And at least these water heaters wouldn’t be dinged.

While they were out, we got our broken whole house filter (still under warranty) replaced and we got a pressure regulator added to the house so the whole house filter doesn’t break again AND so we stop going through toilet innards so rapidly.  (Plus, in theory, one would not be able to injure oneself with the bidet, though I do not plan to test that.)  That was ~$300 for parts and service.  They also checked to see that our shower stall was no longer leaking after DH caulked it and they determined that the bathtub leak in the children’s bathroom was just them not completely turning the middle faucet that switches between shower and tap and they didn’t charge for either of those.  So I feel less bad about the total bill since it seems like they loaded some of the labor onto the cost of the water heaters.

*Sigh*

The moral is that things shouldn’t break when DH is at a conference.  Or maybe if your major appliance comes in a super dinged box you should open the box before calling the plumbers.  I don’t know.

A few years ago this kind of kerfuffle would have made me anxious and worried, but this time it just me tired (so tired, in fact, that instead of finishing making the dinner I was halfway through making, I went online and spent another $40 on pizza delivery).  People say money can’t buy you happiness, but it sure can buy peace of mind.

Europe in the summer is expensive!

DH and I have been booking hotels.  One of the problems is that we’re visiting when most of Europe is on vacation, so hotels that are 99 Euros/night now are $200+ Euros (often more) when we’ll be there in a month.  I wonder a bit if we might have saved money going over Spring Break or the very beginning of summer without any conferences to defray expenses, especially since flights are less expensive now too.

So we fly in, and take a train (tickets not yet purchased) and stay two nights in a “fairy-tale city” that my sister said we had to visit that is also near my second cousins.  $514.42.

Then we train over to a city where I’m giving a talk and spend two nights there (partly defrayed by university).  Our share: €250

Then we head to conference city for 4 nights (partly defrayed by conference).  Our share: €170*4 = €680

Then we head to Paris for 3 nights:  €1,053.56

Then a night at the airport hotel:  $150.51

So, all told, something under $3,000 for housing, depending on exchange rates.  Could we have done all of this cheaper?  YES.  There were sketchy looking places at a fraction of the price, particularly in Paris.  But all of the places we picked have lots of good reviews (for Europe– which is similar to good reviews for NYC– many of these are tiny and old!) and are walkable and close to rail transportation.

We haven’t figured out ground transportation yet, but that’s next on the list, along with phones and tickets to popular attractions.  Trains seem expensive compared to driving your own car and cheap compared to flying, but also extremely convenient.  It looks like it will be something like 50 euro each, give or take, every time we change cities, though I might be underestimating there.  We want to go to museums.  We want to eat out all the meals (except full continental breakfasts are included with about 2/3 of the above hotels, so maybe not breakfast).  (I love Continental breakfasts with their emphasis on things that aren’t sweet, especially when there’s local whole grain bread included.)  I’m not sure how much we will want to go places not in walking distance of the hotels, possibly not that much.

I also added DH to my Capital One account so he has a card with no foreign transaction fees.  So there’s a little savings there.

And DC2’s passport arrived with plenty of time to spare.  Yay!

Any tips for Europe in the summer? (No, I’m purposefully not saying any of the cities except Paris, though if you want more info on that, we’re staying near the Louvre.)

Ask the grumpies: What do you think of the 4% rule

First Gen American asks:

Once you’ve hit your magic 4% rule retirement number, should you reallocate to a more conservative asset allocation. Why or why not. And what do you think of the 4% rule.

Standard disclaimer:  We are not financial professionals.  Do your own research and/or consult a fee-only certified financial planner before making important life changing decisions. 

I mean, do you have a bequest motive?  Do you plan to make a LOT more money before you retire?

4% rule

The 4% rule is ok in terms of preserving your capital until you die on average.  But it’s bad in terms of volatility and uncertainty.  You don’t know how your monetary needs are going to change over time, so it might be too risky.  It may also end up with you not actually being able to take out enough for your needs during a recession, and if you end up taking out more then you’ve broken the rule entirely.  I think the 4% rule is best if you have an additional emergency fund or have the ability to earn more money if necessary.  I don’t think there is any actual safe rule that will both preserve your capital as needed and ensure that you have enough money for your spending in uncertain times.  The 4% rule doesn’t get rid of the need for lots of money.  So, I probably wouldn’t retire just because the 4% rule says I can, especially not while still youngish and during uncertain times.

If you’re planning on continuing to work, it doesn’t matter that you’ve hit the 4% rule retirement number.  What matters is when you actually retire and stop bringing in new money.  While new money is flowing in, you don’t need as much in terms of conservative assets because your income moderates short-term risk, allowing you to reap the benefits of risky assets that aren’t actually that risky over the long-term.

100% safe vs. 100% stocks

Suze Orman famously keeps almost all her money in safe assets.  She recommends you play the stock market, but she doesn’t herself.  Some wealthy people only keep a little spending money in liquid assets and the rest are all in stocks and other risky assets. When you have a LOT of money, both of these are completely logical because you can live off money that’s eroded by inflation but you will also still be fine if the market drops 40% or more.

The standard calculus changes when you have waaaay more money than you will ever need.  You have to think about what it is you want to optimize.

If you don’t care what happens when you die, you’re probably fine no matter what you do.  If you want to keep things for your heirs, then you will need to think about tax optimization and definitely keep a lot in stocks– your horizon is even longer and your heirs benefit from step-up basis upon your death.

 

RBOPG&E

  • PG&E is spitting out dividends again, at least for its preferred stock.  It’s still a fraction of its high value (somewhere between a half and a third), before it was discovered to have set California on fire.
  • It has been so long since its last dividend (2017), that it decided to no longer keep up with direct deposit.
  • I got a check in the mail for $218.  But it also said that they’d paid us another $3K to date (in back dividends).
  • So I figured out how to logon online (it still remembered my password from tax time, I guess) and it said that it sent a check for $3K two days before it sent the check for $218.
  • I set up direct deposit again.  They didn’t know the name of our credit union, but they knew a name with fewer words and there doesn’t seem to be another credit union with those same words?
  • We decided to wait another week to see if the larger check came.
  • These dividends are only for our preferred stock, but most of our stock is regular.
  • I don’t think our preferred dividend amount will ever go up.  I think it’s going to be $218/quarter whenever it pays dividends.  No matter what happens to inflation.  But I could be wrong about this.
  • Our regular stock reached a high of $800/quarter, but those times are long gone.
  • We have twice as much regular stock as we have preferred stock, but the regular stock is only worth a tiny bit more than the preferred stock.
  • The check for $3K came about a week after the check for $218.  I have deposited it to our Wells Fargo account and it will eventually get used for music lessons and other smaller expenses that require checks.  (Expenses above $500 tend to come out of our main credit union account.)
  • Utilities are supposed to be bluechips– stable not risky ways of getting regular income.  But that’s obviously not true.  Index funds really are the best, not single stocks.

Ask the grumpies: Why hasn’t the world cracked down on crypto yet?

First Gen American asks:

Why do you think the world has not cracked down on crypto yet?

We should ban it because it allows people to tax evade and launder money for illegal activities, and, of course, the environmental factors.  The longer we don’t ban it the more difficult it will be to ban as pensions start including it in their portfolios.

(Answer from when this question was first asked):  Because President Trump sucks.  We need US leadership to get the world to do anything– see climate change (#Kyoto)

(Answer from this year): Since this question has been asked, China and 8 other countries have fully banned crypto.  But I think the main reason the US hasn’t is because our political process is being held hostage by ultra-rich people who are making money from it.

In other words:  Citizens United

RBOMoneyAndTravel

  • I got invited to give two talks this summer in Europe within a week and in nearby cities.  They’re both doing the “you pay your way, we pay your stay” thing and my bursary will cover my flight.  One of the cities is also near a lot of second cousins I’ve never met, but my sister has met.
  • After a lot of thinking and concern about covid etc. we decided that the whole family should go.  I don’t know if this is the right decision or not (the state department doesn’t think so), but who knows what European rates are going to be like compared to US rates in the summer.
  • While we were booking our flights, United brought to our attention that we still had $1900 of travel credits left(!) from our anniversary trip and DH’s family trip getting cancelled by Covid.  I totally thought they had expired.  Thank you for bringing that to our attention, United.
  • Total flight cost after credits and minus my flight:  $1600.
  • It’s kind of weird realizing that in a year and some change, DC1 will be off to college and may not always be included in family trips anymore depending on what zie is up to.  This is kind of our last chance to give hir these travel opportunities I never had as a kid.  Maybe zie will study abroad a semester, but that’s not the same as experiencing things as a family.
  • I also have two flights for giving talks scheduled for May.  I’ll also be going to an in-person conference in July.
  • Turns out DC2’s passport expires just before our summer trip.  We renewed DC1’s over break because it was going to expire earlier, but we figured we weren’t going to be going anywhere and could renew DC2’s at our leisure sometime after the school year.  Unfortunately even with expedited we need to renew hirs right away, and we can’t do it locally because there aren’t any appointments available.  We’re going to have to drive an hour and a half to a post office in a small town we’ve never heard of.  (We could do an emergency renewal but we’d have to put off renewing until right before and do it in the city, and we’d rather have that be a last resort option if it truly is an emergency.)
  • There was a last minute cancellation in the town next to ours, so we were able to only drive 30 min instead of 70.  It took half an hour (not including the travel time) and over $200 with all the expediting to get it to arrive in 5-7 weeks.  But it will be worth the peace of mind so long as it actually comes in 5-7 weeks.
  • After we bought our flights, the mask mandate thing was cancelled.  Though it would have expired in early May anyway.  I wonder what international flights will do.
  • I bought some more large masks of various types so DH will have things to choose from.  I also got more POSH masks for the rest of us because the BOTN masks are getting complaints about the nose piece being worse than it used to be and if that happens with POSH I want to have backups.

Ask the grumpies: What should kids know before they move out of the house

First Gen American asks:

[What are] things your kids should know how to do before they go to college[?] Socially and practically. (Safe sex, how to make eye contact, manners, laundry, managing money, dishes, etc.)

We live in a school district with zero sex ed.  DC1 got some age appropriate instruction in 5th grade when we were on leave, and DC2 has read both a boy’s and a girl’s version of puberty stuff.  I believe zie asked DH some questions about them and he gave matter-of-fact answers.  DC1 also has the teen vogue issue on sex, though I’m not sure if zie ever opened it.  We’ve spent a lot of time discussing consent.  We’ve also discussed sexual identity and sexual attraction (specifically, why DC1 may not be feeling attracted to anybody yet even though many other 15 year olds are dating).  But we haven’t yet talked about birth control/STDs (DH says they did when DC1 started going through adolescence and we got those puberty books, but it was a talk aimed at a much lower age), or, what I think is more important, how to deal with sex as a teen/young adult (other than the consent thing, which we have emphasized goes both ways).  We will definitely have those conversations before zie goes off to college (or after zie gets a significant other, whichever comes first).

We’ve been focusing on basic cooking skills, including some simple dishes without a recipe and how to follow a recipe.  Both of our kids can now feed themselves and follow a recipe well enough to feed other people with minimal help.

Laundry is another important thing.  One would think people could just read the instructions on the washer/dryer, but given my experiences at boarding school and college, no, people (including high school me) need instruction.  I’d rather have my kids be doing the instruction than the other way around.

How to make a bed.  How to be a good guest.  How to load and unload a dishwasher.

How to drive and pump gas and use a credit card, maybe even a checkbook.  And how not to get into consumer debt.

DC1’s school recently had a “learning how to adult” day, which is new.  But they gave such terrible advice!  The financial person (who works for a local bank) was 100% Dave Ramsey (name-checked him a lot) and said never to ever use credit cards.  They showed them how to write checks and recommended they call up to negotiate the price on their land-line every time the introductory rate changes.  (Which is great advice for all our rotating services, but who has a land line?)  The college person said that everyone should apply to exactly three schools (aspirational, good chance, safety– not bad advice, but for kids in DC1’s bracket, aspirational and good chance blur a lot and they need to apply to more) and either go to the university in our town, or if they can’t get in, then to a specific one of our regional state schools (one that’s about 7 hours away, which is weird when there’s others that are closer).

Grumpy Nation, what do you think kids should learn about adulting before they leave the nest?