February 2015 Early Retirement Progress

We contributed $5,902.70 this month to our retirement accounts  We gained $16,648.42 in investment value this month. 

February made up for January’s market slides, we “made” almost 70% of our annual total in the first two months of the year.  If we keep “making” this much money, we could retire on it now – too bad it’s not consistent!

This month, we dropped an additional $750 into our Roth accounts for 2014. I’m counting them this month since they were a bit spur of the moment. I added $500 to mine to get it above a $10k balance, and I added $250 to Dad’s because we needed to open a Roth for him anyway and that was a nice round number we could afford.  Most of his is invested in ITOT at the moment since we don’t have $2500 to get to FSTMX.  We likely won’t be contributing any more to Dad’s Roth until we see what our taxes are like in 2016, so it might as well gain us some money in ITOT.

Once closing happens (oh please $DEITY soon!), we’ll know our cash flow better, and I’m hoping to start setting aside money to put in Roths next year after 2015 taxes are done.

2015 Totals

In 2015, so far, we’ve contributed $14,425.07 (20.61% of our goal of 70k), and we’ve gained $13,995.03 in investment value (69.07% of our planned total).

Teaching Little Ones About Money

This weekend, we had our first money lesson with Daughter Person.  I think it went pretty well.

Daughter Person got some money for her birthday, and has been keeping it in a “wallet” with her toys.  She’ll play “pretend store” with me where she dumps a bunch of toy jewelry in my lap and ask me how much something is.  I’ve always been pretty simple and say most things are $1, with a few being $2.  She’s using the real US dollars to “pay” me, then I give them back to her to put back in her wallet.  I had a pretty good idea of how much was in her wallet: $7.

We went to the zoo for a class, and we’re allowed to remain in the zoo afterwards, so we went to the aquarium (she wanted to see the fish, and we were happy to be out of the cold!).  In the aquarium is a store with all kinds of stuffed animals, and Daughter Person wandered in there and started looking at things.  She asked if she could buy something, and I got this bright idea to remind her that she had $7 at home, and that Mommy would give her $7 now, but she had to give Mommy $7 when we got home.  She “got” it, and started looking around. Dad and I started looking around also, and realized that there was absolutely nothing that she could get for $7, so I offered to give her $3, so she could buy something that was $10.  (I completely left taxes and our membership discount out of the discussion).

She spent her time looking around to find things that were less than $10 – there was a small pile of little stuffed animals for $9.99.  She’d ask how much they were, and we’d look and answer with “you can afford that, or no you can’t afford that”.

She settled on a red-eyed tree frog (for some reason, she remembers that episode of Diego really well…).  She picked it up and continued to look, but that’s what she wanted.  So, I gave her $11 to give to the cashier, and told her to pay. I asked over her shoulder about our membership discount of 10%, and handed over our membership card as well.  She handed over her money, and handed back to me whatever the cashier gave her (there were coins involved).

Then, when we got home, she willingly gave me her $7 once I reminded her.

I think it’s time to institute an allowance and let her buy her own toys for the most part. I didn’t think we’d have to worry about the allowance until she was older (like 5 or 6)!  If you have kids, how do you handle the allowance?  Do you tie it to chores?  Do you just give them a certain amount of money?

2014 Roth Contribution – $500

For the first time since I’ve been married (2008), I’ve contributed to a Roth account. I didn’t have much set aside, so I limited myself to $500 into my Roth for 2014. We just barely scooted in under the contribution income limits for 2014, and I wouldn’t have been able to put in the full amount anyway. $500 was enough that I could scrounge up from “extra” money laying around, and we’ll be getting about that much back from our taxes, so I can “float” the $500 in our budget until we get the money from the state of VA.

$500 is also just over the magic number I need to add to the account to qualify for Fidelity’s Advantage class (vs Investor class), which saves me 0.03% in fees (0.10% for investor vs 0.07% for advantage). This is why I really did it :)  I have $200 leeway for the markets to decline and still remain above the 10k minimum needed. I now only have investor class funds in my taxable account, where I just managed to get the $2500 minimum to buy into FSTMX; so it’ll be a while before I qualify for the advantage class fund there.

We should qualify for contributing 2015 funds as well (hopefully the full amount) since I’m finally maxing out my 401(k) contributions and lowering our MAGI. I’m budgeting to put about 75% of the maximum 11k in for 2015. I’m hoping to start a specific budget line item for our Roths in June/July with $950 each month – then doing the actual contributions the following February (once we can confirm that our MAGI is under the contribution limits). The exact timing depends on how closing goes down, how much we have left from what we’ve saved, and what our monthly cash flow looks like.

Did you max out your Roth contributions for 2014?

Detailed Financial Picture – February 2015

January’s Numbers

As of February 6, 2014, we are $13,000 in debt without a mortgage to speak of (yet).  We currently have $564,947.34 in assets.  Our investment accounts are at $442,758.19. Our Net Worth is $551,947.34, up from $532,971.98 last month (3.56% increase).

The markets are going back up (at least for today), and so are our investment accounts.  It didn’t hurt that we added about 8k to our accounts in January.

Our house still didn’t have any siding on it as of this past weekend, but we can’t see inside the house any longer (the garage door has been installed – and we were able to see into the kitchen through the garage).  I sent an e-mail off to the sales guy to ask “permission” to go inside when we drive by this weekend, or if he’d tell us what the progress is :)  It’s recommended that we lock our rate with the mortgage company when the cabinets get installed.

I have a feeling that we’ll be refinancing very shortly after getting the mortgage.  The mortgage company asked me to write a letter explaining why my income dropped between 2012 and 2013 (uh, I got a salary plus bonuses and the bonuses were lower?), and why $1500/mth was being taken out of my paycheck and sent to Vanguard.  Seriously?!?!  Dad didn’t have to write any such letter, despite him also contributing the max to his 403(b) *and* having part of his W2 as bonuses based on how well the company did.    A lot will depend on their rates as to how quickly I refinance.  I may give them a month or two of trial if their rates are sufficiently low.  The estimates they’ve given me so far have been 4.75% – which is outrageously high (and the loan officer admitted that, but it was “safe”) – I’d be on the phone to refinance immediately after closing if that’s the rate.  Unfortunately, the builder is giving credit against our options only if we go with this lender (FBC Mortgage), and because we’re planning on paying off the loan early, the rate would have to be criminal before it made sense for us to finance elsewhere.  Doesn’t stop me from refinancing immediately though!

Since it’s 2015 and we started the year with no debt other than our car loan, I’m going to just drop off the other debts below, and will add the mortgage back in once we have one.  It’s actually driving me nuts seeing the ability to pay off the car sitting in my bank account, but earmarked for something else.  I’m hoping that I’ve really saved way too much for the down payment and I’ll be able to put some of what’s left to paying off the car faster.

Debt (in the order we’re paying it down):

  • Car loan (0%): $13,000 (-500.00)

Total paid off in January:  $500

January 2015 Early Retirement Progress

We contributed $8,522.37 this month to our retirement accounts  We lost $2,653.39 in investment value this month. 

January was an exceptional month for contributions: it was a three paycheck month for Dad, and his company contributed $2250 to our HSA for us on January 1.  This influx lets us put all of our contributions to investments (minimum of 2k in cash).  I also redeemed a little bit (about $64) of our Fidelity cash back points into our Fidelity account.

There are two more 3-paycheck months this year thanks to Jan1 falling on a Friday – Dad’ll get paid on Dec 31 for his last paycheck of the year.  I had to figure this out because there was less taken out of his paycheck for daycare FSA and I wondered why (the year still has 52 weeks, but instead of 26 pay periods like normal, he has 27 pay periods).

We have a good start on our contributions for the year, but the markets have been going down.  I don’t expect to get 6% gains every year, just averaged over the 10 or so years we’re actually contributing.  2015 may turn out to be a down year, but we were well ahead in 2014 to make up for it!

2015 Totals

In 2015, so far, we’ve contributed $8522.37 (12.17% of our goal of 70k), and we’ve lost $2653.39 in investment value (-13.10% of our planned total).

Filing Taxes Online this Year? Consider Some of these Security Safety Tips

Disclaimer: I do not (nor will I ever) file my taxes 100% online, ala TurboTax Online

Some of you may know that my day job is in information security.  As we all look at filing our taxes this year, I wanted to give you some tips if you choose to use one of the online services.  I don’t mean using the desktop version of the software and then e-filing, but using a web browser only to complete and file your taxes.  Although, some of these rules are applicable to many instances, your social security number(s) and tax information in combination make it very easy for opportunistic thieves to steal your identity.

Luckily, to my knowledge, Intuit – at least – has never had a breach of their e-filing systems – and they are a clearinghouse for e-filing, so they’ve got that information already.  (Although, I am a bit surprised, because that’s a *lot* of sensitive information just waiting to be attacked…)  Not that it can’t happen, but it hasn’t happened yet.

TL;DR Version (also the I don’t want to know what can happen, so I’ll stop here version)

  1. Don’t use a “public” computer (public library) to file your taxes
  2. Don’t use a “public” wireless connection (airport, hotel, coffee shop) to file your taxes
  3. Update your system and use anti-virus before starting on your taxes

What To Do

So, if you’ve been getting all your Internet access from the public library computers, what do you do?  If you have a good friend you trust, ask if you can use their computer and Internet access.  If you don’t have that good of a friend, ask your library (or other access point) what they are doing to make sure you are safe when using their computers.

Determining whether a wireless access point is secure is more difficult, and requires some technical knowledge, but it can be done.  First, make sure that you are connecting to an “Access Point (AP)”, not an ad hoc network.  When you look at the list of networks, the icons indicate whether it’s an AP or ah ad hoc network.  Ask the provider what the network name is supposed to be.  Attackers sometimes set up “fake” APs to lure you into connecting to them instead of the “real” access point.  Consider using your cell phone connection (tethering) if you’re in a public location.

If you have a VPN available to you through your job, consider using it to further protect yourself (check company policies first!).

The Reasoning

Now, for the longer version.  This gets a little technical, but I’ve tried to link to “layman’s” articles describing the possible attacks in detail.

Background

“Identity Thieves” steal credit card numbers left and right – it’s really not that big of a deal, just an annoyance.  When’s the last time you were able to open an account or take out a loan based only on one of your credit card numbers?  Generally, you need your social security number, address and phone number to open such accounts – you may or may not need your actual mother’s maiden name – that’s just setting up a (poor) shared secret.  What’s on your tax return?  Your full social security number and address – and if you’re married or have dependents, your family’s information as well.  When’s the last time you pulled a credit report on your kids to make sure no one’s opened an account in their name – without you knowing?  I thought so.  Go do it now – they get free reports every year just like adults do.

When you do your taxes 100% online, you are sending that information to the provider over a secured (SSL) connection.  But, you are using a web browser to do so.

Don’t use a “public” computer

Public computers are “dirty” (not just in a physical sense), and you don’t know where they’ve been or who has been using them.  Most places that offer computers for public use have IT staff on hand to watch for suspicious activity or hardware, but not always.  Almost all use some kind of “kiosk” software to wipe the machine back to a known state between uses – if you see other people’s documents on the desktop or downloads folder, it’s likely not running kiosk software.

An attacker can install a keylogger (physical or software) on the machine and log every keystroke you make – including usernames, passwords, and social security numbers.

An attacker can install a proxy which forces all of your web traffic through a machine they control.  Yes, you can proxy SSL traffic – very easily when you have control of the users’ endpoint/desktop.

Don’t use a “public” wireless connection

Like public computers, public wifi is “dirty”.  You are sharing all of that bandwidth with every other person using that AP.  So, anything unencrypted can be seen by anyone who can connect.  And just because there’s a password on it, doesn’t mean much – those passwords can be cracked with about 4GB of data – under 10 minutes on a very busy network.

Your machine is also available to be attacked by anyone else on the network.  Have file sharing turned on?  It’s available without much effort to anyone else on the network.  Make sure you’ve got your firewall turned on and blocking everything possible!

The general recommendation is to make sure that you are using SSL when connecting to any web site, but recent vulnerabilities make an SSL Man-in-the-Middle (MITM) attack possible – sometimes without your knowledge.  SSL depends on a trusted infrastructure of a bunch of people doing the right thing, a bunch of policies, and a bunch of technology (read more about Public Key Infrastructure).  In the last few months, attacks have weakened SSL (Heartbleed, and Poodle).  There’s quite a bit of discussion in the security community on whether SSL is still “good enough” to continue using or if we should consider another protocol (TLS is one, but very similar to SSL).

Update your system and use anti-virus

This are basic tenants of computer security.  Some of the attacks described above depend on “broken” software.  For the particular ones described above, they’ve all been patched by the respective vendors.  Keeping your system up-to-date helps alleviate the chances of an attack succeeding.  Keeping anti-virus software installed (and running!) can also detect things like keyloggers.

If your public computer provider is doing these two things, they’ve gone a long way towards making you safer online.

Detailed Financial Picture – January 2015

December’s Numbers

As of January 12, 2014, we are $13,500 in debt without a mortgage to speak of (yet).  We currently have $546,471.98 in assets.  Our investment accounts are at $425,862.38. Our Net Worth is $532,971.98, up from $522,285.88 last month (2.05% increase).

I almost forgot to include our HSA into the above values.  I only included the amount that’s in the “investment” side under investments and the remaining as cash.  Part of the large increase in assets was the 2250 that was contributed to our HSA for us by Dad’s company.  That won’t happen any more this year, but we’re contributing $367/mth which with a small change in December (to $363) will max out our HSA.  I’ve got it set up that 2250 stays in the “cash” account, and anything else above that gets swept into the investment piece.  We can then use it for medical expenses if we need to.  There’s a minimum balance of 2k in the “cash” part of the account.

The markets have been up and down since Christmas, and so have our balances.  I am enjoying the lower gas prices though!

We toured our half finished house on Friday, and the production manager is thinking we might move in in early March (about one month ahead of schedule).  It depends on when the hardwood flooring is delivered and if we have any more extreme cold snaps.  He said if the flooring is there by the end of the first week of February, it’s very likely we’ll be moving in at the end of February or early March.  Normally, I love cold weather, but this time I’m going to hope for mild weather so that we can move out of my mother’s house sooner!

The money for closing is sitting in our bank account, but if we close in February rather than march, we might have to float the cost of the refrigerator on our line of credit until we get the credit from the storage company.  We can already float the move for 30 days on our credit card (and get cash back!), which may be all we need.

Debt (in the order we’re paying it down):

  • Line of credit (8.75%): $0.00
  • Chase (4.99% for life): $ 0.00 
  • Student loans (aggregated 4.21%):  $0.00 
  • Car loan (0%): $13,500 (-500.00)
  • Mortgage (4.125%): $0.00 

Total paid off in December:  $500

December 2014 Early Retirement Progress

We contributed $4,797.72 this month to our retirement accounts  We lost $2,275.18 in investment value this month. 

I did realize that my end of year numbers don’t quite match up with the actual balances in our accounts – the statements don’t include dividends in the “investment gain”.  So our actual end of year balances are almost 10k higher than my value.  I need to figure out how to make sure those dividends get added into the calculations for 2015.

We did really well this year, and I may contribute another $500 to my Roth for 2014 if we fall under the AGI limits.  I have $9500 in there, and another $500 would let me qualify for Fidelity’s advantage class of mutual fund, dropping my investment expenses for that account. I need to do our taxes first before I can see if we can do that this year.

2014 Totals

In 2014 we contributed $45,689.7 (114.22% of our goal of 40k), and we’ve made $29,804.04 in investment gains (147.10% of our planned total).

Our ending account balance (according to my numbers) was $413,181.62 (vs a planned $397,949.15)

2014 Goals – Massive Fail

I made a few goals for 2014, almost none of which worked out.  Oh well, I wasn’t expecting to pick up and move either!

Health Goals

Massive Fail here.

  • I gained 20lbs instead of losing 15: FAIL.
  •  I started out the year exercising, but then we moved, and I haven’t gotten back into it other than trying to make 10k steps per day via my Fitbit: FAIL
  • Eating 3 servings of fruits or veggies day?  Nope: FAIL  I’m lucky to get one at dinner…

Financial Goals

Technically failure, but only because we sold our house and lost that asset, although it may have been close if we hadn’t sold the house.

  • Pay off all non-mortgage debt that carries interest.  Everything but the car (at 0% interest) is paid off: SUCCESS
  • Get to 650k Net Worth.  We are sitting about 550k, which without the house is really darn good. If we hadn’t sold the house, we’d have been above 650k based on Zillow’s current estimate of our old house.  FAIL
  • Increase our assets to 1.2 million.  Without the house, we’re down over half a million.  We might have made it to 1.2 million with the house.  FAIL

Household/Parenting Goals

  • Get rid of diapers – we have stopped using her cloth diapers – they don’t fit her any more, so we’ve had to move to pull-ups for at night.  At least we’re completely out of diapers during the day with very few accidents!  I have a feeling we’ll not be buying any more pull ups though, we’re starting to have a couple of nights where she wakes up dry. We’re also not really pushing diaperless at night because of the moving. I’m gonna call this one a (technical) SUCCESS
  • Get rid of another 365 things in 365 days.  We got rid of way more, both via donations and taking things to the dump.  I am already starting a list of things to get rid of once it’s out of storage: SUCCESS
  • Finish the tile in our basement project.  I paid someone to do this, but it was done ($750 including painting!) to show the house:  SUCCESS

The good thing is that we’ve made a serious commitment to saving more for our early retirement this year.  I’ve increased my salary, we’ve upped our contributions to max out our 403(b)s in 2015, as well as contributing to an HSA and hopefully two Roths next year.  Our retirement accounts have increased significantly (from $337,687.88 in January to $423,630.36 at the beginning of December), even if our Net Worth didn’t.

Early next year, I’ll be posting my goals to fail at for 2015.  Have a happy and safe New Year!

Year End Dividends – Happy Holidays!

Fidelity paid out their end of year distributions on 12/19 this year.  We received just over 5k in the December payouts, bringing us to a total of just over 9k of payouts for the year (vs just over 5k last year).  Unfortunately, all but $60 of that is in tax-advantaged accounts and not available to us yet.  It’s nice to know what our yearly “income” is from our investments though.

Once those payments cover our basic living expenses, we can definitely retire and never need to withdraw our principal.  Of course 9k, covers one month of expenses at the moment, but we’ll be adding more money into the account over the next ten years, and will hopefully pump that up.  In our ideal situation, the dividends/capital gains from our mutual funds completely cover our expenses, but I’m prepared to withdraw principal at a 3% rate as well.

Maybe next year we’ll get almost 20k!  I’ll be happy at 15k, but at the new rate we’re putting in money, we should see a significant increase this year.

Have a Happy and Safe Holiday Season!