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Preview: PFBlog.com: The Unique Personal Finance Blog Since 2003

PFBlog.com: The Unique Personal Finance Blog Since 2003



Personal finance observation, musing and decisions in a journey toward financial independence by 2020s with at least $3 million.



Published: 2016-12-07T06:30:05-08:00

 



Monthly Update - February 2015 ($1,998,602, +$28,830)

2015-03-08T06:37:15-08:00

Recovering from the temporary setback in January, our net worth advanced almost $29K in the month and is now tantalizingly close to $2M.

Our household balance sheet, along with monthly, year-to-date, and trailing 12 months comparison, are shown below:

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Monthly Update - January 2015 ($1,969,771, -$12,136)

2015-02-21T05:07:04-08:00

Our back-to-back five-figure monthly asset growth finally came to an end. In the month of January 2015, our net worth dropped over $12K, or about 0.6%. On a trailing 12 months basis, our war chest still delivered a comfortable improvement of $305K, or 18.4%.

Our household balance sheet, along with monthly, year-to-date, and trailing 12 months comparison, are shown below:

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Monthly Update - December 2014 ($1,981,908, +$68,396)

2015-01-25T04:12:34-08:00

Our net worth closed the year of 2014 in a high note, climbing a whopping $68K in December. For the full year, we added over $322K to our bottom line, the largest of any year in our history. In fact, we recorded 5-figure monthly improvement in 10 of the 12 months in 2014, including nine back-to-back months between Q2 and Q4 of 2014.

Our household balance sheet, along with monthly, year-to-date, and trailing 12 months comparison, are shown below:

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Monthly Update - November 2014 ($1,913,512, +$57,816)

2014-12-13T22:36:27-08:00

November has been a great month for us. Riding on some substantial portfolio gains, our net worth climbed to a new high of over $1.9M, making this the 8th month of back-to-back five-figure growth. This year so far, we grew our financial fortune by over $250K. If 2014 ends today, it will be our largest annual gain, ever.

Our household balance sheet, along with monthly, year-to-date, and trailing 12 months comparison, are shown below:

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Monthly Update - October 2014 ($1,855,696, +$18,816)

2014-11-11T05:15:10-08:00

Our net worth continued its steady growth in the month of October. The monthly gain of $18,800 propelled our year-to-date asset growth to almost $200K, handily beating our net worth improvement of $172K in the first 10 months of 2013.

Our household balance sheet, along with monthly, year-to-date, and trailing 12 months comparison, are shown below:

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Monthly Update - September 2014 ($1,836,880, +$21,587)

2014-10-08T19:20:18-08:00

Our family net worth grew a handsome $21,000, or 1.2%, in September, extending our winning streak of back-to-back five-figure monthly gains to the 6th month. For the first nine months of the year, we have grown our total assets by over $177K, besting the $146K gain in the same period last year.

Our household balance sheet, along with monthly, year-to-date, and trailing 12 months comparison, are shown below:

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Monthly Update - August 2014 ($1,815,293, +$73,983)

2014-09-07T11:26:54-08:00

Our net worth typically receives a big increase every August due to the annual vesting of stock awards from my employment. Last August, our net worth rallied $40K. The year before, it was $64k. And we are thrilled to see another $74K boost to our bottom line in the passing month.

This adds to our winning streak -- five back-to-back monthly net worth improvement of over $10K. At $1,815, our net worth gained just shy of $250K in the last 12 months.

Our household balance sheet, along with monthly, year-to-date, and trailing 12 months comparison, are shown below:

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Monthly Update - July 2014 ($1,741,310, +$19,798)

2014-08-18T15:02:09-08:00

With another $19K increase, July is the four consecutive month we enjoyed five-digit monthly net worth improvement. At $1,741K, our net worth rose a handsome $216K in the last 12 months, a good 14.2% gain.

Our household balance sheet, along with monthly, year-to-date, and trailing 12 months comparison, are shown below:

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Monthly Update - June 2014 ($1,721,512, +$16,499)

2014-08-18T14:33:30-08:00

We closed the month of June with a net worth increase of $16,499, or slightly below 1%. In the trailing 12 months, our net worth growth exceeded $220K, of 14.7%.

Our household balance sheet, along with monthly, year-to-date, and trailing 12 months comparison, are shown below:

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Monthly Update - May 2014 ($1,705,013, +$15,050)

2014-06-08T17:34:26-08:00

With another five-figure increase in the month of May, our net worth breached $1.7M for the first time. In the trailing 12 months, we grew our net worth by $197K, or 13.1%.

Our household balance sheet, along with monthly, year-to-date, and trailing 12 months comparison, are shown below:

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Monthly Update - April 2014 ($1,689,963, +$19,015)

2014-05-10T13:34:21-08:00

After a mild setback in March, our net worth resumed its steady growth. In April with a monthly improvement of $19,015, or 1.1%, making it the best showing in the last six months.

Our household balance sheet, along with monthly, year-to-date, and trailing 12 months comparison, are shown below:

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Monthly Update - March 2014 ($1,670,949, -$5,413)

2014-04-10T02:21:31-08:00

Our net worth ended the month of March 2014 at $1,670,949, a slight 0.3% retreat from the prior month. All in all, we ended the first quarter of the year with a combined net worth gain of $11,400, or 0.7%.

Our household balance sheet, along with monthly, year-to-date, and trailing 12 months comparison, are shown below:

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New Year Resolution: I'll Mow My Own Lawn

2014-03-16T07:41:41-08:00

It has been a year since we bought our new home on an acre-shy lot. I am not a particular fan of gardening over my life so far, and hence for most of last year, I had conveniently outsourced the yard work to my gardener for $330 a month, including tax. He is a good young man who bought an established lawn care business and does adequate work. I even introduced him to our neighbor across the street, from whom he won the lawn maintenance business too. By November we mutually agreed to pause the service until grass will grow again in March. I also sent him a Christmas gift card for appreciation.

March has come with a heartburning message from my gardener. Two weeks ago, I received a new proposed contract requesting a price hike of almost 50%, to $490 a month for year-long service.

I know I had a good deal in only paying $330 a month for my big yard -- I did some comparison shopping earlier in 2013 and I was quoted anywhere between $450 to $600 for comparable services. This young gentleman was just resetting his service to the market price so it is nothing wrong with him.

But still, a 50% price hike is a lot to stomach.

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Monthly Update - February 2014 ($1,676,362, +$12,539)

2014-03-02T09:29:11-08:00

Advancing $12,539, or 0.75%, our net worth closed the month of February at $1,676,362. Trailing 12 months improvement is $190,398, or 12.8%.

Our household balance sheet, along with monthly, year-to-date, and trailing 12 months comparison, are shown below:

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What I Benefitted From Filing My Own Tax

2014-02-26T06:58:19-08:00

I spent several hours this Sunday morning to put some finishing touches to our federal tax return, and the 27-page return is now on its way to IRS this week. I have worked on the tax return since the late January, and by my estimate, I spent around 20 hours on TaxAct to prepare the return, not to count the time throughout the year with Quicken to keep a clean financial record. This is higher than the 15 hours average time burden for filing a tax return on 1040 as estimated by IRS. Maybe I could work on my math in the coming year so I can beat the average :-)

I enjoyed acquiring tax knowledge and preparing my own tax, and I put it to good use in filing the 2013 tax return. 2013 is a year of change for us thanks to the relocation, home buying and car purchase, and throughout the year, whenever I come across a personal finance article on tax that reveals something that might apply to our case, I usually do additional research and put a note to my OneNote so I can remind myself when I start to work on the actual return.

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How To Get Your Previous Years' Tax Returns?

2014-02-17T08:07:41-08:00

As part of the HELOC application process, we were asked to sign a 4506-T form to authorize banks to get from IRS transcripts of our prior years' tax returns. This makes me think: as taxpayers, can we get such information ourselves?

Yes, we can.

A quick search on the IRS website yields two different options:

1) One may request a tax return "transcript" for free. A "tax return transcript" contains "most line items from your tax return (Form 1040, 1040A or 1040EZ) as it was originally filed, including any accompanying forms and schedules."

2) Or, one may order an exact copy of tax return, which includes all attachments like W-2. There is a fee of $50.00 for each tax year requested, though.

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Happy 100th Birthday, Federal Income Tax!

2014-02-14T03:52:11-08:00

As each of us are making progress in our respective tax returns, this MarketWatch article conveniently reminded us that it has been 100 years since Americans started paying federal income tax.

Many intriguing facts from the article and the slide show covering the evolution of Form 1040 over the past century. Some fascinating facts I learned by reading this article and doing some additional research:

1) The first-ever Form 1040 (of tax year 1913) was only three page long with one page instruction and no additional forms or schedules. Today: it's two pages but with 206-page instructions, not counting additional forms and schedules and their accompanying instructions.

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Applying for Home Equity Line of Credit (HELOC)

2014-02-13T04:33:38-08:00

When we purchased the our house back in January 2013, we put 20% down payment to secure an ultra-low 1.875% APR 7/1 ARM. In anticipation of potential carry trade opportunities, I'm also exploring possibilities to cash out some of our home equity through HELOC, or Home Equity Line of Credit.

HELOC offers homeowners the flexibility to borrow against their home equity at a variable rate often pegged to a major lending rate index. It works much like a credit card, so over a pre-defined "borrowing period," the borrower can borrow and repay up to a credit limit multiple times. (Its sibling, Home Equity Loan, works more like a mortgage where one borrows a lump-sum upfront at a fixed rate.)

Back in 2004, I established an HELOC account at my local credit union with a credit limit of $30,000. Although I never got a chance to tap into the credit, I see it as a good insurance against occasional liquidity crunch.

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Early Retirement Extreme

2014-02-12T05:45:14-08:00

One book I'm reading lately is Early Retirement Extreme by Jacob Lund Fisker. The book asserts that one can have an "extreme" early retirement by accumulating wealth thru only 5 years of work, and choosing to lead a meaningful retirement life while spending low to the tune of $20-30K a year.

If you think it is another personal finance book about how to save, invest and retire, you are wrong. The book is written in a more academic fashion than I thought, full of philosophical discussion and historic references. Even though I'm only 80 pages into this 238-page book, I found enough "nuggets" that are thought-provoking and challenge me to revisit my more "traditional" path toward early retirement. For a quick recap, take a look at this wiki page about Early Retirement Extreme, or ERE.

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Low Cost Financing Thru Interactive Brokers

2014-02-11T04:00:59-08:00

I have been pondering the idea of USD/Chinese Yuan carry trade for a while now. The investment thesis is one can borrow USD on the cheap and put to investment vehicles denominated in Chinese Yuan with much higher return. And assuming the Chinese Yuan will keep its secular trend to become stronger vs. USD over time, or at least stay flat, one can pocket a decent return from such arbitrage.

Having been exposed to the Chinese financial market for over a decade, I see quite a lot of attractive investment options yielding 8% or higher with minimal risk lately. The other piece of the carry trade puzzle, is how to borrow US dollars at the lowest cost possible.

One source I'm looking at is Interactive Brokers. Interactive Brokers probably is not as well-known as TD Ameritrade, E*Trade, Fidelity or Charles Schwab, but it offers a wide menu of investment options at commission rate as low as $1 for 100 shares of stock (it does charge a monthly minimal commission of $10 if account value is under $100,000 though).

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Adjustable Rate Mortgage: What's the Worst Case Scenario

2014-02-10T04:15:20-08:00

Back in January when I shared my experience choosing an adjustable rate mortgage (ARM) over a more traditional fixed rate mortgage (FRM), I received the following comment from Adam:

I would be interested in understanding more about why you have better options at the end of the ARM. I have thought about getting an ARM, but the potential larger payments in 5/7/10 years seems like a potential albatross. If rates go up, you can end up paying a lot more, and if they're already increased, I don't see how refinancing is going to help you. Perhaps you could discuss or link to an article that helped your analysis.

Certainly our well-defined timeline of living in this house for slightly over 7 years until we send our son to college plays a huge role and almost single-handedly make ARM a much better choice than a 30-year FRM at an interest rate 1.25% higher -- the interest rate difference means over $70K lower interest payment thru the ARM route in the first seven years on the $852K mortgage we ultimately got -- but it is worthwhile to be more analytical on explaining how we will prepare for the worst case scenario.

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Financial Education for Teenagers

2014-02-09T06:32:39-08:00

In about a week's time, our son will turn 12. This means he will pay adult's price at Great Clips and our favorite buffet restaurant. And it's also time for some systematic financial education.

So our weekend assignment for him: read the CNN Money 5-article series "Financial Education For Kids" and summarize his thoughts in writing.

Here is what he turned in (with no edits from me):

After reading this article, I learn the importance of financial education for kids. Financial is a critical lesson for the kids to learn.


Although managing money is a very hard task to do, I still believe it is very important for teenagers to learn how to manage their money. From managing money, you will learn the concept of savings. Today, many Americans don’t have savings. When there is an emergency situation, they can’t handle it. In college, you will use a lot of money for tuition. So the money you save today, it is for tomorrow. Managing money is also very useful because it teaches you how to do research. From researching, you learn how to compare different values, reading articles, and how to negotiate with sales man about the price. For example, I did a lot of research for buying a new phone. I look up all the different prices and compared them. I learned a lot from doing that. It can also exercise the mathematic abilities of the kids.

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How Many Networked Devices Do You Have In Your Household?

2014-02-08T09:05:17-08:00

Satya Nadella, the newly anointed boss at Microsoft, rightfully called out that this is a "mobile first, cloud first" world. Network connections are ubiquitous and everyone has more than one devices to access, consume and create data. Everything is changing and changing fast!

On this Saturday morning, I took some time to count the number of networked devices in our household. I quickly counted toward 14, and then as I compiled
this post, I was reminded of more and more such devices. Even by now, I'm not sure if I counted them all.

Here is my list so far:

Computers

1. My working laptop computer (Lenovo)
2. My wife's laptop computer (Asus)
3. Our son's laptop computer (Asus)
4. Our son's school issued laptop computer (Lenovo)
5. Desktop computer in our den (Lenovo)

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P2P Lending in China

2014-02-07T03:58:34-08:00

Back in 2006, I was among the first group of investors who pumped money into Prosper.com, the pioneer in person-to-person lending in the States. It didn't end up pretty -- my $15K investment turned into a loss exceeding $1,000 due to high number of delinquencies and charge-offs among the 160 loans I invested in.

On the other side of the Pacific, P2P lending is much less regulated in China. One can set up a new P2P lending site by merely registering a business and setting up a web site. In 2013, there were over three dozen such sites closing down for good and many investors losing their shirts along the way. Before they collapsed, they often boasted interest rate exceeding 40%.

My experience in the last few years in P2P lending in China, however, were more successful.

P2P lending exists in very different modalities in China. Here are the several major business models and representative P2P lending sites I tried.

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Washington State GET Is a Loser's Game, Part II

2014-02-06T06:14:48-08:00

Our analysis indicated that if tuition cost will continue to grow at 9.5% per annum, investment into Washington state's GET program can still make sense for people with a long horizon, even if one will pay a hefty 31% front-end load now.

But for those patient parents, it is worth keeping in mind that past return doesn't guarantee future returns. In fact, the tuition at Washington state's top public universities didn't grow in the past year. And according to some reports, slower tuition growth is becoming the new normal.

The next table shows a scenario of more moderate but still high annual tuition growth of 5%, and how it compares to a DIY investor with 1%, 3% or 5% annual return on his portfolio.

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Washington State GET Is a Loser's Game, Part I

2014-02-05T04:25:36-08:00

A friend of mine recently asked my opinion of Washington state's Guaranteed Education Tuition (GET) program.

As the Evergreen State's 529 prepaid college tuition program and backed by the state's full faith and credit, GET allows parents to purchase "units" in today's price and guarantees a payout value that is indexed to the tuition of the highest priced Washington public university. (Each unit represents 1/100th of the annual undergraduate tuition and "state-mandated fees.")

The main selling point: in the past 10 years, tuition in this state has increased at an average of 9.5% per annum (source). In fact, GET units bought back in a decade ago delivered handsome return for their investors despite the financial turmoil in between.

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The Cell Phone Plan for Cheapskates

2014-02-04T03:58:34-08:00

My son earns a weekly allowance for doing a number of household chores. Last month, he finally saved enough to buy a smart phone, which he claims that half of his 6-grader classmates already have. With the father-son agreement that he is responsible for 100% of his cell phone expenses, we allowed him to buy a smart phone. Now the next question is: can we find him a cell phone plan that he can afford?

An unlimited plan from a major carrier like AT&T or Verizon Wireless is out of the question -- the monthly charge will take the poor kid's entire monthly income away, and more. My wife and I are currently on prepaid monthly plans. Her unlimited plan from StraightTalk costs $45 a month. I, normally using less than 100 minutes voice, 10-20 texts and less than 200MB data, keep an AT&T GoPhone plan at about $35 a month. Both options are still too expensive in the eyes of our son.

So we embarked on a journey to find a plan for a cheapskate. "Mobile virtual network operators," or MVNOs, seems to be the way to go. They are wireless service providers who doesn't run the infrastructure but instead buy bulk block of voice, text and data at wholesale rates from AT&T and alike and resell to individuals. Back in 2004, I used Virgin Mobile, also an MVNO, at less than $7 per month (of course, no data back then).

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Will You Accept An Amazon Prime Price Hike?

2014-02-03T04:52:25-08:00

In the latest quarterly earnings release call last week, Amazon's CFO Tom Szkutak indicated in his prepared speech that the online retailing giant is thinking of raising the price of Amazon Prime (transcript from SeekingAlpha, emphasis is mine):

We launched Prime in the U.S. nine years ago with free, unlimited two-day shipping on 1 million items in an annual membership priced at $79. Today Prime Selection has grown to over [19] [ph] million items.

Even as fuel and transportation cost have increased, the $79 price has remained the same. We know that customers love Prime as the usage of the shipping benefit has increased dramatically since launch. On a per customer basis, Prime members are ordering more items across more categories with free two-day shipping than ever before.

With the increased cost of fuel and transportation as well as the increased usage among Prime members we’re considering increasing the price of Prime between $20 to $40 in the U.S.

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Monthly Update - January 2014 ($1,663,823, +$4,273)

2014-02-02T06:37:47-08:00

Our net worth logged a meager 0.3% increase of $4,273 to ended January 2014 at $1,663,823. Trailing 12 months improvement is $183,444, or 12.4%.

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We saved about $5,000 from our wages. It is larger than normal and is helped by 1) $1,250 year-start employer contribution to Health Savings Account (HSA), and 2) my year-start lump sum HSA contribution of $4,050, which lowered my federal tax deduction.

On the investment front, our USD based accounts took a hit about $9,700 due to recent market situation. This is partially offset by $6,200 gains in our CNY-based accounts.

As we prepare our 2013 tax returns, the current estimate is we will receive around $10K refund thanks to some foreign tax credit on my bonus and stock awards attributable to my services in Asia. In this month, we made an conservative accrual of $5,000 to partially account for the expected refund.

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Is It Worthwhile To Keep All Receipts In Order To Maximize Sales Tax Deduction?

2014-02-01T06:12:02-08:00

It's tax season again! I started the annual chore of collecting tax forms and piecing together information over the past weekend. Happily being a bean counter, I plan to share some personal experience of tax preparation in coming weeks.

Today I'd like to discuss sales tax deduction. Sales deduction was allowed starting in tax year 2004. (Back then, PFBlog covered the topic in many posts here, here and here.) It allows taxpayers in certain states to take itemized deduction for sales tax they incur.

One can generally consult the IRS Sales Tax Deduction Calculator for the task (unfortunately, as of today, the calculator hasn't been updated with 2013 tax year information yet), and the calculation is also embedded in most tax preparation software, like TaxAct which I use.

For most people who don't have the habit of collect receipts, IRS provides a simplified way to estimate your annual sales tax payment based on your income and number of exemptions taken. TaxAct reported that we can claim $3,215 under this category.

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MyRA: What's In It For Us?

2014-01-31T04:21:15-08:00

Since he first announced myRA at Tuesday night's State of the Union speech, President Obama wasted no time in signing the executive order to make it happen the second morning, before he started his road trip to tour his newest idea. What is myRA? Whitehouse's fact sheet gave more details. And a quick summary from WSJ's Damian Paletta explained the key points: 1.) The accounts would be aimed at workers whose employers do not offer traditional retirement accounts like 401(k)s. 2.) The accounts would function like a Roth IRA and have government backing like a savings bond. This would give the investments principal protection, meaning the account balance cannot go down. 3.) There will be an initial pilot program for companies that agree to enroll by the end of this year. Workers can invest if they make less than $191,000 a year. 4.) Businesses will not administer or run the accounts. They will simply offer them to their employees if they decide to participate. 5.) There will not be a tax penalty if the investments are withdrawn. 6.) Initial investments could begin at $25, and subsequent investments could be as low as $5. The idea is to have investments added through payroll deductions. 7.) Accounts can be taken by the employee from one job to the next, and they can be rolled into an Individual Retirement Account at any time. 8.) The accounts would have the same variable interest rate return as the Thrift Savings Plan Government Securities Investment Fund accounts that federal employees enroll in. 9.) Once someone’s account grows to $15,000, the myRA must be rolled over into a private-sector Roth IRA. READ FULL POST ... Read more posts like this from PFBlog.com, The Unique Personal Finance Blog Since 2003. [...]



Getting Mortgage On the Cheap

2014-01-30T05:42:50-08:00

Once we decided that adjustable rate mortgage (ARM) should be our cup of tea, we wasted no time in looking for the best lender. To be more specific, we wanted to shop for the best rate when it came to 5-year or 7-year jumbo ARMs -- the price range of our shortlisted properties dictated that conforming loans wouldn't work for us.

The internet resources we used in our previous home financing experience were still very useful. Our inquiry thru LendingTree got us several quick quotes, and Bankrate also provided us with other names. Most of the competitive quotes back then were at 2.50% or 2.75% for a jumbo 5/1 ARM with zero points. Sweet enough already!

I was always under the impression that biggest banks usually don't put their best rates online, but in the spirit of comparison shopping, I took some extra efforts to browse the home loan pages of some large banks. To my surprise, Wells Fargo offered a super attractive 2.125% rate for 5/1 ARM.

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Finding the Most Suitable Mortgage

2014-01-29T05:45:18-08:00

The moment we started the house hunting in late 2012, we also started the mortgage hunting. Compared with getting the dream house at the right price, getting the right mortgage is at least equally important, if not more, to secure a solid financial foundation of home ownership. Deciding the most suitable type of mortgage is the first step in this process. Usually, the choice is between fixed rate mortgage (FRM) and adjustable rate mortgage (ARM). There are some other niches like balloon loans or interest-only loans as well. We used different types of mortgages in our brief homeownership between 2003 and 2005. We bought the house with a 7-year balloon mortgage at the rate of 4.25%, which we later refinanced to a 5/1 ARM with at the rate of 3.50%. (The refinancing experience was documented in this blog here, here, here and here.) READ FULL POST ... Read more posts like this from PFBlog.com, The Unique Personal Finance Blog Since 2003. [...]



Buying A House with Flat Fee Realtor

2014-01-28T04:50:03-08:00

A decade ago in 2003, we bought our first house of $315K. We knew very little about home purchase back then, and listing information on the internet is a scarce resource. Through some luck, we managed to find an real estate agent who was willing to give us a 20% rebate of her 3% commission, a rarity at that time. We benefitted a lot from her expertise throughout our first home purchase experience, and of course, the rebate, amounting to $1,890 ($315K x 3% x 20%), as well. After all, the $2K-shy bounty was 1.5% of our net worth back then. And our share of the realtor commission ended up being $7,560 ($315K x 3% x 80%) -- even though technically the seller paid the commission, it's still coming from our money. I estimated the agent probably spent 30 hours on our case, yielding a hefty $250 hourly rate. Fast forward to late 2005, we chose to sell our house before my job assignment to Asia. Being more comfortable with the details of real estate transactions, I decided to sell it myself instead of through an agent (a.k.a. FSBO, or for sale by owner). I guess we were lucky -- it was a seller's market and it didn't take much talent to orchestrate a bidding war. We ended up selling the property at $420K with buyer paying the 3% commission due for his agent outside of the price. Except for $300 which I paid a real estate lawyer to review the selling contract, I pocketed the entire 3% commission for seller's agent, or $13,500 -- a rewarding 3.4% of our net worth back in 2005. So, when we decided to move back to the States and were back to the real estate market in November 2012, we faced several choices. We knew we wanted to buy a property around a million dollars, and we had a pressing timeline -- we didn't want to make do in a temporary housing apartment for many months, and the workload from my new job was coming up quickly. READ FULL POST ... Read more posts like this from PFBlog.com, The Unique Personal Finance Blog Since 2003. [...]



2013 Year-End Update ($1,659,549)

2014-01-27T05:45:28-08:00

Net worth tracking and reporting has been a staple of this blog since 2003, and therefore it should be no surprise that our Act II begins with a long overdue recap of our financials since our last report two years back. Let's start with a table showing our year-over-year net worth changes in the last two years. A technical note: compared to prior years, we are now reporting our balance sheet in a simplified format with three major components: Cash & Investments (a.k.a. "liquid assets"), Properties and Loans. In the past, we had been itemizing our investments by asset class including domestic equity, foreign equity, fixed income and alike, but since this blog is much less focused on investment decisions and more on broader personal finance topics, this simplified approach will better serve the purpose. A lot had happened in 2012 and 2013. First off, our net worth continues to blossom thanks to the confluence of living below our means and investment gains. Especially, with the growth of our asset base, investment returns have consistently exceeded our savings in past two years. READ FULL POST ... Read more posts like this from PFBlog.com, The Unique Personal Finance Blog Since 2003. [...]



Act II: Back to the (Blogging) Business …

2014-01-26T15:00:31-08:00

It has been a full two years since my last post on this blog. And yes, the blog was already barren for several years before. What happened during this period? In late 2005, we took a long expatriate assignment working in Asia. The original three-year term got extended a couple of times as career opportunities presented themselves and we enjoyed the company of extended families (yes, both my wife and I grew up in China) and the bi-lingual environment for our son. In late 2012, we finally decided it's time to have our son, then 11, benefit from learning and growing in the culture of the other superpower of the world. So, we moved back to the States (and Seattle specifically) and restarted our American life. I am still with the company I worked for over 15 years, and my wife dedicates herself in getting our son and house in good shape, while enjoying her hobbies like piano. While heavy workload and relative disconnection with US-related financial life discouraged me from regular blogging, my passion for personal finance remains throughout the period. For one thing, we keep faithfully tracking our financials; now our Quicken file contains over 26,000 lines of data chronicling our financial transactions since June 2002. I'm still an avid reader of personal finance publications like Morningstar, CNN Money and Kiplinger's Personal Finance. So what's next? As our family net worth grows, we've reached a point where our diligent savings and prudent investments have put the final financial freedom within reach in THIS decade. And personally, I feel regained energy in sharing my learning along the journey and connecting with individuals with the same interest thru social media. I look forward to building on top of the 1,200-strong posts in this blog since 2003, and take it to a new level. So, here comes My Personal Finance Journey: Act II. READ FULL POST ... Read more posts like this from PFBlog.com, The Unique Personal Finance Blog Since 2003. [...]



2011 Year-End Update ($1,212,450)

2012-01-02T16:57:13-08:00

What a coincidence! S&P 500 ended the year of 2011 within 0.01% of where it was at the beginning of the year.

What it means for our household financial life is that while we had our fair share of the rollercoaster financial ride of the year, we barely received any return from our $1M-strong investment portfolio at year end (but fortunately we didn't lose either). Still, we saved our way toward a year-end net worth tally of $1,212,450 with an annual increase of $90,083, or 8.0%.

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And another view of our annual net worth changes -- it is a much choppier ride as we managed thru the financial market ups and downs in recent years.

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Monthly Update - March 2011 ($1,149,008, +$2,362)

2011-04-09T16:51:53-08:00

(image) In a month that is filled with natural disasters and geopolitical conflicts, our net worth survived the month relatively unscathed. In fact, our savings from job income and minimal portfolio gain more than offset the $6K drop in our employee stock option account, and helped us to end the month with a tiny net worth gain 0.2% gain or $2,362.

For the full quarter, we expanded our net worth by 2.4% or over $26K, which represents 18% of our annual net worth growth goal of $148K. We also shifted about 10% of our portfolio from cash and equivalents to investment accounts. As of March 31, we have slightly over 60% of our money fully investment in a number of asset classes.

Financial Matters for the Month

- We invested $16K in 50 shares of Apple Inc. in the month.
- We paid for the vacation in April to Seattle and Chicago.
- We filed extension to extend our tax filing due date to October.

What's Ahead

- Waiting to see the Windy City :-)

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Monthly Update - February 2010 ($1,146,646, +$19,373)

2011-03-05T18:57:50-08:00

(image) The first month of Chinese Year of Rabbit is rather uneventful. Thanks to the steady climb of the stock market, our portfolio also received a nice lift. Our net worth grew almost $20,000 in the month to $1,146,646.

Year 2011 Goal and the Journey to $3M

We are establishing our 2011 year-end net worth goal at $1,270,000. This represents about $147K or 13% year-over-year increase. We hope we can save up to $90K from our take-home pay, and our investment portfolio can have a modest 5% return.

Assuming we can consistently increasing our annual savings by 3% from the 2011 base of $90k, and over the next decade, we can count on an average of 5% investment return, we will hit our goal of $3M net worth by 2020.

What's Ahead

- Tax season is starting now. Need to devote some good hours to tax filing.
- We are planning a trip to Seattle and Chicago in late-April and early May. We've never been to Chicago and near-by states so we are expecting the trip.

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Monthly Update - January 2010 ($1,127,273, +$4,906)

2011-02-05T20:12:55-08:00

(image) January 2011 sees the 10 year anniversary of our marriage, and we celebrated this big event with a weekend gateway in a fantastic boutique hotel in Hong Kong, and a 1.4ct diamond ring from Blue Nile. It is a great trip indeed and a memorable beginning of our second decade together.

Back to the financials, our net worth inched ahead a modest $5,000 in January, despite the sizable cash outlay for the rock and the anniversary trip. We also put a lot of more cash to work in a variety of investment vehicles.

With the beginning of the new year, we are revising our monthly balance sheet format to better highlight the asset class mix in our investment portfolio. Here is our month-end tally in the new format:

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Monthly Update - December 2010 ($1,122,367, +$37,499)

2011-01-01T14:52:17-08:00

Happy New Year Everyone! With the help of cross-the-board gain in financial markets, we closed the year of 2010 in a high note with over $37,000 net worth increase in the month of December. For the full year, our net worth grew a handsome $152K to a new height of over $1.1M. As we combing financial statements and analyzing thru software, slightly more than half of the annual gain, or $82K, comes from savings. Some highlights of the year: - We saved nearly 40% of our $200K+ after-tax income, which aligns with our annual financial plan at the beginning of the year. - I have renewed career challenge in my current job. In 2010, I had been able to lead a huge project team of over 50 professionals to bring a product to market. - My wife is taking her freelancing job to a new height by almost doubling her take-home pay from a job she truly enjoys. - Our son is about 9 now. Although his private school tuition takes over 10% of our budget, it's so great to see him growing up and becoming an energetic young man with many interests. - We continued to resist the temptation of buying a property -- our rent, at 20% of our budget, is approximately 40% what it would cost us if we bought the property we currently lived in. - We allocated over 15% of the budget to travel. The family continued its world exploration and set foot in Dubai, US East Coast and most recently Guam and the Philippines. The family has been to over 30 countries now. READ FULL POST ... Read more posts like this from PFBlog.com, The Unique Personal Finance Blog Since 2003. [...]



Monthly Update - October/November 2010 ($1,084,868)

2010-12-03T15:47:49-08:00

(This is a bi-monthly update covering October and November of 2010.) Our net worth continues to build up after it breaks the million-dollar mark in August. In the last two months, we have grown our asset base by $17,000, largely thanks to savings from job income and healthy investment returns during the period. On the income side, it is worth calling out that my wife's freelancing job business is growing rapidly, and her income in 2010 already exceeded the full year proceeds in 2009 by over 70%. The steady income from that business is providing another meaningful leg to our financial house now. On the investment side, we've substantially increased our exposure in the China market now that the market is hitting a new nadir after a recent dive. Other than that, we are adding some positions to some floating rate fixed income holdings but still park 47% of our asset in cash or cash-like vehicles. If anything, it seems the global economy will get worse before it gets better. READ FULL POST ... Read more posts like this from PFBlog.com, The Unique Personal Finance Blog Since 2003. [...]



Monthly Update - September 2010 ($1,067,889, +$47,223)

2010-10-05T20:07:00-08:00

Our net worth took a great leap forward in September, thanks to the bull run in the stock market and a lower-than-expected tax on my annual cash bonus. With the September monthly gain of over $47k, the largest in three years, we have grown our assets by almost $100,000 since the beginning of the year. We are maintaining a cautious stance in managing our investments, parking almost 60% of our portfolio in safest money market accounts or alike that yield between 1% and 2%. Of course, this is not an offensive strategy, and certainly means some missed opportunity in the recent bullish market environment, but it also gives us many good nights of sleep. With so many clouds over the world economic, we are not seeing a clear risk worth taking at the moment. After all, we probably didn't miss a lot -- the stock market ended the September at the level where it started the year, but those with a committed stock holding probably had a rollercoaster ride so far. READ FULL POST ... Read more posts like this from PFBlog.com, The Unique Personal Finance Blog Since 2003. [...]



Monthly Update - August 2010 ($1,020,665, +$34,678)

2010-09-17T14:34:20-08:00

(image) Every August, our net worth will predictably jump up since it is when the annual cash bonus is announced and annual stock grants are vested. This year is no exception. A handsome bonus and a batch of new vesting activities pushed our month-end tally by over $34,000 to a new record high of $1.02M despite the punishing environment in the equity market.

At the same time, it's great to see that my wife's freelancing career is reaching new heights with over $5,000 billable work in August alone with about 3 working days every week.

So, with 8 months in 2010 behind us, our net worth has increased by over $50,000 so far this year. Let's hope that this time, we will hold on to our seven-figures much longer compared to the two-month stint earlier this year.

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Monthly Update - July 2010 ($985,987, +$24,773)

2010-08-02T23:55:33-08:00

(image) a nice rebound of $25k in July and ended the month at $986k.

The July rebound is certainly nice, but with 58% of our portfolio parked in various money market accounts, we will be happier if the market will make a (big) correction so we can commit more capital to equity. Before that happens, we are comfortable staying in a defensive position today -- yes, we missed the nice 10% climb in the last few weeks, but our portfolio is also spared from the fast drop in May and June.

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Monthly Update - June 2010 ($961,214, -$4,421)

2010-07-09T16:21:34-08:00

(image) Our net worth retreated $4,421, or 0.5% in the month of June. In particular, our employee stock option account extended its distressed journey -- it has lost 75% of its value since the beginning of the year. Conversely, our investment overall fared well, led by a 13% surge in Berkshire Hathaway stock price and fixed income fund gains.

With 2010 half way through, our wealth tally ended the first half a tad below where it started. And after briefly claiming millionaire club membership for a couple of months, we have been back to the $900s for three months now.

It could have been much worse -- the overall market lost about 10% in the last six months, yet we still preserved most of our capital. Chances are, if more investment opportunities present themselves, we are in a very cash-rich position to take advantage of that.

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Monthly Update - May 2010 ($965,329, -$45,686)

2010-06-07T16:34:03-08:00

The renewed global economic uncertainty and ensuing stock market "correction" dealt a big blow to our portfolio. Our net worth retreated to 6-figure with a monthly drop of 4.5%. Most damage was done to our vested employee stock option positions, which behave disproportionately to the change in the underlying company stock. Our partial hedge helped, but not much. On the other hand, our continued "light" exposure in equity positions spared us from more severe damage. So, how does it feel as a millionaire club drop-out? Actually, I feel very good. Why? Since the beginning of the year, we chose to be very risk-reverse with the belief that the bull market had grown teeth and politicians cannot solve a debt problem by issuing more debt. During the same period, we have steadily lowered our equity exposure from over 30% to less than 18% at the end of May. With over $600k cash at hand and another $150k+ in low-risk fixed income funds, all we can pray for is for the market to take another skydive and present much more valuation opportunities. READ FULL POST ... Read more posts like this from PFBlog.com, The Unique Personal Finance Blog Since 2003. [...]



Monthly Update - April 2010 ($1,011,016, +$6,626)

2010-05-09T23:03:43-08:00

(image) Thank you for all the nice words in response to my last post. Life is as usual even though our net worth is in 7 digits, but certainly the sense of achievement tastes good.

As this uneventful month unfolds, our investment grew a bit and my employee stock option rose impressively thanks to a good quarterly earning release. On the other side, we chose to take advantage of a 5% discount by prepaying my son's private school tuition of $12,000 for the next year. All in all, we are still happy to report a net worth growth of 0.7%, or $6,626.

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Finally, A Million!

2010-04-07T23:49:33-08:00

I started PFBlog seven years ago to document the journey toward a publicly-announced net worth goal of $1,000,000. With a starting tally of $47k in 2003, my wife and I were well prepared for a prolonged 13-year fight -- our realistic projection back then envisioned us boasting 7-figure net worth by 2016, or when we will enter our 40s. A mix of luck and hard work brought our net worth to half a million bucks by August 2006, and we reset our goal to accumulate the million by 2012, and hence we changed the tagline of this blog to "Personal finance observation, musing and decisions in a journey toward financial independence by 36 with at least $1 million." Since then, it was quite a drama: a quick ascent in 2006 and most part of 2007 put us within a stone's throw of the million dollar mark, but the following nosedive in 2008 almost wiped out a quarter of our asset base. But finally, a few days before my 34th birthday, our personal accounting software finally had to accommodate an additional digit in our net worth report. In the end, we closed the month of March 2010 at $1,004,389! The Celebration We two newly anointed millionaires went out in a good Saturday evening planning to celebrate this special occasion at the best restaurant in town. But after running an errand first, we found ourselves stuck in a remote area of the city and couldn't get a taxi. After a failed 30-minute attempt, we caved in to our empty stomachs and walked around trying to find a decent enough food outlet with no success. We finally set our feet in a mom-and-pop noodle house with only three tables, and $5 being the highest price tag on the menu. Our final bill for the celebration meal: $9 including drinks :-) READ FULL POST ... Read more posts like this from PFBlog.com, The Unique Personal Finance Blog Since 2003. [...]



1-Year and 10-Year Mutual Fund Performance Figures Skewed

2010-03-12T00:46:28-08:00

This March conveniently marks both the one-year anniversary of the stock market trough during the Great Recession and the ten-year anniversary of the dot.com bubble peak. As such, the trailing 1-year and 10-year performance readings of all mutual funds just had a facelift. Morningstar gives us a timely reminder: For the trailing 12 months: A look at the one-year returns for all of Morningstar's fund categories shows how incredibly strong, and also remarkably broad, the rally has been. The category returns should make one realize how unlikely it is that such performance will recur on more than the rarest occasions. ..., it's always tough to predict the markets, but I'd guess that investors should not assume they'll be getting returns of this magnitude every year. With that in mind, perhaps the best approach right now might be to smile, take a moment to be grateful for such gains, and then forget that the past 12 months ever happened. READ FULL POST ... Read more posts like this from PFBlog.com, The Unique Personal Finance Blog Since 2003. [...]