Ten Internet Points To You, Sir!

If all has gone according to plan, the blog should have just surpassed 50,000 views.  We are ten months into the project, so it's about time!


My Objectivity Is Not For Sale

I am done with affiliate linking and advertising.

I was reading another blog yesterday, specifically a review of a product I have been considering purchasing.  I had been to this site many times before.  The author's points struck me as fairly convincing, and I was leaning more and more into the 'make the purchase' column.

And then, there it was: the paid affiliate link.  No deal.


Experiment 01: Write Every Day

This site has seen a lot of action lately!  October encompassed 31 posts in all, one for every day of the month, bringing the total for the year to 80.  I'm not going to count the words for you, but it was quite a lot of them.

So, what was the point of this exercise?

This was Experiment 01: Write Every Day!

The result: overwhelming success.

my brainstorming-and-initial-drafting weapon of choice, believe it or not


Book Review 02: How To Write A Lot

After the success of the first book review, I'm at it again.  Our second book review victim is "How to Write a Lot", by Dr. Paul J. Silvia.

click the image to buy it on Amazon (don't worry, I don't profit!), or check your local library

Paul is a psychology professor at the University of North Carolina.  This book is primarily aimed at an academic audience—the subtitle is "A Practical Guide to Productive Academic Writing"—but it's lessons are applicable by anyone struggling to write at the desired volumetric rate.


My Investments: Skills

Education has been my primary business over the last twenty years, but it's been far from my only scheme in the works: I've made a huge effort to use every spare minute to develop a wide-ranging collection of hobbies and skills.  While I'm counting on leveraging my formal education to finance this Project (i.e. life), it's these other hobbies and skills that will make the process of achieving financial independence (and the Golden Age that will proceed it) a hell of a lot of fun.

Some of these thing save my money directly; others have the potential to actually make me money.  Nearly all of them save me money indirectly by allowing me to have fun at little or no direct cost.


My Investments: Education

For every hour I've spent learning about and carrying out the act of financial investment, I've probably spent 100 hours in classrooms, doing homework, reading textbooks, and taking notes.

I just entered 20th grade: 12 years up through highschool, 5 years of undergraduate, and now I've just begun my third year of graduate school.  However much I've accumulated in mutual funds, my education has been by far my most sizable investment in terms of time, money, and personal effort.

(I built both lab websites)

Had I been working all of those years instead, I could have amassed quite a bit of money by now.  Getting a good return on this massive investment has always been a high priority.


My Investments: Mutual Funds

Over and over again, I've stressed the importance of building the core of your portfolio out of low-cost, passively-managed index mutual funds.  This is important enough that I wrote a seven-part series on it.

I've been telling you to do this and do that all month long, so in the spirit of full transparency I think it's only fair that I share what I actually do with my own money.

Put the money... there!  Definitely over there.
This is an article about how I follow my own advice.


My Investments: Mosaic

In an earlier article on nontraditional investments, I mentioned Mosaic.

When you join Mosaic, you join a group of investors that are lending money for solar power installation projects.  As the loan is paid back, you receive principal and interest.  Because of the sustainability theme, Mosaic may be popular among those who would consider a Socially Responsible Investing (SRI) strategy.

I joined Mosaic in September 2013, and so far I have invested $500.


My Investments: Lending Club

In an earlier article on nontraditional investments, I mentioned Lending Club.
Lending Club is the leader of the pack of a new breed of peer-to-peer lending platforms.  You can join Lending Club as a borrower or as a lender; for investment purposes, we're interested in the latter.


Correcting Roth IRA Overcontributions

Like most things in life, it's best to be proactive about tax return errors.  If you've made an error, correct it before Uncle Sam comes knocking with additional fees and interest.  You can file an amended return to correct tax errors up to three years ago.


Hooray, A Raise! DON'T BLOW IT.

A windfall may come out of nowhere, coming in the form of a sudden inheritance, a chance winning, or an unexpectedly large sale.  You might abruptly find yourself with money that you have no clear plan for.


Budget Throwdown: Advanced Graduate Student

When we looked at the expenditures of the Average American and the Average Grad Student, I asserted that it was possible to do much better.  To see where I find my savings, first let's break down the model UC Berkeley budget.

Adjusted to include taxes and cover a full 12-month year:

UC Berkeley, 2012-13MonthlyAnnual
Rent & Utilities49%$1,160.00$13,920.00
Total Living Expenses98%$2,317.00$27,804.00
Health Insurance---(covered)$2,306.00
Tuition & Fees---(covered)$12,876.00
Total Graduate Budget2%$3,640.67$43,688.00
Total Expense to Student100%$2,375.50$28,506.00

As previously mentioned, this budget leaves you with nothing saved, or worse, a small deficit.  That's not good.  But we can do a lot better than this!  So much better, in fact, that I save and invest half of my graduate student stipend.



Budget Throwdown: Typical Graduate Student

Yesterday, we took a look at how the typical American household spends their money.  Half of all expenditures go to housing and transportation; the next quarter goes to food, entertainment, and healthcare.

Today, we'll take a look at what universities believe are reasonable budgets for their graduate students.  These budgets, published on the universities' websites, are also used by the federal government in federal student financial aid calculations.


Budget Throwdown: The Average American

The United States Bureau of Labor Statistics publishes the Consumer Expenditure Survey, an excellent collection of data tables that cover, in excruciating detail, the spending patterns of the US population sliced and diced by every possible variable.  In 2012, over 120,000 'consumer units' (households, essentially) were surveyed.  These data are self-reported... so do take them with a grain of salt.

The information in this publication identifies where the average American spends their money, which can serve as a basis of comparison with your own budget.  While everyone's situation is unique, the dominant categories may offer the most room for improvement.


529 Plan: versus UTMA

||  This article is part of a series on the 529 Education Savings Plan  ||

Back in the day, your parents, grandparents, or some other random person might have chosen to express their financial affection by depositing money in a qualified account under the Universal Transfer to Minors Act (UTMA).  The UTMA, itself an extension of the Universal Gifts to Minors Act (UGMA), was originally proposed in 1986 and was ratified as law in most states shortly thereafter.  This law provided a mechanism to transfer ownership of securities, such as stocks, bonds, and mutual funds, to a minor without the complexity of establishing a trust fund.  They were quite popular throughout the 90's, and many young adults today find themselves approaching, or having recently surpassed, the age at which they assume custodianship of these account (18 or 21, depending on the state).

In 2001, things got more complicated: with the passage of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), there was now another option to pass some cash on to the next generation: the USC 26 Section 529 Education Savings Plan (529 Plan).

The 529 Plan is designed to be an improvement over a UTMA account in most situations, but like most things in life, you can't get something for nothing.


529 Plan: Ownership and Student Aid Impact

||  This article is part of a series on the 529 Education Savings Plan  ||

In the previous article, I discussed how an estate planner could potentially use a 529 Education Savings Plan to unload a significant sum of money without tax consequences.  But what are the consequences if you find yourself or your children on the receiving end of a 529 Plan?

How 529 Plan assets and withdrawals affect the beneficiary's student financial aid eligibility depends on who owns the Plan.


529 Plan: Taxes, Revocability, and The Estate

||  This article is part of a series on the 529 Education Savings Plan  ||

We've discussed the 529 Education Savings Plan before: it's by far the best way to save for future education expenses, and it's even useful for graduate students looking to invest when they can't contribute to an IRA.

There's one other group of people that really love 529 Plans: estate planners.


Financial Advisors and Fiduciary Duty

While you'll encounter all sorts of acronyms in the wild, there are really only two flavors of financial advisors: those bound by the fiduciary standard and those not bound by the fiduciary standard. The definition of the term: "from the Latin fiducia, meaning 'trust,' a person (or a business like a bank or stock brokerage) who has the power and obligation to act for another (often called the beneficiary) under circumstances which require total trust, good faith and honesty." Basically, a fiduciary is legally obligated to act in your best interests.

Sounds like that should apply to all financial advisors, right? Unfortunately, it does not.


Book Review 01: Happy Money

In a week of firsts, I proudly present: the first book review!  The lucky victim is Happy Money, released in May 2013 by Elizabeth Dunn (Professor, University of British Columbia). and Michael Norton (Associate Professor, Harvard Business School).  Norton's research interests include consumer behavior, consumer psychology, and philanthropy, so that should give you some ideas about what you're in for.

Executive Summary

In the Financial Independence movement, much thought is given to how we might scrape together a few more dollars here and there by not spending; in contrast, there's much less discussion of how best to allocate what we do spend to maximize its positive effects.  That's the question that this book concerns itself with.

The answer?  In short: spend your money on experiences, not material things; spend it on unique events that build and strengthen social ties; treat yourself only occasionally, to keep it special and prevent it from becoming commonplace; take your time and savor the anticipation while you wait to experience your purchases; reallocate money away from low-satisfaction activities, like a bigger house, fancy cars, or TV, and instead use it to shorten your commute and eliminate other unpleasant tasks; spend money on others, and practice gift-giving and philanthropy.

Overall, the book was a worthwhile read.  The information was interesting and practically useful.  The only thing that stops me from wholeheartedly recommending it is the painfully informal writing style.  ★★★★☆.


Case Study 01: Dividing Household Expenses

Today, we have an exciting thing: the first in this blog's Mail Call case study series!  I've accumulated a backlog of a few of these over the last few months, and I'm looking forward to posting them soon.

I always love receiving and responding to mail, so feel free to shoot me a message if you have something you'd like me to look into.  If you're lucky, our interaction might even be immortalized in these hallowed pages for all the world to see.

$L—name changed to protect the innocent!—writes in from Pennsylvania, seeking advice on managing expense tracking in a multiple-adult home with rather complicated expense splitting:


The $0 Landline

In a previous article, I extolled the virtues of Google Voice.  I told the story of how I've been phone plan free for 18 months, and how I've saved a big stack of cash as a direct result—many of my friends pay nearly $100 per month for a data plan and $200 every two years for a smartphone on a contract, so I may already be as much as $2000 ahead.  That sort of savings will buy you an Excessively Nice Racing Bicycle, pay for a couple cross-country flights, finance an international vacation, or increase my savings rate by 4.5%.

Even if you can't throw out your phone completely, you can still use Google Voice to eliminate ridiculous text messaging fees.

As I discovered over the weekend, you can also use Google Voice to get rid of that ridiculous landline!


Index Investing: Maintenance

|| This article is Part Seven in a series on investing with index mutual funds. ||
||   I. SpeculationII. Index FundsIII. John BogleIV. Vanguard   ||
||  V. Moving to VanguardVI. Asset AllocationVII. Maintenance  ||

When set up correctly, your investments should require very little maintenance.  There's no need to check on your account regularly, but it's a good idea to rebalance your portfolio and reevaluate your contribution rate every now and then.
Nearly time for a rebalancing?


Index Investing: Asset Allocation

|| This article is Part Six in a series on investing with index mutual funds. ||
||   I. SpeculationII. Index FundsIII. John BogleIV. Vanguard   ||
||  V. Moving to VanguardVI. Asset AllocationVII. Maintenance  ||

At this point, hopefully I've convinced you that index mutual funds are a good idea, and maybe even that you should be investing in them at Vanguard.  But when your money hits that account, what, exactly, should you invest in?  This is the question of 'Asset Allocation', which this article will address.

Keep It Simple

In an earlier post in this series, I gave the completely unsupported recommendation to allocate "'your age in bonds' (i.e. 40% bonds for a 40-year-old) and the remainder split 3:1 between domestic and international stocks."  But why?  What are the considerations?


Index Investing: Moving to Vanguard

|| This article is Part Five in a series on investing with index mutual funds. ||
||   I. SpeculationII. Index FundsIII. John BogleIV. Vanguard   ||
||  V. Moving to VanguardVI. Asset AllocationVII. Maintenance  ||

In the previous articles in this series, I described the origin and nature of index mutual funds, why you should invest in them, and why investing with Vanguard is your best bet.  But what if you already have some investments at another company?  That's what this article is all about.

Should I Stay Or Should I Go?

First, you must decide whether it's worth the trouble to switch brokerages.
The Clash weren't sure either.


Index Investing: Vanguard

|| This article is Part Four in a series on investing with index mutual funds. ||
||   I. SpeculationII. Index FundsIII. John BogleIV. Vanguard   ||
||  V. Moving to VanguardVI. Asset AllocationVII. Maintenance  ||

The Vanguard Group is the investment management company started by John Bogle, inventor of the index mutual fund.  As I mentioned in the previous articles in this series, Bogle's big idea, thoroughly derided by the financial establishment of the day, eventually took off: index mutual funds now account for 28% of the $13 trillion invested in mutual funds, and Vanguard manages over $2 trillion as the largest investment management company in the world.  Bogle rejected speculation, short-termism, and high fees, and believed that the investor's best chance of getting their fair share of market returns was to buy and hold a little bit of everything as inexpensively as possible.  History has shown him to be correct.

(If I sound like a Vanguard shill, let me assure you: I'm not getting a dime for this.  I've invested with Vanguard for years, and this article is entirely based on extensive research and the experiences of myself and others with which I've worked.)

Why Vanguard?

In the financial world, bigger is obviously not necessarily better, so Vanguard's advantages must have to do with more than its size.  Why is Vanguard broadly considered to be the best company to invest with?


Index Investing: John Bogle

|| This article is Part Three in a series on investing with index mutual funds. ||
||   I. SpeculationII. Index FundsIII. John BogleIV. Vanguard   ||
||  V. Moving to VanguardVI. Asset AllocationVII. Maintenance  ||

Few of the financial innovations of the last century were particularly beneficial to Average Joe Investor. Complex new investment vehicles, such as the mortgage-backed securities that precipitated the Crash of 2008, have allowed unscrupulous stock brokers to repackage and sell high-risk garbage investments to unsuspecting individuals and institutions.  High fees and hidden costs have siphoned an ever-increasing proportion of market returns away from the investors and into the pockets of fund managers and the titans of Wall Street.  High-frequency trading by supercomputers has distorted the short-term market landscape in unexpected ways.  Hedge funds have made their proprietors billions, but overall have paid out rather poorly to their exclusive clique of megarich patrons.

Amidst all of this 'high finance' dreck, one innovation stands out as an obvious win for the investing Everyman: John Bogle's invention of the index mutual fund.  Far from being met with universal praise, Bogle's big idea was roundly derided by the financial establishment.

38 years later, investments in index mutual funds make up 28% of the $13 billion in US mutual funds.  Well done, Mr. Bogle.


Index Investing: Index Funds

|| This article is Part Two in a series on investing with index mutual funds. ||
||   I. SpeculationII. Index FundsIII. John BogleIV. Vanguard   ||
||  V. Moving to VanguardVI. Asset AllocationVII. Maintenance  ||

If attempting to choose a handful of specific companies to invest in is a losing strategy, what is the alternative?  Own a tiny slice of everything.

To accomplish this, you won't be trading in individual stocks; instead, you'l be investing in index mutual funds.  Investing in this way is much easier than you probably ever would have thought.  This article outlines the what, the why, and the how of investing with index mutual funds.

What is a Mutual Fund?

If you wanted to buy a single share each of Google, Apple, IBM, GE, Dow Chemical, Proctor & Gamble, Exxon Mobil, and Walmart today, it would cost you $1825, and because Google is currently trading at $870 per share, Google alone would make up nearly 50% of your portfolio.  As you can probably see, assembling a well-balanced, sufficiently diversified portfolio from individual stocks of well-known companies is massively expensive.  This is to say nothing of the difficulty and expense of rebalancing your portfolio as the values of these individual stocks go up and down.


Index Investing: Speculation

|| This article is Part One in a series on investing with index mutual funds. ||
||   I. SpeculationII. Index FundsIII. John BogleIV. Vanguard   ||
||  V. Moving to VanguardVI. Asset AllocationVII. Maintenance  ||

"The four most dangerous words in investing are: 'this time it's different.'"
—Sir John Templeton, legendary investor and philanthropist

The financial markets provide investors with the opportunity to grow their money by buying tiny pieces of company equity (the stock market) or corporate and government debt (the bond market).  As the economy grows and companies turn a profit, these investors are rewarded for their participation with debt payments (interest), payouts of corporate profits (dividends), and increases in the value of their investments (capital appreciation).

I've previously discussed the historical performance of the stock market.  The long-term, annualized, inflation-adjusted returns on the US stock market (as represented by the S&P 500) during periods from 1950 to the present have been on  the order of 5-7.5%.  Past performance doesn't guarantee future results, but these historical values provide a basis for calibrating our expectations.

These numbers are averages across nearly every company in the United States.  Shouldn't it be possible to buy only the better companies, and thereby attain a higher rate of return?

In a word?  No.


Free Credit Scores

For easy reference, all credit score and credit report information is now available in one place:

Banks use your credit score to decide the terms of loans extended to you: that is, how much money they'll give you and what the interest rate and terms will be. The better your credit score, the better your loan terms. Lower interest rates, especially on something substantial like a home mortgage, can save you many thousands of dollars over the life of the loan, so a good credit score is worth striving for.


Google Voice: The $0 Phone Plan

We spend far, far too much on phone service.  If you're paying $60+/month on a phone plan, this can be an easy place to add a couple percentage points to your savings rate.  

Some of Mr. Money Mustache's most popular articles have been about cheap phone plans (Republic Wireless, Airvoice Wireless).  These budget smartphone carriers are a hot topic in the frugal living blogosphere.  For a variety of reasons, these plans don't really do it for me.

For instance: Republic Wireless will sell you a phone for $100-200 and unlimited calls and texts for $19 a month.  They keep costs down by configuring the phone to route calls and texts over wifi whenever possible.  Services like these usually come with lots of caveats: you can't bring your own phone, the Sprint network is full of gaping holes, multimedia texts aren't an option, and a non-wifi data plan is going to cost you extra.

These services aren't quite as cheap as they look, either; if you assume a phone will last around two years, that brings the cost closer to $30/month.  And with all of the caveats listed above, why not just pay a little extra to get a high-end phone on a top-flight plan...?

The Google Voice Experiment

For the last 18 months, I've been doing an experiment on the extreme low end of the spectrum: having no phone and no phone plan at all, and just using Google Voice on my computers at home and work.

This option certainly won't work for everyone, but it's completely free and quite sufficient for those, like me, who live fairly regimented lives and believe the gadget arms race is a monumental waste of time and money.


The Debit Card Trap

For easy reference, all credit score and credit report information is now available in one place:

The debit card looks like the perfect financial plastic: all of the convenience of a credit card, without any of the risks.  You can't spend more than you have in your bank account with a debit card, so there's no need to worry about racking up crippling credit card debt and getting slammed with 20-30%+ interest rates.

Those are true facts!  In the younger age groups especially, people are eschewing credit cards and using their debit cards for everything.  But are there any downsides to this trend?

A debit card is a good idea if you have a problem of overspending your limits.  For everyone else, paying with a credit card is the better option.  The reason: credit history and credit scores.


The Sky Is Falling!

EDIT, 10:40pm PST: obviously I'm the worst speculator ever, as the S&P500 was up 0.70% when I woke up this morning.  Blame the release of some strong domestic manufacturing data.

Some politicians have decided that they don't want to come to work tomorrow because they just can't get along with their coworkers.  Their intransigence is now our pain, as the federal government prepares to shut down.

During the shutdown, government offices will be closed and anyone working for the government—including graduate students like me on National Science Foundation fellowships—just won't get paid.  My trip to Yosemite this week will have to be cancelled too, as the national parks will also be closed.

Boo hoo, right?  But this is a lot more than cancelled vacations and minor inconveniences.  There will be substantial negative economic consequences, especially in the short-term.

The New York Stock Exchange opens at 9:30am, which is 6:30am my time (Pacific).  I am not an early bird, so I will probably wake up an hour or two into the trading session.  And oh, what a trading session it may be!


Financial Order of Operations

You may remember the term 'order of operations' from algebra class.  In a mathematical expression such as:

the algebraic order of operations defines the correct sequence in which you must evaluate the components of the expression in order to arrive at the correct answer.

In personal finance too, there is a proper order of operations.  While it's obvious that you shouldn't be researching investment properties while you're deep in credit card debt, the details of the correct order in which to go about improving your financial situation aren't necessarily trivial.  When the way forward isn't obvious, a common reaction is inaction.  This article seeks to summarize a lot of what's out there into a straightforward roadmap toward solvency, stability, and ultimately, financial independence.


Beautiful Math On Your Website

A bit of a departure from Our Regularly Scheduled Program.  I know a lot of my readers aren't scientists and engineers, but who knows when this might come in handy!

This is a post of interest to anyone who wants to use nice-looking math on your blog or website.


Must-Read: Raptitude

Very, very, very occasionally I find a blogger that's so good, by the end of an article or two, I:
  1. consider my life materially improved
  2. subscribe to the RSS feed
  3. schedule a time to dig into the article backlog
  4. definitely want to meet this person.
The last time this happened was with Mr. Money Mustache, whose articles worked miracles to help me crystallize my as-of-yet dilute solution of thoughts on personal finance, financial independence, and lifestyle engineering.

Well folks, it's happened again.

The subtitle is "getting better at being human".  You should already be interested.

David Cain, the Raptitude guy


Nontraditional Investments

While I've spent a lot of time discussing the finer points of choosing the right types of investment accounts and allocating your investment contributions to minimize the taxes you pay, my conclusions concerning what to invest in have been pretty boring.  Whether the money is in a Roth IRA retirement plan or a 529 college savings plan or a military Thrift Savings Plan or any other investing world account acronym, the story is the same: you are best off investing in broad-based, passively-managed index mutual funds.  While the historical context and ultimate triumph of the index mutual fund deserves an article of its own, suffice it to say that any financial expert with an honest, undivided interest in the investor's well-being will give exactly this advice.

To be crystal-clear: that is definitely all you need to know.  From your first investment order all the way through retirement, index mutual funds are by far the surest and most straightforward path to accomplishing your financial goals.

That being said, technology is allowing the proliferation of all manner of new and interesting investment opportunities.  This article focuses on opportunities that meet my definition of the optimal investment:  a low barrier-to-entry, a small minimum investment requirement, limited input of time, energy, and expertise, and minimal fees — plenty has been written elsewhere about effort- and expertise-intensive investments such as real estate, so I won't go into them here.


Saving While Deployed: The Savings Deposit Program

In a previous article, I discussed two powerful tools that servicemembers have for retirement preparation: the US Military Pension and the Thrift Savings Plan (TSP).  In this article, I'll cover one more: the Department of Defense Savings Deposit Program (SDP).

The SDP is a zero-risk savings account with a guaranteed 10% interest rate on deposits up to $10,000, only available to members of the uniformed services deployed in designated combat zones and receiving Hostile Fire/Imminent Danger Pay (HFP/IDP).

If you're eligible, this is the best deal in town.


Free Money Transfers with Google Wallet

If you're not already using Google Wallet to transfer money for free to anyone with a Gmail address, this is your royal invitation.  This service wipes out any reason for a non-business individual to use Paypal, Amazon WebPay, Popmoney, Venmo, &etc.  Never annoy your friends or family with the inconvenience of cashing a paper check again.


Want To Retire Early? Join the Military.

This post is dedicated — and highly relevant — to the United States uniformed services.
(The Fourth of July was two weeks ago.  Better late than never!)

Servicemembers have two powerful tools for retirement preparation: the US Military Pension and the Thrift Savings Plan.

The Pension

Members of the US uniformed services are eligible to receive a pension in retirement after 20 years of service.  For members who entered active duty after September 8th 1980, their pension pay is equal to:

(average of highest three years of base pay) x (2.5% x Years of Service)

At 20 years, the pension is 50% of the three-year average highest base pay; at 30 years, it's 75%; at 40 years, 100%.  At 19.5 years of service?  0%.  The system used to max out at 75%, but the 2007 National Defense Authorization Act removed this cap.  To protect retired servicemembers from inflation, the dollar value of the pension is subject to Cost Of Living Adjustments (COLAs) that are tied to the Consumer Price Index (CPI).

Pension-paying positions are getting harder to find these days, so having one is a major benefit. Imagine: if you maintained a 50%+ savings rate prior to retirement, the pension alone could 100% cover your expenses!  Additional income from the money you saved and invested would be icing on a rather incredible guaranteed early retirement cake.  Social Security should also kick in somewhere between 62 and 70, further sweetening the deal.

Is it possible to save 50% as a servicemember?  Honestly, I have absolutely no idea.  Servicemembers do have financial challenges such as frequent, unexpected relocations and deployments.  But how about 40% or 30%?  Even at those rates, the math works out very much in your favor.

The Thrift Savings Plan

There's more, and this applies even to those who don't stay in the service for 20+ years.

The Thrift Savings Plan (TSP) is a defined contribution plan, the uniformed services' equivalent of the 401(k).  I've written an overview of the TSP's benefits, terms and conditions and added it to the Investment Plans section of the site.

All servicemembers are eligible to participate.  The terms of this plan are incredibly good, offering a selection of high-quality investment options at a shockingly low 0.025% expense ratio (all-in annual fee).

Like an IRA, the TSP comes in both Traditional (contributions made with pre-tax dollars) and Roth (contributions made with post-tax dollars) versions; money invested in either version is never subject to tax on capital gains or dividends.

After leaving the service, money in the TSP can be left alone or rolled over into a (Roth) IRA.  If rolled over, the TSP principal will be available for tax- and penalty-free withdrawal to help cover expenses until the TSP investment earnings become available at age 59.5 and Social Security kicks in at age 62-70.

See the Thrift Savings Plan overview for more information.

Are you eligible or the TSP, and if so, do you contribute to it?

What are the financial challenges of being a servicemember?  What sorts of savings rates are feasible?


Site Infrastructure Updates

For those who are interested in such things, I performed major updates on my Biography, which now includes a sketch of my current budget and financial situation.  To facilitate a series of reader case studies (that I am extremely excited about), I've also added a Contact page.

The Post-It note above my computer monitor reads 'CONTENT FIRST', but sometimes...

My Financial Independence-related blog roll has also been added to the right sidebar.  Note the distinct lack of jumping, talking, flashing, or exploding advertisements.

I'm still working on learning the intricacies of Google Custom Search, and it currently only halfway does what I want it to do.  Once I figure it out, I'll post a brief guide to my Blogging Tools page.  In the meantime, here's a nicely-organized Table of Contents which also contains a list of the posts that are still on the old assembly line.

[X1] Open Clip Art: Gear — http://openclipart.org/detail/169903/gear-by-hank0071


Thrift Is Beautiful: Food

While some might claim that they're 'eating for the flavor', at the end of the day... we're all eating for the calories.  It's our never-ending quest for calories that keeps even the most frugal of us coming back to the kitchen and the grocery store.

Our senses of touch and sight allow us to evaluate our food in terms of how much space it takes up and how much it weighs.  We're unable to gauge caloric content so easily.

Take this quarter-cup of extra-virgin olive oil:

How many calories do you think this contains?  One hundred calories?  Two hundred?

500 calories.

(this is easily verified: 1/4 cup = 60 milliliters, vegetable oil has a density of ~0.92 grams per milliliter [1], and lipids have an energy density of around nine food calories per gram)

Extra virgin olive oil is expensive, right?

1/4 Cup of extra-virgin olive oil = 500 calories = $0.35.


High-Efficiency Procurement

This information has gone stale!

Fortunately, alternative means have become available for automating your Craigslist searching.

Check out the Craigslist channel on IFTTT: https://ifttt.com/craigslist

If your Craigslist hunting strategy involves hitting 'refresh' a whole bunch of times, there is a Better Way.

Not everyone knows about List Alert: http://www.list-alert.com/.

This needs to change.

Setting up a Craigslist alert to find me a bread machine in the East Bay is as easy as:

After hitting 'Search', you can type your email into the box and hit 'Create Alert'.  You'll have to confirm your email address to start things up.  Creating an account is optional, but it gives you the ability to quickly and easily create and edit alerts from http://www.list-alert.com/search/my_searches.cfm.

I created this alert at the beginning of the week.  Taken yesterday evening:

Bread-y success!

I haven't turned the alert off yet, so they keep coming in:

If you're an EBay user, you can do something very similar by saving a search and selecting 'sign up for emails'.

Happy robo-baking!

(or happy... whatever it is you do on Craigslist)


Emergency Funds

Over a century ago, stage magician Nevil Maskelyne wrote in The Magic Circular (1):

"It is an experience common to all men to find that, on any special occasion, such as the production of a magical effect for the first time in public, everything that can go wrong will go wrong. Whether we must attribute this to the malignity of matter or to the total depravity of inanimate things, whether the exciting cause is hurry, worry, or what not, the fact remains."

Whether or not you subscribe to the Resistentialist theories that inanimate objects are out to get us (2), Murphy's Law - and its endless corollaries (3) - pretty much sums it up: if it can go wrong, you'd best bet it will.

This is the rationale behind holding some of your assets in an emergency fund.  Ideally, you'll never touch it - all of your job transitions will be carefully planned, your injuries will all be taken care of with Band-Aids and medical tape, natural disasters will hold off while you're in town, and you'll die in perfect health while mountain biking at the age of 112.

The cargo ship Ital Florida runs into some... issues in June 2007 (X1)
The best bet: hope for the best and plan for the worst, in proportion to an event's severity and its probability of occurring.


Thrift is Beautiful: Fermentation

Mmmmm. (X1)
While growing up, my family kept a vegetable garden in the corner of our suburban lawn.  The garden was not huge - we've expanded it slightly almost every year to the present, but back back then it was maybe 12 feet on each side.  In typical suburban lawn fashion, the developers had scraped away and sold all but the two inches of topsoil necessary to cover the place in a resource-intensive grass lawn; below that was mostly hard, red clay.  My dad raised the beds with railroad ties, started a compost pile, and began turning the soil religiously.  Within a few years, most of the rocks had been picked out and the clay slowly gave way to richer soil.

We grew the typical garden fare: tomatoes, carrots, onions, bell peppers, broccoli, sweet peas, salad greens, beets, herbs.  Even in this modest plot, the yields could be pretty impressive.  Many years we would return from our state park vacation to find our tomato plants bent to the ground with juicy red fruit.

Too much juicy red fruit.


Thrift Is Beautiful: Stuff You Already Own

Chances are, you weren't always a Mustachian.

No.  Chances are, in your former life, you didn't really appreciate the cost of your day-to-day luxury purchases.  You may have even gone through a phase where buying things temporarily eclipsed making and accomplishing things.  Or perhaps it wasn't quite that bad, but over a rather extended period you were rather less careful with your money than you would now have liked.

That era may be past, but the effects remain.  You certainly have less money than you would otherwise.  If you spent primarily on experiences, you have memories, consequences, and outcomes; if you spent primarily on durable goods, you may have quite a bit of stuff.  This article focuses on the latter situation.

I spy with my little eye...

So, what to do?

Sell It

There is a strong argument for getting rid of the extraneous stuff you don't use.  Stuff takes up space, meaning that you are spending more on living space than you need to in order to store it.  Stuff also has mass and volume, and serious mass and volume can set you back serious dollars (and serious time and effort) every single time you move.  Many types of stuff also require some form of management or maintenance: cleaning the stuff, organizing the stuff, keeping the stuff in working order.  If the stuff has little utility to you, that time, money, and effort is yielding a very poor return on investment.

Before you go the commercial route, hit up your friends.  You might not get top dollar, but selling to friends is fast and convenient.

It's extremely easy to sell stuff on Craigslist, Ebay, and Amazon.

Craigslist is by far the easiest - hop on the site or the Android or iOS app, enter a price, description, and location and upload some photos, and you're done.  If you live in or near an urban area with a lot of Craigslist activity, you may be free of the item and holding a stack of cash by the end of the day.  Finding a buyer might take longer in less-active regions.  Also, be prepared to do some negotiating - some people will take your stuff at the listed price without hassling you, but others may try to haggle it down.  If the price isn't negotiable, put that fact in your ad!  Mr. Money Mustache has written his own love letter to Craigslist with some good tips on buying and selling.

With Ebay and Amazon, your customer base - and your potential price range - expand at the cost of more complexity.  You'll have to create an account and set up a bunch of stuff before you can start selling, and you'll have to deal with - and pay for - shipping.  The benefits only outweigh the costs for someone planning to sell a lot of stuff, or stuff that is likely to have a limited local customer base.

If you have junk that no one is likely to be willing to pay money for, put it in the 'Free' section on Craigslist or donate it to a local school or charity.

Use It

When you bought your stuff, you probably had a plan beyond storing it in your closet.  As you scale back your spending, it's likely you'll find yourself with more time available for doing.

Books you've never read?  Tools in mint condition?  Art supplies still in the plastic?  Photography equipment?  Exercise hardware?  Musical instruments?

An often-neglected key to low-cost living is having lots of hobbies that require more time, effort, and thought than they require cash.  Perhaps you once considered exploring a hobby, but you got too busy and you never got around to it.  Especially if you already own what you'd need to get started, why not give it a shot?

One happy side-effect of the explosive growth and maturation of the Internet is that it's much, much easier to learn how to do something new today than it was a decade ago - jump online, run some Google searches, read the Wikipedia page, find a forum (or subreddit, or Google+ Community, or Facebook group, or email list...) dedicated to the topic, and jump in!  You may find that there is still tons of utility and many hours of fun locked away in the neglected stuff that you already own.

Of course, you might spend a few days trying to play the clarinet and suddenly realize why you had shoved it in the back of that drawer.  No personal utility?  Sell it on Craiglist!


Blog Tools

As you may have noticed, my blog - at least aesthetically - has time-warped from the late-90's to the present day in a rather short period of time.  Now, for instance, you can even read the body font without a magnifying glass and a bottle of aspirin.

As you may have also noticed, I've recently mastered snippet engineering, Twitter cards, and a bunch of other neat stuff.

Not content to hoard these techniques for myself, I've created a page to share them:



External Motivation

"You cannot dream yourself into a character: you must hammer and forge yourself into one."
-- James Anthony Froude, The Nemesis of Faith (1849)

Moore's Law of Technological Distraction states that the time-wasting and productivity-sapping powers of the Internet double approximately every two years.  Just see for yourself:

Units: minutes per day spent watching digital images of cats
Tech Foundings
1975.04 - Microsoft
1976.04 - Apple
1998.09 - Google
2001.11 - StumbleUpon
2004.02 - Facebook
2005.06 - Reddit
2006.03 - Twitter
2007.02 - Tumblr
2008.01 - FailBlog
2009.02 - Imgur
2010.10 - Instagram

There are, shockingly, a few services that are designed to improve your ability to make positive life changes and get stuff done.  What will they think of next?