Picking up Nickels

Tuesday, August 13, 2019

August 2019 Financial Asset Roundup

Here are my current financial assets as of the market close on August 12th, 2019:


Asset Jul
2019
Aug
2019
Change
Checking 1,243 993 -250
Money Market 56,338 61,931 5,593
Savings Bonds 159,906 160,224 318
Treasury Bills 0 0 0
CDs 73,721 73,941 220
Brokerage 193,483 178,153 -15,330
401k 201,740 194,392 -7,348
Roth IRA 167,802 161,874 -5,928
SEP IRA 822,046 804,205 -17,841
529 Savings 183,624 183,223 -401



Total Assets $1,859,903 $1,818,936 -$40,967
   
 
-2.20%


The market has reversed course since the last update, with the S&P 500 falling 3.69% during that time:

(chart courtesy of nasdaq.com)

On the jobs front, the unemployment rate for July remained at 3.7%, with 164,000 new jobs created. Oil prices have fallen to the $54 level, with a local unleaded regular gasoline price of $2.49 per gallon at my last fill up. The ill-advised trade war with China is going swimmingly as expected and the FOMC reacted by cutting the federal funds rate for the first time in more than a decade.

On the financial front, it has been relatively quiet except for a recent distribution from my S Corp. I have a college tuition payment due shortly for the eldest Frugalson child, so that cash won't sit idle for long. With the continuing interest rate uncertainty and market volatility, I don't anticipate any notable financial moves in the near future.

As for the non-financial, we enjoyed a week of family vacation and are trying to make the most out of the last few weeks of summer. School is coming!

Thursday, July 11, 2019

July 2019 Financial Asset Roundup

Here are my current financial assets as of the market close on July 10th, 2019:


Asset Jun
2019
Jul
2019
Change
Checking 1,661 1,243 -598
Money Market 45,018 56,338 7,041
Savings Bonds 159,255 159,906 331
Treasury Bills 20,000 0 -20,000
CDs 58,342 73,721 15,192
Brokerage 179,163 193,483 14,930
401k 190,508 201,740 7,904
Roth IRA 162,348 167,802 4,810
SEP IRA 793,989 822,046 24,395
529 Savings 178,838 183,624 2,794



Total Assets $1,789,122 $1,859,903 $56,799
   
 
3.15%


The market has climbed to new all-time highs since the last update, with the S&P 500 up 3.68% during that time:

(chart courtesy of nasdaq.com)

On the jobs front, the unemployment rate for June rose to 3.7%, with 335,000 new jobs created. Oil prices are up ~13% to the $61 level, with a local unleaded regular gasoline price of $2.59 per gallon at my last fill up.

On the financial front, my assets have once again hit another all-time high, surpassing the previous high from June 2019. One change has been my stance on continuing to hold cash in 28 day T-Bills. As calls for a FOMC rate cut have increased (and hinted at), I've watched the investment rates for T-Bills drop (2.174% for 7/16 issues) to a level that doesn't compare very favorably with liquid savings options (like the 2.1% APY offered by Alliant Credit Union). Instead I reversed course and decided to put a portion of that cash into a Alliant 2.55% APY 12 month CD with the rest remaining liquid for now. I have some larger bills coming soon (college tuition, tax payments, etc.), so I will likely stand pat for a while.

As for the non-financial, we've been dealing with hot weather over the past week and will be planning on a week's vacation later this month. Good times. :D

Tuesday, June 11, 2019

June 2019 Financial Asset Roundup

Here are my current financial assets as of the market close on June 10th, 2019:


Asset May
2019
Jun
2019
Change
Checking 1,661 1,841 180
Money Market 45,018 49,297 4,279
Savings Bonds 159,255 159,575 320
Treasury Bills 20,000 20,000 0
CDs 58,342 58,529 187
Brokerage 179,163 178,553 -610
401k 190,508 193,836 3,328
Roth IRA 162,348 162,992 644
SEP IRA 793,989 797,651 3,662
529 Savings 178,838 180,830 1,992



Total Assets $1,789,122 $1,803,104 $13,982
   
 
0.78%


The market is up slightly since the last update, with the S&P 500 rising 0.18% during that time:

(chart courtesy of nasdaq.com)

On the jobs front, the unemployment rate for May remained at 3.6%, with a disappointing 75,000 new jobs created. Oil prices have pulled back considerably to the $54 level (down from $62), with very little impact on local unleaded regular gasoline prices to date.

On the financial front, my assets have hit another all-time high, slightly surpassing the previous high from May 2019. Once again I rolled my maturing 28 day T-Bills into new ones with an investment rate of 2.373% and will look to do so again next month as long as rates continue to be attractive. I also took a distribution from my S Corp and will likely pad my T-Bills a bit with some of the proceeds.

As for the non-financial, the school year is almost over for everyone, and it's time to think about a modest summer vacation. I'm not sure what that will be yet, but hopefully it will be casual and relaxing.

Monday, May 13, 2019

May 2019 Financial Asset Roundup

Here are my current financial assets as of the market close on May 10th, 2019:


Asset Apr
2019
May
2019
Change
Checking 1,308 1,661 353
Money Market 44,346 45,018 672
Savings Bonds 156,523 159,255 2,732
Treasury Bills 20,000 20,000 0
CDs 58,163 58,342 179
Brokerage 176,919 179,163 2,244
401k 191,993 190,508 -1,485
Roth IRA 163,861 162,348 -1,513
SEP IRA 794,235 793,989 -246
529 Savings 178,640 178,838 198



Total Assets $1,785,988 $1,789,122 $3,134
   
 
0.18%


The market has given back some gains since the last update, with the S&P 500 down 0.24% during that time:

(chart courtesy of nasdaq.com)

On the jobs front, the unemployment rate for April fell to 3.6% (the lowest since December 1969), with a surprisingly strong 263,000 new jobs created. Oil prices have pulled back a bit to the $62 level, which has translated locally to an unleaded regular gasoline price of $2.69 per gallon at my last fill-up. And unfortunately, the latest volley in the POTUS's ill-advised trade war with China shows that they are not so "easy to win" after all.

On the financial front, my assets have once again hit another all-time high, slightly surpassing the previous high from April 2019. I've continued to roll my maturing 28 day T-Bills into new ones with an investment rate of 2.434% and will look to do so again next month.

As for the non-financial, the eldest Frugalson just child finished up the first year of college and in the fall of 2020 we will have two college students in the house. It's amazing how fast the time has gone by.

Thursday, April 18, 2019

March CPI-U numbers released: Meh on April 2019 issue I Bonds

The U.S. Bureau of Labor Statistics released the March 2019 Consumer Price Index (CPI-U) inflation data last week, which increased by 0.56% last month.

As always, now (along with the release of the September CPI-U) is one of the best times to consider purchasing I Bonds. The reason for this is that we now know what the rate of return for April 2019 I Bonds will be for both the first and second six month periods, which is important since I Bonds must be held for 12 months before they can be redeemed.

Using the CPI-U data from September 2018 (252.439) and March 2019 (254.202) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for April 2019 issue I Bonds.


That means these bonds would earn a composite rate of 2.83% (using 0.5% fixed & 1.16 variable) for the first 6 months and 1.90% (using 0.5% fixed & 0.70% variable) for the second 6 months. Based on this, April 2019 issue I Bonds are underwhelming when compared to something like the 12 month CD @ 2.85% APY currently being offered by Citizens Financial Group.

Due to the 0.5% fixed rate (the highest since November 2008), I personally maxed out my 2019 annual I Bond allotment in January while redeeming some older ones with a 0% fixed rate. I also elected to take the bulk of my 2018 Federal tax refund in the form of April 2019 issue paper I Bonds, so I'm already maxed out for this year.

Thursday, April 11, 2019

April 2019 Financial Asset Roundup

Here are my current financial assets as of the market close on April 10th, 2019:


Asset Mar
2019
Apr
2019
Change
Checking 2,620 1,308 -1,312
Money Market 50,361 44,346 -6,015
Savings Bonds 156,149 156,523 374
Treasury Bills 15,000 20,000 5,000
CDs 57,977 58,163 186
Brokerage 177,764 176,919 -845
401k 183,217 191,993 8,776
Roth IRA 153,463 163,861 10,398
SEP IRA 769,998 794,235 24,237
529 Savings 175,815 178,640 2,825



Total Assets $1,742,364 $1,785,988 $43,624
   
 
2.50%


The market has continued to rise since the last update, with the S&P 500 up 3.46% during that time:

(chart courtesy of nasdaq.com)

On the jobs front, the unemployment rate for March remained at 3.8%, with 196,000 new jobs created. Oil prices have continued to rise to the $64 level (+11.5%), which has translated locally to unleaded regular gasoline prices rising about 20¢ per gallon.

On the financial front, my assets have once again hit another all-time high, surpassing the previous high from March 2019. I've once again rolled my maturing 28 day T-Bills (plus a little extra) into new ones with an investment rate of 2.434% and will continue to do so as long as the yields stay competitive. And as mentioned last week, my personal tax returns are done (with some of the Federal refund in the form of paper Series I savings bonds) along with 2018 Roth IRA contributions for Mrs. Frugalson and myself. I'll also figure on taking a distribution from my S Corp before the next update.

Another topic that I'd like to touch on is the March 2019 CPI-U release yesterday and what that means for I Bonds (I'm hoping to try to get to that soon in a separate post). Another decision I made in light of capped SALT deduction due to the tax cut is to start throwing some additional cash at our mortgage. I've never been in a rush to pay it off, but we're about halfway through a 15 year mortgage with a relatively modest balance, so why not retire it for good? I'm guessing that we can take care of it in about three years if Mrs. Frugalson and I are healthy and working.

As for the non-financial, lawn season is officially here! I've done my yard cleanup, have sent in a lawn soil sample for analysis, and will be applying my pre-emergent herbicide shortly. I'm looking forward to everything greening up and enjoying the mow. :)

Wednesday, April 03, 2019

The Tax Cuts and Jobs Act (TCJA) and Me

My 2018 personal returns are in and I wanted to share how my numbers turned out courtesy of the new tax cut.

First, let’s take a look at the pre-TCJA situation for my 2017 return. Once the details came out in late 2017, I figured it was my final opportunity to itemize my deductions so I did all of the following before 12/31/17:

  • Paid all assessed property taxes due in 2018
  • Doubled up all planned charitable contributions
  • Paid an extra mortgage payment
  • Increased final 2017 estimated state tax payment
When all was said and done, we were MFJ topping out in the 25% tax bracket and our effective tax rate (total tax/taxable income) ended up at 18.4%. At our MAGI I was able to max out my employer SEP IRA contribution and Roth IRA contributions for Mrs. Frugalson and myself.

Once we hit 2018, I tried to switch gears to a more TCJA-friendly approach where possible:

  • Greater emphasis on business profit over salary due to the Section 199A 20% qualified business income deduction (QBIC)
  • Change my work retirement plan to a solo 401k to help maintain or exceed employee/employer plan contributions allowed with my old SEP IRA
  • Reduced charitable contributions due to extra giving in 2017
As it turned out, our 2018 AGI actually decreased ~1.5% due to increased retirement plan contributions, but our taxable income increased by about 2.4% with the switch to the standard deduction (minus the QBIC) and the loss of personal exemptions. We topped out in the 22% tax bracket and were able to qualify for child tax and education credits in 2018, giving us a 13.4% effective tax rate (a 5% reduction). At our MAGI we were still able to max out Roth IRA contributions for Mrs. Frugalson and myself and I was able to make a healthy contribution to my solo 401k.

Obviously, a 5% tax cut is nothing to sneeze at, but we will lose $1500 of the child tax credit in 2019 as the youngest Frugalson will age out of it. I’m hoping to qualify for a bigger bite of the American Opportunity Credit this year with increased retirement plan contributions, but that can be hard to gauge with unpredictable business income. Finally, I’ve also started to rethink our charitable contributions in terms of gifting appreciated shares of stock directly to charities instead of cash gifts since we can no longer itemize our deductions.

That being said, I have to admit that I am not a fan of this tax cut despite the immediate financial benefit it provided me for 2018. The previous tax rates were already at historic lows, and our debt and deficit problems were already getting worse before this tax cut. I could certainly get behind something like this if we were in a recession and needed short term financial stimulus, but unemployment was already very low and corporate profits were already very high when the TCJA was passed. I expect tax receipts to fall and figure it’s only a matter of time before our friends in Washington will be looking to “reform” (i.e. cut) my future Social Security and Medicare benefits to pay for it. Thanks guys! ;)