Dividends are great but
1) companies can just stop them
2) companies are more likely to stop dividends when business is bad which is bad news for your capital investment too
3) reliable dividends from stable companies can have extremely low yields, in the 1-2% range
It's definitely a strategy but I don't think you can do an entire retirement on dividends, much less an early retirement
edit: unless you want to just bet that AT&T can sustain it's 7% dividend for a long time
Dividends are just a forced conversion from equity to cash which is potentially worse for the investor and no different if you planned to sell anyway and tax treatment is the same.
Well yes and no. The equivalence occurs from the assumption that if the company just holds cash instead of paying a dividend then prices will rise by an equivalent amount and you can then sell some shares to generate that income. But then you do eventually run out of shares to sell and the transfer is from other investors -> you instead of company -> you. Plus the increase isn't guaranteed to ever show up
If you're looking to live off of non-retirement investments the safest approach would be aiming for dividends so you don't touch your capital at all, rather than trying to have a safe withdrawal rate.
It's just... to have a reasonable annual income off of dividends takes a couple $million at least.
...which is also the same amount it takes to have a reasonable annual income by selling shares to raise cash. A 3.5% starting annual withdrawal rate increasing by inflation every year is basically the same as a 3.5% portfolio yield (hopefully filled with stocks that will increase their dividends at least at the rate of inflation), which at a $1.5 million portfolio comes out to $52,500 in income during the first year.
Well yes and no. The equivalence occurs from the assumption that if the company just holds cash instead of paying a dividend then prices will rise by an equivalent amount and you can then sell some shares to generate that income. But then you do eventually run out of shares to sell and the transfer is from other investors -> you instead of company -> you. Plus the increase isn't guaranteed to ever show up
The equivalence occurs because the value of the company drops by the amount they pay out for the dividend. The equivalent of running out of shares, assuming that you can hold fractional shares, for the dividend case is a zero value company. There is a difference in transfer, but assuming a market exists with buyers it's not relevant to the individual.
This does fall apart if the company hoards cash and doesn't generate a return with it, but in practice that doesn't tend to happen. Share buybacks are the closest example and the return for a company giving a dividend or buying back shares with that money is the same. In general there is no reason as an investor to specifically seek out a dividend stocks as an income stream. Looking at historical returns if anything you actually want small caps that are growing, but it's unclear if that trend will continue.
But then you do eventually run out of shares to sell
Just wanna address this part of your post.
Practically speaking this is not true, and is definitely not something worth worrying about or basing decisions on. You can sell fractional shares at most brokerages, and even if you can't sell fractional shares, companies (growing ones anyway) typically split their shares every so often, obvious examples like Google and Amazon notwithstanding. Speaking abstractly, in a perfectly continuous world you can sell 4% of your portfolio every year forever. In practice that's basically true as well, especially if you own index funds with low per-share prices.
Well yes and no. The equivalence occurs from the assumption that if the company just holds cash instead of paying a dividend then prices will rise by an equivalent amount and you can then sell some shares to generate that income. But then you do eventually run out of shares to sell and the transfer is from other investors -> you instead of company -> you. Plus the increase isn't guaranteed to ever show up
The equivalence occurs because the value of the company drops by the amount they pay out for the dividend. The equivalent of running out of shares, assuming that you can hold fractional shares, for the dividend case is a zero value company. There is a difference in transfer, but assuming a market exists with buyers it's not relevant to the individual.
This does fall apart if the company hoards cash and doesn't generate a return with it, but in practice that doesn't tend to happen. Share buybacks are the closest example and the return for a company giving a dividend or buying back shares with that money is the same. In general there is no reason as an investor to specifically seek out a dividend stocks as an income stream. Looking at historical returns if anything you actually want small caps that are growing, but it's unclear if that trend will continue.
A dividend is a company saying it can't generate a good return on that cash, it basically has nothing better to do than give it away, ot at least it feels that is is advantageous to give it away if only to make shareholders happy. So in the case of a company that otherwise would pay a dividend then yes it probably would just hoard that cash
A share buyback is essentially a dividend in different form
But then you do eventually run out of shares to sell
Just wanna address this part of your post.
Practically speaking this is not true, and is definitely not something worth worrying about or basing decisions on. You can sell fractional shares at most brokerages, and even if you can't sell fractional shares, companies (growing ones anyway) typically split their shares every so often, obvious examples like Google and Amazon notwithstanding. Speaking abstractly, in a perfectly continuous world you can sell 4% of your portfolio every year forever. In practice that's basically true as well, especially if you own index funds with low per-share prices.
Yes I suppose that's true especially with fractional shares it's much easier
Per earlier recommendations I spent some time been going down the r/financialindependence hole lately, lot of good information in there. I'm curious about roth IRA conversions as a means of withdrawing money from your 401k early tax-free. If I understand correctly, the scheme goes as follows:
Every year after you retire, transfer your yearly budget from your Traditional IRA into a Roth IRA, paying taxes on it then at a low tax bracket.
Let it sit for five years, continuing to transfer more each subsequent year.
After five years, withdraw your budget tax free from the Roth IRA (but not the profits that it made during that time).
Is that right? What's the drawback to doing this versus letting the money sit in a 401k until you hit retirement age? I guess it all comes down to the specifics of the taxes?
Per earlier recommendations I spent some time been going down the r/financialindependence hole lately, lot of good information in there. I'm curious about roth IRA conversions as a means of withdrawing money from your 401k early tax-free. If I understand correctly, the scheme goes as follows:
Every year after you retire, transfer your yearly budget from your Traditional IRA into a Roth IRA, paying taxes on it then at a low tax bracket.
Let it sit for five years, continuing to transfer more each subsequent year.
After five years, withdraw your budget tax free from the Roth IRA (but not the profits that it made during that time).
Is that right? What's the drawback to doing this versus letting the money sit in a 401k until you hit retirement age? I guess it all comes down to the specifics of the taxes?
Yes, I think that's right. Not sure what you mean by drawback. Obviously, the main drawback is that you're taking money of your retirement account so it's not compounding for when you reach a traditional retirement age. But, most people who do this have planned out an early retirement, so it's a moot point. The point of the conversions is to get money out of your IRA to use without paying the usual 10% penalty. If you're not working anyway, and your spending is low (like most peoples in that subreddit) then your taxable income from the conversion will be minimal. Keeping your taxable income low also helps you qualify for health insurance subsidies on the exchanges. I'm not sure of the details on that part and I think it may vary by state to some extent?
The only clarification to above is that once you hit "retirement age" (I think it's.....65? for Roth?) you can also withdraw the interest it made, tax free.
Make sure you read the posts from people who FIREd already and the challenges they faced. I seem to remember a number of them had to deal with medical issues that had some impact (depending on the person) to their retirement budget.
Yeah, I don't frequent the subreddit anymore but health insurance seems to be a challenge for US based early retirement
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BrodyThe WatchThe First ShoreRegistered Userregular
If I feel fairly competent with basic spreadsheeting, is there any value to trying to use Mint or paying for YNAB over just doing it myself in a google docs sheet, and slowly getting better and making fancy pie charts or w/e?
"I will write your name in the ruin of them. I will paint you across history in the color of their blood."
ChanusHarbinger of the Spicy Rooster ApocalypseThe Flames of a Thousand Collapsed StarsRegistered Userregular
the value of using Mint is not having to track all your spending and bills manually, but that may not be a super big deal
i haven't used YNAB but i assume it's the same
Allegedly a voice of reason.
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ChanusHarbinger of the Spicy Rooster ApocalypseThe Flames of a Thousand Collapsed StarsRegistered Userregular
tbh i don't find the budgeting side of Mint to be very good. it doesn't track things like credit card payments very well and often just randomly forgets your paycheck deposit that is the same every time is your paycheck or that your mortgage payment that is the same every month isn't an unexpected large expense. it's quite stupid
it is great at tracking spending and balances though
Allegedly a voice of reason.
+5
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BrodyThe WatchThe First ShoreRegistered Userregular
tbh i don't find the budgeting side of Mint to be very good. it doesn't track things like credit card payments very well and often just randomly forgets your paycheck deposit that is the same every time is your paycheck or that your mortgage payment that is the same every month isn't an unexpected large expense. it's quite stupid
it is great at tracking spending and balances though
Yeah, I've been looking at YNAB, and its basically a very fancy spreadsheet that does a lot of nice conditional formatting colors for me, which I definitely am not going to be able to do at the drop of the hat. But its also $11 a month or $84 a year, and doesn't seem to import/track individual transactions from my bank, just the total value of the account. I tried starting a mint account last night, and it definitely seemed like it was trying hard to automatically generate a budget for me based on my last 90 days of spending or w/e, but also the constant adds were kind of annoying, and I didn't much care for all the additional services its trying to offer alongside budgeting.
"I will write your name in the ruin of them. I will paint you across history in the color of their blood."
tbh i don't find the budgeting side of Mint to be very good. it doesn't track things like credit card payments very well and often just randomly forgets your paycheck deposit that is the same every time is your paycheck or that your mortgage payment that is the same every month isn't an unexpected large expense. it's quite stupid
it is great at tracking spending and balances though
Yeah, I've been looking at YNAB, and its basically a very fancy spreadsheet that does a lot of nice conditional formatting colors for me, which I definitely am not going to be able to do at the drop of the hat. But its also $11 a month or $84 a year, and doesn't seem to import/track individual transactions from my bank, just the total value of the account. I tried starting a mint account last night, and it definitely seemed like it was trying hard to automatically generate a budget for me based on my last 90 days of spending or w/e, but also the constant adds were kind of annoying, and I didn't much care for all the additional services its trying to offer alongside budgeting.
YNAB will track individual transactions, that's the main way it works. If you're just reconciling most of it's features won't work. It allows either auto or manual import. The automatic import can be a bit twitchy though.
Mint's value for me is that I don't have to remember a bunch of different logins if I want a quick look at, say, my mortgage balance or my 401k. But it's really only reliable with big national service providers, there's a good chance it won't work right with some little credit union or regional bank. I still keep a google spreadsheet to track account balances over time.
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ChanusHarbinger of the Spicy Rooster ApocalypseThe Flames of a Thousand Collapsed StarsRegistered Userregular
Mint's value for me is that I don't have to remember a bunch of different logins if I want a quick look at, say, my mortgage balance or my 401k. But it's really only reliable with big national service providers, there's a good chance it won't work right with some little credit union or regional bank. I still keep a google spreadsheet to track account balances over time.
yeah i mostly use Mint just to see all my balances in one place and get an idea of how much i spend per month
i can't remember the last time i actually looked at the budget tab
Allegedly a voice of reason.
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BrodyThe WatchThe First ShoreRegistered Userregular
tbh i don't find the budgeting side of Mint to be very good. it doesn't track things like credit card payments very well and often just randomly forgets your paycheck deposit that is the same every time is your paycheck or that your mortgage payment that is the same every month isn't an unexpected large expense. it's quite stupid
it is great at tracking spending and balances though
Yeah, I've been looking at YNAB, and its basically a very fancy spreadsheet that does a lot of nice conditional formatting colors for me, which I definitely am not going to be able to do at the drop of the hat. But its also $11 a month or $84 a year, and doesn't seem to import/track individual transactions from my bank, just the total value of the account. I tried starting a mint account last night, and it definitely seemed like it was trying hard to automatically generate a budget for me based on my last 90 days of spending or w/e, but also the constant adds were kind of annoying, and I didn't much care for all the additional services its trying to offer alongside budgeting.
YNAB will track individual transactions, that's the main way it works. If you're just reconciling most of it's features won't work. It allows either auto or manual import. The automatic import can be a bit twitchy though.
Maybe it's that we bank through a credit union, but YNAB didn't seem to be pulling individual transactions. I guess I'll give it a week while I play around with building my own spreadsheet.
"I will write your name in the ruin of them. I will paint you across history in the color of their blood."
tbh i don't find the budgeting side of Mint to be very good. it doesn't track things like credit card payments very well and often just randomly forgets your paycheck deposit that is the same every time is your paycheck or that your mortgage payment that is the same every month isn't an unexpected large expense. it's quite stupid
it is great at tracking spending and balances though
Yeah, I've been looking at YNAB, and its basically a very fancy spreadsheet that does a lot of nice conditional formatting colors for me, which I definitely am not going to be able to do at the drop of the hat. But its also $11 a month or $84 a year, and doesn't seem to import/track individual transactions from my bank, just the total value of the account. I tried starting a mint account last night, and it definitely seemed like it was trying hard to automatically generate a budget for me based on my last 90 days of spending or w/e, but also the constant adds were kind of annoying, and I didn't much care for all the additional services its trying to offer alongside budgeting.
YNAB will track individual transactions, that's the main way it works. If you're just reconciling most of it's features won't work. It allows either auto or manual import. The automatic import can be a bit twitchy though.
Maybe it's that we bank through a credit union, but YNAB didn't seem to be pulling individual transactions. I guess I'll give it a week while I play around with building my own spreadsheet.
BECU doesn't really work if that's who you're using
they don't get along with whatever middleware being used to connect accounts
life's a game that you're bound to lose / like using a hammer to pound in screws
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
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BrodyThe WatchThe First ShoreRegistered Userregular
tbh i don't find the budgeting side of Mint to be very good. it doesn't track things like credit card payments very well and often just randomly forgets your paycheck deposit that is the same every time is your paycheck or that your mortgage payment that is the same every month isn't an unexpected large expense. it's quite stupid
it is great at tracking spending and balances though
Yeah, I've been looking at YNAB, and its basically a very fancy spreadsheet that does a lot of nice conditional formatting colors for me, which I definitely am not going to be able to do at the drop of the hat. But its also $11 a month or $84 a year, and doesn't seem to import/track individual transactions from my bank, just the total value of the account. I tried starting a mint account last night, and it definitely seemed like it was trying hard to automatically generate a budget for me based on my last 90 days of spending or w/e, but also the constant adds were kind of annoying, and I didn't much care for all the additional services its trying to offer alongside budgeting.
YNAB will track individual transactions, that's the main way it works. If you're just reconciling most of it's features won't work. It allows either auto or manual import. The automatic import can be a bit twitchy though.
Maybe it's that we bank through a credit union, but YNAB didn't seem to be pulling individual transactions. I guess I'll give it a week while I play around with building my own spreadsheet.
BECU doesn't really work if that's who you're using
they don't get along with whatever middleware being used to connect accounts
Bollocks.
"I will write your name in the ruin of them. I will paint you across history in the color of their blood."
tbh i don't find the budgeting side of Mint to be very good. it doesn't track things like credit card payments very well and often just randomly forgets your paycheck deposit that is the same every time is your paycheck or that your mortgage payment that is the same every month isn't an unexpected large expense. it's quite stupid
it is great at tracking spending and balances though
Yeah, I've been looking at YNAB, and its basically a very fancy spreadsheet that does a lot of nice conditional formatting colors for me, which I definitely am not going to be able to do at the drop of the hat. But its also $11 a month or $84 a year, and doesn't seem to import/track individual transactions from my bank, just the total value of the account. I tried starting a mint account last night, and it definitely seemed like it was trying hard to automatically generate a budget for me based on my last 90 days of spending or w/e, but also the constant adds were kind of annoying, and I didn't much care for all the additional services its trying to offer alongside budgeting.
YNAB will track individual transactions, that's the main way it works. If you're just reconciling most of it's features won't work. It allows either auto or manual import. The automatic import can be a bit twitchy though.
Maybe it's that we bank through a credit union, but YNAB didn't seem to be pulling individual transactions. I guess I'll give it a week while I play around with building my own spreadsheet.
BECU doesn't really work if that's who you're using
they don't get along with whatever middleware being used to connect accounts
Bollocks.
I got around this by doing most of my purchases with a cc for them points but that doesn't work for everybody.
life's a game that you're bound to lose / like using a hammer to pound in screws
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
tbh i don't find the budgeting side of Mint to be very good. it doesn't track things like credit card payments very well and often just randomly forgets your paycheck deposit that is the same every time is your paycheck or that your mortgage payment that is the same every month isn't an unexpected large expense. it's quite stupid
it is great at tracking spending and balances though
Yeah, I've been looking at YNAB, and its basically a very fancy spreadsheet that does a lot of nice conditional formatting colors for me, which I definitely am not going to be able to do at the drop of the hat. But its also $11 a month or $84 a year, and doesn't seem to import/track individual transactions from my bank, just the total value of the account. I tried starting a mint account last night, and it definitely seemed like it was trying hard to automatically generate a budget for me based on my last 90 days of spending or w/e, but also the constant adds were kind of annoying, and I didn't much care for all the additional services its trying to offer alongside budgeting.
YNAB will track individual transactions, that's the main way it works. If you're just reconciling most of it's features won't work. It allows either auto or manual import. The automatic import can be a bit twitchy though.
Maybe it's that we bank through a credit union, but YNAB didn't seem to be pulling individual transactions. I guess I'll give it a week while I play around with building my own spreadsheet.
BECU doesn't really work if that's who you're using
they don't get along with whatever middleware being used to connect accounts
Bollocks.
Do a manual import. Unlink the account, download the transaction data in quicken format, import manually. It's more of a pain, and may not be worth it for you, but it works.
You could also commit and enter transactions in manually!
I did that for years in the YNAB 4 era.
It kinda sucks but really forces you to pay attention to your spending.
Or forces you to give up in frustration. 🤷♀️
life's a game that you're bound to lose / like using a hammer to pound in screws
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
+4
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BrodyThe WatchThe First ShoreRegistered Userregular
You could also commit and enter transactions in manually!
I did that for years in the YNAB 4 era.
It kinda sucks but really forces you to pay attention to your spending.
Or forces you to give up in frustration. 🤷♀️
I mean, I'm about halfway there. At that point its just a question of whether or not the bonus formatting and well thought out formula's that don't break because I did something dumb are worth paying for.
"I will write your name in the ruin of them. I will paint you across history in the color of their blood."
webguy20I spend too much time on the InternetRegistered Userregular
I pay for YNAB and I do manually importing because it keeps everything in front of my face and also the instant nature of the change. Depending on what bills I'm paying or stores I'm shopping at it might take up to 5 days to register in my bank account. I've got all my reoccurring payments set up so they pop up every month, quarter and year. The big thing for me over a spreadsheet is having a slick phone interface, as that's exclusively where I do my budgeting.
I pay for YNAB and I do manually importing because it keeps everything in front of my face and also the instant nature of the change. Depending on what bills I'm paying or stores I'm shopping at it might take up to 5 days to register in my bank account. I've got all my reoccurring payments set up so they pop up every month, quarter and year. The big thing for me over a spreadsheet is having a slick phone interface, as that's exclusively where I do my budgeting.
Yeah, I guess I forgot about the app, which is nice to have.
Edit: Also, I'm still trying to figure how to set it up to for more intermittent expenses like clothing, toys for the child, that sort of stuff.
Brody on
"I will write your name in the ruin of them. I will paint you across history in the color of their blood."
This is probably not the best approach, but I just put everything on my one active credit card, and can look at that to see what I've been spending my money on.
Aside from the mortgage, HOA, and utilities, obviously. But those are basically fixed costs that I can't change. I could probably do a bit more to be more efficient with electricity, but aside from getting new appliances we are doing about as much as can be with the only real vampires being various chargers that are too inconvenient to unplug regularly. Plus we only pay $30-40/month and it's all coming from nukes, so meh.
None of the software I've seen is good at categorizing stuff. Not just that for some reason the transaction descriptions aren't always 100% the same (which causes mistakes), but also because they are just absolutely terrible at letting you easily add rules for automatic tagging. But having something that brings all of your transactions from every account into one easily exportable location is very nice (as well as being able to see your "net worth" at a glance, sort of).
I've also got an excel spreadsheet that I use to track expenses. I wrote some macros that try and guess what transactions are and apply my tags for them. Which really cuts down on how long it takes me to get everything tagged. I'm curious what kind of analysis people do (and if anyone wants to share macro/spreadsheet setup info I'd love that as well).
These are the categories I am currently using, but I usually summarize into bills, discretionary spending, and net income:
Bills
Car
Cash Withdrawal
Education
Entertainment
Fees
Gifts
Groceries
Health
Home
Income
Personal
Pets
Mortgage
Dining Out
Shopping
Travel
Taxes
Work Expense
Jebus314 on
"The world is a mess, and I just need to rule it" - Dr Horrible
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thatassemblyguyJanitor of Technical Debt.Registered Userregular
tbh i don't find the budgeting side of Mint to be very good. it doesn't track things like credit card payments very well and often just randomly forgets your paycheck deposit that is the same every time is your paycheck or that your mortgage payment that is the same every month isn't an unexpected large expense. it's quite stupid
it is great at tracking spending and balances though
Yeah, I've been looking at YNAB, and its basically a very fancy spreadsheet that does a lot of nice conditional formatting colors for me, which I definitely am not going to be able to do at the drop of the hat. But its also $11 a month or $84 a year, and doesn't seem to import/track individual transactions from my bank, just the total value of the account. I tried starting a mint account last night, and it definitely seemed like it was trying hard to automatically generate a budget for me based on my last 90 days of spending or w/e, but also the constant adds were kind of annoying, and I didn't much care for all the additional services its trying to offer alongside budgeting.
YNAB will track individual transactions, that's the main way it works. If you're just reconciling most of it's features won't work. It allows either auto or manual import. The automatic import can be a bit twitchy though.
Maybe it's that we bank through a credit union, but YNAB didn't seem to be pulling individual transactions. I guess I'll give it a week while I play around with building my own spreadsheet.
BECU doesn't really work if that's who you're using
they don't get along with whatever middleware being used to connect accounts
Downloading and automatically translating financial information from banks is what caused me to give up on shipping an app developed/use for myself (well that and I'm shit at UI, so I can just suffer with my own console/custom reports).
There are multiple competing standards for how banks allow people to connect and download transaction information for accounts, and it takes a large team of people to consistently monitor and update the software that downloads and translates the payloads from the financial institutions.
Additionally, a lot of the bigger banks will charge for API access because to them, why pay for a server and operational expenses and not pass that charge onto the users?
I pay for YNAB and I do manually importing because it keeps everything in front of my face and also the instant nature of the change. Depending on what bills I'm paying or stores I'm shopping at it might take up to 5 days to register in my bank account. I've got all my reoccurring payments set up so they pop up every month, quarter and year. The big thing for me over a spreadsheet is having a slick phone interface, as that's exclusively where I do my budgeting.
Yeah, I guess I forgot about the app, which is nice to have.
Edit: Also, I'm still trying to figure how to set it up to for more intermittent expenses like clothing, toys for the child, that sort of stuff.
I have a couple intermittent categories, stuff like my “car” category includes gas, maintenance, etc. I have a goal configured to put $X into it every month so I don’t forget to set money aside, then I have a pool to draw from when those expenses come up.
Say you make a Clothes category and Toys category. You create a goal, budget $100 per month for each, then you’re setting aside that much all the time, and when you have a Clothes expense, you assign it to that category and it’s all good.
Say your clothes category reaches $800 because you didn’t buy any for a while, because it’s intermittent, that’s fine - just move the money to another category where you need it.
I basically have a bunch of broad categories in my budget, including a catch-all “One-Time Purchases” where all my uncategorized stuff goes, so if I’m not sure how I want to track a certain item I just throw it in there.
I had used YNAB back in the day when it was a Steam app (kind of a clever move on their part) but my finances were always hectic so I was repeatedly scared off. Now, I’ve been using it for a year on the latest attempt and it’s been great. I spend more time assessing my finances now than I used to. I think I used to be scared by irregularities or by indecision on how I wanted to track something, and now I just make a decision and move on.
The YNAB videos might help, especially the ones about setting up your goals and categories. Sometimes they’re a little obnoxious but it’s good info to use the app to its fullest.
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BrodyThe WatchThe First ShoreRegistered Userregular
I've watched a couple of things, its mostly just trying to figure out the nuance of long term use at this point, I feel like.
So you aren't putting a value in for the actual budget? Or just a value in that matches the savings goal that you've set?
"I will write your name in the ruin of them. I will paint you across history in the color of their blood."
I've watched a couple of things, its mostly just trying to figure out the nuance of long term use at this point, I feel like.
So you aren't putting a value in for the actual budget? Or just a value in that matches the savings goal that you've set?
So its design that you assign money as you get it. You load up all of your reoccurring bills and saving goals into the system, and that'll generate demand for which you'll budget against.
For categories that specifically unknown but vaguely known like groceries, you'll put money in as you get it. every pay check for example I put like $400 into the groceries catagory because I roughly know my grocery budget for the month.
Eventually the goal is to always have enough money in your main account to budget a full month ahead.
Honestly I feel like the biggest gain is just knowing where your money is going. Forget setting goals or anything for now. Just track things for a few months. You'd be surprised how much insight you get just from seeing everything. Like you might notice you're spending 5% of income on work lunches (at least I don't buy coffee, heyoo!). Easy to make the change to cut back a bit and see your cash reserves go up.
I usually just do a high level goal like I want my cash reserves to stay around $X, and I want to be putting $Y towards retirement. Then each month I review if I need to cut spending or not to hit those targets, and if I do I look at which categories are out of line with what I usually spend and I should cut back on.
"The world is a mess, and I just need to rule it" - Dr Horrible
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webguy20I spend too much time on the InternetRegistered Userregular
Honestly I feel like the biggest gain is just knowing where your money is going. Forget setting goals or anything for now. Just track things for a few months. You'd be surprised how much insight you get just from seeing everything. Like you might notice you're spending 5% of income on work lunches (at least I don't buy coffee, heyoo!). Easy to make the change to cut back a bit and see your cash reserves go up.
I usually just do a high level goal like I want my cash reserves to stay around $X, and I want to be putting $Y towards retirement. Then each month I review if I need to cut spending or not to hit those targets, and if I do I look at which categories are out of line with what I usually spend and I should cut back on.
Like I have a "Subscriptions" category that is pretty self explanatory. Netflix, Hulu, Patreon etc.... You see that shit add up fast.
If I feel fairly competent with basic spreadsheeting, is there any value to trying to use Mint or paying for YNAB over just doing it myself in a google docs sheet, and slowly getting better and making fancy pie charts or w/e?
I'm manually importing, but via copy paste not line by line. It took me a little time to create tabs for each of the places I import from (bank and 2 credit cards) so that I can copy pasta and have it auto clean the formatting, before I copy paste from there to expenses or income, and I still for example temporarily create a filter for my bank tab to filter for negative/positive numbers when copying out either withdrawls or deposits, but updating it monthly hasn't been onerous and has been worth it.
My issue is things that cross categories. Especially for something like Mint.
For example, did I get gas or buy food at Wawa? It doesn't know! (I don't expect it to know)
If I buy a Chipotle GC on discount, is that food or discretionary?
Is paying for Dash Pass food or subscriptions?
Yeah, that's another reason I pretty much immediately leaned towards passing on Mint, and also the banks default category tracking. Costco is like 50% toiletries, 50% groceries, so what category does it go in?
"I will write your name in the ruin of them. I will paint you across history in the color of their blood."
My issue is things that cross categories. Especially for something like Mint.
For example, did I get gas or buy food at Wawa? It doesn't know! (I don't expect it to know)
If I buy a Chipotle GC on discount, is that food or discretionary?
Is paying for Dash Pass food or subscriptions?
Yeah, that's another reason I pretty much immediately leaned towards passing on Mint, and also the banks default category tracking. Costco is like 50% toiletries, 50% groceries, so what category does it go in?
Posts
1) companies can just stop them
2) companies are more likely to stop dividends when business is bad which is bad news for your capital investment too
3) reliable dividends from stable companies can have extremely low yields, in the 1-2% range
It's definitely a strategy but I don't think you can do an entire retirement on dividends, much less an early retirement
edit: unless you want to just bet that AT&T can sustain it's 7% dividend for a long time
...which is also the same amount it takes to have a reasonable annual income by selling shares to raise cash. A 3.5% starting annual withdrawal rate increasing by inflation every year is basically the same as a 3.5% portfolio yield (hopefully filled with stocks that will increase their dividends at least at the rate of inflation), which at a $1.5 million portfolio comes out to $52,500 in income during the first year.
The equivalence occurs because the value of the company drops by the amount they pay out for the dividend. The equivalent of running out of shares, assuming that you can hold fractional shares, for the dividend case is a zero value company. There is a difference in transfer, but assuming a market exists with buyers it's not relevant to the individual.
This does fall apart if the company hoards cash and doesn't generate a return with it, but in practice that doesn't tend to happen. Share buybacks are the closest example and the return for a company giving a dividend or buying back shares with that money is the same. In general there is no reason as an investor to specifically seek out a dividend stocks as an income stream. Looking at historical returns if anything you actually want small caps that are growing, but it's unclear if that trend will continue.
Just wanna address this part of your post.
Practically speaking this is not true, and is definitely not something worth worrying about or basing decisions on. You can sell fractional shares at most brokerages, and even if you can't sell fractional shares, companies (growing ones anyway) typically split their shares every so often, obvious examples like Google and Amazon notwithstanding. Speaking abstractly, in a perfectly continuous world you can sell 4% of your portfolio every year forever. In practice that's basically true as well, especially if you own index funds with low per-share prices.
A dividend is a company saying it can't generate a good return on that cash, it basically has nothing better to do than give it away, ot at least it feels that is is advantageous to give it away if only to make shareholders happy. So in the case of a company that otherwise would pay a dividend then yes it probably would just hoard that cash
A share buyback is essentially a dividend in different form
Yes I suppose that's true especially with fractional shares it's much easier
Is that right? What's the drawback to doing this versus letting the money sit in a 401k until you hit retirement age? I guess it all comes down to the specifics of the taxes?
Yes, I think that's right. Not sure what you mean by drawback. Obviously, the main drawback is that you're taking money of your retirement account so it's not compounding for when you reach a traditional retirement age. But, most people who do this have planned out an early retirement, so it's a moot point. The point of the conversions is to get money out of your IRA to use without paying the usual 10% penalty. If you're not working anyway, and your spending is low (like most peoples in that subreddit) then your taxable income from the conversion will be minimal. Keeping your taxable income low also helps you qualify for health insurance subsidies on the exchanges. I'm not sure of the details on that part and I think it may vary by state to some extent?
Make sure you read the posts from people who FIREd already and the challenges they faced. I seem to remember a number of them had to deal with medical issues that had some impact (depending on the person) to their retirement budget.
The Monster Baru Cormorant - Seth Dickinson
Steam: Korvalain
i haven't used YNAB but i assume it's the same
it is great at tracking spending and balances though
Yeah, I've been looking at YNAB, and its basically a very fancy spreadsheet that does a lot of nice conditional formatting colors for me, which I definitely am not going to be able to do at the drop of the hat. But its also $11 a month or $84 a year, and doesn't seem to import/track individual transactions from my bank, just the total value of the account. I tried starting a mint account last night, and it definitely seemed like it was trying hard to automatically generate a budget for me based on my last 90 days of spending or w/e, but also the constant adds were kind of annoying, and I didn't much care for all the additional services its trying to offer alongside budgeting.
The Monster Baru Cormorant - Seth Dickinson
Steam: Korvalain
that's basically all i can say about it
my actual budget is a google spreadsheet
YNAB will track individual transactions, that's the main way it works. If you're just reconciling most of it's features won't work. It allows either auto or manual import. The automatic import can be a bit twitchy though.
yeah i mostly use Mint just to see all my balances in one place and get an idea of how much i spend per month
i can't remember the last time i actually looked at the budget tab
Maybe it's that we bank through a credit union, but YNAB didn't seem to be pulling individual transactions. I guess I'll give it a week while I play around with building my own spreadsheet.
The Monster Baru Cormorant - Seth Dickinson
Steam: Korvalain
BECU doesn't really work if that's who you're using
they don't get along with whatever middleware being used to connect accounts
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
Bollocks.
The Monster Baru Cormorant - Seth Dickinson
Steam: Korvalain
I got around this by doing most of my purchases with a cc for them points but that doesn't work for everybody.
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
Do a manual import. Unlink the account, download the transaction data in quicken format, import manually. It's more of a pain, and may not be worth it for you, but it works.
I did that for years in the YNAB 4 era.
It kinda sucks but really forces you to pay attention to your spending.
Or forces you to give up in frustration. 🤷♀️
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
I mean, I'm about halfway there. At that point its just a question of whether or not the bonus formatting and well thought out formula's that don't break because I did something dumb are worth paying for.
The Monster Baru Cormorant - Seth Dickinson
Steam: Korvalain
Origin ID: Discgolfer27
Untappd ID: Discgolfer1981
Yeah, I guess I forgot about the app, which is nice to have.
Edit: Also, I'm still trying to figure how to set it up to for more intermittent expenses like clothing, toys for the child, that sort of stuff.
The Monster Baru Cormorant - Seth Dickinson
Steam: Korvalain
Aside from the mortgage, HOA, and utilities, obviously. But those are basically fixed costs that I can't change. I could probably do a bit more to be more efficient with electricity, but aside from getting new appliances we are doing about as much as can be with the only real vampires being various chargers that are too inconvenient to unplug regularly. Plus we only pay $30-40/month and it's all coming from nukes, so meh.
I've also got an excel spreadsheet that I use to track expenses. I wrote some macros that try and guess what transactions are and apply my tags for them. Which really cuts down on how long it takes me to get everything tagged. I'm curious what kind of analysis people do (and if anyone wants to share macro/spreadsheet setup info I'd love that as well).
These are the categories I am currently using, but I usually summarize into bills, discretionary spending, and net income:
Downloading and automatically translating financial information from banks is what caused me to give up on shipping an app developed/use for myself (well that and I'm shit at UI, so I can just suffer with my own console/custom reports).
There are multiple competing standards for how banks allow people to connect and download transaction information for accounts, and it takes a large team of people to consistently monitor and update the software that downloads and translates the payloads from the financial institutions.
Additionally, a lot of the bigger banks will charge for API access because to them, why pay for a server and operational expenses and not pass that charge onto the users?
I have a couple intermittent categories, stuff like my “car” category includes gas, maintenance, etc. I have a goal configured to put $X into it every month so I don’t forget to set money aside, then I have a pool to draw from when those expenses come up.
Say you make a Clothes category and Toys category. You create a goal, budget $100 per month for each, then you’re setting aside that much all the time, and when you have a Clothes expense, you assign it to that category and it’s all good.
Say your clothes category reaches $800 because you didn’t buy any for a while, because it’s intermittent, that’s fine - just move the money to another category where you need it.
I basically have a bunch of broad categories in my budget, including a catch-all “One-Time Purchases” where all my uncategorized stuff goes, so if I’m not sure how I want to track a certain item I just throw it in there.
I had used YNAB back in the day when it was a Steam app (kind of a clever move on their part) but my finances were always hectic so I was repeatedly scared off. Now, I’ve been using it for a year on the latest attempt and it’s been great. I spend more time assessing my finances now than I used to. I think I used to be scared by irregularities or by indecision on how I wanted to track something, and now I just make a decision and move on.
The YNAB videos might help, especially the ones about setting up your goals and categories. Sometimes they’re a little obnoxious but it’s good info to use the app to its fullest.
So you aren't putting a value in for the actual budget? Or just a value in that matches the savings goal that you've set?
The Monster Baru Cormorant - Seth Dickinson
Steam: Korvalain
So its design that you assign money as you get it. You load up all of your reoccurring bills and saving goals into the system, and that'll generate demand for which you'll budget against.
For categories that specifically unknown but vaguely known like groceries, you'll put money in as you get it. every pay check for example I put like $400 into the groceries catagory because I roughly know my grocery budget for the month.
Eventually the goal is to always have enough money in your main account to budget a full month ahead.
Origin ID: Discgolfer27
Untappd ID: Discgolfer1981
I usually just do a high level goal like I want my cash reserves to stay around $X, and I want to be putting $Y towards retirement. Then each month I review if I need to cut spending or not to hit those targets, and if I do I look at which categories are out of line with what I usually spend and I should cut back on.
Like I have a "Subscriptions" category that is pretty self explanatory. Netflix, Hulu, Patreon etc.... You see that shit add up fast.
Origin ID: Discgolfer27
Untappd ID: Discgolfer1981
I've been using this template for maybe a couple years now and it works and I didn't have to spend ages to set it up.
https://themeasureofaplan.com/budget-tracking-tool/
I'm manually importing, but via copy paste not line by line. It took me a little time to create tabs for each of the places I import from (bank and 2 credit cards) so that I can copy pasta and have it auto clean the formatting, before I copy paste from there to expenses or income, and I still for example temporarily create a filter for my bank tab to filter for negative/positive numbers when copying out either withdrawls or deposits, but updating it monthly hasn't been onerous and has been worth it.
For example, did I get gas or buy food at Wawa? It doesn't know! (I don't expect it to know)
If I buy a Chipotle GC on discount, is that food or discretionary?
Is paying for Dash Pass food or subscriptions?
Yeah, that's another reason I pretty much immediately leaned towards passing on Mint, and also the banks default category tracking. Costco is like 50% toiletries, 50% groceries, so what category does it go in?
The Monster Baru Cormorant - Seth Dickinson
Steam: Korvalain
Category: Costco