Three Notes On Families

I’m en route to my brother’s graduation in Chicago (activity and food recommendations welcome!) so this one is going to be even more slapdash than usual.

Lately I’ve been thinking a lot about families.

1.

The administration’s new policy of separating all families at the border, including those making asylum claims, makes me sick. These families come to the US for relief and shelter, and we kick them while they are down. There are some snapshots and accounts reaching the public: this audio clip released on ProPublica broke my heart.

We donated to RAICES Texas, who is offering legal representation and bond money to those incarcerated for their border crossing. We will also be attending our local chapter of the nationwide Families Belong Together protests on June 30th. Our true blue federal representatives are already on the right side of this issue (and by that I mean the left side), but we’ve made calls to them anyway. Even our Republican governor is saying and, on a surface level, doing the right things for now.

At times I cannot believe this country, my country, would do this. But America’s history is full of racial violence, segregation, and cruelty. And yet we must fight for its ideals.

2. 

I recently finished reading Min Jin Lee’s Pachinko. The book has felt really appropriate to this moment.

Pachinko follows a Korean family through the generations, from Japanese occupation and colonialism through the second world war to the nineties. It’s an epic about family– chosen and “blood”– sticking together in a country that is intent on dehumanizing and forgetting them.

The book makes me think about how often we as humans have used ethnocentrism to caste people, even those who have fully integrated into the dominant culture. It makes me think of the intergenerational trauma that gets passed down in every family where no more than a few generations back at any point in history, the family narrative was one of war, genocide, migration, and hurt. And how quickly that is forgotten by the young ones who don’t live through it. How really all families, to a degree, are “mixed” and yet how culturally divided families themselves really are. Human history as waves of trauma and their rippling effects.

3. 

I think to my own family, itself mixed, intercontinental, and broken. I wonder how many disagreements between my parents and myself– on race, on sexual norms, on gender– come from differences in the culture versus a legacy of trauma. Is culture just a product of the trauma of the times?

I’d been taught from a young age that family was the most important thing. And by family, it was meant “blood” family. Your parents, your children, your grandparents, cousins, etc. Blood sticks together. “Blood” family– not friends, not even your spouse– they were the only ones you could trust when things got hard. How much of that message came from trauma?, I wonder.

And yet it is my chosen family– my friends, my partner, my community– among whom I rely and feel safest. Is this a function of my American-ness, my millennial-ism? Perhaps. Papering over the deep well of hurt and resentment from my family’s past makes it easy to start fresh and new, for me to move forward with my own life. But it also feels ahistorical and flippant.

What am I hiding from? What am I unwilling to engage with in my family’s past?

What are you doing to end family separations at the border? Have you read Pachinko? How do you feel about your “blood” vs. chosen families? Any recommendations for things to see, do, or eat in Chicago? 

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All The Clothes I Bought In The First Half of 2018

After last year’s big clothing overhaul, I’m still basking in the glow of a nice, new-ish wardrobe. Honestly, I’ve found the idea of clothes shopping since to be kind of a chore, in part because I know I’ll have to get anything I buy tailored to make it feel as good as my clothes do right now.

And besides my wallet could use the break– I’m hoping to keep under $350 this year, but won’t be sad if I go slightly over. I also told JP from Fired Up Finance that I’d join her 12 items for 2018 challenge, so that’s another motivator for the relatively low key spending so far this year. Depending on how you count it, I’m somewhere between three and six items (do socks count? do duds count?). This does not include my wedding wardrobe, by the way, which I consider under its own separate budget.

Everything I Bought

Merrell Jungle MOCs – $80.00

These are, by far, my favorite shoes of all time. So comfy, good for urban walking and also light hikes through all sorts of weather. My old pair lasted me about a year to a year and a half, but I wore those shoes every. single. day. And they were probably still serviceable, though they were starting to develop some holes at the toes. If this replacement pair lasts me the year, I’ll be happy.

Mizuno Wave Paradox 3 – $53.13

Over the past few years I’ve burned through quite a few pairs of Mizuno Wave Paradoxes which feels unfrugal but honestly I probably should be replacing them more often than I do. After burning through my stash and realizing that the original design is no longer being sold, I bought an updated though still older version from the same line which is designed for over-pronators like myself. They aren’t as lightweight as the original Wave Paradox, which were a dream, but so far I like them.

Silvertoe Socks – $28.29

Bought a couple packs of Silvertoe socks to replace the thick, hole-in-the-sole pairs I’d inherited a decade ago from my parents. These are nice, thin, and feel appropriate for casual to business casual settings. No complaints so far.

Uniqlo Warhol Shirt – $9

I was idling at one of the consignment shops in the schmancy part of town, and wasn’t feeling enamored by the selection and, more importantly, the prices. Everything was basically at the retail sale price (i.e. about as much as I could spend buying it new straight from the store). Also, they were selling heavy fall/winter wear in June which… why? But anyway, amongst the racks I found this Warhol-esque Campbell’s Beef Noodle tee shirt which was sold at the MoMA for a while. It’s soft, catches the eye, and serves as my one fun purchase of 2018.

Duds – $39.50

I tried out some pieces from Grana but they didn’t end up fitting my body shape well. That resulted in a $8 restocking fee. I also tried buying a pair of Merrells used on Poshmark, but found that their sizing had recently changed. I ended up donating the slightly too small shoes and buying the pair I use now new, as described above.

Total – $209.92

Things I Want

I want to get some more casual tops, but am waiting to start working at my new job to see what the dress code is there first. Also some linen, because summer is hot and while silk is light and breezy, it shows all the sweat, all the time.

What clothes have you bought so far in 2018? What clothes do you want?

Job Offer Negotiation Was A Success

It’s official: I took the new job!

I’m glad to finally have this out of the way so my brain space can be consumed less by anticipating work and instead truly embrace this brief period of funemployment.

Before I accepted my job offer I, of course, negotiated. It helps that I have a lot of very aggressive friends and mentors that have taught me to be relentlessly entitled. You won’t get what you don’t ask for and all that jazz.

In my negotiations, I asked for an extra $20k in salary and an extra week of vacation my first year of employment. In return, my future employer gave me a $10k bump in salary, title promotion, and a promise of flexibility when it came to the vacation, though one they wanted to handle off the books (i.e. we’ll see if they live up to those promises). My new salary is still a pay cut relative to what I’d been making before but is in line with industry standards for the size of the company. The vacation policy is pretty iffy, but I’ll live.

While I’m a little disheartened that I didn’t get quite the salary bump or vacation commitments I wanted, the title promotion by itself is a big plus in my book. One of the things I have been worried about as part of this career change has been moving far back in terms of seniority. My thought is, even if this job doesn’t work out for the long haul, having that “Senior” by my job title will help add legitimacy to my experience and make it easier for me to apply for bigger roles or justify to big companies to bring me on board down the line.

In negotiating my job offer, I did three things:

One, I established a high anchor for compensation early. A lot of folks new to fields try to be wishy washy and force the other party to name a number first. But then, if an employer low balls, you have a much harder time edging them up drastically. With enough data– I use Glassdoor and Paysa for tech roles– you can generally figure out the range which a company is likely to offer and pick a number above it as an anchor point. For me, my anchor point was my previous pay since I was coming from a more highly compensated role and other job offers I had received for that sort of work.

Two, I dug into and negotiated multiple areas of my offer. While compensation was most important to me, through the negotiation process the company was able to “clarify” (i.e. I think they figured this out for the first time) their quite generous maternity leave policy. I also think being flexible on compensation got me a little flexibility in terms of vacation time on their end, which they had started pretty hard-nosed about (for reasons I don’t entirely understand).

Three, and most importantly, I remained consistently open and respectful, even when there was tension between me and the company and when I did not receive exactly what I wanted. In game theory, one’s optimal strategy will differ if they are engaged in a single or repeated game. Salary negotiation is a repeated game. Establishing early that I am willing to assert my worth but also do it in a respectful way will pay dividends down the line, I think, when pushing for raises, promotions, and for being seen as someone who is willing to be “tough” and represent the company as aggressively as I do my own interests. This negotiation may have ended, but the next one is always waiting around the corner.

Have you ever negotiated a job offer? Do you do so by default? What strategies do you use to determine your market value and negotiate?

Buying A Home Is (Mostly) Not An Investment

Brunching with friends over the weekend, the conversation gradually turned to local real estate, as it is wont to do among the late-twenties, early-thirties urban professional crowd. The hosts were heading out to a series of open houses, looking at everything from fixer uppers to new construction. “You’re so lucky you bought a few years ago,” they told me and the other home-owning couple of the group, “Buying a home is just so unaffordable now.”

I live in a bonkers market. For those uninitiated to the current whims of coastal, big city home purchasing, here’s a taste of what’s going on out here: Single family homes in my area start at $1MM and go up from there (unless you’re okay with a teardown or fire damaged property, which you can probably buy for a cool $700k). For any property, especially at the “starter home” bracket, you’ll end up in a bidding war with at least five other dual high-income couples, usually one or both partners in tech. Homes last one weekend, two at most on the MLS unless there’s something seriously wrong with the property. Cash buyers routinely put in offers hundreds of thousands of dollars over asking price without inspection contingencies.

Because demand outstrips supply, since we bought our home in 2015, we’ve seen a consistent 5-6% YoY increase in our home’s value. From purchase until now, our home value has jumped just under $200k in three years. You would think, given that kind of increase, that I’d think home ownership is a wonderful investment, right?

Methodology

I decided to crunch the numbers. What if all the money I have dumped into my home over the years had gone into the S&P 500 instead? Is my home equity more than what I’d’ve had in cold, hard, liquid cash?

In my analysis I took into account all housing expenses including: rent, mortgage, property taxes, insurance, repairs, and the federal and state income tax implications of home ownership. I did not include the impact of my solar panels— i.e. none of the cost, income, change in utility costs, or increase in value to the home– since I think of that more or less as its own self-contained thing with its own payback period. I assumed in my calculations a 3% yearly rent increases under the rental scenario. I discounted my home value by 5% to account for transaction costs upon sale; I also discounted the rental scenario profit numbers by 10% to account for LTCG.

Results

I’m not going to share all my numbers, but here’s how Renter YAPFB and Owner YAPFB do in the relevant time frame at a high level:

In 2015, Owner YAPFB spends a tidy six figure sum for a down payment, delayed maintenance, and repairs on her brand new (to her) condo. The value of her home shoots up after she does mid-five-figure remodel: replacing the roof, new plumbing and electrical, flooring, foundation work. However, most of that equity is eaten up by the transaction costs of buying a home and the four months she spends paying both rent and a mortgage while construction was happening. Cumulative net benefit of buying a home: -$5,777.62.

In 2016, Owner YAPFB thinks her spree of wallet-emptying home maintenance is over when her eight-year-old furnace breaks down in the middle of winter. While she could go with a cheap replacement, she decides to install a heat pump so she can have central air conditioning in the summer. This eats up a lot of her equity gain from increasing home values. Cumulative net benefit of buying a home: $493.24

In 2017, things have mostly stabilized on the home owning front. Owner YAPFB actually spends a little less than Renter YAPFB on housing costs for the year. However, because the stock market is also going gangbusters, the increase in Owner YAPFB’s home value with leverage barely matches Renter YAPFB’s profits from the market. Cumulative net benefit of buying a home: $3,728.56.

So far in 2018, both Owner and Renter YAPFB have been sitting on their laurels, while the stock market has been jutting in fits and starts, the local real estate market continues apace, though who knows how far it can go? Cumulative net benefit of buying a home: $41,266.57.

Conclusion

Even in a very hot market, it’s only really clear that buying has been better financially about three years into ownership. Yes, I’d be ahead ~$40k if I sold now, that’s a far cry from the $200k top line number I started with.

Now, assuming I’m done front-loading my repairs for a while, home ownership should cost a little less than renting by a couple thousand dollars a year. In addition, I’m at the point where I should be able to “pocket” the increase in home values rather than siphon it off into yet more repairs. So assuming (1) home values continue to increase, (2) the leveraged increase in home values outpaces stock market growth, and (3) nothing catastrophic happens in terms of maintenance, my home may turn out to be financially a “better” decision than non-ownership.

But given the unsure nature of the financial situation, I cannot say the money is the main source of value I derive from home ownership. For me, the big things are more qualitative than quantitative: stability in knowing where I will live, lack of worry about being priced out of my home due to rent increases, being more integrated with my local community (homeowners have a very outsized voice in local politics), and being able to customize my home to my aesthetic and comfort preferences (paint on the walls! central A/C!). All these qualitative benefits come with their own costs (liquidity, various worries about climate change on an ocean-adjacent city), but for now I feel they are mostly worth it.

Have you calculated the rent versus buy financials on your home? Why do you (or don’t you) value home ownership?

My Funemployment Bucket List

I am very bad at being unemployed. And by that I don’t mean I am not enjoying my newfound freedom from my recent job, not at all! Rather, I am too employed, even while I am not working for a pay check.

Salary research and negotiation for new job offer? Check. Extensive market research to prepare for new role and field? Check. Batch meal prepping? Check. Put together an Etsy dropshipping store? In progress.

There are so many things to do in this world and always so little time. And yet at some point, I hope I will be able to slow down and just smell the roses, so to speak. When that time comes and the delicious boredom starts to set in, I’ve put together a list of activities that might be nice to do given that I have a little bit of time. This is not a bucket list in a traditional sense– I won’t be sad if these things don’t get done. Rather, I consider it like a menu. Fun side quests for me to pursue while I wait for new content to be released on my main campaign.

• Eat banana sorbet with chocolate olive oil sauce at my favorite gelato shop
• Shop at the Japanese grocery store in nearby town and try natto
• Go to one of the verdant green spaces nearby and read all the books in my queue (at the top of my list are Pachinko by Min Jin Lee and Representation by Hilary Putnam)
• Travel locally: Providence, Acadia, Portland, New York City, or the Berkshires
• Travel domestically, but not so locally: visit my friends in Seattle or Augusta, or visit Detroit and get a sense of the housing investment opportunities there
• Rock climb at the local gym in the middle of the day while it’s empty or do a lunch time yoga or hip hop dance class
• Keep running along the nearby (very long) bike path until I’ve reached a town I’ve never been to before
• Watch a film at the independent movie theater (here’s looking at you Tully)
• Write or outline some new fiction
• Go to a random Meetup and make new friends
• Work on one of my data science or web app project ideas to build my portfolio
• Brush up on my Spanish by watching some telenovelas and reading simple novels

If you had a month of funemployment, what would you do?

Financial Update – May 2018

Each month I will post an update on my finances to both give you, the reader, some insight into my situation and to give me markers of my progress on my financial journey. My updates consist of two parts:

• Financial Progress Table – Tracks net worth progress.
• Spending Table – Compares monthly spending to an average (for me) “bare bones” budget, keeping me accountable for additional expenses.

For now, monthly updates include only my personal net worth and spending. As my fiancé and I combine our finances, updates will shift to cover going values instead.

Financial Progress

Each net worth goal in the Financial Progress table is broken down into undisclosed units of money. My current goal is to reach “Financial Freedom.” By the time I reach this goal I will have:

• A retirement account that can support us when my fiancé hits 65
• Two college savings funds funded for four years of in-state public university tuition, room, and board
• An emergency fund for six or more months of living expenses
• Sufficient liquidity for my fiancé and/or I to make a career change with one to two years’ runway
• A mortgage less than two times my gross salary without bonuses

Once “Financial Freedom” is achieved, the focus will then working be towards “Financial Equilibrium”, where the income from investments covers all our ongoing expenses.

Spending

I’ve created a “bare bones” budget which represents the average minimum amount I can expect to spend each month. This is the minimum amount I need to comfortably live in case of a job loss, emergency, etc. I expect to frequently go over my “bare bones” budget in a number of categories (here’s looking at you, “Groceries & Dining”), but I want to remain accountable to myself when I do so.

For privacy reasons, there are two things I do not include in my spending updates: my monthly mortgage and charitable donations (pegged at 10% of my net income).

Monthly Summary

I’m free!

I expect June to be pretty wan in comparison to the accelerated financial progress I’ve experienced the last few months. I don’t feel any different yet for being unemployed, in part because I did some thinking, planning, etc. for my likely new job over the weekend. However, I am now forcing myself to disengage. This is my funemployment and I’ll play Civ V as much as I want to!

Because I spent May trying to tie up all the loose ends, I was pretty engaged with work. I think this is part of the reason why my spending overall was pretty decent since I tend to overspend when I am stressed and anxious about work, but not when I’m focused and busy.

I spent a lot on taxis this month, first going to jury duty (which was inaccessible by public transit) and then frantically rushing to interviews so as not to be late. With the exception of that and food– always with the food— I was pretty low key.

Notable things that happened this month include:

• Went to jury duty for first time
• Last full month at old job; did the hustle for a new one
• Attended fiancé’s cousin’s first communion
• Finished my last full month of work at my old company
• Got job offer I think I’m going to take (after some negotiation, of course)

How were your finances in May?

Will Changing Careers Destroy My Dreams of FIRE?

My interview last week went really well. There’s a very good chance I’ll be getting an offer from the company, I think, based on the conversations I had with the hiring manager. This role is a good opportunity to get my foot in the door in an industry I’ve been wanting to transition to for a while. And the company itself, while it’s early days yet and I’m sure in time I’ll find it doesn’t hit all my criteria, seems to be a pretty good one with low turnover and good growth. At the very least my commute would be significantly easier, and for that alone the transition might be worth it.

The biggest hesitation I’ve had making this leap has been, obviously about the money. As part of this career change, I’ll be taking a big pay cut. Probably 20% of my pay if I’m lucky. Also, as a smaller company, they are missing a lot of benefits I’ve gotten very accustomed to in the corporate world like retirement plans with matching and maternity leave, etc.

Using rough estimates of what the company will offer based on my discussions with the hiring manager, the average pay for this role in the market, and the maximum I’m willing to take in terms of a pay cut, I expect our household savings rate will drop significantly from 64% to 55%. If I manage to negotiate up the cash compensation to just a “mere” 20% pay cut, our savings rate will only drop to 60%.

Luckily fiancé recently started working again after a six month period of unemployment, so in a sense it won’t feel like our financial progress will be changing that much at all since I never really got “used to” a 64% savings rate. However, the new set up requires that both of us be working in order to maintain a >50% savings rate. Once we have kids, for instance, if we do day care or if fiancé becomes a stay at home father, we’ll be hovering 30-40% savings rate territory. Not terrible by any means, but a huge difference if our goal is FIRE. Like, a ten year difference.

So long and short of it: Am I giving up FIRE to pursue this career change? Yes and no. For just a little while, I want to prioritize the now-me versus the future-me. If I angle this thing right, I should be back on a good career and income trajectory in 1-2 years. Sure, I may not hit all the dates on my FIRE plan. But really this stuff is all about flexibility and optimizing happiness along the way. Hopefully, I’ll be doing just that.

Is it worth it to take a pay cut in order to change careers? Any tips on how to negotiate maximum possible pay while still resigning to a pay cut in this sort of scenario?