Archive for February, 2010

We finally have all of our furniture! YAY!

I spent some time yesterday working on a photosynth of the main open area of our house. It took quite a bit of work! I took about 400 pictures and the program recommends no more than 300. So, after a LONG synthing process, I got a final product that turned out okay. It’s 90% synthy :)  It’s not quite as smooth as I would like, but I’m pretty sure it would explode if I tried to add more pictures. Anyway, take a look at our new furniture:

http://photosynth.net/view.aspx?cid=e1f9c157-b9a2-4c05-9512-009e1c70c3a2&m=false&i=0:0:190&c=3.55308:-1.57147:-0.0275943&z=773.136308079187&d=-1.58668134138256:-0.711237495281171:-0.625584775994399&p=0:0&t=False

Rach’s poem of awesomeness:

Twas the week of the wedding, and all through the Bahamas
Friends and family all gathered, despite weather traumas
Swimsuits were worn as we soaked in the sun
Knowing the wedding was soon to come
On Monday guests gathered to meet and greet
At a local bar with decorations so neat!
Tuesday’s rehearsal dinner was super
Anson snuck in ketchup for his burger and grouper 🙂
Wednesday brought with it a weather surprise
We awoke to see trees bend before our eyes!
The staff at the resort were calm with assurance
That the wind would not be a wedding deterrent!
“Now Jane! Now Eric! Now All! Stay calm!
We shall move the ceremony to the resort’s side lawn!
Among the buildings, the wind will be the norm.
And a reception indoors will keep everyone warm.”
So, with hairspray and pins we made preparations
To share in all the wedding elations.
Out to the lawn, we all made our way
To watch Eric and Jane on their very special day.
Jane walked down the aisle with beauty and grace
While Eric had the most blissful look on his face.
They said their  “I Do”s, then we headed indoors
To watch the newlyweds on the dance floor
The entire evening was amazing, no doubt.
It reminded us all of what love is about.
So, the rest of the stay was spent with good friends
And it was so sad on Saturday when it all had to end
Back to the real world we flew on a plane
But as we left, if you listened, you could hear us exclaim
“Congrats Jane and Eric! You’re married! Woo! Woo!
We couldn’t be more happier or more ecstatic for you!”

Rach and I are now on the plane flying back from the Bahamas.  We had an amazing time; in fact, you can tell just how amazing a time we had because I’m writing this after about 17 hours of flying and layovers (with another 2 or so to go!).  The Bahamas were our first international destination vacation and actually our first time out of the country ever.  It was definitely a new experience to go through customs and to see how different life is in another part of the world – even a part as close to the US as the Bahamas.

Of course, the Bahamas are pretty straight forward with respect to international travel.  Getting through customs going into the country was a snap.  They asked us a single question, and were mostly interested in getting data on us for increasing their tourism (which is obviously their biggest industry).  The islands have their own currency, but it exchanges 1 for 1 against the US dollar.  That made it super easy to spend money, which we happily did :-)  The only issue is that if you use credit you get charged an international exchange rate on purchases, though with First Tech that rate is only 1%.  Of course, an ‘exchange rate’ when the currency is 1 for 1 seems a little silly.

We landed in Nassau, the capital of the Bahamas, last Saturday and then took a small propeller plane to Marsh Harbour on Abaco.  We then had a van drive us over to Treasure Cay (pronounced “key”) where we spent the vast majority of our time.  We shared a beautiful condo with Dave, Sarah and Chris at the Bahama’s Beach Club.  The condo looked out over a pool and then directly onto the ocean.  We ended up getting a super great deal on it because of the time of year and economy, so it was only about $110/night.  Getting a condo was awesome; it had a full kitchen and a washer/dryer.  We actually made dinner most nights there.  It’s hard to describe how beautiful the area is; but it looked so incredible that it was like standing in a stock photo picture of ‘paradise.’  It was almost unreal:

The island itself is definitely one of the more out of the way places in the Bahamas.  It’s decidedly different than the places that Rach and I have vacationed in the past.  First off, there was only one real restaurant.  Luckily that restaurant had pretty excellent food; I had an amazing lobster tail there the Sat. we landed.  It had been forever since I had lobster, so I was unsure whether I was going to like it – but it was amazing.  I originally thought crime was going to be an issue in the area, but it was clear after a couple of days that at Treasure Cay it isn’t a concern at all.  It’s basically a small little retirement/resort town.  The grocery store was also in walking distance of our condo so we bought a lot of stuff from there over the week.  The prices for food, despite having no tax, were anywhere from 2x-7x as much as they are in the states.  It was pretty crazy.  Abaco is geared towards golfers and fisherman, but it’s a pretty perfect place if you want to lie back and relax as well.  We essentially had the resort to ourselves for the first half of the week which was great for reading, sunbathing, and relaxing.

Obviously the main reason for heading to the Bahamas was to celebrate with Eric and Jane.  The wedding was beautiful.  I had the occasional responsibility as best man, but mostly I just hung around and provided moral support for Eric (not that he really needed it, he was having a great time with virtually zero jitters).  The ceremony itself was on Wednesday and was held outside.  Unfortunately a freak wind storm blew in that required moving the location around a bit, but the resort folks and Jane pulled it off amazingly well.  The reception ended up being held inside a large condo which actually allowed everyone to be seated at essentially the same table.  The photographers must have taken several thousand pictures; I really can’t wait to see how they turn out!  Given the beauty of the location, the skill of the photographers, and the amount of joy at the ceremony and reception I think they are probably going to have one of the best wedding albums ever.  After the ceremony, we had some appetizers at the reception; there were enormous shrimp that were amazingly flavorful as well as a really great tasting mushroom stuffed with crab.  After mingling for a bit we sat down for dinner and then speeches.  I finally got to give the best man speech that I’ve been working on for a while and I think Eric and Jane liked it, so I’m pretty happy about it.  After the speeches Eric and Jane cut the wedding cake, which was 3 layers (coconut, chocolate, and red velvet).  Rach and I can attest to the fact that the chocolate and red velvet sections were very, very good.  Finally there was the dancing, which despite desperately trying to avoid, I ended up doing some of.  I’m generally not a huge fan, but for the few dances I went out for I had a great time.  All-in-all it was fantastically memorable, and hugely fun.

There were lots of things I really enjoyed about our vacation, but a few really stood out.  First, it was just great to be down there hanging out with friends.  We ended up playing a lot of a game called Zombie Fluxx which Dave and Sarah introduced us to – we’re big fans now!  Second, the place was laid back and relaxed.  It was easy to just doze off, read a lot, and generally unwind.  Third, the gym looked out over the beach and when I went in the mornings I would get a beautiful breeze off of the ocean.  Finally, renting a condo that had a kitchen and laundry meant we could pack light and eat reasonably healthy and cheaply while we were there.

After this trip we definitely want to try out Hawaii in the future.  The only really frustrating part about the trip was giving up two whole days for the flight.  It actually took us 24 hours from when we got to Seatac to get to the condo.  Rach and I are definitely not used to that much time spent in airports and planes, but it ended up being surprisingly bearable since a lot of us had the same flight so we could entertain each other during layovers.  Hawaii seems like it would be similar in some ways, and a lot closer.  We’ll have to see when we’ll the chance to try it!

You’ve won a brand new car!  It can replace the Donkey that you’ve been riding around on. 

I’ve been driving a 1996 Honda Accord for several years now.  It was a great car.  It was very reliable, extremely economical, and hideously boring.  I honestly didn’t mind that much since I wasn’t driving very far at all on any given day.  Basically I’d drive to work and back which consisted of a total of an 8 minute drive… assuming there was heavy traffic.  It was also nice to basically ignore the car and have it continue to hum along.  That said, the car had all kinds of issues.  It was stupidly loud – most people thought I had intentionally removed the muffler so I could out decibel a motorcycle.  It was a manual transmission which meant Rach couldn’t ever drive it anywhere, and that I quickly got tired of driving it in any sort of real traffic.  It had a big rusting dent in the side from when some kids in our old neighborhood decided to try to break into it.  It didn’t have a stereo because, perhaps the same kids, would steal it every time I got a new one (lost two that way).  The ‘defogger’ would frequently reverse itself and decide to fog up all of the windows instead.  Oh, and it was a nice shiny color of Old.  It likely would’ve lasted another 100k miles, but Rach and I had been saving up some money for a new car for a while and we decided it was a good time to go looking.

My new car is a 2007 Acura TSX, and I love it.  I love it for all kinds of reasons, not the least of which is I feel like I got a super good deal on it.  It’s got about 50k miles on it, but it shines like its brand new.  I convinced the dealer to take my ‘96 Accord as a trade-in for over $4k.  Given that we only paid 10k off the lot for it originally, and its bluebook value was closer to $2k of scrap metal, and it looked sort of like it was taken care of by a semi-domesticated band of wolves, I was pretty stoked.  In fact, overall, we ended up paying enough under the original sticker price on the Acura that KBB actually told me the trade-in value of it was almost equivalent to what I paid.  I expect this means that the engine will fall out in a couple of weeks, but for the moment I’m ecstatic.  Two important things that I learned about negotiating for a car is that it’s critical to start at a super low price point in the bargaining process (you may get it), and second to always negotiate on the “Out the Door” price, particularly if you live in a state with a 9.8% sales tax on autos.

I had no idea how many advancements they have made to cars since ‘96.  I thought it was pretty advanced to have power windows; after all, my car didn’t even play music any more.  My TSX has so many cool features that I could probably go on and on about, but there are some which are just super, super cool.  It’s automatic.  I know, I know, simple right?  I love it.  I just got so tired of dealing with a manual transmission.  It has heated seats which are just absolute paradise in the mornings.  It has auto climate control, and individually customizable heat/cool for the driver and passenger.  Now I don’t have to stew in my own sweat when it’s 70 degrees out and Rach decides to put on the heater :).  It has seat memory so that you can set it once and if someone else drives your car and adjusts your settings you can just hit a button and it reverts to your saved configuration.  I don’t know if anyone has noticed this before, but Rach and I aren’t the same height.  This feature is inspired.  But wait, it’s even better – it’s tied to the keyfob.  So if I use my keyfob to open the doors (yep! remote entry) then when I open the door it updates to my settings.  The car has a hands-free link and I can’t remember the last time I used my cell phone so often.  It’s great to be able to chat with family and friends while I drive home.  It has different programmable voice prompts and commands in an extremely calming voice.  I sometimes hit the push to talk button just for the extra company.  It has a system called ‘home-link’ which is basically a programmable transmitter that I can use to open our garage door, so I no longer need to hang anything on my sunshade.  The car has an auto-dim rearview mirror – I don’t understand how it actually works, but I dig that I never end up blinded by the SUV’s headlights behind me.  It has built in sensors that monitor things like tire pressure, and a trip computer that shows fuel economy and estimates remaining range before a refill is needed.  It automatically resets the tripometer when you refill the tank.  It has comfy leather seats with at least 8 million adjustable settings.  It has cupholders in the front and back.  It has a 6 disc CD changer, built in XM receiver, and radio controls on the steering wheel.  It’s got a sunroof, heated mirrors, fog lights, interval wipers, 6 air bags and it comforts me when I’m feeling down. 

Here it is 🙂

IMG_6418 IMG_6419 IMG_6420 IMG_6421

As most of you know we recently sold our Redmond house.  We now have a stack of cash sitting in the Savings account of our bank depreciating daily, and that prodded me to do some research around personal finance.  I posted last week about analyzing our spending over the last year and deriving what I consider to be a pretty realistic budget.  That was our first step to putting together a plan moving forward. 

We have several goals.  The first is to establish a reasonable plan for retirement.  The second is to rein in our discretionary spending; or at least minimally track it better.  Our third is to make the money that we do have work for us.  Finally we want to make sure to protect against various catastrophes that might otherwise cause financial hardship/ruin.

To that end, I just finished reading Personal Finance For Dummies which I can now highly recommend.  It’s a fantastic survey of the various areas that people might classify as ‘personal finance’ and I find the author to be eminently pragmatic which I appreciate.  If you’re looking for a book to understand how to ‘beat the market’ this is definitely not it; this is more about understanding your options and learning what best practices are.

This post captures the set of things that Rach and I are considering implementing in the next month or so.  Another goal that I didn’t mention is that I’d like to get something in place soon that we will only have to monitor minimally.  For example, I have no desire to try day trading.  Outside of already having a day job, I remain convinced that day trading is tantamount to gambling.  I’d rather invest our money in the best way that we can reasonably figure out now and then check up on it every year to make sure that we’ve still allocated things appropriately for our goals.

Retirement

The first subject that I started looking at was retirement.  Retirement means a lot of different things to different people, but to me it means not being required to work a full time job.  In fact, in my current vision of the future I would still probably do part time work even after retirement, but I want that work to be optional.  Our goal is to be able to retire at around 60 years old (yay for 30 more years of work!).  I did spend some time crunching numbers to see whether it was realistic to retire before that… it doesn’t look good without more compromises than we’re willing to make at the moment. 

The nice thing about retirement is that the government offers some nice incentives to save for it.  Ever since I started working for Microsoft I’ve put 15% of my salary towards a pre-tax contribution to a 401k plan.  MS has a great package that includes a certain % matched.  The annoying thing about 401ks is that they have a pre-tax limit for contributions.  At the moment that limit is 16,500/year.  Rach and I have decided that for our 401k we will continue to contribute the max pre-tax per year.  The one snag that we have to be careful of is that if you happen to make enough to hit that limit early in the year, it’s possible to lose out on some of the employer matching money.  I looked around through the MS plan documentation and it turns out that it currently isn’t effecting us (yay!).

I looked into opening a separate IRA either Traditional or Roth to save a bit more, but unfortunately Rach and I cannot take advantage of any of the pre-tax benefits of those accounts because of the income limits imposed.  Frankly I think it’s silly, given the mess that is retirement for a lot of people to make it hard to save, but it is what it is.

At the moment our 401k will be our primary vehicle for retirement contributions.  When Rach starts to work full time, we’ll see if it’s possible to invest in any employer provided pre-tax program.  I’m currently unsure whether the 16,500 limit is per person or per couple.  Either way, it’s not an option for us at the moment.

Our 401k is currently split 40% in international growth stock, 40% in an index fund, and 20% in a midcap growth fund.  We’ve decided that we’re happy with that allocation.  Both Rach and I tend to be risk averse which is why so high a percentage is in an index fund. 

In case anyone is curious, the calculators that we used suggested that we have roughly $3m dollars for retirement.  Assuming consistent contributions, plus our current assets, with an estimated 8% return and 3% inflation we will get there if we wait until 60 to retire.  That’s based on a lot of things that will change of course, but it’s the best estimate that we have at the moment.  Note, I didn’t include Social Security in those calculations; when added if we start withdrawing money at 67 we’d be in good shape.

Emergency fund

We want to establish a well thought out emergency fund.  In the past several years we’ve kept our checking/savings balance quite high (over $20k).  Our checking gives us exactly 0% interest, and our savings account is currently giving us 0.25%.  In short, they are well below inflation and we’ve been wasting money by letting it sit there.  However, because of the high balance we have, in essence, had a nice cushion in the event of anything catastrophic happening (e.g. if I lost my job).  It wasn’t at all intentional though.

The recommendations for emergency fund ‘size’ range anywhere from 3 months to 1 year of expenditures held in a very liquid ‘instant access’ account.  Rach and I have decided to stow away roughly 5 months of current expenditures, though it would likely last  a fair bit longer if we did have any issue since a large chunk of those expenditures are reducible. 

I have had a heck of a time trying to figure out where to put that money.  Our credit union offers accounts that they call ‘Instant Access’ where we could get 1.15% return.  Honestly that return sucks.  Instead I started looking at Money Market accounts.  The major difference is that MMAs aren’t insured, and while they tend to contribute to low-risk investments there is always the chance that we can lose money with them – particularly if interest rates skyrocket when the economy recovers.  This is a risk that Rach and I have decided to take.  We’re considering one of two different accounts, and if anyone has a suggestion as to which would be better I’d love to hear it.  We’re either going to go with the Fidelity Money Market Fund (SPRXX) or the Fidelity AMT Tax-Free Money Fund (FIMXX).  This choice seems to have a lot to do with understanding the AMT and unfortunately I’m no tax expert.  To date, Rach and I have never had to pay the AMT, but this year we sold a large amount of stock to cover the down payment on our new house.  I don’t know whether that will affect our AMT status or not.  I am leaning toward the SPRXX account at the moment.

Insurance review

One of the fascinating parts about the book I just read was that it included a section on insurance.  At first I didn’t understand why that would be, but the author makes some fantastic points in the chapter.  Basically, his meta point is that insurance is the way you go about making sure that you protect yourself and your family against financial ruin.  He then enumerates the various types of situations which could result in ruin, and the various insurance that you can buy that helps prevent these situations.  A few things that I had never considered that he mentioned:

  • Life insurance is pretty pointless if you’re single with no dependents; it’s also not all that interesting to splurge on life insurance if your spouse is completely capable of continuing their current lifestyle with you gone.
  • One of the most important things to cover when you’re younger is your ability to work, so it’s critical that you consider things like accidental disability insurance (workman’s comp will only pay out if you’re hurt on the job, what if you get hurt elsewhere?)
  • It makes sense to get enough liability insurance to protect your assets.  If you don’t have very many assets, then the default liability is fine.  What if someone sues you for $1,000,000 though?  If you have $500k of assets and only $100k of protection… well, you do the math.  As your assets increase, it makes sense to consider higher liability insurance, potentially under an ‘umbrella’ plan.
  • People pay for silly insurance.  Insurance shouldn’t be used to try to smooth out every day life; if you can afford to pay a $1k deductible if you need to then get insurance that matches; only get covered for things that would be financial ruin.
    • This also makes it an easy decision when asked if you want additional ‘warrantees’ on products that you buy.

After reviewing our insurance we’re covered decently well, but I plan on making the following changes:

  • We had a rider on our auto insurance which pays for towing in the event of an accident.  Towing isn’t expensive, and it’s pointless to insure against it.  Particularly since we belong to AAA (duh!) so I’m removing it.
  • We have Personal Injury Protection on our auto insurance.  Our health insurance will cover both of us in the event of a major accident so this insurance is redundant for us.  PIP would also cover people in our car that didn’t have good health insurance, but the fact of the matter is 99% of the time we drive each other around, and the other 1% of the time we drive folks that also have good health insurance.  It’s not worth it to keep this coverage (and WA doesn’t require it).
  • We are investigating increasing our liability coverage, though I haven’t researched rates yet.
  • We have gone through our house and recorded serial numbers and taken pictures of all high cost items and stored that information up on a protected share in the cloud.  It should significantly reduce the complexity of making a claim in the future if needed.

Additional investments

Outside of the 401k I mention above, Rach and I have a couple of other investments.  In the past couple years I haven’t been contributing heavily to our employee stock purchase plan.  In retrospect that seems silly.  The ESPP allows us to buy Microsoft stock at a discount rate at various set times during the year.  We can then sell that stock immediately if we choose and get an immediate return (minus income tax).  This is an amazing deal, and we’ll be contributing the maximum to that moving forward. 

After establishing our emergency fund we will still have a large chunk of cash from the sale of our previous house.  We have gone back and forth about what to do with it.  There are really two major options.  We either invest the money in the stock market (likely a mutual fund) or we use the money to pay down the principal on our mortgage.  If we had any high interest debt then the answer would be obvious, but our mortgage has a low interest rate and nice tax benefits.  However, I know that Rach and I will procrastinate if we decide to invest this money into the stock market.  Ultimately, we’ve decided to pay down our mortgage.  It’s almost certainly not the highest return move, but I think for us it makes the most sense.

Final actions

I mentioned we procrastinate right?  We still haven’t written up wills.  This is something that we’re going to throw into this bucket and take care of.  We’re going to write up normal wills, as well as put in place durable power of attorney. 

I’d certainly appreciate any thoughts people might have on our plan, particularly if you see something that you think is jut plain wacko.  Keep in mind that Rach and my risk profile is generally adverse, which means that we’re going to make more conservative decisions than other people (e.g. paying down the mortgage).