Exam is Done… Let’s not Waste this Free Time!

Hopefully my final actuarial exam took place on Wednesday. It was an odd sight. It was in a different location (due to the problem attracting proctors), slightly fewer people than normal, and everyone was wearing masks. I think the last sitting had about fifteen exam takers and this time there were only eight, with five taking my exam and the rest taking the other two actuarial exams offered that day. I, and like many of the intense actuaries who post on actuarialoutpost.com, thought the morning three hour session was a bit more straightforward than the two hour afternoon session. I’m hoping I did enough to get by this exam.

I’d like to think since the exam I’ve wasted little time to get my life further along. Immediately after the exam I went and played like three hours of pickle ball, which is quickly becoming one of my favorite things to do. I’ve also been reading three books concurrently: The 50th Law, Playing with FIRE, and Economics in One Lesson. Books have become such a big part of my brother and I’s lives that we’re even debating starting a podcast where we talk about books.

Playing with FIRE is about the financial independence movement, and more specifically Scott Riecken’s journey, with his wife and daughter, from spending 10k a month in Coronado, CA to cutting that significantly down while leaving California to pursue more family time and intentional spending. Two takeaways so far that I need to explore more, and which will likely be future posts that can help people, but thought I’d mention if you want to get a head start:

  • The most popular index funds amongst the FI community are VTSAX and VTSMX. The book said they are funds that track the entire stock market, only differing by their minimums. I’ve been seeing some conflicting information online so I’ll need to do more research.
  • The real game changer idea that got brought up was a way to not pay the 10% penalty on one’s 401(k), which is a tax deferred retirement fund that is sponsored by my employer. I had recently lowered my contribution to this to seek funding of my employee stock purchase plan (ESPP), where I get buy shares of our company’s stock at a 15% discount. I was choosing to do this because I thought it seemed more accessible. This book mentioned a Roth conversion ladder and IRS tax code 72(t) which both found ways around paying the 10% penalty on withdrawing before age fifty-nine and a half.

Back to the fact that land lording aint easy. My property manager told me that one of my renters dropped off the keys and peaced out without notice. Good side I suppose is that the rent there was only $350/month and all of my other renters paid and seem like they’re in a decent financial position. That being said COVID is having real ripple effects.

10-day BS Refresh

Analysis Intelligence

The Opening NW in the 7/20/2020 column is the closing NW from the 7/10/2020 column. The green numbers represent estimated changes to my networth in those categories. The white “Gain from” rows show how the actual numbers turned out compared to my original estimate, ten days prior. You’ll notice my cash position was down $1,571; this was because I actually received my property taxes on the Michigan properties, and while I wasn’t expecting them right now I decided to pay them immediately. “Gain from Stocks” was driven by my Employee Stock Purchase Plan (ESPP). This plan, through my employer, allows me to purchase shares of stock at a fifteen percent discount each quarter.

I do want to take a bit of time to quickly discuss what actually is one’s net worth. I got a couple of messages this week and wanted to clarify. Net worth is NOT your cash sitting in the bank. Your net worth is all of your assets minus all of your liabilities. Assets would be like cash, stocks, home value, gold, bitcoin, etc. Liabilities are dollar amounts that you owe other people/institutions. This would be like a credit card balance, a mortgage, and student loan debt.

Let’s take someone like below. Their net worth is their assets minus their liabilities or in this case 11,000 – 10,000 = 1,000 :

Let’s say now that they take some of that cash, let’s say 5,000, and use it to pay down their credit card:

Notice how their assets went down by 5,000 and their credit card balance went down by 5,000, bringing their liabilities down 5,000. Notice, however, that their net worth did not change at all; It’s still 1,000. While their point in time net worth did not go up that is not to say that this was necessarily a good or bad decision. On one hand they will not be paying interest on that 5,000 credit card balance that they paid down. On the other they have less cash to take care of an emergency, if it were to come along.

Some Americans’ balance sheets show a negative net worth like below, so it can be negative:

Crystal Ball

7/20/2020 I ended with a net worth (NW) of $354,208, which is split below in the following percentages, and I’m projecting to be at about 357k by the end of the month.

Ideas for increasing NW

  • Get more traffic to websites. I just bought a book called Born to Blog. We’ll see if I get any nuggets from it.
  • Spend some time taking Make Better Bet books around to the “leave-a-book-take-a-book” spots.
  • Start analyzing how affiliate programs really work. Right now the only things I would consider are books that I really found valuable. But keep an open mind.
  • My brother brought up tax liens. I read a book about three years ago on this topic and was super excited but I took no action. I think I’m going to table this idea for now but would like for others to explore it.
  • I’ve started listening to The Investors Podcast (TIP) from the beginning to get back to the basics and reinforce some concepts. Keep listening.
  • My brother and I are going to start a podcast to enrich people’s lives through giving them messages from books. If you have any suggestions on books to review please message me. We were even thinking of taking requests from people and then having an individual on the podcast to discuss with us.

Notes:

One thought on “Exam is Done… Let’s not Waste this Free Time!

  1. Jennifer Deck July 19, 2020 / 11:19 am

    I love that paragraph about net worth!!!

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