Monthly Update

May 2021 Update

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The Inertia of Inaction

A few years ago, my wife and I watched The Way Back, a “based on a true story” account of prisoners who escaped the Siberian Gulag on foot, finding their freedom in India. The following is a conversation between two of the escapees:

JANUSZ: He has a plan.
SMITH: Who?
JANUSZ: His name is Khabarov.
SMITH: The actor.
JANUSZ: You know him?
SMITH: He has no intention of escaping.
JANUSZ: What?
SMITH: He’s a liar. Been here for years. Seeks out new arrivals; me, when I first came here. He just likes to talk about escape. I’ve known others like him.
JANUSZ: Why should I believe you?
SMITH (shakes his head): Nothing is for nothing in the camps. From you he gets your energy, your spirit. You feed his ‘dream’ of escape. You help keep him alive. He’s no more than a leech.
JANUSZ: You’re a cold bastard, Mister.

I recently found myself thinking about this conversation after sharing some ideas with someone who I’ve had numerous personal finance discussions with over the years. I thought they were finally ready to take action, but alas, they still haven’t. I had even offered to walk them through it, hoping to overcome the inertia of inaction.

I suspect that like Khabarov, they’ll never take action. The story I’m telling myself is that it’s too unfamiliar, too scary, too much effort. They either don’t realize it themselves or they aren’t able to tell me how they feel. Like Janusz, I’ve been deluding myself.

The silver lining is that each discussion triggers blog post ideas for me.

Closing Out A Custodial Roth IRA

In 2020, I took a pause in matching funds for my oldest daughter’s Roth IRA. I’m already paying her tuition and housing costs, so the Roth IRA can wait. I suspect that I’ll probably only contribute to their Roth’s while they are minors.

Despite the match hiatus, I was still able to talk her into making the full Roth contribution herself. With a 0% tax rate and an exclusion of retirement accounts from financial aid calculations, it made sense. She has enough saved outside her Roth IRA to pay for any needs I’m not covering. When I assured her that she could remove the contribution amount tax-free at any time, she decided to do it.

Now that she’s an adult, we started the process of getting her control of the custodial Roth IRA at Vanguard. This required opening a brand new Roth IRA account of her own, and then me calling Vanguard and giving them her new account number, the old account number, and the instructions to transfer all shares from the old custodial account to the new. Pretty seamless. I suspect the old custodial account will hang out in my account until I hide it.

Building a Climbing Structure for the Kids

a.k.a. Frugal Professor-bait

I realized I forgot to mention the climbing structure I built for the kids in March. Last fall, I drew up plans in the free version of SketchUp Make 2017 and in early March, as the temperatures got above freezing, I started building. The Frugal Professor pointed me to some great climbing rocks that came with all the hardware and were a cinch to install. I designed it to be less than 8 feet tall and with a footprint under 36 square feet to avoid having to get a design review from my HOA. I’m pretty happy with the design and the kids have been having lots of fun with it. I had my second oldest daughter plan where the climbing holds would be. She tried to be random, but only after we stepped back to look at the finished project did we realize the accidental alignment in diagonal lines.

Cheap versus Frugal

I picked up my Moto X4 in May of 2018 while doing a trial of Google Fi. When it comes to cell phones, I like them cheap and I make them last a while. In June 2019, I was disappointed when the phone’s power button stopped working, a common flaw with the X4. With just months before our Spain trip, with no way to power it up or down manually, I wondered if I should replace it. I decided to risk it.

I’ve made due with this flaw for another two whole years. Just this week, an operating system bug started turning off the screen a few milliseconds after I’d turn it on. Of course it was during a trip, making it hugely inconvenient. Normally I’d manually power it down, but without a functioning power button, this wasn’t an option. Instead, I downloaded the Android developer tools to my laptop, connected my phone, and blindly accepted the “do you trust this device?” dialog. With that, I could run adb devices to get the phone’s identifier, then adb reboot <DEVICE ID> to reboot the phone. After it rebooted, I was back in business.

Is it time to replace my phone?

Other Odds and Ends

  • A few years ago we opened a self-employed 401(k) to capture both income from some side work and enable backdoor Roth contributions. Technically we don’t need to file form 5500 because we’re still under a plan balance of $250k, but I started doing it a couple years ago to get in the habit. It’s actually not too difficult to fill out. Once the plan balance moves above $250k and the filing is required, I’ll probably start sending in the form via certified mail.
  • Virginia 529 Day: To celebrate 529 day, Virginia 529 is giving away $10k in contributions to three lucky families who fund at least $25 into a new 529 account. You get entered into the drawing for every unique account owner beneficiary, so between my wife and I and the six kids, we have 12 chances to win. I’m not holding my breath. However, this is one advantage of having many kids. And I was going to do it anyway. I chose the Total International Stock Market option for my accounts and my wife chose the Total US Stock Market option (I’d already exhausted that option). 🤞
  • The 17-year cicadas are in full bloom. It’s been fascinating watching them climb trees, molt, and then start their chirping.

From the Bookshelf

I usually have four books going at a time. This month I finished the following:

  • The Golden Compass, The Subtle Knife and The Amber Spyglass by Philip Pullman. I enjoyed the world building in this series. I was evaluating it for a read-aloud for the kids and decided to hold off for now. It’s not hard to see why it’s earned a reputation as being “atheism for kids”. 
  • Is This Anything? By Jerry Seinfeld. I wasn’t an avid Seinfeld viewer growing up, but I was aware of its existence. I enjoyed this collection of witticisms. Organized by decade, some of the earlier content feels a bit dated with references to things like “phone machines”.
  • Thunderstruck by Erik Larson. An entertaining read weaving together the birth of wireless telegraphy and the Hilltop Crescent murder. Some gruesome parts that the squeamish might want to avoid.
  • What Got You Here Won’t Get You There by Marshall Goldsmith. All too often, successful people mistakenly conflate their success with their behavior, when instead their success came in spite of their behavior. This business psychology book talks through how to approach changing those behaviors so you can move on to the next level.
  • Starclimber by Kenneth Oppel. The last in the Airborne series. Not as exciting as the first two, but still an enjoyable tale of Matt Cruse. It was difficult to finish reading this one to the kids due to my 16 year-old starting her summer lifeguarding.

Conclusion

How was your May? Read anything interesting this month? I’d love to hear about it in the comments.

Hasta luego!

6 thoughts on “May 2021 Update

  1. I liked The Way Back. I give it 7 out of 10 stars.

    No way I’m contributing to a custodial Roth. My kid needs to plan for his own retirement. Once he’s done with undergrad, he needs to figure out his own path. But if tax laws stay as is and the market is good to us, our kids will get a nice inheritence with a stepped-up cost basis but I’m going to make my kid think he’s on his own.

    1. Thanks for your perspective. At this point, I’ve matched $6,219 into her Roth and I’m likely done making contributions. I paid more than that for her first semester of tuition and housing. It’s a small price to pay to educate her about a Roth and create a default for her future contributions.

  2. There’s a personal finance corollary to the 17-year cicada cycle in there somewhere. I’ll have to think about that one.

    I’m a big Erik Larson fan–recently read his new one on Churchill’s first year in power. Always great stuff, but for some reason I haven’t read Thunderstruck yet. Will have to move that up the list now that you’ve reminded me of it!

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