Blog - Lazy Man and Money

Mortgages: To Pay Off Early or Not to Pay Off Early…

May 28, 2020 by Lazy Man 18 Comments

… that is the question. Whether ’tis nobler in the mind to be free of debt, or to invest, perchance to dream of outrageous fortune.

If you thought I was going to continue writing in pseudo-Shakespeare, you don’t know me very well. Or maybe you know me too well, because I do love a good writing challenge.

There’s a lot of debate in the personal finance community about whether you should pay off your mortgage early if you can afford to. I’ll share my opinion on that in a little bit. Before I do, I want to make it clear that this is a topic with no definitive answer. Even with my own strong feelings on this one, I can look at the other side and say, “I understand and appreciate your view.”

So if you aren’t going to find any definitive answers, why continue reading? It might help you decide what is best for you and your situation.

Let’s review what each camp has to offer:

Pay Off Your Mortgage Early

There’s a psychological weight to being in debt. While most will agree that mortgage debt (especially at current rates) is good, responsible debt, it is still debt. Until you’ve paid off your mortgage, it’s likely your biggest expense. After you’ve paid off your mortgage, it may be transportation, or food, or property tax. You are a lot closer to financial independence when you eliminate such a big expense like a mortgage.

There’s also a component of certainty. If you have a 5% mortgage, you are getting a guaranteed 5% return on your money by paying off the mortgage early. You can’t get that in a bank account – especially now. You can’t get any kind of guarantee in the stock market which can move in crazy directions from day to day. We’ve seen that happen a lot this year.

Invest the Mortgage Money Instead

Another school of thought is that it’s best to invest any extra money instead. Most people expect the stock market to earn about 7% or more over the long run. That’s a lot better than most of the mortgage rates out there which are probably around 4% (or could be less with refinancing).

Most mortgages are 30 years long – plenty long enough to smooth out the gyrations of day-to-day stock market. Even 15-years (like the other popular fixed mortgage option) is almost always enough time to see stronger returns on stocks.

Almost no one disputes the math of investing in stocks is better than mortgage debt. Even the people in the “pay off your mortgage early” camp typically won’t argue the math. Instead they’ll point to the psychological benefits of alleviating the burden of debt. They’ll also point to the guaranteed X% return noted above.

My Choice: Pay Off Mortgage or Invest?

I strongly prefer mathematical solutions to psychological ones. Sometimes our brains play tricks on us. Math is consistent – it doesn’t play tricks on us.

Let’s say that I have $200,000 left on my mortgage (4%) and somehow lucked into $200,000 (it’s hypothetical, work with me). That mortgage has 25 years left on it. If I pay off the mortgage right away, I’ll save myself from having to pay $533,167 in mortgage payments and interest [Calculation: ((1.04^25)*200000)]. That sounds like a great move. However, if I invest instead, I would have $1,085,486 [Calculation: ((1.07^25)*200000)]. There are some minor things like taxes and inflation to consider, but they are not enough to make up for the fact that investing is mathematically speaking almost twice as good as paying off early.

I’ve heard some people say that they are so happy that they paid off their mortgage – especially now*. With unemployment so high and income so uncertain, being mortgage-free has to be a great stress reducer.

However, we’ve been saving and investing since we bought our house in 2012. We’ve enjoyed a fantastic ride on the stock market. However, even if it was an average ride, we’d have enough saved up that we could choose to be mortgage-free as fast as the banks can make the money move.** Plus we’d have a lot of money left over. That’s what I consider my great stress reducer.

One of the problems I have with paying off your mortgage faster is that the money is gone right away. You don’t have the money under your control any more. If you put all $200,000 into paying off the mortgage, lose your job, and your car breaks down, can you come up with the money to fix it? If you’ve invested the money and still have control of it, you can continue to make mortgage payments, fix your car, and eat if you lose your job. You have the money to buy you time in making all those payments in such a terrible scenario.

As strong as I feel about investing, we went with a middle ground. We got a 15-year mortgage with a lower interesting rate (a very, very nice bonus!). This forces us to pay off the mortgage earlier than most people. This past weekend, a friend of mine said that she’d never be able to pay off her mortgage. (It’s done in 2037, which can feel like never, but probably comes up on us quicker than we think.) In 2012, it seemed like 2027 would be “forever”, but it doesn’t feel like that anymore.

We are also able to save money each month to invest. We saved and invested a lot over the last decade. I feel that a 15 year mortgage is ideal if you have the income.

Final Thoughts on Paying Off Mortgages Early

I was inspired to write this by an article that had nothing to do with mortgages. Miranda Marquit wrote about her Taxable Investment Account/Emergency Fund and I thought, “That’s somewhat similar.”

Most gurus would say that you shouldn’t put your emergency fund in a taxable investment account. Emergency funds should be very safe liquid investments. However, she has a tiered approach with some safe liquid cash and more in invested in equities. It’s worked out very well for her and provides her with a larger emergency fund today than she would have had otherwise:

This tiered approach allows me immediate access to cash while I liquidate investments. It works for me because I end up with a higher rate of return with the money in a taxable investment account. For example, I’ve got a 13.3% cumulative time-weighted return with the taxable investment account, since the beginning of 2010, when my return with my savings account has been 3.6%.

Marquit has some safety, but also a lot of growth. This seems similar to investing with extra money instead of paying off your mortgage early. I feel I get that safety of control over the money, while growing my nest egg for more safety (or enjoyment) down the line.

What do you think? Let me know in the comments below.

* Is that the 4th or 5th time I made use of “especially now”?

** Most of our investments are in retirement accounts, so we would get a penalty if we cashed out to pay off our mortgage. However, we could do a partial cash out of a little of our investment profits to buy us a year or two of mortgage payments.

Passive Income Update: April 2020 ($6,791.93)

May 21, 2020 by Lazy Man 4 Comments

This report is coming in late. That’s not bad in the grand scheme of things, right? April was the first full coronavirus month. That means that we had no dog sitting income, no kids in school, no… well, you all all know the drill. We each have our things that we can’t do with the coronavirus and last April was the first full month of that for mostly everyone in the US.

To add insult to injury, it seemed to rain almost every day. We almost never got to go outside unless it was just in a car to get out of the house.

Every month I share some photo highlights. The highlights this month aren’t typical. Most are related to the kids and events in the house – just like your photo highlights likely are. Do you really want to see pictures of my blurred out kids doing work off a tablet? (Well, maybe you do. I feel like the bar of entertainment is low considering we’re in the same boat.)

That’s enough lead-in… let’s get to the Passive Income report. In the past, I called it the Alternative Income report, but it seems like that term didn’t catch on. Everyone loves passive income better. While I transition to the new terminology, there may be some “alternative income” mentions including the FAQ. If you are a new reader, you’re going to want to refer to my Alternative Income FAQ as you’ll likely have a lot of questions. They way I calculate these numbers does require some explanation.

Lazy Man’s Passive Income – April 2020

I categorize our passive income into 3 main sources that are largely represented in my passive income pyramid. For this report, I ignore the bottom section, “career/job” – that’s not passive at all. I combine dog sitting and blogging into one section of “somewhat active” income. I leave real estate and investment income as their own separate main sources of very passive income.

1. Blogging + Dog Sitting Income

The last month I reported, March, we had some dog sitting. Actually we had the most dog sitting of the year, even though we only had a 1/3 of a month of it. Those were good times. Today, I sent my dog over to my elderly neighbor who asked if she could pat him. Before COVID-19, I never let him off-leash. He’s slowing down a little at 11 years old and there are no cars, so it’s a good time to test his recall. He passed with flying colors.

Unfortunately, that’s the closest to a dog sitting story I can tell. With everyone sheltered in place, dog sitters are useless. For the first time in this report, dog income came in at zero.

Blogging income was a little better, but not great. As regular readers know, distance learning for the kids isn’t working. From 6AM to 8PM, I don’t even try to work. I’m setting up school, cooking food, doing laundry, washing so many dishes, doing all the school, walking the dog with the kids to get fresh air, and fighting through the bed time routine. After that I can try to manage a couple of emails and perhaps write a paragraph or two of a blog post. Some say it will be better in the summer, but I think I’m going to have to be even more involved in keeping them active and learning. I can’t depend on camps.

Sorry, I got off track there. What I meant to say is that no one is advertising nowadays. Also, few people are searching for information about retiring early. If no one is looking for content and advertisers don’t want to advertise, the income goes in the wrong direction.

In March, dogs and blogs combined for a total of $3,004.18. In April, it was:

Total Blogging + Dog Sitting Income: $2,067.93

Music class! Too bad I don’t play, so it’s most just goofing around.

In the olden days of pre-COVID-19, I would say that dog sitting is great because my kids are old enough to pitch in and help. I could pay them a legitimate earned income (a small percentage of the overall income). This allows them to save money in their kid Roth IRAs, money that they’ll never pay tax on. Now, I have to rethink that. They may play a more meaningful role in the blog going forward.

(Note: The blue line is the monthly number. The red line is a 3-month average which helps smooth the curve.)

2. Rental Property Income

Zillow estimated our rental properties were worth a good deal more than last month. I think Zillow hasn’t done a good job in factoring COVID-19, but I will use the numbers as I always do. So far, tenants continue to pay us. That’s a load off my mind, since we lose money on these properties every month. (We’re accidental landlords for the most part, making the best of the situation. However, we also have 15 year mortgages in hopes of turning them into an income stream in several years.) As with every month, we paid off a few thousand dollars of mortgage debt.

We now have 63.52% of the equity in our properties with a combined rent of $3,325 after insurance, property taxes, condo fees, and estimated maintenance. I use that number because it represents our net gain.

Jack Johnson doesn’t tour very much in New England, but he was in my living room with some other guy last month.

If you multiply $3,325 by 63.52% you get $2,112 in estimated monthly alternative income. When I started tracking this (beginning of 2017), we only owned 36.4% of the properties and they had lower rents. The math worked out to $1,174 back then. So in 39 months, we’ve seen the number grow $938/mo. That’s like giving ourselves an annual $11,256 raise until the end of time. It’s a very nice gain from 3+ years ago.

As the years march on, the ratio will grow to 100% of the $3,325 monthly inflation-resistant rent. That’s what gets us to that annual $40,000 income I mentioned in the FAQ above. I may need to update that $40,000 number as well – it’s looking closer to $30,000. In either case, it should be enough money for us to live on with our own home paid off (plus our solar panels, frugal shopping, and military healthcare.)

In the previous report, the rental property income was $2,065. This number always moves slowly as it only changes if one of two things happen: 1) The properties go up in value. 2) We charge more for rent.

Total Rental Property Income: $2,112

3. Dividend Income

For this section, I assume we will earn a 2.5% dividend yield on our holdings. That could be from a high-dividend ETF or from simply holding strong companies that have a long history of dividend growth. For that we’ll look at making passive income with dividend kings. If I wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get closer to a 4% average dividend yield. That link to the newsletter has a special discount rate and in full disclosure I make a few dollars if you sign up for it.

Our last look at the beach before it closed.

The last snapshot on April 5 had a big, big loss. This snapshot, on May 5th, saw the market return. Maybe the market loves the free money that the government is giving out. Maybe it’s looking forward to vaccines and opening up the country for business. I’m scared by all this, but I can’t deny the math. The market has done very well over the last month.

Last month, we continued to get a profit sharing check since I bought (a lot of) a company. The business is still doing well. It’s actually almost ideally positioned due to its virtual nature. The investment income from this is essentially the same as dividend income. It is taxed differently, but for the purposes of this report, it makes sense to group together all stock ownership in this bucket.

Total Dividend-ish Income: $2,612

Kids are doing a lot of cooking. This is a major step on financial independence path.

Last month, it was $2,403. A couple of months ago, I wrote, “even in a bad-case scenario, we’d be north of $2500.” We weren’t obviously, but we are back there now, with some room to spare. The market has gone even further up over the last two weeks since I compiled the last numbers.

Hopefully we’ll beat COVID-19 and the economy gets fully back to normal. I expect that it will take at least 2 years and probably a lot longer. However, if that happens, this number will grow even stronger than before. We bought shares of companies at depressed prices throughout this.

Annualized, this monthly $2,612 is $31,346. If our mortgage was paid off, we might be able to scrape by on this by itself. However, because most of our investments are in retirement accounts, we can’t use much of this income for now. (We can use the profit sharing check as it goes straight to our checking account.) We’ll let the rest of this income continue to compound for at least another 15 years, but hopefully a lot longer.

Very Close to Passive Income

Our “very close to passive income” is a combination of rental property income and dividend income. If there were some royalty income from books, movies, or music, I’d include that here. I’m too tone-deaf to have a rockstar music career, but maybe there’s room to have a book someday.

Oregon Trail on the big screen with the family. Seven year old was upset that his character died at the end.

The kids are learning entrepreneurial skills the way I did – with the classic game Lemonade Stand.

The stock market goes up and down fast, even more so nowadays. That makes the dividend calculation fluctuate a lot more than it normally would. We don’t even know if companies can reliably pay dividends anymore. Without customers, and profits, many companies have cut their dividends.

The rental property income typically keeps going up because the mortgages are always getting paid down every month. Unless there’s a housing market crash, this should continue to happen. That housing crash may be coming, but for this month it hasn’t happened.

For a few years, I’ve been saying:

I love having both types of income working together for us. I think everyone interested in FIRE should have stocks and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most people in the case of an unfortunate economic event. We’ll still likely get rent checks if the stock market crashes. We’ll still get dividend checks if a tenant is late paying for awhile. Of course a bad economy may impact both at the same time, but that’s what an emergency fund is for.

This is what distance learning looks like on our Amazon Fire HD 10s

Here we are in an unfortunate economic event. Our stocks went down a lot, but then went back up. Our real estate has held steady. We’re just lucky because many tenants can’t pay rent. Zillow’s algorithm seems outdated.

While the stock market is doing well, the real economy is terrible. No president wants to see long food lines, six figure homeland deaths, and an unemployment rate balloon to ~15%. The best answer is a bailout of nearly everyone and everything at a cost of several trillon dollars… and it may go up from there. If only the people in political power believed that an ounce of prevention is worth a pound of cure, we’d be in much better situation. It would have, figuratively, saved our bacon.

We’ll see what next month brings, but for now we have a recovery.

Very Close to Passive Income: $4,724

Last month it was $4,468. We had lost $500 a couple months ago, and got nearly $250 back. All things considered, that’s not bad at all.

This “very close to passive income” has grown from $2,354 in January 2017. It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet (except for that profit sharing check). Add in stock market growth (of a conservative 4%) and this number could be real, non-fudged $100K/year. I’m especially looking forward to 7 years from now when the mortgages on the investment properties (and our primary residence) are paid off. That’s going to be a huge financial swing for us.

Final Passive Income

When you add up “dogs and blogs” to the “very close to passive income” you get:

Passive Income: $6,791.93

That’s reasonably good for a month of everything being shut down. We’re getting back to our frugal roots, so one could argue that this lower number overall could put us in a better long-term financial position. That all depends if we continue be frugal after coronavirus, which may not be likely.

Annual Easter egg hunt as if there was no pandemic going on.

This nearly $6800/mo income is $80K+ a year. That largely hypothetical annual income for writing on a blog, ~~taking care of dogs~~ (not this month), and investing feels like a dream. In the long term, $80K would be a lot more income than we’d need. Here’s what our necessary expenses look like… for the next 45 years.

I always say that you never know what bad news is lurking around the corner, but this gives us the financial flexibility to fight it. With the coronavirus closing schools and my wife on the coronavirus response team, we need this flexibility to continue to educate our two kids.

None of the numbers here include my wife’s bread-winning pharmacist income, her vested military pension (more passive income), or the freelance work I’ve been doing over the last 18 months (which isn’t passive at all). That’s the fuel that drives the passive income engine.

Harry Potter puzzle with big pieces for the kids and little ones for the adults.

As always, I’m still hoping to write a book someday. That would add some more passive income. My wife will probably get her book out first. She had an incredibly interesting life until she met me – I am so boring. I may tip my toe into self-publishing sometime next year. I would love to talk to a real a publisher, but I don’t want to take on the “job” of writing. That’s probably a deal breaker. If you know someone who I could talk to contact me.

My favorite thing about the graph below is that it doesn’t dip down too far. It’s been above $6,000 for awhile now. I thought that it may be tested with the coronavirus, but maybe it won’t be after all.

(Once again, the blue line is the monthly number. The red line is a 3-month average which helps smooth the curve.)

Net Worth Update

My net worth updates aren’t very exciting as I don’t share the exact numbers. That’s why it’s just a footnote here.

I truly believe that net worth is one of the most important numbers in personal finance so it is worth sharing in some way. Showing relative growth can be useful, I think.

Like most investors in April, our net worth did very well. After losing more than 10% in March, we gained 8.84% in April. For the year, our net worth is only down 1.74%. It’s almost like the coronavirus doesn’t matter to the markets. Since I’m reporting this so late in May, I can tell you that our net worth has gone up even more. We won’t count those chickens – they haven’t hatched yet.

Cotton candy treat found at the military grocery store.

Our real estate value seems to be staying steady. The lesson here is that diversification helps a lot in bad times. Even when the stock market was way down, we were still grounded with our real estate. We can’t control the market (especially now!), but we can be happy that the amazing river of compound interest has been working well for us over the years.

I feel it’s important to acknowledge that everyone is in a different place in their financial journey. I’ve been blogging about personal finance for 14 years. FIRE wasn’t a “thing” back then, but it’s in the news all the time now. We naturally are further along in that journey than some younger readers who may be beginning their journey. I hope you won’t be discouraged by some of the numbers above if you are just starting out. I didn’t start many of these graphs until year 11 of blogging (year 13 of early retirement planning). Please try to use it as motivation for what may be possible (depending on your circumstances). I had a number of years where I was ecstatic simply to save ANY money for retirement.

There’s a big wild card in calculating our net worth. Now that my wife’s pension is vested, it’s reasonable to ask whether to include a pension in your net worth. I decided that it does make sense to include it. She could have earned more direct monetary compensation if she didn’t work for the government. That would have boosted all the numbers across the board. Calculating pension value is not easy, but here’s the best way to know what a pension is worth. In the end, it seems my wife’s pension may be worth $2.3 million. However, like most of the money mentioned in this article, this isn’t money we can spend right now.

Because the pension would ridiculously dominate our net worth, I’ll note two separate numbers in my personal spreadsheet. I don’t share the numbers anyway, aside from these hints, so I don’t think it should matter much to you. It’s not like I’m suggesting that you might want to make a financial based decision on a pension.

I always end this article by asking how your last month went. That doesn’t make much sense after the March that everyone had. Feel free to use the comments to vent – it doesn’t even have to be about personal finance.

Distance Learning Doesn’t Work

May 14, 2020 by Lazy Man 9 Comments

Well, distance learning may work for some families, but from everyone I’ve talked to distance learning simply doesn’t work. Our family is no exception.

Editor’s Note: This article has a little less personal finance than usual in it. However, it is still present and it plays a fundamental role in my stress during this time.

If you are a new reader, here are my family’s basic dynamics:

Kids – Two boys, ages six and seven, in kindergarten and first grade
Mother – Virtually-deployed (at home) military pharmacist working 7 days, 12 hours a day weeks
Dad – Me. Blogger. Silicon Valley tech support manager (part-time)
Dog – Extra barky when not walked 2-3 times a day

Distance Learning Doesn't Work — Distance Learning is the exact opposite of this picture.

I know there are difficult situations around the ~~country~~ world. There are single parents. There are parents who have financial problems. (We’re okay in that department.) There are parents who are essential workers and have to put themselves in dangerous situations. (We were lucky that my wife can coordinate the COVID-19 response from home.) There are parents of kids with special needs. (We have one kid with borderline special needs. I hope we can find out more when doctors’ offices open again.)

It would be tone-deaf to compare us to any of the multitude of families who have any of these problems. On the other hand, it’s natural to compare your situation to other families’ situations. I’ve been doing that with some of the other parents in kids’ school and our family dynamic makes is one of the most difficult ones, I think. In the end though, it isn’t about such comparisons, it’s about how the situation works for you and your family. In a lot of ways, this article is a kvetching to get a lot of feelings out of my system. (I’m not sure I used kvetching correctly there, but I’m sticking with it.)

Distance Learning Problem: Two Curriculums

If you have 2, 3, or even 4 children, teaching multiple curricula is an impossible situation for a parent. We wouldn’t ask our best teachers to teach two or more curricula at the same time. The school recommends that they have their own learning space, so I’m running back and forth making print outs, checking workbooks, gathering special supplies, getting websites to work on PCs that won’t work on tablets (and vice versa), etc.

Two kids doing two distance learning curricula at the same time never syncs up. It’s a bad situation if one kid’s curriculum says to take a break and the other kid is still working. Usually when one kid takes a break the other demands a break. They spend most of their time on breaks. It’s hell fighting that inertia to get them back to work.

Distance Learning Problem: Two Young Children

If this came around 2 years ago and I had kids in pre-school and pre-kindergarten, I would likely teach them 100% myself. I had to do this for a month at a time here and there. I know all the best educational streaming shows for preschoolers. (Many people don’t like screen-time, but we talk about the shows and have activities afterward reinforcing the concepts. We did a lot of hands-on stuff too.) In any case, it’s different with kids who haven’t reached kindergarten. There’s not an expectation of academic learning at those ages.

I had great success homeschooling our kids during the start of COVID-19. Their school was on vacation and we had nowhere to go. I had to come up with some way to keep them busy. We had chess, Duolingo, some worksheets, science shows like Mythbusters Jr., and online learning such as Adventure Academy. These activities synced up well.

My kids are just starting to get good with tablets. They don’t know how to type well on a PC and a mouse or trackpad is just weird to them. Printing from a tablet simply doesn’t work. Using technology in this way is completely foreign to them. They are getting good, but everything has to go perfectly or there’s a high likelihood of meltdown.

I don’t know that parents of teenagers have it any better. There’s a whole lot more problems that can come into play as they get older. Let’s just say that I’m not rushing my kids into social media.

Distance Learning Problem: Boredom

I think everyone is fighting boredom nowadays. My kids have always found school boring. They get academics naturally. That’s their thing. The 7-year old in particular. He could have finished whole grammar and math workbooks in the first week of school.

Distance learning for us is taking something that is naturally boring (school), making it review (they already know it), and then putting it on a video screen. I believe the key to learning is intellectual curiosity. We are so very, very far away from that.

Distance Learning Problem: “Simply Opt Out” and “Money”

Whenever parents say that distance learning isn’t working for them, people on social media rush with two “solutions”:

“Simply Opt Out of Distance Learning”
That’s the obvious solution, right? However, we have to do something. No one thinks that a day of video games is the answer, right? I can go back to my homeschooling plan that was working well, but the school is going to have a lot of questions. We already get warning emails from their French teacher if they forget to submit the form. They did the video, but didn’t know that they needed to submit the form.
Also, it costs $5,000 a month to send two children to our private school. We get a generous military discount (or our kids wouldn’t be there). Even with that discount, it is still a lot of money by almost any measure.
It’s hard to spend tens of thousands of dollars a year and then say, “Oh, we’ll just ignore it and flush that money down the toilet.” We paid this tremendous amount of money for a specific service and we are only getting a fraction of it. The school isn’t offering any money back. I understand that it is a tough situation for them, too. A huge percentage of that tuition goes to teacher salaries.
It seems like the best thing we can do is try to maximize the value of this resource we paid for. If we “opt out” of distance learning, we get zero value for our money and the teachers’ hard work.
“Tell the teachers it’s too much work”
Sometimes it seems like the kids are getting too much work. There are days we start at 7:30AM and finish around 5PM. However, that’s not necessarily due to the amount of work assigned. The kids can fight for multiple breaks and then it takes awhile to get back to work.
Other times, the kids knock out the same amount of work before noon. Their mood (and productivity) during the coronavirus is like the rest of us: all over the place. The teachers can’t know the kids’ moods the next day when they are making their lessons.
I’ve found it’s rarely about the “amount of work”, but the type of work. If it’s “busywork” for my kids, the “extra bored” mood kicks in and it’s a failure for distance learning.
If the “work” is playing a game of chess or watching an episode of Mythbusters Jr., they can continue learning all day and all night.

Distance Learning Problem: The Wrong Environment

I make some money dog sitting and I’ve learned that dogs behave differently when they aren’t in their regular home. I’ve seen it in my own dog. He knows in my house that he shouldn’t jump his front paws up on the counters to look for food. In the first two minutes of doing a meet and greet at another house, he’s up there sniffing around.

Humans experience this as well. We have different rules for when we are on vacation than we do at home. We behave differently in the office than we do at home. Personally, I get a lot more work done at the library than I do at home.

Kids behave differently when they are at school when compared to the home. It’s hard to turn the mental switch on a 7-year old and say, “We are going to use our school brains now.” They have a history of home activities. This is the place they watch TV or play games on their tablets. This is their parents, not their teachers.

I’m not naïve enough to think that they behave like perfect students at school. I simply feel that the school environment is more conducive to learning.

Distance Learning Problem: Distance Learning itself

The majority of our distance learning consists of kids watching videos of the teachers and doing worksheets. The teachers have mentioned many times that they don’t get feedback on whether the kids are grasping the lesson or not. They simply send videos into the ether. I do my best to take pictures to document the work being done – mistakes and all. For the kids, it simply isn’t the same as learning the lesson in real time with their peers.

Some of the websites can help because teachers get reports on what the students are getting right and wrong.

Distance Learning Problem: Fighting for that Silver Lining

I spent a very, very long time trying to come up with any kind of silver lining to distance learning. I needed to feel like there’s something of value here. The closest I came is that distance learning allows for students to learn at their own pace. If a student learns faster, they can move on to the next thing. If a student needs more help, some extra review may be necessary.

The curriculum doesn’t have to match the general class speed. It can be fluid for each individual. If some whiz kid can blast through a grade of Khan Academy in a month, maybe he/she can move onto the next grade. One of our kids seems to be that kind of whiz kid.

It took our school a ton of work just to take the curriculum and move it online. They did it very quickly. I’m sure they would say that I should be happy we have what we have. It’s better than a lot of schools.

Unfortunately, I keep going back to what I could teach if only I had the power to adapt the curriculum. If I’m going to spend my time teaching, I should have a say on the curriculum and pace. A famous football coach, Bill Parcells, once said, “If they want you to cook the dinner, at least they ought to let you shop for some of the groceries.” He was referring to the ability to draft his own players, but I think it works here.

For us, I think that distance learning can only work if teachers act like consultants proposing ideas and parents are the ones choosing what to implement. Of course, both parents and teachers have to work towards a common goal of preparing the children for the next grade.

Hopefully by fall, the kids will be back in school. (I’m not optimistic.) Failing that, I’d like to see some individualization take place. Maybe I can convince the school to have my kids do an “independent” study. However, once again, it’s hard to pay all this money simply to ignore the resource.

Final Thoughts: Why Distance Learning Doesn’t Work

Every family is different. Some families may have no problems with distance learning. However, I think almost everyone finds it extremely difficult. Our particular family and school situation makes for one of those difficult situations.

I honestly don’t know what to do about the fall. It doesn’t look like schools are going to open up. The CA State University System has announced it will be online. Dr. Anthony Fauci said that having a vaccine or treatments that would allow for schools to open up is “a bridge too far.”

We have to prepare for the most likely scenario that schools won’t open up in the fall. Do we voluntarily throw tens of thousands of dollars at something that we know doesn’t work? If we decide not to, we’ll lose the ability to send our kids to the best school for years. We’ve valued this school tremendously (when the campus was open).

There are no easy answers here. I don’t even see a clear way to make the best of a bad situation.

This is the biggest stress in my life… and it looks like I’m going to be stuck with it for at least the rest of the 2020.

A Brief History of 14 Years of Lazy Man and Money

May 8, 2020 by Lazy Man 9 Comments

Today is the 14th anniversary of Lazy Man and Money. I’m 44 years old, so next year I will have spent 1/3rd of my life as “Lazy Man.” (Those who have known me through the other 2/3rds of my life may claim that it’s closer to 100%). For now, I’ll have to settle for my “inverse pi-anniversary” because 44/14 is a close approximation of pi. (That got way too nerdy. I’ll dial it down.)

There are only a few single-author money bloggers that have consistently been around longer. The only one I could think of was Jonathan of My Money Blog. There were several others that have taken a hiatus or sold their blog and came back under a different brand.

Consistent blogging is difficult for me these days. My priority is to homeschool the two kids (ages 6 and 7), while my military pharmacist wife is virtually-deployed* to help with the coronavirus. I don’t have much energy after putting the kids to bed. Trust me, I still have many, many money stories to tell. Hopefully, if I continue to stay healthy, you can look forward to be bored by them for decades.

The Beginning of Lazy Man and Money and FIRE

It might be hard for many people to understand what the blogging landscape was 14 years ago. Twitter had launched just a couple of months before so no one had heard of it. Facebook was only 2 years old. Lazy Man’s hockey stick growth curve has to be coming any day now, right?

With that historical perspective in mind, I thought it might be interesting to take a look at my first blog post, “Welcome”.

Here’s what it looked like in November 2006 from the Archive.org’s Wayback Machine:

In hindsight my first sentence of more than 2,558 blog posts (and 2 million words) may have been my best:

“This blog is about a man, a lazy man, and his quest to not only retire early, but to retire rich enough to live a comfortable lifestyle.”

I’m not going to say that I invented FIRE (I didn’t). But I specifically set the FIRE goal about a decade before most personal finance bloggers started categorizing themselves that way. The last half of that sentence translates roughly to what those FIRE bloggers call fatFire.

These concepts are the same by any name. They were here before the Great Recession of 2009 and they’ll be here after coronavirus.

I mention this because I ran a Twitter poll awhile back and most people didn’t consider me a FIRE blogger. I wasn’t sure whether I should be insulted or flattered. The truth is that I’m an overall money blogger. I’ve always tried to be a generalist. I’m not the best frugal, investing, real estate, military, consumer advocate, family blogger, but I cover all those topics.

You can think of me as the blogging equivalent of a Susan Lucci and a Jamie Moyer child, but not as talented.

A History of FIRE

Many people have asked me how I became interested in FIRE and why I created Lazy Man and Money. It was a confluence of four factors, in order from most to least importance:

My military wife’s pension
We were still dating when I created Lazy Man and Money, but she had mentioned that she could retire with 20 years of service – at age 43. Since she was obviously marriage material.
I had to find a way bridge the gap of 22 years from the typical age 65 retirement.
The Dot-Com Bubble of 2000
I graduated with my computer science degree in 1998. After a year at an century-old insurance company, I went to a big dot-com. I was a rising star, quickly becoming a manager of their search engine technology. The start of my career there until the end was only a couple of years. The Dot-Com Bubble lead to the entire technology team getting laid off. It was supposed to happen on September 11, 2001, but the company wisely rescheduled the layoffs.
Like many software engineers at the time, I didn’t find steady employment until 2004, almost exactly at the time that I met my wife.
I had come so close to financial rock bottom, that I knew I never wanted to be there again.
Outsourcing of the mid-2000s
In the wake of the Dot-Com Bubble, many companies realized that they could reduce their risk by developing software overseas. The cost of living is much lower, so oversea software engineers would work for less money than American ones. The movement picked up steam from 2003-2012. I have lost track after that since Big Tech has consolidated to several big companies.
I got very worried that the economics of developing software in the United States simply wouldn’t make sense going forward. At this time, the iPhone wasn’t invented yet. And while its software is still developed in the US, the hardware is largely outsourced to China.
Actual Laziness
Staying competitive in the software engineering world is difficult. In many places, you have work a full 12-14 hour day and then go home and learn all the breakthroughs that other coders have made.
Facebook flew me to their headquarters in 2006 and we mutually agreed it was a terrible fit. Like NFL running backs, I was on the wrong side of 30 (by months) and aged out of the Silicon Valley programmer club. I wanted to go home to my wife instead of living on campus.

Unexpected Bonus 5th Factor:

Starting a Family
There are very few organizations that zero flexibility. You have to do what is required no matter what. One of them is the United States’ military. Another is being a parent. As a military spouse** with children (especially young ones), I have the flexibility of an icicle.
Because I had a long-term view of our money management, we have some flexibility.

A 14-Year Financial Journey

With the image from Archive.org above you can see my goals (on the right side). I wanted to make around $1700/mo. in alternative income. I had made $23.

It was a start, right?

In my last passive income report I made around $7,500*** for the month. Those “***” are important as it isn’t liquid money we can spend right away. However, we can get to a large portion if necessary.

In that image from Archive.org, you can see that my net worth was less than 200K. My goal was to have a net worth of $3-4 million. What is missing from that is a timeline. I could lack through all my old posts to know for sure, but I think it meant for now, when I hoped we’d retire early.

That projection included my wife’s net worth, because $3.5M with the rule of 4% (the standard at the time) would allow $140,000 of spending a year. I wouldn’t need that much if I was just trying to support myself.

If you fast forward to today, my wife’s military pension is worth around 2.3M. Our net worth outside of that is less, but not much less. Most of it is tied up in retirement accounts and real estate investments. We’re expecting that all of this will bring in $200,000 a year in income in retirement.

Is it fair to say that we have achieved our goal? I don’t know. It’s not like we have millions in index funds actively throwing off dividends that we can spend. As we’ve learned over the last couple of months, we never know what challenge lies just around the corner. On the other hand, it’s not like our hard work is invested in Beanie Babies – it’s real money.

Nowadays, I try not to look at money as a destination. This article goal is to highlight that money is a journey. And in the words of my sons’ favorite TV show, “The journey continues…”

Final Thoughts

You may read financial magazines that project how saving and investing works in the long run. We’ve not only experienced it first-hand, but it’s documented here for all to see. Fourteen years can feel like a long time when you trying to reach financial freedom. However, looking back on it, the time flashes by in the blink of an eye.

* “Virtual deployment” means my wife is still working from home, but it’s 12-hours a day, 7 days a week for the next month.

** Happy Military Spouse Day! I’m double-dipping with two special days at the same time.

*** This number has a lot of qualifications attached to it. There’s a whole FAQ about it. The bottom line is that it’s the number that makes the most sense.

A Killer Made Me Do It

May 6, 2020 by Kosmo 6 Comments

Today, we have another post from writer Kosmo… influenced by a killer.

My birthday is coming up later this month. My wife recently asked me what I wanted. Most years, I don’t have a good answer. I pre-order Kindle versions of the books I want, and I generally don’t accumulate a lot of “stuff”.

“Stamps,” I replied.

Why am I beginning a stamp collection just as I approach my 45th birthday? Well, a killer made me do it.

My favorite writer is Lawrence Block. I’ve written several articles about his works over the years. If you like mysteries, you’ll probably find a Block series that you like. The killer who stoked my philatelic interests is a man named Keller, the subject of a five book series. Keller is a hit man. He travels around the country, killing people who need to be killed. When he finishes the job, he ends up with a bunch of cash. You can’t deposit a lot of cash without having the bank file a form 8300 with the IRS. Nor can you structure your deposits in such a way to avoid detection. In fact, making five deposits of $9500 each will raise more eyebrows than a single $47,500 transaction.

So, what’s a hit man to do with all this cash? He plows it into stamps. They sit in albums, slowly appreciating in value (although Keller is quick to point out that it’s difficult to recover the purchase price very quickly, due to dealer markup). Block tends to weave a lot of actual knowledge into his books (particularly the Keller and Tanner series). So I was able to pick up the basics of collecting from Keller.

Block also wrote articles for Linn’s Stamp News. Those were compiled into a book called Generally Speaking. I read it when it initially came out, despite having no interest in actually collecting at that time. The book was recently updated, so if you’re interested in the hobby and haven’t read it, this is a good time to read it.

But enough with the free advertising for my favorite author. What do I hope to get out of stamp collecting?

It’s certainly not a profit motive. While Keller can invest in high dollar items such as Martinique 2 and Martinique 17, I’m going to be buying considerably lower dollar items, such as this lovely set from the Ross dependency. (What’s the Ross Dependency? It’s the section of Antarctica that belongs to New Zealand). I’m doing it purely for the enjoyment. I’ll periodically spend small sums of money and expect the collection to never be particularly valuable.

Speaking of money, there are a lot of things you can buy when you’re getting started in the hobby.

Catalogues – If you want to have an idea of what’s out there and what to expect to pay, you’ll want a catalogue. Scott is the dominant force in the market. There are a variety of catalogues, depending on your area of interest. Expect to pay about $100 for a new catalogue, or many hundreds if you collect several countries (especially if they are in different part of the alphabet). There are some free online catalogues, such as Stampworld and FreeStampCatalogue. However, everyone has their own numbering scheme, and most seller use the numbers from the Scott catalogue (or sometimes Stanley Gibbons). So if you don’t have a Scott catalogue, you may have to do a bit more research when you’re buying or selling. I’ve opted not to buy a Scott catalogue, at least for now. Instead, I spent $15 on a used copy of a book about New Zealand’s stamps.
Tracking software – You probably want to track what you actually have. These are generally subscription-based services. I opted for StampWorld’s VIP membership ($30 per year) which includes tracking of your collection.
Magnifying glass – If you want a close-up look at your stamps, you’ll want a magnifying glass. My close vision has been getting worse in recent years (as a normal part of the aging process), so this will be a must.
Tongs – You shouldn’t touch stamps with your fingers, because the oils on your skin can harm the stamps. Instead, you should special stamp tongs to move stamps.
Storage – There are a different ways to store stamps.
- You can spends hundreds of dollars on nice albums. There are albums for various specialties. If you’re collecting newer stamps, there will be supplements each year, for the stamps that were issued during year. The album will have a specific space for each specific stamp in your collection. You use mounts or hinges (older method, less expensive than mounts) to attach your stamps.
- Stockbooks – Stockbook pages contain a number or vertical strips. Simply slide your stamps under a strip, and you’re done. It might not look quite as nice as a pricey album, but it’s less expensive and it’s easier to move stamps around (for example, if you get a higher quality version of a particular stamp).
- DIY – I’m actually going to buy some Stockbook pages and put them into a three ring binder I have. It’s a nice, big binder that was originally purchased for my baseball card collection. It ended up going into storage and never got used. Finally, it gets to shine. I’m going to buy some stockbook pages and put them into the album. You can buy pages with a various configurations, because stamps vary in sizes. Additionally, some collectors collect “covers” (envelopes with the stamp attached) and those naturally take up much more room. Stockbook pages usually have a lot of holes, so that they can be used in a variety of binders.
- Glassine envelopes for short-term storage of stamps. Glassine is a semi-translucent paper.
Stamps – I knew I was forgetting something. Now that you can store and handle stamps, it’s time to buy them. You can buy from a dealer, or on Ebay or stamp auction sites such as HipStamp.

Before you start just buy stamps randomly, you’ll want to figure out what you want to collect. This may be a particular country or date range (worldwide pre-1940 is a common specialty) or a topical subset, such as stamps that feature fish.

My primary focus will be on New Zealand, pre-1970. In recent years, I have adopted New Zealand as a country of interest. (Executive summary: I wanted to bond with Indian co-workers over cricket. I somewhat randomly picked New Zealand as my favorite team and got hooked). It seems like production of stamps really proliferated after about 1970, and I don’t really care for a lot of the newer stamps. In addition to New Zealand itself, there’s also the Realm of New Zealand – Ross Dependency (in Antarctica), Tokelau, Cook Islands, and Niue. So there’s plenty for me to collect without going beyond New Zealand. If I do branch out further, it will likely be into the non-Australian portions of Oceania.

I’ll also have a few topical subsets, just for fun. I’ll collect baseball, cricket (the sport), dinosaurs, tigers, and elephants. I’ll probably also delve into covers a bit. There are some items from the Ross Dependency that have postmarks from the actual location in Antarctica, which seems pretty cool to me.

How many philatelists are in our midst? What have you found most enjoyable about the hobby? What advice to you have for new collectors? And, if you don’t mind sharing, how much money have you sunk into stamps over the years?