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No. of Recommendations: 5
2012 Update:
Net worth up 20% in 2012. [S&P +13%] (Net worth up 4.7X in past 9 years)

Current Portfolio:
27% Picked Stocks (9% net worth in WMT, PFE, AA) (10% company stock, after tax)
33% 401k Mutual Funds (70% S&P500 index fund)
8% Fixed Income (Cash Savings, Money Market)
107% California Real Estate (Our House Value*0.93)
-75% Mortgage 3.875% fixed 30yr

2012: 38 years old now. My goal for 2012 was to get fixed income back up to 15%, but just didn’t make that happen, and have dropped to 8% from 16% 2 years ago. Did some home remodeling in December which cost about 2% NW in cash, so will focus again to get this back up toward 15% as a better safety net. To accomplish this, I plan to liquidate some stocks this year as I became very heavy in my company stock in 2012, near 10% NW (after taxes). We refinanced again, no cost 3.875% 30yr fixed, rates just keep on dropping (previous rate was 4.25%). Both kids still in and likely forever will be in private school, now 5yo and 7yo; however, we are moving to a new school that should drop tuition costs by almost 50%. My job continues to remain stable with increasing income each year, but my industry will end at some point, 5 years, 10 years? … no one can predict. In 2013 I will reach the holy grail of 6 weeks vacation a year, so even more time to spend on family vacations. Fully funded my 401k this year.

2011 Update: NW +9% [S&P +0%]
http://boards.fool.com/fire-update-2011-29755919.aspx

2010 Update: NW +31% [S&P +13%]
http://boards.fool.com/fire-update-2010-28994598.aspx

2009 Update: NW +6% [S&P +23%]
http://boards.fool.com/Message.asp?mid=28279332

2008 Update: NW (-31%) [S&P -40%]
http://boards.fool.com/Message.asp?mid=27349532

2007 Update: NW +15% [S&P +6%]
http://boards.fool.com/Message.asp?mid=26243566

2006 Update: NW +23% [S&P +14%]
http://boards.fool.com/Message.asp?mid=24999370

2005 Update: NW +46% [S&P +3%]
http://boards.fool.com/Message.asp?mid=23507890

2004 Update: NW +82% (mostly home value increase) [S&P +9%]
http://boards.fool.com/Message.asp?mid=21842676

2003 Update: Net worth (NW) baseline = 1.0 (about 1.5X annual income at the time)
http://boards.fool.com/Message.asp?mid=20380221

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whyohwhyoh
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Thanks whyohwhyoh.

How in the world do you get 6 weeks of vacation per year. Just a generous perk? Gov't job?

I'm a software developer at a relocation company (real estate). I have 4 weeks and will get a 5th after being here 12 years. And I thought my company was incredibly generous. 4 weeks is the most I had ever heard people getting before this.

But in my experience, everytime I get near those lofty levels, a re-org or layoff occurs and I have to start over with 2 weeks at a new company.

MetalDecathlete
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I work for a Fortune500 company. Started at 2 weeks for the first 4 years, slowly climbing, and after 14 years of service everyone reaches the max which is 6 weeks (big jump from the previous level of 4.25 weeks). Enough to almost make a Frenchman jealous.

But now that I've reached it, I'm sure the policy will change, re-org, I'll change jobs, etc. Something will come up.

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whyohwhyoh
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No. of Recommendations: 4
Some FIRE rambling...

Nice 5% tech gain so far this year, so when I just dumped 2%NW in company stock, I'm right back at 9% company stock in NW (post tax). I have to wait until May to dump another big chunk, then again in October, which I plan to do.

When calculating net worth I multiply all my company stock by 0.65 since when I sell, it will get hammered down (fed+state tax).

There was a comment on whether or not to include unvested stock in net worth calcs.... I do include them. It is actual money on paper, and I pretty much always sell once vested so I do realize the gain. I have stock vesting continuously and nothing is more than 3 years out. Including it in NW gives a better picture of where I'm headed.

Paying down the mortgage.... with rates so low I don't. Maybe as I get closer to being able to make a decent move on it, I will. When I refi, I do pay it down a little, opposite of what most do I presume. If I refi again this year (rates still dropping) I'll probably throw more at it to reduce the initial loan balance.

My house is an investment, I include it in net worth calcs. I plan to sell the house some day and realize all the gains. It has 6 bedrooms, 4 bathrooms, in an expensive neighborhood, we don't need that when we FIRE. I am constantly doing small upgrades, sweat equity, on the house each year to help it sell some day.

Right now to calculate what my house is worth, I have been recently using a conservative 2%-3% yearly increase, and multiply by 0.93 to account for costs to sell. For comparison, Zillow is showing 10% year over year for past 2 years for my home and my zip code. Silicon Valley is in full rebound over the past 2 years. Apple and Google probably have a lot to do with it. Traffic is much worse now... my other economic indicator. If I get some good neighborhood comps, I might adjust upward, but I like to remain conservative in my assessment.

I consider my house investment as protection against inflation.

I-bonds look decent right now for fixed income category of my networth. I'm thinking of putting a bunch into I-bonds. I have been using FNBO for many years now, which is 0.85%APR savings at the moment.

How to help FIRE.... I have a 2007 Honda with 86k miles on it, $17k new (out the door). My wife drives a 2007 Subaru... we bought it with 40k miles for $11k. We'll drive these to the ground.

My motto:
I don't mind spending money.... I just hate wasting it!

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whyohwhyoh
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I-bonds look decent right now for fixed income category of my networth. I'm thinking of putting a bunch into I-bonds. I have been using FNBO for many years now, which is 0.85%APR savings at the moment.

Can you elaborate on this, please? I hear a lot of people mentioning I-bonds as a part of their portfolios. Are they just a substitute for holding some type of bond fund?

-Steph
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Can you elaborate on this, please? I hear a lot of people mentioning I-bonds as a part of their portfolios. Are they just a substitute for holding some type of bond fund?

Ibonds are marketed as being immune to inflation risk, but they are merely somewhat resistant. Highly resistant in a tax-sheltered account or if used for certain educational expenses, but only moderately resistant otherwise.

An Ibond is a zero-coupon bond. That means you don't actually get paid interest over time; instead the interest is added (every six months) to your basis, and that's what draws interest for the next six months.

The interest has two components: a fixed portion (which has been zero since 11/1/2010) and an inflation portion (which is computed every six months based on the six-month change in CPI-U). These are combined through a formula to produce a composite annual rate, half of that rate (because it's an annual rate and you're getting six months interest) is applied to your current basis, and that result is what actually gets credited to your basis.

The catch is that every part of the interest is taxable when it is credited to your basis, even though you have no actual income.

Now the current fixed rate is zero, which means the composite rate consists solely of the inflation portion. It's 1.76%. And if it's taxable, you're guaranteed to be losing purchasing power.

And of course there's the question of whether CPI-U is a realistic and accurate measure of inflation. I won't comment on whether the government IS fudging the numbers (or deliberately choosing methodologies designed to cause understatement) on it; I'll merely point out that they have plenty of incentive to do so - and that incentive goes up in proportion to actual inflation.
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When looking at I-bonds one should compare relative to savings accounts and 1 year CD's. Best interest rates for CD's/savings are around 0.85%APR.

I plan to pull the money out of I-bonds after 12-months, so lose last 3-months of interest. So overall interest rate will be (1.76+0.5*the unknown interest rate).

It looks like this will beat the 0.85% rate available elsewhere.

Also I-bonds are exempt from state taxes, which are around 10% in California.

So for e-fund/cash, I-bonds look like the best deal at the moment especially for high income state/local tax locations.

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whyohwhyoh
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