Mustachian Recipes: Oatmeal Chocolate Chip Lactation Cookies

So this is a markedly different post than most of my other personal finance posts, but I figure a little DIY action in the kitchen is a great way to reduce expenses. Plus, this explains why I have been out of action on the blogosphere:

So my wife and I have had a new addition to the family. As with many mothers, she was interested in breastfeeding. The first time around was less than positive and she really fought to maintain an adequate milk supply.

This time around we researched some additional way to increase her milk supply naturally. From there we modified some recipes online and came up with this recipe. The oatmeal helps with increasing supply, the flax seed, coconut oil, and walnut help to increase the quality of the supply (increased fat to water ratio). The rest is to make it taste good. You can also consider substituting brewer’s yeast (may increase supply) for the baking soda. We opted not to try this because of the GI issues.

When comparing this to lactation cookies that go for $1.99 a cookie, we have saved well over a hundred dollars over the month buying baking supplies at Costco and Aldi’s. Her milk supply has been much better this time around as well so we are also saving on not having to supplement formula. Someday I’ll do the math, but for now here is the recipe. Feel free to share it!

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Ingredients

1 cup coconut oil (cold pressed, virgin)

3/4 cup brown sugar (can decrease to 1/2 cup if you do not want it as sweet).

1/4 cup white sugar

tsp vanilla

1 cup unbleached flour

1/2 cup wheat germ

2 tablespoons flaxseed flour

1/3  cup water

1 teaspoon baking soda

2 cup oatmeal

1 cup chocolate

1/2 cup dried cranberries (optional)

1/2 cup walnut or other nut (optional)

Note: if you want a thicker recipe you can add the following:

1 tablespoon of milk

1 tablespoon of whey protein

1 egg

  1. Cream together coconut oil, butter, and sugar in a bowl, then mix in vanilla (this is where you can also add the milk, whey protein, and egg).
  2. Add flour, wheat germ, and flaxseed flour and mix well.
  3. Mix together baking soda and water, and then add to the batter.
  4. Stir in the oats, dried cranberries, nuts, and chocolate chips.
  5. Drop by spoonfuls onto a cookie sheet (no need to grease it) or cook as a single sheet (brownie pan), and bake at 350° for 12-15 minutes.

What type of investor are you?

So with all the recent volatility in the market, I asked myself what sort of investor am I?

When I initially started investing, I was an untrained value investor. I had a general idea that I was looking for undervalued companies, not stocks, but I had no
idea how to really pick a stock. I ended up relying on morningstar.com to help me figure out what was undervalued and to shop for businesses. I found that value investing took a lot of time, and as my work (investing in myself) took off, I found myself with less time. I shifted over to primarily index fund investing and just paying myself first with a set it and forget it rule.

wallstreettumbles-e1440196750745I have to admit that I do play with the numbers a bit and try to buy some stocks/funds at a discount when the price drops. The more this market volatility increases, I now understand that it really is a mental game since you really don’t know how much a stock or fund will drop or go up. I find that if you are going to purchase at a discount you have to be prepared for that investment to drop further, much like what happened when I purchased last week to see my investment drop another 3%. It definitely is tempting to want to recoup this “loss” but it is important to stay strong and remember that if you really did buy a good investment the stock should go up, and in the case of index investors the general growth of the market should also go up so just ride the course, and if it agonizes you to see the fluctuations get off the computer, turn off your TV, and get outside and invest in your health.

So what have you learned about your investment strategy/risk tolerance during the recent volatility? Comment below, thanks!

Also, here is a useful link to help you figure out your risk tolerance.

http://njaes.rutgers.edu:8080/money/riskquiz/

I got a 31 which put me at above average risk tolerance which fell in line with most of the recommended investments I make, though, I think I am slightly skewed to high risk tolerance with my international/emerging market funds and my relatively low amount of bonds.

A Review of Financial Concepts I: Methods, Formulas, and Exercises

I was fortunate enough to get a copy of Gaston Acosta’s first edition of his book Financial Concepts I: Methods, Formulas, and Exercises.

First off, as a lay reader (no formal education in finance), this book was relatively easy to follow. Similar to a statistics book, it builds upon basic concepts to address more advance topics/formulas in later chapters.

It has relatable examples that help you understand key concepts and how you can relate them to personal finance, investment, and business decisions.

The few things I would like to see in an updated version is a glossary of key terms/variables. As a novice, when reviewing more advance topics or referring back to calculations I found myself having to use a considerable amount of time to search the body for these terms.

Another helpful update would be to go through some examples of how to pull this information from stock reports, annuity quotes, etc to help you see how you would find variables that would be used to perform your analyses.

Overall, Mr. Acosta does an excellent job of presenting these concepts in an easy to read and follow format. He also provides you with the reasoning behind various formulas and gives you an opportunity to apply them through examples and a self test. This concise book is worth picking up for anyone interested in an approachable primer to key financial concepts and formulas or as a quick reference for the more advance investor. If you are interested in the checking out the book, there is a link on the image of the book below.

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In the interest of full disclosure, I will receive some sort of loyalty from amazon if you purchase the book through this link. Thanks for reading and supporting my blog.

How being a father has brought out the mustachian in me.

I wanted to make a quick father’s day post to remind myself for one of the main reasons I want to achieve financial independence, and that is for my children.

As I reflect back on my childhood, I remember my parents working during many of my childhood events. They did make it to the occasional band concert and to graduations, but they never saw me run in a track meet and rarely were present for soccer games as a youth. They both worked full time and each had 1-2 part time jobs. I am glad that they were always willing to help pay for educational expenses through high school and emphasized the need for education and the lack of need for the latest toy or video game.

As I raise my kid (soon to be kids in 4 weeks!) I remind myself that being fortunate to have a well paying job and having financial freedom will allow me greater time with my children; if I make it a priority. Many times, I think we need that reminder as we get involved in our careers and advancement. I personally know that as an educator I do let work invade my life and often work off the clock. I am fortunate that I have a boss that sees this hard work and will give me the time off (when possible) to spend time with my family.

However, in the not so distant past, I have had other bosses that have been no where as supportive and knowing that I will soon have the financial means to just walk away if it because a choice between work and my family makes me happy.

 

As a mustachian, I hope to impart some of what I try to live and learn to my kids.

I hope to to teach them:

1. self sufficiency- there are plenty of things we can do ourselves that make us better people. Home improvement and repair projects- that is something I enjoyed doing with my father. Growing our own food, something that I enjoyed learning from both my parents.

2. interest in learning- it is important to encourage this natural curiosity. Right now every day is a new discovery for my son. I hope to continue this as he starts to develop his own interests.

3. exposure to diversity- By learning to do many things yourself, getting out into the actual world, and trying new things I hope to bring diversity to their lives and mine. In medicine, it is easy for your career to consume your life, and I want to open their eyes up to other activities and to other groups of people.

4. money and the opportunities it brings- I want them to understand that money allows you to buy freedom, and this freedom is what really brings you the opportunity to explore new things or you can use it to buy a bunch of plastic crap you don’t need. I hope to teach them that this tool if used correctly will give them many opportunities that others may not be fortunate enough to have.

5. Money is not worth anything if you don’t have others- Money can buy you a lot of crap, but it really does not mean anything if you become a slave to it and you give up the other experiences and relationships that are important to you. Financial independence is a goal, but it should not govern your life. It should guide you into deciding what and who is worth your time.

Well these are the major points that come to mind when I think reflect on being a father. Anyone else have any other thoughts they want to share?

Having Your Cake and Eating It Too

3720165980_cb09acc36b_oThe food industry has convinced many of us of the need to buy food from fancy schmancy groceries stores that charge a premium for “wholesome” food.

I am here to tell you that you can afford to eat delicious and nutritious food and not break the bank. Here are five places you can go to in place of your uber expensive chain grocer.

1. Consider going to a discount grocery store like Aldi.

When I was in college my roommates and I use to make runs to an Aldi out in the barrio. I had stopped once I thought I was too fancy for the store, when I started receiving local ads from my neighborhood Aldi, I came back to the fold, and boy had I been missing out.

So, what is so great about Aldi? First off, it is the sister store to Trader Joe’s. You can get the “generic” of many name brands products including those stocked at Trader Joe’s. You can also get good quality meat, dairy, and produce at a very affordable price. The meat and dairy are generally great deals, the produce, I’ll admit can be hit or miss. They also offer many organic products for whatever that is worth to you.

2. Local bulk grocers or stores like Sprout.

Stores like Sprouts, Natural Grocers, and local bulk grocers off affordable fresh fruit. From my experience the prices are much cheaper than whole foods, especially when it comes to fruit, veggies, and bulk food purchases.

3. Warehouse membership

What can I say, Costco is a great place to buy bulk non-perishables and large amounts of meet. My wife and I will typically buy a large amount on sale, divide it into smaller portions and freeze them for use later. We also like the Costco savings on gasoline, we have not tried out their insurance or mortgage refinance options but have heard great things about them as well.

4. Public Market/Farmer’s Market

My wife and I love the Public Market/Farmers Market, it allows us to support local business and growers. Prices for older groceries are significantly cheaper. We also like buying in season produce from local farmers. In addition to purchases, it is great entertainment and an opportunity to connect with your community.

5. Do it yourself at home- edible gardens, free range chicken, etc.

I have also started home gardening this is my second season and so far with all the rain the plants have been growing well. The vegetables that we have already harvested have been so much tastier than anything we can buy. Nothing like freshly picked food! Also, composting has also helped us save the environment while saving money on fertilizer. Hoping to start free range chicken farming to start harvesting my own eggs.

 

So do any of you use this, or have suggestion for other ways to save money on food while not sacrificing quality? Let me know and thanks for reading!

This old house? What are the tax implications of selling your home?

6a00d834515c5469e2019b01225958970d-500wiSo a couple months back I was talking to a resident about his plans after residency. He had purchased a home where he did medical school and residency and was now looking at options because he was afraid of the capital gains taxes that may be associated with selling. He had thought about renting but did not want the extra work, especially since he was moving several hours away.

He had been told by someone that he would have to sell his home and then turnaround and purchase a home to avoid paying taxes. So while we chatted, I pulled up the boglehead forum for a quick read and to our surprise he would likely not have to pay capital gains provided his home did not appreciate greater than 500,000 dollars over his purchase price (he joint files so both his wife and him can claim 250,000.)

To verify, we went straight to the source: Uncle Sam’s IRS page:

http://www.irs.gov/taxtopics/tc701.html (Publication 523 has all the “fun” reading if you are so inclined). Otherwise here are the high points for anyone making that transition and looking to sell their home.

1. You must have spent at least the last two years in the last five in your home as a primary residence. If you utilized a first time homebuyer credit you need to have stayed 36 months, otherwise you have to pay back that credit.

2. You can exclude up to 250,000 per filer for the sale of the home (500,000 for joint filers).

3. You do not have to file taxes on it if the gain is less than the number in point 2. Otherwise, you have to file and pay taxes on the amount above said number.

4. You cannot deduct a loss from the sale of your main home.

5. If you have more than one home you can only exclude a gain from your main home (where you live the majority of the time). You cannot deduct the gain off of your other home. So if you decide to keep the home as a second home (not a rental, which comes with more issues if you later decide to sell) you cannot exclude the gain if you decide to sell after you have made your new home your main residence.

Hope this short recap helps anyone that is figure out what to do with your home. Unfortunately, there will be many new realtors pressuring you to buy a new home when you come out of residency because it will save you taxes. As noted above, excluding gains on the sale of your home has nothing to do with making a purchase of a new home (with the exception of point 5). I suggest that you wait unless you know that you will not move for the region even if you hate your job.

One step closer to soccer dad…

Funny_Rollin_Minivan_Shirt-2TSo the wife and I finally caved and bought a minivan (Honda Odyssey). We have both enjoyed driving our sedans, but with the expansion of our family (baby 2 on the way) there has been increased pressure to get a bigger car. Especially for the times her parents come to visit since they cannot drive in the US. Our two sedans had been enough, but we found ourselves needing a bit more room.

My wife quickly nixed the idea of a hatchback, we did discuss the option of a SUV, but when it came down to it, we both sucked it up and decided that if we were going to go “big”, we should just get the minivan because it was the most practical. Given the amount of cargo space it can hold for hauls.

Given my mustachian tendencies, I wanted to go with a used car, but the wife wanted a new car (For the sake of family harmony, I agreed with looking for a new vehicle). After several dealerships and a couple months of negotiation we got what we think was a good deal for a trade in (we did not want to shop our old car around, and we took our sweet time making stops to various dealerships when time permitted outside of our other activities). We ended up getting $2000 less than our previous negotiated prices at the final place that we bought from, this price was also below the KBB price for the new car and our used car trade-in.

My wife commandeered my car, and asked me to drive the minivan (I reluctantly agreed to share my baby, but it did make sense she works more often than me). Also, I was comfortable with driving a minivan since I drove one in high school. Our new ride is definitely much more comfortable and I am far less reckless with driving it and with the number of people I cram into it.

What surprised me is that so far we have been driving this minivan much less than our other car. We have increased our occasional carpooling to work (when I am not working evenings or nights, the main reason we have not gone down to one car). Also, I have been much more discretionary about when I take the van out for errands. Probably because parking it feels like a bigger pain in the but than parking a sedan. I was expecting that with the decreased MPG we were going to be spending much more on gas. So far it has not been the case because this new purchase has changed our driving habits and we still default to our sedan when we can drive anywhere together.

Though we did drop a decent amount of cash on this van, we figure we will not have to buy a new vehicle anytime soon because we can continue to grow into it. We will likely use it more for family trips and when we both need the car. Otherwise, we have found that we prefer to drive the sedan when we are together, and I have found that I prefer to walk to the grocery store over trekking over in the van.

sometimes-you-have-to-lose-the-battle-in-order-to-win-the-war1

So even though I may have lost the battle when it comes down to a mustachian motor vehicle purchase, I feel like we have recovered decently from it and continue to move towards FIRE (winning the war).

Has anyone else found any surprising decreases in spending after “upgrading” their car, house, etc?

Fighting the Media and Learned Helplessness, You really can afford to retire.

This evening I was looking at my facebook feed and this article on why the 4% rule only works for the wealthy popped up.

http://www.nbcnews.com/business/retirement/why-4-rule-retirement-only-works-wealthy-n346191

After reading the article and comments, it reminds me how much people need to learn about basic math and finances. Sadly, many of these articles are doom and gloom and don’t provide any of the easy solutions that FIRE proponents advocate.

Simply speaking the 4% rule applies to everyone as long as you adhere to the math. So what math is that you ask?

It basically boils down to two factors: Earning and Spending. Lets start with spending first and then move on to earning.

Determining your spending: 

Before you can reach your goal of financial independence you need to know where you are. In order to do this you need to track your spending. Personally, I use mint.com to track my spending. It lets me see my “fixed” monthly debt (mortgage payments and student loans) and my other expenses- utilities, groceries, child care, leisure/extraneous spending. Looking at these gross numbers you can get an idea of what your annual spending is, some of this will change with retirement (that is one thing the above article got right).

Let’s just say that my anticipated expenses will be 50K a year based on my current spending and the wife and I make 120K a year- this should give me some wiggle room since I should not have child care, mortgage, and student loans, but I may have other medical expenses (hopefully, not).

Figure out your expected earning rate (return rate):

How much do you expect to earn, and how that helps you reach your retirement goals.

Now you have to decide how much you expect to earn off your investments. For the sake of argument let’s anticipate a 7.94% stock return on average and a 4.06% bond return loosely based on the the following link: average http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histret.html

So if I decide to leave 80% of my money investments in stock and 20% in bonds I can expect the following return:

80% x 7.94% stock return + 20% x 4.06% bond return= 6.35% + 0.81% =7.16%

If we expect that up to 3.1% of our money would be taxed or loss to inflation (unlikely given current environment and other vehicles like Roth IRA and HSA) that gives us a 4% earning on our investment.

Figure out your nest egg number:

Based on the 4% rule how much do we need to retire:

Total Retirement fund x earning rate= spending amount

TRF x 4% =$50,000 in our scenario

We would need 2.0 million in order to retire taking into account inflation based on our scenario. It seems like a lot, but it really is not that much once you take in the power of compounding interest. (it is even easier and you likely need an even lower number if you optimize your IRA, Roth, HSA, etc).

Figure out how long you need to keep working:

So let’s run the math on this to figure out how long we need to work in order to retire:

If we start at 0 and put away 70k (120k-50k) a year at earn 4% on it post inflation and taxes it would take us 19 years based on compounding interest calculators.

I used this calculator to help me with the math: http://www.moneychimp.com/calculator/compound_interest_calculator.htm

This same math works for everyone regardless of if you are “poor” or “rich” in the article.

Of course if you don’t want to save this much you have a couple options:

1. Increase earning:

A. You can continue to work part time during retirement- rental income, part time work, etc. This will reduce the money you will need to take out from your investments so they can continue to grow.

B. Change your investment allocations: i.e. increase the proportion of money you have in stocks since they have higher returns. The downside is the relatively higher volatility in stocks, I personally plan to keep 5 years worth of spending in bonds or other “safer” investments to help me weather the storm during bear markets.

2. You can cut down your spending.

A. You can downsize your home once your kids move out and then actually invest any possible earning you have on it.

B. You can cut down your luxury expenses, and find other fun free things to do like enjoy the outdoors and/or spend time with family and friends.

Hope this posts helps put things in perspective. Let me know what you think about it and feel free to post any suggestions.

Don’t Lose Faith You Can Do It! Becoming a Financial Literacy Master

0Young grasshoppers like many of you I am occasionally frustrated by how much there is to know about finances. Just like in medicine, there is a lot to learn and the path to knowledge is often fraught with poor advice. In order to keep from losing faith in my abilities to grow my financial ninja skills, I often have to remind myself about my journey in medicine.

I am sure that many of you in just about any skilled profession (Lawyer, dentist, accountant, engineer, teacher, electrician, chef, entrepreneur, plumber, mechanic, carpenter, etc) there was a steep learning curve, and at times it was difficult to know where you were on that curve.

Learning-CurveAs a first year medical student you knew that you were clueless as you started taking that first sip out of the fire hydrant of knowledge. You were naively confident by the time you graduated medical school. You thought you knew what the practice of medicine was until you started residency, from there you realized how little you really do know about applying your new found knowledge to actually care for someone. The curve up to mastery is and still continues to be bumpy but it starts out during residency and really takes off as you practice independently as an attending.

When I get discouraged, I try to remind myself that I am back on this learning curve. When I first started, I knew how clueless I was about financial literacy. As I would read (books, blogs, forums) I started to feel much more confident, I definitely did gain knowledge. However, it was taking that first step that may me realize that there will be bumps along the road but that there are others out there that are willing to help you attain mastery.

And remember, when “the man” sweeps the leg, don’t give up!

sweep the leg karate-kid

 

 

Balancing Value and Price

Sorry for the gap in postings. I am heading home from a month long trip overseas, but I wanted to make this quick post to talk about the importance of balancing value with price. This trip definitely served as a lesson in picking value over just the best price.

The flight overseas and the current return trip (leg 1 completed of 3) reminded me of the need to balance so that you do not fall into the trap of just saving money for the sake of just saving it (money worship).

When we bought tickets my better half and I discussed a number of options because we were flying overseas with our infant. The flight consisted of 3 legs with a total transit time of over 24 hours. This has definitely been worth it. The flight attendants on the asian carrier we are flying with have been outstanding. They are always willing to help (i.e. respond to request for milk for our little one and not throwing hot meal trays in our lap while the little one is sitting with us- a true recipe for disaster). We will gladly pay more to fly with this airline over the carrier we flew to Taiwan with or just about any US carrier we have flown with. The extra hundred dollars was well worth it on a 30 hour trip.

On the other end of things, we learned never to buy the cheaper good diapers without testing them first. After 2/2 diapers full leakage we should have stuck to our usual brand that was a bit more expensive for our return trip. In hindsight, we should have saved some of those and field tested the cheaper diapers while in Thailand. Not while on a plane.

So remember boys and girls, frugality is not just about saving money but choosing to spend money wisely. Sometimes a bit more in cost is worth the convenience/sanity.

In what areas of your life do you pay more to ensure quality? Post in the comments below!