Our Shocking Investment Strategy… Individual Stocks

This is the second in a series about how we do things differently.  Check out the companion post, Four Personal Finance Rules We Ignored (And Maybe You Should Too) for more about how we disregarded the advice of a popular mainstream personal finance personality to forge our own path to debt freedom and financial independence.  

I got interested in the stock market at an early age.  Around fifth grade, my parents helped me cash in years of birthday money to buy shares of Merck, Disney and TWA.  Merck was a broker’s suggestion, but the two other purchases were based on my own likes as a young consumer (including a love of travel that continues today!)

When I sold those shares of Merck and Disney shortly before college graduation, thanks to years of market growth and reinvested dividends, I had more than doubled my money.  And while TWA filed for bankruptcy just a few months after I bought the stock, it taught me a valuable lesson about risk:  No company, regardless of its size, reputation, or history, is infallible.  When it comes to investing in individual stocks, while you can make big gains, you also have to be prepared to lose it all.

Like many of my personal finance friends and idols (including Mama Fish Saves, Our Financial Path., Budgets are $exy, and of course, Jack Bogle and his devotees) our holdings include a variety of low-cost index funds.  Index funds replicate a market or segment of the market, such as the S&P 500, Dow Jones Industrial Average, FTSE 100, Nikkei 225, or the MSCI EAFE.  They are passively managed, and because of minimal buying and selling, fees are low, making them a popular investment vehicle.

Where our philosophies start to differ is when it comes to individual stocks, which are also a key part of our portfolio.  Our strategy is simple:  We regularly take $1,000 and buy shares totaling that amount in companies whose goods, services or commodities we see used in our daily lives and we believe will experience continued success.

Ideally, we prefer to buy  income stocks, or stocks that generate dividend payments, which we reinvest into more shares of that stock.  But you’ll see in the interactive visualization created by my smarter half, Ryan Sleeper, we also have a few growth stocks, which represent growing companies that reinvest their earnings back into the company instead of paying shareholder dividends.  The cost we incur is a one-time $7 per trade, and we buy and hold, so fees are still comparatively low.

Here’s how we’ve done since starting this strategy in 2013:

(Clicking on the image will take you to an interactive version of the visualization)

     

A few standouts include:

Transocean, Ltd (RIG) – One of our first stock buys, this was a broker pick.  While luckily it didn’t turn us off of individual stocks completely, it did teach us to go with our gut and buy what we know, and not what an adviser recommends.

3M, Johnson & Johnson, Microsoft, and Disney – These are all brands that every American has and uses on a daily basis.  Think you’re a uber-cool SINK or DINK and Disney isn’t reflective of you?  Think again.  Disney owns Marvel, The History Channel, Lifetime, A&E, ESPN and the American Broadcasting Company, better known as ABC.

Ulta and Amazon – We bought Amazon around the time they released Fire TV, knowing that an increasing number of Americans are cutting the cord and choosing streaming television and movies, as well as foregoing the traditional bricks and mortar shopping experience for one involving Prime (and for me, a glass of pinot).  I’ve also been a fan of Ulta for a few years.  I appreciate that they cater to a range of demographics by carrying drug-store brand beauty products as well as luxury labels.  I saw their growing presence in our city as a sign that others must like them too!

Tableau – My husband makes his living using this software to interpret data for corporate and non-profit clients, teaching others how to use it, and evangelizing its functionalities.  It took some convincing, but my husband believes so strongly in this product, that I relented.  And so far, he’s been right.

For us, including individual stocks as a part of our larger portfolio keeps us thinking, learning and engaged in our investments.   And it’s another way we keep personal finance, personal.

The author of this post is not an expert on buying and selling stocks or any other investment vehicle.  These and all investments come with a level of financial risk, which are the sole responsibility of the investor.  This post and commentary contained within is not professional advice or an endorsement or recommendation of any individual stock, company,  investment or strategy.

Four Personal Finance Rules We Ignored (And Maybe You Should Too)

This is the first in a series about how we’ve disregarded the advice of popular personal finance personalities to forge our own path to debt freedom and financial independence. 

Personal finance is just that:  Personal.  Your interests, values and dreams may be different than mine, and that’s how it should be.  In How Our Home Is Helping Us Achieve Financial Success, I talk about how we’ve chosen to “live little” in order to prioritize spending on things more important to us, like travel and sampling every bottomless Bloody Mary brunch in the greater metropolitan area.  But if you prefer mimosas at home in your McMansion, there is nothing wrong with that!  So when it comes to charting your course for financial success, it’s important you customize a plan that aligns with your individual goals and timelines, as well as how you personally manage money.

Here are just a few ways we tailored (or ignored completely!) the advice administered by today’s most well known personal finance experts, and took a road less traveled:

1.  Plastic is fantastic

There are popular personal finance personalities who will tell you to cancel your credit cards and only carry cash.  This is fabulous advice if you struggle with charging things you can’t afford.  But, that’s. not. everyone.  Since our written budget is what holds us accountable, we use credit cards as a tool, utilizing the consumer protection that comes with using plastic and leveraging them for free travel (right now we’re working toward the coveted Companion Pass thanks to our Southwest-branded Chase card).  We pay off any balance weekly to hold ourselves accountable and avoid paying interest.

2.  We’re all special snowflakes

The most popular strategy for paying off debt is the snowball method.  This philosophy recommends you pay off your debts in the order of the amount owed.  Continue to make the minimum payments, except on the debt with the lowest balance.  Once you’ve paid off that first debt, you move to the next debt with the lowest balance.  This method assumes you’ll find it easier to stay motivated when you’re rewarded more quickly with the elimination of individual debts.

In lieu of snowballing our debts, we choose the avalanche method, saving us time and money.  Instead of listing debts by amount owed, this philosophy had us prioritizing debts by interest rate, starting from highest to lowest.  You will end up paying less interest and eliminating your debt-load more quickly by tackling your debts by interest rate, so long as you can remain committed without the psychological boost the snowball method offers.

3.  Not all debt is equal

The same personal finance gurus often recommend stopping any retirement savings while you’re getting out of debt.  Sure, if you’re buried in high-interest credit card debt, stopping your contributions may be a smart idea.  But, if you receive a tax benefit from your interest payments (including interest paid on a qualifying student loan or mortgage), or your debts are no-interest or low-interest (like your Prius payment or the mid-century modern living room set you just bought on a store charge card), you may come out ahead in the long run to keep contributing while still paying off debt.

4.  Capitalize on compound interest

Compound interest is when an original deposit or investment earns interest which is then added to the principal amount and reinvested, earning more and more each period as the account balance grows larger from interest earned.  Compound interest means the balance of an account will continue to grow because of interest earned, even if the account owner doesn’t make another deposit.

Even though we were committed to becoming debt free, instead of stopping our retirement contributions while aggressively paying off our $85,000 in student loans, we kept saving.  We understood that the greatest financial advantage we have at this point in our lives is time.  Traditional retirement age is more than thirty years away, meaning anything we contribute now has decades to double.  We also knew most accounts have a minimum annual contribution limit, so in the future we wouldn’t be able to contribute more than the max to make-up for lost years.

Before we dedicated every spare dime in our budget to settle-up with Sallie Mae, we contributed the minimum to get the match in our respective employer-sponsored retirement accounts.  In addition to taking advantage of free money from our employers, we also made sure to fully fund our individual ROTH IRAs.  The distinction of a ROTH is that it maximizes the principle of compound interest by offering tax free growth, meaning that since income tax has already been paid on those dollars before they’re deposited, at the time of withdrawal, those monies will be tax free.

There are hundreds of television and radio shows, books and blogs that dictate a detailed plan for getting out of debt.  It’s great to learn from a variety of sources and smart perspectives, but it’s important for you to discern which parts and pieces will help you achieve YOUR definition of financial success.

Next in the Series:  Our Shocking (Yet Successful) Investment Strategy… Individual Stocks!

The Top 7 Tax Credits to Maximize Your Return in 2017

Recently, Mother Nature temped us with spring temperatures here in the Heartland.  After a few days of open windows, patio drinks and outside workouts, winter weather returned, but that dose of Vitamin D served as a sunny reminder that the seasons are soon to change – and the end of Tax Season is near.

Even with a few extra days to file, this year’s deadline of April 18 is just a page on the calendar away, so if you haven’t already finished your return it’s time to get started!  As with most areas of personal finance (and life in general), being organized and allocating enough lead time to assembling and preparing your return will reward you in the end.

When you’re pulling together all of the important paperwork to document and include in your return, there are two considerations to keep in mind that will help you maximize your tax return and ensure you’re paying only what you owe or getting the biggest refund back:  deductions and credits.

A deduction is a qualifying expense which reduces your taxable income by the same percentage as your tax rate.  This means, if you fall into the 25% tax bracket ($37,651-$91,150 for a single person or $75,301-$151,900 for married couples filing jointly) a $1,000 deduction saves you $250.  We detailed common deductions earlier this year in the post The Top 7 Tax Deductions to Maximize Your Return in 2017.

A credit lowers your tax bill dollar for dollar, so a $1,000 credit reduces your tax bill by $1,000 no matter your tax bracket.  There are two types of credits, refundable and nonrefundable.  Nonrefundable credits allow you to reduce your tax liability to zero, but any overage will not result in a tax refund.  Any surplus from refundable credits can come back to you as a refund.

Child Tax Credits – This is a nonrefundable credit of up to $1,000 for each qualifying child. Qualifying children must be related to you, under 17 years old, eligible for you to claim as a dependent, and live with you more than six months out of the year. You must also provide at least half of the financial support for the child. 

Earned Income Tax Credit (EITC) – Offers savings to lower income workers and families. The Internal Revenue Service website provides resources for determining your eligibility for this refundable credit.

Adoption Credit – If you adopted a child domestically, internationally or from foster care, you may be able to take a nonrefundable credit of up to $13,460 for qualified expenses incurred, including adoption fees, court costs, attorney fees, and travel expenses. If you adopted a special needs child, you may be able to take the credit even if you didn’t incur any adoption expenses.  Step-child adoptions are excluded from this benefit.

Energy Savings Credit – You may qualify for a credit if you installed a solar, wind or geothermal mechanism for energy collection and use in your home, or purchased a fuel cell or electric vehicle.

Retirement Savings Contributions Credit (Saver’s Credit) – This credit rewards lower income tax payers for making eligible contributions to their traditional or ROTH IRA or employer-sponsored retirement plan. The amount of the non-refundable credit is 50, 20 or 10 percent of retirement contributions up to $2,000 (or $4,000 if married filing jointly), based on adjusted gross income.

Child and Dependent Care Credit – If you have a child under the age of 13 or are responsible for a physically or mentally disabled adult who required and received day care by a non-related provider while you and your spouse worked or looked for work, you may qualify for this credit.

The amount of your credit is based on how much you spent (less any employer provided child or dependent care benefits, including pre-tax flexible spending account dollars), as well as your income.  The higher your income the lower the percentage of costs you can claim, though even those in the top tax bracket can claim 20% of their costs.  Maximum credit is $3,000 for one child or dependent adult enrolled in day care, or $6,000 for two or more.

American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC) – AOTC is a credit for tuition paid by you or through borrowed funds, such as student loans, for the first four years of college.  You can get a maximum annual credit of $2,500 per eligible student in your family. If the credit brings the amount of tax you owe to zero, you can receive 40 percent of any remaining amount of the credit (up to $1,000) as a refund.  To qualify for the AOTC, the student must be pursuing a college degree, be enrolled at least half time for at least one academic period during the calendar year, not have claimed the AOTC or the former Hope Credit for more than four years, and not have a felony drug conviction.

Non-degree seeking students may claim the LLC for courses taken at an accredited institution to develop or improve their job skills.  There is no limit on the number of years you can claim the non-refundable LLC, which is worth up to $2,000 annually.  Between the AOTC and the LLC, the LLC has a much lower income maximum.  You cannot claim the AOTC and the LLC in the same year.  You cannot claim either the AOTC or the LLC if your education expenses were reimbursed by an employer or funded through grants or scholarships.

The deadline for filing your 2016 return is April 18, so you have three extra days this year to make sure you’ve accounted for every single credit and deduction that will benefit you.   

And if you’re filing online, don’t forget to use a portal!  Both Ebates and MrRebates.com offer cash back from H&R Block and TurboTax online or you can earn 1,000 miles by going through Southwest’s Rapid Rewards shopping portal.

Disclaimer:  Many of the credits mentioned above have income minimums or maximums, as well as other qualifying criteria not expressly mentioned.   I am not a tax or accounting expert, so I encourage you to seek the advice of a professional to confirm your individual eligibility for these and other credits and deductions.

How Our Home Is Helping Us Achieve Financial Success

One of the biggest factors in our ability to live below our means is the choices we’ve made when it comes to housing.  Here’s how living little has helped us pay off our student loans and other debt, save for retirement, build an emergency fund, and become self-employed, plus ways you can transform your home from a money pit into a financial asset.

When Ryan and I first met, he had just moved back to Kansas City from San Francisco.  Instead of renting an apartment in one of the new luxury complexes that scatter the suburbs, he leased a one-bedroom unit a mile from his work, built circa 1970.  While it might not have looked like much from the outside, this place was plush.  For a fraction of the price our trendy peers were paying, his apartment was outfitted with all of the appliances and fixtures you would need, plus it had a working fireplace.  We still talk about how much we miss that fireplace!  Saving big bucks on his rent meant that he could buy me this, without going into debt:

Once his lease ended, Ryan moved into the house I bought before we met.  After the stock market crashed in 2008 and the housing bubble burst in many parts of the U.S., the government offered significant credits for first time home-buyers.  I took advantage of the 2009 legislation that entitled new buyers a tax credit totaling 10% of the purchase price of the home or a maximum credit of $8,000.

I’d only been out of school and at my job for two years at that point, and while it was a stretch, I saw opportunity.  I was approved for a staggering $225,000 at 5.25% on a 30-year loan, which I remember people at the time telling me that rate was a steal!  After setting my spending cap well below the amount Wells Fargo told me I could afford, I started house-hunting, targeting a popular suburb in an excellent school district that had charm, character, and most importantly, great resale value.

At a little over 900 square feet of living space, my 1.5 story Cape Cod with three bedrooms and one bath, an unfinished basement and a single-car garage was more than enough space for just me.  In fact, before Ryan moved in, the upstairs bedroom was completely empty.  Even though he left his old futon and hand-me-down mattress in the dumpster at his old apartment complex, we were still a little apprehensive about merging our stuff and the prospect of sharing a single, tiny bathroom.

Turns out, sharing a bathroom was no. big. deal.  In reality, some of our best conversations happen in the morning, while one of us is in the shower and the other one at the vanity.  And while it may be small by today’s standards, when it was new, our post-war tract house built in 1951 likely housed a growing family with children, all of whom shared that single bathroom.

Going from paying for two homes to one, helped us free up money in our budget for other goals.  Since moving in together, we’ve had raises and job changes, refinanced into a 15 year mortgage at a much lower rate, rid ourselves of private mortgage insurance (PMI) and, after paying off our student loans in 2016, are now sending extra money to principal every month.

Living little also means lower utilities.  Even in an area where the climate has us constantly running either the furnace or central air, we pay less than $100 a month for natural gas and electricity, combined.  When you add up our utilities, insurance, mortgage and taxes, we’re spending about 15% of our take home pay on housing expenses.

Here are ways you can cut costs and save money on living expenses:

  • Don’t rent or buy more than you can afford. There’s nothing wrong with a big, stately new home or a loft with urban charm, if that’s your financial priority.  But you can’t have it all.  Build your budget around what matters most to you.  If that’s your home, you’ll need to find cuts in other areas to keep your budget balanced and healthy.
  • Find a roommate. Move back in with mom and dad.  Rent a room, either on Airbnb or by connecting with your local college or medical school to see if they have students in need of short term housing during their practicums, rotations or summer semesters.
  • Regularly look for ways to pay less. Compare renter’s or homeowner’s insurance rates regularly.  We switched and saved an extra $500 by changing companies and paying in full for the year.  If you have the Internet or cable, do the same thing.  Call and see if they’d be willing to lower your cost to keep you as a customer.  Trim your utility costs with a programmable thermostat, by dressing for the season instead of running the furnace or AC, insulating windows, outlets and attics, and by unplugging electronics while not in use.
  • Watch for hidden costs. Our homeowner’s association fees are a whopping $15 a year.  Sure, a community pool, fully-equipped gym, lawn and landscaping services, and other amenities may seem attractive, but you’re paying an inflated price for them.  Consider an apartment complex or a neighborhood without these up-charges.
  • Check on interest rates. Refinancing comes at a cost, both monetary and time, but it could be worth it.  When we refinanced, it not only lowered our interest rate, but the updated appraisal showed that the home had increased in value by nearly 15% in five years.  This increased value meant we were that much closer to having paid down the 20% required to get rid of PMI.
  • Consider location. While we live in a relatively low cost of living city, housing costs decrease the further you live from a major metropolitan area.  While I’m geographically tied to my job, I often think about the benefits of moving back to my hometown, where you can buy a house the same price as a new SUV.  With the rise of telecommuting, if you can find a job that pays big city wages, small town living can offer a financial edge over your downtown-dwelling or suburban HOA paying peers.

While timing has helped us, we’ve also been strategic in the choices we’ve made to rent, buy and now, stay in our current home.  Where you live is one of the biggest financial commitments you will make.  Avoid becoming house-rich and cash-poor by making smart moves.  Literally.

Which Meal Subscription Service is the Best?

This is the conclusion of a series offering reviews of the top meal delivery services, plus tips and tricks on how to get these subscriptions shipped straight to your kitchen for a fraction of the advertised price.  Posts include A Low Price for PlatedHow to Hack Hello Fresh, Home Chef Coupons and Cash Back, and Save Big on Blue Apron.  Here’s how these competitors compared:

Best value:  The pre-discounted advertised price for Blue Apron’s two person, three meal per week plan is $59.94.  Through Ebates I was able to redeem a $30 off coupon and a $7.50 cash back rebate, for an adjusted total cost of $22.44 or $3.74 per meal.

Honorable mentions:  The pre-discounted advertised price for Home Chef’s two person, three meal per week plan is $59.70.  But after redeeming a generous 20% cash back rebate from MrRebates.com, plus an automatic $30 credit for first time customers, my adjusted cost was $23.76 or $3.96 per meal.

The pre-discounted advertised price for Hello Fresh’s two person, three meal per week plan is $59.94.  I scored $25 off through MrRebates.com by using the coupon code FRESHNEW50HF, which is advertised as $50 off your first two orders but still worked for this single purchase.  After my coupon redemption and a $5.94 cash back rebate, my adjusted total cost was $29 or less than $4.84 per meal.

Worst value:  The pre-discounted advertised price for Plated’s two person, three meal per week plan was the highest at $72.  I was unable to find a cash back rebate through Ebates or MrRebates.com, or points and miles for purchasing through any other shopping portal. I used Google to find a $30 off coupon code, which is better than their advertised offer of your first night free, valued at $24. After coupon redemption, my total cost was $42 or $7 per meal.


Most family size and number of meal per week options:  Home Chef offers plans for two, four or six people.  Any of those family sizes can pick between two and six meals delivered per week.

Honorable mention: Plated offers two, three or four meal per week plans for families of two, three or four.

Least family size and number of meal per week options:   Blue Apron’s only two-person plan includes three meals per week.  For a family of four, you have the choice of receiving two or four meals per week.

For two people, Hello Fresh offers plans that include three, four or five meals per week. But, families of four only have the option of three meals per week.  And if you choose their vegetarian plan, regardless of whether you’re ordering for two or four people, you are limited to three meals per week.


Best menu options:  With Plated, each week you can pick between eleven different meals, seven unique to that week, as well as four “Encore Recipes,” top-rated customer picks available all month.

Home Chef offers ten different recipe choices per week, and you are able to select meals by dietary preference (low-calorie and low-carb) as well as choose to avoid foods that may contain common allergens or aren’t permissible for consumption by certain faiths (soy, nuts, gluten, dairy, mushrooms, red meat, pork and shellfish).

Honorable mention:  There are six Hello Fresh meal options from which to choose every week and you are given complete freedom when it comes to choosing your menu.

Worst menu options:   With Blue Apron, you have six options, but aren’t given complete freedom when it comes to choosing your menu.  Based on your initial selection some second and third choice options may be blocked, which I assume is to keep the customer from choosing the three meals with the costliest ingredients.


Most delivery dates available:  Hello Fresh delivers on Tuesday, Wednesday, Thursday, Friday and Saturday.

Honorable mentions:  You can choose Wednesday, Thursday, Friday and Saturday (residential only) delivery options for Blue Apron.

Home Chef can arrive on Wednesday, Thursday or Friday.

Fewest delivery dates available:  Plated only delivers on Wednesday and Saturday.

When you looking strictly at the cost, Blue Apron was the clear winner.  But they didn’t offer the flexibility of Hello Fresh, Home Chef and Plated, when it came to menu selection, delivery dates or family size.  If  you’re thinking about committing beyond the introductory period, those benefits may be just as important.  Bon appétit!

All opinions are exclusively my own.  Prices and available discounts in these posts are current as of their publication date.  I personally paid for all meal delivery service shipments referenced, and all opinions are unbiased and completely my own.  I may receive a commission if you sign-up for these services, as well as Ebates or MrRebates.com using my embedded referral links.  (Please and thank you!)