Saturday Reading Roundup

Yeehaw!

Wanted to share a few articles and podcasts I enjoyed this week. If you’re looking for some informational content over the weekend check it out.

  • Same sex sexual behavior in the animal kingdom (Economist article) – I found this short article very interesting, especially the angle of human bias in the research world skewing prior studies.
  • Investing advice for new investors (Stacking Benjamins podcast) – I really enjoy the Stacking Benjamins podcast and this episode had good, functional advice and included one of my favorite panel members on the show – Paula Pant. Recommend subscribing if you have a general interest in investing.
  • Capitalism is a blessing debate (Intelligence Squared podcast) – This podcast is debate style, typically with four participants. I enjoyed this episode although (spoiler alert) capitalism loses because Marx is way cool. I was on team capitalism and thought their arguments were much better but maybe I’m not a real millennial snake person.

To close off this brief post, here’s my favorite photo I took this week. It’s an Oak tree in Balboa Park, part of the Bennington Memorial Oak Grove adjacent to Golden Hill. Oaks are awesome and palm trees, though associated with California due to sketch tourism marketing over the last century suck. They’re not even actually trees.

Have a great weekend!

10 Years Riding The Bus = $84,000 Saved

Sitting on the couch last night was chatting with the spousal equivalent (“SE”) about how NextDoor is awful. Cue a recent bus rider shaming post that really bothered me:

I had to remove the screenshot from Nextdoor as it was posted against Nextdoor rules. I wasn’t aware and apologize for the error. The remainder of this post has been unchanged.

We talked a bit and then realized SE has been riding the bus to work, or biking, for the last 10 years. Wow, time flies. Somehow, neither lice nor French whore encounters have been a problem. #praise

There are a number of reasons that transit SE likes to support and use transit:

  • Traffic congestion reduction (buses move far more people than the typically single occupant cars common in the US)
  • Cost savings
  • Reduced environmental impact
  • Social unity / exposure
  • Etc

On the cost savings front we estimated that over the last 10 years we saw approximately $84,000 of savings for our family.

  • $200 per month parking x 10 years = $24,000 (Comparison from co-workers)
  • $6000 per year vehicle cost x 10 = $60,000 (About 1/3 less than the average cost per year from AAA since Cali is hella expensive but we’re cheap. Results may vary.)

SE bus cost is covered by employer so if paying the $72 monthly out of pocket would reduce the savings by $8,640 for a total 10 year savings of roughly $75,360.

We took the savings and went on a fat family trip to Vegas and Hawaii which was awesome. Just kidding. We put most of it into index fund investments to grow and throw off dividends until the end of our days.

Wanted to share our public transit savings story in case you’re also interested in saving the better part of $100k every 10 years and putting it to work for you instead of sending it out the exhaust pipe.

Bikes and scooters are fun.

Free Rides with Jump (Uber) Bikes and Scooters – New Yellow Icon Drop Zones

Jump is a company owned by Uber that operates dockless electric scooter and bicycle rentals in a number of cities. I’ve been riding their electric bikes regularly for the past few months and they are the best dockless bicycles I’ve tried. If you are in a city they operate in I highly recommend trying them out – they’re fun, easy, and fast.

A couple of weeks ago I noticed a new feature on the Uber app (which is the app used to rent the Jump bikes and scooters). The map that shows available bicycles (red) and scooters (green) now had yellow icons as well. The below map of San Diego shows this:

When I clicked on the Yellow Icon for more information I was greeted with a message that any trip completed in this “drop zone” would be free and potentially also credit my account with reward points. I was skeptical but took a regular trip and parked it in a drop zone. When my billing receipt for the trip came the total cost was $0.00 instead of the current pricing of $.15 (15 cents) per minute. Awesome! I haven’t been able to figure out if I’m also accruing reward points, or what those points are, to date.

The information in the app is worded a little confusing but based on my experience of about eight trips ending in drop zones over the past two weeks they have all been free. The drop zone locations have remained in the same places as far as I can tell, which is convenient since there’s one a few blocks from my home.

Hope this information is helpful and that you can check out a (free) Jump ride soon. Cheers!

Real Estate Liability Protection – “The Protection Pyramid”

I wanted to share some thoughts about liability protection in real estate. It’s a frequent topic if you’re interested in investing in real estate and is often centered about how best to hold property – in an LLC, corporation, etc. This is certainly a point to consider but there are many other ways to go about addressing liability and working to reduce your risk. Following is a summary of the biggest areas I’d consider.


I’ve tried to build this pyramid model with the base being the broadest type of liability protection and getting more specific going up. Not every piece of the pyramid will make sense for every property or situation – the intent is to have a comprehensive set of options to consider.

  • Legal
    • Entity Form – Holding a property in an LLC, S Corporation, or other entity form can be considered to separate assets from other assets or investment assets from personal ones. Creating an entity will likely include annual fees and filings with the state. There are different tax and legal elements to consider when selecting a form.
    • Revocable Trust or Will – As part of estate planning a revocable trust can be considered in addition to holding property in an entity or directly.
  • Insurance
    • Property Insurance – Property insurance is typically required if property is purchased with debt and is likely a good idea in case of accidents.
    • Umbrella Insurance – Umbrella insurance goes “on top of” property insurance to provide additional liability for incidents not covered by property insurance or exceeding the insurance coverages.
    • Specialty Insurance – Earthquake, flood, or other insurance policies that may make sense depending on the property location.
  • Operations
    • Property Management – Hiring a professional property manager may be a good idea to make management less time intensive and to have a professional on your team. Additionally, this may reduce your liability related to tenant relations and selection.
    • Diligence
      • Due diligence (before purchase) – Inspections of the property before purchasing can identify potential issues in advance to address or avoid. A general inspection as well as specific inspections for foundation, roof, termites, radon, and other areas can be considered.
      • Ongoing diligence – Annual inspections of the property with an eye to potential water damage (roof, plumbing), safety equipment (smoke detectors, CO detectors, fire extinguishers) can identify current or future concerns to address and avoid ongoing damage.
      • Tenant screening – Considering criminal background, credit history, and other criteria when screening tenants can reduce liability.
  • Equity
    • Equity Stripping – To reduce the amount of value that is potentially at risk in a property you can “strip out” the equity in the property by refinancing the property and taking cash out or through other means.

I hope this set of liability considerations is helpful to you and best wishes in your real estate investing!

A property currently for sale in San Diego (from Redfin.com)

Note: The content of this post is for informational and discussion purposes and is not financial or tax advice. Consult with an advisor before relying on this or any information.

Raising An Investor

Raising children entails a lot of trial and error, and hoping that you aren’t screwing things up too much along the way. As our kids have gotten older we are moving into new subject areas, one of which is money. We want to expose our kids to good money habits while also giving them agency and discretion. Investing has been an area that has been going well so far so I wanted to share our experience with others in the same boat.

We set up an investment account at Betterment for each of the kids when they were born and have put in $25 a month since then. Now that the kids are old enough to be involved there is an account history and returns that we can go over together and learn together about expenses, how returns from appreciation and dividends work, and that there is risk involved in investing. Although we primarily use Vanguard for our own investments I like the aesthetics and diversification into multiple index funds / ETFs that Betterment makes more automatic – it seems to connect with the kids better and is more straightforward for them to understand.

Here’s the actual performance of one child portfolio over the past few years. The right graph includes a comparison to the S&P 500. Betterment currently charges a .25% management fee on top of the fees for the funds invested in.

[Note: We have chosen to hold the investment accounts for each of our children in our name so that we have control of the funds until we decide to give over full control. We’ve done this for reasons related to age and maturity, impact on college scholarships, and other considerations.]

Now when the kids receive some money for a birthday or we cash in the coins in their artisanal hand-crafted wooden banks we let them decide what to do with it – spend it, give it away, put in the bank, or invest in their Betterment account. It’s been fun and over the past year they’ve mostly chosen to invest their money, roughly 80% of their “earnings” going into their respective Betterment accounts. We sit with them at the computer but let them use the mouse, type in the contribution and notes, etc.

Here’s the current default allocation within Betterment for one of our child accounts, at a 95% stocks / 5% bonds allocation.

We’ll see how it goes in the future when there are more dollars at stake and more competing options vying for their attention and funds. From the early returns it’s been a simple and effective way to introduce investing for our family.

You can check out Betterment at: https://www.betterment.com/

Calculating compound growth rates like a boss (baby)

Small Tax Refund? Take 5 Minutes To Make It Larger in 2019

It’s tax filing season in America and given the new tax laws that were effective in 2018 there’s a lot of news about filings and refunds. Many headlines are making hay of the smaller tax refund amounts seen so far. [Note: The amount of your refund is not the amount of tax you pay.]

Here’s an example article from yesterday from Forbes:

As Tax Season Rolls On, IRS Still Reporting Fewer Returns & Smaller Refunds

If you are an employee and receive a W-2 with your wage earnings at the end of the year you can take action now to increase your refund in 2019.

Form W-4 is the IRS form you fill out when you start a job and it tells your employer how much to withhold for taxes from your paycheck. It’s a short, simple form but has a big impact on how much of your paycheck is paid to the government during the year.

The form is mostly your personal info – name, SSN, address. Easy enough. The important parts for the amount of tax withholding are Line 5 and Line 6.

Line 5 – How many allowances you’re claiming. Basically how many people will be on your tax return, usually how many people are in your household. The smaller this number is, the larger the taxes withheld. Entering 0 yields the largest withholding.

Line 6 – You can choose an additional amount to withhold on top of the amount determined by the Line 5 Allowances. $100, $500, or whatever number you want to enter will increase your tax withholding. The bigger this number is, the larger the taxes withheld.

If you want to increase your tax withholding, and most likely your tax refund, in 2019 simply complete Form W-4 and send to your company payroll or HR department.

There’s a debate about whether receiving a refund is a good thing or bad thing. Many, like this Motley Fool writer or this article from US News, think refunds are bad – an interest free loan to the government. I mostly sit on the side of refunds being a good thing. This is primarily because as a CPA I’ve seen people have to deal with a $5,000 tax bill as well as a $5,000 tax refund. It’s typically much easier to deal with a large windfall rather than a large amount due. I personally like to have high withholding because it helps to cover taxes due from side hustle / self-employment income that can be tedious to separately calculate and remit during the year.

However you feel about refunds, if you do want to alter your withholding the simple steps above should help you do it. Cheers.



Note: The content of this post is for informational and discussion purposes and is not financial or tax advice. Consult with an advisor before relying on this or any information.

Some Great Books For Free (Sharebook)

Looking for a good book to read? I have a number I’m done with and happy to send your way if interested. The photo shows the titles and the following list is my ranking from best to worst. Use the request link below if you’d like a book to enjoy and I’ll mail it your way. Cheers!

Some great titles in this stack
  1. The Undoing Project by Michael Lewis – Excellent book on two of the most significant economists of the 20th century.
  2. The Golden Compass by Philip Pullman – First book in the His Dark Materials series. Great book and fantastic series despite the floppish movie take. Will soon be adapted by HBO.
  3. Sapiens by Yuval Noah Harari – A short history of humanity and the first in a “sort of” trilogy by the author. Explores big trends over the years and why people are like we are. On the top of many “big thinking people” book lists.
  4. The Hedonism Handbook by Michael Flocker – Bought this as a joke gift at Powell’s bookstore in Portland, OR. Ended up reading it myself and loving it. Light reading about enjoying life and not worrying too much because we’re all gonna die anyway. #whysoserious
  5. Big Shifts Ahead by John Burns – An enjoyable read that breaks down the American population by decade born instead of the typical generation splits. Looks at demographic changes of the past and into the future. A suggestion from the very interesting Coach Chad Carson.
  6. The Plundered Planet by Paul Collier – A world famous economist looks at the big problems of the world, especially the developing world, and how we should proceed.
  7. Ego Is The Enemy and The Obstacle Is The Way by Ryan Holiday – Two titles from the same author on roughly the same topic – a modern interpretation of stoicism and clearing out mental clutter. Quick reads with some interesting history of people you may or may not have heard of.
  8. The Compound Effect by Darren Hardy – I have a bias against “business type” books but enjoy reading them. This should probably be higher on the list. Consistent, directed effort over time can yield big results. Motivational and well written.
  9. 401(k)aos by Andy Tanner – A bit of a conspiracy vibe on this one about how not to trust the stock market. I appreciated some of the contrarian takes on retirement accounts and potential risks. Not great overall though.
  10. The Power of Zero by David McKnight – About how to get to the 0% tax bracket. I thought this would be more diverse in topics covered but is mostly about getting your money into Roth IRA type accounts. Some good information if you’re not already familiar with retirement planning and investing. Probably best part is the start and talking about historic and future tax rates.

I’m sending out these books as part of my “Sharebook” campaign – my personal project to send out books I’ve enjoyed and start a number of book chains to continue them being passed after I first ship them.

If you’re interested in receiving a book you can request one via this simple form.  Takes 30 seconds and you’ll get a free book sometime in the future.

North Park Way and 30th Street – An Intersection In Need of Improvement

Although North Park’s “Busy Corner” lies a block north, the intersection of North Park Way and 30th Street is a popular crossing for pedestrians in the neighborhood.  In the heart of North Park, this intersection hosts Waypoint Public, Pigment, the North Park Parking Garage, and North Park Family Dentistry with many more businesses and residences nearby.  It is also an intersection that needs improvement to increase safety and convenience for residents and visitors to North Park.

Today my neighbor recounted being hit by a car driver at this intersection last week while she was pushing a stroller and walking with her seven-year-old.  The driver did not yield when making a left turn and did not use a blinker to indicate the left turn.  She plowed into the group of three in broad daylight.  If you walk this intersection you may have had close calls with drivers as I have on a number of occasions.  We need to do much more to make our neighborhoods safer – motor vehicle crashes are the top cause of death for American children and adolescents ages 1 to 19.

For this specific intersection here are a number of improvements we can make. (The following could be applied to many areas across the city as well and hopefully some, like LPI, become the default treatment rather than reactive to areas with injuries.)

  1. Sync pedestrian signals.  Currently the east-west and north-south crossing signals do not sync – if you push the button on the east side only that side will give a “Walk” signal on green. These indicators should be synced for both sides of the street.
  2. Automate pedestrian signals with minimum crossing times.  In addition to pushing the pedestrian walk request (aka “beg buttons”) the pedestrian walk symbol should automatically be triggered and illuminated for the minimum crossing time when a vehicle triggers a light change.
  3. Add a Leading Pedestrian Interval (LPI) in addition to automatic minimum crossing time signal.  An LPI gives pedestrians a 3-7 second head start when crossing an intersection.  NACTO notes that LPIs “have been shown to reduce pedestrian-vehicle collisions as much as 60% at treated intersections”. You may have seen LPIs in action at 6th Avenue and Laurel Street or other locations.
  4. Add “Yield to Pedestrian on Turns” signs. A simple reminder to look around when driving and be aware.
  5. Add curb bulbouts to the intersection corners to reduce the road width (and consequently road speeds). The image below is the current intersection with red added for potential curb bumpouts to reduce the road width and in which plants and trees could be added or benches to sit.  The bulbouts would also reduce the roll-through turns that are common enough to be known as “California Stops”.  The yellow portions are for potential additional parking spaces to accompany the bulbouts. (I don’t favor more auto parking in the area as there are better uses for our limited public land but seems to be a way to help get safety improvements done since many like a free lunch.)

6. Add red light cameras to penalize bad actors (after remaking them legal in San Diego).  In 2013 San Diego got rid of red light cameras that were used to penalize those breaking laws at intersections.  Cameras are cheap and effective ways to enforce laws like speeding, running red lights, etc. and would be ideal for areas like this intersection where common law-breaking by drivers has more severe repercussions due to the high number of humans nearby.

7. Lower speed limit to 20 MPH.  Lower speeds help to avoid collisions and reduce the harm when collisions occur.  This article has a great interactive chart showing the relative fatality risk at various speeds.

If you’re interested in helping make this intersection better in the ways noted above (or your own) you can help by contacting our City Councilmember, Chris Ward at christopherward@sandiego.gov and the Council Office Rep for North Park, Tyler Renner  – trenner@sandiego.gov.

Taking a moment to send a message as simple as “Please make the intersection at 30th and North Park Way safer. Our family walks there often. Thank you.” are great and really help to make improvements on the ground reality.

[Related note: Thank you to all that voiced support for a new crosswalk at Jefferson Elementary – located 3 blocks directly west of the intersection highlighted in this post.  Mr. Renner informed me this is scheduled to be installed in 2019 as part of the new Mini-Park in North Park behind the Observatory.]

For context here are a few photos of the intersection I took today, 1/5/2019.

Traditional IRA vs. Roth IRA – It Doesn’t Matter (Tax Rates Do)

Employees often have the ability to contribute to an employer sponsored retirement plan (typically a 401(k) plan) – also known as a Traditional IRA.  To contribute to this plan, the employee selects a percentage of income to contribute each pay period and this amount is taken out of their paycheck and sent directly to the plan administrator to be deposited in the individual’s IRA account.  When contributing to a Traditional IRA no taxes are due at contribution.  When the funds are distributed in the future, typically during retirement, income taxes will be due on the full amount distributed – both the earnings growth and the initial contributions.

Separately from a Traditional IRA, workers can on their own open and contribute to a Roth IRA (subject to income limitations).  In 2019 an individual earning less than $122,000 can contribute up to $6,000 to a Roth IRA.  With a Roth the individual pays taxes up front, when the money is earned, and then contributes the money after taxes have been paid.  When funds are distributed in the future, typically during retirement, there are no taxes on the distributions.

Deciding between contributing to a Traditional IRA or a Roth IRA, or the relative amounts to each, is a frequent topic on personal finance blogs and talk shows.  An important bit that doesn’t get enough coverage is this:

** Income Tax Rate Changes Are What Really Matters **

The are other factors to consider between these types of IRAs outside of tax treatment.  A couple of factors, among others, include:

  • Employer contributions – Traditional IRAs often include employer-matching of employee contributions.
  • Liquidity – Ability to access contributions differ, with Roth contributions being accessible without penalty in some situations.

However, the biggest impact is made by the change in income tax rates between contribution and distribution.  If tax rates are higher in the future at distribution, a Roth IRA is better – you paid at a lower rate when contributing and get to withdraw and avoid taxes at a higher rate.  The converse is also true – lower rates at distribution favor a Traditional IRA.  You avoid higher taxes at contribution and then they are applied at lower rates at distribution. Let’s repeat and then look at a few simple example calculations.

  • Higher income tax rates in future = Roth IRA better
  • Lower income tax rates in future = Traditional IRA better

If there are no changes in income tax rates, there’s no difference between the two types of IRA.  Here’s a calculation example showing the net total distribution is the same if there are no changes in tax rates.

If tax rates are lower in the future than now (lower at distribution) then the Traditional IRA is better and yields a higher total distribution. Here’s the same example, with only the future tax rates decreasing.

If tax rates are higher in the future than now (higher at distribution) then the Roth IRA is better and yields a higher total distribution.  Here’s the same scenario again, but with higher future tax rates.

There are two primary reasons for a change in income tax rates, both of which are difficult to predict over a long-term period.

  1. Changes in Tax Law – changes to the rates and brackets in the IRS Code enacted by Congress
  2. Changes in Income – changes in individual earnings resulting in a change in the applicable tax bracket (whether or not the tax brackets are changed by law)

Planning for the long-term is difficult but remember the impact that tax rate changes can have should be a prominent consideration.


Note: The content of this post is for informational and discussion purposes and is not financial or tax advice. Consult with an advisor before relying on this or any information.

A New Crosswalk Request in North Park at Jefferson Elementary

Let’s make the neighborhood a bit safer and more enjoyable for all

North Park has had a number of crosswalks installed in recent months, including some with push-button flashing lights as you can now see at the corners of 30th Street and Myrtle as well as 30th Street and Polk, as well as other locations.  It has seemed to make a positive impact on the likelihood of drivers that yield to pedestrians at these intersections and hopefully an overall greater awareness for those walking in the area.

This post is to request a new painted crosswalk on the south portion (east-west crosswalk) of the intersection of North Park Way and Utah Street, in front of Jefferson Elementary.  This intersection is just outside the front doors of the school and this three-direction intersection has a stop sign for each direction of oncoming traffic.  There are currently painted crosswalks on the other two crossings at the intersection but just a “No Ped Crossing” sign for the third.

This aerial image shows the existing crosswalks to / from the Jefferson Elementary block in Yellow and the requested additional crosswalk in Red.

With all vehicles already needing to stop at this intersection it seems natural to include a painted crosswalk for pedestrians.  Especially given that the school provides services for children from preschool through fifth grade it seems even more needed to have visible markings and crossings to ensure drivers are aware of the hundreds of small children in the area.

Many parents and children walk to the school from the south and east directions, either from residences or from parking in the neighborhood.  Another marked crossing option would make the journey to school quicker, safer, and more convenient for all.  (And outside of school hours for anyone walking in the neighborhood.)

Below is the current status of this crossing.  Hopefully we can make this small improvement soon, for the use of students and the community at large.

If you’d like to help make this crosswalk a reality please reach out to the San Diego District 3 Councilmember, Chris Ward, at the following email addresses and simply voice your support.  A message as simple as “Crosswalks at Jefferson needed and I support. Thank you.” are great.

Councilmember Ward – christopherward@sandiego.gov

Council Office Representative Tyler Renner  – trenner@sandiego.gov