On Investment Portfolios and Financial Privilege

So I’ve been paying attention to my investment portfolio, even though that is the one thing personal finance experts are telling everyone not to do right now — if you don’t look at it, you can’t worry about it, right?

Well, let’s look at it:

It's a bar graph. A very very downward curving bar graph.

My current net worth, which includes not only my investments but also the $15,450.84 I’ve got saved in various bank accounts, is now $138,011.15.

That’s down $29,020.70 from the beginning of 2020.

And yes, that’s all investment-related. (I didn’t, like, go buy a car or anything.)

I’ll be the first to note that I am still in a very very financially privileged situation right now; I’m still freelancing, I don’t have to worry about where next month’s rent is coming from, and I have a cash emergency fund that will cover me for six months if I’m judicious with it.

The financial independence calculators now estimate it will take me 7 years and 9 months to FIRE (and yes, I ran those calculators with just the past month’s market data, so they wouldn’t be tricked into thinking we were still in a bull market). I’ll remind you once again that I’m not looking at these calculators as an actual predictive tool; they’re just fun to play with — and now it’s interesting to think about how much of that theoretical FIRE money might come from actual earnings and not investing gains.

Because that’s what the calculators told me this morning: that I could FIRE in a bear market if I continued earning at my current level for the next eight-odd years.

That said, I am well aware that employment of any kind is always tenuous (you might remember me writing the “treat your salary like it’s temporary” post for Lifehacker last summer), especially right now.

So I’d love to hear your thoughts on where I should be donating my money at present — is it better to do, like, a Red Cross thing, or to find a few GoFundMes and help fund them?

Because I do very much want to do something. ❤️

UPDATE: There was something that was still bugging me about the FIRE calculator’s numbers, and it turns out it was that the calculator wasn’t pulling current stock returns; it was autopopulated with an automatic 7% percent return.

I adjusted the calculator to run the 3.8% return that my portfolio has actually gotten since I opened it in 2018 (at the end of 2019 it was getting a 9% return; currently it’s getting something like a negative 30% return, although Vanguard won’t calculate negative returns because maybe that doesn’t work mathematically), and the calculator adjusted my theoretical FIRE timeline to 9 years and 1 month.

For whatever that’s worth.

December Financial Update

Happy December! It’s time for another financial update, so HERE WE GO:

This month's YNAB net worth screenshot.

In December, I received $11,024.43 in freelancing income and $2.51 in publishing royalties. My current net worth is $164,475.44, which is up $10,578.49 from last month’s $153,896.95—and, like last month, a lot of that came from stock market gains).

That said, I haven’t put any money into investments for December yet because I’m holding on some numbers from my CPA. We’re doing 2020 tax prep already, in anticipation of me owing more money than, um, anticipated.

Because I just crossed the six-figure mark in gross freelance income for the year, which—well, I’ve known that was coming for a few months, but it still feels very, very weird.

It took me seven years of full-time freelancing to build up to a six-figure income, and there is no guarantee that I’ll earn this much next year (though I’ve got my schedule blocked off through first quarter 2020 and earnings look like they’ll stay pretty level).

But if you are reading this and are, like, “I’m only making $30K as a freelancer,” I want to say keep working and this kind of career is both possible and achievable.

Though I wouldn’t have believed it was possible until I did it myself.

And I have no idea if I’ll be able to achieve the same thing next year. My gross annual freelance earnings have gone something like $20K, $40K, $60K, $80K, back down to $60K, then this year’s $100K, soooooooo… well, all any of us can do is keep working. ❤️

November Financial Update

It’s time for another one of these, so let’s take a look at how my finances have changed over the past month:

In October, I earned $14,606 in freelance income and $9.70 in publishing royalties, giving me a new “highest freelance earning month ever.” (This is still weird. It is still very, very weird, and I am just trying to make the most of it while I can.)

My current net worth is $153,896.95, up $12,360.97 from last month’s $141,535.98, partly because the stock market is doing really well right now (all three market indices reached record highs yesterday).

The FI calculators are saying I could hit financial independence in five years and eleven months if I only count personal expenses, and eight years and four months if I want to keep running my business after I FIRE.

As always, I am taking all of this with an unhealthy amount of salt, because those calculators assume that both my income and my expenses will remain constant over the next five-to-eight years. (I do run an average of my income/expenses, so it’s not like they calculate this based on the last month alone, but still.)

Anyway, that’s the “finance” part of my career—and tomorrow I’m going to do another post on the “art” side. ❤️

June and July Financial Update

I didn’t do an official financial update in June because I was on vacation, so here’s how my finances have changed since May:

My current net worth is $121,598.46, which is up $13,797.02 from the net worth of $107,801.44 recorded on May 1.

Between May 1 and today, I brought in $20,851.09 in freelancing and publishing income (only $14.51 of that came from publishing, if you’re curious).

I also spent $3,249.81 on my two-week “Disney followed by a family reunion” trip ($2,470.87 of which went towards Disney) and put $2,820 towards quarterly estimated taxes, so… yeah, the math on that net worth increase works out.

The FI calculators suggest I could reach financial independence in seven years at my current rate of earning/saving/spending, which would be… like, seriously, I’d be 44 years old. That feels both way too soon and very far away.

However, I’m also going to need to do some thinking about taxes, since my unexpected earnings increase (I thought I would earn $70K this year; now I suspect I’ll hit six figures) is going to need an associated tax optimization strategy.

This isn’t just about me underestimating my taxes, btw. If my adjusted gross income gets too high, for example, I’ll lose my health insurance subsidy and owe the government an additional $3,600.

I can combat some of the tax burden by maxing out all of my available retirement vehicles, including my SEP IRA which can absorb between 18 and 20% of my gross income (no, there isn’t a single fixed percentage i can use here; like most self-employed tax stuff, you have to do a bunch of Tax Math to get the actual number).

I can also start putting more money into tax-deductible business expenses, which is one of the reasons why I just signed up to attend FinCon this fall. (It’s also why I’d love to increase the number of guest posts I run on the site—so pitch me!)

Plus, I’ve started to put together some ad-hoc tax spreadsheets where I run the numbers on what it might be like to earn $100,000 in gross freelancing income and $5,000 in business expenses vs. $100,000 in gross freelance income and $10,000 in business expenses. If my goal is to save as much as possible while also growing my business, which combination of numbers is most likely to get me there?

This is, of course, a conversation I’ll need to have with my CPA this fall, since I’ve made assumptions about taxes before and they have been SUPER DUPER WRONG. (I wish freelance taxes were simple, or at least straightforward. Unfortunately, you get a lot of “you can’t know how much to deduct until you deduct it and then do the math and then adjust your deduction and then do the math again” scenarios, and no I am not kidding about this.)

Anyway. That’s my financial update for this month, and I’m going to get you an investing update later this week since I heard you might be interested in that kind of thing. ❤️

May Financial Update

First of May, first of May, financial updating starts today…

(Or continues, really. I’ve been doing this for years.)

My current net worth is $107,801.44, which is $5,054.69 higher than my April net worth of $102,746.75.

This is nearly entirely due to investment growth—I got a 4.3% return this month—which, even though I knew this kind of thing would start to happen once my net worth passed the six-figure mark, still feels really weird.

I received $9,300 in freelance checks last month plus $43.20 in publishing royalties, and I anticipate breaking $10K in freelance checks in May. June, however, will probably be a low earnings month, since I am taking a two-week vacation (five days at Walt Disney World, five days at a family event, a couple days at the end to rest from all the travel) and won’t be writing or earning money during that time.

This also feels a little weird—it’ll be the longest chunk of time I’ve taken off work ever, I think. I’ve done a week away from work in the past, but I don’t think I’ve taken two weeks off, even back in my employee days.

But I did set myself the goal of taking a two-week vacation in 2019, and now I get to see what happens.

In terms of spending: like many people who discovered their tax burden was lower than anticipated, I took that extra money and let it blow a hole straight through my pocket. I bought $63.13 worth of plants. I got myself a $15.99 gym bag that I didn’t even need (my old one was still functional, I just wanted one that had a pouch for a water bottle). I spent an unbelievable $126.62 on dining out—and before you start laughing, remember that I typically spend $25 per month on restaurants and snacks, and okay, you can laugh now.

Yes, I live a very frugal life, and yes, I’m steadily increasing my monthly freelance earnings, and yes, I’m investing a lot of those earnings—and so this is what my finances are starting to look like.

It’s weird.

I’m very happy with it, but I’m not used to it yet. ❤️

April Financial Update

It’s time for another financial update, so let’s check in with my YNAB account:

My current net worth is $102,746.75. That’s up $5,463.23 from my March net worth of $97,283.52. Total freelance earnings for March (including self-publishing royalties) were $7,388.57, so that was part of it, but my investments also did pretty well; according to Vanguard, I gained $1,896.37 in investment returns in the past month.

I spent $2,676.47 in March on personal expenses and $212 on business expenses. The personal expenses number is higher this month because I started making purchases towards both a personal vacation and a family trip, both of which I’ll take in June; February’s $1,212.15 represents a more typical personal expenses month. (Yes, that includes rent-bills-food-fun-everything.)

According to the financial independence calculators, I should hit FI in April 2030, eleven years from now.

I’m still going to try to beat that goal. ❤️

Why Financial Independence Is Like Self-Publishing

As of this morning’s freelance paycheck, I have $100,203.85 in assets and $825.44 on two credit cards that will both get paid off tomorrow, giving me a total net worth of $99,378.41.

I mean, I’m more excited about the “$100K in assets” figure, since I’ve been working towards that goal for a while (even though I know I probably won’t hit a for-real six-figure net worth until I get my next freelance paycheck).

After this, I guess the next big goal is a total investment portfolio value of $750,000, which — at the recommended 4% annual withdrawal rate and the level of frugality I’ve managed to maintain since college — should render me financially independent. 

In other words, I’ll be able to live exclusively off my investments if I choose.

The various online calculators suggest this will happen in the next 10-12 years. I am smart enough to understand that other things may happen in the next 10-12 years to shift that goal, but optimistic and/or dedicated enough to decide it’s a goal worth working towards regardless.

Being able to live half off my investments and half off my freelance writing and teaching and self-publishing income, for example, would also be good.

There are a lot of potential success scenarios here.

There are also a lot of potential success scenarios for a self-published book — like, it’s literally the first lesson I teach in my online Finances of Self-Publishing course (which you can take next month, sign up here).

You could write a runaway bestseller; you could write and publish a book a year and sell it to your 1,000 True Fans; you could write a book to preserve a piece of family history and use tools like Reedsy and IngramSpark to create a beautiful hardback copy that’ll last for generations.

Self-publishing can also get you many of the aspects of “the author’s life” that a lot of us dream about: a book launch party with cake and sparkling beverages, the opportunity to do readings and signings at bookstores and libraries, the professional expertise required to teach classes or speak on panels at conventions. A quiet home office with plants in it. The ability to say “I will block off X amount of time, every day, just for writing my next book.”

(Current NEXT BOOK draft: 12,253 words.)

Of course, you can get the plants and commit to a writing schedule before you finish that first draft — and if you want to learn more about how to do that, you should sign up for my online course How to Develop a Writing Practice, which runs end-of-April through end-of-May. (It’s a self-paced group course, so you’ll take it as a group but won’t have to be at your desk at any specific time for mandatory webinars or anything like that. You’ll be free to do the readings, chat in the group discussion forum, etc. whenever you have time available.)

Just like I’m already thinking about myself as having committed to financial independence — and behaving and budgeting like a financially independent person might behave* — 10–12 years before I’ll actually get there.

But I thought, during my early-morning yoga practice where I usually get my best thoughts, that the whole financial independence thing was strikingly similar to the self-publishing thing. A nearly identical mindset.

Self-publishers take on both the author role and the publisher role. They develop various “success scenarios” for their books — maybe they want to crowdfund their “advance,” the way I did for The Biographies of Ordinary People; maybe they want to sell more than 500 Kindle copies in the first three months**; maybe they want to to go on book tour or get their book reviewed by Kirkus or submit their novel for various awards.

There’s a lot that a self-published author can’t control, such as who wins those awards or how much money Amazon pours into its Kindle Unlimited Fund or whether the market for their particular genre changes, but there’s a lot they can control through research and careful budgeting.

The biggest factor under their control is whether they spend more on their self-published book than they plan to earn (THIS IS THE NUMBER ONE MOST IMPORTANT THING I WILL TEACH IN MY CLASS, BTW).

That’s also one of the biggest factors that will determine whether they’ll self-publish another book and slowly build up a career as a self-published author.

Likewise, the person going after financial independence takes on both the worker role and the employer role, even if they already have another employer. This person is setting aside money for to pay their future salary the same way an employer sets aside money for payroll, and deciding how much they might want to earn in the future the same way an employer decides how much to pay employees.

There’s a lot that this person won’t be able to control, such as whether they get laid off (or lose their biggest freelance client) and have to cut back on their savings goals (or spend money they’ve already saved) until they find another source of income. They won’t be able to control market changes or recessions.

The biggest factor under their control is — you guessed it — whether they spend more than they earn.

Now, I know what you’re thinking, because several years ago I got myself into $14K of credit card debt during a period of underemployment. There are 100% for-sure times when you cannot spend less than you earn because you are simply not earning enough. I have been there. Lots of people are currently there.

If that’s where you are, and you’d like to not be there, I’d recommend reading Vicki Robin and Joe Dominguez’s Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence. This book should be available at your local library (get the 2018 edition if possible; if not, the older editions should be just as good though slightly less relevant to today’s economy) and it absolutely changed my life when I read it while working as a part-time telemarketer.

If you like cats and glitter, I also recommend Lillian Karabaic’s Get Your Money Together: An Illustrated Purrsonal Finance Workbook to Help You Budget Your Money, Save for Retirement, and Smash Debt. This book might not be available at your local library, but it’s exceptionally useful if — well, to quote Lillian Karabaic:

I only started teaching personal finance only because I was frustrated with the lack of queer-friendly, feminist, and, most of all, fun personal finance education out there — especially stuff that deals with actual real-life money issues and doesn’t assume you have one full-time job with benefits, 2.5 kids, and a white picket fence.

I’d also suggest reading Grant Sabatier’s Financial Freedom: A Proven Path to All the Money You Will Ever Need, because Grant devotes the first half of the book to “how to earn more money” and the second half to “how to become financially independent,” so if you’re interested in that, go check it out. Literally.

And if you’re interested in the finances of self-publishing, well… you could always take my class. ❤️

*Contrary to popular belief, “financial independence” doesn’t mean “having more money than you could ever spend.” It’s more like you’re paying yourself an annual salary based on your investment returns. Which means you’ll still need to stick to a budget, and in some ways you’ll need to be more careful about your budgeting and spending than a person who isn’t “financially independent.” After all, you want that pool of investment money to last for the rest of your life.

**The average self-published book sells fewer than 500 Kindle copies, so hitting this benchmark is an early sign of success.

Elizabeth Forsythe Hailey’s ‘A Woman of Independent Means’ Offers Both Financial and Life Lessons

When I read Grant Sabatier’s Financial Freedom: A Proven Path to All the Money You Will Ever Need three times in a row and decided to go after the financial independence thing, I pulled up this memory of watching this television miniseries, with my family, about a woman who had all the money she would ever need.

I know that particular detail because I had to ask my parents what the title of the movie meant. Of course, I couldn’t remember the title (was it A Financially Independent Woman?); only the moment where my parents explained that the woman in the movie would never need to earn money from a job.

So I looked it up. The 1995 six-hour (with commercials) miniseries A Woman of Independent Means, starring Sally Ford as the titular Woman, was based on the 1978 Elizabeth Forsythe Hailey novel A Woman of Independent Means, which was in turn inspired by Hailey’s grandmother’s life.

The novel is epistolary and written entirely from the perspective of Bess Steed Garner, who learns at a young age that an inheritance has made her financially independent. The book begins as a deceptively quick read — the first few pages take Bess from age 9 to age 20 — but becomes more detailed and immersive as Bess grows in both experience and writing talent.

It also packs in a wealth of advice about both investing and living — but since Bess is constantly maturing and changing, there’s a question of whether the reader should take her insights at face value.

Here’s a letter that the 29-year-old Bess writes her best friend, for example:

Dearest Totsie,

Your letter brought me the first bright day I have known since Rob died. The thought of joining you in Vermont for the summer fills me with delight! What a reprieve from the terrible reality of my life just now!

Once we decided to close the St. Louis office of the company, I knew I had no choice but to sell my house here and move back to Dallas — but to return without a husband and with less money than when we left is an unbearable admission of defeat. And I will postpone it as long as possible.

Your invitation for the summer is such a tangible offer of comfort at a time when words of sympathy ring hollow in my ears. I am so weary of people asking if there is anything they can do for me. Of course I always answer with a polite no, and they go away satisfied at having done their duty. If only one dared answer in the affirmative. But nothing frightens people more than undisguised need. I have kept all my old friends through this difficult time by never demanding the dues of friendship. Not that I doubt they would be paid — but only once. Friendship to me is like a capital reserve. It pays dividends only so long as the principal remains intact. Whatever personal sacrifice is required, I am determined to come through this experience without spending my principal — on any level.

The children are very excited at the thought of a trip east. We are all eager for the sight of a landscape without memories. How I look forward to holding the baby — and you, Please thank Dwight for his share in your kind invitation.

I love you dearly,


Is Bess “right” about the nature of friendship? Is she “wrong?” I’m not sure that’s the question we should be asking. A Woman of Independent Means invites readers to observe Bess as she observes the world, and take from it whatever lessons are most relevant to our own lives.

In my case, the biggest lesson I took from this book is that whenever Bess works to meet her own needs, her life — and her family’s life — improves. Whenever she does something that she believes is in the best interest of someone else’s needs without asking them first, especially when her actions go against her own needs and desires, her life and her family’s life and the life of the person on whom she’s acting get worse.

I suspect that if I read this book again in a few years, I might take a different lesson from it — because, like Bess, I would have the advantage of a few more years of life experience.

If you’ve read A Woman of Independent Means — or have some vague recollection of the miniseries, like I did — I’m curious which aspects of the story stood out to you. Despite the strong financial component of this book, for example, I don’t think it prompts most of its readers to get into investing.

But it might prompt us to view the world a little bit differently, after seeing it through Bess’s eyes. ❤️

March Financial Update

It’s a new month, which means it’s time to check in with my finances.

Here’s a YNAB chart illustrating my net worth, which is $97,283.52 as of this morning:

Currently, my investment balances total $85,296.36, divided as follows:

  • Vanguard brokerage account: $6,401.14
  • Vanguard traditional IRA: $12,078.77
  • Vanguard rollover IRA: $45,534.32
  • Vanguard SEP IRA: $6,484.87
  • Vanguard Roth IRA: $6,685.68
  • TIAA annuity: $5,348.99*
  • Health savings account: $2,744.59

The big gamechanger this month was the money I put in my brand-new SEP IRA: $500 for 2019, and $6,000 for 2018. The latter investment came from money that was part of The Billfold LLC account, which is much better off invested in a SEP IRA than taxed (though it will be taxed eventually).

In case you’re curious, it has cost The Billfold LLC $1,399 to shut itself down so far. This money includes CPA and legal fees, and there is at least one more payment coming as I file the final paperwork. That money also came out of The Billfold LLC account.

I received $5,135 in freelance checks in February, and earned $12.24 in publishing royalties from Amazon. I spent $1,212.15 on personal expenses (rent, bills, food, fun, donations, etc.) and $187.33 on freelance business expenses, not including money put into investments or set aside for taxes.

According to my financial independence forecaster, I should hit FI in 12 years and one month. However, now that I am no longer giving the majority of my time to The Billfold, I’ve been able to take on several higher-paying long-term assignments, which means I’ll probably be able to save and invest additional earnings (especially in my SEP IRA, which can absorb up to 25% of my freelance earnings as tax-deductible contributions).

So I’m very interested to see whether that forecasting number changes by the end of March.

Why am I telling you all of this? Because I’ve been transparently sharing my finances online since 2012, when I was making $500 a week as a brand-new freelancer.

Because I want to present a realistic picture of what a mid-career freelancer (and author, and teacher) can earn.

Because I know that the type of freelancing work I’m doing won’t last forever — the internet might fundamentally change, robots might start grabbing all of the good copywriting jobs, companies might want to work with younger freelancers who know all the dank memes — and so I’m investing in my future by trying to save as much money and grow my net worth as quickly as possible. Even if I don’t hit financial independence, being able to set money aside while I have the privilege to do so will give me more choices in the future. 

So that’s my March financial summary.

We’ll check back again in April.

*When I worked as an executive assistant for a non-profit, I invested in a TIAA 403(b). I was able to roll everything over into a Vanguard rollover IRA except for this one non-rollable TIAA annuity that TIAA told me I’d have to keep until I retire, I guess. If anyone has any suggestions on how to get that money out of TIAA and into Vanguard, let me know.