August 2019 – TieDyeSeniorFi

Who do you work for? This question is not meant in its literal sense. I am not asking who your employer is. I ask myself why I am still working and my thoughts invariably run to this question.

Let me give you some examples of the people I work for:

My wife – so she can have the health care and other things she needs and deserves.
Our dentist (and the staff) – the fillings and other items installed when I was young have been wearing out and are being replaced.
Our primary care physician
Specialist physicians – varies by year but seems to include something every year.
Our veterinarian – health care for animals is not cheap
Our eye doctors
Our pharmicist – Rx costs for me are trivial, but for my wife they are significant.
Our auto mechanic – we tend to keep our cars a long time. Apart from installing new batteries, I prefer to let the professionals do the work.
Coming over the next year or three – all the contractors who will be helping us with various home improvement projects. There is a lot to do around here but frankly, our minds have not been in that game – but I can see it coming.
Verizon – we get internet and entertainment from this bill – it is one of our 4 largest monthly bills – the one area we have not optimized.
Insurance – probably some savings to be had here as well. We are helping to support an insurance agent who for whatever reason, has not been up to par recently. Action required.
My county – property tax is one of my 4 largest bills – reduced this year due to our solar panel installation credit.

What I have not mentioned is debt – we use our credit cards to order online and to get rewards, but not more than we can pay off immediately. I supposed Amazon could go on the list. That said, we are debt free.

I also did not mention our utilities. As we return our water to the ground, our water bill is about 1/2 fees (to the county) and 1/2 for water coming in. It is a low quarterly bill. As we have no electric bill now (apart from the meter rental), we only pay for natural gas to heat our water year round and our house in the winter – so a few months of high bills and the rest is noise.

Reviewing the full list, I can put real names on a number of the people I am working for. While I am just one small slice of their income, it makes me feel good to know that most of these folks deserve the money we provide. For the ones who do not deserve it, we should probably make some changes.

Finally, and most importantly, I am working for our future. Our savings rate is high. Trying to calculate the exact rate hurts my head (and I am a numbers guy). Suffice it to say that less than 20% of my gross pay ends up in our checking account. The remaining 80+% goes to tax withholding, 401K, medical, etc. premiums, ESPP* (proceeds all end up in savings), HSA, and after tax savings. Looked at another way, slightly over 1/3 of my net pay ends up in our checking account. It is fair to say that working for our future is our number one expense.

Some reasons the savings rate calculations are difficult:

My wife’s pay, which is modest but helpful is not included in the above – she uses this money to cover specific household expenses and for some personal needs.
Rental, interest, dividend, and royalty income are not counted – they are not even mentioned in the articles I have read on calculating savings rate. I do save the royalty income for other investments.
I typically save/invest my annual bonus – I never know how much it will be.

One simple method of calculating savings rate is a matter of determining a numerator (amount saved) and a denominator (amount earned less taxes). If one only earns income from a paycheck, this is simpler to do. For our situation, I am just happy to say that it is high.

Therefore, it is fair to say that for the most part, I am working for us.

My question to our readers is this: who are you working for? Please respond with some answers.

*ESPP – Employee Stock Purchase Plan – employee benefit only available to those working for US stock-owned corporations. Rules vary – for my company the rules are great and come close to guaranteeing a 60+% return – let me know if you want more information on how this works.

If you work in the IT or Engineering fields you are probably well aware of the expression RTFM – Read the Fine Manual (google it for the more vernacular translation).

I am coining a similar term: RTFP – Read the Fine Print. No vernacular needed.

Truth is, I got this expression from my wife – the next three paragraphs are a (meant-to-be) humorous explanation of how this occurred.

In the Jewish tradition, a marriage has a legal document called the Ketubah, which is the document given by the groom to the bride that lists his obligations. It is written in Aramaic, my understanding of which is a bit rusty.

The Ketubah often comes up in those memorable discussions a married couple have whereby my wife explains to me that I will end up doing something she wants because, you guessed it, I didn’t read the fine print.

As in ‘Why am I the one who always has to take out the garbage?’ “It’s in the Ketubah,” she tells me. Apparently I didn’t RTFP.

Back to our main topic.

In previous posts I had mentioned that Anne Arundel County offers a $2500 property tax credit for installing solar panels. My salesman did ask me if I am paying that much in property taxes (which I am – but here comes RTFP).

I received the following letter from the county:

RTFP: taxes levied on the building, not the land,,,

In case you have not seen an AA County tax bill, it looks something like this:

Homestead Credit and Land value reduced the solar tax credit.

The portion of the bill attributed to my county tax starts at $3859. This first gets reduced by my homestead credit by $1465, leaving $2394. (The homestead credit limits increases in property taxes for primary residents, to avoid forcing owners from having to sell due to higher taxes – very beneficial to retirees on a fixed income.)

As the letter states, the tax is only on the building, meaning it is not on the land. Our house holds just over 59% of the value of our property. So the math looks something like this:

Initial Property Tax: $3859
Subtract Homestead Credit $1465
$3859 – 1465 = $2394 — remaining property tax
Calculate Building to Total ratio: 243,600/412,800 = 0.59 rounded.
$2394 * 0.59 = $1412 — the value of our solar credit

As the letter states, this is a one-time credit – no carry over into next year. So that is it. Because of the fine print, our county property tax solar credit is $1412, instead of $2500.

In other words, the price we will end up paying after incentives will be about $1088 higher than the roughly $15,400 we projected, or closer to $16,500.

Note that we did not lose anything here – this was always how the tax credit was going to work. The only change is in my less-than-perfect break even calculations. That number is a best guess anyway, and will only be revealed as we take this journey. The information on how this tax credit works was probably available from the county. My calculations are only off because I did not RTFP.

Two updates regarding previous posts:

The web site where you can track SREC values is here. The price has varied a bit in the last few months, rising as high as $67.50 for a couple of days, but settling in around $50 as I write this. It will be a few months before we receive our first check.
The July bill came in. We almost broke even this month, consuming 11 KWh more than we produced. This was subtracted from our roughly 1/2 MWh surplus to date:

Month: August 2019

Who Do You Work For?

TDSF Power Plant Part 8: Lesson Learned – RTFP (also some updates)