Performance Update 45/50: Claw Machine Scheme

My main goal is to build a portfolio of $1,120,000* in 1500 days**, starting from 1/1/2013 and ending in February of 2017. I made my goal a couple months ago, but believe that it’s a worthwhile exercise to continue with my financial updates until the end of 1500 Days, so I continue.

It’s time to take a look back at September. But first, I must discuss a recent confrontation that I had with the immortal enemy of all parents, the claw machine.

Claw Machine Scheme

Everyone knows that the claw machine is a silly waste of money.


This evil device exerts a magnetic force on children. Within a millisecond of spotting one:

Mom! Dad! Can I have some money to play the claw machine!! Please! Please!! PLEASE!!!

My answer is always:


Well, almost always.


A month ago, our youngest child (D) spotted one of these dreaded devices and as usual, begged for money. My ‘No’ was followed up with a lecture about how no one ever wins anything. My words fell on deaf ears.

Then, I started thinking about it. Maybe letting her lose, just this once, wasn’t such a bad idea. I could use the experience as a teaching tool. After she lost, I would have a little talk with her:

  • Certain things are just there to steal our money: The claw machine is a child’s version of the lottery. It is false hope.
  • Compound interest: I’d tell her how much money she’d have if she invested the $.50 instead. Not much, but to a 6 year old, a couple dollars is big-time wealth.
  • The futility of life!: No one ever wins at the claw machine, and no one gets out of life alive. I know, too deep for a young child, so maybe I would have held off on that one…

Anyway, I gave D the $.50 and observed. With great excitement, she put the quarters in and grabbed the controls.

I could tell it was futile at once; she didn’t understand the joystick, moving it around wildly. Then came the big moment.

The claw started its hopeless, doomed descent. D’s eyes grew to the size of frisbees (like the one in the machine she had no chance of winning) as she watched with eager anticipation. I observed with sadness, knowing the disappointment that would soon wash over her.


And then she won.



Now what?


Performance Update

Claw machine misadventures aside, September was another month of boringness. My portfolio went from $1,211,898 to $1,230,542 for a gain of $18,644. I had money accumulating in my business account (which isn’t reflected in my numbers), so I transferred $10,000 into my personal account (which is reflected in my numbers). If I take that out of the equation, my portfolio appreciated $8,644 (yawn). The big dip in the chart reflects me moving money around:


Personal Capital*** is a great, free way to track your investments!

2016 (as of 9/30/2016)

  • Days elapsed: 274
  • Days remaining: 92
  • 2016 gains: $172,581 (including 401(k) and some after tax contributions of about $30,000)
  • 2016 401(k) contributions: $51,000****

Since the start (1/1/2013)

  • Days elapsed: 1367
  • Days remaining: 133
  • Gains since 1/1/2013: $644,499
  • Needed to quit work ($1,120,000 in investments): Mission accomplished!
  • Net worth*****: $1,480,542

My next performance update should be more interesting. Earnings season is upon us and 40% of my portfolio is still made up of individual stocks including Facebook, Google, Apple and Amazon. Tech stocks tend to swing severely, but that’s all part of the fun. I like drama.


The Storm Before the Calm

The past six of months have been the busiest ever. Life has been going by at two miles a minute. Not fun and exhausting:

  • House: We still have some nail holes to patch, but this sucker is 99.99% in the can. We are having it appraised next week for a line of credit that will help fund other projects. I discussed the line of credit back in August: Should I pay off my Mortgage? Anyway, we paid $176,000 for the home and have about $90,000 in improvements. I’m dying to learn what Mr. Appraiser thinks of it.
  • Portfolio on the move: We moved $267,000 to a self directed solo-401(k). With this fun new toy, we are in the process of investing in two real estate deals with more planned. Setting up the SD 401(k) was incredibly frustrating, but I’m glad we did it. More on this soon.
  • Work trip: I spent last week in Chicago on a work trip. I love my old city, but I’m also glad that I don’t live there now (high taxes and low temperature). Work trips are always a grind and I’m tired.

More changes are on the way, but I’ve rambled long enough. I’ll let Bubblegum the Bear have the last word:




*My goal isn’t to have $1,120,000 at the end of 1500 days, but at any time before the day count was up. Why? It all goes back to the 4% Rule. Remember that our little friend, Mr. 4%, is nothing more than the most conservative safe withdrawal rate. So, if I were to quit my job now, I could spend about $44,000 in my first year of retirement. I’d stick very close to that number too because market valuations are ambitious. Let’s say that Mr. Market caught a cold tomorrow and my portfolio dropped down to $800,000. No big deal. This would mean I’d be safer stretching my spending a little north of 4%.

**My original goal was $1,000,000 and no debt, I later raised the goal by $120,000 to $1,120,000 because I will have debt in the form of a mortgage and I firmly believe in not paying it off. My compromise is to have enough money put away to cover the mortgage at the time of retirement. So, to retire today, I would need about $1,120,000.

***This is an affiliate link. If you sign up, the blog (me) makes some cold, hard cash. Personal Capital is a totally free and awesome way to keep watch over your investments. It’s worth it for the fee analyzer alone. I would never recommend anything that I don’t personally use and completely believe in, so give it a try. If you’ve already signed up through the link, please know that you are a fine person of above-average intelligence.

****My 401(k) contributions include my own, Mrs. 15oo’s, and the contributions from my corporation. Self-employment with a solo 401(k) is a very powerful savings tool. I should have done this years ago.

*****The numbers on the right side of the page only reflect my investments and cash. Net worth includes, but is not limited to

  • Home equity
  • Cars
  • Bicycles
  • Really good beer: I’m usually a frugal guy, but my budget knows no limits****** when it comes to good beer. This weekend, after helping a friend build a shower, we sampled some fine beverages.

From left to right: Satisfaction Jacksin (Ale Asylum), Zombie Dust (3 Floyds), Tropicalia (Creature Comforts), King Sue (Toppling Goliath), Full Nelson (La Cumbre), mystic mama (Jackie O’s)

******The wonderful thing about the FI community is that lots of us appreciate fine beer and are willing to share. Thanks Kyle for the wonderful King Sue. Thanks to Joel for some stellar beers from his neck of the woods including everything from Creature Comforts. Also, big thanks to Physician On Fire for hooking me up over the summer. You guys are all awesome.

Join the 10s who have signed up already!

Subscribing will improve your life in incredible ways*.

*Only if your life is pretty bad to begin with.

Powered by ConvertKit
This entry was posted in Performance and tagged , . Bookmark the permalink.

45 Responses to Performance Update 45/50: Claw Machine Scheme

  1. She won?!?! Hahaha, that’s awesome! I’ve never seen anyone win anything from a claw machine.

    You now have a little gambler, hooked for life!

    Just goes to show…any foolish investment can turn out a winner from time to time.

  2. Your in for it now, the pull of the claw will ten times worse from now on. No idea how to convince her it won’t happen again next time, but would love to hear if you pull it off and how.

    Thanks by the way for explaining how the 401k contributions were 51k. I was scratching my head until you reminded us of your spouses 401.
    Full Time Finance recently posted…How to tell the difference between lifestyle inflation and enjoying life?My Profile

  3. Haha, she won. Bummer. And look at how happy she is too! That little bear will probably cost you $20 in future claw machine losses. But isn’t the harder lesson to teach her that sometimes you win, but overall you lose? Maybe that’s the silver lining here and why you’ll be glad to feed her more quarters in the future.
    Biglaw Investor recently posted…What is Your Archimedes Lever?My Profile

  4. Now what? You’re screwed…those lessons won’t set in for 20 years now…talk about your world’s all-time biggest back-fires…
    The Green Swan recently posted…6 Attributes of Successful InvestorsMy Profile

  5. Mrs PoP says:

    One of my dad’s friends owned a bunch of those machines (and junk food vending machines) when I was a kid… He did very well for himself. Last I recall he had retired early to a boat. Owning, not using, is definitely the better relationship to have with those machines. =). D will learn it eventually. In the meantime she can enjoy her bear.
    Mrs PoP recently posted…Design DilemmaMy Profile

  6. Tucker says:

    Damn you, claw machine!

    When I am working I will take the kids out of school on for a “hooky day,” usually around their birthday. I have the same disdain for the claw machine as you do but the youngest insisted on blowing some of the allocated cash to the claw machine and LOW AND BEHOLD if the little bugger didn’t pull out not one, but TWO owls from the thing.

    *throws hands in air*
    Tucker recently posted…Feeling stupid can make you smarterMy Profile

  7. Well look on the bright side at least it was a claw machine and not a casino. 🙂 But you better keep some quarters handy. There’s no stopping her now.
    Brian @ Debt Discipline recently posted…Financial Nerds or Comic Book GeeksMy Profile

  8. Hahahaha! So much for the claw machine lesson. 🙂 I guess you could spin it like, “Sometimes we have to take small risks for rewards”? I usually win stuff from claw machines (what can I say? I must be a claw machine savant) but I agree that they’re still a waste of money!

    Oooh, I can’t wait to hear what the house appraisal is! The before and after pictures I’ve seen are insane. I’m sure your value will be fantastic. 🙂
    Mrs. Picky Pincher recently posted…Finance Advice For My Younger SelfMy Profile

  9. Retire by 40 says:

    Wow, that’s a tough lesson from the claw machine. I’ve never tried the claw machine and my kid never showed any interest in them either. We just walk by real quick so he doesn’t have a chance to linger. hahaha…
    Good luck with the appraisal. Zillow just dropped our rental estimated value by $300,000 yesterday. WTF! Oh well, it was nice to have high net worth on paper for a while.

  10. Daniel says:

    I had a similiar experience with that silly machine. I gave my 3yo 50 cents and left her with my FIL. Came back 2 minutes later and not only had she won, she. got. two. toys!

  11. The claw machine is rigged! Sometimes, it grips hard. Sometimes it doesn’t. Sometimes it intentionally relaxes its grip on the way to the chute. We still had fun with it as kids, though.

    I’ve only had 2 of those good beers, and one of them came from you (the Zombie Dust — great stuff!). The rising cost of the best of the best is concerning, though. Beer snobs starting to resemble wine snobs and bidding up prices like crazy. The good news is there are so many good beers to choose from, and more every day.


    • I knew they were rigged, but not to this extent!

      And the fancy beer dilemma… The older I get, the less crazy I am about finding Pliny or similar stuff. There are some beers out there that I enjoy 90% as much, but that are easily accessible. Velveteen Habit is one (check it out next time you make it to Wisconsin).

      • And for those kids who get ticked off when they figure out it is rigged!

        Love that toothless grin on your little one too 🙂

      • radtek2112 says:

        I began making my own beer about 3 years ago. With the cost of decent beer going through the roof (close to $10 for a 6 pack in my area), I’ve found that making my own isn’t a bad deal. Believe me, I don’t make beer to save money. I really enjoy the learning process of brewing and it’s just fun. I can make a top notch 5 gallon batch (about 48 beers) for $40-$50. A similar quantity/quality commercial beer would cost about $80. My point: make beer, it’s fun.

      • radtek2112 says:

        “I’ve only had 2 of those good beers, and one of them came from you (the Zombie Dust — great stuff!). The rising cost of the best of the best is concerning, though. Beer snobs starting to resemble wine snobs and bidding up prices like crazy. The good news is there are so many good beers to choose from, and more every day.”

        I began making my own beer about 3 years ago. With the cost of decent beer going through the roof (close to $10 for a 6 pack in my area), I’ve found that making my own isn’t a bad deal. Believe me, I don’t make beer to save money. I really enjoy the learning process of brewing and it’s just fun. I can make a top notch 5 gallon batch (about 48 beers) for $40-$50. A similar quantity/quality commercial beer would cost about $80. My point: make beer, it’s fun.

  12. Eric Bowlin says:

    So you’re starting to get more into real estate now? That’s awesome! We’ll have to chat more sometime about your real estate plans!

    On a side note, I know someone who can win those machines literally 90% of the time. I have no idea how she does it.

    Some people also win big with the lottery multiple times in a lifetime…

    • Yep, more real estate. Only hard money and funding syndicators at this point, but we have our eyes on some local flips too that we’re trying to secure pre-MLS…

      • Chris Haas says:

        Would love a post on lending. I have wanted to get into this field but I struggle knowing what rates / points to lend at, and the paperwork side worries me.

  13. TinaP says:

    I think it has something to do with the positive anticipation of children. My daughter, now 11, has won…..I would guess a good 25% of the time she has attempted this since she was like 4 (first one a double win – yes back to back, same day, same restaurant, same machine – there was no stopping her from that point on). Granted, 25% may not be great odds for some of our “real fancy adult risk decisions.” But I wonder what might happen if some of us stuffy old adults quit jumping to negative assumptions so quickly.

    I will also add – my daughter now has her own spend money so my answer is a very easy “it’s your decision” now rather than having to weigh the false hope I instill vs the excitement of a potential win. The hard part is smiling and shrugging and avoiding the lectures when the outcome is as I expected 🙂

    and what’s with the ales? Have you had a Deschute’s Black Butte Porter? Deliciousness!

    • Even if it’s her money, do you still restrict it? I’d feel bad my child wasting too much money on stuff like that, although I like your strategy.

      Deschutes is great, but I haven’t had that one yet. I do like Fresh Squeezed IPA a lot!

      • TinaP says:

        I don’t restrict it other than reminding her of the opportunity cost of things she has talked about wanting. She gets a payday every 2 weeks and has certain “responsibilities” she is required to cover and what is left is hers (that way she learns that if she buys the 20 cent notebook instead of the $3 notebook, she pockets $2.80 – and I get to avoid the battle of the plain blue notebook vs the one with polka dots by simply reminding her of opportunity cost and closing with ‘it’s your choice to make.”). The more disappointments she runs into – and I control myself to not bail her out – the more she “gets it.” She was upset at her limited funds for her school Halloween party this year so we reviewed her tracking on what she spent her extra money on (yes – I make her track it like a checkbook register) the past few weeks and she quit complaining. In addition, she actually said “so, if I stop spending money, by the end of the year I could have $xxx?” She’s 11, so I’m sure the vending machines will still win most of the time, but to hear her come up with that realization without me pointing it out was about the warmest fuzzy a financial control freak mom could ask for!

        • The more disappointments she runs into – and I control myself to not bail her out – the more she “gets it.”

          That’s awesome! Having her learn it instead of you preaching it is 100x more powerful.

          In addition, she actually said “so, if I stop spending money, by the end of the year I could have $xxx?”

          How awesome is that?

  14. ChrisCD says:

    Have her pick numbers for your next lottery ticket purchase. :O)

    You could always give her $5 and show her that 9/10 she will lose and end up spending more $ than the prize is worth. Of course, with her luck, she would end up having a winning streak. :O)

    • “Have her pick numbers for your next lottery ticket purchase. :O)”

      This sounds like the start of an episode of the Twilight Zone! She’ll pick the lottery number correctly and then she’ll pick the date of my death. NOOOOOOO!!!

  15. When I read the title – “claw machine schemes” – I totally thought you were about to invest in a bunch of those claw machines as some sort of passive income generator. Snag a bunch of quarters off disappointed children seems like a nice passive income generator.
    Financial Panther recently posted…Why Bikeshare Systems Are The Best Form Of Public TransitMy Profile

  16. What a moment you and your daughter will have the rest of your lives. All for $0.50. Amazing. I’ve never won anything off those machines. I guess it goes to show you that extreme odds do work out for some people 🙂
    Mustard Seed Money recently posted…Is LASIK Eye Surgery Worth It?My Profile

  17. Team CF says:

    Yep, you’ve officially screwed up on your financial education of your kids 😉 And all that caused by $0.50 and a claw machine, just lovely. Too funny!
    Team CF recently posted…Frugal-licious – Apple PieMy Profile

  18. Wow. I and my kid have never won anything at a claw machine. Your kid winning it twice is like seeing the Yeti or winning the state lottery! How does that happen, wonders this “unclawed” novice and his junior. Maybe we can watch and learn from your kid next time. Can she put up a blog post or video on this? Could go viral.
    Ten Factorial Rocks recently posted…Faithfully ScrewedMy Profile

  19. yyz guy says:

    Beer recomendation:
    Old Speckled Hen, preferably on tap. It’s nitogenated like Guiness, but much lighter. Also comes in 4 pack of big cans with a nitro widget, but tap is still better. (Don’t bother with the bottled version…not enough nitro)

    If you cannot find Old Speckeld Hen then Boddington’s Pub Ale is very similar and often can be found at a grocery store. Watch out…for some reason when you pull the tab it tends to ejaculate!

  20. A classic post from someone who is evidently terrible at the claw game! I’ve got a secret method for winning that I’d be happy to share with you for just $4.99…

    The beers are a good reward for an excellent effort on reaching your portfolio goals. Well done!

  21. Mrs. BITA says:

    She won twice! Hahaha. It is disturbing how often attempts to teach life lessons to your progeny just backfire spectacularly – we’ve all been there.

    Yay for a boring September though. There are much worse things than boring in the world of investments. I have to say that your 40% in individual stocks made me feel better. I have 15% in individual stocks, and that always feels like a guilty pleasure to me. I have a nagging voice inside my head squawking away “Sell them! Sell them all! Index funds only!”
    Mrs. BITA recently posted…A Frugal $10 WeekendMy Profile

  22. At least she learned some adventure with the claw machine experience. So many people live in fear of trying, or the fear of putting some money and effort into a dream to see what happens. But without trying, learning, experiencing, and being open to failure, the magical moments of life can never happen. For the financial lesson, it may be bad she won. But for the life lesson, (that magic can happen if you try), may be even better for her in the long run. God Bless, and enjoy the journey. You only get to experience it once.
    Bill @ Wealth Well Done recently posted…Stop Fighting and Enjoy the Vacation Already!My Profile

  23. Pingback: The Church of FI – The Heavy and Financial News from really, really Smart People | The Jolly Ledger

Comments are closed.