August 2014 Financial Update
Wow, what a month! The markets started off August with a whimper and closed out the month with a bang. The steady rise in the stock market throughout August made us wealthier by $33,000. We spent the month at home in Raleigh, and kept our spending in line with our budget.
$2,523 in total income during August barely covered our monthly expenses of $2,463. The months in between quarter-ends will always be lighter on the income front since our dividends are paid quarterly.
Blog income, shown as “other income” in the chart dipped to only $400 in August. This was much lower than the $2,125 earned in July. The lower August blog earnings reflects some payments being received in July instead of August. September will likely be higher than $400. Long term, it looks like $600-800 per month is a reliable guess for income from this blog, subject to normal monthly fluctuations.
I didn’t receive any freelance writing income in August, however I’ve already received one payment in September for work completed in August and I may receive another payment in late September for other August work.
Mrs. Root of Good is still working, hence the salary income. Mrs. RoG went back to work full time in early August after having the month of July and part of August off for her negotiated fully paid sabbatical. She is mulling over when her last day of work will be, and mentioned to her boss that she might not be here past the end of the year. She’s exhausting her vacation time right now since they don’t pay for unused vacation time for employees that quit. Will she make it into 2015 and take advantage of another month of vacation time and a 2-3 month paid sabbatical? Time will tell!
After a strong month of investment income in June and July (over $7,000 total), we received a paltry $80 of interest and other investment income in August. Our biggest months of investment income are ahead of us in September and December. We’ll likely surpass our $22,300 of dividend income during 2013.
“Deposits” of $32 were from my Mr. Rebates account. I try to go through the Mr. Rebates shopping portal for all of my online purchases and pick up an extra 2-6% on just about everything I buy online. In dollar terms, I get a buck or two for smaller purchases of a few items, $4-5 for reserving a hotel room for a few nights, and $20 or $30 if I buy something significant like a television or computer. I shop at whatever online retailer provides the best deal, and I just remember to click through Mr. Rebates right before I check out. 10 seconds of work for a buck or $30 is a great use of my time I think.
The “Travel income” of $482 reflects the refund of our Quebec City apartment rental. The apartment didn’t work out for us so we canceled and received a full refund from AirBnB. I talked about the apartment in our Quebec City trip summary, but I’ll mention it again here. The apartment was really dirty, and we cancelled and received most of the refund immediately. Then I complained to AirBnB and they refunded the entire amount of our rental and provided an extra $150 credit toward future travel. They seem to go out of their way to make things right. I saved $25 on our reservations through AirBnB and you can too through this link.
In September, we’ll have a good bit more “travel income” in the form of $525 of statement credits that paid for our last minute cruise to Mexico, Honduras, and Belize. If you want to get your own $400-500 of travel credits, sign up for the Barclay Arrival Plus card. Our travel credits almost paid for one cabin on our seven night cruise (we booked two cabins for our family so we can spread out).
If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.
Personal Capital is also a solid tool for investment management. Keeping track of our entire investment portfolio takes two clicks. If you haven’t signed up for the free Personal Capital service, check it out today (review here).
Now let’s look at August expenses:
At $2,463 for the month of August, our expenses are almost in line with our budgeted $2,667 monthly spending.
The biggest category of spending this month was healthcare. Or more accurately, dental care. With dental insurance, two new crowns cost almost $800. We budget for expenses like that since they come up very infrequently but will recur over our lifetimes (crowns don’t last forever says our dentist). Eventually we won’t have dental insurance once Mrs. RoG leaves her job, so we might consider medical tourism to get medical and dental work done overseas at a much cheaper price (without sacrificing quality). That might be a hard sell for Mrs. RoG though!
Our annual car inspections, auto property tax and auto registrations all came due in August and totaled $219. I used a coupon to save $26 off the inspections.
The grocery and restaurant spending of $432 and $92 is roughly in line with our historical spending patterns.
The “online services” of $203 is for three more years of Hostgator web hosting (use coupon ROOTOFGOOD25 to save 25% off all hosting fees!) and annual domain registration fees. Overall I have been impressed with Hostgator service during my first year.
Yes, Root of Good is about to celebrate its one year anniversary, and I’ve made a (small) financial commitment to keep it going at least three more years. I gladly paid the $203 now that I know revenue generated from the blog can way more than cover the expense. Having a hobby that pays for itself is kind of neat.
We also went on a spending spree of personal consumption in August. We picked up a new Night Therapy king size 13″ pillow top mattress for $367 from Sleep Revolution. It’s pretty similar to the $800-1,000+ models we tried at the mattress stores, just without a brand name attached to it. The reviews were awesome and it turned out to be a nice, comfortable mattress.
I decided it was time to upgrade phones (for the second time this year) after my previous phone developed a problem in the USB charging connector. Always seeking out value, I went with the two year old Samsung Galaxy S3. It was $98 at eBay and very lightly used (always kept in a case by the previous owner). This phone is light years ahead of my old Evo 4g phone. The battery lasts a lot longer, and the screen is beautiful. Even though the Galaxy S5 has been out for a while, the S3 still does everything I need it to do at a very fast pace. Hopefully it will last me a while. I activated my phone on the free Freedompop service and it’s working well enough so far (almost exclusively used for data).
I closed out our August shopping spree with the purchase of a very lightly used Playstation 3 that came with four games for $125. I could barely tell the Playstation was ever used. The previous owner was a 30-something neighbor who is a kidless professional that liked to knock off bad guys in his spare time. This Playstation is in mint condition and even came with the box. I bought two more games digitally from ebay for $4. I am once again behind the times because the Playstation 4 has been out for a while. However the Playstation 3 is pretty awesome so far and I have a huge choice of games that are in the $5-10 range.
It’s a little amazing that we can fund all of our regular monthly expenses and pick up all these consumer items for under $2,500.
We budgeted $32,000 per year for retirement, so eight months of spending should be $21,333. At almost $17,374 year to date actual spending, we are roughly four thousand dollars under budget for the year. September will be a bit expensive since we booked a week long Caribbean cruise. I’m not sure of the timing yet, but I need to take care of some major home maintenance items like a new roof and new siding in the fall. This might cost $10,000 to $15,000 depending on the options we choose (or way less if we DIY). We’re sitting on around $40,000 cash right now, so it makes sense to knock out big budget repairs with the stock market being so high right now.
Net Worth: $1,458,000 (+$33,000)
Getting $33,000 (+2.3%) richer in August felt good. After losing $19,000 in July, it’s a nice bounce back. The stock markets really went on a tear in August. Since I generally do very little to my investments other than rebalance occasionally to maintain my asset allocation, I didn’t panic in July and sell everything (OMG!) and as a result I remained fully invested and I enjoyed a nice plump juicy return-laden August. Who knows what September will be like though, right?
I remember a particularly ugly September back in 2008. It was the last week in September and we were vacationing at an oceanfront beach house with the family. We like to go to Topsail Island around Surf City, North Carolina. It’s really quiet down there since the island is only a block or two wide in many places. And it’s even quieter in the off-season that starts in September. There’s not a whole lot to do other than relax and enjoy the maritime scenery.
Except this week in September, 2008 was a little different. The stock market was doing somersaults every day. One day while I was taking a break from the sand, sun, and surf I logged on and found out the S&P 500 had dropped over a hundred points for a 9% loss in one day. Oh well, not much you can do when that happens other than go back out to the beach and enjoy the rest of your vacation. Fast forward six years and the S&P 500 has almost doubled since that ugly day in September. Sometimes it literally pays to do nothing when it comes to managing your investments.
I doubt we’ll have another 9% loss in a single day this September, but being a student of the history of the market makes it easier to stomach horrible (temporary) losses and stay the course. Good thing I kept saving and investing money back then!
The $33,000 increase in net worth this month equates to roughly one year of living expenses for us. It’s a little disorienting to think we can make or lose the amount we spend in a year without a ton of volatility in the markets. But that’s what investing in the stock market is like if you pay attention to daily or monthly fluctuations. It moves, but generally goes up over the long term.
We are approaching the $1.5 million milestone. It won’t really buy us anything beyond what we can afford today (it’s only an extra $42,000 after all), but there’s still some psychological effect of reaching those big round number milestones.
How was your August? If you experienced a big increase in net worth, do you feel richer? Are you planning on spending more money?