August 2017 Financial Update
Greetings from Raleigh! We are back home after nine weeks in Europe. School is back in session and fall is just around the corner. Our five year old started kindergarten and we are transitioning into empty nesters. At least on weekdays between 8:30 AM and 2:45 PM.
Our financials for the month were once again wonderful. Once I arrived home from Europe, I deposited an accumulated stack of checks from the blog and elsewhere which led to a superb monthly income of $6,281. Expenses were tiny at just $1,390 in spite of spending two weeks of August in Europe and picking up a ton of back to school supplies and clothes. Our net worth crept up another $8,000 to $1,890,000 – another all time net worth high.
Investment income totaled $263 for the month. Almost all of that comes from my recent Vanguard Total Bond Market purchases. The bond fund pays interest on a monthly basis. The majority of our equity mutual funds and ETFs pay dividends quarterly in March, June, September, and December. During other months investment income tends to be much smaller. We are well on our way to earning roughly $30,000 in dividends for 2017, as we have in the past.
Blog income, shown as “other income” in the chart, increased to $4,262. In August I deposited checks from advertisers that arrived in our mailbox during June and July, so the blog income for August is higher than usual.
My early retirement lifestyle consulting exploded to $1,197 for the month. This meteoric rise comes after a $0 revenue month in July. Things average out. I was pretty slammed with consulting clients in the last couple weeks of August. I think they all waited until I returned home from Europe. So far September is going slower (which is great – I’m retired after all!).
I racked up $522 in cash back from the Ebates.com and Mrrebates.com online shopping portals. Most of that was referral income from people signing up through this blog. But I also landed several large bonuses related to travel booked in Europe (they often pay out once you complete the travel, not when you pay for it). If you sign up for Ebates through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did. When shopping online, I always check to see if I can score some extra cash back by using one of those online shopping portals (and it usually pays off!).
I had several miscellaneous bits of income including a $20 travel reimbursement from the travel agency I used to book a Hertz rental that fell apart at the last minute. I had to rebook at a slightly higher rate and the travel agency refunded me the difference. I received a $10 cable/satellite refund for the credit balance on my account when I cancelled internet back in June in preparation for being away from home all summer. The healthcare/medical $5 bit of income is a refund from my primary care doctor. They charged a $5 copay but the insurance covered 100% as a preventative visit so I owed nothing out of pocket in hindsight. I think this is the first time a healthcare provider has automatically refunded a credit balance on their own initiative without me begging and pleading for return of my money.
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 take a look at August expenses:
Spending dropped to a modest $1,390 during August. That’s almost $2,000 less than our budgeted $3,333 per month (or $40,000 per year).
Groceries – $357:
We were only home for two weeks in August but we bought a lot of groceries to restock our fridge, freezer, and pantry after being gone all summer. We also threw a birthday party/sleepover for our eleven year old daughter and combined that with a welcome home party for ourselves and several of our friends. So there was a small bump in spending for the nacho bar ingredients and a couple cases of beer.
I used Raise.com to buy some discounted gift cards to save even more on groceries and at Walmart.
Taxes – $300:
Quarterly estimated state taxes. I paid it a little early to meet the minimum spending requirements on my Chase Ink Business card (and snagged a sign up bonus of $800 worth of Ultimate Reward points in the process!). Check out credit card bonus offers if you like free money and free travel as much as I do!
Travel – $292:
We spent the first two and a half weeks of August in Berlin and Koblenz, Germany and Amsterdam, Netherlands. The $292 travel spending is mostly groceries but also includes some restaurants, gas for the rental car, local transit, and family admission to Eltz Castle near Koblenz. All lodging and intercity train travel was paid in previous months. We saved a ton of money by staying most places for a week at a time and renting through Airbnb.
Travel spending for the month was probably several hundred dollars higher than reported here due to the way I tracked expenses. I withdrew hundreds of euros from the ATM in June and July and we ended up spending those euros in August to deplete our euros on hand before returning to the US. The expense showed up in June and July.
Our $10,000 budget for nine weeks in Europe turned out to be doable. Though I don’t have a total trip expense summary down to the penny, it looks like we spent about $8,500 for the nine weeks in Europe (not including around $6,000 in free airfare thanks to redeeming United frequent flyer miles). We ate out a little less than expected which meant the $40/day food budget for a family of five was no problem. We didn’t cut costs on groceries though. We probably spent a little less than budgeted on attractions and admission fees since there was usually a significant discount for family admissions and at some places kids were entirely free.
Clothing/Shoes – $250:
Though we don’t usually do “back to school clothes shopping”, the need arose this year. After walking (and hopping and skipping and jumping and climbing) hundreds of miles this summer, the kids’ shoes and sandals were in varying stages of decay. We also picked up an assortment of clothes for all of us to replace stuff we wore out over the summer (or outgrew, in the case of our three growing children who seem to have overlapping growth spurts).
Education – $69:
Run of the mill back to school shopping. Notebooks, binders, glue sticks, pencils, markers, and index cards. Mixed in with this shopping were some important lessons on getting value. Walmart had name brand Five Star notebooks and binders that were around 100-150% more expensive than the generic store brand equivalents. The kids helped us pick out the less expensive store brand products. Otherwise we would have spent a couple hundred dollars on school supplies.
We didn’t go for the $125 recommended graphing calculator for our new middle school student. Her older sister has one that’s not used all the time and we have an older model graphing calculator from my college days. We may eventually have to buy a graphing calculator but there’s no rush right now. My hope is that phone apps eventually replace the need for an expensive, limited use item.
Restaurants – $42:
After we returned to the US we had to indulge a bit. $42 equals one visit to our favorite Chinese/sushi/Mongolian grill/pho buffet restaurant. Our oldest two kids now pay adult prices so the cost for a meal is creeping up for our family. The food was better than it usually is, or perhaps we were missing it a lot after several months away from home.
Meals at restaurants in Europe are included under the “travel” category of expenses.
Preussen Park in Berlin. Every weekend this place turns into a Thai street food market. Entrees for €5 and small dishes for €1 (about USD$6 and $1.20 respectively).
Gasoline – $35:
Apparently I left the minivan sitting on “E” when we left for Europe. I filled the tank up in August and I’ll have to do so again in September. I tried to top off the tank when there was a feared gas shortage in North Carolina but prices had already shot up by $0.20+ per gallon. So, in a reaction to market prices, I “conserved” resources and skipped the top up until gas prices stabilize.
Healthcare – $16:
Our ridiculously cheap Affordable Care Act-subsidized health insurance plan. Without subsidies it would be over $800 per month.
The political debate over the future of the Affordable Care Act continues in the United States. The Trump/GOP hardliner effort to completely repeal the Affordable Care Act has withered and died on the vine. Maybe it will happen eventually and I’ll lament the loss of my huge subsidy. But the latest I’ve heard is a bipartisan health care bill will be coming from the Senate pretty soon that might actually be able to pass into law. Included in the bill will presumably be fixes and tweaks to keep the health insurance market under the ACA from spiraling out of control with high premiums and lots of uncertainty for insurers and insureds alike. Stay tuned!
Cable/Satellite – $14:
Upon returning to the US after a couple months in Europe, I signed up for new internet service from Spectrum. As a new customer I managed to secure a low rate of $14.99 per month. For that price tag I’m receiving 30 mbit/second download speeds and 4 mbit/second upload speeds with no data caps.
Year to Date Living Expenses for 2017
We have spent a total of $17,323 for the first eight months of 2017. That is $9,000 less than our annual spending target of $26,666 budgeted for the first eight months of the year. We aren’t clipping coupons and rewashing ziplock bags. Instead, I feel like we’re living a pretty luxurious $100,000 lifestyle on under $40,000 per year.
Fall is usually a low-spending time of year. Things slow down for us once the kids are back in school. Mild weather translates to minimal heating and cooling bills. The weather outside is near-perfect for several months so we tend to enjoy tons of free outdoor activities like tennis at the neighborhood park, long walks, hikes, lounging outside with a good book, and backyard campfires. Too much free/cheap awesome stuff to do!
With a $9,000 budget surplus for the year and only four months remaining, I’m fairly certain we will close the books on 2017 with a sizeable sum remaining unspent in our budget.
We are on the lookout for some last minute travel options and found a good deal on a few days at Atlantic Beach, North Carolina in September. The trip won’t cost much since I’m using Chase Ultimate Reward points to get two free hotel nights. We’re dodging hurricanes here in North Carolina but so far it looks like our beach plans will survive.
Monthly Expense Summary for 2017:
- January 2017 – $3,378
- February 2017 – $2,108
- March 2017 – $1,388
- April 2017 – $2,981
- May 2017 – $1,829
- June 2017 – $2,629
- July 2017 – $1,616
- August 2017 – $1,390
Net Worth: $1,890,000 (+$8,000)
It seems like every month I watch our net worth creep up and up and up. August was no different with an $8,000 gain to bring our total net worth to $1,890,000.
In an effort to slightly reduce risk in my investment portfolio, I’ve been slowly selling appreciated stock investments and moving the funds to the Vanguard Total Bond Market index fund. In August, I moved another $20,000 to the bond fund. Right now the bond fund sits at roughly $110,000. That sum along with almost $40,000 in a money market account will be sufficient to provide our living expenses for at least four or five years should the next recession and stock market crash happen sooner rather than later.
Don’t get me wrong – we will still lose several hundred thousand dollars in the next market correction. There’s still a lot of inherent risk that comes with investing in equities. But the shift to a small bond allocation will allow us some certainty in where our next several years’ living expenses will come from.
The luxury of an increasing net worth is that we can more easily handle a massive drop in net worth, should one happen. We’re growing a large margin of safety that should ensure that we never run out of money in early retirement.
As far as the blog goes, I have slowed down with posts lately. Life gets busy! Coming up, I have a few finance-related blog posts in mind and several trip reports from our summer in Europe. I just renewed the Rootofgood.com domain for another year and I’m about to migrate the blog to a new host in a week and sign up for three more years of hosting at the new place, so don’t worry – I’m not abandoning this little project yet. During the migration you might experience weirdness here but hopefully that will be temporary.
That’s it for this month’s financial update. Now that the kids are all in school during the day we are enjoying a lot more peace and relaxation. I’m finally getting more hammock time with a good book. A few years ago I wrote about my weekly schedule as an early retiree, and it’s still about the same today.
Looking forward, we are still trying to figure out what crazy adventure we’ll undertake during the summer of 2018. Mexico? Eastern Europe? USA road trip? Or perhaps be lazy and stay at home?
I’m starting to think of year end financial moves I need to make like taking cap gains and converting traditional IRA to Roth to keep my ladder going. Any big year end plans for your finances (or life in general)?