Author Archives: JustinRoG

July 2017 Financial Update

money-january-2014

It’s a rainy day in the outskirts of Koblenz, Germany and I finally have time to crank out the latest monthly financial update.  It’s 60 degrees and drizzling all day.  The fog rising over the farm fields obscures the view of the next village over.  Though a rainy day would mark ruin for others’ vacations, for us it’s a nice forced break from our routine of exploring new cities and sights.

In July, we visited Milan and Venice in Italy, Ljulbjana and Lake Bled/Kranjska Gora/Soca Valley in Slovenia, Salzburg and Hallstatt in Austria, Munich and Berlin in Germany, and Prague in Czech Republic.  Our nine week summer vacation in Europe is drawing to a close with only a few days remaining in Koblenz, Germany then a few days in Amsterdam before we fly back home to Raleigh.

July was another great month for us.  Our net worth rose another $40,000 to $1,882,000.  Our income remained steady at $1,549 which was barely eclipsed by our spending of $1,616.  In other words, a combination of passive dividend income from our portfolio and a small amount of income from this blog came close to covering all of our expenses for the month while we have been vacationing in Europe.

 

Income

Investment income totaled $940 for the month.  This payment arrived in the first few days of July from second quarter dividend payments.  The majority of our 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, dropped to $608.  I have two large checks from an advertiser waiting for me at home that arrived during June and July, so the blog income is lower than usual.  But watch out for August’s update when I’ll deposit three of those large checks!

My early retirement lifestyle consulting dropped to zero for the month. That’s totally fine with me since we’ve been rather busy on this vacation, and I had several media interviews during July that took some time out of my schedule.  I’m back on track to have several clients in August so I think July’s big fat zero is a temporary lull.  Perhaps everyone else is on vacation too and not overly focused on money.

I racked up about $20 in cash back from the Ebates.com and Mrrebates.com online shopping portals but didn’t transfer that money from paypal to my bank account until August so those funds will show up in August’s financial update. 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!).

july-2017-income

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).

 

Expenses

Now let’s take a look at July expenses:

july-2017-expenses

We spent $1,616 during the month of July.  We spent slightly less than half of our budgeted $3,333 per month (or $40,000 per year).  Travel represented all but about $100 of our total monthly spending.

 

Travel – $1,523:

In July we spent $1,523 in Europe on our big summer vacation.  About six to eight months ago we spent $5,000 for trains and buses between cities plus all of our lodging for nine weeks (through Airbnb) so our expenses right now while on vacation are mostly groceries, dining out, local transportation (transit or rental cars and gas), and admission fees to castles, palaces, and museums.

Looking at the disaggregated data in Personal Capital, our $1,523 travel spending for July breaks out as follows:

  • groceries – $500
  • dining out – $175 (note: this is probably closer to $400 including money withdrawn from the ATM in June)
  • rental car – $400
  • transit – $150
  • admission fees – $300

 

Groceries – We spent around $500 on groceries in July. We eat most meals at our apartment or pack a picnic lunch to enjoy in the middle of the day when we take a break from that day’s activities.  Don’t misconstrue this as a mere cost saving exercise – we enjoyed plenty of the finer things in life (smoked ham, smoked salmon, cheese, wine, beer) along with local staples at each meal.

Picnicking on the hillside overlooking Lake Bled in Slovenia. $5 for fresh baguettes, some ham, salami, prosciutto, and cheese equals a nice little feast with a view.

Picnicking on the hillside overlooking Lake Bled in Slovenia. $5 for some apricots, fresh baguettes, some ham, salami, prosciutto, and cheese equals a nice little feast with a view.

 

Dining out – We usually dine out two to five times per week.  Many times we order take out and dine in the comfort of our own home or take advantage of a park bench or picnic table.  From looking at our ATM withdrawals and credit card purchases pulled from Personal Capital, I see $175 spent during July.  However, we had several hundred euros in cash that I withdrew from ATMs in June that we most likely spent on dining out (our largest category of cash purchases), so we probably spent closer to $400 on dining out during July.  Most meals were USD$20-35.

We got local Czech food take out almost every day in Prague. 4 heaping plates of meat and some variety of potatoes for about USD$20.

We got local Czech food take out almost every day in Prague. 4 heaping plates of meat in a variety of savory and/or spicy sauces plus some variety of potatoes for about USD$20 total.

 

Rental Car – We rented a car twice in July.  Once for 10 days in Ljubljana (returning it in the northern part of Slovenia) and once more for four days just outside of Salzburg, Austria, returning it to Munich, Germany.  We spent $400 in total for rental fees plus gas and parking, which works out to about $29 per day.  We took eight major day trips during this period (including two moves to a new apartment in a new city) so I feel like that’s an incredibly good transportation value, even given the cheap public transportation options available in Europe.

Dachau concentration camp memorial site just north of Munich. 2 hours by public transit or 40 minutes by car.

Dachau concentration camp memorial site just north of Munich. Two hours by public transit versus 40 minutes by car from our south-side apartment.

Renting a car in Europe was a little intimidating but it worked out perfectly well for us.  I paid about 50% extra to reserve automatic transmission cars, which also seemed to get us a free upgrade to mid-size cars in two out of three cases.  I googled the traffic regulations a bit so I knew what most of the signs meant (and only got honked at once or twice).  Some streets were narrow but speed limits in the old towns are very slow.  It’s easy to dodge oncoming cars on what should be one way streets when you’re traveling at 10-15 miles per hour.  Parking was never a problem as we had parking at our apartments and the sites we visited had free parking or very inexpensive parking at $2-7 for the day.

One of the rentals was an Audi A3 and it was our smallest rental.  It was a squeeze but we fit all of our luggage for the five of us plus two big boxes of groceries in the back of the car.  Good thing we packed light because there is no way we could have fit five pieces of checked luggage in the trunk.

One of the main reasons to rent a car in Germany - our visit to Neuschwanstein Castle about 2 hours south of Munich. We decided to skip the interior tour after seeing many other castles and spent the time hiking up to a bridge over a waterfall instead. We ended up touring the castle courtyard for free, so didn't miss much.

One of the main reasons to rent a car in Germany – our visit to Neuschwanstein Castle about 2 hours south of Munich. We decided to skip the interior tour after seeing many other castles and spent the time hiking up to a bridge over a waterfall instead. We ended up touring the castle courtyard for free, so didn’t miss much.

 

Transit – We spent around $150 on transit in July.  In Munich and Berlin, unlimited ride multi-day passes for families were about $11-12 per day.  In Prague we chose to buy individual tickets.  For the whole family this worked out to USD$3 per one way trip (or $6 per day).

Prague Castle in the background and Charles Bridge in the foreground in Prague, Czech Republic. Transit in Prague is great - $3 to get the whole family across town to the castle by subway in 20 minutes.

Prague Castle in the background and Charles Bridge in the foreground in Prague, Czech Republic. Transit in Prague is great – $3 to get the whole family across town to the castle by subway.

 

Admission fees – We spent a total of $300 on admission fees during July.  We visited two caves in Slovenia and an ice cave in Austria that were almost $100 each.  We also visited the Residenz in Munich for $16 for the whole family (excellent value, by the way).  We tend to skip museums because, well, have you ever visited a museum with a five year old?

Cost for admission to parks, playgrounds, hiking trails, and splashing in streams and lakes? Generally zero and way more fun than the typical museum.  Perhaps I have no taste for culture.

Amazing Skocjan cave in Slovenia. Not far from Trieste, Italy.

Amazing Skocjan cave in Slovenia. Not far from Trieste, Italy.

 

Free: Hanging out at the deserted marina on Lake Hallstatt in Austria. I'm catching a quiet moment on the lake while the kids are burning off energy on a tire swing in the park.

Free: Hanging out at the deserted marina on Lake Hallstatt in Austria (Hallstatt village in the background). I’m catching a quiet moment on the lake while the kids are burning off energy on a tire swing in the park. Another one of those surreal “Holy Crap! Am I really here seeing this? Amazing!” moments.  Then of course I ended up on the tire swing five minutes later.

 

So far we are underspending the budget estimate I put together for this trip.  Since we are a few days from returning home, it’s unlikely we’ll encounter any big surprise expenses.

 

Home Maintenance – $60:

A teenager from down the street mowed our grass at home for $20 per mow times three mows.

 

Service fees – $22:

I have a 457 account and Mrs. Root of Good has a 401k that both charge small annual account maintenance fees. In exchange for these fees, the mutual fund expenses are lower than normal on these accounts compared to similar accounts at other institutions.

 

Telephone – $10:

We keep an old T-Mobile prepaid phone active for $10 per year on a grandfathered Gold Rewards plan.  Even though we rarely use it, it’s very handy those few times we do need it.  International roaming is easy and it has a “real” phone number that has proven useful several times this past year to serve as a contact number when verifying accounts for security purposes.  My various free VOIP phone numbers don’t usually work for account verification.

Cheers from Venice! Gelato!

Cheers from Venice! Gelato!

 

Expenses that were zero during June:

Internet – we cancelled internet for the summer since we won’t be using it.

Healthcare/Medical – I prepaid the health insurance through July so we won’t have to worry about that while in Europe.  So far everyone has remained healthy and my extensive first aid kit is still mostly intact.  We chose to skip travel insurance so we are self-insuring for health care here in Europe (other than our emergency coverage through US-based insurance).

Utilities – I prepaid our electric, natural gas, and water bills for several months ahead during prior months.  This was mostly to meet the minimum spending requirements for a series of credit cards we applied for this winter and spring that gave us 360,000 airline miles.  It doesn’t take much to score free tickets to Mexico, the Caribbean, or Europe (we traveled to Europe on free plane tickets, for example).

Do you like free travel as much as I do?  Check out all the credit card sign up bonuses.  Or go directly to the Chase Ink Business Preferred card with an 80,000 point bonus (any size business qualifies you for a business card).  For reference, 80,000 points can fly you almost anywhere in the world on a variety of frequent flyer programs, or get you three domestic round trip tickets.

 

Year to Date Living Expenses for 2017

july-2017-expenses-ytd

We have spent a total of $15,933 for the first seven months of 2017.  That is $7,400 less than our annual spending target of $23,333 budgeted for the first seven months of the year.  $15,933 year to date spending would appear to be a symptom of a painfully frugal lifestyle. It is $600 less than the federal poverty level, after all.  However, through careful planning and judicious spending on things that bring us great value, we’re living what I call a $100,000 lifestyle on under $40,000 per year.

In the fall of 2017 we’ll enjoy several months of cheap living.  The kids will all be in school during the weekdays leaving us parents with plenty of idle time to tackle some postponed DIY projects and general organizing, go out for some adventuring (once the temperature in North Carolina cools off to sub-inferno levels), and relax in my much-missed hammock.  It wouldn’t surprise me to see the year end total spending at $25,000-30,000 barring any unforeseen medical or house-related emergencies.

 

Monthly Expense Summary for 2017:

 

Net Worth: $1,882,000 (+$40,000)

Another month with a huge net worth increase.  Seven months into 2017 and we have zero months with a drop in net worth.  Things always go up, right?  Based on recent history that’s certainly a reasonable conclusion.

july-2017-net-worth

 

Since the beginning of the year we have watched our net worth increase by over $200,000.  To take advantage of a skyrocketing stock market, I’ve been slowly selling appreciated stock investments and moving the funds to the Vanguard Total Bond Market index fund.  I moved another $20,000 in the first couple of days of August.  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.

I started early retirement with a near-100% allocation to stocks.  After a series of sales and shifts to bonds, I’m still at a 90% equities allocation, which is aggressive by most standards.  I’ve been through a few bear markets in my life and I know I’ll be sleeping a lot better with a five year cushion of liquidity to insulate me from the vagaries of the stock market.

No longer a 30-something early retiree. Mrs. Root of Good celebrated the big 40 in Ljubljana, Slovenia with an uncharacteristically small birthday cake.

No longer a 30-something early retiree. Mrs. Root of Good celebrating turning the big 40 in Ljubljana, Slovenia with an uncharacteristically small birthday cake.

Enough of finances. Back to fun.  With a few days remaining on our nine week vacation, I’m in a contemplative mood.  For those still working, you probably know all too well that sinking feeling you get at the end of a one or two week vacation when you realize you’ll be back home soon, it’ll be Monday morning, and you’ll be back in your office chair wading through a backlog of emails, surfing Root of Good, and dreading the quotidian nature of your nine to five (assuming you’re not part of the 13% of folks that actually love their job).

Loving the slow travel lifestyle. Plenty of time to stop in beautiful places not on any tourist checklists take it all in. Bridge over the Ljubljanica River.

Loving the slow travel lifestyle. Plenty of time to stop in beautiful places not on any tourist checklists to take it all in. Bridge over the Ljubljanica River in Ljubljana, Slovenia.

Since I have retired, I don’t get that feeling any more.  I’ve adjusted to my new reality.  Though this particular vacation is about to be over, life as a whole is one big vacation now.  It is within our budget to spend every summer in Europe (or somewhere else) if we want to.  I’m ready to get back home but I know we’ll be back on the road again eventually.

 

 

Do you get that feeling at the end of a nice vacation?  Where should we vacation during the summer of 2018?  

 

 

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Surprising Finds in Lisbon, Portugal

historic-tram-28-lisbon-featured

The Root of Good family started its grand nine week European vacation with five days in Lisbon, Portugal.  After a short flight from Raleigh, Lisbon is an easy 7.5 hour overnight flight from Washington, D.C., so our transatlantic flight to Europe was relatively painless.  We arrived at 10:30 in the morning the next day.  After an arduous journey through the immigration lines, we left the airport by metro for a quick ride to our first (of fourteen) Airbnb apartments that would serve as our homes away from home for the next nine weeks in Europe.

To battle jet lag, I followed the advice to stay awake the whole day of our arrival and DON’T take a nap.  We dropped our bags at the airbnb apartment, hooked up to wifi, unpacked a bit, and did a quick inventory of necessities (“Do we have soap, shampoo, conditioner, and breakfast for tomorrow?”), and headed out for an afternoon of exploring downtown Lisbon so we would be forced to stay awake.  Easier said than done, we had an overly exhausted five year old that fell asleep on the metro ride back to our apartment, and it’s the first time I’ve nearly fallen asleep while standing up (waiting for the metro).

Waking up the next day in Lisbon, none of us really suffered from jet lag. Disaster averted.

Before we jump into the Lisbon trip report, here’s some background info.  Portugal and Spain share the Iberian peninsula in the southwestern corner of Europe, and appear to be similar in terms of climate and culture.  In fact, the two countries shared a king for a period of several decades yet remained separate, independent countries.  Being geographically adjacent, we decided to visit both countries (with Spain covered in a subsequent trip report post).

A quick note on ease of communication: I’m fairly proficient at speaking Spanish which helped immensely when attempting to communicate in Portuguese.  The languages are similar enough that I could get by reading Portuguese, make out some words while listening, and occasionally speak words in English or Spanish to get by.  If you know Spanish, learning the travel vocabulary basics is pretty easy.  English is widely spoken in the tourist areas, but less so outside the center.

 

I'm glad we didn't go bare-bones budget for our Airbnb reservations. This place in Lisbon was nice!

I’m glad we didn’t go bare-bones budget for our Airbnb reservations. This place in Lisbon was nice!  Perfect place to rest up after a flight across the Atlantic.

 

Exploring the City

Our apartment was a few miles from the center of town which meant a 10-20 minute bus or subway ride most days depending on where we were headed.

The biggest attraction in town is the Sao Jorge Castle.  A relic from the days when the Muslim Moors controlled southern Spain for a period of roughly 700 years, this old fortification sits high on a hill overlooking Lisbon.

Sao Jorge Castle

Sao Jorge Castle

 

Our first castle visit in Europe! First of many...

Our first castle visit in Europe! First of many…

 

sao-jorge-lisbon1

 

I'm still not sure how they got the water to the top of the hill to fill up this old moat. Did water run uphill back in the day?

I’m still not sure how they got the water to the top of the hill to fill up this moat. Did water run uphill back in the day?

 

Great views from the castle walls

Great views from the castle walls

 

We took a bus and a tram across the city to see the Tower of Belem. This tower guarded the entrance to the Tagus River, and provided protection for the city and all inland areas of Portugal from ships sailing the Atlantic Ocean.

We took a bus and a tram across the city to see the Tower of Belem. This tower guarded the entrance to the Tagus River and provided protection for the city and all inland areas of Portugal from unfriendly ships sailing the Atlantic Ocean. (note: our son is being goofy – he’s not exhausted or asleep. He simply hates posing for pictures because he’s five.)

 

A short walk from our Airbnb, the Fonte Luminosa or Luminous Fountain entertains and cools us down from the scorching summer heat.

A short walk from our Airbnb, the Fonte Luminosa or Luminous Fountain, entertains and cools us down from the scorching summer heat.

 

Maybe I'm a transportation nerd, but I loved seeing all the trains go by in this "canyon" next to our airbnb. Our apartment is in the building on the right.

Maybe I’m a transportation nerd, but I loved seeing all the trains go by in this “canyon” next to our airbnb. Every five to seven minutes another local or regional train would pass by.  The subway pops above ground for a bit in the far left of the photo and crosses over the railroad tracks.  Our apartment is in the green building just to the right of center.

 

Just across the railroad track "canyon" from our apartment is this deserted city park. Nice way to burn off some pastel de nata consumed during the stay in Lisbon.

Just across the bridge over the railroad track “canyon” from our apartment is this quiet city park. Nice way to burn off some pastel de nata consumed during the stay in Lisbon.

 

Getting Around

We took the Lisbon transit system every day except the final day when we Uber’d (Ubered?) back to the airport at 6 am Sunday since the metro doesn’t start running till 6:30 am.  It turns out Uber is super cheap in Lisbon and doesn’t cost a lot more than transit tickets for short to medium rides around the city.

The transit system has a subway with several lines complemented by a larger network of buses and trams criss-crossing the greater Lisbon area.  Although Lisbon as a whole is rather inexpensive, the structure of the fare system makes Lisbon transit rather expensive compared to most other European cities we’ve visited.  Single transit tickets run USD$1.50 while 24 hour passes are USD$7 per person.  For tourists, no discounts are available for children or families, and even our five year old had to purchase tickets (a rarity with other transit providers).  Frustratingly, the single tickets are not valid for transfers between buses or transferring between the metro and buses or trams (transfers between subway lines are free).  As a result, the day pass quickly becomes an attractive option if you’re making transfers or planning on taking multiple trips during a day of sightseeing.  We mixed it up with some single tickets and some 24 hour passes to optimize the transit spending.

The 24 hour passes can be used on two separate days.  For example, we lazed about the apartment one morning then set out for the day’s excitement around 1 pm which is when we validated our 24 hour pass.  This meant we could travel all day then up till 1 pm the next day.  A small trick, but helpful to stretch a buck when day passes for five total USD$35 per day.

The day pass lets you ride these historic trolleys around the touristic center of town.

The day pass lets you ride these historic trolleys around the touristic center of town at no additional cost.

 

And go up the various elevators and funiculars around town, all for the price of one $7 24 hour pass.

…And go up the various elevators and funiculars around town, all for the price of one $7 24 hour pass.  Though hard to see from this angle, the elevator starts from the ground level where we took this picture and goes up to the top about 80-100 feet where you can walk out to the street level. It’s a hilly city!

 

Food in Lisbon

On our first night in Lisbon, we were jet-lagged and hungry downtown after a day of sightseeing and trying to stay awake.  The kids were starving and exhausted, so we took a break from the tourist trail and stopped into a doner kebab restaurant for some kebabs (something new to us) and burgers (comfort food for the kids).  The whole meal came in at €29 (or USD$31).

Doner kebab prato (or plate) - a double heaping serving of doner kebab meat, veggie salad, and large french fries on the side for USD$6. It came with a soda which we switched for a beer (beer was cheaper than soda so technically it was a downgrade :) )

Doner kebab prato (or plate) – a double heaping serving of doner kebab meat, veggie salad, and large french fries on the side for USD$6. It came with a soda which we switched for a beer (beer was cheaper than soda so technically it was a downgrade 🙂 )

 

Encore appearance of the doner kebab plate - kebab sandwiches on baguettes with tomatoes and olives from the grocery store! Yummy creative way to consume leftovers from huge portions at the restaurant.

Encore appearance of the doner kebab plate – leftover kebab on baguettes with tomatoes and olives from the grocery store and balsamic vinegar provided by the airbnb host. Yummy creative way to consume leftovers from huge portions at the restaurant.  Nice $1-2 bottle of wine and city view as side dishes.

Since we’re on extended travels with our three kids, it’s usually easier to buy nice foods and dine at home or grab take out, rather than try to get the crowd rounded up for lunch or dinner out somewhere, navigate to a suitable restaurant, then wait for our food to come out when our kids are starving to death literally*.

 

* not literally, but you know how kids can over-dramatize

 

Homemade snack time sampler - croissant, camambert and prosciutto (called presunto in Portuguese)

Homemade snack time sampler – croissant, Camembert and prosciutto (called presunto in Portuguese). I forget the exact cost but a fraction of the US cost. Probably $0.50-.75 for this whole plate.

We visited a Portuguese slash Middle Eastern slash South Asian restaurant and ordered several dishes to share.  Chicken curry, steak and egg, empanadas, grilled fish, and burgers. The total was once again €29 or about USD$31 for the five of us.

Chicken curry

Chicken curry, rice, and salad

 

$5 for 3 empanadas and a $1.50 "quibe" - fried meaty deliciousness

$5 for 3 empanadas and a $1.50 “quibe” – crispy fried meaty deliciousness

 

$5 for a steak dinner? Thanks, Lisbon!

$5 for a steak dinner? Thanks, Lisbon!

 

And for dessert - pastel de nata, the most famous sweet treat from Lisbon. We picked these up from the bakery in the grocery store next to our apartment for $0.35 each.

And for dessert – pastel de nata, the most famous sweet treat from Lisbon. It’s a creamy custard baked in a flaky dough.  We picked these up from the bakery in the grocery store next to our apartment for $0.35 each.

 

The $35 big haul from the grocery store to set us up for good eats at “home”:

I love checking out all the different foods they stock at the grocery stores in other countries. And snapping up cheap buys compared to prices at home.

The grocery store had a hot prepared foods counter so I got several different meat filled pastries, a sausage, some croquettes, and a whole rotisserie chicken.  And check out those presunto flavored potato chips.

We have a habit of buying some good bread and sliced meats and cheeses and packing a light lunch to take on the go.  Then we can have a nice picnic whenever we get hungry, or slide a kid a mini sandwich to eat on the go for an energy boost.

 

Thoughts on Lisbon

We had a good time in the city and thought it was a fun introduction to Europe.  Lisbon offers different sights compared to the rest of Europe since there’s the Moorish influence and the climate is drier and hotter.  For those that have only visited the most popular European destinations like Paris and London, it’ll be a pleasant change of scenery.

 

Celebrating my 37th birthday in Lisbon with ice cream cake!

Celebrating my 37th birthday in Lisbon with ice cream cake!

 

The weather was much hotter than usual with temperatures in the 90’s and 100’s while we were there in June.  But it was a dry heat, so not too bad.  On the worst day when temps hovered in the 100-104F range most of the day, we chose to take a “do nothing day” where we were lazy and didn’t leave the apartment for sightseeing.  Though we did explore the neighborhood park right before nightfall when the temperature dropped.  This is part of our “slow travel” philosophy – take it easy and enjoy the traveling.

 

Moon reflecting on the Tagus River - view from our Airbnb.

Moon reflecting on the Tagus River – view from our Airbnb.

 

Food was good and inexpensive, both at the grocery store and at restaurants.  The city is easy to navigate by transit and Uber is so cheap that it’s a cost-effective alternative if you don’t feel like taking transit (or even cheaper than transit if you have four people in your group, for example).  Overall, prices were about 65-70% of what we would pay in Raleigh, North Carolina.

 

Took this tiny turboprop for a short hop from Lisbon to Malaga, Spain.

Took this tiny turboprop for a short hop from Lisbon to Malaga, Spain. Note the luggage – that’s all we packed for 9 weeks in Europe.  Bookbags plus some small sacks for miscellanies.

 

After Lisbon, we spent nine days in southern Spain spread across the Andalusian cities of Malaga, Granada, and Seville.  Stay tuned for the summary of the Spain leg of our trip.

 

 

Have you been to Lisbon before?  Any favorite spots we missed? 

 

 

June 2017 Financial Update

money-january-2014

This month’s financial update comes to you from Ljubljana, Slovenia – an undiscovered gem in Europe.  We are about to head to Lake Bled, Slovenia for some hiking, lake-lounging, and more relaxing.  After that we’re on to Austria, Germany, and the Czech Republic for the next month before ending our vacation in Amsterdam.  It’s hard to believe we are almost half way through our nine week summer vacation in Europe!

June was another great month financially.  Net worth increased $14,000 to $1,842,000.  Income was very strong at $7,793 during June, while expenses remained moderate at $2,629.  Such a great feeling to watch your assets continue to grow for you while you’re on the other side of the world exploring and relaxing!

Income

Investment income totaled $6,265 for the month.  The majority of our 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.  Of the dividends and interest received during June, around $3,000 was in our taxable brokerage accounts with the remainder deposited into our IRA’s and 401k’s.

Blog income, shown as “other income” in the chart, dropped to $906.  I have a large check from an advertiser waiting for me at home, so the blog income is lower than usual.

My early retirement lifestyle consulting remained steady at $480 for the month.  That represents four hours of work.  Some of that work was completed while in Seville, Spain which technically makes me a “digital nomad” (one who is location independent and works wherever they are).

This guy works hard!

This guy works hard! No vacationing here!

Tough to focus when this is your view of Lisbon from the bay windows!

Tough to focus when this is your view of Lisbon from the bay windows

 

The $141 in Deposits includes cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. 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!).

Part of the “Deposits” income is $125 from something called credit card tradeline sales.  It’s something new I’m trying to pick up some easy cash. The 30 second version is: I add an authorized user to my credit card; the authorized user gets a big boost to their credit score; they pay the credit fixing agency; I get paid. I’ll expand on this explanation in a future blog post if it’s ever something worth recommending to my general readership. So far it’s kind of cumbersome for limited payback potential and comes with non-trivial but manageable risks that I would have to explain in detail.

june-2017-income

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).

 

Expenses

Now let’s take a look at June expenses:

june-2017-expenses

We spent $2,629 during the month of June.  We came in several hundred dollars under our budgeted $3,333 per month (or $40,000 per year).  The big expenses this month were travel/vacations and home maintenance (a new roof).

Vacation is underway. La Alhambra in Granada, Spain.

Vacation is underway. La Alhambra in Granada, Spain. And perhaps the only picture where our five year old is smiling normally and looking at the camera. 

 

Travel – $1,290

During June we spent $1,290 here in Europe on our big summer vacation.  I haven’t been tracking this spending in great detail, but looking at the data in Personal Capital, I see $723 in ATM withdrawals (fee free or fee reimbursed, thanks to my Fidelity Cash Management ATM/Debit card).  Of that $723, I still had around $400 in cash at the end of June, so June’s spending is slightly overstated.  The ATM spits out cash and I spend it anywhere that won’t take credit cards.  I don’t keep a detailed list of where this cash goes.

I spent $95 on the annual fee for my new Chase Ink Business credit card. I assess this charge to “Travel” because we’ll use the 80,000 bonus points for signing up for this card to get a free plane ticket or three in the future.

After taking out the $400 that we didn’t spend yet, and the $95 credit card annual fee, we spent a net of $800 in June. About $300 of that is groceries.  $250 on dining out. The remaining $250 we spent on local buses, trains, and subways, Uber, and entrance fees to castles and other attractions.

Groceries – So far we’ve spent roughly $300 for the first 18 days in Europe, or about $17 per day.  Grocery prices in Portugal, Spain, Italy, and Slovenia (where we have visited so far) range from about the same as Raleigh to about a third cheaper.  We aren’t able to take advantage of bulk purchases or shopping big sales, so overall we’re still spending about the same as we do at home in spite of dining out more often here in Europe.

I love checking out all the different foods they stock at the grocery stores in other countries. And snapping up cheap buys compared to prices at home.

I love checking out all the different foods they stock at the grocery stores in other countries. And snapping up cheap buys compared to prices at home.  Prosciutto flavored potato chips! Local pastries. Fresh cherries for a buck per pound. $0.35 fresh baked baguettes. A pound sack of olives for a buck. Croissants, multiple packages of prosciutto. Camambert cheese and duck liver pate.  Beef samosa dumplings, empanadas, and cured bacalhau fish croquettes.  I paid USD$35 for all this.

 

Dining out – we go out to eat about once per day or once every other day.  Even though Europe is supposed to be expensive, we aren’t having a hard time finding meals for €20-30 total for the five of us (about USD$23-34).  Sometimes that’s take out, and sometimes that’s a sit down meal at a simple place.  Even in supposedly expensive Venice, Italy, we found a local pizza place 30 seconds from our Airbnb that serves huge 19-20″ pizzas for €10 (USD$11).  These pizzas wouldn’t fit in the 18″ box so they had to fold the pizza over onto itself to get it in the box.  I also had to incline the pizza box at a 45 degree angle to get it through the narrow doorway of our apartment!  For €20 we fed the whole family and had some leftovers for a midnight snack (and some nibbles at the Piazza San Marco the next day).  Then we broke the bank by ordering a couple of take out seafood pasta dishes that totaled €24.50 (USD$28).

$5 for a steak dinner? Thanks, Lisbon!

$5 for a steak dinner? Thanks, Lisbon!

$5 for 2 empanadas and a "quibe" - fried meaty deliciousness

$5 for 2 empanadas and a “quibe” – fried meaty deliciousness

Most recently in Ljubljana, we spent €27-30 (USD$35 or slightly less) per meal on two meals.  One meal was a nice little cafe with local Slovenian dishes where we ordered some extra sides to try different things.  The lunch special I ordered was €5 (USD$5.60) and came with a medium size salad, pan-fried smoked trout on a bed of rice and spinach, plus a slice of cheesecake for dessert.  Later, we went to the Ljubjana central market and ordered from food trucks and had more than we could eat – burgers, local sausage sandwiches, a local version of stuffed crust pizza, and fried calamari for €27 (USD$30).

The fish and rice part of my 3 course meal in Ljubljana for USD$5.60

The fish and rice part of my 3 course meal in Ljubljana for USD$5.60. Not shown – salad and cheesecake.

 

Transit – Other than a pair of Ubers to catch an early morning flight in Lisbon, we’ve gotten by with buses, subways and local trains everywhere else.  Or our feet.  Local transit usually costs USD$0.70 to $1.50 and sometimes one or two kids ride free.  In almost all cities, it’s cheaper (or mandatory) to buy a transit card for $0.50 to $2.00 and charge it with single rides, or add a day pass for unlimited rides for one or more days.  The most expensive city was Lisbon where everyone had to pay and a one way ride on transit was USD$7 for our family of five.  An Uber to downtown or to the airport is only USD$4-6, but we had to take 2 Ubers since only four passengers can legally ride in an Uber (and yes, I asked if a lap child is acceptable; no, the driver said it was not).  We would have been better off Ubering everywhere if there were only four of us.

Entrance fees – We haven’t had to pay to get into a lot of attractions so far.  Many places are free, or offer free admission on certain days of the week or times of the day.  We worked around these free admission schedules and rarely had to pay an entrance fee.  I think we’ve only paid to get into one museum (well preserved ancient Roman ruins under the city of Seville, Spain, about USD$10 total for the family and totally worth it).  We paid to get into the Sao Jorge castle in Lisbon.  Here in Ljubljana we are paying for entrance to two caves (to be reported in the July financial update).

Random parade in Malaga? Free.

Random parade in Malaga? Free.

Follow the parade into the cathedral? Free.

Follow the parade into the cathedral? Free.

Most in the family aren’t that interested in museums anyway, so we generally skip museums (even if they are free).  I do enjoy the occasional museum so I’ll sometimes leave Mrs. Root of Good with the kids and explore the museum part of an attraction while she rests with the kids (read: the kids drive her crazy).  Even for museums that charge, many are incredibly affordable compared to US prices,  Family admissions for USD$10-20 are common. In a previous month, we paid around USD$40 for La Alhambra tickets in Granada, Spain and that proved to be a cheap price for a nice (but hot) six hour adventure through a beautiful castle, palace, and gardens.

La Alhambra. Amazing to see in person. Can't believe it took us 6 hours to see it all, but it's a massive facility.

La Alhambra. Amazing to see in person. Can’t believe it took us 6 hours to see it all, but it’s a massive facility.

Alcazaba in Malaga - totally free if you time it right

Alcazaba in Malaga – totally free if you time it right. Like a mini Alhambra if you aren’t going to Granada.

 

Transportation between cities and all accommodations were paid for over the past six or eight months, so we’re not spending anything on that right now.

We’re a little below the budget estimate I put together for this trip.  Costs might go up slightly once we enter Germany, but so far I’ve been pleasantly surprised with the moderate costs on the first half of the trip.

 

Home Maintenance – $1,126:

Our portion of the roof replacement was $1,111.  The other 80% of the cost was covered by the insurance company.  It looks really nice, and hopefully it’ll hold up for many years to come.

Work in progress

Work in progress

The remaining $15 in this category is random stuff from Lowe’s to tackle a few small DIY tasks before we left for Europe, plus a gallon of gas for the lawnmower. We’re having a teenager from down the street mow the grass at $20 per mow, and I told him to use our gas to refill his mower so he can avoid hauling the gas can down the street.

 

Groceries – $157:

We left for Europe on June 12, so we only spent a little bit on groceries while in Raleigh.  When we get home in August we’ll have to restock the fridge and freezer so I expect a large grocery bill at that point.

We’re spending quite a bit on groceries while in Europe, but I’m including these in the “Travel” expense category.

At the butcher counter, they'll slice the steak thin for you. Makes it easier to fry up some steak for sandwiches.

At the butcher counter at the grocery store in Lisbon, they’ll slice the steak thin for you (“bife” style the English speaking butcher told me). Makes it easier to fry up some steak for sandwiches.

 

Restaurants – $29:

Went out to eat with our immediate family plus some extended family right before we left for Europe.  Dining out while in Europe is included in the “Travel” expense category.

 

Insurance – $25:

Farm Bureau, the insurer I use, requires a $25 annual membership fee. For some reason they billed me in June whereas I paid the other insurance bills in May.

 

Expenses that were zero during June:

Gas – we didn’t fill up the van in June before leaving on vacation, so we won’t have any gas expenses until August or September when we get back.

Internet – we cancelled internet for the summer since we won’t be using it.

Healthcare/Medical – I prepaid the health insurance through July so we won’t have to worry about that while in Europe.  So far everyone has remained healthy and my extensive first aid kit is still mostly intact.  We chose to skip travel insurance so we are self-insuring for health care here in Europe (other than our emergency coverage through US-based insurance).

Utilities – I prepaid our electric, natural gas, and water bills for several months ahead during prior months.  This was mostly to meet the minimum spending requirements for a series of credit cards we applied for this winter and spring that gave us 360,000 airline miles.  It doesn’t take much to score free tickets to Mexico, the Caribbean, or Europe (we traveled to Europe on free plane tickets, for example).

Do you like free travel as much as I do?  Check out all the credit card sign up bonuses.  Or go directly to the Chase Ink Business Preferred card with an 80,000 point bonus (any size business qualifies you for a business card).  For reference, 80,000 points can fly you almost anywhere in the world on a variety of frequent flyer programs, or get you three domestic round trip tickets.

We spent USD$21 to get into the Sao Jorge Castle in Lisbon. Very nice castle, and our first castle in Europe.

We spent USD$21 to get into the Sao Jorge Castle in Lisbon. Very nice castle, and our first castle in Europe.  Great views all around the city and the bay too.

 

Year to Date Living Expenses for 2017

june-2017-expenses-ytd

We have spent a total of $14,316 for the first half of 2017 (through the end of June).  That is $5,700 below our annual spending target of $20,000 budgeted for the first six months of the year.  I’m a little dumbfounded by this running total since I feel like we’re living a pretty luxurious lifestyle (what I call a $100,000 lifestyle on $40,000 per year).

The bulk of the planned big ticket spending for 2017 is over and on the books at this point. The new roof came in much cheaper than expected thanks to receiving over $4,000 from our insurance company for hail and wind damage.  Our Europe trip is on track for our $10,000 total budget for the nine weeks.  July shouldn’t have more than another $2,000-$2,500 in trip expenses.  There’s a good chance we’ll close out 2017 with a nice budget surplus if nothing unexpected pops up.  It’s also possible we won’t break $30,000 in spending for the year!

 

Monthly Expense Summary for 2017:

 

Net Worth: $1,842,000 (+$14,000)

Another month, another strong net worth boost.  I miss the days of up and down markets where we occasionally lost $50,000 or $100,000 in really bad months.  Right now it’s just up, up and more up.  Which means the odds of down, down, and more down increase.  june-2017-net-worth

 

In the meantime, we’ll continue mostly disregarding market performance.  I might move another $25,000 into the Vanguard Total Bond Market index fund if markets keep going up like they have been.

Life's a beach, man. Total beach.

Life’s a beach, man. Total beach. First time dipping toes in the Mediterranean Sea while in Malaga, Spain.

 

Ok, back to traipsing across Europe!  Hopefully I can carve out some time to provide a more in depth trip report for all these places we’re visiting.

 

 

How is your summer going?  Still enjoying the perpetual stock market gains? 

 

 

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May 2017 Financial Update

great-blue-heron-featured

May is all done, and it proved to be another great month for our household.  Our net worth climbed $23,000 to $1,828,000 (another all time record high).  Our income was huge at $9,149 while our expenses remained moderate at $1,829.

The kids are out of school in a few more days and we head out for our nine week summer vacation in Europe in less than a week!  Exciting, busy times for us.  Let’s check out how we did last month.

Income

Our investment income was $201 in May.  The majority of our mutual funds and ETFs pay dividends quarterly in March, June, September, and December.  During other months investment income tends to be much smaller.  The $201 is the interest from our roughly $125,000 investment in our money market account and bond fund.  In June we’ll be getting several thousand dollars in dividend income since it marks the end of the quarter.

Blog income, shown as “other income” in the chart, zoomed to $8,026.  This is much higher than normal and reflects two months of revenue from a major advertiser.  June and July will be puny months for blog income because I won’t be here to cash the checks.  August, however should be very nice.

My early retirement lifestyle consulting slowed down to $486 income.  That represents four hours of work.  As part of that time, I helped someone with the technical and creative aspects of their blog.

Great blue heron taking flight on our lake.

Great blue heron taking flight on our lake.

The $435 in Deposits includes cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. 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!).  The Ebates payment was larger than usual due to referral bonuses from this blog.

may-2017-income

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).

 

Expenses

Now let’s take a look at May expenses:

may-2017-expenses

At $1,829 total spending for the month of May, we are well under our budgeted $3,333 per month (or $40,000 per year).  Most of the monthly expenses went toward insurance, an expense that comes up every six to twelve months.

 

Insurance – $937:

$227 for six months of auto insurance for the two of us. $603 for one year of homeowner’s insurance. $108 for $1 million umbrella policy.  That homeowner’s policy came in handy when it came time to replace our roof!

 

Travel – $235:

Train tickets and bus tickets for Munich to Prague and Prague to Berlin.  Tickets to El Alhambra in Granada, Spain.  $1 online mail forwarding fee from the US Postal Service.

$95 annual fee for the Chase Ink credit card (which will score me 80,000 Chase Ultimate Rewards points = $800-1,000+ of travel).

Free entertainment - I spent a day playing the solo tourist in Raleigh. State Capitol building.

Free entertainment – I spent a day playing the solo tourist in Raleigh. State Capitol building.

 

Healthcare/Medical – $188:

$111 for a dental visit. For the adults in the house, we pay cash for our dentist visits since we don’t have dental insurance.

$27 for lab work from my routine physical. Before insurance the labs were $400 but insurance negotiated the total down to $27 (which I had to pay in full since my deductible is $100).

In May, I pre-paid three months of health insurance at $16 per month so I wouldn’t have to worry about paying the bill while we are on the road in Europe.  We get a huge Advanced Premium Tax Credit courtesy of the Affordable Care Act, so we pay almost nothing for gold-plated health insurance.

The future of the Affordable Care Act is still in limbo.  Based on the last I’ve seen of the AHCA, the replacement for the ACA, we’ll have roughly the same kind of ACA coverage through 2019 with changes to the structure of the subsidy starting in 2020.  I haven’t heard a lot about the AHCA now that it’s in the Senate, so I don’t have any real news to share beyond what I mentioned in last month’s financial update (skip to the section on healthcare/medical expenses).

 

Groceries – $184:

This category was kind a shocker.  We usually spend $400-600 on groceries in an average month.  We are trying to “eat all the food in the fridge, freezer, and pantry” before leaving for the entire summer, so I guess we didn’t buy much.  I checked the Personal Capital data to make sure there’s no error and the individual shopping trips are certainly there.

However, the dollar amounts are tiny because we didn’t stock up on anything.  $30-40 at Aldi buys a trunk full of groceries that, along with food from our freezer and pantry, lets us eat pretty well for a week.

I’m sure we’ll spend a ton on groceries when we return from Europe.  We already started a shopping list that’s growing longer and longer.

We gave a friend a bunch of pho. She returned the favor with homemade Salvadorean tamales and dim sum dumplings.

We gave a friend a bunch of pho. She returned the favor with homemade Salvadorean tamales and dim sum dumplings.

 

Restaurants – $59:

We went out to eat twice. Once to the neighborhood Chinese restaurant and once to the neighborhood pizza place.  This is one area where the prices DO go up as the kids get older.  The oldest, now 12, pays adult prices at both of these restaurants whereas her two younger siblings still enjoy the kid’s menu pricing.  It’s only a buck or two extra, but it adds up once you stack tax and tip.

 

Home Maintenance – $50:

I bought a $50 gift card for Lowe’s Hardware from the grocery store to earn a $10 off coupon on groceries. I’ll be using the gift card to tackle a few projects around the house before we leave for Europe (time permitting).

 

Charity – $50:

Friend gets cancer – we kick in a few bucks through her GoFundMe.  Sounds like the operation was a huge success and recovery is going well.

Helping kick cancer's ass.

Helping kick cancer’s ass.

 

Cable (Internet) – $44:

Monthly internet bill with Spectrum (formerly Time Warner). We get 100 mbit download and 5 mbit upload.  Over the summer while we will be gone, we’re cancelling the service and hopefully we can restart service at the same price or even lower.  I’m investigating their “low income” pricing that offers 30 mbit service for $15 per month but not sure how many hoops we’ll have to jump through to land that deal.  I know we can’t have had service in the past 30 days before signing up, so our departure for over two months works out perfectly.

 

Gas – $37:

One tank of gas for the van.  It’s still mostly full almost a week into June.  Won’t have to refill the van till September probably!

Drove out to the City's Nature Preserve for some canoeing.

Drove out to the City’s Nature Preserve for some canoeing.

 

Miscellaneous – $40:

Not shown on the expense summary graphic are:

  • quarterly service fees of $15 (Mrs. RoG’s 401k – has access to institutional class index funds)
  • Gifts $10 – photos for end of year gifts for our kids’ friends
  • Telephone $10 – put $10 on Google Voice for international phone calls. I had to call Ticketmaster Spain to buy super popular El Alhambra tickets two months ahead of our visit and the website won’t take US credit cards online.  I can refund any unused funds within one year.
  • Education $5 – End of school festival for the middle school student
  • Entertainment $1 – Computer games from Humble Bundle
Check out this fat snapping turtle. Hanging out in our backyard.

Check out this fat snapping turtle hanging out in our backyard.

Maybe he was smelling the flowers.

Maybe he was smelling the flowers.

 

Utilities – $0 (and travel hacking advice!):

You may notice there is no line item for utility bills.  I prepaid our electric, natural gas, and water bills for several months ahead during prior months.  This was mostly to meet the minimum spending requirements for a series of credit cards we applied for this winter and spring.  And to make sure we didn’t have to mess with any bills while on our summer travels.

I signed up for:

  • Mr. Root of Good Chase Sapphire Reserve card – 100,000 Ultimate Reward points
  • Mrs. Root of Good Chase Sapphire Reserve card – 100,000 Ultimate Reward points
  • Mr. Root of Good Chase Ink Business Preferred card – 80,000 Ultimate Reward points
  • Mrs. Root of Good Chase Ink Business Preferred card – 80,000 Ultimate Reward points

By June or July we’ll have 360,000 Chase Ultimate Reward points which we can redeem for $4,800 worth of travel, transfer as 360,000 airline miles or hotel points, or cut ourselves a check for $3,600 cash.  Not a bad haul for a few credit cards.

Do you like free travel as much as I do?  Check out all the credit card sign up bonuses.  Or go directly to the Chase Ink Business Preferred card with an 80,000 point bonus (any size business qualifies you for a business card).  For reference, 80,000 points can fly you almost anywhere in the world on a variety of frequent flyer programs, or get you three domestic round trip tickets.

Problems with mice or snakes? Not with this hungry red shouldered hawk hanging out on our fence.

Problems with mice or snakes? Not with this hungry red shouldered hawk hanging out on our fence (in the rain).

 

Year to Date Living Expenses for 2017

may-2017-expenses-ytd

Through the end of May we’ve only spent $11,687.  That’s $5,000 below our annual spending target of $16,667 budgeted for the first five months of the year.  So far so good!

The two remaining big cost items for 2017 are the roof replacement and our trip to Europe.  Our new roof is installed!  I still have a few punch list items (which are minimal) and haven’t paid for the roof yet, but it looks like we’ll end up paying $950 out of pocket after factoring in what the insurance paid us for replacement of the roof.  That’s a lot better than the $4,000 to $8,000 I was anticipating before I found out our roof was a total loss due to wind and hail damage.  And in the process of installing the new roof, we added ridge vents and upgraded the gutters.

We’ve already booked and paid for roughly $6,000 out of our $10,000 total budget for our nine week Europe trip this summer.  The remaining $4,000 of vacation spending will be concentrated in June through August while we are overseas.  The good news is we won’t be spending much to maintain our home or car here in Raleigh while we’re traveling, so our monthly expenses probably won’t exceed $2,000 to $3,000.

In other words, we should still be under budget by around $4,000 to $5,000 by the end of summer unless something unexpected (and expensive) pops up during the summer.

Work in progress

Work in progress

Final product. Minus the 2nd story gutters that were installed in June.

Final product. Minus the 2nd story gutters that were installed in June.

 

Monthly Expense Summary for 2017:

 

Net Worth: $1,828,000 (+$23,000)

Wow, another huge gain in net worth.  That makes five out of five months in 2017 with strong net worth increases.  Year to date we’re up $148,000 (which is enough to buy a modest house around here).

At some point we’ll hit a soft spot in the economy and the back to back to back net worth gains will invert themselves into losses.  Maybe this month, maybe next month, maybe next year, or maybe even further out.  I’m pretty horrible at timing the market so I won’t guess when this current bull market will turn the other way.
may-2017-net-worth

As I mentioned last month, I was considering moving another $25,000 from equities to bonds.  I carried through on that plan in mid-May, thereby bringing our cash and bond total to $125,000.  This is enough to cover three to four years of living expenses when you add in the taxable dividends we’ll receive over that time period.  The average recession lasts a year or two, so that should be plenty of stable, liquid assets to support us during the next downtown in the markets.  I might move another $25,000 to bonds if the market keeps on going up.

Last month I shared how our early retirement finances turned out way better than we expected – like a half million dollars better!  We haven’t made any huge changes to our lifestyle as the net worth figure crept up.  It’s mostly small changes in spending.  I could have saved some money on the roof if I did a few of the simple parts myself.  But why bother since we can afford to outsource it?  We saw a friend in need and made a small charitable contribution to help out.  On our Europe trip, we’ll be spending more freely than we have on past trips.

These are all relatively modest spending increases, and are purely discretionary.  Should we find ourselves suddenly $500,000 to $750,000 poorer (not impossible with a 90%+ stock asset allocation), we could minimize these type of expenses to stretch our cash stockpile as long as possible.  However, if we continue growing wealthier long term (which is the more likely outcome), then we’ll continue to look for small opportunities to increase our spending where it brings value, comfort, and convenience.

Our youngest graduated preschool!

Our youngest graduated preschool!

That’s it for this month’s installment of “what we made / what we spent”.  We’ll be off to Europe in less than a week and hopefully sharing some pictures throughout our summer trip.  Once we return in mid-August, it’ll be a whirlwind of reconnecting with family and friends, hosting a birthday party/sleepover for our daughter, and attending back to school orientations.  During September, our daily lifestyle will morph quite a bit since our youngest child is entering kindergarten.  It’ll be interesting to see how our interests and activities change once we have seven hours of kid-free time five days per week!

 

 

Summer is almost here!  Any fun plans?  Any big money plans now that your investments have most likely grown a lot?  

 

 

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Our Early Retirement Didn’t Go As Planned… Our Net Worth Went UP Half a Million Dollars!

cruise-mexico-featured1

In contrast to early retirement modeling that looks for all the worst cases and failure modes, our actual life the past almost four years illustrates that good things can offset the bad events in life.

Financial planning for early retirement is pretty straightforward.  Figure out how much you plan on spending in early retirement then save up till you have between 25 and 33 times your annual expenses in your investment portfolio.  We initially planned on spending $32,000 per year plus a large lump sum for the three kids’ college tuition.  Using the 33x multiplier (which represents a 3% withdrawal rate), that means we needed $1,056,000 plus another $100,000 to cover tuition, or roughly $1,150,000 in total investments.  That’s about what we started with four years ago but now we have a lot more.

 

The Good:

We plan for the worst and hope for the best.  Fortunately, the past four year have been very positive.  Maybe we used our luck making machine.  Or maybe we aren’t as lucky as we think.  We’re earning more than we thought and spending about what we expected, and future expenses don’t look too bad.

More Work, More Money

When I quit working in 2013, we expected Mrs. Root of Good to join me in early retirement within six months.  Then her employer decided to be really really nice to her so she kept working longer than expected.  Her employer met her requests to take a paid five week summer sabbatical in 2014, and again agreed to a paid sabbatical of twelve weeks in 2015.  The sabbaticals were on top of a 40 hour work week with negligible overtime, four weeks paid vacation, two weeks of holidays, and unlimited sick leave.  After returning from the second sabbatical in 2015, Mrs. Root of Good submitted her resignation and tried to retire.

Unsuccessfully as it turned out.  Her employer offered a flexible work from home arrangement where she officially works from home for four 10 hour days per week.  The boss gave her a **wink wink, nod nod** and said she just needed to work enough each week to make sure nothing fell through the cracks as they worked toward replacing her.  She generally worked Monday-Wednesday for six to eight hours per day and some Thursdays, probably averaging 30 hours per week.  While still collecting full time pay!  This part-time-for-full-time lasted about six months before Mrs. Root of Good finally called it quits and promoted herself from part time work to full time retirement.

Mrs. Root of Good’s extra two years of work netted us around $120,000 after taxes and work-related costs in my estimate (she was earning $70,000 gross per year and we paid nearly zero federal income tax but we stilled owed payroll tax plus state income tax).  Toss that $120,000 on the pile and watch it grow!

Mrs. RoG enjoying her first day of sabbatical.

Mrs. RoG enjoying her first day of the flexible work from home arrangement that doesn’t include working on Fridays.

 

Who knew you could make money blogging?

I always wanted to do something “internet-y” and finance related while working but never found myself in a professional role that fit that desire.  About two weeks after retiring, I started looking into this whole blogging thing.  Mr. Money Mustache had a pretty sweet site so I figured maybe it would be fun to do something similar.  I spent the weekend reading and googling and youtubing all about how to start a blog.  How great is it to be able to jump into a new exciting project head first when you don’t have to deal with work all day?!

Two days after I started the intense blog research I figured out enough to register the Rootofgood.com domain name, set up my hosting service, and then I sat staring at that blinking cursor waiting for me to start typing.  The first couple of words I typed were “HELLO WORLD” (of course).  My little homage to all things programming/internet-y. Then I deleted it and got down to business (first ever real blog post and ALL THE BLOG POSTS EVER).

Almost four years and three million pageviews later, this blog is a little dynamo.  Root of Good currently receives an average of 50,000 to 60,000 visits per month.  In late 2015 I started offering Early Retirement Lifestyle Consulting.  Since conception, the net profit from the blog and related activities was:

  • 2013 – near zero
  • 2014 – $12,000
  • 2015 – $29,000
  • 2016 – $31,000
  • 2017 – roughly the same as 2016

Toss another $72,000 on the pile plus whatever we earn this year.

Though not all early retirees start a blog, many early retirees have a side hustle.  Some early retirees turn a hobby into something profitable.  Others retire from full time work while keeping the door open to very part time, flexible work arrangements by only accepting those projects or clients that fit into their early retired lifestyles.  I did both when I started a blog for fun that turned profitable within the first year and I started consulting an hour or two per week (less when the weather is nice outside).

When planning for early retirement many years ago, I occasionally used a “part time income in retirement” line item for forecasting purposes.  At the time I used a tiny annual income for this part time work.  In one model, I assumed I might earn $6,000 per year doing something one day per week for $15 per hour.  This was based on a little side hustle related to engineering data collection that I had some success with during college.  But more generally, $15 per hour represents a pretty broad swath of potential jobs and hustles, and eight hours per week isn’t a huge impediment to otherwise enjoying one’s leisure time throughout the week.  I could mow lawns, start a handyman business, repair appliances, run errands for the elderly and disabled, or drive for Uber (which wasn’t a thing when I was completing my early retirement models and forecasts).

The very part time work for $15/hr was more of a Plan B “what if” scenario.  Adding $6,000 income per year to supplement withdrawals from an investment portfolio means you can get by on a smaller portfolio using the four percent rule.

As fate would have it, I’m blowing that $15/hr threshold out of the water (ER Lifestyle Consulting rates are currently $125/hr and I’m considering raising those given the demand).  Total earnings from my side hustles are running in the $30,000 per year range right now.  And I don’t think I’m putting in eight hours of effort per week.  Life is good as is the financial solvency of my early retirement plans.

 

Spending is in line with budgeted amounts

We started out budgeting $32,000 per year for 2014 and increased it to $32,400 in 2015 to account for inflation.  In 2016 we bumped the budget to $40,000 in light of all the extra side hustle income and better than expected investment results.

Actual spending since 2014 remained pretty close to our annual budget:

We were over budget in 2014 by a few thousand dollars but under budget all other years so far.  That underspending comes in the face of an almost $9,000 major renovation in 2014, an $8,000 minivan purchase in 2016, and paying for the bulk of a $10,000 nine week trip to Europe in 2016 and 2017 (along with several other multi-week or multi-month trips in previous years).  In other words, we have a rather robust spending plan to fund a whole lotta living and the budget seems to be working out perfectly fine.

Four months of spending at just under $10,000 (Personal Capital screenshot).

Four months of spending in 2017 at just under $10,000 (Personal Capital screenshot).

And this is with three kids!  They are now age 5, 10, and 12 years old.  I’ll admit that we’re still a year away from the oldest starting the typically more spendy teen years, but so far we haven’t noticed a significant spike in spending as the kids get older.

Since we’ve already replaced the exterior siding and the windows, and we’re in the middle of replacing the roof right now, we don’t have a lot of major home improvement projects planned for the near future, so spending on the home should remain modest.  We just replaced the car last year, so that should last us quite a while too.  Those big house-related capital replacement costs are amortized and included in our annual budget.

Another area that can bust a budget is healthcare and dental expenses.  We’ve been fortunate to spend very little in this category other than a few doctor’s visits and routine dental checkups (plus a few minor procedures at the doc and dentist).  We haven’t used up our whole healthcare/dental budget in any year of retirement.

We track all our monthly spending in Personal Capital.  It’s a free, easy to use, and automatically pulls transaction data from credit cards and bank accounts so you don’t have to spend any time inputting transactions manually (or maintain another spreadsheet!).  Review of Personal Capital.  It’s also a great tool to consolidate and track your brokerage accounts, IRA’s, and 401k’s so you can track your asset allocation and keep an eye on mutual fund expenses automatically.  Tracking spending is in my opinion the best way to stay cognizant of where your hard earned money goes and what expense categories are dominating your budget.

 

College won’t cost as much as we initially budgeted

By most objective metrics, we are wealthy.  I assumed we wouldn’t qualify for any need-based financial aid for the kids’ college.  I was wrong.  I found out the FAFSA financial aid form doesn’t include the home value nor does it include retirement account values in determining financial aid.  As a result we look relatively poor on paper due to having over 75% of our financial assets in retirement accounts and a modest adjusted gross income around $40,000 per year.

Upon entering early retirement in 2013, I expected to pay around $100,000 in total just for tuition for 3 kids and almost triple that amount if we cover room and board, books, transportation, and other living expenses.

After crunching some numbers on college costs using a few different assumptions, it looks like the worst case scenario will have us paying around $162,000 total while the best case scenario (which isn’t that far-fetched) has us paying just $31,500.  Those are totals for all three kids.  The updated forecasts come from better assumptions about scholarships and grants our children might qualify for given their academic achievements to date, along with a better understanding of how financial aid formulas work.  When I first retired, our oldest two kids were in second and third grade, and we really didn’t know how well they would do in school once the academics grew more challenging.  Several years later and they are doing great!

yale-university-doorway

 

Great stock market returns

Since I retired early, the stock market has been on fire!  As measured by the Vanguard Total Stock Market Index Fund (VTSMX), returns including reinvestment of dividends are:

  • 2013 – 33.4%
  • 2014 – 12.4%
  • 2015 – 0.3%
  • 2016 – 12.5%
  • 2017 (year to date through May 12) – 7.0%

International investments haven’t performed quite as well over the same period.  Our portfolio still managed to swell from around $1.1 million right after I retired up to $1.65 million today.  That’s a $550,000 increase in value.  About $100,000 of that increase can be attributed to Mrs. Root of Good’s extra two years of paychecks and my blog earnings (after subtracting the roughly $100,000 spent on living expenses during early retirement).  That still leaves us with roughly $450,000 of investment gains in the past four years.  Thanks Mr. Stock Market!

The returns have been so great that since the start of 2017 I have moved $90,000 from equities into the Vanguard Total Bond Market Index Fund (VBTLX).  Those bonds plus the $30,000 we have sitting in money market accounts will provide a multi-year safety blanket should the market decide that the party is over.  A six figure low-risk fixed income portfolio will help me sleep at night regardless of market volatility.

 

Successful travel hacking continues

I’ve been scoring huge credit card sign up bonuses and collecting points and miles from credit cards for over a decade.  Upon entering retirement in 2013, I fretted over the eventual end of all these easy bonuses that translate to free trips all over the world, even for our family of five.

It turns out I had nothing to worry about after earning 1,265,000 points and miles from sign up bonus offers in the almost four years of early retirement.  This gravy train keeps rolling down the tracks and shows no signs of stopping!  Some of the rules of the game have changed (Chase’s 5/24 rule is a key example) but there are still plenty of fish in the sea. So cast your net wide and don’t let all these delicious morsels slip past you.  Our credit scores remain a killer 800-something (out of 850 points) and card issuers generally don’t bat an eye at extending us even more credit.

All these free points and miles explain how we’re able to travel the world for weeks or months each year on a modest $5,000 to $10,000 annual budget.  Without free points and miles we would be incurring an extra $5,000-$10,000 expense per trip based on the past few trips.

two-years-early-retirement-mexico

 

No more work = no more work related costs

I’m sure we save a small amount on lunches out and simpler wardrobes (shorts and polos just don’t cost that much, guys).  But the biggest work-related cost that disappeared was our second car.  We questioned whether we could cut back to one car and it turns out it’s not a problem at all with our current lifestyle.  It’s been almost a year since we dropped to one car and there have been just a few times where it would have been nice to have a second car.  But we made it work with just one car.

This one car does it all for us.

This one car does it all for us.

We walk, we can take transit, Uber is always a few clicks away (though we’ve never used it so far).  Postponing or combining trips and smartly scheduling appointments help.  We also enjoy spending time at home or within walking distance in the neighborhood, so there are multi-day stretches were our car doesn’t leave the driveway (but our feet still do!).

The money savings are unquestionable – maintaining one car costs half of what it does to maintain two cars. One set of tires, one set of oil changes, one set of routine maintenance, one set of inspections, registration/licensing, insurance, and taxes.  The time savings are even more important – fewer trips to the auto shop for repairs and maintenance.  It takes less time to check the tire pressure and fluid levels in one car versus two cars.

For us, simplifying saves time and money without being a detriment to our lifestyle.  Of course others’ experiences might differ.  We only drive about 300 miles per month (unless we’re on the road completing a multi-thousand mile road trip).  Many destinations are walking distance in the neighborhood. Our kids aren’t overloaded with after school and weekend activities (though we stay busy!).

 

The Bad:

I feel like we need a counterpoint to “The Good” so I’m sticking “The Bad” in here.

 

Health Insurance in a Post-ACA World

The future of health insurance is our biggest unknown going forward.  There’s a new sheriff in town and he’s adamant that the Affordable Care Act is horrible and must be repealed and replaced.  The replacement bill, the AHCA, recently passed the House and now sits with the Senate for further sausage-making.  What will we end up with?  Your guess is as good as mine.  The following is an excerpt from my April 2017 Financial Update article where I opine about the current health insurance situation in the US:

“Let’s look at the details of the AHCA as passed by the House.  Here’s the best summary I’ve seen of the current version of the AHCA compared to the ACA (courtesy of the non-partisan Kaiser Family Foundation).

Main takeaways:

  • ACA premium subsidies continue through 2017, 2018, and 2019 (so it’s not an immediate “repeal”). Your subsidy declines as your income increases up to 400% of the federal poverty level.
  • Starting in 2020 those buying individual coverage get a $2,000 to $4,000 tax credit per person for qualifying insurance (and policies don’t have to be purchased through the official Healthcare.gov Marketplace to qualify for the tax credit). Tax credits vary with age (older = larger credit) but not with income, however there are income limits where the tax credit phases out
  • Cost sharing reduction subsidies disappear in 2020 (currently available to those earning under 250% of the federal poverty level – it’s what makes my deductible $100, max out of pocket $1,200, and my copays $5-20)
  • In 2018, HSA contribution limits double to $13,100 for family coverage.
  • If a state chooses to allow it, insurers can charge more for pre-existing conditions for those that have a lapse in coverage. Possibly much, much more. Maintaining continuous coverage seems to be the way to go to avoid paying a lot more for pre-existing conditions.
  • Increase the age banding of premiums so that the premiums paid by older people aren’t capped at three times the premiums charged to the youngest people (under AHCA older people will pay five times what younger people pay – while only getting an extra $2,000 in tax credits)
  • No more individual mandate to have health insurance retroactive to 2016

Those are the basics but trust me, I’m leaving a lot out.  Medicaid and Medicare are tinkered with too.

The Senate will most likely make significant modifications to the AHCA, so it’s pure speculation as to what we’ll actually end up with once all the sausage is made.

My main takeaway as a 30-something early retiree that will be 40 by the time the ACA premium subsidies go away in 2020 is that I’ll be paying more for health insurance that will come with higher deductibles and copays.  Mrs. Root of Good and I will each get a $3,000 tax credit to use toward insurance that will probably cost $4,000-$5,000 per year per person for a basic plan, and possibly much more if healthy people choose to go uninsured (since the individual mandate will be gone and many people will pay more for health insurance, making it less affordable).  I don’t know what the kids’ policy pricing will look like or if they’ll end up on Medicaid (if that’s still an option given the possibility of AHCA-related changes to Medicaid), but I understand they’ll be eligible for $2,000 tax credits too (based on their age) if we purchase individual policies for them.

In conclusion, I’m mentally penciling in an extra $4,000 or so for health insurance and healthcare costs starting in 2020, but also accepting that a lot can change with the AHCA before passage (or it might fail altogether).  There might be a subsequent health care bill passed later on in 2018 or 2020 as the political winds change that could put our costs back in line with where they are currently under the ACA.” (end excerpt)

If this bill passes then the near-term damage of this law won’t be horrible.  But it’s still a lot of uncertainty in our early retirement financial plan.

A silver lining of the Republican controlled White House and both houses of Congress: tax cuts.  I’ve heard mutterings about higher child tax credits and larger standard deductions, which could save us some money on taxes to partially offset higher health insurance costs (or, rather, lower health insurance tax credits versus what we get under the Affordable Care Act).  Tax cuts can potentially benefit the economy depending on how they are structured, so it’s possible we’ll see investment gains too.

Stop and smell the roses

Stop and smell the roses

 

Have we reached the top in the stock market?

I’ll be the first to admit I have no clue but I know it’s been on a winning streak the past four years.  That’s not to say it can’t keep going up for several more years.  However, there’s a lower chance of strong continued gains year after year simply because there’s less room to grow when the market is already at high valuations compared to long term historical averages.  It’s the exact reason you would have expected big stock market gains in the long term back about 2009 when the market was valued at a third of what it is today.  From deep valleys rise tall mountains.

Our portfolio might experience several years of sideways movement or suffer a double digit percentage decline.  Either of those scenarios are fairly common in the recent history of investing and it’s most certainly not different this time around.  That’s not pessimism speaking but rather realism.  It won’t mean the end of everyone’s early retirements but it will certainly mean we will keep a closer eye on expenses and income.  However our $120,000 of bond funds plus money market funds will provide a lot of stability for several years in the event of a market downturn.

 

Spending more on travel

I roughly doubled our travel budget from $5,400 when I first retired to $10,000 today.  We didn’t really know how much we would travel since our working lives were filled with work work work and just a few weeks of vacation time each year.  Travel is our safety relief valve – when our portfolio fills up to the top, this is where we let out the monetary steam.  We spend more on travel.  If we have to tighten our belts we can cut back in this area.

We’re also taking advantage of geographic arbitrage by traveling to places where the foreign exchange rate makes everything cheaper.  In 2015 that was Mexico (though we would have saved even more by waiting till 2017!).  In 2016 that was Canada.  2017 is a perfect time to visit Europe with the euro trading at the cheapest levels of the past decade.  If foreign currencies grow significantly stronger (= overseas travel becomes more expensive) then we might knock a few US destinations off our bucket list.

And if our portfolio drops by a half million dollars, we can cut out a huge chunk of spending simply by traveling less or choosing less expensive destinations.  I’m sort of looking forward to spending a lazy summer at home at some point in the near future, and a financial reason to skip a summer filled with travel wouldn’t be entirely unwelcome.

Spending more on travel is a good thing because it’s so easy to trim this spending versus other areas of the budget that are more rigid like housing costs or transportation costs.

Wouldn't mind a summer hanging around our house at all. :)

Wouldn’t mind a summer hanging around our house at all. 🙂

 

Almost four years into retirement, where are we now?

In a few months I’ll celebrate four years of early retirement.  From a financial perspective we are doing great.  We earned close to $200,000 extra that wasn’t anticipated due to starting this blog and Mrs. Root of Good working a couple years longer than expected.  Our investments have grown by an even larger sum.  And we’re keeping our spending generally at or below budget.

Our living expenses in retirement are funded from roughly $10,000 dividends and interest per year plus $30,000 income from Root of Good.  That means we don’t really have to sell any investments on a routine basis for living expenses.  Nor do we have to worry about withdrawing investments from IRA’s, 401k’s or my 457 account.

It also means the Roth IRA Conversion Ladder I planned to set up is partially on hold for now.  I still managed to convert around $4,000 from traditional to Roth IRA in 2016, whereas my Roth IRA Conversion Ladder plan called for conversions of $24,000 per year.  However, I was able to contribute $18,000 to my solo Roth 401k and $11,000 to his and hers Roth IRAs during 2016.  Yes, I have a Root of Good 401k plan and I play a shell game by living off the income from Root of Good while shuttling taxable funds into the Roth accounts.  You could say I’m “living off my portfolio like a real early retiree” and saving the $30,000 Root of Good income, which is also a legitimate way of describing my early retirement finances if one wanted to downplay the significance of the side hustle income (I don’t).  It’s a game of semantics.

The net result is $33,000 of additional Roth assets from conversions and contributions during 2016.  In other words, I didn’t follow my original plan but I accomplished a similar goal – increase the amount of funds in the Roth space so I can withdraw the contributions/conversions penalty free and tax free well before age 59.5 should that be necessary.

The unexpected income from Root of Good also means my decision to choose the Roth IRA Conversion Ladder over the competing 72(t) Substantially Equal Periodic Payments method of withdrawal was a sound one.  The 72(t) method is extremely rigid in the amounts you must withdraw each year once you start your initial withdrawals.  However, I knew going into early retirement that my income needs would vary year to year and there was always the chance I would have earned income (or get bored and go back to some form of work).  As a result, I rejected the 72(t) withdrawal method mainly because of the lack of flexibility in withdrawals.  I would really hate to be taking $30,000 of 72(t) taxable IRA withdrawals while earning another $40,000 between this blog and dividends and interest.

 

Now where are we headed?

Things look pretty rosy.  I took my financials and dumped them into the wonderful early retirement calculator at cFIREsim.com and determined that we could spend somewhere around $65,000 per year with almost zero chance of running out of money before age 90 even when we make conservative assumptions about income from the blog and other side hustle income.  Helping shore up the forecast is roughly $25,000 of expected Social Security income that we’ll start drawing in a little less than 30 years.

I don’t know that we’ll spend $65,000 per year but it’s reassuring to know that money isn’t a real constraint to our lifestyle.  We could increase our budget by 50% to cover a lot of unknowns such as higher health care/insurance costs and higher kid-related costs during the teen years.

Four years into retirement and our potential standard of living is approximately double what it was when I quit working.  It’s not entirely surprising given the conservatism of the worst case analysis performed under the “four percent rule”.  Most of the scenarios modeled in the four percent rule (which is closer to a three percent rule for very early retirees) leave the retiree with several times their initial portfolio value.  End result: a growing net worth in real terms for most very early retirees.

However I keep in mind that we might be at the top of a stock market bubble that’s about to burst and that we might see hundreds of thousands of dollars of our net worth disappear in a short period of time.  In that case, I’ll have to revisit what we are able to spend.  Until then, I’m not gonna worry about money and I’ll keep an optimistic but flexible attitude toward the future.

 

 

Any early retirees in the audience that ended up with substantially more than they started with?  Or did early retirement lead to new ventures or interests that turned profitable?  For those planning on retiring soon, do you have any plans to hustle on the side?  Let me know!

 

 

April 2017 Financial Update

money-january-2014

This year is flying by so far! Now that we are one third of the way through 2017, our financial picture for the year is becoming clearer.  And it’s a good picture so far.  Our spending for April remained below budget at $2,981 while our income of $3,321 slightly exceeded our expenses.  Our portfolio and other assets continue their upward trajectory with a $34,000 gain bringing our total net worth to $1,805,000.

This time of year is one of the prettiest in North Carolina, with moderate temperatures perfect for exploring the outdoors. Or lounging in the hammock on the back porch.  The past month has been incredibly busy for us with school events, time with family and friends, tackling some issues around the house, and entering the final stages of planning and preparation for our nine week summer vacation in Europe (we leave in about a month).

Income

Our investment income was $241 in April.  The majority of our mutual funds and ETFs pay dividends quarterly in March, June, September, and December.  During other months investment income tends to be much smaller.  The $241 is mostly interest from our roughly $100,000 investment in our money market account and bond fund.  Also included in that total is a small dividend payment from a mutual fund.  I have no clue why they paid out in the middle of the quarter.

Blog income, shown as “other income” in the chart, returned to a more normal $2,193 in April after dropping to $508 in March. My early retirement lifestyle consulting took off during April with a half dozen clients seeking advice during the month.  Total consulting income climbed to $836 for the month.  This is busier than I would like to be long term, so if this level of interest continues I’ll probably raise rates from $125 per hour to $150 per hour in order to trim back my hours per month devoted to consulting.  It’s really cutting into my video gaming / Netflix / hammock time and I’m afraid of losing my official “Early Retired” status if I work so much.  Though the consulting continues to be a personally rewarding and intellectually stimulating pastime.

The $49 in Deposits includes cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. 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!).

april-2017-income

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).

 

Expenses

Now let’s take a look at April expenses:

april-2017-expenses

We came in just under our budgeted $3,333 per month (or $40,000 per year) during April with total spending of $2,981.  Where did the money go?

 

Utilities – $662:

In addition to paying the monthly water bill and natural gas bill, I also prepaid about $500 extra in order to meet the spending requirements on our pair of Chase Sapphire Reserve Cards.  I just received one set of 100,000 bonus Ultimate Reward points for one of the Sapphire Reserve cards and I should get the other 100,000 bonus points in a few days.  I had to spend $4,000 per card within three months, which is a stretch for us given our low spending of $1,000 to $3,000 during most months.

The 200,000 Chase Ultimate Rewards points can be redeemed for $3,000 of travel if booked through the Ultimate Rewards portal, or transferred to a ton of different airline and hotel partners, which in turn can be redeemed for a dozen or more hotel nights or several international round trip plane tickets or up to eight domestic plane tickets.  Even if you don’t travel, 200,000 UR points can be cashed in for $2,000 instant cash back.  Credit card sign up bonuses are great, aren’t they?  FYI, the 100,000 Chase Sapphire Reserve offer is gone, but there is an 80,000 point bonus for a Chase Ink business card.  Sell stuff on ebay? That’s a business!

 

Home Maintenance – $609:

This was the worst month of homeownership ever.

After noticing the electricity bill unexpectedly doubling last September, I assumed an inefficient air conditioner was the culprit.  So I planned on having the HVAC system checked out this spring.  $220 later and we have a clean set of coils on the outside compressor unit and an extra pound of R-22 refrigerant added to our system (and picked up a $17 discount for paying in cash).  I haven’t needed to run the AC much given how cool it’s been this April and May, so I’ll probably have to wait till June to see if it helped with the electricity bill.   I’ve done a bit of DIY air conditioner maintenance before but didn’t want to illegally recharge my own AC system (or blow it up accidentally).

Right around the time of the AC repair, our main sewer line completely clogged up.  Not knowing where to start with the repair, I called my trusted neighborhood plumber.  The proposed fix was a $750 installation of a cleanout near the foundation of my house (as long as I dug the two tons of dirt out of the hole myself; $100 extra if they dig it).  So I got out the shovel and started digging. I eventually struck gold – a buried cleanout cap a couple feet down!  They were able to use that cleanout to snake the main drain and remove what might have been roots from the sewer line about 50-60 feet from our house.  It’s a mystery because there aren’t any large trees anywhere near that part of the yard.  It might be that 45 year old sewer pipes clog up due to slow accumulations of gunk.  By the end of it, I was still out of pocket $389, but at least now I know I have a cleanout available if it happens again, and I might try renting an industrial drain snake to DIY the cleaning since it looks pretty straight forward (though dirty).

Dig 2 tons of dirt for $100? Sounds like a good idea to me!

Dig 2 tons of dirt for $100? Sounds like a good idea to me!

Then the lights started flickering.  I called the power company and they came out to determine the problem.  Our meter base housing was busted and their power line from the transformer also had issues, so they shut off our power for the whole day while they installed a new meter base.  They still haven’t returned to replace their line to our house, so in the meantime we have a mystery device – a “service saver” – sitting next to our electric meter that provides the neutral necessary for proper electrical service (the electrician said it was “some kind of transformer but he’s not really sure how it works”). We have power so that’s good enough for me.

I found out I could power our refrigerator and our router using a 100 foot extension cord plugged in at the neighbor’s house.  While the refrigerator was pulled away from the wall, I decided to clean the coils in the refrigerator.  So. Much. Dust.  I’m not really sure how it was able to operate, and I assume this is why many refrigerators fail prematurely.  Hopefully I’ll get around to vacuuming out the coils while brushing them clean with a toothbrush more than once a decade.

I tackled a leaking sink drain line. Unsuccessfully. So I’ll be heading to a home improvement store in May to get the parts to replace the drain line (or at least the one leaky connection).

All of this was a huge distraction in my efforts to get quotes to replace our roof.  As this post goes live I’ve received over a half dozen quotes and should be selecting a roofing contractor soon.  The costs came in exactly as expected – just over $4,000 on the lower end and just over $8,000 on the high end.  We’ll definitely end up using one of the guys that quoted under $6,000 (which includes a few upgrades like chimney repair/replacement, additional/new gutters, and redoing the roofs on the porch and shed).  Insurance already paid $3,300 and should pay another $1,100 once all the work is complete, so out of pocket costs will be limited to roughly $1,500 or less.

Although we tackled a ton of home repairs in April, and the costs are slowly mounting, it’s okay.  We explicitly budgeted for all of these major and minor home repairs with a long term capital replacement plan of roughly $1,500 per year.  The roof is listed in the plan at $4,000 on a 20 year replacement cycle.  Major plumbing repairs listed at $1,000 every 10 years.  The one big shocker will be the hot water heater since I’m planning on converting to a tankless wall-mounted installation to bring things up to code once the current 40 gallon tank water heater dies.  The plumber estimated $2,300 to do that, and I’m only carrying the water heater replacement expense at $700.  Oh well – can’t get it right every time.

This isn’t the first time everything decided to conspire against us at once.  Over three years ago I wrote about the other time all the things broke at one time.

Homeownership certainly has its share of ups and downs.

 

Taxes – $600:

State and Federal estimated income taxes (minus the 2016 tax refunds received).  Since we no longer have paychecks that withhold taxes for us, we have to make small quarterly estimated tax payments to avoid an underpayment penalty at tax filing time each year.  We owe very little tax in early retirement, but it’s still higher than the $150 per year we paid while working full time earning $150,000 per year!

 

Groceries – $476:

Another slightly below average month for grocery spending.  We’re trying not to buy more food than we’ll consume before we leave for Europe in mid-June, so our “stocking up” efforts are near zero these days.  I would like to leave the fridge and freezer as empty as practicable in case we lose power or the refrigerator dies while we are away.

We threw a birthday party for our five year old and our nephew who turned one.  We had around 30-35 guests and provided a Mexican buffet.  All those groceries plus a case of beer are included in our $476 monthly grocery budget.  The other family that joined us brought papaya salad, pad thai, and chicken wings.

Mexican taco buffet - mi favorito!

Mexican taco buffet – mi favorito! Roasted pork carnitas, beans, fajita veggies, and all the fixings.

The Asian delicacies at the birthday party.

The Asian delicacies at the birthday party.

Obligatory monthly pho-to.

Obligatory monthly pho-to.

My first attempt at making Tikka Masala from scratch. Winner!

My first attempt at making Tikka Masala from scratch. Winner!

Homemade lasagna. We invited a few FIRE friends over for a meal.

Homemade lasagna. We invited a few FIRE friends over for a meal and they didn’t leave hungry.

 

Clothing/Shoes – $226:

A new pair of shoes for all of us so our feet will be happy while vacationing in Europe.  A miscellany of shorts, shirts, and socks.  Mostly in preparation for our Europe trip but things we’ll wear day to day at home too.

After I wore my new shoes for a while and completed a five mile walk/hike, I realized the new shoe has a tiny spot that causes friction on one toe. So I went crazy and dropped another $40 (after requesting a $5 discount for a tiny imperfection in the stitching on one shoe) on a SECOND pair of new shoes that are even more comfortable.  I’ll be taking the more comfortable shoes to Europe.  We’ll be doing five miles of walking or more on some days, and I really don’t want to suffer through uncomfortable footwear.

I’m working on loosening up the purse strings (since we can afford it) and spending where it makes sense and brings value.

 

Travel – $181:

We’re slowly completing the final bookings and reservations for our big summer trip to Europe.  We finished booking the last two bus/train tickets from Munich to Prague and Prague to Berlin at the end of April but the charges posted to the credit card in May (so I’ll report on them next month).  Here’s a preview: who knew you could buy five double decker bus tickets for the 4.5 hour ride across Germany from Munich to Prague, Czech Republic for €38 (USD$41)?

I paid our quarterly estimated taxes using credit cards in order to meet minimum spending requirements and to snag some big sign up bonuses on our pair of Chase Sapphire Reserve cards, so I’m including the $34 transaction fee for credit card usage here in the “travel” expense category.

In cruise news, we booked another cruise!  As I mentioned in last month’s financial update, a very helpful Root of Good reader emailed me about an incredible deal over the 2018 Christmas holidays (yes, over a year away).  It was a price mistake but before the cruise line corrected the error, we managed to book the family on a seven night cruise out of Miami bound for the Caribbean on MSC Cruises’ new ship, the MSC Seaside.  Our total cost will be around $1,400 for two rooms to accommodate five of us.  We only had to make a $147 refundable deposit to hold our two rooms, with final payment not due until October 2018.  With two kids in middle school, the cruise over Christmas break is very helpful to avoid excessive absences from school.

 

Restaurants – $48:

$35 for a family meal at the Chinese restaurant to celebrate the kids’ excellent grades. $13 for a box of Bojangles fried chicken and biscuits for the whole family.  We also redeemed a few free pizza codes acquired during March (with no additional costs in April).

The kids' favorite Chinese restaurant. Celebrating great grades on Q3 report cards.

The kids’ favorite Chinese restaurant. Celebrating great grades on Q3 report cards.

 

Gasoline – $42:

One tank of gas for the minivan.  We don’t drive a lot.

 

Cable/Satellite (Internet) – $40:

Now that Spectrum’s done gobbling up Time Warner Cable, we’ve been given a “courtesy upgrade” to a faster, more expensive internet plan.  It’s currently $45 per month for the next 12 months at which point it reverts to the regular $65 (or some other crazy figure – but I’ll be at a different provider if that happens).  I only paid $40 in April because I paid a bit extra in March during the transition to the new plan.

 

Gifts – $28:

$15 for some action figures at Walmart for our son’s fifth birthday.  $13 at a local discount store for some small birthday gifts for our other daughter and a friend (and some glue for the birthday piñatas).

Action figure battle time!

Action figure battle time!

We welcome 30-35 people to celebrate a joint birthday with our five year old son and his one year old cousin. Another homemade piñata to smash!

We welcomed 30-35 people to celebrate a joint birthday with our five year old son and his one year old cousin. Another homemade piñata to smash!

 

Healthcare/Medical – $23:

Another dirt cheap healthcare month.  I paid a $5 copay to visit my new doctor for a routine physical and to get a prescription renewed (usually an extra charge at my old doc).  It turns out he only charged me for a routine physical so the $5 copay will be credited toward a future office visit (or refunded at my request). I had to switch doctors since my new insurance plan for 2017 doesn’t have my previous doctor in the network (but they do have several hundred other doctors within 10 miles of me).  I was pleasantly surprised with the new medical practice and might just stay with them!

I also paid $2 for a 90 day supply at the pharmacy.  This new insurance is saving us more than the old insurance so far.

The balance of the healthcare/medical spending is one month’s health insurance premiums of $16. For us, the Affordable Care Act works phenomenally well in making our health insurance premiums tiny.

Since the ACA and it’s impending demise is a popular topic right now, it’s worth addressing here.  The US House of Representatives passed the AHCA which is the promised “repeal and replace” bill that’s supposed to gut the ACA and Make America Great Again.  The US Senate will get a go at making all the changes they want and then they have to vote on the AHCA (as modified) and pass it, then it goes to the House for further sausage making.  There’s a good chance the final version of the AHCA won’t look a whole lot like the version of the AHCA just passed.

But if it does, here’s the best summary I’ve seen of the current version of the AHCA compared to the ACA (courtesy of the non-partisan Kaiser Family Foundation).  Main takeaways:

  • ACA premium subsidies continue through 2017, 2018, and 2019 (so it’s not an immediate “repeal”). Your subsidy declines as your income increases up to 400% of the federal poverty level.
  • Starting in 2020 those buying individual coverage get a $2,000 to $4,000 tax credit per person for qualifying insurance (and policies don’t have to be purchased through the official Healthcare.gov Marketplace to qualify for the tax credit). Tax credits vary with age (older = larger credit) but not with income, however there are income limits where the tax credit phases out
  • Cost sharing reduction subsidies disappear in 2020 (currently available to those earning under 250% of the federal poverty level – it’s what makes my deductible $100, max out of pocket $1,200, and my copays $5-20)
  • In 2018, HSA contribution limits double to $13,100 for family coverage.
  • If a state chooses to allow it, insurers can charge more for pre-existing conditions for those that have a lapse in coverage. Possibly much, much more. Maintaining continuous coverage seems to be the way to go to avoid paying a lot more for pre-existing conditions.
  • Increase the age banding of premiums so that the premiums paid by older people aren’t capped at three times the premiums charged to the youngest people (under AHCA older people will pay five times what younger people pay – while only getting an extra $2,000 in tax credits)
  • No more individual mandate to have health insurance retroactive to 2016

Those are the basics but trust me, I’m leaving a lot out.  Medicaid and Medicare are tinkered with too.

The Senate will most likely make significant modifications to the AHCA, so it’s pure speculation as to what we’ll actually end up with once all the sausage is made.

My main takeaway as a 30-something early retiree that will be 40 by the time the ACA premium subsidies goes away in 2020 is that I’ll be paying more for health insurance that will come with higher deductibles and copays.  Mrs. Root of Good and I will each get a $3,000 tax credit to use toward insurance that will probably cost $4,000-$5,000 per year per person for a basic plan, and possibly much more if healthy people choose to go uninsured (since the individual mandate will be gone and many people will pay more for health insurance, making it less affordable).  I don’t know what the kids’ policy pricing will look like or if they’ll end up on Medicaid (if that’s still an option given the possibility of AHCA-related changes to Medicaid), but I understand they’ll be eligible for $2,000 tax credits too (based on their age) if we purchase individual policies for them.

In conclusion, I’m mentally penciling in an extra $4,000 or so for health insurance and healthcare costs starting in 2020, but also accepting that a lot can change with the AHCA before passage (or it might fail to pass altogether).  There might be a subsequent health care bill passed later on in 2018 or 2020 as the political winds change that could put our costs back in line with where they are currently under the ACA.

 

We spend almost nothing on entertainment because there's always something free going on in the neighborhood or within a few miles in the city. Like this Big Truck and Heavy Equipment expo at the neighborhood library and community center.

We spend almost nothing on entertainment because there’s always something free going on in the neighborhood or within a few miles in the city. Like this Big Truck and Heavy Equipment expo at the neighborhood library / community center.

 

Entertainment – $22:

Is it weird that I categorize hard liquor as an entertainment expense? We bought a half gallon of vodka and a fifth of tequila (1.75 L and 750 mL, respectively, for those using the far superior metric system). All bottom shelf stuff for making cocktails, although the tequila bottle did come with a red sombrero attached to the lid, so I’m pretty sure it’s high quality stuff.  Or at least high octane.

Our favorite spot in the woods. Free entertainment (if you don't count the dollar's worth of gas to get to the city's nature park).

Our favorite spot in the woods. Free entertainment (if you don’t count the dollar’s worth of gas to get to the city’s nature park).

This snake enjoyed our favorite spot, too. Non-venomous so I let it swim underneath my feet.

This snake enjoyed our favorite spot, too. Non-venomous so I let it swim underneath my feet.  Probably 3-4 feet long.

One of the kids' favorite things to do. LAN party! Roblox and Minecraft are favorites. Fortunately we have 6 PCs so everyone gets to play.

One of the kids’ favorite things to do. LAN party with friends! Roblox and Minecraft are favorite games. Fortunately we have 6 PCs so everyone gets to play.

Education – $13:

The middle kid’s elementary school Spring Fling Carnival.  Admission included unlimited games and we bought a few raffle tickets.  This could just as easily be categorized as “charity” since it’s a huge fundraiser for the PTA.  So far our K-12 educational expenses have been very modest compared to those reported by some blog readers.  No organized sports fees nor band fees certainly helps keep education costs to a minimum.

 

Electronics – $6:

3 replacement USB cables for charging the kids’ tablets. Put this in the “getting ready for our Europe trip” category of expenses.

The tablets require heavy duty USB cables with higher amp ratings to charge the tablets quickly.  Monoprice.com offers good quality cables at a ridiculously low price, even though you do have to pay a couple bucks for shipping.  Still cheaper than Amazon (which might sell lower quality cables).

 

Year to Date Living Expenses for 2017

april-2017-ytd-expenses

Through the end of April we’ve only spent $9,857.  That’s roughly $3,500 below our annual spending target of $13,333 budgeted for the first four months of the year.  So far so good!

The two remaining big cost items for 2017 are the roof replacement and our trip to Europe.  The roofing quotes are coming in low enough that it shouldn’t cost more than $1,500 out of pocket beyond the amounts paid by the insurance company.

We’ve already booked and paid for roughly $6,000 out of our $10,000 total budget for our nine week Europe trip this summer.  The remaining $4,000 of vacation spending will be concentrated in June through August while we are overseas.  The good news is we won’t be spending much to maintain our home or car here in Raleigh while we’re traveling.

Coming up in May, I’ll pay just under $1,000 for our annual homeowner’s insurance and umbrella policy plus our six month auto insurance policy.  Even though the insurance and the roof expense will hit in May, there’s a chance we won’t exceed our $3,333 monthly budget by too much.

 

Monthly Expense Summary for 2017:

Got a mild case of geese on the roof.

Got a mild case of geese on the roof.

 

Net Worth: $1,805,000 (+$34,000)

Another $34,000 added to the pile.  This stock market thingy always goes up, right?  It’s starting to feel that way.  We broke through another $100,000 milestone now that we crossed into the $1.8 million territory.  How long will these gains last?

april-2017-net-worth

I’ll be checking our asset allocation soon to see if I need to rebalance any asset classes since the international markets have done well lately.  I’m also planning on moving another $25,000 to $50,000 from equities into bonds very soon.  That will bring our total cash/bonds position from roughly $100,000 up to $125,000-150,000.

If we get to $150,000 in cash and bonds, that will represent about four years of living expenses without any efforts to curtail spending, without collecting any dividends from the equities side of the portfolio, and without any side income earned from this blog, the early retirement lifestyle consulting, or other ventures I might stumble upon in the future.

In reality, we’ll keep collecting $8,000 or more in dividends and the blog plus consulting will probably bring in $20,000 or more without too much effort.  If we can cut spending by 25% then we won’t need to pull more than $3,000 to $5,000 from our fixed income reserves, which means the cash and bonds could get us to Social Security age (contrary to popular belief, retiring in your 30’s doesn’t mean you won’t collect a fat Social Security check at age 67).  That’s why the next stock market correction doesn’t worry me at all – we’ll be just fine for many years without needing to sell any equities at sharply reduced prices.  In other words, I don’t think we’ll ever run out of money.

 

 

Still enjoying this rising market?  Are you taking any defensive measures to protect against losses, or staying the course (as you probably should!)?  Now that tax season is over, any new tax strategies you’re implementing in 2017?  

 

 

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When is Enough Enough?

sunset-cape-lookout

How do you know when you have enough to retire early?  When is enough enough?  In a rare guest post, the Early Retirement Dude pays a visit to Root of Good to share his thoughts.  

Relatively new to the FIRE blog scene, the Early Retirement Dude is no stranger to the refined art of Early Retirement.  Now 47, he retired over a decade ago at the ripe young age of 36 (ha ha I beat him by 3 years but it’s not really a contest, is it?!).  I had the pleasure of hosting ER Dude at my house several weeks back, and can confirm he’s a legitimate ER Dude, scraggly two week beard and all.

 

=========================

 

It’s May of 2005 and I’m officially quitting my job this morning—or, technically, I’m being laid off because I’ve turned down a directed transfer—and part of the process is an exit interview with our divisional president.

I’ve just turned thirty-six.

Cliff is a good guy, and for a couple more hours I’m two tiers down from him on the org chart. I report directly to a woman who reports directly to him, so he and I have gotten to know one another and become friends. He’s also helped me out career-wise; involved me in higher-level meetings, invited me to the right cocktail parties, and been solicitous of my opinion.

So at the appointed time I show up in his office, him in his charcoal Brooks Brothers and me in my Grateful Dead t-shirt and cargo shorts and running shoes. I mean, what the hell, right? Truckin’…got my chips cashed in, etc.

Cliff checks out my outfit and grins. “I guess you’re serious.”

I chuckle. “Yeah.”

“OK. Can’t say I didn’t try. Have a seat.”

On the far side of his office he’s got two couches and two easy chairs arranged into a conversation pit. I take a couch and he comes over and sinks into a chair.

“Right,” he sighs. “Uh, Rachael filled me in somewhat. Said you were leaving the industry.”

Rachel’s an HR rep. “Sort of,” I say. “I’m getting completely out of corporate America. I’m done.”

“Done?”

“Retiring.”

“Oh.”

He shifts his gaze to the big plate-glass windows. He’s got the blinds open; it’s a bright spring day. “You know,” he muses, “I’ve heard a lot of people talk about doing what you’re doing, but nobody ever does.”

Now: Cliff is a a guy whose net worth is easily ten million dollars. I’m guesstimating, but I’d once seen the standard executive-level contract, blank, and between the perks and the stock options and the bonus floor and the wide wide empty salary line with plenty of room for zeroes; and of course his slice of the phantom equity the company originally distributed when it was a startup, I know he’s done and is still doing well for himself.

So I call him on it. “Man, I don’t get it. I mean, you. You’re worth, what, ten million bucks? And I know you’re burned out, so why are you still here?”

He replies a little too quickly, as if he often asks himself this question. “Because,” he tells me, “you get the big house and the nice cars and the toys, and your kids are in private schools and your wife gets used to the lifestyle, and that’s it.”

I nod. “OK.”

And that’s pretty much it for the personal side of the discussion. The rest of the interview is the usual formulaic bullshit about my satisfaction with career development, how I feel the company can improve employee retention, whether I have any concerns about discrimination or sexual harassment, and so forth, and within twenty minutes we’ve got the whole thing wrapped up. We stand up and shake hands, he directs me to the HR VP’s office, I sign off on my severance contract, and I’m on the train home before noon.

I never see Cliff again.

A few years later I hear through the grapevine that the company axed him after a regulatory agency found his division guilty of violating the agency’s operational standards. Not anything criminal, but sketchy enough nonetheless. The agency’s finding cost the company an eight-figure settlement, which of course resulted in several public and bloody decapitations, including Cliff’s.

Which triggered his severance agreement. And that meant he’d just thrown however many million dollars his package was worth onto his already Kilimanjaro-sized pile of money—not to mention however much that mountain had grown in the years since I’d left.

~

These days I don’t think about Cliff much, but I wonder if that layoff was the point at which he left the industry. I hope so, because how much is enough?

Maybe he started consulting, or maybe he moved on to a different field. He’s not on Facebook, or at least not the last time I checked, and I guess I could google him or search LinkedIn, but I haven’t bothered.

campfire-on-beach

That exit interview was eleven years ago. I’m forty-seven, now, and as I write this I’m sitting alone on the beach on Cape Lookout, a barrier island off the North Carolina coast. This is an undeveloped beach, a national seashore that stretches on and on for fifty miles, and at this time of year it’s deserted. I’d be surprised if there are twenty other people sharing the island with me.

When I drove off the ferry eight days ago I hit the beach and drove south through the sand for I don’t know how many miles until I got seized by The Thirst…so I pulled over onto a nice flat spot in the shelter of the dunes, cracked a beer, and set up camp.

truck-on-beach

I’ve been sun-basking and surf-fishing and beer-cracking ever since. I’ve gone running along the tideline, picked up a million seashells, watched the lighthouse’s beam endlessly circle around and around, counted shooting stars, and of course I’ve been doing some heavy thinking. You can’t help but think in places like this.

And so I thought of Cliff. I don’t know where he is; what he’s doing; how his life is going…but he’s certainly not sun-basking or surf-fishing or beer-cracking or even soul-searching on Cape Lookout.

puffer-fish-beach

This must be an allegory for Cliff – stuck on the hook and unsure how to free himself.

That thing he said about the house and cars and private schools and such. I think taking a job you hate and getting addicted to the paycheck is one of the worst ways you can screw up your life. Money can’t buy you happiness, but I guess it makes misery more enjoyable…as the old saying goes, or ought to.

So wherever Cliff is, I hope it’s someplace he wants to be. He’d be in his early fifties now, so maybe he DID get out.
Whatever the case, I wish him well.

=======================

Don’t forget to visit Early Retirement Dude!

 

 

Any Cliffs out there willing to admit it?  If so, when will you call it quits?  How do you persuade yourself that enough is in fact enough when there’s always the fear of running out of money in early retirement

 

 

March 2017 Financial Update

money-january-2014

I can’t believe we are already a quarter of the way through 2017!  Financially speaking, we are doing incredibly well as we ride this bull market up and up.  March left us $15,000 wealthier thanks to investment gains with our net worth climbing to $1,771,000.  Our expenses for a family of five were very modest at just $1,388, while our income remained strong at $3,747 for the month thanks to quarterly dividend payments.

On the non-financial side, life is going swimmingly well.  We’re two months away from our nine week sojourn through Europe.  Springtime brings us beautiful weather here in North Carolina so we get to enjoy the outdoors more.  And last but not least our oldest daughter made the A honor roll.  College scholarships here we come!

 

Income

Our investment income was $2,791 in March.  The majority of our mutual funds and ETFs pay dividends quarterly in March, June, September, and December.  During other months investment income tends to be much smaller (closer to $100-150).

Blog income, shown as “other income” in the chart, dropped to $508.  That’s due to the lumpiness in payments from advertisers.  A check came a few days into April instead of the end of March as I was expecting, so I’ll have a great month in my next financial update post.  Fortunately I have a very generous cash buffer so I don’t need to rely on the cash flow from this blog to pay my monthly bills.  My early retirement lifestyle consulting income dropped to $240 for March.  It’s just as well since I’ve been busy having fun on other pursuits.

The $180 in Deposits includes cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. 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.  I spent over $4,000 on gift cards to cover lodging for our trip to Europe and received over a hundred dollars of cash back from Ebates on those purchases.

The healthcare/medical “income” of $27 represents a reimbursement of some prescription copays from 2016 where we paid the full price at the pharmacy for preventive medicines that should have been free.  The insurance company noticed the mistake and repaid us on their own initiative!  I filed an additional claim for another $27 x 2 to seek reimbursement for two other instances of overpayments during 2016, but I won’t be surprised to never see a dime of that money.

march-2017-income

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).

 

Expenses

Now let’s take a look at March expenses:

march-2017-expenses

We came in well under our budgeted $3,333 per month (or $40,000 per year) during March with total spending of just $1,388.

 

Groceries – $421:

We spent slightly less than our $500 per month average for groceries.  We used up a few small gift cards for Aldi and Walmart that we purchased at Raise.com when they ran some promotions earlier in the year.  If you haven’t checked out raise.com for discounted gift cards for places you already shop, then feel free to save an extra $5 off your first purchase at Raise.com.

If you’re curious about what kind of groceries we buy, here’s a snapshot of an entire month of groceries from a few years ago that probably includes more “junk food” than we routinely purchase in an ordinary month these days.  The low grocery spending is simply a continuation of our grocery buying strategy.

We don’t do extreme couponing at all.  Instead of couponing, we check the weekly sales papers from a few local grocery stores within 1-3 miles of our house and take notes on potential good buys from their selection of heavily discounted loss leaders and sale items.  We pick the best one or two grocery stores for the week and head there to get our staples, necessities, and the loss leaders and sale items.  Unfortunately most of the sale items are junk, so there has to be some compelling discounts on actual stuff we want to buy to attract us to the grocery store that week.  We do well using this strategy to save big on meat, seafood, fresh fruits and vegetables, some dairy, eggs, and non-perishables.

At any given time, we have several types of fresh veggies and a couple cuts of meat in the fridge (plus several more in the freezer).  In the pantry we keep plenty of rice, noodles, and basic canned goods on hand because we know we’ll be eating several times per day.  Using these basic building blocks, some fresh lime and cilantro, plus a pantry full of spices, curries, sauces, and seasonings, we can make just about anything.  Googling recipes works well too.

Just a few treats we made this month:

My delicious homemade pad thai

My delicious homemade pad thai

Calamari fried rice

Calamari fried rice

Thai pork cucumber salad

Thai pork cucumber salad

 

Travel – $396:

We continue to book bits and pieces of our summer Europe trip.  Right now we are two train tickets away from having all ground transportation booked.  During March we spent $396 on travel expenses.  Half that went toward a pre-paid rental car reservation with the other half spent on four sets of train tickets for the five of us (one of which will be in first class!).  Those train tickets will carry us across Italy, Slovenia, Austria, and Germany.

We also spent a dollar on a five pack of US-to-Europe electrical adapters from ebay.  Direct ship from China.  It amazes me that I can purchase electronics straight from China for under a buck including shipping.

In cruise news, we booked another cruise!  A very helpful Root of Good reader emailed me about an incredible deal over the 2018 Christmas holidays (yes, over a year away).  It was a price mistake but before the cruise line corrected the error, we managed to book the family on a seven night cruise out of Miami bound for the Caribbean on MSC Cruises’ new ship, the MSC Seaside.  Our total cost will be around $1,400 for two rooms to accommodate five of us.  We only had to make a $150 refundable deposit to hold our two rooms, with final payment not due until October 2018.  With two kids in middle school, the cruise over Christmas break is very helpful to avoid excessive absences from school.

 

Utilities – $191:

Water, sewer, and trash bill plus natural gas bill.  We prepaid the electric bill for several months ahead to generate some spending for our credit cards so we can score some huge sign up bonuses.

 

Electronics – $115:

Who knew photos and videos take up so much space? We had to buy a new 2 terabyte hard drive to store all that digital media.  We also picked up a few other goodies like a camera bag for the t5i DSLR camera we’re taking to Europe along with a lightweight wireless mouse.

 

Cable/Satellite (Internet) – $84:

Spectrum bought Time Warner. Along with a new internet overlord comes a new and improved higher price tag. Yay competition! Oh wait…

We’re now paying $45/month instead of $35 with Time Warner.  It took a while to negotiate Spectrum down to $45.  On the upside, they upgraded me from 50 mbit service to 100 mbit service.  Which doesn’t really matter since I rarely use more than 50 mbit of throughput.

The $84 charge also includes $35 for February plus a few bucks extra to make sure I paid the bill in full since the swap to the new rate looked complicated on the bill.

I’m looking forward to finding out more about Spectrum’s low income rate plan that provides 30 mbit service for $15 per month for “qualifying households”.  They don’t have information on their site about this plan yet, so I don’t know if we will qualify.  I would definitely take that package at a 66% discount since 30 mbit bandwidth is plenty for us (a high definition Netflix stream uses about 5 mbit, for reference).  As long as there aren’t too many hoops to jump through (like applying for the plan through a social services agency and filling out reams of paperwork).

 

An uncommon mid-March snowy day.

An uncommon mid-March snowy day in Raleigh, North Carolina.

Same view later in the afternoon when it was warm and sunny.

Same view later in the afternoon when it was warm and sunny.

 

Healthcare/Medical – $71:

I paid $55 for a routine cleaning and exam at the dentist.  It’s normally $99 but I paid the copays for the kids twice by accident, so the $44 overpayment was credited to the charges for my visit.

The balance of the healthcare/medical spending is one month’s health insurance premiums of $16. For us, the Affordable Care Act works phenomenally well in making our health insurance premiums tiny.

Every month I speculate on the future of the Affordable Care Act and this month is no different. Except the continued existence of the ACA is less in doubt these days compared to the past several months.  In case you missed the news, March was an exciting and surprising time for American healthcare.  The House Republican plan didn’t make it to a vote because GOP leadership withdrew the bill due to lack of support.  The proposed American Health Care Act (AHCA) would have sort of kind of repealed the ACA after three years (effective 2020) and replaced the current ACA tax credits with something entirely different.  Tax credits calculated a different way!! (<– sarcasm).  Many of the other provisions of the ACA remained intact.  In other words, you might pay more or less for health insurance under the AHCA versus the ACA and you might call it Trumpcare instead of Obamacare, but it’ll still feel similar to the ACA.

But the AHCA didn’t make it to a vote.  The far right “Freedom Caucus” conservatives didn’t like it because they recognized it wasn’t really much of a departure from the ACA on a fundamental level (“it’s still an entitlement program”), while the moderates in the Republican party realized the AHCA would lead to tens of millions losing access to medical insurance and health care because of the removal of income-based subsidies currently available under the ACA.  Both the far right and the center didn’t want to take the heat in the upcoming midterm election of 2018 (note for non-US readers: our US House of Representative legislative seats are up for election every 2 years and campaigning isn’t far off for contested races).

What does this mean for early retirees and access to guaranteed issue (maybe) affordable health insurance?  Right now it means the ACA remains the law, subsidy cliff and all.  What is uncertain is whether the Republicans will introduce an AHCA v2.0 bill that gains traction.  The vote would have been very close on AHCA v1.0 so I can imagine an AHCA v2.0 could be successful if the right palms are greased and the greediest pockets lined with enough silver and gold.

Our family wouldn’t have fared horribly under AHCA v1.0, since we would still have guaranteed access to health insurance but starting in 2020 we probably would have paid several thousand dollars per year more for a policy with much higher deductibles and copays.  And the insurance would grow much more expensive as we aged, while the tax credits would increase only slightly to compensate for higher premiums.

The big question remains.  What is the fate of the ACA?  Looking at prediction markets where people bet real money on the outcome of political issues (like this one at Predictit.org), suggests a 30-40% chance that the ACA will be substantially repealed and replaced by year end 2017.  Interestingly, the market on the fate of the pre-existing condition coverage reveals just a 12% chance of losing that specific provision.  To summarize, people betting real money think there’s a fair chance we’ll have a repeal-ish and replace bill in place soon, but it will keep at least some provisions of the ACA such as coverage of pre-existing conditions.  I think prediction markets in general are more accurate than expert opinions or polls when it comes to knowing the unknowable.  Consider that the prediction markets were putting the odds of a Trump win as high as 36% in the week preceding the November 8, 2016 presidential election (so it wasn’t a complete surprise for those of us that follow the political prediction markets instead of solely the news’ polls and “experts”).

Will ACA be around in 2020 and beyond? Definitely. Maybe. I don’t know.

 

Gasoline – $64:

I filled up our minivan not once, but twice (!!) during March.  Once at the very beginning of the month and once at the end.  My Chase Freedom card was paying 5% cash back through the end of March so I went ahead and filled up before I needed to in order to snag a little extra cash back.  All this carpool driving to school is driving up our gas costs!

The upside to morning carpool drop off duty: beautiful sunrise/moonsets over downtown

The upside to morning carpool drop off duty: beautiful sunrise/moonsets in downtown Raleigh

 

Restaurants – $36:

We bought take out pizza for a birthday party for around 15-20 guests. We paid in part using gift cards purchased through Groupon during 2016, and the rest was a gift card purchased through Raise.com at a discount.

This was perhaps the most insane deal on pizza ever. I bought gift cards at a discount, and the gift card purchased through Groupon (using a coupon and cash back through ebates!) came with two free pizza coupons.  Then, when I bought the pizza for the birthday party, I used a 50% off coupon and stacked it with a “spend $15+ and get a free pizza code” promotion (times 2 for a his and hers account).  When it’s all said and done I think I paid $2-3 per large pizza.

We celebrated Pi Day on 3/14 at a local pizza place that offered 17″ NY style pizzas for $3.14 each ($6 and change for two, which was enough for a couple of meals for the five of us).  More $3 pizza.  In this case, restaurants are cheaper than home cooking.

17 inches of pure pizza x2. Only $3.14 each. Happy Pi Day!

17 inches of pure pizza x2. Only $3.14 each. Happy Pi Day!

And we got some fried chicken from Bojangle’s (a magical place here in the South if you like fried chicken).  $12 for a dozen thigh pieces.

Never pay retail.

 

Entertainment – $5:

$5 for roller skating admission for one kid.  We threw a birthday party for our newly minted 12 year old and hosted a few other gatherings at our house, but those expenses ended up in the “grocery” or “restaurant” category.

All the besties celebrating 12th birthday for our oldest daughter.

All the besties celebrating the 12th birthday for our oldest daughter.

Smashing the homemade piñata

Smashing the homemade piñata

Adults eating pizza and drinking beer. Can you find the fresh salad I carefully crafted that NO ONE TOUCHED?

Adults eating pizza and drinking beer.

Building dueling robots when the Children's Museum visited our library

Building dueling robots when the Children’s Museum visited our library

 

Year to Date Living Expenses for 2017

march-2017-ytd-expenses

After spending $6,876 for the year through the end of March, we are more than $3,000 below our annual spending target of $10,000 budgeted for the first three months of the year.  I don’t think we’ll make it to almost $40,000 of spending like we did in 2016.

I made progress on reroofing the house.  I don’t have a contractor yet, but I do have $3,300 in cash from the insurance company.  On the advice of some blog readers and family and friends, I called my insurance company to see if they could check my house for hail damage.  It turns out we DO have hail damage and we need a complete roof replacement (score!).  They estimated the price at just over $7,000, and cut me a check immediately for the actual cash value of the roof minus our $2,500 deductible.  In theory if the costs escalate above $5,800 I can recuperate an additional $1,300 or so in “depreciation” that they won’t pay me until they see receipts and documentation that the work is done.  I have a call into the insurance adjuster so I can understand exactly how all this works and how I need to negotiate with contractors to ensure the optimal deal for me.

I’ve been budgeting $4,000 to $8,000 for our roof replacement so this might be a nearly free roof depending on how the quotes come back and how much extra work we get the contractor to perform.  The roof project was going to be our biggest expense of 2017, so this is great news for our budget.

We’ve already booked and paid for roughly $6,000 out of our $10,000 total budget for our nine week Europe trip this summer.  The remaining $4,000 of vacation spending will be concentrated in June through August while we are overseas.  We probably won’t spend a ton beyond that $4,000 while we are gone, so 2017 is shaping up to be somewhat of a low spending year already.

 

Monthly Expense Summary for 2017:

 

Cousin play time. Glad to be able to offer (free) childcare to family occasionally when they have to work

Cousin play time. Glad to be able to offer (free) childcare to family occasionally when they have to work

 

Net Worth: $1,771,000 (+$15,000)

Another month, another bump in net worth.  It’s easy to think the stock market only goes up and our accounts will keep growing in a mostly straight line forever, but I know that’s not true!

march-2017-net-worth

On the investing front, I didn’t do anything in March other than collect dividends and transfer them to my checking account.  I probably won’t touch the portfolio till it’s time for end of the year tax planning unless the markets make a big move up or down.  A big upswing will see me trimming away some equities and buying more of the bond fund.  A sharp downturn in the market will make me consider converting some cash or bonds back to stocks.  I’ll also be checking the asset allocation every few months to see if I need to rebalance any asset classes in the event the international markets zig while the US markets zag.  That’s how I manage a lazy portfolio.

The lazy man with the lazy portfolio proudly sporting his Vanguard gear

The lazy man with the lazy portfolio proudly sporting his Vanguard gear

Our cash position is close to $30,000 in savings and money market accounts, which is enough to fund around a year of expenses at our current spending rate assuming the dividends don’t stop flowing. On top of that we have another two years of living expenses in a bond fund (held inside an IRA) should we need additional liquid funds.  Things are looking very rosy for us at the moment.

 

 

Did you enjoy another positive financial month?  Any big financial moves coming up soon?  Any super frugal moments in the past few months to rival my pizza hustle?

 

 

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Summer Vacation for 5 in Europe: 9 Weeks, 8 Countries, 14 Cities, $10,000

world-maps-europe-featured

The Root of Good family is ramping up for an epic adventure across Europe during the summer of 2017.  The five of us will spend nine weeks traversing an all new (to us) continent by train, plane, bus, car, and foot.

We really struggled to narrow down the itinerary to something feasible for a family with three young children.  As a result this trip will NOT include London nor Paris nor a dozen other cities we would have loved to visit.  What we will see are museums, parks, castles, palaces, cathedrals, caves, mountains, seas, rivers, lakes, and canyons scattered about the rest of western and central Europe.

Many will view this as a “trip of a lifetime” or a “dream trip” but I choose to view this as just another cool vacation in a series of vacations we have already taken and will continue to take.

However, this Europe trip is in some ways the realization of a dream.  As a wistful traveler / college student yearning for adventure before embarking on my 10 year corporate grind, I ordered a stack of maps from AAA back in the dark days before the invention of Google Maps.  What better way to think, plan, and dream about where you want to explore than a pile of maps for all the countries in Europe?  For 15 years I kept these maps in a shoe box in the closet.  Now I’m figuratively dusting them off and planning on hitting the road soon (I’ll leave the maps at home since I’m going all digital with Google Maps on my computer and phone!).

Dreams fulfilled. Finally getting to bust out these maps of Europe.

Dreams fulfilled. Finally getting to bust out these maps of Europe.

This Europe trip is unique compared to our typical budget travel two months in Mexico and road trips through the US and Canada.  We’ll spend two or three times as much as we usually do on our grand summer vacations. And it’s Europe – a place we have never visited before, and in a cliché way, a must-have on every legitimate traveler’s resume.

 

Where are we going?

In mid-June we depart Raleigh for a flight across the Atlantic to Lisbon, Portugal where the adventure begins.  From Portugal we fly to the Andalusia region of southern Spain for a bit over a week before flying onward to Italy for a week.  After landing in Italy we travel overland through Slovenia, Austria, Germany, and the Czech Republic before arriving in Amsterdam where our vacation ends with a flight back to Raleigh.

The itinerary for nine weeks:

  1. Lisbon, Portugal 5 nights
  2. Malaga, Spain 2 nights
  3. Granada, Spain 3 nights
  4. Seville, Spain 4 nights
  5. Milan, Italy 4 nights
  6. Venice, Italy 2 nights
  7. Ljubljana, Slovenia 7 nights
  8. Bovec/Bled, Slovenia 4 nights
  9. Salzburg, Austria 2 nights
  10. Munich, Germany 7 nights
  11. Prague, Czech 7 nights
  12. Berlin, Germany 7 nights
  13. Koblenz (Mariaroth), Germany 7 nights
  14. Amsterdam, Netherlands 3 nights
  15. Back to Raleigh!

 

 

Transportation: Getting around town. And country. And continent.

To get around Europe, we’re relying primarily on buses and trains.  We are also taking a pair of flights for those travel segments that are difficult, expensive or take a long time on ground-based transit.  Overall, transportation in Europe is quite a steal IF you can snag the advance purchase cut rate fares.  Budget airlines aplenty such as Ryanair and EasyJet offer tickets for USD$10-20 in some cases.

Buses and trains can be even better deals for families with kids since children’s tickets are often heavily discounted or free altogether.  I looked into rail passes and quickly decided purchasing tickets a la carte would be much cheaper and easier than understanding the rules for different regional rail passes and days of validity versus days of travel.

All together, we spent 300,000 United Airline miles plus USD$544 cash for plane tickets.  More than half that was taxes on our transatlantic flights from Raleigh to Lisbon and Amsterdam to Raleigh.  The other bit is a roughly 1,000 mile flight from Seville, Spain to Milan, Italy on Ryanair at just under USD$40 per person (and a meager 2.5 hour flight time).

The flight from Lisbon, Portugal to Malaga, Spain was free since we booked an award flight to Europe.  You get a one way flight within the region you’re visiting with United Miles redemptions.  The award flights that we booked for 300,000 miles plus $350 in taxes would have cost $6,000 to $7,000 had we paid cash.  In the end we obtained between 2 to 2.2 cents per mile of value out of these points, which is pretty good for United miles.  All thanks to travel hacking some credit card sign up bonuses over the past few years.

To add to the value, we picked up the Chase Sapphire Reserve card earlier this year which gives us free Priority Pass Select membership.  Priority Pass admits us to certain business/first class lounges in the airports we’re traveling through so we can stop in and grab drinks (alcoholic or non) and some basic grub before and after our flight in lieu of paying for the same at an overpriced airport restaurant or rushing to get to a food establishment before the kids starve OMG literally to death (or so they would claim, literally).

Plane Tickets: Points Cost
United: Raleigh, North Carolina to Lisbon, Portugal x5 150,000 $175
United: Lisbon to Malaga, Spain x5 0 (free 1 way tix with United miles award booking) $0
Ryanair: Seville, Spain to Milan, Italy x5 0 $194
United: Amsterdam, Netherlands to Raleigh x5 150,000 $175
TOTAL 300,000 $544

 

For buses and trains, we spent between USD$40 and $69 for all segments with travel times between roughly two to four hours.  One exception is the Berlin to Koblenz train trip which is closer to six hours.  Since it was a longer duration than other trips, we decided to indulge in a little luxury and spring for first class tickets on Deutsche Bahn for $32 more than second class tickets (that’s $32 total for the entire family!).

Though second class seats on German trains are more than adequate, we opted for the upgrade to get comfier more spacious seating (including a private compartment) and more importantly, first class lounge access for the day.  We’ll be feasting on the all-inclusiveness with pastries, fruit, coffee and hot chocolate for breakfast in Berlin.  After a four hour high speed train ride from Berlin, we’ll grab a quick bite and pop some champagne during the 35 minute layover in Frankfurt before transferring to another high speed train bound for Cologne, Germany.  We have a three hour layover in downtown Cologne to explore on foot and have lunch with some beer or wine (and maybe an early dinner if time permits) in the first class lounge before heading a few minutes down the tracks to the airport for our rental car pickup.  A day on the rails in first class, three snacks or meals in their lounges, plus a quick city tour for $84 for the five of us.  That’s how you travel in style on the cheap!

Bus/Train: Cost (total for 5 tickets)
Bus from Malaga to Granada, Spain $41
Bus from Granada to Seville, Spain $40
Train from Milan to Venice, Italy $49
Bus from Venice, Italy to Ljubljana, Slovenia $69
Train from Bled, Slovenia to Salzburg, Austria $41
Bus from Munich, Germany to Prague, Czech $40 (estimate; not yet purchased)
Bus/train from Prague to Berlin, Germany $53 (estimate; not yet purchased)
Train from Berlin to Koblenz/Cologne, Germany (higher cost due to 1st class tix) $84
Train from Koblenz/Cologne to Amsterdam $40
Total $457

 

We’ll be renting cars for three different periods during our trip.  I’m unable to drive a manual transmission vehicle so I’ll be paying the 20-30% markup for automatic transmission vehicles.  The extra $100 will be recouped dozens of times when I don’t stall the car or inadvertently roll into oncoming vehicles or back down the hill onto the hood of an about-to-be-angry driver.  The frugalist in me says “learn to drive a stick to save a few bucks”. Then the realist shouts “This is why we saved up all this money. To afford small luxuries and conveniences.”  Though learning to drive stick while destroying someone else’s clutch does have its merits.

I’m shocked at how cheap the rental rates are since we are doing one-way rentals for at least two of the rentals (and possibly the third rental in the Koblenz area if I can find a decent one-way rate).  Another lesson learned is the lack of rental office availability on Sundays (note: never plan on conducting business or shopping for groceries on Sunday in Germany).

I’m also shocked at the opaqueness of rental car pricing. It jumps all over from hour to hour and day to day. And there are quirks.  Sometimes the price to rent for seven days is the exact same as for five days. And sometimes the total price DROPS if you extend the rental period.  Our Ljubljana, Slovenia rental was $20+ cheaper for a 13 day rental compared to a 10-12 day rental.  Ummm, okay, I can store your car for you for a few days in exchange for $20.

Rental Car: # Days Cost Cost Per Night
Ljubljana, Slovenia to Bled, Slovenia 13 $161 $12
Salzburg, Austria to Munich Germany 4 $113 $28
Koblenz, Germany (Via Cologne) 7 $181 $26
Total/Average 24 $455 $19

We will be taking public transit during about two thirds of our trip.  Most cities have multi-day or weekly transit passes and discounts for children (or they ride free with an adult pass), so transit costs should be fairly moderate overall.  Except in Venice where it’s $8 per person for a boat-bus called a vaporetto!  I’m sticking $750 in the budget for all transit costs.  Other miscellaneous transportation costs include parking and tolls at $75 and gas for the rental car at $250.  The gas cost is based on 1,375 miles at 33 miles per gallon with gas at $6/gallon.

Gas for Rental Car $250
Parking, Tolls $75
Local Transit $750
Total $1,075

To sweeten these deals, I’m always checking online cash back shopping portals like Ebates.  In this case, I didn’t have much luck finding the European train and bus companies on Ebates (but there are some travel consolidators that sell train tickets and qualify for cash back).  However, most rental car companies qualify for 4-5% cash back (like Hertz and Sixt) and the big travel sites like Expedia and Travelocity offer a couple percent cash back on rental car reservations.  I booked two out of three rental cars through Ebates so I should get another $10-20 cash back once the car rental is complete this summer.

If you’re interested in getting cash back at hundreds of sites where you are already shopping online, check out Ebates.  And click through this link for $10 bonus cash back for new members!

 

Lodging

At first we planned on a combination of hotels for short stays of two or three days and apartment rentals for longer periods.  After digging in to available hotel and apartment offerings, we quickly discovered that apartment rentals offered a much better value even for short stays.  Most hotels in Europe offer standard rooms that sleep two or possibly two plus a kid.  And you pay extra for guests in the room beyond one or two people, including kids.  For our family of five this put us in large hotel suite territory (think $$$) or paying for two rooms, the second of which might come with extra person fees for the third kid.

We moved on to Airbnb, our choice for vacation apartment rentals.  I’ve used VRBO in the past when I couldn’t find anything on Airbnb.  But this time around, the inventory and options available in all the cities we are visiting was simply overwhelming so I didn’t need to expand my search beyond Airbnb.

I love their search tools because you can filter out properties that don’t meet your criteria and then save your favorite properties on a map so it’s easy to see where your most desired properties are located.  Once you know exactly what you’re looking for, the thousands of properties in a city drop to several dozen or several hundred.

My typical search criteria was:

  • Whole house rental (not “shared room” or “private room”)
  • 2+ bedrooms (unless there aren’t many properties or they are super expensive or we’ll only be there for a couple nights, then 1+ bedroom)
  • 4+ guests (many times there’s an extra bed or couch where a small kid can sleep or a huge bed where multiple kids can sleep; 5+ guest weeds out too many perfectly acceptable rentals)
  • Air conditioning if it’s hot (summertime anywhere in Spain, Portugal, Italy)
  • limit price to a max of 60-80% of the average for the city (and increase price limit to show more properties if nothing cheaper looks appealing)

Though not included in our search criteria, we highly desire:

  • washer, and preferably dryer
  • internet
  • non-smoking
  • pet free

I find that limiting a search based on these latter four factors will eliminate nice properties that will work for us with some flexibility.  Sometimes there’s a washer available on site for free or a small charge that isn’t included in the listing.  One place we booked charges €3 per washer load, for example, but costs $40/night less than other comparable apartments!  If the cost savings are huge (as in $100+), or the property is really luxurious or in a sweet location, it might be worth making a trip to a laundromat a couple times to make the apartment work for us.

airbnb-montreal-2

Pretty decent bedroom (with a VERY firm bed) in our airbnb rental in Montreal a few years ago. We booked nicer places during our 2017 trip to Europe.

Internet is another weird one. Almost all rentals that aren’t absolute bare-bones have internet these days, but some don’t list it or only list “wireless internet” or “internet” (they are two separate check boxes on Airbnb’s search).  However, virtually all that have “internet” have a wireless router.  The key is reading the description or asking the owner if it’s in doubt.  Again, if the cost savings are huge or the property is otherwise wonderful we could forego internet.  However, I can’t recall seeing a really nice property that didn’t have internet, which is why I ignore this as a search term but double check that internet is available before booking.

We also looked for places that had ratings of 4+ stars with at least a few written reviews.  There’s no way to limit this with the search terms, but I would often skip over properties with poor ratings or no ratings.  Too many other polished gems out there to research!  However, if you’re on a very tight budget or not able to find much availability, there are certainly hidden gems waiting for you to find them.  We’ve had to stay at a few places with zero or one review due to reservations falling through at the last minute and suddenly needing to book a new apartment on short notice.  They all worked out fine after discussing the properties with the owner.

Amazing last minute booking in Mexico City with only one review. It was around USD$45 per night and beautiful inside and one block from the subway.

Amazing last minute booking in Mexico City with only one review. It was around USD$45 per night and beautiful inside and one block from the subway.

If you haven’t tried Airbnb yet, you should do so on your next vacation.  It’s an incredible way to save money, stay in a much larger, nicer accommodation than a hotel room (especially relevant to families!), and end up in a cool non-touristy neighborhood surrounded by locals (part of the reason you’re traveling, right?).  Right now you can take $40 off your first Airbnb stay through this link.

Here are all the apartments and houses we booked for our nine week trip:

Destination Nights Cost Cost Per Night
Lisbon, Portugal 5 $389 $78
Malaga, Spain 2 $124 $62
Granada, Spain 3 $201 $67
Seville, Spain 4 $252 $63
Milan, Italy 4 $343 $86
Venice, Italy 2 $332 $166
Ljubljana, Slovenia 7 $600 $86
Bovec/Bled, Slovenia 4 $180 $45
Salzburg, Austria 2 $260 $130
Munich, Germany 7 $618 $88
Prague, Czech 7 $351 $50
Berlin, Germany 7 $697 $100
Koblenz (Mariaroth), Germany 7 $383 $55
Amsterdam, Netherlands 3 $517 $172
Total/Average: 64 $5,247 $82
20% savings w/ gift cards   $4,198 $66

We booked 14 different properties for a total of 64 nights at a cost of USD$5,247, or $82 per night.  Most are apartments with two bedrooms, a full kitchen, a living room, and one bathroom.  A few places are three bedrooms with multiple bathrooms.  All but one place booked for three or more nights have a washing machine.

Our goal isn’t to stay in the cheapest lodging possible, but rather to balance cost with comfort, luxury, convenience, cleanliness, and location.  We could have saved 20-40% in most cities if we were traveling on a bare-bones budget and didn’t mind making sacrifices.

We have enjoyed a half dozen very positive Airbnb rentals and only one “rental from hell”.  Feel free to read more about the latter experience.  We learned to be wary of the lowest price properties and go with our guts when it comes to Airbnb places.  If there’s a hint that a place is unclean, it doesn’t make it on our list.

I amplified the cost savings on apartment rentals through Airbnb by buying Airbnb gift cards at a 20% discount through Giftcardmall.com.  Lots of them.  Roughly $5,800.  I clicked through Ebates to make the purchases at Giftcardmall, thereby adding ANOTHER 1% discount to the deal in the form of cash back.  Sadly the Giftcardmall promotion ran for just a few days in December. However, keep your eyes open at discount sites like Slickdeals and you’ll occasionally see Airbnb gift cards on sale for 10-20% off face value (usually in limited quantities).

And don’t forget Ebates for cash back on hotels if you don’t go 100% Airbnb.  Most hotels qualify for 3-6% when booked directly at the hotels’ website (12% for Hilton!!) and about the same if booked through Travelocity or Expedia.  If you go the Hotels.com route (possibly with discounted gift cards from somewhere like Raise.com), you currently earn 6% cash back through Ebates on hotels.com purchases.  Sign up for Ebates through this link for $10 bonus cash back for new members.

To summarize, you should be able to take at least a few percent off the cost of lodging using Ebates, and possibly 10-20% by combining discounted gift cards and shopping through Ebates.

In my case, I paid $4,198 cash for the gift cards used to purchase $5,247 worth of Airbnb rentals, a 20% cost savings (plus I got 1% cash back through Ebates).

 

Eating all the food

Most of the other areas of our trip are pretty well planned out, booked, and paid for.  Food is the one area where we’re going to make it up as we go along.  Belly rumbling means it’s time to eat.

Since we’ll have a full kitchen in all the Airbnb rentals, we have the option to cook essentially all meals.  We (and specifically the kids) enjoy basic breakfasts including cold stuff like fruit and yogurt or cereal and milk.  Sometimes we might get fancy and make some meat or eggs.  Or get pastries from a nearby bakery or grocery store.

For lunch we’ll grab lunch on the go while we’re out sightseeing during the day.  Some days we might pack a picnic lunch if we happen to have good ingredients on hand.  Otherwise, it’ll be a mix of street food and sit down or casual restaurants and cafes.

Dinner will be a mix of cooking at the apartment and getting take out, with some dining out mixed in.  You can’t go to Spain and NOT enjoy some tapas with wine or beer, right?

I know lunch is usually less expensive than dinner at restaurants, and we’ll naturally be consuming a higher proportion of lunches at restaurants given our schedule as tourists.

I found an app called “Too Good To Go” that I’m excited to try. The concept is simple – for a heavily discounted price, you purchase unsold food from a restaurant at the end of their meal service for pickup at a pre-determined time (usually around 3 pm or 8-9 pm).  The price is generally USD$3-4 for a take out plate.  I gather that sometimes it’s a mystery what they give you, and other times they give you a takeout tray to pick from their selection behind the counter or from their buffet.  Definitely an interesting concept, but it leaves me wondering how fresh the offerings will be by the time you pick them up.  So far the app is confined to a handful of countries in Europe plus 10 or so restaurants in New York City.  Of the places we are visiting, the only city with a major Too Good To Go presence is Berlin with 50+ restaurants offering dirt cheap surplus food.

As far as groceries, I always enjoy visiting new grocery stores to see what’s new and different versus our experience at home.  I’ve scoped out a few sales circulars for grocery stores near our rental apartments and confirmed that (1) Europeans do indeed buy food at grocery stores just like us Americans and (2) the prices are roughly the same on average, with some things a little more expensive and many things the same or cheaper.

A grocery run from our last Canada trip

A grocery run from our first trip to Canada. Pastries, fruit, bagels, and yogurt for breakfast or snacks. Broccoli, fries, salmon, tuna, and beef steaks for lunches and dinners.  And jello.

For budgeting purposes I’m making an educated guess that we’ll spend an average of $20 per day on dining out and $20 per day on groceries (with the understanding that we can greatly exceed this budget if we find awesome places to eat!).  That works out to roughly $1,250 each for restaurants and groceries, or $2,500 total for food.

We won’t dine out every day but we might end up dining out twice per day for several days in a row while we’re on the fast paced segments of the trip that find us staying in each city just two or three days at a time.  We’ll have access to free food and drinks on some of the travel days at the airport lounges and the first class train lounges, so we might spend next to nothing on food for a few days of the trip.

 

Having fun

We’ll be on vacation for nine weeks and don’t plan on packing in the museums, castles, and tourist attractions every day we are overseas.  But when we do venture out for the day, we’ll inevitably buy numerous tickets for those museums, castles, and tourist attractions.  I am pleased with just how cheap admission fees are in general.  Many cities have castles, museums, and churches open for free visits all the time or on certain days of the week.  We also enjoy walking around the historic districts, taking the kids to the park, and exploring natural parks and waterfronts (most of which are free or have nominal admission fees).

I’m budgeting $750 total for the various attractions that cost money.  There are a few “must sees” on our trip that cost $40-100 for family admission:

  • El Alhambra in Granada, Spain
  • Postojna Cave and Skocjan Cave, outside Ljubljana, Slovenia
  • Dachstein Ice Cave near Hallstatt, Austria
  • Neuschwanstein Castle (admission is part of Bavaria pass)

We haven’t nailed down every single place we want to visit, but these locations stood out in our preliminary research as places we have to go.  We’re brainstorming fun stuff to do and see in each city and we keep track of all that info in a spreadsheet. Then once we arrive in a new city we’ll dig through our list of local attractions to see what we’re up for at the moment.

 

Packing

Our goal is to pack light.  By light, I mean everything should fit into regular size bookbags.  The idea is we’ll be agile and mobile. We can hop on trains, toss the gear in lockers for a couple hours if necessary, stick the bags in overhead compartments (and carry them on board planes for free), and walk a mile or so with the bags on our backs (remember, we have kids including a soon to be five year old) to get from intercity train/bus station to public transit to our apartment.

The family with all our gear on our backs. Pack light and a mile or two is nothing!

The family with all our gear on our backs. Pack light and a mile or two is nothing!

We’ll probably take three changes of clothes since we’ll have a washing machine in every apartment and can do laundry frequently.

We will keep electronics gear to a minimum.  Phones for the adults, Amazon FIRE tablets for the kids.  We have a pair of ultralight laptops for the adults (the 13″ HP Probook 430 G3 at 3 pounds).  All travel guides, leisure reading books, and entertainment will come from our tablets, phones, and computers.  For photography, we have a basic DSLR, the Canon EOS Rebel T5i with a few lenses including a 75-300mm zoom lens.

Beyond clothes and electronics, we’ll have the regular assortment of toiletries and travel meds, snacks, water, and travel documents.  That plus a spirit of adventure is all we’re taking, folks.

I admit it feels weird to walk out your front door for a two month journey with nothing more than a bookbag slung over your shoulder, but we did exactly that in 2015 when we spent nearly the whole summer living out of our bookbags while traveling around Mexico.  It worked out just fine before with only 52 pounds of gear between the five of us.

This is all we packed for seven weeks in Mexico.

This is all we packed for seven weeks in Mexico.

The only tricky part about this trip is cold weather gear. It’ll be mild to warm in most destinations but the ice cave in Austria is supposed to be around freezing even in summer.  I hate to bring a heavy coat and winter gear for this one cave visit, so I need to figure out a solution.  So far I’m considering wearing socks on my hands, a long sleeve shirt, and accepting that it’ll be cold temporarily.  Or find a thrift shop somewhere in Slovenia or Austria then ditch the clothes after the ice cave visit.

 

Challenges

We are traveling with our three kids who will be five, ten, and twelve during our trip.  The pace of the whole trip takes that into consideration which explains why we’re going pretty slow.  We’re big fans of slow travel and loathe the idea of “popping off to another country for a quick weekend away”.  Slow travel and kids go hand in hand.

The whole idea is to spend a relatively small proportion of the trip on a bus, train, or plane and most of the time relaxing or enjoying the places you are visiting.  Initially we laid out a bold plan to visit 12-15 countries including 25 cities in the same nine week period.  After realizing this was idiotic, we started amputating amazing destinations from our itinerary.  Places like Paris – nope. The French Riviera – nope. Switzerland – nope. London – nope. Rome – nope.  Belgium – nope.  Budapest – nope.  We eventually settled on eight countries with stays in 14 cities.

We designed our itinerary with plenty of time in most cities so we can take a day off every second or third day.  This means we won’t see everything in every place we visit and that is okay, as long as we have a generally good time and all get along.  Nine weeks on the road with exhausted children and frazzled adults is not a good time.

These “do nothing days” are golden.  What a luxury to travel half way across the globe and NOT have to spend every waking moment sightseeing.  It’s like a rainy Saturday back home when you don’t go out and spend the day reading, relaxing, catching some Netflix, and maybe an afternoon nap.  Great way to battle travel fatigue.

Homesickness is a related issue we’ll face.  We crave the familiar and the routine as much as we crave uniqueness.  Sometimes you get tired of arguing with the guy behind the car rental counter or stressing out that you’ll miss your train.  I find the “do nothing” days help it feel a little more like home as much as they provide relaxation and a day of respite.  A nice juicy burger or a familiar home cooked meal helps too.

Along with homesickness is the yearning for people who just speak plain ole “regular” English.  Conversing in a foreign language is tricky and mentally exhausting.

Foreign languages are challenging too.  We are proficient in Spanish which will help for the nine days in Spain.  I’ve completed a few dozen modules of German on Duolingo but I’m nowhere near being able to carry on a conversation.  Otherwise, I’m hoping Italian and Portuguese are close enough to Spanish to let me catch a few words here and there.  We’re totally screwed in Slovenia, the Czech Republic, and Amsterdam since languages spoken there aren’t familiar to us at all.

I hope what they say is true – that everyone speaks English in Europe.  For those that don’t, we have Google Translate on our phones along with mad charade skillz to mime what we need.  I’d like to spend some more time on Duolingo learning the basics of Portuguese and Italian and refreshing my very rusty and basic German.

 

How we planned the trip

We started planning this trip in September of 2016 so that we could book plane tickets as early as possible in order to get the best flight schedules with convenient layovers.  Our transatlantic flights are only 7.5 hours to Lisbon and 8.5 hours returning from Amsterdam (plus a one hour hop from the Washington DC airport to Raleigh here in the States).  Seven or eight hours in coach isn’t ideal but overall our transatlantic flight itinerary is hard to beat.  It’s only two hours longer than flying to the west coast from here and people do that without hesitation.  And they still give out those tasty bags of peanuts, right?  We might even get two bags on the transatlantic flights.

Once the flights were booked we had our trip bookends. We are flying into Lisbon, Portugal in mid-June and flying out of Amsterdam a bit over two months later.  Then we had to figure out where exactly we wanted to visit in Europe and how we were going to travel between cities.  Portugal and southern Spain made it on the list as did northern Italy, Slovenia, Austria, Germany, Czech Republic, and the Netherlands.  The biggest jump of the trip is between southern Spain and northern Italy, so we decided on flights between these two points.

Other cities were close enough together that buses and trains offer reasonable transit times.  As a form of due diligence I checked the prices between cities along our route to ensure that a bus or train link was available at a reasonable price (it was).  Then we started booking Airbnb apartments in all our destination cities before all the cheap and good places were reserved.

Once the lodging was finalized, the train and bus schedules for our specific travel dates opened up and I booked most of the intercity bus/train tickets.  All intercity travel is booked at this time except the segments into and out of Prague which go on sale at the end of April.

The only remaining bookings are a few of the most popular tourist attractions like El Alhambra that can sell out a month or more ahead of time.

In general, we booked the big ticket items first to lock in good prices and options, then drilled down to smaller details on the itinerary once we knew for certain we were staying in a particular city and traveling by a certain method.

This method has worked out well so far except for the rental car pick up in Germany.  We are doing four one week stays across Germany and the Czech Republic and switching apartments on Sundays.  The apartments are already booked and paid for, and come with cancellation fees to change the dates.  We are stuck with Sunday travel days.  Many rental car offices aren’t open on Sundays or open for just a few hours so we’ll end up driving an hour longer to pick up the car at the rental company’s airport location instead of their downtown city locations.  A lesser inconvenience is the German grocery store. It’s closed on Sunday so we’ll have to make do for our Sunday evening meal and get some groceries on Mondays.

To economize on the trip, we used a few tricks:

 

Conclusion

There you have it.  That’s how you do a nine week vacation in Europe for a family of five for around $10,000.

Trip Budget Cost
Planes $544
Buses/Trains $457
Rental Car – 24 days $455
Misc. Transportation $1,075
Lodging – 64 nights $4,198
Restaurants $1,250
Groceries $1,250
Admission Fees $750
TOTAL $9,979

Most of the trip is already booked and paid for, so the hardest part is done.  Now we get to enjoy the fun part of reading about each destination and figuring out what we want to do while we are bumming around Europe.

In some regards, this will be a budget trip because we’re not staying in fancy five star luxury hotels nor dining in three star Michelin restaurants (well, probably not).  In other regards, this really IS a luxury vacation because it won’t be rushed and the itinerary is customized to our interests and tastes.

As this post goes live, we have just under three months till we leave for Europe.  Soon we’ll be packing our meager possessions in our bookbags and bidding farewell to home so we can spend the summer exploring the world.

 

 

Are we crazy?  Can this be done?  Any suggestions on the cities we are visiting? General tips on travel in Europe?  If you’ve been to any of these places, what is number one must see on your list?

 

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February 2017 Financial Update

money-january-2014

Two months into 2017 and things are off to a great start for us.  Our income of $4,893 for the month greatly exceeded our expenses of $2,108.  Our net worth climbed another $38,000 to $1,756,000 primarily due to solid stock market gains.

Our taxes are filed and we’re due small refunds from the state and the feds totaling several hundred dollars.  My first effort at paying quarterly estimated taxes in 2016 were a huge success since I came very close to our actual tax liabilities without giving our state and federal governments unnecessarily large loans.  Our overall tax liability is higher in retirement compared to our working years thanks to the self employment tax due on blog earnings.  At least I’m increasing my future social security check slightly.

 

Income

Our investment income was $132 in February.  We get more monthly investment income since shifting $50,000 from stocks to bonds in January.  However, the majority of our mutual funds and ETFs pay dividends quarterly in March, June, September, and December.  Since the bond yield is about the same as our overall portfolio yield, our total annual investment income will remain roughly the same.

Blog income, shown as “other income” in the chart, remained strong at $3,581.  My early retirement lifestyle consulting income dropped to $465 after a very busy January.  That works out to about one hour per week which is perfect for me.

The $713 in Deposits includes cash back from my credit card (now I’m putting spending on Chase Sapphire Reserves to score 200,000 bonus points).  It also includes cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. If you sign up through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did.  We had a bunch of spending late last year that finally paid out the cash back bonuses in February along with some referral payments for folks signing up through the links on this blog.

february-2017-income

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).

 

Expenses

Now let’s take a look at February expenses:

february-2017-expenses

We came in well under our budgeted $3,333 per month (or $40,000 per year) during February with total spending of just $2,108.

Utilities- $1,036:

This is mostly from the $800 I prepaid on our electric bill.  They charge a flat $2.40 fee for credit card transactions so I usually pay a large chunk at a time to avoid the $2.40 fee every month.  I prepaid enough to cover all spring and summer electric bills since I’m trying to spend $8,000 in three months to score my 200,000 Chase Ultimate Rewards points from our Chase Sapphire Reserve cards (hint: 100,000 point offer is no longer available online but the 50,000 point bonus for Chase Sapphire *Preferred* card is still available).

The utilities total also includes our regular monthly water, sewer, and trash bill from the City plus an abnormally low natural gas bill (thanks overly warm winter!!).

Groceries – $508:

We came in very close to our $500 per month average for groceries.  Not bad considering we bought several discounted gift cards for groceries at Walmart, Aldi, and Kroger during the month and still have about $150 in value remaining from those purchases.  If you haven’t checked out raise.com for discounted gift cards for places you already shop, then feel free to save an extra $5 off your first purchase at Raise.com.

They have sales a few times per month where they offer $5-10 off a $50-100 purchase or an extra 4-5% off all gift cards so it’s easy to get a discount on gift cards and score an additional discount from Raise.com’s promotions.  Since I already spend about $500 per month at stores such as Aldi, Walmart, and Kroger it’s an easy way to save 10%+ off stuff I’m routinely buying.

Homemade banh xeo Asian crepes.

Homemade banh xeo Asian crepes.

Obligatory monthly pho pic.

Obligatory monthly pho pic.

...which we enjoyed outside in the 70-80 degree weather this February.

…which we enjoyed outside in the 80 degree weather this February.  Gotta love “winter” in the South.

I tried out Instacart grocery delivery service during February.  They were offering $15 off a $35 purchase with free delivery.  How bad could it be?  Turns out it wasn’t that great.  They messed up several items by substituting other items that cost twice as much or more. And instead of the two bunches of kale I ordered, I received two partially moldy bundles of mustard greens.  The apples (sold by the pound) were huge while the lettuce (sold by the head) was tiny.  After complaining to Instacart and receiving a refund for the most egregious shortcomings I ended up spending a net of $10 for my grocery order so it wasn’t a bad deal after all.

I think the service is good enough once you learn to specify certain things like “pick small apples”, “don’t substitute”, and “kale is dark green and says k-a-l-e on it, not m-u-s-t-a-r-d g-r-e-e-n-s”.  If I were mobility impaired or without transportation this service would be 100% kick ass in terms of quality of life improvement, warts and all.

The one on the left is Instacart's choice of lettuce. The one on the right is what I usually buy. Mine is twice as heavy as the Instacart lettuce (and 5 cents cheaper).

The one on the left is Instacart’s choice of lettuce. The one on the right is what I usually buy. Mine is twice as big as the Instacart lettuce (and 5 cents cheaper).

Automotive – $165:

This represents our annual car inspection fees, licensing, registration, and taxes.  I appealed our vehicle’s tax valuation and they lowered the appraised value from just over $10,000 to $6,800, thereby saving about $35 in property taxes.  The effort required?  Emailing a scan of the Bill of Sale to the county tax assessors office.  Maybe 10 minutes including finding the Bill of Sale.  If they jack up my assessed value for 2018 I’ll be able to forward the same email in about 30 seconds and save another $35 hopefully.

A little DIY repair. The license tag lights burned out and as a result I failed the state safety inspection. $0.99 on ebay and a few days later and I had a fix. Though it took 45 minutes to install. In hindsight, I should have paid the auto shop $20 to install the new tag lights.

A little DIY repair. The license tag lights burned out and as a result I failed the state safety inspection. $0.99 on ebay for a pair of LED lights and I had a fix. Though it took 45 minutes and removal of all the back tailgate interior panels to install. In hindsight, I should have paid the auto shop $20 to install the new tag lights.

Travel – $150:

We’re still chugging away at our trip planning for our nine week trip to Europe this summer.  The $150 represents three sets of intercity bus tickets for the five of us:

  • Malaga, Spain to Granada, Spain on Alsa – USD$41
  • Granada, Spain to Seville, Spain on Alsa – USD$40
  • Venice, Italy to Ljubljana, Slovenia on Buscenter.it – USD$69

It looks like those Venice-Ljubljana tickets will be our most expensive set of bus or train tickets on the entire trip.  It’s crazy how cheap buses and trains are in Europe.  March’s expense report will include several more sets of tickets in the USD$40-50 range.

I'm hoping to see some of the great outdoors while in Europe. Slovenia looks particularly promising.

I’m hoping to see some of the great outdoors while in Europe. Slovenia looks particularly promising. This, however, is more local. A trail a couple miles from our house.

Healthcare/Medical – $114:

We paid $98 to the dentist which covers the 20% copays on two routine dental visits plus two fillings for our kids.

The balance of the healthcare/medical spending is one month’s health insurance premiums of $16. For us, the Affordable Care Act works phenomenally well in making our health insurance premiums tiny.

Will the ACA remain intact in 2017 and in the future?  Who knows.  The latest draft GOP “repeal/replace” bill didn’t look too ugly for the near term since it kept ACA premium subsidies intact through 2019, with the subsidies changing to a refundable tax credit starting in 2020.

Enjoying our free "made from pallets" balance machine

Enjoying our free “made from pallets” balance machine

Nothing like a completely empty pool and aquatic park during the weekdays for your private lap swimming. Impossible to get in here most weekends due to long lines.

Nothing like a completely empty (other than lifeguards) pool and aquatic park during the weekdays for your private lap swimming. Impossible to get in here most weekends due to long lines.

Electronics – $45:

I ponied up $80 for a new (used) smartphone in preparation for our Europe trip.  I had $35 of ebay gift cards purchased last year that brought the cost down to $45.  I went with the Samsung Galaxy S4 Active, a ruggedized version of the regular Galaxy S4.  The phone is a few years old but still a beast of a smartphone.  And if I drop it in a puddle it might survive the inundation.  If not, at least it won’t cost a lot to replace it.

I’m using a $0.99 global SIM chip purchased from Freedompop for service while in Europe.  It’ll give us 600 MB of data per month (actually x2 since I bought 2 SIMs).  Plus 200 minutes voice calling to US numbers, with 100 minutes of global calling.  I think it will work everywhere in Europe except Slovenia where they currently don’t offer service with the Global SIM.  Not bad for 2 bucks if it works like I think it will.  It’s working very well here in the US so far.

Gifts – $29:

The Samsung Galaxy S4 wasn’t the only cell phone I bought in February.  I also picked up a Kyocera Hydro Icon directly from Freedompop for $29.99.  This is going to be our oldest daughter’s birthday gift later in March, and our kid’s first entry to the world of smartphone ownership.  Scary times for sure.

The phone comes with free monthly service and includes 200 “voice” minutes, 500 texts and 900 MB of data each month.  I can set it up so overages are impossible for a one time $5 fee if that’s what my daughter prefers.  Otherwise she’ll be on the hook for monthly fees.  She has unlimited free wifi at school so hopefully the limited cell data won’t be a problem.

A commenter asked if I’ve done a review of Freedompop on my blog.  I haven’t but you can read my brief thoughts on it in my response to that comment.  Basically, I like it.  We’re on wifi most of the time and the 3G/4G data is adequate for times we’re not.  I put the “voice” minutes in quotes because it’s actually VOIP or voice over internet protocol for their voice minutes.  So if I’m in an area with bad cell data reception I can suffer degraded call quality.  Given that I only use about 5-10 minutes of call time each month it’s not a big deal.  It wouldn’t work for some, but for a light cell user like me it works perfectly. And the $0 monthly price tag is hard to beat.

Right now they have $2 US based SIMs available if you have an old inactive phone that takes SIMs and want to give it a go for a few bucks.  Or power up that old phone for Grandma or for your kids.

Gasoline – $39:

We finally refueled the minivan in February.  We’re carpooling with another family so we drive about 120 miles per month for that in addition to other routine driving around town for shopping, errands, entertainment, and recreation.

I actually refueled again on February 28th but the expense didn’t post on the credit card statement till March so you’ll see that expense next month.  I had to use up my Kroger fuel rewards set to expire at the end of February.  That should get us through March unless we take a big trip somewhere.  Though with nicer weather here we might be out and about a lot more swimming and exploring local trails and parks.  Or not, if the hammock calls my name.

Entertainment – $11:

$11 was roller skating admission for two kids.  Most other entertainment options are free or very cheap.

Who has time for expensive paid entertainment options when there's a lakeside campfire to be enjoyed?

Who has time for expensive paid entertainment options when there’s a lakeside campfire to be enjoyed?

Fire also doubles as a grill.

Along with some flame roasted steaks and sausages. Improv rock tossed in the middle to support the “grill” (aka an old oven rack).

Or things to climb on in the neighborhood?

Free things to climb on in the neighborhood?  Check.

Or more things to climb on ?

More things to climb on at a different nearby park.

Or things to build then climb on?

Things to build then climb on.

How about the state science museum coming to your neighborhood library with snakes and other assorted reptiles?

How about the state science museum coming to your neighborhood library with snakes and other assorted reptiles?

Restaurants – $6 (not shown in the expense summary graphic):

We bought takeout pizza twice during February.  Once was with gift cards bought in previous months (at a discount through Raise.com or elsewhere of course).  The second time was partially paid by us but also included some free personal sized pizzas the kids earned at school.

Not from a restaurant. $2.99 for a one pound bag of pork or chicken potsticker dumplings at Trader Joe's.

Not from a restaurant. $2.99 for a one pound bag of pork or chicken potsticker dumplings at Trader Joe’s.

Fish n green beans. Mmmm...

Fish n green beans. Mmmm…

 

Year to Date Living Expenses for 2017

february-2017-expenses-ytd

At $5,487 spending for the first two months of 2017, we are about $1,000 below our annual spending target of $6,667 budgeted for the first two months of the year.  And that’s in spite of paying the big lumpy annual home property tax bill and prepaying $800 toward the electric bill.

For the financial voyeurs, here is a full summary of our 2016 budget versus actual spending for all twelve months of last year.  In that article I make the case that we’re living a $100,000 lifestyle on roughly $40,000 per year.  Let me know what you think.

This month I plan to solicit bids from a number of contractors to replace our roof.  I expect this will cost around $4,000 to $8,000 which will probably be our largest expense all year.  Our other living expenses are usually pretty modest in March and April so we might not exceed our total annual budget even after the large roof expense.

Most of our travel expenses are already paid for our nine week trip to Europe.  By late January we finished booking 64 nights in Airbnb apartments for around $5,250 or about $82 per night.  We purchased $5,800 worth of Airbnb gift cards in December 2016 so we didn’t pay anything out of pocket in January for the Airbnb rentals (and we still have several hundred dollars left over for future travel).  The good news is that once we are in Europe in June through August most expenses will already be paid other than local transit, rental cars, food, and some attractions.  I hope to publish a big post during March outlining our nine week trip to Europe with a rough budget included!

 

Monthly Expense Summary for 2017:

 

Net Worth: $1,756,000 (+$38,000)

Deja vu! On the heels of a $38,000 net worth increase in January, we experienced another $38,000 net worth bump in February bringing our total net worth to an all time high of $1,756,000.  We didn’t celebrate breaking through another quarter million dollar milestone other than noting it, and accepting that we might get to experience breaking through that particular milestone again at some point if the market doesn’t continue going up forever (which it won’t).

February of 2016 found Mrs. Root of Good leaving full time employment for good.  One year later and our net worth is up by more than $300,000.  It’s a good feeling to have all this cushion in our portfolio but I accept that the stock market goes up and down.  We could just as easily lose $300,000 or more in the next year.  We’d still feel pretty wealthy since I know I felt wealthy one year ago at a ~$1,400,000 net worth!

 

february-2017-net-worth

A quick note on those spikes in the net worth chart.  Nothing crazy here, just hiccups from doing some asset conversions and transfers.  First, I converted my admiral class Vanguard shares to ETF class shares.  It’s a tax free conversion.  It makes the shares easier to transfer in kind to other brokerage firms.

I then transferred over $200,000 of ETF shares to Fidelity to pick up a his and hers 50,000 United Airlines mile bonus when you transfer $100,000 or more to a brokerage account.  This bonus is available once every 12 to 14 months so I’ll probably rinse and repeat in 2018 (by transferring assets back to Vanguard or elsewhere for a few months then round-tripping to Fidelity).  100,000 points equals four flights across the US or around three flights to Mexico/Central America/Caribbean.

This guy right here knows it's feeling like springtime right now!

This guy right here knows it’s feeling like springtime right now!  On a different note, why are dandelions considered a weed?

In investing moves, I maxed out our Roth IRA’s to the tune of $11,000 in February and contributed $4,050 as an employer contribution to my solo 401k.  I’m able to fund the IRAs and the 401k due to earnings from this blog.  Since I wanted to maintain my cash/bond reserve I transferred $15,050 from my money market account to fund these new IRA/401k contributions in the Vanguard Total Bond Market Index Fund.

Fixed income investments are now at roughly $65,000 bonds and $25,000 cash (in money market).  The bonds yield roughly 2.5% while the money market yields 1.0%.  I’ll suffer some cash drag on investment returns but I can sleep at night knowing I have a few years of living expenses tied up in relatively stable fixed income investments.

And when it comes to living well for the next 40 to 60 years, sleeping at night is pretty important.

 

 

Boy howdy, this stock market is on fire! Any newly minted millionaires want to out themselves publicly?  What are you sensible, frugal-minded people doing with all your newfound wealth?  

 

 

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