Where did the year go? As I write this we are less than four weeks from 2018! Time flies when you are having fun. As usual, November weather has been beautiful here in North Carolina and we have enjoyed many nice days outside. Now that December is here, it’s starting to feel more like winter with the short days and frost on the ground for a brief time span some mornings.
Big news on the financial front. In November, our net worth smashed through the big $2 million dollar mark! Our net worth climbed $33,000 to close the month at $2,011,000. Income remained strong at $3,228 while expenses increased to $2,857 (still within budget though). To summarize: we are doing okay financially.
Investment income totaled $271 for the month of November. This is mostly the interest on the bond position I’ve been building during 2017. Our equity mutual funds and ETFs pay dividends quarterly in March, June, September, and December. During other months (like November) 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, remained roughly the same as last month, at $2,349 for November. No complains here as that sometimes covers our monthly spending (and I get to hang out with you guys 🙂 ).
My early retirement lifestyle consulting income (“consulting”) dropped to $465 in November. This is an ideal pace with about one hour of consulting per week. These sessions provide a nice bit of intellectual rigor for me while also helping others fine tune their early retirement goals.
Deposit income of $117 was cash back 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!). I paid for a cruise in October which will lead to $40 cash back later this month.
If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.
Personal Capital is also a solid tool for investment management. Keeping track of our entire investment portfolio takes two clicks. If you haven’t signed up for the free Personal Capital service, check it out today (review here).
Now let’s take a look at November expenses:
After four months of spending less than $2,000 per month, November saw our spending rise to $2,857. That’s just a few hundred less than our budgeted spending of $3,333 per month (or $40,000 per year). November’s spending was bigger than other months because I bought several gift cards and paid extra on our utilities in order to get bonus points from credit card sign up offers. The gift cards and utility balances will be used over the next several months (so I’ll be spending less during those months).
Groceries – $1,068:
We usually spend closer to $500-600 per month on groceries. In November, I spent an extra $325 on Walmart gift cards to snag an extra 10% cash back on those purchases. I checked Personal Capital and we spend about $1,000 each year at Walmart so it shouldn’t take long to burn up these gift cards and make an extra $32 in the process.
After accounting for the gift card purchases, we spent closer to $700 on groceries in November. My best guess at what caused the extra spending was stocking the pantry and wine cabinet. There might be some Christmas gifts mixed in with the grocery spending since we find many gifts at Aldi, Lidl, and Walmart and don’t do the best job splitting out those expenses in these monthly financial updates.
For those that missed my last article comparing Costco versus several other competitors, it is worth checking out since some people found it rather controversial with more than 200 comments so far. I knew Costco would be a little more expensive than some other stores but I was really shocked to see it was 40% more expensive than Walmart for a basket of staples!
Gratuitous food pics from November:
Somen noodles and thin sliced steak with green papaya salad. About $2 worth of food. This plate is $30 at the wildly popular local Laotian restaurant and it’s not as good as this simple home cookin’ 🙂
Utilities – $520:
I added $270 on the water bill account and $250 on the natural gas account even though I still had a small credit balance on both. We usually spend about $250/month total between water, gas, and electric so this month was about double due to prepayment. Gotta earn those credit card sign up bonuses by shifting spending forward sometimes.
Travel – $289:
No cruises this month (like last month). The travel spending came from three annual fees on three new credit cards that were $95 or $99 each. I signed up for two Barclay American Airlines Aviator cards that will yield 60,000 AA points each, plus a Barclay Jetblue Card that will reward us with 60,000 Jetblue points after I meet the $1,000 spending requirement. These points are worth roughly $2,500 to $3,000 at a cost of just under $300 in annual fees. I’ll most likely cancel these cards before next year when the annual fee comes due again.
If you want to peruse the credit card bonuses on offer, check out my credit cards page.
Insurance – $253:
Six month auto insurance premium for the two of us. High liability limits but no comprehensive or collision coverage for our used minivan.
General Merchandise – $234:
$20 set of Pyrex glassware storage containers for the kitchen. The Pyrex glassware was my only Black Friday purchase since we already have a house full of stuff and don’t need anything else.
$63 for three sets of bed sheets from Aldi (one of which will probably become a gift).
The other $150 was a Walmart gift card that earned 10% cash back on my Chase card. I buy a lot of household goods and non-grocery things at Walmart so this gift card certainly won’t go to waste!
Clothing – $142:
New winter coats for the kids ($9.99 at Walmart!!), some shoes, leggings and/or jeggings (I don’t really know the difference nor what exactly we bought).
Gifts – $102:
“Gifts” is a category that raises a lot of questions this time of year. I think a lot of the gifts we buy for people slip through the cracks and fall into other categories of spending. It’s easy to pick up a $5-20 item as you buy groceries which magically becomes a “grocery” expense. As a result I figure I under report my gift spending while over reporting my grocery and household goods expenditures. It all works out in the end since I’m most concerned about our bottom line and not the exact category that everything falls into, but it’s worth mentioning in case anyone sees that we only spent $102 on gifts.
$42 of gift spending went to 2018 custom photo calendars for family (and one for us!). Walmart runs a $10 deal every year and we take advantage of that.
The other $60 was spent on two new Moto E cell phones for our older two kids. One lost her previous phone at school (perhaps it was stolen) and the other kid is a new inductee to phone ownership. We bought the phones from Freedompop which offers a conveniently priced $0 per month cell phone plan.
I’m treating the phones as a gift expense since we usually reward the kids for good grades each quarter and they did phenomenally well with Q1 grades (all A’s between them except for one B). This $60 per quarter incentive should save me a lot of money on college costs one day. Usually we hand them cash: $5 per A, $2.50 per B, nothing for a C and a stern “strategy session” talking-to for anything lower.
I’ve read that paying kids to earn good grades makes kids think grades are instrumentally valuable and not intrinsically valuable. I view it in a different way. It’s no different than earning a merit based scholarship in college or performing well at a job and getting a raise and a bonus. Effort is instrumentally valuable in receiving those good things. Knowledge is intrinsically valuable in itself, and I hope they learn that lesson by example at home regardless of whether we routinely compensate them for good grades.
Keeping them flush with cash also puts spending decisions in their hands instead of mine since my stock response to “can I get this?” is “sure, you can buy anything you want with your own money!”. Because Money is the Root of Good.
Home Maintenance – $74:
$45 went to the teenager we hired this summer to mow our grass while we were in Europe on vacation for 9 weeks. I gave him a $25 end of summer bonus plus his usual $20 for mowing the yard. They just now got around to cashing the check (so I made an extra $0.03 from float since August).
I spent $19 on a new range hood from Amazon. I’m sad to report that the fan in our old range hood died after 45 years of devoted service. I went for an open box item from Amazon Warehouse deals and had to send the first one back due to some defects whereas the replacement is nearly perfect. The range hood would have been $69 full price.
The remaining $10 of home maintenance spending went toward our neighborhood’s annual Luminaria light display on Christmas Eve.
Restaurants – $58:
We don’t spend much on dining out and November was no different. We went out to the amazing neighborhood Chinese restaurant as a family to celebrate good grades ($36). I went out to lunch with an old law school friend and spent another $9 (and finally tried the local Korean fried chicken place that everyone’s been talking about; I was unimpressed). I also used up a $10 Groupon credit plus $3 out of pocket to buy a $20 Groupon for a local Mexican restaurant.
Rounding out the restaurant spending was $9 for two visits to a local bakery for their amazing apple fritters and donuts (Baker’s Dozen Donuts if you’re local to Cary/Raleigh). I’m glad for health reasons that their nearest location isn’t too close to our house…
Healthcare/Dental – $56:
$32 of healthcare spending was two months of monthly premiums for our health insurance plan that’s mostly paid for with ACA premium subsidies.
FYI, open enrollment for the ACA plans is still available through December 15 so head over to Healthcare.gov if you need to sign up for 2018. I already signed up for almost the exact policy we have in 2017. The premium went up slightly due to some quirks in how the ACA premium tax credit is calculated.
I spent $10 on replacement toothbrush heads for my Sonicare. That’s several times more expensive than a regular toothbrush but if it prevents just one cavity every decade it pays for itself. And my teeth are shinier and mostly hole-free.
The remaining $14 was a miscellany of labwork, a $5 copay at the doctor and a $2 prescription. “Obamacare” insurance isn’t a derogatory term in my experience as it’s working pretty well.
Gas – $41:
Our monthly visit to the gas station.
Cable/Satellite – $14:
$14.99 per month for 30 mbit/second download speeds and 4 mbit/second upload speeds with no data caps.
Entertainment – $0:
I’m not sure why this showed up on the Personal Capital expense report. I must have spent a penny or a dollar on a Humble Bundle package of computer games. I also picked up a completely free game through Humble Bundle called “Rebuild 3”. That kept me busy for a couple of weeks. It’s like SimCity or Civilization, except you’re killing zombies while rebuilding a decimated city. In other words, it’s awesome.
Year to Date Living Expenses for 2017
With only one month remaining in 2017, we have spent $23,754 year to date. That’s roughly $13,000 below the $36,667 budgeted for the first eleven months of the year. Needless to say we are well on track to come in WAAAAY under budget for 2017.
Big ticket items remaining in 2017 (or very early 2018) are our $1,500 annual property tax bill and a $600 spark plug job for the van. Who knew spark plug replacement on a minivan costs more than a timing belt change on a Honda Civic?? The shop said they charge four hours of shop time for the repair because half the engine must come out to get to the rear three plugs. Four hours of pro mechanic time translates to 8-12 of my hours so I’m going to outsource this task and be lazy.
Our vacation planning for summer of 2018 is still underway. After a mostly fruitless attempt at finding the perfect beachfront rental in the Cancun area, we have moved on to searching the Bahamas. I think we have found the perfect place and might end up with a $6,000-$7,000 vacation that consists of a month of lounging on a mile of mostly deserted pristine white sand beach with crystal clear water. And the rental has high speed internet and air conditioning. After travel hacking it might only cost $2,000-3,000 out of pocket including groceries and car rental.
Monthly Expense Summary for 2017:
- January 2017 – $3,378
- February 2017 – $2,108
- March 2017 – $1,388
- April 2017 – $2,981
- May 2017 – $1,829
- June 2017 – $2,629
- July 2017 – $1,616
- August 2017 – $1,390
- September 2017 – $1,824
- October 2017 – $1,748
- November 2017 – $2,857
Net Worth: $2,011,000 (+$33,000)
Woohoo!! Two Million Dollars! It’s a big milestone but doesn’t really buy us anything that we don’t already have. It is a nice feeling to quit your full time office jobs, do a little fun creative stuff on the side and mostly sit back and watch your net worth grow by many hundreds of thousands of dollars over the course of a few years.
This might sound strange, but I didn’t do anything to celebrate other than Twitter bragging to Carl (aka Mr. 1500 Days) that I beat him to the $2 million mark. He’s only $10,000 or so behind me so I expect he’s close to cresting this particular hill too.
We are now up roughly $400,000 since October 2016. That’s enough to fund 10-15 years of early retired living expenses if we spend $25-40,000 per year like we have been doing these past several years. It’s crazy to think about it in that way, but that’s the only way I can put these large numbers in perspective.
As I mentioned in last month’s financial update, I’m planning several things for year end 2017:
- harvest capital gains – about $4,000 gains from selling a $14,000 mutual fund position (DONE; $3,994 long term capital gains, $115 short term capital gains (oops))
- continue my Roth IRA Conversion Ladder – planning to convert ~$5,000 (to be done by December 31, 2017) (WORK IN PROGRESS)
- fund my solo 401k to create a tax shelter for income from Root of Good – $18,000 into Roth solo 401k; $6,000 into traditional solo 401k (for the RoG employer portion). (PARTIALLY DONE – took the $14,000 from sale of mutual fund and stuck it in the Roth solo 401k).
- fund a his and hers Roth IRA – $5,500 x2 = $11,000 (to be done by April 15, 2018) (WORK IN PROGRESS)
By the end of this financial fancy footwork I’ll accomplish the following:
- reduce taxable holdings by $14,000
- reduce cash on hand/money market balance by $21,000 (currently at $48,000)
- increase traditional IRA/401k space by a net of $1,000
- increase Roth IRA/401k space by $34,000
As part of the $14,000 mutual fund sale, I ended up swapping around some other investments to add a total of $14,000 more the the Vanguard Total Bond Market index fund (VBTLX), held within a traditional IRA. That puts my bond position at roughly $127,000 and all of that was acquired this year.
I also moved $15,000 cash from a money market earning 1% to a five year CD earning 2% (with a 90 day interest penalty for early termination). If rates remain constant that move will earn an extra $150 per year in interest.
I don’t have many comments on the big tax bill passed by the US House and Senate. There are some significant differences between the two bills so it’s pure speculation as to what we might end up with after reconciliation happens and the final sausage is made. Looking at the prediction markets, there’s still a 10% chance this tax bill thingy won’t pass in the next four months. I think my taxes will stay the same based on preliminary back of envelope calculations. Wealthy people seem to do pretty well with the new bill whereas there will be a lot of subgroups that won’t do very well.
Want to finish the year on a strong note? Here’s 11 tips to get you there.
How about our financially bountiful 2017 so far? What would you do to celebrate cracking the $2 million milestone?
Getting excited for wintertime and the upcoming holidays?