Category Archives: Moneyhacks

How to Pay for College while Early Retired


One of the top questions I’m asked when people see “retired at 33 with 3 kids” is “yeah, but what about college?”.  The truth is I never really gave it a lot of thought because the total cost is well into the future (though closing in fast for our oldest kid) and not huge relative to our total net worth.  I had a very vague goal of being able to cover the tuition and fees for four years of in-state tuition for all three kids.

We funneled some cash into 529 accounts when North Carolina offered a tax credit for doing so.  We earned a $350 tax credit for contributing $5,000 per year to the 529.  When that tax credit was eliminated, I stopped contributing to the 529s and stopped thinking about college funding.  Paying tens of thousands of dollars for college is no biggie when you have a million or two, right?

It turns out my lazy attitude toward college funding won’t spell disaster for my children’s higher education future.  Between what we have saved in 529s, our large investment portfolio, and a plethora of other funding sources, the kids will be perfectly fine when the college tuition bills start piling up.  You’ll have to read on to find out why I’m so confident (or is it cocky?).


How much does college really cost?

“It works out to just pennies per inspiring moment” reports the University of North Carolina at Chapel Hill’s Cost of Attendance page.  While technically true (it’s about six cents per minute assuming all the minutes are “inspiring”), a better way to look at the cost is dollars per year.  For the 2016-2017 school year, the cost of attendance at UNC is just under $25,000.

Univ. of NC Tuition & Fees $8,834
Room $6,292
Board $4,926
Books & Supplies $1,442
Travel $810
Health Insurance $1,088
Loan Fees $58
Personal $1,448
Total $24,898

Here in Raleigh at North Carolina State University, the total Cost of Attendance is closer to $23,000.  NCSU doesn’t include health insurance (something we would likely provide at near zero cost after subsidy through the Affordable Care Act) which explains $1,000 of the difference in cost (the other $1,000 being meals; Raleigh is cheaper than Chapel Hill I guess).

UNC Chapel Hill and NC State University are two great local options for school where the sticker price is under $100,000 for four years.  We pay for these institutions through our tax dollars and we’re hoping to get a nice return on our tax dollars when our kids attend one of these two flagship research universities (Mrs. RoG and I are alumni of one or both schools.  Go Heels/Pack!).

Breaking down the approximately $24,000 cost of attendance further, we see the actual academics cost around $10,000 between tuition, fees, and books.  The remaining $14,000 covers personal expenses like rent, food, transportation, and beer.  For those living on campus, that’s probably a good number to use since the dorms and meal plans cost what they cost and that’s the bulk of the living expenses.  Off campus living costs vary greatly based on whether you own a car, whether you split a house or apartment, and whether your college crash pad is luxury, slummy, or somewhere in between.

For those students living at home, the cost of college is the $10,000 cost of tuition, fees, and books plus whatever the parents have been spending for the past 18 years.

I don’t know whether my kids will live at home, attend NC State University and commute the 12-15 minutes to school by car or live on/off campus at whatever state school they attend.  With either choice, the total cost for college will be between $10,000 per year plus whatever we already spend on them as part of our $40,000 early retirement budget and $24,000 per year.  

A quick note on college cost inflation.  Yes, tuition increases at a faster rate than overall CPI inflation.  But tuition is less than half of the total cost of attendance at the two schools I’ve mentioned.  The room and board, while subject to inflation, isn’t increasing at such a rapid rate.  For example, when I started college in 1998, tuition at NCSU was $2,364 while it’s $8,880 in 2016.  That’s an average annual 7.6% increase.  Holy smokes!  All other costs of attendance totaled $6,672 in 1998 while it’s $14,159 today, a more modest 4.3% average annual increase.  The total cost of attendance increased 5.3% overall during the past 18 years.  CPI inflation averaged 2.2% during that period of time.  Tuition outpaced inflation by 5.4% per year whereas room and board outpaced inflation by only 2.1% per year, with the overall cost of attendance outpacing inflation by 3.1% per year.

Keep that in mind when you see the headlines that read “college tuition increases at 8% per year on average for the past X years”.  Room and board aren’t going up at nearly the same rate, and if you live and eat off campus, your room and board will probably track CPI very closely (because you’re paying the same prices baked into the CPI that all of us are paying outside the university).  It’s also worth noting that the quality of room and board has increased greatly in the 18 years since I started full time higher education.  We didn’t have tikka masala or sushi in the dining hall for example, and many of the dorms didn’t even have air conditioning back in 1998!  You pay more, you get more.  Or you can eat 6/$1 ramen noodles off campus like all the broke college students did in 1998 (back when it was 8/$1).

Life often throws curve balls, so it’s quite possible our kids will attend some other in state public university (which all cost less than NCSU and UNC), a private U, or an out of state school.  It really depends on what will work best for the kids, and what kind of financial aid a particular university offers.  We are still seven years out from the oldest kid starting college, so for planning purposes I’m focusing on the costs for the two best in-state universities that routinely rank well for great values in public universities.


Nobody pays sticker price for college

Like the MSRP on a new car, the college sticker price is the starting point for negotiations.  If you’re early retired and don’t have a high Adjusted Gross Income or huge assets in taxable brokerage accounts, you’re in luck.  You’ll probably get a nice financial aid award.

The University of North Carolina offers a Net Price Calculator to estimate what kind of financial aid package you’ll receive.

After roughly estimating our numbers and filling out the calculator, the results say we’ll get $4,250 in grant money when one kid is in college.  One year later when our second kid enters college we’ll get $10,250 PER KID.  That’s almost half of the total cost of attendance right there, before we even start talking about other sources of financial assistance offered such as work study or student loans.

Is this an equitable result?  Probably not.  But that is how the system works.  We look poor on paper because they don’t ask about retirement account values and that is where 75% of our net worth resides.  Therefore we get a lot of free money for college.  And this is with us making zero effort to game our assets and income to maximize free grant money!

If those grants work out, we’ll be paying a maximum of $14,000 per kid half the time and $20,000 per kid the other half of the time.


What do we have saved for college?

We invested in 529 accounts for several years to snag some state income tax credits.  The older two kids have $18,000 each in 529s while the youngest kid has $7,000 in his 529.

The older two kids have UTMA accounts at Vanguard with about $2,500 per account.  This is their money but could be used for college, or something like a new (used) car to commute to college if living at home.

The remainder of college expenses will come from our main investment portfolio.  As of mid-September 2016 we have about $1.45 million in the investment portfolio (including the 529 accounts) and another $50,000 cash in a money market account.  I’ve mentally set aside $200,000 (including the 529 account values) to cover college, car purchases, higher teenage expenses, and some adult gifts like house down payments and weddings.

That will leave about $1,250,000 to fund the remainder of our early retirement expenses (which, if we spend $40,000 per year according to our budget, will equate to a 3.2% withdrawal rate).  If our portfolio does well, we will feel more free to spend the $200,000 and then some.  If things don’t go well, we might not part with all of that $200,000 if we need it to cover core living expenses. In a way we’re taking a wait and see approach to deciding exactly how much we’ll pay for college.

Money is fungible and we can move it around all we want.  We’ll likely spend enough on college expenses to deplete the $43,000 in the 529 accounts, so I’m not concerned about paying a 10% penalty to withdraw any balance remaining after they finish college.  But I don’t want to save a significantly higher sum in the 529s because I expect they will obtain college funding from numerous other sources (to be discussed later in this article).


Will the kids help with college expenses?

Yes. And we have talked with them about this starting around age 9 or 10.  Exactly how much they will have to pay is uncertain, although we plan on paying (at a minimum) the tuition and fees (and maybe a lump sum for books) which will total around $40,000 per kid.  That leaves them responsible for room, board, transportation and miscellaneous personal expenses, though some of that would be covered by us if they drive one of our cars and/or live with us.

There’s a strong incentive to save when it’s your money you’re spending and not someone else’s.  There is plenty of moderately priced off campus college housing around NCSU.  With roommates, monthly rent is $250-400 per month plus a share of utilities ($50-75/month per person).  A private bedroom in a shared apartment (with kitchen) rents for 12 months for around $4,000.  In contrast, shared dorm rooms cost around $6,500 per person for the fall and spring semesters (summer session costs extra).

A full year of off campus housing is much less than the price of a shared dorm room on campus for nine months, and would allow the option of a full semester of summer studies for only $3,500 tuition and fees.  Two or three summers of that would lead to graduating college in three years (or less!).  Paying for three years of college is a lot cheaper than paying for four.

The same logic applies to the food budget.  Pay the rack rates for on campus dining plans and it costs $8.61 per meal IF every single meal in the plan is consumed during the school year.  I’m pretty sure my kids can figure out a way to pay less than $8.61 for some fruit, cereal and milk, oatmeal, and yogurt for breakfast.  Rules vary by university, but it appears that NC State University requires first year students living on campus to purchase an overpriced meal plan (“looking out for their best interests” and all that), but beyond the first year students have the choice to skip the meal plan and pay a la carte (or dine off campus as often as possible like everyone did when I went to NCSU).

Having the kids pay part of their own way through college isn’t just a devious way to remove some of those costs from my cash flow statement and lower the overall costs for all parties involved.  There’s also a real benefit to the kids.  They will learn crucial money management skills in a sort-of real world environment with a parental safety net stretched underneath them in case they take a tumble.  It’s better to fail when the stakes are small (calling mom and dad to make up their share of the month’s rent) instead of when they are enormous (calling to say they are $50,000 underwater on their mortgage and will lose their house without help).


Sources of college funding

But it’s cruel, you say, to make kids pay for any of their college when they should be studying hard.  That would be true if they didn’t have nights, weekends, breaks, and a huge 3+ month summer vacation to figure out a way to make a little money.

15 possible sources of funds for the kids:

  1. loans
  2. grants
  3. scholarships
  4. research assistanceships
  5. teaching assistanceships
  6. work study
  7. formal co-op program
  8. internships
  9. ROTC
  10. resident advisor (free housing + meals + living stipend)
  11. on campus jobs during school year
  12. summer jobs between college semesters
  13. jobs during the school year in high school or during HS summer breaks
  14. entrepreneurship
  15. UTMA investment accounts

Parental source of college funds:

  1. 529s (currently have $43,000 total for all 3 kids)
  2. our main early retirement portfolio
  3. doing something productive that pays money (part time job, freelancing, more blogging or consulting, entrepreneurship)

As you can see, the kids have more options for funding college than us parents do.

I wanted to elaborate on a few great ways to cover half or more of the total cost of attendance:

Resident advisor or RA – I strongly considered becoming a resident advisor but decided to move off campus and split a $700 per month apartment between four people for extremely cheap rent instead.  The Resident Advisor lives in a dorm room for free, gets a university meal plan, and receives a small annual cash stipend (currently $1,735 or more at NCSU).  The room, board, and stipend are worth about $12,400 per year at NC State (more at UNC), which is over half the total cost of attendance.  You aren’t supposed to work other jobs while working as an RA because they claim it’s a 20 hour per week work commitment, though in practice many of those hours have you chilling in your room in the evenings for “office hours” while you do your homework (or whatever kids do in college these days).  At 20 hours of “work” per week for a $12,400 benefit, that equates to somewhere between $17 and $20 per hour, almost all of which would be tax free. Becoming an RA is an option after your first year of living in the dorms.

My freshman year resident advisor, George, was an overseas engineering student from Ghana paying his way through undergrad primarily by being a resident advisor plus getting some small grants and scholarships.  I could totally see my oldest daughter being an RA and loving every minute of it!

ROTC – I didn’t have any personal experience with ROTC but it sounds like an incredible opportunity.  I reached out to Doug “Nords” Nordman, a retired nuclear submarine officer who blogs at The Military Guide and an occasional guest poster here at Root of Good.  Doug’s daughter Carol recently graduated from college after completing the Naval ROTC program.  Here’s what Doug had to say:

Every student who’s the least little bit curious about the military should join a ROTC unit just to try the first year for free. At the very minimum they’ll get priority registration (for ROTC classes), lots of new friends with peer tutors, and a summer tour of their career options. Parents will know that their freshmen are getting a good start with plenty of career options.

NROTC paid over $160K of Carol’s tuition, fees, and textbooks at Rice University. She also earned $2K-$5K/year in stipends and summer training pay.

Carol also landed a well paid position as a commissioned officer in the Navy straight out of school.  Doug reports her net worth is significantly higher than her peers even though she’s only a few years out of college.  Sounds like another early retiree in the making!

ROTC provides funding for everything but room and board.  Students can drop out of the program at any time during the first year without penalty and don’t have to repay the ROTC funds (that’s what Doug meant by “free”).  There’s very little risk for joining ROTC for one year.  Starting in the second year of ROTC, the grant recipients are on the hook for repayment of any additional moneys received if they drop out of ROTC.  Alternatively they can enlist in the military later to discharge that debt.


How I funded my college

If you’re a long time reader you won’t be surprised to learn that I managed to finish college on the cheap.  First up was entering the fall semester of my freshman year just a few hours short of being a junior upperclassman.  Through AP credits, taking several courses at the state university during high school, taking several more during the summer after graduating high school, and taking one course through credit by examination, I managed to enter the university as a full time student with 56 credit hours (FYI most bachelor degrees require around 120-132 credit hours to graduate).  With all that credit, I managed to graduate with two bachelors degrees in three years.  And I managed to bum around Mexico for six weeks one summer.

Considering I finished 120th in my high school class, my experience wasn’t atypical for the upper level students at my high school which is the exact same high school that our two daughters will attend in a few more years (one of the reasons I like our public schools here).  So far both kids are academically on track to follow the same general path that I did, therefore entering college as a sophomore with 30+ credit hours is very possible.  If that happens, that’s $48,000 saved (minus costs of AP exams and several thousand dollars for university courses during high school and summer sessions).

Once I was in college, I received some parental help with tuition, books, room and board, and other living expenses the first year (but I couldn’t tell you exactly what my parents paid for the first year).  I also took advantage of the subsidized college loans offered to me.

During my first year of college I landed a position as a DJ at the college radio station.  In addition to being as cool as it sounds, it also paid very well if you took the boring shifts that included running the control board during men’s baseball and women’s basketball games (read: 2-3 hours to do homework punctuated with 2 minutes of work each hour to run station identification reels plus a couple of advertisements).  I didn’t suck at DJ’ing so I got promoted to production manager and became a member of the board of directors where I made $200 per month producing commercials and other on air spots.  Overall, the college radio experience was mostly jamming out to music while doing some homework during my shifts.  And getting paid cash money for the privilege.

By my second year of college I won a number of scholarships that more than paid for all of my expenses (I guess doing all that homework while working at the college radio station helped my grades).  I also started teaching an intro to engineering class for incoming freshmen ($25/hour) and landed an internship in the university’s facilities engineering department ($10/hour).  I quit the facilities department internship when a professor hired me on a research assistanceship ($13/hr) that later morphed into a grant ($3000 for a semester).  These progressively more challenging jobs qualified me for an $18/hr research engineer position during the summer between undergrad and law school.  All these dollar amounts are in the 1998-2001 time frame, so you can inflate them by 40% to arrive at values in 2016 dollars.

During law school I founded my own business that initially didn’t make more than $400-500 for an occasional small job.  Then I made $30,000 profit in five weeks (mostly working 12-16 hours per day).  I wish I had a $99 course explaining the secret to making that much, but it’s really common sense.  I did a great job on the smaller projects which led to my selection for a massive job that included some add on work because my quality was better and my prices were lower than the other team in competition with me.  Skip the $99 course fee, just do good work and profit.  And then there were the summer jobs during law school that paid between $0 and $23/hr.

Overall, I made a ridiculous amount of money by the time I graduated from undergrad and even more by the time I graduated from law school.  For the curious, here’s all 20 jobs I held between being a paper boy at age 12 and retiring as an engineering director at age 33.

In addition to making money and learning how to hustle, all those jobs provided invaluable experience that helped me land a professional job right out of school.

Will my kids find as much employment success as I did during college?  Even if they don’t, they can still make quite a bit of money to help pay for living expenses during college.


Hacking college

A four year degree doesn’t have to take four years, nor does it have to cost $100,000 to $300,000.

For those students that excel academically, they can start college as a sophomore or junior.  Focus on AP classes, credit by examination, summer school before college, and university/community college courses during high school.  If you can’t find resources online, then starting around 8th or 9th grade ask your kid’s guidance counselor what programs are available to earn college credit while still in high school.  I recall getting bored on summer during high school so I grabbed a course catalog from NC State University (pre-internet days, folks), and that’s when I realized they have very specific guidelines on what AP test scores get you, and what basic educational courses I should take to apply toward an engineering degree.

Another classic college hack is to attend community college for two years in a college transfer program.  Then, apply to a four year college and transfer in those two years of community college credits.  This way you only pay for two years of the more expensive university tuition.

I’m a little skeptical of this one after running the numbers.  In our situation, tuition runs $2,768 per year for full time at Wake Technical Community College, a $6,112 cost savings versus NC State University’s $8,880 per year for tuition and fees.  Not too bad but it might be a money losing proposition for students that miss out on financial aid and merit based scholarships (the engineering college at NCSU was awash with scholarship money and often had a hard time finding applicants for all that free money in my experience).  Community college is probably a better bet for students in an academic field with little prospect for discipline specific scholarships or for “average” students that graduate high school without credit for many of the freshman level college courses.

I also worry about how well those two years of community college credit would transfer into some four year degree programs that require very specific coursework (NC State University College of Engineering, I’m looking at you).

Ed Mills of The Millionaire Educator fame has figured out a way to hack a college degree in 12 months from a real, accredited four year institution for just $7,500 in tuition and fees.  It’s a little circuitous and requires discipline to study on your own then pass third party exams to demonstrate competency.  But well worth the effort for someone that needs a bachelor’s degree and doesn’t have a lot of money nor four years to waste.  Mr. Mills hones in on a few universities in the US that allow the bulk of the required credit hours to be taken through various credit by exam options.  You might want to add a second year to your course of study to allow time to actually learn the material that will be on your exams (or what the heck, take the exam and maybe you’ll pass it without studying!).


Other thoughts on college

I still wonder whether college will be relevant in another 10 years.  And at what cost will it remain relevant?  Is it worth a quarter of a million dollars?  Half a million dollars?  If college costs continue their meteoric rise to the moon, at some point we can jump off that vertically asymptotic crazy train by simply skipping the whole college charade and handing our kids a huge portfolio full of investments and let them join us in FIRE at age 18.  Then they can read Chaucer and learn Laplace transformations at a more leisurely pace.

To put the absurdities of growing costs in more stark contrast, there are so many free or extremely cheap educational options available today that continue to grow in quantity and quality.  Harvard, Yale, MIT, and Stanford (among other top tier schools) offer tons of free undergraduate and graduate level courses in every academic field imaginable.  Education is mostly free already, it’s just that diploma – that piece of paper that says you’re educated – that you need to get a job.

There also educational consolidators like Coursera, Udacity, Codecademy, and Khan Academy offering courses from a variety of instructors.  If you have $300 for a laptop and access to an internet connection, it’s hard to stay ignorant if you’re motivated to learn.

Will all this easily accessible free education ever supplant the need for a traditional four year degree?  That’s the $64,000 (or $99,592 at University of North Carolina) question that remains to be answered.  It’ll take a paradigm shift in hiring practices and corporate mindsets away from a strict requirement for a four year degree toward a more fluid skills-based or portfolio based assessment of job applicants.  Or a willingness to accept credentials from a different kind of educational institution.

Perhaps one day smart kids will brag about a set of certificates from Coursera instead of a diploma from Harvard.  That day isn’t today and I don’t know if we’ll see it before oldest two kids graduate college in 10-12 years.  But it’s a valid question to ask as you’re planning on college costs for a newborn today.  18 years might be enough time for an educational revolution.

Jeremy at Go Curry Cracker put a lot of thought into college funding for his newborn.  The most interesting take away from his article was the fact that investing college savings into a stock index fund like the S&P 500 is a smart way to combat escalating college tuition if you start early.  He looked at a 34 year period from 1979 to 2013 and found that

[f]rom 1979, consumer prices increased 3.4x.  Tuition increased 10x.  The S&P500 increased 18x.  And with dividends reinvested, the S&P500 increased 45X!

The stock investment grew 4.5 times as much as the cost of tuition.  Even with a much more mediocre stock market, it’s still a good bet that stock returns will at least keep up with inflation.  That’s why I’m not too worried about the inflation we’ll see between now and 7-8 years from now when my oldest two kids enter college.  Their 529s are invested in an aggressive mix of equities, though I’ll be slowly dialing back on the risk as the looming tuition payments draw near.

image courtesy of Go Curry Cracker


The bottom line

My kids will be able to attend college and somehow we’ll pay for it.  And we can remain early retired.

I see the best case scenario playing out like this:

$24,000 cost of attendance for 3 years – BEST CASE SCENARIO:

  • $4,000 – cut costs on room and board, misc. expenses (live at home with us?)
  • $6,500 – average need based grant (probably free money but maybe some loans)
  • $4,000 – merit based scholarships and grants
  • $6,000 – various jobs and internships
  • $3,500 – spending from our 529 accounts

If this rosy tinted picture plays out, we’ll have three years of spending at $3,500 per year times three students.  Our total outlay will be $31,500 in today’s dollars, and our kids might leave college with a small dose of those dangerous student loans.  That’s about $10,000 less than we have in 529 accounts today, so we are well prepared if this scenario occurs.

But what if my kids end up being “average” and deviating from the path their old man followed?  And what if they can’t or won’t economize on housing and food?

$24,000 cost of attendance for 4 years – WORST CASE SCENARIO:

  • $6,500 – average need based grant (probably free money but maybe some loans)
  • $4,000 – various jobs and internships (they’re average; the earnings are lower than the optimistic scenario)
  • $13,500 – spending from our 529 accounts and investment portfolio

In this scenario, where our kids are very average, can’t economize on costs, get no merit based grants or scholarships and deliver pizzas or bus tables instead of engaging in paid activities related to their field of study, we are left with a $13,500 bill every year.  That means we’ll be paying a combined $162,000 for three kids for four years of study.  That figure exceeds our existing 529 balances by $119,000, so we’ll be digging deep into our investment portfolio to cover the shortfall.  I’ve mentally set aside $200,000 in my portfolio to cover some variation of this worst case college funding scenario plus other big, lumpy one time kid expenses, so we’ll be okay financially.

I suppose I should mention the beyond superlative worse than worst case scenario (though in purely financial terms, the least costly).  There’s a chance that one or more of our kids won’t attend a four year college at all, which means that $3,500 to $13,500 per year spending figure drops close to zero (spending tons of money on adult children is a topic best left for another article).

Whether our kids excel academically and need very little parental financial assistance, or whether we end up paying for the majority of their college costs, we’ve got it covered in our early retirement financial plan.



What is your plan for kids’ college funding?  How did you fund your own college experience?  Anything you would do differently?



Going on a Cruise Part 3 – Save on Board and on Transportation


This is part three of my series on cruise vacations.  In my first post on cruising I talked about the basics of cruising.  In the second post, I showed how to get the best deals when booking a cruise.

In this post I want to cover other ways to save money on cruises while on board and while traveling from your home to the cruise terminal.


Saving money while on board

Be a cruise deadbeat like me. Cruise lines lose money on your basic cruise fare but they make it up by selling you extras while on board. Skip or limit all the extras like the photos, spa, art auction, alcohol, and in port excursions and you, too, can get a cruise subsidized by your spendthrift fellow passengers!

From reviewing Carnival’s annual report to investors, they take in around $700 per cabin per seven night cruise from selling all the extras while on board. That’s roughly the amount we pay per cabin for our entire cruise! Those sales come with an 86% gross profit margin for the company since they are selling to a captive audience once you’re on board and don’t need to set competitive prices. If you want a frozen margarita, you’re paying whatever they’re asking or you’re not getting it.

Some people claim the fun of cruising is going crazy on board and buying all those expensive drinks. And that’s okay, but it certainly changes the value proposition if you buy all that pricey booze.

You can hang out here and sip coffee for free!

You can hang out here and sip coffee for free!

Some unscrupulous souls manage to sneak alcohol aboard, thereby depriving these poor corporations of their outsized profits. I can neither confirm nor deny whether the Root of Good household has engaged in this morally ambiguous behavior. But if one were so inclined, here’s a few tips on how to do it:

  • Buy a rum runner. With these flasks, you can sneak alcohol on board like the pros during prohibition.
  • Buy a small bottle while in a port and don’t turn it over to security when you walk back on board. Odds are you won’t get caught if it’s a 375 mL bottle. If you get caught (“oops, sorry I forgot!”), they confiscate it and return it at the end of the cruise. No biggie.
  • Empty a disposable water bottle and fill with clear liquor. Or do the same to an apple juice container with amber colored spirits.

Most cruise lines allow you to bring one bottle of wine per person, so this might last you for much of the cruise if you enjoy a small glass once per day.


While on the topic of alcohol, it’s worth mentioning the bargains you can find in the liquor store on board ship or in your ports of call. On most cruises, we find some incredible deals on liquor at prices about half of what they are back at home in North Carolina. For example, we picked up a few one liter bottles of Jose Cuervo tequila for $8 each ($29 in North Carolina) and one liter bottles of Crown Royal whiskey for $16 each ($40 in North Carolina).

There is supposedly a one liter per person limit on what you can import to the US duty free but we’ve routinely bought more (like 7-8 liters for 2 of us), declared it on the Customs form, yet never paid any duties. Just smile at the Customs agent and play dumb. YMMV of course, but we “saved” $160 on top shelf liquor on our last two cruises, and even if there was an import duty assessed, it would be much less than $160.  We buy the stuff at home anyway, so we aren’t falling into the trap of spending “extra” money just because it’s cheap.  It’s been over a year since the huge liquor haul, and we still have around half of the liquor we bought.

Live performance on stage? Yep, almost every night.

Live performance on stage? Yep, almost every night.

Here’s another radical way to save while on board. Become a shareholder and get free on board credit. If you purchase 100 shares of Carnival (ticker: CCL) or Royal Caribbean (ticker: RCL) then you will get $100 per cabin on a seven night sailing on the respective cruise line or their operating subsidiaries. Carnival owns Costa, Princess, Cunard, and Holland America while Royal Caribbean owns Celebrity. You get a smaller award for shorter cruises and a larger award on longer sailings (up to $250 on 14+ night sailings). When Carnival and Royal Caribbean were trading in the $30-40 range in recent history, it wasn’t too expensive to pick up 100 shares. Both companies have done well and now trade around $50 and $90 per share, respectively, so it’s much more expensive to acquire 100 shares just for the shareholder benefit alone.

Water slide on the Costa Atlantica

Water slide on the Costa Atlantica

While you are in port, you’ll probably want to get off the ship and see stuff. The cruise line sells prepackaged excursions at near-usurious markups, but it’s easy and convenient so many cruisers buy these excursions. Save a fortune by booking your own excursions with private providers ahead of time. Even better, skip the excursions and DIY your time in port. For a cheap cab fare or bus ticket, you can usually get around town and see a few sights on your own.

Some ports, like Nassau in the Bahamas, have a few attractions within walking distance or not far away by water ferry. On our first visit to a port we like to walk around the port or town and get a feel for the area without planning any big activities.

The free aquarium at the Atlantis Resort in Nassau Bahamas. Manta ray!

The free aquarium at the Atlantis Resort in Nassau, Bahamas. Manta ray!


Consider the total cost of the entire vacation

Think big picture. Your cruise ticket covers almost all of your expenses from the time you hop on board until your last day of the cruise when you sadly mope down the gangplank and head back home. In addition to the cruise fare, you’ll have to pay for travel to your port of departure. Squeeze out the savings on that part of the trip budget, too.

Cruises leave from all over the US coast, so check for local cruises. Paying a little more for a cruise that departs from a nearby port may save you money overall. For example, I can book a 5 night cruise from Charleston, South Carolina that’s a 4.5 hour drive from home instead of sailing from Miami that is 11.5 hours drive time from home. I’m willing to pay more (or accept a slightly worse itinerary) for a local cruise to avoid the cost and inconvenience of driving an extra 7 hours or having to fly instead of drive.

The water is still clear, the sun warm, and the breeze calming no matter how much you pay for the cruise.

The water is still clear, the sun warm, and the breeze calming no matter how much you pay for the cruise.

Cruises leave port around 4 pm on the day of departure, so you’ll typically want to get to the port around 12 or 1 pm to maximize your time on board and to make sure you don’t miss the cruise if you’re running late. If we’re driving to Charleston, we can leave early in the morning and make it there by noon, whereas if we’re driving to Miami or Fort Lauderdale, we definitely have to spend the night somewhere along I-95 on the way south.

The mid-day cruise departure time usually makes it impossible to fly down the day of the cruise unless you’re fortunate to have access to a very early non-stop flight to the airport near the cruise terminal. Add in a hotel night and the possibility of a taxi from airport to hotel and hotel to cruise terminal and you’re talking a large additional expense versus driving. Which is why we tend to drive to the cruise terminal, even when we’re departing from a Florida port (a 7 to 11.5 hour drive from Raleigh, NC). In addition, airfare for a family of five is way more expensive than gas for the drive to and from Florida since we can all ride in the same car.

Local ports along the east coast from north to south:

  • Boston
  • New York City
  • Cape Liberty (Bayonne, NJ)
  • Baltimore
  • Norfolk, VA
  • Charleston, SC
  • Jacksonville, FL
  • Port Canaveral, FL
  • Fort Lauderdale, FL
  • Miami

Local ports along the Gulf coast from east to west:

  • Tampa, FL
  • Mobile, AL (starting in 2016)
  • New Orleans, LA
  • Galveston, TX
  • Houston

Local ports along the west coast from north to south:

  • Seattle
  • San Francisco
  • Los Angeles
  • San Diego
Carnival Fascination waterslides

Carnival Fascination water slides.  Departing from Jacksonville, Florida

From my east coast perspective, the biggest down side to choosing a local port instead of a major south Florida port like Miami or Fort Lauderdale is that the cruise won’t get to the Caribbean as quickly. You’ll probably spend additional time at sea transiting to your Caribbean island paradises, and you might not have as many days in port in the Caribbean. Your destinations might only include the Bahamas instead of other islands further away. For wintertime cruises, a non-south Florida departure might mean experiencing chilly winter weather for a day or two of your cruise (and that’s what you’re trying to escape, right?).

That’s not a complete downer, since I really enjoy time on board the ship and don’t care as much about the destinations. But it’s not as much fun being above deck in the wind when it’s 55 degrees and cloudy instead of 75-85 and sunny.

It's hard to get bored

It’s hard to get bored when there’s mini golf on board

We look at every expense of getting to the cruise terminal and try to keep those to a minimum. For cruise parking, we always skip the in terminal parking at the port that usually runs about $20 per day. Instead, we find a private off-site parking provider that typically charges $4 to $7 per day and provides a free shuttle to the cruise terminal. We’ve done this in Jacksonville, Fort Lauderdale, and Miami. Quality of service varies, so be sure to do your due diligence and read the reviews.

Another popular option is a “stay and sail” hotel where you get a room the night before the cruise and it comes with free parking for the duration of your cruise and a free shuttle to/from the cruise terminal. We’ve never done this but prices tend to be around $99-159/night (roughly the cost of in terminal parking).

I could also DIY a “stay and sail” package. When we stayed at the Jacksonville Aloft hotel, they said we could leave our car there for the week while we went on the cruise. Then I could have hopped on a $15 Uber ride to the port (and you can save $20 with that link). So many options to avoid $100+ in parking fees at the port.

We usually stay at hotels for free using Starwood Preferred Guest points obtained through credit card sign up bonuses on the American Express Starwood Preferred Guest card (more on credit cards), and free flights are easy to obtain as well using credit card sign up offers. I just wish I could find a good credit card bonus offer to cover a cruise fare!


Check out all the posts in the Going on a Cruise series:

Going on a Cruise Part 1: Overview

Going on a Cruise Part 2: Getting the Best Deal

Going on a Cruise Part 3: Save on Board and on Transportation (this post)

Going on a Cruise Part 4: The Food!


Where would you draw the line on frugality?  Limiting drinks?  Smuggling liquor?  Driving 11 hours instead of flying? 



Going on a Cruise Part 2 – Getting the Best Deal


This is part two of my series on cruise vacations.  In my first post on cruising I talked about the basics of cruising like what the cruise fare covers (and what it doesn’t) and life on board the ship.

In this post I reveal how to get the best deal on cruise fares.


Finding the best cruise fare

Cruise fares are highly seasonal, so you’ll save a lot of money by traveling during the off season.  For cruises, low season starts in September once the kids are back in school and the odds of a hurricane in the Caribbean skyrocket. The low season ends sometime in February as the spring breaker business picks up, with higher rates in the late spring and throughout summer.  Peak season cruises during summer are usually two or three times the price of off season cruises.

We love booking in the low season.  In the fall, it’s a little cooler in the Caribbean so you don’t burn up as much.  In the winter, we escape the freezing temps at home.  The only problem is the kids’ school schedule so we try to pick a week where they have one or more days off school.


Hurricanes have never caused any problems in our cruising itinerary, and even if there was an active tropical system in the Caribbean, the cruise ship will typically detour around the worst of the storm to visit other ports that aren’t impacted by inclement weather.

For the absolute lowest fares, last minute cruise deals are the way to go.  When we’re thinking about taking a cruise soon, we’ll start checking prices and watch for a really good bargain to show up.  Prices are typically the lowest during the three or four weeks before sailing, so be ready to hit the road not long after booking if you go this route.  Be flexible as to cruise line and ship, departure port, and ports of call, and you can usually find some great last minute bargain cruises at $40 per night per person or less.

Another great source of low fares, sometimes even lower than last minute cruises, are “repositioning” cruises.  Particularly cheap are transatlantic repositioning cruises.  Each April and May, cruise ships leave the warm waters of the Caribbean for a summer of cruising in the warm season in Europe.  In October and November, these ships leave Europe and return across the Atlantic for the warm Caribbean winters.  Hop aboard one of these Europe-bound cruises in the spring or a Caribbean-bound cruise in the fall and you might pay as little as $30-35 per person per night plus tax.  I’ve also seen similar rates on a repositioning cruise from San Diego, California to Chile.

These repositioning cruises are a smoking hot deal if you can devote two weeks to the cruise and deal with one way airfare to or from Europe.  We’re hoping to take advantage of the repositioning bargains to or from Europe some day, and get free one way plane tickets by redeeming airline miles from credit card sign up bonuses.  While we’re in Europe, we can do some sightseeing before returning home.

Just shootin' some hoops. On a ship.

Just shootin’ some hoops. On a ship.


Picking a cabin to save money

The cheapest rooms aboard are “inside” cabins.  This means they are in the interior of the ship and do not come with windows.  The next category of rooms are “oceanview” cabins where you get a porthole or window so you can see the ocean.  Upgrade once more and you get the “balcony room” where you have a door to your own private balcony overlooking the water.  The ultimate upgrade is the suite that comes with a balcony and usually has separate living and sleeping quarters and is more spacious than the lower category cabins.

All the cabins have access to the same dining rooms, shows, and entertainment while on board, so the extra cost that comes with the upgraded room is really just a nicer room.  You do get some extra perks with the suites depending on the cruise line (like an on-call butler).

Being cheapskates we tend to book inside rooms.  Sure, we can’t see the ocean from our room but we don’t stay in the room very long anyway unless we’re asleep.  If you like to sleep in, it’s really nice to have the absolute darkness that comes with a room devoid of all windows.  I like looking around the formal dining room and thinking of all the guests that paid five or ten times what we paid even though we’re chowing down on the same filet mignon and lobster.

If you’re flexible on your room assignment, you can save even more with the “guaranteed inside” cabin category.  Book a “guaranteed inside” cabin and you’re guaranteed some cabin on the ship but the cruise line gets to pick where it is.  It’s typically one of the lower cost cabins but one time we received an outside cabin with a window view (partially obstructed with a lifeboat).  You’re doing the cruise line a favor by soaking up their excess inventory of cabins and in exchange you save some dough.

View from our cabin's balcony

View from our cabin’s balcony


Booking a cruise with kids

When booking a cruise, you’ll see the advertised price.  Double that and add in a bit of tax and that’s what you’ll typically pay for a cabin with two people in it.  Our $199 cruise last September was actually $650 for a two person cabin with taxes included.

The two person cabin is the commodity good of the cruise industry.  Drop to a person traveling solo, and you’ll pay almost the same price as a two person cabin.  Add in a third person to your room and you’ll usually get bumped to a higher category cabin that costs more for the first two cruise fares.

Disco party for the kids

Disco party for the kids

As a result of the increased cost for cabins accommodating three or more people, it’s often about the same price or sometimes cheaper to book two cabins if you’re traveling with four people.  If you’re traveling with kids, it’s nice to have that second cabin so the kids have their own space and the adults have their own, too.  We usually book me and one kid in one cabin, and Mrs. RoG and the other kid(s) in the second cabin since they want an adult present in each room.  Then we switcheroo once we’re on board.  Our cabin attendants knew what we were doing and they never raised it as an issue when our two year old stayed with his 8 and 9 year old siblings in one room while the adults stayed down the hall.

We booked “inside guarantee” rooms on the last two cruises and lucked out with cabins near each other.  If being in a room next door to your kids is a must, you’ll have to pay up for a particular room and forgo the “inside guarantee” savings.

Conversely, sometimes it’s significantly cheaper to book a four person cabin if the cruise line has a “kids sail free” promotion.  We snagged a steal on Costa a few years ago where a balcony room for four of us was under $1,100 total for a seven night cruise.

Our children love the kids clubs on the cruise

Our children love the kids clubs on the cruise


How to search for and book your cruise

If you’re focused on finding the best cruise value, you should be looking at the “price per night” metric.  Travelocity used to have a very nice search interface with filters and screens for cruise length, departure port, cruise line and other features and also allowed sorting by price per night.  Unfortunately they revamped their website and it’s now harder to use.  I contacted them a year ago to suggest a “sort by price per night” option but never got a response.

Travelocity is still a pretty solid option for searching for cruises, and my preferred option for completing the cruise booking.  Travelocity lets you sort by price for the whole cruise.  But if you want to be able to sort by price per night, is a better option for the search.  They have a 90-day ticker for last minute cruise deals and a full search function for all cruises for the next couple years.

I like booking with Travelocity because they offer very competitive sales and incentives to get your business.  They occasionally have sales that beat the rates available at Orbitz or other online travel sites.  Travelocity also offers “on board credit” promotions when you book cruises through their site.  For example, the cruise you want to purchase might be $259 per person at every cruise site on the internet while Travelocity also offers $50 or $75 back in the form of an on board credit you can spend while on the ship.  I use on board credit to buy bottles of alcohol to take home or to pay the mandatory gratuity (around $12/day per person), so it’s almost like a cash rebate.

Speaking of cash rebates, don’t forget to use your favorite online shopping portal.  We usually get $40+ back on each cruise just for clicking through a shopping portal like Mr. Rebates or Ebates.  Looking at those two sites for purchases from Travelocity, I see 4% cash back at Mr. Rebates and 7% back at Ebates on cruises right now.  7% of a $1000 cruise is an easy $70 in exchange for 10 seconds of clicking.  I find the cruise I want to buy, then click through the Mr. Rebates or Ebates site and complete the purchase for some quick cash.


The atrium on Costa Atlantica. Look out below!!!

Another neat site for booking cruises is  It’s like a reverse auction for cruises where the travel agents bid for your business.  You pick the cruise and cabin you want and submit to Cruise Compete, then wait a few hours and get a number of quotes from different travel agents.  For the bargain basement last minute cruises in the lowest room categories that we usually buy, I haven’t received any great offers through cruisecompete since I’m usually getting a promotion from Travelocity and stacking it with 4-7% cash back from Mr. Rebates of Ebates.  From talking to travel agents I found through Cruise Compete, they have mentioned the higher priced cabins and more expensive sail dates typically have more wiggle room to offer free cabin upgrades or on board credits to win your business.

You can also purchase cruise tickets direct from the cruise lines or through your own travel agent.  I’ve found that a lot of the discounts go away if you’re booking straight with the cruise line, though that is how we got our amazing deal on Costa a few years ago.  If you have a preferred travel agent, you’ll get great service from them although you might not get the best pricing or promotions (then again, you might).


Check out all the posts in the Going on a Cruise series:

Going on a Cruise Part 1: Overview

Going on a Cruise Part 2: Getting the Best Deal (this post)

Going on a Cruise Part 3: Save on Board and on Transportation

Going on a Cruise Part 4: The Food!



Do you have any tips or tricks for getting a great bargain on a cruise?



Climbing The Roth IRA Conversion Ladder To Fund Early Retirement


I want to tell you a story about accessing tax-deferred funds in an IRA or 401k before age 59.5 without paying a penalty.  But first I’m going full out White Fang on you.

A trapped animal will do just about anything to get free.  When you get caught, normal rules of comportment and demeanor are sloughed off to make room for the demands of the primordial will to live.  It’s all about survival.  Adrenaline rushing, pumping through arteries and veins, clouding the judgment and dulling the pain, the wild animal will chew it’s own leg off to disengage itself from a trap.  It’s all about survival.

What separates man from beast is consciousness and the ability to plan for the future.  To plan for a tomorrow that’s better than today.  We are wise enough to search for traps and avoid going down paths that might be trapped.

Travel back a few years in time to our recent military conflicts and take a journey with an infantryman across the arid desert landscape cut by wadis and pockmarked with rocks.  When on patrol, the soldier avoids commonly tread footpaths because that’s where the improvised explosive devices (the dreaded IED) often lie in wait for unsuspecting soldiers.  When left with no other alternative but to pass through a choke point like an alleyway between adobe mud compounds, the soldier sweeps the ground with a metal detector to check for IEDs.  Feet and legs are important, and the utmost precautions are taken to prevent loss of life and limb.

A wild animal can’t think ahead like us higher order beasts.  When the animal is out on patrol, a well placed trap can ensnare the unsuspecting creature.  The end result is a leg caught in trap and the choice (that isn’t really a choice) to gnaw its own leg off.

A leg, from just above the knee down to the foot, is about ten percent of a human’s body weight.  Ten percent is a big number when it comes to bodily integrity or the integrity of your investment portfolio.  You don’t want your investment portfolio to lose a leg.  Your portfolio might never walk again, and at the least it’ll need crutches or other assistance to carry you through retirement.  It’s all about survival.


Early Withdrawal Penalties: How to not chop off 10% of your portfolio

Here’s one the most frequently asked questions I receive:

Hey dude, I read your awesome article on earning $150,000 per year while paying only $150 in tax.  You put over $60,000 into traditional 401ks and IRAs by maxing out those accounts each year.  But let me tell you, you’re so screwed because you have to pay a 10% penalty on top of ordinary income tax on every penny you withdraw now because you are in your thirties and nowhere near age 59.5.

The grammarians among us will quickly realize that’s not a question at all but rather a statement.  Some of the nicer readers that aren’t trying to prove the impossibility of early retirement phrase things in a Jeopardy friendly format by asking “what is your plan to access traditional IRAs and 401ks before age 59.5 without paying a 10% penalty?“.

Like a smart soldier navigating a booby-trapped route on a battlefield, it all comes down to careful planning and execution (if you want to avoid losing that ten percent).  There are two major paths that permit penalty free early withdrawals from 401ks and IRAs.

The first path, Rule 72t withdrawals (also known as Substantially Equal Periodic Payments or SEPP), will be discussed in great detail in a future post.  The ten second explanation is that it allows you to withdraw around 3-4% of your tax deferred assets each year following a strict IRS formula.  It requires a long term commitment to a rigid withdrawal scheme with severe penalties for messing up withdrawals.  In other words, it’s very difficult to deviate from the 72t withdrawal plan before reaching age 59.5, and if you do so by accident, you’ll feel the snap of the trap and lose ten percent of your withdrawals backdated to your very first 72t withdrawal (ouch!).

The second path is the Roth IRA Conversion Ladder.  It’s the plan I’m following to fund the next twenty five years of my early retirement before reaching age 59.5.


The Roth IRA Conversion Ladder

By cleverly maxing out our tax deferred savings options, we owed almost nothing in taxes every year in spite of our combined (very very low) six figure income.  It feels like we stumbled into a deep pit of tax liability.  The Roth IRA Conversion Ladder is the tool we’ll use to climb up and escape the tax pit.

But first a note on tax deferred accounts in general.  You can debate the merits of Roth versus traditional IRAs and 401ks all you want, but know that we saved well over a hundred thousand dollars in taxes by maxing out tax deferred options.  Those six figure savings were invested over the years and have grown into even more money today.  When we owe federal income taxes again (in a decade or two), we’ll have a huge war chest filled with all those tax savings over the years to pay future tax liabilities as they arise.

The basis of the Roth IRA Conversion Ladder comes from an IRS rule that allows any amounts converted from a traditional IRA to a Roth IRA to be withdrawn penalty free and tax free.  The rule comes with some catches.  The first is that you have to wait five tax years after the conversion before you can withdraw penalty free.  The second catch is that you have to pay taxes at the time of conversion.

Here’s how it works in practice.  Let’s say you convert $30,000 from your traditional IRA to a Roth IRA during 2015.  You will have $30,000 of ordinary income in 2015 due to the conversion, and might owe tax on that amount depending on your filing status and other income earned during the year.  In 2020, you can withdraw the $30,000 (but not any earnings) penalty free and tax free.  Convert another $30,000 in 2016, pay the tax (if any), then you have $30,000 to withdraw in 2021.  Convert another $30,000 in 2017, pay the tax (if any), then you have $30,000 to withdraw in 2022.  Repeat each year and you have just built a Roth IRA Conversion Ladder of your own!

Let’s take a look at an example of a Roth IRA Conversion Ladder for a 45 year old early retiree:

 Convert to Roth
Withdraw from RothAgeNotes
20203000030000505 years since 2015 conversion
20213000030000515 years since 2016 conversion
20223000030000525 years since 2017 conversion
20233000030000535 years since 2018 conversion
20243000030000545 years since 2019 conversion
20253000030000555 years since 2020 conversion
20263000030000565 years since 2021 conversion
20273000030000575 years since 2022 conversion
20283000030000585 years since 2023 conversion
20293000030000595 years since 2024 conversion
2030300003000060You're over 59.5 – do whatever



Planning for the Roth IRA Conversion Ladder

It takes a little planning to launch your Roth IRA Conversion Ladder successfully.  Take a look at that table and you might notice two problems.

First, there’s no money to provide for living expenses in years one through five.  You’ll have to cobble together five years of expenses from somewhere.  This is where it pays to have some taxable investments on hand to get you through the first five years of early retirement while you’re setting up the Roth IRA Conversion Ladder.  Leading up to early retirement, it might be necessary to back off of the tax-deferred contributions a little in order to top off a taxable portfolio that holds five years worth of expenses.

If you don’t have a sufficient amount in your taxable account, other options for funding the initial five years include:

  • withdrawing Roth IRA contributions (annual contributions can be withdrawn any time without paying tax or penalty)
  • withdrawals from a 457 account if you have one (you’ll owe tax but no penalty)
  • side hustle income from a hobby or part time job
  • proceeds from sale of a business
  • severance pay
  • unemployment payments

Just remember to balance your tax liability in the last few years of work with your tax liability in the first five years of the Roth IRA Conversion Ladder.  You might end up in the 10% or 15% bracket.  Just make sure you don’t end up in the 25% bracket some years and the 0% bracket other years.

In our case, we managed to max out all tax deferred options every year.  Eventually our incomes increased to the point where we were also saving a significant amount in our taxable accounts, too.  The taxable account should get us through at least the first ten years of early retirement, allowing us to slowly set up our Roth IRA Conversion Ladder and stay in the 0% tax bracket most of the time.

The second problem is inflation.  You can’t convert $30,000 today if you want to spend $30,000 in five years because inflation will erode the purchasing power of that $30,000.  You’ll need to convert an inflated amount today to provide for future years’ expenses.  If you want $30,000 in real terms (after inflation) in five years, you’ll need to convert around 16% extra to account for 3% annual inflation.

Instead of converting $30,000 today, you’ll need to convert $34,800 today to provide $30,000 of purchasing power in the sixth year.  Then convert $35,800 in year two to fund year seven’s expenses, and so on.

Here’s a better Roth IRA Conversion Ladder that shows expenses for the first five years while setting up the ladder and the required amounts to cover inflation:

 Convert to RothWithdraw from RothWithdraw from TaxableAgeNotes
202040300348000505 years since 2015 conversion
202141500358000515 years since 2016 conversion
202242700369000525 years since 2017 conversion
202344000380000535 years since 2018 conversion
202445300391000545 years since 2019 conversion
202546700403000555 years since 2020 conversion
202648100415000565 years since 2021 conversion
202749500427000575 years since 2022 conversion
202851000440000585 years since 2023 conversion
202952500453000595 years since 2024 conversion
20305410046700060You're over 59.5 – do whatever

In this table, the early retiree will have a consistent inflation adjusted $30,000 per year (in 2015 dollars).  Withdrawals from the taxable account total $159,300 over the first five years of the withdrawal plan.  That doesn’t mean the $159,300 has to be in the taxable account on day one, because some growth in the account is likely over the five year withdrawal period.


Taxes on the Roth IRA Conversion Ladder

Ignoring other income, a single person climbing the Roth IRA Conversion Ladder will pay $3,213 in federal income tax each year to keep the ladder going.  That’s the tax due on a $34,800 IRA conversion.  Since the standard deduction and personal exemption are indexed to inflation, the tax burden will remain $3,213 each year (in real terms).

Married couples with no children fare much better, owing only $1,420 in federal tax each year.  Throw a child in the mix and the tax burden drops to $20 (due in part to a $1,000 child tax credit).

Since we have three kids, we could convert up to $58,750 each year without paying any federal income tax.  Though we’ll probably keep our total income closer to $40,000 in order to optimize Affordable Care Act subsidies and other benefits tied to AGI as well as keep state income tax burden low.


Root of Good’s Roth IRA Conversion Ladder

So far we have dealt in hypotheticals.  Here is the real Roth IRA Conversion Ladder we plan on following:

Convert to RothWithdraw from Roth5 Yr. Roth IRA Conversion “Bank”Withdraw from TaxableAge   

Here are the assumptions to help understand our withdrawal plan:

  • Annual spending of $32,400 based on our early retirement budget, with increases for inflation each year
  • We have a $345,000 taxable account that we’ll spend down over the next 10 years.  We need 1.6% investment returns to make that last for 10 years
  • Half of the amount spent each year from the taxable account is basis, the other half capital gain or dividend income.  In other words, a $32,400 withdrawal is $16,200 return of capital (not taxed) and $16,200 income (dividends and capital gains)
  • We are aiming at $40,000 per year AGI which will produce a zero income tax bill for the next ten years, then we’ll owe $500 per year between 2025 and 2031 assuming our 2 year old is no longer a tax dependent.  After that, our taxes will rise slightly.

In a nutshell, the table shows how we’ll be able to fund 25 years of early retirement before reaching age 59.5 without ever paying a 10% early withdrawal penalty.  This plan also keeps our income taxes near zero for about half of that period and we won’t owe more than a couple thousand per year for the last ten years of the plan.

In the table I have a column labeled 5 Yr. Roth IRA Conversion “Bank”.  I made this name up but it’s a critical component to any Roth IRA Conversion Ladder.  It’s a running tally of how much 5+ year old Roth IRA conversions we have available each year.  In year 2020, we will be able to withdraw the $23,800 converted in 2015.  By 2024, the year before we plan on taking the first Roth IRA withdrawals, we’ll have $126,300 in the Five Year Roth IRA Conversion Bank.  At the end of 2025, after taking the first Roth IRA withdrawal of $43,500, we will still have $110,400 in the bank.


Breaking the (Five Year Roth IRA Conversion) Bank?

By the end of 2029, our Five Year Roth IRA Conversion Bank will bottom out at only $41,700.  That’s still almost one whole year of expenses in 2029.  I’m not worried about coming that close to emptying our Five Year Roth IRA Conversion Bank because I have a few other cards up my sleeve.

I have a 457 account with $70,000 in it today (that will probably grow to $150,000+ by 2029) that lets me withdraw funds at any time without penalty (just pay the ordinary income tax on the withdrawal).  The 457 can easily cover a multi-year Roth IRA Conversion Ladder shortfall in a pinch (with slightly sub-optimal tax impacts if amounts withdrawn are large).

We also have a Health Savings Account (HSA) with $60,000 in it today that offers tax free and penalty free withdrawals to cover any health related expenses.  Since health related expenses are the biggest unknowns for us over the next several decades, this account will come in handy to smooth out the tax impact of withdrawals if we need a little extra cash in any given year.

And finally, we have $25,000 in Roth IRA contributions from a few low income years during college and some higher income years we were ineligible for traditional IRA contributions.  I don’t want to confuse the details of the larger plan with this $25,000 of Roth IRA contributions, but know that we will technically be withdrawing this $25,000 of Roth IRA contributions in year 2025 when we make our first Roth IRA withdrawals.  The IRS has rules (don’t they always?) on the order of Roth IRA withdrawals and they state that contributions come out first, then conversions. As a result, our $41,700 low point in our Five Year Roth IRA Conversion Bank will actually be $66,700.


Finding the rungs on your own Roth IRA Conversion Ladder

Reading over this post, I realize it sounds very complicated and in depth.  Take it step by step and it isn’t that daunting a task to set up your own ladder.

1. Figure out what you’ll be spending each year in retirement.  Here’s how we developed our $32,400 per year retirement budget.  If you need to track expenses now, check out Personal Capital – it’s free and automates expense tracking for you.

2. Determine how you’ll fund the first five years of retirement while you’re setting up the ladder.  Do you have extra cash on hand or a taxable brokerage account to bridge the gap?

3. Don’t forget to account for inflation when you start the Roth conversions.  You’ll have to convert 16% more today to cover 3% inflation per year for five years.

4. Roth conversions sound scary but are pretty easy.  At Vanguard, for example, you can execute a conversion in less than five minutes on their web page.  If you need help, call your brokerage firm.  It’s a five minute task once per year task once you get your plan figured out.  And you can adjust as you go along if your plans change.

5. If you’re planning on paying for your own health insurance, consider your AGI level due to Roth Conversions in the context of the Affordable Care Act subsidies for health insurance.  The sweet spot to maximize your subsidies is in the 150-200% of the federal poverty level range (<$31k for a family of 2, <$56k for a family of 5).



If you are approaching early retirement, how do you plan on funding your expenses each year?  Or if you’re already retired early, how do you access your tax deferred savings?



Our Bad Experience With AirBnB Rental Had A Happy Ending


While on our road trip through Canada, we rented a two bedroom apartment in Quebec City.  The reviews at AirBnB were great and made the place sound clean and well-appointed.  It had a large kitchen with plenty of room for us to cook.  The living room was spacious and had enough seating for our family of five.  The bedrooms had comfortable beds and plenty of linens.

When I first walked in and the host toured me around his apartment, I thought, “hey this place looks great!”.  I was taking in the big picture of where we would be relaxing and enjoying our vacation for the next week in this beautiful city.  As soon as the host handed over the keys and left, Mrs. Root of Good looks at me with this look.  It’s hard to describe, but it’s the “oh no, something is really wrong” look I rapidly discovered.  It turns out the place was filthy and I was somehow enamored of the big picture of the place and didn’t pay attention to the tiny, crusty, hairy, grimy details of the general state of filth of the place.

Hey, it looked clean enough from a distance...

Hey, it looked clean enough from a distance…

We knew the owner had a cat, but we requested the cat not be present during our stay due to mild allergies suffered by one of our kids.  We didn’t know the owner would leave us with an apartment filled with the cat’s weight in cat hair.  Adhering to all the upholstered surfaces in the living room, the furry critter’s discards made inhabiting the apartment nearly impossible for us.  I’m not talking a little cat hair stuck to the couch and rug and wispy hairballs floating across the floor as we walk by.  I mean 3/4″ of pure unadulterated cat hair quilting everywhere we might have chosen to sit.

I make it sound like the cat hair was spread out everywhere around the apartment.  However that’s far from the truth so I don’t want to oversell it.  Some of the cat hair was highly concentrated in one place.  The owner left us with a trash can half full of cat hairballs (and the cap from a new stick of deodorant).  Bizarre, I know.  I wish we discovered it on the first day instead of later in the stay.



The cat hair was only half the problem.  The floors were incredibly grimy and dirty.  I didn’t realize how bad they were until I took my socks off (we were there to relax, right?) and after a few minutes of walking around the soles of my feet turned black.  Not good.

Two rounds of sweeping and mopping later and I managed to bring it down from DEFCON 5 to DEFCON 3.  In non-military parlance, that means just a moderate amount of grunge instead of the initial thick coating of grunge.

Somewhere during hour #2 of cleaning some other dude’s apartment, I started getting a little disheartened.  Sure, travel is supposed to throw the occasional challenge at you to keep things exciting.  But I seriously didn’t know what to think or do.  While completing the second round of mopping and sweeping, I was still committed to making the apartment rental work (after a little more cleaning, of course).

Improvised sofa cover (=bed sheet from the linen closet).  We tried, folks, we tried.

Improvised sofa cover (=bed sheet from the linen closet). We tried, folks, we tried.

While I was busy getting the floors to some reasonable level of cleanliness (all I ask for is “reasonable”), Mrs. Root of Good found the vacuum cleaner and started battling the blanket of cat hair in the living room.  Those valiant efforts didn’t last long though.  I can’t recall what she figured out first.  It might have been that the vacuum cleaner sucks in the pejorative sense (as in it doesn’t produce an adequate vacuum pressure).  Or it might have been that the vacuum constantly trips the circuit breaker (cleverly hidden behind artwork hanging in the kitchen).


A few hours into our less than pleasant stay, we started to get hungry.  Heading to the kitchen, we discovered it wasn’t much cleaner than the other common spaces.  Pink mold surrounded the sink basin and faucet.  Countertops, cabinets, and kitchen table were all slightly sticky to the touch from years of substandard cleaning efforts.

The floor continued to get dirtier even though we would wipe our feet on the kitchen rugs constantly.  We soon discovered it was the rugs that were actually soiling our feet due to being heavily saturated with an emulsified mixture of cooking grease, dirt, and cat hair.  I rolled those rugs up and stuck them somewhere before mopping (again).

What cat hair?

What cat hair?

Mrs. Root of Good made the call that the kitchen was not fit to cook in, and that we would be escaping our den of uncleanliness for dinner somewhere clean.  Smart choice!

The bathroom was reasonably clean, so we were able to enjoy some nice hot showers and steal a few moments away from the filth.  As soon as we woke up the next morning we both realized this apartment wasn’t going to work out.  We quickly made the joint executive decision to cut our losses and move on.

I found out we could cancel the AirBnB reservation and get a full refund (less AirBnB reservation fees) for the unused nights remaining on our reservation.  I only had 30 minutes to cancel before incurring costs for another day, so I went ahead and processed the cancellation and immediately received a refund for the last six nights of our stay.

At that point, getting a refund was secondary to getting out of that apartment.  We spent the rest of that day sightseeing around Quebec City.  After a day of touring the town that we had planned on visiting over the course of a whole week, we returned to the apartment, packed everything we could into the trunk of our Accord, and went to sleep for night number two in our dirty apartment.  First thing the next morning we set out for the long drive back to North Carolina.  Home.  And cleanliness.

I can agree with half of this:  Behind the couch is a great place to store Christmas wrapping paper and a cat turd.

I can agree with half of this: Behind the couch is a great place to store Christmas wrapping paper and cat turds.

After returning home, I called AirBnB to see what they could do to make our poor experience better.  The phone representative seemed genuinely shocked about the conditions at our apartment, and suggested I send any photos of the filth to them.  The phone representative said she couldn’t promise anything, but that AirBnB would review my case and take the appropriate action (if any).

AirBnB eventually reached out to me after a week or two and offered a full refund of the customarily non-refundable AirBnB fees and a full refund for the two nights we did stay in the apartment.  In other words, our entire stay at the apartment turned out to be dirty, but free.

AirBnB also apologized for the condition of the apartment and gave us a $150 AirBnB credit valid toward any future AirBnB stay anywhere in the world.  They also reaffirmed their commitment to assist me with finding last minute alternative accommodations should there ever be a similar problem with a future rental.


Thoughts on AirBnB

As far as I’m concerned, AirBnB ranks up there with Amazon and Ebay for buyer protections.  They looked at the facts surrounding my problem and made a sensible decision to keep me happy as a customer.  Instead of losing me as a customer forever and leaving me with a poor impression of their business, they left me with some positive goodwill toward their operations.

I won’t hesitate to consider their rental listings in the future (along with competing lodging choices from other vendors).  The apartments and houses I found while browsing on AirBnB were competitively priced compared to hotels in the cities we visited.  Other vacation rental sites like Home Away and had a decent selection of properties, but didn’t seem to have very competitive prices or flexible booking terms.

AirBnB’s site has an intuitive and robust search interface that lets you drill down with filters to find exactly what you want, where you want it, when you want it, and within your desired price range.

If this sounds like sales copy for AirBnB, it is.  I think they have a compelling business model of connecting consumers of lodging with owners of lodging.  They allow people to make a little extra money off their house or apartment, and provide vacationers with a more affordable and more spacious alternative to a hotel.

Unfortunately the occasional issue arises, but if my own experience is any indicator, they work to make things right.  I would encourage you to take a look at AirBnB’s listings the next time you need a place to stay while on vacation.  If you want to save $25 off your booking, please click through this link.  (Note: Airbnb gives me $25 toward my next stay if you sign up through my link and complete a stay).


Updated January 28, 2015:  Looks like this owner took his rental listing off of airbnb.  One less problem property…


Have you ever stayed in an AirBnB or similar rental?  How was it?


Extreme Grocery Shopping Without Coupons


In a previous article, I shared one month of grocery purchases in great detail.  On food items alone, we spent $448 for our family of five.  For those that spend two or three times this amount, read on.  I’m about to share how we keep grocery costs down without dumpster diving* or coupon clipping.  We keep costs down yet eat a relatively varied diet filled with fresh produce, meats, and dairy.

General Grocery Do’s and Don’ts:

We tend to follow these guidelines for our routine grocery shopping.


  1. Shop at stores that are generally inexpensive
  2. Buy stuff that’s on sale that you normally buy
  3. If you see a great deal on non-perishable items, buy as many as you will use by their expiration date
  4. Plan your meals around fresh fruits, vegetables, and meats that are on sale
  5. Try something new occasionally
  6. Know what things cost and buy things at the store where it’s least expensive
  7. Skip juice, eat fruit instead.


  1. Buy more perishable goods than you can reasonably use before they will expire (unless you can freeze them with minimal reduction in quality)
  2. Drive long distances just to save a few dollars at a store with a good sale
  3. Focus too much time and attention on extreme couponing
  4. Buy a lot of prepackaged convenience foods
  5. Be afraid to spend money on expensive foods if it can help you avoid dining at an expensive restaurant


Stick to produce on sale

Our trick to getting the best value in the produce section is simply buying what is on sale each week.  Aldi is where we spend most of our grocery dollars.  Every week they offer six different produce items at a steep discount to their already low regular prices.  Some might think sticking to six different fruits or vegetables each week is a very restrictive way to shop for produce.

Not in our experience.  Within any eight day period, we can buy twelve different fruits or vegetables that Aldi has on sale, plus the produce sale items at other grocery stores we occasionally visit.  We also pay regular price for some produce items because we want them or need them for a particular recipe.  When most of the produce we buy is on sale, the average cost of our produce stays low.

Another benefit to going cheap and buying produce that is on sale is the freshness.  When grocers sell a large quantity of produce and the inventory moves quickly, the consumer wins.  When you pick up a sale-priced fruit or vegetable, odds are good that it’s fresh.

Produce that is on sale can indicate peak ripeness.  When it’s harvest time for a particular crop, there is a glut of supply that floods the market.  Economics 101 reminds us that increased supply pushes the price of a good down.

Sale pricing can also mean locally grown produce.  It costs a lot less to ship produce from fields 50 miles away than it does from the other side of the country 2,000 miles away or even further if imported from South America or further abroad.

Right now (in May), strawberries are in season in North Carolina.  Unsurprisingly, I see a lot of strawberries for sale in grocery store circulars.  You can notice the same trend with other produce like apples, oranges, and zucchini.  When it’s harvest time nearby, you save money at the store and you get fresh, locally grown produce.  I always look forward to later in the summer when peaches mature here in the southeast.  Cheap and perfectly ripe?  Yes, please!

To those that still claim shopping mostly sale-priced produce is overly restrictive for their food demands, consider what markets offered a hundred years ago or more.  Produce shipped from the other side of the country or world was expensive (if available at all).  In the temperate areas of the U.S., stores offered very limited assortments of fresh produce outside of the spring, summer, and fall harvest periods for specific crops.  Buying a mango or avocado in the middle of January wasn’t an option (at almost any price).

Today, the variety is always available, it’s just a matter of paying more for out of season produce.  Shopping the produce sales is no different than shopping the seasonal offerings from the “good” old days.


Load up on deeply discounted or clearance items

We are opportunistic shoppers.  If a store wants to clear out shelf space for new products, we will certainly assist them with their efforts.  As long as they offer us a steep discount to the normal price.

To illustrate what kinds of deals I’m talking about, here’s what we bought on our latest trip to the grocery store.


Discounted items: bowtie pasta, spaghetti, brownie mix, ground pork, mole poblano, papaya pineapple juice. Not discounted but only $0.16 for a small bag (sold by the pound) – chiles de arbol


Everything was 40-80% off of regular prices.  Most of the items were staples that we use regularly.  The non-perishable items all had more than a year before their expiration dates.  The store most likely wanted to change their offerings on the shelf and needed to clear out these specific items.  We grabbed every pack of spaghetti noodles on the shelf (fourteen of them) because we eat a lot of pasta throughout the year.

The ground pork was close to its expiration date, but it’s easy to store it in the freezer for use later.  Although two pounds of it never saw the freezer due to quickly meeting my frying pan and disappearing within 24 hours.

ItemQuantitySizeUnit PriceRegular priceDiscountTotal
spaghetti noodles141 lb0.390.7548%5.46
Dona Maria mole poblano paste616.75 oz2.194.4951%13.14
papaya pineapple juice612 oz0.290.6958%1.74
bow tie pasta27 oz0.290.5042%0.58
brownie mix119 oz0.291.2978%0.29
seasoned ground pork41 lb1.953.9951%7.80
brie cheese28 oz2.343.9941%4.68

The grocery store had a ton of other stuff on clearance, but it was mostly junk we don’t normally buy, or other items where the price wasn’t as good as what we usually pay.  We also walked to the store, so we were limited in what we could buy.  We could have bought more of the canned juice if we drove the car.  That was the least valuable clearance item so we only bought six cans of the juice.

* A Clarification on Dumpster Diving

Technically I did dumpster dive for the first time ever.  I forgot the brie cheese at the grocery store.  After walking back up to the supermarket and pleading for the return of my forgotten brie, I encountered a sympathetic soul who helped me.  He pointed me in the direction of the deli where I encountered a deli clerk that suggested I grab replacement cheese from the shelf. I had grabbed the last two blocks already and there were no more on the shelf.

At that point, the clerk offered to refund my money for the two blocks of cheese.  The cashier with whom I abandoned my cache of cheese had tried to restock the cheese after I left the store but it was too warm so she tossed it in the trash!  I really had my heart set on the brie and not the $5 I paid for it.  I offered to take it back out of the trash since I knew it had at least one but probably two layers of packaging.  For a split second she gave me the “this guy is seriously dumpster diving inside my store” look, then she went over to the trash behind the counter and removed my two blocks of forgotten brie.  It turns out the trash can was lined with a fresh, unused trash bag so my brie was completely unsoiled.  Unless you consider the rind of the cheese to soil the rest of the cheese.  The rind is made out of mold after all.

So to recap, I technically took home food that was once in the trashcan but was protected from germs by two layers of packaging and a thick layer of (good) mold.  That’s how I inadvertently went dumpster diving.  The cheese tastes awesome by the way.


Do you try to buy produce on sale and check out clearance items?  What’s your secret money saving tip for the grocery store?



One Month of Groceries


Over the course of a month, we buy an astronomical amount of food.  It takes a lot of food to provide 450 meals per month for our family of five.  I wanted to show what we put in our grocery cart in a typical month to produce those 450 meals.

The typical articles I see on grocery shopping tend to be either “high end” or “low end”.  On the high end, you see a lot of buzz words like organic, free range, grass fed, or local.  The low end articles focus on bulk buying, couponing, or stretching a grocery dollar as far as possible.

The Root of Good’s grocery spending comes in somewhere comfortably in the middle of those two extremes.  We don’t try to buy the absolute cheapest foods, but rather focus on buying a variety of foods that taste good and prove fairly nutritious overall.  It seems to be a good compromise of cost, nutrition, and intrigue for us.

If we chose to keep grocery expenses to a bare minimum, gustational boredom would quickly set in.  Our stomachs would soon betray us and demand more dining out (where exciting meals can be found in abundance!) and more prepared foods (yummy microwaveable entrees and toaster cuisine).


Putting our grocery cart under the microscope

I’ll admit to never paying much attention to the details of our grocery shopping.  We definitely pay attention to prices and what we buy on an item by item basis.  But I never felt the need to break it down any further than a monthly total “grocery” expense.

Why not?  It’s a lot of work and I’m not convinced that knowing exactly what we buy would change what we buy.  Information has a cost to collect, and the benefit from having that information seemed of low value.


In spite of that, I decided to buckle down, get over my laziness, and keep all my receipts for one month.  I also photographed everything we purchased at the grocery store.  The end result is that we are now more mindful of what we buy and how much we spend on different categories.

This post might come off as painfully mundane to some of you, but for others I hope it serves  as a starting point on your quest to diversify what’s on your plate and save some money while you are at it.  I’d also welcome tips on how we can improve on what we are buying to get more bang for the buck or cut costs without giving up the variety of what we buy.

At the bare minimum, I hope this post is interesting as an anthropological record of daily life for our family of five in the southeastern United States.  I read a couple of beautiful photo-filled books a while back called “What I Eat: Around the World in 80 Diets” and “Hungry Planet: What the World Eats (skip Amazon, get them from the library!).  Both books are a great cross cultural sampling of what people eat around the world.  These books made me think about how lucky we are in America to have access to a variety of inexpensive and healthy foods (if you know where to look and how to shop and cook).


The groceries we bought

I categorized our purchases into the “basics” (dairy, grains, produce, protein, and seasoning), “small luxuries” (drinks, alcohol, and junk), and “household goods” (which aren’t really food at all).

1-protein-grainsWe spent a total of $556 for one month of groceries at these stores:

Aldi and Walmart are both within 1.5 miles of our house and we drive to these stores (and have lots to carry back home with us).  Food Lion and Dollar Tree are in our neighborhood, and we usually walk to these stores (<0.5 miles).




Here is the summary of our basics, small luxuries, and household goods:

One Month Of Groceries

Household goods107.81



After gathering all this data and categorizing everything, I’m not too surprised with the results.  We spent roughly 60% of the grocery budget on basics, 20% on small luxuries, and 20% on household goods.  At $556, we spent slightly more than our long term average of $520/month, but that might be because our long term average is inching up due to inflation (CPI and number of mouths to feed).

Tracking our spending with Personal Capital -

Tracking our spending with Personal Capital – only $421 spent on Groceries in March! 

It’s hard to know for sure whether our grocery spending is higher for this month since our grocery spending fluctuates significantly month to month depending on what’s on sale and whether we are hosting any big parties or holiday gatherings.  That is why we track all of our spending closely with Personal Capital so we can keep tabs on our general spending trends over time.  Looking at just the last six months, we are averaging closer to $500 per month on groceries.  Spending $556 on groceries in one month isn’t out of the ordinary.




Here is a summary of all the basics we bought during one month.  It’s a looong list.

Groceries: The Basics

asiago cheese (block)18 oz3.493.49
butter spread145 oz1.991.99
cheddar cheese (grated)11 lb3.493.49
half and half creamer132 oz1.691.69
milk, 2%11 gallon3.453.45
milk, 2%11/2 gal.2.092.09
milk, 1% *11 gallon00
red velvet cake yogurt16 oz0.390.39
ricotta cheese216 oz1.793.58
sour cream316 oz1.293.87
whole milk mozzarella cheese61 lb3.6922.14
yogurt (plain)232 oz1.793.58
bagels, cinnamon and raisin1620 oz1.691.69
bagels, everything3620 oz1.695.07
bagels, plain3620 oz1.695.07
cereal - Honey Bunches of Oats115.5 oz11.00
cereal - Kix *112 oz00
flour - self rising15 lb1.551.55
French bread (sliced, from bakery)116 oz1.111.11
Italian bread (sliced, from bakery)116 oz1.111.11
lasagna (dry noodle)69 oz.0.663.96
lasagna noodles11 lb1.491.49
oatmeal (quick 1 minute)142 oz2.292.29
pasta (ABC shaped)17 oz0.430.43
ramen noodles (beef, 12 pk)1123 oz each2.092.09
ramen noodles (oriental)53 oz0.21.00
ramen noodles (shrimp)63 oz0.21.20
spaghetti noodles42 lb1.495.96
tortillas (flour)31017.5 oz1.193.57
wheat bread *116 oz00
white bread *420 oz00
artichokes (canned)314 oz13
artisan lettuce14 heads1.691.69
ataulfo mangoes5each0.592.95
baby carrots (bagged)61 lb0.694.14
bananas33.6733.67 lb0.423514.26
basil pesto (jar)18.1 oz2.782.78
black olives (canned)26 oz wt.0.991.98
blackberry bush115.995.99
blueberry bush115.995.99
broccoli crowns11 lb1.291.29
celery 21 stalk0.991.98
chipotle salsa (can)17 oz0.720.72
colored sweet peppers (fresh, small)11 lb1.491.49
grape tomatoes31 pint0.992.97
green cabbage1.851.85 lb0.490.91
guava paste114 oz0.980.98
mangoes (big)100.686.8
mangoes (ataulfo)40.692.76
multi colored bell peppers531.999.95
pasta sauce (tomato-based, canned)1724 oz0.9415.98
peas (frozen)316 oz0.952.85
pickled jalapeno peppers (jar)116 oz1.491.49
pickled jalapenos (sliced)112 oz11.00
pickled jalapenos (sliced, canned)128.2 oz1.541.54
raspberry bush125.995.99
roma tomatoes1.121.12 lb0.991.11
russet potatoes110 lb2.292.29
salsa (medium)424 oz1.696.76
spinach (fresh)29 oz0.991.98
strawberries61 lb1.197.14
white cap mushrooms68 oz0.794.74
bacon bits22.5 oz1.492.98
beef - top round steak2.622.62 lb2.9657.77
chicken breast tenders13.3613.36 lb1.4218.97
chicken breasts (boneless, skinless)5.475.47 lb1.699.24
eggs (large)71230 oz1.8613.02
genoa salami (deli sliced)0.48.48 lb5.992.88
ground beef (85% lean)11 lb2.792.79
ground turkey (85% lean)11 lb1.691.69
hot dogs41 lb0.993.96
pepperoni (deli sliced)0.49.49 lb5.992.94
polska kielbasa314 oz1.995.97
salmon (skinless, wild caught)21 lb3.997.98
sausage links (maple flavor)46.4 oz0.592.36
sliced pepperoni27 oz1.993.98
smoked ham sandwich meat (sliced)11 lb3.293.29
chili seasoning mix (hot and mild)41.25 oz0.491.96
cream of chicken soup (condensed)210.5 oz0.591.18
cream of mushroom soup (condensed)410.5 oz0.592.36
french fried onions16 oz1.991.99
garlic powder15.5 oz0.990.99
italian seasoning11.35 oz0.990.99
taco mix31.0 oz0.351.05

* Note: The milk, cereal, and bread with $0 cost were gifts from family that had extra food.  We give food to others, they treat us kindly in return.  



Mmmmm healthy produce…

How about those 33.67 pounds of bananas we bought in one month?  Kids love those things and they are a healthy breakfast, snack or dessert.  We bought a bunch at a slight discount toward the end of the month to make banana bread birthday cake for our two year old’s birthday party.  We later found some off the shelf chocolate cakes that looked tastier than banana bread, so we ended up with almost 15 pounds of very ripe bananas.  We still made some banana bread and ate a lot of smoothies over the next week.

6-produce-dairyWe spent $18 on fruit bushes.  I stuck this expense in the grocery category because we hope these bushes produce blueberries, raspberries, and blackberries in copious quantities in another year or two.  One month after planting them, they are growing well and seem to be established nicely.  Berries are ridiculously expensive at the store, so it won’t take more than a pint or two of each berry to pay for these bushes (which should produce for many years to come).  If so, that will be a higher dividend yield than our stock portfolio!

Under the “dairy” category, you might notice we only drank 2.5 gallons of milk in one month (for a family of five).  We get dairy in other forms like cheese, yogurt, and sour cream.  No one in the family likes to drink glass after glass of milk.



Next up is our “small luxuries”.  Fun stuff to eat or drink.  Not always nutritious but generally delicious.

Groceries: "Small Luxuries"

coconut juice (canned)217.6 fl oz1.082.16
cola (regular)12 liter0.690.69
juice boxes (100% juice)284.3 oz1.262.52
kiwi strawberry juice164 oz0.890.89
mango guava juice164 oz0.890.89
mango sparkling juice2750 ml1.983.96
Liebfraumilch wine (castles are cool)1750 ml3.993.99
sparkling rose wine (bubbly!)1750 ml3.993.99
wine7750 ml2.8920.23
cake icing216 oz0.751.50
chocolate cookies (oreo style)115.5 oz1.791.79
chocolate crème cake320 oz2.998.97
donuts (bavarian crème filled)161.51.50
donuts (from bakery)11329 oz2.392.39
Easter chocolate figurines18.8 oz1.351.35
food coloring1411.00
grape jelly132 oz1.591.59
Hershey's kisses211 oz1.432.86
jellybeans (Starburst)314 oz0.982.94
kettle style potato chips (barbeque)18.5 oz1.791.79
kettle style potato chips (jalapeno)18.5 oz1.791.79
lemon gelatin13 oz0.360.36
Lindt chocolate truffles (white choc.)19 oz22.00
M&Ms (plain)111 oz1.431.43
marshmallow "peeps"2103 oz0.51.00
microwave popcorn1223.15 lb55.00
mini chocolate eggs (Cadbury)210 oz1.432.86
orange gelatin33 oz0.351.05
peach gelatin13 oz0.360.36
peanut butter eggs (Reese's)17.2 oz1.431.43
potato chips (barbecue)110 oz1.491.49
potato chips (plain)110.5 oz1.491.49
potato chips (sour cream and onion)110 oz1.491.49
pretzel sticks116 oz1.291.29
strawberry preserves112 oz11.00
toffee ice cream bars11230 oz1.991.99
tortilla chips - nacho cheese211 oz1.192.38
tortilla chips (plain)113 oz1.191.19
truffle chocolate eggs15.29 oz1.51.5
vanilla frosting116 oz11.00
vanilla ice cream11.75 quart1.991.99
veggie crisps (jalapeno)14.5 oz0.990.99
wheat thin crackers110 oz1.251.25
Whoppers robin eggs310 oz13.00


We didn’t drink all nine bottles of wine in one month.  There were still four or five left at month’s end.  It’s easier to stock up at once and get a mix of different flavors.  All wines were in the $3-4 range (here’s our take on wine).  We like Trader Joe’s Charles Shaw “3 Buck Chuck” wines better than what we actually bought, but Trader Joe’s is so far away (almost three miles!).  The wine with a castle on the front of it was pretty tasty at $4.




At $11, we didn’t spend a lot on drinks.  We bought one soda for our son’s birthday party.  We drink a few two liter sodas per month, and very infrequently drink juice.  Most juice ends up as a mixer or in sangria.

Some of the junk food spending was for our son’s birthday party.  A few bags of chips, the ice cream, some chocolate, and the three chocolate cakes were purchased for our guests.  The large assortment of candy and chocolate was post-Easter clearance items that should last for many months to come (if we can keep it hidden from our kids and ourselves).




Next we have our household goods.  This category catches everything that isn’t food like toiletries, personal hygiene and beauty supplies, medicine, diapers, paper products, and soaps, detergents and cleaning supplies.

Groceries: Household Goods

9V batteries1211.00
AA batteries1811.00
air freshener (can)28 oz0.981.96
allergy med (Zyrtek generic)3140.882.64
baby wipes3560.852.55
bandaids (cloth)1300.960.96
bandaids (plastic)11000.880.88
chap stick (generic)220.881.76
coffee filters12001.191.19
cough syrup14 oz11.00
dayquil tablets (generic)180.880.88
diapers - size 536211.8335.49
dishwasher detergent (liquid)275 oz2.975.94
facial tissue31841.193.57
febreeze (generic)133 oz11.00
nasal decongestant tablets1240.880.88
nyquil/dayquil liquid (twin pack)1224 oz9.429.42
nyquil-type softgel tabs (generic)280.881.76
sensitive toothpaste (Colgate)22 oz0.941.88
teeth whitening treatment kit1714.9714.97
toilet paper19,216 sheets10.7610.76
toothpaste16 oz0.850.85
ziplock freezer bags1401.991.99
ziplock sandwich bags11001.991.99

13-household-junkThese types of non-food items that we buy at the grocery store or Walmart seem to fit best in our budget as part of our grocery category.  Some items are food related (coffee filters), others (like batteries) are not.

This list covers most of the stuff we buy routinely, plus our occasional shopping spree to restock the medicine cabinet after a particularly rough winter and spring cold and allergy season.  Check out the generic Zyrtek we bought for $0.88 per box instead of $13 for the exact same thing in the name brand.  Nice.


How did we do?

Compared to national averages, we did pretty awesome.  The US Department of Agriculture reports average food costs for individuals and families.  A family of five like ours is projected to spend between $700 per month for the “thrifty” food plan up to $1,400 per month for the “liberal” food plan.

At a total of $448 for food (ignoring the $108 spent on “household” goods), we spent only 64% of the “thrifty” food budget and a mere 32% of the liberal food budget.  Take a look at all the fresh fruits and vegetables and stacks of meat and dairy goods we bought in one month.  It’s hard to believe we are living on a fraction of what is considered “thrifty” by government standards.




We even loaded up on around six months worth of chocolate (thanks, post-Easter discounts!).  That’s an example of buying non-perishable goods when the prices are low and consuming them over time.  In any given month, we will find something at a steep discount and stock up.  Finding things that we regularly consume in the clearance section is like winning the mini-lottery.

I pay close attention to prices, but rarely clip a coupon.  In fact, zero coupons were clipped during the month of grocery shopping I’m showcasing in this article.  I probably found a few attached to products in the grocery store and used those when the overall price of a given product was below what I normally pay.  Otherwise I ignore coupons since they tend to take a ton of time to clip, sort, and use.




What types of meals do we make with all this food?  Like many families, the same ten or fifteen meals make a routine appearance at our dinner table.  In no particular order:

  • spaghetti with marinara (and meat or meatballs and veggies)
  • fettuccine with alfredo sauce (and salmon/shrimp and veggies)
  • lasagna (homemade)
  • pizza (homemade)
  • roasted chicken or pork with rice and veggies
  • seared beef or salmon with rice and veggies
  • stir fry with rice and lo mein
  • pad thai
  • soup (chicken and veggie or pho)
  • tacos, nachos, burritos, quesadillas
  • honey ham
  • chili (pork, beef, chicken)
  • salad
  • hot dogs
  • philly steak, chicken, or sausage subs
  • eggs and rice
  • chicken, beef, pork, or fish curry
  • sushi

That’s what we typically have for lunches and dinners.  There are a lot of variations within each of those recipes, so the diversity of meals is quite a bit larger.  Reflecting back on the last five months, we also made spring rolls, egg rolls, empanadas, tamales, fried rice, and gumbo.  Almost every meal includes meat, and purely vegetarian meals are rare.



We didn’t shop at the Asian grocery store this month, but these are some of the items we have on hand from previous trips. Background, from left to right: coconut milk, sliced bamboo, canned skinny mushrooms, pad thai sauce, ta-dang chili paste, red curry paste, green curry paste, massaman curry paste, sesame oil, hoisin sauce, bean curd vermicelli noodles (Singapore noodles), rice pho noodles. Foreground, left to right: sliced dried black mushrooms, roasted nori seaweed wrappers for sushi, pho seasoning bullion cubes. Not in picture: 50 pound sack of thai jasmine rice.


Breakfasts are usually pretty simple and quick with bagels, toast, cereal and milk, fruit, yogurt or oatmeal.  On the weekends we sometimes have a “good old fashioned” breakfast with waffles or pancakes, eggs, sausage or bacon.  Or biscuits, gravy, ham or sausage, grits, and eggs.


I hope you enjoyed a snapshot of all the groceries we purchased in one month.  In the next article, I share our frugal grocery shopping strategies.


Does your grocery cart look like my grocery cart?  Anything we are doing wrong?  How can I optimize my shopping even more?


When It Pays To Be Cheap


I consider myself frugal in most ways, but not really “cheap”.  Sometimes I approach that thinly drawn line between frugal and cheap and dip my toe over the line to the dark side of cheapdom.  Last week an editor from Business Insider contacted me and asked me to highlight a few specific items where it makes sense to be downright cheap.

The question was specific enough that I knew they weren’t looking for advice on saving money generally, otherwise I would have mentioned buying only the house that you need, keeping auto costs low, and being your own insurance company to slash insurance costs.  Those categories can be big budget killers without necessarily enhancing your quality of life or happiness.

The editor was looking for tips to save money in areas where it pays to be cheap.  I took this to include areas that were personal to me, but might not apply to everyone.


The Interview

Here is the original “interview” response I sent by email:

Toothpaste – Buy the cheap stuff unless your dentist recommends a specific brand or Sensodyne for sensitive teeth. Fluoride (the active ingredient) is what you need and the under-a-buck toothpaste is full of it just like the $5/tube Ultra-whitening-fresh-breath-minty-with-baking-soda kind.

Store brand foods – No coupons required, sometimes half the cost of name brand, 100% money back guarantees are common (but rarely used)

Generics for medicine – Same active ingredients, half the cost. If I can find a $4 bottle of cough syrup at the $1 store, I’m buying a couple of bottles.

Toilet paper – Skip the ultra-thin Scott’s but get the next least expensive kind. You only use it once.

Coffee – I get zero value out of “fancy coffee” so I tend to go for the $5-6 big cans (~2 lb) of store brand or whatever is on sale.

Wine – Same thing – the $3-4 stuff tastes as good as the $10 stuff (to me)

Electronics – I tend to go for the low end stuff. Most tech toys are obsolete after a few years anyway, so longevity or durability isn’t too important since you’ll likely want to upgrade before your device dies. Who’s using an iphone 1 today (even though it’s only six years old)? Low end tech today was high end tech 2 years ago.

Closing thoughts – It’s really about finding “enough” quality at a very low price. Take what you save and spend it on something fun (or save it to fund your eventual financial independence/retirement).

The Business Insider editor had one follow up request.  “Electronics” are apparently the sacred cows of their readers and she preferred not to include electronics in the list of things to buy on the cheap (per the editor above her).  I offered “tools” as a substitute:

Tools – For most infrequent users of tools, going cheap makes sense. The end goal is to fix something yourself, and if a $2 screwdriver set gets the job done as well as a $20 set, why pay more?  Power tools with batteries might be an exception (and an area where I might choose to spend more on a mid-range cordless drill, for example).

Here’s the full story at Business Insider (also featuring some smart tips from Kristen Cross from The Frugal Girl).  The article was picked up by Yahoo! Finance, Time Warner Cable’s various news outlets, and Business Insider Singapore.


My thoughts on the article

It was awesome!  While the tips won’t save you thousands of dollars instantly, it’s a good way to sharpen your spending skills and cut out wasteful spending where it doesn’t really bring you value.  I still stand by my assertion that you can go cheap on electronics and still end up with some awesome gear.  But we’ll keep that secret between me and the Root of Good readers.

I don’t know exactly how much we save by going the cheap route in the areas I outlined.  I’ll venture a guess that we save at least a couple hundred dollars per month by buying store brand foods, cheap paper goods and toiletries and going cheap on wine, coffee and a few other grocery items.  Over the course of the year, that’s a few thousand dollars in savings.

I understand that oenophiles and connoisseurs of fine coffee find my suggestions leaving a bad taste in their mouth.  And that’s okay.  I personally don’t get any more enjoyment from a “good” cup of coffee than I do a plain old cup of the cheap stuff (with a little sugar and cream, of course).  I’m a pretty boring wine drinker, and couldn’t tell a $100 bottle of wine from a $3 bottle.  I just can’t do it.

It would be like asking me to distinguish between “good” abstract art and finger paintings carefully smeared on a canvas by a four year old.  I just can’t do it.  Sometimes the “real” stuff is appealing to me, other times it’s crap.  Sometimes the four year old makes beautiful compositions, other times it’s obvious they would be better served skipping the preschool art class and having a second helping of recess or science.

Modern art or a 4 year old's doodling?  Note the composition and use of lighting.

Modern art or a 4 year old’s doodling? Note the composition and use of lighting.

To the coffee lovers and the oenophiles, I say indulge yourselves.  If the $12/lb coffee is four times better than the $3/lb stuff I buy, go for it!  If the $30+ bottle of wine is all you can stomach, and the idea of drinking Three Buck Chuck next to us proles makes you queasy, then pay up and drink on!

I don’t buy a lot of tools these days.  But when I do, it’s usually a special tool I won’t use a lot.  An air conditioner manifold gauge set was my latest purchase.  At $40 new from Harbor Freight, it feels like a really solid piece of equipment and the online reviews are excellent.  I’m not sure if I’ll be able to fix my car’s air conditioning, but at least I know it’s low on refrigerant and I can refill it to the recommended level using the tool I bought.  I may use the manifold gauge set only a few times in the next decade (or maybe annually to check my own home air conditioning system!), so I didn’t need a professional set of gauges.  The $40 version works well enough for my needs.


Comments from readers at Business Insider and Yahoo! Finance:

There were hundreds of comments at Business Insider and Yahoo! Finance.  Instead of jumping into the fray over there, I figured I would select a few comments and compose my response to those comments here.

Store brand foods

When shopping the dollar store, you need to be careful that the product IS overstock or damaged carton and NOT expired or a knock off made in another country.  Shopping store brands and sales is a good way to save. Buy enough to last until the next sale. Store brands are made by a company that also makes a name brand, it is just labeled as a store brand. – Merav

About ten years ago, I swore off buying food items from dollar stores.  Since then, I’ve returned to buying select items from dollar stores.  Thanks, Merav, for pointing out you have to pay attention to labels, conditions, and expiration dates.

Make sure you’re getting what you think you are getting.  I saw “sour kreme” at one dollar store that wasn’t a dairy product at all.  It was “partially hydrogenated vegetable oil” with sour cream flavoring (that’s why they couldn’t use the word “cream” in the name).  Gross.  I can pay slightly more than $1 for the real deal at Aldi’s or elsewhere.

Generic medicine

 Generic medicines are inspected by the same procedures used for branded, so they are safe. They are also just as effective, except when they are not. If your doctor is good, they will know when to give you generics and when to dispense-as-written (that little DAW box on the prescription pad is there for a reason). My doctor, for example, gives me generics for everything I need except one drug, which he says he has found works slightly better than the generic counterparts. – “Commenter”

The generics work just as well as the name brands almost all the time.  But when in doubt, follow the advice of your doctor or pharmacist.  They are generally more right than wrong.  Some of the name brand prescription drugs have a very similar generic version with the only name brand difference being a different kind of coating or formulation to extend the time release of the active ingredient.

Drug companies can get another 17 year patent when they add something simple like “extended time release” to a previous drug that has lost its patent protection and has thereby entered the generic realm.  Sometimes you need the new and improved name brand version, but often the generic will work just fine.

A lot of name brands are sold at the Dollar Store (Colgate, Crest, Campbell’s, Progresso, Sargento, to name just a few). For other stuff, it depends of your taste (food and drink) or what your using it for. If you need aluminum foil for decorating or a school project, then the Dollar Store brand is as good as heavy duty Reynolds. For covering a Bar-B-Q grill, not so much! – Chicago

I have noticed a lot more name brands showing up at the dollar store, too.  I just bought a few cans of artichokes that were “Progresso” brand.  They aren’t expired or dented.  Just regular artichokes.  For $1.

As for your other comments – the quality of items at the dollar store can vary a lot.  If it’s way cheaper than a regular store, I’ll give it a shot.

Toilet Paper

 He’s wrong about Toilet Paper, wine and coffee…there IS a difference…the fact that this guy can’t tell means he has no taste – JackR

So far, I have never tasted toilet paper.   You use it once and then you throw it away.

As for toilet paper, where exactly could one find cheaper yet just as effective toilet paper? If it’s too flimsy you will be using more of it. – OobieDoob

Walmart.  The big package with 24 rolls in it.  Cheap, yet effective.  I wouldn’t be surprised if it was actually manufactured by the Angel Soft or White Cloud people, but packaged as Walmart’s store brand.  It’s no triple quilted Ultra Supreme TP, but still effective.

Coffee / Wine

Um. With an exception for the Trader Joe’s variety, there’s pretty much no $3 wine that’s even drinkable much less anything I would want to serve for guests. Buying a NICE bottle of wine is still a bargain compared to going out and making pre-made cocktails, plus the company is usually better. And isn’t that the point??  – hannonymousAZ

Trader Joe’s makes a  great $3 bottle of wine.  That’s about the most we spend on wine.  Drinking at home is definitely way cheaper than drinking out at a bar or restaurant.

If you are buying $3.00 bottles of wine, you might as well just give up wine. – Dennis C

$3 Buck Chuck.  Tastes great, won’t leave your wallet with a hangover.  Good thing I don’t have to give up wine since there’s a $3 wine that’s worth drinking!

Please note the number of times you see the phrase or something similar to “To me…” If it is something important to you, the price may be just a number. Perhaps that $10 coffee is the one indulgence you give yourself…perhaps your tools are used more frequently…The last sentence is the most important: may be more cost effective to buy “cheap,” but you need to decide it’s worth for yourself. Don’t buy something just to have it or because it is new. – Tripper

Well said, Tripper.  I hope the folks drinking the $10/bag coffee and $10+ bottles of wine choose the more expensive types because they taste far superior to the $3 alternatives, and not because they are afraid their friends might find out they went cheap or they would be embarrassed when snobby acquaintances see a store brand can of coffee in the pantry.

If you have to have the absolute best of everything in life regardless of the price, you’ll likely be working forever and permanently indebted to “the man”.  I’m glad Tripper picked up on the nuance of the article – find those things that bring great value to you, and spend a little extra on those areas.

Wine …………….2 Buck Chuck !!!!!! – Heywood Jablowmee

Funny name, funny guy.  Serious wine suggestion.  I just wish it was still $2 here in North Carolina.


A good tool can last for generations. A cheap tool not so much. Craftsman use to have an unconditional warranty on many of their tools. Now that the money boys have pretty much destroyed the company I have no idea what their policy is. – Onemoretime

Good tip on Craftsman’s lifetime warranty – I’ll have to check that out.

Don’t go cheap on your flat head screwdriver, phillips head or a starter socket set (all of these can be had for under $50 at the Home Despot) because that stuff will fail just when you need it–like when you’re trying to screw in that new cheap-ass door handle and the screws strip on your cheap ass at the same time the handle on your bargain screwdriver comes off in your hand. Purchases that need to be repeated due to shoddy construction or workmanship are anything but a bargain. – Biff

Under $50??  Those things are $3-7 at Harbor Freight!  And what are you people doing to your tools to smash and destroy them so often?

Cheap tools = broken knuckles and damaged material, which isn’t so cheap after all is done. – Freedom4all

I’m still not sure how you guys get injured so often on inexpensive tools?  And damaged materials?

More accidents happen with cheap tools. Most everyone has experienced this. Where as good tools come with a lifetime warranty, meaning a dutiful owner only need buy one as long as that company is still in business (and that company has a vested interest in ensuring their tool doesn’t break). I have had “generic” screwdriver handles break, cheap shovel or broom handles snap. These situations are dangerous. Again the author favors chancing your health to save money without concern for the likely increase in your cost for healthcare. – Jeff Ray

Snapped broom handles?  Seriously?  I don’t think I put more than five pounds of force on the broom when I sweep.  How can that crack even the flimsiest broom?  Amazing.

“More accidents happen with cheap tools.  Most everyone has experienced this”?  I’m still waiting to suffer calamities from buying inexpensive tools instead of the really good ones.  Maybe it will happen some day.  As some of my tools approach the 30 year mark, I’m starting to think I’ll be okay after all.

The screwdriver I got when I was six.  It's doubled as a hammer, chisel, pry bar, sewer snake, and paint scraper.  "Made in Taiwan" almost 30 years ago but still not smashed into tiny pieces.

The screwdriver I got when I was six. It’s doubled as a hammer, chisel, pry bar, sewer snake, and paint scraper. “Made in Taiwan” almost 30 years ago but still not smashed into tiny pieces.

Other interesting and helpful comments

Except that frugality needs to start at the top, not the bottom. IOW, houses, cars, education, vacation… the big things before I start skimping on toothpaste. – RayO

Right on.  Housing and cars are usually the top budget items (perhaps after groceries) and are the best place to lock in long term low costs by buying what you need and not a status symbol.

You don’t have to buy cheap toothpaste, saline, tools & wine to save money. Stop buying a $4 cup of coffee every morning and eating lunch out everyday. Paint your own fingernails and mow your own grass. That will save you a LOT more. – Linda

You can actually do both!  Buy the cheap hygiene items, tools, and wine to save some money.  Then make your own coffee at home and pack a lunch to save even more money!  I’ll skip the fingernail painting (and I would advise most guys to skip it as well, though not for monetary reasons).  Mowing your own grass is another great way to save money, great exercise, and it can leave your yard in awesome shape since you notice problem areas.

Interesting but not very helpful

Fried farts in garlic are very good too. Very low cost and nutrient filled. – Big D

Thanks Big D.  Although I’m not sure they are nutrient filled.  The garlic will at least ward off vampires though.

Nothing is cheap any more, everything is very expensive and if you buy cheap stuff in the end it will cost you even more. – Brad J

No, Brad, cheap stuff is still inexpensive, expensive stuff is still expensive.  It’s kind of how you define cheap and expensive.  At the dollar store for example, it’s all a buck.  Sometimes less. That’s cheap.

 The water, prescriptions and Cell phone plans are great ways to save, but realistically the other options listed here are a joke, maybe that will save you $20 a month. Not exactly enough to make you financially independent. – Ben

I don’t know – saving $7 by buying a $3 bottle of wine and saving another $5 by buying the store brand coffee can add up to way more than $20 per month unless you hardly touch either one.  As for tools, I’ve already saved over $100 this month alone going cheap.  I’m way past $20 in savings!  You are right in your final thought, Ben.  Saving a small amount on the items mentioned in the article won’t make you FI by itself.  It takes saving on the big ticket items like houses and cars, making smart tax choices, and investing wisely.

The dollar store or for that matter, Walgreens or even Target, often have house brands made in China. Frankly, I don’t trust putting something in my mouth that was manufactured there. They simply have no standards and there have been a number of cases where materials were adulterated. Look for sales or bulk purchases at Costco and you can stock up on items like toothpaste and save some cash. – Pat R

They have “no standards”?  I saw a lot of China-hate and in the comments and randomly picked one to stick on a spit for public display.  Look, I love to drape myself in the American flag, too.  But just because something is manufactured overseas doesn’t mean they can’t follow standard quality control and quality assurance procedures.  The people in China and elsewhere overseas actually have a brain inside their heads and a heart inside their chest.  They are just like us here in the states.  Don’t let xenophobia block the path to cost efficient shopping.

And the China-hate is really misplaced at times.  I pay attention to where things are made, and I rarely see “made in China” on medicine and food items.  More common is “Canada”.  Tools and manufactured goods do seem to come from China or elsewhere in the Orient, but that’s okay.  Those people in China need jobs, too.

Oddly enough, the Chinese have also figured out how to add carbon and a few other elements to iron in order to make steel.  They also figured out how to turn the steel into useful objects!  These amazing talents lead to reasonably high quality manufactured goods (like cheap tools!) that are very cost competitive with goods of US origin.


 Closing Thoughts

The Business Insider and Yahoo! Finance articles sent a lot of traffic this way, which was cool.  I hope the tips help people realize that it’s best to go cheap on some purchases if differences in quality don’t make a big difference.



What things do you usually “go cheap” on?



March 2014 Financial Update

Bizarre but beautiful

March proved to be another great month for our early retirement finances.  Our investment portfolio went up slightly.  I had a fair amount of income from this blog and other online writing.  Spending in March remained roughly in line with our early retirement budget.

With almost $8,000 in income during March, we more than covered our monthly expenses of $3,319.

In March we received just over $3,000 in dividends and interest.  Our mutual fund and ETF investments pay quarterly or annually.  This $3,000 represents the bulk of the first quarter dividend income from our investment portfolio.  Most of the dividend income arrives in December each year, but the $3,000 received in March is roughly one month’s early retirement expenses for the Root of Good household.

Income received from totaled $1,787 in March.  I received the February and March payments from one advertising network, so the online income is higher than normal.  I also received $300 from freelance writing.

I didn’t sell much on ebay during the month, with only $56 in sales.  And $50 of that was actually an insurance payment from the US Postal Service to compensate me for the totally mangled LCD laptop screen I sold last month.  I could have made $25 more if the laptop screen arrived undamaged.

At around $500, my ebay sales this year have been uneventful (which is great!) except for this destroyed laptop screen.  Thanks to the insurance payment, I still made a decent profit on an old laptop screen that I almost tossed in the trash.  Filing the insurance claim online at was incredibly easy and didn’t take more than 15 minutes including gathering my documents.  I’m feeling like my ebay sales experience was a success so far.  I still have a few more odds and ends to dispose of in the next few months.


March 2014 Income


A quick note on the expense tracking and income tracking tools I use.  If you like these pretty graphics, that’s exactly what you get from Personal Capital.  But they really go beyond pretty pictures.  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.  It’s my first stop when I have a quick finance question like “how much cash do we have?” or “what do we owe on credit cards right now?”.

Personal Capital is also a solid tool for investment management.  Keeping track of our investment portfolio takes two clicks and is incredibly easy with Personal Capital.  If you haven’t signed up for the free Personal Capital service, check it out today (review here).


Now let’s look at March expenses:

March 2014 Expenses


We made up for February’s low spending with slightly above average spending in March.  The good news is that about half of our March spending was prepaying utilities and other expenses in order to meet a spending requirement to secure a huge sign up bonus on one of our credit cards.  No more electric or water bills until the fall!  I also paid off the remaining $468 of Mrs. Root of Good’s medical bill from the delivery of Mr. RoG Jr. almost two years ago.

After subtracting those utility and medical prepayments, we spent well under our normal projected retirement expenses.

Big expenses for March included $753 in travel expenses.  Travel expenses reflect $250 spent on passports for those in the family that needed a new one or needed to renew an old one.  For adults, passports remain valid for ten years with a renewal fee of $110.  It’s a large one time expense, but when I mentally amortize the cost over ten years, I don’t feel like $11 per year is an unreasonable amount to pay for the ability to travel to other countries.  I managed to save $43 by printing our own passport photos for $2 at Walgreens, which certainly helps keep the passport costs down given the steep unavoidable passport fees from the State Department.

We also laid out some travel cash toward our big summer trip.  We booked a rental apartment in Quebec City for eight nights (at $471) through AirBnB.  We used a $25 off coupon from a referral link, and you can get $25 off your AirBnb bookings too with our AirBnB referral link.  For our family, it will work out to be way cheaper than a hotel, and we’re getting a two bedroom apartment with a kitchen which will allow us to cook breakfast and dinner at home and avoid dining out all the time.

Gas, grocery, and restaurant spending was pretty ordinary for the month.  Restaurant spending of $61 bought us a couple of meals out for me and Mrs. RoG, a lunch out with a friend for me, a few cups of coffee at work for Mrs. RoG, and a take out plate for the whole family (complemented with home-cooked rice and veggies).


2014 YTD Expenses


Year to date, we have managed to keep spending very closely in line with our budget.  We budgeted $32,000 per year for retirement, so three months of spending should be $8,000.  At $8,293 year to date spending through March 31, 2014, our year is off to a great start.  I don’t foresee any major expenses for a couple of months other than travel expenses.  We will probably spend another $1,000 to $1,200 on AirBnB bookings for the other three weeks in Canada plus a few hundred dollars on a hotel in New York City for a few nights.  April will be a somewhat expensive month due to these travel expenditures.  However I expect overall 2014 expenses to fall back in line with our budget at some point during the year.


Net Worth: $1,350,000

For the voyeuristic eyes out there, I figured I would throw out our net worth figure.  At $1,350,000, it went up a tiny bit in March due to $5,000 in investment gains.  After the huge losses in January (-$60,000) and the huge gains in February (+$86,000 from peak to trough), “only” making $5,000 in one month feels pretty comforting.

With a net worth that is 42 times our annual expenses, I continue to think it’s unlikely we’ll run out of money in early retirement.  Put another way, we are spending around 2.4% of our net worth each year.  The dividend yield on our portfolio is over 2%, so even without supplemental income from ebay sales, freelance writing, and advertising on this blog, we will barely have to dip into our capital to fund our living expenses.


Making More Money in Real Estate?

I have always been interested in real estate.  About ten years ago we became accidental landlords when we moved out of our condo and had to rent it out after failing to sell the place.  It worked out really well financially since the place was cash flow positive the whole time we owned it, and it appreciated for a couple more years before we sold it (to another investor cashing out of the California bubble market circa 2006 and looking for a safe place to park his equity).

Every six months or so I get the real estate bug.  I know owning rental real estate can be a pain in the butt (from personal experience with the condo), but most of the time it’s an uneventful way to earn higher returns with your money.

A friend that I trust just asked me to invest in a property with him.  On paper it pencils out to be easily cash flow positive from day one, and there doesn’t appear to be a lot of hidden risks since the place is only a few years old.  In other words, old enough for most latent construction defects to say “hello” but not old enough to need replacement of major systems or components.

Real Estate Allocation

I checked my investment portfolio at Personal Capital and realized I already have around $150,000 invested in real estate through my mutual fund holdings (around 12.5% of my total investments).  I also have another $150,000 in real estate through my primary residence.  All together, I have 22% of my net worth invested in real estate.

I could certainly make more money with this investment property, but at this point I’m not sure how much more real estate I need.  Or whether I want to spend more time and effort to make more money!  At 22% of my net worth already in real estate, I have great exposure to the asset class without adding any investment properties.


Overall, I’m feeling good about March.  Expenses remained low, income keeps flowing in to our accounts, and the investments held up well.


How did you do in March?  


February 2014 Financial Update

February in the Caribbean

February was a really happy month for our finances.  Spending remained low and our investments went way up.  As long as our investments keep up with inflation after we take out living expenses, we will have a financially successful early retirement.  We are on the right track so far.

This month’s income of $6,844 was a few thousand dollars higher than January’s income.  That’s mostly due to a matter of timing.  We received two repayments on a business loan made to family back in October.  The first payment missed January by a day, which led to the income falling in February.

This month we again received about $50 in investment income.  March will be the next moderately big month for dividends.

The Root of Good earnings from December 2013 were mostly paid in February.  That’s the $1,566 in “other income” shown on the income report.  Root of Good earnings won’t be quite as high in the next few months.

The top income source for February was Mrs. Root of Good’s paycheck.  Having this steady source of income makes it easier to watch violently wild swings in our portfolio value without batting an eye.  All of our monthly expenses are completely covered by a paycheck.  Lest you think I’m being disingenuous in my claim of being retired, rest assured knowing that we would be just fine without Mrs. RoG’s paycheck.


February 2014 Income


As I mentioned in the January Financial Update, I’ve been busy selling crap on eBay.  The totals are in for February.  The “Sales” of $393 reflects the gross amount I received from eBay after paypal fees and shipping costs.  The ebay fees on the sales were paid later, which left me with a $350 profit.

What did I sell? Old cable boxes, cable modems, DVR’s, VOIP phone adapters, a “vintage” bookbag, the “vintage” cabinet pull handles from our kitchen, and an assortment of post-it notes, markers, and pens I obtained “free after rebate” from Officemax.  The post-it notes really blew my mind.  $37 for a couple of small packs of bold colored sticky notes.

Second most surprising were the “vintage” cabinet pulls that sold for $20.  Considering I spent $25 for brand new shiny ones, I’m feeling a little smug about this particular kitchen upgrade since I sold the old ones for almost what I paid for brand new ones from this century.


nickel cabinet handle


A quick note on the expense tracking and income tracking tools I use.  If you like these pretty graphics, that’s exactly what you get from Personal Capital.  With Personal Capital, it is really easy to take a quick look at my income and expenses, and then drill down to areas of spending that I want to take a closer look at.  But they really go beyond pretty pictures.  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.  It’s my first stop when I have a quick finance question like “how much cash do we have?” or “what do we owe on credit cards right now?”.

Personal Capital is also a solid tool for investment management.  Keeping track of our investment portfolio takes two clicks and is incredibly easy with Personal Capital.  If you haven’t signed up for the free Personal Capital service, check it out today.


Now let’s look at expenses:

February 2014 Expenses


Occasionally we have months where we just don’t spend much money.  February was one of those months.  It snowed a lot, and in North Carolina an inch or two of accumulation means businesses shut down and roads are impassible.  For a portion of February, we could not go anywhere to spend money.  That means forced savings!

Our $1,810 spending in February is about two thirds of our normal projected expenses in retirement.  We didn’t really try to save money or go out of our way to reduce expenses.  In fact, I spent more money than usual on a lot of categories.  I prepaid $350 extra on the natural gas bill and $200 extra on the internet bill in order to meet the minimum spending requirements to qualify for a credit card sign up bonus.  That means no more gas bills or internet bills until the summer.

We spent $200 on a deposit for a week long cruise to the Caribbean and Mexico in September 2014.  We found a smoking hot deal and booked it before it disappeared.  We can cancel without penalty until June, and we might do exactly that if we see another cruise that is a better value, or we decide to travel somewhere else.  We also received a $200 refund (shown in the “income” chart) for the cruise we booked in May but had to cancel due to cruise line error.

We spent $318 for three weeks of summer camp for our two oldest children.  At $53 per week, our city parks and recreation department offers a heck of a deal for a high quality camp that the kids really enjoy.  I put expenses like these in the “entertainment” category.

The astute observer would note that I don’t spend anything on cell phone service.  I switched to Freedompop and don’t pay anything on a monthly basis.  So far, I have had consistent data connections but pretty bad voice quality when I’m away from wi-fi.  That’s the price of free.  I rarely use the cell phone, only using 150 MB data and 12 minutes of talk time in February, for example.  It works for me, but wouldn’t be a good solution for anyone that needs reliable voice service.  Or reliable service of any type, for that matter.

The service suddenly stopped working at the end of my plan’s first month.  I had a really hard time reaching anyone in customer service.  Eventually, after bad-mouthing Freedompop on twitter, I miraculously had immediate offers to help.  The issue was resolved within an hour.  My suggestion to Freedompop would be to ditch the telephone customer service if you don’t actually intend to answer the phone or call back customers when you say you will.  I am technically a “beta” customer using their “bring your own device” plan, and I pay nothing, so maybe I’m being a little harsh on them.

Grocery expenses were lower than ordinary at $180.  We tend to stock up when groceries are on sale and then buy less when things aren’t on sale.  February was one of those months where we didn’t stock up on many groceries.  We worked on depleting our stash from the freezer and the pantry and most grocery money was spent on fresh fruits and vegetables and perishable staples like milk, yogurt, and eggs.

The restaurant category didn’t see much action in February.  The only restaurant expense was $8 for a take out tray from the neighborhood Chinese restaurant.  We stretched that one plate into more than one meal (for a family of five!) by cooking our own rice, lo mein (= ramen noodles), and veggies at home to go with the chicken, beef, and pot sticker dumplings from the restaurant.

I hesitated to reveal that we only spent $8 on restaurants and exactly how we could spend so little.  It makes it seem like we are living a life of extreme deprivation.  The truth is that we eat pretty well at home, but most dishes are cooked from scratch.  From naan, curry, pizza, stir fry, and sushi to lasagna, baked honey hams, pad thai, pho, burritos and chili, we like to eat.  We just don’t like to pay a lot for good food.  I love cooking and I tend to spend a good bit of time trying new recipes and whipping up family approved classics from my repertoire.


2014 YTD Expenses


Year to date, we are doing a great job managing our expenses.  Since we budgeted around $32,000 per year for retirement, two months of expenses should be $5,333.  We are under-running our budget by $360 through the end of February.  Our year is off to a great start, and I don’t foresee any major expenses for a couple of months other than travel expenses.

We are in the process of getting our passports updated for our big summer trip.  The oldest kids’ passports are still valid for another 18 months, but the two year old and us parents will need new passports (at a combined cost of just over $300).  At least I only spent $2 on passport photos, and the passports we get will be valid for five to ten years.

After batting around all kinds of places like Thailand, Cambodia, Spain, and Central America, I think we have finally decided to spend five weeks traveling up the east coast and into Canada.  We’ll spend most of the trip in Canada.  But before entering our great neighbor to the north, we hope to make it to New York City around the Fourth of July.  I hear the fireworks are amazing.  I’m guesstimating the whole trip will come in around $5,000 for our family of five.  I’ll save the details of our trip for subsequent posts.

Net worth

Last month I started talking about our net worth in abstract terms (without attaching dollar values to the total).  January was a tough month for our portfolio.  We lost about $60,000.  It didn’t bother me at all because it’s unlikely we’ll run out of money in early retirement.


February 2014 Net Worth


Unsurprisingly, our portfolio fluctuated in value once again in February.  This month it went up roughly $86,000 from the worst point on February third.  One month you lose $60,000, the next month you make $86,000.  It makes our $1,900 February expenditures look really insignificant.  When you are relying on a seven figure portfolio that fluctuates by $50,000-$100,000 many months, it’s hard to stay focused on keeping expenses low over the long term.  However, keeping expenses under control is the key to long term financial success in early retirement.

If we can stick to our current budget, we’ll be able to withdraw less than 3% of our portfolio each year for living expenses.  Historically, this low level of withdrawals would lead to a near 100% chance of our money lasting longer than we do.

We might be millionaires but we can’t spend all our investments in one year.  Then we would have nothing left to grow and pay dividends year after year.



How was your February?  Did you dominate your finances?



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