Category Archives: Personal Finance

March 2018 Financial Update – Spring is Here!

Another month of early retirement is in the books! March was a busy month for us. The weather is finally nice around Raleigh so we enjoyed more time outdoors.  The kids had fun too, with our youngest going on a field trip to the children’s museum that we chaperoned. Our older two children bought themselves bicycles and have been out and about riding on these warm spring days.

Financially, March was a repeat of February. Due to downward movement in the stock market, our net worth dropped by $32,000 to a still-respectable $2,024,000.  Our income of $5,659 far surpassed our spending of $2,025 which means our cash stash continues to grow slightly.

On to the numbers!

 

Income

Investment income totaled $3,108 in March.  Our equity mutual funds and ETFs pay dividends quarterly in March, June, September, and December which explains why investment income was much higher in March than in January or February.  More on our dividend income.

Blog income, shown as “other income” in the chart, declined slightly to $1,925.  I have a couple of tasks in progress to boost this income a bit and they seem to be paying off. However the payment from advertisers tends to lag by a couple of months.

My early retirement lifestyle consulting income (“consulting”) of $465 was a little lower than February.  That works out to roughly an hour per week of consulting, which is a very comfortable pace for me and leaves plenty of free time for all the other fun pursuits in life!

Deposit income of $159 came from two sources.  A small part of that was cash back from the Capital One Spark Business card where I just completed the $10,000 spending requirement to qualify for a $1,000 sign up bonus (plus 2% cash back on the $10,000 spent).  If you want some of this free money being handed out, check out the latest credit card offers.

The second source of “deposit income” was from the Ebates.com and Mrrebates.com online shopping portals (some of which was earned from you readers signing up through these links).  If you sign up for Ebates through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card.  During March and early April, we’ve scored a ton of cash back through those portals from shopping online and from travel bookings.

If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.

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

 

Expenses

Now let’s take a look at March expenses:

I never seem to have a “typical” month of spending because there’s always a “one time” expense of one type or another that happens every month.  That’s why budgeting monthly is a tough chore but budgeting by the year makes a lot of sense to me.  This month, the automotive spending went WAY up compared to the $0 we spend most months. However, I have now paid for almost all of the annual car expenses for 2018 other than gas and unexpected repairs.

In March, we spent $2,025 which is about two thirds of our target spending of $3,333 per month (or $40,000 per year).  Detailed breakdown of spending:

 

Automotive – $809:

Cars are awesome. You get where you want to go in a relatively fast manner and you don’t get soaked when it’s raining.  However, driving costs money.

In March, we had to replace the spark plugs, a routine maintenance item due once every 120,000 miles.  Which is to say, this is the last time we’ll ever replace the spark plugs since we only drive about 5,000 miles per year.

At $594, this maintenance item was extremely expensive and somewhat of a surprise. When we bought our used minivan I thought I was getting out of a huge expense of replacing the timing belt at 90,000 or 120,000 miles since Toyota Siennas have timing chains.

I was right about the timing chain, but didn’t realize that the spark plugs are really hard to get to in the engine compartment.  They require 3.5 hours of shop labor to replace since half the engine has to come out to gain access to the plugs.  In our former lives of owning Honda sedans, spark plug replacement was usually $175-200.

I could have spent a day or two of DIY to save about $500 but decided my leisure time was too valuable for that.  I’m not super handy at auto repair, so I might have inflicted more than $500 of damage to the car during the repair attempt!

The annual inspection, property tax, and tag/registration also came due in March.

Then I had to renew my driver’s license.

The itemized $809 in automotive spending:

  • $594 spark plug replacement
  • $30 North Carolina State inspection
  • $51 Annual North Carolina Registration/Tag Fee
  • $94 Property Tax and Annual City Vehicle Fee
  • $40 Driver’s license renewal – good for eight years

Fortunately, that’s it for 2018 routine car expenses other than gas and liability insurance.

 

Bike time in the neighborhood park. No cars required.

 

Travel – $470:

I bought $200 worth of Airbnb gift cards for $173 at Raise.com when they offered 10% off sitewide. I don’t have any immediate plans to use them, but they never expire once added to your Airbnb account.  The gift card balance will undoubtedly come in handy when we start planning our summer 2019 trip to somewhere.

Where is somewhere? Could be a cross country USA road trip. Or a summer in South America. Or in Southeast Asia.

In other travel spending, I spent $297 to put down a deposit for a week-long cruise aboard the MSC Armonia out of Miami.  The cruise will total about $1,500 for the five of us after applying our MSC Voyager Club past passenger discount and getting 12% cash back through ebates.

The cruise is during spring break 2019.  We are paying a slight premium of a few hundred dollars so that the kids won’t miss any school.

The cruise spends two days in Cuba including an overnight stay in the harbor of Havana! Everyone in the family is excited about visiting Cuba.

Those of us getting off the boat in Cuba will pay an extra $75 for the Cuban tourist visa card.

For those curious about how we’ll circumvent the United State’s restrictions on tourist visits to Cuba, we’ll be traveling “In Support of the Cuban People” which requires among other things that we support local entrepreneurs (buy trinkets and snacks from street vendors) and have significant and meaningful interactions with local Cubans (and presumably tell them how awesome capitalism is and how much communism sucks).

In other words, travel like we always do.

Interested in cruising? Check out my four part series on cruising and my latest update of our cruise on the MSC Divina.

 

We didn’t have to travel because these guys visited us! These faceless people are the folks behind the Enchumbao blog who want to remain anonymous for a little while longer before uncloaking when they retire early.  While on a road trip through Virginia and North Carolina, they stopped by Casa Root of Good for a few hours.

 

Groceries – $430:

Our grocery expenses were slightly lower than usual.  We usually shop at Aldi, Lidl, and Walmart for most things. Occasionally I’ll make a special trip to Kroger or Food Lion (regular grocery stores) to shop their loss leader sales.

During March, we visited two local Asian grocery stores to restock ethnic foods like fish eggs, wasabi, and seaweed for sushi and pastes, spices, and noodles for pad thai.

 

Homemade salmon and avocado sushi

 

Yummy pad thai

 

We celebrated our daughter’s thirteenth birthday party by letting her invite a half dozen friends for a sleepover.  We whipped up a teen-friendly “pasta bar” for our guests.

Spaghetti and penne pasta with meat sauce, meatballs, chipotle alfredo, Italian sausages, honey lemon chicken, and salad.

 

To help with the grocery expenses, I picked up some discounted Aldi gift cards at Cardcash.com (sign up through that link and you get $5 off your first purchase).

More on how we shop for groceries without using coupons.  And why we never shop at Costco.

 

$0.50 homemade fish and avocado sandwich

 

Grocery budget under $500 and still able to put smoked salmon on bagels.

 

Home Maintenance – $152:

Our old lawnmower lasted 12 years but it finally rusted out this year.  The engine on the old mower ran nearly perfectly but the mower deck itself was about to split in half which could have been dangerous.  Time for a new lawnmower.

I picked up a “Bolens” brand 21 inch lawnmower from Lowes.  It’s identical to this Yard Machines mower sold at Home Depot and Amazon other than the color.  Both Bolens and Yard Machines mowers use the same Briggs and Stratton engine and are both manufactured by MTD.

 

Some assembly required.

 

Using some gift card and coupon magic, I managed to bring the $192 price tag down to $152. I bought Lowe’s gift cards through Raise.com when they ran a 10% off sale. On top of that, I used the ebates portal to get another 1% cash back on the gift card purchase at Raise.

Upon paying for the mower at Lowes, I used the ebates portal to get another 1% cash back for Lowes purchases.  I also applied a $20 off $100 purchase coupon that I bought from ebay.

In the end I saved $40 playing the discounted gift card, cash back portal, and coupon game.

And the grass got mowed.

 

Entertainment – $76:

Most of the entertainment expense was random things we bought for our daughter’s 13th birthday party and for the multiple Easter egg hunts we attended.  Decorations, snacks, candy, and party favors.

 

Getting our Easter egg hunt on with our neighbors and classmates

 

Then this bunny shows up. Don’t worry, he didn’t make any kids cry

 

We spent $15 on admission to Marbles, the children’s museum here in Raleigh. Our five year old’s Kindergarten field trip brought him to Marbles and we volunteered to chaperone his class.  We had to pay for our own admission tickets.  At least on-street parking in downtown is free if you don’t mind walking a few blocks (we don’t mind).

 

Kids go CRAZY in this museum. Lots of fun though

 

Closing out entertainment spending, I spent a dollar on some video games through Humble Bundle.

 

Restaurants – $42:

We revisited the Indian restaurant where we ate in February.  This time we were celebrating our anniversary. Of all times, I forgot my wallet at home!  We were 15 minutes from home, so “running back home” for money wasn’t a convenient option.

I checked the van and only had $4 worth of quarters which wouldn’t get us much more than dollar menu fare at Taco Bell or McDonald’s (a rapidly developing Plan B at the time).

Fortunately I didn’t have to disappoint Mrs. Root of Good.

I decided to head a few blocks down the street to my credit union to see if I could beg $20 from my money market account without any physical forms of ID.  It worked! I showed a picture of my driver’s license on my phone (Google Drive for the win, folks) and the bank teller gave me a $20 which was just enough to cover two meals plus tip at the Indian restaurant.

Anniversary disaster averted.

In other restaurant spending, I bought a Groupon for eight meals and drinks at the local pizza place for $22.  We used half of the Groupon in March.

 

Gas – $28:

By month-end I still had close to a half tank of gas. I went ahead and filled up to take advantage of the 5% cash back on gas for January-March on my Chase Freedom Card.

FYI the April-June 2018 Freedom bonus category is 5% back on grocery stores (not including Walmart/Target), paypal purchases, and Chase Pay purchases.  I’m hoping to find discounted gift cards at ebay so I can pay with paypal and score another 5% cash back.  If you’re interested in getting the Chase Freedom Card, it also comes with a $150 sign up bonus after $500 in spending within the first 90 days.

 

Putting together some bikes for the kids. We just bought a pair of bikes for the adults too! More on that in next month’s spending report.

 

Cable/Satellite – $14:

$14.99 per month for 30 mbit/second download speeds and 4 mbit/second upload speeds with no data caps.

 

Note on Utilities and Health Insurance expenses:

  • Utilities were prepaid in previous months to generate spending in order to fulfill the terms of sign up bonus offers on credit cards.
  • Health insurance premiums were prepaid in January and February for the whole year.  If paid monthly, premiums would be $40 per month thanks to very generous Affordable Care Act subsidies that we receive due to our low ~$40,000 per year Adjusted Gross Income.

 

Total Spending in 2018

After closing out the first quarter of 2018, we have spent $6,357.  That’s about $3,500 less than the $10,000 budgeted for three months of our $40,000 early retirement budget.

Things are looking rosy in the spending department.  I’m mentally preparing myself to pay several thousand dollars for major repairs and/or complete replacement of our furnace/air conditioner and our hot water heater since both are approaching or have exceeded their expected service lives.

 

Monthly Expense Summary for 2018:

 

Summary of annual spending from all years of early retirement:

 

Net Worth: $2,024,000 (-$32,000)

Net worth dropped by $32,000 during March.  It was another volatile month in the stock market.  At one point we briefly dipped below the magical $2,000,000 threshold before quickly recovering to multi-millionaire status.  But will we stay above $2,000,000 long term?  Who knows.

 

Taking a look at our net worth chart for the past month, you’ll probably notice two huge dips.  I transferred over half a million dollars of investments from Fidelity to Vanguard in order to consolidate and simplify accounts. The funds went in two chunks and temporarily disappeared from our net worth tracking at Personal Capital (and yes, I freaked out a little when I logged in each time).

In the process I learned that Fidelity charges $50 to transfer and close out each IRA account (and I attempted to close four IRAs).

I called Fidelity and requested that they leave the four IRAs open with $50 in each of them.  I bought two shares of FREL (Fidelity’s REIT Index Fund ETF) in each IRA.  Now I’ll simply forget about the IRAs forever unless I need them in the future. We still have other accounts at Fidelity so we’re not terminating the relationship completely.

After completing the transfers to Vanguard, we’re getting upgraded to Flagship status which is offered to account holders with $1,000,000+ of Vanguard funds and ETFs.  The main advantage to me is 25 commission free trades per year which will make rebalancing and shifting out of some higher cost ETFs slightly cheaper.

 

Life is good down by the lake. Build a little fire and look up at the stars.

 

During 2017 I was focused on taking profits in stocks and shifting the proceeds into bonds.  I haven’t shifted any more funds from stocks into bonds since the market is taking a breather from it’s strong upward trajectory that started in late 2016.  I’m pretty happy with about five years of living expenses in fixed income investments like bonds, CD’s, and money market which yield between 1.7% and 3%.  With this huge safety net, I don’t fear market volatility a bit.

And that, my friends, is how things went for us in the past month.

 

 

How about you? Any big money moves you want to share? 

 

 

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Confessions Of A Frugal Millionaire

Unless you are an heir to a big fortune or you have won the lottery, you have to work hard to have money.  To accumulate wealth, you have to make more money than you spend.  The key is to keep your expenses low.  And there will be sacrifices.  Nothing crazy though.

At the Root of Good household, our clothes are not from the mall, we don’t dine out at Ruth’s Chris, or deck out our split level home with the latest from Pottery Barn or Williams Sonoma.  We choose not to quench our thirst with Dom Perignon or Dasani.  Yes, we have made sacrifices.  At first we balked at some of these sacrifices, but we gave them a try.  You never know until you try right?

We have decreased our expenses by carrying our lunches in disposable plastic grocery bags (which also make great suitcases).  We refill disposable water bottles and reuse disposable straws and plastic utensils.

We keep our lawn care expenses low as well. If the weeds are pretty, why waste money on weed killer?  Makes no sense!  Dandelions are so pretty and the kids love making wishes and blowing on them!  We also keep expenses low buying store brand and finding substitutes where available.  We’ve substituted ground turkey for ground beef and pork, and canned tuna for fresh tuna when we make sushi.

Last but not least, we gave up potted meat for canned cat food.  We confess, we struggled with this idea for a while.  But it dawned on us.  Our cat loves this tasty treat, why shouldn’t we give it a try?  If it’s that bad, then why are we feeding it to another family member?  Are we that much more superior than another living being?  We may face criticism for this culinary choice since we are trusting the tastes of our own cat, who happens to enjoy a steady diet of serendipitously obtained avian and rodent innards.

Much of that criticism will undoubtedly come from those who haven’t even tried a heaping spoonful of the puree’d goodness that comes in those small 5.5 ounce cans.  You wouldn’t trust criticism from a movie critic or a book reviewer who has never seen the movie or read the book would you?  In the same way, we can reject all of this criticism, for they don’t know the subject which they criticize.

cat-food

Cat food should really be the frugal family’s go-to choice for nutritious protein.  At less than a quarter of the price of steak, seafood, pork and chicken, you can easily feed a family of five for under two dollars.  It comes pre-cooked in convenient ready-to-serve containers.  Just pop the lid off, dig in with a spoon, and you’ll feel like you are in heaven (without losing all nine lives!).

The versatility of cat food is often overlooked.  You don’t normally associate it with fanciness (unless you are buying that expensive top shelf Fancy Feast stuff – but who can afford that?!).  But try this.  The next time you throw a dinner party for your friends or business associates, carefully peel off a few labels from some cat food and then make a tray of cat food for your guests.  Serve right out of the shiny silver cat food cans.  Get some really small spoons for that extra fancy touch.  Enjoy the rich, creamy texture smeared across crackers, baguette slices, or toast.  Good accompanying cheeses are Gruyère, cheddar, or American. And don’t forget to serve with tooth picks. Those are fancy, too, and allow for excellent dental hygiene if any cat food gristle takes refuge in the confines between your molars.

 

Foie gras. Or is it? Chew on that one for a bit.

Foie gras. Or is it? Chew on that one for a bit.    // photo credit: Luigi Anzivino / wikimedia

 

The texture and flavor of cat food comes very close to the finest foie gras imported from France.  Considering the cost savings, it’s really a no-brainer to substitute the feline food cousin of foie gras.  At under $.10 per ounce, cat food is 99% cheaper than most foie gras which tends to retail at prices of $10.00 per ounce or more.  If you can find a better way to squeeze out 99% of the cost of luxury goods, please let me know in the comments below.  I’m offering a whole can of “foie gras” for whoever offers the best suggestion.

So far, I haven’t taken a side in the great debate on the best part of the cat food.  Some champion the translucent jelly surrounding the more firm meaty bulk in the middle.  Others prefer the meaty paste itself and care little about the jellied juices lining the inner surface of the can.  To me, it’s all the same.  Dinner.

True frugality comes in when we buy the store brand cat food.  Or you can buy in bulk at Costco.  They come in a variety of flavors.  There are so many to choose from, Ocean Whitefish & Tuna, Mixed Grill, Turkey & Giblets, Turkey & Gravy, and the list goes on.  But our favorite is Sea Captains Choice.  You can literally dine on a different meat flavor every day of the week.  Surprisingly, we find some of the flavors taste better than potted meat.  Cha-ching! You can taste the savings!

If cats can enjoy human food, why can't humans enjoy cat food?

If cats can enjoy human food, why can’t humans enjoy cat food?

I can hear some of you laughing and maybe even gagging.  Remember, we are not trying to keep up with the Jones.  Yes, there are sacrifices, but if you like it, why not? And you’re saving money! Why should you care what others think?  We choose to live how we want to live and fortunately our sensible and frugal lifestyle has led us to an early financial independence.  Every time we hear “ewww, you’re eating cat food?!”, we write it off to that person’s jealousy manifesting itself in an insult vaguely veiled in the form of a question (like they are contestants on Jeopardy).

I hope you all enjoy this insightful post on April 1st.  Happy April Fool’s Day!  Keep all these tips in mind throughout the rest of the year and you, too, can be a frugal millionaire one day. Meow.  For other another great money-saving read on budget foods, check out Jonathan Swift’s recent essay, “A Modest Proposal“.

 

What sacrifices have you made?  Are you brave enough to choose the road less taken?

 

 

February 2018 Financial Update – Weathering Big Losses

Time for another monthly update now that I have wrapped up month #54 in my early retirement journey!  Spring arrived a little early in North Carolina and that means more time outdoors for us.  Goodbye two weeks of “real” winter, we hardly knew ye!

From a financial perspective, February was a tough month punctuated by a strong dip in the stock market, officially putting us in a “correction” with the Dow and S&P 500 index both registering declines greater than 10%. At month end our net worth was down by $58,000 to a “mere” $2,056,000. The silver lining is that our income for the month remained strong at $4,736 while expenses of $3,108 tracked closely to our $3,333 budget.  Spending less than you “make” soothes the sting of a big shift downward in net worth.

On to the details!

 

Income

Investment income was only $314 in February.  This represents monthly interest from CD’s, bonds, and the money market account.  Our equity mutual funds and ETFs pay dividends quarterly in March, June, September, and December.  March will find us with significantly higher investment income given the payout schedule on our equity investments.  More on our dividend income.

Blog income, shown as “other income” in the chart, declined slightly to $2,028.

My early retirement lifestyle consulting income (“consulting”) of $712 was roughly the same as January.  That works out to almost two hours of consulting per week which is the upper limit of what I’d like to do.

 

Gotta keep my schedule free so I can get outside and enjoy the scenery!

 

Deposit income of $1,680 came from two sources.  I received $1,200 from signing up for the Capital One Spark Business card and completing the $10,000 spending requirement to qualify for a $1,000 sign up bonus (plus 2% cash back on the $10,000 spent).  This led to moving some expenses forward into December, January, and February to meet the $10,000 “goal”.  If you want some of this free money being handed out, check out the latest credit card offers.

The second source of “deposit income” was $480 in cash back from the Ebates.com and Mrrebates.com online shopping portals (some of which was earned from you readers signing up through these links).  If you sign up for Ebates through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card.  Some big cash back from Christmastime shopping is finally rolling in the doors this month.

If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.

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

 

Expenses

Now let’s take a look at February expenses:

As mentioned, I had to spend $10,000 to qualify for a $1,000 credit card sign up bonus. This led to extra spending in December, January, and February to hit this target.  In February, we spent extra to prepay utilities and I paid two months of health insurance premiums.  As a result the next several months will see lower than average spending in these categories.

In spite of the extra spending, the monthly total spending of $3,108 in February came in just shy of our target spending of $3,333 per month (or $40,000 per year).

 

Utilities – $1,906:

We prepaid utilities as follows:

  • Electricity – $801
  • City Water/Sewer/Trash/Recycling – $755
  • Natural Gas – $350

We average about $250 per month in total for these three bills, so we effectively paid 7-8 months of utilities all in one month.  See you in September, you dirty utility bills!  As an added bonus, it’ll be nice to not worry about paying these bills while we vacation in the Bahamas for a month during June and July so I can let my mind focus on more important things like crystal clear water, sand, wind, and waves.

February was also a very warm month in Raleigh. As a result we didn’t have the heat on about half the month so our gas heating bill was about half the normal amount for a typical February.  Yay global warming?!

 

Healthcare/Dental – $728:

Our 2018 ACA plan is slightly more expensive than our 2017 ACA plan though we’re still getting heavy ACA subsidies.  The $728 payment reflects two months of health insurance premiums.  I elected to forego $300 per month in ACA subsidies so we’ll probably get that back at tax time to cover any tax due (in lieu of paying estimated taxes).  I’m departing from that strategy going forward since it looks like we might be better off taking all the subsidies we can get.  Depending on income levels, we may not have to pay back 100% of any excess ACA subsidy.  I’m still learning the intricacies and interplay of regular income tax and ACA Premium Tax Credits.

We also had a dental visit during February but it was paid with a Visa Debit card purchased in December (to meet that $10,000 spending requirement!).  As a result the $150 expenditure is not reflected in February’s expense report which is generated automatically from Personal Capital.

 

Groceries – $296:

Our grocery expense was significantly less than a typical month.  We’ve slowed down on alcohol which saves some money (go figure 🙂 ).  And we did dine out slightly more often than normal (which is to say we dined out a few times in total).  February is also a short month.  Otherwise it seems like we ate like we always do and shopped in a routine way. End result: lower than average spending on groceries.

More on how we shop for groceries without using coupons.  And why we never shop at Costco.

 

Homemade spring rolls with peanut hoisin dipping sauce

 

Clothing/Shoes – $79:

We bought three pairs of Saucony running shoes for about $120 total (the missing $41 was spent in a separate order on one of those prepaid debit cards purchased in December and not tracked in this spending report).  We actually bought five pairs however two of them didn’t fit so we took advantage of the generous free return policy. One of the pairs was a mismatch – the left side was size 9 while the right side was size 9.5 (neither fit).  End result: all the ladies in the house are re-shoe’d just in time for spring.

New shoes = time to hit the road!

 

Gas – $39:

We filled up in early February and still have three quarters of a tank going into March.  I’ll probably top off the tank before the end of March since I earn 5% cash back on gas this quarter with my Chase Freedom Card.

 

Restaurants – $38:

We revisited an old favorite restaurant of ours that has changed owners since we last visited many years ago.  The Wild Cook’s Indian Grill near North Carolina State University in Raleigh serves up a truly wild spread of more than a dozen hot dishes. At only $7.99 for their lunch buffet you wouldn’t expect much. But you would be wrong!  We paid for our two lunches and grabbed a takeout plate to share with our kids for dinner (also $7.99 for whatever you can fit in a styrofoam tray).

 

Wild Cook’s Indian Grill in Raleigh. Butter curry chicken, rice, and a bunch of other stuff

 

For Valentine’s day we grabbed some Chinese takeout (including sushi) from our neighborhood favorite for about $12 (cost not included in the $38 restaurant total since I paid with a previously purchased Visa gift card).  We considered dining in but they jacked up their normally priced $7 buffet to $13 as a courtesy to help guys celebrate Valentine’s day without their date thinking them cheap for taking them to a $7 buffet.

 

Potstickers, sushi, an assortment of chicken and what is that? Krab meat wrapped in bacon?!? Yes! I have a feeling it’s not really authentic Chinese but it tasted good. 🙂

 

Our third restaurant outing was $11 for a box of fried chicken and biscuits from Bojangles. We skipped the dine in option and chose an al fresco seating arrangement on our back deck instead.  I took a few dollars off the price by buying a Bojangles gift card through Cardcash.com (sign up through that link and you get $5 off your first purchase). I also use Raise.com to save money by buying discounted gift cards (take $5 off your first Raise purchase too).

 

Bojangles – a regional fried chicken chain that beats all the rest. And they don’t serve this deep fried goodness with any hipster waffles either.

 

Cable/Satellite – $14:

$14.99 per month for 30 mbit/second download speeds and 4 mbit/second upload speeds with no data caps.

 

Home Maintenance – $4:

Our microwave stopped working.  Over time it grew harder and harder for the door to shut completely so that the microwave would turn on.  I figured it was a simple switch or relay that went bad and sure enough it was. After a bit of troubleshooting (remember: youtube is your friend) and voltmeter usage, I isolated the faulty switch and ordered a new one for $4.  While waiting for the switch to arrive, I decided to rebuild and clean the faulty switch by sanding off some of the carbonization so that it could form a more complete electrical connection when closed. So far, so good with that rebuilt switch. I still have the $4 switch waiting for installation if my improvised repair fails.

Not a bad way to avoid spending $100+ on a new microwave!

Tip: working on microwaves can potentially blow your fingers off if you aren’t careful.  If you don’t know or can’t learn how to safely discharge the massive capacitor inside most microwaves, then you might want to skip DIY efforts in this case (assuming you don’t have a surplus of fingers you’re looking to rid yourself of).  

 

Taking a break in the park

 

Total Spending in 2018

Two months into 2018 and I can see a pattern emerging. We’ve only spent $4,332 of the $6,667 budgeted for two months of our $40,000 early retirement budget. And that’s in spite of prepaying seven months of utilities during February (which will lead to continued low spending months through the end of summer).

It feels like we’re living a $100,000 lifestyle on $40,000 per year or less.  After four years of early retirement, our spending has averaged $32,000 per year (see summary below).

 

Monthly Expense Summary for 2018:

 

Summary of annual spending from all years of early retirement:

 

Free entertainment = lakeside campfires

 

 

Net Worth: $2,056,000 (+$-58,000)

It’s been fun watching our net worth increase ever upward for the past two years (other than one bad month in October 2016). Then BOOM! A big fat $58,000 loss in a single month.  In fact, eight days into February we were down an astounding $122,000.  Such is the risk with a 90% equities investment portfolio.  Eventually the stock market rebounded and we gained back about half of those losses during the remainder of February.  Year to date, I’m feeling zero pain since our net worth is up a comfortable $19,000 since January 1, 2018.

I don’t know if the good times are over or if this is just another brief blip in the stock market’s continued long term growth.  But I have to say the ride has been fun so far.  Imagine this: in February of 2016 Mrs. Root of Good quits her full time job to join me in early retirement. Our net worth sits at $1,435,000 at the end of February 2016.  In less than two years our net worth skyrocketed almost $700,000 by the end of January 2018 (in spite of both of us being early retired!).

 

I’m happy with all the gains we have enjoyed the past several years, but I would still be very happy with the $1.4 million or so we had two years ago.  It’s still plenty to enjoy our planned $40,000 per year spending.  So if the worst case happens and we lose $700,000 from our net worth high water mark, I’ll still be smiling every day when I wake up and know I don’t have to go to work.  I doubt we will run out of money during early retirement even if we do see a continued stock market decline.

On the investing front, I shifted to a more conservative 90% equities and 10% fixed income allocation during 2017 into early 2018.

We now hold fixed income assets totaling $176,000:

  • VBTLX Vanguard Total Bond Market Fund – $146,000 (held in traditional IRA)
  • Credit Union 2% CD’s: $15,000
  • Checking and Money Market at 0.25% and 1% respectively: $15,000

With this level of fixed income investments and liquid funds, we’ll be able to wait out a five year stock market correction without needing to sell anything at a capital loss. Factor in a reasonable level of dividend income plus what I’m earning from this blog and the minor consulting efforts, and we’ll be able to stretch those fixed income funds even longer.  So while living through a 30%+ stock market correction will be interesting, it won’t necessarily be damning for our early retirement plans.

Maybe we’ll spend the summer somewhere cheap like Mexico instead of Europe to help cope in the event of an economic downturn.

Goodbye February!

 

How is 2018 treating you so far?  Ready for spring to arrive?

 

 

Want to get the latest posts from Root of Good? Make sure to subscribe on Facebook, Twitter, or by email (in the column to the right) or RSS feed reader.

 

P.S. I’m giving away two free copies of “Meet The Frugalwoods: Achieving Financial Independence Through Simple Living“. It’s the hit new book from fellow FIRE blogger Liz Thames (who you probably know as the author of the Frugalwoods blog).  From previewing an advanced copy, I can tell her new book is an engaging read!

To enter yourself in the drawing for a copy of the book, comment below and mention you want to enter the drawing for the book. I’ll pick two lucky winners on Tuesday March 13, 2018 and I’ll contact you by email (so leave a legit email in the comment form!).

**The book giveaway is over. Congrats to the lucky winners Mary W and Amy S!**

January 2018 Financial Update

Wow, January flew by! I can’t believe it’s already February.  Here in North Carolina it was a rather frigid January.  We experienced not one, but TWO (!!) snowstorms during the month which is a rare occurrence.  If you’ve never experienced snow in the South, it’s a treat. Everything shuts down and the kids get a few days off school.  We busted out the sleds, bundled up, and made the most of it.  Ironically we ended up at our neighborhood elementary school where we hit the slopes hard.

January was a fun month for our finances, too.  The market continued its upward trajectory throughout the month and left us much wealthier.  Our net worth climbed $77,000 to $2,114,000.  Income remained strong at $4,055 which more than covered our spending of $1,281 for the month.

Income

Investment income totaled $345 for the month of January which came from our money market account, CDs, and bond funds.  Our equity mutual funds and ETFs pay dividends quarterly in March, June, September, and December which leaves us with much lower investment income in the other months.

Blog income, shown as “other income” in the chart, remained roughly the same as last month, at $2,377 for the month of January.

My early retirement lifestyle consulting income (“consulting”) dipped slightly to $728 in January compared to $843 in December.  That works out to almost two hours of consulting per week which is what I’m targeting.

 

Don’t want to “work” too much or I can’t do this kind of thing when the opportunity presents itself.

Deposit income of $604 was mostly cash back from a credit card sign up bonus from the Capital One Spark Business card.  I completed the bonus offer in November and the cash back check finally showed up in January.  If you aren’t already enjoying the free money and free travel from credit card bonuses, click here to check out the latest bonus offers.

Another small portion of the deposit income was cash back from the Ebates.com and Mrrebates.com online shopping portals.  If you sign up for Ebates through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card.  We scored a decent amount of cash back while shopping online over Black Friday and leading up to Christmas and that cash back is getting paid out right now.

If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.

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

 

Expenses

Now let’s take a look at January expenses:

Our spending totaled $1,281 during January which is a little less than half our budget of $3,333 per month (or $40,000 per year).

 

Groceries – $563:

A fairly ordinary month of grocery spending right at our long term monthly grocery average.  Lately we have shopped at the new Lidl grocery store that opened up in Raleigh in November. Their regular prices are about the same as Aldi, and they offer weekly sales on their already competitively priced products.  We still visit Aldi but find ourselves spending less there for some reason.

 

Yeah we eat rice and beans. With a side of Tikka Masala and Butter Chicken Curry. Try this curry paste if you want to make delicious homemade butter chicken curry too.

 

And thai coconut shrimp curry.

 

I usually buy jars of Maesri pad thai sauce. This time I made the sauce from scratch using tamarind concentrate. Tastes amazing and costs less (about $3.50 for a 16 ounce jar at our local Asian grocery).

 

Steak fajita time!

 

Healthcare/Dental – $364:

We spent $364 for our monthly health insurance premium.  That’s the premium after we get a $700 per month ACA premium subsidy based on our income.

 

We spent two days this winter cleaning up the bank along the lake. Technically we’re trespassing on city property but they’ve pretty much abandoned it so we clear cut the trees and weeds each winter to maintain our lake view.  In the process, we get tons of free firewood.

 

Taxes – $300:

State of North Carolina estimated quarterly taxes for Q4 2017.  We paid for the federal quarterly estimated taxes using Visa gift cards purchased (at a discount) in December so that expense doesn’t show up in this January financial report.

The state taxes came with a 2% fee (totaling $6) that I’m allocating to the “Travel” category of spending.  We pay the extra fee to generate spending on credit cards so we can qualify for more sign up bonuses each year.  That’s how we get $5,000 to $10,000 in (mostly) free travel or cash back each year.

 

Restaurants – $32:

$32 for Chinese takeout for our family and my parents.

Sushi takeout from the Chinese restaurant. Good stuff!

 

Cable/Satellite – $14:

$14.99 per month for 30 mbit/second download speeds and 4 mbit/second upload speeds with no data caps.

 

Travel – $6:

$6 fee for paying State taxes with a credit card.  Credit card bonus here we come!  Travel plans for 2018 include a month in an oceanfront condo in The Bahamas this summer and a week long cruise in the Caribbean on the brand new MSC Seaside over the Christmas holidays.  The Bahamas trip is all booked and paid for other than a rental car, whereas I still owe about $1,000 on the cruise (due by October).

 

We “traveled” a few miles up a greenway trail to stumble on this beauty. Lassiter Mill dam in Raleigh.

 

Gas – $0:

We didn’t buy any gas in January. The last time we refueled the van was December 10.  It’s looking like we’ll make it almost two months between fill ups!  The snowy conditions in January certainly helped conserve gas since it’s no fun to drive around on slippery roads and many places close for inclement weather anyway.  And who has time to go driving around when you can walk to some fun sledding places for free?!

 

Weeeee! Getting mad slope time at the elementary school.

 

I like snow in North Carolina. It’s beautiful for a couple of days then it all melts and goes away and it’s 70 degrees within a few days.

 

But before it warmed up, it was REALLY cold. Like below freezing cold. For more than a week straight, which was a new record in Raleigh. I’ve never seen our lake freeze this solid.

 

Summary of annual spending from all years of early retirement:

 

Net Worth: $2,114,000 (+$77,000)

Another crazy month in the stock market. It seems like the market only goes up. Until it doesn’t (like last Friday’s 2%+ drop).

During 2017 we moved to a slightly more conservative asset allocation that now includes about $125,000 of bonds and $50,000 of money market and CDs.  The remaining 90% of our assets are fully invested in the stock market which means we do really well when when the market goes up but we suffer quite a beating when the market drops.

This aggressive asset allocation was responsible for a half million dollars worth of investment returns since October 2016. I’ll take it. I might also give it back in the next stock market correction.

View from our bedroom window. Guess how glad I am that I don’t have to get up and go to work in this mess?

Financial goals in 2018 are to have fun, spend on what we want, and enjoy our wealth.  I might sell another chunk of equities if the market continues it’s upward trajectory.  If I sell more equities, it’ll be a speculative play (instead of a defensive play like my sales in 2017) where I’m building up a source of “dry powder” to deploy in the event of a steep market correction.  We’re sitting on around five years of living expenses in cash/bonds/CDs right now and that should cover us through any kind of recession smaller than the Great Depression.

And that’s how our January went! I’m glad that February is here since that means nicer spring weather isn’t far off. In other news, Mrs. Root of Good celebrates two years of early retirement today!  It’s hard to believe we have both been doing this whole not working thing for so long.

 

 

Are you making progress on your 2018 goals?  Still striving to make good on your 2018 New Year’s Resolutions?  

 

 

Want to get the latest posts from Root of Good? Make sure to subscribe on Facebook, Twitter, or by email (in the column to the right) or RSS feed reader.

December 2017 Financial Update

Happy New Year!  Another great year in the books for us.  Our youngest started kindergarten. We took an amazing nine week trip to Europe.  And with all the kids in school we were finally able to take advantage of a nice last minute travel deal when Mrs. Root of Good and I jumped on a cruise to the Caribbean for a week.  Our early retirement lifestyle is going well.

Here’s how our finances finished 2017.  Year end dividends rolled into the investment accounts in December pushing our total income to just over $14,000. Our spending was rather high at almost $8,000 (which needs some explaining). Another freakishly good month in the stock market pushed our net worth up another $26,000 to leave us with $2,037,000 at year end. Needless to say, our 2017 went remarkably well from a financial perspective.

 

Income

Investment income totaled $10,843 for the month of December plus a bit more from a 401k that didn’t show up in Personal Capital.  Our equity mutual funds and ETFs pay dividends quarterly in March, June, September, and December.  Some funds only pay once per year in December which explains why the December investment income is much higher than other months of the year. Mrs. Root of Good’s 401k doesn’t report the dividend income as dividends in Personal Capital. Including those unreported dividends plus all other investment income reported in Personal Capital, we earned a total of $36,234 in investment income during 2017.  That’s a little higher than 2016 dividend income.

Blog income, shown as “other income” in the chart, remained roughly the same as last month, at $2,294 for December.

My early retirement lifestyle consulting income (“consulting”) increased to $843 in December.  That works out to almost two hours of consulting per week which is the upper limit of what I’d like to do.  We’ll see how January goes before I finalize rate increases for 2018.

Deposit income of $51 was cash back from the Ebates.com and Mrrebates.com online shopping portals.  If you sign up for Ebates through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card.  We scored a decent amount of cash back while shopping online over Black Friday and leading up to Christmas.

If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.

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

 

Expenses

Now let’s take a look at December expenses:

December was a high expense month for us. Two main factors added up to much higher than usual spending. I paid the annual property tax bill of roughly $1,500. I also bought around $3,700 in gift cards that I’ll be using throughout 2018 for everyday spending.

The December total spending of $7,953 is about two and a half times our budget of $3,333 per month (or $40,000 per year).  Subtracting out the $3,700 in unused gift cards brings our effective spending to “only” $900 over budget.

 

Groceries – $2,643:

This shockingly high grocery spending is easily explained. We bought $1,000 worth of Visa Gift Cards and $700 worth of Walmart Gift Cards to take advantage of some significant cash back opportunities and to meet minimum spending requirements on a credit card (to qualify for a sweet $1,000 cash back bonus!). We’ll spend these gift cards on things like groceries, household goods, and general merchandise over the next several months. I bought another $2,000 worth of Visa Gift Cards (that cost $1,963 out of pocket) and included those in the “General Merchandise” expense category.

Tracking spending with Personal Capital is easy since the data feeds in automatically from credit cards, checking accounts, and investment accounts.  With simplicity comes limitations. I don’t think there’s a way to add in expenditures manually after the fact as it’s basically a cash basis accounting system.  As a result I have to guesstimate where I’ll end up spending these thousands of dollars of gift cards in the future. Which is okay since I’m more concerned about tracking the total amount we spend instead of getting it allocated exactly between specific categories (= keep it simple).

Other grocery spending included a total of $363 added to our three kids’ school lunch accounts.

The actual grocery store grocery purchases for December totaled only $574 which is roughly what we spend on average in most months. More on how we shop for groceries without using coupons.  And why we never shop at Costco.

Rice and beans. And ribs. Hard to make fun of our frugal ways when there are tender juicy ribs next to the (imported from Thailand) rice and (freshly sauteed) beans.

 

Cooking runs in the family. We hosted potluck Christmas for almost 30 people in our family. We made lasagna and thai noodle cucumber salad, while guests brought egg rolls, spring rolls, salad, shrimp cocktails, broccoli casserole, and other delicious treats.

 

The monthly obligatory pho-to. This time at Mrs. Root of Good’s family’s house celebrating New Year’s Eve.  You can tell this is Mrs. Root of Good’s bowl because of the tripe on the left hand side (something noticeably absent from my own pho bowl 🙂 ).

 

General Merchandise – $1,963:

The $1,963 in this category represents the purchase of $2,000 Visa Gift Cards bought at a slight discount. I purchased these and other gift cards through the Ebates Cash Back portal and I hope to get $45 in cash back or possibly more depending on how they are categorized by the merchant.

 

Home Maintenance – $1,536:

Our annual property tax bill.  Even though our house is worth $200,000 or more, we are paying tax as if our house is worth $147,000.  They only reassess property values every eight years here, and the last re-evaluation came just before our neighborhood property values started skyrocketing as the wave of gentrification pushed east from the “nice” part of town.

 

Travel – $828:

It’s official.  Our 2018 summer vacation is booked!  We’re spending a month in an oceanfront condo in Freeport, Bahamas.  We’re staying in a ground floor unit of a 20 unit condo building that sits on a half mile stretch of undeveloped beach. Lots of bleached white sand, crystal clear water, and not much else.  If you don’t hear from us very much over the summer, just know that we’re relaxing working hard next to the pool or on the deserted beach.

We paid about $2,300 for the one month airbnb rental which includes a 50% “long term” discount.  It’s a 2 bedroom, 2 bath unit with a decent living room and dining room, washer, dryer, A/C, internet, full well equipped kitchen, and pool.  The cost breaks down to $828 out of pocket for Airbnb plus a big chunk of gift cards that I bought in 2016 (at a discount, of course) but didn’t use for our Summer 2017 trip to Europe.  If you want to take $40 off your first Airbnb stay, check it out!

The flights are booked except one flight for me on one leg because I’m being cheap and hoping it drops slightly in price.  I used a combo of Southwest frequent flyer points to for round trip tickets from Raleigh-Durham to Ft. Lauderdale then I used Chase Ultimate Rewards points (from last year’s Chase Sapphire Reserve signup) to get round trip Ft. Lauderdale to Freeport, Bahamas tickets.  Total cost out of pocket would have been around $500 per ticket but we managed to use points or other travel hacking to cover all costs in full (including the $56 tax at Southwest which the $300 Sapphire Reserve annual travel reimbursement covered).

I also used up $544 of remaining Sapphire Reserve travel credit to add to the deposit on our winter 2018 Christmas cruise on the brand new MSC Seaside cruise ship sailing out of Miami. Which means we’ll probably visit the Bahamas a second time in 2018.

Gotta love getting many thousands of dollars in free travel from credit card bonuses!  If you want to peruse the available credit card bonuses, check out my credit cards page.

 

Gifts – $357:

Most of this expense is cash gifts to our kids for Christmas. It’s one of their main sources of spending money throughout the year and preempts all those nagging “can I get this?” questions. It’s their money, they can do what they want (as long as it’s not dangerous or likely to lead to big problems).

We also bought the five year old a new bike for Christmas ($53). And phone cases for our daughters’ new phones ($3).

 

Christmas morning!

 

Little Dude’s sweet new 18″ bike from “Santa” (who doesn’t exist according to Little Dude). No training wheels on here!

 

Getting the hang of it.

 

Healthcare/Dental – $348:

Our 2018 ACA plan is about $60 per month more expensive than our $16 per month plan from 2017.  It offers nearly identical coverage as in 2017 except the deductible increased from $100 to $125 and the specialist office visits are slightly more expensive.  I decided to take less than the full ACA premium subsidy that we qualify for so that I can pay extra each month.

I figured out that I can in essence pay an extra $300 each month for my health insurance and that replaces the need to pay quarterly estimated taxes. In this case the health insurance company eats the credit card processing fees for the $300 per month instead of me paying the 1.87% fee. It’ll only save me $60 each year but it also eliminates the administrative overhead of making four estimated tax payments.  I feel kind of like a genius (a very stable genius).  In future months we’ll owe $364 per month for health insurance premiums ($64 for the actual policy plus $300 per month extra that will count as taxes paid once we get back a large ACA Premium Tax Credit at tax time).

 

Getting our tennis on during an unseasonably warm December afternoon.

 

Entertainment – $71:

Due to a quirky decision I made 8 years ago when I first started keeping detailed spending records, I include hard liquor purchases made at our state run liquor stores (the misleadingly named ABC Stores) in the “Entertainment” line item.  Good for entertaining and making a strong beverage at home for personal consumption I suppose.

 

Bought in November: a few bucks worth of craft supplies from Dollar Tree to make these adorable candy cane reindeer for all of our son’s kindergarten classmates.

 

We volunteered on the last day of school before winter break. The kindergartners needed some help from a retired engineer to ensure proper structural integrity in their gingerbread houses. The world has never seen such strength built from graham crackers, cake frosting, and gum drops.

 

In “real” entertainment spending, we went to The Nutcracker presented by the Carolina Ballet. These $500 worth of tickets were free. Fun story – we gave away an old 32″ CRT TV on facebook and the recipient chatted us up and ended up comping us some super expensive tickets to the ballet since she worked for them. It was pretty fun but wasn’t as exciting as the live performances we are used to on cruise ships.

 

Clothing/Shoes – $52:

A few random winter clothing items and a pair of shoes for Mrs. Root of Good.

 

Cold winter sky

 

 

 

Gas – $51:

Slightly more than one tank of gas. We drove to the North Carolina foothills to visit my grandmother and celebrate her 90th birthday!

 

My uncle’s little country retreat in the NC foothills. My first time driving a long distance in sort-of snowy weather!

 

Where do 90 year olds really really want to go for their big milestone birthday? The “fish camp” of course! Mmmmm piles of fried seafood.

 

Automotive – $44:

I paid $39 for an oil change at the dealership. This is the first time I’ve paid for maintenance on the minivan that we bought in 2016.  While there, we also let the dealer perform a few non-critical recall fixes.  They found a few things that needed attention on the van but otherwise gave it a clean bill of health.

One of those items needing attention was a burned out tail light. Instead of paying the dealer $20 to replace a single bulb, I bought a new set of tail light bulbs and a new set of license tag light bulbs (required equipment in North Carolina, and something that failed me on the annual safety inspection in the past).  Total cost: $4 shipped from Rock Auto online (or about $11-12 at the auto parts store).  In the minivan, it’s a pain to get to the rear light bulbs because the interior panels must be removed. As a result I wanted to replace all the bulbs in there at one time so that they will hopefully last the life of the van (and I paid a few pennies extra to get the “long life” light bulbs).

 

Restaurants – $37:

We’re stuck in our boring ways. Just one family visit to our regular haunt – the neighborhood Chinese restaurant.

 

Cable/Satellite – $14:

$14.99 per month for 30 mbit/second download speeds and 4 mbit/second upload speeds with no data caps.

 

I’m passing my love of Starcraft 2 to my son. Guess what we did during the entire winter vacation from school? Hint: there might have been more than a few Zerg, Protoss, and Terrans harmed in the process.

 

Telephone – $4:

I’ve been using Google Voice hooked up through an Obihai Telephone Adapter to get free VOIP home phone service for several years.  Something technological happened such that the older Obi100 adapter stopped receiving firmware updates. Google updated their Google Voice security interface and boom – my old Obi100 no longer played nicely with Google Voice. I found a $4 workaround through some telephony forums and paid that small fee to keep things running for free (at least on a recurring basis) in the home phone department.  I briefly considered tossing out the home phone completely but it is handy to have the whole house set up with phone service without relying on our cells.  And the price is right.

 

Total Spending in 2017

All told, we spent only $31,708 in 2017. That’s about 80% of our annual $40,000 early retirement budget.  We had a great time in 2017 and didn’t lack for anything.  We enjoyed nine weeks traveling across Europe and a week cruising the Caribbean.  We had a new roof put on the house.  Lots of fun was had by all!

I don’t see any huge expenses coming up on the horizon in the short term.  Our big 2018 summer vacation is mostly paid for.  The annual property tax bill is paid.  I don’t foresee any big housing expenses in 2018 although our water heater and furnace are both getting older and there’s a small chance that we would have to spend a lot on repair or replacement of either one of those systems during 2018.  Don’t worry; it’s in the budget along with other capital expenditures for all major systems in our house.

Life is good.  I’ve expressed this opinion before, but I really feel like we’re living a $100,000 lifestyle on $40,000 per year or less.  After four years of early retirement, our spending has averaged $32,000 per year (see summary below).

 

Monthly Expense Summary for 2017:

 

Summary of annual spending from all years of early retirement:

 

Net Worth: $2,037,000 (+$26,000)

Another month is over. Another YEAR is over! Our net worth increased yet again in December, making 2017 a year with 12 out of 12 months with positive net worth gains.  I’ll be surprised if we ever experience another year with such smoothly positive net worth growth.

In December, our stash of investments grew by $26,000 to bring our total net worth to $2,037,000.  Year over year, we’re $357,000 richer than we were at the end of 2016.  That astronomical amount of growth is more than five times what I earned on a yearly basis while working full time as a transportation engineer.

Here’s my market forecast for 2018: The market will go up, and the market will go down. I have zero clue where we will end up on December 31, 2018.  However I expect that on December 31, 2038 we will look back longingly at how cheap stocks were way back in 2018.

As far as investments, my biggest change in 2017 was switching to a slightly more conservative asset allocation.  I sold stock mutual funds and ETFs throughout 2017 and bought VBTLX, the Vanguard Total Bond Market Index Fund, with the proceeds.  I’m now the proud owner of $127,000 worth of bond funds.  In addition to the bonds, I hold $15,000 in 2% CDs at my local credit union and another $35,000 in money market accounts yielding 1%.

In total, I’m holding just over $175,000 in fixed income investments (including cash) which represents just under 10% of my total portfolio. The other 90% remains invested in a broad asset allocation covering the entire globe.  At an average annual spending level of $35,000 per year, the fixed income allocation will cover five full years of living expenses. Add to that five years of $8,000 per year in dividends from the taxable brokerage account and that would result in another year of living expenses.  If we enter a multi year bear market we’ll have plenty of cash and bonds on hand to get us through the tough spots without selling our equities for quite a while.  This worst case back of the envelope contingency planning excludes any blog or consulting income (which covers our monthly spending in most months).

I wanted to close this blog post with a hearty “Thank You!” to all the Root of Good readers and I’d like to extend best wishes for a prosperous 2018 from my family to you and yours!

 

 

How much progress did you make toward your early retirement goals in 2017? Any big New Year’s Resolutions for 2018? 

 

 

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Cracking $2 Million: November 2017 Financial Update

Where did the year go? As I write this we are less than four weeks from 2018! Time flies when you are having fun.  As usual, November weather has been beautiful here in North Carolina and we have enjoyed many nice days outside.  Now that December is here, it’s starting to feel more like winter with the short days and frost on the ground for a brief time span some mornings.

Big news on the financial front.  In November, our net worth smashed through the big $2 million dollar mark!  Our net worth climbed $33,000 to close the month at $2,011,000.  Income remained strong at $3,228 while expenses increased to $2,857 (still within budget though).  To summarize: we are doing okay financially.

 

Income

Investment income totaled $271 for the month of November.  This is mostly the interest on the bond position I’ve been building during 2017.  Our equity mutual funds and ETFs pay dividends quarterly in March, June, September, and December.  During other months (like November) investment income tends to be much smaller.  We are well on our way to earning roughly $30,000 in dividends for 2017, as we have in the past.

Blog income, shown as “other income” in the chart, remained roughly the same as last month, at $2,349 for November.  No complains here as that sometimes covers our monthly spending (and I get to hang out with you guys 🙂 ).

My early retirement lifestyle consulting income (“consulting”) dropped to $465 in November.  This is an ideal pace with about one hour of consulting per week.  These sessions provide a nice bit of intellectual rigor for me while also helping others fine tune their early retirement goals.

Deposit income of $117 was cash back from the Ebates.com and Mrrebates.com online shopping portals.  If you sign up for Ebates through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did.  When shopping online, I always check to see if I can score some extra cash back by using one of those online shopping portals (and it usually pays off!).  I paid for a cruise in October which will lead to $40 cash back later this month.

If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.

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

 

Expenses

Now let’s take a look at November expenses:

After four months of spending less than $2,000 per month, November saw our spending rise to $2,857.  That’s just a few hundred less than our budgeted spending of $3,333 per month (or $40,000 per year).  November’s spending was bigger than other months because I bought several gift cards and paid extra on our utilities in order to get bonus points from credit card sign up offers.  The gift cards and utility balances will be used over the next several months (so I’ll be spending less during those months).

 

Groceries – $1,068:

We usually spend closer to $500-600 per month on groceries. In November, I spent an extra $325 on Walmart gift cards to snag an extra 10% cash back on those purchases. I checked Personal Capital and we spend about $1,000 each year at Walmart so it shouldn’t take long to burn up these gift cards and make an extra $32 in the process.

After accounting for the gift card purchases, we spent closer to $700 on groceries in November. My best guess at what caused the extra spending was stocking the pantry and wine cabinet.  There might be some Christmas gifts mixed in with the grocery spending since we find many gifts at Aldi, Lidl, and Walmart and don’t do the best job splitting out those expenses in these monthly financial updates.

For those that missed my last article comparing Costco versus several other competitors, it is worth checking out since some people found it rather controversial with more than 200 comments so far.  I knew Costco would be a little more expensive than some other stores but I was really shocked to see it was 40% more expensive than Walmart for a basket of staples!

Gratuitous food pics from November:

Somen noodles and thin sliced steak with green papaya salad. About $2 worth of food. This plate is $30 at the wildly popular local Laotian restaurant and it’s not as good as this simple home cookin’ 🙂

 

Obligatory monthly pho-to (<– see what I did there).  This time it’s pork and turkey pho broth with shrimp and turkey organ meat. I personally omitted the innards from my bowl 🙂

 

Eastern NC Barbeque

 

Thanksgiving at the in-laws. We brought a roasted turkey, pumpkin rolls, cookies, and macaroni and cheese. No one went home hungry.

 

Healthy stuff that was on sale this month (our fruit bowl runneth over).
Pomegranates, avocados, kiwis, tomatoes, and mangoes. The persimmons are from Mrs. Root of Good’s family friends.

 

Utilities – $520:

I added $270 on the water bill account and $250 on the natural gas account even though I still had a small credit balance on both. We usually spend about $250/month total between water, gas, and electric so this month was about double due to prepayment.  Gotta earn those credit card sign up bonuses by shifting spending forward sometimes.

 

Travel – $289:

No cruises this month (like last month).  The travel spending came from three annual fees on three new credit cards that were $95 or $99 each.  I signed up for two Barclay American Airlines Aviator cards that will yield 60,000 AA points each, plus a Barclay Jetblue Card that will reward us with 60,000 Jetblue points after I meet the $1,000 spending requirement.  These points are worth roughly $2,500 to $3,000 at a cost of just under $300 in annual fees.  I’ll most likely cancel these cards before next year when the annual fee comes due again.

If you want to peruse the credit card bonuses on offer, check out my credit cards page.

 

Hiking around the lake at our favorite local nature preserve. Can you tell it’s fall?

 

We didn’t do any traveling in November but we did visit the (free) Science Museum in downtown Raleigh. This is a simulated 3D environment where you can make it rain on mountains you create! Installed by a neighbor up the street from us that sometimes reads this blog (hi if you’re seeing this!).

 

Insurance – $253:

Six month auto insurance premium for the two of us.  High liability limits but no comprehensive or collision coverage for our used minivan.

 

General Merchandise – $234:

$20 set of Pyrex glassware storage containers for the kitchen.  The Pyrex glassware was my only Black Friday purchase since we already have a house full of stuff and don’t need anything else.

$63 for three sets of bed sheets from Aldi (one of which will probably become a gift).  

The other $150 was a Walmart gift card that earned 10% cash back on my Chase card. I buy a lot of household goods and non-grocery things at Walmart so this gift card certainly won’t go to waste!

 

Clothing – $142:

New winter coats for the kids ($9.99 at Walmart!!), some shoes, leggings and/or jeggings (I don’t really know the difference nor what exactly we bought).

 

Gifts – $102:

“Gifts” is a category that raises a lot of questions this time of year.  I think a lot of the gifts we buy for people slip through the cracks and fall into other categories of spending. It’s easy to pick up a $5-20 item as you buy groceries which magically becomes a “grocery” expense. As a result I figure I under report my gift spending while over reporting my grocery and household goods expenditures. It all works out in the end since I’m most concerned about our bottom line and not the exact category that everything falls into, but it’s worth mentioning in case anyone sees that we only spent $102 on gifts.

$42 of gift spending went to 2018 custom photo calendars for family (and one for us!).  Walmart runs a $10 deal every year and we take advantage of that.

The other $60 was spent on two new Moto E cell phones for our older two kids. One lost her previous phone at school (perhaps it was stolen) and the other kid is a new inductee to phone ownership.  We bought the phones from Freedompop which offers a conveniently priced $0 per month cell phone plan.

I’m treating the phones as a gift expense since we usually reward the kids for good grades each quarter and they did phenomenally well with Q1 grades (all A’s between them except for one B).  This $60 per quarter incentive should save me a lot of money on college costs one day.  Usually we hand them cash: $5 per A, $2.50 per B, nothing for a C and a stern “strategy session” talking-to for anything lower.

I’ve read that paying kids to earn good grades makes kids think grades are instrumentally valuable and not intrinsically valuable.  I view it in a different way.  It’s no different than earning a merit based scholarship in college or performing well at a job and getting a raise and a bonus. Effort is instrumentally valuable in receiving those good things. Knowledge is intrinsically valuable in itself, and I hope they learn that lesson by example at home regardless of whether we routinely compensate them for good grades.

Keeping them flush with cash also puts spending decisions in their hands instead of mine since my stock response to “can I get this?” is “sure, you can buy anything you want with your own money!”.  Because Money is the Root of Good.

 

Downtown Raleigh colors in fall.

 

Home Maintenance – $74:

$45 went to the teenager we hired this summer to mow our grass while we were in Europe on vacation for 9 weeks.  I gave him a $25 end of summer bonus plus his usual $20 for mowing the yard.  They just now got around to cashing the check (so I made an extra $0.03 from float since August).

I spent $19 on a new range hood from Amazon. I’m sad to report that the fan in our old range hood died after 45 years of devoted service.  I went for an open box item from Amazon Warehouse deals and had to send the first one back due to some defects whereas the replacement is nearly perfect. The range hood would have been $69 full price.

The remaining $10 of home maintenance spending went toward our neighborhood’s annual Luminaria light display on Christmas Eve.

 

Restaurants – $58:

We don’t spend much on dining out and November was no different. We went out to the amazing neighborhood Chinese restaurant as a family to celebrate good grades ($36).  I went out to lunch with an old law school friend and spent another $9 (and finally tried the local Korean fried chicken place that everyone’s been talking about; I was unimpressed).  I also used up a $10 Groupon credit plus $3 out of pocket to buy a $20 Groupon for a local Mexican restaurant.

Sushi from the $7.99 Chinese buffet.

Rounding out the restaurant spending was $9 for two visits to a local bakery for their amazing apple fritters and donuts (Baker’s Dozen Donuts if you’re local to Cary/Raleigh).  I’m glad for health reasons that their nearest location isn’t too close to our house…

 

Healthcare/Dental – $56:

$32 of healthcare spending was two months of monthly premiums for our health insurance plan that’s mostly paid for with ACA premium subsidies.

FYI, open enrollment for the ACA plans is still available through December 15 so head over to Healthcare.gov if you need to sign up for 2018.  I already signed up for almost the exact policy we have in 2017.  The premium went up slightly due to some quirks in how the ACA premium tax credit is calculated.

I spent $10 on replacement toothbrush heads for my Sonicare.  That’s several times more expensive than a regular toothbrush but if it prevents just one cavity every decade it pays for itself.  And my teeth are shinier and mostly hole-free.

The remaining $14 was a miscellany of labwork, a $5 copay at the doctor and a $2 prescription.  “Obamacare” insurance isn’t a derogatory term in my experience as it’s working pretty well.

 

Gas – $41:

Our monthly visit to the gas station.

 

Cable/Satellite – $14:

$14.99 per month for 30 mbit/second download speeds and 4 mbit/second upload speeds with no data caps.

 

Entertainment – $0:

I’m not sure why this showed up on the Personal Capital expense report.  I must have spent a penny or a dollar on a Humble Bundle package of computer games.  I also picked up a completely free game through Humble Bundle called “Rebuild 3”.  That kept me busy for a couple of weeks. It’s like SimCity or Civilization, except you’re killing zombies while rebuilding a decimated city.  In other words, it’s awesome.

Another $0 entertainment experience. These sunsets over our backyard and lake.  The kind of sunset that makes you drop whatever you’re doing and hurry outside to stare at the heavens on fire.  #nofilter

 

Year to Date Living Expenses for 2017

With only one month remaining in 2017, we have spent $23,754 year to date.  That’s roughly $13,000 below the $36,667 budgeted for the first eleven months of the year.  Needless to say we are well on track to come in WAAAAY under budget for 2017.

Big ticket items remaining in 2017 (or very early 2018) are our $1,500 annual property tax bill and a $600 spark plug job for the van.  Who knew spark plug replacement on a minivan costs more than a timing belt change on a Honda Civic??  The shop said they charge four hours of shop time for the repair because half the engine must come out to get to the rear three plugs. Four hours of pro mechanic time translates to 8-12 of my hours so I’m going to outsource this task and be lazy.

Our vacation planning for summer of 2018 is still underway.  After a mostly fruitless attempt at finding the perfect beachfront rental in the Cancun area, we have moved on to searching the Bahamas.  I think we have found the perfect place and might end up with a $6,000-$7,000 vacation that consists of a month of lounging on a mile of mostly deserted pristine white sand beach with crystal clear water.  And the rental has high speed internet and air conditioning.  After travel hacking it might only cost $2,000-3,000 out of pocket including groceries and car rental.

 

Monthly Expense Summary for 2017:

 

We went hiking at this county park that offers the best long-distance views of the Raleigh area. The park trail is built atop an old landfill.

 

Net Worth: $2,011,000 (+$33,000)

Woohoo!!  Two Million Dollars!  It’s a big milestone but doesn’t really buy us anything that we don’t already have.  It is a nice feeling to quit your full time office jobs, do a little fun creative stuff on the side and mostly sit back and watch your net worth grow by many hundreds of thousands of dollars over the course of a few years.

This might sound strange, but I didn’t do anything to celebrate other than Twitter bragging to Carl (aka Mr. 1500 Days) that I beat him to the $2 million mark.  He’s only $10,000 or so behind me so I expect he’s close to cresting this particular hill too.

We are now up roughly $400,000 since October 2016.  That’s enough to fund 10-15 years of early retired living expenses if we spend $25-40,000 per year like we have been doing these past several years.  It’s crazy to think about it in that way, but that’s the only way I can put these large numbers in perspective.

As I mentioned in last month’s financial update, I’m planning several things for year end 2017:

  • harvest capital gains – about $4,000 gains from selling a $14,000 mutual fund position (DONE; $3,994 long term capital gains, $115 short term capital gains (oops))
  • continue my Roth IRA Conversion Ladder – planning to convert ~$5,000 (to be done by December 31, 2017) (WORK IN PROGRESS)
  • fund my solo 401k to create a tax shelter for income from Root of Good – $18,000 into Roth solo 401k; $6,000 into traditional solo 401k (for the RoG employer portion). (PARTIALLY DONE – took the $14,000 from sale of mutual fund and stuck it in the Roth solo 401k).
  • fund a his and hers Roth IRA – $5,500 x2 = $11,000 (to be done by April 15, 2018) (WORK IN PROGRESS)

By the end of this financial fancy footwork I’ll accomplish the following:

  • reduce taxable holdings by $14,000
  • reduce cash on hand/money market balance by $21,000 (currently at $48,000)
  • increase traditional IRA/401k space by a net of $1,000
  • increase Roth IRA/401k space by $34,000

As part of the $14,000 mutual fund sale, I ended up swapping around some other investments to add a total of $14,000 more the the Vanguard Total Bond Market index fund (VBTLX), held within a traditional IRA.  That puts my bond position at roughly $127,000 and all of that was acquired this year.

I also moved $15,000 cash from a money market earning 1% to a five year CD earning 2% (with a 90 day interest penalty for early termination).  If rates remain constant that move will earn an extra $150 per year in interest.

 

Christmas is almost here! Celebrating with our new $10 white Christmas tree!

 

I don’t have many comments on the big tax bill passed by the US House and Senate. There are some significant differences between the two bills so it’s pure speculation as to what we might end up with after reconciliation happens and the final sausage is made.  Looking at the prediction markets, there’s still a 10% chance this tax bill thingy won’t pass in the next four months.  I think my taxes will stay the same based on preliminary back of envelope calculations.  Wealthy people seem to do pretty well with the new bill whereas there will be a lot of subgroups that won’t do very well.

 

Want to finish the year on a strong note? Here’s 11 tips to get you there.

 

 

How about our financially bountiful 2017 so far?  What would you do to celebrate cracking the $2 million milestone?

Getting excited for wintertime and the upcoming holidays?  

 

 

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Costco Costs More: A Cautionary Tale of Bulk Buying Gone Wrong

Every year or two I revisit my assumption that I’m spending my money in an optimal way.  Sometimes this means shopping my home and auto policies to several new insurers to make sure I’m getting the best rates available. More recently, I questioned whether I could save money by buying in bulk at Costco or by shifting more grocery spending to Target or Walmart.

Enter the cost comparison.  During September and October 2017 I stealthily visited five stores near me in the Raleigh area to check prices on sixteen different staple foods.  I chose Trader Joes, Costco, Walmart, Aldi, and Target.

Going into the experiment, I assumed Walmart and Aldi would be the cheapest, with Target slightly more expensive than those two.  Costco would come in fourth place while Trader Joe’s would stand out as the most expensive.  This was exactly the results of my study (with the exception that Target was noticeably more expensive compared to Aldi/Walmart).  Walmart was the cheapest while Trader Joe’s was the most expensive with the other stores falling in between in the predicted order.

Here are the raw numbers with lowest cost for each item bolded:

ITEM: Trader Joes Costco Walmart Supercenter Aldi Target
apples, per pound $1.31 $1.00 $0.98 $1.10 $1.40
organic apples, per pound $2.00 not available $1.83 $1.83 $1.74
avocados, each $1.37 n/a $1.00 $0.95 $1.32
bananas, per pound $0.57 $0.46 $0.57 $0.44 $0.52
mac n cheese 7-7.25 oz $0.99 $0.72 $0.26 $0.33 $0.69
whole milk, per gallon $3.29 $2.45 $2.38 $2.49 $2.55
loaf bread, 20 oz $2.08 $2.15 $0.88 $0.83 $0.99
fresh chicken breast, per pound $4.99 $2.79 $1.99 $1.89 $1.99
pork loin, per pound $3.99 $1.99 $1.94 $1.89 $2.49
ground beef, per pound $3.99 $3.29 $2.39 $2.99 $3.09
eggs, large dozen $0.99 $1.85 $0.67 $0.74 $0.91
cheerios, 14 oz $1.86 $1.92 $1.15 $1.49 $2.50
peanut butter, 16 oz $1.99 $1.67 $1.16 $1.08 $1.20
canned pinto beans, 15.5 oz $0.99 n/a $0.57 $0.53 $0.54
spaghetti sauce, 24 oz jar $1.65 $1.25 $1.06 $0.99 $1.57
spaghetti noodles, per pound $0.99 $1.09 $0.74 $0.75 $0.76
TOTAL (except Costco) $33.04 incomplete $19.57 $20.30 $24.26
Vs. Costco comparison* $28.68 $22.62 $16.17 $17.00 $20.66
% More Expensive than Walmart 77% 40% 0% 5% 28%

* Since Costco only stocked 13 out of 16 items in the comparison, the total price for those 13 items is shown in the “Vs. Costco comparison” row

Results

Walmart is the clear price leader based on a comparison of these 16 items.  Looking at only the 13 items that all stores had on shelves (the “vs. Costco comparison” from the chart), Aldi was 5% more expensive than Walmart.  Target was 28% higher priced than Walmart. Costco was 40% more than Walmart, while Trader Joe’s was 77% higher priced than Walmart.

Aldi looks slightly better when it comes to comparing the cheapest store for each item. Aldi took the lead with the lowest prices on 8 out of 16 items. Walmart was a close second with 7 out of 16 items.  Target, not wanting to be outdone, came through on organic apples that were 9 cents per pound cheaper than Aldi and Walmart.

Nothing was cheapest at Costco.  However, Costco’s prices on some items like pork loin, bananas, milk, and apples were within pennies of the cheapest alternative. Though not on my comparison list, I went on a search for things that are great values at Costco. I mostly came up empty-handed but did notice a few things. Their store brand paper towels looked like a good deal (if you have a spare closet to store 16 huge paper towel rolls). Blue cheese and parmesan cheese were good values with prices similar to Trader Joe’s but both came in ridiculous two pound blocks.

Costco is the lone store studied that comes with a membership fee.  Yes, they charge you to enter their store and charge you for everything you buy (except the samples; they are free).  Though you don’t always have to have a membership to enter Costco.  Like ninjas, we snuck into Costco while the door attendant was distracted to complete our clandestine comparison shopping and scored some free quesadilla samples in the process.  Costco’s $60 annual fee for basic membership would add a 2% average surcharge to all items if you spend $250 per month (only 1% if you spend $500/month).  Paying $120 for executive membership makes sense at the $250/month spending level since the 2% cashback covers the added cost.  And after hearing from several hard core Costco aficionados, it’s impossible to spend less than $250/month at Costco (probably because they are 40% more expensive than Walmart!).

Trader Joe’s made a weak showing on prices with the highest or second highest price for each individual item.  This wasn’t a surprise at all since we never shop at TJ’s for regular groceries.  We do buy a lot of specialty items at Trader Joe’s that are very competitively priced for great quality items.  Things like frozen dim sum potstickers, frozen edamame, fancy/imported cheeses, $3 Buck Chuck (Charles Shaw) wine, other imported wines, craft beers, nuts and seeds, capers, and marinated artichokes.  On the bright side, TJ’s offers free coffee samples and the TJ staffers are super nice and friendly, plentiful, knowledgeable and helpful (things I mostly can’t say about Walmart staffers other than the friendly part).

$2.99 for a pound of delicious potsticker dumplings from Trader Joe’s.  Sauce is homemade from sesame oil, white vinegar, minced fresh galanga, sugar, water, and soy sauce.

 

A few notes on methodology

I tried to pick the most reasonable items that many buy for a fair comparison.  It’s not necessarily a representative sample in proportion to the categories of groceries people actually buy.  The totals in the chart don’t make any attempt to weight certain products more than others.  If you buy a lot of ground beef and mac n cheese, Walmart would appear much less expensive, for example.

I tended toward the larger packaging when that drove the unit price down.  For example, in the peanut butter category I priced out the 40 ounce container at Walmart, Aldi, and Target because our household can consume a jar of that size before it goes bad.  Costco only offered one size: a two pack of 48 ounces per jar.  Trader Joe’s only offered a 16 ounce container.  The cost data in the chart (above) reflect the unit cost, which was based on a 16 ounce container size in the case of peanut butter.  Costco was the only store that sold larger sizes than I thought we could reasonably use before the food expires or suffers from loss of quality (bread, apples, and bananas for example).

I didn’t look for organic, all natural, non-GMO, gluten free, free range, grass fed, vegan, kosher, halal, or other specialty designations except for the organic apples.  This reflects the way we shop and probably results in the least expensive basket of groceries.  Your mileage may vary if you have specific constraints on your grocery purchases.  I have, however, noticed that many store brand items at Aldi are now non-GMO, all natural, with no artificial coloring without any increase in price.

I looked for store brand or generic products when available.  This might partially explain why Costco was relatively expensive since all of their non-perishable items in this comparison were name brand (Cheerios, JIF peanut butter, Nature’s Own loaf bread, Kraft mac n cheese, Barilla spaghetti, and Prego pasta sauce) whereas the other four stores generally offered comparable quality store brand products.  I’m sure I’ll see some debate in the comments claiming name brand / Costco store brand is better than the other stores’ store brands and I’m okay with that – there might be noticeable differences between name brand and store brand in some cases, with the name brand not always being the best.

I left out local grocery stores like Harris Teeter, Kroger, and Food Lion. The main reason is that I already knew Walmart and Aldi were cheaper than the local grocery stores.  I didn’t visit Whole Foods because it’s all the way on the other side of Raleigh in the “nice” part of town. Not exactly in my grocery market area at 12-15 minutes drive and 6-8 miles away while most of the stores listed in this study are within 6 minutes and 2.7 miles.

 

Grocery Shopping Strategy

How does this cost comparison help me?  It affirms my belief in my current grocery shopping strategy.  In a nutshell, I shop at Walmart and Aldi for most things and supplement those stores by shopping the sale items at a regular grocery store occasionally.

For those more curious about my grocery shopping strategy, I summarized it a few years ago in a post:  “Extreme Grocery Shopping Without Coupons“.

Here are the main takeaways from that article:

 

Do:

  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.

 

Don’t:

  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 helps avoid dining at an expensive restaurant

 

To get a sense of how much we’re saving on groceries by frequenting Walmart and Aldi instead of Costco, let’s look at our grocery spending for a year.  Last year we spent $5,753 on groceries. Given that Costco is about 37% more expensive than the average of Aldi and Walmart, our grocery bill would be $7,880 at Costco, an increase of more than $2,100 for the year.  That’s what we spend on a week aboard a cruise in the Caribbean or two weeks in Europe (in other words, a substantial cost).

On top of $2,100 in extra spending if we shopped at Costco, I’d also have to have a larger refrigerator and pantry plus a deep freezer to store the much larger size of products.  Some of the food would still go bad (for example, what if we can’t eat the whole 10 pound bag of apples before they rot?).  I can’t quantify the added food waste and spoilage but I assume it would add at least 5% to the overall grocery bill.

 

Costco Isn’t All Bad, Right?

So many smart people love Costco.  I assume I’m missing something.  For some, I assume they have very poor alternatives to Costco.  Maybe there is no Walmart, Target, or Aldi nearby (the horror!!) and the regular grocery stores are too pricey.  It’s certainly possible that the 40% additional cost I observed at Costco could be specific to Raleigh and not broadly true across the US.

Costco sells a lot of products beyond groceries. I’ve heard Costco has great deals on travel and new tires, for example.  The times I have compared costs to my usual providers, Costco didn’t come out ahead.

It could be the customer service and ambiance that sets Costco apart. However I didn’t see very many available Costco associates walking the aisles when I was comparison shopping. The check out lines were long and the parking lot was full.  And this was mid-week while everyone was supposed to be at work!  Costco’s return policy is legendary, but Walmart and Aldi have been very kind to me on every occasion I’ve sought out a refund or replacement. In fact, Aldi offers a 200% money back guarantee – a free replacement product plus 100% cash refund of the purchase price. I’ve used this refund at Aldi many times but I refuse the cash back if there was nothing wrong with the product other than I didn’t like it.

I tend to make the assumption that everyone is like me and tries to optimize costs where feasible. However, I realize that some just might not care that Costco costs a lot more than their much cheaper rivals.  In other words, the ~40% premium for shopping at Costco is “worth it” (and I’m okay with that – I don’t optimize for lowest cost in all situations either).  I hope it’s not their decor people love because I found Costco to be more depressing than Walmart.  The huge warehouse shelving at Costco gives it a raw, industrial feel in my opinion (but then again, I didn’t see The People of Walmart at Costco).

 

Conclusion

Walmart and Aldi are the cheapest stores in my price comparison that also included Target, Trader Joe’s, and Costco.  In our case, Aldi/Walmart saves us more than $2,000 per year versus shopping mainly at Costco.

Though none of the sixteen items in my comparison were cheapest at Costco, I did find some bargains on items that I didn’t include in my comparison such as paper towels and imported cheeses.  Other items were within pennies of being cheapest at Costco.  With some effort, I could include Costco into my shopping rotation and buy only those few items that were actually cheaper (or better) at Costco compared to my usual stores.  Then again, I like the relative simplicity of having Walmart and Aldi as a default to take the thinking out of the equation.

After I completed the cost comparison research for this article, a new grocery store popped up next to the Aldi and Walmart in my little corner of Raleigh.  Lidl, another German grocery discounter like Aldi, began operations in mid-November here.  We visited the store on their opening day and after taking a quick look, their prices appear to be on par with Walmart and Aldi overall.  We revisited Aldi the day of the Lidl grand opening and noticed that many prices were slightly lowered to match Lidl’s prices down to the penny.  As happens so often in the grocery game, prices fluctuate over time so it’s good to periodically revisit assumptions on which stores are cheapest.

 

 

Where do you shop for groceries?  Do you shop at Costco?  What items are cheapest (or best) at Costco – and give me some prices!! 

 

 

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Cruising through Fall – October 2017 Financial Update

October was another great month for us!  We had a blast, blew some money on a quick jaunt on the high seas, and enjoyed the outdoors. And grew $42,000 wealthier while having all that fun.  No complaints here.

In financial terms, our net worth climbed to $1,978,000.  Income remained steady at $4,573 while total spending for the month of October remained modest at $1,748.  Given that we don’t even spend our current income, I’m starting to unravel the mystery of why our cash balance continues to grow month after month.  Spending less than we make – an old habit we can’t kick.

Fall is slowly descending on North Carolina. The leaves are finally changing colors and falling off the trees. Mornings are chilly while afternoons are mild.  We haven’t turned on the heat much this year, but that will change soon with forecasted highs in the 50’s and 60’s over the next week.  Thanksgiving is just around the corner which means lots of turkey and family time (and some family members that are turkeys).

Income

Investment income totaled $1,096 for the month of October.  This is the last dribble of quarterly dividends from funds that pay at the end of the third quarter.  Our equity mutual funds and ETFs pay dividends quarterly in March, June, September, and December.  During other months investment income tends to be much smaller.  We are well on our way to earning roughly $30,000 in dividends for 2017, as we have in the past.

About half of October’s investment income came from our taxable brokerage account investments which means we can spend the money without withdrawing it from IRAs or 401ks.

Blog income, shown as “other income” in the chart, remained steady at $2,568.  Not a bad figure given how infrequently I’ve been posting lately!

My early retirement lifestyle consulting income climbed to $845 in October after a big fat $0 for September. I can’t explain why this little side hustle ebbs and flows like it does.  If it remains this busy I’ll look closer at raising rates to reduce demand.

Nephew’s birthday party at the city park

 

Deposit income of $62 was cash back from the Ebates.com and Mrrebates.com online shopping portals.  If you sign up for Ebates through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did.  When shopping online, I always check to see if I can score some extra cash back by using one of those online shopping portals (and it usually pays off!).  I paid for a cruise in October (more details later in this article) which will lead to $40 cash back in the next month or two.

If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.

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

Beautiful lakeside hiking this fall!

 

More stunning hike views

Expenses

Now let’s take a look at October expenses:


For the fourth consecutive month, our spending remained below $2,000 per month.  In October we spent $1,748.  That’s slightly more than half of our budgeted spending of $3,333 per month (or $40,000 per year).  Travel and groceries made up almost all our spending for the month.  Gotta eat and go to fun places, right?

 

Travel – $928:

We found a last minute cruise deal out of Miami on the MSC Divina.  So we booked it six days before the date of sailing.  Here’s the price breakout:

  • Cruise fare – $744 (we’ll end up with ~$64 refunded due to Ebates and the MSC Voyager club discount/refund)
  • Mandatory gratuities – $175
  • Miami light rail tickets – $9 (MIA airport to downtown, then free trolley to Port of Miami)
  • Flights RDU-MIA $0 ($330 each but we used 22,000 (x2) Chase Ultimate Reward points to get free last minute flights).

 

Sailing away from Miami!

 

Beautiful Bahamas

As a family, we sailed on the MSC Divina in December of 2016.  We loved it so much that we jumped on this deal when we saw it.  This time around it was just me and Mrs. Root of Good.  We call it a 13.5 year wedding anniversary present to ourselves because we’re awesome.  It’s the first time cruising without kids since our honeymoon 13.5 years ago.

Hot tub time in the adults only area. Stars. Wind. Waves. Solitude.

The airfare was expensive in points terms for a 2 hour flight, but it made sense to fly instead of drive and pay for gas and parking. Timewise, it’s about six hours door to door to fly versus 12-13 hours driving (which means overnight hotel at least in one direction).  We also used our Priority Pass Select card (a benefit that comes free with the Chase Sapphire Reserve card) to get a free meal and frosty beverage in the Miami airport plus $180 worth of to-go candy and beef jerky at the Corona Beach House restaurant/market.

In selecting expensive flights, we thought to ourselves:

We have money so let’s spend it to gain convenience and comfort because what are we saving it for after all?

I could have booked less convenient flights for a significant points savings that would have us leaving home at 5 am instead of 7 am the day of the cruise (and be dead tired by 3 pm!).  Or book flights with very little slack in the schedule to get to/from the airport and cruise ship (and freak out if the plane or the ship isn’t on schedule).  Or we could have waited six extra hours in the airport to save $80 worth of points (and arrive home at midnight).  In the end, we decided to go first class (well, still in coach but you know what I mean) with a flight schedule that got us to Miami at a reasonable time and got us back home without excessive hurrying or waiting.  Not driving twelve hours home was worth every point expended!

A relatively undiscovered spot of natural beauty an easy one mile walk from the port city of Ocho Rios, Jamaica. Here we are at Little Dunn River Falls/Beach. Climbing up the falls was fun!

 

Mmmm… Good eats! Best pizza in the world, which isn’t surprising since MSC is an Italian cruise line.  Pizza is straight out of Naples, Italy.  Paella, fried fish, asparagus, and veggie lasagna also good.

 

Interested in cruising? Check out all the posts in my “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

Going on a Cruise Part 4: The Food!

Cruising the Caribbean Aboard the MSC Divina

 

We enjoyed several opportunities for free drinks while on board. This was the complimentary beverage assortment at the Cruise Critic meet and mingle where we got to meet a handful of fellow American cruisers and we got to meet all the ship’s senior officers.  Gin martini, pink lady, or champagne anyone?

 

Good times were had by all.

 

Groceries – $609:

Groceries were a little higher than average but nothing to be concerned about.  We spent around $150 at Walmart which gets lumped into “groceries” but routinely includes non-grocery items like clothing and random household or automotive stuff.  The same happens at Aldi occasionally. We bought a $12 ceramic frying pan that’s included here in “groceries”.  That’s the price we pay for automated, simple categorization at Personal Capital.

Prepping for beef/chicken/veggie stir fry. I cut up two batches of meat and veggies and put the second batch in the fridge so I could have freshly cooked stir fry in 5-10 minutes later on.  Mrs. Root of Good assisted with the wine selection in the lower right corner.

 

End result plus jasmine white rice and lo mein.  A healthy dose of chili oil paste and sriracha to keep the intestines purified from disease.

 

We made Banh Cuon wraps. Rice flour wrapping stuffed with beef and mushrooms.

 

Charitable Giving – $50:

We bought a $50 Walmart gift card and gave it to our kindergartener’s teacher so she can buy supplies and technology gear for the class.  The neighborhood school our kiddo attends was one of the worst schools in the district several years ago, but it’s been improving steadily over the years.  The gentrification of our neighborhood certainly helps.

Lazy day in the back yard with friends.

 

Education – $48:

$38 for a year’s worth of field trips for our kindergartener plus $10 for both of us to join the elementary school’s PTA.

 

Healthcare/Dental – $39:

$23 for lab tests for a routine physical. Theoretically this lab work would be covered for free with our insurance since it’s preventative medicine.  In practice, as everyone knows, healthcare billing doesn’t always work out like we think it should.  In order to avoid hour upon hour of phone calls, emails, scanning and sending forms, appeals, and other ugly nonsense to appeal this $23 charge (and possibly end up paying it anyway), I simply whipped out a credit card and resolved this issue in a couple of minutes.  Mental health has its price and it’s somewhere around $23 in this case.  Having plenty of money is nice.

The other $16 of healthcare spending was monthly premiums for our health insurance plan that’s mostly paid for with ACA premium subsidies.  ACA looks to be mostly intact going into the end of the year.  Other than the routine minor billing squabbles, the ACA is working out pretty well for us to provide good insurance at nearly no out of pocket cost.

FYI, open enrollment just started and runs through December 15 so head over to Healthcare.gov if you need to sign up for 2018.  I took a peek at our premiums for 2018 and they will be just over $1,000 per month however we’ll still pay less than $100 per month for the premium after the generous income based subsidy tax credit.

 

Gas – $36:

Our monthly visit to the gas station.

 

Restaurants – $15:

A box of fried chicken and biscuits for the family from Bojangle’s.  This is the In-N-Out Burger/Whataburger for fried chicken (and only available south of the Mason-Dixon line other than a sole location in Pennsylvania).

 

Cable/Satellite – $14:

$14.99 per month for 30 mbit/second download speeds and 4 mbit/second upload speeds with no data caps.

Bird watching in the backyard. Three white egrets floating over the lake.

 

Automotive – $6:

We spent $6 on a replacement key for our minivan.  The minivan only came with one key when we bought it used last year, so I figured a spare key would be a good idea.  Otherwise if we lose it, then we’ll be paying $150-200+ between locksmith fees and/or a new key from the Toyota dealership.  The key has an RF chip in the base of it for security, but I found a nifty Youtube video that allowed me to program it for free in a few minutes (something locksmiths charge $60-80 for) by cloning the existing key I have.  I’ll still have to drop a buck or two at Walmart or the hardware store to get the key custom cut to match the master key.  

Halloween scare house with our little pirate.

 

Year to Date Living Expenses for 2017

Ten months into 2017 and we have only spent $20,896.  That’s more than $12,000 below the $33,333 budgeted for the first ten months of the year.

The highest expense category is travel which is no surprise since we’ve spent 10.5 weeks on the road this year.

We’re taking baby steps to spend more (like that last minute cruise) but still not spending all that we could.  However there will be years with large unexpected expenses (or large expected, but lumpy, spending), so I’m okay under spending our budget potential in these early years of early retirement.

 

Monthly Expense Summary for 2017:

 

The North Carolina State Fair comes to Raleigh every year.

 

We went on “Can Day” where you donate 5 cans and get free admission. I picked up a ton of tomato sauce for $0.03 per can so the net cost of family admission was $0.60 (plus the food bank gets 20 cans of tomato sauce).

 

As we were walking to the exit gate, we found a free light show!

 

Net Worth: $1,978,000 (+$42,000)

October marks the twelfth consecutive month of net worth gains.  The last time we lost money during a single month was October 2016 when our net worth dropped to $1,618,000.  Since then we’ve been on a tear with five digit gains almost every month.  We’re up more than a third of a million dollars in the past year.

I’m hoping we avoid the fate of Icarus. For those not familiar with Greek mythology, I’ll save you the trip to wikipedia.  Icarus was a young man with wings crafted of wax and feathers.  “Don’t fly too close to the sun, son” said Icarus’ father Daedalus.  As kids are wont to do, young Icarus didn’t listen and soared too close to the sun with his “amazing” wax and feather wings.  Long story short, the wax melted, the wings fell apart and Icarus died.  As we glide onward and upward toward the mythical $2 million mark, I hope we can maintain altitude and stay at these levels for a while.  I hope our wings don’t melt this close to the sun.

In financial moves, I’m planning several things for year end 2017:

  • harvest capital gains – about $4,000 gains from selling a $14,000 mutual fund position
  • continue my Roth IRA Conversion Ladder – planning to convert ~$5,000
  • fund my solo 401k to create a tax shelter for income from Root of Good – $18,000 into Roth solo 401k; $6,000 into traditional solo 401k (for the RoG employer portion).
  • fund a his and hers Roth IRA – $5,500 x2 = $11,000

By the end of this financial fancy footwork I’ll accomplish the following:

  • reduce taxable holdings by $14,000
  • reduce cash on hand/money market balance by $21,000 (currently at $48,000)
  • increase traditional IRA/401k space by a net of $1,000
  • increase Roth IRA/401k space by $34,000

My initial Early Retirement financial plans were destroyed by this whole “Blog Makes Money” phenomenon.  As I mentioned in my article on the Roth IRA Conversion Ladder, I initially planned on converting $25,000 to $30,000 per year from my traditional IRA to my Roth IRA and use the proceeds from sales of equities in my taxable brokerage account to fund my annual living expenses.

As it turns out, this blog makes money.  That threw off the Roth IRA Conversion Ladder completely. Now I’m spending income that comes from the early retirement consulting and Root of Good, plus the dividends from my taxable account. Then, I use any excess funds plus some modest sales from the brokerage account to fund the Roth IRA/401k totalling $29,000.  On top of that I’ll still convert several thousand dollars from traditional IRA to Roth IRA each year.

I’m still achieving the same end goal as the Roth IRA Conversion Ladder which is to increase funds in the Roth space to allow tax free and penalty free withdrawals before age 59.5.

As part of this year end tax planning and shifting money around I might move more funds out of equities into bonds.  Throughout 2017 I have shifted $110,000 from equities into the Vanguard Total Bond Market Index. If the market keeps going up, I’ll take some more profits and continue this shift. I also moved $15,000 from a money market account earning 1% to five year certificates of deposit earning 2%.  That’s an extra $150 per year interest income.

 

Want to finish the year on a strong note? Here’s 11 tips to get you there.

 

 

How awesome has 2017 been for you?  Excited about the holidays coming up soon?

 

 

Want to get the latest posts from Root of Good? Make sure to subscribe on Facebook, Twitter, or by email (in the column to the right) or RSS feed reader.

September 2017 Financial Update

Life is going well for the Root of Good family.  The kids are all back in school and we are settling into our new school-time routine.  Most weekday mornings start with the walk to school to drop off our kindergartner. Then we play tennis, take a walk, go hiking, or go swimming.  As the days grow cooler we’ll adjust our routine to take advantage of warmer afternoons on days that we plan on being outside for a while.  I always look forward to fall and this year is no different.  For us it means more time outside, campfires, Halloween, Thanksgiving, and time with family.

We just closed the books on September and along with it, marked the end of the third quarter of 2017.  Our income spiked up to $7,433 for the month while our expenses remained low at $1,824.  Net worth grew by a massive $46,000, thereby boosting our net worth to $1,936,000 by the end of September.

Income

Investment income totaled $3,221 for the month of September.  Dividends were higher than most months because our equity mutual funds and ETFs pay dividends quarterly in March, June, September, and December.  During other months investment income tends to be much smaller.  We are well on our way to earning roughly $30,000 in dividends for 2017, as we have in the past.

Blog income, shown as “other income” in the chart, remained steady at $4,202.  2017 is going to be a good year for Root of Good income.

My early retirement lifestyle consulting dropped to $0 for the month because I didn’t transfer the fees from a September client consultation session until the beginning of October. October is already looking better for this little side hustle, and I’m totally happy with just a few consulting clients per month (and in fact prefer this pace 🙂 ).

Deposit income of $9 was cash back from the Ebates.com and Mrrebates.com online shopping portals.  If you sign up for Ebates through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did.  When shopping online, I always check to see if I can score some extra cash back by using one of those online shopping portals (and it usually pays off!).

If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.

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

What we’re up to these days. As little as possible.

 

And watching this guy on the back fence. Great Blue Heron – stands over 2 feet tall with a 7 foot wingspan.

Expenses

Now let’s take a look at September expenses:


Like August, spending in September remained low at $1,824.  That’s just over half of our budgeted spending of $3,333 per month (or $40,000 per year).  Taxes were our largest category of spending closely followed by groceries.

 

Taxes – $600:

Third quarter estimated federal taxes of $600. I paid this with a credit card (and paid a fee just under 2% for that privilege) to meet the minimum spending requirements for a credit card that will give me $500 cash back (or the same amount of travel reimbursement) after spending $4,000 (Capital One Spark Business card, for the curious).  The $11 credit card usage fee is filed under the “travel” category.

I paid third quarter estimated North Carolina state taxes in August so it doesn’t show up on this month’s expense summary.

 

Groceries – $551:

A pretty average month of grocery purchases for us. We spent about half of the total at Aldi and Food Lion (a regional grocer in the Mid-Atlantic states).  Aldi is where we routinely shop for most things.  Food Lion is very convenient since it’s an easy walk from home.  They had a crazy sale in September where all store brand items were $0.25 off (sale runs through October 10, FYI). Many canned goods were $0.03 to $.25 each, and yogurt cups were $0.15 after the discount.  When this sale runs every 4-6 months I tend to stock up on things that last a while.  I don’t do extreme couponing but I’m okay paying attention to the grocery store sales paper to take advantage of big savings like this opportunity.

 

Groceries mean good eats. Like this pad thai!

 

And thai curry with noodles.

 

And spring rolls with hoisin peanut dipping sauce. We don’t skimp on good ingredients.

 

Healthcare/Dental – $226:

Mrs. Root of Good and I both visited the dentist in September.  We paid cash for our visits that were $99 and $111 each.

The other $16 of healthcare spending was monthly premiums for our health insurance plan that’s mostly paid for with ACA premium subsidies.  The ACA came under attack once again in September though it remained unscathed once again.

 

Business/Misc – $219:

This cost represents my annual domain registration and privacy protection fees for RootofGood.com ($27) plus hosting fees for three years ($192) at my new hosting provider, Rockaway Hosting.  I just switched away from Hostgator because I was up for renewal and their renewal rates were rather expensive given some upcoming upgrades I hope to do (including converting Root of Good to HTTPS).

So far Rockaway works flawlessly.  Things are running smoothly and their tech support is amazing.  I’ve received email responses on tech support issues from the owner at 4 am and 8 pm on weekends (when does he sleep?).  Other hosting companies might be slightly cheaper and they might work just fine until you have a technical problem you need help with.

If you have a blog and need to migrate to new hosting soon, or want to start a blog at a reliable host where real people provide tech support, check out Rockaway Hosting (that’s my referral link – if you sign up and I might make a commission on services you buy). And use coupon code ROCK10 if you want to save an extra 10% off their low rates.  The code generally stacks with their promotions on multi-year packages, too.

 

Clothing/shoes – $123:

We finished our back to school and post-Europe trip shopping during September by spending a total of $123 on clothes and shoes.

I spend more on shoes now that I’m retired than I did while working. Way more time to explore the woods these days!

 

Lake Durant, Raleigh North Carolina

 

Travel – $63:

We took a three day trip to Atlantic Beach, North Carolina in September.  The hotel itself was free using Chase Ultimate Reward points.  Our only expenses were $34 for a tank of gas to get to the beach (about 300 miles round-trip from Raleigh) and $17 for dining out while on vacation.  The hotel provided a free hot breakfast each day along with free snacks, fruits, coffee, and hot chocolate throughout the day. Those freebies plus a small assortment of vittles we brought with us kept our vacation food expenses to a minimum.

I took a gamble on the hotel booking. I could have spent 17% more points to book a refundable room and cancel if there was bad weather.  I opted to take a chance and save the 17% surcharge and hope for no hurricanes.  It worked out in our favor since we dodged both hurricanes that skirted the North Carolina coast in September.  I like being my own insurance company since we save tons of money over the long haul.

The last $11 of travel spending for the month was the 1.87% surcharge to pay my $600 estimated taxes. I stick that expense here in the travel category since I’m usually paying taxes on credit cards to snag some free travel.

If you want to save on travel, check out all the credit card offers and find a good sign up bonus that will take you where you want to go.  And don’t forget about Airbnb – $40 off your first stay.  Our family of five saved thousands of dollars on lodging this past summer in Europe by booking two and three bedroom apartments through Airbnb instead of two hotel rooms (and enjoyed much more spacious accommodations too!).

Exploring the tidal areas of Atlantic Beach.

 

Brother/sister time at the beach.

 

We had the whole beach to ourselves. No one within a quarter of a mile or more. Shoulder season in North Carolina is great (and cheap)!

 

Just up the road from the hotel is Fort Macon, a North Carolina State Park.

 

We stayed at the Hampton Inn and Suites in Atlantic Beach, North Carolina.  It’s a quick three minute walk to the beach and many of the rooms (including ours) come with a great oceanview. For some bizarre reason they charge a premium for rooms with views of the golf course so we luckily got one of the “regular” oceanview rooms on an upper floor.  Using Chase Ultimate Reward points, I paid about 7,000 points per night for a suite that accommodates six and comes with a kitchen and living room (and free breakfast for all).  This was a nice practical hotel for family trips to the beach.

 

Couch folds out into a bed

 

Kitchen with microwave, sink, and mini fridge.

 

One of the better free hotel buffet breakfasts that I’ve come across. Especially if you like bacon with a side of bacon.

 

Poolside in the shade was perfect since it was still rather hot in the afternoons.

 

Restaurants – $21:

Back home in Raleigh, Mrs. Root of Good and I enjoyed a kid-free mid-day post-swimming treat of thin crust NY style pizza (2 smalls for $11 at a local pizzeria).  I thought this pizza was better than the thin crust pies we ate in Venice, Italy this summer, but Mrs. Root of Good disagrees with me.

Later in the month we used part of a Papa John’s gift card someone gave us as a thank you for dog sitting.  I supplemented the gift card with cash ($10) to get some Papa’s pizza a couple times in September.

 

Cable/Satellite – $14:

$14.99 per month for 30 mbit/second download speeds and 4 mbit/second upload speeds with no data caps.

 

Home Improvement – $3:

Bathtub drain washer replacement from Lowe’s. Who knew these things dry rot and leak after 45 years?  It’s apparently been leaking off and on since we bought the house 13 years ago and I have just now isolated the leak after many rounds of troubleshooting over the years including breaking stuff, sawing a hole in the wall, poking a hole in the ceiling, a plumber visit, and replacing some plumbing and fixtures.  And the whole time it was a $3 faulty rubber washer.  This is a situation where it probably would have been cheaper to call the plumber first before trying to DIY.  I still need to patch the hole in the ceiling and do some touch up ceiling painting but at least we no longer get the occasional indoor rain shower coming from the second story bathroom.

 

Year to Date Living Expenses for 2017

Three quarters of the way through 2017 and we have only spent $19,148.  That’s more than $10,000 below the $30,000 budgeted for the first nine months of the year.

2017 is shaping up to be a rather unspendy year.  We have been fortunate to not have any unexpected emergencies, health scares, or other assaults on our budget.  Our planned roof replacement was mostly covered by insurance and our Europe trip came in about $1,500 under our $10,000 budget (and half of the trip was paid for in 2016).

Remaining big expenses for 2017 include summer 2018 travel we book this year plus a more expensive than expected preventative maintenance procedure for our minivan.  When we bought the used van last year, I knew it would need some routine maintenance.  What I didn’t know was that the recommended spark plug replacement at 120,000 miles costs almost $500!  Apparently the layout inside the cramped engine compartment means there are a lot of parts that have to come out to swap out the spark plugs.  The shop quoted three hours of labor which translates to at least double that for a guy like me (assuming I only break a few things).  The van is a six cylinder and we’re used to paying for maintenance on four cylinder engines.  Altogether, this means we’ll be shelling out some big bucks to keep the van running in optimal condition for as long as possible.

I’m tempted to skip or delay this particular routine maintenance but I would hate to lose a cylinder half way through a 1,000+ mile road trip and suffer the consequences which might include missing the departure of our next cruise ($1,000’s of wasted travel dollars).  I’m going to follow the frugal but not cheap route on this issue.  Our minivan has run flawlessly for the past 1.5 years and I’m hoping it remains reliable another 10 years if we keep it that long. This $500 maintenance should be one of the most expensive routine repairs we experience while we own this vehicle.

 

Monthly Expense Summary for 2017:

 

My sister in law wanted to throw a campfire themed birthday party for Mrs. Root of Good’s brother at our house. Sure!

 

Net Worth: $1,936,000 (+$46,000)

Another mind-blowing +$46,000 explosion of net worth in September.  We’re rapidly closing in on the $2 million mark.  Two years ago in September of 2015, I never thought we would be this close to the magic 2 million.  Since then we have enjoyed a half million dollars of net worth creation thanks (primarily) to a booming stock market.  Times are good if you’re a capitalist.

Throughout 2017 I have shifted $110,000 from equities into the Vanguard Total Bond Market Index.  If the market keeps going up, I’ll probably take some more profits and shift more equities to bonds.  Our portfolio is still over 90% equities so we’ll continue to enjoy huge gains if the market continues its upward march for several more years.

Other than thinking about moving money to bonds and transferring dividends to my checking account every quarter, I spend very little time managing my portfolio since it’s all in passive index funds.  Later in the year I’ll be analyzing my tax situation and will probably do one or more of the following:

  • harvest some capital gains (yes, gains)
  • continue my Roth IRA Conversion Ladder
  • fund my solo 401k to create a tax shelter for income from Root of Good

Over the next few months, I’m planning on releasing more Europe Trip Report posts with tons of pictures along with a few other finance-related posts.  I’ve been working on a lot of back end technical stuff with the blog and have some more tinkering to do in the next few months.  This is exactly the kind of “internet-y” nerding out I hoped to do in early retirement. I just didn’t know exactly what it would look like four years ago when I first made the shift away from working for the man.

 

Another great month!

 

Camp FI in Virginia

In other exciting news, I volunteered to speak at a four day retreat in April 2018.  At “Camp FI” in Virginia, 50 FIRE-seekers will camp in the woods, recreate, and mingle while listening to and hanging out with their favorite FIRE bloggers and podcasters.  Or something like that.  There are still several tickets available starting at $225 including lodging, food, and activities for four days if you are interested (click here) (update: as of Nov 1, 2017 these tickets are all sold out but they have a waiting list if you are interested in signing up).  Past guests LOVED it – rave reviews.  Other camps sold out within days or weeks of tickets going on sale so please be aware tickets won’t be available forever if you’re thinking about it.

I don’t make money if you sign up, but figured I’d throw the opportunity out there for those within driving distance of Petersburg or Richmond, Virginia with $225+ burning a hole in their pockets and an overwhelming desire to saturate themselves in FIRE-knowledge for a few days.

 

 

With just under three months left in 2017, how are you going to make the most of it?  Ready for fall?  Looking forward to the holiday season?  

 

 

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August 2017 Financial Update

Greetings from Raleigh! We are back home after nine weeks in Europe.  School is back in session and fall is just around the corner.  Our five year old started kindergarten and we are transitioning into empty nesters. At least on weekdays between 8:30 AM and 2:45 PM.

Our financials for the month were once again wonderful.  Once I arrived home from Europe, I deposited an accumulated stack of checks from the blog and elsewhere which led to a superb monthly income of $6,281.  Expenses were tiny at just $1,390 in spite of spending two weeks of August in Europe and picking up a ton of back to school supplies and clothes.  Our net worth crept up another $8,000 to $1,890,000 – another all time net worth high.

 

Income

Investment income totaled $263 for the month.  Almost all of that comes from my recent Vanguard Total Bond Market purchases.  The bond fund pays interest on a monthly basis.  The majority of our equity mutual funds and ETFs pay dividends quarterly in March, June, September, and December.  During other months investment income tends to be much smaller.  We are well on our way to earning roughly $30,000 in dividends for 2017, as we have in the past.

Blog income, shown as “other income” in the chart, increased to $4,262.  In August I deposited checks from advertisers that arrived in our mailbox during June and July, so the blog income for August is higher than usual.

My early retirement lifestyle consulting exploded to $1,197 for the month. This meteoric rise comes after a $0 revenue month in July. Things average out.  I was pretty slammed with consulting clients in the last couple weeks of August. I think they all waited until I returned home from Europe.  So far September is going slower (which is great – I’m retired after all!).

I had to postpone a consulting session when we stayed in the countryside outside Koblenz. Internet was literally slower than dial-up speeds (as in single kb/s).

I had to postpone a consulting session when we stayed in the countryside 15 minutes outside Koblenz. Internet was literally slower than dial-up speeds (as in single kb/s).  At least we didn’t go hungry nor lack for scenic rural landscapes.

I racked up $522 in cash back from the Ebates.com and Mrrebates.com online shopping portals.  Most of that was referral income from people signing up through this blog.  But I also landed several large bonuses related to travel booked in Europe (they often pay out once you complete the travel, not when you pay for it).  If you sign up for Ebates through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did.  When shopping online, I always check to see if I can score some extra cash back by using one of those online shopping portals (and it usually pays off!).

I had several miscellaneous bits of income including a $20 travel reimbursement from the travel agency I used to book a Hertz rental that fell apart at the last minute. I had to rebook at a slightly higher rate and the travel agency refunded me the difference.  I received a $10 cable/satellite refund for the credit balance on my account when I cancelled internet back in June in preparation for being away from home all summer.  The healthcare/medical $5 bit of income is a refund from my primary care doctor.  They charged a $5 copay but the insurance covered 100% as a preventative visit so I owed nothing out of pocket in hindsight. I think this is the first time a healthcare provider has automatically refunded a credit balance on their own initiative without me begging and pleading for return of my money.

august-2017-income

If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.

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

 

Expenses

Now let’s take a look at August expenses:

august-2017-expenses

Spending dropped to a modest $1,390 during August.  That’s almost $2,000 less than our budgeted $3,333 per month (or $40,000 per year).

 

Groceries – $357:

We were only home for two weeks in August but we bought a lot of groceries to restock our fridge, freezer, and pantry after being gone all summer.  We also threw a birthday party/sleepover for our eleven year old daughter and combined that with a welcome home party for ourselves and several of our friends.  So there was a small bump in spending for the nacho bar ingredients and a couple cases of beer.

I used Raise.com to buy some discounted gift cards to save even more on groceries and at Walmart.

 

Taxes – $300:

Quarterly estimated state taxes.  I paid it a little early to meet the minimum spending requirements on my Chase Ink Business card (and snagged a sign up bonus of $800 worth of Ultimate Reward points in the process!).  Check out credit card bonus offers if you like free money and free travel as much as I do!

 

Travel – $292:

We spent the first two and a half weeks of August in Berlin and Koblenz, Germany and Amsterdam, Netherlands.  The $292 travel spending is mostly groceries but also includes some restaurants, gas for the rental car, local transit, and family admission to Eltz Castle near Koblenz.  All lodging and intercity train travel was paid in previous months.  We saved a ton of money by staying most places for a week at a time and renting through Airbnb.

Travel spending for the month was probably several hundred dollars higher than reported here due to the way I tracked expenses. I withdrew hundreds of euros from the ATM in June and July and we ended up spending those euros in August to deplete our euros on hand before returning to the US.  The expense showed up in June and July.

Our $10,000 budget for nine weeks in Europe turned out to be doable.  Though I don’t have a total trip expense summary down to the penny, it looks like we spent about $8,500 for the nine weeks in Europe (not including around $6,000 in free airfare thanks to redeeming United frequent flyer miles).  We ate out a little less than expected which meant the $40/day food budget for a family of five was no problem.  We didn’t cut costs on groceries though.  We probably spent a little less than budgeted on attractions and admission fees since there was usually a significant discount for family admissions and at some places kids were entirely free.

Eltz Castle - not far from Koblenz.

Eltz Castle – not far from Koblenz.

Amsterdam was one of the more expensive places we visited in Europe. But the canals were worth it!

Amsterdam was one of the more expensive places we visited in Europe. But the canals were worth it!

We had to rent a car to get to our rural Airbnb near Koblenz which let us cruise around the Rhine river valley.

We had to rent a car to get to our rural Airbnb near Koblenz.  Having the car meant a pair of wheels to cruise around the Rhine river valley.

And the Moselle River.

And the Moselle River. Those are vineyards climbing the hillside on the right hand side of the photo.

More

More Moselle. Our airbnb was located between the Moselle and Rhine rivers in the village of Mariaroth which dates back to the 1200’s.

 

Clothing/Shoes – $250:

Though we don’t usually do “back to school clothes shopping”, the need arose this year.  After walking (and hopping and skipping and jumping and climbing) hundreds of miles this summer, the kids’ shoes and sandals were in varying stages of decay.  We also picked up an assortment of clothes for all of us to replace stuff we wore out over the summer (or outgrew, in the case of our three growing children who seem to have overlapping growth spurts).

Lots of walking = time for new shoes. Here we are strolling down the Rhine River in Boppard, Germany (near Koblenz).

Lots of walking = time for new shoes. Here we are strolling down the Rhine River in Boppard, Germany (near Koblenz).

Downtown Berlin along the River Spree. Very quiet and scenic.

Downtown Berlin along the River Spree. Very quiet and scenic.

 

Education – $69:

Run of the mill back to school shopping. Notebooks, binders, glue sticks, pencils, markers, and index cards.  Mixed in with this shopping were some important lessons on getting value. Walmart had name brand Five Star notebooks and binders that were around 100-150% more expensive than the generic store brand equivalents.  The kids helped us pick out the less expensive store brand products. Otherwise we would have spent a couple hundred dollars on school supplies.

We didn’t go for the $125 recommended graphing calculator for our new middle school student. Her older sister has one that’s not used all the time and we have an older model graphing calculator from my college days.  We may eventually have to buy a graphing calculator but there’s no rush right now.  My hope is that phone apps eventually replace the need for an expensive, limited use item.

Each night Berlin projects a historical documentary/light show on the wall of this building. Sit on the steps along the river behind the Reichstag for the best view.

Each night Berlin projects a historical documentary/light show on the wall of this building. Sit on the steps along the river behind the Reichstag for the best view.

Once a symbol of divisiveness, this segment of the wall acts as a canvas for artists.

Once a symbol of divisiveness, this segment of the wall acts as a canvas for artists.

Section of the Berlin wall still standing in the center of downtown Berlin.

Section of the Berlin wall preserved in its original location in the center of downtown Berlin.  To the left is the “Topography of Terror” – a museum/memorial documenting the atrocities of the Nazi regime. It’s situated on the former site of the Gestapo headquarters.

 

Restaurants – $42:

After we returned to the US we had to indulge a bit.  $42 equals one visit to our favorite Chinese/sushi/Mongolian grill/pho buffet restaurant.  Our oldest two kids now pay adult prices so the cost for a meal is creeping up for our family.  The food was better than it usually is, or perhaps we were missing it a lot after several months away from home.

Meals at restaurants in Europe are included under the “travel” category of expenses.

Preussen Park in Berlin. Every weekend this place turns into a Thai street food market. Entrees for €5 and small dishes €1 (about USD$6 and $1.20 respectively).Preussen Park in Berlin. Every weekend this place turns into a Thai street food market. Entrees for €5 and small dishes for €1 (about USD$6 and $1.20 respectively).

 

Gasoline – $35:

Apparently I left the minivan sitting on “E” when we left for Europe.  I filled the tank up in August and I’ll have to do so again in September.  I tried to top off the tank when there was a feared gas shortage in North Carolina but prices had already shot up by $0.20+ per gallon.  So, in a reaction to market prices, I “conserved” resources and skipped the top up until gas prices stabilize.

 

Healthcare – $16:

Our ridiculously cheap Affordable Care Act-subsidized health insurance plan.  Without subsidies it would be over $800 per month.

The political debate over the future of the Affordable Care Act continues in the United States.  The Trump/GOP hardliner effort to completely repeal the Affordable Care Act has withered and died on the vine.  Maybe it will happen eventually and I’ll lament the loss of my huge subsidy.  But the latest I’ve heard is a bipartisan health care bill will be coming from the Senate pretty soon that might actually be able to pass into law.  Included in the bill will presumably be fixes and tweaks to keep the health insurance market under the ACA from spiraling out of control with high premiums and lots of uncertainty for insurers and insureds alike.  Stay tuned!

Bears! The symbol of Berlin.

Bears! The symbol of Berlin.

 

Cable/Satellite – $14:

Upon returning to the US after a couple months in Europe, I signed up for new internet service from Spectrum.  As a new customer I managed to secure a low rate of $14.99 per month.  For that price tag I’m receiving 30 mbit/second download speeds and 4 mbit/second upload speeds with no data caps.

I found this beautiful town while exploring Streetview on Google Maps. Basically zero tourists.

I found this beautiful town of Kobern-Gondorf while exploring Streetview on Google Maps. Basically zero tourists.

 

Year to Date Living Expenses for 2017

august-2017-expenses-ytd

We have spent a total of $17,323 for the first eight months of 2017.  That is $9,000 less than our annual spending target of $26,666 budgeted for the first eight months of the year.  We aren’t clipping coupons and rewashing ziplock bags.  Instead, I feel like we’re living a pretty luxurious $100,000 lifestyle on under $40,000 per year.

Fall is usually a low-spending time of year. Things slow down for us once the kids are back in school.  Mild weather translates to minimal heating and cooling bills.  The weather outside is near-perfect for several months so we tend to enjoy tons of free outdoor activities like tennis at the neighborhood park, long walks, hikes, lounging outside with a good book, and backyard campfires.  Too much free/cheap awesome stuff to do!

With a $9,000 budget surplus for the year and only four months remaining, I’m fairly certain we will close the books on 2017 with a sizeable sum remaining unspent in our budget.

We are on the lookout for some last minute travel options and found a good deal on a few days at Atlantic Beach, North Carolina in September.  The trip won’t cost much since I’m using Chase Ultimate Reward points to get two free hotel nights.  We’re dodging hurricanes here in North Carolina but so far it looks like our beach plans will survive.

 

Monthly Expense Summary for 2017:

 

Net Worth: $1,890,000 (+$8,000)

It seems like every month I watch our net worth creep up and up and up.  August was no different with an $8,000 gain to bring our total net worth to $1,890,000.

august-2017-net-worth

In an effort to slightly reduce risk in my investment portfolio, I’ve been slowly selling appreciated stock investments and moving the funds to the Vanguard Total Bond Market index fund.  In August, I moved another $20,000 to the bond fund.  Right now the bond fund sits at roughly $110,000.  That sum along with almost $40,000 in a money market account will be sufficient to provide our living expenses for at least four or five years should the next recession and stock market crash happen sooner rather than later.

Don’t get me wrong – we will still lose several hundred thousand dollars in the next market correction.  There’s still a lot of inherent risk that comes with investing in equities. But the shift to a small bond allocation will allow us some certainty in where our next several years’ living expenses will come from.

The luxury of an increasing net worth is that we can more easily handle a massive drop in net worth, should one happen.  We’re growing a large margin of safety that should ensure that we never run out of money in early retirement.

 

I'll leave you with this picture that makes money talk seem small. There's a city block in Berlin entirely covered in these rectangular blocks. Almost 3,000 in total.

I’ll leave you with this picture that makes financial talk seem small. There’s a city block in Berlin entirely covered in these rectangular coffin-like concrete structures. Almost 3,000 in total.  It’s the Holocaust Memorial.  Approximately 6,000,000 Jews were killed by the Nazi regime during the Holocaust. It’s daunting to conceptualize what six million looks like. To put it in perspective, imagine that each of these concrete blocks represents 2,000 murdered Jews.  If you spent a minute at each block it would take you two full days to get to the last block.  Pretty mind blowing to think this kind of atrocity was inflicted on mankind by a regime based in what is now a very peaceful Berlin.

 

As far as the blog goes, I have slowed down with posts lately.  Life gets busy!  Coming up, I have a few finance-related blog posts in mind and several trip reports from our summer in Europe.  I just renewed the Rootofgood.com domain for another year and I’m about to migrate the blog to a new host in a week and sign up for three more years of hosting at the new place, so don’t worry – I’m not abandoning this little project yet.  During the migration you might experience weirdness here but hopefully that will be temporary.

That’s it for this month’s financial update.  Now that the kids are all in school during the day we are enjoying a lot more peace and relaxation.  I’m finally getting more hammock time with a good book.  A few years ago I wrote about my weekly schedule as an early retiree, and it’s still about the same today.

Looking forward, we are still trying to figure out what crazy adventure we’ll undertake during the summer of 2018.  Mexico? Eastern Europe? USA road trip? Or perhaps be lazy and stay at home?

 

 

I’m starting to think of year end financial moves I need to make like taking cap gains and converting traditional IRA to Roth to keep my ladder going.  Any big year end plans for your finances (or life in general)?  

 

 

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