I can’t believe we are already a quarter of the way through 2017! Financially speaking, we are doing incredibly well as we ride this bull market up and up. March left us $15,000 wealthier thanks to investment gains with our net worth climbing to $1,771,000. Our expenses for a family of five were very modest at just $1,388, while our income remained strong at $3,747 for the month thanks to quarterly dividend payments.
On the non-financial side, life is going swimmingly well. We’re two months away from our nine week sojourn through Europe. Springtime brings us beautiful weather here in North Carolina so we get to enjoy the outdoors more. And last but not least our oldest daughter made the A honor roll. College scholarships here we come!
Our investment income was $2,791 in March. The majority of our mutual funds and ETFs pay dividends quarterly in March, June, September, and December. During other months investment income tends to be much smaller (closer to $100-150).
Blog income, shown as “other income” in the chart, dropped to $508. That’s due to the lumpiness in payments from advertisers. A check came a few days into April instead of the end of March as I was expecting, so I’ll have a great month in my next financial update post. Fortunately I have a very generous cash buffer so I don’t need to rely on the cash flow from this blog to pay my monthly bills. My early retirement lifestyle consulting income dropped to $240 for March. It’s just as well since I’ve been busy having fun on other pursuits.
The $180 in Deposits includes cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. If you sign up for Ebates through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did. I spent over $4,000 on gift cards to cover lodging for our trip to Europe and received over a hundred dollars of cash back from Ebates on those purchases.
The healthcare/medical “income” of $27 represents a reimbursement of some prescription copays from 2016 where we paid the full price at the pharmacy for preventive medicines that should have been free. The insurance company noticed the mistake and repaid us on their own initiative! I filed an additional claim for another $27 x 2 to seek reimbursement for two other instances of overpayments during 2016, but I won’t be surprised to never see a dime of that money.
If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.
Personal Capital is also a solid tool for investment management. Keeping track of our entire investment portfolio takes two clicks. If you haven’t signed up for the free Personal Capital service, check it out today (review here).
Now let’s take a look at March expenses:
We came in well under our budgeted $3,333 per month (or $40,000 per year) during March with total spending of just $1,388.
Groceries – $421:
We spent slightly less than our $500 per month average for groceries. We used up a few small gift cards for Aldi and Walmart that we purchased at Raise.com when they ran some promotions earlier in the year. If you haven’t checked out raise.com for discounted gift cards for places you already shop, then feel free to save an extra $5 off your first purchase at Raise.com.
If you’re curious about what kind of groceries we buy, here’s a snapshot of an entire month of groceries from a few years ago that probably includes more “junk food” than we routinely purchase in an ordinary month these days. The low grocery spending is simply a continuation of our grocery buying strategy.
We don’t do extreme couponing at all. Instead of couponing, we check the weekly sales papers from a few local grocery stores within 1-3 miles of our house and take notes on potential good buys from their selection of heavily discounted loss leaders and sale items. We pick the best one or two grocery stores for the week and head there to get our staples, necessities, and the loss leaders and sale items. Unfortunately most of the sale items are junk, so there has to be some compelling discounts on actual stuff we want to buy to attract us to the grocery store that week. We do well using this strategy to save big on meat, seafood, fresh fruits and vegetables, some dairy, eggs, and non-perishables.
At any given time, we have several types of fresh veggies and a couple cuts of meat in the fridge (plus several more in the freezer). In the pantry we keep plenty of rice, noodles, and basic canned goods on hand because we know we’ll be eating several times per day. Using these basic building blocks, some fresh lime and cilantro, plus a pantry full of spices, curries, sauces, and seasonings, we can make just about anything. Googling recipes works well too.
Just a few treats we made this month:
Travel – $396:
We continue to book bits and pieces of our summer Europe trip. Right now we are two train tickets away from having all ground transportation booked. During March we spent $396 on travel expenses. Half that went toward a pre-paid rental car reservation with the other half spent on four sets of train tickets for the five of us (one of which will be in first class!). Those train tickets will carry us across Italy, Slovenia, Austria, and Germany.
We also spent a dollar on a five pack of US-to-Europe electrical adapters from ebay. Direct ship from China. It amazes me that I can purchase electronics straight from China for under a buck including shipping.
In cruise news, we booked another cruise! A very helpful Root of Good reader emailed me about an incredible deal over the 2018 Christmas holidays (yes, over a year away). It was a price mistake but before the cruise line corrected the error, we managed to book the family on a seven night cruise out of Miami bound for the Caribbean on MSC Cruises’ new ship, the MSC Seaside. Our total cost will be around $1,400 for two rooms to accommodate five of us. We only had to make a $150 refundable deposit to hold our two rooms, with final payment not due until October 2018. With two kids in middle school, the cruise over Christmas break is very helpful to avoid excessive absences from school.
Utilities – $191:
Water, sewer, and trash bill plus natural gas bill. We prepaid the electric bill for several months ahead to generate some spending for our credit cards so we can score some huge sign up bonuses.
Electronics – $115:
Who knew photos and videos take up so much space? We had to buy a new 2 terabyte hard drive to store all that digital media. We also picked up a few other goodies like a camera bag for the t5i DSLR camera we’re taking to Europe along with a lightweight wireless mouse.
Cable/Satellite (Internet) – $84:
Spectrum bought Time Warner. Along with a new internet overlord comes a new and improved higher price tag. Yay competition! Oh wait…
We’re now paying $45/month instead of $35 with Time Warner. It took a while to negotiate Spectrum down to $45. On the upside, they upgraded me from 50 mbit service to 100 mbit service. Which doesn’t really matter since I rarely use more than 50 mbit of throughput.
The $84 charge also includes $35 for February plus a few bucks extra to make sure I paid the bill in full since the swap to the new rate looked complicated on the bill.
I’m looking forward to finding out more about Spectrum’s low income rate plan that provides 30 mbit service for $15 per month for “qualifying households”. They don’t have information on their site about this plan yet, so I don’t know if we will qualify. I would definitely take that package at a 66% discount since 30 mbit bandwidth is plenty for us (a high definition Netflix stream uses about 5 mbit, for reference). As long as there aren’t too many hoops to jump through (like applying for the plan through a social services agency and filling out reams of paperwork).
Healthcare/Medical – $71:
I paid $55 for a routine cleaning and exam at the dentist. It’s normally $99 but I paid the copays for the kids twice by accident, so the $44 overpayment was credited to the charges for my visit.
The balance of the healthcare/medical spending is one month’s health insurance premiums of $16. For us, the Affordable Care Act works phenomenally well in making our health insurance premiums tiny.
Every month I speculate on the future of the Affordable Care Act and this month is no different. Except the continued existence of the ACA is less in doubt these days compared to the past several months. In case you missed the news, March was an exciting and surprising time for American healthcare. The House Republican plan didn’t make it to a vote because GOP leadership withdrew the bill due to lack of support. The proposed American Health Care Act (AHCA) would have sort of kind of repealed the ACA after three years (effective 2020) and replaced the current ACA tax credits with something entirely different. Tax credits calculated a different way!! (<– sarcasm). Many of the other provisions of the ACA remained intact. In other words, you might pay more or less for health insurance under the AHCA versus the ACA and you might call it Trumpcare instead of Obamacare, but it’ll still feel similar to the ACA.
But the AHCA didn’t make it to a vote. The far right “Freedom Caucus” conservatives didn’t like it because they recognized it wasn’t really much of a departure from the ACA on a fundamental level (“it’s still an entitlement program”), while the moderates in the Republican party realized the AHCA would lead to tens of millions losing access to medical insurance and health care because of the removal of income-based subsidies currently available under the ACA. Both the far right and the center didn’t want to take the heat in the upcoming midterm election of 2018 (note for non-US readers: our US House of Representative legislative seats are up for election every 2 years and campaigning isn’t far off for contested races).
What does this mean for early retirees and access to guaranteed issue (maybe) affordable health insurance? Right now it means the ACA remains the law, subsidy cliff and all. What is uncertain is whether the Republicans will introduce an AHCA v2.0 bill that gains traction. The vote would have been very close on AHCA v1.0 so I can imagine an AHCA v2.0 could be successful if the right palms are greased and the greediest pockets lined with enough silver and gold.
Our family wouldn’t have fared horribly under AHCA v1.0, since we would still have guaranteed access to health insurance but starting in 2020 we probably would have paid several thousand dollars per year more for a policy with much higher deductibles and copays. And the insurance would grow much more expensive as we aged, while the tax credits would increase only slightly to compensate for higher premiums.
The big question remains. What is the fate of the ACA? Looking at prediction markets where people bet real money on the outcome of political issues (like this one at Predictit.org), suggests a 30-40% chance that the ACA will be substantially repealed and replaced by year end 2017. Interestingly, the market on the fate of the pre-existing condition coverage reveals just a 12% chance of losing that specific provision. To summarize, people betting real money think there’s a fair chance we’ll have a repeal-ish and replace bill in place soon, but it will keep at least some provisions of the ACA such as coverage of pre-existing conditions. I think prediction markets in general are more accurate than expert opinions or polls when it comes to knowing the unknowable. Consider that the prediction markets were putting the odds of a Trump win as high as 36% in the week preceding the November 8, 2016 presidential election (so it wasn’t a complete surprise for those of us that follow the political prediction markets instead of solely the news’ polls and “experts”).
Will ACA be around in 2020 and beyond? Definitely. Maybe. I don’t know.
Gasoline – $64:
I filled up our minivan not once, but twice (!!) during March. Once at the very beginning of the month and once at the end. My Chase Freedom card was paying 5% cash back through the end of March so I went ahead and filled up before I needed to in order to snag a little extra cash back. All this carpool driving to school is driving up our gas costs!
Restaurants – $36:
We bought take out pizza for a birthday party for around 15-20 guests. We paid in part using gift cards purchased through Groupon during 2016, and the rest was a gift card purchased through Raise.com at a discount.
This was perhaps the most insane deal on pizza ever. I bought gift cards at a discount, and the gift card purchased through Groupon (using a coupon and cash back through ebates!) came with two free pizza coupons. Then, when I bought the pizza for the birthday party, I used a 50% off coupon and stacked it with a “spend $15+ and get a free pizza code” promotion (times 2 for a his and hers account). When it’s all said and done I think I paid $2-3 per large pizza.
We celebrated Pi Day on 3/14 at a local pizza place that offered 17″ NY style pizzas for $3.14 each ($6 and change for two, which was enough for a couple of meals for the five of us). More $3 pizza. In this case, restaurants are cheaper than home cooking.
And we got some fried chicken from Bojangle’s (a magical place here in the South if you like fried chicken). $12 for a dozen thigh pieces.
Never pay retail.
Entertainment – $5:
$5 for roller skating admission for one kid. We threw a birthday party for our newly minted 12 year old and hosted a few other gatherings at our house, but those expenses ended up in the “grocery” or “restaurant” category.
Year to Date Living Expenses for 2017
After spending $6,876 for the year through the end of March, we are more than $3,000 below our annual spending target of $10,000 budgeted for the first three months of the year. I don’t think we’ll make it to almost $40,000 of spending like we did in 2016.
I made progress on reroofing the house. I don’t have a contractor yet, but I do have $3,300 in cash from the insurance company. On the advice of some blog readers and family and friends, I called my insurance company to see if they could check my house for hail damage. It turns out we DO have hail damage and we need a complete roof replacement (score!). They estimated the price at just over $7,000, and cut me a check immediately for the actual cash value of the roof minus our $2,500 deductible. In theory if the costs escalate above $5,800 I can recuperate an additional $1,300 or so in “depreciation” that they won’t pay me until they see receipts and documentation that the work is done. I have a call into the insurance adjuster so I can understand exactly how all this works and how I need to negotiate with contractors to ensure the optimal deal for me.
I’ve been budgeting $4,000 to $8,000 for our roof replacement so this might be a nearly free roof depending on how the quotes come back and how much extra work we get the contractor to perform. The roof project was going to be our biggest expense of 2017, so this is great news for our budget.
We’ve already booked and paid for roughly $6,000 out of our $10,000 total budget for our nine week Europe trip this summer. The remaining $4,000 of vacation spending will be concentrated in June through August while we are overseas. We probably won’t spend a ton beyond that $4,000 while we are gone, so 2017 is shaping up to be somewhat of a low spending year already.
Monthly Expense Summary for 2017:
Net Worth: $1,771,000 (+$15,000)
Another month, another bump in net worth. It’s easy to think the stock market only goes up and our accounts will keep growing in a mostly straight line forever, but I know that’s not true!
On the investing front, I didn’t do anything in March other than collect dividends and transfer them to my checking account. I probably won’t touch the portfolio till it’s time for end of the year tax planning unless the markets make a big move up or down. A big upswing will see me trimming away some equities and buying more of the bond fund. A sharp downturn in the market will make me consider converting some cash or bonds back to stocks. I’ll also be checking the asset allocation every few months to see if I need to rebalance any asset classes in the event the international markets zig while the US markets zag. That’s how I manage a lazy portfolio.
Our cash position is close to $30,000 in savings and money market accounts, which is enough to fund around a year of expenses at our current spending rate assuming the dividends don’t stop flowing. On top of that we have another two years of living expenses in a bond fund (held inside an IRA) should we need additional liquid funds. Things are looking very rosy for us at the moment.
Did you enjoy another positive financial month? Any big financial moves coming up soon? Any super frugal moments in the past few months to rival my pizza hustle?