Category Archives: Personal Finance

October 2016 Financial Update

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Now that the trick or treating is over and October is gone, I’m ready to share the good and bad financial data from last month.  Our income, mostly derived from this blog, remained very strong at $8,365 while our expenses ended the month at $1,460 which left us with a large cash surplus.  If I make much more money, I’m afraid I might be “unretired”!

I can’t say I paid any attention to the stock market in October but apparently it declined.  In spite of income exceeding expenses by about $7,000, our net worth still dropped by $29,000 to $1,618,000.  Since this is significantly more money than we had a year or two ago, I continue to feel safe and secure at our current net worth levels.

Here’s the straight dope on our October financials:

 

Income

October investment income dropped to $31 after a much stouter September with $4,160.  That’s the nature of the beast since most of our funds pay at the end of each quarter which means March, June, September, and December always bring us high investment income while the other months are near zero.  We are still on pace for matching or exceeding the total of $28,527 in dividend income received in 2015.  Although I’m no dividend-focused investor, dividends still figure significantly into our annual cash flow by helping provide the funds we need for living expenses.

No October post would be valid without the obligatory pumpkin pic. Neighborhood event in the park.

No October post would be valid without the obligatory pumpkin pic. Neighborhood event in the park.

Blog income, shown as “other income” in the chart, ballooned to $7,253 while my early retirement lifestyle consulting also increased healthily to $1,076.  Blog income was higher than normal because I received both September and October payments from one advertiser during the month of October.  The consulting income remained very strong even though I raised rates last month.  As one client mentioned, it’s hard to find good, competent professionals that understand taxes and investments with a focus on very early retirement at any price point, and particularly at the relative pittance I’m charging (though I don’t claim to be a professional or anything more than “a guy that writes stuff on the internet and retired at 33”).

The $4 in Deposits includes the cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. If you sign up through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did.  I try to do all of my online shopping through one of these portals and the cash back adds up fast. I recently booked an $857 cruise for next month through Expedia by clicking through Ebates to get to Expedia.  I’ll be getting $85.70 in cash back once we return home from the cruise in December.  Ebates is a nice way to get a 10% discount on every cruise from a booking site we already use.  I’ll also be using one of those shopping portals later in the month if I see any good deals on Black Friday / Cyber Monday.

On a slightly different note, our ten year old just landed her first job!  Someone asked us if one of our kids would be interested in making some cash as a tutor for their kid.  Now our little gal makes $10 per hour as a tutor.  She will be working one hour after school Monday through Thursday.  If this gig continues, she might make enough to fund a Roth IRA like Go Curry Cracker’s kid!  This also supports my notion that mom and dad won’t be on the hook for very much during the kids’ college years.

october-2016-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 look at October expenses:

october-2016-expenses

While some consider $1,460 to be a mind blowing monthly expense total for a family of five, I consider it just another routine month where we didn’t have any huge lumpy annual expenses (like property taxes or insurance).  We spent almost $2,000 less than our budget of $3,333 per month (or $40,000 per year).  For the second month in a row, travel spending topped the expense report (and I like it that way!).

Travel – $579:  In September it was cruises. In October it was plane tickets for the five of us to, from, and around Europe.  We booked tickets from Raleigh to Lisbon, Portugal for June, 2017 with the return from Amsterdam to Raleigh in August, 2017.  Even though we used United Airline miles to score “free” tickets, we still had to pay tax on the tickets which was almost $400 for the five of us.

For those in the points/miles game, we spent 60,000 miles per ticket, or 300,000 total to fly economy between Raleigh and Europe.  By booking so far ahead of time we scored some great flights that are only 10 hours to Europe and 13 hours back home including connection times.

With United’s new redemption rules, you get a free one way flight anywhere within the region you’re flying to (in this case, Europe).  We used the free flight for a short hop from Lisbon to Malaga, Spain.  We could have flown all the way across Europe to some distant corner (Estonia?) but instead chose to take a relatively short flight to coastal Spain since we wanted to visit that area and it’s cooler in June than it is later in the summer.  We’re slowly making our way north across the continent as the temperature rises throughout the summer.

All of those 300,000 United miles came from sign up bonuses for credit cards, so if you’re interested in free flights to Europe don’t forget to check out my credit card page.

We also jumped on a luke warm Ryanair deal from Seville, Spain to Milan, Italy for $194 total for the five of us.  There might be some extra checked bag fees later on if we can’t pack extremely light like we did for our 7 weeks in Mexico last summer.

All of our gear for seven weeks in Mexico.

All of our gear for seven weeks in Mexico.

So far, we spent $579 for our 9 week trip to Europe and managed to buy all the flights for our trip (20 one way tickets in all).  Hopefully this is prelude to a nice low cost, high value summer in Europe!

After visiting Portugal, Spain, and Italy, we will continue through Slovenia, Austria, Hungary, Czech Republic, and Germany before flying back home from Amsterdam.  It won’t be cheap even with my travel hacking skillz.  I’ll feel really proud if we can pull it off for less than $10,000, and content with a total under $15,000.  In rough terms, we’ll probably spend around $6,000-7,000 on lodging ($100/day), $3,500 ($50/day) on food, $2,000 ($30/day) on ground transportation between and within cities, and $1,000 on various admission fees, attractions, and entertainment.

Sound off in the comments if I’m being completely ridiculous about prices but keep in mind we have hotel points for free nights and will rely heavily on airbnb (click for $35 off your first rental), and will probably dine out once per day and buy groceries for the other meals.  Trains and buses are stupid cheap in most places (goeuro.com is amazing for cost comparisons) and often come with kids ride cheap or free promotions.

I’ll probably ramp up the hotel/airbnb reservations in the early spring and book those advance purchase train tickets that come with discounts for booking early as the reservation windows open up.  Anyone have experience booking airbnb apartments six or eight months before their stay?

I’ll publish a more in depth article on the trip at some point.

Groceries – $366: Another modest month buying groceries.  Some of the savings came from “shopping in our freezer and pantry” instead of buying stuff at the store.  Here’s a typical month of groceries for us.

We enjoy good food cooked from scratch.  Somehow we find these incredible deals on groceries including some high end, “fancy” ingredients.  At Kroger, we scored about $80 worth of imported Italian goodies like cheeses, pasta sauce, prosciutto, and olives at 75-95% off retail prices.

We also shop at the ethnic grocery stores in our neighborhood.  After walking to the kid’s school for morning drop off, we continued walking to the neighborhood Latino supermarket and picked up three pounds of poblano peppers (on clearance but still perfectly good), a bunch of cilantro, two and a half pounds of fresh tortillas, and two bottles of imported Guatemalan hot sauce for $6.  These goodies combined with some large hunks of meat led to incredible fajitas for under $1 per meal.  “Reminds me of those street tacos in Mexico” one of our kids remarked.  ¡Que rico!

Some of that prosciutto and mascarpone gracing the tops of some day old ciabatta bread. Mmm... discount good eats.

Some of that prosciutto and mascarpone gracing the tops of some day old ciabatta bread. Mmm… discount good eats.

Clothing – $134: Fall and winter clothes for the kids.  One pair of shoes.  A combo of Walmart and the thrift store.  The thrift store offered all girls/women’s apparel at 40% off.  How incredible is that?  A steep discount on top of already low prices.  As usual, the thrift store haul included some articles of clothing with price tags still attached.

Healthcare/Medical – $129: Health insurance premiums of $125 for our very impressive gold plated silver plan obtained through Healthcare.gov with some very sizable ACA subsidies. $4 for some random lab tests at the doctor.

For those looking for insurance in early retirement, on November 1st the Healthcare.gov marketplace started open enrollment for 2017.  You can price out plans based on your income and household size.  Even though North Carolina was one of those states that lost a few insurers, we picked up one new insurer (Cigna) bringing the total number of companies offering insurance in Raleigh to two, with Blue Cross Blue Shield being the other one.

The two cheapest silver plans look like reasonably good options for our family.  I’m debating between the $50 per month plan with $200 deductible, no kid dental coverage and limited network and the $125 per month plan with $800 deductible, kid dental, and nationwide network plus out of network coverage.  Those costs are after the very generous premium tax credit/subsidy and include large cost sharing subsidies since our MAGI is less than 150% of the federal poverty level.

Utilities – $103: Water, sewer, trash.  In a previous month I prepaid the electric bill by applying an extra $250 toward my account balance – more credit card travel hacking.

October is a cheap time of year for utilities since we don’t need to use the heat or the air conditioning.  Winter is coming (like the Game of Thrones reference?).  A few minutes before pressing “publish”, I had to turn on the heat.  It was 62 inside the house and the forecast for the week calls for brisk mornings in the 40’s and cool afternoons topping out in the upper 60’s.  I appreciate thriftiness, but don’t mind dropping a few bucks to keep it 68 degrees during the day and 63 at night.

Hurricane Matthew blew through in October. Culvert underneath our property almost topped out. That plus 4-5 more feet of water equals a flooded crawlspace.

Hurricane Matthew blew through in October. Culvert underneath our property almost topped out. That plus 4-5 more feet of water equals a flooded crawlspace.

On the bright side, the kids got to play in a hurricane!

On the bright side, the kids got to play in a hurricane!

Education – $66: Field trips for the year for the elementary school kid.

Free education: troubleshooting a freebie TV given to us by some family. Looks like a $4 fuse will fix it.

Free education: troubleshooting a freebie TV given to us by some family. Looks like a $4 fuse will fix it.

Restaurants – $38: Dinner at a pizza place for the whole family and a clandestine lunch at the Chinese restaurant for Mrs. Root of Good and I (we brought home some fortune cookies and mints for the kids).

Internet (“Cable”) – $34: 50/5 mbit service.

Entertainment – $4: One hour boat rental on the city lake.  Small price to pay for a beautiful morning paddling on the water.  My first bald eagle sighting was included at no additional charge.

Most of our entertainment is free.  Tennis or other sports/recreation at neighborhood parks.  Walking/hiking on the trails.  Hanging out with friends at the park or at our house.  Campfires in the back yard.  A seemingly endless string of birthday parties.  Visits to the art museum, science museum, and children’s museum.  After all that, it’s time to kick back and relax with some video games, Netflix (which actually costs us a tiny bit), and library books (like European travel guides).

Free visit to the children's museum. I'm strapped in with the little dude at the flight stick. HELP!!

Free visit to the children’s museum. I’m strapped in with the little dude at the flight stick. HELP!!

Special huge inflatable bunny week at the Art Museum. Free, of course.

Special huge inflatable bunny week at the Art Museum. Free, of course.

Boat rental - not free but worth every penny of the $4. Also cheaper and more fun than a gym membership. And bald eagles.

Boat rental – not free but worth every penny of the $4. Also cheaper and more fun than a gym membership. And bald eagles. And look at that grin.

Home Maintenance – $2: A gallon of gas for the lawn mower. Colder weather = no more mowing (soon).

Gas – $0: Nope, not for the car. But I did get a full tank in early November which you can read all about next month.

 

Year to Date Living Expenses

october-2016-ytd-expenses

That should read “through 10/31/2016”

At $30,780 year to date spending, we remain below our annual spending target of $33,333 budgeted for the first ten months of the year by a few thousand dollars.

Other than paying for gas, parking, and tips on our two cruises in December, we won’t have a lot of expenses out of the ordinary.  I’m planning on replacing the roof sometime in the next year but I don’t think I have time to get bids, research those bids, schedule an installation time, and deal with any unexpected delays before we leave for our first cruise in less than three weeks.  And there’s a huge Thanksgiving feast we’ll be throwing somewhere in that schedule.  Otherwise, I would go ahead and tackle this project in November.

The budget for the roof replacement is somewhere around $4,000 to $8,000.  I could probably fit it in the $40,000 annual budget this year, or underspend 2016’s budget by a bit, then go over slightly in 2017 if we do the roof replacement in the spring.

 

Monthly Expense Summary:

 

Net Worth: $1,618,000 (-$29,000)

After several good months we experienced a slight reversal of fortune in October as $29,000 disappeared from our net worth statement.  It’s to be expected.  The market goes up, it goes down.  October happened to be a down month.  So far November is following in October’s footsteps.

october-2016-net-worth

From last month’s financial update:

We’re still sitting on over $50,000 in cash in our credit union money market account right now.  I’ll be moving some of that cash around for year end tax planning, like a large solo 401k contribution, but I will also hang on to part of that cash in order to provide a buffer against severe market downturns.

My procrastination paid off since we’re sitting on even more cash right now and I still haven’t pulled the trigger on the IRA or solo 401k contributions and the market is lower now than it was a month ago.  I’m either the wisest or laziest investor ever.

This pretty much sums it up right here. Didn't cost a penny but worth a million bucks.

This pretty much sums it up right here. Didn’t cost a penny but worth a million bucks.

 

Looking for year end tips to get your finances in order? Check out these 11 tips to finish the year strong.

 

 

How was your October?  Any big year end financial moves?  Ready to end the year on a high note?

 

 

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September 2016 Financial Update

two-cents-photo

I can’t believe September is already over!  Our oldest two kids are settling into the back to school routine (with a few hiccups along the way) while our youngest starts one day per week pre-school next week.  Fall usually brings cooler, dryer weather to North Carolina but this year summer decided to overstay its welcome by keeping the warm, humid air around much longer than normal.

September was another great month for us financially.  Our income remained strong at $5,695 while our spending remained below budget at $2,781.  Net worth increased by $12,000 to $1,647,000.

Here’s all the nitty gritty details on our September finances:

 

Income

September investment income was $4,160 thanks to all the quarter-end dividend payments from our mutual funds and ETFs.  We are well on our way toward matching or exceeding the total of $28,527 in dividend income received in 2015.

Blog income, shown as “other income” in the chart, shrunk to $1,044 in September while my early retirement lifestyle consulting brought in $484.  Blog income was lower than normal because I received a large payment from one advertiser in the first days of October (it usually arrives at the end of the month but was a few days late this time).  The consulting income maintained about the same pace as August thanks to steady traffic here at Root of Good.  On the consulting side, I’m a little busier than I would like to be, so I raised the hourly rates again.  I’m aiming for 3-4 consulting sessions per month at a maximum.

$5 in Deposits includes the cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. If you sign up through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did.  I try to do all of my online shopping through one of these portals and the cash back adds up fast.  For example, in September I booked an $857 cruise through Expedia by clicking through Ebates to get to Expedia.  I’ll be getting $85.70 in cash back once we return home from the cruise in December.  Ebates is a nice way to get a 10% discount on every cruise from a booking site we already use.

september-2016-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 look at September expenses:

september-2016-expenses

Spending for September totaled $2,781, which was slightly lower than the $2,817 we spent in August.  We spent $500 less than our budget of $3,333 per month (or $40,000 per year).  The bulk of our spending last month came from more cruise bookings and quarterly estimated taxes.

Travel – $868:  We booked a second cabin on our second cruise in December so our son can join us (along with my mother who’s paying her own way).  We booked a four person cabin last January and hoped we would find a two person cabin at a great deal and we finally did just a few months before the sail date (patience/procrastination pays off).  The final payment for our four person cabin was also due last month.

If you are interested in taking a cruise, now is the time to start shopping for deals because the fall season (hurricanes, oh no!) and the winter season offer the lowest prices for cruise fares.  Check out my cruise overview and my tips on getting the best deals.  And don’t click on this cruise ship food unless you want to get hungry.

Taxes – $600: Another quarterly estimated tax payment.  Half that went to the State of North Carolina, the other half went to the feds.  I paid both of these bills using my credit card to rack up some free airline miles (1.87-2% convenience fees to pay by CC were included in the “travel” expense category).

Utilities – $455: Water, sewer, trash, and electricity.  I prepaid the electric bill by applying an extra $250 toward my account balance – more credit card travel hacking. The natural gas bill was paid in October so it didn’t show up in this total.

Groceries – $420: After a restocking binge upon returning home from our 3.5 week Canada road trip, we didn’t have to shop as much in September.  We still made some awesome dishes.

pad-thai-september-2016

Pad thai, my specialty. Just because we spend very little on groceries doesn’t mean we don’t eat amazing stuff. (edit: after all the comments on this pad thai I feel like I need to post the recipe!)

Healthcare/Medical – $336: Health insurance premiums of $125 for our very impressive gold plated silver plan obtained through Healthcare.gov with some very sizable ACA subsidies. $99 for a routine cleaning, x-rays, and exam from our dentist that gives great discounts to cash/debit payers. $66 in co-pays and co-insurance for a couple of doctor’s visits and some lab tests.  $45 for a few prescriptions.  The $336 we spent this month is much higher than average for our healthcare and medical expenses.

Gas – $35: We had to refuel the van in early September.  North Carolina also suffered a brief gasoline shortage when the Colonial pipeline supplying the southeastern United States leaked and had to be shut down for a couple weeks.  Some panicked.  We were fine because we drive so little (this drives up the “new shoes” budget line item, of course).  I think we’re at a half tank as of press time, so watch out, there will be another ~$35 gas purchase at the end of October or in early November.  Or maybe sooner since there’s a Hurricane Matthew pointed at us right now (fingers crossed that no one gets hurt but fingers also crossed that we lose our roof and get a free one courtesy of the insurance company).

Internet (“Cable”) – $34: 50/5 mbit service.

Restaurants – $19: Mrs. Root of Good and I went to Golden Corral.  At lunch time, it was disappointing.  We dined there several months ago for Father’s Day (with premium pricing!) and it was much better during that visit with fresh vegetables, steak from the grill, and some other delicious eats greeting us along the buffet line.  Apparently the cheaper lunch buffet doesn’t have much to offer.

Vietnamese chicken and rice noodle dish. Not at a restaurant though.

Vietnamese chicken and rice noodle dish. Not at a restaurant though. $.75 worth of ingredients that would be $8-15 at a restaurant.

Entertainment – $5: The kid’s school’s skate night at the roller skating rink down the street.   We skipped the $8 glow in the dark flashy thingy toys and the $4 slices of frozen reheated pizza.

Education – $5: PTA membership

 

Year to Date Living Expenses

september-2016-ytd-expenses

At $29,319 year to date spending, we are once again below our annual spending target of $30,000 budgeted for the first nine months of the year by almost seven hundred dollars.  In spite of the $8,200 minivan purchase in March, we managed to get our year to date spending back in line with our annual target.

The remaining three months of the year should see fairly low spending from us.  The high summer air conditioning bills are gone, no more estimated taxes due in 2016, and most of our travel expenses are already paid for the year.

In the next week or two, we are hoping to book tickets to Europe for our summer 2017 trip.  Since we are redeeming United Airlines frequent flyer miles, we’ll only owe the taxes (probably under $500).  We will start booking hotels, airbnb rentals, and local train/plane tickets some time in the spring of 2017, so our spending will ramp up at that point.

Time to hit the books.

Time to hit the books.

Monthly Expense Summary:

 

Net Worth: $1,647,000 (+$12,000)

Another $12,000 added to our net worth!  It’s been smooth sailing in the investment portfolio lately.  Everything feels good in the markets but who knows what will happen in the next six months.

september-2016-net-worth

We’re still sitting on over $50,000 in cash in our credit union money market account right now.  I’ll be moving some of that cash around for year end tax planning, like a large solo 401k contribution, but I will also hang on to part of that cash in order to provide a buffer against severe market downturns.  If the market drops 20-30% (which it does occasionally), then we’ll sit back and live on our cash reserve and dividends (plus income from the blog and my early retirement lifestyle consulting).

Enjoying nachos al fresco. We did the Moe's free queso day this year and I had to convert the chips and queso into full on nachos.

Enjoying nachos al fresco. We did the Moe’s free queso day this year and I had to convert the chips and queso into full on nachos.

In the meantime, we’re busy enjoying our daily early retirement routine (which lately includes a lot of walking through the park and playing tennis first thing in the morning) and working out the bones of our summer in Europe next year.  We’re thinking of starting in northern Italy, then working our way through Slovenia, Austria, Germany, Czech, and Hungary with a possible side trip to Spain and/or Portugal.

Edit 10/12/2016: We just booked plane tickets to/from Europe (10 hours there, 13 hours back; excellent flights using United points!) and flights within Europe from Lisbon to Malaga, Spain, and Seville, Spain to Milan, Italy.  We’re adding Amsterdam, Netherlands to the end of our trip bringing the total country count to nine (in nine weeks).  More details soon! 🙂

 

How did you do in September?  Enjoying the steady upward trend in the markets?

 

 

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How to Pay for College while Early Retired

yale-university-doorway

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

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

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

 

How much does college really cost?

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

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

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

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

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

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

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

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

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

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

 

Nobody pays sticker price for college

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

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

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

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

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

 

What do we have saved for college?

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

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

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

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

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

 

Will the kids help with college expenses?

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

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

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

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

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

 

Sources of college funding

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

15 possible sources of funds for the kids:

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

Parental source of college funds:

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

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

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

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

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

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

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

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

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

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

 

How I funded my college

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

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

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

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

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

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

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

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

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

 

Hacking college

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

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

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

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

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

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

 

Other thoughts on college

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

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

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

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

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

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

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

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

image courtesy of Go Curry Cracker

 

The bottom line

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

I see the best case scenario playing out like this:

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

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

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

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

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

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

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

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

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

 

 

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

 

 

August 2016 Financial Update

two-cents-photo

Now that August is over, we are officially in the last third of the year!  It’s hard to believe the year is already winding down.  August was a decent month financially.  Our net worth crept up another $2,000 to $1,635,000.  Income totaled $5,191 while expenses were $2,817 for the month.

After spending the first part of August on our three and a half week road trip to Canada, we returned home in mid-August to a flurry of activity to get the kids ready for school.  That meant buying school supplies (including a brand new fancy pants TI-84 CE color graphing calculator) and attending two back to school orientations.  Our oldest daughter just entered middle school so now we have twice as many PTA meetings and school events to fit into our not-so-busy schedules.  She’s loving middle school so far!

Here’s what our August 2016 looks like under a financial microscope.

 

Income

August investment income was $60.  Our portfolio consists of mutual funds and ETFs that pay dividends at the end of each quarter.  September will generate a much higher level of investment returns.  We are well on our way toward matching or exceeding the total of $28,527 in dividend income received in 2015.

Blog income, shown as “other income” in the chart, ballooned to $4,279 in August while my early retirement lifestyle consulting brought in $565.  Blog income was higher than normal because I received two month’s worth of payments from a major revenue source.  The consulting income was also higher than normal and I’m not sure why other than strong traffic thanks to continued good exposure in the media (including this podcast interview with fellow 30-something early retiree blogger Brandon the MadFIentist).

$211 in Deposits includes the cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. If you sign up through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did.  I try to do all of my online shopping through one of these portals and the cash back adds up fast.  For example, in August I booked an $810 cruise through Expedia by clicking through Ebates to get to Expedia.  I’ll be getting $81 in cash back once we return home from the cruise in December (more on the cruise later in this article!).  Ebates is a nice way to get a 10% discount on every cruise from a booking site we already use.

The $64 Insurance income is a refund of our auto insurance premiums thanks to removing the Honda Accord from our policy.  We became a one car family when we sold the 2000 Honda Accord in June (after debating whether we should be a two car or one car household for a while!).  Our auto insurance premiums are now $344 per year for a half million dollars of coverage for two drivers.  Given how little we drive on a routine basis, I’d say that’s pretty fair.

The $10 “Entertainment” income came in the form of a $10 rebate check from a liquor purchase.  We categorize hard liquor purchases as “entertainment” whereas beer and wine find themselves in the “groceries” category.  It’s an arbitrary distinction but makes sense when you consider we buy liquor at the state run ABC store whereas we buy wine and beer at the grocery store (and don’t feel like splitting the wine/beer to a separate category called “alcohol” because we simply don’t spend a ton in that area.  Burp.).

august-2016-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 look at August expenses:

august-2016-expenses

After spending a measly $1,190 in July, we seem like frivolous spendthrifts in August because we spent a whopping $2,817 during the month.  That’s cool, we’re still $500 under our budget of $3,333 per month (or $40,000 per year).  The higher spending comes from booking more travel for later in the year and from taking care of business after returning home from our almost month-long vacation.

Travel – $1,144: August represents the second month in a row where travel topped our spending.  That’s no accident since it makes up our single largest expense category in our carefully crafted annual retirement budget at $10,000 per year.  Around $300 of the travel expense covered gas for the van, meals at restaurants, parking, tolls, and other travel related expenses for the nine days of August that we were on vacation.

We booked another cruise for late 2016 for $810.  They are fun.  After our annual turkey-filled Thanksgiving fiesta we will set sail in late November on a five night cruise from Jacksonville, Florida destined for Half Moon Cay, Bahamas (a private island) and Nassau, Bahamas.  On this cruise we’re only taking our four year old son and cruelly leaving our two older daughters at home with Grandma so the girls can attend school (bwahahahahaha).  Don’t worry, our two daughters will join us on an even better and longer seven night cruise later in December (should we even unpack between the two cruises?).

Fun times in the Bahamas on our January 2016 cruise.

Fun times in the Bahamas on our January 2016 cruise.

I think we are done booking cruises for 2016.  Maybe.  Unless a really good deal pops up later in the year.  We are only spending around $5,000 of our $10,000 travel budget in 2016.  The unspent funds will help cover the cost of a potential eight to nine week excursion through Europe in the summer of 2017 (more details on that at a later date!).  I hear Europe ain’t cheap like Mexico.  Or our sub-$1000 3.5 week Canada trip this year for that matter.

Groceries – $816: A few hundred dollars higher than usual in August after underspending the budget by a few hundred dollars in July.  We restocked the fridge and freezer after returning from our trip.  And restocked the pantry and wine cabinet.  We also spent a hundred bucks on massive quantities of heavily discounted toilet paper and did this with it:

At least $100 worth of fun. Plus free butt-wipe material for a six months. Or a year??

At least $100 worth of fun. Plus butt-wipe material for six months. Or a year??

Healthcare/Medical – $249: Health insurance premiums of $125 for our very impressive gold plated silver plan obtained through Healthcare.gov with some very sizable ACA subsidies. $99 for a routine cleaning, x-rays, and exam from our super awesome dentist that gives great discounts to cash/debit payers. $25 for a few prescriptions.

Home Maintenance – $225 + Home Improvement – $59: Our magical plumber earned a solid $225 this month by replumbing and installing a new shower valve, faucet and supply pipes plus installing a new kitchen faucet.  The shower developed a slow leak that appeared while we were out of town (fortunately mold wasn’t an issue!).

This is all work that I could maybe DIY but choose not to.  My track record on plumbing jobs is pretty poor so I probably saved myself a few bucks by outsourcing the task.  $59 was most of a new shower valve and faucet from Lowe’s (the remainder came from gift cards purchased over the past year and recorded as “home maintenance” expenses at the time). Of course I purchased a $15 off $50 Lowe’s coupon from ebay for a buck which saved me $14 on the purchase.

I spent the several hours of the afternoon while the plumber was here profitably researching our summer 2017 Europe trip.  I don’t regret the $225 expenditure a bit (really more like $150-175 after factoring in cost of supplies and special tools).  It’s taken me a while to get to this mindset of outsourcing tasks I really don’t enjoy or don’t excel at.  But I think I proved my mettle in this situation by putting the wrench down and picking the phone up.

Restaurants – $81: Two visits to the Chinese restaurant plus a birthday pizza party for the 10 year old and half a dozen of her friends (and a half dozen of our friends!).

Utilities – $72: Water, sewer, trash, and natural gas bill.  These bills were much lower than normal because we were out of town during most of the billing cycle.  All told, we saved about $200 on utilities during the 3.5 weeks we were out of town.  The electric bill doesn’t make a showing in this expense report because we still have a credit balance from pre-paying the electric bill in the spring to meet credit card minimum spending requirements to qualify for sign up bonuses (gotta love credit card travel hacking!).

Clothing – $56: Back to school clothes.

Education – $46: School supplies.

Internet (“Cable”) – $34: 50/5 mbit service.

Root of Good hosting fees – $27 (not shown in the summary chart): Once per year domain name registration and privacy protection service.  I paid about $60 per year for 3 years of hosting and things are working quite well for me at Hostgator.  I like Hostgator and recommend them if you’re thinking of starting a blog.

Gas – $0: Other than refueling during our road trip (which gets included in the “travel” category), we didn’t spend anything on gas in August.  The van is below a quarter of a tank so I expect to drop $30 or $35 on a full tank in the next several days.  That should last us the remainder of September.

 

Year to Date Living Expenses

august-2016-ytd-expenses

At $26,538 year to date spending, we are once again below our annual spending target of $26,667 budgeted for the first eight months of the year by about a hundred dollars.  In spite of the $8,200 minivan purchase in March, we managed to get our year to date spending back in line with our annual target.  I guess we’ve been lucky that we haven’t suffered any large unexpected expenses.  That’s mainly because we included the routine “unexpected” stuff when we developed our first annual early retirement budget over two years ago.  Unexpected expenses are highly predictable over the course of a 40+ year retirement.

September should be a relatively low expense month other than $600 in estimated tax payments to North Carolina and the IRS.  The weather cools off here in Raleigh and almost all of our favorite outdoor activities are free or very inexpensive.  Now that the oldest two kids are back in school full time, we are back to our school year early retirement weekly routine.

Monthly Expense Summary:

 

Net Worth: $1,635,000 (+$2,000)

At +$2,000, it’s a small gain, but a gain nonetheless.  August started with a slight drop in the markets before a strong recovery that fizzled out a little toward the end of the month.  September is already shaping up to be a great month.

It’s a bit scary watching the investment portfolio climb month after month because these things rarely go up in a smooth line.  I’m expecting a dip at some point but not doing much about this “knowledge” because I don’t know when this dip will happen, how severe it will be, or when the market will recover.  If I knew any of that, then Bernie Madoff’s investors would have invested their billions with me for a guaranteed 12%+ annual return.

august-2016-net-worth

In a way, I am doing something defensive during this time of perpetual market gains.  In portfolio news, I just sold $15,000 worth of a junk bond I bought many years ago at a steep discount to par.  I sold it at 99.8% of face value (the theory being “get out while the gettin’s good”).  That pushes our cash on hand to roughly $50,000.  That represents about two years of core living expenses.  Add to that the $8,000 to $10,000 in taxable dividends we get each year and we’ll be close to two years of our full-of-fluff $40,000 annual budget.  And then there is the $2,000 to $3,000 per month that this blog and my little Early Retirement Lifestyle Consulting brings in right now.

To summarize, I might need to figure out a strategy for all this cash on hand.  It’s invested at 1% in a FDIC/NCUA insured money market at my credit union right now.  I could move some of it to 1.75% four year CD’s (with 90 day interest loss for early redemptions) at the same credit union with near-zero effort.  I’m thinking that might make sense.  Bond fund yields don’t seem too exciting right now with the Vanguard Total Bond Market Index Fund yielding 1.88% for a fund with an average duration of 5.8 years (that translates to a non-negligible loss of principal if interest rates increase).

I guess this “too much cash” is a great problem to have.  At these recent market highs, we have almost $1.5 million invested in equities, which means our overall liquid net worth is 97% equities and 3% cash.  That’s very aggressive overall.  I’m in no hurry to redeploy any of the $50,000 cash because it feels nice and comfy as a security blanket since we have no bonds in the portfolio at this point.

 

 

How was your August?  Did you see big gains or a smaller steady rise in net worth?  Any big shifts in spending if you (or your kids) are headed back to school?

 

 

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Trip Report: Toronto, Mammoth Cave, and Niagara Falls Road Trip

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The Root of Good family made it back from our 3.5 week road trip a couple weeks ago.  Here’s an after action battle report on our trip including highlights from all the places we visited plus a complete cost breakdown of our trip budget.  Skip to the end for some travel hacking tips to save big bucks on your next epic vacation!

 

Trip summary

We traveled for 24 days with stays in the following cities:

  • Between Charlotte and Asheville, NC – staying with family 3 nights
  • Nashville – 1 night
  • Bowling Green, KY (Mammoth Cave) – 3 nights
  • Detroit, MI – 2 nights
  • Toronto, Canada – 12 nights
  • Niagara Falls (Canadian side) – 2 nights
  • Washington D.C. – 1 night
  • Back home in Raleigh!

When I describe this summer’s big crazy road trip to people, their first reaction is to drop their jaw, drool, and say “wow, sounds like an awesome trip!”.  Their second reaction is to scrunch their eyebrows, and ask in a puzzling way “wait, Nashville and Toronto – those… aren’t anywhere near each other are they?”.

They aren’t.  But we’re not complete geography noobs either.  We wanted to visit Nashville and Niagara Falls (near Toronto), and decided to embrace the triangular path between those two locations, with Raleigh forming the third vertex of the triangle.  And visit some cool places along the way (some of which you, dear gracious readers, suggested!).

For more detail on our trip planning, check out “The Great American Canadian Road Trip – Summer 2016 Edition“.

 

Nashville

We only spent one night in Nashville, so we had to play the role of stereotypical tourist and see what we could during our limited time in town.

Honky Tonkin' - It's what Nashville is all about, right?

Honky Tonkin’ – It’s what Nashville is all about, right?

 

Nashville riverfront

Nashville riverfront

 

Who put the Parthenon in the middle of Nashville?

Who put the Parthenon in the middle of Nashville?

 

Tennessee State Museum

Tennessee State Museum

 

World's largest iPad (at Nashville Public Library).

World’s largest iPad (at Nashville Public Library).

 

Who has time to visit places that cost money when libraries are free and come with bridges and skyscrapers?

Who has time to visit places that cost money when libraries are free and come with bridges and skyscrapers?

 

Lunch.

Was it the #1 Cheesesteak in the world?  Probably not, but it was good.

 

Grand Ole Opry Resort. One of three hotels we visited in Nashville because the interiors are mind-blowing.

Grand Ole Opry Resort. One of three hotels we visited in Nashville because the interiors are mind-blowing.  They have a boat. In a canal. Inside the hotel lobby.

 

Bowling Green, Kentucky and Mammoth Cave

We only spent one night in Nashville so that we could spend two full days exploring Mammoth Cave.  We stayed in the city of Bowling Green about 30 minutes from the Cave entrance.

Airbnb rental in Bowling Green, Kentucky. Way better than a hotel!

Airbnb rental in Bowling Green, Kentucky. Way better than a hotel!

 

The descent to Mammoth Cave

The descent to Mammoth Cave

 

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Mammoth Cave in Kentucky. The reason we only spent one night in Nashville.

 

mammoth-cave-4

 

mammoth-cave-3

 

mammoth-cave-2

It’s hard to capture the scale of these rock formations but they were about 50 feet tall.

 

A rainbow wished us well as we departed Bowling Green.

A rainbow wished us well as we departed Bowling Green.  Also symbolic of post-retirement life.

 

Dayton, Ohio (Air Force Museum)

Thanks to all the commenters and Root of Good friends that suggested the Air Force Museum in Dayton, Ohio.  It was a perfect break from our seven hour drive from Bowling Green, Kentucky to Detroit, Michigan.

Before the museum we stopped for lunch at Gold Star Chili. Considering the tiny portions and food that's not that great, a more accurate name would be Bronze Star Chili.

Before the museum we stopped for lunch at Gold Star Chili. Considering the tiny portions and food that’s not that great, a more accurate name would be Bronze Star Chili.  Don’t get me wrong.  The chili itself was pretty good.  Both tablespoons of it.  My hand isn’t abnormally large in the pic.  It’s an optical illusion because the plate is tiny.

 

dayton-air-force-museum-1

 

"Oh, that's just a thermonuclear bomb, son. Move along."

“What’s that? Oh, that’s just a thermonuclear bomb, son. Move along.”

 

Kennedy's Air Force One.

Kennedy’s Air Force One.

 

Detroit, Michigan

Exactly zero people got excited when I mentioned that we were spending two nights in Detroit.  It’s not exactly the kind of place you visit while on vacation apparently.  My perception of the big D included active gang warfare, rounds flying overhead, and houses going up in smoke as the innocents suffered collateral damage to life and property.

We needed a place to stay half way between Toronto and Bowling Green, Kentucky, and Detroit was almost in the middle.  And they have one of the only four Category 1 Starwood Preferred Guest hotels in the nation (the Four Points By Sheraton Detroit Airport was beautiful, by the way).  So it was settled.  We would pause for two nights, rest, relax, and possibly test out the thickness of the sheet metal on the minivan as we drive through the inevitable war zones.

Sadly, there was very little going on in Detroit.  It was very quiet.  No people.  Almost eerie.  Mid-day on a Saturday and there were basically zero people in downtown.  Traffic was light.

We rolled around town to check out the blighted areas and they didn’t disappoint.  Through the window, block after block rolled by.  We saw more cleared or reforested lots than abandoned houses.  Most blocks had no more than one or two inhabited houses.  We didn’t see any crime probably because there were no people.  Zero corner boys slinging their trade.  No one running from the non-existent cops.  No gunfire.  Just a very peaceful drive around a mostly deserted part of town.

Upsides included the Renaissance Center on the waterfront and the burgeoning Mexicantown (which was booming!).

I bet this place was a beauty 50 years ago. Where did the neighbors go?

I bet this place was a beauty 50 years ago. Where did the neighbors go?

 

Looks more like a country house than what used to be densely packed center city blocks.

Looks more like a country house rather than what used to be densely packed center city blocks.

 

The Renaissance Center. The only place we saw a bunch of other people in Detroit.

The Renaissance Center. There were some people here, but not a lot.

 

Hey, look kids. It's Canada across the water! We're going there next!

Hey, look kids. It’s Canada across the water! We’re going there next!

 

A buck fifty each for some authentic chorizo street tacos from Taqueria del Rey in Mexicantown. Amazing.

A buck fifty each for some authentic al pastor street tacos from Taqueria del Rey in Mexicantown. Amazing.  Who knew you could get these in Detroit?

 

Toronto, Ontario Province, Canada

We spent 12 nights in Toronto in an Airbnb rental in the Roncevalles neighborhood a few miles west of downtown.  Since we had our van, we skipped the streetcars and subway in Toronto and chose to drive or walk everywhere.  Downtown was about 15-20 minutes away by car.

 

Very cool Airbnb rental in Toronto. Probably the nicest one we've stayed in.

Very cool Airbnb rental in Toronto. The nicest one we’ve stayed in.

 

Full kitchen and dining area.

Incredibly well appointed kitchen with eat in dining area (pic taken from the living room).

 

A second living room in the upstairs bedroom/loft area let us all have our own space at times.

A second living room in the upstairs bedroom/loft area let us all have our own space at times.

 

Enjoying the rooftop patio.

Enjoying the rooftop patio.

 

 

We made use of all that space by hosting lunch for dynamic blogging duo and fellow 30-something early retirees Kristy and Bryce of Millennial-Revolution.com fame.

We took advantage of our Airbnb’s spacious layout by hosting lunch with dynamic blogging duo and fellow 30-something early retirees Kristy and Bryce of Millennial-Revolution.com fame.  Bryce is the weird one not wearing pink.

 

A city perpetually under construction. The orange traffic cone must be the city's mascot (at least for the six weeks of summer when construction goes gangbusters).

Toronto, a city perpetually under construction. The orange traffic cone must be the city’s mascot (at least for the six weeks of summer when construction goes gangbusters).

 

You like the pretty buildings at sunset, eh?

You like the pretty buildings at sunset, eh?

 

View of downtown skyline from the Centre Islands ferry.

View of downtown skyline from the Centre Islands ferry.

 

The Lake Ontario beachfront on Centre Islands.

The Lake Ontario beachfront on Centre Islands.

 

Familia Root of Good

Familia Root of Good

 

Public art in City Hall. A sculpture made from tens of thousands of nails. Why didn't I think of something like that?

Public art in City Hall. A sculpture made from tens of thousands of nails. I don’t think you’re actually supposed to touch them though.

 

A metropolitan city, full of culture and life. The Art Gallery of Ontario proved impressive (and free on Wednesday nights).

A metropolitan city, full of culture and life. The Art Gallery of Ontario proved impressive (and free on Wednesday nights).

 

An art gallery of another breed. Graffiti Alley (a few blocks south of Chinatown) is more my style. You can see (and smell) the strong influence of the medical marijuana dispensaries located just around the corner.

An art gallery of another breed. Graffiti Alley (a few blocks south of Chinatown) is more my style. You can see (and smell) the strong influence of the medical marijuana dispensaries located just around the corner.

 

Don't worry, it's not really a pot shop for kids.

Don’t worry, it’s not really a pot shop for wee little kids.

 

The massive High Park was walking distance from our house.

The massive High Park was walking distance from our house.  We visited several times during our stay.  High Park has it all.

 

Beautiful wildlife.

Beautiful wildlife.

 

Castles for a playground.

Castle playground.

 

Comfortable park benches for weary travelers.

Comfortable park benches for weary travelers.  Possible food coma in progress (see following pics for explanation)

 

Chinese pastries from the Ding Dong Bakery (great name by the way). This mother lode was just under $15 USD.

Chinese pastries from the Ding Dong Bakery (great name by the way) in Chinatown. This mother lode was just under USD$15.  Some sweet, some savory, some meaty.  All delicious.

 

Vietnamese vermicelli noodles with pork and spring roll from Bun Saigon in Chinatown. USD$8

Vietnamese vermicelli noodles with pork and spring roll from Bun Saigon in Chinatown. USD$8

 

A heaped up plate of Korean bbq pork ribs, chicken, and beef. Plenty for two hungry people. USD$14

A heaped up plate of Korean bbq pork ribs, chicken, and beef with tempura zucchini, potsticker dumplings, and rice. Plenty for two hungry people. USD$14

 

A homemade creation. The salami bagel.

A homemade creation. The salami bagel.  One of the benefits of staying in an Airbnb is having a full kitchen so you can cook big meals (or toast a salami bagel, in this case).

 

Niagara Falls

After leaving Toronto, we headed south to spend two nights on the Canadian side of the falls.  On the way down we stopped at Welland Locks to watch a ship transit the canal up river.

Once we arrived in Niagara Falls, we planned to do the Maid of the Mist (also called Hornblower Cruises on the Canadian side) but learned that the wait to board the boat can be two hours.  Poor planning on our part because we visited during the busiest time of year on the busy weekend.  Instead, we explored the falls on foot and by bus from the US and Canadian sides.

 

Looking up river from the observation deck

Welland Locks, about 30 minutes from Niagara Falls.  Looking up river from the observation deck.  The ship in the lock to the left waits for the water level to rise even with the upstream water elevation.

 

Niagara Falls from the American side.

Niagara Falls from the American side.  We took a day trip to the US to get a different vantage point of the falls.

 

View of both falls from the Canadian side.

View of both falls from the Canadian side.

 

Falls at night.

Falls at night.

 

The Niagara River forms a massive Whirlpool a few miles downstream from the falls. Circling the Whirlpool are a number of (free) overlooks.

The Niagara River forms a massive Whirlpool a few miles downstream from the falls. Circling the Whirlpool are a number of (free) overlooks. Pictured is the not-free Aero cable car suspended above the Whirlpool where you can enjoy waiting in line and then, for a few minutes, get a slightly different vantage point compared to what we enjoyed.

 

Washington, D.C. (Smithsonian Air and Space Museum – Udvar-Hazy annex)

Washington, D.C. served as our last waypoint on the trip.  We spent the night at an Aloft hotel near the Dulles airport (free with SPG points, of course) then woke up, played some pool, and departed for our last bit of tourism of the vacation.  The Udvar-Hazy Annex of the Smithsonian Air and Space Museum.

It’s got a bunch of cool planes, missiles, rockets, and spacecraft of various types.  But the most awesome vessel in the hangar is the Space Shuttle Discovery.  This bad boy flew to outer space 39 times over the past several decades.  And we got close enough to almost touch it.

For anyone thinking of replicating our trip, the Air Force Museum and the Air and Space Museum had a lot of overlap (once you’ve seen several hundred planes from the various eras of flight, several hundred more planes don’t add a lot of marginal utility).  Air and Space is still an awesome museum because of the Space Shuttle.  The Air Force Museum stood out for having a few historic Air Force Ones that used to fly former presidents (and you can walk through the Air Force Ones).  Both museums are free except for a $15 parking fee at the Air and Space Museum.

 

The Space Shuttle up close.

The Space Shuttle up close.

 

'Merica!

‘Merica!

 

Not the space shuttle.

Not the space shuttle.

 

Something I could possibly pilot.

They let me in the cockpit.

After 2,432.3 miles and 25 days on the road we made it home in one piece.  Another great vacation on the books!

 

Trip Budget

We budgeted $2,100 for the whole trip.  We’re good at optimizing expenses on the fly and miraculously managed to spend only $954 for our 3.5 week road trip.  Of course we’re travel hackers, so that total doesn’t include several thousand dollars worth of free lodging expenses (including 4 room nights at a USD$300-400/nt hotel in Niagara Falls).  First I’ll show the travel budget with actual expenditures, then I’ll reveal some travel hacking tips so you can replicate some of my success.  All amounts in US dollars with the US to Canadian dollar exchange rate hovering around USD$1 to CDN$1.30.

Lodging – $157 (budget: $476) 

  • 12 nights Toronto Airbnb rental – $43 (after $345 airbnb referral discounts, $85 cancellation/rebooking credit and $500 Barclay Arrival Card travel rebate/bonus, plus a $56 damage charge for our kiddo breaking a fancy pants light fixture)
  • 3 nights Bowling Green, KY Airbnb rental – $47 (after $250 Airbnb gift card from Amex credit card reward bonus)
  • 1 night hotel in Nashville from Hotwire – $66
  • 2 nights x 2 rooms – Four Points by Sheraton Detroit Metro Airport – $0 (8,000 SPG points from Starwood Amex)
  • 2 nights x 2 rooms – Four Points by Sheraton Niagara Falls Fallsview – $0 (12,000 SPG points from Starwood Amex)
  • 1 night x 1 room – Aloft Dulles Airport North – $0 (4,000 SPG points from Starwood Amex)

We initially booked a two bedroom Airbnb apartment on the east side of Toronto.  The landlord cancelled a month before our trip so we had to re-book a different property.  Airbnb offers a rebooking credit of 10% of the amount you initially paid to help you find a replacement property.  The new rental was a big win because it was cheaper and nicer.

Now for the bad news.  Our four year old pretended one of the light fixtures was a steering wheel.  He drove it hard.  It broke.  We agreed to the landlord’s request for $56 in damages to replace the light fixture.  Otherwise the 12 nights in Toronto would have netted out to negative $13!

In other lodging snafus, let’s talk about the $66 Nashville hotel we purchased through Hotwire.  The room itself was okay, but the hotel had serious issues with management.  We showed up around five or six in the afternoon expecting our hotel room to be ready (check in time was three pm).  It was not ready.  We grabbed dinner nearby then checked in with the hotel.  Still not ready.  We gave up checking in at that point and decided to spend the rest of the evening touring around downtown Nashville.  Fortunately when we returned to the hotel around nine pm our room was ready.  The hotel had many cautionary reviews, but these weren’t visible until after we booked the room through Hotwire and they revealed which mystery hotel we booked.  Next time around I think we’ll either book a higher class of hotel through Hotwire or book directly with a hotel and not roll the dice.  Though at $66 for a room with clean sheets, clean bathroom and free breakfast in the morning, it wasn’t a horrible deal in spite of the six hour delay checking in.  I might be able to get a partial or full refund if I fought and fought and fought, but it’s simply not worth $66 to me.

 

Transportation $264 (budget – $500)

  • 2,432 miles – $148 (most gas was below $2/gal)
  • Tolls – $6.50 ($5 bridge crossing in Detroit; $1.50 bridge to US in Niagara Falls)
  • Parking and Transit – $110 ($18 for 24 bus pass in Niagara Falls; $92 for parking)

I used the Gasbuddy app to find the cheapest gas stations along the way.  Most were under $2 per gallon.  We filled up just before entering Canada because the average gas price north of the border is around USD$3/gal, so we only had to purchase a few gallons in Canada at those prices.

We somehow managed to avoid toll roads everywhere other than the one international bridge crossing from Detroit to Windsor, Canada (USD$5).  We also walked to the American side of Niagara Falls for the day and spent USD$1.50 for the privilege of making a pedestrian crossing on the international Rainbow Bridge.

We budgeted $200 for parking and/or transit and spent almost half that.  I used the Best Parking website to find the best deals for parking and frequently paid USD$3-5 for all day parking in downtown areas that might have been $20+ otherwise.  Except one day when there was a Drake concert and the “event rates” kicked in.  You win some, you lose some.  For us, driving proved cheaper than transit so we went with the less expensive option.

 

Food $435 (budget – $720)

  • Restaurants – dining out about once per day – $435 or ~$20 per meal
  • Groceries – slightly less than what we usually spend at home ($125-150/wk) – $0 extra (but $208 total, mostly in Toronto)

It seems like we ate out constantly, but looking at the numbers, we only ate out once per day on average.  At $19 or $20 per meal, this roughly matches our average from our Canada trip two years ago.  Some of the meals were very inexpensive at $10-15 (think fast food dollar menu or BOGO falafel wraps), other meals were closer to the $20 average (inexpensive take out from a “real” restaurant), while several meals were $35-45 at regular sit down restaurants.  We usually drink water with our meal and skip alcohol at restaurants.  That plus the weak Canadian dollar meant some really good eats for under USD$50 for our family of five.

 

Entertainment/Admission Fees $98 (budget – $400)

  • 2 days of Mammoth Cave tours – $96
  • Touristy stuff at Niagara Falls – $0
  • Bata Shoe Museum in Toronto – $2

The two days of Mammoth Cave tours was the only big museum or park admission cost during this trip.  So many other museums are free all the time (Air Force Museum; Air and Space Museum) or certain days of the week (like the outstanding Art Gallery of Ontario).

We also visited the Bata Shoe Museum in Toronto – a “name your own price” museum where I dropped two American $1 bills into the donation slot.  It was worth every penny (they had Shaq’s boot available to touch and smell!) but not a lot more.  Regular admission was crazy expensive so it’s unlikely I would have visited without the name your own price option.  The museum wasn’t crowded even on the day you can get in for free, so I imagine the regular admission days are really desolate.

 

Souvenirs $0 (budget – $0)

  • 5,024 pictures and tons of  memories – $0

I don’t like souvenirs.  Toronto’s City Hall handed out free TORONTO pins, so technically we received a few souvenirs but paid nothing for them.

 

Budget Wrap Up

  • Lodging – $157
  • Transportation – $264
  • Food – $435
  • Entertainment – $98
  • TOTAL: $954

At $954 for 3.5 weeks of life on the road for a family of five, I’d say we did okay.  Our goal wasn’t to travel this cheaply.  It just happened.  We also had several hundred dollars of Airbnb referral credit that brought costs down which might be hard to replicate if you don’t have a blog.

We saved about $200 on utilities while we were out of town primarily by setting the thermostat on 90 degrees and therefore using very little electricity.  We also consumed zero water and almost zero natural gas for the hot water heater.  Does that make our net vacation cost $754?

 

Travel hacking tips

When we plan a trip we try to leverage our existing stash of airline miles and hotel points for free flights and hotel rooms.  For stays over two nights, it’s often cost effective to stay at a short term rental located through a service like Airbnb or VRBO.

Large credit card sign up bonuses are our main source for miles and points.  Some cards entice new cardmembers by offering $400-500 reimbursement for any kind of travel expense (like the Barclay Arrival Card and the Capital One Venture card).  Other cards provide 30,000 to 50,000 hotel points or airline miles.  A third variety of cards, like the Chase Sapphire Preferred and Sapphire Reserve cards, offer points that can be transferred to a variety of hotel or airline programs or redeemed at the Chase site for 25-50% extra value (compared to redeeming for cash).

We slashed the lodging expense significantly by careful use of our credit card points.  We redeemed the $500 sign up bonus from our Barclay Arrival card on the Toronto Airbnb rental.

I picked up a $250 Airbnb gift certificate by redeeming 25,000 of the 150,000 American Express Membership Rewards points we earned when we signed up for a pair of Amex Business Gold Rewards cards in December last year.  That slashed the total price for three nights in an Airbnb rental in Bowling Green, Kentucky from $297 to $47.

We booked nine nights at Starwood Hotels (including Four Points by Sheraton and Aloft hotels) using 24,000 Starwood Preferred Guest points from a single Starwood Amex sign up bonus offer.  The most amazing redemption of the bunch was a $400 per night (in Canadian dollars) room in Niagara Falls for 3,000 points per night (and one of our rooms was upgraded to the Falls View executive room priced over $500 per night).

Overall, we slashed what would have been $3,000 in lodging expenses to under $200 using credit card reward points and hotel points.  Not a bad deal at all.

Travel hacking is how we traveled through Mexico for seven and a half weeks in 2015 for $4,500.  If you like free travel as much as we do and want to get some of these same cards, check out these credit card offers.

Airbnb is an incredible way to save money while on vacation, particularly if you’re traveling with a family.  We booked decent two bedroom apartments and houses for much less than the cost of a crappy hotel room suite.  The biggest benefit beyond having tons of space is that we get a full kitchen so we don’t have to dine out for a month straight.  If you haven’t tried Airbnb before, check them out for your next vacation and save $35 off your first stay.

Cooking at our house or apartment helps bring the food cost down.  This doesn’t mean you can’t try new restaurants and cuisines while you’re vacationing, but simple things like cereal, yogurt, fruit, and eggs for breakfast are much cheaper when prepared at “home” rather than purchased at a restaurant.  For lunch and dinner, we made a variety of wraps, sandwiches, and salads (on the easy end) while frequently delving into more complex culinary pursuits by cooking ribs, sausages, tortellini, spaghetti, and tacos during our two week stay in Toronto.

A few technological innovations helped us immensely.  The GasBuddy website/app shows the cheapest gas stations along your route.  The Best Parking website/app shows the cheapest parking for your area and time of day.  Google Maps is another great free resource and allows offline download of maps with navigation (we didn’t have data on our cell phone while “overseas” in Canada).

It’s worth mentioning the financial benefits of slow travel.  When you aren’t trying to hit all the bullet pointed sites in your travel guide within the typical American week long vacation, you can take time to relax and enjoy the trip more.  Schedule a “do nothing” day every two or three days of the vacation and spend the day strolling around the neighborhood, take the kids (or just you!) to the pool, catch up on your Netflix queue, or cook a big feast in your kitchen.  When you’re paying a weekly or monthly rental rate instead of a nightly rate at a hotel, it doesn’t cost much to take the day off from the sightseeing trail.

I also find tracking expenses and seeing where your travel dollars went to be a useful exercise.  I don’t really manage our spending against the budget while on vacation, but that could be useful if you are on a really tight budget or need to conserve cash for another upcoming trip.  Personal Capital is a great (and free!) app and website tool to track your spending automatically.  Then you can see where your travel dollars go without spending lots of time manually tracking expenses.

 

Where to next?

For 2016, we increased our travel budget to $10,000.  However we most likely won’t spend it all this year.  Year to date through August we have only spent $3,100 for travel.  That total includes our Canada road trip, $810 for a recently booked cruise in late November, partial payment toward another cruise in December, and some miscellaneous travel related expenses throughout the year.  We should spend another $1,000 to $2,000 for the remainder of the second cruise and other cruise expenses.  We will likely end the year with half of our $10,000 travel budget unspent.

Not to worry, as we are already talking about spending the summer of 2017 in Europe, so there’s a good chance we will use most of the $10,000 travel budget next year, and the $5,000 not spent in 2016 might come in handy too.

 

 

What epic trips have you taken?  Where do you want to travel next?  

 

 

July 2016 Financial Update

two-cents-photo

Thanks July, you were great.  Can you tell August to keep doing the same thing please?  Our net worth continued to climb throughout July to an all time high of $1,633,000.  Spending was very low at $1,190 while income was a bit higher for the month at $2,336.

We just returned home from our three and a half week road trip to Canada and it was a huge success!  Some of those travel expenses are included in this post, however I hope to have a separate post outlining our trip and the travel budget later in August.

Here’s what our July 2016 looked like from a (mostly) financial perspective.  And some random travel pics to prove we were actually on vacation.

Niagara Falls from the American side.

Niagara Falls from the American side.

 

Income

July investment income dropped to $78.  Our portfolio consists of mutual funds and ETFs that pay dividends at the end of each quarter, so July is typically a very slow month for investment income.  Our total investment income for the first half of the year is almost $10,000, putting us on pace to hit and possibly exceed the total of $28,527 in dividend income received in 2015.

Blog income, shown as “other income” in the chart, returned to a more normal $2,244 in July after a very low June.  My early retirement lifestyle consulting brought in $184 at the very end of July but will show up as part of my August expense report because that’s when the payment posted to my account.  August’s blog income won’t be quite as high since I didn’t publish much during July (advertising payments lag by a month).

The $13 of healthcare/medical income was a refund for the electric toothbrush heads I bought in June.  Turns out they weren’t authentic Philips Sonicare brand toothbrush heads as advertised.  They were very convincing fakes including the packaging, but I grew suspicious and noted enough differences to contact Philips to investigate.  Turns out they aren’t particularly concerned about high quality forgeries of their merchandise, so they didn’t even ask for the eBayer’s name that I bought them from.  I mentioned that the seller had hundreds of the same product listed for sale.  Still no concern from Philips.  Oh well.

I contacted the eBay seller and informed him he sold me some fakes and asked for a refund.  $13 was refunded immediately, no questions asked.  Pretty sure that’s a confirmation of my theory.  In the end I got a free two pack of generic electric toothbrush heads and a cool story to share with any intellectual property attorneys I may bump into at cocktail parties.

july-2016-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 look at July expenses:

july-2016-expenses

Another month of ridiculously low (but real) spending.  At $1,190, we spent just over a third of our budget of $3,333 per month (or $40,000 per year).  Not bad considering we were on vacation for over half the month (though we paid for our two airbnb rentals in previous months).  It’s worth noting, however, that we didn’t have any large, lumpy expenses in July like taxes, insurance, or a new minivan purchase so getting close to the magical $1,000 mark is relatively easy in those kind of months.

Travel – $423: The single largest expense for the month.  This include gas for the van, meals at restaurants, parking, tolls, and other travel related expenses.  We paid for the airbnb rentals and the two days of Mammoth Cave guided tours in previous months so this number seems artificially low for 17 days of traveling.  We also stayed with family in the North Carolina foothills for three days on the way to Tennessee, which meant close to zero spending those days.

Mammoth Cave in Kentucky. The reason we only spent one night in Nashville.

Mammoth Cave in Kentucky. The reason we only spent one night in Nashville.

Groceries – $299: A few hundred dollars lower than usual.  We didn’t buy many groceries in the two weeks of July before we left for vacation.  Two thirds of the grocery spending occurred while we were on the road trip.

While visiting family, we found a discount grocery store that sells odd lots of product, some of which were slightly expired.  We scored two cases of delicious granola bars at $0.29 per box.  Great road trip food (a small step up from chips or cookies) and handy snacks while out exploring.  Part of one case made it’s way back to Raleigh.

SCORE!! FYI, that's $0.29, not $29.

SCORE!! FYI, that’s $0.29, not $29.

Utilities – $140: Water, sewer, trash, and natural gas bill.  We still have a credit balance from pre-paying the electric bill in the spring to meet credit card minimum spending requirements to qualify for sign up bonuses (gotta love credit card travel hacking!).

Healthcare/Medical – $125: Health insurance premiums of $125 for our very impressive gold plated silver plan obtained through Healthcare.gov with some very sizable ACA subsidies.

Entertainment – $55: Hard liquor.  For some reason I categorize liquor store purchases as “entertainment” while beer and wine are “groceries”.

We restocked the liquor cabinet at home before vacation, and bought a ridiculously expensive pint of Canadian whiskey at the LCBO store in Canada (LCBO = ABC store north of the border).  While at the Canadian liquor store, I cringed as I watched a guy pay USD$12 for a six pack of Coors.  South of the border that’ll almost get you a 12 pack of fancy beer or a case of 24 Coors.

Toronto skyline from the Centre Islands

Toronto skyline from the Centre Islands.  Photo credit goes to fellow 30-something retiree/blogger FIRECracker from millennial-revolution.com, who gave us a tour of the island. 

Restaurants – $49: Chinese restaurant in Raleigh for the family; a new (to us) fried seafood restaurant for fish and shrimp for the adults in the house (kids are like “ewwwww fish!” – more for us).

Clothing – $46: Thrift shopping.

Internet (“Cable”) – $34: 50/5 mbit service.  Mostly good except when it rains.  The service technician is coming in a few days to figure out why.

Telephone – $12: Our annual $10 phone bill for Mrs. Root of Good’s rarely used T-Mobile cell phone plus two SIM chips for Freedompop’s free international phone service.

Service Charges – $3: Mrs. Root of Good’s 401k.  Institutional Vanguard shares at tiny expense ratios but we pay a few bucks per quarter for that privilege.  Worth it.

The Space Shuttle. The coolest thing I've ever seen in a museum.

The Space Shuttle. The coolest thing I’ve ever seen in a museum.

 

Year to Date Living Expenses

july-2016-expenses-ytd

At $23,720 year to date spending, we have exceeded the $23,333 budgeted for the first seven months of the year by a few hundred dollars.  In spite of the minivan purchase in March, we are almost back to meeting the annual budget.  By the end of August we should be on track.

August is shaping up to be a low cost month.  I’m not certain what the rest of 2016 holds for expenses.  We are taking both of the older kids to the orthodontist at the end of August, so there is a chance we’ll start paying for $10,000 worth of braces this year.  Their insurance covers braces in cases of medical necessity, so we’ll see whether that helps us any.

In October we’ll make the final payment of several hundred dollars for our December 2016 cruise to the Caribbean.

Monthly Expense Summary:

 

Net Worth: $1,633,000 (+$67,000)

Our net worth continued to climb throughout July to an all time high of $1,633,000.  Taking a look back at 2016, we are up almost a quarter of a million dollars since Mrs. Root of Good quit working and retired early six months ago.  Quit work, make a quarter million dollars every six months. Rinse, repeat.

Well, that’s probably not how the next several years will transpire but I expect the next several decades will see us occasionally tacking on another quarter of a million dollars to our net worth given our low spending, side hustle income from this blog and my consulting, and the background growth of our portfolio.

july-2016-net-worth

Looking back at June and July, it’s clear the one day loss of $70,000 that we suffered after the Brexit vote was no more than a bump in the road.  The lasting economic impact remains to be seen, but over the short term it turned out to be nothing more than a fleeting scare that briefly interrupted the market’s growth.

Where the markets head from here is anyone’s guess.  I can’t help but feel we’re riding an old, rickety wooden roller coaster as it ratchets its way slowly up an incline.  After it gets to the top, you know what happens next.  But even if we see a sudden crash from the recent highs, odds are it’ll be back up the incline once more after a bit of a wild ride.  That’s been the long term trend.

 

 

How was your August?  Did you let your investments rise with the market?  

 

 

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June 2016 Financial Update

two-cents-photo

On a day to day basis, our net worth in June zipped around like a spooked jackrabbit chased by a wolf.  That rabbit didn’t know the wolf’s name was Brexit.  By the end of the month, nothing much changed, with our net worth increasing very slightly by $1,000 to $1,566,000.  Income remained strong at $7,614 thanks to dividend payments at the end of the second quarter.  Expenses continued to be low in spite of a hefty estimated tax bill coming due in June.  Overall, our early retirement finances are looking great and our cash buffer account keeps growing.

The start of summer was remarkably mild here in North Carolina and we have enjoyed numerous days with temperatures in the 70’s.  I expect we are escaping the heat just in time as we’re about to depart on a three and a half week road trip to Canada.

Let’s open the ledger book and take a peek at June 2016!

 

Income

June investment income spiked to $5,165.  The months of March, June, September, and December are big for dividends because our portfolio is all funds and ETFs that pay dividends quarterly or annually.  Our total investment income for the first half of the year is almost $10,000, putting us on pace to hit and possibly exceed the total of $28,527 in dividend income received in 2015.

Blog income, shown as “other income” in the chart, plummeted to $642 in June after peaking at $8,950 in May.  In May I received two months of payments from a large advertiser, which means June was much worse for blog income.  My early retirement lifestyle consulting brought in $184 in June – a few hundred less than in May.  It’ll all average out in the end.  I’m glad I don’t have to rely on blog related income to survive in early retirement!

Deposit income of $1,522 mostly came from the sale of our 2000 Honda Accord.  We are once again a one car family and don’t miss having a second car (but we are missing the ease of driving a sedan instead of the bulkier minivan).  We sold the car for $2,300 to Mrs. Root of Good’s nephew who needed basic reliable transportation to get to class and work.  $1,500 cash up front and the remaining $800 over the next few months as his financial aid comes in for the fall semester.  So far this year we spent $8,200 buying our minivan and sold our two sixteen year old cars for $5,200 total, leaving us only $3,000 poorer due to car swapping.

The other $22 of deposit income represents the cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. If you sign up through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did.  I try to do all of my online shopping through one of these portals and the cash back adds up fast.  Last month I received the $110 cash back for booking our January cruise through Expedia (while clicking through Ebates to get to Expedia).  It’s a nice way to get a 10% discount on every cruise from a booking site we already use.

Travel income of $100 is part of the Barclay Arrival card $400 sign up bonus.  It ended up being closer to $500 cash back on travel when you meet the $3,000 minimum spending requirement (earning 6,000 more points) and get the 5% point refund when you redeem points.  To cash out the Barclay Arrival bonus reward points, I paid $394 toward our December 2016 Caribbean cruise then immediately reimbursed myself using the bonus points.  Then I charged another $100 payment for the cruise and reimbursed myself using my last 10,000 Barclay Arrival reward points.  In June we finished meeting the minimum spending requirement for Mrs. Root of Good’s Citicard American Airlines Aadvantage card for another 50,000 AA miles.  Now I’m working on earning the 50,000 mile bonus on my own Aadvantage card.  It’s a shame to pay full price for travel so don’t miss out on the credit cards that allow you to travel hack your way to a free trip.

june-2016-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).

Lunch with the kids on the last day of school!

Lunch with the kids on the last day of school!

 

Expenses

Now let’s look at June expenses:

june-2016-expenses

Another month of modest spending.  At $2,485, we were almost $1,000 under our budget of $3,333 per month (or $40,000 per year).

The top expense for the month was income tax at $1,250.    Now that we are both retired, I’m including tax payments and refunds as expenses and income, respectively, since they are included in our $40,000 annual retirement budget.  We started making estimated tax payments this year because we no longer have income tax withheld from paychecks at work.  I asked the IRS to apply my $640 federal income tax refund for 2015 to my 2016 tax liability but they didn’t listen and instead sent me a check last month.  Going forward, I’ll pay $600 every quarter and might be entitled to a small refund once I file taxes.

All other “core” expenses in June totaled about $1,200 so we are doing a great job keeping routine expenses low.

The next largest expense for June was groceries at $673.  This is slightly higher than normal (here’s what we buy in a typical month) but includes $100 in Visa gift card purchases (to save $10 on groceries).  I’ll be using those Visa gift cards for groceries in the future.  We won’t spend nearly as much on groceries in July since we will try to clean out the fridge and freezer before departing for our almost month long road trip.  Time to get creative with leftovers.

Chipotle chorizo shrimp alfredo on penne pasta.

Chipotle chorizo shrimp alfredo on penne pasta.

Healthcare spending totaled $199.  Health insurance premiums were the bulk of that at $125 for our very impressive gold plated silver plan obtained through Healthcare.gov with some very sizable ACA subsidies.  The other $74 was a copay for a doctor’s visit, six months of prescriptions, and four Sonicare electric toothbrush head replacements.

$98 for utilities is our water/sewer/trash bill from the city.  I paid the June natural gas bill in the first few days of July.  I was a few days late paying the $24 gas bill (oops!) and they hit me with a $0.24 interest charge.  I don’t have the bill on auto-pay because I want to optimize my utility spending each month to meet minimum spending requirements on credit cards.  I prepaid our electric bill earlier in the year to meet minimum spending requirements on a credit card, so I won’t have an electric bill until the end of the summer.

Restaurant spending of $62 covered our family plus one more adult at a Father’s Day lunch (a made up holiday here in the US for all you international readers) for Mrs. Root of Good’s family.  It was a last minute event and those who set it up didn’t realize it was $15 per person until it was too late.  The restaurant’s affordable weekday lunch prices double on weekends.  Lesson learned for next time – suggest a restaurant that doesn’t double prices on weekends.  At least the food was better than expected!

Free birthday treats at Starbucks and Chik Fil A for my 36th birthday.

Free birthday treats at Starbucks and Chik Fil A for my 36th birthday.

The home maintenance expense of $60 covers gift cards for Lowe’s I bought on ebay at a $15 discount.

$58 in automotive spending covered all the replacement parts and supplies to rebuild a portion of the air conditioning system in the Honda Accord we just sold.  The expansion valve clogged and the high pressure fill valve failed leading the system to evacuate itself in a messy volcano of refrigerant and compressor oil.  I could have taken the car to the shop and paid somewhere around $700 for the repair.  Or spend $58 in parts and supplies and several hours under the hood.  You know which one I chose. After a valiant effort the air blows cold and the pressures on my manifold gauge set were in line with expectations.  I think I did it.

By the way, Autozone and other parts stores have tons of tools that you can “rent” for free by putting down a deposit.  Just “pay” for the tool and get a full refund when you return it within 90 days – it’s legit.  I borrowed a vacuum pump, leak detector and oil/dye injector gun for a deposit of $250 (since refunded).

My refrigerant refill rig.

My refrigerant refill rig.

Cable expense of $34 is our 50 mbit internet connection from the cable company.  You didn’t think we would waste money on cable, did you?

$23 in travel expenses represents the fees I paid for the privilege of paying my $1,250 tax bill by credit card.  The tax bill represents almost half of the $3,000 minimum spending required for my latest American Airlines Aadvantage card which will yield 50,000 miles (enough for a free flight to Europe in the off season or two domestic round trip flights any time).  More spending equals more free miles since there seems to be an endless flow of credit card offers with enticing sign up bonuses.

$12 in gas covered a partial refill for the Honda Accord before I delivered it to my nephew plus a gallon for our lawnmower.  I also filled up the minivan for $36 using an Exxon gift card purchased last year.

 

Year to Date Living Expenses

june-2016-ytd-expenses

At $22,530 year to date spending, we have exceeded the $20,000 budgeted for the first six months of the year by a few thousand dollars.  This includes the minivan purchase in March, so if we keep under spending our monthly $3,333 budget (like we do many months) then we’ll be back on track in a few more months.  I’m guessing by August or September we’ll be back on budget for the year.

July and August should be fairly low cost months since we’ll be traveling for half of each month on a road trip through the US and Canada and have already paid for all of our vacation lodging expenses.

Monthly Expense Summary:

Vacationing in our own town. Enjoying the free parking and free museums in downtown Raleigh.

Vacationing in our own town. Enjoying the historic buildings, free parking, and free museums in downtown Raleigh.

 

Net Worth: $1,566,000 (+$1,000)

Another month of gains (just barely).  Though the headline reads a $1,000 gain because of rounding, the exact increase was $258 for the whole month.  That’s still positive territory, right?

june-2016-net-worth

It’s hard to believe June’s finish line was so close to the starting point given the volatility throughout the month.  The day Brexit hit the markets, my portfolio was smashed particularly hard because of my asset allocation’s tilt toward 50% international investments.  The British pound dropped 7% overnight against the USD while other foreign currencies suffered fates almost as bad.  The stock indexes in the UK and Europe also dropped heavily.  Combine huge exchange rate losses with underlying market losses and your international investments hurt.  A lot.

I’m reminded how it feels to lose $70,000 in one day (almost three times what we spent in all of 2015).  I was pretty busy the day the markets crashed the most so I didn’t have time to babysit my portfolio.  It’s just as well since there’s not much to be done.  Eventual losses totaled $90,000 by day four.  In hindsight, my “do nothing” approach paid off once again since the market has mostly recovered since the Brexit crash.  Shrug, do nothing, collect dividends, and move on.

Cautioning attendees at an event in the Research Triangle Park to stick with long term investments a few days BEFORE Brexit.

Cautioning attendees at an event in the Research Triangle Park to stick with long term investments a few days BEFORE Brexit.  You would trust financial advice from a guy in shorts and sandals, right?

These market hiccups, burps, and farts are nothing more than distractions from a long term investment plan.  When they hit, the natural response is “how rude!”.  Then the gassy stink dissipates and we remember that the occasional expulsion of gaseous substances is a natural byproduct of digestion; a sign of a properly functioning system.

A new all time high net worth brought us within $500 of hitting the $1.6 million milestone earlier in June but we got knocked back a bit from that goal.  Maybe July will bring us to new territory?  In any event, I’m going back to doing nothing.

Times could be better, but they could also be a whole lot worse.  No complaints from the Root of Good family.

This guy is ready for summer 5x.

This guy is ready for a sunny summer 5x over.

 

 

Did you Brexit the market or stick it out through the slaughter?  Are you back in positive territory with your investments? 

 

 

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

May 2016 Financial Update

two-cents-photo

May proved to be another good month financially for us.  Our net worth continued its upward march with a $13,000 addition, bringing total net worth to $1,565,000.  Our income ballooned to $10,826 while our spending increased slightly to $2,979 to almost match our monthly spending target.

Summer sneaked up on us this year.  The hot, humid air that just appeared in North Carolina is a reminder that spring is no longer with us.  Fortunately, we’re escaping the heat by heading north to Canada for a couple of weeks.  Our kids have four more days of school before they are out for the summer, which means us parents get to sleep in seven days per week.

Now for the May numbers!

 

Income

May investment income dropped to just $59.  Since our portfolio is all funds and ETFs that pay dividends quarterly or annually, the months of March, June, September, and December are big for dividends.  We should receive a few thousand dollars during the month of June.  In 2015 we earned a total of $28,527 in dividend income.

Blog income, shown as “other income” in the chart, was well above average at $8,950.  This represents two months of payments from a large advertiser, which means June might be an abnormally low month for blog income.  My early retirement lifestyle consulting brought in $503 in May, more than doubling the revenue from March and April.  I’m still aiming to live off of four percent of our portfolio but this month’s blog income and consulting income way more than covered our living expenses (and total year to date blog/consulting income almost equals year to date spending).  I’m still not convinced that the blog income is a reliable source of funds indefinitely, but it looks like it’ll remain strong in the near term.

Tax income of $640 is our federal income tax refund.  I asked the IRS to apply the refund toward our 2016 income tax liability and they screwed up (which might cost me a little due to underpayment penalties as I file quarterly estimated income taxes).  Before 2016 I didn’t include income tax refunds or income tax payments in these expense reports, but now that we are both retired, I’m including tax payments and refunds as expenses and income since they are included in our $40,000 annual retirement budget.

Travel income of $394 is part of the Barclay Arrival card $400 sign up bonus.  It’s actually closer to $500 cash back on travel when you meet the $3,000 minimum spending requirement (earning 6,000 more points) and get the 5% point refund when you redeem points.  To cash out the Barclay Arrival bonus reward points, I paid $394 toward our December 2016 Caribbean cruise then immediately reimbursed myself using the bonus points.  I’ll charge another $100 payment for the cruise and reimburse myself using my last 10,000 Barclay Arrival reward points.  Right now I’m working on meeting the minimum spending requirement for a Citicard American Airlines Aadvantage card for another 50,000 AA miles.  Don’t miss out on travel hacking your way to a free trip.

Deposit income of $279 comes from the cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. I’m all about sharing the wealth, so if you sign up through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did.  I try to do all of my online shopping through one of these portals and the cash back adds up fast.  I finally received the $110 cash back for booking our January cruise through Expedia (while clicking through Ebates to get to Expedia).  It’s a nice way to get a 10% discount on every cruise from a booking site we already use.

may-2016-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 look at May expenses:

may-2016-expenses

We almost hit our target budget of $3,333 per month (or $40,000 per year) in May with $2,979 of spending.

The biggest expense this month was our home, auto, and umbrella insurance policy premiums coming due for the year, totaling $1,022.  We pay:

  • Home policy – $589 per year
  • Auto policy – $272 every six months
  • $1 million umbrella policy – $162 per year

Grocery spending was slightly higher than average at $601 for the month.  We stocked up on some staples at the twice per year sale at our Food Lion grocery store ($0.25 off all store brand items), so that pushed our monthly grocery bill up a bit.

Pork shoulder on sale at the grocery store? Why not make eastern NC style pulled pork BBQ?

Pork shoulder on sale at the grocery store? Why not make eastern NC style pulled pork BBQ?

Home maintenance was a big spending category in May.  I had to call a plumber when a routine drain cleaning (pulling off the P-trap to remove a clog) went sour.  I twisted the pipe leading into the wall drain too hard and sheared the pipe in two.  Then I couldn’t get the pipe out of the wall drain.  Eventually I gave up and paid the $89 our neighborhood plumber charges for a house call (even though it took him all of ten minutes to remedy my botched job including going slowly and showing me how to do it right next time).  My first big DIY fail in a while.

It wasn’t a complete bust though.  He explored inside and underneath the house and provided some good tips on other plumbing issues I have (such as the busted pressure reducing valve in the crawl space).  I also got a quote for replacement of three toilet shut off valves (the joys of owning three toilets…) and the hot water shut off valve in the kitchen.  The 44 year old original valves that came with the house were worn out and wouldn’t shut off completely.  The plumber came back a few days later and charged $225 for replacement of those four shut off valves, three of which required a blow torch – something I’m not skilled at.  Not a bad price to remedy what could be a huge inconvenient mess without operational water shut off valves.

He also quoted $269 to replace the pressure reducing valve or $389 to replace the PRV and relocate the main house shutoff to the other side of the crawl space where I could shut off the main water supply by simply reaching an arm into the crawl space.  After researching the PRV assembly I realized I could easily remove the PRV and install a new one since it’s a matter of unscrewing the old PRV and screwing on the new PRV then tightening the bolts holding the PRV on.  I found an exact match for the old valve, a Watts 3/4″ Pressure Reducing Valve for only $72 at Amazon, so I saved almost $200 versus the plumber’s quote for parts and labor.  I also had to buy 12 and 18 inch adjustable wrenches for $12 total to complete the job.  Without doubt, those wrenches will come in handy the next time I work on the plumbing or the car (that’s June’s DIY project).

pressure-reducing-valve

The 44 year old pressure reducing valve I pulled out.

A quick note on pressure reducing valves.  If you are on municipal water service, you receive water at whatever the municipal system provides it.  In my case, my water pressure was 110 psi.  That’s almost double the 60 psi recommended for houses.  High water pressure can cause leaks or damage toilet fill valves, faucets, hot water heaters, and clothes washers.  High water pressure also leads to higher water use since turning on a faucet “full blast” (as my kids love to do) leads to a much higher flow rate.  The pressure reducing valve limits the pressure coming from the municipal water supply to a level that’s manageable for common household plumbing fixtures and appliances.

After installing the pressure reducing valve, we immediately noticed the extremely noisy toilet fill valves became barely audible.  We no longer hear the hiss of the ice maker refilling.  Water pressure in our sinks and showers is still adequate.  In hindsight, high water pressure explains all of our busted garden hoses that exploded or started leaking, the cracked fill valve on our dishwasher, the water hammering, and the hard to fix leaks from plumbing fixtures.

I’m glad I called the plumber since the pressure reducing valve was an issue that I didn’t know existed.  It makes perfect sense in explaining the occasional plumbing issue we’ve experienced over the years.  I’m hoping to experience a noticeable reduction in our water bill.  At the least, we’ll save money on repairs, extend the life of appliances, and enjoy quieter water throughout the house.

You don’t have to spend $89+ on a plumber to check your water pressure.  Water pressure gauges are extremely cheap.  This one is $9 at amazon.  Buy it and screw it onto your hose connection outside your house or to your clothes washer cold water connection.  If it’s over 60 psi, you may want to look into a pressure reducing valve.  You may not have one, or it may have failed over the years.  The PRV is usually located at the beginning of your clean water plumbing where the municipal supply comes into your house.  If you’re on well water you may not have a PRV (I’m guessing).

Home improvement 101 is over.  Back to my financial update.

Rounding out the home maintenance expenses was another $50 for some weed killer spray, fire ant killer, and some plumbing supplies to replace the faucet for the kitchen sink (my next plumbing DIY project).

diy-roof-repair

Another DIY project in May. Repairing the leaking roof vent pipe flashing.

The $394 travel expense was discussed under “Income”.  It’s another payment toward our December 2016 cruise and I used Barclay Arrival card reward points to pay for the $394 cruise expenditure.

$132 for utilities is our natural gas bill and our water/sewer/trash bill from the city.  I prepaid our electric bill earlier in the year to meet minimum spending requirements on a credit card, so I won’t have an electric bill until the end of the summer.  Unfortunately I haven’t figured out a cost effective way to eliminate electric bills completely without dropping tens of thousands on a solar panel array.

Healthcare spending totaled $131.  Health insurance premiums were the bulk of that at $125 for our very impressive gold plated silver plan obtained through Healthcare.gov with some very sizable ACA subsidies.  The other $6 was our share of the biopsy from Mrs. Root of Good’s minor surgery on her arm last month.  The biopsy was negative as expected, so no worries!

Gifts of $114 included $90 in cash to our son for his birthday.  That’s the main way our kids get spending money right now.  Mrs. Root of Good and the oldest daughter are assembling photo books to give to her fifth grade friends as they part ways and head off to different middle schools.  We spent $24 for photo prints for that project.

A gift for my neighbor. Assembled her Gorilla garden cart.

A gift for my neighbor. Assembled her Gorilla garden cart.

General merchandise of $52 was a run to Walmart for miscellaneous stuff around the house.

Entertainment expense of $38 includes a $1 computer game for me and $37 to pay for the rest of the year for our half of the family Netflix account shared with my parents.

Cable expense of $34 is our 50 mbit internet connection from the cable company.  You didn’t think we would waste money on cable, did you?

Not shown on the expense summary graphic (but included in total monthly expenses) are:

  • $17 on restaurants – $10 for donuts, $6 of Chinese dumpling take out, $1 Outback steakhouse blooming onion
  • $12 for automotive – 2 cans of r134a refrigerant – oops, another DIY fail – more on this next month!
  • $4 for electronics – random USB cables for the kids’ tablets; they consume cables routinely by being rough on them

And that’s how you live an okay life on just under $3,000 for one month!

Free 15 cubic yard load of white oak hardwood chips. Tree companies routinely give this away for free. Just call them.

Free 15 cubic yard load of white oak hardwood chips. Tree companies routinely give this away for free. Just call them.

 

Year to Date Living Expenses

may-2016-expenses-ytd

At $20,044 year to date spending, we have exceeded the $16,667 budgeted for the first five months of the year by a few thousand dollars.  This includes the minivan purchase in March, so if we keep under spending our monthly $3,333 budget (like we do many months) then we’ll be back on track in a few more months.  I’m guessing by August we’ll be back on budget for the year.

I don’t expect any large expenses in June, so there’s a good chance we spend well under our $3,333 monthly budget.

July and August should be fairly low cost months too since we’ll be traveling for half of each month on a road trip through the US and Canada and have already paid for all of our vacation lodging expenses.

Monthly Expense Summary:

In case you think all I do is DIY. I also "volunteer" (which is more fun than work).

In case you think all I do is DIY. I also “volunteer” (which is more fun than work).

Net Worth: $1,565,000 (+$13,000)

The headline number keeps going up and up.  Every time it does this I expect it to drop the following month because that’s how it goes – up and down, up and down, like a ride at the fair.

may-2016-net-worth

I just celebrated my 1,000th day of early retirement at the end of May.  During that nearly three year period, our net worth has increased by a few hundred thousand dollars.  I’m not expecting that to happen over the next three years since Mrs. Root of Good is no longer working.  However, if the blog and consulting income remains the same as it has been over the past year, we will only have to dip into our investment portfolio a tiny amount to fund our living expenses.

No matter what, I don’t think we will run out of money in early retirement even if my blog income dries up completely.  We’re spending a very conservative 3-4% of our portfolio value each year, which should last us indefinitely.  In the worst case we would spend most of our portfolio by the time we hit our 60’s at which time we would start drawing our $24,000 per year Social Security benefits.

Potential encore career if this whole early retirement thing doesn't work out.

Potential encore career if this whole early retirement thing doesn’t work out.

Now it’s time to get back to enjoying the freedom of early retirement.  And the carefree days of summer are a perfect symbol of that early retirement spirit!

 

 

Still riding the market up, up, and up?  How did you do financially in May?  

 

 

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April 2016 Financial Update

two-cents-photo

Now that April is over, we are one third of the way through 2016.  How are we doing?  Where are we going from here?

Financially, April was a great month on all fronts.  Our net worth increased by $23,000 to $1,552,000.  Our income remained strong at $2,471 even though it’s been a few months since we received any pay checks from employers.  Our spending dropped significantly compared to last month to $1,829 (not buying a new minivan certainly helped keep expenses low).

On the personal side, April was an incredibly busy month.  The weather was nice so we spent a lot of time outdoors.  We were busy with kids’ school events and volunteering, hanging out with friends, and enjoying the wonderful life we have built through a decade of financial butt kicking.  We capped off the month with a day trip to the beach for a wedding.

On to the numbers!

 

Income

After receiving $4,476 in dividend income in March, our investment income dropped to just $130 during April. Since our portfolio is all funds and ETFs that pay dividends quarterly or annually, the months of March, June, September, and December are big for dividends.  As this post goes live, we’re about six weeks from the start of the next dividend season in June.  In 2015 we earned a total of $28,527 in dividend income.

Blog income, shown as “other income” in the chart, was fairly normal at $2,043.  My early retirement lifestyle consulting brought in $180 in April (same as March).  I’m still aiming to live off of four percent of our portfolio, and treating the blog and consulting income as purely discretionary money that we can spend if we want (or save if we want).  The next month or two should be very good months for blog income thanks to a lot of recent attention in the media (part of what kept me busy during April!).

TV talking head - my new career?

TV talking head – my new career?

Deposit income of $117 includes $87 of ebay and craigslist sales plus $30 of cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. I’m all about sharing the wealth, so if you sign up through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did.  I try to do all of my online shopping through one of these portals and the cash back adds up fast.  I’m not sure when I’ll actually get the cash but my Ebates account was just credited with over $100 in cash back from our January 2016 cruise I booked through Expedia (via Ebates).  Very nice and worth the wait!

april-2016-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 look at April expenses:

april-2016-expenses

Monthly spending in April totaled much less than our budget of $3,333 per month (or $40,000 per year).  We didn’t buy a minivan and we didn’t have any large annual bills like property tax or insurance, so it was easy to come in well under budget for the month.

Grocery spending dropped back to a more normal $428 during April.  I thought this would be a lot higher given how well we ate and how much we shopped for groceries during the month.  I guess I’ll have to thank Aldi, Trader Joe’s, Kroger, Walmart, Food Lion, the Asian store, and the Mexican grocery store for keeping their prices low.

Spend little on groceries; make awesome food like homemade tamales? Yes, please.

Spend little on groceries; make awesome food like homemade tamales with fresh guacamole tomatillo salsa? Yes, please.

Healthcare spending increased significantly to $270.  Since we no longer have dental insurance, Mrs. Root of Good paid $105 for her routine dental visit (the cash rate for uninsured patients at our dentist).  We finally got to use our new health insurance when Mrs. RoG visited the doc to have a lump on her arm checked out.  It was diagnosed as likely being a lipoma (a lump of fat, and please note, NOT lymphoma or anything like it fortunately!).  The doc scheduled her for minor outpatient surgery the next day.  The biopsy revealed it was, in fact, just a lump of fatty tissue and totally benign.  Our insurance is working out well so far with two $20 copays paid at the time of service plus another $120 bill for the surgery (20% of the $700 price the insurance allowed for the surgery).

Health insurance premiums totaled $125 for our very impressive gold plated silver plan obtained through Healthcare.gov with some very sizable ACA subsidies.  Quick update on our health insurance situation: four of us obtained insurance through the healthcare.gov exchange very quickly.  We had to apply to the state’s medicaid/NC Health Choice program for our three year old (now four year old).  We’re currently on day 87 of waiting for our application to be approved so our four year old has been uninsured since May 1 (during March and April we had the possibility of retroactive COBRA coverage for the little dude but that option expired April 30).  He will have retroactive coverage if his NC Health Choice application is ultimately approved (which it should be).  The wheels of bureaucracy move.  Slowly.  Let’s hope they finish processing the application before he’s five.  And I think the State of North Carolina is distracted with other important issues these days, so I understand the delay.

Good thing we don’t pay state tax to fund the agency processing his paperwork.  Except we do!  Since we don’t have any tax withheld from a paycheck, we now have to make estimated tax payments.  I made the first estimated quarterly tax payment of $225 for state taxes.  We can pay online and we can even pay with a credit card for a 2% fee.  Good to know if I need to meet minimum spending requirements for my credit card travel hacking hustle!

Clothing and shoe purchases totaled $200 for the month.  Everyone but me got new shoes and the ladies got new swimsuits.  We also did a bit of thrift shopping.

Utility spending of $167 includes the water/sewer/trash and the natural gas bill.

Restaurant spending of $103 included some horribly unhealthy but delicious donuts, Chinese take out, and a fun lunch out with an old friend.  However, the bulk of the restaurant spending in April was for a meal at the restaurant where the beach wedding reception was held ($62 for okay but not great food).  We had to pay for our own meal but (1) we can afford it and (2) at least the bride and groom didn’t have to pay tens of thousands of dollars for their wedding.  Nicely done newly married couple!

donuts-bakers-dozen

Delicious. $17 for 13 of the most mouth-watering treats that aren’t Mexican food. Courtesy of Baker’s Dozen Donuts in Cary and now in Raleigh. And a Cambodian-owned business so we’re supporting Mrs. RoG’s people.

The $69 electronics purchase was an ASUS RT-N66W router.  We tried to go cheap on a router last month and it didn’t have the range that we needed to cover the whole house.  Lesson learned and $15 wasted (but we have a backup router just in case).

The uncategorized expense of $67 was mostly the purchase of our new couch at a thrift shop benefiting the homeless.  The curb sleepers of Raleigh get some of our cash to keep them off the street and we got a new couch.  Now to craigslist the old couch for more than we paid for the new(er) couch.  We also found some other ridiculous items like a brand new pair of shorts from Jos A Banks with tag still on for $3.  The only reason this expense was uncategorized is that Personal Capital couldn’t categorize the purchase correctly since it’s the first time we’ve shopped at this particular thrift store.  After I update it, it’ll be in the system correctly for good and subsequent purchases from this retailer will appear correctly too.

The minivan needed a few final touches before getting it road ready for our summer trip.  I spent $16 on some fancy windshield wiper blades at Walmart (they were on clearance) and $42 for tire rebalancing.  The tech said the wheels were way out of balance. The vibrations observed at mid to high speeds disappeared immediately after the rebalancing.  So far so good on the used car purchase.

The entertainment expense of $48 was a brand new camera lens for Mrs. RoG’s photography addiction.  I debated whether to put this in entertainment or electronics because it’s really both.

Not shown in the expense graphic because of their small dollar values were:

  • gifts – $45
  • gasoline – $40 (mostly the trip to the beach at 23 miles per gallon in our minivan with 7 passengers)
  • internet – $31
  • service charges/fees – $26 (Mrs. RoG’s 401k – I’ll have to follow these closely to see how much they total per year)

That’s a lot of consumption but we still spent at a level 30% below the poverty line.  Maybe we’ll throw in some cigarettes, alcohol, bail bonds, flashy rims, and lottery tickets to bootstrap our way up to the lofty heights of poverty level living next month (no offense to my distant kinfolk if you guys are reading this month’s edition of Lifestyles of the Rich and Boring).

Giving the little guy a taste of stardom.

Giving the little guy a taste of stardom.

 

Year to Date Living Expenses

april-2016-ytd-expenses

At $17,065 year to date spending, we have exceeded the $13,333 budgeted for the first four months of the year by a few thousand dollars.  This includes the minivan purchase in March, so if we keep under spending our monthly $3,333 budget (like we do many months) then we’ll be back on track in a few more months.

I just received the annual or semi-annual bills for about $1,000 for home, auto, and umbrella insurance policies.  July and August should be fairly low cost months too since we’ll be traveling for half of each month on a road trip through the US and Canada and have already paid for all of our vacation lodging expenses.

Our goal this year was to spend more than the $24,000 we spent last year, and so far we are on track spend a bit more than that paltry figure.  Regardless of whether we spend the whole $40,000 budgeted for 2016, we are having a good time, enjoying life, and doing the things we want to do in early retirement.  And that’s what matters the most, right?

Monthly Expense Summary:

Living like a pauper is tough but somebody's gotta do it. And do it well.

Living like a pauper is tough but somebody’s gotta do it. And do it well.

Net Worth: $1,552,000 (+$23,000)

Another month of net worth growth!  Yippee!  We are within $40,000 of our all time high net worth reached in 2015.

The net worth is just a number to me.  I don’t really get excited when I see a $23,000 increase in one month because I know the net worth figure will fluctuate by a five figure amount almost every month.  That’s just the nature of the stock market and there’s very little one can do when investing most of one’s portfolio in equities.

If volatility concerned me, I would shift into more stable asset classes like bonds and cash.  But it doesn’t so a high equities allocation is fine with me.

april-2016-net-worth

Every month we are growing more and more comfortable with our early retirement finances.  Toward the end of 2015 and beginning of 2016, we watched our investment portfolio drop almost $200,000 over a three month period.  A few months later, we have recovered all those losses and even gained a small amount.

What will the future hold?  If by future you mean the rest of 2016, I have no clue other than it will go up and it will go down.  In 2025 or 2030, I expect markets will be up.  Let’s check back in at that point and compare notes.

In the meantime, I’m ignoring the daily market vacillations.  I’m planning on enjoying a beautiful May in North Carolina (one of our best months weather-wise) and ease our way into summer when we depart for our road trip up north in mid-July.

 

 

 

And you? How was your April?  Enjoying the rising stock market?  Gearing up for summertime fun?  

 

 

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The Great American Canadian Road Trip – Summer 2016 Edition

city-wall-quebec

I dropped some hints about our big summer plans in my last post, and now it’s time to make it official!  We’re going on an almost month long road trip to Canada by way of Kentucky and Michigan.  For those following along with my early retirement journey for the past few years, you might be experiencing deja vu because doesn’t a month long road trip to Canada sound familiar?

You aren’t experiencing deja vu. In 2014 we did set out on what was supposed to be a month long road trip to Canada that turned into a two and a half week road trip when we came home early.  The exhaustion that comes from superintending a rambunctious two year old combined with a disappointingly dirty Airbnb apartment rental persuaded us that it was time to return back home to Raleigh for some true R and R.

The 2014 Canada trip included visits to Montreal and Quebec City.  After leaving Quebec City we intended to visit Ottawa and Toronto, then stop by Niagara Falls on the return trip south to Raleigh.  We never made it to Ottawa, Toronto, or Niagara Falls.  On this summer’s trip we are headed back to Canada to enjoy the mild summers and hit some of the stops we missed two years ago.

 

The Great Triangle

This road trip evolved from our desire to see Niagara Falls and Nashville.  Students of geography know those two cities aren’t near each other.  They aren’t even in the same direction if you start in Raleigh.  In fact, the straight lines from Raleigh to each of those two cities are approximately perpendicular.  For the record, Mrs. Root of Good chose Niagara Falls and Nashville as our summer destinations (she’s less a fan of maps than I am).

If we want to travel along two perpendicular lines, why not make a triangle spanning the eastern half of the United States (and extending into Canada)?  By combining my clever knowledge of geometry with Mrs. Root of Good’s shotgun approach to destination selection, the Summer 2016 road trip was born.

Instead of taking a 17 hour round trip to Nashville then a 22 hour round trip to Niagara Falls for a total drive of 39 hours, we decided to make a triangular shaped journey from Raleigh to Nashville to Niagara Falls then back to Raleigh that would take 30 hours.  By taking the hypotenuse of the triangle in a northeasterly direction, we shaved nine hours off of our total driving time.

Back in our working days with the constraints of a one or two week vacation upon us, we might be happy with seeing the booming city of Nashville and a natural wonder like Niagara Falls.  But we have all summer and wanted to add some value to this road trip.  If I’m driving 30 hours I’d like the trip to be more epic than “just” Nashville and Niagara Falls.

That’s when Toronto re-entered the picture.  Arguably the most metropolitan city in Canada, Toronto was on our wishlist during our 2014 Canada trip but it didn’t happen.  On Canada trip round #2, we’re going to make it happen.  It’s only two hours north of Niagara Falls.  A very logical addition to our road trip since we’ll already be “way up north”.  It’s also a destination with tons of stuff to see and do, unlike Niagara Falls which is mostly just a waterfall (though admittedly a very very big impressive waterfall with lots of water).  Nothing wrong with a two week layover in Toronto when you aren’t in a hurry, right?  Just another benefit of the slow travel mindset.

Along with Toronto, we decided to add two full days exploring Mammoth Cave in Kentucky.  We’re staying down the road in Bowling Green, Kentucky.  After leaving Kentucky, we will head north toward Toronto with a two night pit stop in Detroit.  On the return trip back to Raleigh from Toronto and Niagara Falls, we will stop for one night in the outskirts of Washington, D.C. to visit the Smithsonian Air and Space Museum near the Dulles Airport (the kids didn’t know what the Space Shuttle was, so we’re going to see one up close).

The trip will cover around 2,100 miles and 34 hours (assuming light traffic).

So far we don’t have anything specific planned in any cities other than visiting Mammoth Cave, Niagara Falls, and the Air and Space Museum in DC.  Eventually we’ll get down to business and find something cool to do in Detroit and Toronto (and feel free to suggest anything worth seeing in the comments!).

The whole trip will last 24 nights with stays in the following cities:

  • Between Charlotte and Asheville, NC – staying with family 3 nights
  • Nashville – 1 night
  • Bowling Green, KY (Mammoth Cave) – 3 nights
  • Detroit, MI – 2 nights
  • Toronto, Canada – 12 nights
  • Niagara Falls (Canadian side) – 2 nights
  • Washington D.C. – 1 night
  • Back home in Raleigh!

 

Trip Budget

We usually put together a rough budget for our big summer trips.  For the 24 days we’ll spend traveling through North Carolina, Tennessee, Kentucky, Ohio, Michigan, Canada, New York, Pennsylvania, Maryland, Washington D.C., and Virginia, we expect to spend around $2,100 after our valiant travel hacking efforts.  Numbers for the curious:

 

Lodging $476 

  • 12 nights Toronto Airbnb rental – $363 (after $220 airbnb referral discounts and $500 Barclay Arrival Card travel rebate/bonus)
  • 3 nights Bowling Green, KY Airbnb rental – $47 (after $250 Airbnb gift card from credit card rewards)
  • 1 night hotel in Nashville from Hotwire – $66
  • 2 nights x 2 rooms Four Points by Sheraton Detroit Metro Airport – $0 (8,000 SPG points from Starwood Amex)
  • 2 nights x 2 rooms Four Points by Sheraton Niagara Falls Fallsview – $0 (12,000 SPG points from Starwood Amex)
  • 1 night x 1 room Aloft Dulles Airport North – $0 (4,000 SPG points from Starwood Amex)

 

Transportation (Gas, Tolls, Parking, Transit) $500

  • 2,400 miles at 22 mpg and $2.50/gal. gas = $275
  • Tolls = $25 (2 international bridges; PA/NY going south toward DC)
  • Parking or Transit – $200 (10 days at $20/day)

 

Food $720

  • Restaurants – Once per day at $30 per meal average = $720
  • Groceries – No more than what we usually spend at home ($125-150/wk) – $0 extra
A grocery run from our last Canada trip

A grocery run during our last Canada trip

 

Entertainment $400

  • 2 days of Mammoth Cave tours – $96 (already booked)
  • Touristy stuff at Niagara Falls – $100
  • Random museums/parks/etc in Toronto and elsewhere – $200

 

Souvenirs $0

  • lots of pictures and memories – $0

 

All of the lodging and $96 of the entertainment expense was paid in March.  The other $1,600 we’ll spend in July and August during the trip.

 

Travel hacking our way to glorious savings

We slashed the lodging expense significantly by careful use of our credit card points.  We redeemed the $500 sign up bonus from our Barclay Arrival card on the Toronto Airbnb rental.

I picked up a $250 Airbnb gift certificate by redeeming 25,000 of the 150,000 American Express Membership Rewards points we earned when we signed up for a pair of Amex Business Gold Rewards cards in December last year.  That slashed the total price for three nights in an Airbnb rental in Bowling Green, Kentucky from $297 to $47.

We booked nine nights at Starwood Hotels (including Four Points by Sheraton and Aloft hotels) using 24,000 Starwood Preferred Guest points from a single Starwood Amex sign up bonus offer.  The most amazing redemption of the bunch was a $400 per night (in Canadian dollars) room in Niagara Falls for 3,000 points per night.

Overall, we slashed what would have been $3,000 in lodging expenses to under $500 using credit card reward points and hotel points.  Not a bad deal at all.

Travel hacking is how we traveled through Mexico for seven and a half weeks for $4,500.  If you like free travel as much as we do and want to get some of these same cards, check out these credit card offers.

Another travel hack of ours is renting apartments for a week or more.  Airbnb is an incredible way to save money while on vacation, particularly if you’re traveling with a family.  We booked decent two bedroom apartments and houses for much less than the cost of a crappy hotel room suite.  The biggest benefit beyond having tons of space is that we get a full kitchen so we don’t have to dine out for a month straight.  If you haven’t tried Airbnb before, check them out for your next vacation and save $35 off your first stay.

 

Hitting the Road

We are leaving in mid-July and returning home in mid-August.  We have our new (to us) minivan which will make for a very comfortable and luxurious touring vehicle for this road trip.  One of the goals of the trip is to skip the typical rush rush rush that accompanies the normal one week American vacation and travel at a slower pace.

Other than the hotels and apartment rentals, our daily routine is very flexible so that we can take a vacation from sightseeing if we’re feeling lazy or exhausted. We’ll have a swimming pool at our hotel or apartment during most of the trip.  The kids promised to make the pool an often used luxury.

The trip budget includes dining out once per day.  We spent an average of $19 per day on restaurants during our last trip to Canada, so $30 per day should let us dine out more than we did last time.  The Canadian dollar is about 20% weaker this time around so our USDs will go farther.  We’ll probably dine out more when we are staying in hotels and less frequently when we’re settled in to our Toronto apartment for almost two weeks (if Toronto’s amazing food scene doesn’t prove overly tempting!).

Maybe we go absolutely crazy and spend way more on dining out than we budgeted.  That’s okay too because we increased our travel budget to $10,000 this year.  Beyond the $2,100 budgeted for this trip and a little under $2,000 budgeted for our December Caribbean cruise, we won’t be spending much on vacations during 2016.  With around $6,000 going unspent in our 2016 travel budget, I think we can afford to live it up a little while on vacation.  Though we’re already talking about a big 2017 trip (Mexico again? Europe?) so any unspent money could be used next year.

 

 

Any tips or hints for the cities we’re visiting?  Any hidden gems?  Free family fun? Any can’t be missed favorites?  

 

 

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