December 2016 Financial Update

two-cents-photo

Now that the year end celebrations are over, it’s time to get down to business.  Our December finances closed on a strong note with a big $29,000 boost to our net worth, bringing the total to an all time high of $1,680,000.  Our income for the month totaled $16,120 primarily due to year end dividend income while our expenses increased to $6,326 thanks to some incredible travel deals.

We closed out the year just under our $40,000 budget with total spending of $38,991.

Here’s how everything went down:

Income

In December our investment income climbed to $12,686 thanks to year end dividend payments from our investments.  Since our mutual funds pay at the end of each quarter, the months of March, June, September, and December always bring us high investment income while the other months are near zero.  Total investment income for 2016 rose to an all time high of $35,190, roughly 20% higher than the $28,527 dividend income we earned in 2015.  We aren’t dividend focused investors but the mutual funds we invest in tend to yield between 2% and 3%.  This year was no different with an overall portfolio yield of 2.52%.

Blog income, shown as “other income” in the chart, returned to a more normal $3,272 after a very slow November.  My early retirement lifestyle consulting income slowed to $125 in December after several months of much stronger results.  I was out of the country for roughly half the month without internet, which possibly led to the loss of a client or two (but it was worth it for the peacefulness and relaxation!).

What I was doing instead of helping people retire early.

Busy being early retired instead of helping other people retire early.

The $35 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 made some large travel-related purchases in December (more on that below) and I expect to get over $100 cash back on those purchases.

december-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 December expenses:

december-2016-expenses

Our core expenses remained very modest but a busy month of traveling and travel-related purchases pushed our total spending for the month to $6,326, or almost twice our normal budget of $3,333 per month (or $40,000 per year).

Travel – $5,332: Of the total travel expense, we spent $697 on all cruise costs beyond our cruise fares for the two cruises that we took in December.  The $697 includes mandatory gratuities of $12-13 per person per day (half that for children on MSC Cruises), gas for the minivan, and a week of parking at the Miami light rail station.  $36 for parking at the South Miami rail station parking deck was the cheapest way to get Port of Miami parking for a week at 80% less than the port charges.  However it took much longer than I expected to park the car and get back to the cruise terminal due to downtown construction and related transit detours.  The upside is I spent a few hours wandering around downtown Miami.

We travel-hacked this free two bedroom, two bathroom two story hotel suite (with full kitchen) that sleeps six for 10,000 Marriott points (= 3,333 Starwood points).

We travel-hacked this free two bedroom, two bathroom two story hotel suite (with full kitchen) that sleeps six for 10,000 Marriott points (= 3,333 Starwood points).

And it came with free breakfast. Incredible waffles and yes, that is brie (first time seeing that on a hotel's free breakfast buffet).

And the suite came with free breakfast. Incredible waffles, hot goodies like eggs and sausage (and tortillas!) and yes, that is brie (first time seeing that on a hotel’s free breakfast buffet!).

The bulk of the travel spending was for Airbnb gift cards.  I spent $4,635 to purchase $5,800 worth of Airbnb gift cards, which equates to a 20% discount.  I also bought them through an online shopping portal to snag another $100+ in cash back.

I estimated the cost of nine weeks of Airbnb rentals in Europe at roughly $90 per night and bought enough gift cards to cover what I expect to spend for this summer’s lodging.  We might stay in hotels for short stays of a night or two, and some airbnb’s will cost more than $90 per night, but overall I figure I’ll use up most of the $5,800 Airbnb credit.  If not, it never expires so I can use it on a future vacation.

If you have never tried Airbnb, it’s worth checking out.  We just booked a two bedroom, two bath high rise apartment (with a view!) in Lisbon, Portugal for five nights at USD$76 per night.  Get $35 off your first reservation using this link.  In our experience, we pay about half the rate of similar hotels and gain access to a living room and kitchen which makes family vacations go more smoothly (especially by week seven or eight).

For those following along with last month’s saga of the Cardcash.com disaster where many of us bought $500 to $1,000 worth of Aldi gift cards and they all turned out bogus (but we all got our money back as far as I know!), these Airbnb gift cards don’t have the same risk.  I bought them through GiftCardMall which is a “new” seller of gift cards and not a reseller, so there is no risk of shady fly by night sellers trying to pull one over on unsuspecting buyers through Cardcash.com (which is really a marketplace to connect buyers and sellers).

I still think places like Cardcash.com present a great way to save 5-20% off of places you plan on shopping anyway.  And I continue to think they are generally reliable due to several previous successful purchases and the 45 day cash back guarantee actually working in this most recent case.  Another alternative site I used more recently is Raise.com which is a gift card reseller just like Cardcash.com.  Raise.com offers a 100 day money back guarantee so there’s even less risk involved.  You can snag $5 off your first purchase at Cardcash or at Raise when you click through those links (I get $5 too!).  Just don’t buy more gift cards than you plan on using within the money back guarantee period.

Healthcare/Medical – $308: The majority of the healthcare spending for December was dental care.  Four of us had checkups and we have to pay for part or all of the dental visits out of pocket.  Also included in December’s medical expenses were prescription drugs.

We paid for the first month of insurance premiums on our new ACA-subsidized insurance plan.  It’s a slightly worse plan than what we had in 2016 and requires us to switch doctors.  We usually go to the doctor’s office once or twice per year so it’s not a huge deal to switch.  I can’t complain too much since we are only out of pocket $16 per month.  The $100 deductible and $1,200 out of pocket maximum means our medical costs will remain fairly minimal.  The $16 per month is also significantly less than the $125 per month we paid in 2016.

I guess we are the only ones in the nation paying less in 2017 than in 2016 for health insurance and generally happy with it?  The Healthcare.gov application process this year took no time at all as (amazingly) almost all of my information was pre-filled from last year’s application.  If this is evil commie government health care I’d like some more, please.

2017-health-insurance-costs

Since we carefully manage our Adjusted Gross Income to fall just over the poverty line, we get a large ACA subsidy.  We picked the cheapest silver plan.  The more expensive Blue Cross plan would cost about $125 per month (and that’s the cost the ACA uses to calculate the $856 per month subsidy).  We get to use the $856 per month subsidy on any Marketplace plan of our choosing, so we opted for a cheaper plan.

As of press time in early January, our two oldest children have “pending” applications with the North Carolina Children’s Health Insurance Program / Medicaid.  They qualify for this “free” coverage based on our low AGI and it’s pretty decent coverage from what we can tell (though not as flexible as some private insurance).  If one of the kids develops a significant medical issue and we need private insurance, we can always re-apply to the healthcare.gov Marketplace based on changed circumstances (our income could significantly increase, for example) and obtain heavily subsidized private insurance for the kids, too.

A quick note on “OMG OBAMACARE IS ENDING!!1”: Yeah, maybe.  There’s a lot of uncertainty over what the promised “repeal and replace” actually means.  I wouldn’t be surprised to see many parts of the Affordable Care Act remain in place under TrumpCare like the coverage for children on the parents’ policy through age 26, coverage of pre-existing conditions, and some form of subsidies to make insurance affordable.  Who knows, TrumpCare might actually be better for the average person than ObamaCare (though unlikely to be better for us given our $16 policy for 2017!).

In terms of timing, I expect the ACA subsidies and coverage to definitely remain through 2017 and most likely remain through 2018, and possibly later.  So now isn’t the time to panic. Yet. We’re probably good for two more years.

What will we do in 2019 should TrumpCare prove unfavorable?

  • Pay more, possibly tens of thousands per year more, and spend less elsewhere
  • Or work a little bit harder at money making endeavors and keep non-healthcare spending the same as today
  • Accept worse coverage to save money
  • Move overseas to any of the dozens of countries with reasonable health care costs
  • Move to a state with reasonable health insurance costs (that might include state-level subsidies or adult Medicaid)
  • Adapt our plans to maximize our benefit under the new TrumpCare subsidy rules
  • Throw in the towel and get a job with employer provided (and subsidized) health insurance

Fortunately we have time to see how the situation unfolds and react to new information as it becomes available.  Pay close attention in the coming weeks and months.

This is the special place I'd like to return to so that I can properly ponder future Affordable Care Act questions.

This is the special place I’d like to return to so that I can properly ponder future Affordable Care Act questions.

Groceries – $205:  We spent a lot less than normal on groceries in December because we weren’t at home for half the month and we enjoyed several nice meals at other peoples’ houses for the various winter holidays.

Shrimp and grits. And ham and cheese. (grits = ground up corn meal, popular in southern USA)

Shrimp and grits. And ham and cheese. (grits = ground up corn meal, popular in southern USA)

10 pounds of barbeque. We buy whole pork shoulders (also called boston butts), roast them all day, let it fall off the bone and serve it.

10 pounds of Eastern North Carolina style barbeque. We buy whole pork shoulders (also called boston butts) for about a buck per pound, roast them all day, let it fall off the bone and serve it.

Cruise ship desserts. Mmmmm flan.

Cruise ship desserts. Mmmmm flan.

Utilities – $156: The city water, sewer, and trash bill plus the natural gas bill.  In a previous month I prepaid the electric bill by applying an extra $250 toward my account balance – more credit card travel hacking.  January will see me paying the electric bill once again.

Education – $150: An overnight school field trip for one kid. Now that she’s attending the fancy middle school instead of the worst elementary school in the district we can no longer count on $20-60 per year in field trip costs. It’s still about $10,000 cheaper than private school and probably better.

One of our Christmas traditions - candy cane reindeer

One of our Christmas traditions – candy cane reindeer

The finished product. Nothing celebrates America and Baby Jesus better than candy cane reindeer.

The finished product. Nothing celebrates America and Baby Jesus better than candy cane reindeer.

 

Restaurants – $76: I bought some Taco Bell gift cards (my fast food weakness) through Raise.com for approximately 30% off (after factoring in the new account $5 discount).  I suppose I should allocate part of the expense to “Travel” because we had to stop for a bite on the drive back from Miami and I used up part of the card balance.

Gifts – $51: Picked up a few birthday and Christmas gifts.  Some of these included superheroes with superpowers. Because four year olds love superheroes with superpowers.  And Pikachu piggy banks.

Kaboom!

Kaboom! Wrapping paper everywhere!

I wish I could figure out Pinterest so I could put this pic on there.

I wish I could figure out Pinterest so I could put this pic on there.

Cable – $34: This is internet from the cable company.  Yes, it’s pretty cheap for 50 mbit service.  I call or go online annually to get this rate after a little finessing.

Home maintenance – $10: Donation for our neighborhood’s luminaria display along all the neighborhood streets on Christmas Eve.  This single annual payment is much cheaper than an HOA and provides more pleasure (and NEVER tells you your grass is unkempt).

Neighborhood luminarias (white paper bags filled with candles line all the streets - it helps Santa Claus find us)

Neighborhood luminarias (white paper bags filled with candles line all the streets – it helps Santa Claus find us)

Service Charges – $1: I pay a buck per month for my credit union checking account.  They pay me decent interest with no account minimums which usually offsets this buck.

Gasoline – $0: Other than the gas we used to get to and from the cruises, we haven’t had to purchase any gas locally.  We can go for a couple months between refills when we’re strictly staying around home (our feet are good at taking us places and almost everything is just a couple miles away if we’re driving). Gas purchased while on road trips is included in “Travel”.

Other than pre-paying $4,635 for our summer 2017 European lodging, we only spent $1,691 for our routine expenses in December.  Another great low cost month!

Root of Good's abode all lit up

Root of Good’s abode all lit up.  We’re gentrifying this joint!

 

Total Living Expenses for 2016

december-2016-ytd-expenses

At $38,991 total spending for 2016, we remained about $1,000 below our annual spending target of $40,000 budgeted for the entire year.  I can’t believe we actually came so close to our spending target.  The $8,000+ minivan purchase would blow our budget for sure, I thought.  But as the year wore on and we spent less than the monthly budget most months we eventually got back on track for our annual spending target.

I’d like to do a full 2016 budget versus actual blog post so I’ll leave the gritty details for that post in the near future.

Big expenses for 2017 include replacing the roof early in 2017.  The budget for the roof replacement is somewhere around $4,000 to $8,000.

Nine weeks in Europe in the summer of 2017 won’t be cheap either.  Now that all flights and most lodging expenses are already paid, I think I can easily fit in ground transportation, food, and entertainment for nine weeks within our $10,000 travel budget for 2017.

There’s also the chance for higher than average dental expenses to take care of some issues that the dentist noticed during 2016 that may need attention eventually.

Living the good life on under $40,000 per year!

Living the good life on less than $40,000 per year!

If we give ourselves an inflationary raise based on the 1.7% CPI inflation for 2016, then our $40,000 2016 budget becomes $40,680 for 2017.  I’m pretty sure we can fit all our desired spending into that budget.  Our investment portfolio is over $1.5 million, so a $40,680 annual expenditure represents a 2.7% withdrawal rate from our portfolio (ignoring other income sources).  We could spend more from the portfolio if we wanted, plus we have the income from this blog and my consulting income if we find a worthwhile way to spend more money.

Monthly Expense Summary:

Free gingerbread house event at the public library.

Free gingerbread house event at the public library.

 

Net Worth: $1,680,000 (+$29,000)

Year end 2016 brings us another all time high net worth.  With $29,000 in net worth gains during December, we were closing in on the magical $1.7 million mark by year end (and have since surpassed it a few days into the new year).

We are $177,000 wealthier compared to one year ago when our net worth was $1,503,000.   That one year jump in net worth comes in a year with Mrs. Root of Good’s retirement, Brexit, a surprising upset in the US presidential election, civil war(s), scary geopolitics, and continuing terrorist attacks around the world. Even though the world we live in seems turbulent at times, it doesn’t mean you can’t make money with long term investments.

Skip the worries over market turbulence. Focus on the important things in life.

Skip the worries over market turbulence. Focus on the important things in life.

Most of this year’s net worth increase came from investment growth.  This blog and my Early Retirement Lifestyle Consulting generated enough income during the year to almost offset all of our living expenses, so we haven’t touched our investments during the year other than withdrawing the dividends from our taxable portfolio.

In fact, I plowed $18,000 into my Roth solo 401k from Root of Good earnings.  In other year end tax moves, I started climbing a baby step up my Roth IRA Conversion Ladder with the conversion of $4,300 from my traditional IRA to my Roth IRA.  Before the April 2017 tax filing deadline I plan to invest another $11,000 into his and hers Roth IRAs as well.  This means I’ll be expanding my Roth account balances by $18,000 + $4,300 + $11,000 = $33,300 for tax year 2016.  That translates to almost one full year of tax free withdrawals at some point in the future as I continue to climb the Roth IRA Ladder.

Here's our Design On A Dime foyer makeover. Classic video game systems like Nintendo, Super Nintendo, and Playstation 2 along with a 32" CRT TV.

Here’s our Design On A Dime foyer makeover. Classic video game systems like Nintendo, Super Nintendo, and Playstation 2 along with a 32″ CRT TV.  Bean bags and Mexican woven blanket/rug for 100% crash pad authenticity.  Foyers are pretty much a waste of space unless you put video games in them.

From a cash flow perspective, we’re hovering between $40,000 and $50,000 in money market accounts.  I’m considering selling a few taxable investments that have roughly zero capital gains to shore up the cash position (or at the least, use the sales proceeds to fund the $11,000 Roth IRA 2016 contributions coming up soon).

I don’t “fear” a market correction but know well enough they happen periodically.  Having enough cash on hand to supplement other income streams for the next several years is a comforting feeling.  If a 20% or 30% market crash occurs tomorrow, I’ll lose $300,000 to $450,000 but I won’t have to sell anything at a loss for several years.

december-2016-net-worth

Overall, we had a great 2016 and look forward to more good times in 2017. Financially things are looking good.  We made it through our first year of both of us being retired and profited nicely (but may give away all of the gains and then some in the coming years!).

As for the blog, in the next couple of months I’ll be posting about the family cruise in December, our summer 2017 European vacation, our 2016 budget vs. actual spending, and, as it evolves politically, health insurance for early retirees.

Happy new year!

Happy new year and best wishes for 2017!

 

Did you enjoy Christmas and New Year’s?  Any juicy family gossip you heard? Any good money talks with family and friends?  What’s your plan for 2017?

 

 

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139 comments

  • Awesome read. U got the life!

  • Justin you guys did an amazing job on controlling expenses this year. Still under budget with a $9,000 van purchase AND prepaying all the AirB+B expenses for next years trips. Living the dream! I LOVE your crash pad. We have the classic video game systems set up on our older TV as well, but have one of those 2 in 1 systems that plays both NES and SNES games.

    With where your AGI is at I’m pretty sure the kids will end up on Medicaid. Our kids have been on it in MI for a while and the only problem we have had is that sometimes specialists won’t accept medicaid so we have to travel to one who does. We have had to go across the state to Detroit to see a specialist once. Overall it works out well though, essentially everything is covered.

    • Our youngest was placed on Medicaid in 2016 but our older two ended up on our Unitedhealthcare insurance for some reason. But you’re right – looking at the numbers they should qualify for medicaid. I don’t think we’ll have any problems finding specialists since we live “in the city” with at least one large hospital that takes medicaid patients and the furthest drive to specialists would be UNC hospital in Chapel Hill, about 30-40 minutes away. I’m still a little dumbfounded that we don’t owe any copays or deductibles for doctor/dentist visits on Medicaid (maybe we would if we made more??).

      • Because, in America, only poor people and early retirees get good health insurance. It’s a total mystery to me why workers aren’t rioting that they have to subsidize Medicaid, which is far better than their own insurance.

        • That’s a good point, and one of the shortcomings of the ACA in my opinion. Working poor and middle class folks with employer provided family coverage that often costs $8000-10000+/yr are deemed to have “affordable” health insurance because the ACA only looks at the cost of the single employee premiums which are usually heavily subsidized by the employer (or completely free in some cases). Then that working poor or middle class person won’t qualify for ACA subsidies (like the $16/month plan we’re on!) because their employer provided insurance is “affordable”.

          • True, I just missed getting hit with that because I’ m on a temp job now, and I wont be here long enough for them to actually offer me insurance. They charge $50 per week for a single employee for health insurance. For a family it is $400 per week. So even though I need a family plan, my health care exchange eligibility would be based on the cost of the single plan. They would say I can afford my employers insurance and I would not receive a subsidy on the exchange, even though my AGI would qualify me for a substantial one.

            • That would be the worst. Since retiring I’ve had one job opportunity dangled in front of me and I said I wouldn’t do it if it were W-2 with “traditional” health insurance benefits because it would cost me dearly in terms of quality and price of our current insurance. It’s a real bum deal for working middle class and lower income people since they are exactly the ones that SHOULD be benefiting under the ACA’s “make it affordable for EVERYONE” goal.

              I’ve long said that many employers would make their employees better off by eliminating their employer provided plans altogether (and either keeping the cost savings or paying it to employees). Many would qualify for cheaper coverage on the Exchange, and almost all would do better with they have a few kids. Take a typical small business doing something industrial with most employees earning in the $30-50k range. Employer family coverage might be $800-1000/month whereas those working folks would get near free insurance (with lower copays) through the ACA exchanges.

              One silver lining of the Trumpcare changes might be a shift toward giving a health insurance subsidy to everyone even if they are working. Not sure how they are going to structure it, but it could actually be a big improvement for the working middle class/poor (even if Trumpcare proves to reduce benefits to us fat cat early retirees!).

  • Choose the device the photo is saved on and go to your Pinterest account, ideally on the Pinterest app. Click the person on the bottom right to get your account and then click the plus sign top right. Choose photo in the drop down that appears and browse photos til you find the tree. Save to relevant board. Watch Pinterest account obsessively to see if anyone likes it 😀

  • Solid month, RoG family.

    Is the AirBNB discount deal still going on? I could have definitely taken advantage of that with all the AirBNB’s in my future. Missed opportunity.

    • I think that deal ended Dec. 17. I was half way out the door to go on our cruise when I landed that deal and the actual gift cards weren’t e-delivered to me until I was part of the way out to sea (just before losing cell signal and internet connectivity) so I didn’t mention it much. I’ll add you to my “list of ppl that might like to save tons on travel” when I see a similar deal pop up in the future. Actually, now that I think about it, I think someone commented on my blog mentioning the 20% off Airbnb and I swooped in on the deal as soon as I could.

      • Yep, that was me.

        I had read it on Slickdeals and remembered that you were going to book stuff, so I left it in the comments on the blog.
        I am glad it all worked out.

        I think I have seen another deal on AirBnB lately. I will post if I see it again.

        • Thanks so much! I saved a thousand bucks! I wasn’t sure the deal would go through after reading more about it (lots got blocked by their CC’s or by giftcardmall’s fraud department apparently). Please do post here in the future if you see similar deals.

        • we are about to book an AirBnB, would love an update on any deals available!

  • Wowza, nine weeks in Europe? That sounds awesome! You really do have to book and pay in advance to save on big trips like that, but it sounds like you’ve got it squared away.

    With tax season approaching I’m considering adding more to my Roth IRA. Does that decrease our taxable income for 2016? I’m nervous about 2016 taxes since we bought a home and had income increases. Yikes! I’d love to feel a little less freaked out about April lol.

  • Hey where do you find Boston Butts for a buck per pound!? We live in the Charlotte, NC area and cook a ton of BBQ, would be nice to find them that cheap regularly! Congrats on the solid month and year, Happy New Year!

    • Grocery store loss leader sales. Food Lion, sometimes Kroger I think. Anywhere from $.99-1.29/lb is a good price. Sometimes they will go on clearance at Food Lion for $0.99 or less. We’re also slightly closer to all the hog farms so maybe that makes it a little cheaper here?

  • Congratulations Justin! Thanks for being so transparent with the numbers. I know a lot of people appreciate seeing the path laid out so clearly. Very cool to see you end up $177,000 wealthier and yet retired.

  • Well done, RoG. You and other bloggers inspired me to be equally transparent with my finances on my blog. I think there are huge benefits to showing how simple the mechanics are of wealth accumulation and investing. No smoke and mirrors. Just frugality + deliberate tax planning + low-cost investing.

  • What a great year for you guys! Congrats

    I am so glad the AirBnB giftcard worked out for you. Awesome. So amazing to stay under budget with all the travel that you have done and prepaid for. Hacking sure is awesome. That is my goal this year. Travel more but pay less.

    Are you going to be able to get in the Chase Reserve card before the bonus expires on Jan 11?

    • Not sure about the Chase Reserve card. We’re stuck under the 5/24 rule and January 11 2015 was our 5th most recent credit card application so I’m planning on applying Jan 11 (the last day) and crossing my fingers it’ll work or the reconsideration will go in our favor. That would be sweet to snag 200k pts between the two of us! Otherwise I’ve seriously considered driving to a Chase branch 4+ hours away from Raleigh to apply in person before March 12.

      • Yeah I was going to say go in Branch, I forgot about that. 4 plus hours away from you? That is nuts. I am in a crazy small town and the have one within 20 mins.

        Do you have any other travel booked besides Europe? Maybe another cruise and stop on the way an do the application.

        We got the 200 points between my dh and myself. Now just thinking about what to do with it.

        • We don’t have any in North Carolina. I thought DC had some and I’ve been thinking about a long weekend in DC. But no such luck! Looks like Delaware is the nearest opportunity north on I-95. Otherwise Jacksonville Florida is nearest to the south and somewhere in the backwoods of W. Virginia is the nearest geographically at 4 hours away. Unless I’m missing something with their branch locator module on their site.

          I was pricing out Jacksonville Fl or Miami cruise deals yesterday and thinking about driving or flying down, taking a cruise and doing in branch application just to snag the extra 50k pts and throwing the travel time/cost/hassle toward getting the pts at the same time. Can’t find any good deals right now though.

      • My understanding (and I may be wrong b/c its just what I’ve read on the internet) is that Chase goes by “months”, not “days”. If so you won’t be under 5/24 until Feb 1st. All is not lost becasue the same random internet says that you have 30 days to contact the reconsideration line. So if you apply January 12th or so and get denied, wait until Feb 1 to contact the reconsideration line.

        • That’s what I’ve read, too. And kind of my plan 🙂 I’m close enough to getting away from 5/24 that hopefully a sympathetic credit analyst will hook me up. I actually have a longstanding credit card account at Chase that I use regularly, so there’s some hope I can make the argument that I’ve been a loyal customer but one who appreciates the best offers in the market, and I have a lot of upcoming international travel planned so the Reserve matches my needs closely. I’ll let you know how this goes 🙂

  • Dude, nice score on the Airbnb gift cards! I’m gonna have to look into that, though we might have enough travel rewards to cover most of our Airbnb stays this summer. We did finally book our tickets for the Europe trip, it’s not Lisbon though. Some fares went on sale over the holidays and we snagged direct flights to Barcelona for $576 worth of Delta vouchers each. We travel hacked the vouchers on our Colorado trip 🙂

    Awesome year end spending, and best wishes for you and the family in 2017!

    • Nice job on those fares! And direct flights to boot! Even better than our 1 hr flight to Washington DC and decent connection to get to/from Europe. Enjoy your trip!

  • Congratulations on controlling your expenses, Justin! If it were me, I would have blown the budget with the purchase of that minivan.

    • It was tempting to get a much newer model or even a brand new one, but the one we ended up with is pretty sweet and got rave reviews from our mechanic’s inspection. In hindsight it’s proven reliable on the road too.

  • Interesting, I’ve used the whole buy gift cards thing to save money on consumer goods but I never thought to look and see that they also have air bnb gift cards. Thanks, it helps a lot. We’re already booked for an Airbnb stay in February, I might see if we can get the payment changed for the remaining amount from credit cards to gift cards.

    • Hope it works out! Finding those Airbnb cards was totally unexpected since I’ve never seen them discounted before.

      • The AirBnB cards were also just discounted on Amazon.

        This was on Dec 30
        $50 card for $35

        Not sure how many you could get.

        So maybe this will happen more often?

        • I picked up one of those. It was a maximum of one per account (applied as a coupon at checkout). I looked at slickdeals.net and searched on airbnb and found similar deals of 15-20% off fairly often the past few months. But limit is probably one for most of those deals (like $10-15 off a $50 or $100 card).

  • I love the update posts and I know you hate work ha! but I’d love a more in depth investing post. Just a beginner, step by step…and up from there. Pretty please! After following for just over a year, I’ve implemented the things you most commonly mention. I’m ready to go to the next step, but not sure where to begin. I paid off all the debit, I max out my IRA, I max out the HSA, I’m trying to manipulate my taxable income and now I need to get rid of some money to lower you taxable income. That’s where I’m stuck. Many wishes and can’t wait to read more!

  • Wow, great job in 2016. Your dividend income is awesome. That’s almost enough to pay for all your expenses.
    I’m a bit nervous about TrumpCare. I heard on the radio that it’s going to be very easy to shut down ACA. I just hope TrumpCare would replace it with something. We’ll be watching that in 2017.
    Great job with the hotel suite. I need to do more travel hacking, but we just don’t like signing up for credit cards. Mrs. RB40 needs to get onboard here and pull her weight…
    Happy New Year!

    • There’s been a lot of talk but very little concrete details (unless you count Paul Ryan’s proposal from last summer, and that still doesn’t explain how subsidies will be provided or calculated). I think the GOP and Trump are in a tough spot because they will piss off a lot of people if they take away their affordable health insurance after having it for several years, or eliminate the popular ACA provisions. But they have to make good on their “repeal and replace” promises or they become flip floppers.

  • Love the photo of you and your wife on the cruise ship. Looks like you both have giant antennae coming out of your heads!

  • I am just curious. How did you manage to have so low AGI when your monthly income (I assume) around $16K? What is the threshold of AGI to be receive max ACA subsidy?

    • Much of the $16k income in December was in tax-deferred accounts, and that’s a once per year occurrence (year end dividends from mutual funds). Our annual adjusted gross income is closer to $40,000. For our household, the max AGI is around $115,000 I think (family of 5). So we could still get some fat subsidies even with a much higher income.

      • So your AGI is $40K but income is much higher right? How did you achieve such a low AGI with such high income? I am sorry if this question was answered before

        • No, $40k is our AGI and about all the income we receive. I made some Roth contributions in 2016 so my AGI was also my income as well (no big deductions for IRA or 401k like in years past).

          • And you probably dont pay tax on this $40k income because it is all investment or dividend income?

            • That’s right. With a household size of five, our standard deduction plus personal exemption is over $32,000. Add to that the 0% tax rate on qualified dividends and capital gains and we don’t owe any federal taxes.

  • You’re doing exactly what you should be doing with regard to health insurance—getting the best deal available for you by working within the system. But you are a great example of one way the system is flawed. Millionaires should not be putting their children on Medicaid, or getting nearly their entire insurance premium subsidized. You are certainly not in need of a social “safety net”.

    So while I salute what you’ve accomplished, I do hope that the system changes so that you can’t accomplish it again—at least, not in the same way. It’ll be the ingenuity of people like you that creates a fair, sustainable system in which people who can’t afford health care are helped, those who can afford it pay, and the prices at the hospital and doctor’s office actually reflect the value provided. Then people like you and I can get busy making early retirement work without being unfairly subsidized by those still working and saving.

    • Great post. There are many of us that agree this approach is wrong. It may be legal, it is still wrong. This family is making choices, which is their right. However there is no reason society/taxpayers should be subsidizing these choices.

      • I consider much of what our federal government spends on to be waste and not something I would personally choose to spend money on. Sadly, I can’t pick and choose which programs I support 🙂 I’d put my money toward health insurance and subsidies, especially for kids (why not provide basic healthcare to all kids through age 18 or so??). But I’d also be just fine with lower governmental spending and reduced tax burdens for all (doesn’t seem to be the direction we’re headed, at least with respect to “lower governmental spending”).

        There’s also the issue of the broken health insurance/care system in the US. I can’t point a finger at a single cause, but the hundreds of billions of dollars in tax subsidies we give to employees with employer provided coverage certainly helps perpetuate a broken system. Should society/taxpayers really be paying for all those hundreds of billions in subsidies?

    • Yes, it’s a complicated issue. I’m interested in seeing what kind of subsidies, tax breaks or premium assistance will be available under Trumpcare and how those will be structured. I’ve heard that we might see refundable tax credits to help pay for healthcare and that might include the option to pay for really cheap (but not too comprehensive) coverage and actually make some money back from the government.

      I’m not sure how you enforce the limitation on “Millionaires should not be putting their children on Medicaid, or getting nearly their entire insurance premium subsidized” unless you’re talking about means testing hundreds of millions of people (and hiring an army of paper pushers to determine what each person is worth). One method is to use the Earned Income Credit’s eligibility rules so that if you have more than ~$3400 in dividend or interest income or pension/retirement income then you’re ineligible for several thousand dollars of what has basically become THE main cash welfare payment in the US. Of course you would also catch a lot of people who are disabled but not enough to be on SSI disability and drawing on meager pensions or withdrawing from IRAs before regular retirement age.

      • The fix to this problem can’t come in the form of subsidies or assistance to the majority of people, as the ACA has done and as the tax-advantaged, employer-provided system has done. That was tried in the run-up to the housing bubble with cheap federal loans, and it caused unrealistic real estate price inflation; it’s still being done for higher education, with the familiar inflation in college costs. The simple fact is that the less of the cost of a service we bear personally, the less we care how much it costs in total—and the greater the incentive for providers to raise prices, whether they are education or healthcare providers. An economist would refer to this as messing with the demand curve by muting price signals.

        There is no fundamental reason why obtaining health care should be different than obtaining groceries. Visit a provider, get what you need, and pay for it. People buy what they can afford. Those who can’t afford anything can get assistance (in the form of food stamps/WIC for groceries, and a similar credit for health care). Price signals can be maintained that way, and providers incentivized to lower cost by dismantling the huge systemic overhead that currently burdens the industry. Medical insurance should be limited to what we today call “catastrophic insurance”—that is, it should be bought against the possibility of a $20,000 injury or sickness, not to pay for routine $50 doctor’s office visits. And with that, the need for government intervention of any kind—ACA, means testing, tax credits—can be mostly eliminated.

        We early retirees would benefit immensely from lower cost of care, no need to plan against unknowable moves by a government apparatus, and the ability to choose for ourselves what we want to purchase. We would have the added security of knowing that, since we aren’t being subsidized, we don’t have to worry about the subsidies being yanked. And we could then do it without the moral quandary of a system in which we implicitly accept assistance from those worse off than we are.

        • I’m with you in spirit but get stuck at this part:

          “Medical insurance should be limited to what we today call “catastrophic insurance”—that is, it should be bought against the possibility of a $20,000 injury or sickness, not to pay for routine $50 doctor’s office visits. And with that, the need for government intervention of any kind—ACA, means testing, tax credits—can be mostly eliminated.”

          Catastrophic insurance will be horribly expensive for anyone with pre-existing conditions absent government regulation that limits or prohibits underwriting (or those pre-existing conditions will be excluded). It might be horribly expensive even for a healthy person when they are older (especially if we get rid of Medicare). And do we allow a sick person who shows up at the ER door with no insurance and no apparent ability to pay to die on the doorstep? What if I’m out hiking and have no ID and someone finds me unconscious? Does the hospital render aid to me without knowing whether I can pay?

          I’d like to get to a point where we can pay reasonable prices for care, self insure for that first chunk of costs (a super-high deductible plan), and have catastrophic costs covered by a third party (insurance? government?). I don’t see a clear path from where we are today to that vision but I’ll keep my eyes and ears open.

          • Your vision of the last paragraph is pretty much where we need to be. Most pre-existing conditions are only a liability if your medical life is run by an insurance company. Most would be manageable individually if costs reflected value; those that were not would be corner cases that could be handled differently, through a safety net if need be.

          • Means testing millions of people isn’t the way. I have personally seen those that need food stamps the most be severely discouraged by the amount of paperwork and inefficiently some states have put on this program in an attempt to reduce spending.

            To date the ACA total subsidy cost is smaller than the yearly cost of tax breaks for employor provided healthcare.

            Honestly heathcare has been made super complicated in America and we need to either do a complete overall (which will anger many who work in the system) or slowly tweak Obamacare year by year until it brings down cost significantly.

            I would start with where even the creators say it has failed – tech. Taiwan spends 3% on administration and we spend closer to 30%.

            Another area is pharma. We currently are subsidizing other wealthy developed counties who obtain drugs at a fraction of the cost because they have price controls. We should say we wont pay more than 5% more than the average of what the next top 10 developed countries pay for the same drugs.

  • WOW….$16 a month for health insurance WITH $1200 out of pocket…..That’s just crazy….Good for you. The plans in this “neck of the woods” do not approach yours. High deductibles with CRAZY out of pockets. We chose to stay with our “grandfathered plan”….DW hit her deductible end of September. So for 3 months super cheap healthcare. That IS sad about the Aldi gift cards. That was like a homerun!

  • Hi Justin! I’m always amazed at how far you guys stretch that small budget! Congrats on what looks like a wonderful 2016.

    It looks like you dividend income *almost* covered your expenses in 2016 too! That’s pretty fantastic!

    Like you, I’ll be watching closely what happens with the ACA and TrumpCare!

    • At this point we could pretty easily live off of dividend income if we had to. Definitely a reassuring thought! Though I’m more focused on total return and don’t mind dipping into principal as necessary.

  • Congratulations on a great 2016 to you and your family. You put in the time and you reap the rewards; not a lot of mystery there.

    We also had a great return in 2016 from our regular and retirement accounts, and 2017 is starting off gangbusters as my options trades (in some cases) from many months ago are expiring at various times this month to our benefit. The problem is having to replace them for our next round of profits; the positive Trump effect on the markets has made quality stocks expensive. Oh well, there are worse problems to have in this world. Best wishes for a safe and prosperous 2017 for you and your readers.

  • I love the blog, especially as it’s so family centric. I was wondering if you could write about having three kids? We are debating number 3, already have a 1 and 3 year old. It’s definitely a heart over wallet decision though as we need full time childcare.

    • We’ll see! That would make a good article – “the marginal cost of having a third child”. Lots of kid-related costs seem to be easy with 2 kids but cost a lot more with 3 kids (taxi/uber, hotel rooms, cruise ship cabins, buy one get one free / kids eat free deals, sedans turn into minivans).

  • What a fun December! It is still incredible to me how good a life you live on so modest a budget. Congratulations on a stellar financial year and a happy new year to you and yours.

  • “What will we do in 2019 should TrumpCare prove unfavorable?…”

    7) Move to Canada. Become Canadians.

    We are a frozen wasteland but we do have sweet sweet subsidized healthcare! Also our PM is a dreamboat <3<3<3

    Glad your had an awesome year! Our investments are up as well (7.7% in 2016), and we also made some side income in the first 1.5 years of retirement. Why do people keep saying early retirees are going to run out of money? 😉 Clearly they mean to say "make more money".

  • I keep reading your blogs, but can’t help thinking.
    1. How does your family feel about living with a money fiend?
    2. Do you ever feel like you want to contribute to the world in some tangible way?
    3. Don’t you feel any desire to pay taxes and give to others in need?
    I love the idea of smart investment and working less, but can’t imagine never working. I pay taxes quite willingly as I appreciate the society and services they provide and i also love to give.

    • 1. Fiend? I think I’m pretty normal! To the extent there are sacrifices, there are also huge benefits (time, freedom, doing things that most other households can’t do). We also live in a fairly modest area so we’re probably more of the Joneses rather than trying to keep up with the Joneses. Our $40,000 annual spending probably equates to $80-100k spending for those still working, paying a mortgage and a lot of taxes and not really paying attention to how they spend their money.

      2. Contribute to the world in some tangible way? Pretty sure I am already (thousands, perhaps tens of thousands of readers here). Raising responsible kids, being a generally civic-minded person. You mean do Peace Corps or be the next Mozart/Shakespeare?

      3. I have no problems paying the taxes I owe, I simply try to minimize them over the long term to the extent possible (doesn’t everyone?). I still pay $4000 or so in self employment taxes (don’t mind providing medical care for those over age 65 and social security for the elderly), and state taxes (public K-12 schools and public universities). I know my $1500 property tax bill goes toward quality services and approve of how the money is spent – largely on schools (we’re getting a great deal!).

      As for charity, we don’t have a concrete giving plan right now. There’s zero tax benefit to giving anything away right now. I’d like to synergize any giving we do with some tax breaks if possible. I’m also responsible for three children for 10-20 more years, so I’m hesitant to give away anything of substance today given the uncertainty of future responsibilities (for example, health care/insurance that might get thousands or tens of thousands more expensive in the next few years).

      To each their own though!

  • Impressive month as usual! How do you keep gifts so low in December? My kids are about the same age and we spend a couple hundred a kid for Christmas. Also do you send Christmas cards, tipping or teacher gifts?

    • We pick up gifts throughout the year if we see a good deal. We’re also not into giving huge gifts. Our older kids aren’t really into “toys” as they get older and mostly do electronic entertainment, books (free from library or online), and social stuff. Mrs. Root of Good cleverly accumulated some arts and crafts gear that we already had around the house (those school supplies you buy that never get used!) and assembled them into some binders or portfolios to make some really great arts and crafts kits. The kids LOVE them and carry them to school and all over (no clue if they know we “recycled” all the goodies 🙂 ).

      And some of the gift costs get lumped into “groceries”, such as when we spend $50 at Walmart and $10 of that is for a gift and the other $40 is legitimate groceries (which includes paper products and toiletry stuff in my bookkeeping). So I put it down as $50 for groceries and the $10 gifts get skipped over. I’m not too concerned with accurately accounting for every single dollar but get the big picture stuff correct.

  • Fantastic job on the budget for 2016. We made just about $16,000 in dividends last year and were super excited. Since we aren’t retired yet, all that money will just keep making more money for us! I wish I wasn’t worried so much about the future of healthcare in the US but I am. My wife is actually from England and my daughter has British citizenship so we’ve actually considered moving there once we stop working so we have a better safety net. The problem is there are lots of unknowns with that plan as well because taxes are higher and we aren’t sure if we’ll be able to manipulate our income as well as you have done. I need to do more research to understand how much the British take into consideration what you have invested and saved when deciding what kind of tax breaks you are eligible for. Our other strategy is to just work a bit longer to be sure we have enough to fund healthcare.

    • I meant to also comment on your credit card rewards. I’ve taken the rather simplistic approach of wanting cash back rather than any rewards. We have been using the Costco Amex and now Visa and have usually gotten around $400 back each year. This year will be almost $600. While that seems like a lot, I might have to reconsider for travel points. I also need to do a better job of using the card for utility payments and other recurring charges.

      • Cash isn’t necessarily a bad reward to go after. My everyday spending goes on a 2% cash back Fidelity card when I’m not putting my spending on a particular credit card to meet minimum spending requirements.

        • Using credit cards for rewards/ cash is really a good thing as long as you do it responsibly. Probably due to my good credit, but I’ve signed up for a few cards that offered me a $200 sign up bonus if I spend $500 in like 3 months as well as 1.5% cash back. I think my best deal was my Amex Gold card which gave me 50k pts if I spent $1000. I was able to redeem them for a $500 Home Depot Gift card through their portal. There are always larger bills I can charge over the 3 month period like heating oil, car insurance, etc to meet the spending requirement and I always just pay them off every month.

          • “Using credit cards for rewards/ cash is really a good thing as long as you do it responsibly. ”

            That’s the key right there. I think most of my readers have debt under control, or at least know better than to carry big debts on credit cards charging high interest rates.

    • That’s a nice Plan B to have if health insurance becomes unavailable or more affordable in the US.

    • Jack-

      England is very strict on the NHS, much stricter than the US is for Medicaid. If you aren’t working, even as a spouse of a UK citizen you have to buy private insurance until your citizenship goes through. If you don’t, you may be ineligible for citizenship or even asked to leave. Also, they are fairly aggressive about revoking citizenship for dual citizens, especially those who naturalized. It’s considered a privilege, not a right.

      The grass is not always greener.

      • Any idea what the private insurance would be in the UK? I bet it’s much more affordable than what we have here on the private insurance market (without subsidies).

        • That’s a great question. I am sure it is cheaper, but I’m not sure it would be easy for elders to get policies.

  • I wish, I wish I could live in North Carolina. Alas, us big city folk have to wrestle with housing, which ruins everything.

    Congrats on a great year! I agree the ACA will be rebranded, hopefully with a slightly less regressive subsidy structure, but will largely remain intact.

  • Great job on the 2016 expenses. Really impressed with the forward thinking in purchasing AirBNB ahead of time for next summer. Every dime counts and it is fun to see you make the most of it.

    Also…kind of jealous of your swanky 1990’s crash pad…every house should have one😀.

    Happy New Year Root of Good…looking forward to more posts!

    • “Every dime counts”? How about every thousand dollars! 😉

      I don’t know how we survived the earlier years of the 2000’s without a 1990’s crash pad.

  • You are doing it right. Spending not much more than me as a single person! Keep kicking ass!

  • Thanks again for a great post. I am watching closely to see what’s going to happen with the ACA. I don’t see anything changing for 2017 and who knows about 2018. I am fortunate in that I have worked in the public sector for 18 years and I will be able to collect a pension as early as age 50 for the rest of my life, however, I will be responsible for my own health insurance. This is where I hope there are still more options for those of us who retire before age 65, too early to qualify for Medicare. I also have a 457 plan that I have been contributing to consistently for 18 years of employment, however, not maxing it out. My goal for this year is to get $18,000 into it!!
    Happy New Year Root of Good Family!!!!

  • Awesome job! I love reading your monthly debrief. Glad you guys had fun on your trips.

    Also, your post yesterday somehow finally convinced me to sign up for Personal Capital (I used your link). I must have been living under a rock but it seriously kicks butt. Where has PC been all my life? Even my husband, who generally isn’t interested in personal finance, asked me about our total expenses this morning because the graphics are easy to understand in a blink. PC is going to save us so much money because I don’t want any transactions…lol

    Thanks again for all you do! I learn so much from the FI community and you are definitely one of my “go-to’s”.

    • It’s a great tool. Certainly simplified things for me after I started using it.

      • Is there any risk in losing personal Dara when you tie all your accounts together?

        • They have pretty good security including two factor authentication so I’m not personally worried. Obviously it’s a scary world out there with data integrity issues all over so YMMV. I find the convenience and profit from using the free service worth the slight added risk (if any).

          • Thank you! One more question. Do you have any info regarding if my 20 year old dependant college student would qualify for Medicaid like your children?

  • impressive numbers!
    Shoot me a message if your European travels have you passing through Belgium. i might be able to give you some tips.

    Also, there is a thread on the money moustache forums about monetization of a blog where we would love your input …

  • Don’t you feel a little shady accepting Medicaid for your children? I’m not saying you should and I respect your hard work but I can’t say that I would do the same in your situation.

    • There’s really no choice since we don’t qualify for private insurance at our income levels (I’d be fine paying our designated share for private insurance or something for medicaid/CHIP FYI). I think you’re applying some stigma you have about the program to others, and I certainly don’t feel medicaid is a negative thing. Don’t know why there’s a stigma there in the first place. You’d send your kids to public school when you could easily afford private school, right (assuming the schools were decent)? 🙂

      • Good point I do send all three of my kids to the local public schools.

        • Yeah me too. I personally feel like I get great value out of public schools given how little we pay. And I don’t mind paying for them long after our kids have graduated because the alternative is a bunch of uneducated people running around our country with little in the way of productive skills. Doesn’t sound like a good future to me (economically or socially) so I support public education.

    • “Whenever the government provides opportunities and privileges for white people and rich people they call it ‘subsidies.’ When they do it for Negro and poor people they call it ‘welfare.’ The fact is that everybody in this country lives on welfare. Suburbia was built with federally subsidized credit. And highways that take our white brothers out to the suburbs were built with federally subsidized money to the tune of ninety percent. Everybody is on welfare in this country. The problem is that we all too often have socialism for the rich and rugged free enterprise capitalism for the poor. That’s the problem.”

      –Martin Luther King Jr.
      Miami, FL

      I read this quote yesterday and it put me in my place. 🙂

      • Ha ha, yes! Pretty much all of us benefit greatly from public goods, regulations, and welfare/subsidies. Even those that work in private industry. The various local, state, and federal governments are huge consumers of goods and services and the subsidies all end up in the pockets of people that tend to expend them on things in the economy.

  • Im a family of 5 in Texas. Im make a bit over 72k and insurance is $450 for lowest cost silver ACA Plan. Im a contractor and if I was employed with my Employer is would be $320 a month for similar coverage. Ive used the exchange for 3 years straight and its beenn fine. No issues here even in middle income.

    • Derrick, I don’t understand. It seems like you are not getting any subsidies but you should. Am I wrong? I believe 3 kids with 72K income should pay much less than $450/month

    • Good to hear it’s working out for you. And your $320/month coverage through work (if you were W-2 employee) is way cheaper than what many people are paying for family coverage through their employers (my family coverage was always $800-1000 but fortunately Mrs. Root of Good had better options through her employer – under $50/month).

  • Nice work here Justin! Looking forward to reading about what you’ll be getting up to in 2017, other than that trip you guys have planned for Europe..

    Gotta love dividend payments right? I’ve gotta get onto this in 2017, it’s been too long that I haven’t 😉

    I loved a bit of a break over the Christmas and New Years period and going full steam ahead on some longer term travel into Africa this year, then I’ll be ploughing ahead into some investing and back into the career as well!

    • Africa? Cool! We almost decided to drop down to Africa from Southern Spain but decided it would make our schedule too hectic. Enjoy!

      • Yep, heading there for 6 months to do some volunteering, trips and generally doing a bit of a “mini-retirement”.. Agreed especially on those smaller trips it’s best to not pack too much in..
        Enjoy your trip to Europe as well, will be a blast 🙂

  • We are getting ready to apply for Obamacare at the end of the month. It’s a little nerve wracking to start relying on it just as it looks like it will be “repealed,” but I also feel like it will be OK in the end.

  • Hi Justin. Are there any financial independence oriented meetup groups in The Triangle area?

    • There is “Triangle on FIRE” – check facebook. It started as the local Mr Money Mustache meetup group then changed names when some members created that facebook group. I go to those meetups maybe half the time.

      There’s also a local Bogleheads meetup (in Durham I think??) that’s not strictly FIRE oriented but you’ll find a lot of the FI and/or RE mentality there. Never been to those as Durham is a bit of a commute for me.

  • Hi, Justin,
    It was cute to read people’s opposition against your ‘manipulation’ of the system with regards to the healthcare. I sometimes resent other people doing it myself but honestly it’s all legal, so why not use it. People call your strategy shady, unethical, immoral, etc. etc. (or even a fiend… is this jealousy?) but legal nevertheless :-), right? Who created all this BS system in the first place? Not the morons people elected? I call it human nature… I don’t think a system exists in any country that is fair to every single citizen of that country. It’s just not possible… I definitely don’t aim to make this a political post, but it chafes when people get upset (I’ll venture to guess that some are just jealous) about such things vs. complaining about say companies or rich people (read multi-millionaires and wealthier) pulling all the tricks in the hat to avoid paying taxes and those schemes are quite borderline legal or not and definitely immoral. But we’re OK with that.
    Funny how “Jailbreak” tried to explain how he’d fix the system. Yep, it’s probably feasible in theoretical/philosophical way, but in practical terms in a country the size of the United States? Do you honestly think that the free market/capitalism would really let it happen? To fix healthcare you’d need to destroy other systematic abuses like education, litigative nature of this country that adds insane costs to the healthcare, and even such basic human feelings as greediness to get as much money as possible (as docs and lawyers do or as stakeholders of the companies making stuff for healthcare). No wonder, I didn’t exactly grasp everything he tried to say. I’m honestly curious how TrumpCare will ‘fix’ everything. I think there will be a ‘catch’ or two. The next 4 years will not be boring for sure :-).

    Now a question from the ‘down to Earth’ land: How do you snag $34 price for the internet? I’m in Charlotte. We have AT&T Uverse and we pay $64/mo. for the internet and a land-line (no TV) and this includes the $15 ‘discount’ as AT&T calls it. I don’t know whether I’d need to consider a Magic Jack and just get a cable internet, but I don’t have a clue how it all works. We’ve been with AT&T for years. We kind of need a dependable phone-line at home since we don’t have smartphones (by choice), only prepaid plans like Virgin Mobile and Page Plus. I think AT&T and Time Warner Cable have a duopoly in our city and it would be hard to get anything cheaper than we have now, but maybe I’m wrong…?

    Thanks

    • I agree – the health insurance issue is rather tricky and slippery and not as easily solved as jailbreak suggests. But I’m optimistic that the GOP leaders and president can come up with something workable (but I’m skeptical they will actually make it better overall than the ACA). Unfortunately there doesn’t seem to be any motivation to actually reform health care and tackle the cost issue (HSA’s alone and placing the burden on the consumer won’t due that). Fingers crossed it all works out! 🙂

      Time warner’s regular plan is $40/month for the 50 mbit service. I’m always able to call or go online and knock $5-10 off that price. Google fiber is installing lines all over so TW and ATT are both competing hard for our business. I think I saw ATT offering $50/month fiber connection for 300 mbit service.

      For home phone I use google voice and an Obihai adapter for free home phone service (we have very limited voice minutes on our phones too). I’d put the Obihai/google voice combo at the intermediate to slightly advanced technology level to install and configure. A couple hours max to read, buy, and install in order to save hundreds of dollars per year.

  • Looks like the House is on track to repeal the ACA. Let the games begin…I’m curious as to what will transpire, and what your plans will be!

  • I think these are the most likely scenarios:

    1. Change nothing and rebrand it as TrumpCare

    2. Keep the basics but change the subsidies to a tax credit

    3. Blow the whole thing up (but I think this is less likely)

    I do think that Medicaid is in for a strafing, also known as changing to a block grant. This is unfortunate because more people will end up with private insurance instead of goldplated Medicaid.

    I guess we’ll see!

    • I see us going somewhere between 1 and 2, probably closer to 2 (some things will change but some of the key ACA elements will remain the same).

      I’m really eager to see the proposed legislation. Depending on how it’s structured we might be able to double dip (and end up even better off than we are today!!). For example if we get 5x tax credits yet our kids end up qualifying for Medicaid/CHIP. Hopefully they are smart enough to tailor the credit to people based on income, household size and access to free/cheap healthcare, and use the federal resources to help those who need the help the most. Guess I’m an optimist and shouldn’t expect so much out of our elected officials.

      • I think Medicaid will go on the chopping block, at the very least the expansion. My guess is the Republicans don’t hate the ACA that much since it involves private enterprise, except for the subsidies.

        Their real targets may well be Medicaid (I don’t really care) and Medicare (tragic- the old and disabled really need care).

  • I have to admit I got a little bit lost in nogslatia when I saw the picture of you and your son playing Nintendo and Super Nintendo on the tube tv. I still have both Nintendo systems and I haven’t brought them out in awhile.

    Needless to say I will now be skipping some of the NFL playoffs to play some Tecmo Bowl. Bo Jackson is calling my name 🙂

  • How can you contribute to a ROTH if its all passive income?

    When I have researched this, monies from div, cap gain, interest income, does not count.

    Thanks

    • My wife had a month of earned income in January 2016 before retiring. I also have “self employment” income from this blog and that’s considered earned income. Otherwise, you’re right about divs, interest, cap gains, etc not counting as earned income.

  • Nice job Justin. Amazing you can live such a great life at that price point, the COL where I am just wouldn’t allow it.

    I like your attitude regarding the impending death of the ACA. You have plans and options in place. I doubt you will be able to hack whatever comes next like the ACA, but you never know. Smart people will figure out how to minimize costs. Medical care is probably my biggest concern with respect to early retirement. A chronic illness or disaster can really blow up medical costs much faster than inflation as both medical costs and insurance costs rise simultaneously. I work in medicine and even from the inside view I can’t really figure out how to contain costs in the current framework. It is tempting to just think the free market will solve everything, but medical care is different. Pricing is opaque, there is little competition in many markets and often determining value is hard. Patients often do not have the medical sophistication to make rational decisions about their care, especially when they are sick or in am emergent situation. There is no easy answer.

    • I’m a big proponent of the free market but I acknowledge where there’s a market failure regulation can be useful. Maybe we’ll see some positive changes to increase price transparency. Imagine what it would be like if you could actually get a firm quote for healthcare at the negotiated rates that hospitals and medical professionals accept from the big insurance and government plans.

      But the cost issue won’t go away for those with chronic conditions or sudden catastrophes. Free market says “let em die if they can’t afford it” but I think we moved beyond that sentiment sometime in the last century or two. As far as I can tell, there are no “let em die if they can’t afford it” proponents out there, but plenty willing to stick their head in the sand and allow de facto “let em die if they can’t afford it”.

  • I am paying $ 600 monthly for insurance, family of 4, My children do not qualify for Medical because of my income.. I must be doing something wrong!! I have a small business, S Corp, being my own boss, I have to pay a reasonable income to myself….I need help figuring this out, I would definitely need to read more of your blog.

    Carol

    • Carol let us know as well, because I am in the same shoes as you are

    • It really comes down to minimizing your Adjusted Gross income (AGI) or more specifically your Modified Adjusted Gross Income for the ACA subsidy purposes. Maybe there’s some moves you can make like solo 401k contributions and traditional IRA contributions that could snag you some extra ACA subsidies?

  • Trump’s first executive order??? Not looking good for ACA and no replacement plan.

    To Carolina and Matthew. I pay 692.84 per month for single coverage which is 32% of my pension. Thank goodness I saved for retirement and have other income

    • Still waiting on the other shoe to drop. What are the odds that GOP and Trump can’t reach a consensus and pass a law? What if something crazy happens and the fed up moderates (to the extent they exist!) of the GOP team up with democrats and hammer out a veto-proof workable replacement to ACA? Crazier things have happened.

      But yeah, I won’t be shocked by repeal of the ACA. It’s just a question of timing.

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