February 2017 Financial Update
Two months into 2017 and things are off to a great start for us. Our income of $4,893 for the month greatly exceeded our expenses of $2,108. Our net worth climbed another $38,000 to $1,756,000 primarily due to solid stock market gains.
Our taxes are filed and we’re due small refunds from the state and the feds totaling several hundred dollars. My first effort at paying quarterly estimated taxes in 2016 were a huge success since I came very close to our actual tax liabilities without giving our state and federal governments unnecessarily large loans. Our overall tax liability is higher in retirement compared to our working years thanks to the self employment tax due on blog earnings. At least I’m increasing my future social security check slightly.
Our investment income was $132 in February. We get more monthly investment income since shifting $50,000 from stocks to bonds in January. However, the majority of our mutual funds and ETFs pay dividends quarterly in March, June, September, and December. Since the bond yield is about the same as our overall portfolio yield, our total annual investment income will remain roughly the same.
Blog income, shown as “other income” in the chart, remained strong at $3,581. My early retirement lifestyle consulting income dropped to $465 after a very busy January. That works out to about one hour per week which is perfect for me.
The $713 in Deposits includes cash back from my credit card (now I’m putting spending on Chase Sapphire Reserves to score 200,000 bonus points). It also includes 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. We had a bunch of spending late last year that finally paid out the cash back bonuses in February along with some referral payments for folks signing up through the links on this blog.
If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.
Personal Capital is also a solid tool for investment management. Keeping track of our entire investment portfolio takes two clicks. If you haven’t signed up for the free Personal Capital service, check it out today (review here).
Now let’s take a look at February expenses:
We came in well under our budgeted $3,333 per month (or $40,000 per year) during February with total spending of just $2,108.
This is mostly from the $800 I prepaid on our electric bill. They charge a flat $2.40 fee for credit card transactions so I usually pay a large chunk at a time to avoid the $2.40 fee every month. I prepaid enough to cover all spring and summer electric bills since I’m trying to spend $8,000 in three months to score my 200,000 Chase Ultimate Rewards points from our Chase Sapphire Reserve cards (hint: 100,000 point offer is no longer available online but the 50,000 point bonus for Chase Sapphire *Preferred* card is still available).
The utilities total also includes our regular monthly water, sewer, and trash bill from the City plus an abnormally low natural gas bill (thanks overly warm winter!!).
Groceries – $508:
We came in very close to our $500 per month average for groceries. Not bad considering we bought several discounted gift cards for groceries at Walmart, Aldi, and Kroger during the month and still have about $150 in value remaining from those purchases. If you haven’t checked out raise.com for discounted gift cards for places you already shop, then feel free to save an extra $5 off your first purchase at Raise.com.
They have sales a few times per month where they offer $5-10 off a $50-100 purchase or an extra 4-5% off all gift cards so it’s easy to get a discount on gift cards and score an additional discount from Raise.com’s promotions. Since I already spend about $500 per month at stores such as Aldi, Walmart, and Kroger it’s an easy way to save 10%+ off stuff I’m routinely buying.
I tried out Instacart grocery delivery service during February. They were offering $15 off a $35 purchase with free delivery. How bad could it be? Turns out it wasn’t that great. They messed up several items by substituting other items that cost twice as much or more. And instead of the two bunches of kale I ordered, I received two partially moldy bundles of mustard greens. The apples (sold by the pound) were huge while the lettuce (sold by the head) was tiny. After complaining to Instacart and receiving a refund for the most egregious shortcomings I ended up spending a net of $10 for my grocery order so it wasn’t a bad deal after all.
I think the service is good enough once you learn to specify certain things like “pick small apples”, “don’t substitute”, and “kale is dark green and says k-a-l-e on it, not m-u-s-t-a-r-d g-r-e-e-n-s”. If I were mobility impaired or without transportation this service would be 100% kick ass in terms of quality of life improvement, warts and all.
Automotive – $165:
This represents our annual car inspection fees, licensing, registration, and taxes. I appealed our vehicle’s tax valuation and they lowered the appraised value from just over $10,000 to $6,800, thereby saving about $35 in property taxes. The effort required? Emailing a scan of the Bill of Sale to the county tax assessors office. Maybe 10 minutes including finding the Bill of Sale. If they jack up my assessed value for 2018 I’ll be able to forward the same email in about 30 seconds and save another $35 hopefully.
Travel – $150:
We’re still chugging away at our trip planning for our nine week trip to Europe this summer. The $150 represents three sets of intercity bus tickets for the five of us:
- Malaga, Spain to Granada, Spain on Alsa – USD$41
- Granada, Spain to Seville, Spain on Alsa – USD$40
- Venice, Italy to Ljubljana, Slovenia on Buscenter.it – USD$69
It looks like those Venice-Ljubljana tickets will be our most expensive set of bus or train tickets on the entire trip. It’s crazy how cheap buses and trains are in Europe. March’s expense report will include several more sets of tickets in the USD$40-50 range.
Healthcare/Medical – $114:
We paid $98 to the dentist which covers the 20% copays on two routine dental visits plus two fillings for our kids.
The balance of the healthcare/medical spending is one month’s health insurance premiums of $16. For us, the Affordable Care Act works phenomenally well in making our health insurance premiums tiny.
Will the ACA remain intact in 2017 and in the future? Who knows. The latest draft GOP “repeal/replace” bill didn’t look too ugly for the near term since it kept ACA premium subsidies intact through 2019, with the subsidies changing to a refundable tax credit starting in 2020.
Electronics – $45:
I ponied up $80 for a new (used) smartphone in preparation for our Europe trip. I had $35 of ebay gift cards purchased last year that brought the cost down to $45. I went with the Samsung Galaxy S4 Active, a ruggedized version of the regular Galaxy S4. The phone is a few years old but still a beast of a smartphone. And if I drop it in a puddle it might survive the inundation. If not, at least it won’t cost a lot to replace it.
I’m using a $0.99 global SIM chip purchased from Freedompop for service while in Europe. It’ll give us 600 MB of data per month (actually x2 since I bought 2 SIMs). Plus 200 minutes voice calling to US numbers, with 100 minutes of global calling. I think it will work everywhere in Europe except Slovenia where they currently don’t offer service with the Global SIM. Not bad for 2 bucks if it works like I think it will. It’s working very well here in the US so far.
Gifts – $29:
The Samsung Galaxy S4 wasn’t the only cell phone I bought in February. I also picked up a Kyocera Hydro Icon directly from Freedompop for $29.99. This is going to be our oldest daughter’s birthday gift later in March, and our kid’s first entry to the world of smartphone ownership. Scary times for sure.
The phone comes with free monthly service and includes 200 “voice” minutes, 500 texts and 900 MB of data each month. I can set it up so overages are impossible for a one time $5 fee if that’s what my daughter prefers. Otherwise she’ll be on the hook for monthly fees. She has unlimited free wifi at school so hopefully the limited cell data won’t be a problem.
A commenter asked if I’ve done a review of Freedompop on my blog. I haven’t but you can read my brief thoughts on it in my response to that comment. Basically, I like it. We’re on wifi most of the time and the 3G/4G data is adequate for times we’re not. I put the “voice” minutes in quotes because it’s actually VOIP or voice over internet protocol for their voice minutes. So if I’m in an area with bad cell data reception I can suffer degraded call quality. Given that I only use about 5-10 minutes of call time each month it’s not a big deal. It wouldn’t work for some, but for a light cell user like me it works perfectly. And the $0 monthly price tag is hard to beat.
Right now they have $2 US based SIMs available if you have an old inactive phone that takes SIMs and want to give it a go for a few bucks. Or power up that old phone for Grandma or for your kids.
Gasoline – $39:
We finally refueled the minivan in February. We’re carpooling with another family so we drive about 120 miles per month for that in addition to other routine driving around town for shopping, errands, entertainment, and recreation.
I actually refueled again on February 28th but the expense didn’t post on the credit card statement till March so you’ll see that expense next month. I had to use up my Kroger fuel rewards set to expire at the end of February. That should get us through March unless we take a big trip somewhere. Though with nicer weather here we might be out and about a lot more swimming and exploring local trails and parks. Or not, if the hammock calls my name.
Entertainment – $11:
$11 was roller skating admission for two kids. Most other entertainment options are free or very cheap.
Restaurants – $6 (not shown in the expense summary graphic):
We bought takeout pizza twice during February. Once was with gift cards bought in previous months (at a discount through Raise.com or elsewhere of course). The second time was partially paid by us but also included some free personal sized pizzas the kids earned at school.
Year to Date Living Expenses for 2017
At $5,487 spending for the first two months of 2017, we are about $1,000 below our annual spending target of $6,667 budgeted for the first two months of the year. And that’s in spite of paying the big lumpy annual home property tax bill and prepaying $800 toward the electric bill.
For the financial voyeurs, here is a full summary of our 2016 budget versus actual spending for all twelve months of last year. In that article I make the case that we’re living a $100,000 lifestyle on roughly $40,000 per year. Let me know what you think.
This month I plan to solicit bids from a number of contractors to replace our roof. I expect this will cost around $4,000 to $8,000 which will probably be our largest expense all year. Our other living expenses are usually pretty modest in March and April so we might not exceed our total annual budget even after the large roof expense.
Most of our travel expenses are already paid for our nine week trip to Europe. By late January we finished booking 64 nights in Airbnb apartments for around $5,250 or about $82 per night. We purchased $5,800 worth of Airbnb gift cards in December 2016 so we didn’t pay anything out of pocket in January for the Airbnb rentals (and we still have several hundred dollars left over for future travel). The good news is that once we are in Europe in June through August most expenses will already be paid other than local transit, rental cars, food, and some attractions. I hope to publish a big post during March outlining our nine week trip to Europe with a rough budget included!
Monthly Expense Summary for 2017:
- January 2017 – $3,378
- February 2017 – $2,108
Net Worth: $1,756,000 (+$38,000)
Deja vu! On the heels of a $38,000 net worth increase in January, we experienced another $38,000 net worth bump in February bringing our total net worth to an all time high of $1,756,000. We didn’t celebrate breaking through another quarter million dollar milestone other than noting it, and accepting that we might get to experience breaking through that particular milestone again at some point if the market doesn’t continue going up forever (which it won’t).
February of 2016 found Mrs. Root of Good leaving full time employment for good. One year later and our net worth is up by more than $300,000. It’s a good feeling to have all this cushion in our portfolio but I accept that the stock market goes up and down. We could just as easily lose $300,000 or more in the next year. We’d still feel pretty wealthy since I know I felt wealthy one year ago at a ~$1,400,000 net worth!
A quick note on those spikes in the net worth chart. Nothing crazy here, just hiccups from doing some asset conversions and transfers. First, I converted my admiral class Vanguard shares to ETF class shares. It’s a tax free conversion. It makes the shares easier to transfer in kind to other brokerage firms.
I then transferred over $200,000 of ETF shares to Fidelity to pick up a his and hers 50,000 United Airlines mile bonus when you transfer $100,000 or more to a brokerage account. This bonus is available once every 12 to 14 months so I’ll probably rinse and repeat in 2018 (by transferring assets back to Vanguard or elsewhere for a few months then round-tripping to Fidelity). 100,000 points equals four flights across the US or around three flights to Mexico/Central America/Caribbean.
In investing moves, I maxed out our Roth IRA’s to the tune of $11,000 in February and contributed $4,050 as an employer contribution to my solo 401k. I’m able to fund the IRAs and the 401k due to earnings from this blog. Since I wanted to maintain my cash/bond reserve I transferred $15,050 from my money market account to fund these new IRA/401k contributions in the Vanguard Total Bond Market Index Fund.
Fixed income investments are now at roughly $65,000 bonds and $25,000 cash (in money market). The bonds yield roughly 2.5% while the money market yields 1.0%. I’ll suffer some cash drag on investment returns but I can sleep at night knowing I have a few years of living expenses tied up in relatively stable fixed income investments.
And when it comes to living well for the next 40 to 60 years, sleeping at night is pretty important.
Boy howdy, this stock market is on fire! Any newly minted millionaires want to out themselves publicly? What are you sensible, frugal-minded people doing with all your newfound wealth?