January 2014 Financial Update

Let’s go over the Root of Good household’s financial activity in January 2014.

I’ll start off with income.  This month’s income of $4,291 was much lower than December’s income of almost $20,000.  We only received around $50 in investment income this month, which was much less than December’s massive $13,100 year-end dividend payments.  March will be the next moderately big month for dividends (but not “December” big!).

The Root of Good earnings from November 2013 finally appeared in my checking account in January.  That’s the $1,515 in “other income” shown on my income report.  December and January Root of Good earnings weren’t quite as high, but at least I know I’ll be seeing that revenue flow in over the next few months.

The biggest source of income in January was “deposits” which were Mrs. Root of Good’s earnings from her job and a small repayment of the business loan we made to family back in October.

February is stacking up to be a very nice month for income.  Mrs. Root of Good just received a sweet bonus.  As expected, the majority of it was siphoned off to fund her 401k and pay ridiculous taxes that we’ll mostly get back in April 2015.

I’ve also been busy selling crap on eBay.  I’ll have a better update on what I sold and what I made in next month’s financial update.  So far I’ve made a few hundred dollars, but I’m not booking that as earnings yet until the buyers have a few weeks to defraud me or dispute charges.  I’m new to the ebaying hustle so I’m hoping for the best but expecting the worst.  So far, so good.

A quick note on the expense tracking and income tracking tools I use.  If you like these pretty graphics, that’s exactly what you get from Personal Capital.  With Personal Capital, it is really easy to take a quick look at my income and expenses, and then drill down to areas of spending that I want to take a closer look at.  But they really go beyond pretty pictures.  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.  It’s my first stop when I have a quick finance question like “how much cash do we have?” or “what do we owe on credit cards right now?”.

Personal Capital is also a solid tool for investment management.  Keeping track of our investment portfolio takes two clicks and is incredibly easy with Personal Capital.  If you haven’t signed up for the free Personal Capital service, check it out today.

Now let’s look at expenses:

January wasn’t as spendy as I expected.  We paid the annual property tax bill of $1,431 and the twice per year auto insurance of $235.  That was about half of our monthly expenditures.  I actually saved about $10 per year on auto insurance by changing the main purpose of my driving from “commuter” to “pleasure/recreational”.

The expense summary shows we spent $200 on “travel” but we’ll be getting all of that back.  We booked a $600 cruise that was supposed to take the four of us (excluding the toddler) on a week-long journey through a bunch of island destinations in the Caribbean.  The seven night cruise was unilaterally changed to a two night cruise (for the same $600), so I canceled.  I’m still waiting on the refund.  Preparing this post on our expenses motivated me to collect on this debt.  Travelocity “filled out a form to escalate my issue with accounting”, so I assume that means I can expect a full refund of my $200 deposit within the next month or so.

In some areas we spent a lot – thrift shopping for clothes and shoes ain’t cheap after all ($75, but that includes a few brand new toys, too).  In other areas, like “restaurants”, we spent very little ($46 in January compared to the $80 per month we have in our budget).  Too much awesome home cooking I guess.

The “home maintenance” expense of $124 has been mostly refunded (but it showed up as “income”).  That was for the replacement microwave I bought when our old one died.  I borrowed a working microwave from family, so I returned the unopened microwave I bought.  We also replaced the kitchen cabinet handles in January.

We spent almost $100 on electronics in January, which is higher than our average electronics spending of $50 per month.  Those expenses were the replacement laptop screen ($45 from eBay) and a brand new (to me) phone ($54 from eBay).  I bought the phone in order to try out Freedompop’s “bring your own device” phone service.  I rarely use my cell phone for voice, so the monthly fee of free is pretty enticing.  So far, the voice quality is fair to poor, but I think it’s because I don’t have the 4G service configured correctly (freedompop uses VOIP over data to carry the voice signal).  The data works perfectly though.  I’ll give it another month or two before deciding whether to dump it for a better but more expensive service provider.

I was using Virgin Mobile’s grandfathered $25/month unlimited data plan, although the best they offer these days is $30-35 per month.  I liked them a lot and would recommend them if you need an inexpensive prepaid option. In fact, I’ll sell you my old Virgin Mobile phone with the grandfathered $25/month plan if you’re nice to me (and pay me).  Although I might go back to Virgin Mobile before my grandfathered plan expires in a few months.

Overall we are doing great on our expenses.  Since we budgeted around $2,700 per month for retirement, we are well on our way to staying within our targeted budget.  January was certainly a more expensive month than usual with the annual property tax bill and the six month auto insurance bill coming due at the same time.

February will probably be a low-spending month.  It’s 10% shorter than January, which helps.  The kids’ summer camp just hit the credit card, but that’s about the only big expense I expect in February.  Unless we start blowing some money on the big summer travel we are planning.

Net worth

I don’t normally say much about our net worth.  But I figured I’d give a general update.  Someone mentioned to me that they thought I was crazy for remaining heavily invested in equities “during these crazy times”.  I assume they were talking about the barely noticeable mild volatility we experienced in January and early February.

By the third of February, our net worth declined over $60,000 from where it was just a few weeks earlier.  That’s about two year’s worth of expenses.  I guess to some people that would be a cause for panic.  Since I think it’s unlikely we’ll run out of money in early retirement, I’m not panicked at all.  We still have over 30 years of annual expenses in our investment portfolio!  Maybe I’ll panic if the portfolio drops to 15 year’s worth of expenses.

To put that $60,000  loss in perspective, it made us as poor as we were on December 17, 2013.  I didn’t feel particularly poor back on that particular day in December (quite the opposite actually!).  Since the third of February, the stock market has switched directions and started marching upwards once again.  As of today (February 15th), we are once again within $4,000 of our all time high net worth.

Over the next few years, I wouldn’t be surprised to see our net worth drop by 20% in a relatively short period of time.  We’ve seen much worse in the ugly financial markets of 2008-2009.  While I don’t expect it to be quite as bad as 2008-2009 any time soon, a 20% loss in the stock market isn’t all that uncommon.  Historically, the markets bounce back after a period of time.  The next major correction won’t scare me any more than the mild turbulence of January 2014.  I guess that’s why I’m happy enough holding an equities-heavy investment portfolio.

January was a wonderfully blissful month of retirement in spite of the fact that we didn’t spend that much money.  Our cash accounts have been growing over the last five months since I retired, and if the blog income and other sources of income stay constant, we won’t need to dip into the investment portfolio very much.  Here’s to a good February and good remainder of 2014!

How was your January?  Is the year off to a good start?

photo credit: 401(K) 2013 creative commons