January 2015 Financial Update
How did we kick off 2015? With a month of average spending of course! January’s expenses of $2,548 were very average in spite of some lumpy expenses like the annual property tax bill. When it comes to spending money, average is good. Our income of $2,068 was on the smaller side and much lower than last month’s income.
Our investment income was under $100 for January. This is completely normal, but a psychological let down after receiving over $13,000 in December due to year end dividend payments from our mutual funds. For all of 2014, we received $29,383 in dividends, which was up significantly from the $22,300 of dividend income during 2013.
Blog income, shown as “other income” in the chart, was lower than average at $249. December and January were actually very busy months at Root of Good but none of the revenue generated in those months has shown up in the magical form of cash in my checking account. February, however, will be a very good month in terms of revenue. And if you share anything you find interesting here, a very good month in terms of traffic, too!
Freelance writing (“consulting” income in the chart) was $125. I expect to make around $600-800 per month over the long term from blogging and freelance writing, and January is just one of those months that came in below the long term average due to the timing of when I get paid.
The “deposits” of $85 represents cash back from our 2% Fidelity American Express card. When I’m not working on other cards to meet minimum spending requirements to qualify for big sign up bonuses, my spending defaults to the 2% Fidelity cash back card. I just signed up for a pair of Chase BA cards to get another 100,000 BA Avios points (= how we fly for free). That means a $2,000 minimum spending requirement per card. And that means I might be buying a bunch of gift cards and prepaying utilities in April if we don’t spend that much naturally. Check out all of the current credit card deals if you want to cash in on free travel too!
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 look at January expenses:
At $2,548, we spent a little bit less than our target of $2,700 per month (1/12th of our $32,400 per year early retirement budget). For those clicking that link, you might realize the budget numbers in that article say we have a $32,000 per year budget. I gave us a 1.3% inflation adjustment for the 2015 budget based on 2014 inflation figures, which resulted in an extra $400 added to our annual budget.
I’m pretty sure we can spend more than $32,400 without busting our early retirement plans, but that’s the number I’m sticking with for targeting purposes. $32,400 equals 2.7% of $1.2 million, which is well below the spending allowed by the “four percent rule”.
More than half of our spending in January was the annual property tax bill for our home ($1,532). A small price to pay in exchange for enjoying pretty good schools and an awesome city Parks and Recreation department (and libraries, and fire department, and police protection, and roads, and well, you get the point). Dear everyone north of North Carolina, don’t you wish you could pay $1,532 per year in property tax for a four bedroom house on a third of an acre in the city? No hate mail, please. 🙂
In December, we paid for most of our five night cruise to the Bahamas as I mentioned in last month’s financial update. As a result, the cruise fare of $1,134 didn’t show up in this month’s spending report. We spent another $325 this month on cruise-related expenses to cover on-board gratuities, gas for the drive down, and parking. At $1,459 total, this vacation provided a lot of value since we had an awesome time and enjoyed the warm Caribbean weather. We brought the two year old this time, and he was quite a handful.
I’m still working on a series of posts outlining how we cruise “on the cheap”, but it might not get released until August when the good deals return for the off season starting in September. Check out my summary of our September 2014 cruise if you want a preview.
Automotive expenses of $301 represent six months of auto insurance for the two of us. I think that’s pretty low and having a good driving record helps keep rates low. I also picked up a $20 per year discount by switching from “commuting” to “leisure/recreational” driver type. Other than vacation related driving, I’m only putting about 80 miles per month on my car. I’ll have to look at other insurance companies that offer per mile rates or some different rate structure since our annual miles driven will drop drastically once Mrs. RoG joins me in retirement.
January’s grocery expense of $134 should be viewed right next to the $900 we spent last month. Average the two months out and we get back to the long term $500-ish grocery spending. I used up some Visa gift cards at Aldi for groceries that aren’t included in the $134 January figure. We did save some money on groceries by taking a week off to defrost in the Bahamas, although we paid for our food through our cruise fares.
We spent $9 on restaurants in January (not shown in the summary but included in total spending). That’s a plate of Chinese take out. I guess we had plenty of dining out on our vacation and didn’t feel the need to go out as much. We also worked our way through all of the contents of our fridge so that nothing spoiled while we were gone for the week.
We really upped the sartorial ante in January with our $16 thrift shop visit. Mr. RoG Jr. picked up four pair of pants and a few “new” shirts while the other kids and Mrs. RoG found a few tops and bottoms they liked. Mrs. RoG also found a brand new looking purse for $3. It’s not Louis Vuitton or Coach. It’s not even fake Louis Vuitton or Coach. But it looks pretty swanky.
As always, the thrift shop visit culminated in all of the kids receiving free stuffed animals (that we don’t need) from the “free, take one” box in the store. This box has saved us hundreds (thousands?) of dollars on stuffed animals. Our kids realize that there is a huge surplus of unhomed stuffed animals in the world. As a side note, free stuffed animals are way easier to care for than real fur friends, and they don’t shed everywhere nor do they slobber on you.
In January, our garbage disposal started smoking. At twelve years old, it was turning into quite the rebellious pre-teen and we knew things had to change for us to get along. Thanks to Amazon, we picked up a 1/2 horsepower Badger InSinkErator garbage disposal for $80 ($11 after applying some accumulated Amazon gift cards). Installation was a breeze and saved us from a big fat plumbing bill. After pulling out the rebellious pre-teen garbage disposal I discovered the cause of the smoking. I’m assuming the main crusher vessel started leaking because the motor was damp and full of rust and gunk.
I think our dishwasher felt neglected because it sprung an ugly, slow, hissing leak. After locating the leaking part (the inlet water valve made of some cheap plastic) I dried out the flooded part of the kitchen. The timing of this failure was perfect. The dishwasher drain feeds into the garbage disposal, so I saved some time when putting in the new garbage disposal and reconnecting the dishwasher to the house’s plumbing.
This January reminds me of last January when I had to fix a lot of things around the house. At least I have plenty of time now that I’m retired! Although I’m starting to wonder if we are doing something wrong to break all of this stuff each January.
Net Worth: $1,429,000 (-$8,000)
We lost $8,000 in net worth during January. Apparently the stock market dropped some but I honestly didn’t check to verify that fact. If so, that’s great news because I’m about to stick $11,000 into our traditional IRAs for the 2014 tax year contributions. That should get our adjusted gross income low enough to bring our tax liability to zero for 2014 and bring us some sweet Obamacare subsidies in 2015 once Mrs. RoG gives up the day job.
This is the second month experiencing a net worth drop, but I’m not worried yet. We are back to October 2014 net worth levels so it’s not exactly the end of the world.
These net worth drops are good reminders that we don’t know if our portfolio will go up or down, but we do know that it will fluctuate every month. That’s the cost of a high equities allocation, but one we are willing to bare (I almost said “bear”).
Between dividends and some income from this blog and freelance writing, we don’t plan on selling huge amounts of investments each year to fund our relatively modest living expenses. So a big drop in the market wouldn’t mean the end of early retirement for us.
How did you do in January? Any big expenses coming up for 2015?