January 2017 Financial Update

January is over and what a fine January it was for our finances!  Our net worth climbed another $38,000 to $1,718,000 and in the process we broke through another $100,000 milestone.  Income for the month of January was solid at $5,068 while expenses remained roughly on budget at $3,378 in spite of a few large, lumpy quarterly or annual expenses.

After finishing 2016 about $1,000 under our $40,000 budget with total spending of $38,991, we are off to a great start in 2017.

 

Income

Our January investment income was a modest $54 since almost all of our mutual funds and ETFs pay dividends quarterly in March, June, September, and December.  I reallocated some equity mutual funds into a bond fund during January so our monthly investment income will be slightly higher going forward (but about the same over the course of an entire year due to the bond fund yielding about the same amount as our overall portfolio).  More on the portfolio moves in the “Net Worth” section of this financial update.

Blog income, shown as “other income” in the chart, was up slightly in January compared to December 2016 to $3,834.  I’m still blown away that this blogging gig actually makes money.  I guess that is what happens when you get a consistent 50,000 visitors per month (#humblebrag).  My early retirement lifestyle consulting income jumped to $952 after a slow December.  That’s about as busy as I want to get (two hours of work per week), so if business remains strong I may have to raise rates again.

Trying not to work too hard IS a full time job. Don't hire this bum.

Trying not to work too hard IS a full time job. Don’t hire this bum.

The $226 in Deposits includes cash back from my credit card thanks to high spending in December plus the proceeds from the sale of a $12 Lego cruise ship I bought while on our last cruise.  The Lego ship sold for $75.  I also received 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.  Though not included in January’s Ebates cash back, January was a bright month because I finally received credit for 10% cash back on our two December cruises purchased through Expedia after clicking through Ebates.  They wait an excruciating 40 days after your cruise before crediting the 10% cash back and then pay out earned balances quarterly.

january-2017-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 take a look at January expenses:

january-2017-expense

In spite of some big lumpy quarterly or annual expenses, we still came very close to our budgeted $3,333 per month (or $40,000 per year) with total expenses of $3,378.

Taxes – $2,120:

Taxes are my least fun expense and unfortunately they top the charts for last month.  Our annual real estate bill of $1,520 was due just after the first of the year.  Of course we get a ton of value out of our local taxes (police, fire, great parks and swimming facilities, “free” public education for the kids, and pothole free streets and sidewalks).

Quarterly estimated taxes were due once again on January 15.  $300 to the State of North Carolina and $300 to the feds.

Teaching the kids how to make banana bread.

Teaching the kids how to make banana bread.

 

Finished product.

Finished product.

 

Groceries – $855:

We usually spend closer to $500 per month on groceries.  Part of the higher expense in January was refilling the kids’ lunch money accounts for $244 (the max I can fund with a credit card at one time).  We also replenished our fridge and freezer after spending just $205 on groceries during the month of December (thanks, busy travel schedule!).

Mrs. Root of Good indulged her smoked salmon habit quite a bit as well (if anyone knows where to buy decent quality smoked salmon for less than Aldi’s $3.49 for 3 ounces please let me know in the comments).  This is slightly cheaper than going on a Carnival cruise where the smoked salmon bagels flow freely and plentifully from their on-board sandwich shop.

Accidental low carb sushi with the smoked salmon on top.

Accidental low carb sushi with the smoked salmon on top.

 

Caviar and champagne don't help the grocery budget any.

Caviar and champagne don’t help the grocery budget any.

I also picked up a $100 Kroger grocery store gift card from Raise.com at a $10 discount.  So far about half that value remains on the card and I’ll spend it in the next month or two.  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.

First time making this. Steamed banh bao char siu barbecue pork rolls.

First time making steamed banh bao char siu barbecue pork rolls.

 

Ok, last food pic I promise. Coconut curry fish and bamboo with egg and somen noodles.

Ok, last food pic I promise. Coconut curry fish and bamboo with egg and somen noodles.  We could spend WAAAY less on groceries if we stuck to rice and beans (but what fun would that be?).

 

Utilities – $155:

Since we were out of town on two cruises during December, our water bill which lags by a month was lower at $86 (hidden savings due to travel!).  Our natural gas bill was also lower than usual at $69.  Being out of town helped but the unseasonably warm weather probably played an equal role.  We didn’t pay the electricity bill in January because we prepaid many months ago using a credit card to snag some sign up bonuses.  We finally received a bill with a balance due and I just paid $800 in February which will cover electricity through the expensive summer cooling season (when we’ll set the thermostat way high when we depart for Europe for the majority of the summer).

 

Gifts – $111:

We purchased a number of small “generic” gifts during some after Christmas sales.  These will come in handy throughout the year when our kids are invited to birthday parties (and our kids might see some of these gifts as well but I can’t say more since they might read this blog post!).  The gift total also included some belated Christmas gifts.

 

Entertainment – $64:

This represents my family’s share of a shared Netflix subscription.  Our only real paid media expense during the year.  I also paid under $1 for a computer game.

One of 2016's entertainment expenses: wheels from Harbor Freight strapped to the bottom of a wood pallet for insta-pull cart fun time lakeside tomfoolery. Also doubles as a utility cart.

One of 2016’s entertainment expenses: wheels from Harbor Freight strapped to the bottom of a free wood pallet for insta-pull cart lakeside tomfoolery. Also doubles as a utility cart.

 

Cable – $34:

Our monthly internet bill for 50/5 mbit service from Time Warner Cable.  I believe my rate will reset to the normal $40 per month sometime soon so I’ll have to make my annual phone call to snag a $30 or $35 monthly rate for 12 more months.

 

Healthcare/Medical – $16:

One month’s health insurance premiums.  I can’t speak for others but the Affordable Care Act works phenomenally well in making our health insurance premiums tiny.

I’ll reprint what I posted in last month’s financial update (which went to press two weeks before the Presidential Inauguration):

“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.” END QUOTE

We still don’t know much more now than we did a month ago, although the grumbling I’ve heard coming out of Washington is that a number of legislators have realized it might not be the best thing to get rid of this whole Affordable Care Act without figuring out a way to affordably insure most of those that would lose coverage with a repeal.

If you're worried about health insurance in 2017, take a deep breath and enjoy the view. Life is good.

If you’re worried about health insurance in 2017, take a deep breath and enjoy the view. Life is good.  It’ll be alright.

 

Travel – $11:

I used our credit cards to pay our quarterly North Carolina and federal taxes.  They charge a convenience fee around 2% for the privilege.  Right now I’m working on spending $8,000 on a pair of Chase Sapphire Reserve credit cards so that I can snag 200,000 Ultimate Rewards points (worth $3,000 of travel or transferable to a wide selection of airline frequent flyer programs for many thousands of free flights).  Check out current credit card offers if you like free travel as much as I do.

 

Service Charges – $8:

Mrs. Root of Good’s 401k charges small quarterly fees.  In exchange we get institutional class Vanguard funds with expense ratios as low as 0.02% which saves us a lot of money on the $300,000+ balance.

 

Restaurants – $2:

I used two free coupons for Papa John’s pizza and paid $2 to upgrade one to an extra large.  I obtained the free pizza coupons when I purchased a $25 Papa John’s gift card for $25 on Groupon last year.  We also enjoyed some takeout tacos using a previously purchased gift card.

Ok, I lied earlier. But this is the last food pic for real. We bought an extra turkey right before Thanksgiving when the grocery store practically gives them away at $0.37/lb. This bird chilled in the freezer till mid-January.

Ok, I lied earlier. But this is the last food pic for realz. We bought an extra turkey right before Thanksgiving when the grocery store practically gives them away at $0.37/lb. This bird chilled in the freezer till mid-January.  We had a little feast, turkey sandwiches and wraps for a few days, then froze the remaining meat.  We also kept the bones and meaty scraps for some soup in February.

 

Gasoline – $0: Another $0 month for gasoline purchases.  I finally had to refill the tank in early February.  We also switched up the school transportation for our oldest kid and are now carpooling with another family instead of sending our daughter on the free school bus at 5:50 am.  That will add about 120 miles per month to our routine driving, which means we’ll need to buy gas around once per month now.  Not a bad trade off for an extra one or two hours of sleep each morning.

 

In the next several months I hope 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.  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).

 

Net Worth: $1,718,000 (+$38,000)

Another month, another massive net worth increase.  The stock market remained strong throughout January which was the primary driver behind our $38,000 net worth gain, bringing out total net worth to $1,718,000.  This represents an all time high net worth for us.

The strong increase in net worth comes at a time when we are celebrating Mrs. Root of Good’s one year retirement anniversary.  Not a bad way to end the first full year with both of us retired.

 

 

january-2017-net-worth

As I said in last month’s Financial Update:

“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.”

While some would freak out facing the loss of hundreds of thousands of dollars, I’m more of a “glass half full” kind of guy.  Even after sustaining heavy portfolio losses of 30%, we would still have over a million dollars in our investment portfolio above what we are setting aside for the kids’ college costs.  While we will feel a little poorer, it’s still a pretty sweet spot to be in.

What we REALLY focus on. Enjoying those sunny 70F+ days in the middle of January.

What we REALLY focus on. Enjoying those sunny 70F+ days in the middle of January.

 

...and dipping our toes in the water.

…and dipping our toes in the water.

Of course I have to disclose a big move in my portfolio during the month of January that helps me stare down huge market corrections.  I moved $50,000 worth of equity mutual funds into the Vanguard Total Bond Market Fund (VBTLX / BND for those following along at home).  Nothing more than taking some profits while the markets are at relatively high levels.  Other than the $40,000 or so sitting in a money market, we didn’t have any bond positions prior to this move.

In absolute terms it’s not a big move at roughly 3% of our total investment portfolio value.  But what it buys us is over one year of our $40,000 budget and probably closer to two years if we cut spending to 2015 levels.

Take note that this isn’t a move derived from fear or a gut reaction to current events.  I saw the market hit a new all time high and I decided to make a small shift to secure a year or two of additional relatively liquid funds to protect against a prolonged down market.  In another three to six months I might move another chunk of funds to bonds if stock market valuations continue their upward trajectory.  I’m not calling the top of the market because I really have no clue where the market is going but I know where it’s been.

To quote Warren Buffett:

“Be fearful when others are greedy and greedy when others are fearful”

 

 

Those nasty market corrections strike when least expected.  Now that we have almost $100,000 in near-liquid investments we can rest easy during all but the worst market dives.

In the meantime we spend very little mental energy thinking about investments and zero energy worrying about our investments.  Life is too short and there are too many other exciting diversions demanding our time and attention.

 

 

How did the first month of 2017 treat you?  Enjoying this rocket ship upward trajectory in the stock market?  

 

 

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137 comments

  • It will be interesting to see what happens with Trumpcare. Sooo many people are freaking out. I agree with you that nothing will change at least for this year and possibly the next couple years as well. It’s good to look at all of the possible options, even the somewhat far fetched ones. Obamacare doesn’t give us as good of a deal, but its still pretty darn nice. All 4 kids have medicaid and Mrs. C. and I have a silver plan with $600 deductible and around $1,500 max out of pocket for roughly $270 per month.

    I love the cart! I’m gonna have to make one.

    • That’s not a bad set up for healthcare at all! Way cheaper and better than all the employer provided plans I’ve had while working full time (more like $800+/month for higher deductibles).

      • Just read an interesting article on Obamacare and what went wrong. It’s really sad , insurance companies and entities were promised reimbursement from the FED for subsidies and losing plans by the Obama Administration. Then Congress refused to fund Mr. Obama’s commitment which meant despite having “guarantees” in writing these entities only received 10-12% of the promised amounts. Which may explain why a lot of insurance companies are done with the ACA. I don’t know Justin…you might want to start shopping around. Crazy times when you can’t trust your own government to honor an obligation….Sad. My understanding is the insurance companies want to be made whole before they sign on to Trumpcare….Your thoughts?

        • Lots of partisan politics at work. You had a democrat for President asking for fixes from a Republican congress. The Republicans really want the ACA to fail so bad so they can say “I told you so / “socialized” medicine will never work”. So nothing gets fixed in the ACA and we are where we are. Now, with the current political instability, I’ll be surprised if more health insurers don’t bow out of the ACA marketplace given the unknown future. Which means Obamacare will fail. I’m not quite ready to go shopping for a new policy (I figure I’ll have several months in the fall to take care of that) but yes, there is a lot of uncertainty.

          • Hmm, ACA passed w/out one repub vote. Obama still had the senate until Nov and yet the Senate (dem controlled) did absolutely nothing to fix the ACA. Be careful Justin, your political skirt is showing.

            • I agree, I don’t think even more deficit spending, with a 20 trillion dollar DEBT, is a viable or sustainable option.

            • True enough. Lots of unnecessary spending in the government.

            • You might consider this FAKE NEWS but the republicans have had a majority in the Senate for over 2 years now (with them taking over roughly one year after the ACA’s subsidized insurance market actually started operating during 2014).

              The real issue is neither party has a supermajority sufficient to overcome the filibuster. It’s unfortunate there has been no bipartisan tweaking/fine tuning of ACA.

  • Your AirBNB gift/cards spend has us super excited about future travel. We were trying to figure out all the hotel cards (which we’ll keep working on) but I hadn’t realized the savings we could using your strategy. I also had never used Raise or sites like BeFrugal or Ebates, etc. That cash back really adds up. Purchasing gift cards (with bonuses/or at discounts!) is a great way to keep that eating out category in check too. Since I’m back to work full-time, I can see how easy it is to order out or be too tired to cook each night. Your grocery budget is my TOTAL envy! 4 more months of full-time work and then I’m going to get busy following more of what you do! We have pieces in place but have yet to master a few key categories. Thanks for the update as always Justin!

    • 4 more months! Exciting!

      I found out you can stack ebates with raise.com to get cash back on gift card purchases. So in the end it’s like 2%+ cash back on your credit card, 1% on ebates, and 5-10%+ discount at raise.com (maybe more if they have a $10 off $100 promo or 3-5% off entire site). Some restaurant GCs are 15-20%+ discount too, and can be combined with any lunch specials or coupons you have.

      • Great article! Thanks. 🙂
        I find that you can’t combine gift cards (i.e. raise.com) with sites like ebates (or an equivalent like BeFrugal) because “Cash Back is not available on…redemption of gift cards.” I would love to combine raise with ebates but for this reason it doesn’t work. Are you finding something different? If so, how do you manage that?

        • You’re right – many times use of gift cards on an order disqualifies the whole order from cash back % through a shopping portal. One way to handle that is to avoid buying gift cards for places that offer a higher % cash back vs the % discount on gift cards. I actually find that I buy most discounted gift cards for places that don’t offer % cash back anyway (restaurants, shopping at big box brick and mortar stores, some travel direct with a service provider or consolidator site, grocery stores, or in-person hardware stores).

          You could also focus on using up gift cards then do a separate order and pay for the full 2nd purchase with a credit card so that you can get cash back.

          I also take the approach of making the best effort to get cash back or discounts through gift cards and accept that I’m not 100% accurate or effective. I win most of the time and therefore it’s a worthwhile endeavor generally.

  • Congrats on hitting an all time high! It was a good month for us as well. These market highs are feeling good, but also have us considering picking up a rental property to divest a little. We’ll see if something worthwhile comes up, otherwise being lazy is good too 🙂

    Nice work booking your Europe trip, thats a lot of nights to plan out! We need to start booking our Spain trip before all the good Airbnbs are gone.

    That coconut fish curry is making me hungry, I might have to try making one of those..

    • We spent a couple hours (or more!) per city scoping out all the different Airbnbs around town and weighing cost vs distance from town center vs luxury level while researching the destinations to figure out what we might want to do in each city or region. That was our evening entertainment for most of January! I was surprised at how many places were already booked up, but I guess Airbnb is a “thing” now so people will reserve way ahead of time for big vacations.

    • Have you considered REITs (in a tax-advantaged retirement account) in place of real estate to remain passive?

  • January was a good month for us as well. Although I’ll admit we didn’t have the same jump as you did 🙂

    I love the picture of you in a hammock while talking about working. 2 hours a week sounds amazing and definitely something I’d love to try in the future!!!

  • Great way to buy a vacation cruise package and get some money back on it! I hadn’t heard of going through Ebates for that, but it’s genius. There are a lot of great ways to book cheap vacations. I was impressed when my brother bought his honeymoon trip through Costco and got what sounded like a steal of a deal. Groupon I know also offers trips at reasonable prices. Good work!

    We just had our annual call with TWC. Hopefully yours goes better than ours. They weren’t budging on going back to $35 (for 50/5 speed), even though that is the advertised rate on their website for new customers. Annoying how they don’t offer any loyalty benefit, but Google Fiber will be here in Charlotte soon! We were sick and tired of haggling with TWC, so we canceled the account under my wife’s name and opened it under mine to get the $35 rate. Annoying as ever, but we are good for another year now! You should watch out for new promotions though, which they said they would be rolling out in the next month as they finish combining with Spectrum.

    • Hmmm, now I’m curious how my TWC call will go. Worst case we pay $40 for a few months then cancel the service while we are in Europe for 2+ months. Then we come back and establish new service and get whatever current promotion they are offering (or investigate ATT fiber which I’ve heard is $50/month right now for 300mbit service but oh how I hate AT&T). And google is coming theoretically but I imagine it will take a while before they light up our neighborhood.

  • I certainly do not criticize anyone for taking advantage of good opportunities but subsidized health insurance premiums of $16 per month for a family with a net worth of $1,718,000 are a good illustration of what is wrong with the Affordable Care Act. More of the actual costs must be shifted to the consumers.

    • Thank you, Clay, for that comment. I thought the same thing. We had to leave the exchange when our premium more than doubled. We couldn’t afford the increase, along with a ridiculous deductible. I don’t fault Justin for taking advantage of the low price though, but something is awry with ACA. We’re trying health sharing this year, which isn’t health insurance but the monthly outlay is far more reasonable.

    • So you propose some form of means testing (which in a way acts as a tax on success/wealth)?

      I’m not sure how I feel about means testing. On the one hand it would reduce the cost of the program to taxpayers. On the other hand, it would make low cost health insurance/healthcare inaccessible to anyone who finally breaks out of poverty and starts rising up the wealth ladder. It’s hard to get motivated to bootstrap your way to wealth if it means losing out on possibly tens of thousands of dollars of benefits.

      • The real problem with health care in America is that 70% of the money spent is on diseases that are mostly or completely preventable. Then we fight each other afterward about who gets to pay for it (insurance companies, consumers, or taxpayers). This makes absolutely no sense. We don’t have a health care system. We have a disease management system. That needs to change. Dan Buettner provides a path out of this mess:

    • Agreed; however, this is the case with so many subsidized programs. Most look at income and not net worth. This is just an example of a larger phenomenon.

  • Congratulations on a record month! I debated on applying for the CSR, but haven’t. I’m just getting my feet wet with award travel and managed to earn the SW Companion Pass late last year. Have fun spending the 200k CSR points on travel!

    Our January went well and we had very low expenses (compared to late last year where we had more than usual planned expenses we used to help meet the minimum spend for our two SW cards). Our net worth saw a nice increase (not nearly as much as yours, though). Looking forward to another low-expense month in Feb.

    • If you want to snag the 100k bonus for CSR you have until early March I think. At this point the offer is no longer available online, you must go in branch (if they even have Chase branches in your city/state; NC has none!). So don’t delay too long!

      The card is pretty awesome. We already bought a number of bus tickets in Europe and they were free (instantly reimbursed under the $300 per year travel expense reimbursement). And I snagged the Priority Pass for lounge access. That might come in handy for you as you take advantage of the SW companion pass (though Priority Pass’s lounges aren’t as awesome or plentiful in the US I have heard).

  • THANK YOU for posting the lovely picture of your kitchen complete with yellow laminate counters. It’s a refreshing break from the palacial marble kitchens filling the internet.

    • Haha, can you source that?

    • I love this comment. Thank you for this, Staryla.

    • Those are vintage counter tops! Some day we may upgrade if we ever redo our kitchen but so far they serve the purpose.

      Sadly, I think our 45 year old cooktop finally died (or the thermostat on one burner died, more specifically) so I think I’ll have to swap it out for a freebie flat surface cooktop I picked up from a neighbor. That will bring our kitchen up to the 21st century since the cooktop is the last remaining original appliance in our kitchen.

      • I love your countertops. Yellow was so popular! Is it 1950s or early 1960s time period? We have vintage white glitter formica from ’59 and I just love them. If we we ever had to replace countertops ( due to changing out our appliance odd shapes), I would do formica again. Granite is out of style.

        • I’m thinking stainless steel maybe if we ever replace. Seems so much better than granite for everything we do in the kitchen and probably less expensive. Impact resistant, non-porous, non-reactive, easy to clean, no maintenance required.

          But the current 45 year old countertops are still in great condition so I’m not sure they will require replacing in our lifetimes other than for aesthetics or if we ever redo the kitchen (and just want to make a change). Might be hard to sell the house as is but you never know. The retro look appeals to some! 🙂

  • Hi Justin,

    I actually read the ROG blog mainly for the food pictures. Wait, you also write about financial independence too? 😉

    So is your allocation to fixed income ( bonds + MM + cash) essentially at 5% ($90K/$1720K)? If so, that is reasonable to me given your age. But I am not sure that timing the market is really a good idea – many people have been calling for the top of the bull for 8 – 9 years in a row now. Unless of course you are planning a big purchase you haven’t shared with us yet 😉

    I am curious of course. From a portfolio perspective ( forgot the % that the house accounts for), your portfolio could easily throw off $30K+ in annual dividend income. While this is not “guaranteed”, I view that future receivable as a replenishment for the cash coffers of ROG Inc 😉 It is equivalent to a HY bond type annuity stream 😉

    Plus, with the side income, although riskier in nature, you are essentially drowning yourself in cash. You may want to slow it down even further 😉

    I am not sure what to do about the ACA thing. We may just move abroad when the time comes. Though we are one of the few people close to FI that will likely continue working for a while after hitting the sweet spot.

    • Our portfolio is closer to $1,550,000 or $1,600,000 (depends on the market’s movement during the day 😉 ). So yeah, $90k/$1550k = ~6% in cash/bonds.

      Having “only” 6% in fixed income is probably lower than what a consensus of experts would recommend in general, so I still think I’m well within the range of what is prudent. I still have 94% of my portfolio invested in equities so I should still enjoy strong NW growth if the markets continue upward. At this point though, I feel like I can afford to get a little defensive and offense is less important.

      For example, if the markets continue a bull run and double from here, I’ll miss out on $90,000 of gains due to my cash allocation (assuming 0% real return on fixed income, which is about correct!). Then again, I’ll watch my $1,450,000 invested in stocks double to $2,900,000 so I’ll still be fabulously wealthy compared to right now and the past several years. If the opposite happens and we experience Great Recession II with a 50% drop in equities, my stock allocation will drop to $725,000 value while I’ll still have approximately $90,000 in cash/bonds. I’m making the worst case scenario less bad because that’s what worries me more than missing out on $90,000 in gains in the best case scenario. Missing out on the best case scenario won’t blow up my ER plans whereas messing up on the worst case scenario might blow things up completely (and would certainly worry me in the meantime 🙂 ).

      You are right though that the dividend income plus the blog/consulting income more than covers my current expenditures. The cash/bonds are another layer of security to insulate me against a worst case scenario. It’s why the possibility of losing $500k in the stock market doesn’t bother me excessively.

  • Wow, 82 bucks a night for Europe in the summer. That is great. And you have money left on top of that bonus!

    Awesome that you got in on the Chase Reserve cards. Did you do it online or did you end up having to make a trip to do them in branch?

    They say another Chase Business card is going to go to 100k points too.

    • I applied on January 11, right before they shut off the online applications for 100k. Miraculously they approved me and Mrs. ROG in spite of us being at 5/24 until February 2017. And our credit scores dropped a ton too during January due to high credit utilization % on one card (charged the Airbnb gift cards and some other big stuff for a family member). But we were still instantly approved! Very glad because I’m not sure I would have driven 4+ hours just to get the 100k bonus (versus 50k online).

      Can’t wait for that 100k business card. And that might not count against 5/24 either!

      • Doesn’t this card cost quite a bit annually?

        • $450 annual fee. However that’s offset by $300 in free travel reimbursement and they issue that annually. So I’ll get $300 in 2017 and another $300 in December (for the 2018 $300 reimbursement) then probably cancel the card before the annual fee hits. So I’ll still net $150 in free travel plus the 100k points. And we’ll actually use the priority pass lounges some while in Europe.

  • Do you have to report points like the Reserve points on taxes?

    • Credit card points tend to be tax free as they are viewed as a rebate on expenditures. Bank Account points though are taxable. I’ve heard if you get a bank account with Citi and they give you a bonus for signup they actually send you a W2. Not all banks do this as it’s a gray area, but something to consider.

      January has been a heck of a month. We’re on track for our expenditures and the market made me a very healthy return. Still we’ll see, 1 month out of 12 leaves a long way to go in 2017.

    • I don’t think so. My understanding is that the banks and the IRS treat credit card rewards as cash back or rebate on purchases.

  • Killing it RoG. Congrats! Our net worth increased $15k last month, but not nearly as impressive as you who did it without working.

    I love how retired people like you accidentally make good money after quitting. Not a bad problem to have! I think it’s a common problem for a highly skilled people with a lot of free time on their hands.

    • If you look at the typical 30-something early retirees, you’ll see them being productive at something that ends up making at least a little money. I think it’s the fact that we somehow got to FIRE in our 30’s, so we know how to save a buck and make one too.

  • Hi Justin this is adam hall

    utilities- am I understanding correctly that you get 50 mbps with time warner cable and you only pay $35. I think I am mis-understanding something. We stream netflix a lot and pay $60 per month for att. How do i pay less and still get netflix at a good speed?

    • Hey Adam!

      Yes, that is right – $35 for 50mbit service.

      You could try to downgrade your speed at AT&T. If you have 1080p HDTVs, I’ve read that you need at least 5 mbit service to get a good picture quality. If you have 4K tvs, then you might need closer to 15-20 mbit to keep that picture quality. And if you plan on streaming on more than one device at a time you’ll need more speed as well. So if ATT has a 20 or 30 mbit package that’s cheaper it might be worth trying it to save $ (and switch back to your current speed if you’re buffering a lot and/or can’t get good internet surfing while others are watching movies).

  • Congratulations on reaching an all time NW high. January was a big month for us financially too. The market blessed us with about $21k in gains and we saved an additional nearly $55k – a record for us. I also booked travel to Europe in Sep using rewards points for the first time ever. I was sitting on close to 300k UR points, too fearful to spend in case I ‘did it wrong’. Taking the plunge is immensely satisfying.

    It isn’t even 7 in the morning here yet and I’m already craving lunch, thanks to your food pictures.

    • Sorry about the food pics. That wasn’t very considerate of me considering how many Left Coasters I have reading the blog. Maybe you could enjoy some coconut curry fish for breakfast? 🙂

      Did you use your UR points to purchase travel through Chase UR portal or did you transfer them to a partner airline? I’m curious what folks are doing with these if they have the Chase Sapphire Reserve where you get 150% of the value if you buy travel through Chase.

      • I transferred to an airline partner. I did first search for the flight route through the portal though and checked that I was getting a better deal with the transfer.

  • I’m not worried about not having health care coverage. I work part-time “for the benefits” with a very large insurance company that provides outstanding benefits, even to part-timers. Our rates went up for 2017, but the company still pays about 75% of the premium. I am, however, sick and tired of the medical rates!! I can’t emphasize that enough. Prices for medical care, even with great insurance, are stupidly expensive. Thanks Obamacare!! Just to give you an example…the before insurance price for an endoscopy and colonoscopy for our 16yo daughter was almost $19,000 at a well-known children’s hospital. A steroid injection into my oldest son’s surgery scar at Mayo Clinic was $409! With our “low deductible” plan, we still had about $10,000 out of pocket (not including premiums) in 2016. This is how it is beginning to look to me. Low income people can go on the state plan and pay a really low premium. They then don’t get the bills after medical care. Mid-range earners work hard to get good benefits, then get huge bills after insurance pays. The middle class is getting crushed (by design, IMHO) and it is my honest prayer that Mr. Trump can make some meaningful changes in this area.

    • I completely agree with u. We paid 16k cash last 18 months from 2 surgeries with insurance. Im feeling now it sucks having health insur.

    • Interesting comments, and I’ll echo the hope that “Mr. Trump can make some meaningful changes in this area” since there is definitely plenty of room for improvement. Another gaping hole is the poorest people in the dozens of states that didn’t expand medicaid. Make less than 100% of the poverty level and you get NOTHING! So you could theoretically be working at a low paid or minimum wage job to make ends meet, making less than the poverty level, and paying taxes to subsidize nearly free health insurance for millionaires like me. It’s a no-brainer for those states to extend medicaid but politics is an ugly nasty hurdle to get over and the people suffer in the meantime (since they get no help with health insurance or healthcare costs in general).

  • The pictures of the food 🙂

    January was a good month for me also, I’m still in the accumulation phase but can’t wait to get to FI.

    For the medical rates, I suggest taking a look at companies that do the health sharing ministry similar to MediShare, I switched and its 1/3 of what I was paying under the ACA.

    • I’ve seen reports of some people unable to get large medical bills at hospitals paid by the health sharing ministries. It’s like those plans work fine for doc visits where the cost is low to moderate, but as soon as you submit a $100,000 claim for a major hospital visit, the health sharing ministry suddenly becomes less charitable 🙂 And those huge claims are what I need protection against, not the small time $100 or $1000 for visiting the doc and a minor medical procedure.

  • Justin, how did you achieve net worth climbing to $1,718,000. Is there a breakdown of what you invested in?

  • Bravo for scoring some healthy blog income! That’s no easy feat. 🙂 Those smoked salmon snacks look mighty fine! Mr. Picky Pincher slurps up smoked salmon like it’s water, so it’s good to see there are different ways to serve it than just on bagels.

    Duddddde. I downloaded Personal Capital last night and I was actually REALLY pleased with it. I normally hate money apps, but this was actually a really good one.

    • Persona Capital is pretty great. It saved me some $$ last night when I queried my 2016 spending and discovered my annual pool passes are about to expire (purchased in March of 2016). Now I can extend them and save the $60 or $70 worth of admission fees.

  • I really like how you keep your spending in check even though you could easily spend more. You come to realize that you dont need so much fluff in your life to be happy as all the marketing wants you to believe. Much better to have your freedom and maintain your financial independence. I buy the discounted gift cards too. I still want to do some things but my philosophy is “fun for less”. With a little effort and self control you can find ways to save on things you like to buy or do. Opportunities and specials are always popping up. I great deal I just got was for the Hulu promotion for new customers. $29.95 for 4 months of Hulu plus a free Roku Express. My Amex Gold card had an offer if I spent $25 or more on Hulu I would get a $25 statement credit! So it will end up costing me $5 and Ill probably cancel when the 4 months are up. You can really make out if you can stack offers. Hard to pass up a deal like that 🙂

  • I think it might not be easy to repeal everything of ACA. Perhaps old wine in a new bottle. Health care costs are one of the main unknown aspects of the retirement panning for those who would like to retire early.

  • Sounds like another good month!
    I can’t believe your daughter had to catch the bus at 5:50 AM. That is crazy. It makes me appreciate that our house is walking distance to K-12 schools.

    • We have it easy for elementary school since it starts at 8:30 and it’s an easy 10 minute walk (not much further than the walk to the middle schooler’s bus stop). So far the carpool thing is working out well. This is our “off” week where the other family drives our kid to school so we get to sleep in until it’s time to walk the elementary school kid to school.

  • Congrats on an awesome January! And congrats on the blog income. I would love to have that hammock life. You make it look so easy. And the food! My god, the food! I just might have to copy one or two of those recipes. Thanks for the inspiration 🙂

    Mad Money Monster

  • Very nice January RoG! What a great net worth increase!

    I bet you’re happy as a clam about how things are going! Love all those food pictures!

    I’m worried about what’s going to happen with Trumpcare — I hope you’re right and it all works out.

    Keep up the positive and inspiring blogging!

    • If I thought my worrying would do anything constructive I would worry more. But as it is, we’re left to speculate until one or more ACA repair/replacement bills are passed into law. There’s such a range of outcomes I don’t think it makes much sense to worry about it too much at this point. Other than possibly postponing FIREing if you’re about to pull the trigger and don’t have an adequate layer of fat in your budget to cover contingencies like higher than expected health care costs.

  • Another great month – congratulations! Had a good January as well, including my best week (Jan 20) for options at just over $20K on that portion of our investments.

    One big change was the decision on my part to start SS after waiting one year beyond the minimum age. I did all my calcs and it wasn’t worth it to wait until FRA. Everyone is different but that was my choice (the wife took hers at 62 since longevity is not a big part of her family’s genetic makeup).

    Continued wishes for an increasing NW for your family.

  • Congratulations on a great month and hitting a new milestone!

    It’ll be interesting to see what would happen with ACA in the next four years, and hopefully it would be for the better. I’m thinking that most likely we would just get add-ons to the ACA and patch up the holes that Trump doesn’t like, but who knows?

  • Congratulations on your continued success RoG! I always enjoy reading your blog. And the food pics are nice to boot.

    Since you have recently increased your bond position, I’m wondering how you would use those funds in the event of a major market correction. Do you anticipate that you would just sell the bonds and use those proceeds for living expenses while leaving your equity positions intact?

    • My idea is to use the bonds/cash for spending during a down market. At some point I might opportunistically buy some equities with the bonds or cash in order to snap up some incredibly discounted equities.

  • Justin! Your writing is a pleasure to read – funny, uplifting, and amazing food pics.

    I’m enjoying a “semi-retired” lifestyle up here in the Great Northwest at age 50. Your blog, along with MMM, JL Collins, and a couple of others is a great inspiration and source of info and encouragement. Thanks and keep up the great (little bit of) work! : )

  • Congrats on an awesome month ROG! We did well in January too, almost the same gain actually, but unlike you – it was not mostly due to passive income. Still slaving away at the job for now. Really impressive numbers on the blog income and readership #envious!

  • What a great month! I think you don’t have a lot to worry about Justin with health insurance at least for a couple of years. My thought is Paul Ryan and others will “tweak” the existing ACA and rename it. However, I do think there will be a “means test” on the new package and you will be able to “opt out”. As for me…I want the “same benefits package” that our elected officials have. I read an article once in the Wall Street Journal about health insurance for Senators and Representatives….I don’t think “generous” quite covers it….and they pay no premium…nor have a deductible as memory serves….

    • I wish everyone could buy on the exchange and get access to the same subsidies (or open up a medicaid for all kind of deal for everyone!). Then get rid of employer provided health insurance subsidies altogether.

      Agreed that there will probably be tweaks and changes rather than a radical repeal and replace as was promised on the campaign trail.

  • “Ok, I lied earlier. But this is the last food pic for realz…”

    lol…just had to rub it in, didn’t you? 🙂 Wow, so impressed with your (or more likely Mrs.RootofGood’s) cooking skills. Left to my own devices, I just do the bare minimum. That’s why I love SE so much because I can outsource the work to more talented people.

    Anyhoo…well done on an amazing January! Even if your healthcare costs go up, your passive income is more than enough to pay for it.

  • All of this food looks delicious. Great job on the low spending, especially only spending $2 on eating out. We are so terrible in that area.

  • As always I love these updates. I feel like you maximize every last dollar possible.

    People drop their jaw about me maximizing at around a 90% level… and I often wonder if we’re missing out on a life we could afford. That said, my wife went to Hamilton last month. I’ll buy a lot of Patriots’ Super Bowl stuff this month (supporting the free entertainment they gave me for many days this year).

    I do wonder how caviar made it to your groceries… my Aldi doesn’t sell that (I think). I hate the stuff, so even if they did, it would be the easiest expense to avoid.

    • We also shop at other stores besides Aldi. There’s a decent Mediterranean/Russian/Near East grocery store in our neighborhood that sells a variety of caviar at decent prices. The one in the picture is from Kroger ($6 for a 2 oz container I think). We also buy fish eggs/roe from the Korean grocery store for sushi (a pound for $10; comes frozen so they last us 6 months to a year usually). We definitely don’t cut our grocery budget to the bone and have a fair bit of fancy/luxury purchases in the budget. You can eat a meal of caviar for not much more than the price of a McDonald’s combo meal so in absolute terms, it’s not that expensive (just a matter of where and how you spend your money!).

      But I have to admit I don’t like caviar either. That’s Mrs. Root of Good’s thing. I’ll try it occasionally and sometimes put a little fish egg on my sushi (and krab sushi is about the only kind I actually like!). Otherwise, no thanks. The salty fishy creamy combo flavor doesn’t do it for me.

  • Try Costco for smoked salmon. Out local Costco has several varieties of smoked salmon ranging in price, but I believe the Kirkland brand one (which is quite excellent) was about $12 a lb (I can’t confirm right now because Costco doesn’t show their in store stuff online). Sam’s also has a version that’s like $14 a lb.

    • That’s a good price! We’re paying $18.50/lb for the 3 oz packages at Aldi and Mrs. Root of Good says those are the best tasting versus the local grocery stores. I might have to check out costco at some point (not a member but there’s one a couple miles from the house right next to my usual Trader Joes and Kroger that I visit occasionally).

  • Awesome month! Just another benefit of starting to save early. Once that ball gets rolling, it really starts picking up some steam and big gains result. I agree you can’t be scared of the next market correction. It will happen eventually. Will it be this year? The next? Who knows. Experts have been calling for it since 2011. We’ll see it eventually, which will give us a nice sale on stocks and then continue to go up from there.

  • Great job in January! I hope Trumpcare will be better too. It will probably go into effect right when Mrs. RB40 retires… We’ll see how it goes.
    I moved some money into bonds too. My allocation is 20%, but it dropped closer to 16% over the last year. I need some dry powder in the keg when the market crashes.
    Keep on trucking!

  • Hi ROG,

    I like that your idea of retirement safety is cashing out equities and moving into bond funds. I always thought that instead of some silly arbitrary rule, like 4%, that it was easier and wiser to instead put two years of living expenses into cash and cash equivalents.

    Also, my wife and I also signed up for two Sapphire Reserve cards (going to Puerto Rico in May, with the first bonus). I think this is very wise. Are you aware that Fidelity also offers miles to three different airlines, if you transfer up to 100k in assets to a Fidelity brokerage account? The three airlines they offer are United, American, and Delta. My wife and I decided to take advantage of the AA promotion, since we already have United miles transferable from Chase.

    Thanks and keep up the good work

    • Thanks for mentioning that Fidelity transfer bonus. I’m in the middle of doing exactly that right now! I have to get my Vanguard Admiral funds converted to ETFs so I can transfer to Fidelity for the bonus. So far Vanguard messed up the cost basis info when I converted so I’m waiting for the research team to rectify that problem. Then I’ll transfer over $200k to Fidelity to get 50k x2 points (one bonus for me, one for Mrs. Root of Good). Do you know if you can do a second set of $100k transfers to get another 50k bonus at a different airline? As in, can I get 50k at United then transfer another $100k to get 50k at American (all in the same 12 month period)?

      • I don’t believe you can, but you can wait 9 months (read their fine print) and do another transfer I think. I am not sure if you have to “round trip” the money or not, to get another bonus. (ie round trip is Fidelity- different brokerage- back to Fidelity).

        Also, if you have to close a different account somewhere else and are charged a fee, Fidelity will reimburse you for it (so will TD Ameritrade, Schwab will not).

        • I finally initiated the bonus offer (x2 – one for me and one for Mrs. RoG). Went with the 50,000 United points x2.

          I couldn’t sign up for other bonus offers at the same time. I also called the Fidelity number and talked to the guy that handles all these promotions. He said it’s one bonus offer per year (and he actually said it’s once per 14 months since you have a 2 month window to transfer assets to trigger the payout of the bonus). I found out they also have a cash bonus offer that also includes IRA transfers (the united miles is only for taxable brokerage accounts). Cash = $2500 max if you transfer $1,000,000 or more (less payout for lower $$ like $600 for quarter million, $300 for $100,000 I think). But they 1099 you for amounts $600+, so the value of that isn’t quite as great as it seems.

          The transfer initiation itself was incredibly easy. Didn’t even have to sign anything on paper (which Vanguard required IIRC).

          Looks like I can do this again in 12-14 months by transferring assets back to Vanguard after 9 months (so they won’t recapture the miles and/or ban me from the promotion) and then transfer back once my eligibility window opens. Pretty sweet for what amounts to 3 round trip tickets to Central America, Caribbean, or Mexico (or 1.5 round trips to Europe).

          • That is great news and good work ROG. My wife just signed up for her individual Fidelity account for another 50k miles.

            May I recommend NOT transferring the money back to Vanguard? There are plenty of brokerage offers out there, such as TD Ameritrade, Etrade, Merrill Lynch, and all EXCEPT Vanguard will pay you to transfer money to them. I forgot Schwab, they will grease you $500 at the $100k asset transfer level as well. Yes, they are taxable, but with a solo 401k and other income reduction means, you needn’t worry much about the taxes.

            • Good point. I might have to check out somewhere other than Vanguard to transfer $$. I just need somewhere to park the $200k+ for a few months till I’m eligible for another 100k points at Fidelity. I assume most of those other brokerage firms have a minimum holding period and then would 1099 you for bonuses paid. And you’d get another set of 1099-DIVs from the new brokerage firm. Worth some consideration though for sure!

  • Wow, just a fan! Since we are facing down retirement in the next few years, we pulled 2/3 of our money from our IRA’s (Fidelity Mutual funds) fearing another 2008-style “correction” would sink us whilst too close to retirement (Ages 59 — yup, we needed this blog 30 years ago 😉 We certainly survived the last one but are playing it safe this time (and surely losing some $$. but not sleep) So commend you guys on your careful choices and joie de vivre — kudos! And the pix are awesome — actually reminds me that simple pleasures ARE great and often cheaply had. Thanks for sharing your know-how and encouragement!

    • That’s not a bad move to go more conservative with your asset allocation at your age. You don’t want to be forced into working several more years if the market tanks right as you’re ready to call it quits.

  • Mr ROG,

    I read your archived articles on cruising Wednesday night. My wife and I are taking a 14 day cruise on Holland America around Australia starting next Wednesday.

    In one of the articles you causally mention that Holland America offers an onboard credit of $250 to shareholders. So I bought some shares Thursday morning. Contacted HAL and BOOM $250 coming my way !!!!!!

    THANKS BUDDY!!!

    • Incredible! We still haven’t purchased any cruise line shares. I felt like they were too expensive a couple years ago when we started cruising more often and the share price has gone up 40% since then 🙁 Goes to show how bad I am at market timing. So we’ve missed out on several hundred dollars in on board credit over the past few years.

  • That are more than excellent results.

    I like the idea that yuo will raise your rates for consulting sessions as you see a strong demand. It is actually nice that you are “not working” yet you are making enough money to cover your expenses.

    A nine week trip through Europe sounds like great fun! This year, we will do a first 2 week trip with our kids to croatia, just to see how that goes. From there, I hope to evolve into longer trips the coming years.

  • Oh you got me with the coconut shrimp noodle picture. It looks absolutely wonderful! I admit l haven’t looked at my 401K statement for almost 2 years (after you had opened yours). Hoping for good news on it when l do. Looking good on the hammock!

    • Assuming at least some of your 401k money is invested in equities, I bet you’ll be pleasantly surprised. You might want to take a peek at the balance at some point just to make sure it’s all still there. 🙂

  • Do you put in 2 hours a week in your consulting? How much time do you put in on your blog?

    • It’s probably an hour or two on consulting during a typical week. This week I have 2 hours booked so far, but didn’t spend any time last week on it.

      For blogging, it’s hard to say since I’d have to define what is blogging and what is internet surfing 🙂 It takes roughly 4 to 8 hours to write, proofread, and edit a blog post. Then I’ll usually spend an hour or two reading and responding to comments. Since I post around 2 articles per month these days, that’s about 4-5 hours per week on average I’d say.

      • Hope you keep finding time to blog! I really enjoy reading about your adventures and life with the kids. Looking forward to reading about how that trip to Europe goes this summer ….

        The food pics are fun too. We are not big seafood eaters here, but find creative ways to use chicken and pork a lot as those are the least expensive meats in this part of the country. I love to just put together stir-frys with whatever we have available at the moment in the veggie keeper.

  • Congratulations on the January update RoG. Your detailed and interesting blog posts have been very inspirational to me in the early stages of striving for Financial Independence. Thanks for the good work.

  • Hi,
    Bad year so far, my freezer, air conditioner and car all broke down. Had to buy a new freezer (got it for $200 less due to a sale) but repair costs for the air conditioner and car were outrageous. I know you save $50 per month for car replacement costs, do you have a separate fund for catastrophe’s ?

    • In our budget we include $500/year for maintenance and $1000/year for depreciation. That $500 maintenance budget item includes routine stuff plus unexpected repairs. In a typical year we won’t spend all $500 but if something major fails we’ll be spending much more than $500 (like a new transmission!).

  • I agree that this Congress is going to find a lot of barriers to repealing the ACA, but I do not think that justifies a cavalier attitude. I have friends who have health conditions from birth that have high medical costs and the ACA was a literal lifesaver for them. Under all of the plans floating around Congress, my wife and I will be fine. But our friends will not be. It will not be alright.

    • My understanding is that at least one of the proposed plans includes coverage of all pre-existing conditions. Not sure if that same plan would provide cheap/free insurance (like very low income people enjoy under the ACA). Can you elaborate on how your friends will not be alright under the proposed plans? Maybe I’m missing something.

      • Helps to think of how the ACA was drafted in the first place:
        1. Preexisting conditions, lifetime limits on care, dropping kids from insurance at 18, etc, are unpopular and and so Congress banned them (or guaranteed access in jargon). This is unsurprisingly the most popular part of the law.
        2. To keep risk pool large and healthy enough, there is the individual mandate (and employer mandate, but Obama nixed it during implementation). This is the least popular, for lots of obvious reasons
        3. Subsidies to make the premiums more affordable.

        All three are necessary for the reform to work. Most of the current replacement plans guarantee access but do have a mandate to carry insurance. This will cause costs to skyrocket as they did in Oregon in the 90s when that state implemented guaranteed access without any sort of requirement to carry insurance. This is because people will just sign up for insurance in the ER knowing they cannot be denied, leading to incredibly high risk and expensive risk pools for the carriers, which mean incredibly unaffordable insurance.

        As for subsidies, all of the plans I have seen greatly reduce the subsidies that the ACA provides, particularly for the poor, which will increase the cost of insurance for those who enrolled via the ACA.

        All of this is the natural consequence of pursuing healthcare reform via private health insurance.

        Add all that together and I have friends who can only afford treatment through their subsidized health plans. Which means if anything with the law changes they cannot afford the drugs they currently only get because of their insurance, even with the high premiums and deductibles, because those are affordable compared to getting treatment and drugs without.

        One of them developed cancer 2 years ago and is alive only because of the insurance she has now. She went into remission in December.

        • It will be interesting to see how many of those three points remain in ACA v2.0. After all, they have a lot of pressure to come up with something that actually works for most people and doesn’t implode in on itself.

          That said, I would be the first one to skip extremely expensive insurance and sign up only when it is necessary (assuming pre-existing conditions must be covered AND there is no individual mandate). However my understanding is that at least one plan included coverage of pre-existing conditions as long as there is continuous coverage (otherwise there’s a 2 year exclusion before you can sign up for guaranteed coverage w/ coverage of pre-existing conditions).

          My feeling is that with whatever Trumpcare is, we will have more sick people unable to access care, like your friend. I’m optimistic but realistic. I might be okay (with enough money), your friend might not.

          • Continuous coverage + generous subsidies could work, despite my doubts. AFAIK that bill has very minimal subsidies and, worse, are age adjusted instead of income adjusted (meaning Bill Gates gets more subsidy to buy health insurance rather than a 27 y/o line worker). Under that scheme costs are going to rise quite a bit and lots of people are going to fall off the rolls.

            Your last statement is the line thinking that prompted me to reply to your post. In the post, it was this line:
            “If you’re worried about health insurance in 2017, take a deep breath and enjoy the view. Life is good. It’ll be alright.”

            I cannot in good conscience take a deep breath knowing what is at stake. I would really prefer to not have to go to another friend’s funeral. I just want to get it out there that there are very legitimate reasons to be freaking out about what this Congress intends to do, its not just liberal over-zealotry.

            Anyways, I enjoy your blogs, you give me lots of things to consider. Since you’re replaying anyways, would you mind answering a completely unrelated question? If I remember from your writings correctly, you’ve paid off your mortgage, as well as all the other FIRE blaggers I read. Would you say that is essential to early retire on 1M, or could you rent forever? My napkin calculations indicate renting might be possible, but only in incredibly cheap areas of the country and without kids. I’m thinking it would be very difficult in a major US city or with kids.

            • Re: social outrage over elimination of access to affordable health care. Yep. People will die if the ACA goes away and Trumpcare makes health insurance less accessible (or doesn’t cover pre-existing conditions). I’m not worried as a 36 year old generally healthy millionaire with the ability to pay for insurance out of pocket or catch the first flight to another country where healthcare is reasonably priced. I’m saying “hey don’t worry (yet) if you are similarly situated to me”. I’m not saying you should abandon your efforts to make your voice heard as a citizen (that’s where the “worrying” will have the biggest benefit).

              As for your question on renting, I think it’s still possible to retire early with a million dollars and rent but it would be tight. Difficult but not impossible. In a high COL, probably impossible. With kids, doable but challenging. You can rent a near-luxury studio apartment in downtown Raleigh for $800-900 (with access to a nice lounge, free coffee/cappuccino and gym). That wouldn’t work with kids but you can get a non-luxury 2-3 BR apartment for around $1000. At a 4% safe withdrawal rate, you could still spend $40,000 per year. If you’re only spending $10,000 to $12,000 on rent, you could pretty easily get by on $28-30k for all other expenses since most of your home insurance, taxes, and maintenance are included in rent, and your utilities would likely be lower in an apartment vs. a single family house.

              Who knows? After the kids move out we might sell the homestead and move to that luxury studio apartment downtown! 🙂

            • I understand what you’re saying now. I completely misread that at first. Thanks for clarifying.

              We will finish drowning our student loans in the bathtub at the end of this month and I am beginning to research more into how we can achieve the lifestyle we want and retire early. Your blog is really helping and giving us hope. Cannot wait to hit the milestone!

  • Great start to 2017! Just discovered your blog and love your articles. You’ve inspired me to start my own blog and consulting business. It’s great how you live on a budget and still get to enjoy all that life has to offer. Many people have the misconception that the dreaded B word (budget) is so restrictive that you can never enjoy your money. In fact, a budget is exactly the opposite. It gives you permission to spend. Keep posting great content!

  • Nice work here Justin! Congrats on the blog income you’ve picked up there and keep on keeping on 🙂
    January for me was nice although I spent roughly what you did as a single guy :O, was happy with what I did spend though as it’s being tracked

  • Interesting about moving 3% of your investments into a bond ETF. I did something similar by moving 3% of my 457 plan balance out of a stock fund and into a stable value fund toward the end of 2016 for similar reasons.

  • How much cash on hand are we talking that you keep in case of a market correction? This is why I diversify with a mix of Bonds and REITs in the picture that have low correlation (R-Squared) to stocks so if stock went down I’d still be selling the other classes at a high and get a discount with more stock purchases before having to sell them.

    There may be an opportunity cost with that income stream cash buffer that may not be warranted with a diversified portfolio on top of tax loss harvesting if you did have to sell some stock.

    • Cash plus bonds equals 6% of our overall portfolio (and we have 11% in REITs). 6% in cash/bonds will undoubtedly generate a small cash drag, but just a small one. 🙂 In dollar terms, it’s $40,000 cash and $50,000 bonds (roughly; haven’t checked the value of either account in a while).

  • What website did you use to book the Airbnb gift cards? Planning to do an Asia trip this upcoming Fall and would like to save $$$ on rentals.

    • I used GiftCardMall. Unfortunately it was a one time deal in December for just a few days. My suggestion is to go somewhere like SlickDeals and set up an alert for “Airbnb” so they will email you when someone posts a deal on discounted airbnb gift cards. Lots of $15 off $100 type of deals there from time to time.

      Also check out Raise.com as they occasionally have airbnb gift cards at a decent discount (plus a discount off ANY gift card through that link). And Raise has sales all the time for extra % off or $ off gift card purchases. I’m probably saving $20+/month just by buying a random gift card or two when they have a deal.

  • Dude I love reading your blog. I’m far from retirement or have any sizable investments to allow me to retire but I do enjoy the details that you put in. I’m an engineer too and I think this is in our training — pay attention to details and provide the details honestly.

    • There are tons of engineers on this path to FIRE so I agree! Detail oriented, good with numbers, generally good salaries all lead to potential to FIRE.

  • Great post, thanks for your blog, I always learn a lot from your site.

    Thought I’d share two things you might be interested in.

    Since it sounds like you use Kroger, I’ve found a bit of a hack that you might like for cheaper gas.

    If you buy gift cards you get 2x gas points.

    1,000 gas points = 1.00 off 35 gallons maximum gas fillup, or .10/gal per 100.

    Your gas tank is probably 16 gal or so, so take 2 cars or a few extra cans with you to stock up and maximize the deal, if you want.

    Kroger often advertises 4x gas point gift card promotions.

    It’s even sometimes possible to stack this with other gift card promotions where they might give a $10 instant rebate when you buy a Visa Gift Card, or Mastercard.

    So, buy $100 Visa Gift Card, cost: $106.95 including fee. Net profit after $10 instant rebate: $3.05, plus you get 200 gas points, which is worth .20/gal, or a maximum of a $7 discount on a 35 gal. fill up.

    If you wanted to create multiple Kroger Rewards Cards you could further scale this up, and it’s very possible to easily convert most Visa/Mastercard gift cards to cash/bank deposit/money order so you’re not stuck with a bunch of annoying prepaid gift cards.

    Also, I recently locked in a 1.25% no penalty 11 month CD from Ally. The rate promptly dropped after I got it, but they might offer it again, so maybe be on the lookout for that if you’re interested in an FDIC insured bond-like yield with zero market risk.

    Thanks again for your blog, it’s reassuring as I proceed with my own plans. Your blog income is tempting me to make one of my own.

    • I missed the last $10 discount on gift cards. Kroger isn’t a store I visit every week so it’s hard to justify a special trip for just a few dollars savings. I did get $0.20 discount on gas in January (used in February) but for some reason it only took $0.10 off the first fill up so I had to use the other $0.10 on not quite a full tank on Feb 28. I still managed to save a few bucks at the pump for routine grocery spending (without manufacturing the gift card spending) so that’s pretty cool.

      As for the discount at the pump, we usually get 16-19 gallons in our van, and don’t own any other cars. And only have a 1 gallon gas can for our push mower 🙂 And we only fill up about once per month so our gas savings are limited. But on the bright side our gas expenditures are minimal. 🙂

  • Is Aldi cheaper than Walmart? I would like some opinions here. I always shop at Walmart but I’m looking for even cheaper places..any suggestions?

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