July 2015 Financial Update
Adios, July! You were great. We just returned home from our seven week vacation in Mexico where we ate tons of crazy delicious food, visited amazing places, and had lots of fun. We thought about whether we could retire abroad and patted ourselves on the back for packing very light for our trip.
July left our finances in great shape. Our net worth continued its climb to $1,544,000. Income for the month was ridiculously large at $9,751 (read on to find out why). Expenses were ridiculously tiny at just $498. A wondrous month of travel and adventure, income 20 times our expenses and a big bump in net worth means we had a superb month in financial and non-financial terms.
June provided us with $2,680 in investment income. Our dividend income arrives at the end of each quarter since we own mutual funds and ETFs. July’s investment income arrived in the first few days of the month (spillover from the second quarter dividends). The second quarter produced a total of $7,500 in investment income including the $4,833 we received at the end of June.
Blog income, shown as “other income” in the chart, was much higher than normal at $5,928 for the month. This represents almost two whole months of blog income because we weren’t here in June to cash any paper checks we received during that month. Blog income remains surprisingly strong, although it could be lower for the next few months since summer is usually a slower time for personal finance blogs.
Freelance writing income totaled $250 (which represents two months of freelancing income). Not a huge source of income, but it’s interesting work and doesn’t consume a lot of free time.
Even though Mrs. Root of Good hasn’t worked since early May, her paycheck still shows up each month since she’s on a paid sabbatical. As her sabbatical draws to a close, she’s preparing to return to work in a few days. For how long? Who knows.
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 July expenses:
What can I say? It’s low. At $498 for July, we spent just a fraction of our targeted $2,700 per month (1/12th of our $32,400 per year early retirement budget). The highest expense category was travel expenses since we spent 29 days of July out of the country . The second highest expense was a huge grocery run to Aldi on the last day of July to restock our fridge, freezer, pantry, and fruit basket. August spending should return to normal.
Other expenses for the month include the internet bill (for two months) and our annual cell phone bill of $10 (our plan with T-Mobile isn’t available any longer unfortunately).
Summary of costs for seven weeks in Mexico
This month’s travel expenses of $269 included a mix of groceries, museum admissions, and intercity bus tickets. We probably spent another $600 in cash that we withdrew from the ATM in June so it ended up in the June 2015 Financial Update.
- Lodging – $3000
- Food – $1,960
- Transportation – $1,679
- Museums and attractions – $735
- Miscellaneous – $294
We ended up spending about 60% of that amount, or roughly $4,450 (or $86/day) on:
- Lodging – $1,600 ($31/day)
- Food – $1,250 ($24/day)
- Flights and intercity buses – $1,350 ($15/day)
- Local transportation (taxis, metro, buses) – $150 ($3/day)
- Museums and attractions – $100 ($2/day)
I showed the per day costs just to show how little we spent for 52 days in Mexico.
Compared to our budget, we came in well below our targets for lodging, food, and entertainment.
We took advantage of the cost savings from slow travel by staying in three major cities for two weeks each. This cut down on travel costs between cities, saved us money by getting weekly rental rates on apartments and houses, and provided the luxury of time. Time to relax, take a day off from being a tourist and simply lounge around the house when we wanted to.
For lodging, we primarily used AirBnB and VRBO. You can save $25 on AirBnB reservations using this link, although they offer great value accommodations all the time. The places we stayed all had 2+ bedrooms and 2+ bathrooms.
We redeemed our Starwood Preferred Guest points for a total of seven free nights at Four Points by Sheraton and Aloft hotels in Mexico.
For flights, we booked free flights (just pay tax) to Mexico City using British Airways Avios points (obtained from Chase BA Visa card bonus offers), and return flights from Cancun to Raleigh on Southwest using points from the Chase Southwest card. We bought deeply discounted tickets on Interjet for about $80 each from Mexico City to Cancun.
Here’s a quick summary of the cards we signed up for to get enough points for our trip:
- Chase British Airways Visa – currently 50,000 points bonus offer
- Southwest card by Chase – 25,000 points bonus offer (sometimes as high as 50,000)
- Starwood American Express – 25,000 bonus points offer (sometimes as high as 30,000)
Whether it’s hotel points or airline miles you seek, it certainly helps stretch the travel dollar. Check out some of the airline or hotel credit card offers if you would like to get free flights and hotel nights too. It won’t take long to accumulate enough points to travel the world for free, even if you have a family like us.
We managed to economize on food very well. We budgeted $40 per day and spent only $24 per day. We picked up carry out food very often and ate in restaurants when it was convenient. Meals rarely ran over $20 for our family of five. Some sit down restaurants were half that, and street food was often no more than $5-10 USD for all of us. Dining out is cheap.
Groceries were cheaper than the US, especially fruits and vegetables. We usually ate breakfast at home which was typically pastries, cereal, fresh fruit, and yogurt. Cheap groceries plus cheap restaurants add up to much lower food costs than we anticipated. Not that we didn’t eat like royalty on this trip.
Local transit was also a lot cheaper than expected at $3/day versus $8/day as budgeted. Some days we traveled exclusively by foot and spent nothing on taxis, buses, and subways. However, one day we retained a taxi for the entire day to tour us around a few different outlying cities and tourist sites near Oaxaca and spent about $70 USD including a tip. It wasn’t much more than various local transit options and was actually cheaper than going on an organized tour. Typical prices for the metro or local buses are $0.30 USD. Taxis are around $3-5 USD for short trips of a few miles.
At $14,883 year to date spending, we are four thousand dollars under the $18,900 budgeted for the first seven months of 2015. And that’s in spite of spending seven crazy weeks on vacation in Mexico!
We have spent most of our $5,400 travel budget for the year. Since we are doing so well with spending in other categories, we won’t hesitate to go on another trip this year (maybe another cruise!) if something appealing pops up.
Our spending for the year as a whole will probably be below our $32,400 budget as long as no major unexpected expenses pop up later in the year.
Monthly spending for 2015 to date:
- January 2015 – $2,548
- February 2015 – $903
- March 2015 – $2,443
- April 2015 – $4,549
- May 2015 – $849
- June 2015 – $3,089
- July 2015 – $498
Net Worth: $1,544,000 (+$25,000)
This is the fifth month where our net worth ended the month above the magical $1.5 million mark. During the month of July, we dipped below $1.5 million for a few days before dramatically recovering. It didn’t matter much. We kept on enjoying our vacation as if nothing had happened. Because nothing did happen. Doing nothing during small shocks in the market has its advantages.
As I wrote in last month’s Financial Update, the Greek Crisis was a huge deal. Until it wasn’t. It turned out to be a relative non-event.
We continue to make our own luck using our patented Luck Making Machine. It’s working well so far. Even if our lucky streak doesn’t continue forever (which it won’t), I still won’t worry. I’ve explained before why I think it’s unlikely we’ll ever run out of money in early retirement. As I approach two years in early retirement, I growing increasingly comfortable with that idea.
As for which way the markets are headed, I can’t say. No one can. Stick with a solid asset allocation and skip expensive money managers and you’ll do much better than the average retail investor over the long term.
Did you see a big jump in net worth during July? Any big money moves coming up in your life?