July 2017 Financial Update
It’s a rainy day in the outskirts of Koblenz, Germany and I finally have time to crank out the latest monthly financial update. It’s 60 degrees and drizzling all day. The fog rising over the farm fields obscures the view of the next village over. Though a rainy day would mark ruin for others’ vacations, for us it’s a nice forced break from our routine of exploring new cities and sights.
In July, we visited Milan and Venice in Italy, Ljulbjana and Lake Bled/Kranjska Gora/Soca Valley in Slovenia, Salzburg and Hallstatt in Austria, Munich and Berlin in Germany, and Prague in Czech Republic. Our nine week summer vacation in Europe is drawing to a close with only a few days remaining in Koblenz, Germany then a few days in Amsterdam before we fly back home to Raleigh.
July was another great month for us. Our net worth rose another $40,000 to $1,882,000. Our income remained steady at $1,549 which was barely eclipsed by our spending of $1,616. In other words, a combination of passive dividend income from our portfolio and a small amount of income from this blog came close to covering all of our expenses for the month while we have been vacationing in Europe.
Investment income totaled $940 for the month. This payment arrived in the first few days of July from second quarter dividend payments. The majority of our mutual funds and ETFs pay dividends quarterly in March, June, September, and December. During other months investment income tends to be much smaller. We are well on our way to earning roughly $30,000 in dividends for 2017, as we have in the past.
Blog income, shown as “other income” in the chart, dropped to $608. I have two large checks from an advertiser waiting for me at home that arrived during June and July, so the blog income is lower than usual. But watch out for August’s update when I’ll deposit three of those large checks!
My early retirement lifestyle consulting dropped to zero for the month. That’s totally fine with me since we’ve been rather busy on this vacation, and I had several media interviews during July that took some time out of my schedule. I’m back on track to have several clients in August so I think July’s big fat zero is a temporary lull. Perhaps everyone else is on vacation too and not overly focused on money.
I racked up about $20 in cash back from the Ebates.com and Mrrebates.com online shopping portals but didn’t transfer that money from paypal to my bank account until August so those funds will show up in August’s financial update. If you sign up for Ebates through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did. When shopping online, I always check to see if I can score some extra cash back by using one of those online shopping portals (and it usually pays off!).
If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.
Personal Capital is also a solid tool for investment management. Keeping track of our entire investment portfolio takes two clicks. If you haven’t signed up for the free Personal Capital service, check it out today (review here).
Now let’s take a look at July expenses:
We spent $1,616 during the month of July. We spent slightly less than half of our budgeted $3,333 per month (or $40,000 per year). Travel represented all but about $100 of our total monthly spending.
Travel – $1,523:
In July we spent $1,523 in Europe on our big summer vacation. About six to eight months ago we spent $5,000 for trains and buses between cities plus all of our lodging for nine weeks (through Airbnb) so our expenses right now while on vacation are mostly groceries, dining out, local transportation (transit or rental cars and gas), and admission fees to castles, palaces, and museums.
Looking at the disaggregated data in Personal Capital, our $1,523 travel spending for July breaks out as follows:
- groceries – $500
- dining out – $175 (note: this is probably closer to $400 including money withdrawn from the ATM in June)
- rental car – $400
- transit – $150
- admission fees – $300
Groceries – We spent around $500 on groceries in July. We eat most meals at our apartment or pack a picnic lunch to enjoy in the middle of the day when we take a break from that day’s activities. Don’t misconstrue this as a mere cost saving exercise – we enjoyed plenty of the finer things in life (smoked ham, smoked salmon, cheese, wine, beer) along with local staples at each meal.
Dining out – We usually dine out two to five times per week. Many times we order take out and dine in the comfort of our own home or take advantage of a park bench or picnic table. From looking at our ATM withdrawals and credit card purchases pulled from Personal Capital, I see $175 spent during July. However, we had several hundred euros in cash that I withdrew from ATMs in June that we most likely spent on dining out (our largest category of cash purchases), so we probably spent closer to $400 on dining out during July. Most meals were USD$20-35.
Rental Car – We rented a car twice in July. Once for 10 days in Ljubljana (returning it in the northern part of Slovenia) and once more for four days just outside of Salzburg, Austria, returning it to Munich, Germany. We spent $400 in total for rental fees plus gas and parking, which works out to about $29 per day. We took eight major day trips during this period (including two moves to a new apartment in a new city) so I feel like that’s an incredibly good transportation value, even given the cheap public transportation options available in Europe.
Renting a car in Europe was a little intimidating but it worked out perfectly well for us. I paid about 50% extra to reserve automatic transmission cars, which also seemed to get us a free upgrade to mid-size cars in two out of three cases. I googled the traffic regulations a bit so I knew what most of the signs meant (and only got honked at once or twice). Some streets were narrow but speed limits in the old towns are very slow. It’s easy to dodge oncoming cars on what should be one way streets when you’re traveling at 10-15 miles per hour. Parking was never a problem as we had parking at our apartments and the sites we visited had free parking or very inexpensive parking at $2-7 for the day.
One of the rentals was an Audi A3 and it was our smallest rental. It was a squeeze but we fit all of our luggage for the five of us plus two big boxes of groceries in the back of the car. Good thing we packed light because there is no way we could have fit five pieces of checked luggage in the trunk.
Transit – We spent around $150 on transit in July. In Munich and Berlin, unlimited ride multi-day passes for families were about $11-12 per day. In Prague we chose to buy individual tickets. For the whole family this worked out to USD$3 per one way trip (or $6 per day).
Admission fees – We spent a total of $300 on admission fees during July. We visited two caves in Slovenia and an ice cave in Austria that were almost $100 each. We also visited the Residenz in Munich for $16 for the whole family (excellent value, by the way). We tend to skip museums because, well, have you ever visited a museum with a five year old?
Cost for admission to parks, playgrounds, hiking trails, and splashing in streams and lakes? Generally zero and way more fun than the typical museum. Perhaps I have no taste for culture.
So far we are underspending the budget estimate I put together for this trip. Since we are a few days from returning home, it’s unlikely we’ll encounter any big surprise expenses.
Home Maintenance – $60:
A teenager from down the street mowed our grass at home for $20 per mow times three mows.
Service fees – $22:
I have a 457 account and Mrs. Root of Good has a 401k that both charge small annual account maintenance fees. In exchange for these fees, the mutual fund expenses are lower than normal on these accounts compared to similar accounts at other institutions.
Telephone – $10:
We keep an old T-Mobile prepaid phone active for $10 per year on a grandfathered Gold Rewards plan. Even though we rarely use it, it’s very handy those few times we do need it. International roaming is easy and it has a “real” phone number that has proven useful several times this past year to serve as a contact number when verifying accounts for security purposes. My various free VOIP phone numbers don’t usually work for account verification.
Expenses that were zero during June:
Internet – we cancelled internet for the summer since we won’t be using it.
Healthcare/Medical – I prepaid the health insurance through July so we won’t have to worry about that while in Europe. So far everyone has remained healthy and my extensive first aid kit is still mostly intact. We chose to skip travel insurance so we are self-insuring for health care here in Europe (other than our emergency coverage through US-based insurance).
Utilities – I prepaid our electric, natural gas, and water bills for several months ahead during prior months. This was mostly to meet the minimum spending requirements for a series of credit cards we applied for this winter and spring that gave us 360,000 airline miles. It doesn’t take much to score free tickets to Mexico, the Caribbean, or Europe (we traveled to Europe on free plane tickets, for example).
Do you like free travel as much as I do? Check out all the credit card sign up bonuses. Or go directly to the Chase Ink Business Preferred card with an 80,000 point bonus (any size business qualifies you for a business card). For reference, 80,000 points can fly you almost anywhere in the world on a variety of frequent flyer programs, or get you three domestic round trip tickets.
Year to Date Living Expenses for 2017
We have spent a total of $15,933 for the first seven months of 2017. That is $7,400 less than our annual spending target of $23,333 budgeted for the first seven months of the year. $15,933 year to date spending would appear to be a symptom of a painfully frugal lifestyle. It is $600 less than the federal poverty level, after all. However, through careful planning and judicious spending on things that bring us great value, we’re living what I call a $100,000 lifestyle on under $40,000 per year.
In the fall of 2017 we’ll enjoy several months of cheap living. The kids will all be in school during the weekdays leaving us parents with plenty of idle time to tackle some postponed DIY projects and general organizing, go out for some adventuring (once the temperature in North Carolina cools off to sub-inferno levels), and relax in my much-missed hammock. It wouldn’t surprise me to see the year end total spending at $25,000-30,000 barring any unforeseen medical or house-related emergencies.
Monthly Expense Summary for 2017:
- January 2017 – $3,378
- February 2017 – $2,108
- March 2017 – $1,388
- April 2017 – $2,981
- May 2017 – $1,829
- June 2017 – $2,629
- July 2017 – $1,616
Net Worth: $1,882,000 (+$40,000)
Another month with a huge net worth increase. Seven months into 2017 and we have zero months with a drop in net worth. Things always go up, right? Based on recent history that’s certainly a reasonable conclusion.
Since the beginning of the year we have watched our net worth increase by over $200,000. To take advantage of a skyrocketing stock market, I’ve been slowly selling appreciated stock investments and moving the funds to the Vanguard Total Bond Market index fund. I moved another $20,000 in the first couple of days of August. Right now the bond fund sits at roughly $110,000. That sum along with almost $40,000 in a money market account will be sufficient to provide our living expenses for at least four or five years should the next recession and stock market crash happen sooner rather than later.
I started early retirement with a near-100% allocation to stocks. After a series of sales and shifts to bonds, I’m still at a 90% equities allocation, which is aggressive by most standards. I’ve been through a few bear markets in my life and I know I’ll be sleeping a lot better with a five year cushion of liquidity to insulate me from the vagaries of the stock market.
Enough of finances. Back to fun. With a few days remaining on our nine week vacation, I’m in a contemplative mood. For those still working, you probably know all too well that sinking feeling you get at the end of a one or two week vacation when you realize you’ll be back home soon, it’ll be Monday morning, and you’ll be back in your office chair wading through a backlog of emails, surfing Root of Good, and dreading the quotidian nature of your nine to five (assuming you’re not part of the 13% of folks that actually love their job).
Since I have retired, I don’t get that feeling any more. I’ve adjusted to my new reality. Though this particular vacation is about to be over, life as a whole is one big vacation now. It is within our budget to spend every summer in Europe (or somewhere else) if we want to. I’m ready to get back home but I know we’ll be back on the road again eventually.
Do you get that feeling at the end of a nice vacation? Where should we vacation during the summer of 2018?