June 2015 Financial Update
June is over which means we are half way through the year already. After climbing for most of the year, our net worth reversed course and dropped to $1,519,000 due to fluctuations in the stock market. Our income outpaced our expenses by a few thousand dollars and spending for the year remains within our budget. I’d say we are doing pretty well in spite of the drop in net worth.
Right now we are at the midpoint of our seven week vacation in Mexico, so our spending is very different than it normally is while at home in Raleigh.
June provided us with $4,833 in investment income. Our dividend income comes at the end of each quarter since we own mutual funds and ETFs. We also received another few thousand dollars in the first few days of July, but those will be reflected in next month’s financial update. About $2,500 of our investment income came from our taxable investment accounts. That represents about one month’s worth of expenses.
Blog income, shown as “other income” in the chart was lower than normal at $463 for the month. It would have been a lot higher if I was able to cash the checks that are (hopefully) waiting for me at home. I expect July or August will have phenomenal blog income once I return home and cash all those checks!
Freelance writing income was fairly steady at $125.
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.
The $162 of “insurance” income was a refund of my home and auto policies that I cancelled after obtaining new insurance with more coverage at lower premiums. Now I’m the proud owner of an umbrella policy! In general, you should be your own insurance company but in this case the extra liability coverage wasn’t very expensive and will protect me from all but the most expensive lawsuits (should the need arise). When you have significant assets, it makes sense to protect them if the cost of insurance isn’t ridiculous.
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 June expenses:
At $3,089 for June, we spent slightly more than our target of $2,700 per month (1/12th of our $32,400 per year early retirement budget). Almost all of our spending was vacation related or insurance.
Travel expenses of $1,687 made up our highest category of spending for the month. This breaks down to $1,100 in cash withdrawals from the ATM and spending on the credit card as follows:
- $130 at grocery stores here in Mexico
- $400 on bus tickets for the five of us
- Under $100 on restaurants
The $1,100 in cash wasn’t fully spent in June but I’ll leave it in the June report for the sake of simplicity. We carried about $600 of the $1,100 cash into July and it should last us the rest of the trip (or close to it). I haven’t been keeping track of every dollar (or peso) spent in the cash category since I’m more interested in having fun than being an accountant. It’s roughly 80% restaurants, snacks and produce at the open air markets, 10% museum admissions and fun stuff, and 10% local transportation (taxis, buses, subway).
I talked about how cheap it is in Mexico in my first week’s trip update and in the post where I considered whether we could retire to Mexico (or at least spend extended periods of time here). From $0.30 USD metro tickets to $8 museum admission fees (for a family of 5!), it’s a very affordable place to vacation or spend a longer period of time. With longer stays we can take advantage of the economics of slow travel.
So far we aren’t spending as much as I planned in our full trip budget. I budgeted $8/day for local buses, subways, and taxis and we are closer to $3 or less on most days. Groceries and restaurants have been less expensive than anticipated probably because we are dining at home more than dining in restaurants (some cooking, some take out).
All other categories of our budgeted trip expenses are cheaper than planned except intercity bus travel. We’ve already spent the budgeted $800 because we decided to take the two hour flight to Cancun instead of the 26 hour bus ride. We still have to buy round trip bus tickets from Cancun to Tulum, so we’ll come in a little over budget in this category.
Our Raleigh based utilities were only $120 for the month. I prepaid our water bill and electricity bill in previous months to meet our minimum spending requirement on the Chase United Mileageplus Explorer card and the Chase British Airways card. Those cards gave us over 100,000 airline miles (= how we fly for free). Check out all of the current credit card deals if you want to cash in on free travel too!
Grocery expenses back home in Raleigh were under $100 since we were only there for a week. I’m missing the convenience of a well stocked fridge, freezer, and pantry we usually have at home since we’re only able to buy what we can consume within two weeks (we’re moving to a new city every two weeks).
At $14,384 year to date spending, we are almost two thousand dollars under the $16,200 budgeted for the first half of 2015. And that’s in spite of spending seven crazy weeks on vacation in Mexico. Our spending for the year as a whole should be roughly within our budget and possibly below 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
Net Worth: $1,519,000 (-$31,000)
This is month #4 above the magical $1.5 million mark but we’re dipping dangerously close to the line after a $31,000 loss in June. $31,000 used to seem like a lot of money, and I guess it still is since that’s about what we spend each year. But in the game of watching your investment portfolio fluctuate month to month, it’s just noise. It goes up some months and it goes down other months in an unpredictable fashion over the short term.
Last month I said:
[Our portfolio growth] won’t continue in a relatively straight line forever, so perhaps June will be that month that looks like a bump in the road a few years from now (but feels pretty ugly as we experience it in real time).
I guess the loss of a year’s worth of expenses should be troublesome. But I’m not worried about it yet. We still have plenty of funds to provide our living expenses for this year, next year and many years afterward. I don’t think we are likely to run out of money any time soon.
We have been so busy exploring San Miguel de Allende, Guanajuato, and Mexico City that I haven’t paid much attention to daily fluctuations in the stock market. Other than logging in to transfer the thousands of dollars of dividend income to my checking account, I just haven’t had time to dwell on what’s happening each day in the market. It’s just as well since there will always be some crisis distracting us from the long term approach required to be a successful investor. Today it’s the Greek financial crisis, tomorrow it will be something else.
How was your financial June?