June 2015 Financial Update

diego-rivera-mural-national-palace

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.

 

Income

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.

june-2015-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 look at June expenses:

june-2015-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.

Chapultepec Castle, Mexico City

Chapultepec Castle, Mexico City before the hike up

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).

Some of the fun stuff: $2 USD for admission to the ropes course and zip line.  Wheeee!

Some of the fun stuff: $2 USD for admission to the ropes course and zip line. Wheeee!

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.

Pyramid with snakes and monsters, National Anthropology Museum, Mexico City

Pyramid with snakes and monsters, National Museum of Anthropology, Mexico City

Mayan Temple, National Museum of Anthropology, Mexico City

Mayan Temple, National Museum of Anthropology, Mexico City

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.

Main courtyard of the National Palace, Mexico City

Main courtyard of the National Palace, Mexico City

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).

june-2015-ytd-expenses

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:

 

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.

june-2015-net-worth

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?  

 

 

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37 comments

  • Must be comforting knowing you still have a paycheck rolling in while your wife isn’t working this summer. Bumps in the road should be expected, and I think you are fully aware of how to handle them… by doing nothing. If a big blip hits your portfolio, I’m sure you have a decent emergency fund and can ride out the wave by hunkering down on spending until it smooths out. Enjoy the rest of your trip!

    • Our dividends roughly cover our annual spending. On top of that, my blog income covers monthly spending in many months. So the pay check is like a caramel covering on top of the icing on top of the cake. In other words, we have our expenses covered a couple times over from income streams and won’t have to rely on portfolio growth (other than for long term inflation protection).

      It’s a great feeling and helps me ignore the investments and enjoy the vacation. 🙂

  • Most people will experience a drop in investable income as you did this past month; it goes with the territory. I echo your thoughts on an umbrella policy – have had one for many years now. Not as cheap as they used to be but still a smart investment. Continued safe travels, and the Mayan entryway was amazing!

    • I was finally able to get a reasonably priced umbrella policy. I don’t even think it was priced based on risk as they didn’t have to run my info to get the cost. They did have to put me through underwriting, presumably to make sure I don’t have a ton of DUIs on my record (I don’t) or a lot of past lawsuits.

  • Quit posting updates and get back to the vacation! Sounds like it is going well. It is amazing to see a sabbatical/early retired combo still covering vacation expenses and not missing a beat.

  • I enjoyed reading the update on the expenses and net worth. It looks like you are in great shape.

    I think it is awesome that you have spent 36% on travel year to date. That is the same thoughts we have regarding how our lifestyle will be, once we have our passive income in place. We are almost there and can’t wait to travel more extensively!

    • I’ve always included a decent sized pot of money for travel in our ER budget. We may not always use that money for travel, but it’s definitely earmarked for fun. The nice thing about the travel budget is that it’s purely discretionary, meaning if our portfolio goes up or down and we want to spend more money (or cut spending), the travel funds are a great area to make changes.

  • Your healthcare insurance over the first half of the year is amazingly low. I’m assuming that’s largely due to ACA offsets. I’m looking forward to the income-based assessment when I get on the exchange in a few years! Perfect for early retirees.

    Eric

    • I cheated a little. I didn’t include our actual HI premiums because they come from Mrs. RoG’s employer. We do pay around $500/yr for family coverage on a $5000 high deductible plan. I do include Mrs. RoG’s gas and tolls for commuting, so that more than offsets our HI premiums withheld from her pay check.

      But yes, once we get on the ACA subsidized plans, we won’t be paying very much either. And we’ll have a low deductible plan with very low copays.

  • Wow, that’s a pretty steep drop in June. I’m glad you’re not stressing out about it. You’re investing for the long term after all.
    The admission fee is so cheap! Everything is ridiculously expensive here in the States. Enjoy the rest of your trip!

    • It goes up, it goes down. Like a yo-yo. Worrying won’t change the losses. 🙂

      And yes, it’s so easy to spend money here because almost everything is cheap. At $8 to get into a museum, I don’t feel obligated to spend all day there if it’s just not that interesting. We actually left the Anthropology museum (supposed to be one of the most impressive in the country) without seeing all of it because we wanted to go back to the zoo (which is free).

  • Man I love reading income and net worth updates. They just keep me absolutely fired up.

    Since my portfolio is much smaller than yours I was still able to see an increase of almost $10K in June. Mostly through new contributions.

    But I also have a lot of cash sitting on the sidelines as I prepare to pounce on opportunity that I hope this whole Greece thing explodes into.

    Thanks for the update, now get back to that awesome vacation.

    Cheers!

  • Just curious … who cuts your grass when you are gone for seven weeks. I just got back from a week’s vacation and my lawn was a jungle.

    • We had Mrs. RoG’s brother staying in the house for the first few weeks. He had to move out suddenly so I’m not sure what we’re going to do about the grass. I’ve heard it’s been dry lately so maybe we’ll let it go for the last few weeks and plow through it when we get back. Oh the joys of yard work.

      The initial plan if we couldn’t find a house sitter was to hire a mowing guy. It’s about $30/visit and we would only need 2-3 during the 7 weeks. I guess we could ask our neighbor how it looks in another week or two and get her guy to mow ours too if it’s jungle-like.

      • It’s rained the last three nights- you might want to look for that lawn guy 🙂

        • Right after I posted that comment, I found out Mrs. RoG’s brother (our housesitter for the first few weeks) stopped by and mowed the yard for us. A birthday present for Mrs. RoG! So the grass was short a day or two ago. I think it’ll be manageable but long when we get back home in 3 weeks.

  • Does the net worth drop make Mrs. ROG any more/less inclined to continue working post sabbatical or does she share the easy going attitude?

    • Just asked her. She says the $31,000 NW drop doesn’t impact her decision to quit. A $310,000 NW drop might (though we would still be fine from a strictly numbers/analytical perspective).

  • Trip looks amazing as usual. I don’t blame you for taking a 2 hour flight over a 26 hour bus ride.

    • I didn’t realize the trip would be 26 hrs when I first planned and budgeted the trip. Google maps said it was something like 17 hours driving time, so I figured break it up into 2-3 bus trips of maybe 6-7 hours each. After digging in to the actual routes and bus availability, it would have been two overnight bus trips of 13 hours each. No thanks! And the cost of flights ($400) was about the same as the bus tickets anyway. Although we would save on two nights of lodging if we did the overnight bus rides (what a crappy way to save money on lodging 😉 ).

      In any event, after our 6.5 hour bus ride today, we are 100% sure we made the right decision to book flights instead of the long bus ride. We’ll have to take the 6.5 hour bus ride back to Mexico City and then the 2 hr flight to Cancun which will be our busiest travel day of this trip.

  • You are living the life I want!! 🙂 Its amazing how cheap Mexico is isnt it? And the beaches are beautiful. My GF and I are going to Tulum next month and Im really excited about it. Cant wait to hear about how it is from you.

    Sorry to hear about that 31k dip.

  • Think about it this way, the market is down 2% and so is your net worth. It just seems like a lot because quite frankly you have a lot. Have fun and I’m enjoying the cool pictures. Take care in Mexico.

    • I’m doing better and better with keeping these large losses in perspective. Sitting on a decent pile of cash to cover the next year or two certainly helps me sleep better at night.

  • June was a solid month in our household paid off all student loans!

  • Everyone’s investment assets have mirrored the market. If it didn’t, then you’re probably not indexing. Congrats on keeping the expenditures down and again on building up your substantial ‘stash. Safe travels!

  • I’m always curious how your grocery bill is so low. I live in Raleigh and find it super expensive. The USDA provides statistics which show a family of 4 low cost budget of $570/month if the kids are young and $650 if they are older. Your showing just a little over $2K. Food is our biggest factor in cost issues for our budget. Maybe you can throw some tips my way.

    • Well, here’s a peek at what we bought for a whole month. And here’s some tips I have on how we shop.

      2015 has been a little unique because we spent roughly 1 month out of the six months so far out of the country, therefore no grocery bill. I think I also had a visa gift card that paid for a couple hundred $ in groceries in the first part of the year. We still average around $500/month on groceries and don’t compromise too much (lots of fresh fruits and vegs but nothing really organic; ethnic foods aplenty, etc). I’ve seen those USDA food recommendations and I guess we would be spending the $700+/month for a family of 5 if we didn’t shop sales and get a lot of stuff from Aldi. We literally pay half the retail price or less compared to prices at the more expensive grocery stores and I can’t tell that there’s any diminution in quality.

      As for Raleigh shopping, I skip the warehouse stores and skip Harris teeter and whole foods. Aldi, Walmart, and occasionally Kroger and food lion for sales are my go to places, plus Asian and Latino grocery stores for the ethnic goodies.

  • Sounds like a great trip! We absolutely love Mexico. If I may ask, where did you do the zipline & ropes course? We visited Tulum a few years ago, I’m sure you will love it!

  • Sounds like everything is going to plan down there. Glad you guys are having fun! Good call on the plane tickets. A 20+ hour bus ride for a family of 5 sounds terrible. Enjoy the sunshine and inexpensive entertainment. I’m off to Central America myself tomorrow morning. Cheers!

    • Enjoy! The 20+ hour bus ride was supposed to be broken up into 2-3 shorter bus rides that would let us see more of the interior of the Yucatan peninsula and other cities en route to Cancun, but once I saw the actual bus schedules I realized we would be in for 2 12+ hour overnight bus rides. Plane tix it is. And it really didn’t cost much more for the tickets.

  • You must be enjoying your vacation in Mexico at the same time having your financial security in check. The fact that you have not exceeded your budgeted expenditure for the first half of the year shows that you are on course to increase your net worth by the fall of 2015. From my point of view, i think taking up an umbrella policy is very important despite its cost. It is worth the risk and will come in handy many years down the line when need arises.

    • I’m stoked about the NW gains over the last year or two. I think our spending is low enough that we’ll continue to build wealth year after year over the long term.

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