March 2014 Financial Update

March proved to be another great month for our early retirement finances.  Our investment portfolio went up slightly.  I had a fair amount of income from this blog and other online writing.  Spending in March remained roughly in line with our early retirement budget.

With almost $8,000 in income during March, we more than covered our monthly expenses of $3,319.

In March we received just over $3,000 in dividends and interest.  Our mutual fund and ETF investments pay quarterly or annually.  This $3,000 represents the bulk of the first quarter dividend income from our investment portfolio.  Most of the dividend income arrives in December each year, but the $3,000 received in March is roughly one month’s early retirement expenses for the Root of Good household.

Income received from rootofgood.com totaled $1,787 in March.  I received the February and March payments from one advertising network, so the online income is higher than normal.  I also received $300 from freelance writing.

I didn’t sell much on ebay during the month, with only $56 in sales.  And $50 of that was actually an insurance payment from the US Postal Service to compensate me for the totally mangled LCD laptop screen I sold last month.  I could have made $25 more if the laptop screen arrived undamaged.

At around $500, my ebay sales this year have been uneventful (which is great!) except for this destroyed laptop screen.  Thanks to the insurance payment, I still made a decent profit on an old laptop screen that I almost tossed in the trash.  Filing the insurance claim online at USPS.com was incredibly easy and didn’t take more than 15 minutes including gathering my documents.  I’m feeling like my ebay sales experience was a success so far.  I still have a few more odds and ends to dispose of in the next few months.

A quick note on the expense tracking and income tracking tools I use.  If you like these pretty graphics, that’s exactly what you get from Personal Capital.  But they really go beyond pretty pictures.  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.  It’s my first stop when I have a quick finance question like “how much cash do we have?” or “what do we owe on credit cards right now?”.

Personal Capital is also a solid tool for investment management.  Keeping track of our investment portfolio takes two clicks and is incredibly easy with Personal Capital.  If you haven’t signed up for the free Personal Capital service, check it out today (review here).

Now let’s look at March expenses:

We made up for February’s low spending with slightly above average spending in March.  The good news is that about half of our March spending was prepaying utilities and other expenses in order to meet a spending requirement to secure a huge sign up bonus on one of our credit cards.  No more electric or water bills until the fall!  I also paid off the remaining $468 of Mrs. Root of Good’s medical bill from the delivery of Mr. RoG Jr. almost two years ago.

After subtracting those utility and medical prepayments, we spent well under our normal projected retirement expenses.

Big expenses for March included $753 in travel expenses.  Travel expenses reflect $250 spent on passports for those in the family that needed a new one or needed to renew an old one.  For adults, passports remain valid for ten years with a renewal fee of $110.  It’s a large one time expense, but when I mentally amortize the cost over ten years, I don’t feel like $11 per year is an unreasonable amount to pay for the ability to travel to other countries.  I managed to save $43 by printing our own passport photos for $2 at Walgreens, which certainly helps keep the passport costs down given the steep unavoidable passport fees from the State Department.

We also laid out some travel cash toward our big summer trip.  We booked a rental apartment in Quebec City for eight nights (at $471) through AirBnB.  We used a $25 off coupon from a referral link, and you can get $25 off your AirBnb bookings too with our AirBnB referral link.  For our family, it will work out to be way cheaper than a hotel, and we’re getting a two bedroom apartment with a kitchen which will allow us to cook breakfast and dinner at home and avoid dining out all the time.

Gas, grocery, and restaurant spending was pretty ordinary for the month.  Restaurant spending of $61 bought us a couple of meals out for me and Mrs. RoG, a lunch out with a friend for me, a few cups of coffee at work for Mrs. RoG, and a take out plate for the whole family (complemented with home-cooked rice and veggies).

Year to date, we have managed to keep spending very closely in line with our budget.  We budgeted $32,000 per year for retirement, so three months of spending should be $8,000.  At $8,293 year to date spending through March 31, 2014, our year is off to a great start.  I don’t foresee any major expenses for a couple of months other than travel expenses.  We will probably spend another $1,000 to $1,200 on AirBnB bookings for the other three weeks in Canada plus a few hundred dollars on a hotel in New York City for a few nights.  April will be a somewhat expensive month due to these travel expenditures.  However I expect overall 2014 expenses to fall back in line with our budget at some point during the year.

Net Worth: $1,350,000

For the voyeuristic eyes out there, I figured I would throw out our net worth figure.  At $1,350,000, it went up a tiny bit in March due to $5,000 in investment gains.  After the huge losses in January (-$60,000) and the huge gains in February (+$86,000 from peak to trough), “only” making $5,000 in one month feels pretty comforting.

With a net worth that is 42 times our annual expenses, I continue to think it’s unlikely we’ll run out of money in early retirement.  Put another way, we are spending around 2.4% of our net worth each year.  The dividend yield on our portfolio is over 2%, so even without supplemental income from ebay sales, freelance writing, and advertising on this blog, we will barely have to dip into our capital to fund our living expenses.

Making More Money in Real Estate?

I have always been interested in real estate.  About ten years ago we became accidental landlords when we moved out of our condo and had to rent it out after failing to sell the place.  It worked out really well financially since the place was cash flow positive the whole time we owned it, and it appreciated for a couple more years before we sold it (to another investor cashing out of the California bubble market circa 2006 and looking for a safe place to park his equity).

Every six months or so I get the real estate bug.  I know owning rental real estate can be a pain in the butt (from personal experience with the condo), but most of the time it’s an uneventful way to earn higher returns with your money.

A friend that I trust just asked me to invest in a property with him.  On paper it pencils out to be easily cash flow positive from day one, and there doesn’t appear to be a lot of hidden risks since the place is only a few years old.  In other words, old enough for most latent construction defects to say “hello” but not old enough to need replacement of major systems or components.

I checked my investment portfolio at Personal Capital and realized I already have around $150,000 invested in real estate through my mutual fund holdings (around 12.5% of my total investments).  I also have another $150,000 in real estate through my primary residence.  All together, I have 22% of my net worth invested in real estate.

I could certainly make more money with this investment property, but at this point I’m not sure how much more real estate I need.  Or whether I want to spend more time and effort to make more money!  At 22% of my net worth already in real estate, I have great exposure to the asset class without adding any investment properties.

Overall, I’m feeling good about March.  Expenses remained low, income keeps flowing in to our accounts, and the investments held up well.

How did you do in March?