March 2016 Financial Update
I don’t know about you, but we had a wonderful March! The weather is beautiful and life is going very well at the Root of Good household. March represents the first full month of early retirement for Mrs. Root of Good. Last week the kids celebrated spring break and we had a very successful week of relaxing and enjoying the complete lack of a daily schedule.
In financial terms, March was very kind to us. Our net worth shot up $94,000 in spite of spending almost $11,000 (most of which was a used minivan purchase). Our income was higher than normal at $7,806 thanks to quarterly dividend payments from our investments.
In March, we received $4,476 in dividend income from our mutual funds and ETFs. This represents almost double the $2,500 dividend income earned in March 2015. Since our portfolio is all funds and ETFs that pay dividends quarterly or annually, the months of March, June, September, and December are big for dividends. The $4,476 we received in March will go a long way toward helping us exceed the 2015 total of $28,527 in dividend income.
Blog income, shown as “other income” in the chart, was back to normal at $2,575 after a weak February with under $500 income. My early retirement lifestyle consulting brought in $180 in March. So far the blog and consulting income has remained relatively steady this year and $2,000 to $2,500 per month might be the new normal. I’m still aiming to live off of four percent of our portfolio, and treating the blog and consulting income as purely discretionary money that we can spend if we want (or save if we want).
The $500 in “travel” income is actually a $500 cash back sign up bonus from Mrs. Root of Good’s Barclay Arrival card. I’ll discuss this later in the “Expenses” section.
We had a $43 refund from the insurance company for canceling coverage on my Honda Civic since I sold it in February (hence the Automotive income of $43).
The $8 “Deposits” income represents two class action settlement checks from Red Bull energy drinks.
The days of earning a paycheck are over for Mrs. Root of Good, so no more paychecks in these monthly income reports!
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 March expenses:
After a record month of spending to excess, the total damage came to $10,911. This is more than three times our budget of $3,333 per month (or $40,000 per year).
Most of the cash that left our hand in March went toward the $8,228 purchase of our new (used) minivan. When you buy new things, you tend to spend even more money after the purchase. A new car is no different. We spent another $98 on the pre-sale vehicle inspection (didn’t want to buy an $8,228 lemon!), $108 for property taxes, and $23 for two sets of floor mats. I still need to pick up three windshield wipers (yes, it comes with a rear wiper) that will cost another $15, and it needs the tires balanced to hopefully fix the minor vibration at highway speeds (fingers crossed it’s nothing major beyond tires out of balance). To add the minivan, our insurance went up by $40-50, which will probably be due in April.
Our $1,072 travel expense in March is for our upcoming summer road trip through Tennessee, Kentucky, Michigan, Ontario/Toronto Canada, Niagara Falls, and Washington, DC. The $1,072 covers all of our accommodations for almost a month and two days of cave tours at Mammoth Cave National Park. I’ll have a lot more detail on this exciting trip in a post to be released soon.
The $1,072 travel expense is actually $572 when I subtract out the $500 travel credit we received from Mrs. Root of Good’s Barclay Arrival Card. She signed up for the card in January and we already received $500 cash back as a sign up bonus (including the extra points from spending an extra $1,000 beyond the $3,000 minimum required to get the $400 initial sign up bonus). The Barclay Arrival Card allows you to redeem points toward any travel expenses including Airbnb or hotel stays. $500 = a free week in a two bedroom apartment rental in Toronto.
I picked up a $250 Airbnb gift certificate by redeeming 25,000 of the 150,000 American Express Membership Rewards points we earned when we signed up for a pair of Amex Business Gold Rewards cards in December last year. That slashed the total price for three nights in an Airbnb rental in Bowling Green, Kentucky from $297 to $47.
We booked nine nights at Starwood Hotels (including Four Points by Sheraton and Aloft hotels) using 24,000 Starwood Preferred Guest points from a single Starwood Amex sign up bonus offer. The most amazing redemption of the bunch was a $400 per night (in Canadian dollars) room in Niagara Falls for 3,000 points.
Travel hacking is how we traveled through Mexico for seven and a half weeks for $4,500. If you like free travel as much as we do and want to get some of these same cards, check out these credit card offers.
Airbnb is an incredible way to save money while on vacation, particularly if you’re traveling with a family. We were able to book decent two bedroom apartments for much less than the cost of a crappy hotel room suite or two budget level hotel rooms. The biggest benefit beyond having tons of space is that we get a full kitchen so we don’t have to dine out for a month straight. If you haven’t tried Airbnb before, check them out for your next vacation and save $35 off your first stay.
Our grocery spending of $611 was a little higher than normal, but nothing to worry about yet. We continue to spend money on good food so we aren’t tempted to go out and eat all the time.
But we did spend on restaurants this month. We dropped $25 on a Groupon for Papa Johns that will end up buying us six or seven large pizzas (coupon codes will be used heavily). It’s hard to make pizza that cheap. We also dined at the Chinese restaurant once and got take out from a different Chinese restaurant once. All restaurant spending totaled $59.
Utility spending of $202 included the $115 water/sewer/trash bill (slightly higher than normal) and $87 for the natural gas bill. The gas bill will be a lot lower until November when the cooling season starts back in North Carolina. Right now we’re enjoying free heat and air conditioning courtesy of the wonderful spring weather!
Gifts of $153 include our daughter’s birthday gift, a wedding gift for a sibling, and a few gifts for some nieces and nephews with upcoming birthdays.
Our entertainment spending of $136 includes:
- $48 for a swimming punch pass good for 15 adult admissions to any city pool or water park
- $31 for four new bike tires for the girls’ bikes
- $27 for fishing gear (Mrs. RoG’s thing; not mine)
- $29 for skating rink admission and pizza for two extra guests beyond the ten free birthday guests (nice cheap commercial birthday party thanks to winning a free birthday party for ten!)
Our healthcare expense of $125 covers the insurance premium for our sweet gold plated silver health insurance plan with heavy Affordable Care Act subsidies. Mrs. Root of Good used the insurance for the first time today and so far it works. It’s health insurance, so I’m sure we’ll be disappointed eventually.
We went crazy with the gas purchases this month (given we’re both retired!). $74 gets you a tank and a half for a Honda Accord and a full tank for a Toyota Sienna minivan. I went ahead and filled up during March to score the 5% cash back on gas purchases on my Chase Freedom card (and because gas prices at all the other stations around town had already gone up significantly). We’re going to the beach in late April for a wedding so I imagine that will be the next time we have to pay for gas.
I spent so much time in March shopping for things that I feel like I need a vacation from buying stuff!
Year to Date Living Expenses
At $15,236 year to date spending, we have far exceeded the $10,000 budgeted for the first three months of the year. That’s okay because we won’t be buying a car every month and we actually made $2,900 from the sale of our old Civic.
Looking ahead, I expect April to be a low cost month. In May or early June we’ll owe almost $1,000 for home, auto, and umbrella insurance policies. July and August should be fairly low cost months too since we’ll be traveling for half of each month and have already paid for all of our vacation’s lodging expenses.
Our goal this year was to spend more than the $24,000 we spent last year, and so far we are on track to do so. However, I know we’ll also have those months where we barely spend $1,000 so we might not spend our whole $40,000 budgeted for 2016. Our spending philosophy hasn’t really changed, but we’re certainly open to occasional small luxury purchases since we know we can afford it.
Monthly Expense Summary:
Net Worth: $1,529,000 (+$94,000)
After four months in a row with a decline in net worth, we have finally turned the corner to a healthy, positive growth in wealth. The gains came from our stock market returns – someone told international investments that we were waiting on them to perform well.
We are now as wealthy as we were during most of 2015 and much wealthier than we were during all of 2014 (and we felt wealthy back then!). We’re still about $50,000 away from our wealth high water mark set in June of 2015, but still feeling like we are swimming in money without any real need to sacrifice quality of life to save money (of course we’re naturally frugal so thrift is easy for us).
I’ll reprint what I said in last month’s financial update:
[The market] goes up, it goes down. What are you going to do? Freak out over every movement, or let the long term growth engine of the stock market work its magic?
In hindsight I look kinda smart by holding on and letting the market swing back into the positive. But I fail to see how “do nothing for a long time” is smart. Nor is it dumb. It’s just the right thing to do if you want to avoid panic selling at the low points and getting overly aggressive after huge market run ups.
After almost two months of Mrs. Root of Good not working and after spending over $8,000 on a minivan, we’re still sitting on around $24,000 in cash. That amount of cash plus the dividends we’ll receive in our taxable brokerage account will cover our expenses over the next year so we won’t have to sell anything for living expenses if the stock market takes another big dip.
Eventually if the market stays flat or keeps going up, I’ll start to harvest some capital gains to pad the cash buffer we have on hand. I don’t have a particular S&P 500 or Dow price target to know it’s time to take gains, but I’ll know it is time when we get there (and I’ll let you know!).
That’s it for this month’s installment of “what did we make and spend, and what are we worth?”. I’ll leave you with this article from the end of last year that is a good summary of everything I blogged about in 2015 (for those new readers that made their way here from the recent articles featuring Root of Good in CNBC, MSN, and Yahoo Finance).
How was March for you? Was your boat lifted by the rising tide?