May 2017 Financial Update
May is all done, and it proved to be another great month for our household. Our net worth climbed $23,000 to $1,828,000 (another all time record high). Our income was huge at $9,149 while our expenses remained moderate at $1,829.
The kids are out of school in a few more days and we head out for our nine week summer vacation in Europe in less than a week! Exciting, busy times for us. Let’s check out how we did last month.
Our investment income was $201 in May. 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. The $201 is the interest from our roughly $125,000 investment in our money market account and bond fund. In June we’ll be getting several thousand dollars in dividend income since it marks the end of the quarter.
Blog income, shown as “other income” in the chart, zoomed to $8,026. This is much higher than normal and reflects two months of revenue from a major advertiser. June and July will be puny months for blog income because I won’t be here to cash the checks. August, however should be very nice.
My early retirement lifestyle consulting slowed down to $486 income. That represents four hours of work. As part of that time, I helped someone with the technical and creative aspects of their blog.
The $435 in Deposits includes cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. 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!). The Ebates payment was larger than usual due to referral bonuses from this blog.
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 May expenses:
At $1,829 total spending for the month of May, we are well under our budgeted $3,333 per month (or $40,000 per year). Most of the monthly expenses went toward insurance, an expense that comes up every six to twelve months.
Insurance – $937:
$227 for six months of auto insurance for the two of us. $603 for one year of homeowner’s insurance. $108 for $1 million umbrella policy. That homeowner’s policy came in handy when it came time to replace our roof!
Travel – $235:
Train tickets and bus tickets for Munich to Prague and Prague to Berlin. Tickets to El Alhambra in Granada, Spain. $1 online mail forwarding fee from the US Postal Service.
$95 annual fee for the Chase Ink credit card (which will score me 80,000 Chase Ultimate Rewards points = $800-1,000+ of travel).
Healthcare/Medical – $188:
$111 for a dental visit. For the adults in the house, we pay cash for our dentist visits since we don’t have dental insurance.
$27 for lab work from my routine physical. Before insurance the labs were $400 but insurance negotiated the total down to $27 (which I had to pay in full since my deductible is $100).
In May, I pre-paid three months of health insurance at $16 per month so I wouldn’t have to worry about paying the bill while we are on the road in Europe. We get a huge Advanced Premium Tax Credit courtesy of the Affordable Care Act, so we pay almost nothing for gold-plated health insurance.
The future of the Affordable Care Act is still in limbo. Based on the last I’ve seen of the AHCA, the replacement for the ACA, we’ll have roughly the same kind of ACA coverage through 2019 with changes to the structure of the subsidy starting in 2020. I haven’t heard a lot about the AHCA now that it’s in the Senate, so I don’t have any real news to share beyond what I mentioned in last month’s financial update (skip to the section on healthcare/medical expenses).
Groceries – $184:
This category was kind a shocker. We usually spend $400-600 on groceries in an average month. We are trying to “eat all the food in the fridge, freezer, and pantry” before leaving for the entire summer, so I guess we didn’t buy much. I checked the Personal Capital data to make sure there’s no error and the individual shopping trips are certainly there.
However, the dollar amounts are tiny because we didn’t stock up on anything. $30-40 at Aldi buys a trunk full of groceries that, along with food from our freezer and pantry, lets us eat pretty well for a week.
I’m sure we’ll spend a ton on groceries when we return from Europe. We already started a shopping list that’s growing longer and longer.
Restaurants – $59:
We went out to eat twice. Once to the neighborhood Chinese restaurant and once to the neighborhood pizza place. This is one area where the prices DO go up as the kids get older. The oldest, now 12, pays adult prices at both of these restaurants whereas her two younger siblings still enjoy the kid’s menu pricing. It’s only a buck or two extra, but it adds up once you stack tax and tip.
Home Maintenance – $50:
I bought a $50 gift card for Lowe’s Hardware from the grocery store to earn a $10 off coupon on groceries. I’ll be using the gift card to tackle a few projects around the house before we leave for Europe (time permitting).
Charity – $50:
Friend gets cancer – we kick in a few bucks through her GoFundMe. Sounds like the operation was a huge success and recovery is going well.
Cable (Internet) – $44:
Monthly internet bill with Spectrum (formerly Time Warner). We get 100 mbit download and 5 mbit upload. Over the summer while we will be gone, we’re cancelling the service and hopefully we can restart service at the same price or even lower. I’m investigating their “low income” pricing that offers 30 mbit service for $15 per month but not sure how many hoops we’ll have to jump through to land that deal. I know we can’t have had service in the past 30 days before signing up, so our departure for over two months works out perfectly.
Gas – $37:
One tank of gas for the van. It’s still mostly full almost a week into June. Won’t have to refill the van till September probably!
Miscellaneous – $40:
Not shown on the expense summary graphic are:
- quarterly service fees of $15 (Mrs. RoG’s 401k – has access to institutional class index funds)
- Gifts $10 – photos for end of year gifts for our kids’ friends
- Telephone $10 – put $10 on Google Voice for international phone calls. I had to call Ticketmaster Spain to buy super popular El Alhambra tickets two months ahead of our visit and the website won’t take US credit cards online. I can refund any unused funds within one year.
- Education $5 – End of school festival for the middle school student
- Entertainment $1 – Computer games from Humble Bundle
Utilities – $0 (and travel hacking advice!):
You may notice there is no line item for utility bills. 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. And to make sure we didn’t have to mess with any bills while on our summer travels.
I signed up for:
- Mr. Root of Good Chase Sapphire Reserve card – 100,000 Ultimate Reward points
- Mrs. Root of Good Chase Sapphire Reserve card – 100,000 Ultimate Reward points
- Mr. Root of Good Chase Ink Business Preferred card – 80,000 Ultimate Reward points
- Mrs. Root of Good Chase Ink Business Preferred card – 80,000 Ultimate Reward points
By June or July we’ll have 360,000 Chase Ultimate Reward points which we can redeem for $4,800 worth of travel, transfer as 360,000 airline miles or hotel points, or cut ourselves a check for $3,600 cash. Not a bad haul for a few credit cards.
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
Through the end of May we’ve only spent $11,687. That’s $5,000 below our annual spending target of $16,667 budgeted for the first five months of the year. So far so good!
The two remaining big cost items for 2017 are the roof replacement and our trip to Europe. Our new roof is installed! I still have a few punch list items (which are minimal) and haven’t paid for the roof yet, but it looks like we’ll end up paying $950 out of pocket after factoring in what the insurance paid us for replacement of the roof. That’s a lot better than the $4,000 to $8,000 I was anticipating before I found out our roof was a total loss due to wind and hail damage. And in the process of installing the new roof, we added ridge vents and upgraded the gutters.
We’ve already booked and paid for roughly $6,000 out of our $10,000 total budget for our nine week Europe trip this summer. The remaining $4,000 of vacation spending will be concentrated in June through August while we are overseas. The good news is we won’t be spending much to maintain our home or car here in Raleigh while we’re traveling, so our monthly expenses probably won’t exceed $2,000 to $3,000.
In other words, we should still be under budget by around $4,000 to $5,000 by the end of summer unless something unexpected (and expensive) pops up during the summer.
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
Net Worth: $1,828,000 (+$23,000)
Wow, another huge gain in net worth. That makes five out of five months in 2017 with strong net worth increases. Year to date we’re up $148,000 (which is enough to buy a modest house around here).
At some point we’ll hit a soft spot in the economy and the back to back to back net worth gains will invert themselves into losses. Maybe this month, maybe next month, maybe next year, or maybe even further out. I’m pretty horrible at timing the market so I won’t guess when this current bull market will turn the other way.
As I mentioned last month, I was considering moving another $25,000 from equities to bonds. I carried through on that plan in mid-May, thereby bringing our cash and bond total to $125,000. This is enough to cover three to four years of living expenses when you add in the taxable dividends we’ll receive over that time period. The average recession lasts a year or two, so that should be plenty of stable, liquid assets to support us during the next downtown in the markets. I might move another $25,000 to bonds if the market keeps on going up.
Last month I shared how our early retirement finances turned out way better than we expected – like a half million dollars better! We haven’t made any huge changes to our lifestyle as the net worth figure crept up. It’s mostly small changes in spending. I could have saved some money on the roof if I did a few of the simple parts myself. But why bother since we can afford to outsource it? We saw a friend in need and made a small charitable contribution to help out. On our Europe trip, we’ll be spending more freely than we have on past trips.
These are all relatively modest spending increases, and are purely discretionary. Should we find ourselves suddenly $500,000 to $750,000 poorer (not impossible with a 90%+ stock asset allocation), we could minimize these type of expenses to stretch our cash stockpile as long as possible. However, if we continue growing wealthier long term (which is the more likely outcome), then we’ll continue to look for small opportunities to increase our spending where it brings value, comfort, and convenience.
That’s it for this month’s installment of “what we made / what we spent”. We’ll be off to Europe in less than a week and hopefully sharing some pictures throughout our summer trip. Once we return in mid-August, it’ll be a whirlwind of reconnecting with family and friends, hosting a birthday party/sleepover for our daughter, and attending back to school orientations. During September, our daily lifestyle will morph quite a bit since our youngest child is entering kindergarten. It’ll be interesting to see how our interests and activities change once we have seven hours of kid-free time five days per week!
Summer is almost here! Any fun plans? Any big money plans now that your investments have most likely grown a lot?