October 2016 Financial Update
Now that the trick or treating is over and October is gone, I’m ready to share the good and bad financial data from last month. Our income, mostly derived from this blog, remained very strong at $8,365 while our expenses ended the month at $1,460 which left us with a large cash surplus. If I make much more money, I’m afraid I might be “unretired”!
I can’t say I paid any attention to the stock market in October but apparently it declined. In spite of income exceeding expenses by about $7,000, our net worth still dropped by $29,000 to $1,618,000. Since this is significantly more money than we had a year or two ago, I continue to feel safe and secure at our current net worth levels.
Here’s the straight dope on our October financials:
October investment income dropped to $31 after a much stouter September with $4,160. That’s the nature of the beast since most of our funds pay at the end of each quarter which means March, June, September, and December always bring us high investment income while the other months are near zero. We are still on pace for matching or exceeding the total of $28,527 in dividend income received in 2015. Although I’m no dividend-focused investor, dividends still figure significantly into our annual cash flow by helping provide the funds we need for living expenses.
Blog income, shown as “other income” in the chart, ballooned to $7,253 while my early retirement lifestyle consulting also increased healthily to $1,076. Blog income was higher than normal because I received both September and October payments from one advertiser during the month of October. The consulting income remained very strong even though I raised rates last month. As one client mentioned, it’s hard to find good, competent professionals that understand taxes and investments with a focus on very early retirement at any price point, and particularly at the relative pittance I’m charging (though I don’t claim to be a professional or anything more than “a guy that writes stuff on the internet and retired at 33”).
The $4 in Deposits includes the cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. If you sign up through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did. I try to do all of my online shopping through one of these portals and the cash back adds up fast. I recently booked an $857 cruise for next month through Expedia by clicking through Ebates to get to Expedia. I’ll be getting $85.70 in cash back once we return home from the cruise in December. Ebates is a nice way to get a 10% discount on every cruise from a booking site we already use. I’ll also be using one of those shopping portals later in the month if I see any good deals on Black Friday / Cyber Monday.
On a slightly different note, our ten year old just landed her first job! Someone asked us if one of our kids would be interested in making some cash as a tutor for their kid. Now our little gal makes $10 per hour as a tutor. She will be working one hour after school Monday through Thursday. If this gig continues, she might make enough to fund a Roth IRA like Go Curry Cracker’s kid! This also supports my notion that mom and dad won’t be on the hook for very much during the kids’ college years.
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 October expenses:
While some consider $1,460 to be a mind blowing monthly expense total for a family of five, I consider it just another routine month where we didn’t have any huge lumpy annual expenses (like property taxes or insurance). We spent almost $2,000 less than our budget of $3,333 per month (or $40,000 per year). For the second month in a row, travel spending topped the expense report (and I like it that way!).
Travel – $579: In September it was cruises. In October it was plane tickets for the five of us to, from, and around Europe. We booked tickets from Raleigh to Lisbon, Portugal for June, 2017 with the return from Amsterdam to Raleigh in August, 2017. Even though we used United Airline miles to score “free” tickets, we still had to pay tax on the tickets which was almost $400 for the five of us.
For those in the points/miles game, we spent 60,000 miles per ticket, or 300,000 total to fly economy between Raleigh and Europe. By booking so far ahead of time we scored some great flights that are only 10 hours to Europe and 13 hours back home including connection times.
With United’s new redemption rules, you get a free one way flight anywhere within the region you’re flying to (in this case, Europe). We used the free flight for a short hop from Lisbon to Malaga, Spain. We could have flown all the way across Europe to some distant corner (Estonia?) but instead chose to take a relatively short flight to coastal Spain since we wanted to visit that area and it’s cooler in June than it is later in the summer. We’re slowly making our way north across the continent as the temperature rises throughout the summer.
All of those 300,000 United miles came from sign up bonuses for credit cards, so if you’re interested in free flights to Europe don’t forget to check out my credit card page.
We also jumped on a luke warm Ryanair deal from Seville, Spain to Milan, Italy for $194 total for the five of us. There might be some extra checked bag fees later on if we can’t pack extremely light like we did for our 7 weeks in Mexico last summer.
So far, we spent $579 for our 9 week trip to Europe and managed to buy all the flights for our trip (20 one way tickets in all). Hopefully this is prelude to a nice low cost, high value summer in Europe!
After visiting Portugal, Spain, and Italy, we will continue through Slovenia, Austria, Hungary, Czech Republic, and Germany before flying back home from Amsterdam. It won’t be cheap even with my travel hacking skillz. I’ll feel really proud if we can pull it off for less than $10,000, and content with a total under $15,000. In rough terms, we’ll probably spend around $6,000-7,000 on lodging ($100/day), $3,500 ($50/day) on food, $2,000 ($30/day) on ground transportation between and within cities, and $1,000 on various admission fees, attractions, and entertainment.
Sound off in the comments if I’m being completely ridiculous about prices but keep in mind we have hotel points for free nights and will rely heavily on airbnb (click for $35 off your first rental), and will probably dine out once per day and buy groceries for the other meals. Trains and buses are stupid cheap in most places (goeuro.com is amazing for cost comparisons) and often come with kids ride cheap or free promotions.
I’ll probably ramp up the hotel/airbnb reservations in the early spring and book those advance purchase train tickets that come with discounts for booking early as the reservation windows open up. Anyone have experience booking airbnb apartments six or eight months before their stay?
I’ll publish a more in depth article on the trip at some point.
Groceries – $366: Another modest month buying groceries. Some of the savings came from “shopping in our freezer and pantry” instead of buying stuff at the store. Here’s a typical month of groceries for us.
We enjoy good food cooked from scratch. Somehow we find these incredible deals on groceries including some high end, “fancy” ingredients. At Kroger, we scored about $80 worth of imported Italian goodies like cheeses, pasta sauce, prosciutto, and olives at 75-95% off retail prices.
We also shop at the ethnic grocery stores in our neighborhood. After walking to the kid’s school for morning drop off, we continued walking to the neighborhood Latino supermarket and picked up three pounds of poblano peppers (on clearance but still perfectly good), a bunch of cilantro, two and a half pounds of fresh tortillas, and two bottles of imported Guatemalan hot sauce for $6. These goodies combined with some large hunks of meat led to incredible fajitas for under $1 per meal. “Reminds me of those street tacos in Mexico” one of our kids remarked. ¡Que rico!
Clothing – $134: Fall and winter clothes for the kids. One pair of shoes. A combo of Walmart and the thrift store. The thrift store offered all girls/women’s apparel at 40% off. How incredible is that? A steep discount on top of already low prices. As usual, the thrift store haul included some articles of clothing with price tags still attached.
Healthcare/Medical – $129: Health insurance premiums of $125 for our very impressive gold plated silver plan obtained through Healthcare.gov with some very sizable ACA subsidies. $4 for some random lab tests at the doctor.
For those looking for insurance in early retirement, on November 1st the Healthcare.gov marketplace started open enrollment for 2017. You can price out plans based on your income and household size. Even though North Carolina was one of those states that lost a few insurers, we picked up one new insurer (Cigna) bringing the total number of companies offering insurance in Raleigh to two, with Blue Cross Blue Shield being the other one.
The two cheapest silver plans look like reasonably good options for our family. I’m debating between the $50 per month plan with $200 deductible, no kid dental coverage and limited network and the $125 per month plan with $800 deductible, kid dental, and nationwide network plus out of network coverage. Those costs are after the very generous premium tax credit/subsidy and include large cost sharing subsidies since our MAGI is less than 150% of the federal poverty level.
Utilities – $103: Water, sewer, trash. In a previous month I prepaid the electric bill by applying an extra $250 toward my account balance – more credit card travel hacking.
October is a cheap time of year for utilities since we don’t need to use the heat or the air conditioning. Winter is coming (like the Game of Thrones reference?). A few minutes before pressing “publish”, I had to turn on the heat. It was 62 inside the house and the forecast for the week calls for brisk mornings in the 40’s and cool afternoons topping out in the upper 60’s. I appreciate thriftiness, but don’t mind dropping a few bucks to keep it 68 degrees during the day and 63 at night.
Education – $66: Field trips for the year for the elementary school kid.
Restaurants – $38: Dinner at a pizza place for the whole family and a clandestine lunch at the Chinese restaurant for Mrs. Root of Good and I (we brought home some fortune cookies and mints for the kids).
Internet (“Cable”) – $34: 50/5 mbit service.
Entertainment – $4: One hour boat rental on the city lake. Small price to pay for a beautiful morning paddling on the water. My first bald eagle sighting was included at no additional charge.
Most of our entertainment is free. Tennis or other sports/recreation at neighborhood parks. Walking/hiking on the trails. Hanging out with friends at the park or at our house. Campfires in the back yard. A seemingly endless string of birthday parties. Visits to the art museum, science museum, and children’s museum. After all that, it’s time to kick back and relax with some video games, Netflix (which actually costs us a tiny bit), and library books (like European travel guides).
Home Maintenance – $2: A gallon of gas for the lawn mower. Colder weather = no more mowing (soon).
Gas – $0: Nope, not for the car. But I did get a full tank in early November which you can read all about next month.
Year to Date Living Expenses
At $30,780 year to date spending, we remain below our annual spending target of $33,333 budgeted for the first ten months of the year by a few thousand dollars.
Other than paying for gas, parking, and tips on our two cruises in December, we won’t have a lot of expenses out of the ordinary. I’m planning on replacing the roof sometime in the next year but I don’t think I have time to get bids, research those bids, schedule an installation time, and deal with any unexpected delays before we leave for our first cruise in less than three weeks. And there’s a huge Thanksgiving feast we’ll be throwing somewhere in that schedule. Otherwise, I would go ahead and tackle this project in November.
The budget for the roof replacement is somewhere around $4,000 to $8,000. I could probably fit it in the $40,000 annual budget this year, or underspend 2016’s budget by a bit, then go over slightly in 2017 if we do the roof replacement in the spring.
Monthly Expense Summary:
- January 2016 – $2,293
- February 2016 – $2,030
- March 2016 – $10,911 (includes minivan purchase)
- April 2016 – $1,829
- May 2016 – $2,979
- June 2016 – $2,485
- July 2016 – $1,190
- August 2016 – $2,817
- September 2016 – $2,781
- October 2016 – $1,460
Net Worth: $1,618,000 (-$29,000)
After several good months we experienced a slight reversal of fortune in October as $29,000 disappeared from our net worth statement. It’s to be expected. The market goes up, it goes down. October happened to be a down month. So far November is following in October’s footsteps.
From last month’s financial update:
We’re still sitting on over $50,000 in cash in our credit union money market account right now. I’ll be moving some of that cash around for year end tax planning, like a large solo 401k contribution, but I will also hang on to part of that cash in order to provide a buffer against severe market downturns.
My procrastination paid off since we’re sitting on even more cash right now and I still haven’t pulled the trigger on the IRA or solo 401k contributions and the market is lower now than it was a month ago. I’m either the wisest or laziest investor ever.
Looking for year end tips to get your finances in order? Check out these 11 tips to finish the year strong.
How was your October? Any big year end financial moves? Ready to end the year on a high note?