September 2014 Financial Update
September. An ugly month for our investments, but an awesomely fun month for us. After making $33,000 in August, we gave it all back and then some in September by lopping $50,000 off our net worth. Our spending was roughly in line with our budget in spite of almost $2,000 in unplanned vacation expenses (the “awesomely fun” part).
With $6,125 of income in September, we more than covered our $2,802 in spending. More than half of our income came in the form of dividends and interest from our investment portfolio.
At $3,250, investment income represents the majority of our September 2014 income. September is the end of the quarter, and that’s when we get most of our dividends. We received a tiny amount of dividends in the beginning of October, but the real dividend party starts in December when some mutual funds and ETFs pay out all the dividends accumulated for the whole year. Total investment income year-to-date for 2014 comes to $15,700. Will we break $30,000 investment income for 2014? You’ll have to wait and see just like me! We’ll likely surpass our $22,300 of dividend income during 2013.
Blog income, shown as “other income” in the chart was up slightly in September to $421. The “consulting” income of $250 represents payment for freelance writing completed in August. In total, I received a bit over $600 from writing and blogging, which is about what I expect on average each month.
Mrs. Root of Good is still working, hence the salary income. This income will likely cease some time in the next year, and possibly within a few months depending on when Mrs. RoG joins me in early retirement.
The “travel income” of $525 are credit card statement credits that paid for our last minute cruise to Mexico, Honduras, and Belize. Our travel credits almost paid for one cabin on our seven night cruise (we booked two cabins for our family so we can spread out).
“Deposits” of $63 were mostly cash back from my Fidelity American Express credit card (2% cash back is pretty cool). I haven’t signed up for any new credit cards lately, so my spending has defaulted to my 2% cash back card.
“Healthcare” income represents a refund from our dentist after he billed us too much (pay attention to charges and insurance explanation of benefits!).
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.
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Now let’s look at September expenses:
At $2,802 for September, our expenses were slightly higher than our budgeted $2,667 monthly spending (but nothing to worry about).
We decided to squeeze in a last minute vacation in September. Our daughter made a request we couldn’t resist:
Our family (minus the two year old) went on a seven night cruise on the Carnival Glory to the Caribbean with stops in Mexico, Honduras, and Belize. The total cost for the trip was $1,888 which included:
- the cruise tickets ($645 per cabin times two cabins)
- gratuities for housekeeping and dining room waiters on the ship ($360)
- gas for the 1,600 mile round trip between Raleigh and Miami
- meals on the drive back (we packed dinner for the trip to Miami)
We stayed in an Aloft hotel in Jacksonville, Florida on the way to Miami for free. We used 2,000 Starwood Preferred Guest points for the room instead of paying the $80-90 cash rate.
While on the cruise we bought some Jose Cuervo and Crown Royal liquors at 50% less than North Carolina prices (liquor falls in the “entertainment” expense category).
Overall, the cruise was a very good value for what we received: transportation to three foreign countries, constant seaside views, three or four meals every day, and two clean rooms with comfortable beds each night. In other words, a few notches of luxury above our summer road trip to Canada. The cruise is probably our last vacation for the year.
Groceries were second on the list of expenditures in September. The $626 spent on groceries includes $200 I added to the kids’ school lunch money accounts (that should last 2.5 months). Otherwise, grocery expenses are pretty average considering we were out of town for a week on vacation.
The month was otherwise one of relatively modest spending. We only went out to eat once in Raleigh at a Salvadorean restaurant in our neighborhood. $14 for a table full of a la carte dishes. It was just okay, not great, but way cheaper than a trip to Central America.
Taking out the vacation expenses, our core spending dipped below $1,000 for the month for the second time this year (it also happened in June). That’s what allows us to blow almost $2,000 on a vacation when our daughter asks politely!
We budgeted $32,000 per year for retirement, so nine months of spending should be $24,000. At roughly $20,000 year to date actual spending, we are roughly four thousand dollars under budget for the year.
I’m still not sure of the timing, but I need to take care of some major home maintenance items like a new roof and new siding in the latter part of 2014. This might cost $10,000 to $15,000 depending on the options we choose (or way less if we DIY). We’re sitting on around $40,000 cash right now, so it makes sense to knock out big budget repairs while we can and while Mrs. RoG still has a steady paycheck.
If we manage to complete the repairs in 2014, we’ll be significantly over our $32,000 annual budget. However, I don’t anticipate any major repairs or expenses like siding and roof replacement any time soon.
Net Worth: $1,408,000 (-$50,000)
Some months we make money, some months we lose money. September was one of those months where we lost money. Then lost more. And kept losing it in a slow and steady trickle day after day.
In August’s financial update I said this:
I remember a particularly ugly September back in 2008. It was the last week in September and we were vacationing at an oceanfront beach house with the family. We like to go to Topsail Island around Surf City, North Carolina. It’s really quiet down there since the island is only a block or two wide in many places. And it’s even quieter in the off-season that starts in September. There’s not a whole lot to do other than relax and enjoy the maritime scenery.
Except this week in September, 2008 was a little different. The stock market was doing somersaults every day. One day while I was taking a break from the sand, sun, and surf I logged on and found out the S&P 500 had dropped over a hundred points for a 9% loss in one day. Oh well, not much you can do when that happens other than go back out to the beach and enjoy the rest of your vacation. Fast forward six years and the S&P 500 has almost doubled since that ugly day in September. Sometimes it literally pays to do nothing when it comes to managing your investments.
I doubt we’ll have another 9% loss in a single day this September, but being a student of the history of the market makes it easier to stomach horrible (temporary) losses and stay the course. Good thing I kept saving and investing money back then!
September didn’t present a day with a single huge loss, but rather many days of ups and downs with losses over 1% being all too frequent.
Our net worth dropped 3.5% for the month. But I know the net worth figure fluctuates every month, so I’m not worried. The $50,000 drop represents a year and a half of our annual living expenses, however we aren’t adjusting our budget at all (yet). In fact, I’m considering increasing the budget (more on that in a future post).
Last month I mentioned that we were approaching the $1.5 million milestone. Now we are a lot closer to the $1.4 million milestone! October isn’t shaping up to be much prettier so far.
How ugly was your September? Did you take the market dips as an opportunity to buy more equities?