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.

 

Income

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!).

 

september-2014-income

 

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).

 

Expenses

Now let’s look at September expenses:

september-2014-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:

How do you say "no" to this?  She even learned Spanish before the trip.

How do you say “no” to this? She even learned Spanish before the trip.

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.

Sorry about getting the propped up feet into the frame.

Sorry about getting the propped up feet into the frame.

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!

 

september-2014-ytd-expenses

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).

 

september-2014-net-worth

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?

 

 

31 comments

  • Thanks for the update. September was interesting. The DOW, NASDAQ and S&P 500 were not really all that far off their highs, but portfolios were way down. October is off to a rough start.

    A long slow climb up and a quick and jolted drop. Our investments are now just up a little based on income. Oh well. What can you do except stay the course. Who is panic selling? 🙂

    • Based on the drops, someone is panic selling! Not me. I’ll be the first to predict all the major indexes will be up. Maybe next month. Or next year. Probably in five years. And almost definitely in 10 or 20 years. 🙂

  • That is a lot of vacation time in a short period! It will be a relief to spend some quiet time at home now I bet.

    Exterior repairs really hurt the wallet, but for some reason seem more palatable to me than car repairs. I think it is the longer life of the house that makes me more okay with it.

    I had an unexpected medical refund, too. We were able to unload some stocks at (luckily) good timing and add to our mutual fund positions in our retirement accounts. I am looking at the correction as a buying opportunity right now.

    • Funny enough, I’m pretty happy being back at home. Vacations are awesome. Staycations are awesome. Early retirement is basically a 52 week per year staycation.

      I know what you mean about the house repairs. New siding and a new roof should last for 20 years or so relatively problem-free. I doubt I’ll have my current car in 20 years though!

  • Thanks so much for your detailed financial update. September and October to date have been really rough on stock portfolio and overall net worth. Your thoughtful comments on staying the course is really helpful and a good reminder that my horizon is for the long term of 10-20 years and beyond!

    • Thanks! If you have enough money to get through next month and a steady source of income to get you through the next year, don’t worry about investments. That’s long term money you won’t touch for a loooong time. Even once you start living off your portfolio, you’ll only touch 3-4% per year so a big downturn is usually followed by a recovery before you have to spend the rest of your portfolio.

  • I can’t imagine posting that our net worth has gone down $50,000 in one month – it must feel wonderful that it doesn’t have the biggest impact on your finances even though it’s quite a big number 🙂 and the cruise sounds lovely – love the picture!

    • If it drops another few hundred thousand dollars then I might be a little concerned and starting to think about cutting expenses or bringing in more income (temporarily). So far, it’s been smooth sailing!

  • A really thorough update – jealous of all your travelling – you’ve even made a cruise seem appealing to me!

    • Thanks!

      Cruises are awesome particularly when you pay very little for them. I guess we are lucky being near the east coast of the US and especially Florida because we can drive down to Miami or Ft. Lauderdale or Jacksonville, FL and take advantage of extremely low last minute fares.

  • We also had a net drop in investment assets of 3-3.5%; by coincidence I had just done the monthly summary this past weekend. Not much to worry about now but something to keep an eye on. I trade options some for the income so that likely kept the loss down to that level, since even in retirement I keep the bulk of our investments in the Market.

    Heard Leon Cooperman on CNBC this morning say that 75% of all stock trades have nothing to do with the fundamentals of the market, but rather they are just high-frequency trades being engineered by computer programs. Makes sense which is why if you are a small player, you can win against the big boys at time, since their attention is not always focused on underlying fundamentals.

    Good value on the cruise, btw. Hard to pass up that good a deal.

    • I don’t mind the high frequency traders. It’s actually a good thing that brings liquidity to the market and narrows bid/ask spreads. I say let them trade and trade. In the meantime, I’ll get better executions the few times each year that I buy or sell something. 🙂

  • Did you actually go on a cruise without spending any additional money on the ship or on shore?

    • Yes!

      The only extras on this cruise were gratuities which are essentially mandatory ($80/person), plus we bought some liquor to take back home (which I put in the “liquor” category and not “vacation” category).

      We did spend $2 for a coconut in Belize so the kids could have fresh coconut milk. Otherwise we didn’t spend a penny.

      While on board, there are so many free activities that we never find time to spend money on things you have to pay for. And for the days in port, we explored on foot everywhere we went. Some days we only spent an hour or two on shore, then returned to the ship to relax. For alcoholic drinks, Carnival (and many other lines) allow passengers to carry on 1 bottle of wine per passenger, so we had a glass of wine each day (sometimes mixed with fruit juice a la sangria).

      If there’s interest I can pull together an article on our cruise and how to spend nothing while on board and still have a good time.

      • I would appreciate an article on keeping costs low with a cruise. I have never been on one.

      • I’m interested in that article too! My in-laws talked us into a Disney cruise with them in February rather than staying near Fort Lauderdale. This will be my first cruise on a big ship (we did a Rhine river cruise for our honeymoon) and our daughter turns 4 right before we go.

        • Okay, I’ll have to pull something together. One piece of advice would be to avoid Disney cruises if you’re looking for a bargain! Although if your kid loves Disney I guess you can’t get that on other cruise lines. 🙂 Enjoy your cruise, it should be awesome.

          • Hah, yeah, we had previously ruled out a Disney cruise as too pricey but since we insist on separate sleeping areas for us and the 4 year old the curtain in each stateroom on Disney made it a reasonable price vs. a suite on any other cruise-line. At least, that’s what I told myself. 🙂

            • Gotcha. Yes, you’re probably in that unique stage in life where it may make sense. Our two girls are 8 and 9 and we let them stay in their own room down the hall from us this time around. I’m not sure what we’ll do when we bring the 2 year old next time (he’ll probably be 3 before we go again though).

              I know there are some ships that have adjoining staterooms where you can book 2 rooms next to each other and have a door that closes between the two. So you can put the kid(s) to sleep in one room, then close the door between cabins and sleep in your own room. It’s probably still cheaper to book those 2 rooms than a suite, but I would guess about the same price as a Disney cruise.

              And if you’re looking for private time for you and your spouse (away from the kid), there’s always the kid’s club on each ship. Our kids have loved it on the cruises we have been on, and we feel the kids are well taken care of by the attentive staff. And it lets the adults have time to themselves (it’s your vacation, too!).

  • Looks like your October financial update will be the first really bad one in a long time… But your overall networth has a lot of safety room and your withdrawal rate is non-existent with your wife working… Down markets are truly a test of faith, and for myself I have lost 18K in 2 weeks (on a portfolio of 300K)… But I still believe 🙂 I find it amusing though that people say that down markets are great because you can buy more shares at very low prices…. That’s true in the beginning of accumulation period… but once you have a portfolio of several hundred thousands, any significant drop will never be offset by investing new money .I invest 5K per month. Next month I will buy more shares with 5K because the market went down. But the higher potential return on that 5K will never offset the 18K I lost.

    I just see down markets as part of a healthy overall market, not a great situation to buy more shares. I will buy the same amount next month wether or not the market went up or down.

    Keep the faith!

    • We are down $50k for October so far and it’s only half over!

      I agree with you to a certain extent – the ups and downs are a necessary part of the market, and keeps a lid on speculation while also providing a risk premium that leads to higher long term returns than fixed income investments (or so the theory goes).

      But I’ll have to disagree on the “not a great situation to buy more shares” comment. I see what you mean – you lost a lot and it will be hard to replace those gains, but consider it again. The huge crash in 2008-2009 has now been erased and just looks like a dip on the stock charts. Everything I bought at the bottom of that dip is (or was 3-4 weeks ago!) up 100-200%. So while I lost many hundreds of thousands in the crash, I’ve made a lot more since then on what I invested during the dip plus all the investments that went down in value went back up. If it gives you any consolation, we only had around $300,000 at the worst part of the 2008-2009 crash, but only four years later had over a million.

      I would say the best thing that could happen to a young person today would be to have the market crash by 50% and stay that way for a few years (assuming they could keep their jobs and hence continue investing). It’s not fun losing money, but eventually the tide turns and you make it all back.

  • Nice blog you have. Congratulations on your achievements, they seems to be great! You have a gift to write about this stuff.
    Cheers from Portugal!

  • its impressive that at age 33 you have a 1 mil portfolio. I read your article on how you manage to retire but couldn’t get the part how the 1 mil came about. I wonder is because of a 500k cost becoming 1 mil due to the bull market. even then its very good because each of your wife and yourself would have contribute 250k each. I am just wondering how many years of contribution you take.

    • Most of the million+ portfolio is contributions, although gains in recent years certainly added up. I’ve never looked at exactly what our contributions were versus our gains on investments. Maybe $300-400k in gains if I had to guess?

      • hi justin,

        that is still very impressive. thanks for sharing with me. how much did you contribute the 600k over how long of a period. I am asking because i have a feeling a lot of your story was talking about struggles and trying to piece together how 2 person each earning 70k accumulates that much.

        I am contrasting that with myself cause i earn between 36 to 70k and by year 10 this year at most i can gain only 420k.

  • Question, my mortage payments in Personal Capital are just showing as transfers from my checking to my mortgage account. As such, I don’t think they are being counted in my expenses cash flow. Is this the right way to do it, or should I change something so that they are being shown as an expense?

    • You can click on your mortgage account and change the expense category from “transfer” to “mortgages” and then it should show up as an expense.

      I think once you categorize an expense it will keep that categorization in subsequent months. So you should see the mortgage payments show up as “mortgages” every month after you initially set it.

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