September 2017 Financial Update

Life is going well for the Root of Good family.  The kids are all back in school and we are settling into our new school-time routine.  Most weekday mornings start with the walk to school to drop off our kindergartner. Then we play tennis, take a walk, go hiking, or go swimming.  As the days grow cooler we’ll adjust our routine to take advantage of warmer afternoons on days that we plan on being outside for a while.  I always look forward to fall and this year is no different.  For us it means more time outside, campfires, Halloween, Thanksgiving, and time with family.

We just closed the books on September and along with it, marked the end of the third quarter of 2017.  Our income spiked up to $7,433 for the month while our expenses remained low at $1,824.  Net worth grew by a massive $46,000, thereby boosting our net worth to $1,936,000 by the end of September.

Income

Investment income totaled $3,221 for the month of September.  Dividends were higher than most months because our equity mutual funds and ETFs pay dividends quarterly in March, June, September, and December.  During other months investment income tends to be much smaller.  We are well on our way to earning roughly $30,000 in dividends for 2017, as we have in the past.

Blog income, shown as “other income” in the chart, remained steady at $4,202.  2017 is going to be a good year for Root of Good income.

My early retirement lifestyle consulting dropped to $0 for the month because I didn’t transfer the fees from a September client consultation session until the beginning of October. October is already looking better for this little side hustle, and I’m totally happy with just a few consulting clients per month (and in fact prefer this pace 🙂 ).

Deposit income of $9 was cash back 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!).

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).

What we’re up to these days. As little as possible.

 

And watching this guy on the back fence. Great Blue Heron – stands over 2 feet tall with a 7 foot wingspan.

Expenses

Now let’s take a look at September expenses:


Like August, spending in September remained low at $1,824.  That’s just over half of our budgeted spending of $3,333 per month (or $40,000 per year).  Taxes were our largest category of spending closely followed by groceries.

 

Taxes – $600:

Third quarter estimated federal taxes of $600. I paid this with a credit card (and paid a fee just under 2% for that privilege) to meet the minimum spending requirements for a credit card that will give me $500 cash back (or the same amount of travel reimbursement) after spending $4,000 (Capital One Spark Business card, for the curious).  The $11 credit card usage fee is filed under the “travel” category.

I paid third quarter estimated North Carolina state taxes in August so it doesn’t show up on this month’s expense summary.

 

Groceries – $551:

A pretty average month of grocery purchases for us. We spent about half of the total at Aldi and Food Lion (a regional grocer in the Mid-Atlantic states).  Aldi is where we routinely shop for most things.  Food Lion is very convenient since it’s an easy walk from home.  They had a crazy sale in September where all store brand items were $0.25 off (sale runs through October 10, FYI). Many canned goods were $0.03 to $.25 each, and yogurt cups were $0.15 after the discount.  When this sale runs every 4-6 months I tend to stock up on things that last a while.  I don’t do extreme couponing but I’m okay paying attention to the grocery store sales paper to take advantage of big savings like this opportunity.

 

Groceries mean good eats. Like this pad thai!

 

And thai curry with noodles.

 

And spring rolls with hoisin peanut dipping sauce. We don’t skimp on good ingredients.

 

Healthcare/Dental – $226:

Mrs. Root of Good and I both visited the dentist in September.  We paid cash for our visits that were $99 and $111 each.

The other $16 of healthcare spending was monthly premiums for our health insurance plan that’s mostly paid for with ACA premium subsidies.  The ACA came under attack once again in September though it remained unscathed once again.

 

Business/Misc – $219:

This cost represents my annual domain registration and privacy protection fees for RootofGood.com ($27) plus hosting fees for three years ($192) at my new hosting provider, Rockaway Hosting.  I just switched away from Hostgator because I was up for renewal and their renewal rates were rather expensive given some upcoming upgrades I hope to do (including converting Root of Good to HTTPS).

So far Rockaway works flawlessly.  Things are running smoothly and their tech support is amazing.  I’ve received email responses on tech support issues from the owner at 4 am and 8 pm on weekends (when does he sleep?).  Other hosting companies might be slightly cheaper and they might work just fine until you have a technical problem you need help with.

If you have a blog and need to migrate to new hosting soon, or want to start a blog at a reliable host where real people provide tech support, check out Rockaway Hosting (that’s my referral link – if you sign up and I might make a commission on services you buy). And use coupon code ROCK10 if you want to save an extra 10% off their low rates.  The code generally stacks with their promotions on multi-year packages, too.

 

Clothing/shoes – $123:

We finished our back to school and post-Europe trip shopping during September by spending a total of $123 on clothes and shoes.

I spend more on shoes now that I’m retired than I did while working. Way more time to explore the woods these days!

 

Lake Durant, Raleigh North Carolina

 

Travel – $63:

We took a three day trip to Atlantic Beach, North Carolina in September.  The hotel itself was free using Chase Ultimate Reward points.  Our only expenses were $34 for a tank of gas to get to the beach (about 300 miles round-trip from Raleigh) and $17 for dining out while on vacation.  The hotel provided a free hot breakfast each day along with free snacks, fruits, coffee, and hot chocolate throughout the day. Those freebies plus a small assortment of vittles we brought with us kept our vacation food expenses to a minimum.

I took a gamble on the hotel booking. I could have spent 17% more points to book a refundable room and cancel if there was bad weather.  I opted to take a chance and save the 17% surcharge and hope for no hurricanes.  It worked out in our favor since we dodged both hurricanes that skirted the North Carolina coast in September.  I like being my own insurance company since we save tons of money over the long haul.

The last $11 of travel spending for the month was the 1.87% surcharge to pay my $600 estimated taxes. I stick that expense here in the travel category since I’m usually paying taxes on credit cards to snag some free travel.

If you want to save on travel, check out all the credit card offers and find a good sign up bonus that will take you where you want to go.  And don’t forget about Airbnb – $40 off your first stay.  Our family of five saved thousands of dollars on lodging this past summer in Europe by booking two and three bedroom apartments through Airbnb instead of two hotel rooms (and enjoyed much more spacious accommodations too!).

Exploring the tidal areas of Atlantic Beach.

 

Brother/sister time at the beach.

 

We had the whole beach to ourselves. No one within a quarter of a mile or more. Shoulder season in North Carolina is great (and cheap)!

 

Just up the road from the hotel is Fort Macon, a North Carolina State Park.

 

We stayed at the Hampton Inn and Suites in Atlantic Beach, North Carolina.  It’s a quick three minute walk to the beach and many of the rooms (including ours) come with a great oceanview. For some bizarre reason they charge a premium for rooms with views of the golf course so we luckily got one of the “regular” oceanview rooms on an upper floor.  Using Chase Ultimate Reward points, I paid about 7,000 points per night for a suite that accommodates six and comes with a kitchen and living room (and free breakfast for all).  This was a nice practical hotel for family trips to the beach.

 

Couch folds out into a bed

 

Kitchen with microwave, sink, and mini fridge.

 

One of the better free hotel buffet breakfasts that I’ve come across. Especially if you like bacon with a side of bacon.

 

Poolside in the shade was perfect since it was still rather hot in the afternoons.

 

Restaurants – $21:

Back home in Raleigh, Mrs. Root of Good and I enjoyed a kid-free mid-day post-swimming treat of thin crust NY style pizza (2 smalls for $11 at a local pizzeria).  I thought this pizza was better than the thin crust pies we ate in Venice, Italy this summer, but Mrs. Root of Good disagrees with me.

Later in the month we used part of a Papa John’s gift card someone gave us as a thank you for dog sitting.  I supplemented the gift card with cash ($10) to get some Papa’s pizza a couple times in September.

 

Cable/Satellite – $14:

$14.99 per month for 30 mbit/second download speeds and 4 mbit/second upload speeds with no data caps.

 

Home Improvement – $3:

Bathtub drain washer replacement from Lowe’s. Who knew these things dry rot and leak after 45 years?  It’s apparently been leaking off and on since we bought the house 13 years ago and I have just now isolated the leak after many rounds of troubleshooting over the years including breaking stuff, sawing a hole in the wall, poking a hole in the ceiling, a plumber visit, and replacing some plumbing and fixtures.  And the whole time it was a $3 faulty rubber washer.  This is a situation where it probably would have been cheaper to call the plumber first before trying to DIY.  I still need to patch the hole in the ceiling and do some touch up ceiling painting but at least we no longer get the occasional indoor rain shower coming from the second story bathroom.

 

Year to Date Living Expenses for 2017

Three quarters of the way through 2017 and we have only spent $19,148.  That’s more than $10,000 below the $30,000 budgeted for the first nine months of the year.

2017 is shaping up to be a rather unspendy year.  We have been fortunate to not have any unexpected emergencies, health scares, or other assaults on our budget.  Our planned roof replacement was mostly covered by insurance and our Europe trip came in about $1,500 under our $10,000 budget (and half of the trip was paid for in 2016).

Remaining big expenses for 2017 include summer 2018 travel we book this year plus a more expensive than expected preventative maintenance procedure for our minivan.  When we bought the used van last year, I knew it would need some routine maintenance.  What I didn’t know was that the recommended spark plug replacement at 120,000 miles costs almost $500!  Apparently the layout inside the cramped engine compartment means there are a lot of parts that have to come out to swap out the spark plugs.  The shop quoted three hours of labor which translates to at least double that for a guy like me (assuming I only break a few things).  The van is a six cylinder and we’re used to paying for maintenance on four cylinder engines.  Altogether, this means we’ll be shelling out some big bucks to keep the van running in optimal condition for as long as possible.

I’m tempted to skip or delay this particular routine maintenance but I would hate to lose a cylinder half way through a 1,000+ mile road trip and suffer the consequences which might include missing the departure of our next cruise ($1,000’s of wasted travel dollars).  I’m going to follow the frugal but not cheap route on this issue.  Our minivan has run flawlessly for the past 1.5 years and I’m hoping it remains reliable another 10 years if we keep it that long. This $500 maintenance should be one of the most expensive routine repairs we experience while we own this vehicle.

 

Monthly Expense Summary for 2017:

 

My sister in law wanted to throw a campfire themed birthday party for Mrs. Root of Good’s brother at our house. Sure!

 

Net Worth: $1,936,000 (+$46,000)

Another mind-blowing +$46,000 explosion of net worth in September.  We’re rapidly closing in on the $2 million mark.  Two years ago in September of 2015, I never thought we would be this close to the magic 2 million.  Since then we have enjoyed a half million dollars of net worth creation thanks (primarily) to a booming stock market.  Times are good if you’re a capitalist.

Throughout 2017 I have shifted $110,000 from equities into the Vanguard Total Bond Market Index.  If the market keeps going up, I’ll probably take some more profits and shift more equities to bonds.  Our portfolio is still over 90% equities so we’ll continue to enjoy huge gains if the market continues its upward march for several more years.

Other than thinking about moving money to bonds and transferring dividends to my checking account every quarter, I spend very little time managing my portfolio since it’s all in passive index funds.  Later in the year I’ll be analyzing my tax situation and will probably do one or more of the following:

  • harvest some capital gains (yes, gains)
  • continue my Roth IRA Conversion Ladder
  • fund my solo 401k to create a tax shelter for income from Root of Good

Over the next few months, I’m planning on releasing more Europe Trip Report posts with tons of pictures along with a few other finance-related posts.  I’ve been working on a lot of back end technical stuff with the blog and have some more tinkering to do in the next few months.  This is exactly the kind of “internet-y” nerding out I hoped to do in early retirement. I just didn’t know exactly what it would look like four years ago when I first made the shift away from working for the man.

 

Another great month!

 

Camp FI in Virginia

In other exciting news, I volunteered to speak at a four day retreat in April 2018.  At “Camp FI” in Virginia, 50 FIRE-seekers will camp in the woods, recreate, and mingle while listening to and hanging out with their favorite FIRE bloggers and podcasters.  Or something like that.  There are still several tickets available starting at $225 including lodging, food, and activities for four days if you are interested (click here).  Past guests LOVED it – rave reviews.  Other camps sold out within days or weeks of tickets going on sale so please be aware tickets won’t be available forever if you’re thinking about it.

I don’t make money if you sign up, but figured I’d throw the opportunity out there for those within driving distance of Petersburg or Richmond, Virginia with $225+ burning a hole in their pockets and an overwhelming desire to saturate themselves in FIRE-knowledge for a few days.

 

 

With just under three months left in 2017, how are you going to make the most of it?  Ready for fall?  Looking forward to the holiday season?  

 

 

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73 comments

  • Dang, your campfire pictures make me jealous!! I’m ready for cool enough weather to do that! It’s October… that should be s’mores… dang southern heat 🙂

    Those are some awesome numbers for the month. After we pay off our house, that will be about what we spend monthly on expenses….really looking forward to that. I am so excited about Fall and the holidays! My kids are counting down the days to Halloween. I’m pretty sure getting free candy for nothing is the essence of joy in childhood.

    Also, wow… 3 months of this year left?? Anyone else find that hard to believe? I can’t get a hold on how fast the years have been flying by! Congrats on a great financial month in September!

    • It was still hot that evening of the campfire but we couldn’t really pick the date since it was for someone’s birthday 🙂 Still waiting here for the cooler weather. Mornings are feeling nice but it’s been climbing into the 80’s in the afternoons so it’s a little warm for several hours each day.

  • September was great for us. We saw a net worth increase of 3% and celebrated my son’s birthday. We thought my wife would give birth to our 2nd son but he’s still waiting. So we’re hoping of an exciting October.

    I’ll definitely have to check out the Camp FI especially if it’s going to be in VA. Thanks for sharing!!

  • I’m a brand new reader to your blog and I gotta say – nice work! I’m particularly impressed with your blog income.

    A long time ago, Mrs. FF and I used to live in Durham when I went to Duke and she worked in Raleigh. My parents retired near Asheville, so I’m familiar with that area as well. North Carolina is a pretty state. Now we’re FIREd in Philly, but we stop by Durham whenever we’re passing through.

  • September was awesome. We passed the 500k mark in investible assets. Love Vanguard Total World Index. At what balance did you start seeing the compound interest take on a life of it’s own? Basically the holy crap moment in seeing compound interest work wonders.

    • Probably starting around 2009, that’s when the real snowballing started. Markets kept going up and up. We continued to dump money in but I think that’s the point at which annual gains started to outpace what we were contributing each year. Yes – a very nice feeling. Much like watching your net worth continue on an upward path after you ditch a full time job! 🙂

  • Wow!! +$46,000 well done!!
    Interesting to see what you’re doing with the portfolio rebalancing. Do you have a target to keep 90%S 10%B ?
    Are you planning on increasing the Bonds slide?

    • I’m improvising the asset allocation right now. I wanted to drop the risk level slightly and build up a multi-year source of liquid and safe funds in the event of a downturn. That means I’m pretty close to 90/10 right now. I might shift more into bonds if these markets keep on going up but I’m taking it very slow since I want to be mostly invested in stocks over the very long term.

  • Justin,

    I’d like some clarification. When you show quarterly “dividends” in your reports you mean that those dividends are within deferred retirement accounts and you do not have direct access to them if needed until you’re 59.5 y.o., correct?
    Have you moved your and your wife’s 401k plans to traditional IRA’s in your names or have they stayed with your former employers after you both left them? Have you done any conversions from 401k (or IRA) to laddered Roth IRA’s? If not, why?

    What I’m getting at is that I’d like some enlightenment how ERs can devise a plan to convert their 401k to Roth IRA. My own understanding is that if one wishes to do ladder Roth IRA’s conversions, it’s not a good idea to roll the whole 401k balance to a traditional IRA when leaving their workplace, but it would be preferable to roll a small amount from 401k to the IRA and then convert to the Roth IRA on the *yearly* basis. But I wonder if employer 401k administrators allow to do that as in “you either roll the entire 401k or leave it with us, but no annual rolls are permitted”. Would you or any of your readers have any insight about this?

    And congrats on your growing balance. What’s your current AA? It sometimes makes me a bit nervous how long this generous bull will continue.

    • Most (many?) people transfer the entire 401k to a tIRA and then do Roth conversions from there. The initial transfer from 401k to tIRA has no consequences.

    • Easy question first – I’m at roughly 90/10 stocks/bonds right now.

      As for rolling 401k into IRA and converting to Roths – check out my article on the Roth IRA Conversion Ladder as it may lend a little more clarification than what I can write up here.

      You can roll a 401k to a traditional IRA and then convert to Roth on your own schedule as you see fit based on your individual tax situation. That’s what we’ve done for most 401ks. We did, however, keep Mrs. Root of Good’s 401k at her old employer’s plan because they provide access to Vanguard Institutional class funds with unbeatable expense rations.

  • Another great month RoG! I’m always amazed at how low your cost of living is! Out here in the Pacific Northwest, our cost of living is considerably higher (like 2x what you guys pay).

    Good thing we have the dividend income to support it!

    Also — holy hell that’s a lot of bacon! Love the food pics as always.

  • Thanks for another write-up. Congrats on the quickly approaching 2MM milestone.

    Just curious, whose your cable/satellite provider and how did you get such a great deal ($, no caps, etc.)?

  • Google domains (https://domains.google.com/) does domain name registration and privacy for $12/year total. I’ve been happy with them since I transferred a few months back.

  • Looks like the market really wants to make you a multi millionaire. Nothing better than watching your net worth climb after doing nothing but having fun 🙂

    Nice work on the free beach vacation! We just got back from a couple days surfing in Rhode Island. Free hotel stay courtesy of Starwoods, and with only 3k points!

    • Very cool! This beach trip was “free” though I could have cashed out the Chase points for $140 in cash, so in a way I was paying for it. I couldn’t find any good oceanfront hotels nearby to redeem with points!

  • Another great month for the Plutus Award Finalist!

    I’m always amazed at your uberfrugal travels. I’m looking forward to more of the European vacation posts — lots of great pictures and tips in your travelogues.

    Cheers!
    -PoF

  • Great job on the groceries, I am trying to get ours down but will take a few months. How much do you pay for your cell service?

    • Cell service for 2 adults and the 12 year old is actually free through Freedompop (just buy/bring your own phones – we have a few and all were $30-100). We do maintain a “regular” prepaid cell phone with T-Mobile and pay $10/yr for that privilege but rarely use it (emergency phone with free overseas roaming).

  • I am still working and we are constantly trailing your net worth by like $30,000! You have more invested in the market than we do (we have some real estate in the mix). I thought for sure as we tipped over 1.9m that we might catch you this month but to no avail 🙂 These market returns have been insane. Hard not to feel like we’re blowing up a pretty big bubble at this point.

    Your blog and lifestyle remain an inspiration. Keep up the good work!

    (Also, not sure if it matters to you, but Google is “cracking down” more seriously on HTTP-only sites, preferring HTTPS. Suppsedly there going to start putting “not secure” in the address bar. We recently upgraded our blog to HTTPS. Not too bad as the host made it easy (but $ was about 50 / yr for a certificate). Supposedly Google gives a slight ranking bump for HTTPS so we’re expecting ad revenue will more than make up for the cost.)

    • Good to hear the HTTPS conversion worked ok. I’m planning on using a free SSL certificate from Let’s Encrypt as it’s automated through my host. Definitely don’t want to face the wrath of a Google warning showing up when visitors surf over here!

  • I think I am most impressed with your trip to North Carolina. It looks beautiful, and wonderfully empty. And it was so cheap! I am always so tempted to eat out when I travel but you guys are amazing at cooking while on vacation. I love to cook at home, but can’t seem to make it happen when traveling. Any advice?

    • The beach is very close to us here in North Carolina and always a nice, relaxing vacation. It spoils other beaches though, since it’s hard to find this kind of sparsely populated beach elsewhere in more popular areas.

      As for cooking on this vacation it was mostly scavenging stuff from the hotel plus bringing a couple of leftovers or easy foods like hot dogs that don’t require more than microwaving. We packed some sandwiches for the drive down since we picked the kids up from school on the way out of town. I forgot to mention this in the article but we did spend another $15 or so on take out tacos and frozen drinks once we arrived at the beach, so that was dinner (the $$ came from a gift card I bought earlier in 2016 or 2017).

  • Not a European vacation, but we’re looking at $1500 for a week in Hawaii next month. Amazing how a vacation is even more enjoyable when you don’t spend a ton of money on it 🙂

  • Approaching that big 2MM… 😀

  • Another great monthly recap! I’m constantly impressed by how cheaply and how well you and your family manage to live when people who make $100K+/year are barely scraping by (supposedly). Your spending is a great lesson in managing your resources wisely. 🙂

    I’m always jealous of your cooking skills when it comes to Asian food. I love Asian food but can never cook it quite to my liking so that’s something we usually order out. One of these days, I’m hoping to get better at making Asian dishes so we can skip ordering from restaurants.

    • We have the advantage of Mrs. Root of Good’s mom and sister to copy and ask for help and directions. Her family is from Thailand/Cambodia and cook a ton of authentic dishes from all over southeast Asia. And we have tons of inexpensive Asian grocery stores to supply ingredients and inspiration if we pick up random things to try.

  • It is truly amazing how well you can live on so little. It’s almost like magic. Send a little of that pixie dust north to West Virginia.

  • FIRE Family Finance

    Another awesome month. I have been stalking your site for almost a year now, and have been impressed by how much your bottom line has grown, in the absence of a traditional paycheck.

  • Where is you big trip for 2018? We are going to the South of France. I got the basic planning done (air, hotels, rental cars). Not worrying about the rest until January.

    • No clue yet. I’m kind of waiting to see Southwest’s summer flight schedule to see if anything interesting pops up. Maybe Mexico/South America. Maybe central/eastern Europe (Vienna-Slovenia-Croatia-Budapest-Bratislava or something like that).

  • Wow, you guys are doing so well. Great job! Pretty amazing with the $2 million mark. You’ll get there very soon.
    On a side note, my brother is moving to North Carolina early next year. I’m sure we’ll come out to visit at some point. We’ll see how it goes.

    • Way cool! Lots of great jobs in the Raleigh/Durham area to go along with our fairly cheap cost of living. Is your brother moving to the Raleigh/Durham area? Definitely look me up if you’re in town and have some free time.

      • I think Raleigh. His girlfriend is a nurse and she will look for a job after they get there. The cost of living there is very attractive. My brother doesn’t like the Bay area because it’s too expensive there.

        • I’ve had friends return home to NC from the Bay Area and be shocked that they can still make about the same here as there. The only difference is the cost of living is much lower, particularly for housing.

  • It’s amazing to me that your family can live on that amount. It gives me hope. A good month for us is $9k, but then again I have a mortgage.

    • Wow, $9k! Yes, the mortgage adds a lot and once we got rid of that it dropped our baseline expenses down to the point where we we’re able to have lots of months under $2k spending.

  • Ah the $3 plumbing fix! I think civil engineers have a hard time not being their own plumbers! (I doubt we’ll ever hire one at our home.)

    • I have a hard time going into a job in figuring out whether a plumber would be able to handle the job in a cost effective way. There are times when I’ve done a 20-30 minute job and saved $200 because everything worked as I expected it to. Then there’s this $3 repair that ended up taking 13 years and $250 or so.

  • Yahoo! What a huge gain! I bet your children are jealous of their parents who go and have fun after dropping them at school. I love these posts!

    • Mrs. Root of Good always lies to our youngest – “we’re just going to the park to inspect the tennis courts, not play on them” 🙂 I think the teachers and principal at his school get jealous too since they see us walking him to school then heading past the school on the way to the park. Many of them know we’re early retired 🙂

  • Amazing, almost $50k net worth increase and year isn’t over yet!

    When I read your excerpt on the FI Retreat I almost read “procreate” instead of “recreate” and my eyes widened lol! I guess that would be a different kind of retreat in the woods haha.

    That’s a very good back to school amount to spend on your two kids! Amazed at how you keep your expenses so low.

    • Funny I almost thought the same thing at first 🙂

    • Ha ha, no. Definitely recreation going on there. 🙂

      We did have a few hundred more $$ for back to school clothing and supplies in August but yes, still pretty frugal costs overall (versus the many hundreds PER KID that many claim to spend).

  • @ Mary W: Yes, I know you can roll the whole 401k to a trad.IRA upon your leave from the company. My question stems more from the tax perspective. Once you have the whole dough in that IRA, but you wish to convert it to the laddered Roth IRA annually doesn’t the form to the IRS tell you to calculate some kind of pro-rata taxes on the amount you wish to convert vs. the total amount on the entire traditional IRA? To be honest, I never investigated this subject myself, but I recall reading that it’s not a great idea to roll the whole 401k to your traditional IRA if you *retire early* as opposed to at age of 55 or later.
    Hopefully Justin will have some thoughts about this.

    • When you convert part of a trad IRA to a Roth IRA you just treat that converted amount as ordinary income. I think the pro-rata stuff you’re talking about is if you’re converting other types of IRA money to Roth (non-deductible traditional IRA contributions??).

  • Oh man….you’re guys on FIREeee! Approaching the 2 million mark in just a few years. You guys are inspirational to my own Journey! Keep up the good work…..hope to be in a million mark myself in few more years, but I know its coming!

  • How much longer do you think this hot stock market will last?

    • No clue! Might be one more day or it might last several more years (with a bump or two along the way). We’re pretty far into an economic expansion and due for a recession based on historical economic cycles.

  • Lovely trip to the beaches … when I lived in North America … we often took the camper and canoe for similar outings …. but now that I have been based in Asia for 20ish years … it is not quite the same … that campfire looks great and brings back fond memories … very economical …. God Bless, Michael

  • Do you have to worry about harvesting too many capital gains such that your ACA subsidy will be reduced?

    • Yes, I have to keep capital gains to a moderate level if I want to keep most of my ACA subsidy. I could take a lot more CGs at a 0% federal income tax rate but I would lose about 12% of my ACA subsidies for every dollar of CGs taken (plus the 5.75% NC taxes that are assessed on CGs – no LTCG tax break at the state level unfortunately!). I aim for about $40-42,000 AGI to keep my ACA subsidies high and overall tax liability near zero.

  • Great lifestyle !
    What advice would you have for someone living in a country where tax-deferred retirement accounts don’t exist. Can you achieve the same only using a taxable account?

    • You can do it with taxable accounts only. Depending on your tax rate, it will be harder. For example, you’ll have all your dividends and capital gains in a taxable account subject to tax each year, whereas for most Americans, they pay no tax on their investment income because it’s usually held within IRAs and 401k type tax-deferred accounts.

      But as long as you’re saving some each year and adding to your investments, you’ll eventually reach financial independence.

  • Another great month for you and your family! I love reading these updates. What do I have to do to get my hands on that pad thai recipe?! Looks delicious

    • It’s a family secret 😉 I might have shared it here in the past at some point, can’t recall. Secret sauce is Maesri Pad Thai sauce if you want to look for that at Asian grocery store.

  • Great
    Questions: where is your car insurance in the expenses tab?
    Is the $600 in taxes due because of the blog income only?

    • We pay car insurance twice per year in June and December. It’s about $200-250 for six months (in total, for both of us; no comprehensive or collision).

      $600 in taxes is indeed for blog income. It’s self employment income so I have to pay the hefty 15.3% payroll taxes on it, which make up essentially all of my federal tax liability.

  • Off subject but I was wondering how horrible the summers are in raleigh? We’re from the west coast and considering moving there for retirement. Thank you for any info.
    Michelle

    • Summers are always great…especially if temperatures stay at 90F range…I don’t understand why Americans complain so much about hot weather while everybody else in the world just love it. Beach time are the best.
      My FIRE dream is to move to the caribbean

      • Are you talking about Raleigh? It gets incredibly humid here and very uncomfortable during the worst part of summer. Sure, temps below 90F aren’t too bad, especially if humidity is moderate, but it routinely gets hotter than that here.

        However if you’re talking about a dry 90F temperature, I can see how it’s comfortable. I recall feeling chilly for a little while when it was over 90F in Malaga when we were in the shade and the wind was blowing. I was a bit sweaty so the wind had that chilling effect. 90F in Raleigh with high humidity means you’re dripping wet with sweat if you do anything outside. Even sitting in a chair = sweat a lot.

    • Pretty horrible at times (in my opinion). Some days are just hot and you’ll sweat. But when temps get into the 90’s or break 100 you’re going to suffer. It’s not the heat as much as the humidity. Just no way to get by outside without dripping with sweat. You’ll notice we typically travel a lot during the summer and that’s partly to chase good weather so we can actually enjoy the outdoors. Most folks here in Raleigh don’t spend a ton of time outside in July and August when it’s the hottest, or they go out early morning and later in the evening when the sun’s not hitting directly.

      I’d suggest booking a trip here in July-August to see if you can handle it. The good news is electricity is pretty cheap and our air conditioners can run all summer 🙂

      March-May and September-November are usually pretty nice for outside fun times, and our winters are relatively short and not too cold (but you’ll probably see snow a couple days per year and freezing temps much more often than that).

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