Another month in the record books. What a month it was! During these “interesting” times we are taking it one month at a time and remaining flexible about our expectations for the near future. It appears we are on the cusp of everyone giving up on the whole “stay at home” thing and doing whatever they want. So maybe everything will be okay. Or maybe we’ll be in Lockdown Round 2 in another month or two. Just have to adapt and stay flexible at this point!
At least while we are stuck at home, the weather here in North Carolina is beautiful so we have been able to enjoy the outdoors a lot. We also celebrated another kid’s birthday, held an immediate-family-only Easter egg hunt, painted a bathroom, and homeschooled our kids. I’m ready for a vacation!
From a financial perspective, April was an incredibly great month for us. After a devastating March, our net worth skyrocketed by $134,000 to end April at $1,953,000. Our income was very high at $8,548 while our expenses were low at $1,324 for the month of April.
Let’s jump into the details from last month.
Investment income totaled $1,338 in April thanks to the quarterly dividend payments from our index funds. Our equity index funds and ETFs pay dividends quarterly at the end of March, June, September, and December with some payments arriving at the beginning of the next month. Here’s more on our dividend investments.
Blog income, shown as “other income” in the chart, totaled $1,452 for the month. Blog income has dropped lately for everyone since advertisers are spending less money on advertising right now.
My early retirement lifestyle consulting income (“consulting”) was $275 for the month of April which represents a single two hour consulting session. This level of revenue is the same as March. After two very good months in January and February with ten or more hours of consulting booked each month, the work rapidly dried up as people tightened their spending and refocused attention away from early retirement.
With the blog income and consulting income down by half or more, I am very glad I didn’t factor those two income streams into my long term early retirement financial plan. We’re still living very comfortably on $40,000 per year and I won’t be ruined if the blog and consulting income drop to zero.
The “deposit income” totaled $5,482. The biggest chunk of “deposit income” was our $3,900 stimulus payment from the federal government which showed up in our checking account in early April. Calculation of the stimulus payment is based on two adults ($1,200 each) and three qualifying kids ($500 each). Most Americans will qualify for some level of stimulus payment if they earn less than $100,000 individually or less than $200,000 if married filing jointly.
I also received $1,500 in my IRA at Citibank. I transferred a half million dollars worth of ETFs to my new Citibank IRA in late 2019 in order to qualify for a $1,500 sign up bonus. Mrs. Root of Good will receive a similar bonus in June since her Citibank IRA account was funded in the same way.
The deposit income includes $82 that came from cash back and incentive bonuses from the Ebates.com and Mrrebates.com online shopping portals (some of which was earned from you readers signing up through these links).
If you sign up for Ebates through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card.
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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Tracking spending was one of the critical steps I took that allowed me to retire at 33. And it’s now easier than ever with Personal Capital.
Now let’s take a look at April expenses:
In total, we spent $1,324 during April, which is down slightly from March’s spending of $1,600. The $1,324 spent in April is less than half of our target spending of $3,333 per month (or $40,000 per year). Groceries and gifts topped the spending categories for the month.
Detailed breakdown of spending:
Groceries – $635:
Grocery expenses are slightly higher than normal. One contributing factor is the purchase of a $150 Walmart gift card from Raise.com that I will use in future months.
In terms of safety concerns, I’m still shopping at the grocery store or Walmart while trying to keep frequency of trips to a minimum to limit potential exposure. In the past we often visited three stores during the course of a week to shop the best deals at each store. Now I shop solo and I only visit one or two stores during the week.
I also “quarantine” all the non-perishable items for at least three days before putting them away or consuming them.
Another big change I made to the grocery shopping routine is using Walmart Grocery pick up service. It’s totally free and tipping isn’t customary. You get the same prices as what you normally pay inside the Walmart store. The main advantage is they fill the shopping cart for you, check out, bag your items, and bring it to your car and load it for you. All you have to do is pull into a Walmart Grocery pick up space and notify them through the Walmart app to let them know you’re ready to receive your order.
I tried Instacart several years ago and it was a disaster. My main complaint was poor substitutions of items that were out of stock. They subbed the more expensive name brand items that cost more for for smaller package sizes.
I have used Walmart Grocery twice now and their substitutions work MUCH better than my Instacart experience. Walmart substitutes name brand items or larger quantity items yet still charge you for the cheaper item you originally ordered. Or if they are out of one size of item, they will substitute several smaller items to get the right total weight or volume you ordered, yet charge you only for the cheaper bulk package.
For example, I got three 1 pound boxes of macaroni elbow noodles for the same total price as the one 3 pound box I actually ordered. They will email you the proposed substitutions ahead of time and allow you to accept or deny the proposed substitutions. The process is very smooth and user-friendly compared to my past experience with Instacart online grocery ordering.
- you save time because someone else shops for you
- less exposure to potential sick people
- every day low Walmart prices
If you want to try Walmart Grocery, you can take $10 off your first $50+ order with my referral link. Enjoy!
Gifts – $226:
During April we celebrated our son’s eighth birthday. We baked him a cake and had family and friends livestreamed into the party. His gift from us included a Lego play set and some other small toys (purchased in prior months) plus $100 cash (reflected in this month’s expense summary).
He bought 2 shares of Vanguard’s “VT” ETF with part of his birthday money. It was his idea, not ours. But of course we are excited! He even calculated how many shares he could buy with his birthday money.
We also gave $126 to our kids for good grades in quarter 3 of school. Each A is worth $5 in elementary or middle school and $10 in high school. B’s are worth $2.50, and C’s subtract $2.50. So far the kids have avoided D’s altogether.
Utilities – $190:
The city water, sewer, and trash bill was $123 for April. We are using slightly less water than normal even though the kids are home all day. My guess is that less laundry and fewer showers more than offset increased dishwasher loads and toilet flushes.
The natural gas bill (for the water heater and furnace) totaled $67 for the month.
In February I paid $602 for electricity which left us with a huge credit balance. The utility charges a $1.50 convenience fee to use a credit card so I usually charge a big lump sum at one time so that the convenience fee is negligible as a percentage of the payment. These big payments help me hit credit card minimum spending requirements for new sign up bonuses too.
Healthcare/Medical – $142:
Our 2020 healthcare premiums are $123 per month thanks to very generous Affordable Care Act subsidies that we receive due to our low ~$40,000 per year Adjusted Gross Income. The benefit of being “poor” on our tax return.
I paid $19 for my monthly dental insurance premiums for 2020.
Clothing/Shoes – $82:
Two pairs of shoes for the older two kids for $82 total. Now if we only had places to wear these new shoes to…
Restaurants – $30:
$30 for a huge 20 piece fried chicken order from Bojangles. This meal was requested by the birthday boy. He didn’t really care what we had for lunch, but I think he selected Bojangles because his mommy loves it so much!
Cable/Satellite – $18:
We pay $18 per month for a local reduced rate package due to having a lower income and having kids. 30 mbit/s download, 4 mbit/s upload.
Home maintenance – $3:
$3 represents the cost for slightly more than a gallon of gas for the lawn mower.
Not reflected in the home maintenance costs for April was a $3 toilet valve gasket I bought using Amazon gift card credit purchased a couple of months ago. Prior to the repair, our toilet tank would barely refill after flushing. The replacement part took less than 5 minutes to replace and it’s running smoothly now.
Total Spending for 2020 – Year to Date
After four months, our spending totals $8,223 for the year. This is $5,000 less than the $13,333 we budgeted for four months of our $40,000 annual early retirement budget.
2020 continues to be a very low spending year for us. Traveling is our main discretionary expenditure most years. The odds are stacked against us for our summer travel so I’m expecting 2020 travel expenses to be minimal. We may start booking something in the fall or winter for 2021 but time will tell whether that is a realistic time frame for us.
Upcoming spending over the next year might include a second car and a new water heater. These are included in our annual $40,000 spending target.
In the intermediate term, our two oldest children will start college in the next 3 to 4 years. We think college costs will be manageable as I laid out in this article.
Monthly Expense Summary for 2020:
Summary of annual spending from all years of early retirement:
- 2014 – $34,352
- 2015 – $23,802
- 2016 – $38,991
- 2017 – $31,708
- 2018 – $29,058
- 2019 – $25,630
- 2020 – $8,223
Net Worth: $1,953,000 (+$134,000)
Wow! How crazy is it that we’re in the middle of a global crisis yet the stock market recovers so strongly? That’s why it’s hard to get market timing right. Nobody knows when it’s time to buy or sell until after the fact. Passive index fund investing is incredibly easy and simple in contrast, which is why I’m a fan.
Thanks to strong stock market gains, our net worth climbed $134,000 to leave us with $1,953,000 by the end of the month.
The one financial move I made during April was tax loss harvesting. I sold some ETFs in my taxable brokerage account at an $11,000 loss and reinvested the proceeds into similar (but not substantially similar) investments. The new ETFs should closely approximate the returns of the investments that I just sold. And in 31 days if the market is even lower, I may switch those new investments back to the old investments and book additional tax losses. The 31 day waiting period is required in order to avoid the wash sale rule.
These capital losses will allow me to offset any capital gains during the year plus I can write off $3,000 of the losses against ordinary income this year (and in future years until the losses are exhausted). That means I’ll be able to convert $3,000 more from my traditional IRA to my Roth IRA while still hitting my optimal $45,000 AGI target.
Life is going pretty well, all things considered. We have a big house, a big yard, a big neighborhood, and plenty of outdoor spaces nearby when we need to escape the monotony of self-isolation while still avoiding people.
We don’t usually go out that much anyway, so the current stay at home order doesn’t impact us a ton. The biggest change we have experienced is the homeschooling. Instead of the kids getting up early and going to school all day, we now wake up later and tag team the homeschooling – or “distance education” as the school system calls it.
I still go out on a long bike ride at least once per week with some shorter rides to run errands mixed in. The bike trails are definitely more crowded compared to normal times, but not to the point of forcing me to avoid them altogether.
I’m finally almost done with my last hard copy book from the library that I checked out pre-shutdown. I’ll be whittling my way through my own collection of books and relying on e-books from here on until the library reopens.
I don’t know what adventures (if any) summer will present to us. I have cancelled the first segment of our summer trip through South America. Panama and Peru won’t happen this summer, but perhaps we’ll still get to visit Chile, Argentina, and Brazil later in July and August. I’m not too optimistic but we’re taking it a month at a time at this point.
I like to focus on the good parts of life instead of dwell on the negatives. While our life is somewhat limited today, we do have a lot to be thankful for. We don’t have to worry about jobs or finances. Our house and car are paid off. We have plenty of fresh food on the table and adequate access to plenty more of it. We have ample recreation and leisure opportunities indoors and outdoors. Overall, there isn’t a lot to complain about!
Until next month, stay sane and healthy my friends!
How was your April? How are you hanging in there?
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