December 2017 Financial Update

Happy New Year!  Another great year in the books for us.  Our youngest started kindergarten. We took an amazing nine week trip to Europe.  And with all the kids in school we were finally able to take advantage of a nice last minute travel deal when Mrs. Root of Good and I jumped on a cruise to the Caribbean for a week.  Our early retirement lifestyle is going well.

Here’s how our finances finished 2017.  Year end dividends rolled into the investment accounts in December pushing our total income to just over $14,000. Our spending was rather high at almost $8,000 (which needs some explaining). Another freakishly good month in the stock market pushed our net worth up another $26,000 to leave us with $2,037,000 at year end. Needless to say, our 2017 went remarkably well from a financial perspective.



Investment income totaled $10,843 for the month of December plus a bit more from a 401k that didn’t show up in Personal Capital.  Our equity mutual funds and ETFs pay dividends quarterly in March, June, September, and December.  Some funds only pay once per year in December which explains why the December investment income is much higher than other months of the year. Mrs. Root of Good’s 401k doesn’t report the dividend income as dividends in Personal Capital. Including those unreported dividends plus all other investment income reported in Personal Capital, we earned a total of $36,234 in investment income during 2017.  That’s a little higher than 2016 dividend income.

Blog income, shown as “other income” in the chart, remained roughly the same as last month, at $2,294 for December.

My early retirement lifestyle consulting income (“consulting”) increased to $843 in December.  That works out to almost two hours of consulting per week which is the upper limit of what I’d like to do.  We’ll see how January goes before I finalize rate increases for 2018.

Deposit income of $51 was cash back from the and 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.  We scored a decent amount of cash back while shopping online over Black Friday and leading up to Christmas.

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 take a look at December expenses:

December was a high expense month for us. Two main factors added up to much higher than usual spending. I paid the annual property tax bill of roughly $1,500. I also bought around $3,700 in gift cards that I’ll be using throughout 2018 for everyday spending.

The December total spending of $7,953 is about two and a half times our budget of $3,333 per month (or $40,000 per year).  Subtracting out the $3,700 in unused gift cards brings our effective spending to “only” $900 over budget.


Groceries – $2,643:

This shockingly high grocery spending is easily explained. We bought $1,000 worth of Visa Gift Cards and $700 worth of Walmart Gift Cards to take advantage of some significant cash back opportunities and to meet minimum spending requirements on a credit card (to qualify for a sweet $1,000 cash back bonus!). We’ll spend these gift cards on things like groceries, household goods, and general merchandise over the next several months. I bought another $2,000 worth of Visa Gift Cards (that cost $1,963 out of pocket) and included those in the “General Merchandise” expense category.

Tracking spending with Personal Capital is easy since the data feeds in automatically from credit cards, checking accounts, and investment accounts.  With simplicity comes limitations. I don’t think there’s a way to add in expenditures manually after the fact as it’s basically a cash basis accounting system.  As a result I have to guesstimate where I’ll end up spending these thousands of dollars of gift cards in the future. Which is okay since I’m more concerned about tracking the total amount we spend instead of getting it allocated exactly between specific categories (= keep it simple).

Other grocery spending included a total of $363 added to our three kids’ school lunch accounts.

The actual grocery store grocery purchases for December totaled only $574 which is roughly what we spend on average in most months. More on how we shop for groceries without using coupons.  And why we never shop at Costco.

Rice and beans. And ribs. Hard to make fun of our frugal ways when there are tender juicy ribs next to the (imported from Thailand) rice and (freshly sauteed) beans.


Cooking runs in the family. We hosted potluck Christmas for almost 30 people in our family. We made lasagna and thai noodle cucumber salad, while guests brought egg rolls, spring rolls, salad, shrimp cocktails, broccoli casserole, and other delicious treats.


The monthly obligatory pho-to. This time at Mrs. Root of Good’s family’s house celebrating New Year’s Eve.  You can tell this is Mrs. Root of Good’s bowl because of the tripe on the left hand side (something noticeably absent from my own pho bowl 🙂 ).


General Merchandise – $1,963:

The $1,963 in this category represents the purchase of $2,000 Visa Gift Cards bought at a slight discount. I purchased these and other gift cards through the Ebates Cash Back portal and I hope to get $45 in cash back or possibly more depending on how they are categorized by the merchant.


Home Maintenance – $1,536:

Our annual property tax bill.  Even though our house is worth $200,000 or more, we are paying tax as if our house is worth $147,000.  They only reassess property values every eight years here, and the last re-evaluation came just before our neighborhood property values started skyrocketing as the wave of gentrification pushed east from the “nice” part of town.


Travel – $828:

It’s official.  Our 2018 summer vacation is booked!  We’re spending a month in an oceanfront condo in Freeport, Bahamas.  We’re staying in a ground floor unit of a 20 unit condo building that sits on a half mile stretch of undeveloped beach. Lots of bleached white sand, crystal clear water, and not much else.  If you don’t hear from us very much over the summer, just know that we’re relaxing working hard next to the pool or on the deserted beach.

We paid about $2,300 for the one month airbnb rental which includes a 50% “long term” discount.  It’s a 2 bedroom, 2 bath unit with a decent living room and dining room, washer, dryer, A/C, internet, full well equipped kitchen, and pool.  The cost breaks down to $828 out of pocket for Airbnb plus a big chunk of gift cards that I bought in 2016 (at a discount, of course) but didn’t use for our Summer 2017 trip to Europe.  If you want to take $40 off your first Airbnb stay, check it out!

The flights are booked except one flight for me on one leg because I’m being cheap and hoping it drops slightly in price.  I used a combo of Southwest frequent flyer points to for round trip tickets from Raleigh-Durham to Ft. Lauderdale then I used Chase Ultimate Rewards points (from last year’s Chase Sapphire Reserve signup) to get round trip Ft. Lauderdale to Freeport, Bahamas tickets.  Total cost out of pocket would have been around $500 per ticket but we managed to use points or other travel hacking to cover all costs in full (including the $56 tax at Southwest which the $300 Sapphire Reserve annual travel reimbursement covered).

I also used up $544 of remaining Sapphire Reserve travel credit to add to the deposit on our winter 2018 Christmas cruise on the brand new MSC Seaside cruise ship sailing out of Miami. Which means we’ll probably visit the Bahamas a second time in 2018.

Gotta love getting many thousands of dollars in free travel from credit card bonuses!  If you want to peruse the available credit card bonuses, check out my credit cards page.


Gifts – $357:

Most of this expense is cash gifts to our kids for Christmas. It’s one of their main sources of spending money throughout the year and preempts all those nagging “can I get this?” questions. It’s their money, they can do what they want (as long as it’s not dangerous or likely to lead to big problems).

We also bought the five year old a new bike for Christmas ($53). And phone cases for our daughters’ new phones ($3).


Christmas morning!


Little Dude’s sweet new 18″ bike from “Santa” (who doesn’t exist according to Little Dude). No training wheels on here!


Getting the hang of it.


Healthcare/Dental – $348:

Our 2018 ACA plan is about $60 per month more expensive than our $16 per month plan from 2017.  It offers nearly identical coverage as in 2017 except the deductible increased from $100 to $125 and the specialist office visits are slightly more expensive.  I decided to take less than the full ACA premium subsidy that we qualify for so that I can pay extra each month.

I figured out that I can in essence pay an extra $300 each month for my health insurance and that replaces the need to pay quarterly estimated taxes. In this case the health insurance company eats the credit card processing fees for the $300 per month instead of me paying the 1.87% fee. It’ll only save me $60 each year but it also eliminates the administrative overhead of making four estimated tax payments.  I feel kind of like a genius (a very stable genius).  In future months we’ll owe $364 per month for health insurance premiums ($64 for the actual policy plus $300 per month extra that will count as taxes paid once we get back a large ACA Premium Tax Credit at tax time).


Getting our tennis on during an unseasonably warm December afternoon.


Entertainment – $71:

Due to a quirky decision I made 8 years ago when I first started keeping detailed spending records, I include hard liquor purchases made at our state run liquor stores (the misleadingly named ABC Stores) in the “Entertainment” line item.  Good for entertaining and making a strong beverage at home for personal consumption I suppose.


Bought in November: a few bucks worth of craft supplies from Dollar Tree to make these adorable candy cane reindeer for all of our son’s kindergarten classmates.


We volunteered on the last day of school before winter break. The kindergartners needed some help from a retired engineer to ensure proper structural integrity in their gingerbread houses. The world has never seen such strength built from graham crackers, cake frosting, and gum drops.


In “real” entertainment spending, we went to The Nutcracker presented by the Carolina Ballet. These $500 worth of tickets were free. Fun story – we gave away an old 32″ CRT TV on facebook and the recipient chatted us up and ended up comping us some super expensive tickets to the ballet since she worked for them. It was pretty fun but wasn’t as exciting as the live performances we are used to on cruise ships.


Clothing/Shoes – $52:

A few random winter clothing items and a pair of shoes for Mrs. Root of Good.


Cold winter sky




Gas – $51:

Slightly more than one tank of gas. We drove to the North Carolina foothills to visit my grandmother and celebrate her 90th birthday!


My uncle’s little country retreat in the NC foothills. My first time driving a long distance in sort-of snowy weather!


Where do 90 year olds really really want to go for their big milestone birthday? The “fish camp” of course! Mmmmm piles of fried seafood.


Automotive – $44:

I paid $39 for an oil change at the dealership. This is the first time I’ve paid for maintenance on the minivan that we bought in 2016.  While there, we also let the dealer perform a few non-critical recall fixes.  They found a few things that needed attention on the van but otherwise gave it a clean bill of health.

One of those items needing attention was a burned out tail light. Instead of paying the dealer $20 to replace a single bulb, I bought a new set of tail light bulbs and a new set of license tag light bulbs (required equipment in North Carolina, and something that failed me on the annual safety inspection in the past).  Total cost: $4 shipped from Rock Auto online (or about $11-12 at the auto parts store).  In the minivan, it’s a pain to get to the rear light bulbs because the interior panels must be removed. As a result I wanted to replace all the bulbs in there at one time so that they will hopefully last the life of the van (and I paid a few pennies extra to get the “long life” light bulbs).


Restaurants – $37:

We’re stuck in our boring ways. Just one family visit to our regular haunt – the neighborhood Chinese restaurant.


Cable/Satellite – $14:

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


I’m passing my love of Starcraft 2 to my son. Guess what we did during the entire winter vacation from school? Hint: there might have been more than a few Zerg, Protoss, and Terrans harmed in the process.


Telephone – $4:

I’ve been using Google Voice hooked up through an Obihai Telephone Adapter to get free VOIP home phone service for several years.  Something technological happened such that the older Obi100 adapter stopped receiving firmware updates. Google updated their Google Voice security interface and boom – my old Obi100 no longer played nicely with Google Voice. I found a $4 workaround through some telephony forums and paid that small fee to keep things running for free (at least on a recurring basis) in the home phone department.  I briefly considered tossing out the home phone completely but it is handy to have the whole house set up with phone service without relying on our cells.  And the price is right.


Total Spending in 2017

All told, we spent only $31,708 in 2017. That’s about 80% of our annual $40,000 early retirement budget.  We had a great time in 2017 and didn’t lack for anything.  We enjoyed nine weeks traveling across Europe and a week cruising the Caribbean.  We had a new roof put on the house.  Lots of fun was had by all!

I don’t see any huge expenses coming up on the horizon in the short term.  Our big 2018 summer vacation is mostly paid for.  The annual property tax bill is paid.  I don’t foresee any big housing expenses in 2018 although our water heater and furnace are both getting older and there’s a small chance that we would have to spend a lot on repair or replacement of either one of those systems during 2018.  Don’t worry; it’s in the budget along with other capital expenditures for all major systems in our house.

Life is good.  I’ve expressed this opinion before, but I really feel like we’re living a $100,000 lifestyle on $40,000 per year or less.  After four years of early retirement, our spending has averaged $32,000 per year (see summary below).


Monthly Expense Summary for 2017:


Summary of annual spending from all years of early retirement:


Net Worth: $2,037,000 (+$26,000)

Another month is over. Another YEAR is over! Our net worth increased yet again in December, making 2017 a year with 12 out of 12 months with positive net worth gains.  I’ll be surprised if we ever experience another year with such smoothly positive net worth growth.

In December, our stash of investments grew by $26,000 to bring our total net worth to $2,037,000.  Year over year, we’re $357,000 richer than we were at the end of 2016.  That astronomical amount of growth is more than five times what I earned on a yearly basis while working full time as a transportation engineer.

Here’s my market forecast for 2018: The market will go up, and the market will go down. I have zero clue where we will end up on December 31, 2018.  However I expect that on December 31, 2038 we will look back longingly at how cheap stocks were way back in 2018.

As far as investments, my biggest change in 2017 was switching to a slightly more conservative asset allocation.  I sold stock mutual funds and ETFs throughout 2017 and bought VBTLX, the Vanguard Total Bond Market Index Fund, with the proceeds.  I’m now the proud owner of $127,000 worth of bond funds.  In addition to the bonds, I hold $15,000 in 2% CDs at my local credit union and another $35,000 in money market accounts yielding 1%.

In total, I’m holding just over $175,000 in fixed income investments (including cash) which represents just under 10% of my total portfolio. The other 90% remains invested in a broad asset allocation covering the entire globe.  At an average annual spending level of $35,000 per year, the fixed income allocation will cover five full years of living expenses. Add to that five years of $8,000 per year in dividends from the taxable brokerage account and that would result in another year of living expenses.  If we enter a multi year bear market we’ll have plenty of cash and bonds on hand to get us through the tough spots without selling our equities for quite a while.  This worst case back of the envelope contingency planning excludes any blog or consulting income (which covers our monthly spending in most months).

I wanted to close this blog post with a hearty “Thank You!” to all the Root of Good readers and I’d like to extend best wishes for a prosperous 2018 from my family to you and yours!



How much progress did you make toward your early retirement goals in 2017? Any big New Year’s Resolutions for 2018? 



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  1. Over $10,000 in investment income this month? …and I was so proud of my $1,000:)
    So impressed with your lifestyle Justin, you guys seem to have found the perfect balance (money, family, travel). You are such an inspiration, thank you for sharing.
    I can’t wait to hear about the Bahamas, it has been on my radar.
    PS: Cute little reindeers!

  2. 2017 was another great year for you guys. You’ve gotta love having all kids in school now — that is life changing.

    All those prepaid cards will make your 2018 expenses look downright tiny to start the year. And $1,000 cash back for a CC bonus? That’s fantastics — one card or two?

    Last, my wife and I also volunteered together at our kids’ school. We were the only couple there on a weekday. Loving my part-time schedule.


  3. I’ve got to start looking at the credit cards with cash back, travel hacks etc that you talk about. I don’t do any of these. I think there is a whole new world of money saving ideas that I have to discover. I’m not a complete disaster, but I think my report card would say “could do better”.

    1. You really should. We used nearly 2 million miles and points last year. It’s definitely a great hobby and way to see the world for a fraction of the price.

      It is truly low hanging fruit, ripe for picking!

  4. You guys are killing it! Looks like little dude is riding a wheely on his new bike. Nice perspective.

    That fish fry looks awesome. Haven’t had that in a long time myself.

    I have got to learn your credit card hacking mastery. Making $1000 by buying gift cards is pretty awesome considering there is no cost whatsoever.

    Good luck in the new year.
    -Justin (Mr. Atypical)

  5. Wow you all are crushing it. I have to admit when I saw your grocery bill at first I was thinking what in the world happened but it makes a ton more sense now 🙂 Hope you all have an even better 2018!!!

    1. I cringed when I pulled up the monthly summary too. Then realized it’s not “real” spending for December so no worries. We’re already making use of some gift cards for regular spending so it’s balancing out spending like expected.

  6. Thanks for not trying to call a top or bottom on the market. It seems like every other blog is ready for “tomorrow’s crash”. I don’t know and you don’t know what tomorrow or next year brings. But 20 years from now? You bet. Sunshine and roses compared to today!

    ps – did you say the ballet WASN’T exciting? Huh…:)

    1. Tomorrow’s crash might come tomorrow or next year or 5-10 years from now 🙂 Short term I don’t mind raising a little cash after a huge run up but not going to make a huge change in general strategy!

      Re: ballet – I’m pretty open minded. Interesting show but I guess I don’t appreciate ballet. Give me other kinds of dancing, singing, acrobatics, etc.

  7. Livin’ the dream man. What a great year, I can see why folks are paying you for consulting.

    And keep junior riding that cool little bike. Once hooked on bikes he will be destined for a lifetime of fitness and coolness. And of course money-savings too 🙂

  8. Another great month to finish a great year. Congrats, Justin.

    I continue to be amazed at how low your expenses are but your family continues to do great things.

    On your questions, we did have a good 2017. Our net worth increased just over 26% and passive income increased just over 9% from last year.

    Our focus areas for 2018 is around passive income:

    – (1) Taxable Accounts: increase passive income derived from taxable investments vs. non-taxable assets.

    – (2) Schedule and Frequency of Distributions – consider obtaining appropriate assets that payout during lower contributing months (NOT: March, June, September, and December).

    – (3) Liquidity: continue to be mindful of the massive disproportion of passive income from investment vs. banking/savings accounts.

    – (4) Type of Income and Diversification: look for new sources of passive income beyond traditional “portfolio” income.

    Thanks again for the post. – Mike

  9. Awesome year for you guys! I’m beginning to think if I retire my NW will just go up from all the bloggers that track their NW :).

    Do you have a link to that “fish camp” place? Headed back to Durham for a wedding in May — looks like a yummy restaurant!

    1. I can’t think of any good fried seafood places in Durham. I’d try Yelp and look for fried seafood or “calabash” style seafood. Or ask the guy behind the counter at a gas station or at the hotel where to get good local fried seafood. There’s probably a hole in the wall place nearby wherever you are.

  10. Justin,
    Happy New Year! The pho bowl looks very delicious, especially with tripe. I love noodles. The young boy’s bicycle looks so cool. Glad to hear all your kids are in the school now. That gives you folks more time for your own. My kid is an adult now. Sometimes I do miss those old days when I gave him a ride to the school.

  11. Congrats! You guys had a great 2017. I’m still very jealous of your annual expense. Your cost of living is so low and you live such great lifestyle.
    Nice job volunteering at school. I really dropped off this year in that aspect. Maybe I’ll volunteer more the next school year. Good luck in 2018! I like your move of going a little more conservative. Will you keep the same allocation this year or add a bit more to bonds?

        1. Eventually we’ll get dinged a little when interest rates rise. Just a fact that comes with holding bonds. Or rates could go lower. Hard to predict. I expect I’ll be in bonds fairly long term though.

  12. Congrats on another year of very stable spending, Justin! It’s a by-product of being a very stable genius, it’s phenomenal. You should remind your son that you have the biggest Starcraft optical mouse on your desk, and it works.

  13. You paint an inspirational picture — thanks for sharing it with us! I, too, am interested in the $1k cash-back card(s) you mention. Right now we’re at about 25% VBTLX (up from 15% a few months ago); the market’s been so kind to us this year that I felt good about tucking a little more away for a rainy day.

    PS: those reindeer just now threw me back to when I was 6. Googly eyes and pipe cleaner antlers FTW! Now I miss my mom, but it’s bittersweet. Thank you for reminding me.

  14. Congrats on a great 2017 RoG family! Your annual spending is always so low, despite your luxurious lifestyle!

    We spend roughly double that number out here in the PNW. (I attribute most of the difference to childcare and real estate costs for us.)

    P.S. Aren’t you afraid of losing those gift cards. That’s similar to a great big pile of cash sitting around.

    1. I have methods of securing the gift cards that I can’t cover in great detail due to security concerns 🙂 Always a concern but I’ll probably use them up rather soon.

  15. I love the white Christmas tree look and you family is adorable! The photo of you and your son hunching over Star Craft made me laugh. Am I staring at our future too? Haha.

    We had a good financial year in 2017 and only hope to pull the same for 2018. Then someday I can say I was staring at our future on your blog 🙂

    1. I saw you mentioned fostering kids (real kids, not the furry kind 🙂 ) on your blog. Maybe they can hunch over Starcraft 3 with you in the future 🙂

  16. I hadn’t thought of the whole “opting for less ACA subsidy vs. paying more quarterly taxes” idea. So I went and checked and, to absolutely nobodies surprise, our insurance company doesn’t accept credit cards (thanks Blue Cross!). So we’ll just keep using the quarterly SE Taxes to knock out credit card spending requirements.

    Perhaps unrelated to this post, but I wanted to say that your ACA subsidy posts were a real inspiration to us. For 2018, we’re gonna go all out and maximize pre-tax retirement accounts (~$58k), not only to minimize taxes, but mostly to optimize ACA subsidies. So, thank you!

    I know you’re big on credit card bonuses (me too). Have you ever looked into bank account bonuses as well? In 2017, we ended up with an extra $3,700, with very little effort. Unfortunately, we’ll have to scale that back for 2018 in order to keep our MAGI in check.

    1. I’ve looked at bank bonuses but the fact that they’re taxable income takes away a lot of interest. Maybe someday I’ll look closer because I know I could make several thousand dollars in short order.

  17. Congrats on your success this past year! I guess I have to work on cutting our spending.

    Where do you get your cable so cheap?

    Have to look into the Chase Sapphire Card in more detail.

  18. What a great year. You guys are an inspiration to the Oldster household. Can’t wait to see how 2018 turns out. Agree with PoF, your first quarter ’18 expenses should show pretty low.

    Happy New Year to you and your family.

    1. Is that a throwback to Warcraft 3?? 🙂 Haven’t thought of that game in ages but I think that’s what the supply building for the undead faction was called.

  19. Enjoying the Christmas pictures. The potluck food looked great.

    You inspired me go take a to look at my investment gains year over year. I think I made more than my yearly wages this year!

  20. Hi Justin!

    Another great post… I really love how you personalize the financial side of your life for us! I like how you thought out your health care for 2018 and how that will offset the need to pay estimated taxes. The phrase “…so that I can pay extra each month” came across as a shocker and made me slow down and read twice, but it certainly makes sense. You’re definitely living the charmed life!

    Just last week, we also joined the “DDCC” (double-double comma club ,as coined by Mr. 1500) so it’s nice to be in that company with you, the 1500s and others in the FI community. We haven’t pulled the FIRE ripcord just yet, but my employer has effectively pulled that for me as I’m losing my office (read: climate-controlled, little physical exertion, yet soul-sucking) job in April once the company ceases operations. I could walk out today without hesitation, and because we’re totally debt-free and have 5+ years of expenses in cash and non-retirement investments we would be fine. I guess I’m staying put to stretch out my health insurance a couple more months and snatch up any severance benefits. Is waiting it out till the end the thing to do? We’re 51 and 44 respectively, and have a 15 year-old that we homeschool. My wife is a part-time realtor but we’ve treated any income from her as fun money over the last several years.

    I’d be interested to hear your thoughts on, as The Clash asked, “Should I Stay Or Should I Go?” Any advice on how to transition to early retirement and what impacts staying, or leaving, may have on ACA coverage and subsidies the longer I stay into 2018?

    I realize it’s not much to go on but if you have any off-the-cuff thoughts I’d love to hear them. Best wishes for continued awesomeness in 2018!

    1. I’d definitely stick it out till the end. The time will fly by and you’ll earn those final paychecks. Then you’ll get some severance and unemployment. Not too often that you get the opportunity for free money.

      1. Thanks Arrgo – that’s been my inclination too. While I’m finding no fulfillment in my job, walking out before the end seems to make no sense because of the reasons that you mention. I’m pulling a regular 8-5 shift weekdays and tiny amounts of after-hours responsibilities so it definitely is not impacting my lifestyle adversely.

    2. If it’s not too bad you could stick it out for a few months, show up, get some ass in seat time, and collect a paycheck. If the company is winding up, I assume you can fax it in (email it in? Is that the right saying in 2018??) without stressing too much.

      ACA-wise, April-ish is often a good time to call it quits since your income won’t be huge for the entire year and you’ll still qualify for some decent ACA subsidies. In terms of timing, you can usually get insurance coverage under ACA for the 1st of the month after you quit (and lose insurance) as long as you apply at or your local exchange by the 15th of the month. So file by April 15 to get insurance with an effective date of May 1 (for example).

  21. Justin, you and the family remain an inspiration to us. Hope we get to meet on one of our trips to Raleigh at some point post-FIRE. We are planning to take the leap at ages 38/39 on 1-June-2018 and your blog and early retirement consulting advice has been an invaluable source of information and inspiration.

    Our 2018 finished way ahead thanks to a windfall from a business activity that went right as well as the tremendous market gains we both experienced.

    I am looking forward to doing much more optimization of our finances post-FIRE – especially some of the credit-card hacking that you’ve been so successful with. Keep up the good work!

    1. It’s great to hear your 2017 ended well financially. 🙂 I know you had some big $ coming in and it sounds like it went smoothly. Best of luck finishing up your next 4.6 months (or are you counting in days now? 😉 ).

  22. Hey Justin- great update! Taking the lower subsidy in lieu of quarterly taxes makes perfect sense, good on ya to catch that option.

    In your research, did you note any major impact on overall pricing of the “gold plated silver plans” now that the government is not reimbursing insurance companies for those?

    We’re a few years out, but had been planning to take advantage of those staying under 200% of FPL.

    1. The pricing went up a good bit in NC (as it seems to do every year both before ACA and after!). My cost didn’t go up any as a result of the elimination of the CSR subsidy to insurance companies, but the premium did go up a little because the 2nd lowest cost policy didn’t go up in price as much as the lowest cost one did (I chose the lowest cost policy). Since they base the subsidy on 2nd lowest cost plan, my subsidy, while larger than last year, didn’t increase quite enough to cover as much of the policy this year. Just a quirk of the way the subsidy is calculated I guess.

      I think you’ll still do well to get the big CSR “gold plated silver” plans under 200% of FPL, and your subsidy will increase roughly dollar for dollar to cover extra costs in premiums due to loss of the CSR.

  23. Congrats on another great year. Where do you hold the bond fund holdings? An update to your complete asset allocation and location will be good.

    1. Bond funds are held in traditional IRA account. The idea is to keep the interest payments in a tax deferred account since they are inefficient, and since bonds grow very slowly they’re better in a traditional IRA instead of a Roth (put very high growth stuff in Roth!).

  24. Your doing great,you mention your bond fund what kind of equities do you hold. I sold of some equities last year to take some profits off the table,not sure what to do with the cash.

    1. He’s posted on this earlier. It’s basically Paul Merriman’s “Ultimate Buy-and-Hold” portfolio, which is evenly split between U.S. and international equities, with tilts toward small and value in both.

      1. Thanks I thought I saw that info before just had a hard time finding it. Great communicating with like minded people.

      1. Thanks for the info,I’ve been semi retired for a few years now. We have similar investments,nice to see what other successful people are doing as it helps confirm I’m doing the right thing.

  25. Congrats on another great year of low retirement spending!

    You’ve given me so many ideas on how to keep costs down when I get to the point of hanging it up. I especially love the idea of paying more of your insurance costs so that you can get bigger credit card rewards.

    A quick question on your income. Where do you record any capital gains distributions that your funds may pay out? Part of dividend income?

    1. “paying more of your insurance costs so that you can get bigger credit card rewards.” That is a nice little trick, isn’t it? 🙂

      re: cap gains distributions – I don’t get any since I’m invested in index funds that rarely (basically, never) pay cap gains distributions. But if I did have them, I’d say they are more analogous to return of capital and not really income since it’s just a quirk of the tax law that says they must pay out cap gains earned within the mutual fund due to the structure of the fund.

  26. That’s a pretty impressive year right there. I think you are indeed living a $100,000 lifestyle while spending less than $40,000. I’m a huge fan of taking trips on the bank’s (or its travel partners’) dime.

    1. Trips are even more fun when you’re not paying for them. I’ll reflect on this principle a lot when I’m philosophizing on the beach in the Bahamas this summer 🙂

  27. It is really great that the markets held up the last four years and helped you get to the $2.0m mark. Seems like you’ve passed the mark, assuming your expenses are low, of your money growing faster than you can spend it. If it holds up you’ll be able to put even more toward the kids’ education and weddings. Huge congratulations to you!

    We started 2018 with the plan to join you by 40 (hopefully much sooner). We are at about the $500k mark today. We’d be at about $800k, but we’ve spent the last two years paying back about $270k of student loans from business and medical schools. The frugal living to repay those loans quickly was fun in hindsight. We’re looking forward to finding more creative ways to save money and cut down on our expenses.

    1. That’s the hope, that our portfolio grows faster than we’re spending it. At this point our spending in 2017 was roughly equal to our overall dividend yield, so in theory we could live on just the dividends which are fairly stable year to year. Kids will be lucky to have more college paid for! 🙂

  28. Just curious about your overall asset allocation to see how it compares with my own.
    It seems like you have approximately:
    175,000 in income funds and cash
    1,575,000 in stock funds
    287,000 in real estate holdings
    Is this correct ?

    1. Pretty close. A little more in stock funds and a little less real estate. Unless you’re counting REITs as real estate in which case you have it pretty much correct.

  29. Great year and thanks for sharing. One of my goals for 2018 is to explore the CC hack world. I will reviewing your write ups for additional wisdom. I love the fact that you made ~5x more this year than when you were working. Amazing!! Best of luck in 2018.

  30. One thing I noticed is that you seem to keep the spending on gifts with the kids to reasonable levels which is a good thing. Probably not so much as a major budget concern now, but it will likely be a good example and benefit them in the future by having good habits and expectations that aren’t excessive.
    This market rally has been pretty amazing and has really put me over the top. I didnt expect for the market to get to this point for like another 5 years. Like you mention, I’ve made a lot more over the last 2 years than I ever made at my day job. Investing is the way to go!
    The picture of the ribs looks so good. How about a RoG Food consulting class? I’d sign up for that 🙂

    1. I hear horror stories from my kids about their classmates that are drowning in wealth. They have a relatively new iphone whatever and try to smash it on the ground because they know their parents will buy them a new one. What better way to guarantee yourself an iphone X if that’s what happens when you break your phone? 🙂

      So we give them gifts but nothing crazy. I literally hear my middle kid saying she didn’t want to waste $5 on something because she doesn’t think it’s worth it, whereas most kids wouldn’t give $5 a second thought IF it wasn’t their money.

  31. I paid the $50 to upgrade my OBI device. I considered the workaround you did but decided against it ($4 annual expense X 2 phone lines). Any time I deviate from ROG’s decision making, I learn to question my own. Thanks for being so transparent with your finances.

    I forget what you do for cell phones, but this works great for us:

    GV + Hangouts + OBI + Tello = $1/month total phone bill per phone. I don’t understand why everyone doesn’t jump on this. Admittedly the setup was better before RingPlus died.

    1. I’m hoping it’s a 1 time $4 expense but either way, I’d probably still pay it for convenience. I’m learning more about these little devices and the shortcomings of limited timeframe of firmware updates. Our old Western Digital Media player has lost a lot of functionality after WD quit updating its firmware. Like the Obihai, changes in service providers API and security interface led to errors that the developers no longer patched in firmware (it’s a software issue, not a hardware incompatibility issue). So it seems buying a device that must interface with other secure systems has become renting a device that works as long as the developer continues updating the firmware. I figure the 200 series Obihais will lose their support at some point and you’ll be forced to buy the new and improved (nearly functionally identical) 300 series. $50 for several years of home phone service is still a great deal 🙂

      That Tello service looks great. I could probably get by on about $1/month too with those text and data rates. Am I reading the rate sheets correctly in that they offer overseas voice and data without roaming fees? I didn’t see data rates but voice looks pretty cheap. That would be super sweet if we ever travel in a part of the world where my freedompop SIM doesn’t offer free service (= outside of Europe 🙂 ).

      I am surprised more people don’t do these little phone hacks but I guess the appeal of simple and unlimited (or at least a big fat package of voice/data/text/whatever) is more appealing.

      1. I’m going to have to cry ignorant here. We took a trip to British Columbia over the summer and I believe our phones (the non-VOIP variety) didn’t work up there. The perfect solution for the world traveler is Project FI.

        I do 99% of texting/calling through free GV apps (mostly through PC actually; I hate pecking on a phone). The remaining 1% of my activity costs me $1/month. Pretty good system.

  32. Here in North Myrtle Beach for our three month winter sojourn with a backpack full of gift cards and rebate cards totaling about $2500. Like yourself I take advantage of deals and gas points at Kroger that accrue from all store purchases, including gift cards. Add on 6% cashback from my AmEx card for grocery store purchases and it is a heck of a deal.

    Let me make a prognostication based upon my years of investing experience – the markets will go up, or go down, or move sideways for the year. There; now I sound like every highly paid “analyst” out there.

    1. You have quite a crystal ball there 🙂

      That’s a good deal on gift cards. If I used more than a tank of gas per month Kroger would be a lot more handy for the gift card game!

      1. Seri, yes I do pay the annual fee, but it is the only card I am willing to do so for. They will do the 6% up to a maximum of $6000 per year, or a $360 cash rebate, and they oftentimes throw in other non-grocery purchases throughout the year for rebates available only if you use the AmEx card. You can get the card without the annual fee since they have a version like that, but it is not as attractive to me and my circumstances, with a reduced rebate.

        BTW, the only way I can get up to the maximum rebate is through purchasing gift cards at the grocery store for everyday type purchases; $6000 is a lot of groceries to buy all by themselves.

  33. Hi RoG. I’m your fan.
    I’m an NRA investing in the US. Therefore I cannot have the benefit of a tax deferred account as you have.
    Do you think I should focus on index investing only or focus on dividend growth and income generation? I’ll be paying 30% taxes no matter what (in my home country that is) so what would be the best strategy here?

  34. Justin, I give you a lot of credit for putting all of your financial information out there for everyone to critique. I am sure you have to deal with issues from time to time that come up from friends, family and extended family knowing your net worth, although on the flip side you really are teaching a lot of people how to achieve financial independence. It’s not hard, but it does take a while and I think you have to have the right personality for it. I always think it would be great to let all the young people know what they need to do and how simple it is. But unfortunately most of the time it goes on deaf ears because when your young it’s harder to think about things 10 or 20 years off in the future.

    Good job!

  35. My cellphone was so old that it would cease working all together. The company sent a brand new one for free in order to keep me as a customer. Whatever works.

  36. Thanks for the ER consulting session- very helpful indeed. Congratulations on a great 2017 and enjoy 2018 with your beautiful family, stable genius!

      1. Lol. I am a bit inert at the moment, but once they start making me take call, I envision a hasty exit! Will keep you posted!

  37. So do you just buy gift cards or do you throw in a few extra items as well? I remember a while back some stores wouldn’t allow you to only buy gift cards with a credit card, probably due to profit margin and to avoid potential identity theft issues.

  38. Justin, you really should write a book!

    Out of all the early retirement bloggers (and I’ve read most of the more popular ones), you have the most detailed, practical and systematic approach to frugalness. Other bloggers are more aspirational and motivational but don’t have as many concrete details on, e.g.:
    1) how to minimize taxes
    2) how to save on groceries
    3) how to win the credit card game
    4) how to travel hack

    You already have most of the material on this blog, it would just be a matter of selecting the key blog posts, revising and expanding, and then adding a few more chapters.

    The fact that you’ve done this successfully for 4 years gives you enormous credibility, plus you’re very good at explaining things in simple terms.

    Hopefully, you’re already working on this!

  39. Justin – curious – have you thought about the absolute minimum your family could live on if you “had to” each year and how far away from it you are? (Don’t sell your car or anything … just squeezing the last bit out). Is it as low as $20,000?

    1. We could probably eliminate $9,000 per year if we really had to without suffering big time. That would mostly come from cutting out vacation spending. Then little cuts here and there. So the final number would be a lot closer to $20-25,000 I think. Really hard to get it below $20,000 without serious sacrifices or structural changes (selling the house and buying a 2-3 BR small cheap house or townhouse or condo) or moving to a much lower COL area (probably have to be outside the US and we would have to homeschool the kids or deal with local schools that aren’t great).

      1. That is truly incredible if you think about it – the ability for a family of 5 to live on $20k per year is a feat that almost everyone believes is impossible…

        I get that the house is essentially subsidized by owning it outright, but even still, if you added in a modest housing expense to that you’re still going to be close to $30k for a family of 5. It’s actually shocking.

        1. I don’t know how sustainable it would be long term but for a year or three we could probably squeeze by on $20-25k/yr. No replacement vehicles, no room for big medical/dental bills, not a ton of fun expenses, little to no alcohol, no major house repairs/upgrades, etc.

    1. I’m dumping a lot of that cash into my solo 401k and maxing out a his and hers Roth IRA in the next month or so. I’ll probably put those new contributions into bonds. That should take around $20,000 or so from the cash pile.

      My general goal with the fixed income is to stagger the terms. Very short term = cash. Then the longer term CDs (5 years but I might set up a ladder at some point; only 3 months interest penalty if cancelled early). And bond funds would be used last, especially if bonds are down. Otherwise I might switch it up and sell bonds first and then CDs to avoid the loss of 3 months interest on CDs.

  40. Nice way to the end the year Rootski! Just an FYI…many of us are reading the blog during the afternoon between breakfast and dinner and every time we see your delicious looking food pictures we suddenly break into intense hunger pains.

    I’m not saying you shouldn’t show us giant plates of lasagna and shrimp, I’m just saying I’m now very hungry.

    Happy New Year!

  41. My wife and I are retiring in March and trying to get a handle on the plan options and income estimates. We too live in NC (Cary) and it appears that Blue Cross is the only option for out of network coverage. We are in good health, have sufficient aftertax savings to raise and lower our MAGI, so bronze is doable and appealing at zero cost. However, based on your comments that drives a quarterly tax reporting requirement. Read your “Cliff” post which was helpful, but would appreciate if you could elaborate on the decision tree for your choice for the 2018 plan.

    1. We rarely use the insurance so we opted for the lowest cost silver plan with near-zero deductibles. It’s slightly more expensive than the free bronze plans but if we actually use the insurance, we’ll pay next to nothing out of pocket. It’s HMO, so a limited network, but there are hundreds and hundreds of docs, specialists, etc in network.

  42. Congrats on a great year! So much time with your wife and children doing things you value! That’s amazing. 2017 went very differently than I imagined. Thankfully, some of the choices I made have resulted in less pain (thank you invisalign) and that is a long-term dividend that I have to love.

  43. Hey I know I’m coming in late to the thread, however Durham County has accelerated property tax assessments to every 3 years. I couldn’t find a quick reference to see if Orange County had done the same not sure about wake

    1. I think ours is still every 8 years. Our property tax rate tends to go up a penny or two each year, but the underlying value the tax is assessed on remains the same for 8 years.

  44. Did you determine a Federal Poverty Level % target for your Roth conversion that minimizes your effective tax rate considering the ACA subsidies?

    1. Yes, we aim for right around 150% of the federal poverty level which works out to $42,000 AGI for us. Right now because of the blog/consulting income I earn, I’m only doing $2000-5,000 in Roth conversions each year (but making $29000 in Roth 401k/IRA contributions using those blog/consulting income streams).

  45. Hey Justin! Congrats on your twelve month streak of portfolio growth! Looking forward to read about your 2018’s summer vacations! They look promissing!
    All the best for this new year!

    Mr. WB

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