Time flies when you’re having fun, right? Although in the case of February I think it flew by because it’s the shortest month of the year. Only 28 days! Here we are in March, just a couple of weeks away from the official start of spring.
I’m looking forward to springtime which means short sleeves, hammock time, and campfires down by the lake. It means my bike rides won’t be as cold, and I can lounge around during rest stops and enjoy the weather.
February was a good month for our finances. Our net worth went up $36,000 to end the month at $2,580,000. Income of $6,967 significantly exceeded our spending of $951 for the entire month of February.
Let’s jump into the details from last month.
Income
Investment income totaled $325 in February. Our equity index funds and ETFs pay dividends quarterly at the end of March, June, September, and December. As a result, we didn’t receive much investment income during the month of February. However, our dividend income in December 2020 was over $15,000. Here’s more on our dividend investments.
Blog income totaled $1,744 for the month which was slightly higher than the past several months. The small bump is due to the payout of the advertising revenues from the Black Friday holiday shopping season. Retailers bid the ad prices way up in November and December so I get a little year-end bonus as a result.
My early retirement lifestyle consulting income (“consulting”) was $557 for the month of February which represents four hours of consulting sessions. I bumped my rates up by about 5% in February but the business keeps on coming in the door without any real marketing efforts.
Tradeline sales income was $275 in February. I ramped up my tradeline sales about six months ago and discussed it in a bit more detail in my October 2020 monthly post.
The “deposit income” totaled $13 in February which 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/Rakuten through this link and make a qualifying $20 purchase through Ebates/Rakuten, you’ll get a $20 sign up bonus (limited time only; normal bonus is $10 after a $25 purchase).
My Youtube earnings totaled $401 last month. Here is the channel for the curious. It’s random travel videos, birds, kids, and a couple of DIY videos. Somehow through the magic of the internet hundreds of thousands of people watch the vids and we get paid for it.
Rounding out the income for last month, we had a superb month for various sign up bonuses. We got $3,000 for transferring two IRAs and a brokerage account to Merrill Edge ($1,000 per account). We got another $649 from a credit card sign up bonus.
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).
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.
Expenses
Now let’s take a look at February expenses:
In total, we spent $951 during February which is over $2,000 less than our regularly budgeted $3,333 per month (or $40,000 per year). Groceries and utilities topped the spending categories for the month.
The very low $951 in spending illustrates the inherently lumpy nature of early retired finances. Most months we spend two or three thousand dollars because there’s almost always a big bill like insurance, taxes, home repair, or car repair. In February we didn’t have any of those big expenses so we managed to drop the spending under $1,000! It always feels good to see those triple digit spend months but the reality is we spend a lot more than that on average.
Detailed breakdown of spending:
Groceries – $448:
Grocery expenses of $448 are a little lower than the $500 or $600 we spend in a typical month. That’s probably due to February being slightly shorter than other months so we probably made one less trip to the grocery store compared to an average-length month.
I’m always surprised that our grocery spending is so low because we buy a lot of imported ethnic foods and cook a wide variety of dishes.
I’m still using Walmart Grocery pick up service several times per month along with visits to Aldi, Lidl, and Food Lion.
The Walmart grocery pickers put together your order for you and you just drive up and click a button on the Walmart app to get them to bring the order out to you. The best part is you pay the same low prices as they offer in-store to all their customers and there is no delivery fee.
If you want to try Walmart Grocery, you can take $10 off your first $50+ order with my referral link. Enjoy!
Utilities – $278:
The water/sewer/trash bill was $98. Our electricity bill was $71 for the month. The natural gas bill, which we covers our heating and hot water, was $111 in February which reflects heating for January, the coldest month here in North Carolina.
Healthcare/Medical/Dental – $135:
Our 2021 healthcare premiums are $135 per month thanks to very generous Affordable Care Act subsidies that we receive due to our low ~$45,000 per year Adjusted Gross Income. The benefit of being “poor” on our tax return.
We decided not to renew our dental insurance for 2021, so there are no recurring monthly dental insurance payments. Instead, we’ll just pay cash for our routine cleanings and exams throughout the year.
General Merchandise – $50:
I needed to spend $50 on a credit card to redeem $50 in cash rewards, so I bought an Amazon gift card. I used part of it to buy a fancy $40 bike tire (a Schwalbe Marathon for the bike enthusiasts). I’ve ridden my bike so much over the past couple of years that my original bike tire was threadbare!
I could have gone with a cheaper bike tire but so far I’m getting a lot of use out of my bike. I don’t mind paying up for quality. This tire includes extra durability against flats which buys me peace of mind when my rides take me 10+ miles away from home or away from where I park.
Mrs. Root of Good is in charge of expanding our collection of bird feeders and bird food. She has spent at least $150 at Walmart (using a gift card purchased in previous months).
Travel – $23:
How nice is it to see travel return to the spending reports? We’re optimistic about travel later in 2021. I booked a pair of round trip tickets to Miami for an October cruise for me and Mrs. Root of Good (no kids on this cruise!). The total cost per round trip ticket was 20,000 American Airlines points plus $11.20 in taxes.
If you have a business and want to earn a bunch of free travel, you can get $750+ in cash back bonus or travel with a new Chase Ink business card.
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.
Gas – $0:
Another month of no gas purchases. I’ll definitely buy a tank of gas in March since I’m down to a quarter of a tank. And with the weather warming up nicely, we’ll be taking more short trips.
Total Spending for 2021 – Year to Date
Our spending totaled $3,527 for the first two months of the year. This is about $3,000 less than the $6,667 we budgeted for two months of spending in our $40,000 annual early retirement budget.
One of the biggest reasons we are underspending our budget right now is the lack of travel spending. We usually book a lot of reservations for summer travel during January and February.
So far we’ve postponed the bookings for this summer. We are tentatively planning on spending six or eight weeks driving across the USA on a grand road trip. We were waiting to see what would happen with case numbers and vaccinations before making our “go/no-go” decision.
In the past few days, the picture has become a little more clear that we’ll be able to get vaccinations in about a month or so, which would mean we have substantial immunity sometime in May. Case numbers continued to drop throughout February, albeit slowing the descent toward month-end.
All this news taken together gives us an optimistic outlook for this summer’s big trip. We haven’t booked anything yet, but we are starting to look at destinations, routes, and places to stay along the way.
Monthly Expense Summary for 2021:
- January – $2,577
- February – $951
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 – $28,466
- 2021 – $3,527 (year to date)
Net Worth: $2,580,000 (+$36,000)
February brought us solid investment gains once again, with our net worth shooting up another $36,000 to end the month at $2,580,000. In fact, for most of the month we were above the $2.6 million mark!
With our spending hovering around $40,000 per year and our investment portfolio at approximately $2,350,000 (with the rest of net worth being our house), we are only spending around 1.7% of our investments per year. This is about half of what we could be spending at these asset levels using the classic 4% rule.
Perhaps some day we will dramatically ramp up spending, but for now we’re happy maintaining the status quo.
So far I’ve kept the stock/bond ratio to about 90% stocks, 10% bonds. That amount of bonds translates to 5-6+ years of stable funds to cover our spending in the event of a market downturn. The bonds definitely help me sleep at night when the market has a hiccup.
Life update
I had a funny experience this past weekend that reminded me how cushy my life is these days.
I get together (virtually) with a few friends for four hours every other weekend to play traditional pen and paper role-playing games (think Dungeons and Dragons).
We were chatting about video games we have played recently. I asked if any of them downloaded Sunless Sea, a game I recommended that was available for free last week from Epic Games store.
“Is it any good?” my buddy asks.
I reply “Yeah I guess so. I’ve played it for 30 or 40 hours since I got it last week.”
His response: “WHAT?!?! That’s ridiculous! I’m lucky if I can squeeze in an hour of game time once or twice during the week!” <– That’s the typical life of a guy with a full time job and two young kids.
I’ve been there, done that, and definitely love the extra 40+ hours of freedom every week that comes with early retirement. Even if I do “waste” it playing video games!
But after being retired over seven years, I sometimes forget how fortunate I am. I’m thankful for these little reminders from time to time.
That’s it for this month’s installment of what I’m up to. See you all next month!
What is everyone doing this summer? Any big plans yet?
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Great post and congrats on all your success. I use Personal Capital too but not for the credit card spending/tracking. How does it categorize spending for cc purchases? Do you have have to initially label each one or?
If you had front-loaded some Wal-Mart gift cards and got solar panels, you might have been able to get under $500 for the month ;-).
That’s another great month. I was surprised your investments were up, because mine were down, but then I realized that I do my cut off at the 5th or 6th of the month. I think I got the March yield curve volatility in my numbers.
Hey Justin, great post as always. I was curious as to your thoughts on Bitcoin and cryptocurrencies. I may have missed anything you’ve had to say about them in the past, but I was curious as to your take and if/when you planned on adding any of them to your portfolio. We’ve (very carefully) been in the space since about 2014 and it’s been a pretty amazing (and terrifying at times) ride but very profitable. Anyhoo, just curious to hear your thoughts about it.
Hi Justin,
Thanks for your nice post as usual.
We are planning, if the boarders will open before summer (we are form France), a roadtrip in California, Nevada, Utah and Arizona in July. Our last year’s one obviously was canceled. Discover those faboulous national parks and cities.
And you? What are you planning for you roadtrip?
Great Job. I’m very interested in seeing your tax return tips. You must pay quite a bit of div income if you got 15k in December. I know you don’t post anymore about other things but please consider doing one with tax return, which is something we in the FIRE community really enjoying reading about.
Thank you
Schwalbe knows what they’re about — great choice! Keep that tire pressure up. 😉 I got really into running over the course of the pandemic and last Saturday morning finished (barely) my first half marathon; it’s getting toward time to buy another pair of $130 shoes, which I know I can afford and which are well worth it for my weird narrow feet, but still I hesitate. Frugal mentality is weird.
That electric bill is amazing!
I always enjoy these updates and am amazed how low you’ve been able to keep your spending and on your search for all the little additions to the income stream (rebates, etc.). Certainly not the typical lawyer/engineer life. I know you mentioned having student loans in past posts – are you still milking those along or have you paid off the student loans? I’m also curious about your thoughts on inflation – do you see it as a current issue for you and have you incorporated a plan for inflation? Thanks for blogging.
Hello,
While you were working, what was the order of your contributions? As this author argues against Trad IRA contributions… The Tax Bomb In Your Retirement Accounts: How The Roth IRA Helps You Avoid It (Scandlen Sustainable Wealth Series Book 2) Kindle Edition
Another fan of Schwalbe tires! I rode my bicycle from Bar Harbor Maine to Key West Florida and I only got one flat! I still have those same tires on five years later. If you are riding more you could invest in a couple tire levers, spare tube and a small bike pump. That’s all you need to fix a flat while on a ride!
Zero gas, hard to fathom. We drive two or three thousand miles per month, most of it recreationally. We’ve got three cars between the two of us. But our hobbies take us all over the place and its not a cost that is significant to us. But it does point out how different everybody’s life is. My neighbor from the Philippines gets upset with me if I bring her fresh caught fish filets with no skin or bones. She wants to have the heads on and the skin and, well, yuck to that! Again, different strokes for different cultures. We spend a lot more but we keep our spending way below what our investments can comfortably fund.
Great choice on the Schwabie marathon tires! I plan to ride RAGBRAI this Summer.
Is it easy to set up a Youtube channel? It feels like something I should do.
Summer plans are to travel back to the states and then moving to Bangalore, India! If I can’t retire early, being an international teacher definitely cures the wanderlust!
How do you find you keep yourself challenged/intellectually stimulated? I’m finding that I miss that sometimes in FIRE and that the videogames feel great for a bit, and then when I do too much it feels less fun.
Do you miss the intellectual stimulation that you got from work, or does the blog, some DIY, some games and the consulting fill enough to feel challenged? Or do you not feel that way at all?
Thanks for the great update, well done on the expenses, it must be a great feeling to be earning 6x the expenses just from the side hustles!
I’m just here for Mrs Root of Good’s cooking! 👍
We are also looking forward to travel again after the pandemic. I already got both of my shots – my wife is still waiting on hers. If the borders are open we will go international. Otherwise, we will do some more car trips and camping around the western USA. Being retired myself, I do not have any problem keeping busy. I have plenty to do with exercise, maintaining the house, pursuing my hobbies and travel.
Glad you’re able to start planning some travel. Much more inspiring when you largest YTD expense is travel rather than taxes. :_)
I have planned a Hawaii trip in the fall and an Egyptian river cruise in 2022. Yes 2022. And yes, I am that old. Maybe some sort of road trip this summer.
If you’re looking to expand your YouTube earnings, just post some cooking videos. I don’t even like cooking, but I would 100% watch a how-to video of all this delicious food.
Tradeline sales is a mistake.
I think trading a few grand and possible opportunity for even more is quite worth the risk to a credit card account, no? I don’t think a retiree is exactly the demographic who would be hurting from lack of a credit card when you can just whip out the cash
This has been a pressing need. When do you decide to retire?
Your monthly expenses are low but kudos to you for managing and keeping it low.
Our monthly expense is about 4k – what would be your suggestion on needed portfolio value if we had 4k monthly recurring expense. Would it still be $2M or is it $4M?
We are in late 40s so another 15yr before getting our hands on social security.
Please advice
4% rule suggests that $2,000,000 will reliably generate $80,000. Bump down to 3% for $60,000. You’re actually in the 2.8% range. For context – if you spend $50,000 per year, on a flat basis it would take more than 40 years to spend $2,000,000.
At $2,000,000 invested properly, if you only withdraw $50k/year, you’re likely to end up with a stash that is higher than $2m when you die.
Thank you for your response.
More than half is in retirement account(401k, IRAs) and won’t be able to touch them until 59.5 and hence, why it’s challenging.
Is the 3% or 4% rule based on funds solely in taxable accounts? or does it include retirement accounts too?
Roth conversions. You just need 5 years in Roth Contributions/taxable to cover the first five years.
The 4% rule usually counts retirement assets. There are ways to touch them before 59.5, but you need to take care in how you withdraw from them in order to minimize fees.
There’s something called a ROTH conversion ladder that will allow you to minimize withdrawal fees to access your 401k retirement funds after converting them to Roth and waiting 5 years.
https://www.madfientist.com/how-to-access-retirement-funds-early/
You can always withdraw from your Roth IRA contributions. It’s the earnings that need to wait until 59.5.
https://www.investopedia.com/ask/answers/05/waitingperiodroth.asp
For myself and my spouse, the bulk of our assets are in retirement accounts as well. Before deciding to FIRE, we saved up roughly 5 years worth of expenses in non-retirement accounts. For the remaining years up until 59.5, we’re going to do the Roth conversion ladder.
I wanted to chime in, though I’m obviously not Justin.
Deciding when to retire is so personal.
I think Mrs. RoG joined Mr. RoG in retirement sometime in 2016. When I checked their posts around that time, I think they had a little more than $1.4 Million. For myself and my spouse, we’re trying to do the same right now with about $1.6 Million (not including the house and some other earmarked expenses). We expect to spend a little more than 4k a month as well (50k per year). For us, it’s enough… we hope?
Also, timing mattered for us. My spouse didn’t want to go back to work in person during the pandemic, even though it’s winding down, so we figured now would make sense.
We’re in our early to mid 40s, if it matters, and we have two young kids.
From what I understand, if you don’t have a traditional IRA, you will be subject to RMD on a Roth. Best to have both, but more in a Roth if possible. Taxes in retirement is rough, my biggest expense. Can I claim the government as a dependent?
Impressively low spending as usual Justin! Well done!
You make my fairly frugal lifestyle look like one of fat and excess by comparison!
“Income of $6,967 significantly exceeded our spending of $951 for the entire month of February.”
This literally made me LOL.
You absolutely annihilate the financial talking points that pervade our society… “You can’t live on less than $100,000” etc. etc. etc.
You make it look easy, Justin. Great work.
Hi Justin,
I’ve been following your site for a few years now, and I wanted to say thank you for the time and effort you’ve put in here. It’s been really encouraging and helpful following you.
My spouse and I hit our FI number recently, and we are transitioning to a FIREd lifestyle over the next few weeks. (I’ve been on the phone a lot this week just trying to get health care set up on our state’s marketplace.) I’ve read a few blogs over the years, and the one that resonates the most with me is yours. When I want ideas on where to start in making plans, I can usually find an article about it on root of good.
In any case, I don’t know that we’ll be as successful as you in our FIREd lifestyle, but we’re going to try. Thanks again!
Mrs. FireDesired
Hi Justin — do you have any thoughts about the changes to the ACA as part of the Amer Rescue Plan? Do you (or anyone) have a link to a digestible summary? I ask because I’ve recently been offered a Voluntary Buyout from my job. I’ve seen anecdotes about how the new changes will be helpful for early retirees. I’m not *that* early (late 50s), but healthcare will be the biggest impact to crunching my numbers.
This “opportunity” comes a few years before my planned exit from the full-time corp job world, so I’m trying to correctly assess my options and healthcare is the biggest question mark. The buyout actually addresses access to a very good plan, but it will be expensive over time.
Of course, I know the ACA and it’s pros/cons can change over time, but trying to correctly understand the new aspects.
Hmmm, in my own searching, I did find this: “The American Rescue Plan Act of 2021 explicitly states that the changes to ACA subsidies are applicable only in the 2021 and 2022 tax years. What happens beyond that? No one knows for sure.”
Since my Buyout offer wouldn’t even begin until mid 2022, it seems like the new rules both arrive and depart before I’m actually going to be impacted.
I found this link off of reddit on a similar topic: https://www.kff.org/health-reform/issue-brief/impact-of-key-provisions-of-the-american-rescue-plan-act-of-2021-covid-19-relief-on-marketplace-premiums/
Hi, where do you get the discounted card to pay your taxes? I thought that was a great idea.
Congrats on reaching this level of blog income! And for spending less than $1000 in one month. Wow. Thanks for sharing your numbers and giving us all a peek into many nuances of a successful early retirement.