Did March seem like a particularly long month to anyone else? Looking back at my month in review, I have a hard time believing the world has changed so much in one month. In America it was mostly business as usual on March 1st. However by March 31st we are all self-isolating at home, many places are shut down, and international travel is nearly impossible.
North Carolina hasn’t been particularly hard hit yet. One model forecasts that we won’t run out of hospital beds or ventilators during the peak in a couple of weeks, so that should help our local situation even more. Other folks in the rest of the country and overseas haven’t been as fortunate.
As with last month’s update, I’ll go over our finances and provide some more thoughts on current events near the end of this article.
Financially, March was about as ugly a month as I ever expect to see in my lifetime. Our net worth dropped by $298,000 to reach $1,819,000 by the end of the month. Income was relatively strong at $7,832 while expenses remained very low at $1,600 for the month.
Let’s jump into the details from last month.
Investment income totaled $3,983 in March 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 $3,118 for the month. This income stream will shrink significantly over the next several months based on several factors related to the current economic crisis. Advertising revenue has taken a significant hit over the past month for everyone.
My early retirement lifestyle consulting income (“consulting”) was $275 for the month of March which represents a single two hour consulting session. As I noted last month, the stock market drop led to all of my consulting client inquiries drying up completely. I get it – no one is focused on retiring early at the moment because bigger concerns loom over all of us. The silver lining in this cloud of doom is that the weather in North Carolina is excellent right now and I have even more free time. That means I can lounge around outside and take more long bike rides!
With the blog income and consulting income expected to drop by 50-80%, 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 won’t be ruined if the blog and consulting income drop to zero. No need to stress over this!
The “deposit income” totaled $455. The deposit income includes $50 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.
$400 of deposit income came from two sign up bonuses of $200 each on our new Citi checking accounts. We moved some assets over to Citi to get some big brokerage bonuses too. They should be paid in a few more months.
The remaining $5 of “deposit income” came from our Chase credit card. They gave us a $5 statement credit to sign up for e-statements.
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 March expenses:
In total, we spent a nice round $1,600 during March. That is about half of our target spending of $3,333 per month (or $40,000 per year). Groceries and taxes topped the spending categories for the month.
With the (much needed) government imposed stay-at-home order, it’s a lot easier to spend very little. If it weren’t for global travel restrictions and cruise line shutdowns, we would have been half way through our 11 night Caribbean cruise right now and spending money along the way.
Detailed breakdown of spending:
Groceries – $563:
A pretty ordinary month of grocery spending overall. We continue to maintain our high level of food on hand in case we experience further supply chain interruptions. I’m still not able to find a few random items at the store but inventory levels have mostly gone back to normal with the exception of toilet paper. I imagine in another month stores will be doing even better.
Our normal grocery buying habits of stocking up on huge quantities if we see good sales really paid off. We entered the current period of shortages with pretty much everything we need for a while.
The one trend I have noticed is that the cheaper alternatives at the grocery store are perpetually out of stock. The store brand items seem to fly off the shelves while the comparable name brand items remain in stock (at a much higher price point). If this trend continues then eventually we will be paying higher prices as we exhaust our current supplies of the less expensive store brand items.
In terms of safety concerns, I’m still shopping at the grocery store or Walmart while trying to keep frequency of trips to a bare minimum to limit potential exposure. I also “quarantine” all the non-perishable items for at least three days before putting them away or consuming them.
Taxes – $300:
I paid our estimated state income tax bill in March. They extended the due date for first quarter estimated tax payments but I went ahead and got it out of the way early. I’m doing my small part to help our government out!
Utilities – $225:
The city water, sewer, and trash bill was $138 for March.
The natural gas bill (for the water heater and furnace) totaled $87 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 – $164:
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.
The remaining $21 in healthcare spending is the copay from Mrs. Root of Good’s routine physical lab work from September 2019. Gotta love our healthcare system. Yes, sometimes it takes seven months for the final bill to arrive when insurance is involved.
Automotive – $139:
The annual license, registration, and property tax for our minivan came to $139 in total.
Travel – $92:
If you haven’t been following the news in the cruise and travel industry, it’s pretty dire. All the major cruise lines halted new cruise departures in mid-March and it’s looking like none will resume operations until May or later. Perhaps much, much later.
We cancelled our cruise that was scheduled to depart March 29th from Tampa then arrive in New York City in mid-April (by way of five Caribbean islands). We will get a full refund of the Chase Ultimate Reward points used to pay for the cruise. We already received a full refund of the airline points and taxes paid for the flights to Tampa and back home from New York City.
Very soon we will have to make a call on what to do for our big nine week summer trip through South America ending with a Caribbean cruise out of Miami. At this point most of the countries we are scheduled to visit have travel bans in place preventing foreigners from entering the country.
We also hit another roadblock. Peru requires passport validity of at least six months after departure from their country. Two of our kids’ passports expire in just under six months from the dates we will visit and the US State Department is no longer issuing new or renewal passports except in emergency cases.
At this point I expect to have to cancel most or all of our summer trip unfortunately.
But I have high hopes for our October trip to Spain! Fingers crossed!
As for the travel expenses during March, we spent a net of $18 on rebooking some cheaper and better flights for our summer trip before all the countries closed their borders to foreigners. We’ll likely get back most of those fees once we cancel.
I also included as a travel expense the $6 convenience fee from paying our $300 state income tax bill with a credit card. We try to put as many expenses as possible on our credit card to earn points for travel.
Right now, we are trying to complete the spending requirements on the Southwest Airlines credit card to earn 75,000 bonus miles. This credit card came with a $69 annual fee that I’m including as a travel expense for the month of March. This card is available through my referral link although the bonus for new card members may be lower at the moment.
If you want to score more free travel from credit cards, there are several other cards currently offering 50,000 points or more. These points can be redeemed for $500 cash or $500+ in free flights or hotel stays. Compare travel credit card deals.
Entertainment – $48:
$48 for a bunch of liquor. When I first started tracking my spending 10 years ago I decided to categorize liquor purchases under “entertainment” instead of groceries and I’ve stuck to that over the decade.
At this point in our self-quarantine no one is coming to visit so it’s really just us entertaining ourselves!
Restaurants – $28:
$28 for a huge 20 piece fried chicken order from Bojangles. It’s not my favorite restaurant but Mrs. Root of Good loves it. We picked this up almost a month ago when times were relatively normal.
These days we aren’t planning to go to any restaurants for a while.
Gas – $23:
I topped off the minivan with sub-$2 per gallon gasoline. We didn’t really need it yet but I got it just in case we had to get a few hundred miles away from here for some reason.
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 – $0:
I bought some Walmart gift cards (included in last month’s spending report) and we used those during March to buy about $60 worth of paint supplies to redo our half bathroom downstairs. We stripped off the old wallpaper that had been painted over, then patched up some ugly spots, sanded, primed, painted, and trimmed the room.
It turned out much better than I expected! I’ll post the final “after” pics next month once we get all the fixtures back in places.
Total Spending for 2020 – Year to Date
After three months our spending totals $6,900 for the year. This is $3,100 less than the $10,000 we budgeted for three months of our $40,000 annual early retirement budget.
2020 may 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.
Fortunately we were planning a road trip across the USA for summer of 2021 so maybe that will be possible even if international travel remains difficult or inconvenient.
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 – $6,900
Net Worth: $1,819,000 (-$298,000)
A bit of a bumpy ride in the stock market last month, huh? Anybody else lose any money on paper?
Our net worth dropped by a staggering $298,000 during the month of March to bring our net worth down to $1,819,000. We experience two days with losses exceeding $100,000 and a third that was very close. We also experienced gaining $100,000 in the stock market in a single day. Needless to say, there was a huge amount of volatility in March.
The almost $300,000 drop in our investments during March is on top of the $114,000 drop we experienced in February. Our total losses from the peak are just over $400,000 at this point.
I wish I knew if this was the bottom or we have further to drop. If I did I would time the market by knowing when to sell out and when to get back in. Absent the ability to accurately forecast the market day to day, I’m staying the course and “doing nothing”.
I have a gut feeling that the market will go down some more before it starts going back up. Two factors may counteract any further declines, however. One factor is the potential for further rounds of federal stimulus money being sprinkled across our economy. You drop a few trillion more dollars on everyone and things might look downright rosy (economically at least).
The other factor is the potential for an upside surprise in how fast we beat this thing. Vaccines might be developed and deployed sooner than expected. More effective treatment options may materialize. Our “stay-at-home” orders, social distancing, and better/more testing might actually do the job to flatten the curve and even lead to a significant decline in new cases and deaths. Stranger things have happened!
Which leads me to my investing conclusion: I have no idea what will happen in the near future in the stock market.
I’m going to stick with my boring 90% equities + 10% bond asset allocation and live off the bond portion if the market stays in negative territory.
We have enough cash on hand to fund the remainder of 2020 living expenses, plus we will undoubtedly get some level of dividend income during the rest of the year. However, dividend payouts are likely to be smaller than previous years.
Beyond 2020, we have about six years of living expenses in relatively safe bond funds.
We also paid off the mortgage several years ago, so our living expenses are fairly modest most months when we aren’t booking big international travel.
As a result, we feel very comfortable financially and don’t have to worry too much about the huge paper losses we see in our portfolio. I mostly disregarded the gains of the past few years and didn’t inflate our lifestyle to match our “newfound” wealth.
So when our wealth suddenly shrunk and we dropped back to our net worth level last seen in April 2017, it wasn’t too painful. Looking back at that post from three years ago, we were very happy and living well. No reason to throw a pity party for our recently impoverished selves!
In fact, in that three year old post I mentioned how we were taking profits at that time and shifting more funds into bonds. Those are the very same bonds that provide a lot of peace of mind right now!
Okay my dear friends, that is all I have for this month. I’m sure April will be just as crazy and unpredictable as March was. Try to stay grounded and keep a level head. Follow your long term investment plans. Make smart decisions to keep you and your family safe. Get outside (6+ feet away from others) and enjoy the spring when you get a chance.
And if you see any toilet paper on the shelves, leave me a pack or two if you don’t mind.
Feel free to share how your March was. Any craziness you saw (in life or in finances)? Thoughts on the next few months?
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