October is over and our investment portfolio decided to celebrate Halloween by giving us a treat after offering nothing but tricks the last couple of months. Our net worth rose by $93,000 fueled by a recovery in the stock market. With $7,715 in income and only $1,015 in expenses, we’re still making way more than we spend each month.
I’ll have to make this monthly financial update relatively short since my ten year old requested a pre-bedtime game of Monopoly and I’m running out time. How can I turn down the opportunity to teach my kids about buying assets, leveraging those assets to generate income, and trying to bankrupt the competition by building hotels that they can’t afford to rent?
In early October we caught the tail end of the third quarter dividend season when our mutual funds and ETFs pay out quarterly dividends. We received $5,038 in dividends in September and $1,564 in October. A solid quarter for investment income, but it’s still a little less than the $7,500 in dividends for the second quarter of 2015. In December, we should get a very significant set of dividends from our investments since some only pay once per year in December (see my full article on our dividends for more info).
Blog income, shown as “other income” in the chart, was a very solid $3,873. This represents two month’s worth of payments from some sources, so it won’t be this large every month. In fact, November will probably be a lower than average month for blog income.
Last month I mentioned that profitable hobbies and side hustles keep finding me in early retirement. I launched my early retirement lifestyle consulting practice about a month ago and it’s off to a surprisingly strong start. I collected $667 in October between freelance writing and consulting. If it gets much busier I may have to raise my hourly rates since I’m trying to keep my schedule open for maximum pursuit of leisure and do as little work as possible (you know, to stay as early retired as I can).
Competing with my desire to do as little as possible is the knowledge that I’ve helped every single one of the people that have participated in the early retirement lifestyle consultations. Almost all my clients have discovered immediately actionable ways to save many hundreds or even thousands of dollars through better tax planning, savvier investment management, or some other clever move that requires relatively little effort. That’s pretty cool, and helps me feel justified in charging a fee to chat about this stuff.
The last item in the income report is Mrs. Root of Good’s paycheck. She’s still working but only four days per week from home. Hey, it’s still work, but on pretty good terms. If anyone wants to wager some money, I can take bets on how many more months she’ll remain on the job.
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 look at October expenses:
We just barely cracked the $1,000 spending barrier with a very respectable $1,015 in expenses for the month. This level of spending is less than 40% of our targeted budget of $2,700 per month (1/12th of our $32,400 per year early retirement budget).
Groceries are our largest budget item when we don’t have any large lumpy expenses like major auto repairs, insurance, or property taxes due during the month. For $491, we fed the five of us very well. Here’s what a typical month of groceries looks like (in pictures) and here’s how we get by so cheap without using grocery coupons.
Travel expenses were passport renewals for our two daughters. At $105 per passport (plus a couple bucks for passport photos printed at Walgreens), it’s not a fun expense but it means we can continue indulging our international travel habit and visit places like Canada, Mexico, and the Caribbean (on board a cruise!). We are actively looking for a cruise right now, but aren’t seeing any that fit the kids’ school schedule well and also happen to be dirt cheap. The economy is doing so well that the cruise lines don’t have to discount fares as much as they have in the past five or six years. But we’ll keep searching for a nicely discounted last minute cruise.
Home maintenance expenses of $135 represent the purchase of two Lowe’s gift cards with a face value of $160. I spent about $60 of that on painting and roofing supplies so I can patch a roof leak and paint our shed, back porch, and mailbox. The painting project is half way through and a huge success so far. The other $100 of Lowe’s gift cards will be used later on other projects.
The $55 in gifts covered Christmas presents for five people. We shopped ahead during a really good sale. It’s something useful yet not very expensive. It’s also a surprise so I can’t say exactly what it is. Yeah, we’re cheapskates and I’m glad our families don’t have a habit of giving expensive presents worth many hundreds of dollars.
Education expenses of $48 reflects the total cost of the year’s field trips for our two elementary school students. There may be an extra fee for another field trip later in the year if the school can’t secure grant funding for the charter bus ride to the coastal area. Overall, we have experienced very moderate expenses for field trips throughout their elementary school careers.
Cable at $34 is our internet (provided by the cable company). $34 for 20 megabits is a really good deal, and might get even better once Google Fiber lights up our neighborhood. Competition is great.
Our total restaurant spending of $22 is a little lower than average. That’s two visits to the neighborhood Chinese restaurant for take out dumplings and one trip to an infamous unnamed Mexican fast food restaurant (which, by the way, I love). We also love Mexican food. And cruise food.
Gas expenses dropped to $2. That was for our lawn mower. We did refill about a half tank of gas in one car but used previously purchased gas gift cards (so the expense was recorded in a previous month’s expense report). Since Mrs. RoG isn’t commuting to work any longer, we just don’t drive very often. So many of our destinations are walkable. Going forward, we will probably use about a half tank of gas per month. We could drop to one car at this point, but our transportation needs might change when our oldest child enters middle school next year.
Other expenses include $9 for utilities. We pre-pay utilities occasionally to meet credit card spending requirements to snag those sweet sign up bonus offers. After months of living off the largesse of our pre-payment, our natural gas account finally went in the negative, so they wanted us to pay them something. Go figure.
Year to date expenses
At $18,482 year to date spending, we are $8,500 under the $27,000 budgeted for the first ten months of 2015. And that’s including our $5,100 expense for a seven week trip to Mexico.
We are on track to significantly under spend our $32,400 annual budget as long as no major unexpected expenses pop up later in the year. In the last two months of 2015, we’ll have to pay a six-month auto insurance bill and the annual real estate tax bill, but otherwise we don’t anticipate any large expenses.
Monthly spending for 2015 to date:
- January 2015 – $2,548
- February 2015 – $903
- March 2015 – $2,443
- April 2015 – $4,549
- May 2015 – $849
- June 2015 – $3,089
- July 2015 – $498
- August 2015 – $1,701
- September 2015 – $927
- October 2015 – $1,015
Net Worth: $1,527,000 (+$93,000)
After losing a total of $110,000 in August and September, our bad fortunes reversed course and left us with a generous $93,000 gain in October. It’s not quite enough to put us back to where we were financially at the beginning of August, but it’s a strong start.
The net worth rebound hasn’t changed our daily spending habits, and we remain as frugal as we’ve always been while not hesitating to spend on luxuries and niceties that are important to us.
Most of October’s rise in net worth happened in the first week. That’s why I don’t worry when I see a $100,000 drop during one month. The portfolio can rebound even faster. Over the short term, it goes down and it goes up. Long term it goes up.
Once again, we watched our portfolio drop by six figures then regain most of the losses. Though I never know which way the market is headed, I am confident that we will see many more of these six figure losses and strong rebounds throughout the rest of our multi-decade retirement.
We can choose to obsess and worry over daily, weekly, and monthly fluctuations. Or, we can choose to largely ignore the volatility, skip the worrying, and engage in fun stuff that actually makes life meaningful. I know which one I prefer! While we can’t control the volatility in the equity markets, we can control our reaction to it.
In the meantime, I’m hoping to get outside and partake of our mild fall weather and finish painting the shed.
Run, bulls, run! How did you like that October market rally?
Root of Good Recommends:
- Personal Capital* - It's the best FREE way to track your spending, income, and entire investment portfolio all in one place. Did I mention it's FREE?
- Free Travel* - We score $10,000 worth of free travel every year from credit card sign up bonuses. Get your free travel, too.
- Save more on travel with Airbnb and take $40 off your first stay*. We usually get apartments with 2-3 bedrooms plus a kitchen and living room for less than the price of 1 hotel room. Save even more with weekly and monthly discounts.
- Use a shopping portal like Ebates* and save more on everything you buy online. Get a $10 bonus* when you sign up now.
- Google Fi* - Use the link and save $20 on unlimited calls and texts for US cell service plus 200+ countries of free international coverage. Only $20 per month plus $10 per GB data.