October 2018 Financial Update – Cruising the Caribbean

Does it feel like 2018 is flying by? Less than two months to go until 2019!  We’ve been busy during the month of October. We spent the first part of the month aboard the Caribbean Princess cruise ship. Once we returned to Raleigh, we tackled several projects around the house and enjoyed the nice weather outside.

In financial news, you may have heard that turbulent times have returned to the stock market. At one point, our portfolio was down almost $200,000 for the month before recovering to $1,988,000, a loss of “only” $98,000. Income for the month remained strong at $5,352 while expenses remained rather low at $1,784, or exactly one third of our income. In conclusion, our net worth dropped by a significant margin, however our diversified income streams outpaced our spending.

Let’s check out the details for October.

 

Income

Investment income totaled $3,145 in October. Our equity mutual funds and ETFs pay dividends quarterly in March, June, September, and December, and sometimes the payments lag a few days into October as was the case this month.  November will be a low month for dividend income while December is usually the largest month of the year by far thanks to year-end dividends. More on our dividend income.

Blog income, shown as “other income” in the chart, totaled $2,187 for the month of October. And November is shaping up to have even higher revenues!  I expect I’ll have more time indoors when the weather gets cold this winter so my blog posts may become more regular at that point. The revenue will probably follow.

My early retirement lifestyle consulting income (“consulting”) dropped from $472 in September to $0 for the month of October. I probably lost a client or two while I was on the cruise because I didn’t answer my emails. We’ll see what happens in November.

Deposit income of $19 came 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.  We continue to accumulate cash back from lots of different online retailers for travel bookings, gift cards, and general merchandise purchases.

 

 

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 October expenses:

 

In total, we spent $1,784 during October which is roughly $1,500 less than our target spending of $3,333 per month (or $40,000 per year).  Top expenses for October include travel and groceries which has been the case for the past four months as we saw in JulyAugust, and September expense reports.  That also means we haven’t had any big lumpy expenses or unexpected “emergency” spending (which is great news).

 

Detailed breakdown of spending:

 

Travel – $1,237:

We paid for parts of three trips during October.

The first bit of travel spending covered miscellaneous October cruise costs:

  • remainder of rental car fee – $14
  • local bus fares on the islands of St Kitts and St Lucia for the two of us – $13
  • Lyft ride from the cruise terminal to the Ft Lauderdale airport to get the rental car – $12
  • Gas for the rental car – $5

 

Middle eastern lunch overlooking St. Lucia.

 

Some great food on this cruise (and a whole article on cruise food for those interested/hungry):

 

Surf and turf

 

Scallops and shrimp

 

Indian food buffet

 

Can’t forget dessert!

 

We toured the galley where they cook all the food

 

The second trip we spent on is our upcoming Christmas cruise. The final payment came due at $740 (with around $500 already paid over the past year).

For our third upcoming trip, we’re going to Vietnam, Cambodia, and Thailand.  I bought some more Airbnb gift cards at a discount using Raise.com. They routinely offer coupon codes that take 4% to 10% off their already discounted gift cards. This time around I bought $200 worth of Airbnb gift cards for $159 using a coupon code and a $25 referral credit.

We’ll be spending eight weeks in Southeast Asia and most of the time we’ll be renting Airbnbs by the week.

Save $40 off your first Airbnb stay with my airbnb referral link.

For our Southeast Asia trip, I also booked the return flights home from Thailand for next August. I used 187,500 American Airlines Aadvantage miles to book five one way tickets from Bangkok to Raleigh plus a total of $297 in taxes.  Since I have the Barclay American Airlines Aviator card, I got a 10,000 mile rebate on the AA redemption (10% of amount of miles redeemed up to a redemption of 100,000 miles).

If you want to score some free travel from credit cards, there are several 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.

 

The mountain goats of St. Maarten. We stayed on the ship on this island while it poured down rain. Upside: lots of mountain goat watching from the convenience of the ship’s back deck.

 

We spotted a huge alligator at Green Cay Wetlands near Fort Lauderdale (after the cruise)

 

Heron?

 

While exploring the area post-cruise, we got stuck at what appears to be a temporary lift bridge constructed in West Palm Beach, FL right next to Donald Trump’s Mar-A-Lago resort (which we couldn’t sneak into).

 

Groceries – $296:

We spent less than normal this month at grocery stores. The culprit for lower spending is most likely the fact that we weren’t at home for a third of the month. It’s funny how travel can save money in some categories.

We didn’t go hungry though. Here’s a nice grocery haul from Lidl that only cost $42:

 

 

In my never-ending quest to optimize my spending, I visited BJ’s Warehouse for the first time. BJ’s was offering free admission without a membership for a couple of weeks in October. We ended up finding a few items that were cheaper than Walmart, Lidl, and Aldi like:

  • 500 yards of dental floss for 5% less than Walmart
  • prosciutto fresh from the deli for $8 per pound
  • A gallon of soy sauce at 30% off Walmart prices

Overall, we were not impressed. Much like my comparison shopping at Costco, I quickly figured out that warehouse stores aren’t a great way to save money and would add a lot of time to my weekly grocery shopping routine.  Most items were about the same price or even more expensive than the low cost stores I usually shop at.

 

Starting them young. Teaching my daughters how to butcher and trim a pork loin for some crock pot Korean BBQ pork bulgogi.

 

 

Clothing/Shoes – $68:

A pair of shoes for the six year old and several miscellaneous items for the rest of the family.

 

Education – $53:

$10 PTA dues for the two of us. $43 for three field trips the first graders will take this year.

 

Gas – $37:

Refueled about three quarters of a tank of gas.

 

Home Maintenance – $34:

I installed a new (used) cooktop in our kitchen. Once it was installed, I realized the front dual element burner didn’t work. After some troubleshooting, I realized the burner element wasn’t faulty. It was the switch for the burner. Who knew those switches cost $34?!  At least we saved $500 by getting a lightly used cooktop for free from a neighbor instead of buying a similar unit brand new.

Mrs. Root of Good decided to film the repair process so we can make ten times that amount from Youtube ad revenues. Professional videographer in the making!

 

 

 

Entertainment – $30:

We chaperoned our son’s first grade class field trip to the North Carolina Zoo. We had to buy the zoo admission for the two of us for a total of $30, which I’m classifying as “entertainment”.

 

Free entertainment – classic Super Nintendo with my six year old. FirePower 2000 anyone?

 

More free entertainment – top notch Chinese Cultural Art & Performance Troupe at NC State University.

 

The local news station featured us on the six o’clock news in October talking about early retirement.

 

Cable/Satellite – $15:

$15 for one month’s internet bill. We qualify for a local reduced rate package due to having a lower income and having kids. 30 mbit/s download, 4 mbit/s upload.

 

Utilities – $10:

Utilities are typically paid in lump sums in order to fulfill the terms of sign up bonus offers on credit cards.  We still have around $500 worth of positive balances on our electric and water accounts, but the prepaid balance on the natural gas account finally got used up.  I had to pay $10 to cover part of last month’s gas bill.

 

Telephone – $7:

My cell provider, Freedompop, decided to shut off my SIM card without advance notice. End result: I had to buy a new SIM card for $7 to get my cell service going again. I wouldn’t really recommend Freedompop since they are tricky and sometimes difficult to deal with.

But for my needs, I’m fine paying $0 each month for 250MB of 4G data and 200 VOIP minutes. I rarely use my phone so this is plenty for me. And I normally go a year or two between big problems, which seems par for the course for cell providers in general.

 

Restaurants – $5:

We had two free burger coupons for Ruby Tuesday’s so we went out for lunch (without the kids – shhhh… don’t tell them).

I left a $5 tip so the burgers weren’t entirely free.

 

Ridiculous burger!

 

Pre-burger hiking in the woods. That offsets a burger and fries, right? Did I mention we walked really really fast because there were a ton of mosquitoes biting me?

 

Note on Health Insurance

  • Health insurance premiums don’t show up this month because we prepaid the premiums in January and February for the whole year.  If paid monthly, premiums would be $40 per month thanks to very generous Affordable Care Act subsidies that we receive due to our low ~$40,000 per year Adjusted Gross Income.

 

 

Total Spending in 2018

 

With ten months of expenses on the book, we have spent $22,335 year to date.  That’s $11,000 less than the $33,333 budgeted for the first ten months of our $40,000 early retirement budget.

Big upcoming expenses include $1,400 for our Spring Break cruise to Cuba with the whole family.

 

More cruising to tropical places like St. Thomas, US Virgin Islands

 

In March, we will celebrate our fifteenth anniversary.  We hope to book a one to two week trip to Mexico City for that occasion. Swanky Airbnb, coffee at sidewalk cafes, a bunch of tacos, and some cervezas and vino por la noche. And maybe we’ll visit ancient ruins and a volcano while there.

In summer of 2019 we will travel to Southeast Asia for around eight weeks. We will be planning that trip in more detail during late 2018 into 2019.  I’ve already accumulated $2,400 of Airbnb credit so spending on lodging for this trip might be relatively minor during 2018.  Next up, I plan to book several flights between cities in SE Asia which will add up to about $500.

For housing expenses, we have our $1,600 annual property tax bill due at the end of the year.

So far, we are on track to end 2018 with a significant budget surplus as we have in three out of the past four years of my early retirement.

 

 

Monthly Expense Summary for 2018:

 

Summary of annual spending from all years of early retirement:

 

We built an 8′ x 12′ storage shed about 15 years ago. It was approaching hoarder territory with all our stuff crowded in there. Over the course of two days, we cleaned it out, purged a bunch of junk, and reorganized everything.

 

After. Plenty of room to store our bikes, yard tools, and other outdoor stuff. I built a ladder rack on the wall as part of the reorganization.

 

 

Net Worth: $1,988,000 (-$98,000)

What can I say? We lost a bunch of money in October. At the worst point toward the end of the month we were down almost $200,000. Since we tend to spend $30,000 to $40,000 per year, last month’s “loss” of $98,000 represents about three years of living expenses.

Such is life. The market goes up and down. I never know which way it’s headed. In 10, 20, 30, or 40 years I expect the market will be up. Over shorter periods of time I’m less certain. The market requires patience and perseverance. In absolute terms, we’re still wealthier than we were during most of last year, and I felt pretty wealthy back then!

 

 

My advice for those early in their investing careers is to keep plowing money into their investments according to their asset allocations.  If the market correction continues, then this might be one of the best buying opportunities of your lifetime. I look back fondly on the extremely low asset prices we saw in 2008 and 2009.

For those approaching retirement (early or otherwise), this little market hiccup is a good test of your nerves. And your asset allocation. If you can’t stomach market volatility right now while you’re working, then you’ll probably have a much harder time doing so once your portfolio is the main source of living expenses during retirement.

 

No stock market worries at the campfire down by the lake.

 

For us, we are sleeping well at night in spite of market turbulence.  We’re sitting on a $180,000 stockpile of cash, CD’s, and bonds so we aren’t too worried about last month’s stock market losses.

 

 

How did you do in October? Stock market ghouls and goblins got you spooked?

 

 

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66 comments

    1. They’re definitely goats. I’m not 100% sure they are the mountain variety of goat 🙂 But they are climbing the side of a mountain (well, it’s the Caribbean – it’s a really big hill).

  1. Amazing as always.

    Have you ever had any issues paying ahead on Utilities? I’m thinking about doing the same next year. My CSR experience left me wanting to avoid the hassle of trying to hit spending. My wife and I pretty much split the spending my household does, so we were always passing the card back and forth.

      1. Same here, except for my city bill (water/sewage) where they simply stopped taking credit cards sometime last year. Otherwise, I think those companies are quite happy to have the money.

        Every other utility I have that charges a fee is a flat fee, so those routinely get paid $500-600 at a time. That’s as much so I can pay by CC (rather than check) as for the small amount of rewards gains.

        1. I figure the same – they get several hundred $$ in float for a few months and probably negotiated a smaller credit card processing fee vs what I pay through paypal on my consulting clients’ payments.

          And I do about the same – $500-800 charge at a time on my electric that charges a flat ~$2 fee. It works out to well under 1% fee so it’s worth it to get the points and meet the sign up bonuses (plus the CC payment isn’t actually due for 45-60 days typically so I get some free float too).

  2. It is nice you can take those losses in stride. I lost about a hundred grand in a surprise divorce, and it has taken years to recover.

  3. wooow $200 grand ?!?! I could never live with such a stress. I prefer to be more like 50% cash 50% mix portfolio so I don’t have to keep awake all night long !

    1. A 10% market correction is par for the course, even for a 50/50 portfolio. If you can’t “live with such stress,” stocks may not be right for you.

  4. I just wanted to say that I look forward to your monthly update every month and want to thank you for giving me a goal to strive towards (have a life still like yours). I found out about this blog last year and have been keeping tabs ever since, keep up the good work, also make more youtube videos, I really enjoyed the on this post

  5. Man, you guys are living it up. Awesome. We’ll have to give cruises another try someday. It looks good from your pictures. 🙂
    I’m heading to Thailand for 5 weeks pretty soon. Then we’ll be there again in the summer. It’s not exactly a vacation, though. We’ll see you over there, hopefully.
    I like your 10% cash/bond/CD pile. Nice! That’s why you need to diversify a bit, better sleep.

  6. Nice summary of your lifestyle in October, 2018! Really like the photos you shared….makes it look relatable.

    The market goes up and down. Sharp corrections of 10-15% over a period of few weeks should be expected annually (we have had two this year). It is very important, as you rightly said, to stay invested as per your asset allocation. We are 1 year into early retirement at age 57 (yeah…..not so early) and we saw our portfolio go down more than the value of our house! We did end up changing our asset allocation permanently from 85/15 (stock/bonds) to 72/25/3(Stock/Bond/Cash) as a result of this sharp correction. Now with enough cash and bonds now to last 13 years of our living expenses, we are breathing easier, knowing that we won’t need to sell stocks (for living expenses) when they in correction territory in the future!

    Good luck for your upcoming travels!
    Cheers. 🙂

    1. Good to hear you’re getting to a more comfortable asset allocation. You’re right – these little periods of turbulence happen often enough. I recall another similar downturn in February of 2016 right when Mrs. Root of Good quit working for good. Of course it bounced back and we’re much higher in the markets today.

  7. Ridiculously low spending and incredible quality of life Justin! You guys are just amazing.

    Indeed, our net worth was down also in October, but I don’t sweat it with over $600k in cash (or cash equivalents). Just a little burp in the market! 🙂

    1. Agreed! Maybe it’s the magic of North Carolina (humidity discount?), but you guys seem to live far better for far less than any other ER blogger. Then again, I’m not replacing a cooktop haha.

      More power to you all!

    1. bellbang – For purposes of ACA (and taxes for that matter) there’s “income” and then there is “income”. Gains inside IRAs or 401k’s don’t count. Neither does withdrawals from Roth IRAs. There are lots of ways to manage what counts as income for ACA purposes when you aren’t a W2 employee.

    2. Much of the dividend income is within tax sheltered accounts. We also tax optimize at year end to shift funds into 401ks and IRAs which can reduce taxable income further (though we do put a lot in Roths too, which doesn’t reduce income). Still targeting 40k.

  8. We are possibly considering a Cuban cruise, as well, next year. Not sure if it’s in the finances or not. We could use our saved up miles, but then those would be gone for other trips. We don’t quite understand yet how to keep those accruing faster than we can spend them (sounds like a nice problem to have) without singing up for credit cards all year round, each year. I’m just not comfortable doing it repeatedly.

    The market has given me a slight taste of how it feels to lose some net worth. I think I was at -5.6% or something by the final week of the month. I felt great – cheaper prices! But I felt bad – my parents are retiring and the market is making it very, very hard for them. 🙁 I’ll just have to be happy that my 401k contributions are up to 25 or 30% (I honestly can’t remember. Huh.) and that I’ll likely have a comfortable, maybe early, retirement..More comfortable than them.

    1. I don’t think there’s a great way to keep piling on the points unless you’re doing the occasional credit card bonus sign up. Those are like an easy $500 or 50k points for one card. Whereas if you’re just putting your regular spending on the card, you’ll get 1-2 points per dollar in general which is 50-100k points per year if you have “average” spending. Nothing to sneeze at, but not enough to fund a big vacation every year.

    1. You’re using a mainstream provider. There are several smaller providers that piggyback off of the mainstream cell towers that offer very low prices. The ‘catch’ is often spotty service and/or few minutes/little data. But with a prepaid plan, you can still get service from a mainstream provider for around $20 per month, but you won’t have a lot of talk time or data.

      1. That’s true and there are tons of providers up and down the quality/price scale. Pay more and you get more in terms of quality, coverage, and voice/data allotment.

    2. That’s actually the up front cost to buy a new SIM chip. The ongoing monthly charges are $0 🙂 It’s with Freedompop but the service isn’t that great, and I only get 250MB per month of free data. Google around for reviews if you’re interested but it’ll be a big downgrade in quality from Verizon.

  9. Well I live through 1999/2000 and then retired in 2009 right after the 2008 crater so the latest blip didn’t bother me too much. I lost 185K which I think is the largest one month hit ever since I have more a larger portfolio now.

  10. I’m selfishly rooting for it to keep going downwards. I want the stocks as cheap as possible during these working and earning years!

    Sooo many vacations coming up, how do you keep track of them all!? 😉

    1. Spreadsheets! How else? 😉

      No, but seriously, spreadsheets. I have a “Travel” folder in google keep and several subfolders for the big trips with spreadsheets on them. I have a template of sorts that I’ve developed on past trips so it streamlines the planning and data handling a bit. Also have a few packing lists that I recycle and customize in my spreadsheets.

    1. Whoops! I knew we forgot something! 😉

      We prepped the fridge and freezer and left it pretty full. And the kids were in school and ate there much of the time we were gone. And they spent the weekend at grandma’s house once. And grandma took them out to eat 1-2x. So they probably only had 15 or so meals at our house. I think we spent extra in September to stockpile the food for our period of absence.

    1. Mortgage is all paid since 2015 or so. I think I told the reporter we did have a mortgage right when I retired but paid it off soon afterward. The “paid it off” part didn’t make it into the news story.

  11. Excellent use of income with expenses. I cant believe how little you spend on travel. Keep it up and youll hit every country in the world soon.

    1. I still have a looooong way to go but I’m working on it. 🙂 Going to add Cuba, Hong Kong, Vietnam, Cambodia, and Thailand in 2019 and perhaps more if we do something big in the fall.

  12. This is great! Because I thought a few people would have it on their minds, I posted this yesterday. 😉 One of the options for leaving the US is “sail around the world.” In the same category as “cruise around the Caribbean” I’d say!

    The link to the post is below. Enjoy!

  13. Thank you or the update. I am reading a lot of your posts for I truly envy your life situation. I normally do not comment just in the sideline. Question: Is your wife a Filipino? I am thus I asked.

      1. Thank you for the response. Your updates provide me hope that one day I will be jumping off the rat race. By FI definition, we reach FI but still adamant to totally retire. Currently considering “hybrid type of retirement.” But do not have the guts to jump.

  14. Like you, it was kind of weird to lose all of that money as my mutual funds decreased during the month of October. I suppose that I should be happy since I don’t need the money right now and stocks are on sale … but I still wanted to see my net worth go up : )
    Anyways, congrats on having travel as the largest item in your expenses!
    Nathan

  15. Hi Justin,

    It’s nice seeing that you are enjoying the greatest moment of life. The circumstance of sleeping soundly at night despite the seemingly bear market is priceless. This goes to show that dividend growth investment is the way to go on a long run.

    WTK

  16. Just found you guys and loving it so far! You seem to cruise a lot and that’s something that my husband and I would love to do now and more when we FIRE. From what I could see online though, there doesn’t seem to be a way to really travel hack with points for cruises so I was just wondering, how do you guys save money on your cruise trips? Thanks!

    1. We usually pay cash. But with the Chase Sapphire Reserve you can redeem for cruises at 1.5x value. I’m stocking up on Ultimate Reward pts at Chase and plan on getting the Reserve next time I’m eligible (about 2 years). Then it’ll be free cruises for us!

      Otherwise, use a cash back portal for 5-20% cash back on cruises. Here’s a full article on saving $ on cruises.

  17. One thing that you could try is getting a credit card such as the Barclaycard Arrival Plus card or the Capital One Venture card. Each of these cards offers 50,000 – 60,000 bonus miles just to sign up. This equates to $500-600 of money that can be redeemed on any travel purchase (cruises, hotels, airlines, etc). I used my Barclaycard to get a free ferry ride to Beaver Island, Michigan last summer because this was classified as a travel expense.
    Good Luck!

  18. Can you expand a little on signing up for new credit cards for bonus mile/point awards? I’m wondering what you report as income on a new credit card application and does being retired negatively affect your credit rating?
    How many new cards, on average, do you get annually and do you cancel existing cards when you sign up for new ones?

    Thanks so much, love your blog!

    1. I’ve used “retired” and “self employed” as my occupation. I usually put $40,000 on my application for income since that’s about what we show on our income tax form most years. So far I’ve never been denied or punished for having that “low” income.

      I get maybe 5-7 new cards each year on average. Lots of business cards (for my blog 🙂 ). I usually cancel if they carry an annual fee and I don’t see a need for the card. Otherwise I might keep a card if no annual fee or it’s a great value. Sometimes I’ll close a card knowing I can reapply after a year or two and get another big sign up bonus (“churning”).

  19. Wow! You really research it all! I guess that is why your blog is so successful. When I was single, i went to Europe for the whole summer for $850. Uh, that was in 1973. I still have the itemization!

    1. Ha ha! I still have a diary of my first big six week trip abroad. I visited Mexico during college and backpacked around. I remember we spent something like $719 for the whole trip (back in 2000).

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