September is over and left us a little poorer but in overall great financial shape. Our net worth dropped by $36,000 in spite of $8,225 in income for the month and a meager $927 in expenses.
The older kids are back in school and we’re settling into the school year routine. I’m back to my normal weekly early retirement schedule. We returned home from our 7 week vacation in Mexico two months ago. Mrs. Root of Good experienced some excitement this month when she submitted her resignation letter to join me in early retirement. Instead of quitting outright, she’s now working from home four days per week with full time pay. Pretty sweet deal!
September is dividend season for us since that’s when our mutual funds and ETFs pay out quarterly dividends. We received $5,038 in dividends in September and around $1,500 so far in October. A solid bit of investment income, but it’s still a little less than the $7,500 in dividends for the second quarter.
Blog income, shown as “other income” in the chart, is back up to $1,448 after coming in at less than $100 last month. I started this blog as a hobby without any great expectations to make big money, so it’s pretty amazing watching the blog income cover all of our expenses some months. Somehow profitable hobbies or side hustles keep finding me in early retirement!
I didn’t make any money from freelance writing during the month (it turns out the check was really in the mail and arrived in October) but I did pick up $55 in consulting fees from my newly launched early retirement lifestyle consulting practice. I’m not really advertising it or promoting it (other than tossing a page up here on my blog), because I don’t want it to consume all of my time. So far interest has been strong. If you’re interested in a one on one consultation to help guide you on your path to early retirement, check it out and give me a shout.
The “deposits” income of $70 comes from cash back from credit card spending plus cash back rebates from the Ebates.com and Mrrebates.com online shopping portals. I’m all about sharing the wealth, so if you sign up through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card like I did a while back. I try to do all of my online shopping through one of these portals and the cash back adds up. While shopping for cruises at Travelocity, for example, I noticed Ebates pays 7% cash back on cruise purchases whereas Mr. Rebates pays only 4%. It pays to compare rates between those two online shopping portals because the cash back rates vary.
Rounding out this month’s income is Mrs. Root of Good’s paycheck. She’s still working but only four days per week from home. She managed to retain her full time pay, work a little less and skip the 30-45 minute one way commute and the related gas and tolls.
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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Now let’s look at September expenses:
We ended the month without breaking the $1,000 spending barrier. I always feel thrifty whenever we spend less than $1,000 in a month. $927 is just a third of our targeted budget of $2,700 per month (1/12th of our $32,400 per year early retirement budget).
Just like last month, we spent the most on groceries at $507 for the month. That’s an expense that’s hard to avoid when you’re feeding five mouths.
The $182 in healthcare expenses includes a doctor’s visit, a prescription medicine, and a tube of prescription toothpaste with really high fluoride content. Since we have high deductible health insurance through Mrs. RoG’s employer, we pay out of pocket for doctor’s visits other than physicals. We rarely have more than one or two of these “sick visits” per year so we’re still coming out way ahead versus paying thousands extra for more comprehensive insurance with lower or non-existent deductibles. And we get to max out our Health Savings Account (which stays fully invested at Fidelity).
Once Mrs. RoG quits working, we’ll be jumping into an exchange health insurance plan and snagging some big Affordable Care Act subsidies.
The prescription toothpaste was recommended by our dentist as a bootleg way of receiving fluoride treatments at a fraction of the cost. At $1 for a moldable athletic mouthguard and $5 for the 5x strength prescription fluoride toothpaste, it’s a cheap way to prevent tooth decay and rebuild enamel in a problem spot the dentist found at my last routine check up. Per the dentist, squeeze toothpaste into the mouthguard and wear for at least 30 minutes. We’ll see how well it works!
The $75 in gifts represents cash we gave to our middle child for her birthday. We gave her a few small toys too, but the cash is her main source of spending money throughout the year. Whenever she asks if she can have something, our normal response is to say “sure, if you want to spend your money”. The kids are getting really good at spending their money wisely and maximizing value. And we never get nagged to buy them the latest gadget.
Another month of low restaurant spending at $54. Two thirds of that figure went toward large quantities of pizza (about once per week roughly – thanks crazy good Papa John’s deal!) and one third to Chinese take out from Mrs. RoG’s favorite spot near her work (incredible marinated tofu). Since she’s telecommuting, she won’t be visiting that restaurant very often since it’s on the other side of town from our house.
Gas and tolls at $45 are much lower than previous months when Mrs. RoG was commuting full time. Since she’s no longer driving to work, we haven’t needed more than one car at a time during September, so I’m thinking we could drop to one car if we want to.
Rounding out the other expenses are $34 for internet (“cable”), $16 for entertainment (two roller skating trips for two kids to the neighborhood skating rink), and $9 in “other income” (a blog-related expense for web site hosting at Hostgator).
Year to date expenses
At $17,467 year to date spending, we are almost seven thousand dollars under the $24,300 budgeted for the first nine months of 2015. Considering we spent $5,100 for a seven week trip to Mexico, our 2015 living expenses are ridiculously low for a family of five!
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. With an almost $7,000 budget surplus, we can cover a lot of unexpected mishaps in the last few months of the year and still do okay overall. We’re starting to get cruise fever again, so that might be a fun way to spend another couple thousand bucks before the year is over.
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
Net Worth: $1,434,000 (-$36,000)
Another month with a big drop in net worth! After losing $74,000 in August, our net worth dropped another $36,000 in September, bringing our two month total loss to $110,000.
After spending five months of 2015 in the $1.5 Millionaire club, we are sadly no longer qualified to hang out and breath that group’s rarefied air. Otherwise, the drop in net worth hasn’t change a lot in our daily lives. We’re still spending (or not spending) the same as we always do.
We have close to a year’s worth of living expenses sitting in cash even after dropping $15,000 into my solo 401k to shield most of my online income from taxation for 2015 (part of our strategy to keep our taxes near zero). Eventually, we’ll use the Roth IRA Conversion Ladder to unwind these tax-deferred contributions and convert them into spendable assets.
Emotionally, it feels good to know we won’t have to sell any investments to fund our living expenses for the next year or so even if:
- Mrs. Root of Good quits working for good,
- Root of Good blog income and my freelancing/consulting income drops to zero, and
- all of our investments stop paying dividends.
Odds are that those sources of income won’t disappear completely in the next year or two (though Mrs. RoG’s income probably will!). I’m pretty confident we won’t run out of money any time soon.
The chart tells the whole story – it was a bumpy month of ups and downs (with a little more down than up). In the middle of the month we were actually in the positive before losing the gains and closing out the month on a down note. However the first few days of October have erased most of September’s losses.
Our net worth at the end of September is still higher than it was during most of 2014, so in relative terms we’re still feeling pretty wealthy. We have more than enough to cover our spending needs for the foreseeable future and a steady stream of income from multiple sources.
Life is good.
How did you do in September? Another ugly month or a month of opportunities?
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