Retirement Travel

December 2019 Financial Update – Root of Good

After a busy end of the year, it has taken me a while to pull this monthly update together. In December, we spent twelve days on a cruise. Once we returned home, the Christmas holiday season started shortly thereafter. Then the New Year’s celebration commenced. In between were several other gatherings of family and friends.  I’m looking forward to a much lazier 2020! 

From a financial perspective, we had a great month in December. Our net worth climbed $63,000 to reach another all time high of $2,261,000. Our spending was slightly below budget at $3,193 while our income was a monstrous $23,579 for the month. 

Let’s jump into the details from last month.

 

Income

Investment income totaled $20,683 in December. Our equity mutual 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. December is always the highest month for investment income because several ETFs we hold only pay dividends once per year in December. Investment income for all of 2019 totaled just over $40,000. Here’s more on our dividend investments.

Blog income, shown as “other income” in the chart, totaled $1,785 for the month. This level of blog income is about $1,000 lower than a typical month. 

My early retirement lifestyle consulting income (“consulting”) was $825 for the month of December which represents 6.5 hours of consulting sessions. Business remains strong even though I don’t market these services at all (other than a passing reference here once per month). I’m evaluating increasing rates for 2020 since I’m slightly busier than I want to be. 

The “deposit income” totaled $285. The deposit income 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). We received most of that cash back from the purchase of our summer 2020 cruises. Normally we get paid after the cruise is complete. In this case, the cash back was paid soon after booking the cruises. 

If you sign up for Ebates through this link and make a qualifying $25 purchase through Ebates, you’ll get a $10 gift card. 

 

 

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 December expenses:


 

In total, we spent $3,193 during December which is slightly less than our target spending of$3,333 per month (or $40,000 per year). Housing-related expenses and groceries topped the spending categories for the month. 

 

Detailed breakdown of spending:

 

Home Maintenance – $1,762:

This is our 2019 property tax bill for our house. We paid it in one lump sum. 

Using my credit card, I bought Visa debit cards at Gift Card Mall (through the ebates shopping portal) so that I could pay the property tax bill using the Visa debit cards. This lets me save on the credit card fees at the county tax website ($4 flat fee per $500 debit card payment instead of 2.3% of the payment amount). 

 

Groceries – $608:

We spent $608 on groceries during December. This is slightly higher than our average grocery bill but we purchased some gifts (both food and non-food) at the grocery store and at Walmart so the grocery numbers are skewed a bit for December. 

 

Grandma’s homemade pho for New Year’s eve family gathering. And we didn’t even have to cook it this time!

 

General Merchandise – $250

I purchased a $250 gift card at Raise.com for Walmart at a 3% discount (technically $7.50 in Raise cash back redeemable on the next gift card purchase). We spent most of that gift card at Walmart during December on toothbrushes and stuffed animals. I still have about $75 remaining on the gift card.

I bought four Philips Sonicare DailyClean 1100 electric toothbrushes for the whole family (excepting the youngest kid). The total cost was $86 including tax. After spending hours researching all the different varieties and trim levels of electric toothbrushes, I realized the most basic version was perfectly adequate. The new toothbrushes replace a collection of older electric toothbrushes that are in various states of obsolescence and disrepair. 

We also purchased a ridiculous shopping cart full of fluffy stuffed animals, Christmas lights, and miscellaneous Christmas goodies for $71 (all on clearance after Christmas). Some of the stuffed animals will be gifts during 2020. 

 

This is what a cart full of stuffed animals and Christmas lights looks like.

 

Utilities – $233:

The city water, sewer, and trash bill was $160 for December. This is higher than usual and we don’t really know why. January’s bill is back to normal.

The natural gas bill (for the water heater and furnace) totaled $74 for the month. It turned cold during December. January has been shockingly warm so far so we haven’t used the heat very much. Thank goodness for global climate crisis warming change! I jest…

Several months ago I prepaid $600 on the electricity bill to hit the minimum spending requirement on a credit card. As a result, December utility charges didn’t include electric. There is only a $15 credit remaining on the account so we’ll be back to paying for electricity in January. 

 

Travel – $125:

Our 11 night cruise on the MSC Divina was paid for in previous months. But we still had to pay for transportation between the Ft. Lauderdale Airport and the Miami cruise port. We took public transit and paid about $15 in each direction. I messed up and bought an extra one way ticket that was only valid for the date of purchase and thereby wasted $6. 

 

First time visiting Aruba for us (Eagle Beach). It’s definitely not a bad place to spend a couple of days in December.

 

The other travel expense is a $95 annual fee on my new Chase Ink Business Preferred credit card that comes with an 80,000 point bonus. Those 80,000 points can be redeemed for $1,000 in travel (any kind of travel!) so it’s a valuable card in my wallet. Here’s my referral link if you’re interested in signing up for one on your own. 

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

 

Hot tub on deck 16 of the cruise ship? Check. Martini in hand? Check. Full moon and shooting stars? Check. Life is good.

 

My fellow engineering nerds can appreciate the Queen Emma swinging pontoon bridge in Curacao. We were fortunate to watch the bridge swing fully open during our visit to the island.

 

Gifts – $83:

We printed five customized photo calendars for gifts for family totaling $54. 

The other $29 is a gift to Mrs. Root of Good from me. A new camera bookbag for use on our trips. 

We tend to accumulate other Christmas gifts throughout the year and sometimes the gifts get lumped in with “groceries” or “general merchandise” and never make an appearance in the “gifts” spending category. 

 

Root of Good family had a very merry Christmas this year!

 

Healthcare/Medical – $61:

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 this bill in November (for January’s coverage) so I won’t have another bill until January (for February’s coverage).

In other healthcare expenses, we spent $42 at Amazon for various over the counter medicines bought in bulk. 

The remaining $19 in medical expense is my monthly dental insurance premiums for 2020. It covers two routine visits plus x-rays for $223 per year. The cash price for these same services would be $249 per year, so the insurance will save me money even if I never “take advantage of” the insurance coverage for filling cavities. Let’s hope I don’t get to take advantage of that benefit! 

 

If I was a doctor I’d prescribe a visit to Ocean Cay for the ultimate in stress reduction. We found the perfect deserted beach to lounge on.

 

 

 

Gasoline – $31:

Refueling three quarters of a tank of gas in the minivan

 

Restaurants – $23:

We spent $20 for two large pizzas from Sam’s Club. They make some surprisingly good pizza. Far better than Costco, even though it’s slightly more expensive per square inch. 

The other $3 we spent at Wendy’s. During December Wendy’s ran a contest where you win a food or drink item each day through their app. We had several family meals at Wendy’s over the winter holidays that included a lot of free food from that promotion. We also redeemed three coupons that required a purchase ($1 times 3 purchases). 

 

$1 total cost for a big meal after redeeming a bunch of freebie coupons.

 

We got invited to a birthday party for our kid’s friend. The parents own the best authentic Mexican street food restaurant in America and they let us order anything off the menu. I got my regular – 2 tacos and a sope. This is as good as anything we ate in Mexico!

 

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.

 

Christmas with family.

 

 

Total Spending for all of 2019

 

For the entire year of 2019, we spent $25,630. This amount is approximately $14,000 less than our $40,000 annual early retirement budget

An interesting comparison for our spending is the Federal Poverty Level. For a family of five, the US government says we should spend $30,170 or more to escape the poverty level. For 2019, we came close but couldn’t quite climb out of poverty. Between a couple of months vacationing in southeast Asia, a couple of nice long cruises, and a whole lot of prosciutto, we tried really hard but ultimately failed. 

Are we really living a life of abject poverty? Not really – our $40,000 per year budget actually buys us about as much as an ordinary family would have on a $100,000 per year income

How do we do a lot yet live on so little? We take some small steps in a lot of different directions that add up to big cost savings overall. We’ve also been lucky to avoid serious illnesses and casualty losses like wrecking the car or burning down the house. 

Taking a look at the individual spending categories, we’re roughly in line with our budget that we developed before retiring (and modified upward in 2016 as our wealth increased). We spent less than budgeted in every category except clothing and shoes ($828 spent versus $800 budgeted for clothes).

Plan well and stick with the plan. Or come in under budget.

Will we spend more in the future? Who knows! With our invested assets exceeding $2,000,000 we could easily spend $65,000 per year at a 3.25% withdrawal rate. 

The next decade is likely to be more expensive for us compared to the last decade, mainly due to kid-related expenses. Our oldest child turns 16 in just over a year. Since we are currently a one car household, it’s likely that we will feel transportation-constrained if all of us continue to share just one car. So a new (used) car is on the horizon, probably in 2021. It probably won’t exceed $5,000 or $6,000. 

Teen drivers also mean higher insurance costs in 2021 and even higher in 2022 when we have two teens driving! 

Then comes college in 2023. But we have a plan for college costs, too

Coming back to the present spending plans for 2020, we just booked our flights for our big summer 2020 trip. Airfare was mostly covered by miles and points, but the taxes were significant on several segments. In addition, we booked a few segments on discount airlines and paid out of pocket for the full cost. We booked $10,000+ worth of flights for 337,500 miles/points and $1,540 cash. 

We’ll probably have to pay for some lodging once we exhaust our several thousand dollar stash of Airbnb gift card credit we purchased in the past years.

Our recently booked flights form the backbone of our ambitious itinerary that will have us spending eight weeks split between Panama, Peru, Chile, Argentina, and Brazil (with a side trip to Paraguay). We’ll end the summer back in Miami just in time to go on a one week cruise to the Caribbean. More on the big summer trip in a future post! 

 

Monthly Expense Summary for 2019:

 

Summary of annual spending from all years of early retirement:

 

Net Worth: $2,261,000 (+$63,000)

Another month of slow and steady gains. Will this stock market boom ever stop? Or did I just jinx us all? 

 

 

Our net worth climbed $63,000 to reach a new all time high of $2,261,000 at the end of 2019. This is approximately one million dollars higher than our net worth when I left my job as an engineer six and a half years ago. 

Almost all of these gains have come from a strong stock market. Which means a weak stock market could erase many hundreds of thousands of dollars from our net worth. 

To reduce our risk of portfolio collapse, I have slowly reduced our allocation to equities. We started 2017 with a 100% equities allocation (other than a few percent in a cash buffer). By the end of 2018 we had migrated to a 90%/10% equities/bond allocation. 

In late 2019, I botched Mrs. Root of Good’s 401k rollover and failed to reinvest $100,000 of equities before the market took off without her money. The bad news is the money is still sitting on the sidelines as the bull market rages on. The good news is we accidentally acquired an 85%/15% equities/fixed income allocation.

I’m very comfortable with that asset allocation today. As mentioned earlier, we have several years of potentially higher expenses in front of us (teen drivers; college). Having approximately $300,000 in low/no risk assets set aside will let me sleep easier at night should we see a sharp correction in the next several years.

When the crash hits us, life will go on, kids will still attend college, and none of us will lose any sleep. And we’ll probably still blow a lot of money on frivolous things like travel. 

That’s the plan anyway.

And with that, I’d like to put a wrap on my last update for 2019. I wish you all a very prosperous 2020! 

 

 

How was your Christmas (or “winter holidays” if you prefer) and New Year’s? Any big New Year’s resolutions?

 

 

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