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April 2013 Goals and Financial Update

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April Highlights and Lowlights

  • 2013 Financial Goals – Not much progress in April. I’m waiting for some pullback before adding money to baby RB40’s 529 account.
  • Rebalance – I rebalanced our portfolio to be more conservative because I think we are due for a market correction soon. See more detaisl below.
  • Rental Income is negative this month because we finally paid for the big drainage repair. Things are still not going well on this front. We need to complete an exterior paint job at the rental home this summer and it’s not going to be cheap.
  • P2P income from Prosper is still below target this month at $47. This is actually from the March statement and I’m seeing fewer defaults and late payments. I’m pretty sure we’ll see around $100 income in the next statement.
  • Tax – I found out we don’t have to pay estimated tax in 2013 because we can use the accumulated rental losses to offset other incomes. That’s great because I won’t have to add to my tax fund the rest of this year.

Net Worth (+7.35% YTD)

The stock market was quite volatile in April and I sold most of the equities in my IRA. I’m pretty happy with the gain so far and I’m willing to sit on the sidelines for a while and test the Sell in May and go away theory this year. I mostly left my dividend stock portfolio in my after tax account the same though.

Even after selling most of the stocks in my IRA, we still have quite a bit of stocks left. Here is our asset allocation now.

  • US stocks 37%
  • International core stocks 11%
  • Emerging market stocks 9%
  • Bond 20%
  • Cash 18%
  • Alternatives 5%

I’m just more comfortable right now in a more defensive position. I’ll rebalance later to get back into stock. Yes, this is market timing and it might not work out well, but sometime you just have to learn the hard way.

If you need help keeping track of your finances, try using Personal Capital to manage your budget and net worth. It can help you keep track of your income, expenses, and net worth, all in one place. Personal Capital is geared for investors and has many great tools. See my review of Personal Capital and how they helped me reduce what I’m paying in investment fees.

personal capital asset allocation warning

Personal Capital thinks my asset allocation is out of whack right now.

Saving (+$6,538 so far)

The negative rental income really put a damper on our cash flow this month. Luckily, this was a 3 paycheck month for Mrs. RB40 so we manage to pull out a positive cash flow month.

Our saving for March is only $406. We’ll allocate $300 to Baby RB40’s college education and split the rest between travel, fun money, and additional investment/slush fund.

Piggy Bank 2013

  • 529 fund: + $300 = $2,000. The market seems a bit frothy right now so I’m keeping this fund in our savings account. I will send it over when I see a good buying opportunity.
  • Travel fund: +$50 = $1,300
  • Fun money: +$50 = $800
  • Investment/Slush Fund: +$6 = $2,337

Estimated Tax

  • For Uncle Sam: -$432 = $3,058. I finished tax in last month and figured out that we won’t have to pay estimated tax this year. We had to send the government a few checks on April 15 though. I’ll just deduct it from the tax fund.

Cash Flow

April Cash Flow

Income (target > $4,500)

Ugh, what a come down from our great income month in March. That’s the problem with self employment, you never know what’s going to happen month to month.

  • Rentals: We paid $2,500 for the drainage repair and that is hard to overcome. This year is actually not looking very good. We’ll have to repaint the rental home and that is going to put another dent in our rental income.
  • P2P lending is still a bit slow as mentioned above. Our ROI went up from 8.07% to 8.83% in April though. I’m pretty sure the next statement from Prosper will be much better. Here is an update I wrote recently – Peer to Peer lending isn’t as passive as I thought.
  • Dividend and interest: Looks normal this month.
  • Online income was good in April. It was actually a pretty slow month. We’ll see if it picks up in May.

Expense (target < $4,000, not including tax)

Our expense was in line for April and I don’t see any trouble on the horizon. We’ll probably spend a bit more in the summer, but that’s alright because we have a travel fund.

Wrap Up April

April could have been much worse if we didn’t see the extra paycheck from Mrs. RB40, but I’ll take it as a win. May should be better.

How about you? Did you have a good month? Any progress on your New Year Goals and Resolutions?

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{ 39 comments… add one }
  • Michelle May 3, 2013, 9:32 am

    That stinks about the rental income and repairs that need to be done.

    April was pretty good for us. Hoping for an even better May! 🙂

    • Dividend Growth Investor May 3, 2013, 10:43 am

      Those rental properties are draining your cash flow pretty badly. I know that REITs are overvalued these days, but have you considered selling your real estate holdings and buying publicly traded real estate investment trusts?

      REITs are how I get my real estate exposure for my investment portfolio.

      • retirebyforty May 3, 2013, 3:09 pm

        I’m thinking about it. We have some cash sitting around now so we’ll start a small position first. If our rentals don’t turn around in a few years, I’ll probably sell and go with REIT. I do have some VNQI in my IRA.

  • Financial Samurai May 3, 2013, 9:50 am

    Gotta say, it is crazy how much the markets are rocking! Who woulda thought huh?

    Are your income figures net of taxes? I think so, but just wanted to ask.

    • retirebyforty May 3, 2013, 3:05 pm

      Yes, it’s net of taxes. I was deducting estimated tax in previous months, but I don’t think we need to do anymore this year.

  • My Financial Independence Journey May 3, 2013, 10:05 am

    I’ve been following your rental situation and you’re getting hammered this year. Any relief from repairs on the horizon?

    I agree that the stock market is probably in for a correction at some point. I’m almost starting to hope for one soon since there are so few good buys out there right now.

    • retirebyforty May 3, 2013, 3:06 pm

      The 4 plex should have regular maintenance for the rest of this year. The rental home, I’m not sure. Both properties are getting a little long in the tooth. I’m hoping for a correction soon too. I can wait until October though.

  • krantcents May 3, 2013, 10:29 am

    With the stock market and home values up, I am a happy guy. It helps that our careers are stable too.

    You are going through the perils of rental property ownership. With a small number of units, any expense is huge because you have so little income to support it. After it is over, make sure to establish reserves for future expenses.

    • retirebyforty May 3, 2013, 3:07 pm

      Luckily, we have cash reserve so it’s not a huge deal right now. I really hope they turn around soon though. At least the property value is up.

  • writing2reality May 3, 2013, 10:36 am

    Bummer on the rental and the lower income! I have been able to make great progress on my goals for the year and am actually going to come out on top. I think I might need to revise things in the back half of the year to better reflect the direction my investments are headed.

    Stick with the peer-to-peer lending! I believe things will turn around for you in the future!

    • retirebyforty May 3, 2013, 3:08 pm

      I will stick with P2P lending. Prosper is starting to perform better, but it’s getting more difficult to find the right loans. I probably have to go with Lending Club next.

  • SavvyFinancialLatina May 3, 2013, 2:20 pm

    Wow, you are really taking a hit on your rentals. I know most pf bloggers paint a shiny picture of rentals, but I think you provide an example of how much hard work goes into a rental.

    • retirebyforty May 3, 2013, 3:09 pm

      It’s easiest if you live on location. That way you can keep an eye on the property.

  • Joe May 3, 2013, 3:12 pm

    Hi Joe,

    I really love transparency with your family’s financial situation. Wish I had the guts to post numbers on my blog.

    I have a question about how you decide to buy or sell equities. Sounds like “waiting for a correction” etc. is “timing the market,” which is mostly frowned upon by the other finance bloggers I read. Do you have a strategy for timing? Is it something you do by gut feel? Do you keep stats to track whether or not your timing has been profitable (compared to buy-and-hold)? Just curious.

    Thanks,
    Joe

    • retirebyforty May 3, 2013, 3:18 pm

      Hey Joe,
      When I was working full time and making good money, I didn’t bother trying to time the market because I know I can keep throwing money at it. If the market is down, I dollar cost average in as much as I could. Now that I’m not working, I am a lot more on the defensive side. This is the first time I’m trying to time the market and I will keep stat and see if it works out.
      My strategy is to set a yearly goal – 8% for 2013. Once we reach that in the IRA, I go on the defensive if things are looking too hot. I’m only doing this in the IRA because it is tax sheltered. In 2013, we reached the 8% goal pretty quickly and I traded in most of the stocks for bonds in the IRA.
      I’m leaving my after tax portfolio alone for the most part.

      • Joe May 3, 2013, 4:39 pm

        Makes sense! I’m interested to see the numbers. I’m a fan of ignoring conventional wisdom 🙂

      • Chris May 4, 2013, 8:43 pm

        I know for one of my portfolios held in an IRA, I hit 8.1% in 3 months alone. That was a combination of stock growth and dividends.
        Unfortunately my 401K was a little more lackluster and only hit 4.4% over the same timeframe.

        • retirebyforty May 5, 2013, 3:13 pm

          8.1% in 3 months is just awesome. It would be great if you can keep it up the rest of 2013.

  • Rich Uncle EL May 3, 2013, 4:11 pm

    Hey Joe,

    I am proud of my progress so far this year, I want to just demolish goals because I feel good when I check another one off my list. One goal I have is to increase net worth by 30%+. I am up 14% so far.

    • retirebyforty May 4, 2013, 2:14 pm

      Great job! 14% is huge. There is no way we can increase by 30%, but maybe 14% is possible if the planets align. Good luck the rest of this year.

  • Zimmy May 3, 2013, 5:32 pm

    Thank you for posting. I am very interested in P2P lending and what type of return on investment a site like Prosper.com or others can provide. I am looking forward to doing a little research on the matter.

  • I spent money I shouldn’t have on things I didn’t need (take out dinners and junk food) during April and that slowed my debt repayment.

    When I first tried blogging in the later part of 2012 I was quickly booted from AdSense for illegal or immoral clicks or something I don’t understand. I know I didn’t do anything so I am attempting an appeal but I have heard those aren’t very successful.
    My goal for 2013 is to get 1 ad on my blog. Just 1 tiny ad and I would be happy. Trying to figure out how that happens without the people from Google is my goal for May.

    • Zimmy May 3, 2013, 7:53 pm

      You should try looking at a list of Adsense alternatives such as the ones from the link below (I have nothing to do with the author). If you did nothing wrong then some of these guys should work with you. If you or a group of your friends were clicking the ads for you..You might get the same treatment from these other guys also…good luck 🙂

      http://smartadsensealternatives.com/

      • I never clicked on any ads and most of my friends don’t know that I blog. My employer is against any kind of online presence and so I must remain anonymous.

        Thank you for the alternative possibility.

        • The Shoestring Investor May 4, 2013, 5:13 am

          I’m intrigued as to what employment you’re in where you’re not allowed an online presence, sounds mysterious! I wouldn’t worry too much about adverts at first – just get your blog up and running. Unless you’re getting thousands of visitors you’ll make next to nothing from them. As a fellow blogger I have found it more beneficial to focus on using affiliate links in really good content and build from there.

          • I am in health care and last year a co-worker posted unflattering comments about our employer on Facebook. After that they developed an internet policy and I need my day job to pay the bills.

    • retirebyforty May 4, 2013, 2:15 pm

      I use Media.net. It’s not as good as Adsense, but they have good support and are hassle free.

  • When considering rental income, you seem to do a great job of keeping the long game in mind.

  • Pretired Nick May 3, 2013, 10:02 pm

    Don’t feel bad, Joe! I once had to cough up $30,000 for a new sewer line unexpectedly. I’m still feeling that one. That was like a year of rental income up in smoke!

    • retirebyforty May 4, 2013, 2:17 pm

      Wow, that’s a big chunk of change to put down at once. I don’t know if I’d be willing to stay in the game if we see that kind of expenses. I guess everything adds up in the long term.

  • Retirement Investing Today May 4, 2013, 1:54 am

    It’s interesting that their is a myriad of financial data out there yet there must be about as many investment strategies as there are people investing.

    You mention “I’m waiting for some pullback before adding money to baby RB40?s 529 account.” and “I think we are due for a market correction soon.” This makes me think you are a market timer.

    My strategy is very different. I have a mechanical strategy which was set out 4 years ago with very clear buy/sell criteria. At this moment it’s telling me to do nothing but the closest asset class to a buy criteria is interestingly gold (and I’m not a gold bug but have it as an asset class because of it’s low correlation with my other asset classes).

    All of that said you’ve beaten me YTD with your +7.35%. I’m sitting at +6.9% but my financial year runs from 05 January this year. I know the market did well in those first few days so we may not be so far apart even though our investment strategies are completely different.

    • retirebyforty May 4, 2013, 2:19 pm

      I usually buy and hold, but I’m trying market timing this year. Can you share your mechanical strategy? It sounds like a good idea. Gold still seems a bit expensive to me, but I don’t know anything about it.

  • Mike May 5, 2013, 6:54 pm

    At least you are starting to see a few turnarounds. I am in the boat that I am trying to recover lost incomes (I lost about 40 to 50% since I got a late payment from an ad network. Right now my income is hinging off of two streams but I am planning on building them up again as well as diversifying this week).

  • Evan May 6, 2013, 12:51 pm

    Wow the rental sounds painful right now. I really want to get into real estate in the next couple years, but every so often I hear of this kind of story and it brings me back to reality.

    Why do you need to do the exterior paint? If you have tenants which are paying and aren’t going anywhere, why do anything to the outside that doesn’t provide a benefit other than ascetics?

    • retirebyforty May 6, 2013, 3:13 pm

      Yeah, it is kind of sucking right now. We did very well last month though so it balanced out. The HOA is telling us to repaint…

  • Anton Ivanov | Dreams Cash True May 11, 2013, 7:57 pm

    I haven’t been reading your posts for long, so I may be missing something, but in light of the fact that you are retired, your investment portfolio seems to be lacking in income-generating investments, such as bonds.

    What primarily sustains your monthly expenses, if you don’t mind the question?

    • retirebyforty May 13, 2013, 12:02 am

      Hey Anton,
      We have income from the following – my wife’s job, my online income, rental properties, dividend stocks, and P2P lending. I would like to be able to cover expenses without my wife’s salary at some point. She likes her work though so she won’t retire yet.

      • Anton Ivanov | Dreams Cash True May 13, 2013, 9:16 am

        Thanks for the clarification!

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