I hope you’re having a relaxing Labor Day weekend. It’s unusually HOT here in Portland. I was thinking about heading to the beach to escape the heat, but we were too lazy. We’ve already been to the beach 3 times this year and we have 2 more beach trips scheduled. Summer has been really busy for us so we decided to hang out at the pool instead. I also made BBQ beef ribs for Labor Day. Mrs. RB40 made a bunch of sides too. They were fabulous. You can see the picture of our Labor Day spread at the end of this post.
RB40Jr started first grade last week and he is very happy that we have a long weekend. He is such a strange kid. Every kid I know wants to go back to school so they can see their friends. He’s the only little kid that dislikes school. He seems to be doing better this year, though. The first week went very well and he didn’t hit anybody. (Yes, we have a pretty low bar…) He also seems to be having fun with his friends so that’s good. Anyway, we really need to turn that attitude around. He still has at least 16 years of schooling left. It’s way to early to dislike school. Does anyone have tips on how to get kids to like school?
On the financial front, August was a fantastic month for us. Our income was rolling and our expenses were under control. Mrs. RB40 had 3 paychecks in August and that gave our income a nice boost. Woohoo! Our expense was good as well. We had a mini vacation and went camping at the beach to see the eclipse. The camping trip was a ton of fun and very affordable. We spent about $160 for the campsite, grocery, and gas. We cooked almost all our meals this trip because the TV said Oregon small towns would be overwhelmed with tourists. However, the beach towns didn’t seem much busier than usual. I think most eclipse tourists went to central Oregon instead. The weather can be iffy at the beach because of morning fog. It turned out fine and we saw the totality without any problems. It was an awesome sight. If you have a chance, you must make a trip to see it next time. On the way home, we splurged and went to our favorite seafood restaurant in Newport – Local Ocean. The lunch cost $80 for 4, but it was delicious after a few days of camp cooking. It was worth it. Check them out if you’re at the Oregon coast. They make great seafood with local ingredients.
Okay, let’s go over the 2017 goals first and then see the details of our cash flow in July.
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At the end of August, the year is 2/3 over. We’re in the last third of the year. Now is the time to review your New Year goals and see what you can still accomplish. Personally, I’ve been doing well with most of my goals. The goals that take the whole year are on track. There are 2 goals that I won’t accomplish this year and I gave up on those. The main thing I’ll focus on for the rest of 2017 is fitness. Summer break wreaked havoc on my exercise schedule, but school is back in session now. I’ll start working out again next week and hope to stay on track for the rest of the year.
Here is my goal tracking spreadsheet.
- Save $50,000 in our tax advantaged account– We’re doing very well here and have saved $43,400 in our 401(k) and the 529 college fund. We’re also done with our Roth IRAs contributions in 2017. We’re way ahead on this goal and should complete it soon.
- Dividend Income $11,500– I’ll update our passive income post next week and you can see the details there. In the first 8 months of 2017, we received $7,479 in dividend. We’re right on pace at 65%, that’s great! We should be able to complete this goal by the end of the year.
- FI ratio > 78% – This is passive income divided by expense. Currently, our FI ratio is 91%. That’s way ahead of our target and I’m quite happy with it. We’re doing better than expected here.
- Net worth gain > VFORX– Our net worth gained 9.8% so far in 2017. That’s really good after 8 months. However, it is 2% behind our benchmark. The VFORX (Vanguard’s 2040 fund) is up 12%. We’re behind, but I’m not going to worry about it too much. I’m extremely happy with 9.8%.
- Move RB40Jr’s 529 plan to Vanguard – Finished! You can read about our 529 plan transfer here.
- Move Mrs.RB40’s IRAs to Vanguard – Finished!
- Online income > $36,000/year– My online income has been incredible this year and I made $49,747 so far. I was able to finish this goal at the end of June! I made more in 6 months than the whole 2016 blog income. I’m really grateful to all our readers. Thank you!
- Redesign Retire by 40 – I gave up on this one. It’s too much work. I’ll try to do a minor update in 2018 instead of a big redesign.
- Pinterest > 25,000 visits– I gave up on this one. I haven’t been able to grow our Pinterest traffic. It’s just not my thing. Pinterest is not fun for me at all. Mrs. RB40 will be our media person when she retires from her full time work.
- Fitness – August was a tough month because school is out. I will have a better plan next year. My workout season will be from September to May. Once summer break starts, I’ll just take it easy and relax. Summer will be the off season for me. I did pretty well with steps in August, though. I walked about 7,330 steps per day which is more than my goal of 7,000 steps per day.
- Start a new site – I started a new site with a focus on fitness: Fit by 40. There isn’t much traffic, but that’s okay. I’m using it mostly for self motivation. It’s working really well and I’m much more active this year than in 2016. I don’t know why blogging helps so much, but it works for me. The site is on hiatus until summer vacation is over.
- Join Toastmasters – I plan to join Toastmasters in November after we come back from our Cancun vacation.
- RB40Jr’s after school programs – RB40Jr is done with Wushu (kung fu) for now. He doesn’t follow instructions well. This fall, he is in a soccer team and that’s plenty of activity for him.
- See the total solar eclipse – We saw the eclipse from Newport Beach. It was totally awesome.
- National Park – We visited Fort Vancouver National Monument over spring break. That’ll be it this year…
- International Trip – We are heading to Cancun in November. I booked our tickets with points and we’re ready to go! Next, I will need to book our 4 free nights at the Hyatt. I also need to find another affordable hotel for the other 4 nights. I’m looking forward to this trip.
Net Worth (+9.8% YTD)
I’ve been tracking our net worth since 2006 and it is very motivating to see the progress we’ve made. For 2017, I’ll benchmark our progress with the Vanguard Target Retirement 2040 Fund, VFORX. Their current allocation is about 52% US equity, 35% international equity, and 13% bonds. I thought this was a good measuring stick and we should be able beat it. Now that we’re 2/3 of the way through 2017, we are a bit behind, about 2%. VFORX is killing it this year.
Our net worth is up 9.8% so far in 2017. That’s really good at this stage of our lives. I would be extremely happy to get 10% gain in 2017. Recently, I shifted some of our stock allocation to bond. The market seems too high and I want to be a little more conservative. We are a bit behind VFORX, but it isn’t a big deal to me. Next year, we’ll probably just avoid benchmarking altogether. It doesn’t seem to add anything useful.
Here is the picture of our net worth on Personal Capital. Zillow decreased the estimate on our properties in August, but I haven’t changed my personal spreadsheet yet. Valuing real estate is always tough.
If you need help keeping track of your finances, try using Personal Capital to help manage your investment accounts. We have many accounts and Personal Capital shows me the big picture in just a few minutes. Also, I’m a huge fan of their retirement calculator. You can read my review here – The Best Free Retirement Calculator.
August 2017 Cash Flow
We had a great month with our cash flow in August. Our income was great and our expense was low. Everything went right in August. Nice! Let’s go over the details.
Take Home Income (target > $5,000)
Our take home income target is $5,000 and we came in way above that at $11,937. This is much higher than usual because Mrs. RB40 had 3 paychecks in August. I love those 3 paycheck months! Our other income did very well also.
Mrs. RB40’s paycheck: $8,542. Mrs. RB40 is doing very well at her day job. She got a raise earlier this year and she is bringing in great income and benefits. That’s one reason why she isn’t ready to quit working full time yet. She also doesn’t want to deal with health insurance uncertainties at this point. Her employer sponsored health plan is working really well for us.
Rental income: $971.
Online Income: $5,093. My online income was good in August. This year I’m focusing on increasing our income so Mrs. RB40 can retire sooner. I’m placing more affiliate links and focusing on writing relevant articles that will be helpful to investors. Here is how we generated online income last month.
- Banner ads: $2,236. These are the banner ads you see on Retire by 40. I hope to make about $1,500/month from these ads.
- Affiliates: $3,182. These are referral fees from affiliate links. If a reader signs up for a service through our affiliate link, then we sometimes earn a referral fee. One example is the Personal Capital link at the net worth section above.
- Brand promotion: $0. I’m cutting way back and probably won’t make much money in this category going forward.
- Expenses: -$325. Internet, email service, CDN, cell phone, meals, etc…
Starting a blog is a great way to build your brand and generate some extra income. Thank you for your support!
Dividend income: $759. You can see our dividend portfolio here.
- P2P lending: $46. I’m slowing getting out of P2P lending. I just don’t think they will do well when the economy turns south.
- Realty Shares:$150. I started investing with Realty Shares earlier this year. So far, I’ve invested in a commercial property and an apartment complex. I like RealtyShares and I’m planning to invest much more next year.
- KickFurther: -$56. A couple of businesses went sour last month. Kickfurther is similar to P2P lending, but investors lend to small businesses instead of individual borrowers. The big difference here is the money will be used to fund inventory. I’m also getting out of this one. Small businesses have way too many problems. You can read more about them next week when I go over our passive income.
Pre-tax savings: -$3,585. I sent $1,500 to my solo 401k. Mrs. RB40 saved $2,085 in her retirement account.
Expense (target < $4,500)
Our monthly expense target is $4,500 per month and we spent $3,777 in August. Summer is more expensive than normal because there are so many things to do. We did pretty well in August, though. Our camping trip was cheap and we didn’t spend a lot of money on other activities.
Housing: $2,289. This includes the mortgage, HOA, and property tax. Housing is a huge part of our monthly expense. We may have to move to a cheaper location to reduce this expense.
Cash Allowance: $0
Groceries: $603. Our grocery bill was higher than usual last month. That’s not a big deal and I’m sure we’ll get back under $500 next month. Groceries seem to be getting more expensive recently.
Transportation: $75. This is for gasoline and parking. We share one car and usually don’t drive much.
Kid: $216. This includes the RB40Jr’s Wushu lessons, soccer uniform, and a few things from Walmart. School is in session now so next month should be much better here. We still need to get new shoes and a winter jacket for him.
Bills: $234. Electricity and insurance (auto, home, term life, and umbrella).
Entertainment: $95. We ate out quite a few times last month. It was still summer break and I wanted to try a few restaurants. It was mostly lunch with RB40Jr. This category also includes my gym membership fee.
Travel: $254. Our camping trip.
Misc: $10. Not sure what this was. Probably some charges from the summer camp.
YTD Extra Savings: $50,489
August was a good month and we saved $8,160 in addition to our tax advantaged savings. Everything worked just right and we were able to save a substantial amount of money. So far in 2017, we saved $50,489 extra. This is more than the whole 2016 so we’re doing really well this year. What I did with the extra money.
- I stashed $30,000 in VNQI. This fund will be cashed out when Mrs. RB40 retires.
- I invested $13,000 with Realty Shares. This is working well so far and I’m planning to ramp it up much more next year.
- The rest is in our savings account for now. My online income is much higher than last year and we’ll have to pay more taxes in April, at least $5,000.
Can Mrs. RB40 retire?
This is a new section I added for 2017. I want to see what happens if Mrs. RB40 stops working full-time. Basically, I will remove Mrs. RB40’s income from our spreadsheet and stop contributing to our tax-advantaged accounts.
Drum roll please … for August 2017, Mrs. RB40 could retire early! We had another good month and it looks like we should be able to keep this up for the rest of 2017.
If we remove Mrs. RB40’s income from the spreadsheet, we’d still be ahead $3,203 in August! My online income is strong this year so this challenge has been really easy. Online income could be fickle, though. Last year’s online income was much lower than 2017.
August 2017 wrap up
August 2017 was another solid month at the RB40 household. Our income streams were firing on all cylinders. Our expense was lower than usual as well. Everything is just going really great this year. We haven’t had a nice streak like this in a long time so we feel good. Usually, our finance has more ups and downs.
September should also be pretty good. We have a trip to Hawaii coming up, but it isn’t going to be expensive. Mrs. RB40 has a business trip there and we’re tagging along. I used our airline points for RB40Jr and my tickets. We only have to pay for 2 extra nights of hotel. I haven’t been to Waikiki for a long time so I’m really looking forward to it.
*Oh yeah, if you’re going to retire early, summer is the best time to do it. There are a ton of fun activities to do. Retiring in the winter is the pits. You’ll be stuck at home all day and that’s not a good way to transition into what should be a fun phase of life.
Did you have a good August? What’s your plan for September? I’m ready for the cooler weather after this scorching weekend.
Happy Labor Day!
I hope you’re enjoying the long weekend. To celebrate Labor Day, I made BBQ beef ribs and Mrs. RB40 made some great sides. Yumm!
Other than the BBQ, we just went swimming and grocery shopping. The 99 Ranch Market, the biggest Asian grocery chain in the US, just had a opened up in Beaverton so we went to check them out. The take out dim sum was a good deal, but the groceries weren’t any cheaper than at Fubonn. It was a fun excursion, but we probably won’t make it out there too often. I hope you had a great Labor Day too. Stay Safe!