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December 2013 Goals and Financial Wrap Up

by retirebyforty on January 3, 2014 · 31 comments

in cash flow

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Highlights and Lowlights

Whew! Here is the last article to close out 2013. We had a great December on all fronts and 2013 was very good overall. Now, I’m ready to face 2014.

  • Online Income – We continue to do well with online income and didn’t slow down much in December.  I will break down the online income in our monthly newsletter so if you’re curious, sign up with our email list.
  • Rental Income  – For 2013, we had a small positive cash flow year with our rentals at +$1,163. That’s not great, but I’ll take it. This is a $1,036 increase from 2012.
  • P2P income from Prosper was good in December at $156. We didn’t have any defaults and the ROI rose slowly to settle at 8.92% this month. We should be seeing around $80/month on average. In 2013, we made $872 with P2P lending. This is increase of $48 from 2012. That’s expected with no new money going into P2P.
  • Dividend and interest income – December is always a great month for dividends. We collected $1087, but January will be much less. For 2013, we made $8,036 from dividend and interest. That’s an increase of $1,245 from 2012.

Net Worth (+25% YTD, +4.9% MTM)

I updated our properties’ values and that gave us a big boost. I only do this a couple of times per year and it’s nice to see the increase. The stock market also had a great year in 2013. The S&P500 increased about 30% and I hope you were a stock investor this year.

Our net worth increased 25% last year and that’s amazing! I hope 2014 will be even better, but I don’t see how we can beat 25%. Actually, I hope to increase our net worth by 10% in 2014. We will need a lot of help from the stock market and the real estate market to achieve that.

If you need help keeping track of your finances, try using Personal Capital to manage your investment and cash flow. 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 review cash flow net worth investment rebalance

Personal Capital has a great Investment Checkup tool. It will help you keep an eye on your asset allocation so you don’t drift too far from your target. I need to sell some US stocks and buy internal funds soon.

Surplus (+$28,254 YTD)

We did quite well with our cash flow in 2013 and had a surplus every month. My online income was much higher than expected and that was a big factor.

Our saving this month is +$2,884.

Piggy Bank 2013

  • Earmarked for the 529: $0. We contributed $10,000 to RB40 Junior’s 529 fund, so we’re done with this one for the year.
  • Travel fund: $0. We are pretty much done with our travel this year.
  • Fun money: $1,000
  • Investment/Slush Fund: +$2,884 = $15,098. All of this went into my solo 401(k).
  • Taxes$2,666. We are done with taxes until next April. From my estimate, we probably need to send in around $1,000 next year.

Cash Flow

cash flow income expenseTake Home Income (target > $5,000)

I’m raising our take home income target from $4,500 to $5,000. It’s a small increase and we should  be able to meet it.

  • Rentals: As mentioned in the opening, the rentals are doing better in 2013 overall. I think the 4 plex is still negative cash flow, though. I will need to sit down and crank the numbers. 2014 should be better for the 4 plex because I don’t think there are any big repairs scheduled. The rental home did well in 2013, but we need to paint both the exterior and interior next year. I also might just sell them off if I can get the right price for them. We’ll see how it goes.
  • P2P lending: Our current ROI is 8.92%. I’m still hoping we can raise it to 10% at some point. The income seems to be more stable now. P2P lending also became very passive for me so I’m happy with it.  See my last update – Peer to Peer Lending Is A Pretty Good Passive Investment.
  • Dividend and interest: We had a nice dividend and interest income year and I will try to increase it even more in 2014. My goal is to eventually hit $10,000, but that might be a couple of years off. For 2014, we’ll shoot for $9,000.
  • Online income was good in December (+$2,810.) Thank you for supporting us and signing up for products I wrote about. I will break down the income in the monthly Retire By 40 Newsletter, so sign up now if you haven’t yet (at the top of this post.)
  • Misc income: I redeemed my credit card credit for $57 cash back this month.

Expense (target < $4,500)

We spent $4,040 in December. That’s a little over our old target of $4,000. Our expense budget has been the same for over 2 years so I’m giving us a big raise. I think I’ll give us a 3% raise every year to keep up with inflation from now on.

  • Cash and groceries: Next year, I’m going to break out groceries to its own category. We have been using cash at our grocery store so that’s why it’s difficult to keep track of. I’ll use a debit card from now on. Our store don’t take credit.
  • RB40 Junior: Kids are not cheap! This month, we paid for preschool, childcare at the gym, and some new clothes.
  • Entertainment: I booked us a 3 night stay in a yurt at the beach next summer. This should be a lot of fun.
  • Misc: Mrs. RB40 is getting new glasses so she can use up her FSA ($264.) This should be reimbursed next month.

Wrap Up 2013

I think we did very well with our cash flow in 2013. We had positive cash flow every month and we were able to save and invest. Next year, I’m going to revamp this series and do a better job taking taxes and retirement contributions into account. My self employment tax estimate might be a bit low so I’ll need to work on that.

How about you? Did you have a good 2013? Happy New Year!

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{ 31 comments… read them below or add one }

C. the Romanian January 3, 2014 at 2:55 am

You indeed did really well in 2013, Joe! The good thing about money is that once you get smart, things can only go up, so despite the increased expenses RB40 Junior brings to the table, you will also generate more income and be able to save more, so I am sure that 2014 will be much better. Here’s for a great year!

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Maverick January 3, 2014 at 2:55 am

Happy New Year…and what great 2013 to be thankful for Joe! Even though you didn’t have much income from your rentals, you can thank them for expenses when filing taxes. My wife and I only increased 20% net worth, and that is from dividend and interest only. No online, P2P or rentals. And now that I am FI, our only income is from the Mrs, who will retire later in 2014. We are holding a significant % in cash as the markets seem saturated like a wet sponge. My goal continues to be a conservative 5% return on markets after taxes, and assuming 3% inflation increases year over year on expenses (e.g. a 2% spread). I figure, at some point, the markets will be taking some of this gain back. :)

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retirebyforty January 3, 2014 at 9:03 am

I think the market will continue to gain in 2014, but who knows. I don’t like holding cash at all. Inflation is just going to take a big bite out of it. 5% gain is a good bet.
20% net worth gain is great. I think people are expecting too much of 2014 after such a huge 2013.
Happy New Year!

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Moneycone January 3, 2014 at 5:51 am

Nice going there Joe! I love how meticulous you are with the tracking! (Do a tutorial someday!). Hope you have a very prosperous 2014 as well!

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retirebyforty January 3, 2014 at 9:04 am

That’s a great idea. I will put that on my list. Thanks!

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Justin @ RootofGood January 3, 2014 at 6:58 am

Looking good! Best of luck in 2014 to keep your rental income and online income growing!

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Done by Forty January 3, 2014 at 7:40 am

That’s a pretty awesome year, Joe. I hear what you’re saying on the percent increases not always being sustainable. I’d be happy with a 10% increase, too. :)

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retirebyforty January 3, 2014 at 9:05 am

I’d be ecstatic with a 10% increase this year. :)

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Wilson January 3, 2014 at 7:54 am

Congrats on the great year and recent publicity. Keep the momentum rolling!

That yurt trip sounds awesome. I haven’t stayed in one since I lived briefly in OR, which was over 10 years ago. They haven’t really caught on down in these here parts – everything’s a musty old cabin.

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retirebyforty January 3, 2014 at 9:05 am

Thanks! I’m looking forward to a nice 3 day getaway in the summer.

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JC @ Passive-Income-Pursuit January 3, 2014 at 8:21 am

Great job in 2013! Love the rental and online income. Those are great ways to diversify the sources. I’m hoping to pick up at least one rental property in 2014 and if things go well and I can still find some good deals then maybe 2 or 3. Best of luck in 2014!

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retirebyforty January 3, 2014 at 9:06 am

The real estate market shot up quite a bit last year. I don’t think there are any good deals in our area anymore. It’s probably time to sell and take some gain and get ready for the next downturn.

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davidmichael January 3, 2014 at 8:51 am

Thanks for your annual update.

Personally, I see warning signs that you are expecting too much and dissatisfied with some excellent returns. Speaking as someone much older (77), and hopefully wiser, the best thing going for you is Diversification. The Market will come crumbling down again one of these days, usually within seven or so years. Your P2P Program looks excellent. I don’t know why you are complaining about the returns. And, whining about the time it takes to look at the daily offerings. Give me a break, Joe, I have $10,000 invested as well and it only takes minutes a day. Compare this to 0.75% return for savings accounts, or
1.8% for I-Bonds.

Rentals are a pain and most likely will always be a pain, but nearly all of my friends who are multimillionaires made it with rentals, not stocks. Slow and steady makes it. This is a marathon not a sprint. Thirty years for a lifetime of financial independence is not too much to ask for.

I love the returns you are getting from your Dividend paying stocks. Incredible! However, Lehman Bros events are a way of life in our present laissez faire capitalist economy with such high Military expenditures and lack of accountability on Wall Street.

So, in summary, I feel too many young people in our country are chasing the rabbit of obtaining millions to “Retire Early” while forgetting to feel the thanks and satisfaction of living each day. Sorry for the “down-to-earth” message here, but it’s real easy to forget about where we came from and what we have now in the quest for what we want in the future. As the Indian writer Tulsidas once said, “All that you see is Illusion.”

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retirebyforty January 3, 2014 at 9:10 am

Thanks for the down to earth message. :)
P2P lending is going much better now that I put it on autopilot. The screen is much more objective than I am and won’t be influenced by sob stories. I really don’t have time to look at the P2P offering with the kid around.
I will try to enjoy each day more. I’m much better than when I was working full time, but I still get caught up with the busy work. Happy New Year.

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davidmichael January 3, 2014 at 10:21 am

Joe, you an such an inspiration!

Could you devote a blog to the filters that you now use for P2P on autopilot. I woud like to automate it myself in the next step of investing.

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retirebyforty January 3, 2014 at 1:07 pm

Here is a site the helped me set up my automatic screening. It’s very helpful.
http://www.lendacademy.com/

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Tushar @ Everything Finance January 3, 2014 at 9:35 pm

Wow, 2013 was a really great year for you, it seems. Looks like you are doing great on the income aspect of things, and I am sure that your 2014 will be just as profitable.

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retirebyforty January 4, 2014 at 8:16 am

Thanks! Happy New Year!

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Ellen Edwards January 4, 2014 at 8:43 am

My first time visiting your site! Great stuff! Happy New Year to you! I plan on following your progress. Thanks for being so open with your results.

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retirebyforty January 5, 2014 at 10:12 am

Happy New Year to you as well! I think 2014 will be a great year.

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Jerred Morris January 4, 2014 at 1:41 pm

I just found your blog and really enjoy the conversations. 2013 was a great year for me!

I’m fully employed and the company will get sold within 5-7 years max. My plan is to take the payout and pay off a portion of rental properties accumulated over the next 5 years.

Outside of work I started an online business and netted a mid 5 figure income over 6 months time.

I bought 3 real estate investments over the course of the year. We generate the leads via online websites and direct mail. The first was a flip, the second was a buy and hold, and the third one I assigned to one of my business partners.

2014 offers a lot of opportunity and I hope that I capitalize on it! I’m looking forward to following you in your quest to stay retired.

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retirebyforty January 5, 2014 at 10:13 am

Mid 5 figure income for 6 months is really great. Good luck in 2014.

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Barbara Friedberg January 4, 2014 at 4:30 pm

I enjoy peaking into other’s lives and seeing how their goals pan out. Investing was a huge win this year, but of course given that the S & P was up close to 30%, I can’t attribute our net worth boost to my own brilliance :). This was a good year for indexing stock funds!

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retirebyforty January 5, 2014 at 10:14 am

I agree. I’m sure we won’t be able to top 30% this year, but who knows.

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Buck Inspire January 4, 2014 at 10:42 pm

What a month for you Joe! Impressive haul on dividends. How do you keep your expenses so low? I need to cut down on dining out and gas. You still using public transportation I take it? Happy New Year!

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retirebyforty January 5, 2014 at 10:15 am

December is always a great month with dividend. I like it. :)
We drive a bit more now because I have to drop the kid off at preschool. Our expense is still a bit high and I’d like to keep it stable this year.

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Jack @ Enwealthen January 5, 2014 at 3:18 pm

Great work! Always puts a smile on my face to watch the non-work income number climb higher and higher.

Given the real estate bubble reinflating, personally I’d be leery of including property value increases in my net worth calculation. I only update my property value when it gets reassessed by the county. It keeps me honest, and away from inflated estimates either from myself or Zillow.

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retirebyforty January 5, 2014 at 11:56 pm

I don’t really like to update the real estate either. I’m sure we won’t get that much when we sell. Zillow is a bit inflated.

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Bill January 5, 2014 at 4:17 pm

Unless you really need the cash, it’s my opinion that it’s best to hold onto the real estate. Even if the cash flow seems low, you’re paying down principal, seeing increased value, and getting tax breaks on top of the cash flow–4 ways to help net worth! If you get out of real estate, then you may very well decide to jump back in soon, and you’ll have all of those transaction costs that you wouldn’t if you’d just held steady with the investments you already have. If you’re sure you want out of RE once and for all, the of course more power to you. :)

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retirebyforty January 6, 2014 at 12:02 am

Thanks for your input. One reason I got into real estate was to take advantage of the crash a few years ago. It’s been a little more stressful than I thought and I am thinking of getting out for now. A better approach for me would be to live in a multi plex and rent out the rest. That way I can manage the property myself.

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Ernie Zelinski January 5, 2014 at 9:16 pm

Congratulations on your great year!

Although I would not get into rental properties because of the hassles, I know others who have done very well.

I am also into dividend stocks. Since I am quite lazy, I turned over my dividend portfolio to a friend who specializes in dividend stocks and manages over $300 million in other people’s money. He along with his employer normally charge 1.5 percent a year to manage other people’s money but he agreed to manage mine for only 0.5 percent a year.

My net worth also went up nicely this year as it did last year. In my case, my net worth goes up mostly due to the proceeds I get from my intellectual property. My book “How to Retire Happy, Wild, and Free” had the best year ever in sales (about 25,000 copies sold in all formats) in 2013 since it was published 10 years ago. Because I make about $5 a copy, the book alone earned me over $100,000 in pretax profits.

Incidentally, I often refer to you and your website when I post on retirement articles where people are complaining about not having saved enough for retirement. But most of the complainers in this world will not like to hear how well you are doing with the approach that you taking. These quotations apply.

“People who don’t respect money don’t have any.”
— J. Paul Getty,

“If you borrow money to make money, you’ve done something magical. On the other hand, if you go into debt to pay your bills or buy something you want but don’t need,
you’ve done something stupid. Stupid and short-sighted and ultimately life-changing for the worse.”
— Seth Godin

“If you want to fix your money problems, get your head examined. It’s your mindset and attitude about money that will either draw it in to you or repel it away from you.
What’s in your head determines what’s in your wallet.”
— Darren Hardy

Again, congratulations.

Ernie J. Zelinski
International Best-Selling Author
“Helping Adventurous Souls Live Prosperous and Free”
Author of the Bestseller “How to Retire Happy, Wild, and Free”
(Over 200,000 copies sold and published in 9 languages)
and the International Bestseller “The Joy of Not Working’
(Over 250,000 copies sold and published in 17 languages)

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