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Early Retirement Preview – April Cash Flow

{ 35 comments }

Retirement Preview – 1st month

As some of you may know, I am taking 3 months off to be a stay-at-home dad and preview early retirement. I’ll take this opportunity to track all income and expenses to see if we can live on one paycheck. I know one income won’t cover all our expenses and we need to see how much of a shortfall we have.

Here are the numbers from April

Income
Mrs. RB40’s paycheck 2622
rental income 1334
blog income 266
rebate 60
Total income 4282
Expenses
Housing -1992
rental debt service -1367
cash allowance -400
transportation -46
pet -66
baby -229
bills (electric, insurance, internet) -293
misc (H&R block, repair, charity) -142
Total expense -$4535
saving (Income – Expense) -253

 

As you can see, we dipped into savings a little bit in April. This was actually much better than I expected. I thought we would be short by at least $500.

Income

The blog income was a pleasant surprise and I hope we can continue to make at least $100/month. The $60 rebate was also a windfall that we won’t see next month.

Expenses

This month’s expenses are not too bad. You can see that our housing expense is the biggest piece of the pie. That’s because we pay quite a bit for HOA and we live downtown. Living downtown enables us to share one car and to spend very little on transportation. Thank goodness because gas prices are going up up and away!  We also reduced our cash allowance to 50% while I’m off. It worked this month, but we’ll have to see if we can keep it up. Another big expense this month was baby RB40. We purchased a baby carrier and an activity mat. Hopefully, we are pretty much done with extra baby expenses for a while.

tiny love baby activity mat retire by 40

Plan for improvement

The rental income will go up to $1,450 because I fired the property manager and will manage the rental home myself. I’ll also start working on my dividend portfolio to supplement our monthly income, but that will take quite a while to complete. Mrs. RB40 maxed out her 401k contribution so we can reduce her contribution if we really need extra income. We are also working on acquiring a 4 plex, but that will also take a lot of time and it won’t pay off right away either.

On the expense side, I don’t think we’ll go much below $4,500/month. April was actually a very good month for expenses. There were not a lot of surprises or emergencies so it worked out well. There is one more expense that didn’t show up on the monthly cash flow and it’s property tax. We pay property tax once a year and usually we’ll save up a few months in advance before it’s due.

Well, what do you think? If you have any suggestions, let us know?

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{ 35 comments… add one }
  • MoneyCone May 2, 2011, 7:05 am

    The baby is adorable! Hope you guys are getting enough sleep!

    Though in the negative, not by a large amount! In my books you are doing good!

  • Jessica07 May 2, 2011, 7:53 am

    First off, that has to be the cutest baby in the world!!!

    Your pet expenses almost made me want to go sell my Dane. LOL! He eats through about $100 a month.

    It’s amazing to see your finances laid out like that and compare them to my own. I don’t have any suggestions about what you could possibly change, other than the rental income. It will of course be better when your rental income surpasses the amount you pay for the rental debt service. 🙂

    • retirebyforty May 2, 2011, 11:33 am

      Thanks! We have 3 cats so I’m sure they are way cheaper than your Dane.

      • Jessica07 May 3, 2011, 6:20 pm

        Aww! We actually have two cats we adopted when we got married and then (more recently) inherited a 20 year old cat from my late father-in-law. Between the three cats, Dane, and Belgian Malinois (plus cattle and horses), the human food allowance looks REALLY small in our budget. LOL!

  • Little House May 2, 2011, 10:21 am

    Cute baby! He also seems to really like his activity mat so I’d say that was a great investment. 😉 Is the rental debt service the management company you use? If you do manage your own properties, that would save you quite a bit. But then I’m guessing you’d have to factor in your own time. Your budget looks pretty good otherwise. 🙂

    • retirebyforty May 2, 2011, 11:35 am

      The activity mat was a great buy! Anything that give me 15 minutes to do something is extremely helpful. 🙂
      The rental debt service is just a fancy way of saying rental home’s mortgage. On the bright side, we only have about 6 years left on the rental home mortgage and then it’ll all be gravy after that.

  • Squirrelers May 2, 2011, 10:39 am

    Great picture! I remember buying a play mat like that a few years back….

    You seem to be doing quite well all things considered, especially with the reality that you’re trying out early “retirement” (though I know caring for a little one can be hard work).

    • retirebyforty May 2, 2011, 11:35 am

      The little guy needs so much attention. It’s exhausting. 🙂

  • krantcents May 2, 2011, 11:31 am

    How do you like retirement? Considering you are living on one paycheck you are doing pretty well. I think I would wait on the 4plex until you return to two incomes. Income property can be a drain before it is a windfall!

    • retirebyforty May 2, 2011, 11:37 am

      I love the break from working. I really needed this time off since work has been less and less fun lately. The 4 plex is a short sale so we are still waiting to hear back. It will probably take another month or so. It should be cash flow positive once the deal is done unless we have a vacancy. It would be better to have 2 pay checks as you say.

  • Lindy Mint May 2, 2011, 12:28 pm

    Is your blog income number just from Adsense? What a nice surprise!

    Once baby RB40 (so cute, by the way) gets to about 4 months you may need to spring for one of those upright exersaucers, but until then, you should be good. 🙂

    • retirebyforty May 2, 2011, 4:40 pm

      I sold a couple of in content text ad and a link on the side bar. I think I can make at least $100/m, but probably won’t hit $250 again for a while.

  • FB @ FabulouslyBroke.com May 2, 2011, 4:24 pm

    Without the blog income, you would have been on the money.. as in.. $500 short 🙂

    Hope the baby watching and the Adsense goes well for May!

  • Robert @ The College Investor May 2, 2011, 7:19 pm

    The Four-plex will be a great supplement to your income, but will probably lower your dividend income. Hope you find a good deal!

    • retirebyforty May 3, 2011, 9:09 am

      The 4 plex will take a while to pay off, but I think it’s a good long term investment. I’ll keep working on the dividend portfolio too, it’s very small right now.

  • Money Reasons May 2, 2011, 8:04 pm

    I think after 5 years, you’ll be making as much money as you did when you were working for an employer! Sounds like a great plan for “retirement” 🙂

    • retirebyforty May 3, 2011, 9:10 am

      I doubt I’ll make as much money as a day job unless inflation goes into double digit or something like that. 🙂

  • Dana May 2, 2011, 8:10 pm

    Good income. I think you can improve the blog income at least to USD1000 per month. It is feasible based on my experience.

  • youngandthrifty May 2, 2011, 11:16 pm

    Hehe I hope the adsense goes well in May too! I might have sped it up a little bit just now 🙂

    Good idea on firing the property manager- if you’re not working 9-5 I think it should be much easier to be a building manager.

    • retirebyforty May 3, 2011, 9:12 am

      I need to get out of this PR0 purgatory! Oh well, I guess I’ll keep working at it.

  • Melissa May 3, 2011, 10:13 am

    Your baby is adorable! I second the idea about a baby activity center when the baby is about 6 months old. It keeps baby occupied while you cook, etc.

    I am in PR0 purgatory with you!

    Just curious, what do you spend the $400 cash on?

    • retirebyforty May 3, 2011, 11:16 am

      $400 cash is for groceries, eating out, entertainment, shoes, etc… We haven’t gone shopping while I’m off so $400 works well enough.
      PR0 is really hurting my bottom line!

  • Sandy @ yesiamcheap May 3, 2011, 11:42 am

    Baby RB40 is so cute and growing so fast! It was like yesterday that he popped into the world.

    All-in-all you’re doing pretty well. Your blog income CAN increase if you are willing to do some more things. I have a couple of “making money” posts on my blog that you can follow.

    Also, firing the property manager was a good idea. Perhaps you can manage my property too? 🙂 Other than going on a serious diet and not eating, and dropping the entertainment money by half, I don’t think that you can squeeze more out of your budget, so it’s time to make more money. Good luck!

    • retirebyforty May 3, 2011, 9:44 pm

      Thanks for the compliment! He is getting heavier and heavier!
      I’ll check your site on making more blog income. 🙂
      As you know, my property manager wasn’t doing his job so it’s time to step in. We’ll see how it goes.

  • Darwin's Money May 3, 2011, 12:20 pm

    Cool insight into the early retirement test. Keep us posted! (our expenses are way to high to ever pull this off…maybe when the wife goes back to work, I can stay home :>

    • retirebyforty May 3, 2011, 9:43 pm

      The wife going back to work is the ticket to early retirement, equality and all that. 😉
      Of course now she is starting to say she doesn’t want to go back…..

  • Financial Samurai May 13, 2011, 6:19 am

    Joe, the Yakezie is gonna help you try and reach $500-$1,000 a month by the end of this year from this site!

    Sam

    • retirebyforty May 13, 2011, 9:23 am

      Woohoo!!! I’m all for that!

      • Financial Samurai May 13, 2011, 9:32 pm

        Joe – Just realized something. Do you have savings interest income, or dividend income that you’ve developed over your career?

        Just wondering what is the income stream you’ve developed to be able to fully retire by 40? For example, I’m working towards interest income from my CDs/savings, and of course an online revenue stream.

        BTW, highlighted this post in my latest post.

        Cheers, Sam

        • retirebyforty May 13, 2011, 10:19 pm

          I was concentrating on growth stocks/funds for a long time. I’m slowly converting part of that to a dividend portfolio. Last year I had only about $1,000 dividend income. I’ll keep working on increasing that to about 5k/year.
          I’m also working on rental income. We have a rental home and I’m working on a 4 plex deal that should pay off in the long run.
          The reality is I’ll keep working for myself even after I quit my job. Ideally, I would make a bit of money from various hobbies, but we’ll see how it goes.
          Cheers!

  • Jeff @ Sustainable life blog May 13, 2011, 8:08 am

    Looks like you had a good trial month – even though you didnt come out in the black. Good luck in month 2!

  • Len Penzo May 14, 2011, 10:11 am

    Cute baby! Hey, enjoy that time off — family should always come first!

    All the best,

    Len
    Len Penzo dot Com

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