Happy Halloween! Do you have any big plans for Halloween this year? We’re skipping it entirely at the RB40 household. Well, I got a pumpkin and Mrs. RB40 carved it, but that’s about it. RB40Jr does not like dressing up and he’s too scared to go trick or treating. Even candy is not enticing enough to get him to enjoy Halloween. He says he can buy his own candy. That’s okay with us. I was never into the holiday either so it’s no big loss to me.
Anyway, I’m doing our October update a couple of days early because we’re heading down to Cancun, Mexico on November 1st. I didn’t plan on it, but we’ll be there for Dia de los Muertos. Heh heh, RB40Jr will jump out of the frying pan into a fire. Hopefully, he won’t get too scared by the costumes there. This trip shouldn’t be too expensive because we used reward points to pay for the flights and some hotel rooms. I’ll write up the trip when we get back. We haven’t been there and it should be a ton of fun. The beach looks really nice.
On the financial front, October was a good month for us. Our income was good and our expenses came in under budget, even though we spent more than usual due to the upcoming Cancun trip. Okay, let’s go over my 2017 goals first and then I’ll share the details of our cash flow.
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Wow, the year is almost over and there are only two months left to accomplish our New Year Goals. The year is really flying by, but that’s how it is every year. Christmas will be here before we know it. That’s Mrs. RB40’s favorite holiday and we’re all looking forward to it.
Personally, I’ve been doing pretty well with most of my goals. The yearlong goals are on track. There are 2 goals that I won’t be able to accomplish this year and I gave up on those – Pinterest and site redesign. For the rest of 2017, I’ll focus on fitness, Toastmasters, and our international trip. Fitness will be the toughest one out of these 3. It’s always difficult to regularly workout when there are interruptions such as vacation and holidays.
Check out my goal tracking spreadsheet.
- Save $50,000 in our tax advantaged account– We’re done with this one! We saved $50,180 in our tax advantaged accounts and still have two months left. Once again, it feels great to finish this one. Next year, I should challenge myself and push it up to $60,000.
- Dividend Income $11,500– I’ll update our passive income post next week and you can see the details there. In the first 10 months of 2017, we received $9,705 in dividend. We’re right on pace at 84%, that’s great! This goal should be completed by the end of the year.
- FI ratio > 78% – The FI ratio is passive income divided by expense. Currently, our FI ratio is 97%! That’s way ahead of our target and I’m quite happy with it. We’re doing much better than expected here.
- Net worth gain > VFORX– Our net worth gained 12% so far in 2017. That’s really good and I’m very satisfied with anything above 10% in 2017. However, it is 4% behind our benchmark. The VFORX (Vanguard’s 2040 fund) is up 16%. I’m not going to worry about it too much.
- 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 $58,263 so far. I met my online income goal at the end of June. I made more in 6 months than the whole 2016 blog income. Thank you all our readers. I’m really grateful for your support.
- 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 because 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 take over our social media when she retires from her full time work.
- Fitness – October was an uneven month for fitness. I took a week off to fix up our rental condo and also missed a few days due to various appointments. Fall seems to be a busy time for me. Overall it was okay and I give myself a C+ for October. I walked about 8,170 steps per day which is more than my goal of 7,000 steps per day, nice!
- 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 was on hiatus until school started. However, I’m finding it hard to get back to blogging about fitness. I’ll just blog every few weeks or so.
- Join Toastmasters – I plan to join Toastmasters in November after we come back from our Cancun vacation. I found a club near where we live so it should be easy to join up.
- RB40Jr’s after school programs –This fall, RB40Jr is on a soccer team. We really need to get him out of the house because he’d get too much screen time if he stays at home. Soccer is a great activity, but he doesn’t follow directions very well. Hopefully, he’ll get better soon.
- See the total solar eclipse – We saw the eclipse from Newport Beach, OR. 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 this week! I booked our tickets with points and also booked our hotels last week. I’m so ready to go.
Net Worth (+12% 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 3/4 of the way through 2017, we are way behind, about 4%. VFORX is really killing it this year.
Our net worth is up 12% so far in 2017. That’s really good at this stage of our lives and I’m happy for 10+% gains in 2017.
Recently, I’ve been nervous about the stock market. The valuation is getting too rich for me so I’m selling a few stocks and will try to sit on the cash for a while.
Here is the picture of our net worth from the beginning of 2017, on Personal Capital. It is somewhat distorted because of Zillow. They pumped up the estimates of our properties earlier this year and then dropped them down over the last 2 months. I haven’t changed my personal spreadsheet yet. Valuing real estate is always tough. If we don’t include real estate, then the graph would rise steadily throughout this year.
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.
October 2017 Cash Flow
We had a pretty good month with our cash flow in October. Our income was solid and our expense was just under budget. All in all, no big surprises. Let’s go over the details.
Take Home Income (target > $5,000)
Our take home income target is $5,000 and we came in above that at $8,070. This is a bit below average for 2017 due to slow online income. Everything else is in line with the average.
Mrs. RB40’s paycheck: $5,637. Mrs. RB40 is doing very well at her day job. She got a raise earlier this year and she is bringing home 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 very well for us.
Rental income: $976.
Online Income: $4,222. My online income was below average in October, but it’s still very good. 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: $1,735. These are the banner ads you see on Retire by 40. I hope to make about $1,500/month from these ads.
- Affiliates: $2,765. 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.
- Expenses: -$278. Internet, hosting, email service, CDN, cell phone, meals, etc…
Starting a blog is a great way to build your brand and generate some extra income. You can see my tutorial here – How to Start A Blog and Why You Should. Check it out if you’re thinking about blogging.
Dividend income: $1,080. You can see our dividend portfolio here.
- P2P lending: $22. I’m slowing getting out of P2P lending. I just don’t think they will do well when the economy turns south.
- Realty Shares: $7. I started investing with Realty Sharesearlier this year. So far, I’ve invested in 2 commercial properties and an apartment complex. I like RealtyShares and I’m planning to invest much more next year. See how I’m doing with real estate crowdfunding here.
Pre-tax savings: -$3,890. I sent $1,500 to my solo 401k. Mrs. RB40 saved $1,390 in her retirement account. We also added $1,000 to RB40Jr’s 529 account.
Expense (target < $4,500)
Our monthly expense target is $4,500 per month and we went over a little bit in October. The Cancun trip was the main reason why we almost busted our budget. We paid for 5 nights of hotel and took out some cash for this upcoming trip. Our clothing expense was higher than usual as well. It got cooler in Portland and we found that RB40Jr outgrew all of his cold weather clothes from last year. I needed some new clothes too so we went shopping. Other expenses were normal.
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: $465. Our grocery bill was average last month.
Transportation: $77. This is for gasoline and parking. We share one car and usually don’t drive much.
Kid: $42. RB40Jr attended some birthday parties last month and we got the kids some gifts.
Bills: $212. Electricity and insurance (auto, home, term life, and umbrella).
Healthcare/Medical: $110. We had a few routine visits to the doctor office.
Entertainment: $243. Mrs. RB40 got 2 tickets for The Book of Mormon. She also went out of town on anther business trip and met up with some friends. This category also covers my gym membership and eating out.
Travel: $861. I paid for 5 nights of hotel, airport transfer, and took out $500 cash for the Cancun trip. We probably will take out another $500 to spend on a tour and eating out when we’re there. I’ll write up the trip when we get back.
Clothing: $193. We got some new pants and long sleeve shirts for RB40Jr. My clothes were disintegrating too so I picked up some cold weather clothes while we were shopping.
YTD Extra Savings: $58,169
October was a good month and we saved $3,577 in addition to our tax advantaged savings. Our income is doing really well this year. So far in 2017, we saved $58,169 extra. This is much better than 2016. What did I do with the extra money?
- I stashed $30,000 in VNQI. This fund will be cashed out when Mrs. RB40 retires.
- I invested $18,000 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 next 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 October 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 $1,831 in October! My online income is strong this year so this challenge has been a bit too easy. Online income could be fickle, though. Last year’s online income was much lower than 2017.
October 2017 wrap up
October 2017 was another solid month at the RB40 household. My online income was lower than average, but still really good compared to 2016. Our expense came in right under budget even with our upcoming Cancun trip. That’s good news. 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 finances has more ups and downs.
The next two months will probably slow down a bit because of Thanksgiving and Christmas. A lot of people will take time off to be with family and friends. The blog traffic will probably slow down a bit, but hopefully we can maintain the same level of income. Oh, we have a big expense coming up, though. Our 1960s era HVAC system hasn’t worked for about 5 years and I kept putting it off. We’ll get a new system soon and that will cost around $7,500. Ugh, being a homeowner can be a pain sometimes.
Did you have a good October? Do you have any vacation plans next month? It’s a great time to go on vacation because there are so many days off at school. We’ll be gone for 10 days, but our kid will only miss 4 days of school. Pretty good timing, right?
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.
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