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August 2015 Goals and Financial Update

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Whew, August is over. It was a wild month, that’s for sure. We were very busy trying to cram in as much fun as we can before the rain starts. We went camping at the beach, hiked at Mt. Saint Helens, went to concerts, and attended various festivities around town. We are all worn out and I’m really looking forward to school starting up again. We also spent 2 weekends doing DIY on the rental duplex. August was a busy month.

Of course, the stock markets around the world were having their own wild rides in August. The S&P 500 Index gave up all its gain and was at -4% year-to-date on August 31st. It looks like the wild ride isn’t over yet because the S&P 500 dropped 3% further on September 1st! We are investing for the long term so I’m not losing much sleep over the volatility. The majority of our investments are in low cost Vanguard funds and solid dividend stocks. We have a few speculative stocks, but they are just a tiny sliver of our net worth. With this style of investment, we just need to concentrate on adding as much to our investment as we can. We don’t need to pay much attention to the short term volatility. I’m confident that the stock market will recovered by the time we need to withdraw from our retirement fund in 2035.

On the personal finance side, August wasn’t a very good month for us. We spent more than usual due to trips and DIY fixes at the rental. Let’s see how I did with my 2015 goals first and then I’ll share our cash flow.

2015 Goals

Invest $50,000 in our tax advantaged accounts (progress at 79%)

We added $10,598 to our tax advantaged accounts in August. I have been looking for an opportunity to contribute to our Roth IRA and i401k so the mini crash was welcomed. Everything is still down, but I’m glad I picked up a few shares at a discount. We added $5,000 to our Roth, $3,500 to my i401k, $1,698 to Mrs. RB40’s 401k, and $400 to RB40jr’s 529 account.

That’s $39,632 so far in 2015. With the extra contribution this month, it looks like we should be able to meet this goal handily.

Surpass $50,000 in RB40 Junior’s 529 account (about $6,900 to go)

RB40jr currently has $43,114 in his 529. We contribute $400 per month via auto deduction. The stock market is down so this account is down too. I don’t think we will be able to meet the $50,000 goal in 2015. Unfortunately, we don’t have enough extra cash to make the extra contribution here unless we have a windfall in the next 4 months.

Generate $10,000 from our dividend portfolio (progress at 65%)

We made $640 in dividends last month. We are at $6,522 so far this year. It looks like we are on pace to complete this goal.

Exercise 120 times (I gave up tracking…)

I went to the gym once in August… This is one area that I haven’t been doing well in early retirement. Summer was tough because our schedule was so flexible. I hope to get back to the gym once school starts up again. Next year, I will need to make a better goal and get Mrs. RB40 onboard. She is exercise-averse.

Try 6 new restaurants in Portland (Done!)

We tried 2 new restaurants in August. We are at 7 so far in 2015.

Pambiche is a great authentic Cuban restaurant in a colorful building on the east side of town. I had Rabo Encendido, oxtail on fire. The dish was so flavorful; it had me gnawing on the bones. Yum… Mrs. RB40 had fish in coconut milk stew. Jr had a beef, bacon, and olive empanada. Those dishes were really good, too. We’ll have to go back to try the whole menu.

We also tried Wow Burger. This was a working lunch when we were having our DIY weekend at the rental. The burger was good, but there are better burger joints in Portland.

Visit a foreign country (WIP)

We are heading off to Costa Rica in September! It will be the rainy season, but I think we will still have a great time. We got RB40jr’s passport and renewed mine. It’s been 6 years since we left the country and I’m really looking forward to traveling again.

Net Worth (+0% so far in 2015)

Needless to say, August wasn’t good for our net worth because of the stock market drop. Our net worth is now at almost the same level as it was on January 1st. I guess that’s not bad because the S&P 500 dropped almost 4% YTD.

Check out how our portfolio performed compare to the S&P 500. Our portfolio didn’t drop as much as the S&P 500 because we have bonds and other alternative investments. We also added money this year so that pushed us to 0% instead of -1.76%.

August performance stock

If you need help keeping track of your finances, try using Personal Capital to manage your portfolio. Also check out their fantastic retirement calculator. You can read my review here – The Best Free Retirement Calculator.

Cash Flow

 

August cash flowTake Home Income (target > $5,000)

Our take home income was lower than usual in August at only $3,742. The biggest contributor to that is the negative cash flow on the rental due to the repairs. All the income streams were on the low side in August. That happens sometimes.

Mrs. RB40’s Paychecks: $4,658.

Rental income: -$605. We spent $923 on replacing a sink, 2 faucets, and 2 toilets. That dropped us into the negative territory. Hopefully, we don’t have any more big repairs this year.

Online income: $2,716. Online income was a little low in August. I attribute that to the summer slowdown. I’m hoping it will increase once vacation season is over. I will break down the online income and expenses in our monthly newsletter so if you’re curious, sign up with our email list.

Dividend: $640. Our dividend payout is always a little low in the 2nd month of the quarter. You can see our dividend portfolio here.

Interest: $9. Interest rate is quite low so this will be small in the foreseeable future.

P2P lending: $86. Our ROI hovers around 7% and I’m not too hopeful for the prospect of P2P lending when the economy goes south. I’m slowly reducing our investment in this column.

Misc income: $0. No extra income this month. 🙁

Expense (target < $4,500)

Our personal expense actually came in under budget at $4,332. That’s actually pretty amazing because we had some big expenses in August. Mrs. RB40 took a trip to DC for a job interview. We had a camping trip to the beach. I booked some hotels in Costa Rica. We also paid for passport processing fees.

Housing: $2,228. Mortgage, HOA, and property tax.

Cash Allowance: $200.

Groceries: $241. Hmm… Grocery bill was down. I guess that’s due to the out of town trips.

Child/Dependent: Refunded $42. RB40jr refused to take the level 3 swimming class so we canceled.

Healthcare/Medical: $145.

Entertainment: $74. Gym membership fee and we ate out a few times.

Misc: $1,237. This is mostly travel cost as mentioned above. I also got a Kindle Fire and Mrs. RB40 got a new pair of sandals.

Transportation: $34. Not including gasoline for out of town trips.

Saving

Pre-Tax Saving: $3,598. My solo 40k, Mrs. RB40’s 401k, and Junior’s 529 account.

Extra Saving ($12,042 so far in 2015)

Unfortunately, we had negative cash flow in August, -$590. That’s not good at all, but I guess it happens. Once we get back from Costa Rica, we should be able to hunker down and reduce our monthly expense.

Misc fund: $2,042.

Extra retirement fund: So far we sent $10k from our extra saving to fund our Roth IRA and my i401k.

Overall, August was a rough month for us financially. Our income was lower than usual and our expense was relatively high. Summer is over so we should be able to cut back for the rest of 2015. Our income in September will be better, but we will have another high expense month due to our Costa Rica trip. The last quarter of 2015 should be much better, though.

Did you have a good August? Anyone have travel plans in September or are we the only one taking a vacation after school starts?

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.

Joe also 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 DIY investors analyze their portfolio and plan for retirement.

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{ 25 comments… add one }
  • Jason @ Dividend Mantra September 2, 2015, 11:03 am

    Joe,

    Looking good, my friend. The recent volatility is a gift for us long-term investors looking to buy stocks at cheaper prices/higher yields.

    Costa Rica sounds like a lot of fun. Make sure you take lots of pictures. 🙂

    Cheers!

    • retirebyforty September 3, 2015, 10:18 pm

      It was great to pick up a few shares at a discount. We’ll take plenty of pictures. 🙂

  • Jason September 2, 2015, 10:45 am

    Hey Joe

    I never used to pay much attention to your monthly balances/expenditures, but now that I’m within a few months of FIRE, I’m finding this really helpful as a benchmark. It makes me a little nervous to just pull the plug and rely on investments, so some real numbers gives me faith. Plus, I’ve seen a lot of people say that you really don’t need as much as you think.

    BTW, I think your wife still works, right? If so, is that where your healthcare comes from right now? Have you looked at what it would cost in the US for the 3 of you if you paid it by yourself? That’s one cost we haven’t done a lot of research on but I know it can be substantial.

    • retirebyforty September 3, 2015, 10:17 pm

      Yes, we have our healthcare from my wife’s employer.
      You can check healthcare.gov to see how much it would cost. I think health insurance would cost us about $1,000/month. It really depends on the plan.

  • Michelle September 2, 2015, 9:52 am

    Costa Rica sounds like fun. I hope you and your family have a great time!

  • Max September 2, 2015, 9:00 am

    Hmmm, this all looks good enough. Are you all contemplating a move to DC or how would that work out if your wife ends up getting the job there?

    • retirebyforty September 2, 2015, 10:08 am

      Mrs. RB40 went to interview with the foreign service. If she got the job, then we would be assign to any location around the world. I thought it would be fun for a few years. We’ll blog about it soon.

  • Tawcan September 2, 2015, 6:59 am

    I hope the market stays down longer so we can buy more stuff. Like you I’ve had pretty poor track record with exercising in August. Need to improve that.

    • retirebyforty September 2, 2015, 10:06 am

      Be careful, you might get what you wish for… I wouldn’t want a prolonged drop like the Japanese market…

  • Joel September 2, 2015, 6:29 am

    Well, your August looks like mine. Too much spent on rentals, lots of expenses overall, and income pummeled as it relates to investments. I did a whole lot better on the exercise front than you did though. 🙂 Better luck this month!

    • retirebyforty September 2, 2015, 10:05 am

      Good luck to you too. I forgot to add that we went hiking, biking, and swimming pretty often. I still need to revamp our diet though.

  • Lisa September 2, 2015, 6:20 am

    I had a slow August, as well. Thank you for posting your perspective! – if someone as astute as you are can have an off month, then I don’t feel like such a loser.

    What I’ve learned over the past 4 or 5 months being “semi-retired” is that the seasons really do have a different financial impact. Meaning wedding season, graduation season, travel season in summer. Almost half of my monthly income is variable! — Fixed costs in my budget only account for about half, so I’m going to focus more on increasing my contingency fund awareness and allowance.

    I notice that most of us are thinking things will pick up this Fall. But then — wham — holiday season….

    • retirebyforty September 2, 2015, 10:03 am

      Yeah, we all have an off month once in a while. The variable income does need a bit of adjustment. A bigger cash reserve would do the trick. I’m going to ignore the holiday season until I hear Christmas music on the radio. 🙂

  • Dividend Growth Investor September 2, 2015, 6:18 am

    Well, hopefully the markets stay down, so you can invest the rest of your 401K and IRA contributions at low prices.

    By the way, $646/month is some nice dividend income.

    • retirebyforty September 2, 2015, 10:01 am

      Thanks. I’d like to increase the dividend income to about $1,000/month. It will probably take a couple of years, though.

  • Steve Miller September 2, 2015, 6:08 am

    I bet you are excited about your Costa Rica trip this month. We just returned from 4 months of travel to Colorado and Montana and are now back at the beach. I’m looking forward to swimming in the Gulf of Mexico, boating and golfing!

    Our portfolio also took a beating this month but our cash reserves and bonds will allow us to weather the storm.

    Have a blast in Costa Rica!

    • retirebyforty September 2, 2015, 10:00 am

      We are really excited. Jr has been telling everyone we’re going to Costa Rica in 2 weeks. I’m sure we’ll have a great time. We just need to take it slow and relax. Great job with your cash reserve and bonds. That’s what retirees need to plan for.

  • Justin @ Root of Good September 2, 2015, 6:07 am

    Well, we didn’t spend much but we did lose $74k in the markets in August. That doesn’t really change my “happily and comfortably retired” status any. 🙂

    We’re thinking about traveling in September but not sure yet. Possibly a short weekend trip to the beach while the water and air are warm. It won’t cost much at all and might just be a day trip.

    • retirebyforty September 2, 2015, 9:59 am

      It’s great that you don’t mind a little set back. 🙂
      I’m not losing sleep yet because our net worth is still doing fine. I might get worried if I see our net worth drops 20% or something like that.

  • ROI @retireoninvestments.com September 2, 2015, 6:04 am

    I would say you did very well considering everything, Joe! The only financial item that doesn’t look like it might hit the goal is Jr’s 529 account. I’m still up 13% this year on my brokerage account, roughly even for my IRAs but my 401k, which wasn’t managed by me, lost about 5%.

    On exercise, I’ve been neglecting mine a bit. It can get hard sometimes but what I find that helps somewhat is to get other people to do exercises with you or to take classes at the gym. You might want to try a few :). Or do swimming and get junior to join.

    • retirebyforty September 2, 2015, 9:58 am

      Great job with your brokerage account! That’s impressive considering the market is down. We went swimming, hiking, and biking pretty often. I should incorporate those into the goal some how. I’ll probably get a fitness tracker band like Chuck suggested.

  • Ramona September 2, 2015, 3:45 am

    I dare say your goals look pretty dandy overall 🙂

    We had a slow August, but hope we’ll get back on track from now on, since both our business do better during autumn anyway.

    Keep up the great work 🙂

    • retirebyforty September 2, 2015, 9:56 am

      Thanks! Good luck to you in August.

  • Chuck September 2, 2015, 12:47 am

    Joe, With regard to your exercise “budget”, I think basing your success/failure primarily on whether you go to the gym is much too limiting, especially given your current lifestyle. I would suggest this: purchase a watch that counts steps/miles per day and set a daily goal, say for number of miles, steps, and or moves. May I suggest a watch that I purchased over a year ago from Movable.c0m for 29.99? I have also purchased several of these for my family members to encourage them to be more active. What I like about it is you can easily download and store the data. The data can be viewed hour by hour for a given day or over a period of weeks or months. While you’re wearing it, it displays time, “moves”, and total mileage. Then when you download the data (via USB), you can display the aforementioned data plus steps (steps are different than moves). As a self-proclaimed nerd, I can see how my activity was impacted by, for example, going on vacation, working on the house, walking with friends, seasons (I’m from the northeast with defined seasons), etc. As an example, I wear it 24/7 every day and set a goal for myself of 12000 moves per day. Then at the end of a month, I can tally exactly how many days I reached my goal (typically about half the time). Good luck my friend. P.S. Buy one for your son and the Mrs, and “compete” — lots of fun!

    • retirebyforty September 2, 2015, 9:56 am

      I think you’re right. I have been having a lot of trouble with fitness since I quit working full time. I will put this on my Christmas list and try to convince Mrs. RB40 to join me. Jr doesn’t need a fitness tracker, he’s running around all day. 🙂

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