I already said this once, but I’ll say it again because it feels so good. Woohoo! School is back in session. I love it. RB40Jr (our son) isn’t enjoying it much, though. He always has a tough time with the transition back to school. While 2nd grade is better than the previous years, he still had a rough first week. He complained that the new teacher gives the kids so much work. He said, “I need more time to get used to school again.” Also, his hearing impairment is a much bigger issue in class than at home. RB40Jr doesn’t hear very well in his left ear. We got him a hearing aid, but it really hasn’t helped much. As common with sensorineural hearing loss, he is sensitive to loud noises. It’s too loud when all the kids are talking at once and he gets a big headache. Being 7 isn’t easy. We’ll meet with our audiologist and school counselor to see if there is anything we can do to improve the situation.
Things are great on my side, though. I’m easing back into my regular routine and the first week went very well. This school year, I’m adding a new habit into my schedule – intermittent fasting. Rather, I’m taking out breakfast. I drink coffee and then just keep busy until noon. It’s been surprisingly easy so far. My SAHD routine is busy in the morning so I don’t have time to fixate on food. We’ll see if I can keep this up. I’ll try intermittent fasting for a month and see how it goes. The main goal is to get a bit leaner. On the weekends, I eat like normal. On the chart below, I fast during the Yellow hours. You can check back next month to see if I lost any weight. Today, I weigh 138.6 lbs.
On the financial front, August was meh. Our net worth increased a bit and the cash flow was okay last month. Our income was lower than usual, but that’s just due to a delay in payment processing. The expense was under budget so we’re good there. Not much excitement in August.
Okay, I’ll go over my 2018 goals first and then share the details of our cash flow in August.
This is my goal scheduling spreadsheet. Last year, I found that I needed to start these goals in the first half of the year. If I waited until summer, they just won’t get done. 2018 isn’t looking too good because the goals are more ambitious than previous years. You can get a quick status update from the chart and see the details below.
- Increase our real estate crowdfunding investment to $100,000. August was a great month with real estate crowdfunding. All my projects paid out and we collected $552! That’s really good. Why can’t it be like this every month? You can read more about my investments at my real estate crowdfunding page. Sign up with RealtyShares and see what projects are available.
- FI ratio > 100%. The FI ratio is passive income divided by expense. So far, our FI ratio is 70% for 2018. This year is not looking good because our expense is higher than normal due to a major home repair and a pricey vacation. Some years are just harder than others. This year is going to be one of those and we need to learn from it.
- Increase bond/cash allocation to 30%. Going to 30% bond/cash will beef up our opportunity fund. This is very slow going because I’m not in a big hurry. Currently, our bond/cash allocation is up to 23%. That’s not too bad. The US economy is doing pretty well so I might delay this change for a while.
- Travel hack 100,000 points. Finally, we finished a goal! We signed up for some new cards and use them to pay for the home repair and vacation. These points will come in handy for our vacation next year. It’ll probably be Argentina or the Bahamas.
- Minor Redesign RB40. This one is really difficult to do because I can’t seem to budget time for it. It’s already tough to write and keep the site running. In May, I switched the site to https. That’s a big part of what I wanted to do this year. In August, I started working on the banner and logo. I’ll probably ask your opinion on Twitter soon so keep an eye out for it.
- Blog 12 times at Fit by 40. This one is way behind now. I’m just not motivated to write about fitness this year even though I’m keeping a log for intermittent fasting. That’ll be good material when I’m ready to write about fitness again. For now, I’ll keep FB40 as a test site for the redesign. You can see how I started the site here – How to Start a Blog and Why You Should.
- Blog revenue $100,000. This one is going to be very difficult so I’m grading it on the academic system. Also, I changed the goal from blog “income” to blog “revenue.” Income is after taxes and expenses. Revenue is just gross income. The blog generated $58,068 so far in 2018. That’s really good. You can see more detail on my Blog Income page.
- Join Toastmasters. I visited a local club and it was a good experience. However, there are too many things going on right now. My mom needs help with her health. Also, school is out so I’m spending more time with RB40Jr. When school was out during the summer, I spent more time with RB40Jr. I just can’t squeeze Toastmasters into my schedule. This will have to be put off until RB40Jr is a lot more independent.
- Not paying for leaf removal. Showdown in November.
- Consolidate down to one property. We plan to move into our rental duplex and sell off the other 2 properties. This one will definitely take more than one year. I changed the due date to 2020.
- Visit Iceland. Iceland was incredible. I got some nice pictures so check out my Iceland trip report
Net Worth (+3.1% YTD)
I’ve been tracking our net worth since 2006 and it is very motivating to see the progress we’ve made. 2018 has been uneven for us. The US stock market is doing well, but bonds and international equity are down. Our net worth is up 3.1% since the beginning of 2018. That’s a little lower than I’d like, but I’m fine with it. At this point, I’m being more conservative and I don’t mind giving up some gains.
My bet with Warren Buffett – I’ll benchmark our net worth against VFINX for 10 years starting in 2018. VFINX is up 8% since the beginning of 2018. Our net worth is up just 3.1% so we’re a bit behind. Our net worth is diverse so it does better when the market drops. It’s early in the race yet. Also, I haven’t updated our property prices in over a year so that part of our net worth is probably a bit low.
Here is a graph of our net worth on Personal Capital. 2018 has been lackluster.
*Sign up for a free account at Personal Capital to help manage your net worth and investment accounts. I log in almost every day to check on my accounts and cash flow. It’s a great site for DIY investors.
2018 Passive Income ($32,036 YTD)
Here is a quick summary of our passive income. You can see all the details on my new Passive Income page. We had a slow start in 2018 because one of our rentals was vacant for the first 2 months. It’s occupied now so the passive income is looking better. Hopefully, it’ll be smooth sailing for the rest of 2018.
The only trouble spot now is P2P lending. We’re seeing more defaults and the interest payments aren’t enough to overcome the hits. If we reinvest in P2P lending, it would look better. However, I like real estate crowdfunding much more so I’m investing new money there.
August 2018 Cash Flow
Our cash flow was okay in August. The take home income was a little below expectations, but that is due to a delay in payment processing. My blog income should be higher next month as they catch up. On the expense side, we came in under budget. Actually, we spent more than I’d like, but we’re in the green so I can’t complain. You can see the detail in the spending section.
Here is my Sankey diagram for a quick look.
Take Home Income (target > $10,000)
For 2018, our monthly take-home income target is $10,000. We didn’t meet that goal in August. Our take home was $7,594 after tax and retirement savings. (I had to put retirement savings in the expense column in the Sankey diagram.)
- Mrs. RB40’s paychecks: $5,593.
- Blog Income: $4,154. You can read more details on my Blog Income page. RB40Jr is on the payroll now as model and photographer. The income will go straight into his Roth IRA. I’m excited to see how this experiment will turn out.
- Rental Income: $927. All our rentals are occupied and we didn’t have any big repairs last month. Read more at the Rental Property Passive Income page.
- Dividend Income: $750. More details at my Dividend Passive Income page.
- Real estate crowdfunding: $552. We’re finally getting some traction here. Read more at my Real Estate Crowdfunding Passive Income page.
- Prosper P2P lending: $27.
- Interest Income: $20.
Monthly Expenses (target > $4,800)
For 2018, our monthly spending budget is $4,800/month, an increase of $300 from 2017. This does not include contributions to 401k, Roth IRA, and college savings. This year has been really tough and we went over budget many times already. We came in under budget in August, at $4,403. We need to do better to improve our FI ratio for 2018.
- Housing: $2,365. Our housing expense is getting spendy. This category is over 50% of our expense most months. This includes mortgage, HOA fees, and property taxes.
- Groceries: $608. We spent a bit more on groceries this month. My brother came to visit for a week. We made lots of food and spent more than usual. Here are some of the photos we took last month.
Temaki sushi. This time we had spicy tuna and California hand rolls. These are way easier than the normal sushi (maki) rolls. Making sushi at home is much easier this way.
Mrs. RB40 made brunch – avocado bagel toast with freshly picked baby arugula, smoked salmon bagel, and an egg. Mmmm… Brunch at home is the best. Why stand in line when you can have it at home? She also made an onion pie and kale salad. These tasted way better than they sound.
Bhindi masala – okra curry. I really enjoyed this one. The okra curry turned out really well, no slime at all. The last one here is an emergency grilled ham & cheese sandwich that I made for lunch. I didn’t have any leftovers in the fridge that day so I had to scrounge around. Follow me on Instagram if you’d like to see more of my unglamorous early retirement lifestyle.
- Cash: $0.
- Transportation: $52. We share one car and we usually don’t drive much. This is one tank of gas, parking, and a car wash.
- Kid: $96. Soccer season started and we needed to get new cleats and a new ball. We also purchased some back to school supplies for him.
- Pet: $0.
- Bills: $217. Electricity, credit card annual fee, and insurance (auto, home, term life, and umbrella.)
- Health: $26. Gym membership fee.
- Travel: $254. Mrs. RB40 booked a ticket to go see her family in October.
- Clothing: $726. Mrs. RB40 purchased a few nice items for work. We also purchased a few things for our son and my mom.
- Misc: $22. I took my mom to get a haircut.
- Pre-Tax Savings: $3,430. I contributed $2,000 to my 401k. Mrs. RB40 contributed $1,430 to hers.
- Extra Savings: $3,191.
Extra Savings 2018: $36,219
2018 is going very well and our extra savings totaled $36,219 so far. We sent a bunch of money to the IRS in April so that put a dent in the opportunity fund. I didn’t send in estimated tax payments last year so we owed the tax man. I’ll do a better job this year and try not to owe as much.
Here is what I plan to do with our opportunity fund in 2018.
- Invest more in real estate crowdfunding. I just invested $12,000 in a student housing project.
- Pick up some dividend stock if I see a good deal. I purchased 50 shares of PM in April.
August 2018 Wrap Up
August was meh for me. We did okay, but it could be better. The number should improve next month once my delayed payment comes in. We’ll need to watch our spending for the rest of 2018 and try to improve our FI ratio. Summer is always a little rough because income drops while spending increases. Fall and winter are usually much better.
Did you have a good August? Any big plan for next month?
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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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