It’s been a rough winter for us. RB40Jr and I were sick on and off in February and we didn’t do much. This February felt much colder than normal to me. We had warmer weather for about a week early on and then the temperature plunged. I guess the false spring got my hopes up for nicer weather, but winter came back with a vengeance. RB40Jr even got a snow day and didn’t have to go to school. He also missed a couple of days due to some kind of stomach bug. Anyway, the upside is that we didn’t spend much money at all. We stayed home on the weekends and entertained ourselves with books, board games, and movies from the library. It was nice to avoid spending money, but I’m ready for spring and really hope the weather improves soon.
On the financial front, February was rough. The stock market turned volatile and our net worth decreased over $80,000. We’re still up a bit for the year so it’s not a big deal. I don’t worry about the stock market until I see at least 20% downturn. Then it will be a buying opportunity. Also, I finally found a renter for our rental condo! I screened over 20 potential tenants over 10 days. It was hectic. I’ll share this experience next time.
As for cash flow, everything looks good. Our income streams improved and we didn’t spend that much. Okay, let’s go over my 2018 Goals first and then I’ll share the details of our cash flow in February.
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 wait until summer, they just won’t get done. The first 2 months were slow. It’s hard for me to get much done in the winter. You can get a quick status update from the chart and see the details below.
- Increase our real estate crowdfunding investment to $100,000. We’re doing well with this goal and now have $38,000 invested. We’re low on cash, though. I’ll probably have to save up for a few months before I can invest in the next project.
- FI ratio > 100%.FI ratio is passive income/expense. Currently, our FI ratio is 41% in 2018. That’s very low, but it will improve. Our expenses were higher than usual because we just paid for our summer vacation to Iceland.
- Increase bond/cash allocation to 30%. Going to 30% bond/cash will beef up our opportunity fund. However, I’m not in a big hurry to do this because I think the stock market will go up this year. I plan to get it done before the end of 2018.
- Travel hack 100,000 points. I got a head start on this one from last year. It’s on the back burner for now. I’ll sign up for new cards later this year when we have a big expense.
- Minor Redesign RB40. WIP
- Blog 12 times at Fit by 40.This one is on track so far. It’s not an ambitious goal and I think it will help me stay on top of fitness. You can see how I started the site here – How to Start a Blog and Why You Should.
- Blog income $100,000.This one is going to be very difficult so I’m grading it on the academic system. Q1 is the best quarter for blog income and we did very well. I made $11,434 so far in 2018. You can see more detail on my Blog Income page.
- Join Toastmasters. February wasn’t a good month so I had to put this off until March.
- 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. Our rental condo is rented for at least a year so the earliest we will be able to consolidate is 2019.
- Visit Iceland. The trip is a go. We booked our flight tickets, lodging, and rental car. Iceland is a very expensive country to visit, but it should be a great trip.
Net Worth (+0.6% YTD)
I’ve been tracking our net worth since 2006 and it is very motivating to see the progress we’ve made. 2018 started off with a bang and we had a great month in January. However, the stock market turned volatile in February and we gave up almost all the gains. I expect that 2018 will be a good year for the stock market, but nobody knows how it is going to turn out. President Trump announced new tariffs on steel and aluminum and this could spark trade wars with other countries. It’s a going to be a wild ride this year.
My bet with Warren Buffett – I’ll benchmark our net worth against VFINX for 10 years starting in 2018. VFINX dropped 4% in February. Our net worth also dropped 2.5%. We’re pretty much even at this point.
Here is the picture of our net worth in February, on Personal Capital. Our net worth decreased over $80,000 in February. It looks a scary, but it really isn’t bad in the grand scheme of things. I know it will turn out okay in the long term so I’m not worried about the short term performance.
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2018 Passive Income ($4,795 YTD)
Here is a quick summary of our passive income. You can see all the details at my new Passive Income page. We’re off to a slow start in 2018 because one of our rentals was vacant. It’s occupied now so the passive income will start to look better in March. Things are looking up.
February 2018 Cash Flow
Our cash flow was very good in February. My blog income was great. March should look even better as the rental income and dividend income pick up. I think we did very well on the expense side too. We didn’t spend much money because we stayed home most of the month. The expense looked a bit high due to our upcoming summer vacation to Iceland. That was the only big expense we had.
Check out the Sankey diagram and see the details below.
Take Home Income (target > $10,000)
For 2018, our monthly take home income target is $10,000. February was a great month and we blew that target away. March should look a lot better too so things are going well here.
- Mrs. RB40’s paychecks:$5,839
- Blog Income:$5,954. You can read more details at 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:$340. Woohoo! Our rental condo is occupied. Read more at the Rental Property Passive Income page.
- Dividend Income:$661. The second month of the quarter is slow for our dividend income. It should look better next month. More details at my Dividend Passive Income page.
- Crowdfunding Income:$197. Real estate crowdfunding was good in February. This should pick up as the year goes on. 2 deals just closed and they will start paying out soon. Read more at my Real Estate Crowdfunding Passive Income page.
- Interest Income:$13.
Monthly Expenses (target > $4,800)
For 2018, our monthly core expense should be under $4,800, an increase of $300 from 2017. This does not include contributions to 401k, Roth IRA, and college savings. We didn’t spend much locally this month, but we went over budget just a little bit. We spent $5,307. Like January, the travel bill busted our budget again.
We’re going to Iceland in June with another family. I have known them since college and our kids were born just one day apart. We’re getting a van and renting Airbnb to fit our 2 families. It should be a lot of fun. Iceland is more expensive than any country I’ve visited, though. The van rental cost $1,700 for 10 days and that’s not including extra insurance. Food and lodging will be very expensive as well. I used up most of my travel hacking points last year so we’ll pay for everything this year. Next year, we’ll visit somewhere much cheaper, maybe in South America.
- Housing: $2,355. Our housing expense is getting expensive. This category is over 50% of our expense every month. There’s not much we can do at this point. This includes mortgage, HOA fees, and property tax.
- Groceries: $435. Our grocery bill was good in February. We ate very well at home and I cooked many delicious meals. I joined Instagram recently and have more food pictures to share. I hope you like them. Clockwise from top left – shrimp etouffee, shrimp taco with avocado slices and Parmesan cheese, gyro, and pad see ew noodles. Yummm!
- Cash: $0. We didn’t withdraw any cash in February.
- Transportation: $44. We share one car and we don’t drive much. I drop RB40Jr off at school in the morning and go grocery shopping on the weekend. That’s about it. We drive more in the summer when we visit local attractions.
- Kid: $35. We got a pizza for his birthday. We also picked up a puzzle game for our trip to Iceland.
- Pet: $0.
- Bills: $257. Electricity and insurance (auto, home, term life, and umbrella.)
- Health: $26. The only one in this category was the gym membership fee.
- Travel: $2,156. We booked our rental car and an Airbnb at Vestmannaeyjar.
- Clothing: $0. Mrs. RB40 wanted to buy some new work clothes, but she put it off until our condo was rented out.
- 401k: $3,390. I contributed $2,000 to my 401k. Mrs. RB40 contributed $1,390 to hers.
- College Savings: $2,600.
- Extra Savings: $1,706
Extra Savings: $3,972
2018 is off to a good start and our extra saving totaled $3,972 so far. This will go into our saving account to beef up our opportunity fund. We keep about $10,000 in cash as our emergency fund. Anything above this, I’ll invest opportunistically.
Here is what I plan to do with our opportunity fund in 2018.
- Invest more in real estate crowdfunding.
- Pick up some dividend stock if I see a good deal.
February 2018 Wrap Up
Overall, February 2018 was a great month for us. Our income was great. Our regular expense was good. Our Iceland summer vacation cost a lot, but that should be it until June.
March should be better on both the income and expense for us. Our passive income should increase and my online income is looking good too. Our expense should be back to normal because most of the Iceland vacation is paid for already. The stock market looks like it will continue to fluctuate. Nobody know what it’s going to do so we should focus on what we can control – our saving rate. The stock market will do well in the long term so don’t worry about the volatility. Anyway, stick to your plan and keep investing.
Did you have a good February? Winter is always a little slow for us. We like hunkering down at home and not do too much when it’s cold outside. I’m really looking forward to more daylight in March. Have a great 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.