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February 2013 Goals and Finance Update


February Highlights and Lowlights

  • 2013 Financial Goals: No progress in February. It’s a bit disappointing because we did so well in January by maxing out the IRA and setting up Mrs. RB40’s 401(k).
  • 2013 Personal Goals: I tried several new beers in Feb. and met up with local bloggers for a drink. Hopefully I can do this on a monthly basis. I need to get out of the house once in a while.
  • Problem with the rental home. The tenant gave me a bad check. 🙁 After working with them a bit, it turned out that they can only pay half the rent in February. They promised to pay the rest plus fees in March so we’ll see. Being a landlord isn’t all fun and game.
  • Online income was big in February. Online income exceeded all expectation in February. A couple of checks from last year came in and they gave us a big boost. This more than made up for the low rental income this month.
  • A rash of defaults at Prosper continues. This month we only made $20 from peer to peer lending. This is a far cry from my $100/month target. I made some changes in the way I invest so we’ll see if that helps.

Net Worth

The S&P500 Index increased from 1,513 to 1,518 in February, basically no gain although it was a very volatile month. Our net worth didn’t changed much either (+0.04%) and I’m happy that at least we came out ahead for the month. The first few days of March are looking nice though – see graph below.

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personal capital net worth


We did very well with cash flow in February. We didn’t have a lot of expenses and our income was better than normal. Our saving for February is $2,322. We’ll allocate $600 to Baby RB40’s college education and split the rest between travel, fun money, and additional investment/slush money.

Piggy Bank 2013

  • 529 fund: + $600 = $1,100. The market seems a bit frothy right now so I’m keeping this is fund in our saving account. I will send it over when I see a good buying opportunity.
  • Travel fund: +$500 = $750
  • Fun money: +$250 = $500
  • Investment/Slush Fund: +$972 = $1348

Estimated Tax

  • For Uncle Sam: +$1,463 = $1,921. I increased the withholding from 20% to 30%. I think a reader suggested 40% withholding, but that seems high to me. 

Cash Flow

February cash flowIncome (target > $4,500)

We had some bumps and bruises this month, but we came out well ahead at the end.

  • Rentals: At least, the rental income was positive ($96) even with only half the rent from the rental home. Next month won’t be much better because we just finished repairing the drainage at the 4 plex and I’ll have to pay a big bill in March.
  • P2P lending was very disappointing with only $20 positive. We’ll see how the rest of the year pans out. Here is an update I wrote recently – Peer to Peer lending isn’t as passive as I thought.
  • Dividend and interest got back in line with expectation at $538.
  • Online income gave us a huge boost in February. I don’t think we’ll see this level of income very often. Everything seems to be slowing down now so I expect March and April to be more normal ($500-$2,000.)

Expense (target < $4,000, not including tax)

We actually did very well with our expense this month. If we take out the estimated tax, we spent around $3,000 again. That’s well below our $4,000 target. February was quite rainy so we didn’t spend much money. Spring is coming soon and hopefully we’ll be able to keep our expense low as the weather warms up.

Wrap Up February

February was a good month for us overall. We had a big surplus month, but I think March is going to do a number on that surplus. Anyway, that’s next month and I’m just going to enjoy a good cash flow report for now.

How about you? Did you have a good February? Any progress on your New Year Resolutions?

See the January Update if you’re interested.

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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, he hated the corporate BS. He left his engineering career behind to become a stay-at-home dad/blogger at 38. At Retire by 40, Joe focuses on financial independence, early retirement, investing, saving, and passive income.

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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{ 33 comments… add one }
  • papadad March 6, 2013, 1:15 am

    I had a renter like that once — paid half a month…then basically perpetually fell behidn, ie, never caught up. Got worse and worse over time. In the end it took 6 months to evict her, she wound up owing me several thousand dollars in back rent and had to sue in small claims court. Small claims ruled me a debtor in line and would NOT allow me to charge interest while the debt remains unpaid – apparently she had done this to others, knew the law well enough to know that with 2 kids, it would be court favoring her against the “cruel landlord” and she had other landlords who were previously in line to get repaid….4 years later I have yet to get a penny back. Deadbeat renters suck — lesson learned is that nice guys finish last….hit them with overdue penalties and dont be afraid to threaten eviction to the extent the law allows if they dont get current quickly. The issue is that you may be stuck for months with them not paying rent but in your place, which becomes lost income….since often it’s difficult to get a settlement from them (especially with the uber-liberal oregon tenant laws)….

    On a broader level – is a deadbeat renter, and prosperity.com defaults both a sign of a downturn in the economy (main street diverging from wall street) ? Caused by Payroll tax increase causing less discretionary income? Other? What do you think ?

    • retirebyforty March 6, 2013, 3:34 pm

      Ugh… I did not want to hear that. I’m building paper trails now in case I need to deal with the eviction. They were pretty good tenants until now though so I have high hope.
      It seems the economy is picking up. The news are good and companies are hiring. I guess the payroll tax would hurt a bit, but it’s just a few dollars in the scheme of things. I only notice a small decrease in our income.

      • sin camisa March 6, 2013, 4:43 pm

        Payroll tax affects discretionary spending, not the roof on your family’s head. If there was no layoff, there could be an unexpected medical or repair bill.

        • retirebyforty March 7, 2013, 8:01 am

          I agree. But some people live paycheck to paycheck though. That’s not a good way to handle your finance.

          • so March 7, 2013, 1:27 pm

            Toss them if next month is not full and on time.

  • Carrie @ LPOHH March 6, 2013, 4:51 am

    I know all about deadbeat renters and feel your pain! I hope yours don’t turn out to be true deadbeats. Our current renters had trouble paying their rent in full, on time so we divided their rent in half to coincide with their bi-weekly paychecks. It’s working out better this way, but they’re still not perfect. At least they answer the phone when I call them though. We’ve had others that tried their best to avoid us when the rent came due and they couldn’t pay. Good luck working that out!

    • retirebyforty March 6, 2013, 3:35 pm

      That’s a good idea. I will keep that in mind. Hope they get caught up soon though.

  • Glen @ Monster Piggy Bank March 6, 2013, 6:12 am

    I was sure your luck was going to turn around with prosper. Hopefully it is a short run of defaults and soon things will get back to the way they should be.

    • retirebyforty March 6, 2013, 3:36 pm

      Thanks. I will keep a close eye on them.

  • Moon March 6, 2013, 6:33 am

    I think we did really good in February too, afterall it is a short month!. Mint.com told me that our net income is about $2,500. We won’t be able to keep some of our new year resolutions this year, but for a good reason. We originally planned to increase both of our 401K contributions, but now we actually lowered them to the matching only (husband: 5%, mine: 6%) because we want to save up extra $1000 per month for the rental property downpayment that we just signed the contract on. So hopefully this is just temporary and once the rental is closed, we will bump them back up. With that I know we will hit our emergency fund goal way sooner but a good chunk will be gone when the house is closed! Also with that I am definitely not getting plantation shutter for the house this year, nor we are going to Boston – I am trying to substitute a scenic steam train ride in East Texas (We live in Houston) during the memorial weekend. It’s not the same but we are willing to make scarifice so we can put ourselves in a better position.

    • retirebyforty March 6, 2013, 3:37 pm

      Sounds good. How about liquidating some stock position to help with the down payment? Stocks are high right now and it might be a good time to cash out a little bit.

  • Jane Savers @ The Money Puzzle March 6, 2013, 6:47 am

    Progress on debt repayment is frustrating slow and I have a bad case of debt fatigue.

    There were little improvements in February but things are moving so slowly that I am attempting an extreme budget maneuver for March and April to keep me motivated with big results.

    • retirebyforty March 6, 2013, 3:38 pm

      Sorry to hear that. Maybe you need a month off to regain your composure. I guess going extreme is another way to go, but wouldn’t that make you more fatigue?

  • writing2reality March 6, 2013, 7:24 am

    I wouldn’t worry too much about the P2P lending! I think you will bounce back well from your defaults!

    Good luck with the upcoming challenges and expenses in March!

  • nicoleandmaggie March 6, 2013, 8:22 am

    I didn’t have traditional new year’s resolutions next year, but I had a nagging list of things that I’ve been putting off for ages. In Jan I finally got a flu shot. Next week (over Spring Break) I will do the other three things on that list. I have appointments set up for two of them and plan to do the third next Wednesday.

    We kept our spending down last month for our February Challenge. http://nicoleandmaggie.wordpress.com/2013/03/04/what-did-i-learn-from-the-february-challenge-and-a-mortgage-update/

  • John S @ Frugal Rules March 6, 2013, 9:15 am

    Great work with the online income! We had a very good February, almost too good. We were slammed with business, but that’s a good problem to have I guess. 😉 The nice thing is that we should be able to sock away a little extra in our savings that we would not have been able to otherwise. From the first two months of the year, it looks like it’s going to be a good 2013 for us.

    • retirebyforty March 6, 2013, 3:39 pm

      February was pretty crazy. I’m quite worn out so a slower March is OK with me.

  • krantcents March 6, 2013, 10:35 am

    My approach for this year is different, no monetary goals. Instead I renewed my commitment to the writing and I am seeing a positive trend. I expect as the numbers go up, the dollars will too.

  • Nick March 6, 2013, 11:26 am

    Good job on your savings goal and increasing your net worth. My major goals this year are getting in our house and putting our yard and fence in!

    • retirebyforty March 6, 2013, 3:41 pm

      Good luck with the house. It’s a lot of work.

  • justpayitoff March 6, 2013, 11:39 am

    how do you keep your bills so low? under $300? are these just for utilities? what about insurances – health/life/accident etc. do you have those too?

    • retirebyforty March 6, 2013, 3:42 pm

      Those are just utilities, insurance, and cell phone bills. Our utilities is pretty low. In Feb, we paid about $75. Our place is small so we don’t use a lot of energy.

  • Mike March 6, 2013, 1:15 pm

    Looks like you have gotten a few things going on this month-but just keep working towards goals and somehow things tend to fall into place like they should! The P2P lending might be something that you have to watch-have you tried looking at whether Prosper allows you to sell the notes to a collector or something like that?

    • retirebyforty March 6, 2013, 3:43 pm

      Thanks. I can sell loans on Prosper, but only the ones that are on time. If they are late, you can’t sell them. Seems a little silly to me.

      • Mike March 6, 2013, 4:05 pm

        Hmm…it was worth a shot though. Maybe you’ll have better luck the next few months. Lending Club seems to do the same thing as Prosper (earn good interest for a few months, then have a plethora of defaults, then better interest rates, etc…).

  • sin camisa March 6, 2013, 2:28 pm

    Joe; what does cash allowance cover? does it include groceries? Is the tax you are keeping aside for the online income? I see you don’t put money aside for Life and car insurance; I assume you just let whatever month they are due take the hit, correct?

    • retirebyforty March 6, 2013, 3:44 pm

      Cash allowance covers groceries and discretionary spending like eating out and clothes.
      The estimated tax is for online income, dividend, P2P lending, and rental income.
      We pay the insurance monthly so that’s in the bills row.

  • Financial Samurai March 6, 2013, 4:10 pm

    Big bucks for online income in February! Nice job! Drinks on Joe at Fincon perhaps? 🙂

    • retirebyforty March 7, 2013, 8:00 am

      I don’t think I’m going to make it this year. I’m already going to WDS this year.

  • Laurie @thefrugalfarmer March 7, 2013, 4:11 am

    Great job in Feb! Congrats on the high online income! We did well in Feb. too, although we exceeded our expenses on groceries and gas a bit. This month is shaping out to be better, though.

  • Brick By Brick Investing | Marvin March 7, 2013, 5:26 pm

    Congrats on the online income. February looked like a great month for you. Sorry about the Prosper defaults, that is what happened to me and is why I know longer invest in P2P lending.

  • JW @ VisualFin March 7, 2013, 8:32 pm

    Your online income for February is very impressive. Do you mind sharing what that primarily consists of?

    As far as renting, you must be in state that favors renters. I rent out a house in a state where renters have very few rights. I was able to evict a tenant in less than a month and that consisted of a delay due to snow.

  • Shawn @ PipsToday March 8, 2013, 9:13 pm

    Congratulations on the online income! Great work done in Feb, keep it up. I’m impressed with your online income. Yes, My February was good not bad. My New Year Resolutions on progress. I will make the savings goal but it is time to shift all hard work towards the land expansion, to reach the 20% net worth raise goal!

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