January is over! We were sick on and off for about 3 weeks, but we’re all much better now. It was a very slow month and we spent most of our days at home. Mrs. RB40 enjoys these slow winter days because she can catch up on some of the things she’s been meaning to do. The summer months are so much busier for us because there are so many activities to do. Anyway, it wasn’t an exciting month at the RB40 household. We went out to eat a few times and that was about it. Oh, Mrs. RB40 took me to see The Book of Mormon. That was a lot of fun, but there were many cringe worthy moments. Mrs. RB40 should have told me the show was from the creator of South Park. I’d have expected plenty of offensive jokes, then.
On the financial front, January was a great month for investors. The stock market shot up most of the month and went down a bit over the last few days. The pullback probably will continue for a bit, but I’m not worried. The economy is still doing great so I think the stock market will come around. I’ll keep contributing to my 401k and not worry about the stock market blow off too much. We did very well in January and I hope February will turn out equally well. Okay, let’s go over my 2018 Goals first and then see how we did with our cash flow in January.
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. January was pretty slow. 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. 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 39% so far in 2017. That’s very low, but it will improve. Q1 is a slow passive income month. Our expenses were higher than usual as well.
- 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’ll try 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 in January. You can see more detail on my Blog Income page.
- Join Toastmaters. WIP
- 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 probably take more than one year.
- Visit Iceland. The trip is a go. We booked our flight tickets and some rooms. Iceland is a very expensive country to visit, but it should be a great trip.
Net Worth (+3.4% YTD)
I’ve been tracking our net worth since 2006 and it is very motivating to see the progress we’ve made. 2018 is off to a great start. Our net worth gained 3.4% in just one month. That’s big. February has been bad so far, but I think it will turn around.
My bet with Warren Buffett – I’ll benchmark our net worth against VFINX for 10 years starting in 2018. VFINX had a great month and outpaced our net worth by a huge amount (5% vs 3%.) The smart money would be on Warren Buffett. However, I think we still have a chance. This is just the beginning of the race.
Here is the picture of our net worth from the beginning of the year, on Personal Capital. We’re doing well so far.
*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 ($2,403 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 is vacant. I’m sure it will pick up, though. I met a very good prospect this weekend and the condo should be rented very soon.
January 2018 Cash Flow
Our cash flow was very good in January. Mrs. RB40 had 3 paychecks which gave us a big boost. My blog income was also excellent. Our expenses were higher than usual, though. We spent more than usual on health and travel. 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. January was a great month and we blew that target away. Mrs. RB40 had 3 paychecks so that helped tremendously. The only big issue was the rental income. Our rental condo has been vacant so it is hurting our bottom line. I raised rent a bit on our duplex and that helped a bit. At least, we have positive cash flow even with one unit empty.
- Mrs. RB40’s paychecks: $9,684
- Blog Income: $7,199. You can read more details at my Blog Income page.
- Rental Income: $106. I hope to get the unit rented by early March. More details at my Rental Property Passive Income page.
- Dividend Income: $941. Everything looks good because the stock market is doing well. More details at my Dividend Passive Income page.
- Crowdfunding Income: $100. Real estate crowdfunding did very well, but P2P lending was negative in January. Read more at my Real Estate Crowdfunding Passive Income page.
- Interest Income: $15.
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. This month, we went over budget quite a bit. We spent $6,284. The travel bill busted our budget.
In January, we had spent more than usual in health and travel. We visited our dentist for a routine checkup and cleaning. I also went to see my optometrist and ordered a pair of computer glasses. My eyes are getting older and I need a separate pair of reading glasses. My right eye gets blurry by the end of the day with my current single vision glasses. Pretty soon, I’ll need a pair of progressive glasses. 8(
As for travel, 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 go somewhere cheap.
- Housing: $2,355. Our housing expense is creeping up due to property tax and HOA fee increases.
- Groceries: $381. Our grocery bill was surprisingly low in January. We ate very well at home and I even cooked a Chinese BBQ duck for New Year. Junior loved it.
- Cash: $100.
- Transportation: $76. 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: $68. Junior signed up for soccer in spring.
- Pet: $20.
- Bills: $274. Electricity and insurance (auto, home, term life, and umbrella.)
- Health: $594. We visited our dentist. I also visited my optometrist and ordered a new pair of glasses. This category includes gym membership, new electric toothbrush, and vitamin D.
- Travel: $2,141. We got our flight tickets and a cabin near Skaftafell National Park. Next month, we’ll book the rental van and the rest of our lodging.
- Clothing: $275. Mrs. RB40’s work clothes.
- 401k: $4,085. I contributed $2,000 to my 401k. Mrs. RB40 contributed $2,085 to hers.
- College Savings: $2,000.
- Extra Savings: $5,676
Opportunity Fund: $4,880
2018 is off to a good start and we have an extra $5,676 to play with. This will go into our saving account to beef up our opportunity fund. We keep about $15,000 in cash as our emergency fund. Anything above this will be use opportunistically. Our opportunity fund is very low right now because I just contributed $11,000 to our Roth IRA.
Here is what I’d like 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.
- Actually, I think we’ll owe some taxes this year. It will come out of this fund also.
January 2018 Wrap Up
Overall, January 2018 was a great month for us. Our income was great. Our expenses were higher than usual, but that’s all right. I’ll work on keeping our expenses under control for the rest of 2018. We still have 11 months left to average it down so I’m not too worried.
Iceland will be an awesome trip and we’re all looking forward to it. I just wish we could have travel hacked a bit better. Apparently, Iceland is so popular in the summer that we have to book as soon as we settled on the date. We didn’t have time to apply for a new credit card and put these charges on it. Oh well, I’m sure there will be other opportunities to spend money this year.
February should be fun with the stock market gyration. Our portfolio dropped 3.55% last week according to Personal Capital. We’re still up for the year and I don’t think the stock market is quite ready to blow off yet. I’m pretty sure it will recover and pushes higher. Anyway, stick to your plan and keep investing.
Did you have a good January? 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 hoping for nicer weather soon, though.
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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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