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January Goals and Finance Update


For 2013, I’m going with a new format for our monthly cash flow posts. I’ll keep it more generic up top and add more detail at the bottom for readers who are interested. It should be easier to read and you don’t have to go through all the numbers unless you are curious.

January Highlights

  • 2013 Financial Goals: Contributed $11,000 to both Roth IRA accounts. This was pretty easy because I sold off some stocks near the end of last year and earmarked $11,000 for the Roth IRAs.
  • 2013 Financial Goals: Increased Mrs. RB40’s 401k. In January, Mrs. RB40 increased her contribution to take advantage of the increased contribution limit ($17,500 in 2013.) We should be good here.
  • Did not spend any money on gasoline! I filled up in late December and didn’t have to buy gasoline in January. We only drive once or twice a week now and it feels great to avoid the gas stations.
  • A positive month for the rental income. One of our tenants left in early December, but the place filled within the month so we didn’t lose too much income. We still have the drainage to deal with, but that’s on schedule and hopefully it will be done soon.
  • No new clothing challenge is still on track. I haven’t been tempted by anything yet.
  • Added a row for Estimated Tax in the expense sheet. Starting this year, I’ll have to pay estimated tax every quarter because the online and rental income will be a significant portion of our income. Previously, these income streams weren’t a big percentage because I had a W2 from my employer. I’ll withhold 20% for tax.
  • A rash of defaults at Prosper dropped my seasoned (over 10 months) ROI from 12% to 8%. 🙁 This month we only made $47 from peer to peer lending. This is below my $100/month target, but we’ll see if we can recover next month.

Net Worth

The SP500 gained about 6% in January. In comparison, our net worth grew about 3.5%, but that’s somewhat expected. Our net worth is not 100% invested in the stock market after all. Actually, that’s really good for just one month because my goal for 2013 is 7-8% net worth growth. I’m thinking about taking a lot of money off the table if February is as good as January and we hit that 7-8% goal early.

If you need help keeping track of your finances, try using Personal Capital to manage your budget and net worth. It can help you keep track of your income, expenses, and net worth, all in one place. Personal Capital is geared for investors and have many great tools. See my review of Personal Capital and how they helped me reduce what I’m paying in investment fees.

personal capital net worth


We did pretty well with cash flow in January. We didn’t have a lot of expenses and our income was good. Our saving for January is $1,376. We’ll allocate $500 to Baby RB40’s college education and split the rest between travel, fun money, and additional investment.

Piggy Bank

  • 529: $500
  • Travel fund: $250
  • Fun money: $250
  • For investment: $376

 Cash Flow

Jan Cash flow

Income (target > $4,500)

No big surprise this month. The rental, dividend, and P2P incomes are a little low this month, but they are all positive. The online income picked up the slack and we made enough to cross over the $4,500 income target.

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

We actually did very well with our expense this month. If we take out the tax, we spent around $3,000. That’s well below our $4,000 target. We didn’t do much in January and I even asked myself – Are we being too cheap? Can’t argue with the result though.

Wrap Up January

All in all, I’m quite happy with January. We didn’t spend much money and had a nice positive cash flow month. I think February should be good too. Of course, it is a short month. We’ll see how it goes. How about you? Did you have a good January? Any progress on your New Year Resolutions?


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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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{ 53 comments… add one }
  • Andrew Wong February 4, 2013, 12:55 am

    How do you generate online revenue? I’m planning to retire in 3 to 5 years from now and would love to learn more about your online income generation strategies. And thanks for the Personal Capital recommendation. They are working out much better than Mint.

    • retirebyforty February 4, 2013, 8:12 am

      I’ll PM you more detail, but it’s mainly advertising and writing on Retire By 40. I’m glad Personal Capital is working out for you. I like them a lot too.

      • Dividend Growth Investor February 4, 2013, 10:35 am

        So, if you are already retired, why do you need to contribute to a ROTH IRA 😉

        Sorry, I wanted to play devil’s advocate here.

        • retirebyforty February 4, 2013, 2:40 pm

          It’s just for more tax options in the future. Since we don’t plan to withdraw for a long while, why not move some money into a tax shelter? 🙂

  • My Financial Independence Journey February 4, 2013, 2:58 am

    Congratulations on the rental income. I remember back when you were losing money due to some major renovations.

    The Prosper returns are a bit disappointing. If that is 8% annualized, then P2P lending isn’t doing much different than average stock market total returns.

    January was a good for savings, but otherwise dull. Most of my savings went to my emergency fund. And the market kept flying up so none of my limit orders triggered.

    • retirebyforty February 4, 2013, 8:13 am

      You’re right about P2P. I need to keep an eye on it and figure out how to increase the returns. It’s a different asset class than the stock market though so it’s a good diversification.

      • Mrs. 1500 February 4, 2013, 1:59 pm

        Hello Mr. RB40. I just came across your site, and I really like it. My husband and I are starting to transition our portfolio to income-generating investments, and P2P is a large part of that. We use both Lending Club and Prosper, and initially we went with A and B loans, to play it safe. He is now starting to use Brave New Life’s strategy for investing (http://www.bravenewlife.com/08/lending-club-investment-strategy/) along with Lend Academy’s strategy (http://www.lendacademy.com/simple-investment-strategy-for-lending-club-and-prosper/) and is comparing them to his original low-risk (or so we thought) strategy. He, too just had a few defaults that sent his return way down.

        P2P is still a great diversification for our portfolio – even with the defaults we are still making money. His rate of return is 12%. Mine is still too new to accurately calculate.

      • My Financial Independence Journey February 4, 2013, 6:28 pm

        P2P is a different asset class, but I remember back when the 2008 recession hit and something like 30% of Prosper borrowers defaulted. If everyone loses their job, they’re certainly not going to be able to repay their loans.

        I have heard that Prosper (and probably Lending Club) underwent some substantial changes after the recession. It will be interesting to see if these changes make P2P investments more stable during economic downturns.

  • Mike February 4, 2013, 4:00 am

    January is always a slow month in many regards. Look at my ad revenue from mobile apps-the income is a little smaller then what it has been in the past few months. I am expecting this to bounce back in the next few months.

    • retirebyforty February 4, 2013, 8:14 am

      January was pretty good for us. Hopefully we’ll keep it up over the next few months.

  • Jane Savers @ The Money Puzzle February 4, 2013, 4:12 am

    We are experienced a few weeks of extreme cold and that has driven all my expenses up. The car has had to run for ten minutes while I chipped ice off the windows many days this month and I have been leaving early for work and driving around so the car can actually get warmed up and the battery can recharge.

    Every savings and investment account increased, if only slightly, but I am still very short on my goal of a minimum balance in the chequing account to avoid fees.

    I have some money set aside to try p2p lending but I am having trouble finding a reputable Canadian company.

    • retirebyforty February 4, 2013, 8:17 am

      We had a few cold days here too, but it’s not as bad as the East coast. Good luck with increasing your checking account minimum balance. Can you use a credit union or other banks instead? I hate paying a monthly fee.

  • Amanda L Grossman February 4, 2013, 4:53 am

    Great month!

    I actually have had my slowest month in the past several years of blogging…figures it would come at the same time that I quit my day job:).

    Here’s to a prosperous and fabulous February!

    • retirebyforty February 4, 2013, 8:18 am

      Oh no! I hope it picks up in February. Good luck!

  • Glen @ Monster Piggy Bank February 4, 2013, 4:58 am

    Why do you think that you lost so much on Prosper this month as opposed to other months? I really want to get into the whole P2P lending thing and any advice or experience you have would be both beneficial and appreciated 🙂

    • retirebyforty February 4, 2013, 8:19 am

      I think we are in the period of high default rate (6-10 months.) Hopefully the default rate will drop in a few months. I will write more about P2P soon. Thanks!

  • JC @ Passive-Income-Pursuit February 4, 2013, 6:45 am

    Hitting close to half your net worth goal for the year in one month is pretty nice. I’m glad the rental income is back on track and cash flow positive for you. I’ll have to look into Personal Capital a bit more, although I prefer the trusty old spreadsheet.

    • retirebyforty February 4, 2013, 8:20 am

      I use both Personal Capital and my spreadsheet. 🙂 I like the spreadsheet because it force me to pay more attention, but it’s a lot of work.

  • Michelle February 4, 2013, 6:48 am

    Glad the rental was filled within a month, that’s awesome! And I still think you did great with your net worth.

  • 20's Finances February 4, 2013, 9:11 am

    20% seems a little lower for estimate taxes. Is there a reason why you are setting that at 20%? I paid quarterly taxes last year at 33% of net revenue and I was too low. I’m thinking of bumping it up to 40% as that would be closer to the 25% + 13.5%.

    • retirebyforty February 4, 2013, 2:38 pm

      I was just looking at the bracket and assumed I’ll just have to pay on top of my wife’s income. I need to do a bit more research on this since I haven’t done it before. A little low is ok as long as I don’t have to pay penalty.

  • Edward Antrobus February 4, 2013, 10:55 am

    Congrats on not having to buy gas once last month. I just realized that over the past 9 weeks, I’ve had to buy gas 10 times!

    • retirebyforty February 4, 2013, 2:40 pm

      Wow, 10 times? That’s a ton of money!

  • Sustainable Life Blog February 4, 2013, 12:39 pm

    Looks like you had a pretty uneventful month joe – which I think is a good thing when PF is concerned. Nice work on getting the spending down and keeping up with the goals.

    • retirebyforty February 4, 2013, 2:41 pm

      Uneventful is good. We’ll have more fun when the weather is better. Thanks!

  • Bill Jones February 4, 2013, 1:14 pm

    First, thank you so much for this blog. I sincerely appreciate your transparency and insights. Second, how in the world do you get >$1400 in one month via this blog? I can’t figure it out. I’ve been blogging for a while and I’m lucky to get $10 a month. I would love an explanation from you on this.

    Thank you!

    • retirebyforty February 4, 2013, 2:43 pm

      A few affiliate network just paid this month. The payments were stuck for a couple of months last year. I’ll PM you more info.

  • Kathleen, Frugal Portland February 4, 2013, 1:45 pm

    Good month! Keep up the great work!

  • Integrator February 4, 2013, 3:39 pm

    Nice job on the online income! Hopefully that will pick up strong for you over the course of the year.

    I’m still a prosper skeptic. I know some people have had some good success with limited defaults, but we are still in a rough economy with close to 8% unemployment, you should expect default rates that are typical for general consumer lending, no better than that i’d argue.

    • retirebyforty February 5, 2013, 10:38 pm

      The return looks good when you’re starting out because the defaults haven’t shown up yet. I’m refining my investment strategy and hopefully will be able to stabilize around 10% at some point.

  • Lance @ Money Life and More February 4, 2013, 4:22 pm

    Seems like you’re doing great without the corporate income 🙂 Keep up the good work Joe!

  • [email protected] With a Few February 4, 2013, 4:57 pm

    Amazing job this month! I am totally impressed! No gas money..a dream!

    • retirebyforty February 5, 2013, 10:40 pm

      Thanks! I just filled up last weekend and gas price is going up again. 🙁

  • krantcents February 4, 2013, 5:45 pm

    Good job! Your P2P return is not all that bad considering the risk. Were you ale to increase the rent when the tenant moved out?

    • retirebyforty February 5, 2013, 10:42 pm

      Yes, we increased it $25. I would be quite happy if we can keep increasing $25 per unit every year.

  • Jefferson @SeeDebtRun February 5, 2013, 5:28 am

    its a shame you have had a rash of defaults on your prosper loans lately… but glad that you are still in the green.

  • Moon February 5, 2013, 9:19 am

    We are doing so far so good. We have been under our credit card budget for 6 months and I plan on keeping it up!

    We also plan on maxing out both of my husband and my Roth IRAs so far it’s on track since I simply raised the monthly contribution. We also sponsored a child through World Vision (one of my resolution is to make a monthly donation to a charity), paying off student loan is on track also (in fact I am considering tripling our payment in April to move up the paid off day for 2 months since we will receive 3 paychecks in March).

    Originally I plan on increasing both of our 401K contribution for 3% (each) once student loan is paid off. But now we have an idea about buying a rental property so I am thinking if I should just put the extra money into money market and save for a good downpayment. What you do think, Joe, about this trade? We both contribute a decent % already on our 401K (12% on mine and 10% on my husband, and he makes quite a bit more than I do), and we have a good cash cushion too but I don’t want to spend a majority of it on the downpayment. I am thinking about buying a brand new property (people like new houses!). We never had an investment property before and that idea makes me nervous. Although I do feel that in order to retire comfortably I need the passive income besides our regular income from our job. Any insights are appreciated!

    • retirebyforty February 5, 2013, 10:47 pm

      Great job in January! I think investing in a rental property is a great idea. Most banks want 25% down on investment properties though so it might be difficult to finance on less. You can move into a new house and rent out your current home. That’s a good way to start investing in rentals. You know your old home very well and know what needs to be done to maintain it. It will also be much easier to finance a new primary residence rather than an investment property. Good luck!

      • Moon February 6, 2013, 6:48 am

        Thanks for the insight Joe! We should be able to put down 25% sometime next year. We don’t plan on moving into this new house we are going to buy (since our current house is much nicer), we are picking a smaller/cheaper house to rent out. The house will be in our neighborhood but on the other side of the main road so it will be VERY close by. Do you have any concerns buying a brand new home to rent out? In our area I don’t see any rental properties that are built after 1990. I just thought by having a brand new house to rent out will attract more people and probably can get better rent since everything is more up-to-date(and I don’t have to worry about spending money on repairs for a few years).

        • retirebyforty February 7, 2013, 8:46 am

          I don’t know enough to comment about renting out a new house. It might be hard to get renters because the price will be higher. That’s the only thing I can think of.

  • Financial Samurai February 5, 2013, 2:24 pm

    One of my goals is to try and grow my net worth faster than the S&P500. I’m not sure if it’s working, but we’ll see at the end of the year.

    Nice job with your stock portfolio returns!


    • retirebyforty February 5, 2013, 10:48 pm

      That’s a great goal. We were able to beat the S&P500 last year, but that’s mostly due to new money. I think it will be very difficult this year because our income is much less and we won’t be able to invest as much. Good luck!

  • Julie @ Freedom 48 February 5, 2013, 6:31 pm

    Great job in spending ZERO on gas! And here I thought we were doing well. We share one vehicle and only drive 8kms each way to work. However we fill up once or twice each month… which costs us $75 each time. I like $0 better!

    • retirebyforty February 5, 2013, 10:49 pm

      Thanks! I had to fill up last weekend though.
      Gas price is going up already. 🙁

  • Brian February 7, 2013, 3:33 pm

    I may have missed this, but where do you account for expenses such as car/home insurance, grocery costs, gas/electric/internet costs or is that all in your bills line? The no spending money on gasoline must be nice, my last fill-up was $4.09 down her in San Diego.

    • retirebyforty February 7, 2013, 11:37 pm

      The groceries come out of our cash allowance. Everything else is in the bills line. $4.09 is pretty expensive. Last year some places went up to $5, right?

      • Brian February 12, 2013, 12:36 pm

        yep, and it was $4.29 on Sunday =(

        I did switch from my 21% chevron to a 10% amex with 6% cash back so at least I’ll get a little of it back.

  • Brick By Brick Investing | Marvin February 7, 2013, 5:50 pm

    I suffered the same fate with P2P lending back in 2008. Everything started out perfect then defaults started happening left and right. My biggest problem with the default process with P2P is they do an awful job collecting.

    • retirebyforty February 7, 2013, 11:39 pm

      You’re right. I haven’t seen any recovery from the defaults yet. I’ll give P2P one more year. If it goes below 8%, it’s probably time to try something else.

  • JT February 8, 2013, 6:41 am

    Sorry to hear about the Prosper defaults. You could probably guess that I keep a close eye out on that. Still, 8% return in a diversified asset class is not bad. If the economy doesn’t get worse, then it should stabilize. The problem is that if things tank, stocks, P2P and real estate could all tank at the same time. That’s when it is good to have a cash cushion to get through those tough times.

    I am also envious of not having to purchase gas.

  • Evan February 12, 2013, 8:35 am

    Can’t believe you were able not to fill up your car! AMAZING. Any plans to build additional income streams or just keep adding to the ones you currently have (either invest more or pay down debt)?

    • retirebyforty February 13, 2013, 10:59 pm

      I’m just trying to grow what I have for now. Once the kid goes off to school, I’ll definitely try to build more income streams.

  • Saverocity February 24, 2013, 1:53 pm

    I’m envious of the passive income streams, mine are a quite a bit behind that.. was wonder about costs though – when you are balancing your monthly costs are those inclusive of every regular expenditure? I’m thinking big things like groceries etc…

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