Whew, what a busy month July was. We went to visit Mrs. RB40’s family in California, went hiking in a lava tube at Mt. St. Helen, and generally enjoyed the summer. I love summer in the Pacific Northwest. The weather is hot, but it is still much better than many other parts of the US. In contrast, the California desert was almost unbearable. The AC was a lifesaver down there. That’s one of the reasons why I prefer to travel in November. Portland would be cold and dreary so going out of town would be an escape.
Sadly for RB40Jr, summer is coming to an end rapidly. Mrs. RB40 already started shopping for school supplies. Our public school begins on August 30th. Woohoo! I can’t wait for our kid to go back to school. Spending the summer with him is a lot of fun, but I’m ready to have more time for myself again.
Also, check out my 5 Years After Early Retirement Update. I left my full time job in July 2012 to become a stay at home dad/blogger. Early retirement has been amazing and these last 5 years flew by. Unexpectedly, ER gets better and better every year. It sounds too good to be true, but early retirement is pretty fantastic.
On the financial front, July was a pretty good month. Our income was good, but our expense was higher than usual. We usually spend more money in the summer because there are so many fun things to do. Once school starts, our expense should drop a bit. In July, the big expenses were RB40Jr’s activities, our CA visit, and Mrs. RB40’s professional clothing.
Okay, let’s go over the 2017 goals first and then see the details of our cash flow in July.
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At the end of July, the year is 58% over. We’re in the second half of the year now and we need to keep pushing to accomplish our goals. This is pretty tough in the summer because there are so many things to spend money on. In particular, my fitness goal suffered from the unstructured schedule. RB40Jr is out of school so it has been very difficult for me to go to the gym. That’s all right, though. We all need time off. School will start pretty soon and I’ll get back to my regular workout program.
Here is my goal tracking spreadsheet. We’re looking really good except for the Pinterest goal and the site redesign. I gave up on Pinterest, but I’ll keep tracking it for the rest of this year. I’m still planning on the redesign, but I think it will be a minor update instead of a big redesign.
- Save $50,000 in our tax advantaged account– We’re doing very well here and have saved $39,815 in our 401(k) and the 529 college fund. We’re also done with our Roth IRAs contributions in 2017, that’s $11,000 for both of us. We’re way ahead on this goal and should complete it soon.
- Dividend Income $11,500– I’ll update our passive income post next week and you can see the details there. In the first 7 months of 2017, we received $6,719 in dividend. We’re right on pace at 58%, that’s great! We should be able to complete this goal by the end of the year.
- FI ratio > 78% – This is passive income divided by expense. Currently, our FI ratio is 85%. That’s ahead of our target and I’m quite happy with it. The FI ratio has been decreasing a bit because our expense is higher in the summer. We’re still doing better than expected so I can’t complain.
- Net worth gain > VFORX– Our net worth gained 7.9% so far in 2017. That’s really good after 7 months. However, it is 4% behind our benchmark. The VFORX (Vanguard’s 2040 fund) is up 11.7%. That’s insane! We’re behind, but I’m not going to worry about it too much. I’m happy with 7.9%. Next year, I probably won’t bench mark our net worth against anything.
- Move RB40Jr’s 529 plan to Vanguard – Finished! You can read about our 529 plan transfer here.
- Move Mrs.RB40’s IRAs to Vanguard – Finished!
- Online income > $36,000/year– My online income has been incredible this year and I made $44,654 so far. I marked this goal finished at the end of June! I made more in 6 months than the whole 2016 blog income. I’m really grateful to you, our readers. Thank you!
- Redesign Retire by 40– This one is a huge job and it is very daunting. I did some investigation in May, but couldn’t find a layout I liked. I’ll keep working on this. The redesign will be put on ice for the summer because I don’t have time to work on it. It will probably be an update instead of a big redesign.
- Pinterest > 25,000 visits– I gave up on this one. I haven’t been able to grow our Pinterest traffic and it’s just not my thing. Pinterest is not fun for me at all. Mrs. RB40 will be our media person when she retires from her full time work.
- Fitness – July was another tough month for fitness. RB40Jr is out of school so I can’t go the gym much. We also traveled and I got sick. Consequently, my steps per day dropped to just 6,670 in July. July is the first month it went below my goal of 7,000 steps per day. Oh well, I’ll resume working out regularly when school starts in September.
- Start a new site – I started a new site with a focus on fitness– Fit by 40. There isn’t much traffic, but that’s okay. I’m using it mostly for self motivation. It’s working really well and I’m much more active this year than in 2016. I don’t know why blogging helps so much, but it works for me. The site is on hiatus until summer vacation is over.
- Join Toastmasters – This one is scheduled for the 2nd half of the year after school starts.
- RB40Jr’s after school programs – RB40Jr is now going to Wushu (Chinese martial art) classes and soccer. He doesn’t like them because group activities are difficult for him. He’d rather stay home and goof off, but he needs to learn to be a part of a team. I hope these activities will help him develop more grit.
- See the total solar eclipse – The eclipse is only a few weeks away and we’re really looking forward to it.
- National Park – We visited Fort Vancouver National Monument over spring break. That’ll be it this year…
- International Trip – We are heading to Cancun in November. It should be a cheap trip because we have plenty of reward points to use on flights and accommodations. We got 4 free nights at a Hyatt so I’m going to book a room at the Hyatt Ziva. We’ve never been to an all inclusive resort before so it’d be interesting to see if we like it. Normally, we like to mingle with the locals.
Net Worth (+7.9% YTD)
I’ve been tracking our net worth since 2006 and it is very motivating to see the progress we’ve made. For 2017, I’ll benchmark our progress with the Vanguard Target Retirement 2040 Fund, VFORX. Their current allocation is about 52% US equity, 35% international equity, and 13% bonds. I thought this was a good measuring stick and we should be able beat it. Now that we’re more than half way through 2017, we are way behind at -4%! VFORX is killing it this year.
Anyway, our net worth is up 7.9% in the first half of 2017. That’s really good at this stage of our life. I’d be extremely happy to get 10% gain in 2017. We are a bit behind VFORX, but it isn’t a big deal to me. Next year, we’ll probably just avoid benchmarking altogether. It doesn’t seem to add anything useful.
Here is the picture of our net worth on Personal Capital. Zillow increased the estimate on our properties so this chart looks great. I haven’t changed my personal spreadsheet yet, though. Valuing real estate is always tough. The big movements are the 529 plan and Mrs. RB40’s accounts being transferred.
If you need help keeping track of your finances, try using Personal Capital to help manage your investment accounts. We have many accounts and Personal Capital shows me the big picture. Also, I’m a huge fan of their awesome retirement calculator. You can read my review here – The Best Free Retirement Calculator.
July 2017 Cash Flow
We had a good month with our cash flow in July. We spent more than usual, but our income was high enough so we didn’t have to worry about it. Let’s go over the details.
Take Home Income (target > $5,000)
Our take home income target is $5,000 and we came in above that at $9,115. All our income streams performed well and we just need to keep this up.
Mrs. RB40’s paycheck: $5,082. Mrs. RB40 is doing very well at her day job. She got a raise earlier this year and she is bringing in great income and benefits. That’s one reason why she isn’t ready to quit working full time yet. She also doesn’t want to deal with health insurance uncertainties at this point. Her employer sponsored health plan is working really well for us.
Rental income: $913. I just fixed the sidewalk at our duplex. It’s a temporary fix and I hope it holds for a few years.
Online Income: $6,010. My online income was good in July. This year I’m focusing on increasing our income so Mrs. RB40 can retire sooner. I’m placing more affiliate links and focusing on writing relevant articles that will be helpful to investors. Here is how we generated online income last month.
- Banner ads: $2,258. These are the banner ads you see on Retire by 40. I hope to make about $1,500/month from these ads.
- Affiliates: $3,760. These are referral fees from affiliate links. If a reader signs up for a service through our affiliate link, then we sometimes earn a referral fee. One example is the Personal Capital link at the net worth section above.
- Brand promotion: $291. I’m cutting way back and probably won’t make much money in this category going forward.
- Expenses: -$306. Internet, email service, CDN, cell phone, meals, etc…
Starting a blog is a great way to build your brand and generate some extra income. Thank you for your support!
Dividend income: $978. You can see our dividend portfolio here.
- P2P lending: $6. I’m slowing getting out of P2P lending. I just don’t think they will do well when the economy turns south.
- Realty Shares:$0. I funded my first deal at Realty Sharesearlier this year. It’s a commercial property in Arizona. I like RealtyShares and I’m saving up some cash to invest in another property.
- KickFurther: $0. Currently, I have about $800 invested at Kickfurther. Kickfurther is similar to P2P lending, but investors lend to small businesses instead of individual borrowers. The big difference here is the money will be used to fund inventory. I’m also getting out of this one. Small businesses have way too many problems. You can read more about them next week when I go over our passive income.
Pre-tax savings: -$3,890. I sent $1,500 to my solo 401k. Mrs. RB40 saved $1,390 in her retirement account. We also send $1,000 to our kid’s Oregon 529 plan in July.
Expense (target < $4,500)
Our monthly expense target was $4,500 per month and we spent $5,131. Summer is more expensive than normal because there are so many things to do. In July, we flew down to California to visit Mrs. RB40’s family. Another reason why we spend more money in the summer is because school is out. I’m sending RB40Jr to half day camp every other week because I need a little time to myself. Mrs. RB40 also purchased a few pieces of good quality clothing for work. It should be back to normal for us once school starts.
Housing: $2,289. This includes the mortgage, HOA, and property tax. Housing is a huge part of our monthly expense. We may have to move to a cheaper location to reduce this expense.
Cash Allowance: $100
Groceries: $434. This is good for a family of 4. My mom is staying with us for a while. I’m pretty happy as long as we keep it under $500.
Transportation: $55. This is for gasoline and parking. We share one car and don’t drive much.
Kid: $789. This includes the RB40Jr’s Wushu lessons, ice cream, new shirts, summer camp, soccer fee, toys, and back to school supplies. Whew, everything hit all at once in July. We’re done paying for summer camp so next month should be better.
Bills: $233. Electricity and insurance (auto, home, term life, and umbrella).
Entertainment: $113. We ate out just once in June, great job! This category also includes my gym membership fee.
Travel: $665. Three tickets to southern CA. We used the companion fare ticket from Alaska airline for this and the bill is pretty expensive. I thought flying is supposed to be cheap this year.
Clothing: $454. Mrs. RB40 purchased a nice top, pants, and a few other things.
YTD Extra Savings: $42,328
July was a good month and we saved $3,978 in addition to our tax advantaged savings. Our monthly expense was higher than usual, but our income was able to cover it. What can I say? Summer is expensive. August should be a bit better because we’re only taking local trips and don’t have as many kid expenses. So far in 2017, we saved $42,328 extra. This is already more than the whole 2016 so we’re doing really well this year.
I just sent $11,000 of this fund to our Roth IRA. I stashed $30,000 in VNQI to be used for Mrs. RB40 early retirement fund. My main goal for the rest of 2017 is to build up some cash so I can invest more at Realty Shares.
Can Mrs. RB40 retire?
This is a new section I added for 2017. I want to see what happens if Mrs. RB40 stops working full-time. Basically, I will remove Mrs. RB40’s income from our spreadsheet and stop contributing to our tax-advantaged accounts.
Drum roll please … for July 2017, Mrs. RB40 could retire early! We had another good month and it looks like we should be able to keep this up for the rest of 2017.
If we remove Mrs. RB40’s income from the spreadsheet, we’d still be ahead $2,786 in June! My online income is strong this year so this challenge has been really easy. Online income could be fickle, though. Last year’s online income was much lower than 2017.
July 2017 wrap up
July 2017 was another solid month at the RB40 household. Our income streams were firing on all cylinders. Our expenses were higher than usual, but not by a huge margin. Everything is just going really well this year. We haven’t had a great streak like this in a long time so we feel good. Usually, our finance has more ups and downs.
August is looking much slower on the online income front. Traffic is down and our affiliate income is slowing down a lot as well. I’m pretty sure our expense should look much better in August.
*Oh yeah, if you’re going to retire early, summer is the best time to do it. There are a ton of fun activities to do. Retiring in the winter is the pits. You’ll be stuck at home all day and that’s not a good way to transition into what should be a fun phase of life.
Did you have a good July? What’s your plan for August? Enjoy the rest of summer!
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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