Summer is almost here! Our kid only has 2 weeks of kindergarten left and then it will be summer break. He’s really looking forward to goofing off all day at home. That means playing on the tablet, watching TV, and having LEGO wars. However, that’s not going to work. It’s not good for kids to have so much screen time. I’ll drag him out to go see free concerts, swim, hike, and do other activities around town. Also, we’ll sign him up for half day summer camp every other week. That will give me a little time to blog on Retire by 40. Anyway, we’re both looking forward to the longer days and more fun in the sun.
May was another great month for us financially. Our income was high and our spending was reasonable. We also got our tax refund! It’s great to get that little boost and we’ll put it straight into our investments. Our spending was under budget, but it will probably increase a bit over the summer. We’ll have to pay for those day camps and we have a couple of vacations lined up, too. Public school kindergarten really spoiled me. Life was so good this past 9 months. We didn’t have to pay for childcare and I had more time to myself. Summer will be fun, though.
Okay, let’s go over the 2017 goals first and then see the details of our cash flow in May.
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At the end of May, the year is 42% over. It’s almost time to do our half year check up. We need to keep working on our goals to make sure everything will be near that 50% mark in just one month. This is important because it’ll be really tough to catch up if you’re behind at the half way point. We’re on track for the most part so I’m pretty happy.
This is my goal tracking spreadsheet. In general, things are looking good. The only one that’s in real trouble is the Pinterest goal. All in all, it’s not too bad for the first five months of 2017.
- Save $50,000 in our tax advantaged account– We’re doing very well here and have saved $22,035 into our 401(k) and the 529 college fund. This one is right on track, but I need to contribute to our Roth IRAs soon.
- Dividend Income $11,500– I’ll update our passive income post next week and you can see the details there. In the first 5 months of 2017, we received $4,446 in dividend. That’s a bit behind, but many funds payout more in Q4 so I think we’ll be fine here.
- FI ratio > 78% – This is passive income divide by expense. Currently, our FI ratio is87% for That’s ahead of our target and I’m quite happy with it. I’m optimistic that we’ll meet our goal.
- Net worth gain > VFORX– Our net worth gained 6.8% so far in 2017. That’s really good for just 5 months. However, it is almost 2% behind our benchmark. The VFORX (2040 fund) is up 8.6%. That’s nuts! We’re behind, but I’m not going to worry about it. 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– Our online income has been incredible this year and we made $30,691 so far. That’s 86% to our goal and we already surpassed our 2016 blog income. I think we’ll be done with this one by the half way mark. 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 like. I’ll keep working on this. This one might be on ice for the summer because I won’t have much time to work on it.
- Pinterest > 25,000 visits– This one is a bust for sure. I haven’t been able to grow our Pinterest traffic and I’m getting discouraged. Pinterest is not fun for me at all.
- Fitness – May was a good month for fitness. I made it to the gym almost every weekday and I also met my goal of 7,000 steps per day. In May, I walked about 7,800 steps per day. That’s quite good for me. Also, check out my pull ups below. My goal is 15 20 consecutive pull ups and I’m almost there!
- 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.
- 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 practice. He doesn’t like these activities because group activities are difficult for him. He’d rather stay home and goof off, but he needs to learn to toughen up. I hope these activities will help him develop more grit.
- See the total solar eclipse– I reserved a campsite at the beach and we’re set for August. I’m really looking forward to this trip.
- National Park– We visited Fort Vancouver National Monument over spring break. We decided to skip camping at a National Park because our summer schedule is tight.
- International Trip– We plan to visit Mexico in November. It should be a cheap trip because we have plenty of reward points to use on flights and accommodations. The Hyatt card mentioned earlier should help a lot. I’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. ** I just found out that Europe is very affordable his year. A flight from LAX to Rome on the Norwegian Airline is just $420 in November! That’s very cheap. We might change our plans from Mexico to Rome instead.
Net Worth (+6.8% 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 make it simple and try to beat 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 a third into 2017, we are way behind at -2%! The international sector is doing great this year. I’m going to rebalance and move some money to international equity. From what I read, US equity might not be able to beat the international stocks for the next few years.
Anyway, our net worth is up 6.8% after just 5 months. I think 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 our net worth on Personal Capital. It went up about 0.5% in May. 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.
May 2017 Cash Flow
We had another great month financially. Our income was higher than average and our spending was good. We also received our tax refund checks so those helped our income a bit. 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 $10,339. Our income streams were firing on all cylinders and we just need to keep it up.
Mrs. RB40’s paycheck: $5,132. Mrs. RB40 is doing very well at her day job. She got a raise this year and she is bringing in great income. 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: $955. I fixed a burst PVC pipe myself and probably saved $200.
Online Income: $5,470. Our online income was down in May, but it is still very good. The summer slowdown must have started. 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: $2,204. These are the banner ads you see on Retire by 40. I hope to make about $1,500/month from these ads.
- Affiliates: $3,530. These are referral fees from affiliate links. If a reader signs up for a service through our affiliate links, then we sometimes earn a referral fee. You can see an example from the Starting a blog post below. The summer slowdown has started and our earning is down a bit. We’ll see how the rest of the summer goes.
- Brand promotion: $0. I’m cutting way back and probably won’t make any money in this category going forward.
- Expenses: -$264. 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: $808. Dividend income was good in May. You can see our dividend portfolio here.
- P2P lending: $49. I’m slowing getting out of P2P lending. I just don’t think they will do well when the economy turns south.
- Realty Shares:$71. I funded my first deal at RealtySharesearlier this year. It’s a commercial property in Arizonaa. I like RealtyShares and I’ll try to invest in another property soon.
- KickFurther: $0. I invested about $1,300 at Kickfuther. 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. The investors own the inventory and we can vote to liquidate the inventory if the business can’t sell it. You can read more about them next week when I go overour passive income.
Misc: Our tax refund.
Pre-tax savings: -$3,890. I sent $1,500 to my solo 401k. Mrs. RB40 saved $1,390 in her retirement account. We also sent $1,000 to our kid’s Oregon 529 plan.
Expense (target < $4,500)
Our monthly expense target was $4,500 per month and we spent $4,102. That’s under budget so I can’t complain too much. We spent a little more than normal on our kid because school will be out soon and we need to put him in childcare occasionally.
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: $0
Groceries: $466. 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: $37. This is for gasoline and parking.
Kid: $389. This includes the RB40Jr’s Wushu lessons, summer camp, and his school’s fundraiser. He also got some new clothes and shoes.
Bills: $243. Electricity and insurance (auto, home, term life, and umbrella).
Healthcare/Medical: $0. Wow, no healthcare spending this month! Nice.
Entertainment: $129. We ate out a couple of times in May. I got eclipse glasses for this summer. Mrs. RB40 got some gardening stuff. This category also includes my gym membership fee. Not too bad for a month.
Travel: $138. We paid the Alaska Airline’s annual fee. Mrs. RB40 went on a business trip.
Clothing: $143 I got a new library T-shirt for $12. Mrs. RB40 got some new clothes and shoes, too.
Misc: $253. This is mostly the county tax. I also got a new fan from Amazon for $40.
YTD Extra Savings: $30,389
May was a very good month and we saved $6,236 in addition to our tax advantaged savings. Our income exceeded our expenses by a large margin and it felt great! This is when you feel rich, when you have plenty of positive cash flow. So far in 2017, we saved $30,389 extra. This is already more than the whole 2016 so we’re doing really well this year.
Part of this extra savings will be sent to our Roth IRA later. For now, I put most of these into our brokerage account for the 1% dividend from the money market fund.
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 May 2017, Mrs. RB40 could retire early! We had another great month and it would be awesome if we can keep this up for the rest of the year.
If we remove Mrs. RB40’s income from the spreadsheet, we’d still be ahead $4,995 in May! This is due to our excellent online income. 2017 is looking really good so far.
May 2017 wrap up
May 2017 was another solid month at the RB40 household. Our income streams were firing on all cylinders and our expenses were reasonable. 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.
Now, let’s go on to summer. School will be out soon and I’ll try my best to keep up with blogging. We’ll probably have a few hiccups because I won’t have as much time while our kid is home. There probably will be fewer posts about investing and more about relaxing in the summer. The site redesign will have to take a backseat for a while as well. Anyway, summer will be a ton of fun and I’m looking forward to sharing it with you.
*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 May? Are you looking forward to summer?
Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.