Autumn is here! The weather is cooler and the leaves are starting to fall. This is a great time of the year in the Pacific Northwest. We finally get some relief from the hot summer days and forest fires. School has started and the kids are all busy with various activities. And we have the holidays to look forward to. September was a pretty good month for us. Here are a few things that happened.
School – RB40Jr got used to going to school again. The first couple of weeks were pretty rough. This year (2nd grade) he has more homework than last year and he spent more time whining about it than doing math, reading for 20 minutes, and putting his homework sheet into his backpack. By the end of September, he finally got into the routine and stopped complaining so much. I kept telling him to just do it and get it over with. There is no use wasting time and whining about it.
Personal adversity – My mom was having problems with dementia in September. We’re still trying to figure out what’s best for her. You can read more about this adversity here.
Intermittent Fasting – I’ve been intermittent fasting for about a month. I skip breakfast on the weekdays. This means I fast for 16 hours, 5 days every week. I also try to exercise on those days before lunch. It seems to be working and my weight has decreased from 138.6 lbs. to 134 lbs. in September. That’s pretty good. I’ll keep at it and see if I can get down to 125 lbs. Mrs. RB40 isn’t quite ready to try intermittent fasting yet, but she has been very supportive.
Finance – We had a really good month financially. Our income was great and our expenses were very low. We usually do pretty well in the fall as we hunker down more at home. There are just fewer things to do, but we’re happy with that. All of us need a breather from constant activities. Our net worth increased a little bit and I’m happy with that. I won’t complain as long as it doesn’t go down.
Okay, I’ll go over my 2018 goals first and then share the details of our net worth and cash flow.
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. 2018 isn’t looking too good because the goals are more ambitious than previous years. You can get a quick status update from the chart and see the details below.
- Increase our real estate crowdfunding investment to $100,000. September was a slow month with real estate crowdfunding. Only one project paid out and we collected just $40.I’m halfway to my $100,000 goal. I’ll keep working on it in Q4. You can read more about my investments at the real estate crowdfunding page. Sign up with RealtyShares and see what projects are available.
- FI ratio > 100%. The FI ratio is passive income divided by expense. So far, our FI ratio is 79% for 2018. This year is not looking good because our expense is higher than normal due to a major home repair and a pricey vacation. Some years are just harder than others. This year is going to be one of those and we need to learn from it.
- Increase bond/cash allocation to 30%. Going to 30% bond/cash will beef up our opportunity fund. This is very slow going because I’m not in a big hurry. Currently, our bond/cash allocation is up to 23%. That’s not too bad. The US economy is doing pretty well so I might delay this change for a while.
- Travel hack 100,000 points. Finally, we finished a goal! We signed up for some new credit cards and collected quite a few points. These points will come in handy for our vacation next year. It looks like I’ll have to go to Thailand a couple of times in 2019.
- Minor Redesign RB40. This one is really difficult to do because I can’t seem to budget time for it. It’s already tough to write and keep the site running. In May, I switched the site to https. That’s a big part of what I wanted to do this year. In August, I started working on the banner and logo. I’ll talk to a logo designer and get that wrapped up by the end of October. I’ll probably ask your opinion on Twitter soon so keep an eye out for it.
- Blog 12 times at Fit by 40. This one is way behind now. I’m just not motivated to write about fitness this year even though I’m keeping a log for intermittent fasting. That’ll be good material when I’m ready to write about fitness again. For now, I’ll keep FB40 as a test site for the redesign. You can see how I started the site here – How to Start a Blog and Why You Should.
- Blog revenue $100,000. This one is going to be very difficult so I’m grading it on the academic scale. Also, I changed the goal from blog “income” to blog “revenue.” Income is after taxes and expenses. Revenue is just gross income. Retire by 40 generated $66,781 so far in 2018. That’s actually really good. You can see more detail on my Blog Income page.
- Join Toastmasters. I visited a local club and it was a good experience. However, there are too many things going on right now. My mom needs help with her health. Also, when school was out during the summer, I spent more time with RB40Jr. I just can’t squeeze Toastmasters into my schedule. This will have to be put off until RB40Jr is a lot more independent.
- 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 definitely take more than one year. I changed the due date to 2020.
- Visit Iceland. Iceland was incredible. I got some nice pictures so check out my Iceland trip report
Net Worth (+3.5% YTD)
I’ve been tracking our net worth since 2006 and it is very motivating to see the progress we’ve made. 2018 has been uneven for us. The US stock market is doing well, but bonds and international equity are down. Our net worth is up 3.5% since the beginning of the year. That’s lower than I’d like, but I’m fine with it. At this point, I’m being more conservative and I don’t mind giving up some gains. I’ll be happy with 5% gains this year.
My bet with Warren Buffett – I’ll benchmark our net worth against VFINX for 10 years starting in 2018. VFINX is up 8% since the beginning of 2018. Our net worth is up just 3.5% so we’re behind significantly. Our net worth is diverse so it does better when the market drops. It’s early in the race yet. Also, I haven’t updated our property prices in over a year so that part of our net worth is probably a bit low.
Here is a graph of our net worth on Personal Capital. 2018 has been lackluster for us.
*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 ($38,722 YTD)
Here is a quick summary of our passive income. You can see all the details on my new Passive Income page. We had a slow start in 2018 because one of our rentals was vacant for the first 2 months. It’s occupied now so the passive income is looking better. Hopefully, it’ll be smooth sailing for the rest of 2018.
The only trouble spot now is P2P lending. We’re seeing more defaults and the interest payments aren’t enough to overcome the hits. If we reinvest in P2P lending, it would look better. However, I like real estate crowdfunding much more so I’m investing new money there.
September 2018 Cash Flow
Our cash flow was excellent in September. The income was higher than usual. My online income was great and our dividend income was really good too. The 3rd month of the quarter is always great for dividend income. We did really well on the expense side too. September was our most frugal month of 2018 so far. Our cash flow came together very well last month. You can see the detail in the spending section.
Here is my Sankey diagram for a quick look.
Take Home Income (target > $10,000)
For 2018, our monthly take-home income target is $10,000. We exceeded this goal in September. Our take home was $11,309 after taxes and retirement savings. (I had to put retirement savings in the expense column in the Sankey diagram.)
- Mrs. RB40’s paychecks: $5,678.
- Blog Income: $8,255. This is about 20% higher than normal. You can read more details on my Blog Income page. RB40Jr is on the payroll now as model and photographer. The income will go straight into his Roth IRA. I’m excited to see how this experiment will turn out.
- Rental Income: $1,014. All our rentals are occupied and we didn’t have any big repairs last month. Read more at the Rental Property Passive Income page.
- Dividend Income: $1,025. More details at my Dividend Passive Income page.
- Real estate crowdfunding: $40. We’re finally getting some traction here. Read more at my Real Estate Crowdfunding Passive Income page.
- Prosper P2P lending: $26.
- Interest Income: $26.
- Misc: $175. I participated in an online discussion about helping your parent. It took less than 2 hours total. Score!
- Refund: $127. Mrs. RB40 returned something.
Monthly Expenses (target > $4,800)
For 2018, our monthly spending budget is $4,800/month, an increase of $300 from 2017. This does not include contributions to 401k, Roth IRA, and college savings. This year has been really tough and we went over budget many times already. We did really well in September, though. We spent just $3,498. That’s way below our budget. It’ll be tough to keep this up with the upcoming holiday season.
- Housing: $2,365. Our housing expense is getting spendy. This category is over 50% of our spending most months. This includes mortgage, HOA fees, and property taxes.
- Groceries: $563. We spent a bit more than average on groceries this month. We’re trying to eat healthier and that means spending more. I didn’t cook too many exciting dishes last month. Here are some.
Shishito peppers and figs from the farmer market. The shishito peppers are really easy to prepare. I just sautéed it with EVOO, salt, and pepper. This is a great side dish for any occasion.
Kalbi sliders with Hawaiian sweet rolls. This one was a big hit with RB40Jr. They are much better than your run of the mill sliders. The other dish was Keema Curry, a Japanese style ground beef curry. We really enjoyed this one, too. The flavor is spot on and it’s super easy to make.
Lentil bowl – the family will have to learn to like lentils. We’re trying to eat healthier and legumes are a big part of that effort. The next dishes are from when I took my mom to lunch at Rose VL, Portland’s best noodle soup joint. They only make 2 noodle soups every day and they are awesome. I had the crab flake soup and my mom had the shrimp cake soup. Don’t miss it if you ever visit Portland. Follow me on Instagram if you’d like to see more of my unglamorous early retirement lifestyle.
- Transportation: $74. We share one car and we usually don’t drive much. This is 2 tanks of gas and parking.
- Kid: $105. I signed RB40Jr up for basketball at our community center. He needs to learn how to play. I also got him a small LEGO set as a reward for not frowning during his school picture day photo.
- Pet: $30.
- Bills: $244. Electricity and insurance (auto, home, term life, and umbrella.)
- Health: $100. Gym membership fee. I got 2 big packages of Retaine, preservative-free artificial tears. I really need these for the days I work on the computer.
- Travel: $40. We took a day trip to Hood River, OR. It was a nice short getaway.
- Clothing: $0.
- Misc: $81. I got a Himalayan salt lamp for my mom. She needs more light at night now. We also got a small mattress for RB40Jr. He moved into our room and we needed a small mattress for him. He used to share a room with my mom, but it doesn’t work anymore.
- Pre-Tax Savings: $2,930. I contributed $1,500 to my 401k. Mrs. RB40 contributed $1,430 to hers.
- Extra Savings: $7,811.
We saved $79,329 so far in 2018. The saving rate is about 55%, not too shabby! (Saving rate is just savings/total income before taxes and deductions.)
- 401k: $30,699
- Roth IRA: $11,000
- 529 college savings: $4,600
- Extra savings: $33,030
Some of the extra savings was used to pay tax to the IRS in April. The rest is mostly invested in real estate crowdfunding.
September 2018 Wrap Up
All in all, September was a great month. We had some challenges, but we’re staying positive and we’ll work through them. That’s just life. Our finances were excellent, though. We just need to keep this up for a few more months and our FI ratio will improve quite a bit. Maybe we’ll get into the 90s% by the end of the year. I’m optimistic. Hopefully, we can avoid overspending over the holiday season. We’ll see how it goes.
Did you have a good September? Do you have any big plans for next month? We’ll probably continue to hunker down in October.
*Sign up for a free account at Personal Capital to help manage your investments. I log in almost every day to check on my accounts and cash flow. It’s a great site for DIY investors.
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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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