December 2020 Early Retirement Update
2020 is (finally) over. What to say? Overall it was a pretty good year for us. The complete lack of traveling wasn’t great. Wearing masks is no fun. But we persevered and survived and got to enjoy another year of early retirement.
In December, we enjoyed the moderate North Carolina winter weather and got outside a good bit. Not quite hammock weather but still good enough for hikes and bike rides. Christmas with family was an abbreviated affair compared to normal years, but at least we’re all keeping safe and healthy. There’s always next year!
In financial terms, December built on November’s successes with another all time high net worth. We saw a jump of $100,000 in our net worth to bring the total to $2,505,000. Our spending was rather modest at $1,851 while our monthly income was much larger at $20,699.
Let’s jump into the details from last month.
Investment income totaled $15,143 in December. Our equity index funds and ETFs pay dividends quarterly at the end of March, June, September, and December. The last month of the year is always our biggest dividend income month because some of our equity funds and ETFs pay only once per year in December. Here’s more on our dividend investments.
Blog income totaled $1,567 for the month which was pretty average for 2020.
My early retirement lifestyle consulting income (“consulting”) was $682 for the month of December which represents five hours of consulting sessions. 2021 is already off to a great start for consulting with several repeat clients and some new business so far. I’m also looking at increasing rates a bit for 2021.
The “deposit income” totaled $3,131 in December.
The biggest chunk of deposit income was our $3,000 federal stimulus checks from Uncle Sam. Our kids really aren’t costing us very much this year given all the stimulus funding based on number of people in the household.
Another $100 in deposit income came from redeeming $100 in cash back rewards on a credit card.
The final $31 in deposit income came from cash back and incentive bonuses from the Ebates.com and Mrrebates.com online shopping portals (some of which was earned from you readers signing up through these links).
If you sign up for Ebates/Rakuten through this link and make a qualifying $20 purchase through Ebates/Rakuten, you’ll get a $20 sign up bonus (limited time only; normal bonus is $10 after a $25 purchase).
The “tradeline sales” income of $175 represents one tradeline sold a few months ago (payment lags by a month or two). This is quite a drop from my $1,000+ tradeline sales back in October but closer to the $200-300 per month I expect to earn on average.
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Tracking spending was one of the critical steps I took that allowed me to retire at 33. And it’s now easier than ever with Personal Capital.
Now let’s take a look at December expenses:
In total, we spent $1,851 during December which is almost $1,500 less than our regularly budgeted $3,333 per month (or $40,000 per year). Travel and gifts topped the spending categories for the month.
Detailed breakdown of spending:
Travel – $895:
We booked two new cruises in December for later in 2021. Each cruise required a $398 deposit to hold the reservation.
The first cruise is in June 2021 and it might happen if all the stars align. It’s cancellable until mid-March so we’ll see what happens with vaccines and case counts. If we don’t go on that cruise, we may start our planned summer road trip a couple weeks earlier.
The second cruise is booked for Christmas 2021 and I’m a lot more optimistic about that one!
We also spent $99 for the annual fee on a new Jetblue Plus credit card. We’ll end up with 100,000 Jetblue points after spending $6,000 in total. Even net of the $99 annual fee, the points are easily worth $1,000 or more in free flights!
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Gifts – $416:
Christmas time! We gave $360 in cash to our kids and various nieces and nephews. We also got a soldering iron for $6 for one of our industrious children because she likes to tinker.
The remaining $50 was a cash gift to the family of a cousin in California that passed away in December. Cambodians give cash instead of sending flowers.
Groceries – $327:
Grocery expenses were less in December than normal months where we spend $500 to $600. This is mainly due to using up a Walmart/Sam’s Club gift card purchased a couple of months ago.
Healthcare/Medical/Dental – $64:
Our 2020 healthcare premiums were $123 per month thanks to very generous Affordable Care Act subsidies that we receive due to our low ~$40,000 per year Adjusted Gross Income. The benefit of being “poor” on our tax return.
We had already paid the December 2020 premium in November, and our new 2021 insurance premium of $135 was also paid during November. So we didn’t have any health insurance spending in December.
Both of the adults in our household bought dental insurance since the premiums were less than the actual dental care reimbursements we received during 2020. The premiums total $64 per month for the two of us.
We chose not to renew the dental insurance for 2021 because we anticipate dental needs to be less than they were in 2020.
Entertainment – $60:
A $60 Netflix gift card that should last us several months. I bought this online at Target on a Google Pay promotion that offered $21 cash back on any $50+ Target purchase. I have to wait 30 days to withdraw the cash back.
Utilities – $52:
I used a prepaid debit card loaded with cash rewards from our health insurance company to pay for most of our $130 water/sewer/trash bill, $47 gas bill, and $63 electricity bill. The net cost was $52 for all of those bills.
Restaurants – $38:
A big box of Bojangles fried chicken, biscuits, and fries were $38. Great comfort food!
That’s it for restaurant spending other than using up some Taco Bell promo gift cards obtained in November.
Cable/Satellite – $0:
We pay $18 per month for a local reduced rate package due to having a lower income and having kids. 30 mbit/s download, 4 mbit/s upload.
I used a rewards card from our health insurance company to pay the $18 internet bill for December, so the net cost to me was $0.
Gas – $0:
Another month of no gas purchases. The car is down to a half tank so we’ll probably have to fill up in January or February.
Google Maps sent me a helpful (and slightly creepy) summary of my 2020 transportation trends. I drove 651 miles in 2020 compared to a bit over 400 miles combined walking and biking. And the non-motorized transport is undercounted because I don’t always carry my phone with me when I’m biking or walking. But the driving mileage is pretty close for me. We just don’t drive very much in general, and even less in 2020 given the events of the past year.
Total Spending for 2020 – Year to Date
Our spending totaled $28,466 for all of 2020. This is about $11,500 less than what we budgeted in our $40,000 annual early retirement budget. The main contributor to underspending the budget in 2020 was the near-complete lack of travel during the year. We budget $10,000 per year for vacations and we didn’t spend anywhere near that much.
We did have a couple of big, lumpy multi-thousand dollar expenses this year. Mrs. Root of Good’s root canal was almost $2,000 even after factoring in the insurance reimbursement. And we spent a net of $3,250 on a new water heater.
The good news is that we budget for these big expenses every year, so it’s no big deal to pay for these “unexpected” costs. We expect them to occur on a fairly regular basis over the several decades of our early retirement.
Looking ahead, college costs for our kids will start in a bit over two years. We have over $70,000 saved in 529 accounts and expect to get a decent amount of financial aid as well based on our low incomes. Recent changes to the federal student aid formula will help out even more.
We will also be purchasing a second vehicle in 2021 when our oldest daughter gets her driver’s license. I expect it will cost around $5,000 to $6,000 for a lightly used sedan.
Overall, our spending has remained under control for the seven full years of early retirement. There haven’t really been any big surprises so far. Hopefully the rest of our lives remain just as financially “boring”!
Monthly Expense Summary for 2020:
- January – $2,682
- February – $2,618
- March – $1,600
- April – $1,324
- May – $4,692
- June – $2,311
- July – $3,035
- August – $3,468
- September – $1,830
- October – $1,624
- November – $1,437
- December – $1,851
Summary of annual spending from all years of early retirement:
Net Worth: $2,505,000 (+$100,000)
Stocks went up again; net worth went up again. It seems like a story that kept repeating itself in the latter half of 2020.
December saw a slow but steady rise in equities and we benefitted from the trend like many of you. It’s starting to feel bubbly, but feel free to ignore me because I’m not actually shifting anything in my portfolio (yet).
I’ll rebalance my portfolio in the next month when I make my solo 401k and IRA contributions for 2020. I’m still targeting a 90%/10% equities/bonds asset allocation.
At our current $2,505,000 net worth, we are approximately $250,000 richer than we were at year-end 2019. That’s a pretty decent year-over-year financial gain!
It seems popular to bash on the year 2020 as something horrible. It definitely had it’s down times. We have all been cooped up way more than normal. Travel proved difficult. Uncountable deaths across the nation and the world including in our own extended family.
But to me, it’s just another year. While we can’t prevent all of the “downs” in life, we can certainly set ourselves up to have a lot of “ups”.
I’m thankful for all the “ups” we enjoyed last year. The pace of life slowed down and “local” became the focus.
Since we spent a lot more time at home, I was able to read a ton more books in 2020 and play more computer games. I even built my own computer. Hiking in the woods and biking along the river replaced our normal overseas trips to Mexico, Southeast Asia, the Bahamas and elsewhere.
What keeps my spirits up? I know that the tough times of 2020 will not last forever. We’re already seeing progress as vaccines roll out slowly across the country. It may take another 6 to 12 months but eventually life will return to normal.
Until then, all we can do is make smart choices, be patient, persevere, and appreciate the all the good things in life.
Who’s looking forward to 2021?
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