February 2021 Early Retirement Update

Time flies when you’re having fun, right? Although in the case of February I think it flew by because it’s the shortest month of the year. Only 28 days! Here we are in March, just a couple of weeks away from the official start of spring. 

I’m looking forward to springtime which means short sleeves, hammock time, and campfires down by the lake. It means my bike rides won’t be as cold, and I can lounge around during rest stops and enjoy the weather. 

February was a good month for our finances. Our net worth went up $36,000 to end the month at $2,580,000. Income of $6,967 significantly exceeded our spending of $951 for the entire month of February.

Let’s jump into the details from last month.

Income

Investment income totaled $325 in February. Our equity index funds and ETFs pay dividends quarterly at the end of March, June, September, and December. As a result, we didn’t receive much investment income during the month of February. However, our dividend income in December 2020 was over $15,000. Here’s more on our dividend investments.

Blog income totaled $1,744 for the month which was slightly higher than the past several months. The small bump is due to the payout of the advertising revenues from the Black Friday holiday shopping season. Retailers bid the ad prices way up in November and December so I get a little year-end bonus as a result. 

My early retirement lifestyle consulting income (“consulting”) was $557 for the month of February which represents four hours of consulting sessions. I bumped my rates up by about 5% in February but the business keeps on coming in the door without any real marketing efforts. 

Tradeline sales income was $275 in February. I ramped up my tradeline sales about six months ago and discussed it in a bit more detail in my October 2020 monthly post. 

The “deposit income” totaled $13 in February which 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). 

My Youtube earnings totaled $401 last month. Here is the channel for the curious. It’s random travel videos, birds, kids, and a couple of DIY videos. Somehow through the magic of the internet hundreds of thousands of people watch the vids and we get paid for it. 

Rounding out the income for last month, we had a superb month for various sign up bonuses. We got $3,000 for transferring two IRAs and a brokerage account to Merrill Edge ($1,000 per account). We got another $649 from a credit card sign up bonus. 

If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!). All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital. We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.

Personal Capital is also a solid tool for investment management. Keeping track of our entire investment portfolio takes two clicks. If you haven’t signed up for the free Personal Capital service, check it out today (review here).

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.

Expenses

Now let’s take a look at February expenses:

In total, we spent $951 during February which is over $2,000 less than our regularly budgeted $3,333 per month (or $40,000 per year). Groceries and utilities topped the spending categories for the month. 

The very low $951 in spending illustrates the inherently lumpy nature of early retired finances. Most months we spend two or three thousand dollars because there’s almost always a big bill like insurance, taxes, home repair, or car repair. In February we didn’t have any of those big expenses so we managed to drop the spending under $1,000! It always feels good to see those triple digit spend months but the reality is we spend a lot more than that on average. 

Detailed breakdown of spending:

Groceries – $448:

Grocery expenses of $448 are a little lower than the $500 or $600 we spend in a typical month. That’s probably due to February being slightly shorter than other months so we probably made one less trip to the grocery store compared to an average-length month. 

I’m always surprised that our grocery spending is so low because we buy a lot of imported ethnic foods and cook a wide variety of dishes. 

I’m still using Walmart Grocery pick up service several times per month along with visits to Aldi, Lidl, and Food Lion.

The Walmart grocery pickers put together your order for you and you just drive up and click a button on the Walmart app to get them to bring the order out to you. The best part is you pay the same low prices as they offer in-store to all their customers and there is no delivery fee.

If you want to try Walmart Grocery, you can take $10 off your first $50+ order with my referral link. Enjoy! 

 

Utilities – $278:

The water/sewer/trash bill was $98. Our electricity bill was $71 for the month. The natural gas bill, which we covers our heating and hot water, was $111 in February which reflects heating for January, the coldest month here in North Carolina.

Healthcare/Medical/Dental – $135:

Our 2021 healthcare premiums are $135 per month thanks to very generous Affordable Care Act subsidies that we receive due to our low ~$45,000 per year Adjusted Gross Income. The benefit of being “poor” on our tax return.

We decided not to renew our dental insurance for 2021, so there are no recurring monthly dental insurance payments. Instead, we’ll just pay cash for our routine cleanings and exams throughout the year.

General Merchandise – $50:

I needed to spend $50 on a credit card to redeem $50 in cash rewards, so I bought an Amazon gift card. I used part of it to buy a fancy $40 bike tire (a Schwalbe Marathon for the bike enthusiasts). I’ve ridden my bike so much over the past couple of years that my original bike tire was threadbare! 

I could have gone with a cheaper bike tire but so far I’m getting a lot of use out of my bike. I don’t mind paying up for quality. This tire includes extra durability against flats which buys me peace of mind when my rides take me 10+ miles away from home or away from where I park. 

Mrs. Root of Good is in charge of expanding our collection of bird feeders and bird food. She has spent at least $150 at Walmart (using a gift card purchased in previous months). 

Travel – $23:

How nice is it to see travel return to the spending reports? We’re optimistic about travel later in 2021. I booked a pair of round trip tickets to Miami for an October cruise for me and Mrs. Root of Good (no kids on this cruise!). The total cost per round trip ticket was 20,000 American Airlines points plus $11.20 in taxes. 

If you have a business and want to earn a bunch of free travel, you can get $750+ in cash back bonus or travel with a new Chase Ink business card. 

Cable/Satellite – $18:

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.

Gas – $0:

Another month of no gas purchases. I’ll definitely buy a tank of gas in March since I’m down to a quarter of a tank. And with the weather warming up nicely, we’ll be taking more short trips.  

Total Spending for 2021 – Year to Date

Our spending totaled $3,527 for the first two months of the year. This is about $3,000 less than the $6,667 we budgeted for two months of spending in our $40,000 annual early retirement budget.

One of the biggest reasons we are underspending our budget right now is the lack of travel spending. We usually book a lot of reservations for summer travel during January and February. 

So far we’ve postponed the bookings for this summer. We are tentatively planning on spending six or eight weeks driving across the USA on a grand road trip. We were waiting to see what would happen with case numbers and vaccinations before making our “go/no-go” decision. 

In the past few days, the picture has become a little more clear that we’ll be able to get vaccinations in about a month or so, which would mean we have substantial immunity sometime in May. Case numbers continued to drop throughout February, albeit slowing the descent toward month-end. 

All this news taken together gives us an optimistic outlook for this summer’s big trip. We haven’t booked anything yet, but we are starting to look at destinations, routes, and places to stay along the way. 

Monthly Expense Summary for 2021:

Summary of annual spending from all years of early retirement:

Net Worth: $2,580,000 (+$36,000)

February brought us solid investment gains once again, with our net worth shooting up another $36,000 to end the month at $2,580,000. In fact, for most of the month we were above the $2.6 million mark! 

With our spending hovering around $40,000 per year and our investment portfolio at approximately $2,350,000 (with the rest of net worth being our house), we are only spending around 1.7% of our investments per year. This is about half of what we could be spending at these asset levels using the classic 4% rule. 

Perhaps some day we will dramatically ramp up spending, but for now we’re happy maintaining the status quo.

So far I’ve kept the stock/bond ratio to about 90% stocks, 10% bonds. That amount of bonds translates to 5-6+ years of stable funds to cover our spending in the event of a market downturn. The bonds definitely help me sleep at night when the market has a hiccup. 

Life update

I had a funny experience this past weekend that reminded me how cushy my life is these days.

I get together (virtually) with a few friends for four hours every other weekend to play traditional pen and paper role-playing games (think Dungeons and Dragons). 

We were chatting about video games we have played recently. I asked if any of them downloaded Sunless Sea, a game I recommended that was available for free last week from Epic Games store. 

“Is it any good?” my buddy asks. 

I reply “Yeah I guess so. I’ve played it for 30 or 40 hours since I got it last week.”

His response: “WHAT?!?! That’s ridiculous! I’m lucky if I can squeeze in an hour of game time once or twice during the week!” <– That’s the typical life of a guy with a full time job and two young kids.

I’ve been there, done that, and definitely love the extra 40+ hours of freedom every week that comes with early retirement. Even if I do “waste” it playing video games! 

But after being retired over seven years, I sometimes forget how fortunate I am. I’m thankful for these little reminders from time to time. 

That’s it for this month’s installment of what I’m up to. See you all next month! 

What is everyone doing this summer? Any big plans yet?

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