January 2025 Early Retirement Update – Winter Edition

Welcome back to another monthly update from Root of Good! The new year is in full swing and off to a good start so far. We just got home from an 11 night cruise to Mexico out of San Francisco. And in two weeks we will set sail again for two weeks in the warm Caribbean waters. 

While I’m at home for a few weeks at a time, it’s always a scramble to take care of chores around the house, take care of some car maintenance, and keep an eye on my financials. It’s not all productivity – we’re also busy spending time with our kids and visiting with family and friends. 

So far we’ve managed to dodge the worst of winter by escaping to warmer climates. And now that it’s mid-February, winter is slowly withering away and it’s getting nicer and warmer outdoors here in North Carolina. By the time we get home from our next cruise, spring might be in full swing! 

On to our financial progress. January was a great month for our finances. Our net worth climbed by $89,000 to end the month at $3,322,000. Our January income of $4,117 was just a bit lower than our spending of $5,091 for the month.  

Let’s jump into the details from last month.

Income

Investment income totaled $86 in January. Our equity index funds and ETFs pay dividends quarterly at the end of March, June, September, and December. As a result, we had a much smaller than normal amount of investment income last month. Here’s more on our dividend investments.

Blog income totaled $706 for the month. This represents an average month of blog income. 

My early retirement lifestyle consulting income (“consulting”) was $0 last month. I was out of town a lot during January which led some clients to hold off on consulting sessions. 

Tradeline sales income totaled $625 last month. I ramped up my tradeline sales a few years ago and discussed it in a bit more detail in my October 2020 monthly post and in my July 2021 monthly post. During 2024 I made over $6,000 in exchange for lending out my stellar credit history from half a dozen credit cards. 

For last month, my “deposit income” was $25 due to cash back and incentive bonuses from the Rakuten.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 Rakuten through this link and make a qualifying $25 purchase through Rakuten, you’ll get a $10 sign up bonus (or more!). 

My bank and credit card bonuses totaled $2,674 last month. Of the total, $274 comes from the Chase Sapphire Reserve’s “Pay Yourself Back” feature. I get a 25% bonus when I redeem the Chase Ultimate Rewards points to reimburse for my purchases in select categories like utilities and insurance. Since I have a TON of Chase points, I have started cashing them out by placing my utility and insurance payments on my Chase Sapphire Reserve card and using the 25% bonus Pay Yourself Back redemptions. 

The remaining $2,400 of bank and credit card bonus income was $2,000 from transferring some funds to my IRAs at Citibank plus a $400 bonus for opening a new checking account. 

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

Empower Personal Dashboard 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 Empower Personal Dashboard 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 Empower Personal Dashboard.

Expenses

Now let’s take a look at January expenses:

 

In total, we spent $5,091 during the month of January which is about $1,800 more than our regularly budgeted $3,333 per month (or $40,000 per year). Taxes and groceries and were the two largest categories from last month. 

Detailed breakdown of spending:

Taxes – $3,337:

Our annual property tax bill of $3,037 came due in January. The property tax bill is more than a third higher than last year. The county just reassessed housing values, as they do every four years. Our home value increased by 71% (a much higher increase than the average house in Raleigh). Fortunately the tax rate per $1,000 of value declined so the overall increase was “only” 36% compared to last year. I guess that’s the price of living in a gentrifying area – outsized property tax increases. 

The remaining $300 of taxes came from my fourth quarter estimated state income tax payment for the state of North Carolina. I also paid a $6 convenience fee for the privilege of paying the estimated tax bill with my credit card, but I record that $6 fee separately as a “travel” expense. 

Groceries – $653:

Our grocery expenses returned to a more normal level in January after climbing in excess of $1,000 during December. We were gone for half of the month of January but our kids still had to eat while we were out of town. 

Utilities – $407:

We spent $146 on our water/sewer/trash bill last month. 

The electric bill was $121 last month. 

The natural gas bill was $141 for January for the water heater and gas furnace. The January and February bills are always higher because that’s when it’s coldest in North Carolina. Since it’s starting to warm up we should see much smaller heating bills after next month. 

Automotive – $241:

The battery in our car died during January and cost $193 to replace with a high end battery. As luck would have it, the old battery with a 36 month warranty died during month 37. No free or discounted replacement battery for me this time around. 

I also paid $48 for a big shipment of six wiper blades and assorted cabin and engine air filters delivered from Rock Auto for both of our cars. These would have been at least twice as much if I went to a regular auto parts store or Walmart. Or probably $200-250 if installed by the auto shop. And it only takes a few minutes to swap out all of these wiper blades and air filters myself. 

Gifts – $117:

Some future birthday presents and other gifts totaled $117.

General Merchandise – $106:

Assorted home goods from Walmart and Amazon.

Healthcare/Medical/Dental – $94:

Our 2025 health insurance is free thanks to very generous Affordable Care Act subsidies that we receive due to our low ~$51,000 per year Adjusted Gross Income. 

Our 2025 dental insurance plan costs $37 in premiums per month. We picked a plan from Truassure through the healthcare.gov exchange. The dental insurance does a good job of covering most of our routine cleanings, exams, and x-rays plus most of the cost of basic procedures like fillings. 

The other $57 in medical/dental spending was a copay for a dentist visit. 

Travel – $79:

Even though we spent almost half of January on vacation, our travel expenses were only $79. Mostly because our flights and cruise were nearly free other than taxes and fees (which were paid in previous months). 

We spent $26 for an Uber from our San Francisco airport hotel to the downtown SF cruise port. The post-cruise Uber trip back to the airport was at the end of January. But the credit card charge posted in February so we’ll report that second Uber charge next month. The return trip to the airport was more than double the price of the ride into town!

While on the cruise we spent $48 on various souvenirs in Mexico. For souvenirs, Mrs. Root of Good bought several woven bead hummingbirds. We also purchased several containers of caramel made from goat milk and cow milk. And a 3.5 pound package of Mexican peanut brittle. 

The remaining $6 in travel spending came from the convenience fee for paying our $300 estimated state income tax bill last month. I love to spend as much as possible on our credit cards for the excellent points and miles we receive in return for all that spending. 

Get free travel like us

If you are interested in getting free travel from your credit card like I do, consider the Chase Ink Preferred business card (my referral link). Right now, the Chase Ink Preferred business card offers an above average $900 worth of Chase Ultimate Rewards points that can be redeemed instantly for $900 in cash (or even more for travel!). I just signed up for another new Ink card to snag one of these great bonus offers.

Chase is pretty liberal when it comes to “what is a business”. If you sell stuff on eBay or Craigslist or do some odd jobs occasionally then you have a business and could get a credit card as a “sole proprietor”. 

I use the 90,000 Chase Ultimate Rewards points by transferring them to my Chase Sapphire Reserve card (also offering a 60,000 point sign up bonus right now). With the Sapphire Reserve card, I can get 1.5x the points value by booking cruises, flights, hotels, or rental cars through their travel portal. For example, I used 165,000 Chase Ultimate Reward points to pay for the $2,475 in taxes, fees, and gratuities on two of my cruises. Or I can transfer those Ultimate rewards points to over a dozen travel partners’ airline/hotel programs like United, Southwest, or Hyatt. 

Capital One VentureX card

Another favorite travel card in my wallet is the Capital One Venture X card. The Venture X card is a “keeper” for me. First off, it comes with a $750 sign up bonus after spending $4,000 in the first three months. The bonus is paid in the form of 75,000 bonus points that you can redeem against any travel purchases from anywhere. Then you earn a solid 2 points per dollar spent forever! The other big perk is airport lounge access. You can get yourself plus unlimited guests into Priority Pass lounges. And you and two of your guests can get into Plaza Premium network lounges and Capital One Lounges. 

The Capital One Venture X card does have one catch – a $395 annual fee. But they reward you every year with an easy to use $300 travel discount plus $100 worth of points. Together, that makes $400 they give you annually which completely offsets the annual fee. Another benefit worth mentioning: you can add up to four authorized users for free, and they also get all the benefits of the Venture X card including the valuable airport lounge access. We used this perk to “gift” a pair of Venture X cards with airport lounge access to my brother in law and his wife to use on their family trip back home to Cambodia last April with their two young children. 

Since the annual fee is offset in full by travel credits each year, I personally plan on keeping the Venture X card forever since the card benefits are so great.

Gas – $60:

A tank of gas for our fuel-sipping Hyundai Accent and another tank of gas for our thirstier Toyota Sienna minivan. Our daughter drives the Hyundai to school four days per week so she uses about a tank of gas each month when school is in session.

Cable/Satellite/Internet – $0:

We usually pay $25 per month for a local reduced rate package due to having a lower income and having kids. 50 mbit/s download, 10 mbit/s upload. We paid the January bill in early February so we’ll have a double payment in next month’s update. 

Restaurants – $0:

No restaurants during January (other than a couple dozen meals on the cruise ship that were almost free).

11 Years of Early Retirement Spending

We have a $40,000 annual early retirement budget and for the last 11 years we have pretty much stayed within the budget.

Here’s the data. 

Summary of annual spending from more than a decade of my early retirement:

• 2014 – $34,352
• 2015 – $23,802
• 2016 – $38,991
• 2017 – $31,708
• 2018 – $29,058
• 2019 – $25,630
• 2020 – $28,466
• 2021 – $31,740
• 2022 – $29,449
• 2023 – $37,865
• 2024 – $40,286

I ran this data series through ChatGPT to get a quick take on the trends. And asked the AI bot to generate a linear regression equation and correlation coefficient. It’s been 25 years since high school and college stats so I’m adapting to change! 

Conclusions:

• Volatility: The values rise and fall frequently, with no consistent upward or downward movement.
• Significant growth in 2023 and 2024: A noticeable rise starts in 2023 ($37,865) and continues in 2024 ($40,286), reaching the highest value in the dataset.
• Average annual increase of $516 per year in spending
• Correlation coefficient, r, is 0.316 which represents a weak but positive correlation

In other words, our spending is trending upward over time but varies a lot year to year. This makes sense as we tend to have big lumpy expenses in some years while other years we don’t have any major purchases. The major spending items over the last decade include: new (used) cars, roof replacement, new siding and windows, and medical bills. 

It’s also interesting that the AI analysis picked up on the 2023 and 2024 spending being higher than the trendline. We feel more free to spend money now since our portfolio has more than doubled compared to when we first retired. Inflation since 2020 has been pretty rough too, with an almost 25% increase since 2020. A hypothetical $32,000 budget in 2019 is roughly equal to $40,000 in 2025. 

Net Worth: $3,322,000 (+$89,000)

After a six figure decline in net worth during December, we partially recovered with an $89,000 gain during January. Our net worth ended the month at $3,322,000. 

As I frequently say, these five and six figure swings in net worth don’t really bother me. Our spending is so low that I wouldn’t be too concerned if our net worth dropped a million dollars in one month. In fact I’d probably be looking for lost quarters and $100 bills in the couch cushions and trying to invest more money if stock prices collapsed to that extent! 

For the curious, our net worth reported above includes our home value (which is fully paid off). I value the house at $300,000, which is probably what we would net after sales expenses. However, please note that I don’t consider my home value as part of my portfolio for “4% rule” calculation purposes. I realize folks ask me about that every month so I just wanted to state that here for clarity.

Closing thoughts

Mrs. Root of Good just celebrated her nine year anniversary of leaving work. She worked about two and a half years longer than I did and took a couple of sabbaticals in her last few years of work as well. 

I left work about eleven and a half years ago. 

When I left work, my kids were age 1, 7, and 8. We were still changing diapers for the youngest one and pushing him around in a stroller. At the time, I had no clue that we would end up traveling so much. 

For one thing, we didn’t have a ton of funds in our budget for traveling when I quit working. In 2013, I summarized our somewhat barebones initial FIRE budget with $5,300 devoted to travel. This was much more than we spent historically while working but really not a ton given how much we travel today. 

After a few years of watching our portfolio grow, I almost doubled our travel budget to $10,000. I figured we should spend a lot on fun, discretionary purchases like travel. No reason to avoid spending if you can afford it, right? 

Over the last decade I’ve also focused more time and energy on travel hacking. By continually acquiring points and miles to get even more free or cheap travel, we can stretch that $10,000 budget even further. It’s so nice to go on these long multi-month vacations around the world and know that we spend about as much as a lot of families spend for a weeklong trip to the same places. 

I don’t know if we’ll keep up our current pace of travel indefinitely but I hope we’ll keep exploring as long as there is somewhere interesting to go. With our portfolio continuing to grow, I don’t think there will ever be a real financial constraint on our travel plans. 

Will we eventually grow bored or exhausted with traveling? It’s certainly possible. But until then, we’ll keep on lining up new adventures and hitting the road when our schedule allows. 

Well folks, that’s it for me this month. See you in February once I get back from my next cruise! 

How is everyone’s new year going so far? 

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