Money

February 2022 Early Retirement Update – Early Spring Edition

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Another month flew by! Here we are in March and spring is slowly making an appearance. I definitely like the warmer days but it’s almost too hot right now! 

The nicer weather means spending more time outdoors. We got out the hammock on one particularly nice day. And we enjoyed several hikes last month. Hopefully the temperate weather is here to stay for a while before the summertime heat sets in. 

Financially, February was a mixed month for us. Our net worth dropped by $40,000 to end the month at $2,719,000. Income during the month totaled $2,312 while expenses were a modest $2,535 during February. 

Let’s jump into the details from last month.

Income

Investment income totaled $270 in February. Our equity index funds and ETFs pay dividends quarterly at the end of March, June, September, and December. As a result, we had a small amount of investment income last month. Here’s more on our dividend investments.

Blog income totaled $1,119 for the month. This is pretty average for blog income lately, given I’m not posting as often as I did several years ago when I first started blogging. 

My early retirement lifestyle consulting income (“consulting”) was $490 in February. This reflects three hours of consulting time. That means I spent less than one hour per week with consulting clients.

Tradeline sales income was $275 in February. I ramped up my tradeline sales in 2020 and discussed it in a bit more detail in my October 2020 monthly post and in my July 2021 monthly post. I just had over $1,000 in tradeline sales at the end of February, so my March and April tradeline sales totals should be fairly high. 

For February , my “deposit income” totaled $157. Of this total, $133 came from 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

I also found $24 in “unclaimed cash” from the North Carolina Treasurer’s Office. It was a collection of $4-5 rebate checks from 5 to 10 years ago that were apparently lost in the mail. Nice unexpected little chunk of “free money”! 

My Youtube earnings were $0 last month. The actual earnings were $97 but Youtube only pays out when you exceed $100 in revenue. So next month I’ll get paid for sure. Here is the channel for the curious. It’s random travel videos, birds, kids, and a couple of DIY videos. There are only a few main videos that bring in most of the traffic (and revenue!).

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 $2,535 during February which is about $800 less than our regularly budgeted $3,333 per month (or $40,000 per year). Travel and Utilities were the top two spending categories for last month. 

Detailed breakdown of spending:

Travel – $1,784:

For our two month summer trip through Croatia, Slovenia, and Hungary, we managed to book all of our accommodations in late January and early February. We had over $3,700 worth of Airbnb gift cards purchased in previous months that we used to pay for our European lodging. During February, we spent another $1,784 at Airbnb.

We still owe $959 for our booking in Zagreb, Croatia that only required a 25% deposit up front. 

In total, our lodging will cost around $6,500 for the whole two month trip to Europe. 

We tried to keep all of our trip fully refundable. I have the plane tickets and a month-long rental car booked. I can cancel them all with no penalty. Most of our Airbnb bookings are fully refundable. However we had to book partially refundable accommodations in two cities simply because the supply of fully refundable lodging wasn’t to our liking.

In total, we’ll forfeit about $1,200 if we have to cancel our trip at this point. The upside is that we got some pretty nice places to stay for eight weeks throughout Croatia, Slovenia, and Hungary. 

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Deer hanging out behind our yard

Utilities – $371:

The total utility spending was $371 last month.

We spent $75 on the electric bill and $134 for the water/sewer/trash bill. The natural gas bill, which provides heating and hot water, totaled $163 for last month.

The heating bill was pretty high. Natural gas prices increased 50% since 2020. Fortunately for our wallet, this winter was warmer than most, so the overall bill of $163 wasn’t noticeably higher than our normal peak winter heating bills. 

At this point in the year, it’s warm enough that we don’t need the heat very often. In fact, it is 85F outside as I type this, so we are struggling through a heat wave and trying to avoid using the air conditioning as long as possible! So far, so good…

Groceries – $252:

Our grocery spending was anomalously small during February. We only spent $252 on groceries. Typically we spend $500-600 per month on groceries.

A big part of this unexpected drop comes from my lazy accounting practices. 

I bought a lot of Walmart gift cards a few months ago, and we are using those gift cards right now for our Walmart grocery purchases. But I reported the expense a few months ago when I bought the gift cards and not this month when I’m actually spending the gift cards. 

Another factor keeping our grocery spending somewhat low is the empty shelf factor. We simply can’t buy some items because they aren’t available. I guess we end up eating less expensive grocery items as a result.

A third factor resulting in lower grocery spending is our intentional effort to empty out the fridge, freezer, and pantry before we head off to Europe for two months in June. We aren’t buying as many groceries each month since we are consuming what we already own. 

A quick note on prices: inflation is definitely alive and well. I notice it every time I go to the grocery store. But we haven’t seen huge monthly grocery bills in the aggregate. I’m sure we will eventually. 

We used the dehydrator to make pork jerky.
Then deep fried the pork jerky to eat with sticky rice.

Education – $119:

Cap and gown and senior class fees. Our oldest kid graduates in June, and $119 is apparently what it costs to walk across the stage these days! 

Entertainment – $10:

I bought a new computer game in February. I picked up Witcher 3: Wild Hunt plus both DLC expansion packs for $10 on sale. According to the game, I’ve played 76 hours so far. I guess you could say I find the game rather fun!

I really liked Elder Scrolls: Skyrim, and Witcher 3 feels pretty similar. Not bad for a game released 7 years ago in 2015! 

Healthcare/Medical/Dental – $0:

Our current 2022 health insurance is completely free thanks to very generous Affordable Care Act subsidies that we receive due to our low ~$45,000 per year Adjusted Gross Income. 

The “American Rescue Plan Act” passed in March 2021 makes the Affordable Care Act premiums even cheaper through 2022. Households with modified adjusted gross incomes (MAGI) below 150% of the federal poverty level get select silver-level health insurance plans completely free. 

For the adults in the household, we usually spend $20 per month ($240 per year) for a basic dental insurance plan for each of us. Our routine dental exams and cleanings with the occasional x-ray have increased in price recently. The cost is now $125 (no x-ray) or $170 (with x-ray). 

With two routine visits per year, we will spend almost $300 per person. A $240 insurance plan provides those same services for free. And we get some minimal level of insurance if one of us needs a filling during the year. 

This month, the dental insurance auto-pay hit our credit card in early March instead of late February. As a result, we’ll have $80 for dental insurance in March’s spending report next month. 

Gas – $0:

After topping off with a half tank of gas in January, we didn’t need to buy any gas in February. I imagine by the end of March we’ll start running low and need to refuel. Low gas consumption is a nice benefit of retiring early.

Cable/Satellite – $0:

We generally 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. Right now the cost of the internet service is temporarily reduced to $0 due to the “Emergency Broadband Benefit”. 

A great blue heron hanging around our yard

Total Year-To-Date Spending for 2022

Our spending totaled $3,728 for the first two months of 2022. This is about $2,000 less than the $6,667 we budgeted for two months of spending in our $40,000 annual early retirement budget.

So far the impact of inflation on our bottom line spending number has been fairly insignificant. We know everything costs more at the individual level. But we’re still generally staying within our retirement budget that we set way back in 2014! 

Coming up this spring, we will have to pay our annual home insurance bill plus a six month auto insurance renewal. These insurance bills will likely exceed $1,000 in total. I also need to complete some maintenance and repair tasks on our minivan, which will cost another $700-800. 

Looking ahead to this summer, we’ll probably not spend a ton in Europe beyond lodging costs already paid. The three countries we are visiting are 20-40% cheaper than the USA, so dining out, groceries, and local transit tickets won’t break the bank. The only major expense that we have yet to pay is $1,200 for our rental car for five weeks. 

In the fall, we will most likely buy a used car. That will definitely come with a larger than normal price tag given sky high used car prices. 

The oldest kid’s college costs should be very minimal this year. Most likely, we’ll get a Pell Grant or other financial aid that covers the full cost of community college. And if not, our state just announced a program to make the local community college free for all NC residents (if other financial aid/grants don’t cover the cost in full). 

Monthly Expense Summary for 2022:

Summary of annual spending from all years of early retirement:

Enjoying a walk through the neighborhood park while babysitting our niece.

Net Worth: $2,719,000 (-$40,000)

Another lackluster month in the stock market means another drop in our net worth. Our net worth declined by $40,000 to end the month at $2,719,000.

I guess this is the cost of several years of excellent stock market returns. We were due to face a correction eventually. 

For the curious, our net worth reported above includes our home value (which is fully paid off). 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.

Am I worried about the stock market correction? Not at all. It goes up. It goes down.

Is it different this time? Probably not. 

Fortunately, I’m still working on funding my 2021 retirement contributions: $19,500 for my solo 401k and $6000 times two for our Roth IRA’s. So a decline in the stock market is actually an excellent buying opportunity for me right now! 

Life update

A month ago we were dealing with waves of people getting sick, wearing masks (or not), and worrying about travel interruptions due to all of this. 

Now the war in Ukraine is a larger source of uncertainty for our travel plans this summer. Let’s hope for the sake of the Ukrainian people and their livelihoods that the war ends quickly and a tentative peace resumes rapidly. 

At the closest point of our trip, we’ll be in Hungary, just 70 miles away from the Ukrainian border. Lots could go wrong in the region during the next three months. 

But the optimist in me says things will calm down a lot in the next month or two. Wishful thinking, perhaps.

Enjoying some calm and peaceful sunsets by the lake

Currently, there is very little ground combat in the western part of Ukraine where it borders Hungary. So it is hard to imagine the war spreading into Hungary where we will be in July and August. And if it does, we may detour somewhere else during that segment of the trip. 

We’ll continue what we’ve been doing these past two years. Remain flexible and adapt as the situation evolves. Hope for the best but plan for the worst. 

How is your 2022 so far? Things getting better for you? Or taking a turn for the worse?

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