Money

August FIRE Update

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Hey everyone! It’s September and the kids are back in school. Woohoo! The first week of school was okay for RB40Jr. He used to get in trouble at beginning of every school year, but he is staying under the radar this year. We’re happy he matured a bit. The only big problem so far is the school bus. It either came very early or very late. The driver is new and she didn’t know how to get around the neighborhood. We still have a school bus driver shortage so I guess they’ll hire anyone. This is tempting me to go back to work for a bit. I need some extra cash to send to my dad so I’m looking for a new side gig. We’ll see how it goes.

On the personal finance side, August was rough. Our income was much lower than usual because Mrs. RB40 didn’t work. I also didn’t blog much because we were traveling. Our monthly expenses were relatively low, but we still had negative cash flow in August. We’re back home now so next month should be a lot better. As for the net worth, the stock market took a tumble in August and our net worth followed it down. It’ll get worse before it recovers so let’s just ignore it for now.

Today, I’ll share how I’m doing on my New Year goals. Then, I’ll show you our monthly cash flow. Here are the details.

2022 Goals

Here is my 2022 goal spreadsheet. It works really well. Try it out if you can’t keep up with your New Year goals. The key is to go over the spreadsheet at least once a month to track your progress. That way, you can see which goals need extra attention.

I’m not doing so well on my goals this year. The progress is very uneven. I will have to set better goals next year.

Financial Goals

  • Real Estate Crowdfunding $200,000. I’m not doing well on this goal. In May, one project completed and we got our investment + profit back. I needed to reinvest and finally found a project I liked last month. Anyway, the projects on CrowdStreet finish their funding phase very quickly. Investors are taking money off the stock market to diversify. It’s a great way to invest in real estate and generate passive income.
  • FI Ratio > 110%. This is my main goal for 2022. The FI ratio is passive income divided by expense. So far, our FI ratio is 128%. The big payout from the real estate crowdfunding project helped a lot.
  • Sell rental condo. Our tenant decided to stay for another year. He’s a great tenant so I’m okay with it. The price isn’t great in that area anyway. Portland is still struggling with a lot of issues. Anyway, I failed this goal.
  • Speculate crypto $10,000. Occasionally, procrastination is a good thing. I didn’t add much money to my crypto account this year, because it is going through a shakeout. I’m too afraid to add more money. Crypto is probably too volatile for me.

Health Goals

  • Unfortunately, I lost my fitness tracker in Bangkok. I have no idea how it happened. It probably just popped off my wrist. Oh well, I’ll see if I can pick up another tracker later.

Fun Goals

  • Travel 180 days – I spent 142 days traveling this year and I am exhausted. We spent the whole summer on the road while Mrs. RB40 was on a sabbatical. She could retire if she wants, but she plans to go back to work soon.
  • 1,000 subscribers on my YouTube channel. Currently, we have 1,381 subscribers on our YouTube channel. I don’t think I’m cut out to be a YouTuber. I just don’t have the personality for it. But we gained some subscribers this year so I met my goal.
  • Hot air balloon ride, zipline, and Disneyland. This isn’t looking good. I haven’t been able to bake these fun things into the schedule. We’ll probably put it off for now.
  • Happiness level > 8. We were on vacation for most of August so it was a good month. I gave August a 9. We were really worn out at the end of our trip, though.  

Net Worth (-13.6% YTD)

I’ve been tracking our net worth since 2006. It is very motivating to see the progress. The power of compounding is unbelievable. Our net worth increases more than we earn almost every year. However, 2022 is turning out to be an exception. The stock market is down and dragged our net worth down significantly. We diversified with real estate and other holdings so our portfolio is a bit more stable than the stock market. It still hurt, but don’t stop investing!

***Important*** Do not stop investing. You need to keep investing when the stock market is down. Eventually, the stock market will recover and you will do very well as long as you keep investing through the downturn.

Here is a chart of our net worth from Personal Capital. 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 our accounts. It’s a great site for DIY investors.

2022 Passive Income: $50,172 YTD

Here is a quick summary of our passive income. You can see all the details on my Passive Income page.

Our passive income is strong this year. In particular, real estate crowdfunding paid out nicely. Also, our rentals are performing better than the last few years.

*FI ratio = passive income/expense

August 2022 Cash Flow

Our cash flow was negative last month. Mrs. RB40 was on sabbatical and our other income streams were low. Our spending is back in the manageable range, though. Our cash flow should get back on track next month.

Here is the Sankey diagram of our cash flow. You can get a quick overview from the diagram and see the details below.

Gross Income: $2,211

Our gross income was way lower than usual because Mrs. RB40 was on a sabbatical. Also, we were traveling and I didn’t work much. Like many families, we withdrew from our savings to travel. We saved quite a bit earlier this year so it was fine. After this summer, we’ll be home for a long time.

  • Mrs. RB40’s job: Mrs. RB40 was on a sabbatical.    
  • Blog income: $736. My blog income was down last month. Blogging income is 50% passive, at best. If I post less, income drops too.
  • Real estate crowdfunding: $0. No payout from real estate crowdfunding last month. You can read more on the RE Crowdfunding Passive Income page.
  • Rental income: $703. We had a nice month at the rental. I think we’ll have a good year with rental income. Things are much smoother than the previous years.
  • Dividend Income: $788.
  • Interest Income: $1
  • Side hustle & Misc: $0. I really need to find a new side hustle.

Monthly Spending: $2,681

This year, I plan to spend about $50,000. So our monthly spending budget is $4,166. In August, we spent well under budget. We paid for our travel earlier and we didn’t spend much money after we got home.  

Here are the details.

  • Housing: $1,305. This category includes mortgage, home insurance, HOA fees, property taxes, utilities, home improvement, repair, and furnishing. The price of utilities increased a little this year.
  • Parents: $250. My brothers and I each sent $250/month to my parents. They don’t have much retirement savings. Fortunately, they live in Thailand so their cost of living is pretty low.  
  • Groceries: $306. Usually, we spend about $500/month on groceries. This month, we didn’t buy much grocery because we were on the road most of the time. I cooked a few things once we got home.
Green curry noodle
Chili dog! We had a ton of great Thai food when we were on the road, but comfort food like this tasted really good at home.
  • Bills: $23. (This is just life insurance. Water, gas, and electric bills are included in the housing category.)
  • Transportation: $465. This category includes gasoline, insurance, public transportation, and car maintenance. This one was much higher than usual due to registration renewal.
  • Entertainment: $70. We ate out a couple of times.  
  • Kid: $25. School fundraiser.
  • Travel: $100. The last bit of our summer trip.     
  • Health: $116.      
  • Clothing: $0
  • Misc: $21. Post office.

Others

I don’t count these as personal spending.

  • Taxes and deductions: $450 

August 2022 wrap up

August was another month that we needed to draw from our savings. We have enough savings so I’m not too worried. We’ll get back on track in September. I think the economy will worsen before it improves, though. Our net worth probably won’t recover for quite a while. We should all prepare for a tough recession. The Fed will keep raising interest until inflation drops close to 2%. It seems like inflation has peaked, but it will take a while to get down to 2%. So get ready for some pain.

All right, that’s it today. Are you ready for more economic pain? Am I too pessimistic?

Passive income is the key to early retirement. These days, I’m investing in commercial properties with CrowdStreet. They have many projects across the United States. Go check them out!

Disclosure: We may receive a referral fee if you purchase or signup for a service through the links on this page.

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.

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