Retiring Early – January 2014 Cash Flow Summary

Prior to writing this report, I haven’t set or managed a budget in well over a year.  This wasn’t an accident or a product of my laziness.  It was to see how my expenses would fair after taking some time off and living frugally, but not obsessively.

Unsurprisingly, my expenses have risen.  They rose so much, in fact, that I’m practically embarrassed to share the report in such a public forum.  Fortunately, our expenses are still lower than your average suburbanite and should easily get back down to my goal of less than $2500/month.

Expenses ($3176)

Groceries $678
Restaurants $125
Utilities $249
Cable $82
Cell Phone $69
Doctor $160
Pharmacy $83
YMCA $97
Gifts & Donations $301
Pets $295
Shopping (clothes, books, etc) $219
Pre-school $211
Entertainment $143
Cord Blood Registration $125
Misc $8
Gas $82
Auto Insurance $41
Home Improveent $124
Vitamins $30
Overdraft $20
Legal $17
Library Fines $9
Bike $8
 Total $3176


Many of these expenses are unusually high…

Between groceries and eating out, we spent $800!  My wife and I talked about this, and we have absolutely no clue how we did this.  We’re not dining on filet mignon, and we rarely eat out.  Restaurants were higher than usual (along with some other expenses) because we had family in town after Christmas and that tends to result in more dining out.  But still, we have no explanation for almost $700 in groceries.  Because of this, we agreed to keep a closer eye on our trips to the grocery in February.  This isn’t about depriving ourselves from good food, we simply want to understand what’s going on.  I have a feeling this will naturally drive our expenses closer to my expectation of $400-$500 in groceries.

The cable bill was $82, but we cancelled that this month.  We’re back to over-the-air HDTV, Netflix, and Hulu.  The only reason we ever added cable was because we had cable internet and we ignorantly fell for the “package deal”, but we’ve now switched to DSL for $35/month and no cable.  So this saves $50/month, and $600/year.  It also gives us back time, since we can all admit that watching cable TV is not a long-term rewarding experience.

Our cell-phone bill is $69/month, which is just the cost for my wife’s phone.  I’ve recently given up my work cell phone, which was paid for by my company, and I’ve switched to a Republic Wireless subscription for $10/month.  My wife is locked in to her iPhone deal for another year, but then she’ll switch to the $25/year Republic Wireless offer.  That will save us another $45/month, and $540/year.

We spent nearly $250 on doctors and pharmacy bills.  Sickness hit us hard this month, including both kids coming down with strep throat. This was unavoidable, but its safe to say the expenses were more than we will budget for in the future.

January is also an expensive time for gifts.  My wife, son, and daughter all have birthdays between January 12th and February 3rd, so between gifts and party favors, it’s tough to keep expenses down.  So while $143 in gifts seems high to me, it should be closer to $0 most of the year until December, with the exception of small gifts for grandparents’ birthdays.

Our dog was also very expensive in January.  Sadly, after 13 great years with her, we had to say goodbye.  She had a wonderful, healthy life, but a few weeks ago she stopped eating and the vet diagnosed her with failed kidneys.  At her age, this was untreatable and we had to let her go. From a heartless, economic perspective, we just saved any future costs of the dog.  But while she did cost us $250 this month, we would have gladly paid it many times over for a few more months with her.  Unfortunately this wasn’t an option.

Entertainment is another area where I expect to reduce our costs.  It’s sometimes easy to “buy” fun activities if you’re not budgeting, and out lack of a budget got the better of us here.  My experience has been that the most fun activities tend to be free or very cheap, but it’s also very easy to outsource the fun.  For example, while our extended family was visiting from out of town we dropped $30 for the kids to go ice-skating for an hour and we also paid $30 for some overpriced science projects online.  The skating, while fun, was really no more fun for our small kids than sled riding is for free.  And the science projects could have been done with basic household ingredients for a few cents.  That would have saved us $60, just between those 2 hours of kids entertainment.

The last unusual expense was for the kids’ cord blood banking.  This is an annual fee, so it will not be incurred for another 12 months. Honestly, I’m not sure this is a worthwhile expense, but we decided to keep paying for it, and it’s not something we’d ever want to regret in the future.

All told, I think our expenses could have been worse.  But I also see drastic room for improvement.  As it stands, we’re already set to reduce cable/internet by $50, pets by $250, and entertainment by $30.  This would take us from $3176/month to $2846/month.  Additionally, the cord blood fees averages to $10/month rather than the $120 we just spent, so that reduces our expenses another $110. I’d also like to reduce groceries by atleast $250, and expect medical costs to average at least $100 less per month, and gifts to average $100 less per month.  If those goals come to pass, then our monthly expenses would be closer to $2346.  This is, in my opinion, without any deprivation or sacrifice.  After next year, we’ll also rid ourselves of $200 in school tuition costs – but that’s down the road.

Income (not including my full-time salary) $2,376

Now the fun part…  Here’s a list of my diversified income portfolio and nano-businesses.

Dividends $1106
Rental $0
Hard Money $0
Lending Club $130
Prosper $187
Real Estate Private Equity #1 $208
Real Estate Private Equity #2 $0
Realty Mogul $0
Nano-business “o” $202
Nano-business “w” $40
Nano-business “e” $0
Nano-business “d” $500
App Development $3.5


My income is much lower than I expect it to be in the future.  The basic reason for this is because I have quite a bit of money tied up and not working for me currently.

Rental – In December 2012, I bought a rental house.  I paid $162K, cash.  It was a huge mistake.  Although I got a pretty good deal on it, I live in an area where rental rates just aren’t high enough to justify being a landlord.  I quickly rented out the house for $1400/month, but after taxes and home-owners association fees, I was only making $1000/month.  This still seems like a lot, until you consider the costs of upkeep and vacancies.  After 5 months, my renters broke their lease and there was no penalty because they were a military family.  I decided to cash out, and for 7 months I’ve sat on a vacant house.  Thankfully, the house is under contract for $190K and set to close in a few weeks.  This will free up $178K after transaction fees, which as 4% would pay out another $600/month.

Hard Money – I also have quite a bit of cash sitting in a savings account right now, waiting to lend out as hard money.  I’ve been working with a friend of mine who flips houses, and will likely be lending him about $100K at 12% sometime in February or March.  If this works out, my income will be increasing by $1K/month for the duration of that loan and hopefully be setting up a good long term partnership.

Real Estate Private Equity #2 – This is a new investment I’m in the process of funding.  The company has about $50M in capital, lending to builders and renovators in Washington state.  I’m currently on a 2-4 month wait list to invest with them, where I will receive a preferred interest of 6%, and a historic interest of 12%.  The minimum investment is $100K, which means I should recieve about $1K monthly with the minimum investment.

Realty Mogul – This investment is experimental, much like I’ve treated Lending Club and Prosper. Realty Mogul is a crowd funding website that invests in real estate and pays anywhere from 8% to 18% interest depending on the deals and risks involved.  Currently I’m invested in a Bed and Breakfast renovation with $5000 in capital, paying 10%.  I should get my first interest payment in February or March.

Nano-Businesses – As you can see, my wife and I have 4 different nano-businesses.  One is just her, one is just me, and two are things we’re doing together.  Once I quit, I’m hoping all 4 can be things we do together with more of our time when the kids are in school and after they go to bed.  These are really just fun hobbies, that happen to pay.



All in all, we spent $3176 and made $2376, for a net cash flow of -$800 (not including my salary).  This would be alarming, except that I fully expect my expenses to drop by $700 and my income to increase by $1500 over the next few month.  Once that’s achieved, we would be left with a net cash flow of +$1400, which would be a savings rate of 61%.  I still need to account for health insurance, but even after that I should be sitting around a 50% savings rate in retirement.


Don’t forget to check out the forum to see others’ January reports, and to start your own if you’re interested.  Several people have already signed up and written their first reports.

71 Responses to Retiring Early – January 2014 Cash Flow Summary

  1. A good example of when you stop tracking expenses they start to creep up!

    I’ve been slack the last few months but have decided that we are going to live on a strict budget of £2000 per month, and I will take the rest straight out into retirement and savings accounts so it can’t be touched.

    One thing I noticed missing was travel, do you not plan to take any holidays?

    • We don’t travel much, and when we do it’s pretty cheap. We drive instead of fly, and we can usually find a cheap but nice place to stay on AirBNB. For example, last time we drove cross country, we couldn’t find a hotel suite for under $180/night – but we “need” a suite with a door to the bedroom or else we’ll never get our kids to sleep… Instead, I found an entire furnished house for $75 in the same town – complete with 3 bedrooms, a furnished kitchen, and cable TV. The house was actually nicer than my own, and located just outside of St. Louis. I was tempted to stay a few extra days. :)

      • Frugal travel rocks! Booked my first air bnb the other day for the summer. Cheaper and nicer than staying in a hotel room that looks the same as anywhere else in the world!

  2. Insourcelife says:

    I think your house is paid off but what about property taxes and homeowners insurance? Any HOA fees?

    • Good point, nothing gets past you guys. :)

      I don’t have an HOA, but taxes plus insurance will cost about $150/month. I’ll roll that into the budget next month. I kind of rushed this article and didn’t consider the things that I didn’t spend this month. Fortunately, this goes both ways because there were some income sources that I also didn’t include because I didn’t make anything this month either. They should even out, but I’ll fine tune the report next month for a more complete look.

      • Insourcelife says:

        $150 is cheap, I pay double that for taxes and insurance plus another $30 for HOA and another $45 for pool, which is optional but a must here in the summer. Big house = big expenses :)

      • I’m all too aware of high property taxes. When I lived in Austin TX I had a house appraised for $415K, and paid $1000/month in taxes alone! That was a worst case scenario though, since Texas has no state income tax.

  3. Camille says:

    Thanks for sharing. How many years did it take for you to build your dividends that high? I’m almost earning $40/month (started investing last year) so the investment and time to get to $1100/mo seems so far away

    • I started investing at 21, when I graduated college. So I guess you could say that it took me 14 years or so since I’m 35 now. Up until I was 32-33, I didn’t invest in dividend stocks. Instead, I focused on finding the best valued companies with large moats. I guess you could say I’m a bit of a Warren Buffet aficionado, like so many other investors online.

      But if you’re investing consistently, it’s quite possible to get to $1100/month much faster. For example, I have about 50% of my money in non-dividend investments so the $1100/month could easily be $2200 just by reallocating – I just choose not to do this. I also have some of my dividend stocks in companies that pay pretty low dividends – for example, I bought WAG in 2012, and it has since doubled in value. The dividend hasn’t doubled with it, so it’s now only paying ~2% yield. I could tweak my portfolio for higher yield, but WAG is an example of a company and value I’m still happy to hold so I’ve chosen not to touch it for now.

  4. Kevin says:

    Just a comment about your internet. Depending on where you live you might want to check if FreedomPop is available. The device is $89 and then it is $19/month for the highest speed internet (I think 13 Mbps or so) and 10 GB of data but there are cheaper plans than that depending on your usage.

    • Thanks for the heads up! I just checked availablility of FreedomPop in my area, and it appears that they only offer 3G/4G service, but not home service. Do you use it for home service? What is the medium for transferring data? E.g. cable, phone, 3G/4G, etc?

      • Kevin says:

        Oh that’s too bad. I do use it for home service and it transfers data through 3G/4G so I guess it works like those phones you can turn into a mobile hot-spot. I did a speed test with it and got 5 Mbps which was still able to stream Hulu without any problems.

  5. Ken says:

    For LC, are you withdrawing all revenues and no longer buying more notes? I’ve been doing $100 per week to buy notes while also buying notes with any revenues earned. Though, my cash balance has begun to creep up as I’ve been having a harder time finding notes to buy.

    Do you need a landline for your DSL? Is it reliable? I’m paying $70/month for just Comcast internet now that they raised it $2 again. We use an antenna for TV and stream shows so we don’t pay for cable.

    • I’m using Century Link DSL, and no land line is required. You need the house wired for phone service, but you don’t actually have to subscribe to the service. There was also no long-term commitment, just a small activation fee.

      For LC, I’m still rolling over my profits. I started with $10K and I’m now over $13K. My plan was always to build it up to $15K, then start taking out the interest as a paycheck. Once I officially quit, I’ll probably just invest the remaining amount to get up to $15K so I can jump start that plan. For Prosper, I invested $15K from the beginning so I’m taking out the cash over $15K each month already.

      • Ken says:

        Do you have to rent a dsl modem every month or can you buy one? I’ve owned my cable modem for almost 10 years and recently bought another one on a deal for $45 to try and correct an unreliable connection that hasn’t helped at all. $70/month is insane for internet, especially when it goes out so often.

        I’m currently at $7500 with my $400/month contribution and was planning on stopping once I reached 10k for a year or so to see how it does from then.

      • Nope, we’re not renting the equipment. They delivered it as part of the activation fee, and we’re supposed to return it if we ever cancel the service. But there’s no monthly fee.

        When I had cable internet, I did lease for a few months. Then I realized that it was just a generic device so I bought one on Craigslist for the same price as one month of the lease and used that for 2 years before finally canceling the service. Those leases are a complete ripoff – but it works because most people just pay it without question.

  6. AJ says:

    Sorry to hear about the rental property, but at least you had some capital gain. Was it in a poor area, why did you have trouble not re-renting, winter season? Just because you had a bad experience doesn’t mean you should ignore rentals going forward. Sounds like a topic for another post.

    • I should have been more clear. I didn’t have trouble renting, in fact it filled very quickly. The mistake was buying in that neighborhood, which was new and somewhat expensive and had a really expensive HOA.

      Rented at $1400/month, but taxes and HOA took it down to $1000/month. At $190K in value, that’s an ROI of just 6.3% before any maintenance fees or vacancies have been accounted for. The reason it didn’t rent out again for 7 months is because I didn’t try, I had it on the market to sell.

      We haven’t ruled out buying another rental in the future, but we don’t know how long we’re going to live in CO before moving east to be closer to family, so we decided to hold off on that.

  7. Eli G. says:

    Sorry to hear about you’re dog. And along with that, do you not plan to adopt another one? and if you do how do you account for those expenses?

    • We decided not to get another one for now. I think we’ll reconsider in 5 years or so when our kids are a bit older and can help take care of one. For now, we’re sticking with the goldfish in my aquaponics setup. :)

  8. Matthias21b says:


    What company are you investing in for your ‘Real Estate Private Equity #2’ investment and why did you choose to go with them versus investing more money with pine financial? I’m curious as I have invested in pine in the past and am looking to invest more money in real estate private equity.


    • I’ll send you an email about the fund. I’ve been told to be careful about discussing these types of investments in a public forum.

      But for those wondering, the reason I’ve gone with a second fund is simply for diversification. Each of these two funds focus their real estate portfolio in a specific area of the country, so preferably I would diversify across 5-10 funds over time. Unfortunately, they have pretty high minimum investments so I can only diversify to a limited extent.

  9. Shawn says:

    Hey there!

    So sorry about the dog.

    Your income without salary is outstanding!

    Good to see your posts.

  10. What will your health insurance cost? Mine for a family of 5 will be about 875 for obamacare and we don’t qualify for subsidies. our property tax is $5500/yr, too. I feel discouraged. health insurance and property tax would be over 50% of your expenses if it were me in your shoes. Maybe we should move out of state.

    • Ken says:

      $875 PER month?! What’s affordable about that? The plans my wife and I looked at were all $400+/month and the deductibles were super high and nothing was covered. We’re going to have to pay the fee. So bummed.

    • RB says:

      You don’t qualify for subsidies being retired with no employment income? That sounds very fishy to me.

    • I was gonna say the say thing as RB. I’m not using them yet since I’m still working, but I’ve already checked and I’ll be paying about $270/month for insurance after subsidies. That’s for my family of 4.

      I’ve been told that it varies from state to state, but my understanding was that every state had some level of subsidies for low income earners.

      • tk says:

        Just caution that you there are income limits low and high – for FIRE people the low might be problematic….unless you are ok with medicare….if not you will want to manage your income so that is above the low threshold.

        i.e. lets say you desire to live on $3000/month or $36000 per year – all your income may not be coming from taxable sources. Your overall passive income might be $36000 but what if half is from retirement accounts, you would probably fund it from the passive income and selling shares of non-retirement accounts.

        Just something to pay attention too.

    • No, I’m saying I don’t qualify for subsidies pre-retirement, with my full time income now. But yea, I see what you guys are saying, if I actually DID retire then of course I’d qualify for subsidies. Good point, thanks for bringing that up. Of course, the very HIGH deductible insurance policy says that I’d pay like crazy for any medical expenses that do come up. So I guess that leaves only my house as my biggest thorn in my side to prevent me from early retirement, as my house is expensive.

      I guess Obamacare then is just one MORE reason to retire and join the ranks of Americans collecting from Uncle Sam. What happens when all the working Americans retire early to collect their subsidies and no one is left paying for the subsidies? I guess Obama didn’t consider that…

      • Ken says:
        What happens when all the working Americans retire early to collect their subsidies and no one is left paying for the subsidies?

        And this is why socialism never works: eventually you run out of other people’s money 😉

      • What happens when all the working Americans retire early to collect their subsidies and no one is left paying for the subsidies?

        What happens when everyone is an artist, and no one farms the food?

        What happens when everyone is a farmer, and there is no more art?

        Or worse, what happens when everyone buys the idea that we all must work as much as possible for as long as possible under stressful environments? Hint: it involves chronic mass stress, anxiety, depression, and obesity resulting in, you guessed it, higher healthcare costs for all.

      • Bryan –

        Regarding the expensive house, it turns out there’s a really easy trick to getting around that. I didn’t realize it for a long time, but it just so happens that you can actually downsize your house and/or move to a less expensive area. Voila!

        Sarcasm aside, downsizing was the best thing I did for my family. I moved from a 3200 sq-ft house worth $415K, to a 1850 sq-ft house worth $200K. At the same time, I switched from a 2.5% property tax state/city to 0.9%. And beyond the obvious financial benefits, we found ourselves so much happier and fitting in. We have a lot more in common with the young frugal parents in our new neighborhood than we did with the rich, baby boomer grandparents in our old neighborhood.

      • Brave – yea, downsizing is something we’d consider. Our house is worth $550,000, and our property taxes are only 1%, but that adds up on $550k. We have a few obstacles though, being that I work from home in an inventory based business and our property is set up very much for my business and it’s hard to find properties that work for this. Being that I work from home is one reason also that I’m not as desperate to retire as some of you guys who work in cubicles. If I went to a 9-5 job in an office, I’d ditch this house so quick it would make your head spin. Also, currently, in our income bracket, the write off’s from this house pay for a lot of it. And we live in a VERY expensive part of the country… a $200k house would be pretty awful. We could move to a different city. But that is a bigger discussion to have.

      • Ken says:

        200k houses exist in CO? That’s our sweet spot but haven’t been able to find any with basements which is a requirement for us.

      • By the way this whole discussion is so interesting to me. I have a close friend I was just talking with. He is 66 years old. He makes $300,000 – $800,000 / year depending on the year. He spends about $200-300k/ year. He’s not that lavish, just has a lifestyle he’s built up. He’s always stressed about money and works 70 hours per week and retirement seems impossible for him. This problem in America is SO common. It’s like a hidden epidemic of monstrous proportions. It’s really crazy.

      • I paid $199,900 for my house in north CO Springs, a few miles south of the Air Force academy. It’s a top school district, walking/biking distance to the grocery store, library, coffee shops, and anything else you might need. And, it has a basement!

        I’m selling my rental now for $190K, also in the Springs but farther out west away from the mountains a bit. It’s 2400 sq-ft, built in 2007, and a large finished basement.

        So yeah, the houses are here. It just depends what you’re looking for. You won’t find the same deals up north in Denver and the surrounding towns.

      • Ken says:

        I keep forgetting you’re in CO Springs.

      • Bryan –

        My uncle makes $500K per year, and was recently hospitalized for heart conditions caused by sever stress related to money and work. He has a huge house, a good wife, and two beautiful young girls. He has 4 cars and a yacht, complete with DirecTV where the satellite sits on a gyroscopic doo-dad that ensures it’s always pointing south for good reception, even while he drives the boat.

        After he was hospitalized, the doctor told him he needed to take time off work, and look for a new job that was lower stress. He took off a month, and returned to his high stress life. It’s sad, really. Watching him literally kill himself with his deteriorating health caused by stress is like watching an addict that can’t put down the bottle.

      • Hedonic adaptation. It’s an addiction as deadly as heroin or cocaine.

  11. R P says:

    Can you talk a bit more about Realty Mogul?

  12. Brave, I’ve got a question for you. You sure do post a lot about early retirement but I’m wondering: are you actually gonna do it? What would you say the probability is that you quit your day job within, say, 3 years? I’m just curious. I ponder it a lot too, but I don’t pull the trigger.

    • Oh, I’m doin’ it, man. It’s kind of a long story, but here’s where I stand:

      For the past 6 months, I’ve been planning to quit as soon as I sold my rental and got that money back freed up. That closing is on 2/26. I have a meeting with my boss the following Monday, and I plan to give my notice then.

      But…. Last week, we had a fellow EE quit to go to another job. There were 5 of us EE’s, with an open requisition for a 6th. Now we’re down to 4! When I leave, if we haven’t filled these positions, that would be 3 and all hell will break loose.

      So… I was considering the option to offer to work part time (20 hours) on a temporary basis for an additional few months, perhaps to the end of the school year. That’s partially me being nice, and partially me finding a middle ground that makes the transition a little easier.

      Long story short, there’s a 100% chance I quit within the next 3 years as you asked. I’d say it’s 90% that I’m working no more than part time by the end of March, and 95% I’m not working at all as an engineer by the end of the year. Those are the odds I’m floating out to Vegas, anyways.

  13. Love the income diversification BNL! I’m fascinated with all things P2P lending/dividend/real estate investment related and you’ve hit all those points. Looking forward to seeing and hearing more about some of those sources of income.

    As for Realty Mogul, are you capping yourself at $5k, or will you expand a bit further to diversify the number of deals invested through them?

    Best wishes.

    • I’m not caping myself at $5, but I’m planning on sticking around there for a little while. Here’s the thing.. I read all their documentation and prospectus before getting started, and that took a few days. After I signed up, but before I invested, I was contacted by one of their “Investor Executives” who answered a dozen or so questions I had.

      After I submitted to make my first $5K investment, I got an 85 page document detailing that specific deal, along with all the risks. That was 85 pages that had clearly been written by a lawyer, which is to say that it was long and painful to read.

      I finally gave in, skimmed the last 40 pages, and just put the $5K forth so I could officially start getting my feet wet. I still have some more research to do before I go in bigger. Once I’ve done all that, I’ll also write more about it here.

  14. Brave, when you “retire,” why wouldn’t you look for an engineering job for say 10 hrs / week? Could bring in $30k or whatever, and would go a long way toward having to pinch pennies so much. This is what I’m considering in my own situation — instead of cutting out all of our expenses ( we spend about $80k/year…) I’m looking at part time work that I have access to that could easily pay 1/3 or 1/2 our living expenses with 10 or 15 hrs / week.

    • Bryan,

      This answer probably deserves it’s own post, but I’ll try to give a semi-short answer here.

      First, it’s possible that I will work part time in the short term, partially as a “transition” from full time work, and partially to help out at my job because we’re already short staffed even before I leave (this is assuming nothing changes in the next month or so). Of course, they may not even take me up on my offer to work part time, so who knows…

      But here’s the real answer: for me it’s a simple evaluation of the pros and cons. The cons to working part time are that I would remain in an industry and job that bores me and adds no real value to my life, other than the money it provides. Additionally, it confines me to specific physical locations and schedules, and provides small amounts of mental overhead (e.g. thinking about a project I don’t really care about when I should be completely engaged with something else).

      The pro’s are that it provides the aforementioned extra money. But when I consider the marginal utility of that money, it simply lacks significant value. If I felt I was “pinching pennies” as you described, I would probably continue to work full-time until I had enough that I was no longer pinching pennies. Fortunately, I don’t feel that way.

      Here’s the truth of it, at least as it pertains to me and my personal experience. If I think in a manner of “I’ll just work a little longer so I can have X, and then I’ll quit,” the ‘X’ is always changing and always keeping me in the status quo. Working part time, for me, is inviting that way of thinking and leaves me in a frustrating limbo.

      There is one more thing… As you’ve seen in the income report, my wife and I have 4 nano-businesses. I also have about 4 more ideas that interest me. Any one of these is capable of making that extra $20K-$30K or more, if I want it and if I put in the time and effort. I would much prefer to try something new and challenging in an area that excites me, than to continue to trade my time for money. And I don’t mean that to criticize others who do trade their time for money (as I’ve been doing for over a decade now), it’s just that I’m lucky enough to be in a position where I don’t need to do that anymore, so I’m choosing not to.

      tl;dr? There are lots of different reasons I can think of that working part time as an engineer would make sense, but I’m not convinced they apply to me, my own desires and goals, and my specific financial and professional situation. That is subject to change…

      • Thanks for the great answer.

      • By the way, your answer blew me away. You’ve got some guts, to hang it all out there and go 100% the direction you want. I wish I was there. I keep part time work now that I don’t like, because I haven’t learned the lesson of marginal utility of money I guess. Also, it’s hard to know how much is “enough” for a safe retirement. I guess if you still have a significant savings rate even with retirement income, that savings rate is a good metric for if you have a big enough moat to be OK.

    • Ken says:

      Bryan – I think spending 80k a year is what is preventing you from retiring. That is A LOT of spending, $6,666/month roughly. I don’t know your specific situation, but you should be able to live comfortably on half that spending and still be plenty happy. Of course, if you live in NYC or some other expensive city that will obviously be different.

      • My $80k expenses are mostly house and $875 health insurance (thanks obama). My house isn’t all that exorbidant, but where I live in tahoe, a $520k house is just a basic home with 2200 sf. I work from home and have an employee work here too so a smaller house would be hard. I think if we really wanted to target $40k expenses we’d have to move to Colorado or something. Right now with income, I get to write off the health insurance and the mortgage interest/taxes. But if I retired and income dropped a lot, the write off wouldn’t matter.

      • Ken says:

        @Bryan: How are you writing off health insurance? I’m also self employed and work from home, but the high cost of Obamacare is keeping me from buying insurance. Plenty of great ski resorts in CO 😉

      • line 29 of my 1040 return, you get to write off self emplpoyed health insurance. It’s part of the law. As long as the self employed person pays for it. If your wife has benefits, it doesn’t work. And, not having health insurance isn’t a good option for me, I have assets, and if you are uninsured and have a major incident your assets can be seized. No thanks.

      • Ken says:

        The write off isn’t a linear credit, but rather a deduction right? My wife is a school teacher and does not pay for insurance through her school, though she could if she chose to pay for it. Would that preclude us from deducting?

      • Hmm, I still think you could deduct if she is insured through your family biz or self employed insurance. And yes it’s a deduction not a credit. It comes off gross AGI.

  15. Brian says:

    Thanks for sharing – this is insightful info. Your focus on creative and innovative generation of a diversified passive income stream is a big part of what makes this blog special. Being smart on expenses will only take me part of the way and as you say the income side is the fun part!

    I’m also invested in Realty Mogul (thanks for the tip). I have a small investment in a portfolio of mobile home parks with a projected IRR of 16-18% annualized and an anticipated hold period of 5-10 years. I’m curious how it will play out as it is my initial use of their platform. They aren’t as polished as Lending Club, but the website and model is similar. RM is in startup mode and is much smaller in terms of headcount and investments funded compared to LC. Several of my pre investment questions were answered by one of the RM co-founders. The RM investments are fairly complex to evaluate for someone like me without a real estate background, but RM does vet the potential investments prior to making them available. I have high hopes for RM as it allows smaller investments in real estate projects I normally wouldn’t have access to.

    One a separate note I’ve read that Lending Club is planning to IPO in 2014. Once they go public LC can allow investments by residents in all 50 states. Currently there are many states that for the most part do not allow investments via LC due to state regulations.

    Thanks again and looking forward to future posts on this topic!

    • Hmmm… will LC going public make it more or less desirable to get in now? Maybe more, as demand increases later?

      • Brian says:

        Good question and I’m not sure. But the LC founder has said the idea behind an IPO for Lending Club is not so much to raise capital as to make more consumers aware of the company’s services. I’m assuming he is referring to borrowers since as we all know there is more than enough investor interest.

  16. MJ says:

    Hi BNL,

    Looking at your expenses I do not see real estate tax/HOA fees. Was wondering why you don’t have those because unfortunately they are a big chunk in my expenses.

    • That was an oversight. We’re paying taxes for 2013 right now, and it looks like the taxes will be about $120/month. We don’t have an HOA. I also need to figure out what out monthly insurance cost is and roll that into the budget.

      I’ll make sure that’s all included in February’s report.

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  19. Mike says:

    Great blog. Thanks for your info. I’m fairly new to this but I’m curious about Lending Club. I checked out the website and it definitely looks legit. What would be the main reason someone would invest in LC vs mutual funds or what not? Just for diversification or maybe it pays out monthly? Thanks for your time it is much appreciated.

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