July has been a roller coaster ride in many ways, especially with my ERE goals. As the month wrapped up, however, it was by far the most successful month I’ve ever had (despite losing a bunch of capital in the stock market).
In June I made a ton of life changes, including changing jobs, moving to a new state, and selling my car. It wasn’t until July that I started seeing those massive changes paying off.
As I said, it was a roller coaster ride. In July, my 18-month old daughter had a second bout of seizures. This is a life threatening problem, and it’s extremely stressful. It puts my ERE goals into question, to say the least. Besides the obvious costs associated with several days in the ICU, it also calls into question my life’s priorities. It’s been an emotionally draining experience, so I’ve decided to continue to march forward with ERE plans for now, and reconsider everything as I become more rational with my thoughts.
OK, here are July’s numbers:
Auto Sevice and Parts: $41
Auto Insurance: $53
Auto Registration: $21
General Shopping: $230
Utilities: $513 ($280 was old house)
Student Loan: $143 (paid off!)
Home Improvement: $231
My original ERE stretch goal was to get expenses under $3000, which I accomplished. But it’s so much better than that. I set that goal with the assumption that I paid off my house in cash, which I chose not to do because of the low interest rates. I expect the number to now go even lower because I paid off my wifes student loan ($143/month), I’m done paying old utility bills from my old house ($280 last month), and last months home improvement fees were mostly due to buying a new house (~$150). Subtracting those fees, I now realize that $2500 is reasonable, and $2300/month is my new stretch goal. If I paid off my house, I could be looking at closer to $1600/month for my family of 4 – and yet still not feel like I’m making big sacrifices.
I’m most satisfied about our improvement with food costs. We dropped from $800 last month to $420 this month. This was my primary goal for the month, and it was extremely successful. My strategy was to do all the shopping myself, and not let my wife in the store.
My secondary goal was to get the general shopping down. I did not succeed in this, although my wife and I have agreed to start analyzing it more. Next month, I hope to either bring that number down or break it out so we understand where it’s going.
Lending Club: $0 (future monthly estimate is $45)
Dividends were a bit low, but July is just not a big payout month for me. Neither is August, but September should be very good. Average payout should be $1295/month, which equates to nearly half my expenses. I expect my dividend income to rise quite a bit over the next few months as I continue to reallocate my portfolio.
Taxable stocks: $464K
Lending Club: $5K
Investment House: $7K
I lost quite a bit this past month in the stock market. I’m not panicking, in fact I’m glad I didn’t invest more last month and instead I’m still holding on to quite a bit of cash. I plan to invest another $50K this month into dividend paying stocks and bonds. Because of the recent market drop, I will be getting more for my money.
Savings rate: 61%
Months to retirement at current expenses (3% SWR): 45
Months to retirement at current expenses (4% SWR): 5
Overall I’m happy to see that a 3% safe withdrawal rate results in just 4 years to retirement at current expenses. This number is pessimistic because it assume my July’s monthly income, which was low for dividends and slightly low for salary. I also think a 3% SWR is conservative considering some of my investments are significantly higher returning over the long run (with higher short term risk).