August was another successful month on my road to extremely early retirement. We have once again achieved our goal of keeping our family expenses below $3000 (well, close anyways). This, despite several large purchases. In fact, although I was a few dollars over, I’m encouraged because it included nearly $600 of one-time expenses that we could have done without. I’m not happy about those expenses, but it was a compromise with my wife who has been very open to our drastic life changes. I’m continuing to stick with my stretch goal of $2500/month as my next target. To do that, we need to step up on getting our grocery expenses down.
Here are August’s numbers:
Auto Sevice and Parts: $21
Auto Insurance: $0
Auto Registration: $0
General Shopping: $0
School Supplies: $38
Student Loan: $0
Bike Stuff: $40
Home Improvement: $609
- My wife’s student loan is paid off, saving $140 per month.
- I finally broke out the general “Shopping” category which was mostly unknown payments to Amazon and Walmart. Turns out it’s a combination of groceries, diapers, and bike gear this month.
- My in-laws came to town and spent a bunch of our money painting and doing other home improvements that I considered unnecessary. We also bought a new bed, which was slightly more necessary. This all resulted in $609 of home improvement. I’d like to keep this under $100/month. Remove this expense and we hit our stretch goal of $2500/month
- I continued to take too much out at the ATM.
- Grocery expenses began creeping back up. There were a few good reasons for this, but I want to get it back under $400. Originally I wanted to hit $300, but I’m easing off that. $300 is a better goal when I actually retire and can spend the time preparing less expensive food. Targeting $300 now puts too much burden on my wife.
My salary was nice this month because I got three paychecks instead of the typical 2. For dividends, I’ve decided to start reporting the annualized expected payout divided by 12, rather than see some months extremely high and others extremely low. I’m trying to reduce the volatility in the tracking of my progress.
For my online store, I had not previously been paying myself any income. Now, I’ve decided to pay out 10% of sales. Profit margin is close to 50%, so that still allows us to reinvest quite a bit. Reinvesting all goes into buying more inventory, although I’m also thinking about hiring out some designers to improve the look of the store. I did it all myself, and while I’m proud of the work, it’s not up to par with the high-end competitors we have, who spent thousands on their design. I often wonder how much that hurts sales.
I was happy to see a sale on Commission Junction. It’s actually from this blog, when someone signed up for Lending Club. I don’t write on this blog to make money, but if I make a few bucks while also helping someone else get involved in a product I believe in, all the better.
You’ll also notice that I set up a placeholder for Admob. This is an advertising platform for mobile devices. I’ve recently started re-learning java and plan to try writing some Android apps. For now I’m writing custom games for my kids. I figure if they like them, then other kids will too. It might be an utter failure, or it could be another fun way to get some income diversification. I’m enjoying the challenge, so even if it fails financially I’ve had some fun.
One of my other outlets for investing is real estate. I don’t do any work, I just fund a partner who does all the work and take in 50% of profits. This week, we found a renter for our first house together, so we’ll start to see mild cash flow from that. It was rented out as “rent-to-own”, and once she qualifies for the purchase I should see about a $10,000 payout. That should happen in 1-2 years. Not bad on the $7000 investment. We are also looking at doing a flip together which will cost me about $109,000 for 3-4 months time, with an expectation of about $11,000 payout. That would be a 30% annualized return. I’m still analyzing that purchase, however.
Investable Assets: $948,000 – does not include house equity
I re-positioned my investments quite a bit this past month. After the volatility we experienced in the stock market, I’ve decided to re-allocate to a more conservative (smarter) portfolio. Predictability is key when approaching an extremely early retirement. The allocation is similar to Harry Browne’s Permanent Portfolio, and I’ll be writing about it in my next post – so stay tuned!
Savings rate: 75%
Months to retirement at current expenses (3% SWR): 28
Months to retirement at current expenses (4% SWR): 7
This is the first month where my “Months to retirement” at a 3% safe withdrawal rate will actually get me to my goal of retiring at 35. In 28 months I will be exactly one month shy of my 36th birthday – still 35! That’s cutting it a little close, but I will build some buffer as I continue to drive expenses lower.
Picture of progress (click to expand):