Retire By 35: September 2011 Results

September was a great month for my overall extreme early retirement goals.

First, I had my lowest month of expenses despite having my mom staying with us for 2 weeks.  Normally, having visitors drives expenses up because we spend more on food and entertainment.  Although we did spend more in those two areas, the impact was minimal.

Second, I had good income due to a new income source writing Android apps. Unfortunately, I expect this income to go down next month since my best apps were suspended by Google due to trademark violations. Many of my app themes were based on cartoon characters, and Google started suspending these types of apps last week.  I was surprised about this given that there were so many apps out there that were doing exactly what I did (some with over a million downloads!),  but most of those were suspended as well.  Nevertheless, I still have some income coming in and several more app ideas to implement when I have some time.

Third, and most importantly, I feel I’m putting together a more complete philosophy behind my early retirement goals.  I’ve written before about what I’ll do in retirement, but I’ve never talked about why I so strongly want to achieve this.  This is because I’m still exploring my thoughts and philosophy in this area – for instance, what are my virtues?  Is frugality a virtue, or is it merely a path to virtues?  Or is it completely unrelated, and a waste of time?  I haven’t quite reached my answer yet, but this past month allowed me to make a lot of progress in the area.

As always, thanks for reading and thanks for your support.  I’m feeling more pressure to add value to the web and share only great ideas and stories as my readership has grown.  I really like the community that’s been visiting here lately.  Here are September’s numbers:

Expenses: $2737

  • Mortgage: $871
  • Education: $141
  • Utilities: $203
  • Groceries: $364
  • Diapers: $35
  • Restauraunts: $107
  • Fuel: $115
  • Gym:$187
  • Clothes: $115
  • Auto Sevice and Parts: $87
  • Auto Insurance: $0
  • Auto Registration: $202
  • Bike Stuff: $59
  • Medical: $23
  • Cash: $80
  • Entertainment: $127
  • Home Improvement: $6
  • Books: $15

My latest stretch goal is $2500/month, which I still think is attainable.  The car registration was a one time expense from moving to Colorado.  The entertainment was high because we got an annual membership to the Cheyenne Mountain Zoo (which is awesome, by the way), so it’s more like $10/month if you were to amortize the cost.  And the gym price was high because it had a $100 initiation fee.  Originally I had not intended to join the gym, but changed my mind.

I decided to join the gym as part of my ever-evolving Brave New Life philosophy.  I don’t need a gym to stay fit.  I have kettleballs at home, which is mostly how I workout, along with running and biking.  However, the YMCA here has a great kids club that allows my wife to drop the kids off and workout so it adds to her sanity.  Also, I’ve recently begun playing racketball with a co-worker of mine and I do want to ensure that I stay socially healthy once I retire.  Since I’m new to the area I don’t have a lot of friends here so this is a step in that direction.

Income: $12465

  • Salary: $6596
  • Online Store: $318
  • Android Apps: $673
  • Amazon: $17
  • Relocation Bonus: $3316
  • Commission Junction: $50
  • Dividends: $1327
  • Lending Club: $68
  • Adsense: $0.84
  • Real Estate: $0

I’m happy with the continued diversification of my income.  In fact, if you take out my salary and one-time payout for relocation, I still earned $2554.  This is just under what I spent.  This is obviously encouraging news, and builds confidence that I really can retire at 35.

You may have also noticed that I listed real estate as another income source this month.  This is because I’ll be closing on an investment property later this week.  More on this later.

Assets: $935,000

  • Cash: $69K (to be used for REI)
  • Taxable stocks: $486K
  • 401K/IRA: $360K
  • Lending Club: $10K
  • First Investment House: $7K

Unfortunately my overall invested assets dropped.  At first glance, that is bad – especially when you consider that I saved over $9000 of income.  On the other hand,in a month  where the stock market dropped 7%, my BNL portfolio only dropped 1.5%. When you’re talking about nearly $1M in assets, that’s a lot!  A 6% drop would have been $70,000. This is why I like the stability of the BNP so much.

Overall Outlook:

Savings rate: 78%
Months to retirement at current expenses (3% SWR): 17
Months to retirement at current expenses (4% SWR): 4 

In August, I had my first month where my “months to retirement” were on target to retire at 35.  However, it was very close with only 1 month of margin.  In September, the number dropped significantly and now I have 10 months of margin.  Since I’m contractually obligated to work 20 more months, this means I should be able to retire in June 2013.

Image of progress (click to enlarge):

24 Responses to Retire By 35: September 2011 Results

  1. Martin says:

    Congratulations on a big month. I certainly envy the diversity of your income.

  2. Squirrelers says:

    Doing well on the diversity of your income, as well as accumulation of assets. With respect to the income, it’s good that you can still bring in a decent chunk of money even in the absence of job income. Important these days!

  3. Congrats on a great month! That really sucks about the apps but all you need is a couple of good graphic designers and you should be good to go.

    • Surprisingly the apps are still making between $10-$15 per day even after 2 weeks of being off the market. I still expect to see it slowly creep towards $0, but the longer it stays up the longer I have to write some new programs to replace the income.

  4. Congratulations on the month. I know your side income just barely covers your expense, but it is almost equal to my monthly take home pay from work, so I think you’re doing well :).

    Also, getting into developing apps sounds like a lot of fun, especially with so many new devices coming out that people will want to play games on.

  5. Mom's Plans says:

    This is so inspiring to read! I love to see how low you kept your expenses and how much you were able to make on the side. We just visited Colorado, and I would love to go back.

  6. That stinks about your apps!

    Great income, and you are really close to reaching your goal of early retirement! Just 17 months?

    • Yep, 17 months at the current income and spending rates, and assuming no losses or gains on current investments.

      Of course, all three of those variables are likely to change, but hopefully for the better.

  7. 1step says:

    Congrats! Great progress, especially on setting up the alternative income. I’m also contemplating a rebalancing of my retirement investments as it’s been highly volatile recently.

    • I’ve been extremely happy with my new portfolio. As the market rises and plunges by 2-3% many days, I almost never see more than 0.3% movement in a day. As I near my early retirement, this stability is far more appealing to me than volatility with potential long term benefits.

  8. BrunoB says:

    This post is like sex to my statistical background. Fancy graphs!

    Thanks for sharing

    • Glad you like them. The graph is straight out of Your Money Or Your Life. It also acts as great inspiration to keep my expenses down.

    • DJ says:


      Awesome man! So we have been in the industry for roughly the same time (~11 years?), so I’m curious to know how you have $360k in your 401k? Also, I have some questions about your strategy?

      * I only invest up to the limit in my 401k because I had the limit investment options. What do you invest in?
      * After 35 will you move your taxable stocks to MUNI bonds? Wouldnt this be safer than stocks? Also avoids some tax hit?
      * How will you withdraw from your 401k without early withdrawl fee?
      * Is a million the wrong target. I mean it’s the proverbial target you hear about today, but that’s for those 65 years old. Will a million really be enough for someone 30 years younger?
      Do you plan on moving at 35? so called downsizing to a low cost area? if so, where?


      • Hi DJ – The 401K/IRA of $360K consists of what my wife and I each saved. She only worked a few years, and contributed about $70K of this money. The remaining $290K ismostly 401K,but some Roth IRA that I contributed separately. I maxed out my 401K each year until recently, and have had decent market returns the past 5 years. Now let me attempt to answer your other questions:

        1. I invest my 401K as part of my overall Brave New Portfolio strategy.

        2. No, I don’t intend to change my investment strategy after I retire at 35. The portfolio I have has a very low standard deviation (good measure of risk). Reducing the deviation in retirement is more important to me than maximizing gains. By the way, I don’t consider muni bonds a safe investment right now – but that’s just my non-professional opinion.

        3. I’ll withdraw from my IRA using the 72(t) rule. This allows a slow withdrawal over several years with no penalty. I will only do this if I need to, which I very possibly won’t if I average 9% (historical average of my portfolio) with a low standard deviation. 9% is not something I’d bank on, however, which is why I’ll probably be below a 3% safe withdrawal rate (SWR).

        4. As I see it, a million is enough for my me. I don’t expect my income to go to zero because I am too active not to stumble into income here and there (like real estate investing). I’ll be at or below a 3% SWR, which means my net worth is more likely to increase over time than decrease. On the contrary, a million is not enough for a 65 year old that wants to spend $100K/year on a big retirement home, travelling the US on an RV, and taking cruises in the Mediterranean. They would be one bad year in the market (see 2008) from losing it all and returning to work. In other words, it’s not about how much you have, it’s the ratio of expenses to savings and income.

        5. We’ll probably move eventually, not for the purposes of downsizing but rather to be closer to our extended families. We already did the downsize a few months ago. 6 months ago I was in a McMansion where the house mortgage plus maintenance cost me more than our current monthly budget. When we move, it will likely be Pittsburgh. This is where my wife and I grew up, much our family is still there, it’s inexpensive in most areas, and it has great culture. Also, I’m a yinzer at heart.

      • DJ says:

        Wow! thanks for the lightning fast response. Interesting portfolio. So I’m concerned we are in the middle of another 2-decade period of flat stock growth (like the 60’s and 70’s) so right now most of my NW ~200k consisting of my 401k/Roth is basically split 50% in a total bond index and 50% in total stock index. I want to retire at 50, but you inspire me to go much lower. However, the so-called “experts” tell me I need to be in 70+% stocks (given my age). I can’t afford to not gain 0 for the next 10 years… right? At least the bond holdings are earning something right now and strategically I can rebalance on these wild swings. I also feel keeping expenses low and saving as much as possible allows me to not depend on the 8%+ historical stock return of the market. To your point of 100k/ year, absolutely. Its also this drum beat from the greedy financial industry brainwashing people they need ~20 times 70% of their pre-retirement income. Those numbers are so silly! They basically keep people working well into their 70’s, but says nothing about expense side.

      • I’ve always found it humorous that recommendations for savings are based on pre-retirement income rather than expenses. Since my income has increased year over year for 11 years now, I would actually be getting farther from retirement. Money Magazine would have me believe I need $2.1M to retire, despite the fact that I spend less than $36K per year.

        Your mix of stocks and bonds is good, better than all stocks. You may want to do some research on the modern portfolio theory if you’re really interested. It shows that there’s no such thing as a “lost decade” if you have a healthy asset mix and you reallocate consistently. The only thing I don’t like about your mix is that it seems you aren’t protected from high inflation (if that were to happen). That’s why I have gold, but there are other methods as well.

      • DJ says:

        Here is a new income stream for you.. investment advice. Maybe the legality it has to be called entertainment..

        Ok.. so I max out my 401k, Roth, HSA

        Mostly those accounts invest 50/50 (total stock/bond index funds)

        I have 25k in a 5 year ally CD @ 2.7% ( ~8 months expenses)
        Each CD is 5k with 4 years left; early withdrawal is only 2 months interest.

        I have 15k in my checking account earning nothing! ~5k is earmarked for 2012 Roth, leaving me 10k not knowing what to do with it. Currently Ally’s 5 year CD’s earn 2%, blah!

        * I tend to avoid ETF’s as they have not been time tested on mass redemptions also the NAV can differ from the trade value.
        * I don’t chase fads so tech, REITS, homebuilders, gold, international, BRICs, EM, even TIPs, etc.. these allocations only made headlines after someone else made a killing, I don’t want to be the one holding the bag so I don’t jump in and keep it simple (bond and stock indexes).

        However I might be willing to take a bit more risk in my taxable holdings now.

        Idea 1. I like that dog of the dow (DOD) strategy $1000 at 10 stocks.
        Idea 2. Add some junk, Fidelity Capital and Income (FAGIX) (was thinking of adding this in 2012 IRA)
        Idea 3. Keep it conservative US Bond Index (FBIDX) (already hold this in IRA)
        Idea 4. Foolish 4? Variant of DOD, although the revised edition of “intelligent investor” said that was just foolish.

        Im leaning towards idea 1…. What would you do? Thanks

      • Brave New Life says:

        Hi DJ,
        As you alluded to, I can’t give you investment advice. But for me personally, I choose the DOTD approach and so far have enjoyed it. I try to limit to $5000 purchases to reduce impact of transaction fees. However if it’s buy and hold for several years, $1000 isn’t too bad.

  9. Martin says:

    BNL – You may have addressed this in an earlier post that I missed, but what is your target figure to hit before retiring?

    I am just starting to look at dividend investing and I love the idea of living off the payouts instead of having to sell equities in retirement. That being said, a huge amount of money invested in dividend stocks seems necessary to make this happen.

    Are your plans to to get dividend “income” to meet your family’s monthly expenses before retiring? You had mentioned expenses were around 3K, but the dividend earnings are currently around 1.3K. If the goal is to make these figures meet, how will you more than double your dividend payouts in the next two years before retiring?

    I am new to this stuff, so forgive me if I am overlooking something obvious. Thanks.

    • what is your target figure to hit before retiring?

      It used to be $1.2M, which is a 3% safe withdrawal rate of $3000/month. But to be honest, I no longer have a target. I’m confortable that I could quit today and live quite happily. A lot of this comes from the ease of which I’ve created other incomes (online business, Android apps, real estate, and others). Since I don’t plan on sitting around watching TV all day, I’m sure many of my adventures will create small amounts of income.

      Regarding dividend income, I’m not trying to make that match my family’s expenses prior to retirement. You’re right, a huge amount is necessary to accomplish that – unless you chase high yields, which is a dangerous game. For example, there are REIT’s yielding 20% right now, but I’m not going near them right now.

      Instead, I’m focused on a a diversified income stream. As you mentioned, I have about $1300/month in dividends (stocks and T-bonds). I could increase this by reducing ownership in gold and cash, but I doubt I will. I have about $150/month coming from Lending Club, which I plan to slowly increase to $250-$300/month over the next 2 years. With my recent experiments with Android app development, I’m bringing in $300-$400/month. Finally, I own a small online business that I could easily grow, but is passively bringing in about $300/month. So if you add this up, I’m looking at anywhere from $2150-$2300/month from those things. I’m also starting to experiment in real estate, which will likely bring in >$12000/year ($1000/month) which putsme well over the top.

      I’m also considering to decrease my portfolio’s cash ownership (25%) to pay off my mortgage, which will take my overall expenses to less than $2000/month. I only have that loan because I got it at 3.1%, which seemed like “good debt” but I’m beginning to question that.

      Let me know if you have anymore questions.

      • Martin says:

        I understand better now regarding the goals of your dividend income. Thanks for clarifying.

        Assuming that the RE plans end up netting you another $1,000 a month, and Lending Club increases to $200-300 a month before the planned retirement date, would you worry at all if your guaranteed income does not cover your planned expenses? What I mean by that is that it seems like you are going to be reliant on the web business and App creation to make up the last few hundred dollars each month.

        Do you have any concerns that being required to hustle for a few hundred dollars each and every month might handicap your freedom a bit? I am trying to come up with a plan where I have income that is as secure as possible that would cover my monthly expenses, where other projects on the side would just be extra. In two years, if “safe” income is not consistently meeting your monthly expenses, would you consider staying employed for a while longer to make that match up?

        In a very long-winded way, I guess what I am saying is this: When I think of my own retirement, I want the freedom of being able to do the side projects that you are currently working on, but I also want the freedom of not doing them if there is some other thing I want to work on that may not bring any income. If I knew I had to make $300 each month in side activites, it seems like I would feel that it was hampering my ability to do other things in a month where I felt like I just wanted to travel or visit family or study or whatever else. What are your thoughts on this?

      • Hi Martin –

        The short answer is that I wouldn’t retire if my passive income wasn’t reliably making more than my expenses – such that I could sit on my butt watching TV everyday if I wanted to (of course, I don’t). So in that sense, I think we’re in the same boat. Like I was telling someone the other day, my ideal situation is where I do a lot, but don’t need to do anything.

        The long answer is that I really don’t foresee a situation where I don’t easily have enough income to cover my expenses. First, when I pay off my mortgage I’ll take my $2800/month expenses down to about $2000/month. If I did nothing else, I could then take my remaining investments and move them away from my current portfolio allocation (which has 25% cash and 25% gold) and distribute those in dividend paying stocks and T-bonds. This would double my dividend payout from $1300/month to $2600/month (technically less since I would be using some of my investments to pay off the house – but then again I also have 20 more months of income in which I’m saving at an 80% rate and rising).

        So I’m already there before you take into account the other forms of income. It’s worth noting, though, that these are mostly passive forms of income. The online store is 95% passive for me (I split the profits with my mom, who manages the inventory and ships orders). The android apps are mostly passive, in fact I haven’t touched them for over a month and I’m watching the profits rise day over day. Lending Club is mostly passive – except when I’m finding new investments. Even my REI is mostly passive because I just fund my partner who does all the work, the only active part is because I’m trying to learn what she does also in case I want to do a deal on my own some day.

        There’s no doubt in my mind some of these side incomes will grow boring, but other new ones will come to me. I would expect the income to go up before down, however…

        When it’s time to retire, my plan is to see where these side projects are in regards to passive income, and modify my portfolio to spit out whatever I need (if anything). So, for instance, if my expenses are $2200, dividends are $1500,and passive income is only $300 – then I’ll sell enough gold and cash (1-year T-bills) to make up the $400 delta. I like the short-term and long-term stability of my portfolio, which is why I would sell as little as possible.

      • Martin says:

        BNL – Thanks for taking the time to explain further.

        “Like I was telling someone the other day, my ideal situation is where I do a lot, but don’t need to do anything.”

        This is exactly where I want to end up.

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