Retire By 35: October 2011 Results

Each month I calculate my family’s cash flow and balance sheet to track my path to extreme early retirement.  I do this to ensure we are spending our money on things we need and activities we enjoy.  My intention with sharing it here with such transparency is not to show off my income or savings, but rather to show what can be done if you stay focused and deliberate.  I strongly encourage everyone to create a similar report, even if you don’t share it with others.  It takes me 2 hours, and it’s the only time I look at my portfolio or expenses each month.


It was another stellar month on my path to extreme early retirement.  In fact, for all intents and purposes I’d say that I’m there financially.  The only reason I’ll continue working for another 19 months is due to a contract I signed. My contract runs out on May 31st, 2013.  This is on the Friday of a 4-day work week (Memorial Day), and it will be my last day I ever spend in a cubicle.

We achieved our lowest spending month ever, despite some areas where I still felt we spent too much – particularly groceries (more on that later in the post).  I’m happy to say that we achieved my stretch goal for expenses of $2500.  I have no plans to drive this lower, to my wife’s delight.  😉

Here are October’s numbers:

Expenses: $2450

  • Mortgage: $871
  • Education: $130
  • Utilities: $311
  • Groceries: $455
  • Diapers: $63
  • Restauraunts: $26
  • Fuel: $51
  • Gym:$81
  • Clothes: $0
  • Auto Sevice and Parts: $0
  • Auto Insurance: $0
  • Auto Registration: $0
  • Bike Stuff: $0
  • Medical: $313
  • Cash: $20
  • Entertainment: $18
  • Home Improvement: $94
  • Books: $15

After hitting $3000/month a few  months ago and finding it surprisingly easy to do, I set a new goal of $2500/month.  I was surprised to see that we hit the target, again without much effort.  There is still room for improvement, but I’m not going to press for any new goals at this time.    I think $625/person*month is satisfactory, and something wouldn’t have thought possible until I did it myself.  This is exactly why I share these reports, so you can see the possibilities.  I don’t feel deprived at all, in fact I’m much happier than I was when I spent $7500/month.

(worth noting, this still puts us in the top 10% spending in the world.  So for those that think I’m depriving myself or my family, you should reconsider in a global perspective).

I continue to be dissatisfied with our grocery budget.  We made great improvements since  March when we were spending $750/month, but I want to continue to improve.  So this coming month we’re going to take a stab at batch cooking.  I will, of course, document the experience here.

Income: $15626

  • Salary: $10067
  • Online Store: $229
  • Android Apps: $422
  • Amazon: $3
  • Relocation Bonus: $3471
  • Commission Junction: $75
  • Dividends: $1287
  • Lending Club: $70
  • Adsense: $3
  • Real Estate: $0

Income was unusually high this month, due another relocation check and my quarterly bonus.  This should be the last relocation check.  My Android app sales were down, mostly because Google shut down my best games.  I do have a few games planned that will not violate any trademarks (I’m not inherently evil and so unlawful that I would continue to violate these trademarks, I just ignorantly made bad assumptions with my initial games).  Lending Club income continues to rise slowly, and I expect it to continue to rise as I find more notes to invest in.

Next month, I’m hoping to show my first income from real estate.  As I’ve discussed here before, I’m financing a home rehab and the work will  be done in the next 1-2 weeks.  It should be on the market immediately after the work is complete, and I’m hoping for a quick sale.  I’m probably being overly optimistic about a quick sale given the time of year.

Assets: $971,000

  • Taxable Portfolio: $525K
  • Tax-Deferred Portfolio: $362K
  • Lending Club: $10K
  • First Investment House: $7K
  • Second Investment House: $75K

My portfolio grew $36K in October, so that’s always fun.  Not quite as good as the S&P 500’s 10% gain, but I’m far outpacing the S&P on the year.

Overall Outlook:

Savings rate: 84%
Months to retirement at current expenses (3% SWR): 2!
Months to retirement at current expenses (4% SWR): -17

It’s incredible to me to see my “months to retirement” continue to drop each month.  Every time I write this  report I convince myself that this was an unusually good month for one reason or another, and that I shouldn’t get used to it – then the next month we perform even better. I’m starting to realize that this isn’t luck.

Image of progress (click to enlarge):

20 Responses to Retire By 35: October 2011 Results

  1. John says:

    Very nice report for this month! You will be there in know time. What do you plan on doing with your Free time earned back?

    Do you know of some really good links to get started with programming Android Apps besides the Android App Main Site? Maybe any beginner android template how-to’s? I took AP Java Programming a few years ago, and have been meaning to get back into the hobby, just need the motivation outside of work.

    • I’ve written about some things I’ll do after retirement here. Of course this is subject to change. I already see things that are changing, even after only a few months since I wrote this.

      As for Android resources, there are so many. I learned a lot from searching for examples on youtube and watching the video tutorials. I learned better from this than reading similar examples. Also, is great if you just need a question answered or if your application is not performing like you’d like. I often just showed my source code, asked the experts there, and they knew the answer. They were probably laughing at my ignorance, but I’m OK with that.

  2. Wow, congratulation! You are doing so well, it’s amazing. I think your grocery bill is very reasonable, but good luck cutting it down further. Do you think you guys will get frugal fatigue at some point?

    • I know that I won’t get “frugal fatigue.” I feel as though I’ve not made any real sacrifices, and I’m very happy with where we are.

      I can’t say I know the same about my family. As my kids get older, I know it will be harder (but possibly even more important) to maintain a simple lifestyle. At the same time, while my wife has been supportive of my early retirement desires, she may get fed up after awhile. Of course I’m open to compromise. I suspect money won’t be an issue in retirement, my larger concern will be in avoiding another round of lifestyle inflation.

  3. Yabusame says:

    More of a long-term goal for attacking your grocery bill, but have you thought about growing some of your own food?

    I’ve just started doing this over the last two years and I’ve really enjoyed the tomatoes and onions I’ve grown. Just starting small so I don’t have many outgoings on this project and the lessons learned are still worth learning.

    The most obvious lesson. Learned recently is hoeing. I dug over three different garden areas, clearing them of weeds (there were huge amounts of weeds!) and then I dug the earth over with a fork and then hoed it. I am hoeing that earth once a week to stop weeds coming up and it doesn’t take much time to do. I need to decide what I’m going to plant where now.

    I have a small raised bed (6′ x 4′) and a tiny section I just cleared (4′ x 1′). These can be used for growing food. The rest of the work, so far, has been tidying the front garden so it’s presentable but that garden is north facing and in shadow so I’ve no idea what to do with that. It’s bare earth with rocks on it at the moment. Anyway, I’m thinking of planting tomatoes in the small bed (4′ x 1′) but I’m undecided about the raised bed probably more onions and some carrots.

    I have quite a sizeable garden (for urban England) but it’s mainly under gravel for easy maintenance for the previous owners. I’ll dig out some of it as I go and turn it to producing something for the kitchen.

    • We do have a raised garden area that is there from the previous owners, but I know nothing about gardening. It’s probably about 20 ft. by 5 ft. in size, so fairly large. My intent was to try growing something this coming spring, and then becoming more of an expert once I retire.

      I live at 6500 ft. in elevation, so I need to do some research on what will grow here. I’d like to grow tomatoes, onions, and maybe a sweet fruit like strawberries – but I have no idea what will grow.

      I’ve also begun composting, so I figure I’ll have some rich earth by next spring.

      Thanks for the tip, and good luck with your garden.

  4. Bonuses and relocation checks are always a nice bonus. The dividend income was nice too this month! Overall, looks pretty nice!

  5. 1step says:

    Good job! I need to start doing a more defined monthly recap rather than just my networth. I’ll be 30 next year and I need to have a 5 year goal, although I think retirement by 35 is pretty much out of the question for me right now.

  6. Mike says:

    I am a recent reader to your blog and enjoy it very much, especially for the transparency that you provide (as well as the great content & ideas you provide) but also for the fact that we are in similar positions as far as age, family, finances and desire to retire ASAP. Just a few questions: is your income from work your take home pay or your gross salary and also you said your portfolio grew by $36K to $971K, but not long ago you posted about finally getting over the $1M mark. Was Sept a bad month that took your net worth down to $935K?

    • All income I report is take home – so for salary this is money after taxes and 401K investments. I realize this is not the most thorough cash flow analysis, but I’m also not meeting any GAAP requirements…

      Good catch on my “assets” that I reported. I did recently pass $1M, but that is my “net worth” where I include my home equity (not assuming any appreciation I might have received). This equates to $40K, a small amount in the grand scheme of things. The $971K I reported for October in my “Assets” does not include this $40K. I’ve always considered that number my invest-able assets, where home equity should not be included.

      Thanks for stopping by, Mike. It helps me to know people appreciate this transparency because I’ve lately been questioning whether to continue these reports…

  7. Mike says:

    Thanks for the reply. And please continue with the monthly reports, they are very insightful and instructive. As I said, I find myself in a very similar situation to yours. I work in finance in NYC, live in Northern NJ, and ours is a year-end bonus industry, so my goal now is to start my early retirement soon after my 2012 bonus, so I’ve got about as much time left on the clock as you. You and Mr Money Mustache are recent finds and I love catching up on all the older posts and the nice new content. As great as the ERE blog and forums are, it is sometimes difficult to relate to those in a much different demographic and with a much different income/expense/asset profile, so your prespective is great to read. Not sure if you’ve mentioned it here, but I am curious where you were living before the move to CO. We’ve made about 6-8 trips to CO over the years to ski Vail, Keystone, Steamboat and others. Needless to say we love just about everything about CO and have always thrown around the idea of living out there. Was your move a deliberate one, or did you get the job offer first and then deciede to move?

    • I lived in Austin, TX before the move. I took this job in CO as a way of escaping the golden handcuffs I was bound to in Texas. The new company paid all expenses of moving, including all fees to sell my old (large and expensive) house. Overall they paid about $60K in expenses to move me up here, and I used it as an opportunity to choose a small house that was within biking distance of 95% of everything we need.

      So you are early retiring in just over a year? Tell me more!

  8. I think it’s great that you’re expenses are down to under $2500/month. However I noticed a section of your expenses where everything was $0:
    Clothes: $0
    Auto Sevice and Parts: $0
    Auto Insurance: $0
    Auto Registration: $0
    Bike Stuff: $0

    On months when you have to back to school shop, or get the car fixed, pay the insurance, etc., are you still going to strive for $2500/month expenses? Mostly I ask because on a month when I pay my 6 month insurance bill, that and my mortgage put me at $2500 all on their own. Or do you have savings set aside specifically for those things and you won’t really count it against your monthly spending?

    • For now I’m looking at $2500 as the base target for an average month. I realize some months will have increased planned expenses (auto insurance) and increased unplanned expenses (medical emergency). I could attempt to spread those payments out evenly, but that would take more mental work, and I didn’t see a substantial payout. With my graph that tracks my expenses over time, I’ll be able to see if there is a sustained upswing in expenses – and that is more of my concern. To be honest, $2500 was a goal just for the sake of having a goal.

  9. Mike says:

    To answer the request for more info on my situation from Nov 9 – I can add that we have a 2 yr old and our second on the way – due in May. That’s a big factor in my decision to work through 2012, I have great health insurance through my job and our whole pregnancy and delivery will run us just a handful of co-pays and not much else since the doctor and hospital are all in our network. Your $1 million net worth post also resonated with me since we reached that milestone of $1M in investable assets ourselves last December. We also have about $200K of equity in our house so I estimate our net worth around $1.3M. We just re-fi’d into a 10 yr at 3.375% so our mortgage + prop taxes and homeowners insurance will run just over $3K per month for the next 10 years.

    We love our house and our neighborhood but our high NJ property taxes and the amount of equity we have could yield a similar house in a different area of NJ or even a different part of the country. One of the many decisions that we’ll have to face in the coming years.

    I am happy to share more if there are specifics. Again, love the blog and your perspective on our somewhat similar circumstances.

    • Thanks for sharing your situation, Mike.

      $200K in equity and still $3K/month in housing expenses is really high. I’m not familiar with New Jersey, but it sounds like you have a very expensive house with high property taxes, is that right?

      With $1.1M (not including equity, since you can’t really make money with that) a 3% SWR would be $2750/month to spend. 4% would be ~$3700. If your housing costs $3000/month, are you comfortable with that savings?

      Maybe you should move to Colorado. :)
      Beautiful weather, and your $200K in equity could buy your house outright with a view of the mountains from your back deck. My $200K house costs less than $250/month in taxes and insurance. They make it up with state income taxes, which is less of a factor in retirement…

  10. Yabusame says:

    In a similar way to your ‘Image of Progress’ I just put a chart together showing the same things (Income, Outgoings, Passive Income) and its looks for sorry reading. My passive income is practically nothing at present, but at least I’m earning more than I spend, so I hope to see a change in my fortunes (and my chart) over the next few years.

    Learning that Early Retirement is just the same as Financial Independence is great. But realising that Financial Independence relies, simply, upon a Passive Income (i.e. interest on savings, dividends, or even a company pension) has really given me some pointers in which to direct my finances in future.

    My chart to Financial Independence is looking sorry for itself at the moment but I’m looking forward to the future rather than regretting the past.

    • Definitely don’t spend time regretting the past. Have you read Your Money Or Your Life? If you haven’t, it should be the next book you read. That book is where I learned to do the charting, and they are very clear that you should not spend any time regretting your past. You’ll need to look at it analytically so that you can make strategic changes – but don’t apply any judgement.

      When I did my first chart, my heart sunk. I literaly felt sick to my stomach. While I thought I was close to being able to retire, it turned out I was a world away. But then I attacked my spending with major life changes, and it’s been miraculous.

      Simply by doing the charts, you’ll start making major improvements.

  11. VoodooChild says:

    Hi Brave New Life,

    This is my first visit here but I just want to say congratulations on this accomplishment. Also, thanks for the inspiration. I’m currently 34 and at my current trajectory I will hit Financial Independence (at a level that I’m comfortable at, signficantly more income that actually necessary to cover expenses and current lifestyle) in appx 5 years. Forgive me for being lazy and not reading older posts for answers to these questions, but what’s your age and occupation? (I’m just curious.)

  12. VoodooChild says:

    Ha ha…okay, nevermind on my questions. Just read your “About Me”. Great story. Just so happens that I am in I.T. also, with passive income from rental property. My FI plan is basically just getting more rental properties and keeping expenses low by living simply and not falling into the consumerist trap. Being a married man, that last part has it’s challenges but we seem to have found a system to make it work and keep everybody happy.

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