Our financial situation as of July 1, 2017

Hey there, hi there, ho there…it’s time once again to open our books and show whether we’ve been walking the talk.

First up: we’ve chosen to use Personal Capital as our financial management slash tracking system. Click here to read my full review.


In the last thirty days our net worth dropped from $2,267,501 to $2,246,178.

June was a decent month for us despite our net worth going down ~$22K. I say “decent” because we came in on budget, and as a housing bubble survivor you’ll never hear me complain about our investments shrinking by 1.35% in thirty days. Also, due to credit card bills and payments passing in the mail, or at least online, our liabilities dropped from $22,171 to $18,359. We pay off in full every month, so no worries there.

Cash:

This is a new line item. It’s only showing up because a couple of days ago I linked in our PayPal account, which currently has a zero balance.

Investments:

This category includes assets I hold at Morgan Stanley, at Vanguard, and in my daughter’s 529 college fund.

Our assets at Morgan Stanley include a self-managed account that’s pure equities, two managed funds I’m in the process of exiting (see “I have a big-ass tax problem“), and traditional and Roth IRAs. At Vanguard I have an S&P ETF (VOO), and my daughter’s 529 is likewise made up of several Vanguard low-fee funds blended for a five-year targeted withdrawal which contains a 25% bond component. Not as conservative as some, maybe, but I have a decently high appetite for risk.

While my daughter’s 529 is included in this asset category, I don’t include its $69,725 balance in our 4% rule withdrawal calculation. Wouldn’t be appropriate. This leaves a pure investment balance of $1,829,396; 4% of which would be $73,175. Since our annual spending usually runs $55K-$60K, I feel good about our withdrawal rate. The 4% rule isn’t without its problems–I’ll have an upcoming article on this–so I think maintaining a lower spending rate is a fine practice.

Bear in mind that we’ve been retired for twelve years, so our investments have kicked out roughly $600,000.

Liabilities:

Right now our liabilities include four credit cards: Chase Ink Preferred, Citibank Double Cash, Discover, and Kohl’s. Each carries a generous kickback. We pay off all balances every month through an auto-draft against our cash balance at Morgan Stanley.

We started credit card churning at the beginning of the month, and so far I like how it’s going. On our new Chase Ink Business Preferred card we’re well on our way to the minimum spend of $5,000 required to collect 80,000 Chase Unlimited Rewards points, which will be worth a minimum of $1,000 in travel. Since we pay in full each month and consequently never owe interest, an initial “investment” of the annual $95 fee is about to lock us in a 952% “return.” I’ll take it.

Current credit card balance is $4,916.31, down from last month’s $8,354.75, but this is mainly a function of statement timing–again, bills and payments crossing one another during delivery.

Loan:

A couple of years ago we bought a used Prius, and while I went to the dealer intending to pay cash, I was able to negotiate a five-year fixed-rate 1.9% loan. In general I consider loans under 2% to be free money, so here it is. Current balance = $13,443.

Other Asset:

To complete our net worth picture, I carry a selection of capital assets on our books. Current balance = $365,416, which is up from last month’s total of $364,677–mainly due to the increase in our “budgeting account.”

Here’s how our budgeting account works. Obviously some of our expenses are monthly (like groceries); others are payable quarterly (insurance bills); still others are payable annually (property tax.) So every month I make a budgetary deduction of $1,145 for accrual purposes. I keep track of this in an imaginary account, and whenever I pay an accrual-type bill, I net that bill out of it. As you see, I show that account in the Other Asset column.

There’s also our “vacation fund,” an imaginary account I haven’t yet updated. It works in a fashion that’s similar to the budgeting account. I consider vacations to also be accrual expenses, so each month I use $250 from our $1,145 budget deduction to fund them.

Two cars. They’re capital assets and I’m showing a loan against the Prius, so what the hell. This is just a personal quirk. Debate whether they belong in our net assets or not in the comments.

As far as our home valuation, we’ve got $330K in the place and Zillow’s valuing it $345,724. I’m not thrilled with Zillow, but since I carry all our other assets at current value, and since Zillow’s valuation is the best mark-to-market I have convenient access to, I again figure what the hell. I could keep my own comps, but who has time? We do indeed live in a hot neighborhood where houses are constantly turning over, so maybe Zillow’s on point. And we’re not planning to sell anytime soon.

Budget:

This month we overspent our $4,100 budget by roughly $150. I’ll lay that off to attending Bonnaroo, an annual four-day music festival where baseball game prices are charged for beer and food. I’ve discussed elsewhere in this blog how Roo ended up costing us $6 an hour and served as a second honeymoon after a long run of bad marriage trouble. That $150 was money well-spent.

Our annual withdrawal rate runs $55K-ish. While we shoot for $4,100 there are always unexpected incidentals. But I ALWAYS carry from six months to a year’s anticipated spending in cash, so I’m not terribly concerned about the overrun.

Now: I’m not what I think of as a “micro-budget” guy. That may fly in the face of conventional wisdom, but as long as we hit $4,100 a month, or close to it, I don’t sweat deep categorization. Like: I don’t bother splitting sales tax out of the grocery bill. First, we’re no longer in the accumulation phase. Second, Personal Capital does a good job keeping track of broad categories. I’m fine with it.

Every Friday morning I do our bookkeeping. This includes a check of our spending for the month so far. If towards the end of the month we’re getting close to $4,100, my wife and I have a conversation like this: “Hey, we need to cool it between now and the first.” That’s pretty much all it takes.

So in conclusion: this is our latest monthly update. Please check back each month for the latest installment.. Your comments are welcome. And again, please check out my full review of Personal Capital.

Author: ER Dude

Sick of your job? After a thirteen-year career, Early Retirement Dude fled corporate America for good. You can do it too! Visit http://EarlyRetirementDude.com or email EarlyRetirementDude@gmail.com.

7 thoughts

  1. I think your budgeting style is interesting! I’m a granular type of person (I like to know where the hell every dollar went), but I could see this working too. 🙂 Great job paying down those liabilities!

    1. What finally got me off “micro-tracking” was the necessity of taking every transaction in our tracking system and splitting out the sales tax on the theory that I could take a federal deduction at the end of the year. And then after a couple of years I realized we’d likely always be taking the standard. That’s the exact day I started using a net approach rather than a line-item approach. So much simpler.

  2. Hi ERD,

    It looks like if you have no other source of income, you can earn $95K in qualified dividends and long-term capital gains and pay not Federal Taxes ( assuming married filling jointly)

    This adds up the 15% tax bracket + Standard deduction + PE. So you can sell those shares off in about 5 years. You can also hedge your positions to protect you from losses while you are doing that (if for example AMZN goes from $1000 to $200 for example, while you are trying to convert to the funds you want).

    It looks like you are already transferring those assets over to another broker. A friendly advice – why not transfer to a broker that gives you an account opening bonus? If not, have you heard about Interactive Brokers – they have super low margin rates ( used to be 1.5% but recently raised to a little over 2%)

    Also, do you have children? You and your spouse could donate highly appreciated stock to them, they can sell it at their lower marginal tax rate, and voilla less taxes to be paid. I know that the limit comes out to roughly $28K per relative ,
    but still not bad (14K from you + 14K from your wife). Now if you had 2 kids, that is $56K worth of stock you could donate, that can be sold at lower tax bites.

    Of course, this opinion is all like shooting in the dark – I have no visibility on how your total net worth is invested, specifics on taxable/tax deferred etc, sources of income etc.

  3. Since you include the car loan as a liability, I guess we’ll let you count the cars as assets. 🙂

    I’ve stopped focusing on Net Worth and started focusing on investable assets. The house just clouds the issue for me as it needs A LOT of repairs and remodeling before we could ever sell it so the value artificially inflates NW. (No mortgage or other loans, just credit cards we pay off every month.) The other reason is that the bigger the number on which I focus, the harder it is not to quit my job every day.

    Thanks for sharing your numbers. Of all the FIRE blogs I follow, yours was the only one I felt like checking today.

    1. >Of all the FIRE blogs I follow, yours was the only one I felt like checking today.

      That’s high praise. Thanks.

      >The house just clouds the issue

      Yeah, I totally respect that. I’m constantly hearing debate one way or another. It’s a capital asset and so I count it, but that’s just business school accounting talking. 🙂

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