Our financial situation as of June 3rd, 2017

My dad taught me never to tell people about our finances, so it’s time to tell people about our finances.

Nah, seriously, there’s a certain “practice what you preach” component to running a financial independence & early retirement blog, so I’ll keep our books open for credibility’s sake if nothing else.

Before I get started, though, I apologize to any readers who got the erroneous email on 6/3 that this article had been published. I was working on it and hit the “Publish” button instead of “Save Draft.” Dumb mistake I hope not to repeat.

And with that said…consider these numbers our base situation going forward. On the first of each month I hope to send out an update.

I’ll start with account balances and then move on to our budget. Since today’s June 3rd and this post is the first in the series, I’ll begin with the numbers as of today.

We use Personal Capital to track our finances. Click to read why I made this decision.

We’re starting with a net worth of $2,267,501.

As you can see, our assets/liabilities are grouped into four categories: investment, credit, loan, and a capital asset category I’ll discuss in just a moment.

Investments:

May was an awesome month on paper. Our investments ran up $47,000-ish.

So as of this writing our investments total $1,924,995.96. This category includes assets I hold at Morgan Stanley, at Vanguard, and in my daughter’s 529 college fund. Several points to be made here.

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 $70,027.22 balance in our 4% rule withdrawal calculation. Wouldn’t be appropriate. This leaves a pure investment balance of $1,854,968; 4% of which would be $74,198.72. Since our annual spending usually runs $55K-$60K, I feel good about our withdrawal rate.

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

Liabilities:

We’ve just started churning. 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.

Current credit card balance is $8,354.75, but this is mainly a function of statement timing. You’re essentially seeing two months at once. This number also includes a couple of annual expenses I budget for on a monthly basis.

Here’s how that 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’ll see, I show that account in the other assets column.

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 fixed-rate 1.9% loan. In general I consider loans under 2% to be free money, so here it is.

Other Asset:

OK: budgeting account on top line as discussed.

“Vacation fund” is another accrual-based pot of money. I make a hundred bucks and change a month from a side gig, and sometimes there’s found money like parental birthday gifts. We generally save all that up and splurge it on a trip to the beach. And we’ve also started churning, as I mentioned.

Two cars. They’re capital assets and I’m showing a loan against the Prius, so what the hell. I’m not inclined to debate whether the cars belong in the balance sheet; this is just a personal quirk.

As far as our home valuation, we’ve got $330K in the place. 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?

Budget:

As I mentioned, 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 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 baseline. Please check back each month for updates. 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.

13 thoughts

    1. Thanks! Onwards and hopefully upwards. It’ll be painful to update if we have a big correction, but I’ll have to grit my teeth and do it…

  1. We’re kind of the same way with spending. We rarely exceed our $3333/month “budget” so I don’t even look at it during the month. Only time we do is if we’re paying a fat ass lump sum annual thing, like property taxes, home/auto/umbrella insurance, or major home repair. And it’s usually 2-3 months/yr maximum and gets smoothed out with plenty of months of underrunning the budget by $1000+.

    Right now I think we’re running a $5000 budget surplus year to date and we have all of our big lumpy annual expenses out of the way. So we are so far in the black that we can do whatever the hell we want (within reason 🙂 ) and still hit our bottom line $40,000 annual spending goal. That means no need to try to economize when it’s a pain or forego the small luxuries, or skip any big upcoming trips that might be fun.

    1. >I don’t even look at it during the month

      I do it more often. We save our receipts and every Friday I gather them and sit down and go through a matching exercise with what Personal Capital is showing. Through the years I’ve found a couple of cases of identify theft; one that was in the multiple thousands. It’s also nice to see in a general way how we’re doing, and of course towards the end of the month I like to know how close to that $4000 target we are.

  2. Thanks for sharing and creating your baseline. I recently shared mine info as well, it was bit of a strange feeling, but it has been great. The learning process, the sharing, questions, comments, has helped me so much in a short time frame. Looking forward to seeing future posts.

    1. Sure thing. I also found baselining to be a good exercise. While I do find tracking our net worth–especially our investments–to be an essential exercise for the sake of budgeting, outlook, etc., I have to confess that it also gives me a kick. Worked so hard to get here, and right here in black and white are the results.

  3. Looks great! We budget exactly the same way. We usually don’t go over $4,000/month, but if we do, it’s not the end of the world. We’re already frugal so we don’t spend frivolously. Very nice investment portfolio. I’m with you on the possible downturn. We’ll just have to grit our teeth and get through it the best we can.

    1. >I’m with you on the possible downturn.

      They’re always possible, right? Best to keep prepped by maintaining discipline through the lows AND the highs.

Leave a Reply

Your email address will not be published. Required fields are marked *

Rockstar Finance

Important Disclaimers