Hey Everyone, what a difference a week makes. The coronavirus is spreading in the US and investors are panicking. Last week, the stock market dropped over 10% and it’s nowhere near over yet. The news over the weekend wasn’t good. The US saw 2 deaths and quite a few new cases of community transmission. Long term investors should brace themselves for more decline in the stock market in the short term. However, don’t panic too much and sell off your investments. Eventually, your portfolio will recover so stick with your plan and hang in there.
In February, we did pretty well financially. Our income streams were solid and we spent much less than usual. That’s the good thing about winter. We mostly stayed home and relax. Once the weather warms up, we’ll probably spend more. There is one piece of bad news. Our net worth dropped substantially. That’s expected because the stock market is a big part of our investment portfolio. For now, I’ll keep a close eye on the stock market and invest more when the price is right. I’m not too worried because we won’t need to withdraw for a while.
On the personal side, life was great in February. The weather warmed up close to 60 degrees and we had many sunny days. It was really nice to finally spend a bit more time in the sun. We also celebrated RB40Jr’s 9th birthday. Yes, halfway there! All in all, life was good in February. I don’t have anything to complain about.
Okay, I’ll go over my goals first and then share the details of our net worth, cash flow, and savings.
Here is my goal scheduling spreadsheet. It works really well. Try it out if you can’t keep up with your New Year goals. The key is to go over the spreadsheet at least once a month to track your progress. That way, you’ll see which goals need extra effort.
2020 is starting off pretty well, but there are some issues too. I’m way behind on some of these goals.
- Real Estate Crowdfunding $150,000. Earlier this year, I added $25,000 to our RE crowdfunding investment with CrowdStreet. This will be it for a while because we’re low on cash now. I plan to complete this goal by the end of 2021.
- FI Ratio > 110%. This is my main goal for 2019. The FI ratio is passive income divided by expense. Once we reach 100% consistently, then we’ll be set to retire in style. 2020 is going very well so far for this goal. Our expenses were low and our FI ratio looked great. We’re at 124% for the year. Let’s hope we can keep this up for the rest of the year
- Saving rate > 50%. This one is really tough because I use pretax income. If you make a lot of money, your tax rate is higher. If you don’t, then your expenses overwhelm the income. I’m sure only a few people can reach 50% saving rate. We’re at 66% so far. That’s really high.
- Side hustle income > $5,000. This one is not going well at all. Winter is not a good time for gig jobs. It’s not looking good.
Branding (by 40)
- Content creation > 178 blog posts and videos. This is a huge amount, but we’re ahead of the pace. In February, I posted 11 blog posts and 4 videos. I’m trying to get ahead because in the summer, I will slow down a lot. This one is going great so far.
- Refresh RB40. This one is put on hold while I do taxes. I’ll probably hire someone to do this for me.
- 1,000 subscribers on Eat by 40! Currently, we have 74 subscribers. This is a slow process that will probably take more than one year. We’ll keep working on this one. I’m optimistic.
- Visit Thailand + 1. I’m putting this one on hold for now until the coronavirus problem improves. I was planning to go in June, but it’s not certain anymore.
- Travel hack 200,000 points. I applied for an Alaska Airlines card in January. Mrs. RB40 has a business trip in Honolulu in the spring. We can use the companion pass and save some money on our flight. We have to spend $2,000 to get the bonus.
- Update our Will. I haven’t started this one yet. Plenty of time for this one, hopefully…
- Happiness level > 9. February was a good month and I was pretty happy. Even the weather was pretty good, way better than in January. It’s a 9. All in all, I’m very happy so far in 2020.
Net Worth (-4.8% YTD)
I’ve been tracking our net worth since 2006 and it is very motivating to see the progress we made. 2020 looks like it’s going to be a bad year for the economy. Investors are expecting the worst case and sold off a ton of stocks in February. We have a lot of stocks so our net worth decreased too.
For 2020, our net worth is down by nearly 5%. That’s not too bad considering the stock market is down over 10%. I’m not too worried. Eventually, we’ll recover. Meanwhile, I’m happy that our investment is doing better than the benchmark.
Here is a chart of our net worth from Personal Capital.
*Sign up for a free account at Personal Capital to help manage your net worth and investment accounts. I log in almost every day to check on our accounts. It’s a great site for DIY investors.
2020 Passive Income ($5,868 YTD)
Here is a quick summary of our passive income. You can see all the details on my Passive Income page.
Our passive income looks good so far. Even our rental income is doing well this year. However, it won’t stay this good for long. I need to remove a huge tree from our property and it will cost over $1,200. Ugh! That’s the problem with being a landlord. It’s always something. Anyway, I’m enjoying strong income streams so far.
Our FI ratio looks great this year. We didn’t spend much in Q1 and our passive income surpassed our expenses. Hopefully, we can continue this trend for the rest of 2020.
*FI ratio = passive income/expense
February 2020 Cash Flow
Our cash flow was good last month. All our income streams were solid and we didn’t spend much money. I made 2 contributions to my i401k to take advantage of the stock market correction. We had a good month.
This is the Sankey diagram for February. You can get a quick overview here and see the details below.
Gross Income (target > $13,000/month)
This year, our gross income target increased to $13,000/month. If we make this much every month, we’ll be able to save a good amount. I’m optimistic because our blog and rental income are good so far. If these two continue to do well, it shouldn’t be too difficult to meet our income target.
- Mrs. RB40’s job: $8,470. Mrs. RB40’s job continues to be the pillar of our household income. We could survive without her income, but life would be more stressful.
- Blog Income: $6,636. My blog income was great last month. You can read more details on my Blog Income page. Also, RB40Jr is on the payroll now as a model, YouTuber, and photographer. His income will go straight into his Roth IRA. He has over $3,500 in his Roth IRA now. That’s a great head start in life.
- Rental Income: $721. Last month was a good month because we didn’t have to fix anything. I think we should be able to generate about $500/month this year. Read more at the Rental Property Passive Income page.
- Dividend Income: $946. Our dividend income started off slow in 2020. I think it will pick up by March. See more details at my Dividend Passive Income page.
- Real estate crowdfunding: $689. RE crowdfunding was great last month. We received a big payment from PeerStreet. I think this will be a good year in this category. You can see how we’re doing at the RE Crowdfunding Passive Income page.
- Interest Income: $21.
- Side hustle: $60. I’m not doing very well with side hustling. This $60 is a refund from our son’s soccer team because I signed up to be a coach. Next month, it should be better because I’ll be able to hustle more once the weather improves.
Monthly Spending (target < $4,166/month)
This year, I want to spend about $50,000 so our monthly spending budget is $4,166/month. February was a good month for us. It was still cold and rainy so we didn’t do much. We spent $2,799. That’s very low. It will increase quite a bit when the weather improves.
- Housing: $1,182. This category includes mortgage, home insurance, HOA fees, property taxes, utilities, home improvement, and furnishing. Our housing cost decreased significantly from previous years. We moved into our duplex and we can share some expenses with our tenant. This helps a lot.
- Parents: $400. I’m sending $400/month to my parents to help out with healthcare and living expenses. This year, my brothers are helping out so it should be better than last year
- Groceries: $490. This looks good. I can’t complain when it’s under $500.
Here are some of the dishes I made last month.
Pad See Ew Noodles (recipe at this link.)
Rad Na Noodles (recipe at this link.)
- Travel: $0. We didn’t have any travel-related expense last month.
- Entertainment: $213. We went to eat out and purchased a ticket for a show.
- Health: $0.
- Bills: $23. My term life insurance payment.
- Transportation: $87. Our car is paid off so this is just gas, maintenance, and insurance.
- Kid: $78. I took Junior and a few friends to play laser tag and arcade on his birthday.
- Pet: $20.
- Clothing: $18. Mrs. RB40 went to get her boots repaired.
- Misc: $288. Mrs. RB40 got 2 electric blankets for us. I got a tree removal permit, $100! We also spent a few dollars at Home Depot.
I don’t count these as personal spending.
- Taxes and deductions: $2,880.
- 401k savings: $6,770. I contributed $3,250 to my 401k. Mrs. RB40 contributed $1,520 to her 401k.
- Roth IRAs: $1,000. We contributed $500 each to our Roth IRAs.
- 529 College Savings plan: $2,000. I contributed $2,000 to our son’s 529 plan.
- Extra Savings: $4,094. Whew! We saved a lot last month.
2020 Savings ($22,252 YTD)
So far, we saved $22,252. This is a great way to start off the year. Our expense was lower than usual and we were able to save a huge percentage last month, 68%. That’s really good.
- Joe’s 401k: $10,375.
- Mrs. RB40’s401k: $3,020
- Roth IRAs: $2,000
- 529 College Savings: $2,000
- Extra savings: $4,857
YTD 2020 saving rate = 66%
February Wrap Up
Overall, we had a great February. The only hiccup was our net worth dropping like a rock at the end of the month. Even that wasn’t too bad. I look at it as a buying opportunity. We don’t need to withdraw anytime soon so it’s a chance to invest more. It’s going to be scary in the short term, but it’ll pay off in the long term. March should be a pretty good month too. We’re removing a huge tree and it’ll cost over $1,200. That will set us back, but our income should be pretty good too. Check back at the end of March to see how things are going at the RB40 household.
How about you? Did you have a good month? Are you working on your New Year goals?
Source: Retire By 40
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