Happy New Year!!! Good riddance 2018, right? Yuk, December was a schizophrenic month on the stock market. Luckily, I missed most of it because I flew to Thailand right before the craziness started. Actually, my luck wasn’t that great because I had a tough time selling stocks once I was in Thailand. I wanted to take some capital loss deduction this year and I should have sold before I left. Vanguard made it difficult to log in from Thailand so there was a delay. Eventually, I was able to sell some shares, but the market already tanked by then. Oh well, I plan to buy most of them back in January (Wash Sale Rule) so it’s not really a big deal. Anyway, I didn’t pay much attention to the stock market because I was busy visiting families and having fun. That’s really the best policy when the stock market is volatile. The more you look at it, the more you’ll want to do something. It’s better to stick with your strategy and ride it out.
On the personal side, December was a great month for us. I’m here in Thailand with my mom and RB40Jr for 5 weeks. My mom was diagnosed with dementia in 2018 and she was having a really difficult time in Portland. We’re here to find a better living arrangement for her. Thailand has been really good for her so far. The familiar faces and environment help her feel better and she is less stressed out than in the US. Her dementia symptoms are much less severe here. Hopefully, this will last a while.
Currently, she is living with my dad in Chiang Mai. The city changed a ton over the last 10 years. It’s bustling with tourists and the traffic is jammed up all the time. Actually, I’m quite impressed. There are nice malls, condos, food courts, restaurants, coffee shops, theaters, and more. I wouldn’t mind living here for a few years after Mrs. RB40 retires. The cost of living is lower than Portland and our savings would stretch much further. I think we can live a very comfortable lifestyle here for about half what we spend in Portland.
On to the goals! Whew, I’m glad 2018 is over. It’s been a tough year for us on many fronts. For example, we had more problems than usual with our rentals. The night before I left, our renter called and told me the GFCI outlet in the bathroom is broken. I asked Mrs. RB40 to take care of it and left. She had a hard time with this and hired someone to fix it. Also, we had some vacancy early in the year. Next year, I plan to consolidate down to just one property and cash out. There are various other minor problems too.
The second half of the year was tough on the personal front due to my mom’s health. 2018 was just a rough year. I plowed on with most of my goals, though. Check out my goal sheet. I’ll share the details of our net worth and cash flow afterward.
This is my goal scheduling spreadsheet. Last year, I found that I needed to start working on these goals in the first half of the year. If I wait until summer, they just won’t get done. I wasn’t too optimistic about 2018 because so many things were happening. However, it turned out pretty good. I accomplished a few goals, mark some off as fails, and got partial credit for the rest. You can get a quick status update from the chart and then see the details below.
- Increase our real estate crowdfunding investment to $100,000. Incomplete. We ran into a speed bump here. RealtyShares stopped accepting new investments so I need to sign up with a new company next year. Fortunately, our existing investments are all doing well. In 2018, we had $2,156 of passive income from RE crowdfunding. That’s not bad at all. You can read more about my investments at the real estate crowdfunding page. I will keep working on this goal next year.
- FI ratio > 100%. A! The FI ratio is passive income divided by expense. Our FI ratio is 95% for 2018. Whew! It was stuck around 80% for a while. The Q4 dividend payout really helped. It’s still under 100%, but we kept it close. Some years are just harder than others. We’ll do better next year. There are some bargains on the stock market now and I should be able to increase our passive income next year.
- Increase bond/cash allocation to 30%. A! Increasing our bond/cash allocation to 30% would beef up our opportunity fund. I took my time with this and it was a mistake. I should have done it in the summer instead of waiting. Currently, our bond/cash allocation is up to 28.3%. That’s pretty close and I’m happy with our progress. I’ll give myself an A in this goal. Next year, I will probably tilt more toward equity again once the stock market starts to recover.
- Travel hack 100,000 points. Done! We signed up for some new credit cards and collected quite a few points. These points will come in handy for our vacation next year. It looks like I’ll have to go to Thailand a couple of times in 2019 to check on my mom.
- Minor Redesign RB40. Done! This one was really difficult to do. I just didn’t the expertise to accomplish it easily. It is already tough to write and keep the site running. Anyway, I switched to https, got a new logo, and cleaned up the site a bit. I hope you like the cleaner look. I’ll hire someone to install a new theme next year to improve the site even more.
- Blog 12 times at Fit by 40. FAIL! I’m just not motivated to write about fitness this year. For now, I’ll keep FB40 as a test site for the redesign. You can see how I started the site here – How to Start a Blog and Why You Should.
- Blog revenue $100,000. B-… This goal was a difficult one so I’m grading it on an academic scale. Making $100,000 from blogging is big league. I’m not quite there yet. Also, our revenue dropped sharply in Q4. We barely crossed over the $80,000 line. Whew, at least I didn’t get a C. Anyway, 2018 was my best year so far so I can’t complain too much. You can see more details on my Blog Income page. Thank you for your support. I really appreciate it.
- Join Toastmasters. FAIL! I visited a local club and it was a good experience. However, there were too many things going on in my life. My mom needed help with her health. Also, when school was out during the summer, I spent more time with RB40Jr. I couldn’t squeeze Toastmasters into my schedule. This will have to be put off until RB40Jr is a lot more independent.
- Not paying for leaf removal. Done! I DIY-ed the leaf removal this year.
- Consolidate down to one property. WIP! We plan to move into our rental duplex and sell off the other 2 properties. This one is going to take more than one year. I changed the due date to 2020. Although, it looks like I might be able to get it done in 2019. Stay tuned for more news about our rentals.
- Visit Iceland. Done! Iceland was incredible. I got some nice pictures so check out my Iceland trip report.
Okay! I’m pretty happy with my 2018 goals. I accomplished more than I thought. It was looking iffy for a while. There are 2 fails and an incomplete, but that’s life. The academic grades were pretty good too. Three As and a B. I’m good with that.
Net Worth (-1.5% in 2018)
I’ve been tracking our net worth since 2006 and it is very motivating to see the progress we’ve made. 2018 has been uneven. The US stock market had a volatile December and our net worth reflects that. We’re down -1.5% in 2018. That’s disappointing, but it could have been a lot worse. At this point, we just need to stick with our asset allocation, buckle up, and enjoy the rollercoaster ride.
My bet with Warren Buffett – I’ll benchmark our net worth against VFINX for 10 years starting in 2018. VFINX is down -6.2% for the year (adjusted for the dividend.) Whew, one month made a huge difference. We’re winning. Woohoo! Actually, that’s not really good news. Our net worth is bound to decrease with VFINX going down. Let’s hope for a better 2019.
Here is a graph of our investment portfolio on Personal Capital. 2018 was a tough year for investors. December pulled everything down.
*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.
2018 Passive Income ($57,928 YTD)
Here is a quick summary of our passive income. You can see all the details on my Passive Income page. We had a slow start in 2018 because one of our rentals was vacant for the first 2 months. It’s occupied now so the passive income is looking better.
The only trouble spot now is P2P lending. We’re seeing more defaults and the interest payments aren’t enough to overcome the hits. If we reinvest in P2P lending, it would look better. However, I like real estate crowdfunding more so I’m investing new money there. Next year, I’ll remove P2P lending from this sheet. It’s negligible now.
2o19 will be a year of change for us. If all goes well, we’ll sell off our rental properties so we won’t have the rental income anymore. The proceeds will be invested in dividend stocks and RE crowdfunding so those incomes should increase. Our cost of living should decrease too. We’ll just have to see how it goes. I’m not really sure how to account for real estate gains either. Should it be a part of passive income? If so, our FI ratio should look really nice in 2019. Taxes will be tough to figure out too.
2019 Cash Flow
Our cash flow was rough in November. Rental income, online income, and dividend income were all lower than average. Our crowdfunding income and side hustle income were better than usual, but they couldn’t make up the gap. Our expense looked good, though. I also saved extra in my i401k during the market dip. I maxed out my i401k contribution for 2018, but I still need to add the employer contributions. You can see the details below.
Here is the Sankey diagram for a quick overview of 2018.
*I found some discrepancies in the numbers, but I did my best. I’ll have to wait until I get back home to figure it out. It’s too difficult to go over all the accounts in a coffee shop. I think it’s pretty close so we’ll just go with this for now.
Take Home Income (target > $120,000)
For 2018, our monthly take-home income target is $10,000. That’s $120,000 annually. We handily beat this and took home $162,882. My blog income was quite good in 2018. Our passive income was great too. All in all, we did very well on the income side of the equation this year.
Next year, I’ll use gross income here instead of takehome. Takehome is not quite correct here because I still have the 401k on the expense side of the equation.
- RB40’s paychecks: $74,479. Mrs. RB40 had a solid year and she plans to continue working until 2020. Next year should be the same here.
- Blog Income: $62,460. 2018 was our best year yet. I seriously doubt we will make this much income next year. You can read more details on my Blog Income page. RB40Jr is on the payroll now as model and photographer. The income will go straight into his Roth IRA. I’m excited to see how this experiment will turn out.
- Rental Income: $8,999. Our rental income was okay in 2018 even with some vacancy and repairs. I’m pretty happy with this. Read more at the Rental Property Passive Income page.
- Dividend Income: $14,164. More details at my Dividend Passive Income page.
- Real estate crowdfunding: $2,156. This income is looking good. I’m very happy with this. It just needs to hold up over the life of the investment. Read more at my Real Estate Crowdfunding Passive Income page.
- Interest Income: $289.
- Misc:$1,105. Survey, gifts, etc…
Monthly Expenses (target > $4,800)
For 2018, our monthly spending budget is $4,800/month. That’s $57,600 per year. Unfortunately, we blew past that and spent $60,835. For me, the standout expense was the HVAC. We spent nearly $8,000 to replace our HVAC. If we didn’t have that expense, we’d still be under budget. I guess I need to budget better for home repairs.
For 2019, I’m not sure what our expense will look like. We’re planning to move and that’s always an expensive proposition. I also plan to travel to Thailand to check on my mom. That’s not cheap either. I guess we’ll see how it goes. Hopefully, we can keep it under $60,000 next year.
- Housing: $28,420. Ugh! I hate this category. We spend way too much on housing. We have HOA, property tax, mortgage, and more. I hope our housing expense will decrease after we move, but I’m not sure. Portland isn’t cheap anymore.
- Groceries: $5,680. We spent quite a bit on groceries in 2018. We could eat out every day in Thailand with this budget. A cheap casual meal cost just a few bucks and a nicer meal in a restaurant cost $5 to $10. The food is awesome too. I’m about ready to move. Check them out! (Of course, you can spend a lot more if you go to a fancy restaurant.)
Khoa Soi – Curry noodle with chicken. This one cost a little over $1. You can expect to pay about $15 in Portland for one that’s bigger, but not as delicious.
Isan Sausage – This sausage is stuffed with rice and fermented pork. It usually cost around 30 cents each.
Tom Yum soup, Fried wings, and a whole fish – This meal was about $17. That’s not bad for 4 people.
Charcoal grilled chicken and sticky rice – This lunch cost us about $7. The chicken was awesome. It was perfectly juicy and tender. American chickens are just too big. Thai chickens are so much better. This was at a roadside shack so it was a relatively cheap meal on our road trip.
Khoa Mun Gai aka Hainanese chicken – OMG, this meal was so delicious and it cost just a buck! This Khoa Mun Gai in Chonburi was so much better than in Portland. It’s incredible people pay $11 to eat an inferior dish there. It’s sad. I’m never eating Khoa Mun Gai in the US again.
- Transportation: $1,254. We share one car and we usually don’t drive much. I filled up a couple of times last month. This category works pretty well for us.
- Kid: $762. This includes clothing, activities, toys, and various other things for RB40Jr. I think we did okay here in 2018.
- Pet: $130. We have one cat.
- Bills: $2,978. Electricity and insurance (auto, home, term life, and umbrella.) This seems like a lot of money to me, but that’s part of living in the US.
- Health: $1,956. Gym membership fee and co pay for various doctor visits. I guess we did okay here too. We’re still young so we don’t have a ton of healthcare bills.
- Cash: $460. We didn’t withdraw much cash in 2018.
- Travel: $9,836. We traveled to Iceland and Thailand in 2018. Iceland was a very expensive trip. I think this expense will come way down in 2019. I have some points I can use to help pay for various trips. This current Thailand trip should be relatively cheap. I used some points and we’re staying with families for the most part. Travel hacking is a great way to help pay for trips. See my credit card page if you want to travel more for less. I just signed up for the Capital One Savor and got $500 bonus. Sign up before the bonus expires if you want the same deal. See my credit card page.
- Clothing: $1,574. Whoa, we spent a lot of money on clothing this year. I blame Mrs. RB40 for this expense. Heh heh.
- Entertainment: $316. Okay, this one seems low. I guess we didn’t spend a lot on entertainment this year.
- Misc and HVAC: This is mostly the HVAC.
- Pre-Tax Savings: $75,000. This is one of the discrepancies. I’m having a tough time adding up the figures because I can’t log on to Vanguard today. I’ll have to fix it when I get back. It’s pretty close to this.
- Extra Savings: $27,817. I rounded the numbers out with this. It’s a bit off and I’ll have to fix it later.
We saved $102,817 in 2018. That’s quite a bit of saving, but our net worth is down -1.5%. It isn’t ideal, but that’s investing. It’s hard to make any headway when the stock market corrects. I’m not too worried, though. The stock market should recover in the long term. For now, we’ll just focus on saving and investing as much as we could. It’ll pay off when we’re 65.
- Joe’s 401k: $40,680 (Some of this was 2017 contributions that I made in February.)
- Mrs. RB40’s 401k: $18,500
- Roth IRA: $11,000
- 529 college savings: $4,600
- Extra savings: $27,817
The extra savings was invested in real estate crowdfunding and dividend stocks.
2018 Wrap Up
All in all, we got through a challenging 2018 without hurting too much. Our net worth dropped a bit, but it could have been much worse. Our cash flow was good overall. The annual expense was higher than expected, but I think we’ll improve next year. On the income side, it was fantastic in 2018. Unfortunately, I doubt my online income will be this high in 2019. Business is already slowing way down and I’ll need to figure out how to improve it.
I’m not too worried, though. Our expense is modest and our income is way higher than that. Unless something drastic happens, we should be fine in 2019. I’ll focus on increasing our passive income through dividend stocks and RE crowdfunding next year. I’m optimistic for 2019.
Did you have a good 2018? Did you accomplish all your goals? It’s okay if you didn’t. Let’s wrap it up and start over with 2019. Happy New Year!
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Source: Retire By 40
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