This is the first installment of my monthly expense recap on the early retirement blog. There is a lot that happens each month and I want to talk about some of the more interesting items going on for us financially. I am not listing every income and expense item, only some of the highlights and lowlights.
There was no significant income outside of the regular paychecks in September. That is unless you count a birthday check from my parents! We also received a $130 refund for previous medical bills; I think the insurance company ended up paying more than initially expected. Neither is really true income, more like found money. Regardless, those dollars will be put to work like all the rest.
Vacation Planning and Spending
Right now I have been incurring a lot of vacation costs for two reasons. First, we just finalized our plans to take the kids and grandma to Hawaii in late February. That means I spent about $700 in airfare to get the five of us there and back. That is pretty good right? Thanks to American and United points and the Barclays Arrival card, I was able to get two roundtrip tickets completely free and another one almost completely subsidized by the Barclays rebate points. It took me a while (about 3 hours), but I was able to get us all on the same flights and next to each other seat wise.
The second vacation cost has been my travel hacking for a future vacation to the Caribbean, more specifically either Grand Cayman or St Thomas. They both have nice Marriott’s and I am trying to get enough points to cover the entire week’s stay and most of the flights. It might take half a million points, but we are getting close (about 250,000 Marriott points and 120,000 United Airlines points). As such I have been paying the mortgage with a credit card to get the spending bonus. For just under a $38 fee, I can get close to the 3 month spending requirement by paying one mortgage payment. The rest can be utilities that don’t cost anything to pay by credit card.
Each time I do this, I get about $500 worth of frequent flier miles, rebates, or hotel points. That means I am getting the travel at about a 90% discount. I can handle paying $38 a couple of times to get a $4,000+ vacation for free. Either way, I code the extra costs as vacation, not fees. This lets me see how much I am “investing” into the future vacation expenses.
Outside of that our biggest expenses in September were for some miscellaneous house purchases. We have been really trying to do more projects ourselves to save money, but if you want to refinish a dresser you still have to buy some supplies. I also bought about $75 worth of LED light bulbs for the house. At this point I have replaced 99% of the light bulbs in the house with low wattage LED bulbs. Less energy and no heat generated make it good spending in my mind. Finally, we bought some new curtains (and curtain rods) for the living room. While it may seem like an extravagance, it adds privacy and helps regulate the temperature in the house better in the summer.
As usual, our food expenses are kind of high for a family of 4 (and grandma). I still eat out too much for lunch at work, even though I had a $100 gift card from AT&T for complaining about service and charges that I used multiple times for lunch. We have really cut back on fast food for meals though.
Spending on the kids decreased significantly as we stocked up on diapers and wipes in August when they were on sale at Costco (about 3 months’ worth). Since we have space in the garage for them, it’s worth saving about $75 and buying in bulk.
Since I traveled for work the auto fuel category looks high, but that will be offset by the mileage reimbursement I will receive in October (just a timing issue). In fact, it will be more than double the cost of the gas so the October number will be artificially low.
Impact of Solar Panels
The elimination of the power bill from solar continues to make me smile each time I look at our expenses. Now that fall is here, we should start racking up net metering credits to cover the higher costs of running the AC next summer. The rest of the utilities (trash, water, gas) only added up to $158 for the month.
Even though I financed part of the purchase with a 0% credit card offer, paying off the principal is an outlay I am okay with these days. Since the research shows home values are increased by the solar panels, I am investing in the house by making those payments. Using the credit card also avoided us using our own cash for the 30% of the purchase that will be a tax credit for 2014. We will get about $6,000 back to pay off the rest of the card. We can instead direct our current cash towards investments.
I also will be getting a referral bonus of $500 sometime soon for a friend buying solar from the same company I did. While it will look like income, I really consider it another $500 discount on my purchase and will put 100% of it to pay off the credit card transfer.
I decided to move our savings accounts for us and the kids over to Barclays. Chase only pays .01% and Emigrant Direct was down to .50%. Barclays pays .90% or .95% depending on which savings account you set up. It was easy to open and link to my checking account. You would think a bank would give you higher rates when you have checking and credit card accounts with them, but alas that is not the case.
In terms of debt, we did not make any extra mortgage payments and don’t plan on any in the near future given the higher return of shielding income by maximizing retirement contributions or investing in Prosper/stocks versus a 2.625% mortgage rate. We did manage to eliminate another ~$1,200 worth of student loans. A few more months of 6x the minimums and there will be none left! We also paid about ~$600 towards the solar self-financing payoff. While I would rather pay for something like that with cash, the first 12 months of energy savings amount to about $2,200, so putting it on the credit card at 0% interest was actually the best financial return for the project.
I hope to redirect funds in 2015 from the above student loan and solar payments into more taxable trading account contributions, Prosper loans, and tax deductible 457b plan contributions (auto withhold from paychecks). That will really supercharge the retirement savings for us.
All-in-all it was a good, but not great, month for our finances as our spending was a bit higher than I would have liked. We managed to put an additional $100 into Prosper loans (in addition to funding new loans from its current cash flow). We also put $500 into an IRA that will help reduce our 2014 tax bill and $760 into our Scottrade Roth IRAs. Those are in addition to the regular 403b/401k deposits that come out of paychecks. Finally, $220 in Coverdell ESA contributions were also made for our youngest son (the older one’s account is already maxed out at $2,000 for 2014).