Since I have all my numbers in Quicken, it’s pretty easy.
And I thought you might find the results interesting — so I’m turning it into a post!
As a reminder, 2017 was my first full year of retirement, so it provides a good insight into how our finances might play out over the rest of our lives.
Net Worth Results
Net worth was up 11.6% thanks to an awesome stock market run. How long can it keep going up?
I record our net worth at the end of each month. 11 out of 12 months posted were the highest net worth I’ve ever had. Not bad for a retired guy. 😉
This included the fact that I put $35k of appreciated index funds in my donor advised fund this year. FYI, this is why there are no giving “costs” below — we did our giving from assets instead of from income.
We have now averaged 13.71% compound average annual net worth growth since I started tracking in 1996.
Sorting Out What Really Happened
My spending as recorded by Quicken is a bit off due to how I account for things.
For example, my largest spending category by far is “school” (which includes college costs for my daughter).
While I did pay these costs, I was then reimbursed from a 529 account. But since I didn’t take the money directly out of the 529 as the expenses came due (I made one big withdrawal at the end of the year) it looks like my cost of college this year was $30k (which it was not). So I backed out the reimbursed costs and just left in the ones I paid without reimbursement.
This was by far the largest adjustment I had to make but there were a few others. But I sorted through those to try and give the most accurate picture possible.
One other thing bears mentioning: the numbers below are not cash numbers, but income and expenses.
How does this make them different? A few examples:
- I sold about $70k in index funds when I thought I was going to buy more real estate. No impact on income or expenses, but it did contribute to my cash position. (Yes, I did have capital gains income but since this was a one-off, I didn’t include it in the numbers below).
- I had a major influx of cash as I withdrew from Lending Club and Prosper as loans came due.
- I had large tax refunds (almost $18k) but since they were not normal, I took them out.
Needless to say, my cash balance was way higher than what the numbers below imply.
Finally, these are not audited numbers. I’ll get to the specific details when I do my taxes (which I am just starting). Consider the numbers below as close but not exact.
So I moved a TON of numbers around to try and get to a true representation of what happened. Once I got them all settled out, here’s where I netted out:
- Rental Income: $49,726
- Dividend Income: $8,674
- Other Inc: $3,980
- Wife’s Job: $2,623
- Interest Inc: $2,393
- Websites: $1,396
- Total: $68,793
- I actually pulled the trigger on several discretionary rental income expenses this year (a couple remodels and a new parking lot upgrade) to lower my 2017 income. The tax return income numbers will be even lower as we’ll have depreciation deducted from what’s above.
- The dividend income is from my taxable account at Vanguard which invests in the Total Stock Market Index fund.
- Other income is from credit card rewards. I’ll write a separate post on how I made this much, but the big impacts were 1) paying for college with a credit card (no additional fees), 2) charging our travels (at 3% cash back), and 3) the point/cash bonuses I got when I tried travel hacking.
- My wife began working at our church in the middle of the year, so next year this number will be twice as large.
- The interest we earned was from two “high interest” online savings accounts that had substantial amounts invested in them.
- I paid every expense I could to make my online earnings as low as possible this year. I wanted to keep my income low so I can avoid taxes on my capital gains sales.
- One area that underperformed was my P2P investments. Both Lending Club and Prosper are earning very small returns, so I’m withdrawing money as fast as it becomes available.
- Travel: $14,427
- Food: $7,766
- Taxes: $6,706
- Med. Insurance: $6,010
- Utilities: $5,653
- School: $5,500
- Medical: $4,544
- Misc: $4,086
- Car Repairs: $2,688
- Entertainment: $2,444
- Car Insurance: $2,404
- House Insurance: $2,301
- Eating Out: $2,237
- Clothes: $1,704
- Gas: $1,327
- Life Insurance: $848
- Home Repair: $743
- Furnishings: $526
- Christmas : $428
- Total: $72,342
- I think it’s appropriate that “travel” is my largest expense by far in retirement. 🙂 We took two major trips (or at least paid for them) last year (Grand Cayman and Seattle) plus several small ones. I’ll detail the Grand Cayman trip in future posts coming up soon.
- As detailed in my Blue Apron post, we’ve been around $11k-$13k in food costs for the past three years. This is right in the range of a “moderate cost meal plan” for a family our size. If you add “food” and “eating out” we’re at $10,003 for 2017, but my daughter was gone for five months so the lower-than-normal amount makes sense.
- Taxes include property taxes, income taxes in Michigan (where my rental properties are), and state and federal quarterly estimated taxes.
- Medical insurance is our monthly costs with Samaritan Ministries.
- Utility costs include TV, electric, gas, cell phones, water, and trash.
- School includes the non-529 reimbursed costs we paid (i.e. those costs that came out of pocket). We didn’t take out all tuition costs from the 529 so we could claim tax credits. In addition we had travel costs (to move out there plus my daughter to come back at Thanksgiving and Christmas), and school/room supplies.
- Medical costs were mostly driven by the ten (yes, ten) cavities that my daughter had filled this past year. In addition we had costs for my wife’s eyes (new glasses and contact issues), cost of my trainer, and the annual fee for our dental plan.
- Miscellaneous is literally a catch-all and has been $4k to $5k for many years now.
- Remember that $10 car I got? Well, it needed a lot of work. Almost $2,700 worth of work to be exact. 🙂
- We have two big entertainment costs: our gym membership and movies.
- Clothes is one area where we can save some money this year. I simply need to stop buying them altogether as I have enough to last me years.
- Home repairs included a new garage door spring, sprinkler repair for a busted pipe, and a fence post repair which blew down in a wind storm.
- Furnishings included a portable AC unit for our bedroom that made the summer bearable. We have central AC but our bedroom is the farthest room from the fan so we get little cooling up there. We’re also directly above the garage and directly below the attic, two places that heat up easily.
- Christmas is simply the cost of presents handed out. There were other gifts whose costs were placed in different categories including the trip to Grand Cayman (in “travel”), covering the condo cost for my parents in Grand Cayman (in “travel”), and the cell service we cover for the kids (in “utilities”).
In the end, the income and expenses were a wash, which is pretty much what I thought they’d be. And as you can tell from the overall amount we spent, we didn’t compromise on anything.
2018 Estimated Budget
Looking ahead, here are the high-level numbers for our 2018 budget:
- Income: $114,110
- Expense: $79,504
Some commentary on what’s included:
- Income will go up in two main areas: ESI Money and Rockstar Finance. The other numbers from this year should hold firm. There’s some upside on the web income, but I like to be conservative.
- Expenses should be about the same as they were in 2017 — I don’t see why they would be much different.
Those are the details for 2017 and our plans for 2018.
Any questions or comments?