early retirement

May Investment Income- $76.53

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My May investment income increased to $76.53 from $63.83 the month before. My investment income has been rapidly increasing the last few months due to the rising stock market. My Roth IRA had been slow in recovering but last month it finally started making decent progress toward recouping its earlier losses. It still has a ways to go to break even though. My personal portfolio has done much better and is showing a nice profit. This is mostly due to one stock going from $9.15 to $22. I wish I would have put more money in it now but I’m not complaining. I also added about $1600 to my stock portfolio this month. I will be putting most of the money I receive from the medical study in my stock portfolio. My investment income has almost tripled since I started tracking it last year. If I could maintain this rate of increase being able to retire early would be no worry at all.

Disclaimer: This is not my actual investment income. To get this figure I first add up my retirement savings, emergency fund, and any other money I consider permanent savings. What the total of my savings would earn at 6% interest for a month is my monthly investment income.

April Investment Income- $63.83

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My investment income had another nice increase last month to $63.83 from $58.12 the month before. This was due to the gains in the stock market. My personal stock portfolio is now showing a profit and my IRA is finally starting to gain back some of its losses.

Disclaimer:This is not my actual investment income. To get this figure I first add up my retirement accounts, emergency fund, and any other money I consider permanent savings. What the total of my savings would earn at 6% interest for a month is my monthly investment income.

Reviewing My Income and Expenses

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Jacob at Early Retirement Extreme is having a 30 Day Early Retirement Extreme Makeover.   One of the goals of this makeover is cut your expense level to $10,000 or less a year.  I thought I was close to this goal already since I try to keep my monthly expenses at $1000 a month or less and I knew I was below that level a few months this year.  After reviewing my expenses for the year I realize I’m farther away from the $10,000 goal than I thought.  Although I did have some months below the $1000 level I had more months above the $1000 level.  I’m estimating that my total expenses will be about $15,000 for this year and  my total income at about $12,000.  This is not as good as I thought but that is part of the reason why I track my income and expenses; so I can review them and tell how I’m doing.

Looking at my expenses my budget busters are transportation and entertainment.  The transportation category is somewhat misleading because I drove my car delivering pizza most of the year.  Some of that expense should really be a deduction from income.  Still there is plenty of room for improvement in the transportation category and I will be making some major changes there.  Some of the increase in my entertainment expenditure is from having a GF but most of it was just the result of stupid decisions on my part.  This expenditure can easily be reduced just by choosing more free or low-cost options for entertainment.

Since the new year is almost here I’ll go ahead and set a couple goals now.  The first is to have my expenses under $10,000 next year.  The next is to have my income higher than my expenses.  These are reasonable goals and I will be planning specific measures to achieve them.

November Investment Income- $39.17

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November was another bad month for my retirement savings.  My monthly investment income went down from $41.34 last month to $39.17 this month.  I actually made more money in interest and dividends last month than what I’m projecting as my income.  This is because I received a quarterly dividend payment and I earned interest on accounts that I don’t consider part of my retirement savings.

Disclaimer:This is not my actual investment income. To get this figure I first add up my retirement accounts, emergency fund, and any other money I consider permanent savings. What the total of my savings would earn at 6% interest for a month is my monthly investment income.

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A $500 a Month Retirement Budget

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Jacob at Early Retirement Extreme recently posted an example $500 a month retirement budget.  It is displayed below.

  • Rent $200-250
  • Health insurance $75 (get the cheapest possible and stay healthy!)
  • Food $50-75
  • Transport $0-$75
  • Utilities $25-100

I found this very interesting because I’ve been making over $500 a month in alternative income lately.  If I could get my budget down to $500 a month I could “retire” and live off my alternative income.   Here is one possible budget.

  • Rent $250
  • Health Insurance $70
  • Food $75
  • Transportation $25
  • Utilities $80

It is possible to rent an apartment for $250 in some areas.  I think there are even some place in KC that rent that cheap but I wouldn’t want to live there.  A better alternative is to move to a small town or live with a roommate. The health insurance is what I actually pay now.  The food budget would require a little more self-discipline on my part.  I used to spend about $100 a month on food and if I were to cut out fast food I could get that down to $75 or lower.  The transportation cost is for an occassional bus or giving a friend gas money for a ride.  Ideally I would live somewhere I could walk to most places I needed to go.  The utilities expense of $80 would include a phone.  This amount would vary somewhat but an average of $80 seems easily achievable.

An alternative would be to live in Guatemala (or any low-cost country) for part of the year.  Or to spend several months hiking.  Both would allow me to live on about $300 a month.  A possible budget would be.

  • Rent $100 (if hiking would be for hostels, hotels, showers, etc.)
  • Food $75 (would probably be more while hiking)
  • Health Insurance $70 (this would be the same although I could consider going without in Guatemala since health care is so cheap there.  I wouldn’t want to take the chance of being uninsurable upon a return to the U.S. though.)
  • Miscellaneous $55 (entertainment, postage, gear replacement, transportation, etc.)

The $300 budget would allow me to spend a little extra when visiting the U.S. or not hiking.  Some of the difference would have to go airfare to get to Guatemala or transportation to and from the trailheads but the savings would more than make up for this amount. These budgets might seem a little extreme but based on my experiences living in Guatemala and hiking long distances I’m confident that they are feasible.  I’m planning on doing a $200 a month hike for several months next year.

For now though these budgets are just musings but after I get out of law school they could very well become reality.