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Anytime you can throw the words “million net worth” into a discussion, the words “scraping by” shouldn’t follow. It just doesn’t fit the bill.
Now before I continue, let me say that we’re fine, but we ran into an interesting financial problem that has messed us up this year. And, of course, my job is to share that with you so you can make sure you don’t run into a similar small dilemma.
I’m always very forthcoming regarding our money situation – both on this blog and in “real life.” It’s so weird that talking in-depth about money can be such a taboo subject.
So telling you that we have over a $1.3 million net worth shouldn’t be a surprise. I wrote about when we first hit $1 million in April 2017 and I update my net worth page every month. We’ve also been extremely fortunate to have such a great market return during our first years of retirement.
But even though a $1.3 million net worth is comforting, there are still problems that I don’t hesitate to tell you about. Whether it’s an investment property that wasn’t the best, almost losing the Panama dream, or struggling to find balance in early retirement, you get it all here!
Today, I’m going to tell you how we’re scraping by just trying to make the numbers work until the end of the year…
A smart decision?
As part of our drawdown strategy, I move about one year’s worth of spending from our investment accounts to our online savings account. Right now, that amount is about $50,000/year. That’s more than we normally spend each year so that gives us a little breathing room.
In early March, I decided to take some of this extra “breathing room” money and move it into a CD. Interest rates were starting to drop and I wanted to get a little more return on our cash-on-hand.
In the worst case scenario, I could pull the money from the CD prematurely and pay the penalty, which would mean only losing 60 days of interest. That’s far from the end of the world.
So I moved $15,000 into a high-yield CD at Ally. At the time, calling 2.00% “high-yield” seemed a little silly. But as I type this, that same CD is offering a 0.65% yield and we’re now only getting 0.60% on our online savings so I guess that was a good move.
Of course, making that move meant it would be a little tighter this year, but we had no plans to do anything crazy. It’s not like a pandemic was about to hit, uproot everyone’s lives, and turn everything upside-down, right? Oops.
Becoming a Piloteer was unexpected
First off, who woulda thunk there’d actually be a devoted fan base for Pilot owners called Piloteers… but there sure is!
Anyway, like most everyone, this pandemic threw us off-balance. Once we got back to the U.S. on a humanitarian flight, we soon realized we couldn’t do much anyway. Visiting with friends and family during a pandemic required a little more strategic planning. Additionally, we were being careful so didn’t want to make that too much of a regular thing.
So… what to do?
We bought a car and went on a road trip! It sounded like a great idea and it was but it certainly wasn’t a cheap endeavor. And buying a used car was the bulk of our expense for this trip. Not only did the 2012 Pilot cost $12k but then there comes the other fun of taxes, registration, insurance, gas, etc.
And even though we talked about selling it after our trip, we liked it so much that we didn’t put in too much of an effort of making that happen. Now she’s all ours and resting comfortably at my parents’ house waiting for our return!
A road trip can be costly
We have so many great memories from our 40-day road trip this past summer that I can’t complain. Plus I had all sorts of fun posts that came out of the deal:
- When Life Gives You Lemons… Take a Road Trip!
- Tennessee and Arkansas – Leg 1 of the 2020 Road Trip!
- Three Weeks in Texas – A Big Stop on the Road Trip
- El Paso, Tucson, Viva Las Vegas!! – Road Trip Leg 2
- An Overnight at Cracker Barrel and 5,863 Miles Logged
- Here’s Why I’m Liking… RV Parky
- Free Nights – We’ve Had 5 at Hilton Hotels Recently
That’s a lot of solid material for the blog! Sheesh, the things I do for you guys! 🙂
But alas, that came at a price. It was an expensive amount of fun. Sure we cut corners all over the place to bring the costs down big time. However, our gas costs alone were over $600. Throw in various lodging, entertainment, and food along the way and it becomes some good money gone.
Mint is telling me that we spent $7,821.34 during those 40 days. And we had pre-paid our rent for our place in Panama for a couple of months before we left from there earlier in the summer. So that amount is without even the cost of rent!
To give you an idea of our normal spending while in Panama, I thought $3,468 for a month there was expensive! So yeah, even with a $1.3 million net worth, pushing our spending close to $8k for 40 days is waaaaaay outside of my comfort range.
Having a $1.3 million net worth and scraping for pennies
Our automated transfer has already taken place from our savings to checking for November, so here’s a look at our checking account balance:
And what’s left in our online savings account for the year:
Finally, here’s the total of our outstanding credit card bills, which are set to auto-pay on their due dates:
Just so you know, I was able to easily grab all this info using Empower (formerly Personal Capital). It makes it easy to see all your balances, transactions, and investments from all your financial institutions in one dashboard. Best of all, it’s free. Because it pulls all your information together, you can also easily use their tools like the Retirement Planner, Retirement Fee Analyzer, and Investment Checkup to ensure you’re on the right track (also free, I might add!).
If you look at the numbers, we should be Ok getting through November, but then we’re going to come up short by about $135 in December. The $3,000 transfer scheduled for December 1 isn’t going to happen. There’s no minimum balance at Ally, but I’d at least have to drop the transfer down to maybe $2,860 at the most.
Don’t forget, we do spend more than $3,000 in months, too. Usually, we have a nice buffer in each account, but it ain’t happening this year. We’re really cutting things close.
And the only reason that we’re still in the right ballpark is that I started moving money from other places to this account. For instance, I moved most of the money from my Route to Retire business checking over to help fill the online savings bucket.
So there you go – we have a nice million net worth but we’re still scraping to make sure we have enough until the end of December (and maybe a week into January). It’s a strange phenomenon but understanding the why hopefully made this a little more clear.
My game plan now is to borrow a little more money from other places. Unfortunately, our duplex has had a rough year (I’ll talk about that in an upcoming post). So that business account is down to basically nothing and has its own problems – ain’t no money coming from that account!
In an effort to ensure we have a little bit of a buffer to cover us, I’ll probably have to scrape from the Route to Retire business checking again. And if that doesn’t cover it, I’ll borrow from Faith’s savings account with Ally. Then I can pay her account back (with some interest) at the start of next year… ssh, don’t tell her!
And as a reminder, if we run into a big emergency over the next couple of months, we could always cash out our $15k CD early. We’d lose a little bit of money but nothing substantial – probably around $60. But to me, there’s a challenge in not touching this account so I probably won’t do that.
We’re good – in fact, we’re better than good with our $1.3 million net worth
Before you start commenting that I left my job too early, we should have saved more, blah, blah, blah… save it. We’re just fine.
We’re actually better than fine. Think about what transpired.
That $15k in the CD is set to mature in March 2021. That means we’ll have our $50k we’ll move over to savings for spending for next year PLUS an additional $15k. We only spend about $35-40k per year so suddenly, we’ll have an extra $25k for the year… not too shabby!
And, as a bonus, we now have a car that we can use when we’re back in the U.S. or can sell if we decide to down the line.
Life is good even if we have to do a little more planning due to some unexpected occurrences. Nothing like a small pandemic to change everything in the blink of an eye!
Has the pandemic messed with your finances this year in either a good or bad way?
Thanks for reading!!