After a fews days on the road we are settled into our new spot in Pennsylvania where we will stay for a couple of months. Normally I love being on top of everything that is going on in the markets and with our financial situation, but I have to admit that focusing on driving and enjoying the scenery for a few days was a really nice break. I tend to get overly invested in the market details, trends and financial news. This is probably not very healthy so being away from turmoil for a few days was refreshing and something I should do more often.
As for the current state of the economy, there isn’t really much more to say. Our government failed us, and is continuing to fail us. All we can do is wait to see how everything plays out and take advantage of any opportunities that may arise. Sadly I think we are heading for a recession as we can’t count on an incompetent fed, and an even more incompetent former fed chairman turned treasury secretary, to glide the economy down to a soft landing.
These people can’t even handle their core responsibilities so we shouldn’t count on them to suddenly become reliable and of sound judgment in a time of crisis. Both of them are guilty of making false and misleading statements about inflation and the state of the economy. Even a college dropout such as myself could see they were full of transitory garbage. It’s now obvious their statements were more about politics and putting on rose colored glasses for the people that are less inclined to keep updated on facts. Just the fact that these two are even still employed shows how dysfunctional and weak our government leadership is.
Here is how our portfolio performed in May 2022:
(Our original portfolio goal $1.5m)
Portfolio = $1,427,567
Our Portfolio Increased By $1,777 or 0.12% From The End Of April
Year-To-Date Our Portfolio Has Decreased By -13.05%
Net Worth = $1,472,229
Our Net Worth Increased By $3,921 or 0.27% From The End Of April
Year-To-Date Our Net Worth Has Decreased By -12.48%
We managed to eke out a small gain in another extremely volatile month. Unfortunately, we are still sitting about 70k below our $1.5m goal number so that continues to be a sore spot. Like I said there’s not much anyone can do about the current situation so we will just continue to stick to our dividend reinvestment plan and see if there are any other ways we can take advantage of the lower prices.
One of the ways we already took advantage of the lower prices was to convert some shares of our pretax IRA over to our Roth IRA to begin a conversion ladder. In our last update I mentioned that we had put this and our rule 72(t) withdrawal plan on hold with the markets continuing to go lower. Looking back I wasn’t very clear and I didn’t do a good job of explaining why or that there were two separate reasons for holding off on our plans.
The rule 72(t) withdrawal is something that is converted to cash for immediate use and that we would have to pay taxes on. The catch is that once you start taking your equal payment withdrawals you can’t stop until after a minimum of 5 years or you turn 59 1/2, which ever one is the longer period. So if Mrs. RVF is 51 we would take equal payments until she is 59 1/2. A total of more than 8 years. As such it benefits us more to let this money continue to grow tax free in an IRA for as long a possible before we start the clock. It’s also not ideal to start withdrawals in a downward trending market as you are selling more shares at a low price which could hurt growth in the long run. We could always reinvest the withdrawal in a taxable account, but why go through the hassle right now if we don’t need to cash?
A Roth IRA conversion is much different. First, it’s not a cash transaction. We are simply moving mutual funds shares from a pre tax account and transferring them into a Roth account. We will pay taxes on the dollar value of the transferred shares at the time of the transaction. Second, we are not required to continue making conversions once we start and can do more conversions whenever we want to throughout the year. So in a downward trending market there is actually an incentive to wait as lower prices allow us to convert more shares than we otherwise would have been able to in the beginning of the year, when the markets were higher. So waiting allowed us to convert more shares and pay less in taxes over the long run. To be clear, we are not trying to time the market per se, but the trend was pretty obvious so we waited for a more opportune time to make the conversion.
Our plan is to convert at least up to the standard married filing jointly tax deduction each year to limit our out of pocket tax bill. We might do more if the markets continue heading down and we feel the tax benefit will be better for us in the long term. The money also can’t be touched for 5 years which works for us given our taxable accounts.
I hope this sheds a little more light on our process.
Now onto our not so favorite part of the financial spectrum, spending!
Here is how we did on our spending for May 2022:
Monthly Budget = $5,000
Total spend for May 2022 = $5,320
Over/Under Monthly Budget = -$320
Over/Under Budget YTD = -$2,929
Less Prepaid Site Fees = $1,554
Net Over/Under Budget YTD = -$1,375
Knowing that we were heading into a very expensive month of May we made a point of being very frugal with our cash spend. We took advantage of our location and saved money by just enjoying the beaches, resort pool and local state park that was just a bike ride away. None of these activities cost us anything, except a $3 parking fee at the beach, and allowed us to have a great time on the gulf coast for little expense. Although the food prices in Alabama are outrageous compared to Texas and other states we have visited.
While in Alabama we had to make several reservations for next year in order to make sure we could secure spots in locations we want to visit. Aside from the high fee we paid for the resort this is where the majority of our spending came from in May. If we back out those prepaid expenses we were under budget by about $500 for the month. Considering our resort fees alone for May took up 30% of our monthly budget we did a really good job of controlling expenses and never would have anticipated being on the positive side of our budget at the end of the month.
For the year we are $2,929 over budget of which $1,554 is for prepaid resort fees going through the middle of next year. Net of these charges we are still $1,375 over our budget for 2022 which is actually a pretty good place to be with most of our annual expenses front loaded in the fist half of the year.
As we head into the second half of 2022 we should see everything begin to level off. The wild card to this happening are the current fuel prices. Our budget calls for $250 per month on average for diesel fuel. Through the end of May we were in great condition having only spent $780, which put us $480 under budget year to date.
Then we hit the road to Pennsylvania where we needed to fuel up three times. This was our first trip to the fuel station since February when we preemptively topped our tanks before parking in Texas upon the news of Russia invading Ukraine. At that time we paid $3.79 a gallon for diesel fuel. On this leg of our adventure our average fuel price was $5.62 per gallon for a total of $965! Ouch!! This puts our total diesel fuel spend at $1,745 for the year and wiped out our budget surplus with no end in sight for rising prices.
This is obviously a concern and something we have to monitor. We decided to top off before parking in Pennsylvania just in case prices continue to jump. Since we are currently sitting with a full tank we will not have to spend money on fuel until sometime in August. That puts us exactly on our budget number through July, so maybe we will get lucky and prices will reverse downward before then. Probably not, but one can hope.
Heading into our full-time RV lifestyle we knew we would have to wear many new hats like plumber, electrician, auto mechanic, RV repair and carpenter. Diesel fuel price hedging wasn’t something that was on the list or considered, but here we are!
Thank you for reading our blog. As always we appreciate everyone taking time to follow our adventures. Please follow us on instagram for more updates as they happen.
See you on the road……………
P.S. If you haven’t heard we started an online store called StuckonCamping where you can get some of our designs on stickers, magnets, shirts, hats, tote bags and more! Check it out for camping, RV, Jeep and other outdoor designs!
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