Backyard Renovation, Guilty Pleasures, and April 2022 Financial Results

Welcome to Rich Frugal Life’s April 2022 financial results!

It’s spring here in Arizona, and that means the 90 – 100 degree weather has arrived (boo)! I guess that’s the price we have to pay for mild winters and sunshine.

Before we get into the numbers, here’s a little bit about what we got up to last month.

Backyard renovation

After a long hiatus during the pandemic, we’ve finally turned focus back to finishing our massive home renovation.

While there are still a few projects left to complete inside, the biggest thing left to tackle is the backyard, which has been partially completed for about a year now. This month we finally began working on the first of two paver patios and walkways that we plan to install.

Although I wanted to let go of the spending guilt and actually pay someone to do this for us, there was only one subcontractor (of the handful I called) who was willing to bid on the project. He was sketchy as hell, and we weren’t comfortable paying the full amount before they’d done any actual work, as he demanded.

So, after some research (thank goodness for YouTube), we decided to DIY the project. By now, I’m sure you know that when I say “we” for these sorts of projects, I mean mostly Mr. RFL. I help out, of course, but Mr. RFL does the heavy lifting.

We’re about done with the first patio. It’s a lot of work, but we’re confident that we’ll be happy with the quality, save a little money, and pick up some new DIY skills.

Guilty pleasures

One of my many goals for 2022 is to read more (and watch less TV). Although I wouldn’t say I’ve been watching less TV, I have definitely been reading more.

In tend to devour health, finance, and historical fiction books, but enjoy the other genres every now and then.

In between all the self improvement and respectable “book club” books, I’ve found a new guilty pleasure. I just finished the second book in the Court of Thorns and Roses series by Sara Maas (affiliate link) and I’m all in. The series feels like some combination of Game of Thrones, Twilight and Hunger Games. Although clearly written for a female audience, it’s has just the right mix of epic fantasy adventure and romantic angst to hook me.

Celebrating 2 years of early retirement & revamping the budget

Last month marked 2 years of early retirement for me, and I’ve been doing a lot of self-reflection.

Additionally, we decided to make some revisions to our budget after reading “Die with Zero” (my review here).

I’ll share more on our budget updates, including how that will impact our FIRE number, and my second year of early retirement later this month.

Without further ado, here are our April 2022 financial results, with all the juicy details of this month’s spending, passive income, savings rate, investments, and changes in net worth.

Why share the details of our spending and finances?

Because I’m nosey and enjoy reading about other people’s spending habits and net worth.  Maybe you do, too.

Everyone’s financial situation is unique.  However, I believe there is value in sharing information to provide context and normalize the discussion of money.

Seeing other people happily embrace simpler lives gave us the confidence to begin our own journey to financial independence and a lifestyle we believe will be healthier, happier, and more fulfilling.  I’m just trying to pay it forward.  Sharing our finances each month also helps us stay accountable.

Other information useful in reading our monthly financial results

Did we just buy a money pit?

We bought a complete fixer upper in late 2018… with a toddler.  When we moved across the country for Mr. RFL’s job, housing costs were much higher than we were used to.  So, when we found a great deal on a fixer upper, we decided to go for it.

We’ve been working on projects ever since, trying to do as much as we can ourselves to learn some new skills and save money.  Since the costs of a whole home renovation are significant and non-recurring, we don’t include them in our monthly expense budget.  However, we do share renovation costs each month for full transparency.  

How we define an “expense”

The table below shows all expenses for the month, excluding renovation costs.  Principal payments on debt are not included.  As a former accountant, I don’t view principal payments as “expenses,” since they directly reduce debt and increase net worth.  We don’t anticipate having any debt in retirement. 

April 2022 Financial Results

Net Worth

We calculate net worth by subtracting debt & other liabilities from total assets. Total assets include cash, investments, home equity, and an immaterial amount of other assets.

Our total net worth increased by 3.2% this month, and is up 36% from a year ago. 

Yes, I realize that it’s surprising to have an increase in net worth during a month where the stock market took a nose-dive. Indeed, our investment balances took a massive hit this month. However, we still experienced a net increase in net worth.

Some of this increase is due to the paycheck Mr. RFL continues to earn by working. But, the majority was due to a significant adjustment I made to our home’s value on the balance sheet.

House prices are still rising by double digits in our neighborhood. While I try to be conservative with asset estimates, the increases have gotten too high to ignore.

For balance sheet purposes, I record our home at its net realizable value (after estimated selling costs). Recently, I’ve been using 92% of the lowest estimate provided by either Zillow, Redfin, or Realtor to determine the NRV. These values are all significantly higher from my last estimate, which led to a $100,000 increase.

You can easily track your investments and net worth, as well as plan for retirement, for free with Personal Capital (affiliate link).

Investments

We added $14,700 to our Financial Independence (“FI”) portfolio this month (including employer matches). Technically we invested a lot more than that, but a significant portion of our April investments were bought by reducing our existing cash positions. I love buying the dip!

After surpassing our FIRE goal earlier this year, we ended April with an investment balance of $1,127,000. This is a little less than last month, but that’s okay.

If we were to retire today, our nest egg would provide a base withdrawal of $45,100 per year, using the 4% rule. This exceeds our current FIRE budget.  However, if we used the more conservative 3.3% rate suggested by Morningstar, the amount would only be $37,200.

Debt

We currently have $179,600 in debt, the majority of which relates to our mortgage, which has an interest rate of 2.5%.  Because the rate is so low, we rarely make additional principal payments to our mortgage. 

Savings Rate

Our after-tax savings rate this month was 70%.

We prefer using an after-tax rate, since it allows us to assess our true living expenses and savings rate more clearly.

While we currently pay an obscene amount of taxes, it’s because we’re still bringing in a lot of money. Our taxes should be much lower, and close to $0 in early retirement.

If we do opt for an activity that generates income in retirement, than we wouldn’t need to withdraw as much from our portfolio anyways.

April 2022 Financial Results: Monthly spending

Ok, full disclosure time! The table below shows our expenses for the month, along with some additional thoughts (or excuses).

*Does not include monthly spending for home renovation of $883, or charitable contributions made, which we don’t treat as expenses (to encourage more giving) or share publicly.

Housing-Related – $851

Housing-related costs include mortgage interest paid, and a monthly allocation for property taxes, insurance, and HOA dues. 

Insurance – $460

This category includes our premiums for auto, term life, personal liability, and health insurance.

Health insurance premiums are withheld from Mr. RFL’s paycheck, but all our other insurance plans are paid annually or biannually.  We allocate an amount for auto insurance each month since the cost is high, but other insurance premiums are included here only when they’re actually paid.

We enrolled Mr. RFL’s car in our insurance company’s drive and save program, which netted an immediate $5 off our monthly bill. I enrolled my car in January, since our base rates had increased 10%. We’ll see if the final savings on these programs are worth the hassle when our policy renews in a few months.

Food – $1,032

We spent a lot on groceries this month, but that was expected. I ordered a ton of stuff from ButcherBox this month (referral link – save $30 & get free stuff), which made up more than half of this total. However, this freezer restock will last us about 6 months. You can read more about my strategy for getting the best deals and my (unpaid) review of ButcherBox here.  

We dined out a couple of times this month during our day dates. We even enjoyed a rare evening date at a fancy steak restaurant, however, that bill was only $40, since an old gift card covered the majority of the dinner. 

Household Consumables – $122

This category includes most of the non-food consumables used in our household, such as toilet paper, shampoo, skincare, laundry detergent, cleaning products, batteries, etc.  I went to Costco again this month…

Utilities – $182

Utilities includes electric, water, gas, and security. We’ve already had to turn on the air conditioning to deal with the hot temperatures, which seem to be coming earlier each year.  These costs are only going to go up over the next several months.

Home Maintenance – $22

We bought a giant rake for the millions of bougainvillea petals that collect in our yard.

Fuel & Car Maintenance – $25

One expensive fill up this month was partially offset by a mileage reimbursement for one of Mr. RFL’s work trips.

Entertainment – $12

This category is for television, streaming music, books, games, concerts, and other family activities. Just Hulu and Spotify this month.

Alcohol – $173

Oh, but the deals were incredible! I got so much wine (and liquor) for this price.

Plus, as the heat rises here in Arizona, so do the chances we’ll receive a poorly transported bottle that tastes “off.” I like to stock up on my food and alcohol before the summer heat peaks.

Child Activities & Other Purchases – $142

This month we paid $118 for our daughter’s swim lessons and bought a couple pairs of sneakers from Target (she just keeps growing!)

Other Shopping – $17

After spending way too much last month, I came so close to not spending a dollar within this category in April. Then I went to Costco at the end of the month and impulse-bought some pantry organization containers.

Overall, this is still pretty good for us. We do have some larger home purchases planned for later this year, which is one of the reasons we recently increased our 2022 budget for this category. That blog post coming next week…

Gifts – $35

We bought this adorable toy for our nephew’s 1^st birthday (affiliate link). We also had a birthday party for one of our daughter’s school friends. The cost for these gifts was partially offset by a gift card previously received.

April 2022 Financial Results: Other Income

The majority of our income comes from W-2 wages and related employee benefits (i.e. 401k match); however, we’re continuing to build our passive and other income streams.

The total non-employer related income either earned (or gifted to us) this month was $776.

Interest & Dividends

Back to normal this month, though we still earned $454 in interest and dividends.

Reselling

One sale this month on the secondhand market, netting $14 in commissions.

Cash Back Rewards

We received $208 in cash back rewards this month.  

We added a new cash back card to our arsenal and have increased our purchases of gift cards to maximize rewards. This worked especially well last month when we were buying a lot of supplies for our backyard DIY project.

We strategize the timing of expenses and charge everything we can in order to maximize credit card rewards. However, we always pay the full balance due each month.

Hope you enjoyed your sneak peek at our April 2022 financial results. How’d your month go?

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