More Free Time, Grass & August 2021 Financial Results

Before we get into our August financial results, let’s talk about what went down in August. It was a big month for the Rich Frugal Life family, in many ways.

Back to School!

Despite an unexpected escalation in the pandemic, thanks to Mr. Delta Variant, we sent our daughter off to school for the first time in 18 months. As an only child, we felt like it was important to get her back in the classroom and around other kids. That’s not to say it was an easy decision. She’s only 5 and cannot yet be vaccinated. We sent her with a mask (she was one of the few students wearing one) and the first two weeks were filled with as much anxiety as excitement. Our school district has since enacted a mask mandate which makes me feel a little safer.

Back to school also meant that I finally had the chance to do some of the things I’d planned to do when I first started my early retirement. This month, that mostly meant baking and binge-watching TV (as predicted). Hopefully next month will be a lot more productive. Little A is loving her new school and I’m loving my freedom!

We have grass!

Ok, artificial grass. But, it’s green and better than the yard full of rocks we had before. I’m not fond of “desert landscaping,” but it seemed irresponsible (if not impossible) to grow real grass given the current water shortages. Luckily, this is pretty realistic looking and feeling. Although there are still a lot of rocks, we have some DIY projects planned for other parts of the yard. We also got back to work on other in-process home renovation projects in August, like baseboards.

And, a wonderful surprise!

But the most exciting thing that happened in August? Rich Frugal Life was selected as a finalist for the 12th Annual Plutus Awards in two categories: Best New Personal Finance Blog and Best Financial Independence or Retire Early (FIRE) Content!

After sharing how tough my first year of blogging was, this was a huge surprise and honor! With so many amazing FI/RE and personal finance blogs out there, I didn’t think I had a chance at being selected for this. I’m beyond grateful and happy! I really appreciate the support of my readers, so thank you!

Without further ado, here are our August 2021 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 love reading about other people’s spending habits and net worth. Maybe you do, too.

Everyone’s financial situation is unique, and personal finance is personal. However, I do believe there is value in sharing information and providing context.

We’ve been motivated by people in the FI community who’ve happily embraced simpler lives. Seeing others succeed 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.

If you’re looking for the frugalist of the frugal, you won’t find that here. Life is short and we have no problem splurging on things that make us happy. Although we spend freely in these value areas, we’re trying to ruthlessly cut back everywhere else.

Sharing our finances each month helps us stay accountable.

Other information useful in reading our August financial results

Did we just buy a money pit?

We took a risk and bought a complete fixer upper in late 2018… with a toddler. When we moved across the country for Mr. RFL’s job, we found housing costs 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. 

August 2021 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 net worth is up 3.4% this month, which was due to our income and market activity, as well as another increase to our estimated home value. We’re up 31.0% year-to-date, and 88% over the past 3 years!

Now that our backyard grass is installed, and the remaining projects for our home renovation are smaller DIY ones, I decided to increase our home value another $30,000 to better align with current market estimates.

Real estate markets are hot, and although I know that estimates from online sites are flawed, consensus estimates can be useful when determining your home value. Zillow, Redfin and Realtor provide both a price range and point estimate. Recently, these sites showed point estimates for our home’s value between $880,000 and $1,000,000.

Up until now, I’d been discounting our home value even further since we were mid-renovation. However, now that our home is sellable and the project is winding down, I’ll use the lowest point estimate from these three websites to determine our home’s value. Additionally, since there are selling costs, and likely some margin of error, I’ll use 92% of the selected value as the net realizable value (NRV) for our net worth calculation.

Investments

Our Financial Independence portfolio, which consists of cash and investments, excluding our daughter’s 529 Plan, is up by 30.1% year-to-date.

We invested $12,848 this month; however, nearly all of that money came from existing cash, so the net addition to our Financial Independence (“FI”) portfolio during the month was nil. Additionally, we liquidated our Renovation SINK fund this month, so the cost of our turf came directly out of this month’s savings. But that’s okay, since the market continued to do its thing. We finished the month with a balance of $910,000…or 91.0% of our FIRE goal.

Debt

We ended the month with $200,500 in debt, the majority of which relates to our mortgage.

For the most part, we no longer make additional principal payments to our mortgage during the year. We shifted our priorities to investing excess cash once we got the mortgage balance below $200,000 and refinanced to a lower rate.

The remaining debt is for a small project loan (0% rate), and my student loans (0.75% rate). We only pay the minimums on these balances since the rates are so low.

Savings Rate

Our after-tax savings rate was 73.6% for the month, which is way above our budgeted rate for the month. Yay!

August 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 $8,816, or charitable contributions made (which we don’t share publicly).

Housing-Related – $876

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

Insurance – $465

This category includes our monthly 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.

Student Loan Interest – $1

I graduated with $40,000 in student loans, but only have a balance of $1,600 remaining. Because the loans carry an extremely low interest rate (0.75%), I only pay the minimum each month. Mr. RFL graduated debt-free.

Food – $425

We continued to chip away at our budget deficit in the food category this month by minimizing grocery purchases and not eating out. We’re now only $273 over our food budget for the year, which feels a lot better than where we were a few months ago.

As the weather begins to cool and we’re able to eat outside again, I expect our restaurant spending to go up a bit. Mr. RFL and I are also planning to meet up for lunch or schedule day dates more often, now that the kiddo is finally back in school.

Alcohol – $73

Picked up a few bottles of wine during Fry’s 25% off wine & spirits sale.

Household Consumables – $31

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.  Nothing scandalous to report this month.

Utilities (incl. internet) – $426

Utilities includes electric, water, gas, security, and internet.

Thankfully, our electric bill peaked in August (September’s bill is much lower). Our highest bill this year is lower than last year’s peak, which means our attempts to save money on our summer cooling bills are paying off!

Mobile phone – $0

Yes! I finally reaped big savings from my switch to a prepaid plan a few months ago. Verizon credited my account with $40 after my last payment as part of the promotion I signed up for, which covered this month’s renewal. Now that I’ve enrolled in autopayment (you couldn’t be on autopay to receive the $40 credit), I’ll receive another $5 off, for a total of $30/month. In a few more months, I’ll be down to $25/month.

Home maintenance – $110

Most of the money spent was for HVAC air-filters (affiliate link) this month. We’re buying the fancy ones, but getting them in bulk to save a little money. Because of the excessive heat and dust, filters need to be replaced monthly this time of year where we live. And after investing over $16k in new HVAC systems for the house (that I don’t want to repair or replace before we move), I’m not willing to mess around. 

Medical – $22

Just some OTC medicine this month. I’m expecting a big fun invoice next month for some medical tests I recently had done. And by fun, I mean NOT fun.

Entertainment – $46

This category is for television, streaming music, books, games, concerts, and happy hours.

We paid for Hulu & Spotify this month. I also bought Discovery+ for the next year, after having cancelled my subscription a couple months ago. They offered me 40% off to come back. I’m obsessed with home renovation and cooking shows, so $29.99 for the whole year is worth it to me. 

Clothes – $40

Only bought clothes for the kiddo this month. She needed a few pairs of shoes and shorts for back to school.

Proud to stay that my no spend clothing challenge is still going strong! I haven’t spent a dime on clothes, shoes, or accessories since June 2020.

Child Activities & Other purchases – $143

We paid $88 in monthly dues for swim lessons, plus $45 for a lunch box and additional school supplies, and $10 for a build-your-own racecar kit from Lowes.

Other Shopping – $36

My super old Apple headphones (affiliate link) finally died, so I bought a new pair.

We also bought more filters for our reusable facemasks. I never know what to categorize pandemic stuff as in the budget, so it’s going here.

Annual Credit Card Fee – $95

As our hopes for more travel in the future grow, we’ve been dipping our toes into travel hacking.

Though I haven’t put much effort into the process yet, we did recently open up a Chase Sapphire Preferred card to take advantage of their awesome 100,000-point reward bonus (worth approximately $1,000 – $1,250). In order to get the bonus, we had to spend $4,000 during the first 3 months, which was easy for us with the large renovation purchase this month. We put $4,000 of the turf purchase on this card, and the rest on our cash back credit card. This card has an annual fee of $95, which hit our account this month.

We don’t have a lot of credit cards that charge fees. However, for any we do have, we assess whether the annual fees on our credit cards are worth it each year before the renewal date.

August Financial Results: Other Income

While the majority of our income comes from W-2 wages and related employee benefits (i.e. 401k match), we continue to build on our passive and other income streams. The total non-employer related income either earned (or gifted to us) this month was $930.

The amounts below don’t add up, because we received a gift contribution to our daughter’s 529 plan this month.

Interest

We earned $118 in interest this month, primarily from our high-yield savings account and interest earned on Mr. RFL’s deferred compensation investments.

Dividends

We received $124 in dividends this month. Since most of our investments are in equity ETFs which only pay dividends quarterly, if at all, September will be a more impressive month.

Reselling

We’re continuing to declutter and sell unwanted clothes and kid gear on the secondhand market. I sold three items during the month on Poshmark (referral link) for a net reselling commission of $75.

If you join Poshmark using my referral link above or the promo code “RFL2024”, you’ll receive $10 off your first order.

Cash Back Rewards

We earned $113 in cash back rewards this month, primarily from our credit cards. We charge everything we can on our cards to maximize cash back, but always pay the full balance off each month.

This month also included our quarterly rebate from Rakuten (referral link) for $29.

If you don’t already use it, I highly recommend Rakuten. With one click, you get cash back from the online purchases you’re already making. Cash back amounts vary by store and change daily, but they frequently run promotions where cash back is 10% or more. You can also stack the deals on top of other coupons and/or your credit card’s cash back reward programs. We’ve earned over $1,600 in cash back since joining about 5 years ago.

If you sign up with my Rakuten referral link, you’ll get a $30 sign up bonus in addition to any cash back earned after your first $30 spent. There’s usually a cash bonus, but I can’t promise it will be this high in the future. I’ll also receive a $30 credit. Thank you for your support!

August was a great month for us, both personally and financially. How did your month go?

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