Decluttering Challenge and August 2023 Financial Results

Welcome to Rich Frugal Life’s August 2023 financial results! Before we get into the numbers, here’s what we were up to this month.  

Getting back into the swing of things

This month we returned to usual routines with our little one starting 1st grade. My volunteer activities have been ramping up, which is a good thing, but it’s also left me with less energy than expected to do “productive” things around the house. Perhaps I just needed a couple of weeks to recover from the summer.

For those of you pursuing “FIRE” who are worried that you might become bored if you retire early… the answer is you won’t.

While I’ve shared some of my emotional struggles on this journey, none of them have ever related to a lack of things to do, or that I want to do with my time. In over three years of early retirement, I’ve never been bored. The list of hobbies, volunteer opportunities, adventures I want to go on with my family, and projects around the house that I want to tackle is long enough to fill a lifetime.

Chances are you won’t be bored either, especially if you’re the type of person for whom this lifestyle appeals. You find things to occupy your time. But instead of a job and doing the things you have to do… it becomes the things you want to do. Freedom of choice.

Let the decluttering challenge begin!

This month we embarked on a new decluttering challenge. You already know that I love a good challenge, like my recent no spend clothing challenge that lasted almost two years.

Mr. RFL and I have been finding ourselves craving a more minimalistic lifestyle lately. We’ve been gradually working towards this goal and are ready to take the next step.

When we lived overseas for two years early on in our relationship, we had very little in terms of material things and a small apartment. Yet, we were so happy! Sometimes simple is better.

Less stuff will also make it easier (and cheaper) to move across country again in a few years. Plus, less clutter makes it easier to keep a clean home.

So on August 1st, we began a year-long decluttering challenge… because why wait until New Year’s Day to change your life?!

During the year, we will sell, donate, give away, or trash at least 1,000 items. We already got rid of over 500 items last year as a part of my 2022 goals, so wanted to set a goal that felt achievable. Items don’t make the list until they physically leave the house.

The other part of the challenge is something that we’ve never done before, and that is tracking the items that we bring into our home. There is little point in decluttering 1,000 items if you’re just going to add most of it back. So during this challenge we’ll also track the items that we buy (or receive) into our home. This list will exclude household consumables. Obviously, we’ll buy some things during the year, but we want to remove way more things than we add. Our goal is to have a net reduction in household items of at least 700 by the end of the year.

Let’s get decluttering!

Without further ado, here are our August 2023 financial results, with all the juicy details of this month’s spending, passive income, savings rate, and investments.

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, we decided to just go for it when we found a great deal on a fixer upper.

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 an 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 2023 Financial Results

Investments

Surprisingly, we actually reduced the net investment in our Financial Independence (“FI”) portfolio by $6,700 this month.

The reason for this negative investment is that we sold off $36,000 worth of the vested company stock we were holding but didn’t finish reinvesting all the money into our brokerage account before the end of the month.

Because this negative result skews our investment percentages, I’m not going to include my usual pie chart showing where our money went. However, of the money that we did invest this month, roughly half went to the total stock market, 15% went to dividend paying investments, and another 15% went to municipal and high-yield bonds. Most of the leftover money will be put into the market during September. Although with interest rates as high as they are (our money market fund is currently paying over 5%), we’ve decided we’re comfortable holding a little extra cash for now. 

Our reported investment number includes employer matches but does not include reinvested dividends and interest.

Debt

We currently have $158,200 in debt, all of which relates to our mortgage.

Our mortgage has a fixed interest rate of 2.5%, which is a lot less than the 4.3% our high-yield savings account currently pays. We’re taking advantage of the interest rate arbitrage while it lasts, so won’t be making any additional principal payments anytime soon.  

Savings Rate

Our after-tax savings rate this month was 67.5%.

This is a pretty low savings rate for us. However, I have to frequently remind myself that anything over 60% is still an awesome savings rate for anyone!  Once you get into the frugal mindset, it can be hard to relax the reigns… even after you’ve surpassed your goals. I’m still working on it.

We calculate our savings rate after taxes, because we believe this gives us the best insight into our true cost of living.

Including taxes would skew our expenses and savings rates when comparing over a period of time. Although we currently pay a lot in taxes each year, it’s because we’re still earning a high income. We expect to earn and pay much less in early retirement.

August 2023 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 charitable contributions made, as we don’t share that information publicly. Although we budget for donations each year, we don’t like to treat charitable giving as an “expense” against our budget (to encourage more giving).

Housing-Related – $801

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

Our housing costs went up a little this month because we recently received the annual property tax bill for our home, which was more than I had budgeted for the year. Our property taxes are up about 6% this year, so I made an adjustment to my monthly accrual to spread the difference over the remainder of the year. It’s hard to complain about a 6% increase this year, after a decrease of over 10% last year.

We’ve refinanced our home several times over the past few years down to a rate of 2.5%. Because of this, and since we had been paying extra all along, our loan-to-value ratio and mortgage payment are now quite low.

Insurance – $451

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.

Food – $894

After having a few months of spending well below budget, our food spending crept back up in August.

We spent $667 on groceries, which included one trip to Costco, several trips to other grocery stores and a Vitacost order.

We also continued to indulge in dining out for experiences or dates, spending $227 for two lunch dates, two coffee dates, lunch purchased at a Diamondbacks game, and an ice cream outing.

Household Consumables – $86

This category includes most of the non-food consumables used in our household, such as toilet paper, shampoo, skincare, laundry detergent, cleaning products, etc. 

Utilities – $381

Utilities include electric, water, gas, and security. It’s summer in Arizona, so the bulk of this is for electricity.

Fuel – $62

Only one car needed a fill up this month.

We save money on gas by maximizing our Fry’s Fuel Points each month. We jack up our fuel points by purchasing gift cards at the grocery store (typically 4x fuel points) and paying for them with our American Express Blue Cash Preferred card, which offers 6% cash back at grocery stores.

I just re-ran my annual credit card fee analysis for this card, to determine if the $95 fee is worth it, and it still pays for itself and saves us money! (Get a sign-up bonus of $250 after spending $3,000 in the first 6 months when you use my referral link above).

Car Maintenance – $471

Mr. RFL’s car battery died, and mine was almost out of juice, so we replaced both. Unfortunately, car batteries only last 2-3 years in Arizona and ours were right around 3 years. This purchase was much more expensive than our last battery replacement. Yay, inflation.

Travel – $1,575

We’re going to Disneyland! Our daughter’s big birthday present for turning 7 years old was the promise of a trip to Disneyland and California Adventure this fall.

Talk about sticker shock… Disney is very expensive these days! We paid about $800 for three tickets to the park for two days, and that doesn’t even include the Genie+ pass or other addons that we haven’t researched or booked yet. The rest of this money was to secure a hotel for three nights. This is shaping up to be a very pricey road trip.

Entertainment & Learning – $42

This category is for television, streaming music, books, games, concerts, and other family activities.

This month our spending included the cost of our regular streaming services (Spotify, Hulu, Amazon Kids+ and Disney).

We also caved and signed up for Netflix this month (ad-free, because our time is worth a few bucks more). It’s been a few years since we had Netflix, so naturally my productivity has been way down this month.

Self-care – $119

This month I bought a new yoga mat, since my old one was almost 20 years old. Mr. RFL and I both also bought cheap sneakers to keep inside (and clean) for our indoor workouts (affiliate links).

Although I typically cut my husband’s hair, he gave me a break this month and paid for a professional haircut.

Clothes – $382

Oops! So, I’ve been buying more clothes lately. The bulk of these purchases were made at Vuori for another pair of joggers and a sweatshirt in a color I love (my self-selected anniversary gift), plus a few more workout shorts and sports bras. Sorry, not sorry.

I also bought several pairs of “no show” socks from Amazon, since the other socks I have either aren’t actually no show or don’t stay up. These are great.

Although I’ve worked hard to reduce my spending in this category over the past few years, I’ve loosened the reins a bit over the past 9 months or so. What we spend will be over budget for the year, but will still fall below 1% of our income, so I’m not too worried. It’s more important to me that I have clothes I love and feel good wearing.

Plus, I’ve already made $166 selling old clothes on Poshmark this year, including a pair of Vuori joggers at near cost, which has offset some of my spending.

Kid Activities & Other Purchases – $490

The bulk of this month’s spending was for our daughter’s activities. We paid $125 for gymnastics and another $218 for after-school enrichment activities.

The rest was spent on school photos, new sneakers, a school spirit laptop case, more back-to-school supplies, and an adorable kid’s mermaid yoga mat for our daughter to work out with me (affiliate link). 

Furniture, Tools & Other Home Purchases – $188

This month we bought a new set of 800-thread-count sheets and pillowcases during a sale at Costco. We also purchased new sheets for our daughter, and some pretty nifty BBQ skewers from Amazon for grilling our tenderloin tips from ButcherBox.

Fees – $95

This is the annual fee for our Chase Sapphire Preferred card. I don’t think we’re currently maximizing our benefits with this card, but the $50 hotel credit helps to offset at least part of that fee. I’d like to devote more time to travel hacking this year to see if we can better use this card to save some more money.

Cash Back Rewards

We received $213 in cash back rewards in August.

Since these ultimately represent reductions in the purchases we make, I decided to reflect them as a reduction of expenses this year, rather than as income.

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.

August 2023 Financial Results: Other Income

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

Total non-employer-related income earned this month was $1,649. Here’s a breakout of how that money was earned:

I’ve continued to see high referral credits from my updated ButcherBox review! We’re at a point now where the credits more than cover our typical cost of meat/seafood.  I show these credits here in the “Other income” section for transparency. However, since they are paid out as discounts off future orders (i.e. they reduce our grocery expenses), I don’t treat them as income within our budget or for calculating our savings rate.

That’s a wrap on our August 2023 financial results. How was your month?

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Featured image by Rich Frugal Life

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