A Big Bonus, Pickleball and February 2023 Financial Results

Welcome to Rich Frugal Life’s February 2023 financial results.

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

It’s bonus time!

February is when annual bonuses are paid, which makes it an exciting month for financial nerdery. I typically have a fair amount of excess cash to invest as I wish… I mean, in alignment with our most recent investment strategy. Investing is fun!

This was the first bonus payout since Mr. RFL’s big promotion last year and his company had a really strong year, so it was much bigger than expected. Neither of us have ever received a bonus even close to the size of this one during our careers thus far. Not a bad way to kick off the year!

You can see how we invested this influx later on in the post.

Spending time outside

Although we had a bit of a cold streak near the end of the month, the weather in Arizona is typically pretty great in February. It’s sunny and mild, perfect for enjoying all sorts of outdoor activities.

I continued with my pickleball lessons this month and finally feel like I could get on a court and play. Well, maybe just with people who are only mildly competitive.

But, I now appreciate all the fuss about the game. It’s really fun! Even for someone like me who isn’t very athletic. Mr. RFL is enjoying it as well, and we’ve added the game into the rotation for our weekly day dates.

We also got out to enjoy an day at the Waste Management Open this month. We lucked out with the weather, attending on the most perfect February day for sitting in the grass, drinking beer, and watching golf.

Admittedly, I haven’t gotten outside as much as I would like. My volunteer positions and new part-time job picked up steam during the second half of February, but more on that in next month’s post…

Without further ado, here are our February 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. 

February 2023 Financial Results

Investments

We made a net investment of $79,900 to our Financial Independence (“FI”) portfolio during the month!

Yes, I realize that’s a very big number. Our reported investment number includes employer matches, but does not include reinvested dividends.   

Most of the increase this month came from Mr. RFL’s bonus check, which was paid out in early February.

Here’s a break-out of investments we made this month:

Debt

We currently have $164,200 in debt, all of which relates to our mortgage.

Although we have historically put a portion of our bonuses and other windfalls towards the mortgage, we stopped doing once we refinanced to a very low rate. Our mortgage has a fixed interest rate of 2.5%, which is LESS than the 3.4% our high-yield savings account currently pays, so we have no plans to make additional principal payments anytime soon.  

We did use a portion of Mr. RFL’s bonus to pay off the remaining $2,400 on our 0% HVAC Loan that was coming due in a couple months.

Savings Rate

Our after-tax savings rate this month was 98%! This is much higher than our typical average, with the increase being driven primarily by Mr. RFL’s big bonus this month. It didn’t hurt that February was also a rather low spend month for us.

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

For example, this month we paid $57,000 in social security and income taxes. That’s more money than we spent on everything else during all of 2022!

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.

February 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 monthly spending for home renovation of $2,432 (HVAC loan). Also excludes charitable contributions made, as we don’t share that information publicly. While we do 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 – $830

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

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

Insurance – $387

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.

This month, I received the annual refund from my life insurance policy (the provider pays back a portion of unused premiums each year), which is why the other insurance category reflects a negative expense. 

Food – $800

Overall, this wasn’t a bad month for food. While our restaurant spending was above our monthly budget, spending on groceries was well below, keeping us close to our overall budget.

This month’s restaurant spending paid for two “happy hour” dinner dates, one coffee date, our food and drinks while attending the Waste Management Open, a couple family dinner outings, takeout, and reloading our daughter’s school lunch card. Not bad for $348!

Household Consumables – $0

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

Nada this month, which is fairly unusual. But then again, I do have mild hoarding tendencies, so we’re usually pretty well stocked. 

Utilities – $239

Utilities includes electric, water, gas, and security. Winter is our cheapest time of year here in Arizona.

Entertainment & Learning – $25

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

Just our streaming services this month (Spotify, Hulu, Amazon Kids+ and Disney).

Travel – $603

This was for a down payment on a week-long house rental in the North Carolina mountains for our summer vacation.

Flight prices have been ridiculously high compared to what we used to pay for this same itinerary, so we haven’t pulled the trigger on that purchase yet. Although I doubt the prices will go down.

The flights for this trip will probably be a March expense.   

Clothes – $26

I bought a new bathing suit during a sale at Target this month. My old ones are all either too big or too small. While I just avoided the pool last year, summer in Arizona is certainly more pleasant in the pool.

Child Care – $232

Prepaid for after-school care through March.

Kid Activities & Other Purchases – $119

Monthly dues for Gymnastics classes.

Furniture, Tools & Other Home Purchases – $0

A rare no-spend month!  

Cash Back Rewards

We received $151 in cash back rewards this month.

Since these ultimately represent reductions of the purchases we make, I decided to reflect them as a reduction of expenses this year, rather than as income. For example, we sometimes make a purchase only because there is an attractive cash back offer on that item (i.e. when we wouldn’t have paid the full price for it).

I’ll probably allocate our cash back to the related expense categories later in the year, which will help me understand how savvy we are being with our credit card rewards. 

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.

February 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.

The total non-employer related income earned this month was $2,439. Here’s a breakout of how that money was earned.

That’s a wrap on our February 2023 financial results. How’d your month go?

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