Dividend Growth and September 2023 Financial Results

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

Bring on the quarterly dividends!

March, June, September, and December are the best months when it comes to passive investment income, since most mutual funds and ETFs pay dividends quarterly.

As we’ve aggressively added money to our investment portfolio over the past few years, it’s been exciting to watch our passive investment income steadily climb.

During the first nine months of 2023, we earned $19,470 in dividends and interest!

That is a 34% increase over last year’s earnings and almost 4 times the $5,800 we earned year-to-date in 2019… just four years ago.

Approximately 75% of the dividends and interest we’re earning come from outside of our formal retirement accounts, so we’ll have immediate access to that income in early retirement. For now, we will continue to reinvest earnings.

I’m excited to see where we land on this one at the end of the year. We’re getting very close to being able to cover half of our regular (after-tax) expenses with passive income, which is a great feeling!

Year-to-date Dividend and Interest Comparison for 2022 vs. 2023

Hacking piano lessons

We just paid $162 to keep using the Simply Piano app for another year, and it was worth every penny!

One of my personal goals for 2022 was to learn piano, so I bought this app last summer and started taking lessons. While I’m certainly not the expert player I naively pictured I’d become when starting (yet), this app has helped me advance pretty quickly from having no previous experience.

Our daughter recently expressed an interest in learning piano also. We are a music-loving family (Mr. RFL plays several instruments), so it was only a matter of time before we got her started on an instrument. But we didn’t want to push her into something before she was ready.

We set her up a profile on the app so she could give it a try and she loved it! She’s picking it up quickly and begs me to let her practice most days. I think the gamification of the app makes learning and practicing more appealing than traditional piano lessons, especially to children.

While I imagine traditional piano lessons are better for learning piano than an app, the app is still pretty darn good. Plus, it’s WAY cheaper! Piano lessons in our area seem to go for $45-$60, per half hour lesson!

Does this mean that we’ll never take a real lesson in the future? Not necessarily. But, for now, this is a great start.

Without further ado, here are our September 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. 

September 2023 Financial Results

Investments

We made a net investment in our Financial Independence (“FI”) portfolio of $23,950 this month.

If you recall from our August financial update, we didn’t finish reinvesting the $36,000 worth of vested company stock we sold in August, which resulted in a negative net investment of almost $7k.

We finished reinvesting that money into our FI portfolio in September, in addition to making our regular monthly investments using earnings and existing cash.  

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

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

Debt

We currently have $157,200 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 additional principal payments anytime soon.  

Savings Rate

Our after-tax savings rate this month was 73%.

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.

September 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 – $800

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 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 – $1,400

So, we spent A LOT of money on food this month!

Most of this spending was for groceries ($1,080). I wish I had a better excuse for this, but I don’t. I’m starting to realize that I have hoarding tendencies when it comes to food, which have only gotten worse with the periodic food shortages we’ve seen over the past few years. I also find it very difficult to pass up a great sale when I find one.

Our pantries and freezers are now stuffed to the brim, so I’ll need to reign it in and start using up what we have so these “good deals” don’t turn into food waste.

We also spent $320 on restaurants this month. This included $150 in discounted gift cards from Costco to a favorite local restaurant, as well as one date lunch, a couple coffee dates, and reloading our daughter’s school lunch wallet. We typically make lunches at home since it’s both cheaper and healthier, but one day a week we let our daughter buy school lunch (and drink all the chocolate milk she wants).

Household Consumables – $53

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 – $417

Utilities include electric, water, gas, and security. It’s still in the 90’s and 100’s in Arizona, so the bulk of this is for electricity.

Fuel – $126

We filled up both cars this month.

Car Maintenance – $636

After spending $471 last month on new car batteries for both cars, September was another expensive car maintenance month.

Mr. RFL brought his car to the dealer for an oil change and tire rotation and found out that he was overdue for new brake pads and a couple other repair and maintenance items. It was a much pricier visit than expected.

Fortunately, we haven’t incurred too many unexpected costs for our vehicles yet.  

We bought both cars a little over 8 years ago, after moving back to the US from an overseas work assignment. My car was new, but we bought a slightly older used car for Mr. RFL so that we could stagger future purchases and reduce the upfront cost.

Since then, we’ve spent $6,700 on both cars (excluding auto insurance and gas costs). That’s an average of $837 per year. Every year we pay $250-300 for property taxes and vehicle registration to the state. The rest of that money is an average of the true maintenance and repair costs.

As our cars age, we expect these costs to continue to rise.

Alcohol – $379

We’ve been tracking under budget in this category for most of the year, but certainly made up for it this month.

In addition to a stock up on wine and bourbon during a Fry’s 25% off sale this month, we decided to give the Cooper’s Hawk wine club a try and paid for two months (plus a couple extra bottles of wine we really liked). Since there is a Cooper’s Hawk restaurant and winery nearby we can actually take advantage of the wine club events and free tastings, unlike when we were wine club members of the Napa and Sonoma wineries.

Entertainment & Learning – $211

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

This month we paid for streaming services from Spotify, Netflix, Hulu, Amazon Kids+ and Disney.

We also renewed our Simply Piano app for another year, as mentioned above.

Clothes – $191

This month I bought another pair of Vuori shorts and an Athleta wrap during sales, as well as a couple more tank tops and sports bras from Old Navy. I feel like I’m ready to slow down on clothing spending for a while now.

Kid Activities & Other Purchases – $196

Substantially all of this month’s spending was for gymnastics and Girl Scouts.

Furniture, Tools & Other Home Purchases – $361

We bought a large Gladiator storage cabinet for our garage on sale at Lowes this month which matches our existing set.

Gifts – $155

This month we gave money to our daughter’s classroom funds, bought a classic toy for our nephew’s birthday, and started buying Christmas presents (which I’ll keep a secret).

I also restocked our kid birthday present stash. Yes, rather than buying a present every time we have a birthday party to attend (which is often), I keep a few artsy or STEM-based gifts on hand. When it’s time to give a gift, my daughter picks out something she thinks her friend would like from the gift shelf. Our current favorites are this soap making kit, color-your-own messenger bag and build and paint car model kits (affiliate links)

Fees – $95

This month we paid the annual fee for our American Express Blue Cash Preferred card (referral link).

I’m not a big fan of fee-based credit cards, but I love this one! After performing my annual credit card fee analysis for this card again last month, it continues to more than pay for itself.

We primarily use our Amex for groceries (6% cash back), streaming (6% cash back) and gas (3% cash back). We also buy gift cards at the grocery store for restaurants, Amazon, and home improvement stores using this card to extend the 6% discount to other categories and earn fuel points.

Get a sign-up bonus of $250 after spending $3,000 in the first 6 months when you use my referral link above to apply.

Cash Back Rewards

We received $85 in cash back rewards in September.

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.

September 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 $4,545!

 Here’s a breakout of how that money was earned:

I love collecting dividends and interest income! This month we raked in $3,984 since it was a quarter-end month. Investment income is truly passive, and it’s really fun seeing our money continue to grow without us having to do a thing. Income investing is something that we’re considering making a larger part of our investment and early retirement strategy now that we’ve reached our FIRE milestone.

Additionally this month, I earned another $450 in referral credits from my updated ButcherBox review. I show referral 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 September 2023 financial results. How was your month?

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Featured image by Larisa Koshkina from Pixabay

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