Welcome to Rich Frugal Life’s February 2022 financial results! Before we dive into the money talk, here’s a brief update on what we were up to last month.
A very frugal Valentine’s day
Valentine’s day isn’t a holiday that we typically go all out for. Perhaps it’s because we try to show our love and appreciation for one another on a daily basis, or perhaps it’s because we’re frugal introverts who just prefer a quiet night at home.
Either way, no fancy gifts or expensive dinners out for us.
We typically keep our celebration low key, usually opting to cook a fancy dinner together at home. This year, we simplified dinner even further to just a charcuterie board, crackers, and a nice bottle of wine.
Enjoying the “winter” weather
Winter has never been my favorite season. Having grown up in New England, fall is the season with a special place in my heart. I frequently long for the crisp air, color-changing trees, and apple cider donuts from my youth.
However, since moving to Arizona, our transitional seasons are brief and the summer is ungodly hot. Winter has become the season where we can finally get outside, go hiking (lead photo from a recent hike), and enjoy the weather.
Mr. RFL was promoted!
The most exciting news came on the last day of the month. Mr. RFL received a promotion at work!
This potential promotion is why we moved across the country for the job offer 3+ years ago, so it wasn’t completely unexpected. Still nothing is guaranteed, so it was an exciting day nonetheless. Proud of you, babe!
The compensation bump was larger than we’d expected, with a 35% increase in salary and small boost to bonus and stock compensation eligibility. It’s firmly pushed us into the “high earner” classification (if we weren’t there already), which will provide a nice cushion for our early retirement fund.
Ironically, as the income potential increases, it becomes more and more challenging to walk away. A higher income presumably leads to a larger financial cushion, which is good (in case our estimates are too aggressive). But it also makes it more difficult to avoid the “one more year syndrome” other early retirees have encountered.
Hopefully this new position will be rewarding in all the ways he’s hoped. But, either way, having financial freedom lowers the stress associated with this big transition. We’ll see how our planned timeline ultimately pans out.
Without further ado, here are our February 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.
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.
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, 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.
February 2022 Financial Results
Net Worth & Investments
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 3.9% this month, and 36% from a year ago.
We added $33,600 to our Financial Independence (“FI”) portfolio this month. The majority of investments this month were made through paycheck withholdings, which were much higher than normal due to a bonus payout. In order to ensure that we don’t exceed 401k contribution limits for the year, we will significantly lower Mr. RFL’s withholding rate going forward.
We passed our FIRE goal in January and ended the month with an investment balance of $1,090,000. This balance provides a base withdrawal rate of $43,500 per year, using the 4% rule or $36,000 if we use the more conservative 3.3% rate suggested in a recent Morningstar report.
Debt
We currently have $182,200 in debt, the majority of which relates to our mortgage.
For the most part, we no longer make additional principal payments to our mortgage. However, the lower market returns being projected for the next 10 years have caused me to consider hedging our bets around this decision.
Because of a lump sum influx of cash early this year, we decided to pay $9,000 extra to towards the mortgage in February. This is probably the only additional payment we will make in 2022.
Savings Rate
Our after-tax savings rate was 95% for the month. This rate is higher than normal due to a bonus payout during the month and was slightly above our budgeted savings rate for February.
February 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).
| Feb 2022 | |
| Fixed Costs | |
| Housing (Interest, Insurance, Tax, HOA) | $873 |
| Auto Insurance | $105 |
| Health Insurance | $360 |
| Other Insurance | $(52) |
| Needs (but can be managed a bit) | |
| Groceries | $439 |
| Household consumables | $65 |
| Utilities | $219 |
| Internet | $52 |
| Cell phone | $27 |
| Car Maintenance | $56 |
| Home Maintenance | $52 |
| Fuel (for vehicles) | $59 |
| Medical | $99 |
| Preschool Tuition | $684 |
| Wants | |
| Entertainment | $11 |
| Fitness | $0 |
| Clothes | $0 |
| Alcohol | $0 |
| Restaurants | $92 |
| Child Activities & Other Kid Purchases | $156 |
| Furniture, Tools & Other Home Purchases | $57 |
| Other | $18 |
| TOTAL SPENDING | $3,372 |
| Total Spending (Excl. Mortgage) | $2,985 |
*Does not include monthly spending for home renovation of $347, or charitable contributions made, which we don’t share publicly or treat as expenses (to encourage more giving).
Housing-Related – $873
Housing-related costs include mortgage interest paid, and a monthly allocation for property taxes, insurance, and HOA dues.
Insurance – $465
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 also received our annual premium refund for my term life insurance policy, which reduced our total insurance cost this month. The insurance company pays back a portion of unused premiums to policy holders each year.
Food – $531
Inflation finally hit our grocery stores in a noticeable way. Prices are up and there have been few “good” deals in recent weeks, which has led me to do far less stocking up. I’ve been primarily using up what we already have and buying the things we need for the week from our closest store.
We ate out a few times in February but utilized gift cards expensed in prior months for two lunches, one takeout dinner, and a coffee date, which kept restaurant spending reasonably low.
Household Consumables – $65
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.
Utilities – $219
Utilities includes electric, water, gas, and security. Gas prices are up, and we had a brief cold spell that required turning the heat on, but otherwise this is still pretty low compared to the summer months.
Home Maintenance – $52
So many weeds. Ugh! We thought yardwork would be easier in Arizona than back in North Carolina, but we were wrong.
Medical – $99
Purchased half a year’s worth of the probiotics I use daily during a sale (affiliate link).
Entertainment – $11
This category is for television, streaming music, books, games, concerts, and other family activities. Charges this month are for Hulu and Spotify.
Clothes – $0
My no spend clothing challenge is still going strong.
Child Activities & Other Purchases – $156
This month we paid $95 for our daughter’s swim lessons and $37 to buy her new shoes and summer clothes (it’s already topped 80 degrees here).
We also spent $24 on Valentine’s Day goodies, an activity during a visit to our local farmer’s market, and new swim googles (affiliate link).
Other Shopping – $57
Because we couldn’t decide the placement for our second raised garden bed without seeing them all laid out, Mr. RFL went ahead and built the final of our three planned beds. Guess I better start planting.
No other home purchases this month, which is pretty good for me!
February 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 $803.
Interest & Dividends
February is a lower month for investment income. We earned $453 in interest and dividends this month.
Reselling
I sold a pair of designer shoes on the secondhand market this month, earning $245 in commissions.
Cash Back Rewards
We received $105 in cash back rewards this month. We charge everything we can in order to maximize credit card rewards, but always pay the full balance due each month.
Included in this amount was our quarterly “big fat check” from Rakuten (formerly Ebates). Although the checks are smaller than when we used to buy more things, I’ve earned $1,658 in cash back in 6 years by using Rakuten (referral link).
If you’ve never used Rakuten, I recommend checking it out! The cash back amounts change daily, but you can usually get at least 1% – 2% back, even at mega retailers like Target and Lowes. Department store, clothing, personal care, and other online retailers tend to offer more, and regularly have promotions boosting cash back up to 5% – 20%.
I always check for deals before making an online purchase to make sure I’m maximizing my savings. You can also stack the offers with cash back or other rewards offered through your credit card, as we often do.
Just be careful that you don’t let the “deals” lead you to spend on things you don’t need.
If you use the link above to sign up, you’ll receive $30 cash back after making a purchase of $30 or more from any retailor through one of their links (while this offer is still active). For full disclosure, I’ll receive $30 for the referral and would be so grateful for your support!
Hope you enjoyed our financial results for February 2022.
How did your month go?
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