Household Maintenance & Other March Expenses

Spring is here! The weather has been incredible in AZ (and air quality as well, which is rare), so we’ve been spending a lot of time outdoors. This month marked the end of my first year of early retirement and being happily unemployed. Mr. RFL and I were also able to get our first dose of the COVID vaccine, so we can finally see the light at the end of this pandemic tunnel.

Our biggest expenses this month, besides the continued bombardment with medical fees, were related to household maintenance. Spring is always a great time to clean the things you rarely clean and make sure all your mechanical appliances are properly maintained and running smoothly.

Today, I’m sharing our March financial update, with all the details of this month’s spending, passive income, savings rate, investments, and changes in net worth for your voyeuristic pleasure.

Related post: EARLY RETIREMENT UPDATE – THE FIRST YEAR & A PANDEMIC

Why share the details of our spending and finances?

Because I’m nosey. Seeing the inner details of other bloggers’ spending habits and net worth gives me a thrill. You, too? I won’t tell anyone.

Everyone’s financial situation is unique. As such, you probably shouldn’t judge your own financial progress based on what others have achieved. However, I do believe there is value in sharing information for context.

We’ve been motivated by the number of 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. However, while we spend freely in these value areas, we’re trying to ruthlessly cut back everywhere else. We call this “value-spending.”

Sharing this information each month helps us stay accountable to our goals, and hopefully provides you some context as well.

Other information useful in reading this report

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 chose to live close to his work for a shorter commute and better quality of life. Unfortunately, real estate is expensive here.

When we found a great deal on a fixer upper that had a lot of potential, 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 this is a whole home renovation, the costs are significant and non-recurring. We don’t include the costs in our monthly expenses budget as we have cash set aside for this in a renovation SINK fund, but I do share the amounts each month.

How we define an “expense”

Outside of renovation costs, the table below shows all expenses for the month. Principal payments on debt are not included. As a former accountant, I don’t view principal payments to be “expenses” since they directly reduce debt and increase net worth. Our current plan is to have all debt paid off by the time we fully retire.

MARCH FINANCES & NET WORTH UPDATE

Net Worth

We calculate net worth by subtracting total debt & other liabilities from total assets. We include cash, investments, home equity, and an immaterial amount of other assets in “total assets”.

I really enjoy tracking our net worth over time and seeing the progress we’ve made on this journey. The month-to-month changes are usually pretty small, but over time, they add up!

Our net worth grew by 2.3% this past month, and 6.6% year-to-date. However, net worth has increased by 29% since March 2020, and 55% since March 2019.

Investments

Our Financial Independence portfolio, which consists of cash and investments, excluding our renovation SINK fund and daughter’s 529 Plan, is up by 10% year-to-date.  

We invested $11,312 this month into our FI portfolio, including company matches, and finished the month with a balance of $754,000…or 60.3% to our Financial Independence (“FI”) Number.

We are on currently track to reach our “Lean FIRE” target later this year, which is $850,000. This would require downsizing to pull some of the equity out of our home, which we don’t plan to do yet, but it’s still nice to have the option!

If you’d like to learn more about our investments, check out the recent post on Our Investment Strategy & Portfolio Allocation. 

Debt

We ended March with $208,200 in debt, $195,200 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 after we got the mortgage balance below $200,000 and refinanced to a lower rate.

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

Related Post: SHOULD YOU PAY DOWN THE MORTGAGE OR INVEST EXTRA CASH?

Savings Rate

Our after-tax savings rate was 69.5% for the month. This was a little under our budgeted savings rate for the month of 71%; however, we’re still on track for our annual savings rate goal of > 65%.

MARCH FINANCES – MONTHLY SPENDING

Ok, full disclosure time! The table below shows our expenses for the month of March, along with some additional thoughts (or excuses).

_{*Does not include monthly spending for home renovation from Reno SINK fund of $347, or charity contributions made (which we don’t share publicly).}

Housing-Related – $875

Housing-related costs include mortgage interest paid, property taxes, insurance, and HOA dues. As a reminder, this does not include the principal amount of our mortgage payments which is another $925 that we cash flow each month.

We refinanced our mortgage in November to take advantage of lower rates. We paid $855 to lock in a rate of 2.5% on our $200,000 mortgage, which will save us money over the 15-year term. We’ll receive the full benefit of the lower rate this year, saving around $100 in interest each month during 2021.

Insurance – $460

This category includes our premiums for auto, term life, personal liability, and health insurance.

We are on a high-deductible health plan that is subsidized by Mr. RFL’s employer, and as such, health insurance premiums are withheld from each paycheck.

We pay our other insurance plans annually or biannually. Because auto insurance is pretty significant, we allocate that out to the budget each month. However, premiums for life and liability insurance are expensed in the months they are paid.

Student Loan Interest – $2

Though my parents helped to pay for my undergraduate degree, I graduated with two degrees and $40,000 in student loans. The loans have a low interest rate (only 0.75% for the past several years). Since high-yield savings accounts have historically paid better rates than this, I only pay the minimum. Less than a year and $2,600 left on this loan. Mr. RFL graduated debt-free.

Food – $386

This is WAY below our budgeted amount, which ranges from $650 – $800 per month. (depending on if there’s a holiday or special occasion which would increase spending that month).

However, if you saw how much we spent on food in February, you’d understand how we’re still over budget for the year in this area. Oh, well. I’m still ok prioritizing high quality food for my family and indulging when we feel like it.

That said, we’ve reduced our food spending by 25% over prior years, thanks to some savvy take-out replacements and a few other money saving strategies.

Related Post: 19 WAYS TO EAT HEALTHIER & SAVE MONEY ON GROCERIES

Alcohol – $334

Oops… we stocked up on wine before finally cancelling our Sonoma wine club membership. We also bought some more affordable wines this month from the grocery store during a great sale. 

Household Consumables – $98

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 exciting or scandalous in here this month.

Utilities & Mobile Phone – $297

This includes electric, water, gas, security, internet, and cell phones.

Winter is the cheapest time of year for basic utilities & services in Arizona, and we spent $196 on these.

We were able to get a discount on our internet bill to $42/month last year.

Still haven’t switched to an MVNO to save money on our cell phone bill yet. Knowing is half the battle, but I’m such a procrastinator.

Home maintenance – $619

This month included the usual pest control and some other maintenance items, but the biggest expense was our HVAC cleaning & maintenance annual contract. We put in two new HVAC systems about a year and a half ago and need to make sure we’re properly maintaining them. Since we are NOT experts, and live in a very hot and dusty climate, we’re leaving this up to the experts.

Proper Maintenance can be pricey… but not maintaining your expensive appliances and other mechanical possessions will usually cost you more in the long run via additional repairs and a shorter life.

Transportation (excluding insurance) – $55

We just had one gas fill up this month, with prices at the pump a little higher lately.  

Medical – $555

The medical expenses continue to trickle in and push us further and further past our budget for the whole year. Our total spending for the year through Q1 is $2,122 and I still have not solved my mystery illness. Additionally, we still haven’t been billed for some procedures I had this month, so spending in this category will continue in April as well.

Preschool & childcare – $250

Our four-year old is officially enrolled in Pre-kindergarten for this coming Fall! She desperately needs to hang out with other kids her age, and I desperately need the FREEDOM! It’s really a win-win.

Entertainment – $21

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

Since the pandemic has kept us at home, this is mostly for television and music. I splurged and finally subscribed to Discovery+ … the ad free version. Well worth the $7 in my opinion, especially since we’ve cancelled almost everything else. I’ll binge watch this for the next few months and then we’ll cancel it for a while.

Clothes – $41

Purchased a few pairs of new shoes for our little one, since she outgrew the old ones.

Shopping – $134

This month, we renewed our Quicken membership, which is primarily how I track all our spending and investments. I also purchased a bunch of mason jars for my future gardening, fermenting and DIY food preparation needs, along with additional cloth facemasks so we could do laundry less often. 

MARCH OTHER INCOME (Non-Employer Related)

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 earned or gifted this month was $1,688.

Dividends

March is a huge dividend month, so it’s always fun. A good portion of our investments pay dividends, and of those that do, most pay them quarterly.

We received $1,421 in dividends in March, and $1,685 for the first quarter of 2021.  Comparatively, we only received $1,281 in Q1 2020, which represents an increase of almost 32% year over year!

Interest

We earned $123 in interest this month, primarily from our high-yield savings account and interest earned on Mr. RFL’s deferred compensation investments.

Reselling

I made two sales on Poshmark this month for a commission of $67. I’m currently working to add more listings from my “to sell” closet. Yes, I have one of those. After losing 30+ pounds last year and retiring from the corporate world, I have a lot of clothes to sell and/or donate this year. 

Cash Back Rewards

We earned $98 in cash back rewards this month from our credit cards. We always pay the cards off each month.