Financial Independence, Gardening, and January 2022 Financial Results

Today I’m sharing our January 2022 financial results, including monthly spending, passive income, and updates on our net worth and investment portfolio.

But before we dive into the money talk, here’s what the RFL Family was up to last month.

We reached Financial Independence!

Yes, that’s right folks. In case you missed my (not so) big announcement last week, we finally reached financial independence this month!

The achievement was a bit underwhelming given all the celebrating we’ve done along the way, but it’s still awesome to have Mr. RFL officially in the “work optional” zone. Our journey’s not over though. We’ll continue to build our cushion and plan for early retirement. However, we’ll also begin loosening the purse strings and trying to enjoy more our hard earned money in the meantime.

Getting started on health and sustainability goals

This month also marked the first that I could begin working towards my ambitious 40 goals for 2022.

We kicked things off by doing a 2-week whole-food, plant-based diet challenge, which excluded animal products and most processed foods. We remained dairy-free for another 2-weeks after that.

Overall, the challenge was a success, although it wasn’t life-changing enough for us to convert to veganism. That said, we continued to eat a high number of plant-based meals even after adding animal products back into our diet. For example, we only consumed red meat twice during the month.

Either way, we found a number of amazing vegan meals that we will keep in the rotation as we work to increase our vegetable and fruit consumption (and reduce everything else).

We also spent a fair amount of effort tending our existing garden, learning how to compost, and building a new garden bed for the spring. Photo at top shows my first lettuce harvest this winter.

My first podcast appearance!

I finally said “yes” to an interview request… and so glad I did.

Although I was incredibly nervous, it was fun chatting with Andy Hill from Marriage, Kids & Money, and I appreciate the opportunity to share our story with a broader audience.

If you’d like to hear my blatantly honest and transparent take on our journey to financial independence, how we got there, and what it was like retiring during my peak earning years, you can listen to the podcast interview HERE (or wherever you listen to podcasts).

Let’s get on to the fun stuff. Here are our January 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. 

January 2022 Financial Results

Net Worth & Investments

Our net worth and investment portfolio took a hit this month thanks to the recent market correction.

If Mr. RFL hadn’t also vested in a significant amount of company stock this month, our investment portfolio would have dipped back below our FI Number. However, we ultimately ended the month a little over our goal. Phew!

Outside of the stock compensation mentioned above, we watched our existing portfolio drop by almost $100,000 at one point during the month. Thankfully the market has since recovered some of those losses and we won’t be needing to sell any investments in the near term.

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 4.1% this month.

We made investments of $31,158 in January, which included the purchase of $20,000 in U.S. government I-Bonds.  A significant portion of these purchases were made using existing cash, so the net investment to our Financial Independence portfolio was $9,306.

Although I don’t directly share net worth figures on the blog, it’s not difficult to approximate using the information available.

One of the main reasons we are comfortable relying on the 4% rule to determine our FI Number is that we hold a meaningful portion of our net worth outside of our investments. This gives us the flexibility to down-size and shift some of that value towards our investments at a later date, should we choose (or need) to do so  

Here is our current net worth allocation:

Debt

We currently have $192,500 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 are causing me consider hedging our bets around this decision. We will likely make a small lump sum payment at some point this year.

Savings Rate

Our after-tax savings rate was 95% for the month! This is way higher than normal and due to the influx of company equity mentioned above.

January 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).

*Does not include monthly spending for home renovation of $347, or charitable contributions made (which we don’t share publicly).

Housing-Related – $875

Housing-related costs include mortgage interest paid, and a monthly allocation for property taxes, insurance, and HOA dues. Both our HOA fees and homeowner’s insurance increased a bit this year, which is why this number went up.

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.

Food – $810

Grocery spending came in just under our ~$600 monthly budget, which is a good start to the year.

Although restaurant spending exceeded our monthly budget, $150 of the $215 spent was to purchase gift cards to one of our favorite local restaurants at a 25% discount. We’ll use these over the next few months. The other $65 was spent during our weekly day dates, which included a sushi lunch and a mid-morning coffee date

Alcohol – $183

Another great sale at the grocery store. I picked up a case of craft beer, a bottle of bourbon, and 14 bottles of wine for this price. All will be drunk in good time.

Preschool – $497

Our preschool bill was a little lower this month. I was pleasantly surprised when the school offered to pro-rate our dues for a voluntary 5-day quarantine following a close-contact exposure. Thankfully all tests in this house were negative, and our youngest member is now fully vaccinated.

Household Consumables – $18

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 – $163

Utilities includes electric, water, gas, and security. Another low-cost winter month here in the Arizona desert!

Home Maintenance – $154

The majority of this was spent on a year’s worth of Honeywell replacement filters and prefilters (affiliate link) for our home’s three air purifiers.

Medical – ($32)

After a year in which we completely blew the medical budget, we’re starting our 2022 with a credit balance!

We had a couple OTC healthcare purchases this month. However, these costs were more than offset by the claim payment received from our vision insurance provider for prescription sunglasses Mr. RFL ordered from EyeBuyDirect last month (referral link – Get $10 and 15% off). 

Entertainment – $98

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

Well, I tried to cancel Disney. Then Encanto came out. We ultimately resubscribed less than two weeks later… and we do talk about Bruno.

Fitness – $100

I resubscribed to a fitness app to take advantage of an offer two free protein powders, which mostly offset the cost.  

I was also able to submit the purchase under our health insurance plan’s wellness incentives to receive a $50 contribution to our Health Savings Account.  For budgeting purposes, we code wellness incentives as “other employment-related income,” so we can keep track of our true expenses, as well as the value of benefits Mr. RFL receives from his job.  

Clothes – $0

No spend clothing challenge still going strong.  

Child Activities & Other Purchases – $103

This is primarily for our daughter’s swim lessons.

Other Shopping – $325

Most of this spending relates to my gardening and sustainability goals for the year.

Because I don’t like the smell of trash, I purchased a compost tumbler from Amazon (affiliate link). With this and the small kitchen compost bucket (affiliate link) that I received for Christmas, I was able to officially begin my quest of turning trash into nutrient rich garden food.

Mr. RFL also worked hard during the month to build me a second raised garden bed. My first garden here in Arizona wasn’t a complete fail (like my previous gardening attempts) and I want to grow more produce. We paid $213 for building materials, organic potting soil, and compost.

January 2022 Financial Results: Other Income

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 non-employer related income either earned (or gifted to us) this month was $2,067.

Interest

We earned $331 in interest this month. The increase over prior months is primarily due to interest accrued on our newly purchased I-bond holdings (currently paying 7.12%). The remainder is from our high-yield savings account and interest earned on Mr. RFL’s deferred compensation investments.  

Dividends

We earned $1,618 in dividends this month! Although January dividends are typically low, we received a lump sum payout for dividends accrued over the 3-year vesting period on performance shares Mr. RFL received this month.

Reselling

I managed to sell a couple bundles of clothes on the secondhand market this month, earning $83 in commissions.   

Cash Back Rewards

We didn’t hit the redemption threshold on one of our cash back cards, so only received $35 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.

Those are our financial results for January 2022.

How was your first month of the new year?

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