Sweating it out and July 2022 Financial Results

Welcome to Rich Frugal Life’s July 2022 financial results!

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

It’s freaking hot here!

July and August are the worst months to live in the Arizona desert. With the exception of a brief dip in temperatures, we’ve been hovering around 110 degrees for a while now. Even the lows are in the high 80’s/ low 90’s.

I love walking and spending time outside, but rarely get to enjoy it this time of year. Like last year, being couped up is making me feel a bit “down” lately. Hopefully the heat will subside sooner than it did last year (late October), and we can get back to enjoying the sunshine.

Backyard renovation progress

Despite the brutal heat, Mr. RFL has been sweating it out and slowly making progress on our backyard renovation. 

This month, he was able to complete the second paver patio in our renovation plans. This back patio will serve as a fire pit area and includes a walkway from our existing concrete patio. While the first patio was certainly a learning process, this one moved much faster and looks amazing.

Once the temperatures drop, I’ll give our turf guy a call (yes, we have one of those) and get the final sections scheduled for install. We’ll also work on our “game court” when it’s cooler, which is the last big piece of our design. The rest is landscaping maintenance and low-priority design elements that we’ll tackle or hire out later this year or early next year.

Without further ado, here are our July 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.

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 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. 

July 2022 Financial Results

Net Worth

Have we reached the bottom of this bear market? It seems possible, as the stock market set off on a rapid recovery during the second half of the month. Only time will tell if this is a “dead cat bounce” or the real deal. Either way, we’ll keep on investing regularly and enjoy the win (even if it is only temporary).

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.

After being slaughtered in June, our net worth increased by 6.5% during July and is up 21% year-to-date.

Investments

We made a net investment of $9,400 to our Financial Independence (“FI”) portfolio this month (including employer matches).

After surpassing our FIRE goal earlier this year, our financial independence continues to be threatened by recent market declines. Fortunately, both the overall equities market and Mr. RFL’s company stock made a significant recovery this month.

We ended July with an investment balance of $1,189,000, which is a new high for us and about $20,000 more than our previous peak in March. Unfortunately, this is despite investing an additional $43,000 since then, so we’re still at a small loss.

If we were to retire today, our nest egg would provide a base withdrawal of $47,500 per year using the 4% rule. This exceeds our current FIRE budget, although we’ve recently been reconsidering if that budget still works for us. 

Regularly tracking our investments and net worth has been a big factor in our financial success.

You can also easily track your investments and net worth, as well as plan for retirement, for FREE with Personal Capital (affiliate link).

Debt

We currently have $175,600 in debt, the majority of which relates to our mortgage. Because our mortgage only has an interest rate of 2.5%, we rarely make additional principal payments anymore. 

Savings Rate

Our after-tax savings rate this month was 78%.

We prefer using an after-tax rate, since it allows us to assess our true living expenses and savings rate more clearly.

While we currently pay a lot in taxes, we’re also still bringing in a high income. Our taxes should be much lower in early retirement.

If we decide to do something that generates income in retirement, that’s okay. We’ll owe more taxes, but we also won’t need to withdraw as much from our portfolio.

July 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 $371, or charitable contributions made, which we don’t share publicly or treat as “expenses” (to encourage more giving).

Housing-Related – $844

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

Insurance – $452

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 – $847

Our food spending was quite a bit higher in July than previous months. However, we’re still on budget for the year, so I don’t mind.  

Additionally, $150 of our restaurant spending was to buy discounted gift cards for a local restaurant from Costco that we’ll use in the future.

Household Consumables – $129

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. 

This month we bought a few household supplies from Costco and stocked up on my favorite pens for journaling and using with my daily planner (affiliate link).

Utilities – $199

Utilities includes electric, water, gas, and security. A surprisingly low month for the summer, probably due to lower-than-normal air conditioning usage during our June vacation.

Home Maintenance – $102

We live in a scorpion-heavy area, so pest control is a necessity. Last fall, we decided to switch to a DIY approach to save money, and because we’d observed a decline in service with our existing pest control company.

With this insecticide concentrate (affiliate link) and a cheap sprayer, Mr. RFL has been able to treat our yard in about 30 minutes and for $7 per month. Previously, we paid $65 per month. When we tried to switch to every other month, the pest control company increased the price to $85, citing more chemical needed for less frequent visits.

Our first bottle of insecticide ran out this month, so lasted 10 treatments. So far, we haven’t seen any scorpions and saved over $500 on monthly spraying.

We also picked up some gardening and grill supplies in preparation for the Fall.

Auto Maintenance – $248

The registration on my car was up for its bi-annual renewal this month. This amount covered the required emissions test and Arizona’s registration fee and property taxes for two years.

Medical – $184

I received a very late bill for a mammogram performed last summer.

I turned 40 last year so was technically entitled to a FREE preventative “baseline” mammogram. However, because I vocalized a concern, I was sent in and charged for a “diagnostic mammogram” instead. Fortunately, everything was fine, but this brings my total cost for the procedure (after insurance) to $347.

The U.S. health care system is stupid.

Entertainment & Learning – $62

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

This month, in addition to our normal streaming services, I took advantage of a $40 cash back offer using our Amex Blue Preferred card (referral link) to purchase an annual premium subscription to Duolingo. We primarily use this credit card for the 6% cash back on groceries and streaming services, but it often has additional cash back bonus offers. While learning Spanish wasn’t in my formal goals for the year, I’ve been meaning to re-learn and advance my language skills for a while now.

Clothing – $80

Oops, I bought more clothes this month. But I swear I’m done for a while now… maybe.

I loved one of the sustainable Pact dresses that I purchased last month so much that I bought another one during their summer clearance sale this month. (Referral link – Get 20% off your order)

I also bought a pair of woven sandals from Amazon (affiliate link), that are surprisingly comfy. Just added them in another color to my Christmas wish list (Hi Mom!).

Alcohol – $0

Still drinking what we’ve got… and recovering from the many indulgences during our vacation last month.

Child Activities & Other Kid Purchases – $678

This month was an expensive one for the kiddo, with another month of swim lessons and a week at a STEM camp (which she loved).

We also dropped nearly $200 for tickets to the North Pole Experience up in Flagstaff this winter. Although I was initially debating whether this cost should go to travel or entertainment, it’s ultimately a kid cost. Mr. RFL and I are too old to visit Santa Claus. Since I like to track how much our kid really costs us, I’m including the charge here.

Additionally, we purchased this year’s required school supplies.

Furniture, tools & other home purchases – $145

I finally caved and bought a hand vacuum (affiliate link) to make daily quick cleans a little less burdensome. This was certainly not a “need,” but will hopefully mean fewer crumbs left on the floor because I’m too lazy to get out the corded vacuum every day.

We also purchased a wine saver pump from Amazon (affiliate link), so we don’t feel the need to polish off every bottle of wine we open within 24 hours. Finally, picked up several of my favorite “Korken” glass food storage jars from IKEA.

July 2022 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 $1,026.

Interest & Dividends

We earned $854 in interest and dividends this month.

While not as impressing as our quarter-end investment income, it’s still nice to have truly passive income.

Reselling

I made $24 selling an old dress and kid’s toy on the secondhand market this month.

Cash Back Rewards

We received $97 in cash back rewards this month.

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.

That’s a wrap on our July 2022 financial results. How’d your month go?

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