Summer Vacation, New Clothes, and June 2022 Financial Results

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

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

Our New England Road Trip

The summer heat is no joke here in Phoenix. Although I’d prefer to escape for the entire summer, we were grateful to at least enjoy a couple weeks of cooler weather in June!

More than half our total spending this month went towards our two-week New England Road trip. And that doesn’t even include the $813 we paid for the rental car a few months ago. It was a pricey trip, but totally worth it!

We spent the first few days of our trip visiting with family in Massachusetts and Connecticut, before meandering our way around New Hampshire, Vermont, and southern Maine. After being away for so long, I had forgotten how charming, green, and beautiful New England is!

Part of our motive for this extended trip was to explore potential future hometowns. With it’s cooler weather, northern New England is one of the places expected to fare best as climate change worsens. It might be a little too cold for us after having spent so much time in Arizona and North Carolina, but that is still TBD.

We had a few one night stays along the road-trip, but our longest stops were in Burlington, VT and Portland, ME.

I’ll write a post will all the details of our trip, break-out of the travel costs, and more pictures in the near future.

Mama got some new clothes

My no-spend clothing challenge only ended a month ago and I’m already making up for lost time!

Don’t worry. I haven’t returned to my spendy ways… at least, not completely.

After forgoing the purchase of new clothes for so long, several of my most worn items are nearing the end of their lives.

This time, I decided to vote with my wallet and try out Pact, a clothing company that better aligns with my values.

As my old clothes wear out, I’m trying to replace them with more sustainable options whenever possible. The organic cotton dresses and T-shirts I purchased are comfy, cute, and fit the bill perfectly. I will definitely be buying more in the future.

Pact makes some of the most affordable organic cotton clothing and linens that I’ve found. They use sustainable crops, organic farms, and chemical-free dyes, in addition to partnering with Fair Trade Certified factories to ensure safe and fair working conditions for employees. They also offer carbon offset shipping and recyclable packaging.

This post is not sponsored, but the links above are referral links. If you’re interested in checking out Pact, please consider supporting this blog by using my referral link. Doing so will get you an extra 20% off your first order. I’ll also receive a $20 credit off my next dress (at no extra cost to you). Thank you 😊  

Without further ado, here are our June 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. 

June 2022 Financial Results

Net Worth

June was the first month where we finally saw a big net decrease to our net worth. No more rising housing prices to offset the market losses.

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 net worth fell $80,000 just this month! Ouch! And that was despite Mr. RFL earning a healthy paycheck and receiving over $3,000 in dividends.

We’re still up about 14% for the year, but it’s not easy to watch.

Investments

We made a net investment of $10,500 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.

We ended June with an investment balance of $1,066,000, which is $103,000 less than it was at our peak three months ago. The real loss is even greater if you factor in the $34,000 we added to our investments during that time.

If we were to retire today, our nest egg would provide a base withdrawal of $42,600 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 $176,900 in debt, the majority of which relates to our mortgage, which has an interest rate of 2.5%.  Because the rate is so low, we rarely make additional principal payments to our mortgage. 

Savings Rate

Our after-tax savings rate this month was 71%, which was a bit lower than recent months due to our high travel costs this month.

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.

June 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 $164, or charitable contributions made, which we don’t share publicly or treat as “expenses” (to encourage more giving).

Housing-Related – $846

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

Insurance – $460

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.

This month we received the semi-annual renewal invoice for our auto insurance policy. It was nice to finally see our full discount for participating in our insurer’s “Drive Safe” program, which we enrolled in earlier this year.

Although we previously received a low annual mileage discount for both cars, we got a small discount just for signing up for the program. The additional discount on Mr. RFL’s car wasn’t that impressive. However, the additional discount on my car (which rarely gets driven), was pretty big. Together, we’re saving about $240 per year by participating in the program. The additional savings will kick in next month.

Food – $355

It was another low spend month for groceries. While we are trying to be better about eating what we have, this is mostly low because we were on vacation for half of June.  

Additionally, the restaurant spending number is a bit misleading. It doesn’t include any of the meals from our vacation, pretty much all of which were eaten out. This is because any food purchased on vacation goes to the “Travel” line item of our budget. 

Household Consumables – $0

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 – $209

Utilities includes electric, water, gas, and security. 

Travel – $3,467

See above.

Entertainment – $12

This category is for television, streaming music, books, games, concerts, and other family activities. Just our normal streaming services this month.

Clothing – $123

See above.

Alcohol – $0

This one is also misleading. We actually we spent a lot of money on craft beer during our two weeks in New England. The beer scene in that part of the country is much stronger than where we live, and it’s one of our value-spending areas.

However, since all that delicious beer was purchased and consumed during the trip, it goes to the “Travel” line item of our budget.  

Child Activities & Other Kid Purchases – $171

We paid for another month of swim lessons and purchased a portion of our daughter’s birthday present this month.

She’s had a toy on her birthday wish list for a while (cut out of a catalog at school and taped to her door). I couldn’t find the actual toy without the catalog name, but this similar one should be close enough and was probably way cheaper.

We also loaded up on art supplies for some screen free fun during the remainder of summer break (affiliate links).

Rich Frugal Life Blog – $154

While there are certainly more expensive hobbies, blogging isn’t cheap. I don’t buy any “extras” for running this blog, but I do still pay for domain registration, privacy protection, and hosting fees each year.

June 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 either earned (or gifted to us) this month was $3,325.

Interest & Dividends

Quarter-end months are the best months… at least when it comes to passive investment income.

While some of our investments pay out dividends or interest monthly, most pay quarterly. We earned $3,153 in interest and dividends this month!

This was not our largest month ever (December 2021 was), but it was the biggest non-year-end month to date.

Our year-to-date investment income is more than double last year’s and was enough to cover 33% of our expenses so far this year! We may not need that full 4% withdrawal rate after all.

Year-to-Date Dividend and Interest: 2022 vs. 2021

Reselling

I didn’t make any sales this month on the secondhand market.

My reselling profits have been low lately partially because we’re running out of things to sell, and partially because I been putting little time or effort into it. After reflecting on how I spend my time, I decided to reduce my effort even more going forward.

Cash Back Rewards

We received $72 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 June 2022 financial results. How’d your month go?

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