Woodworking & May 2021 Financial Results

This month was filled with a lot of home projects, most notably yardwork (damn weeds), planning our backyard renovation, and several woodworking projects.

Since the start of our home renovation, Mr. RFL has really gotten into woodworking. Many hours are spent researching tools, techniques, and projects. I feel safe in assuming that this will be a hobby he spends a lot of time on in early retirement.

The biggest project this month was a big girl bed for Little A, which was Mr. RFL’s first piece of furniture! It took a few months to complete, since we have little free time and a lot of home projects to tackle, but I’d say he did a pretty darn good job! His customer was pretty happy as well.

Today, I’m sharing our May 2021 financial results, with all the details of this month’s spending, passive income, savings rate, investments, and changes in net worth for your voyeuristic pleasure.

Why share the details of our spending and finances?

Because I’m nosey and love reading about other people’s spending habits and net worth. Maybe you do, too.

Everyone’s financial situation is unique, and personal finance is personal. However, I do believe there is value in sharing information and providing context.

We’ve been motivated by the 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. Although we spend freely in these value areas, we’re trying to ruthlessly cut back everywhere else.

Sharing our finances each month helps us stay accountable.

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 two years ago 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”

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 as “expenses,” since they directly reduce debt and increase net worth. We don’t anticipate having any debt in retirement. 

MAY 2021 FINANCIAL RESULTS

Net Worth

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

Our net worth is up 2.1% this month, and 14.4% year-to-date.

The further we get on the journey, the more our money works for us. Our net worth has grown by 30% in the past year and 84% over the past 3 years!

Investments

Our Financial Independence portfolio, which consists of cash and investments, excluding our renovation SINK fund and daughter’s 529 Plan, is up by 17.8% year-to-date.

We invested $16,264 this month. However, a portion of this money came from a reduction in our cash position, so the net addition to our Financial Independence (“FI”) portfolio during the month was $8,444. We finished the month with a balance of $813,600…or 81.4% of our NEW FI Number.

Debt

We ended the month with $204,900 in debt, the majority 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 (0% rate), and my student loans (0.75% rate). We only pay the minimums on these balances since the rates are so low.

Savings Rate

Our after-tax savings rate was 62.9% for the month, which is right around our budgeted amount.

MAY 2021 MONTHLY SPENDING

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

_{*Does not include monthly spending for home renovation from Reno SINK fund of $471, or charitable contributions made (which we don’t share publicly).}

Housing-Related – $882

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

Insurance – $925

This category includes our monthly 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.

May was higher than usual because it included the annual premium for Mr. RFL’s term life insurance policy. As the sole provider for our family and with a young child, we think it’s prudent to have adequate life insurance in place in the event of tragedy. You don’t need all the fancy stuff. Term life is the most affordable and best option in most cases.

Student Loan Interest – $2

Though my parents paid for part of my education, I still graduated with $40,000 in student loans. The loans have a low interest rate (only 0.75%). Since high-yield savings accounts have historically paid better rates than this, I only pay the minimum. Less than a year and $2,100 left on this loan. Mr. RFL graduated debt-free.

Food – $936

We’re still trending over budget on food for the year, with $4,348 YTD spent on groceries and eating out, compared to the budget of $3,550. Although, I do still have two fully stocked freezers and enough food to feed our family for several months.

This month’s bill was a little larger because it included a huge ButcherBox order to stock up our freezer with grass-fed and sustainable meat before the brutal Arizona summer kicks in. The pandemic made it harder to source high quality meat locally, so we gave this service a try and have been pretty happy with the quality and price (compared to the grocery store). I only order every few months to keep costs down and best take advantage of the add-on deals. This order will be our last until September.

If you’d like to give ButcherBox a try, please use my referral link to get $30 off your first order (I’ll get $30 off also, so thank you!)

I also did a final Vitacost stock up of our pantry items before summer, which I couldn’t resist because they had a sale at the same time as I had a 20% off coupon AND 15% cash back through Rakuten (referral link).

We paid a visit to one of our favorite local restaurants this month during “restaurant week.” It’s been several months since we ate at a restaurant and was nice to get out, now that we’re finally vaccinated, while the weather is still pleasant enough to eat outside.

JUNE CHALLENGE: To get the food budget under control, I’m implementing a challenge to see how little we can spend on food next month. We have enough in the house, so should be able to get by with just a weekly refresh of dairy and produce. I just have to resist the sales!

Alcohol – $69

Bought some tequila and a few bottles of wine at the grocery store during a sale this month. It’s margarita season here in Arizona! We’re still (surprisingly) tracking under budget in this category for the year.

Household Consumables – $42

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

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

Mobile phone & new iPhone – $98 + $760

After months of procrastination, I finally made the switch to a prepaid plan for my cell phone service this month!

We had higher bills in May due to overlapping lines, which will go down after next month. Although, I did use the switch as an excuse to spend $760 on a new iPhone 12. It’s a splurge, but a phone upgrade was planned for this year anyways. I’ve been using Mr. RFL’s old iPhone 7 which was starting to fall apart.

I decided to give Verizon’s prepaid plan a try since they have the best service in our area and there aren’t many affordable MVNOs on Verizon’s network. The plan is better than what I had and decreases in price during first 9 months, getting down to $25/month. Since I got a new line, I was also able to get $100 off my new iPhone and should receive my 3^rd month of mobile service free. 

Home maintenance / Garden – $171

This majority of maintenance costs this month were for my garden.

Yes, despite achieving 0% success so far, Mr. RFL built me a pretty sweet raised-garden bed out of cedar fence posts. This time, we added some removable bird protection, since those jerks ate my entire crop last time. We also bought a ton of potting soil as well, before realizing that nothing grows in the summer here. My next attempt will have to wait until late August.

Ironically, Mr. RFL and Little A decided to use the cedar scraps to make the cute little bird house together (pictured at top). I’m glad they enjoyed their daddy/daughter time. As long as the birds stay away from my garden, we’ll all be okay.

Transportation (excluding insurance) – $45

One trip to the gas station this month, with a 40-cents off per gallon discount from our Fry’s card.

Medical – $339

More medical bills rolled in this month for a grand total of $2,996 year-to-date. I’m tired of watching this number go up. This month did include annual eye exams and some new glasses, but most of the costs were unexpected.

This is going to be a record year for medical costs… and not in a good way.

Even in the year our daughter was born, which required hospitalization and multiple surgeries after I nearly died, we only paid $1,300. Of course, we had better insurance coverage back then. At least we have access to an HSA now as a consolation prize.

Entertainment – $21

This category is for television, streaming music, books, games, concerts, and happy hours. Currently the costs are just for TV and music. I cancelled my Discovery+ account which will reduce TV costs next month. A couple months of binge watching was enough to scratch that itch for now.

Now that we’re vaccinated, we’ll probably attend more social events, so overall spending will likely go up in this category.

Fitness & Wellness – $60

Technically, I made $40 from these purchases…

Our health insurance plan offers incentives for fitness and wellness. I bought some heavy-duty booty bands from Amazon to up the intensity of my workouts, and a subscription to the Calm app, and was rewarded with $100 deposited into our HSA account. Sweet! 

Other Shopping – $103

We didn’t buy much else this month. Little A picked out some cute sheets from Amazon for her new big girl bed, and I I picked up a cheap iPhone case. We also bought another tool for DIY yardwork.   

MAY 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 $791.

Dividends

We received $113 in dividends during May. Not much, but June will be a big month.

Interest

We earned $101 in interest this month, primarily from our high-yield savings account and interest earned on Mr. RFL’s deferred compensation investments.

Reselling

It was another good month for reselling secondhand items, with the sale of our old refrigerator and several sales of pre-loved clothing on Poshmark, for a net of $409.

If you join Poshmark using the link herein or the referral code “RFL2024”, you’ll receive $10 off your first order.

Cash Back Rewards

We earned $168 in cash back rewards this month, primarily from our credit cards. We always pay the cards off each month.

This month also included a “Big Fat Check” for $11 from Rakuten. If you don’t already use it, Rakuten makes it easy to get cash back on the online purchases you’re already making. Standard cash back amounts vary by store front, but they frequently run promotions which can bump cash back up to 10% or more. I always check the site before making an online purchase or booking travel to see if there’s cash back. You can also stack the deals with other coupons and your credit card’s reward programs. We’ve earned over $1,600 in cash back since joining about 5 years ago.

If you sign up with my Rakuten referral link, you’ll get a $30 sign up bonus in addition to any cash back earned after your first $30 spent.

There you go… a transparent look at our May 2021 financial results.

What are your budget goals for June?

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