Happy holidays! I hope you and your loved ones had a happy and healthy November. Our November was filled with gratitude and the shock of an unexpectedly optimistic stock market. We also managed to squeeze in a mortgage refinance and some pandemic stockpiling this month.
What happened this month…
The US stock market had a great month! If you have a lot invested in the market you were likely rewarded with a nice boost to your net worth. The S&P had it’s best November ever with almost 11% growth (in one month!) while the Dow had its best month since January 1987.
As our financial independence (“FI”) portfolio grows, we are reaping more and more benefits from these boon months. You can see how much our net worth grew in the “Net Worth Update” section below. Of course, the converse of this effect is that our net worth now suffers a lot more in months where the market tanks. But that’s ok, as we’re in this game for the long haul. And when the market tanks, we’ll just keep putting in more money.
November expenses were actually really low for us, with the exception of our mortgage refinance and some extra shopping to stock up on household supplies and groceries for the winter. Can you believe there’s another toilet paper shortage here?!
We were able to refinance our mortgage from 3.125% to 2.5% for $855 in net mortgage refinance fees. The costs are reflected in this month’s spending below, but you can read the full post on our mortgage refinance strategy and savings in “WE JUST REFINANCED OUR MORTGAGE (FOR A THIRD TIME IN TWO YEARS)!“.
Read on for the details of the mortgage refinance fees and other November expenses, as well as an update of our net worth.
Why share our monthly expenses?
Confession time. I’m nosey… and seeing the details of other finance bloggers’ spending habits and net worth gives me a voyeuristic thrill. You, too? I won’t tell anyone. Everyone’s financial situation is unique, and as such, you shouldn’t compare your own financial progress to 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 and seeing how little they spend while doing so. This knowledge 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 applaud the kindness and openness of the FIRE community in this regard and want to do my best to pay it forward.
If you’re looking for the frugalist of the frugal, you won’t find that here. While Mr. RFL and I both tend toward minimalism, life is short and we have no problem splurging on things that make us happy (i.e. travel, good booze & music). However, while we continue to spend freely in these value areas, we’d like to ruthlessly cut back everywhere else. We call this “value-spending.”
I’m hoping this commitment to share our spending with you each month will provide us the accountability we need to stick to our goals and that you’ll find some benefit in it 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 these costs in our monthly expenses budget as we have a separate renovation SINK fund for this, but I’ll still 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 payed off by the time we fully retire.
The “mortgage” expenses included in the table below include mortgage interest and an allocation of annual property tax, insurance and HOA costs.
We have no credit card or other debt with a high interest rate. However, we do have approximately $15,400 in low interest or non-interest-bearing loans, including the following:
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- Student loans – Though my parents helped to pay for college, I still graduated with approximately $40,000 in student loans. These carry an interest rate of only 0.75% so I always pay the minimum, and have about a year left before they are paid off.
- Home renovation project loan – We replaced the 20+ year old HVAC systems as part of our overall home renovation project (see above). The vendor offered us a project loan with 0% interest if paid evenly over four years. Since it’s not that difficult to beat a 0% return, we took advantage of the offer. These payments are included in the monthly renovation spending.
NET WORTH UPDATE – NOVEMBER 2020
Net worth is calculated by subtracting debt & other liabilities from total assets. Our assets used in calculating net worth include cash, investments, home equity, and an immaterial amount of other assets.
After experiencing a slight decrease in October, it was exciting to watch our total net worth increase by a whopping 5% in November! The increase is primarily due to the rapid growth in the market last month, which as stated above, was one of the best months for market returns in years. That’s an annualized rate of 60% which would be crazy (in a good way). Of course, we know the market goes up and down, but it’s still exciting to see.
Our FI portfolio, which consists of cash and investments excluding our renovation SINK fund and daughters 529 Plan, was up over 9%!
The increase in November puts our net worth up for the year by more than I ever expected, especially after the pandemic hit. Just proves that this year is as crazy as they come. Excited to see where we end out the year next month.
We had total debt of $215,400 outstanding at the end of November, which is only about a $1,000 less than October. We didn’t make any additional debt payments and refinanced our mortgage in the beginning of the month so no major changes here. Our mortgage balance at month end was $200,000.
I’m debating sharing more information on our net worth and investment portfolio in future monthly updates, but we’re just easing into this for now.
MORTGAGE REFINACE & OTHER NOVEMBER 2020 EXPENSES
Ok, here we go! Below are our monthly expenses for November, along with some thoughts (or excuses).
| Purchase | Amount | Commentary |
| Mortgage | $934 | Monthly interest, property tax, insurance & HOA. Interest costs will be a bit lower going forward since we refinanced our mortgage this month (see below). |
| Health insurance | $360 | We have a high deductible plan which is subsidized by Mr. RFL’s employer |
| Groceries | $628 | Not going to lie, I definitely did some pandemic stockpiling this month. Trying to keep a few weeks of food on hand and minimize trips to the store this winter. |
| Wine & whiskey | $76 | Much lower than last month, couple bottles of wine & whiskey at the grocery store. |
| Auto & liability insurance | $103 | Monthly insurance for both vehicles |
| Utilities | $238 | October bills. Finally getting into our cheap utility season here in AZ! |
| Internet | $42 | Locked in another promotional rate to save $300 over the next year with a 15 min phone call. Learn how we save money internet and TV here. |
| Cell phone | $58 | I still haven’t done anything to lower this. Debating if I should replace my phone first or not. |
| Streaming subscriptions | $13 | We cancelled most streaming in October. However, we did pick up Hulu again in November. Our digital antenna finally bit the dust and we couldn’t pass up the $1.99/month black Friday deal. |
| Home purchases | $70 | Holiday welcome mat and lots of storage organizers |
| Household Consumables | $101 | So apparently there is ANOTHER toilet paper shortage! We did a stock up and overpaid for some basic paper and personal care consumables to make sure we don’t run out. |
| Mortgage Refinance Fees | $855 | We refinanced our mortgage from 3.125% to 2.5% and it only cost us $855! You can read the full post about what we paid and how much well save here. |
| Clothing | $31 | Pants & dress socks for Mr. RFL. Gotta love Target prices! |
| Medical | $37 | Copay for bloodwork taken during annual check up |
| Membership Fees | $109 | Annual membership fees for Costco and local Mom’s group |
| Movember contest | $51 | We don’t publicly share our charity donations – this is the fee for a Movember contest Mr. RFL’s participated in. He won! See embarrassing photo below. |
| New mattress | $180 | Our little girl is growing up. Time to move to a twin bed. Mr. RFL is going to attempt building the frame and headboard. |
| Christmas Gifts | $149 | Round 1 of Christmas shopping |
| Other | $2 | |
| TOTAL | $4,037 | Total excluding mortgage refinance = $3,182 |
Final thoughts
Outside the mortgage refinance, this was actually one of our lowest spending months of the year at only $3,182! Clearly the refinance is a one-time expense, and it will pay for itself through reduced interest costs in about 9 months. With the continued savings in interest, the investment will be well worth it.
I’m happy with our spending this month. The $3,182 is well below our current target for average monthly expenses of $3,750 (or $45,000 per year). December will be a big spending month with some healthcare costs and holiday spending. Let’s see how low we can keep it!
