Welcome to Rich Frugal Life’s May 2023 financial results!

Before we get into the numbers, here’s a brief update on our month.  

School’s out for summer

And just like that, summer is here!

With the end of May, comes the start of Arizona’s (brutal) summer heat and full-time parenting once school gets out for summer break.

Our daughter thrived in Kindergarten this year and is excited to start the number grades next year. But first, we have two months off together.

We’ll fill a couple of those weeks with camps, and a few more with family trips to colder lands. The rest of the time we’ll be hanging out together while Mr. RFL works. Guess it’s time to get my mind back in full-time parenting mode.

The one activity that our daughter has specifically requested for this summer is that I teach her how to cook. We’ve been watching old episodes of Master Chef Jr. lately and she’s been showing more interest in joining me in the kitchen. Cooking and baking are things I really enjoy, so I’m looking forward to doing these things together. She’s most excited to learn how to crack eggs, which unsurprisingly is the request I’m the least excited about (cleaning up).

To help with this cooking adventure, I surprised our daughter with a couple small gifts to celebrate her graduation from kindergarten. These kid-safe chef’s knives and adorable apron set were a huge hit, earning me a big hug and rare “You’re the best Mom ever!” proclamation.

Without further ado, here are our May 2023 financial results, with all the juicy details of this month’s spending, passive income, savings rate, and investments.

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 an 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 2023 Financial Results

Investments

We made a net investment of $15,470 to our Financial Independence (“FI”) portfolio during the month.

Our reported investment number includes employer matches but does not include reinvested dividends and interest.

Here’s a break-out of investments we made in May:

Debt

We currently have $161,200 in debt, all of which relates to our mortgage.

Our mortgage has a fixed interest rate of 2.5%, which is LESS than the 4.0% our high-yield savings account currently pays. We’ll be taking advantage of the interest rate arbitrage while it lasts, so won’t be making any additional principal payments anytime soon.  

Savings Rate

Our after-tax savings rate this month was 78%, which is about average for us.

We calculate our savings rate after taxes, because we believe this gives us the best insight into our true cost of living.

Including taxes would skew our expenses and savings rates when comparing over a period of time. Although we currently pay a lot in taxes each year, it’s because we’re still earning a high income. We expect to earn and pay much less in early retirement.

May 2023 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 charitable contributions made, as we don’t share that information publicly. Although we budget for donations each year, we don’t like to treat charitable giving as an “expense” against our budget (to encourage more giving.)

Housing-Related – $786

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

We’ve refinanced our home several times over the past few years. Because of this, and since we had been paying extra all along, our loan-to-value ratio and mortgage payment are now quite low.

Insurance – $914

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 paid the annual premium for Mr. RFL’s term life insurance policy, which we are keeping primarily for the benefit of our young child.

Food – $1,086

It was another big month for food spending, with $648 going towards groceries (including a big Costco run).

We spent $438 on dining out in May, which included two date lunches, two family dinners, one coffee date and a mom’s night out.

Restaurant spending is clearly tracking to be well above our $2,500 budget for the year. However, I‘m not too bothered by this fact. We intentionally decided to spend more money on dining experiences this year. My guesstimate for how much more just appears to have been too low. We’re also tracking under budget in several other discretionary areas, which will compensate for this extra spending.   

Household Consumables – $269

This category includes most of the non-food consumables used in our household, such as toilet paper, shampoo, skincare, laundry detergent, cleaning products, etc. 

May was another abnormally high spending month for this category. This time I did make a big Costco shopping trip, which pretty much explains any large outlay of cash. Is anyone able to go in that store and not drop a couple hundred bucks!?  

I also picked up a set of organic wool dryer balls, and extra face sunscreen for summer (now that I’ve finally found one I like) from Amazon (affiliate link).

Utilities – $184

Utilities include electric, water, gas, and security. This was surprisingly about $20 cheaper than last month, which I had expected to be our cheapest of the year. Enjoying one more month of these low prices before the very expensive air conditioning bills arrive.

Fuel – $126

We both filled up our car’s tanks this month, but got some discounts courtesy of all the Fry’s fuel points we racked up by buying gift cards.

Entertainment & Learning – $32

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

This month our spending included the cost of our regular streaming services (Spotify, Hulu, Amazon Kids+ and Disney), as well as Apple+ TV. We finished Ted Lasso but might check out a couple more shows on Apple before cancelling it again.

Clothes – $53

I bought a couple more workout / summer clothes that actually fit me.

Kid Activities & Other Purchases – $220

We paid $120 for gymnastics in May

Spending in this category also includes the gifts I bought for the mother/daughter cooking adventures mentioned above, as well as a set of watercolor crayons and textured paper that I ordered for her, which she really enjoyed using while in school (affiliate link).

The rest of this spending was for new summer clothes in the next size up, since she’s finally outgrown all her hand-me-downs.

Furniture, Tools & Other Home Purchases – $198

Most of this month’s spending for home purchases was spent on a new Vego Garden bed I purchased this month for our hillside (affiliate link). I actually want to buy several of these, but thought we’d start with one to make sure they’re worth the hype before investing more money. While our homemade cedar garden beds are beautiful, they are already starting to rot and warp in the Arizona sun. These bad boys are supposed to last for 20 years or more.  

Mr. RFL also bought a pair of over-the-ear, wireless headphones for working around the yard and I bought an hourly day planner (affiliate links) to better organize my time using a time-blocking and boxing strategy.

Cash Back Rewards

We received $94 in cash back rewards this month.

Since these ultimately represent reductions in the purchases we make, I decided to reflect them as a reduction of expenses this year, rather than as income.

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.

May 2023 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.

Total non-employer-related income earned this month was $1,340. Here’s a breakout of how that money was earned.

We had another decent month of investment returns, which have been higher lately thanks to higher interest rates and bond yields (which typically pay out monthly). June will be a big quarter-end month, so I’m looking forward to those numbers.

I also had another great month of referral income from my ButcherBox review that I updated for 2023 in April. This has (surprisingly) become one of my most popular articles on the blog. Earning free food might actually be more exciting to me than earning money!

That’s a wrap on our May 2023 financial results. How’d your month go?

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Image by Silvia from Pixabay.

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