Turning off the AC and October 2023 Financial Results

Welcome to Rich Frugal Life’s October 2023 financial results! Before we get into the numbers, here’s what we were up to last month.  

Thank goodness this summer is finally over!

We were excited to finally turn off our air conditioning last month… with the exception of a couple rouge days that crept back into the 90’s.

The weather this past summer was pretty unbearable here! The Phoenix metro experienced a record breaking 31 days in a row above 110 degrees (54 total during 2023). Low temperatures were in the 80’s for months on end, giving little relief at night. As if that wasn’t bad enough, we also somehow missed our regular monsoon season in July/August so there was not a drop of rain to be seen. When Saguaro cacti are dying off, you know it’s bad.

We’ll do our best to embrace these next few months which should (hopefully) be filled with sunshine and milder weather.

We went to Disneyland!

We also took our last planned vacation of the year in October, a family vacation to Disneyland for three nights! It was our family’s first time there and we had a blast.

In case you missed it, I wrote all about our visit to Disneyland and how we saved money on the trip in this recent blog post.

Is it time to update our investment strategy?

As the market has remained volatile, bond yields have recovered, and we’ve well surpassed our FIRE goal, Mr. RFL and I have been discussing whether it’s time to make some changes to our investment strategy and de-risk our portfolio a bit.

I think we know where we’re headed, so stay tuned for an update next month on our investment strategy as we enter the next phase of our FIRE journey.

Without further ado, here are our October 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. 

October 2023 Financial Results

Investments

We made a net investment in our Financial Independence (“FI”) portfolio of $26,960 this month.

This number surprised me, as it’s quite a bit more than our monthly income (with matching contributions) and our bank cash remained relatively stable. After some investigation, the difference primarily stems from the extra cash I had previously transferred to our brokerage accounts last month, but hadn’t yet invested.

For the purposes of disclosures on this blog, I only count money as a “new investment” when it’s been used to purchase something within our accounts, not when the cash has been transferred into the account. Usually, the amount of cash sitting in our brokerage accounts is pretty low. However, since that money sits in a money market account, which is currently earning over 5%, I’ve been more aggressive about how much money I transfer over in recent months.

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

Here’s a break-out of investments we made this month:

Debt

We currently have $156,200 in debt, all of which relates to our mortgage.

Our mortgage has a fixed interest rate of 2.5%, which is a lot less than the 4.35% our high-yield savings account currently pays. We’re taking advantage of the interest rate arbitrage while it lasts, so won’t be making additional principal payments anytime soon.  

Savings Rate

Our after-tax savings rate this month was 77.6%. This is a pretty normal savings rate 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, that’s because we are still earning a high income. We expect to earn and pay much less in early retirement.

October 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 – $798

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 down to a rate of 2.5%. 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 – $473

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 also paid the premium for my small life insurance policy.

Food – $640

After spending $1,400 on food in September, we were able to (thankfully) reign the spending in this month!

We spent $494 of this money on groceries, which included one trip to Costco and several smaller trips to the grocery store. Hoping that I can keep my grocery spending low for the rest of the year.

This month’s food spending also included $146 at restaurants, for a coffee date, lunch date, and take-out ordered when an out-of-town friend paid us a visit.

Household Consumables – $88

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

Utilities – $338

Utilities include electric, water, gas, and security. Now that the weather is cooling off, we’re finally seeing some lower utility bills.

Fuel – $45

Only one car needed a fill up this month, discounted using Fry’s fuel points. We did fill up the other car a couple times during our road trip to California, but those costs went to our travel budget.

Car Maintenance – $34

We purchased new wiper blades from Costco for both cars.

Medical – $448

We paid a bit more than expected for medical costs this month. Fees included dental costs for my third cleaning of the year (not covered by insurance) and x-rays. I also received a bill for a “preventative” ultrasound that was ordered with my mammogram, which the insurance company apparently did not consider preventative. I’m ultimately not surprised by this. Oh well.

Alcohol – $65

The only alcohol we purchased this month was through our Cooper’s Hawk wine club membership.

Travel – $406

This is for the remainder of our trip to Disneyland trip, most of which was paid for in previous months. See my blog post on our Disney vacation for a full break out of our travel costs associated with that trip.

Entertainment & Learning – $37

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

This month we paid for streaming services from Spotify, Netflix, and Amazon Kids+. We temporarily cancelled Hulu and Disney since our deal from last year’s Black Friday was expiring.

Clothes – $34

We just purchased one work shirt for Mr. RFL from Target this month. Their Goodfellow brand is surprisingly decent for the price.

Kid Activities & Other Purchases – $293

This month we paid for gymnastics lessons, as well as dues and training fees for Girl Scouts. I also purchased a couple pairs of winter boots during a sale at Target and some new cozy winter PJs for our daughter.  

Furniture, Tools & Other Home Purchases – $217

My biggest purchase this month was a fancy new Instant Pot multicooker on sale (affiliate link). I’m obsessed with my 6 Qt Instant Pot but have been wanting a larger model for making stock and roasts. Additionally, there have been several times I’ve wanted to make multiple components of a meal in the instant pot, and either had to stagger my cooking or use another method. Now I can cook everything simultaneously. This model also has a sous vide feature, which I’m excited to try out. I’ll be saying buh-bye to my dusty old slow cooker, which hasn’t seen much use over the past few years.

I also bought a large collapsible disk basin for bulk washing produce, steamer baskets that fit both Instant Pots, and a couple presents for Mr. RFL for Christmas (affiliate links).

Gifts – $78

Christmas presents (shh… it’s a secret).

Cash Back Rewards

We received $141 in cash back rewards in September.

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. Travel hackers are always bragging about how little they pay for vacations, but the reality is that they are making a trade-off between earning cash back and earning points with their purchases. That’s not to say that the trade-off isn’t better for anyone who travels a lot (it appears to be for skilled travel hackers). It’s just different, so this is how I like to view the trade-off for our personal finances.

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.

October 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.

Our total non-employer-related income earned this month was $2,445.

 Here’s a breakout of how that money was earned:

As expected, income from dividends and interest was quite a bit lower this month. However, anything over $1,000 is still pretty exciting to me.  

This month, I blew my previous records out of the water and earned $1,050 in referral credits from my updated ButcherBox review! Mind blown. I was joking with Mr. RFL that we should start eating filet mignon every day, but I’ve since changed my tune now. Why? Because we’re almost through November and I’ve only earned $50 this month. If this unexpected gravy train is potentially ending, I should probably start budgeting my credits more and go back to seeking the best deals.

I show referral credits here in the “Other income” section for transparency. However, since they are paid out as discounts off future orders (i.e. they reduce our grocery expenses), I don’t treat them as income within our budget or for calculating our savings rate.

That’s all for our October 2023 financial results. How was your month?

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Featured image by James Lee from Pixabay

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