Last month I shared with you a savings rate of over 70% (you can read about it here). I want to share with you our March 2021 results. I’ll get straight to the point- we have a negative savings rate this month.
*Rotten tomatoes are thrown our way*
As a reminder, I explained how I calculate our savings rate in a separate post.
In March 2021, we managed to achieve a negative (!!!) savings rate of 0.87% (so close to breaking even!).
This brings our (weighted) average savings rate for the past 6 months, October 2020 to March 2021, to 43.39%.
The crazy fluctuation in the savings rate from last month to this month actually shows the value of looking at a longer time period. I use 6 months to “smooth” the data and I think it gives an interesting insight.
I am, of course, not happy with this month’s results as it is negative. However, a positive plot twist is on its way. Achieving a six-month average savings rate of over 40% while having a daughter in childcare is an achievement we do not take for granted. I think that long-term, I expect us to hit the 35%-45% saving rate range.
What was different this month?
Every month something unusual happens, this means that March 2021 results might be different from other months. Sometimes it’s a one-off expense and sometimes it’s a one-off income. The fact that this happens every single month amuses me but also makes it harder to analyse the savings rate and draw conclusions. That’s why I also use the 6-month average.
Anyway, what happened this month that caused us get such a high savings rate?
- We flew to Israel. The flight costs and the mandatory pre-flight COVID 19 test weren’t cheap. I know it is illegal to take holidays but we came to Israel to vote in the elections, which is an approved reason by the UK government.
- As explained in an earlier post, we pay for our daughter’s childcare once every 3 months. March was one of those months.
- Urban Massage.
I suffer from back pain. This means I need osteopathy treatments, Lazy FI Mum gets regular deep tissue massages as maintenance. I recently found out about Urban Massage as my employer was offering temporarily 20% off (usually 10%) vouchers to their app/website and we bought quite a lot. If you’re interested in using them, I’ll explain how to get the best value for money at the end of this post.
In March 2021, our net worth increased by 2.67% (a bigger increase than in February!).
“Wait, you said you had a negative savings rate this month, something smells fishy”
That may be the gefilte fish (happy Passover everyone). But let me explain.
This increase is made of 2 parts:
- Our actual savings decreased our net worth by 0.02%
- Our investment returns increased our net worth by 2.69%
Finally, our investment portfolio doing some of the heavy lifting, happy days.
On one hand, of course that’s positive- our money earns more than us, Lazy utopia.
On the other hand, you can look at it as a “scary” thing- we have less control over our net worth than the market does. I see this one as a positive thing as we worked very hard to get to this position and it’s nice to see the fruit of our labour doing its thing.
Let’s see how we’re doing on the journey to that ultimate lazy utopia and when we think we’ll get there.
Achieving FI– how far are we into our journey?
Reminder: I set our FI number (how much we need to retire) in July 2020 and update it every month for inflation (I use CPIH* index).
At the end of March 2021, our net worth is 24.16% (February 2021: 23.55%) of that number which means we’re even closer to the 25% landmark.
The 0.61% increase in our FI journey (as a percentage of our FI number) from 23.55% to 24.16% means a real (inflation-adjusted) increase of 2.58%**(24.16/23.55 – 1) can be broken down into these two parts:
- Our increase in net worth increased by 2.67% as mentioned above.
- The CPIH index went down up 0.09%, which increased our real (inflation-adjusted) net worth.
When can we achieve FI (and possibly retire)?
Based on my current calculations, I and Lazy FI Mum should both be able to retire (not saying we will, it’s about having the option) in 2030/2031. No change from last month but that is maybe due to the fact I only measure in full tax-years. That means that we may have brought our retirement date a month closer but it still falls within the same year.
- A real (inflation-adjusted) return of 4% on our investments.
- No more children and no more pay increases. This does not mean we will not have more kids (we plan to have a few more). It also does not mean we will never get pay increases. It only means I can’t reliably forecast these numbers so “assume” they will net each other off.
- I treat all our net worth as one despite some of the money (LISAs and pensions) being “locked up” for 20+ years.
- Our expenses stay the same as today. This causes one major issue- moving back to Israel someday. I have no idea what the cost of raising a child is in Israel as I’ve never done it. I will reassess our position and update our model once we do decide to make this move.
- No income once we retire- this is my main safety cushion. Lazy FI Mum has no intention of retiring (I wish she will be as happy in her job as she is now) but I would like her to have the option. In addition, as mentioned in the past, I plan to teach/tutor once we achieve FI which will also provide additional income.
- No taxes. I explained the reason for this in this post.
The part we have control over, the savings rate, was disappointing. However, we worked hard to invest a decent amount of money and that came to our rescue. Our 6-month average of 43.39% is within the range I expected of 35%-45%, I expect to stay within that range going forward.
And now, as promised, a bit of extra information about Urban massage.
Urban massage lets you get deep tissue massages, Osteopathy, physiotherapy and other treatments at home! That was already an amazing selling point for us, especially as my previous osteopath was a 50-minute commute each way. The fact that an hour of Osteopathy via Urban Massage was cheaper than a 25-minute session with my previous osteopath was a second selling point. 20% off was a third selling point and a £20 welcome referral bonus (I referred Lazy FI Mum) was a fourth selling point.
Anyway, as you can imagine, we were sold. We started with an appointment each and were very happy. Once we saw we were happy, we bought a LOT of credit vouchers, which was another big expense. However, as this is something we would spend money on anyway, I see it as bulk buying when something is on sale. Or maybe I’m just convincing myself?
How can you use Urban Massage too to get good value for money?
First of all, a disclaimer: Urban massage don’t pay me, didn’t ask me to write this or anything of that sort. I am just a happy customer sharing information about a great product. The only thing I can gain if you use my referral link is 20% off one treatment for one referral, 50% off one treatment for two referrals and a free treatment if three of you sign up. Cool, now everything’s out in the open, we can go ahead.
How to get one/two 1-hour massages:
- Sign up using my referral link and get £20 credit:
- Order a deep tissue massage midweek during work hours, Lazy FI Mum’s one cost £56 for an hour.
That’s it, one hour massage in your own home for £36. Got a partner? Refer them using your own referral link and they can get also another massage for £36!
How to get a longer massage (for example, 1.5 hours)- for American Express card holders
Using the method above, a 1.5-hour massage will cost you a total of £64. £84 for the massage minus the £20 welcome bonus for using a referral link. However, there is a better way:
- Sign up using my referral link and get £20 credit:
- If you have an AMEX- go to your AMEX offers and activate the Urban Massage 20% cashback offer (when you spend over £50).
- Now, order a 1.5-hour massage for £84.
£84 minus the £20 welcome offer will mean you’re down to £64. However, that’s over £50, which means you have 20% cashback! 20% of £64 is £12.80 cashback. £64 minus £12.80 means you get a 1.5-hour massage for £51.20.
I know, I’m the only one who can take a relaxing massage and turn it into a math question. I hope that’s clear and that you enjoy your treatment as much as we did.
Do you track your savings rate? Let me know how you did this month in the comments section
*CPIH- “Consumer Price Inflation including owner-occupiers’ Housing costs”. As we are consumers and we do, partly, own our home- I think this is the best inflation metric for us.
**The calculation in the brackets gets you to a 2.59% real net worth increase but that’s due to rounding differences. 2.58% is our actual real net worth increase for March 2021.