Before I share with you July 2021 results, I want to start a new tradition. I want to tell you what we’ve been up to the past week, then we can talk about the numbers.
What have we been up to this week?
This week was tough, I will not lie. My workload increased (temporarily) and our daughter was ill for most of the week. Luckily, Lazy FI grandma was here to help until Thursday morning. Due to a work call that I had to attend and Lazy FI Mum having to go into the office, I did something I hoped I would never have to do. We picked her up an hour late.
Our daughter gets picked up at 15:00 from childcare every day, that is because we love spending time with her and we don’t want to see her only on weekends. The fact that we couldn’t pick her up at 15:00 really made me think long and hard. I hate putting work before my family (see this blog’s logo) and this incident motivated me even more to achieve FI.
I know, I know- first world problems. We are very fortunate that these are our problems but still, it affected me, what can I do?
The important thing is that our daughter is now feeling better and I get to spend the full weekend with her!
Ok, let’s talk money and move on to July 2021 results.
July 2021 results- savings rate
Our savings rate for July 2021 was 48.04%. As a reminder, my long term target is 40% with 50% being an ambitious target. I actually ran some numbers and got to a really interesting conclusion:
If we keep our current pension contributions, keep paying our mortgage and not save another single £, we would still hit a 40% savings rate. I hope you appreciate the level of automation and laziness of this situation. We can literally spend all of our net income and still hit a 40% savings rate. If you want a reminder of why our pension contributions are so high, you can go back to the post about how to increase your child benefit with pension contributions.
Our (weighted) average savings rate for the past 6 months is 55.15%. As I started my current Excel file in July, I finally have my first (weighted) average savings rate for the past year! it is 49.20%. That’s very close to my ambitious goal of 50%. With December 2020 and March 2021 resulting in a very low savings rate, once these months leave the 6 and 12-month savings rate, I think it will increase slightly.
July 2021 results- What was different this month?
Every month something unusual happens. 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 (and 12-month) average figure to “smooth” the data.
Anyway, what was different this month?
Funny enough, not a lot.
We had guests over. First, it was my brothers who came to watch the Euros (*typing through the tears*). Then, Lazy FI Grandma came to visit. These visits mainly resulted in a higher grocery bill and an increase in the “going out” and “eating out” categories. Totally worth it by the way, we love having family over.
Another category that went up is “Mystery dining”, which you can read more about in the post I wrote about it. The reason this is an expense is that I pay for my food (and cinema tickets this month) and only get reimbursed a few weeks later. This will result in a “negative expense” in that category next month.
The biggest “one-off” we had this month is a transfer I made to a family member’s account. They will pay me back next month but until then, it’s an expense. If I ignored this “expense” our monthly savings rate would have been 58.93% rather than 48.04%. Next month, when the money comes in, we’ll see a higher savings rate so it’s fine. This is exactly why I look at the 6-month and 12-month savings rates, where these little weird things net each other off.
I already know next month will have many one-offs, especially on the income side (hurray!). My side hustles have really picked up this month and I should see payments coming in during August.
July 2021 results- Net worth
In July 2021, our net worth increased by 2.32%. The 2.32% is made of 2 parts:
- Our actual savings increased our net worth by 1.08%
- Our investments went up in value, which increased our net worth by 1.25%
I know this sums to 2.33% but that’s due to rounding.
Mr Market once again shows us who’s the boss. The more we invest, the more power he will have over our finances.
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 July 2021, our net worth is 27.26% (June 2021:26.74%) of that number.
The 0.52% increase in our FI journey (as a percentage of our FI number) from 26.74% to 27.26% means a real (inflation-adjusted) increase of 1.96%** (27.26/26.74 – 1), which can be broken down into these two parts:
- Our nominal net worth increased by 2.32% as mentioned above.
- The CPIH index increased by 0.36%, which decreased our real (inflation-adjusted) net worth.
As you can see, there are 3 factors that aren’t in our control:
- The market performance (are our investments worth more or less this month?)
- FX rate (are our Israeli Shekels worth more pounds or less compared to last month?)
- Inflation (are things more expensive than last month?)
When can we achieve FI (and possibly retire)?
Based on my current calculations, I and Lazy FI Mum should both be able to retire in 2030/2031 if we wish to. This is the same result as last month. I only look at full (tax, April-April) years so it takes a lot to move a full year.
This month, I ran 2 more calculations:
What if we only pay our mortgage, contribute to our pensions and max our LISAs (no other savings or investments)?
Well, this will push our date back to 2031/2032, 1 year back.
What if we don’t even contribute to our LISAs and just pay our mortgage and keep our pension contributions?
This will push us back by 2 more years to 2033/2034.
That’s not too bad actually. I will be able to reach FI at the age of 46 even if we reduce our investments significantly.
Well, that’s our July 2021 results, have a great weekend everyone!
*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. You can see the changes in the index here.
**The calculation in the brackets gets you to a 1.94% real net worth increase but that’s due to rounding differences. 1.96% is our actual real net worth increase for July 2021.