Before I share with you our December 2021 results, as I promised in July, I’ll share with you what we’ve been up to the past month. After that, we can talk about the numbers.
What have we been up to this month?
Personal life positives
The most important thing for me is that my family is now all healthy, that wasn’t the case throughout the month (see “Negatives” section below).
Besides that, we also (finally) got to go to the Van Gogh immersive experience which was Lazy FI Mum’s birthday gift (her birthday’s in March!). Our daughter loved it and so did we.
It seems like at least once a month we have some family member visit London. This month it was Lazy FI Mum’s dad. He was in London for a few days and our daughter got to spend some quality time with her grandpa. It was very funny to see how it takes her time to trust new people. Luckily, on his last day here, she finally trusted him, took his hand and took him for a walk around Covent Garden.
A few days earlier, we met grandpa in Carnaby street to see the light. This year it was all rainbows and butterflies so my daughter absolutely loved it! She loved it so much that we went back twice.
I also got to see the new spiderman movie. In case you’re wondering- yes, It was a mystery dine visit to an Everyman cinema. I got to watch it with a good friend who I haven’t seen for a while, so that was nice. The food was also great (although it wasn’t Nando’s). The movie itself was meh, I don’t get the hype and why people love it so much. Feel free to leave hate comments in the comments section below 🙂
Money related positives
Oh my god, I finalised the numbers for 2021 and I’m super excited, I’ll write a separate post about it next week.
This is the third month in a row I tell you about the law firm that hired my services to improve their employees Excel skills. In October I told you we agreed, in November I told you we’re halfway through. I’m happy to report the course has finished and the money was transferred 2 days before the new year, talk about a buzzer-beater. That really helped this month’s saving rate.
My main corporate client also booked training courses for Q1 (January-March) and they booked two courses more than I expected!
Still on Excel, I got hired by a professional body in Israel to record a four-hour Excel course in Hebrew for their members. Pretty cool to think that any member from that organisation that will want to learn Excel will be taught by me.
Enough with Excel. We finally got our cashback from our American Express card (which will get its own post in 2 weeks). It was a very decent amount and helped our saving rate as well.
Once we got over COVID19 (for now), our daughter went back to childcare. A few days later she caught a virus, which meant she had a very high fever and stayed home for more than a week. I wrote a separate post about this experience.
It seems like she was home for most of December, partly due to illness (not fun) and partly due to bank holidays, which were a lot of fun.
Another negative (sorry) is that we’re still (!) having a bit of a delay with purchasing our shared-ownership flat. Last month I told you we were doing our best to complete while the valuation is still valid. I contacted the surveyor, who agreed for the valuation to be extended, which is apparently something you can do.
December 2021 results- savings rate
Our savings rate for December 2021 was 66.55%. As a reminder, my long term target is 40% with 50% being an ambitious target.
However, for 2022 with a new kid and maternity leave, my goal for the upcoming year is a third (33.33%). After that year, it will be back to 40% long term.
Our (weighted) average savings rate for the past 6 months is 46.89%. Our 12-month-weighted average savings rate is 54.19% (* fireworks in the background *).
66.55%! What an amazing way to close the year.
December 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?
In short- Other income and no childcare payments.
As you may remember, we contribute to our daughter’s tax-free childcare account once a quarter (every 3 months). This causes a huge fluctuation in our monthly saving rates. As we paid it in November, not having to pay for childcare this month definitely boosted our saving rate and our December 2021 results.
As mentioned in the “Money related positives”, we got a lot of other income (not our salaries) this month. A client paid me for a course just before the year-end and American Express paid us too. This was the main reason for our high savings rate.
Besides that, our eating out and going out expenses also increased this month. Partly due to grandpa’s visit and partly due to the existence of Nando’s.
Another big expense was a gift we bought for my future niece’s birth. My brother and his wife live in Israel, they told us what they wanted as a gift (they started buying stuff in preparation) and we transferred them the money. Guys, I’m going to be an uncle!
December 2021 results- Net worth
In December 2021, our net worth increased by 2.58%. The 2.58% is made of 2 parts:
- Our actual savings increase our net worth by 1.56%
- Our investments went up in value, which increased our net worth by 1.02%
Mr Market, this month we beat you. We can’t wait for you to do all the heavy lifting again. Challenge presented.
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 December 2021, our net worth is 29.81% (November 2021: 29.24%) of that number.
That is annoyingly close to 30%, which is crazy to think about. That means that we will have a net worth that equals 7.5 years of our expenses (30% * 25), the 25 deriving from the 4% rule.
The 0.57% increase in our FI journey (as a percentage of our FI number) from 29.24% to 29.81% means a real (inflation-adjusted) increase of 1.95%** (29.81/ 29.24 – 1), which can be broken down into these two parts:
- Our nominal net worth increased by 2.58% as mentioned above.
- The CPIH index increased by 0.62%, which decreased our real (inflation-adjusted) net worth**.
As you can see, 2 factors are out of our control:
- The market performance (are our investments worth more or less this month?)
- Inflation (are things more expensive than last month?)
As these factors are out of our control- I’m very happy with this month’s results as we achieved a great savings rate. Luckily, this month, Mr Market really helped us while inflation has been annoyingly high this month (and this year).
When can we achieve FI (and possibly retire)?
As I told you last in the October 2021 results, calculating an FI date is not relevant for us anymore. We will move back to Israel sometime between December 2025 and June 2026. As my models are split into tax years, that means April 2026 is our relevant date.
Once we move back to Israel, I will either move to “just” teaching (no accounting) or try and keep my current job but part-time.
If anyone’s wondering if moving to Israel will help or hurt our FI journey, I present to you this article:
Tel Aviv named as world’s most expensive city to live in – BBC News.
No need to click the link, the title gives it away. Good luck to us.
In any case, we will not reach our full FI number by the time we move to Israel. Therefore, the only relevant question is…
How far into our journey to FI will we be by April 2026?
Based on my “regular” (which is more like worst-case) scenario, we expect to be 50.67% FI by April 2026. That means that if our expenses in Israel will be the same as in the UK, we only need to cover 49.33% of our expenses from work.
However, this is based on our UK level of expenses. I really don’t know how expensive Israel will be. We’ll need to track our expenses for a few months there to get a better understanding. Also, I will have to learn all the little local tricks (like I learned in the UK) on how to save money, get free stuff, and reduce my tax bill.
The 50.67% I just mentioned is lower than 51.19% because of another change in assumptions.
As I was going through our 2021 annual results with Lazy FI Mum, she wanted to see what other tabs I had in my spreadsheet. She asked about the “April 2026” tab, which calculates the figures below. She noticed I had applied a 4% real annual return to our cash. Once I corrected this to 0%, it reduced our April 2026 percentage. Because we’re still waiting to complete the purchase of our flat, we have a larger than usual cash amount.
The April 2026 model assumptions
My model assumes that only our ISAs, LISAs and pensions (essentially, our stock/equity investments) will generate an annual real return of 4%. Meanwhile, I assume our real estate and cash will retain their real value but not increase.
In addition, I assume no future income from teaching as I can’t reliably forecast how much I’ll earn from this side hustle. That means any future income from teaching will be treated as a pleasant surprise.
Another future income I ignore is my job’s annual bonus. Just like teaching, this is not guaranteed. That means that if my employer has a bad year, the bonus can be 0%. My model assumes every year is such a year. Again, any bonus that does come through will be treated as a pleasant surprise.
I know these assumptions are very prudent but I prefer being prudent and positively surprised than “realistic” and having to deal with unforeseen issues.
I am happy with the changes to the model and how it looks (until the next mistake is found). Especially as it’s based on a worst-case scenario, which is no bonus from work and no income from teaching.
Well, that’s our December 2021 results, have a great weekend everyone and happy new year!
*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.
** While 2.58% – 0.62% = 1.94%, the correct way to calculate it is 1.0258/1.0062 – 1 = 1.95%