Before I share with you our February 2022 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.

In the March 2022 results post, I’ll explain why there haven’t been any posts for the past 3 weeks, big news coming up

What have we been up to this month?

Positives

Personal life positives

We started February with a few more visits to our local soft play, which our daughter absolutely loved.

However, we will always remember February 2022 as the month when we first visited Center Parcs. We didn’t grow up in the UK so we didn’t know about the existence of Center Parcs. Holy s**t, that place is amazing. I will write a separate review post once I have some time. Meanwhile, here’s the executive summary- we loved it, our daughter loved it, and we’ll probably go back.

Just like every month, we had family from Israel come to London for a short visit. This time it was Lazy FI Mum’s dad. Our daughter loved spending time with him and going into the pool in the hotel in which he stayed.

Oh yeah, it was also my birthday.

Money related positives

I finally got paid for a lot of the Excel courses I did.

In addition, Lazy FI Mum took her annual salary from our limited company. Yes, we have a limited company. We opened the company to hold our one rental property (this will also be a future post at some point) and she mainly manages the company.

Although this doesn’t affect our February 2022 results, I do have one more money related positive point about tax-free childcare (TFC). If you have no idea what this is, go to this post, you can save up to £2,000 per annum per child on your childcare costs. Anyway, I thought you couldn’t contribute while you or your spouse are on maternity leave. However, I like to double-check things so I called HMRC. Apparently, you CAN contribute to your child’s TFC account if you’re on maternity leave, it’s only the newborn who you can’t contribute to.

So imagine you take six months of maternity leave for your second child. I thought you would lose £1,000 of free money from the government. But that’s not the case, you can keep contributing to your older kids’ accounts. Not only that, I asked HMRC another question. I knew it takes time for them to process a new tax-free childcare account, so I asked how long before the end of maternity leave can you apply for an account. You have 31 days to do so!

If we take the same scenario as before of 6 months maternity leave, you should apply for the TFC account (roughly) 5 months into your maternity leave, or (again, roughly) one month before you finish your maternity leave.

Negatives

The only money related negative is that we’re still (!) having a bit of a delay with purchasing our shared-ownership flat. I’m really getting sick of writing this every month.

February 2022 results- savings rate

Our savings rate for February 2022 was 59.28%.

As a reminder, my long term target is 40% with 50% being an ambitious target. However, with a new kid and maternity leave, my goal for 2022 is a third (33.33%) with 40% being the ambitious target. After this year, it will be back to 40% as the long term goal.

Our (weighted) average savings rate for the past 6 months is 48.12%. Our 12-month-weighted average savings rate is 50.07%.

In addition, I’ve added a new calculation to help me track our annual goal. I would like to introduce to you the YTD (Year to date) savings rate. This rate is the weighted average savings rate from January to whatever month we’re in. For this month, it will be January 2022 – February 2022 (two months). In April 2024, it will be January 2024- April 2024 (four months).

Our YTD weighted average savings rate is 53.24%, which is pretty awesome. However, I expect it to decrease in the next few months.

February 2022 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, 12-month, and YTD average figures to “smooth” the data.

Anyway, what was different this month?

In short- childcare, income, and health

Childcare costs

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. February was one of those months, paying for childcare this month affected our saving rate and our February 2022 results.

The fact we achieved a 59.28% savings rate in a month that included childcare payments is amazing.

So how did we do it? high income

Income

As I mentioned above, there were two sources of income that affected our savings rate. The first one was Lazy FI Mum’s salary from our company. The second one (which I also mentioned above) is that I finally got paid for a few Excel courses I ran during the past few months. Both of these boosts to our income made our savings rate much higher.

Health

In February 2022, I had two osteopathy sessions for my back. In addition, we all went to the dentist (our daughter’s first time). While these expenses will be mostly paid back to us by our insurance during March 2022, they are still an expense for February.

February 2022 results- Net worth

In February 2022, our net worth increased by 1.49%. The 1.49% is made of 2 parts:

1. Our actual savings increased our net worth by 1.95%
2. Our investments went down in value (second month in a row), which decreased our net worth by 0.46%

This month we beat Mr Market. Despite the negative return, our savings rate was so impressive, it beat it by a mile. In case you’re wondering- no, we’re still not worried about the negative market returns. We’re in this for the long run and that’s why short term fluctuations don’t bother us.

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 February 2022, our net worth is 29.06% (Junuary 2022: 28.60%) of that number.

We were so close to 30%, I can already taste it. We just need to keep doing what we’re doing. Once we do, we will have a net worth that equals 7.5 years of our expenses (30% * 25), the 25 deriving from the 4% rule. That’s very cool to think about.

The 0.46% increase in our FI journey (as a percentage of our FI number) from 28.60% to 29.06% means a real (inflation-adjusted) increase of 1.58% (29.06/ 28.60 – 1), which can be broken down into these two parts:

1. Our nominal net worth increased by 1.49% as mentioned above.
2. The CPIH index decreased by 0.09%, which increased 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 tend to focus on the savings rate. I am very pleased with our 59.28% savings rate, especially as this is a month with childcare costs, which usually decreases our savings rate.

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 a worst-case) scenario, we expect to be 49.17% FI by April 2026. Still below the 50% mark, but an improvement from last month.

As a reminder, this number 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 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.

Well, that’s our February 2022 results, have a great weekend everyone!

Notes

*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.