Before I share with you our July 2022 results, as I promised in July 2021, 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?
Positives
Personal life positives
The nice weather (except for the days it felt like hell) definitely got us out, I loved it. I got to spend some quality time with my loved ones.
Quality time with my daughter
I started the month with a day at the zoo with my daughter. We had a great time and saw lots of animals.
A few days later, I saw a post on Facebook. We have a Facebook group for all the people who live on our road. One of my neighbours posted that they’ll be away and asked if someone could water their plants while they’re away. I thought it would be a nice experience for my daughter (and a chance to be a good neighbour), so I volunteered. She loved it! Every time she got bored around the house, it was “let’s go water the plants”, to which she replied “Yeay!”. We grabbed a few empty water bottles, filled them with water and headed out, she was very proud of herself and I was proud of her too.
The highlight of our month was, of course, the theatre. I took my daughter to… you guessed it… The tiger who came to tea. She had a great time and I even bought her a stuffed tiger (a doll, not a dish).
Quality time with Lazy FI Mum
During July, I had 7 (!) mystery dines. One of them was lunch at a pub, where Lazy FI Mum found something she could have from the menu. We had a lunch date, which we haven’t had for a while. We had a great time and so did our son, who came with us and threw up on the floor (lovely).
Quality time with my son
I was also able to take my son and daughter to the local pond to feed the ducks early one morning. This also gave Lazy FI Mum a chance to sleep a few extra minutes.
Besides that, I started spending a lot more time with my son and even took him along on a mystery dine (start’em young). He is adorable and I love him, we’re getting a lot closer as time goes by. As you may remember, that wasn’t always the case as I shared in this post.
Quality time with the whole family
During one of the weekends, our local park had a screening of Disney’s Encanto and we (all 4 of us) decided to go. My daughter has never seen a film longer than 24 minutes (The tiger who came to tea), so I was curious how she’d react. While the movie didn’t really interest her, she enjoyed the music and being at the park. She ran around, danced, and had a great time. Our son enjoyed some outdoor time and fresh air. Lazy FI Mum enjoyed the popcorn we brought with us.
Later in July, we all went to the Paddington BRICKLIVE event where they had big (my size) statues of the Paddington characters made from legos! They also had a live band, it was a great place to spend an hour before heading to lunch (Nando’s for the win).
The best smiles-per-pound ratio ever!
At the beginning of July, my daughter saw a toy pram on our neighbours’ balcony. She said to me: “Abba (dad in Hebrew), buy me a pram”. This is a kid that never asks me to buy her anything so I said ok. A few days later, on my way to the barber, I kept my eyes open in case I see a toy pram in one of the shops. Just before I got to my barber, I saw a small, pink, perfect toy pram in a charity shop. It cost me £2 and has been making my daughter happy for the past two weeks. That’s great value for money.
So yeah, July was awesome!
Personal life negatives
Luckily, I can’t think of any this month.
Money related positives
Lazy FI mum went back to work after four months of maternity leave. That means that our July income was a lot higher thanks to that compared to previous months.
This month, I got paid only by private clients (private tutoring, not corporate courses). I have a new Excel student who pays at the end of each session. It’s so convenient.
Money related negatives
I can’t believe I’m even typing this but… WE’RE STILL DELAYED WITH PURCHASING OUR SHARED-OWNERSHIP FLAT. However, all obstacles have been cleared and I am very confident that I can deliver some good news next month.
July 2022 results- savings rate
Our savings rate for July 2022 was 60.67%.
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 was a third (33.33%) with 40% being the ambitious target. After this year, it will be back to 40% as the long-term goal.
I am certain we can meet that “ambitious goal” of 40% and 50% is looking more and more achievable.
Our (weighted) average savings rate for the past 6 months is 61.39%.
Our 12-month-weighted average savings rate is 54.89%.
Finally, our YTD (since January) weighted average savings rate is 59.55%.
July 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?
Not a lot actually, I think the July 2022 results represent an almost “normal” month.
In short- childcare and tutoring income
Childcare costs
As you may remember, we contribute to our children’s tax-free childcare account twice every quarter (every 3 months), once for each child. We don’t pay for them in the same months so we pay it every two months out of three. This causes a huge fluctuation in our monthly savings rates. July was one of those months where we do NOT pay it. Actually, that’s not accurate.
We had to pay in a small amount (less than £100) just to top up our daughter’s account as it finally ran out of money. Thinking as I type, this means that we will now have to contribute to our children’s tax-free childcare account every month! Once for our daughter (the max £2,000), once for our son (again, the max £2,000) and one more time for our daughter to top up any costs over £2,500 (our £2,000 + the £500 the government pays in).
While it annoys me that we’ll have to pay more, the fact that it will smooth the results softens the blow a little.
Tutoring income
Last month I wrote: “June is actually pretty quiet from a tutoring perspective (July is very busy) so I don’t expect to be paid a lot in July.”.
Funny enough, private students pay immediately so I did get some tutoring income, that was a nice surprise.
However, if we’re forecasting- I did a lot of corporate training in July so August should be very nice from that perspective. The reason for that is that corporate clients usually pay 1-2 months after I do the actual teaching. That creates a small lag but that’s normal with corporate clients. As Lazy FI Mum and I earn enough money (as employees) to cover all our costs (and even save some), it’s not too big of a deal for us.
July 2022 results- Net worth
In July 2022, our net worth increased by 5.48%. The 5.48% is made of two parts:
- Our actual savings increased our net worth by 1.24%
- Our investments went up in value which increased our net worth by 4.24%.
Hello Mr Market, welcome back (even if it’s only temporary).
We don’t get too excited about market increases or decreases. We’re in this for the long run and that’s why short-term fluctuations don’t bother us too much. We are patient.
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 2022, our net worth is 30.47% (June 2022: 29.08%) of that number.
That’s the highest % we ever had! It only beat March 2022’s rate (30.42%) by a bit but that’s still impressive, let me explain why. Markets are still down since March and inflation is still increasing rapidly. This means that our savings beat those market decreases and inflation. That makes me very happy, we’re doing good.
I must admit it feels good to be back above the 30% mark. Let’s see if it lasts and if it does, when we will hit the 40% mark.
Real change
The 1.39% increase in our FI journey (as a percentage of our FI number) from 29.08% to 30.47% means a real (inflation-adjusted) increase of 0.93% (30.47 / 29.08 – 1)*, which can be broken down into these two parts:
- Our nominal net worth decreased by 5.48% as mentioned above.
- The CPIH index increased by 0.67%, 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 tend to focus on our savings rate. A 60.67% savings rate sounds amazing. However, this was a month with very little childcare, I doubt we’ll get close to this rate in August and September (but who knows?). On the other hand, it may be a great representation of our “normal” life once our kids reach the age of 3 (and a bit) and the childcare cost reduces (unless we have another kid). Yes, I know, as they grow up, new expenses show up.
Let me know in the comments section if there’s anything we should watch out for.
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 49.85% FI by April 2026. We are getting closer to the 50% mark. I think it’s going to be very close to that in the end.
As a reminder, this number is based on our UK level of expenses. I 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, any future bonus is not guaranteed. That means that if my employer has a bad year, the bonus can potentially be 0%. My model assumes every year (from 2023 onwards) 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 to “realistic” and having to deal with unforeseen issues.
Well, that’s our July 2022 results, have a great weekend everyone!
Notes
* You might get a slightly different number (by 0.01%,). That’s due to rounding. The numbers I share are the accurate ones, the equations are just so you understand the way I calculate the numbers.
**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.
