Before I share with you our August 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?
Personal life positives
Our daughter’s nursery was closed for a holiday for two full weeks (plus another day). We had lots of family members come over and it’s been (and still is) great.
In addition, our kids continue to amaze me every month and this month was no different.
My son started eating solids!
This month, my son started eating solids and he loves it! He’s been trying loads of vegetable puree and as I know this really interests you- his favourite so far is parsnip and his least favourite is peas.
He also started drinking water and, just like his sister, he loves it! Initially, we gave him water with a spoon but that was too slow and messy, so we moved to the Calpol “syringe”, which worked beautifully. However, Lazy FI Mum let him try the munchkin cup (if you’re not a parent- don’t worry about this part) and he got the hang of it really quick!
We’re very proud of him.
My daughter’s potty training
We waited for these two weeks with no childcare to potty train our daughter. Out of those two weeks, it was almost a week and a half until we saw any serious progress (which is fine).
Now- she’s killing it! She lets us know when she needs to pee or poo and out of 3-5 times a day, she only misses 0-1.
She has a portable potty shaped like a ladybug so she can go while we’re not home (however, when I use it, I get weird looks from the other people in the park). As you can guess, during two weeks without childcare, we were out quite a lot.
Anyway, she’s a star and we’re super proud of her too.
Lazy FI uncle
The first family member to come over was Lazy FI Mum’s brother. He took our daughter out every day and they had a great time. They went to the zoo, the soft play, and Hampstead heath. My daughter was over the moon, they both had a great time together and it was great to see. She asked where he was every morning.
His visit also allowed us (sadly) to work and save some annual leave days for when we go to Center Parcs again later this year (I told you we’ll go back) and when we go to Israel.
Oh yeah, I was also able to take him on a mystery dine.
Lazy FI grandpa
Next came my dad. My dad came for four days, then went elsewhere in the UK for work (I tease him that I’ll retire before he does) and he’ll be joining us tomorrow for half a day before he flies back home (Israel).
He also learned about this blog during this visit so if you’re reading this- Hi dad! *wave*
He got to see his two English grandchildren and I took him to everything London has to offer:
We went to see the book of Mormon (my 3rd time). I took him to our local soft play (with both kids), he got to see my daughter use her ladybug potty in the soft play. We even went to the miniature exhibition I told you about back in May 2022 results. He also got to join me on a mystery dine. However, none of these even come close to the highlight of any day out in London (or anywhere in the UK)- Nando’s. Of course, I took him (and my daughter) to Nando’s.
Lazy FI Grandma
Last but not least, Lazy FI Mum’s mum came to visit (she’s still here). Funny enough, our next-door neighbours went on holiday and let her stay in their apartment for her whole visit. Nothing like having your mother-in-law on the other side of the wall. Has anyone watched “Everybody loves Raymond?”
I’m joking, of course, she’s a huge help and we really like having her over. We’ve been going out a lot as a big family and she also takes our kids out herself. Today, she took our daughter to the zoo and they had the best time ever!
Weirdly, the past two weeks have been crazy(!) with Excel teaching, I taught enough hours in these two weeks to fill a decent quarter (three months). In addition, work has been more intense than usual. That means I had less time to spend with my kids and having family over has been a huge help!
Lesson learned- no teaching during the month of August in the future.
This is also a good opportunity to thank Lazy FI Mum for managing everything (with the help of family) while I was less available. Thank you!
Quality time with the whole family
Earlier in August (before all the visits) we did some cool stuff as well. I think the best one was our visit to Tate Modern, we saw (and participated in) the The Obliteration Room. It (was) an area of the size of an apartment, with rooms and furniture but it was all white. Guests got colourful stickers to stick anywhere they wanted. We had a great time and if it was still on- I would recommend it.
One more thing that happened this month- I was able to take my son for a 2-hour walk along our local canal. It’s a beautiful route and I used to take my daughter there all the time when she was younger.
Note to self: take more faceless pictures of my son. Oh, wait! I have one from the Battersea park children’s zoo from last week! He looked at the rabbits and wondered if they were edible:
I know I share lots of pictures, please remember:
- One of my favourite parts of these monthly results blog posts is going over the month’s photos and remembering all the nice things we did.
- I’m very proud of my kids.
- This is me sharing what’s going on with the Lazy FI Family.
I have one more non-money-related positive. The Lazy FI Dad blog is a finalist in the “Best New Personal Finance Blog” category of the Plutus awards, which is a great honour. The winner will be announced next week, September 9th.
Personal life negatives
The only negative I can think of was the workload , which should reduce by mid September.
Money related positives
Wow, so many Money related positives this month that affected our August 2022 results!
As I said, I taught a lot of Excel (I’ll get paid for this in a month or two). In addition, a big client paid me on August 31st, for a real buzzer beater.
Another Excel-related one- I joined (as a freelancer of course) a team who have developed an FI (Financial independence) app that helps people track their journey towards FI. I started building the financial models in Excel. Later, developers will translate it into some weird app language (I am 100% sure that’s not the correct term haha). It will also be used to compare to the current model they have to identify any mistakes in the existing model or in mine.
However, the most exciting (money-related) news is…. drum roll, please…we FINALLY completed our staircasing! That’s when you increase your ownership in a shared ownership property. We now own 100% of our apartment and owe way too much to our mortgage provider.
Money related negatives
Can’t think of any, I’m happy with where our money is going.
August 2022 results- savings rate
Our savings rate for August 2022 was 35.82%.
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 this year’s “ambitious” goal and even 50% is looking more and more achievable.
Our (weighted) average savings rate for the past 6 months is 57.52%.
Our 12-month-weighted average savings rate is 53.31%.
Finally, our YTD (since January) weighted average savings rate is 56.51%.
August 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?
Holy s**t, I can barely think of anything that wasn’t “different”.
In short- childcare, tutoring income, a new mortgage, going out, holiday income, and health income
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. August 2022 was a double one!
I was expecting to pay our daughter’s quarterly payment, so that’s fine. However, when I logged into the system, I had a look at my son’s account too. I noticed he had an available government top-up amount. Obviously, I topped his account to max the government top-up.
I need to call HMRC, I really do. Instead of being surprised each time, I will just ask them: “At what date does each kid’s top-up allowance reset?”. As someone who promotes laziness, efficiency, and automation, I should have done that ages ago and set a quarterly calendar reminder (or a standing order for full automation).
I think childcare had the biggest effect on our August 2022 results.
As I said, A big client paid me on the last day of the month to save our August 2022 results. While I did teach a lot during August, I will see that money only in a month or two.
In order to fully own our home, we had to get a new mortgage. The first payment is only in September, so cashflow is great but I still treated the interest part as an expense. I usually don’t recognise expenses until they’re actually paid. However, I do reduce the principal part of the mortgage from our expenses each month in order to show only the interest as an expense. Therefore, I thought it would be fair to include the interest this month too.
August 2022 saw the highest “going out” figure this year. It’s actually higher than any month in 2021 too!
That’s what happens when you have so much family come over. It was totally worth it and we don’t regret spending even a penny from that amount.
During our last visit to Israel, our luggage was 3 days late. We had to buy some clothes and other stuff to replace what was in our luggage. (After a bit too long,) the airline finally paid us back for those expenses, which helped our August 2022 results a little.
I finally got around to claiming back money from our health insurance for all our dentist visits and other treatments. It was enough to cover the monthly insurance premium and then some. That’s how you get “health” income.
August 2022 results- Net worth
In August 2022, our net worth decreased by 0.76%. The 0.76% is made of two parts:
- Our actual savings increased our net worth by 0.92%
- Our investments went down in value which decreased our net worth by 1.67%.
Funny enough, the investment decrease is the best part of this month’s figures, let me explain.
When we originally bought (a share of) our apartment, the amount we paid (+ borrowed) was the value of the whole property multiplied by our share (the percentage of the property which we bought).
This time, we had to buy the additional share based on a NEW valuation, which was lower than what we paid the first time! I was over the moon, we got our apartment for cheaper than I expected! However, in my personal finance model, I had to decrease the value of the previous share.
The decrease in the apartment’s value affected our net worth and our August 2022 results.
I hope this makes sense and I didn’t lose you but essentially:
Our apartment decreased in value so while I had to decrease the value of our old share, it meant we could buy the new share for a lot less than I anticipated.
No, I have no idea how or why it went down in value and I don’t really care, I’m just happy it did.
Achieving FI– how far are we on 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 August 2022, our net worth is 30.06% (July 2022: 30.47%) of that number.
With the decrease in our apartment’s value and two childcare payments, I’m shocked we’re still above 30%, that’s incredible.
The 0.41% decrease in our FI journey (as a percentage of our FI number) from 30.47% to 30.06% means a real (inflation-adjusted) decrease of 1.33% (30.06 / 30.47 – 1)**, which can be broken down into these two parts:
- Our nominal net worth decreased by 0.76% as mentioned above.
- The CPIH index increased by 0.58%, 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 35.82% savings rate is pretty low for us. However, with two different childcare payments, that is an amazing result! I am now very confident we can have 2 consecutive years with a savings rate higher than 50%.
When can we achieve FI (and possibly retire)?
As I told you 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 48.96% FI by April 2026. We are getting further from the 50% but that’s mainly due to the decrease in our apartment’s value. 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 August 2022 results, have a great weekend everyone!
*CPIH- “Consumer Price Inflation including owner-occupiers’ Housing costs”. As we are consumers and we own our home- I think this is the best inflation metric for us. You can see the changes in the index here.
** 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 so that you understand the way I calculate the numbers.