Before I share with you our December 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?
There’s so much to share for December 2022, both in our personal life and our financial life. Let’s start.
Personal life positives
Loads of positives (woohoo)
We started December 2022 with an Urban farm that Lazy FI Mum found online, near Brick Lane. We went there and had a great time. My son got to see some animals and was forced to wear the same hat (not sure that’s the best word) as me. My daughter got to see some animals, run around, and ride some bikes.
It was a great idea and we enjoyed it.
Our son learned to sit
After learning to crawl, our son learned how to sit. He is now a lot more independent. He can go wherever he wants (except the pub), and he can stop whenever or wherever he wants (again, except the pub), it’s awesome.
Well done baby! I’m very proud of you.
My son’s skin problem
My son had skin problems. Thank god I can say “had” and not “has”. He had dry and scaly skin and some red spots. Trying to get our local GP to see him is almost impossible. Luckily, we have some money saved up and I can’t imagine a better use for it than my family’s health.
I asked some friends for a recommendation, got one, and he saw a doctor a few days later. It was quite expensive but probably the best use of money we made during that month.
The doctor prescribed some creams. I headed to the nearest pharmacy and was given a surprise bill. It wasn’t too much, it’s just that I was used to the fact that prescriptions (through the NHS) were free, but that’s not the case for private prescriptions.
I’ll see if our health insurance will pay for it (which is also partly cheating because we’ll see the upside in 2023).
Still 100% worth it. I’m happy to report his skin is as smooth as, well… a baby (couldn’t resist myself).
As the doctor was amazing, and my son’s skin got fixed so quickly, I’m including this in our “positives” section. It’s also positive because I’m thankful that we had the money to allow us to book a private doctor to see him so quickly.
Holy s**t, we saw so many family members during December 2022!
It started with my brother and his wife (that’s the brother that got married a month before). My kids got to see their uncle (and new aunt) and I took them out for lunch once, it was great seeing them.
A few days later (while they were still here), my mum, her husband, and my 2 sisters came over.
We went to the dinosaur exhibition at the Excel (no, not my favourite kind on Excel) Centre. My daughter had a lot of fun and so did my sisters.
After my brother and his wife left (mum and sisters still in London), another brother came over.
I used the opportunity to take my sister to dinner (a mystery dine, of course). While there, I took a picture and sent it to the family Whatsapp group. My brother saw this and said, “wait, we have that place on our list of places to visit, will you still be there in 30 minutes?” We said “yes” and they joined us. They arrived, we talked about life, caught up, had some cake and headed out to see…. snow!
What perfect timing! We were out just as it all started, everyone got excited (very Christmassy) and we even had a little snow fight.
As most of you know, the snow lasted for a few days, so in the morning- my kids saw (and played in) the snow as well. It was my son’s first snow.
After everyone left, it was time to celebrate Chanukkah with… Lazy FI Mum’s mother haha.
She couldn’t come at a better time, I’ll go into a bit more detail later under the “personal life negatives” section. In any case, she found a sublet across the road (less than 1 minute’s walk from us) so we got to live in our own episode of “Everybody loved Raymond”.
To sum up, during December these are the people who visited London from our family:
My mum, her husband, my 2 sisters, 2 of my brothers (and their wives), and my mother-in-law.
In one month!
I also answered some questions from the FIonists, you can read the post on their blog here:
Personal life negatives
We had quite a few “negatives” this month.
Health- illnesses galore
There were roughly 2 weeks when someone was ill in the Lazy FI household. It started with my daughter, who had a high fever for roughly a week, then Lazy FI Mum was ill, and finally, my son wanted a turn at being ill too.
If I’m honest, Lazy FI Mum being ill was the toughest one for me. She was completely out for 2 full days, which she spent in bed. Looking after 2 kids that aren’t 100% healthy while your partner is ill in bed was very tough and included a lot of running from one part of our apartment to the other.
Luckily, my mother-in-law arrived towards the end of Lazy FI Mum’s 2nd day of illness.
Before she arrived, there was one day when my daughter was home. As I try to avoid exposing my kids to screens as much as possible, I had to find ways to keep her busy and entertained while she was awake. We went and bought a pack of disposable cups (sorry Gretta) and played so many games! I didn’t know I could make up so many games with cups. She loved it! She still asks to play cup games even (roughly) a month later.
Health- wisdom tooth
Although not too bad, I had a wisdom tooth removed. I was in pain for a day or two but all in all, not too bad. I just wish they could take all 4 out and finish with it.
In December 2022, Lazy FI Mum and I “celebrated” our 4th anniversary. We “celebrated” it by dealing with all the illnesses we had.
I put it as a negative because we didn’t celebrate it properly (we didn’t go out or something like that). However, I think it was perfect. Lazy FI Mum and I live far away from our family, which means that (usually), when something bad happens we have to deal with it ourselves, we can’t rely on anyone else. Yes, this makes things harder but it also makes us stronger and a lot closer as a family and I’m grateful for every struggle we face.
Lazy FI Mum, I love you, even if we don’t go out to celebrate our anniversary.
My daughter’s best friend lives a floor above us, she’s much older than my daughter. The friend and her younger sister decided to open a lemonade stand and “hire” my daughter to help. It was adorable, they made lemonade, got all excited, and my daughter got to wear an apron and feel part of it.
If you’re thinking “did that get them closer to FI”? let me share the numbers:
Total expense: £1.50 (3 cups of lemonade that I bought to support a local business)
Total revenue: £0.00 (I think it’s called “work experience” in the UK, or “slavery”, not sure. In any case, she didn’t get paid).
December 2022 results- savings rate
Our savings rate for December 2022 was 34.07%.
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 initially a third (33.33%) with 40% being the ambitious target. After this year, I was planning to go back to 40% as the long-term goal, with 50% being the ambitious goal. However, this year made me rethink our 2023 goal.
Now that 2022 is over, I’m proud and delighted to announce that we absolutely smashed it this year! We made it to a 2nd consecutive year with over 50% saving rate. This will also be our goal for 2023, with no additional “ambitious” goal for 2023, just 50%, binary.
Our (weighted) average savings rate for the past 6 months is 43.80%.
Our 12-month-weighted average savings rate is 51.92%.
Finally, our YTD (since January) weighted average savings rate is 51.92%.
Of course, as it’s the December results, the 12-month-weighted average savings rate and the YTD (since January) weighted average savings rate are the same thing.
December 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 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, cashback, side hustles, holiday, health, and cheating (yes, you read correctly)
As you may remember, we contribute to our children’s tax-free childcare account once every quarter (every 3 months). Both children’s contributions are in the same month. This causes a huge fluctuation in our monthly savings rates. December 2022 was a “no childcare cost” month.
Any “no childcare cost” month looks better than it really is so you should have that in the back of your mind while going through our December 2022 results.
Around a year ago, I shared with you Our experience with a cashback credit card. Our card pays us cashback once a year, which happened in December. We treated this as “other income”.
Of course, the cashback improved our December 2022 results.
A few clients decided to pay me before 2022 ended, no complaints here. This income improved our December 2022 results.
We paid for our holiday in Israel in the first half of 2023.
This is kind of “cheating” (see below for more) as we’re prepaying for 2023 expenses in 2022. However, the main reason I did that is that I had an increased discount from work for that specific airline.
This specific expense had a big (negative) impact on our December 2022 results.
My son’s skin problem, as mentioned above. Worth every penny!
As we started December, I knew we were going to hit the 50% savings rate.
Mentally, I was already thinking about next year’s goal and how I really want to hit 50% again in 2023 as well, so I thought:
If I have a surplus (above the 50%) and I want to reach 50% next year, why not prepay for 2023 expenses in 2022?
Now, in the context of personal finance, this is a form of Mental accounting bias.
In the world of accounting (which I come from), this is called income smoothing and is a big no-no. You can read more about it here:
However, as my family’s personal finance is not regulated by any real “rules” (although you’re free to judge me), I’m ok to do that. So we started spending. I’m almost certain that all our spending would have been spent in 2023 anyway but I can never be 100% sure.
Anyway, here’s the list of “cheats” and excuses haha:
- Last month I shared with you in our November 2022 results that we prepaid for our osteopathy treatments by purchasing gift cards for treatments. This increased our 2022 health expenses and will reduce them in 2023.
The excuse: 20% cashback via Amex.
- Flight to Israel in the first half of 2023 (see above).
The excuse: an increased discount from work and we usually book flights a long time in advance (once we know we’re definitely going) anyway.
I forgot to mention this in our November 2022 results, but we also prepaid for another stay in Center Parcs in the 2nd half of 2023.
- Also in November 2022 results, I shared with you that I renewed my professional subscription (which allows me to continue to work) and that my employer will reimburse me for this cost in the future. This hasn’t happened yet and will only happen in 2023.
The excuse: I really tried to claim this back in December but they needed some extra invoice so it got delayed.
- I bought a new laptop. My laptop was 2-3 years old and was one of the cheapest ones I could find at the time (before I started teaching). It got to a stage where my screen would freeze mid-session, which meant my Excel sessions seemed less professional. I used the Black Friday Week deals to get a strong computer that should last me a few good years.
The excuse: I need this for my side hustle, it will (kind of) pay for itself really quickly and it was a good deal.
Counter excuse- this could have waited for 2023.
- Finally, I did some work for clients that will pay me in 2023.
The excuse: If you’ve been following our monthly results, you know most of my clients are corporate clients that have a lag between the session happening and payment, usually a month or two. That’s quite regular.
Summary of cheating
We’re starting 2023 with:
- 2 Prepaid holidays: Israel in the 1st half of 2023 (only flights are prepaid) and Center Parcs in the 2nd half of 2023
- Prepaid back treatments
- A new laptop
- Money coming in from clients and my professional subscription
December 2022 results- Net worth
In December 2022, our net worth decreased (again) by 1.02%. The 1.02% is made of two parts:
- Our actual savings increased our net worth by 0.96%
- Our investments decreased in value, which decreased our net worth by 1.98%**.
When the market goes down, our net worth naturally goes down with it, which feels like a bad thing. However, that’s only psychological because we’re in the accumulation stage. That means we’re buying and not selling, so market drops are actually better for us in this stage of our journey. Think about it like buying a property. Do you want to buy when prices are high or low?
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 November 2022, our net worth is 29.14% (October 2022: 29.56%) of that number.
We are once again below the 30% mark and are on a very similar percentage to the one we had a year ago.
The 0.42% decrease in our FI journey (as a percentage of our FI number) from 29.56% to 29.14% means a real (inflation-adjusted) decrease of 1.41% (29.14 / 29.56 – 1)**, which can be broken down into these two parts:
- Our nominal net worth decreased by 1.02% as mentioned above.
- The CPIH index increased by 0.40%, 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 34.07% savings rate is not great for a “no childcare cost” month. However, it’s hard to look at December alone without looking at the full year that just ended. If I look at YTD (we made it! over 50% savings rate 2 years in a row) and the fact that some expenses are prepaid for 2023, I’m very happy with our December 2022 results.
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 August 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 45.87% FI by April 2026. We are getting further and further from the 50% mark. However, I still think it’s going to be very close to that benchmark 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.
I will, just like last year, write a “2022 annual results” post to analyse what happened in the year, I hope to post this in a week or two. You already know the savings rate.
Well, that’s our December 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.