Monthly Finances - August 2022
For your own safety, please keep your hands inside the ride at all times and scream if you want to go faster!
Life, Health & Early Retirement - 28 Months Since Retirement
Well, looks like the "Green Shoots Of Recovery" got mowed over, then had weed killer poured on them, then got napalmed, dug up and then buried again very deep in the ground in a steel box........inside a nuclear reactor.
Seems we are fully back on the economic roller coaster and whilst August's numbers don't look that bad, Septembers are expected to be fairly dire as I am seriously late in my update this month I already have some insight.
I do have an excuse, we took a bit of a holiday.
Well, I say holiday. Mrs H, myself and Winston the wonder puppy are just back from a few days out in nature on our first camping trip in about 20 years. I think the last time I slept in a tent was at Glastonbury Festival, I can't remember what the year was (I'm told I had a great time!) but Coldplay were headlining, and as they've headlined 3 times, I'm guessing my trip was their first time, making it 2002 and almost exactly 20 years ago.
This years trip was definitely a more civilised affair; on an apple farm in the mountains, drinking wine while we watched Winston play for hours in the river. It was however, mighty cold up in them there mountains and after the first night of zero degrees and sitting up from 3am playing solitaire on my phone waiting for hypothermia to kick in, we threw some money at the problem and the second night was significantly more cosy on our king size airbed and abundance of sleeping bags and extra blankets.
This was a bit of a test to see if we're still up for "roughing it" now we're a little older, wiser and spoiled. Camping is a good option for us because we can take Winny with us and because we don't have to go to work, we can go midweek and still be home for the weekends to socialise with our friends who are mostly still wage slaves. Finding pet friendly accommodation is not that complicated but it can be painful and there's also something kinda relaxing about camping. So it looks like it might be a bit more of a regular occurrence. Mixed in with trips meeting our usual standards of comfort obviously!
We've hit spring in South Africa and whilst it's still not too hot, we've been getting some nice days and the fire doesn't need to be lit every evening so Mrs H and I have been spending quite a bit of time doing our hobbies and even went to a local auction in August and came back with a load of antiques (read: Old tat) for Mrs H to restore. This does mean that my sanctuary and workshop has been invaded, along with all (and I mean all) my tools not being where they should be which means I spend a lot of days swearing a lot and muttering under my breath about the "bloody woman" and how I'm going to have a bonfire with her part restored furniture if I don't find the power tool I need for the job I'm doing. I love her dearly but when it comes to my workshop, organised tools mean an organised mind!
Luckily all of this actual retirement stuff has taken me away from watching the economic crisis unfold and very unlike me, I've been a little bit behind on my side-hustling and have had to have a word with myself to remind me that large amounts of cash for small amounts of work should be a priority while the work is easily attainable.
I also had a bit of a splurge on some cooking apparatus that I've been wanting for ages as I've been getting more and more back into cooking and still intend to monetise my hobby in some way so a cool R60,000 / $4,500 / £3,000 of my personal allowance that we pay ourselves every month (and I've been saving mine) has been blown on some seriously cool cooking kit so I am officially broke when it comes to fun money and need to avert my eyes from anything shiny that catches my eye for the foreseeable future.
Our Net Worth: R17,669,648 / $1,104,353 / £883,482
Previous Month: R17,431,397 / $1,089,462 / £871,570
Change: +1.3% (Previous Month +1.5%)
A pretty good increase in the net worth this month considering the state of the nations. Right now, treading water would be fine and I think in truth, that's pretty much what happened and the increase is actually the side-hustle income.
We're still down around R1.3m / $81k / £65k since the new financial year kicked off in March which is a chunk of change, especially when I've billed just over that amount again in side-hustling meaning if I hadn't had the hustle, our net worth would have been reducing by a massive R430k / $26k / £21.5k per month for the last 6 months.
But this is the reality of early retirement, there are good times and bad times, the point is you have to trust the process. Even today, if we never earned another cent from any form of work and the last 3 years repeat themselves over and over (and it's been a rough few years for the world), we still have enough saved to last 22 years. So if things don't improve, I might start looking for a job in about 19 years!
I'm not sure if I'm just an eternal optimist but my view is that the best thing about an economic crisis is that you're getting it out of the way. They're always going to happen and in my experience, something goes tits up about every ten years in the world of investing and so far it has always fixed itself in the end, so better to get it out of the way and then enjoy ten years of upside before it all happens again, right?
Living Expenses: R66,754 / $4,172 / $3,338
Budget: R75,000/ $5,000 / £3,750
The second month in a row we've come in nicely under budget on the spending. One more month and we can call it a trend.
For anyone who isn't a regular reader and is now wondering how I managed to spend R60k on cooking gadgets and only spent R67k on living expenses, I should probably explain. The way Mrs H and I manage our finances is that we pay all of our living expenses out of a joint account and we also pay ourselves R10k / $625 / £500 per month into our personal accounts for all our personal and non-essential spending. So in actual fact our living expenses are actually more like R47k and R20k is our personal fun money which we use for going out with our friends (not together, that comes out of the joint account) buying our own clothes, hair and Beauty (just hair for me, I'm beautiful enough) and any "things" we want to buy ourselves. I tend to save most of mine to buy big things once every few months whereas Mrs H saves some of hers for the bigger things but also likes a bit of retail therapy on the regular.
It still seems that the main area we've made savings on August is groceries much like July. We have been hitting the dreaded Household Maintenance budget a bit this month and I used a whole tank of petrol in a weekend for our comping trip so we may see a bit of a spike this month but that's OK, the idea is to have an enjoyable lifestyle in retirement so if we spent money on our camping trip without blowing the budget, that is living the dream right there.
Monthly Investment Return: +R140,483 / $8,780 / £7,024
Investment Return Percentage: +0.8% (+1.6% Last Month)
Annualised Investment Return: +4.5% ( +4.8% Last Month )
About half the investment return compared to last month but I'll take it.
It was a yoyo month which could have gone either way, the month started strong on the stock market and then died away. We made good income from the solar panel rentals with the spring weather bringing some sunshine and that income will increase significantly now for the next 6 months as we go into summer but also because I put all of my side hustle profits into new solar panels and that project is about to go live any day. That project alone should add around another R11,000 / $700 / £550 in monthly rental payments, which is taxable income but is pretty safe income that grows with inflation for the next 20 years. that's my kind of investment.
I'm still furiously re-investing all of our investing income back into the markets to Dollar Cost Average our investments while stocks are getting cheaper so we can shorten the recovery time as much as possible when the market does finally turn around and start heading back north. I've paused any new crypto purchases for now but the coins/tokens I do own are holding pretty well and I think the strategy there is simply to hold for the long term now.
The thing that's keeping me awake on the investment side is that our annualised return is now down to 4.5% and I need it to be 9.5% over the long term. That number is based on 4 years of investing so it still has some natural volatility but if I look back at this time last year, it was 8.4% having risen from 6.9% the year before so it really gives a true picture of how bad the stock market crash has been this year and how my net worth is heavily protected by the side hustle income.
That's not good considering I plan to stop my most lucrative side-hustle which is consulting in March next year, giving me just 7 months to go. I would really like to be on the 9.5% before I tell the world (and my clients) that I'm out of the game. that's going to be a focus area for the next few months to get that number back up as I can see it's pretty much been stagnating for the last 5 months since the markets really dropped.
The gigs have been busier in August although I have been much better at not working for the sake of working especially between meetings (80% of my paid work is for participating in meetings and giving advice based on my experience) so I've been getting away from the desk and doing things more useful rather than sitting on YouTube killing time between sessions. I've even started to keep a clean shirt in my office bathroom so I can shoot in from whatever I'm doing 5 minutes before a video conference, brush my hair, wash my hands and look smart for the video. I suspect people really know I'm in shorts and flip flops from the waist down. Just have to remember not to stand up during a meeting!
I have been spending some time thinking about the replacement for the consulting gigs and on top of a few conversations a friend and I are having about possible global domination, I've managed to narrow it down to an online Deli. I love to cook and it's hard to get the ingredients I like to use in South Africa when I could pretty much get anything food-wise when I lived in the UK. I can't be the only one with this problem so I'm working on a concept for a small online retail business specialising in hard to find ingredients and that kind of thing. I plan to import some things, make some things myself under my own brand (which is yet to be created) and even try and promote some of my newly learned African ingredients to the world and equally maybe one or two British classics to the South African population (I'm not sure they're ready for my beloved haggis though!)
Who knows if it will make any cash but it's something I can get excited about, possibly combine my love of food and maybe a little travel also and apply a business brain to my hobbies. If it breaks even and I get to spend time in the kitchen, meet some like-minded folks and eat some good food, what could possibly be bad about that?
Picking A Winning Stock 2022
Lets check in on Tribal Finances investing gurus and see how the competition is going
Whilst I suspect StuffyUncle is far from quaking in his boots, Lawrence is starting to look like the only possible challenger to the top spot with everyone else showing fairly dire losses for the year so far. Slightly embarrassingly, nobody is suffering as much as me and I am now regretting my somewhat risky bet on crypto exchange Coinbase. One of their employees officially pleaded guilty to insider trading this week so I can't see my luck improving any time soon. However, Nvidia continues to have no real good news so I am laser focussed on Jo's 6th place and avoiding the wooden spoon with the help of the graphics card giant.
Still very tight in the middle of the field with Charlie and Shane staunchly represented by the South African economy which seems to be fairing Ok in comparison to the US and UK, I suspect because our economy was already pretty broken before this. Ross continues to be the only one taking a chance on China with his Alibaba play. With the supply chain recovery at risk from the ongoing Covid outbreak in China it's hard to call whether Shane will have a late bloomer or will simply wither on the vine
We'll find out more next month!
A fairly decent month financially considering the bigger picture but some worrying long term trends that need to be reversed to safeguard our future retirement. Conversely, retired life just keeps getting better with more time doing enjoyable things and less time doing things because you have to.