Monthly Finances - February 2023
I beg your pardon? Did you say it was March already?
Life, Health & Early Retirement - 34 Months Since Retirement
Well it's that time of year when I do my little happy dance and enjoy the return of silence and solitude!
The one big thing about being a British Expat in South Africa is that from about the end of December / start of January, the visitors start to arrive. They've been freezing their proverbial off for a few months and need to get some sun on their pasty complexions. And who do they call? Mr & Mrs H, to get some of that sweet sweet southern hemisphere sun!
We actually love having visitors but the older I get, the less tolerance I have for people in my space, even my nearest and dearest. I've also noticed that I've either become quicker at springing into action or the Brits have become slower. I think down here in South Africa, we "seize the day" a bit more and get out and about early with a view to getting home lighting a braai, pouring a glass and relaxing into the evening in the late afternoon. I suspect it's because they have to wait for the ice to melt each morning but I notice our guests don't really function very well before midday so there's a lot of sitting about waiting for them to speed up at the first part of the day and some purposeful yawning around 10pm before I make my excuses and retire. Maybe it's just me!
Anyhooo, it is right about now that the last visitors return to their frozen tundra ready for spring as we settle into Autumn and Winter in Cape Town. Mrs H has also headed back to Blighty today to see a client and spend some time with our granddaughter so her plane took off a couple of hours ago. Winston the wonder puppy and I are enjoying the sound of only the wind blowing and the birds singing with a full English Breakfast (well, cheese grillers, bacon and eggs) contemplating whether to head down to the workshop after writing this post or accepting the inevitable that nothing useful is getting done today beyond this. Peace has returned to the kingdom. Bliss!
One big-ish event in February is that I become an extra year older at the ripe old age of 47, giving me just 53 more years to figure this out so I'm becoming dangerously close to being middle aged.
Work wise, February ended up being busier than expected and I even got the band back together with Mrs H as we worked together on a project for one of my clients for the first time in over a year so that was good fun.
My mum also came out for my birthday and stayed until hers a month later., At 81 she's not as fast as she used to be so we had to lay off the sky-diving, kite surfing and speed skating but we did enjoy some good food, plenty of gin and the occasional shopping trip so it wasn't too exhausting.
The office / lair is now in full use and I've slowly started to move all of my maker gadgets over there like my 3d Printer, Vinyl Cutter, Laser Cutter and Photo Printers so there's little excuse for me to get creative now with the hustle. I also spent two weeks doing the annual woodworking shop clear-out which ended up being quite an event as I decided to use all of the cupboards we took out when I replaced the kitchen to re-model my workshop so literally everything had to come out before it could go back in. My driveway resembles Steptoe's yard (If you have no idea what that looks like, see the picture here) as I seem to have collected enough scrap wood to build another house and now need to go through the traumatic job of deciding what to dispose of (woodworkers don't like parting with even the smallest piece of scrap wood)
So between fitting kitchens, moving into offices, renovating and cleaning out workshops I have a to do list of about 100 things in a 90% completed state. I also have the small job of getting my new side-hustle off the ground so it will be nose to the grindstone throughout March and April while the consulting gigs are quiet.
There's a lot going on but it's all the stuff I enjoy and I intend to spend the coming week making a few lists and prioritising so things actually get done. Life will definitely be a little darker if her who must be obeyed comes home in two weeks and finds the place looking exactly as she left, so the temptation to do all the fun stuff whilst she's away must be resisted!
Our Net Worth: R18,539,592 / $1,059,405/ £862,307
Previous Month: R18,543,491 / $1,069,628/ £862,488
Change: 0.0% (Previous Month +3.4%)
I don't think there's ever been a month before where it's been a 0% change.
I didn't bill my clients much last month as all the projects were coming to an end so I decided to send final bills at the end of February so they'll start showing next month. Plus considering last month was a good month, I'm pretty happy with being flat this month actually. The renovation spending has now stopped thankfully and apart from one last job ripping out a bathroom and having the walls replastered, We don't really have any more big bills to come for a while so that will take out any surprises. We had a bit of a stroke of luck and received tax rebates which was pretty much the same as we'd spent on the kitchen so that was a win. I do normally use the tax rebates we get to replenish our cash reserves as we generally have a few surprise bills outside of the budget as we go through the year so I need to cater for that but as with all projects, it cost about 30% more than planned so it was a welcome surprise.
As it's the end of the financial year I can look at our net worth again to see how early retirement is actually going. I think I worked around about 50 days this year which is well down from the previous year but as I've always invested the profit in my side hustle, I've got some returns from that also.
So a quick summary of income and spending in the last financial year.
Net Worth - Start of year: R18.974,251 / $1,084,243 / £882,523
Net Worth - End of year: R18,539,592 / $1,059,405/ £862,307
Change - 2.2%
Net Worth When I Retired: (April 2020): R12,850,442 / $803,152 / £642,552
Net Worth - Now: R18,539,592 / $1,059,405/ £862,307
Side Hustle Profit Last Year:R1,797,988 / $112,374 / £89,899
Side Hustle Profit This Year: R706,349 / $44,146 / £35,317
Living Expenses Last Year R741,714 / $41,206 / £37,805
Living Expenses This Year R931,788 / $51,766 / £46,589
Makes for pretty interesting reading for me on a couple of fronts. I knew I'd done less hustling but my hustle profit drop feels disproportionate. I feel like I've dropped my effort by around 40% so for the profit to be down 60% must mean I'm acquiring extra costs in the business. This will get worse now I have office rental and costs to pay so that's an area of focus. I don't want to work more as it feels like 1 day a week on the consulting gig is great as I only want to work 2.5 days (or 5 mornings) so that leaves a day and a half for other hustles.
I should however mention that I only really started to take a salary half way through the first year so that has a definite affect in that it reduces my profit but stops me from drawing down from my investments so there is a possibility that the number makes sense in the wider scheme of things.
Secondly, I know we're going through a cost of living crisis right now and everything is off the chain cost-wise particularly food (did I mention a block of cheese is now R160 / $10 / £8!) but I would have guessed 15% so there's extra fat I need to check out in that number too.
However, putting those two areas in context and still achieving a pretty flat net worth in a year that has been a bit of a nightmare for investors shows we made good decisions and our investments are holding up.
I still don't quite feel like I could quit my consulting hustle completely, which was my initial plan by May 2023 but I am quite pleased we're surviving the downturn in the markets as when it's over, we should enjoy a few years of steady growth which will hopefully put that option on the table.
I guess what I'm saying is I need to revise my "no work required" goal to my 50th birthday I think.
Monthly Investment Return: R52,739/ $3,014/ £2,453
Investment Return Percentage: +0.3% (+4.5% Last Month)
Annualised Investment Return: +5.5% ( +5.5% Last Month )
Although the numbers look boring, there was actually a lot going on on the investment side in February., mostly because we were coming to the end of the tax year.
Probably one of the dumbest things I did when we first retired is stopped paying into our Retirement Annuities. I guess I was worried about not having liquid cash as when you pay into your RA, you say goodbye to that cash until minimum 55 or more likely when you hit 65+
If you're earning money though, maxing out your RA every year is about the smartest thing you can do and in SA you can pay up to 27.5% of your taxable income. Now for most people that's more than they can afford after living expenses but when your a a FIRE retiree, it's pretty easy as your side hustle and other income is generally "Extra" to your plan and if not, it still makes sense to sell some of your taxable investments to top up your RA. So needless to say I had to do all of that before the end of February to get it in the tax year so a lump sum payment was made equivalent to Mrs H & my RA limit which meant a fair bit of money moving.
Then there was SVB bank collapse and the house of cards which looks to be a bit wobbly. Whilst I didn't go into a blind panic, as a survivor of the 2008 crash, I've seen this movie before and this looks like the trailer to the sequel, so I liquidated my offshore share dealing account and took profits so I have a small but meaningful cash pile sitting on the side lines in case things go south. Ironically markets have recovered since the moment I sold so I've now missed out on some profits as a reminder that doing nothing is usually the best move when it comes to stock investing.
Then finally I re-balanced our investments to make sure we have enough accessible cash to live for another year and put the remainder into more solar panels to get another 20 years of income. Any further solar investments are currently on hold as the company I do my investments through are going through some growing pains and have made some changes to the proposition. The only problem with this investment is there's no way out of it so the obvious risk is the company themselves and I'm heavily reliant on my partnership with them so I've moved them to the "Watch and wait" list before I add more of my life savings. The alternative right now is buying cattle through SV capital which has similar risks but a 12 month timeline so I can have my money sit there making a good return until we decide on the future of solar investing.
Budget & Spending
This months expenses: R66,720 / $3,734 / £3,336
Budget : R75,000 / $4,687 / £3,750
Surprisingly, we were slightly under budget in February but I think that is mostly because I had a separate budget for the renovations which probably picked up the cost of lunches and snacks whilst we worked instead of the grocery budget. I also just realised I didn't pay the municipality in February so will have double this month so that probably brings us in largely on target which is good because March has been tough. I'm actually waiting for "payday" for the first time in years!
More importantly is its that time of year we look at the full year. In the last 3 years since we retired we started at R62k per month which definitely felt a bit oppressive and stressful so in year 2 we went to R68k which felt better but then the cost of living crisis hit and that was like being at R62k again so I raised it to R72k. Then Mrs H laid down the law and insisted we increased our monthly "allowances" (the money we each get to spend on whatever we want) from R10k each to R12k so after a hard round of negotiating she got her way but I only added R3k to the budget and absorbed the reminder.
So what was our average monthly spend for the last 12 months? R76,401
It would appear I've found the magic number for now at least so I'm going to hold at R75k for financial year 2024. I didn't feel like we held back on our spending last year and one of my new year's resolutions is not to sweat the small stuff. We did save a bit mid-year by ditching our electric shock exercise thing which we both enjoyed but cost R3,700 a month so was just difficult to justify. We also decided to reduce our gardening and cleaning help and do more ourselves which I would say has saved us around R2k per month and then although I spent a big chunk of cash on a new car, that comes with free servicing and a warranty for the next few years so I estimate that will save us around R1k per month.
So when you take all that into consideration and the fact that hopefully, food prices might come back under control soon, R75k per month feels easily achievable.
This is where the action is going to be in March. Now that I'm not hosting any guests I can get the non-consulting side hustling gig off the ground. I've partnered up with a friend of mine and after much deliberation we've decided our first gig will be in the online retail space and more specifically with an online pet supply store.
Now I should point out that it's probably not a lifelong dream of ours to own an online pet store but being doting fathers to a dog is one thing we have in common. With that in mind, lets call this the "pilot" project.
We have a bunch of other ideas around the online space but neither of us have masses of expertise on the subject other than I had a pretty successful online business as a side gig when I was in the UK but that's almost 10 years ago. We'll learn a lot through this process and undoubtedly make mistakes but we both believe online shopping in South Africa is still some way behind other countries but improving at pace so it's not a bad thing to become proficient at and can be applied to most side hustle businesses. Additionally, online retail is a business you can realistically do in your spare time and control in terms of your personal involvement so it feels like a good starting point as an alternative to selling my knowledge.
That said, I have no objection to become a pet supply magnate either. We do have a few ideas that might just make us stand out from the crowd or even cause a small amount of disruption so if it went really well and became our first and last side-hustle, I'd be Ok with that if I can stick to my 5 mornings / 2.5 days / 20 hours a week target and it doesn't limit my travel or other retirement plans. We're both agreed that having fun is the second priority to making money but ahead of everything else, so if we can keep that ethos going, it doesn't matter so much what we're doing if we like doing it.
More info on this in the coming months but I'm excited to be involved in a new money making project and am already thinking of ways to scale down my consulting business to only my loyal and profitable customers so that's great.
Stock Picking Completion 2022 Results & 2023 Lineup
And the winner for the second year running is...........StuffyUncle!
I would like to tell you it was a hard fought race but, well, it wasn't. Stuffy smashed it, again!
He was head and shoulders above us all and with a return of 42.3% massively outperformed the market.
Well done Stuffy, please email me your address to MrH@TribalFi.com and I'll get your prize in the post to you. Yes, there's actually a prize. Be prepared to be underwhelmed!
Honourable mentions go to Lawrenceinvesting and Shane Perrier for their silver and bronze respective podium positions and the only other players to make a (if somewhat measly) profit!
And finally, drawing a welcome close to this years competition is the wooden spoon, which goes to yours truly for picking the dog that is Coinbase.. Crypto was not my friend in 2022, not only did I lose a small fortune to the (Alleged, although admissions of guilt have arrived) corruption at FTX, now crypto is responsible for my loss of credibility and respect as a personal finance blogger. I hate you Bitcoin!
As you can see, I'm dealing with the result like a champ.
Thank you to everyone who took part in last years competition, the final leader board is below.
I will be positing the line-up and starting prices for 2023 in the coming week so if you haven't entered and would still like to, all you have to do is send me your pick by commenting on this post or emailing me at MrH@Tribalfi.com with your pick and desired username. For fairness, I will use the price from the day I upload the first leader board as prices have been loaded already for 1st March for all entrants but I'm always happy to take late entrants until I post the line-up as it's primarily for fun.
There will be a prize for the 2023 competition which I'll provide details of in the post next week. I believe I've confirmed all entrants so far but will check all the comments and emails of the last few months to make sure nobody is missed.
Until then, keep living.