Monthly Finances - January 2023
2023 is in full effect, except for electricity
Life, Health & Early Retirement - 33 Months Since Retirement
Its looking distinctly like 2023 is going to whizz by the same way 2022 did. I thought I was going to be quick out of the gate for the January update and then I blinked and it was nearly three quarters of the way through February, wasn't it Christmas just last week?
The first half of January was spent on the house renovations, which still seem to be never ending but I'm close to finishing other than a worktop that I decided to epoxy and now wish I hadn't. It's going to look great but don't believe the YouTube videos that say it's a piece of cake to do. It's not, it's difficult, messy and filled with booby traps. It's also not cheap, by the time I've finished I think a 3m by 2m Island is going to have cost us around R8,000 / $500 / £400. Now I'm not sure how much granite / marble / quartz etc is, but I suspect it wouldn't have been that much more and a lot less hassle!
I am proud of what Mrs H and I have achieved though and whilst it's taken almost 3 months, I think the place is looking great and that's what matters.
The second half of January was taken up by a visit from our son and his partner over from Scotland. They're in their late twenties and have good jobs and certainly live life to the full. In the two weeks they were here, they stayed on a house boat, had couple of days in a house on the beach, visited multiple wine farms and had multiple wine tastings, had a spa day, played golf, visited the old biscuit mill, the V&A waterfront and most of the local restaurants. Went everywhere by uber and when they weren't eating out, they were ordering in. In fact in the whole time they were here, I only cooked for them once I think. And they seemed to feel like they'd had quite a relaxed holiday!
It was so interesting to talk to them and see how they live their lives. I'm guessing they're pretty typical millennials but they certainly live up to the stereotype of YOLO (You Only Live Once) and don't seem to worry too much about how they're spending and are not afraid to spend serious cash on experiences rather then things and of course, it ALL goes on Instagram.
I'm very proud of them (and I guess a little envious) and of their live in the now attitude and the seize the day approach to life. The FIRE part of me though is completely freaked out. The amount of money they must have spent in just two weeks is probably what we spend in a couple of months and I guess I'm conditioned now but all I can see is money that could be paying down a mortgage or being invested to bring that retirement date forward.. Of course I try to keep my mouth shut as I can remember all the wisdom that was lectured to me when I was that age and completely ignored and there is something undoubtedly liberating about not worrying about money and not planning but actually doing. If they are typical of their generation, I do worry though about what happens when the merry-go-round comes to a stop and all the credit cards are maxed out and living like that ceases to be an option. I guess that's what they call growing up though, I have fond memories of paying my rent with a credit card cheque and driving a car that I could only just manage to make the monthly payment on, because of my huge debts all of which had scandalous interest rates and hidden fees. Ah the good old days!
January continued to be criminally hot in Cape Town which made all the manual labour even more taxing but my trusty smartwatch tells me I managed to walk on average around 13,000 steps per day which is about 5,000 steps above my normal rate so I'm hoping that there are some health benefits from all of that added effort, although the end of day reward beers for a hard working man have prevented any improvement when I get on the scales. You win some, you lose some.
Our Net Worth: R18,543,491 / $1,069,628/ £862,488
Previous Month: R17,908,050 / $1,023,317/ £832,933
Change: +3.4% (Previous Month -4.8%)
Considering last month we were around R900k / $60k / £45k down after blowing R600k on a new car and a new kitchen, to make over R600k back this month feels like a win.
The doom and gloom in the stock market abated for a couple of weeks in January and some of the cheap stocks I bought over the last few months turned a profit which I grabbed with both hands.
As it's getting to he end of the financial year I thought I'd take a look at how things are looking for the year as 2022 was lousy for investing and whilst I don't think 2022 will get remembered like 2008 or 1990 but in FIRE terms, I think it safely qualifies as a crash and whilst it's not over yet, and many of the doomsday influencers say the worst is yet to come, I disagree and whilst I thin it's going to continue to be flat. Maybe show a bit more downside, but I don't think we'll see more than another 10% drop. I may regret typing that and posting it on the internet for the world to see!
But using the South Africa financial year from 1st March 2022 to now, I'm currently around R430k / $27k / £21k down for the year which is right around 2.2% so whilst its a hard pill to swallow that I did a fair bit of side hustling for nothing, we have come out of 2022 with nothing more than a couple of flesh wounds. We'll rub some sand it in it and crack on.
With close to zero consulting on the horizon though, we're going to have to batten down the hatches until the investments start to grow again. I do find though I'm one of those people that is more effective with a bit of added pressure so the old grey matter has been working overtime on some ideas and it has also caused me to keep revisiting my financial planning and simplify my portfolio.
I have had somewhat of a breakthrough with my financial adviser who has finally come to the conclusion that I don't really need investment or estate planning (which is probably what he does for 90% of his clients) , I need lifestyle planning. support (Hallelujah) I need someone to take an independent, non-emotional view of our finances and then forecast that (more accurately than I can) to my 100th birthday and tell me if I'm spending enough money. You see, one of my biggest fears about early retirement is not running out of money, its dying with too much left over. One of the flaws of the FIR|E movement is that its fairly risk-averse and the math that supports it, although very clever, is also completely generic and therefore largely inaccurate, so when you're literally throwing away your career, you're definitely taking a jump into the unknown.. How this manifests in most FIRE 's individuals is you build in plenty of margin for error, you obsess over your spending and you create a big buffer between you and the employment line.
I'm trying to hack that problem, well more accurately Peter the CPA is and I think between us we are close to cracking it. The desired outcome is simple. I want him to crunch all of my financial data, overlay my lifestyle, inflation, the market outlook and every other single factor that we can get to make the next 53 years outlook as realistic as possible, and then I want him to tell me how much I should spend each month in order that we run out of money the day I kick the proverbial bucket (we're assuming I go last as Mrs H has few years on me if you were wondering)
It sounds complicated but as I've been religiously tracking our finances on a monthly basis across all of our investments & spending for years now, I have a pretty good data set to work from . Let's see, I guess if I need to double or half my spending, you'll hear it here second, right after we hear it for ourselves.
Monthly Investment Return: R805,564 / $46,032 / £37,468
Investment Return Percentage: +4.5% (-2.3% Last Month)
Annualised Investment Return: +5.5% ( +4.6% Last Month )
Almost all of the returns in January came from the stock markets and it really didn't come from any one area in particular. Stocks were up across the board. Mostly driven by the news that global inflation is starting to slow down.
Its so weird, inflation is rampant because governments printed and gave away money like sweets through covid (and before that), so people spent that new money and that (as well as other things like the massive war going on) caused the price of things to go up. So now the governments have stopped printing money and have raised interest rates so that people stop spending so much and a large portion of what they do spend goes back to the governments so they can get back all the free money that they printed and gave away. We all know what happens when they do that (because they've done it before), we will fall into a recession where people won't have enough money to buy things and some of them will lose their houses and become homeless or they will have to go hungry. That will mean that businesses will need to bring the price of things down again otherwise they won't sell their stuff and that means they need to reduce their costs which means they'll probably have to let some staff go so we'll have more people without jobs that need money from the government to live. Then because the government can't really put taxes up much more because people are already struggling, they'll probably print some more money to give away to get people spending again.
I'm not sure which is worse, the fact we have governments that are so useless they can't manage an economy or the fact that we can see it coming and just let it happen. I don't have the answers but it doesn't stop me for seeing it for what it is, bonkers!
However, that is what they mean when they say money makes the world go around and whilst all of this nonsense continues, and it will, investors can make, or lose fortunes. Buy low, sell high, or sometimes in my case, buy high sell low!
So that is why, for the time being my investing strategy remains fairly simple. I am taking a DCA / Grid Bot approach to my investments and taking small gains when the market spikes up a little and re-investing when it drops back a bit. I specifically used "a little" and a "a bit" there as I'm taking about 5% spikes and dips rather than my preferred buy and hold strategy. The most important part is that I'm not putting my small profits back into the markets, Those profits are going into my two non-stock market related weapons of choice, solar panels and cows. They have been providing annual returns of 15% and 12% respectively and that is good enough for me. Until we are out of the woods and the economic recovery is clear, this is the mode of operation for the foreseeable future.
I'm also trying to slightly reduce my exposure to the US as their money printer has been working overtime for a loooooong time and whilst I would never bet against the US in the long run, it's all starting to feel a bit plump and I really can't afford a US meltdown with probably 60% of our net worth riding on 'merica getting it right.
So somewhat controversially, I am increasing our exposure to UK & Europe. Now I may live to regret it but I reckon between the cost of living crisis, the Ukraine war, Brexit, the comedy government and all of the other woes they've been going through, my birthplace and the surrounding countries have weathered quite a beating and whilst I suspect it's not over yet, my gut tells me that if there was one place in the world that is due some good news, it may be them. So the white stars of the US of A are in some part getting swapped for the yellow stars of the European union. In reality that means selling some S&P500 stock and buying EuroStoxx 50 and FTSE 100 index trackers. Definitely not complicated.
It is starting to feel a bit repetitive in the investment section of these updates and I guess that's because there's not much more you can do in a flat market where you're waiting for something to happen.
Budget & Spending
This months expenses: R81,700 / $4,669 / £3,800
Budget : R75,000 / $4,687 / £3,750
Another rough month on the spending. Primarily due to al those little bits you don't budget for when you're decorating like caulk, sealer, primer or the endless supply of paint brushes because you simply can't be bothered to clean them at the end of the day.
Plus hosting two yuppies with an addiction to living life meant we did a massive amount more eating out and ordering in than normal.
Then I was reminded that not driving an old jalopy means that you have to pay proper insurance with my car insurance increasing by a whopping R2000 / $133 / £100 per month. Regular readers know how m much I love insurance companies and now that my premium has crept up from R3,800 to R6,700 per month in just two short years I would normally have begun the search to replace said insurer.........
But I can't do that right now. Why? erm because I crashed my new car. Whoopsy!
Yes, unfortunately in a momentary lapse of concentration whilst looking for an AirBNB, I missed a turning and quickly realising, I threw the car into reverse to back up and correct my mistake. What I failed to release was that there was a small chevy van behind me which is now dead. Death by tow bar.
So needless to say, I have to pay for the van that I killed as well as the damage to my own car, well when I say I, I mean the insurance company will pay for it and then increase my premium again to probably R8,000 per month to get their money back. So we now have around a R4k or 5% increase in our living costs for the foreseeable future so I'm currently trying to figure out where I might make a saving somewhere else to offset it but there's not a lot of wiggle room it would seem.
As we're coming to the end of the budget year, it's time to start reviewing the monthly spend again and whilst I need to wait for February's numbers before making a decision, the average monthly spend in the last year has been R77,281 / $4,830 / £3,864. My instinct is to suck it up and hold the budget at R75k per month the same as last year and tighten the belt a bit but considering my insurance problem and the ongoing inflation on food which is where we're mostly affected, and the fact one of my New Year's resolutions is "not to sweat the small stuff", I'm mulling over the idea of rounding off our living expanses to R80,000 / $5000 / £4,000- which feels like a nice round number but at the same time leaves me feeling a bit guilty that 2 people and a wonder puppy can manage to spend that amount of money on a far from lavish lifestyle when I have friends and former colleagues who I know get paid a fraction of that and have families and all of that good stuff to support.
I think I need to revisit our budget with a blank sheet before I decide.
Most of the work I'm doing at the moment is either free favours for friends or heavily discounted work for, well, friends. I'm clearly a good friend to have!
The job sheet is pretty much empty and I'm not really looking for any more work as my mum is visiting us for a month in February / March so I want to spend time with her. In fact, her and my dad once flew across the world to see us in South Africa for 6 weeks and I spent the entire time working on a project in the UK and was flying back to South Africa at weekends so I didn't miss them completely.
And people ask me why I retired early!
I'll go into more detail on it next month as it actually happened on 1st February but I have now moved into my new office / lair. My friend who I'm sharing with and I have resolved that we are going into business together BUT we are committed to it being a business based on something we enjoy and not the more, somewhat obvious, corporate world that we came from. He is about to take a road trip to Botswana so we have agreed to get her thinking caps on an regroup with a kick-off on the somewhat fitting 1st of April.
I still haven't got around to writing a post on my first couple of years as part-time self employed but I promise I will so I can give a proper breakdown.
I currently have the constant reminder in my head that I would only do corporate work for three years which is just 3 months away so the motivation to make another plan is growing by the day. I just need to nail down on what it's going to be.
Picking A Winning Stock 2022
And as we enterer the final month, here are the penultimate scores on the doors for our competition.
Whilst there's still plenty going on in the middle tables, I think it's fair to say the first and last positions are now, short of a miracle, decided. Stuffy continues to be way out in front with literally no challenger and I am 40% a drift from Charlie with no sign of recovery.
The lower podium positions are where the action is and Ross took a bit of a beating on Alibaba this month, allowing Shane to sneak into 2nd place. A month is a long time so I think with only a 10% gap between Ross and Shane, it is still wide open for 2nd and third.
Don't forget, if you want to take part in 2023, the closing date for entry is 1st March so you have a coupe of weeks left. entry is free and just for fun and all you have to do is add your pick to the comments below or send me an email to MrH@Tribalfi.com with your pick and the name you want to go by and you're in.
The rules for 2023 are simple, you are allowed to choose one company and one company only (its a pain to track multiple picks) from either the US, UK or SA. I will register the price of your stock on or around the 1st March 2023 and I will take the price on 28th February 2024 to calculate your performance. No dividends will be recorded or included so it's all about the growth stocks baby. Who ever has made the largest percentage return on the final day will be crowned the winner. Simple as that. so get your research done and let me know the name of the company you want to back, I'll do the rest.
I definitely have a strong feeling of deja-vu as I've written this months update and I think it's because things are fairly stagnant on the investing front right now but also that I'm spinning my wheels a bit on decisions around side-hustling and it's also the time of year that we have lots of visitors so the stuff I talk about here goes on partial hold a bit.
I still have very little to be unhappy about and any pressure is only what I put on myself so I'm looking forward to a bit of relaxing over the next few weeks while my mum visits and then get the financial year closed out and use March as my month to finalise plans and then hit the ground running in April.
Until next time, keep living.