Finding Enough

The journey to financial independence and a world of choices

What a great way to start the year! When we updated our spreadsheets this month, we were delighted to see that we had hit a big milestone. Despite the fact we only had one income in 2020, and therefore a significant drop in our saving rate, our money has been quietly toiling away. It is very satisfying to see the compounding machine we have been building for years really working for us.

The freedom fund clocked up another all time high at £1,003,110 at the end of December, this would produce a hypothetical monthly income of £3,344 at a 4% SWR. Our December spending came in at £2,316. That makes a 6th consecutive month since I have been tracking it, where our monthly expenses are more than covered by the income that our investments would provide using a 4% standard withdrawal rate. This gives us confidence that reducing our salaried income is sustainable.

Due to coronavirus restrictions in the UK, December was a fairly uneventful month. For the first time, Mr W and I had a quiet Christmas at home, just the two of us and the dog. It was actually a nice change to avoid the normal trekking round the country for various family gatherings in favour of video calls, and 10 days off work has provided a well needed reset. It has also provided time to reflect on 2020 and how our spending compares with 2019.

As I wrote earlier in the year (the difference a pandemic makes), other than our ability to see friends, family and colleagues anywhere other than on a screen for most of last year, the coronavirus pandemic didn’t have too much on an impact on how we lived our lives, other than restricting travel (and DIY during the first lockdown when we couldn’t get materials!). This seems to be borne out in our spending for 2020 being very similar to 2019, despite all the restrictions.

Vehicles & fuel1,80310,193*
Groceries & Household3,5244,917
Home & Garden9,923**976
Other / Misc6601,210
Individual allowances***7,2007,200
Breakdown of spending 2019 vs. 2020. Note: there is no mortgage or rent shown, as we paid off the mortgage in 2018 🙂

*We bought the van in January 2020 and expect to keep it for 5-10 years. The cost was partially offset by the proceeds of selling the MX-5 in August. In 2019, commuting related fuel costs came out of individual allowances

**We completed home improvements costing nearly £8k in 2019, which will pay for themselves when we sell, and which have definitely improved our quality of life having spent so much more time at home this year!

***It is important to us that we each have our money each month so spend as we choose. This £300 each per month has been especially important this year as Mr.W has been focussing on re-training and starting his own business. This allowance covers clothes, technology, hobbies, haircuts (remember them?) and other misc expenses. The reality is that on average this year I spent closer to £200 a month, so some of this has built up in savings.

Surprise, surprise, we spent less on travel in 2020 than 2019. We were incredibly lucky to have booked a cottage for the first two weeks that self-catering accommodation was allowed to re-open in Wales in July. When we booked at the end of 2019, it felt very extravagant, and was certainly more than we would normally spend for the 2 of us, but it was in such a beautiful location with stunning views we decided to go for it. As it turned out to be our only holiday except for a camping weekend in Sept, we were very glad we did!

Also unsurprisingly, our grocery spend was up, but entertainment was down. We did subscribe to a wine delivery club which has made our weekly bottle of wine more interesting. A case of 12 every 12 weeks works well for us, but it is definitely not an essential. What was more surprising was a big increase in spending on presents. I think there are several reasons for this. We have always bought presents for each other and our own families out of individual allowances, with only presents for nieces and nephews coming out of the joint account. In 2020 we had an extra niece added to the family, but we also bought additional ad hoc presents for people we were unable to see through the year, and more of this came out of the joint account as we would do the same for both sides of the family. I had a nice cake delivered to my mum on Mothers day for example, whereas normally I would have baked one and visited. We sent Easter eggs to relatives we were unable to see, not to mention the postage costs for Christmas presents we would not normally have had to post. This was all money well spend to cheer people up and show we were thinking of them when we were only able to see them via WhatsApp or Duo.

Overall, the similarity in spend between 2019 (when there were no restrictions) and 2020, tells me that our spending is fairly well optimised. There is definitely room for reduction, but that would mean starting to deprive ourselves of things we enjoy, so we would only do that if circumstances required it.

On the whole, I am pretty happy with how 2020 panned out financially, lets see what 2021 has in store……..

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