September 2021 Savings ReportBy Money Mage · · Frugality, Savings
Welcome to our Q3 2021 Savings Report.
This month marks two years of straight saving reports. You find find the first being September 2019. But in more important news, this coming month marks the other-MM’s and I’s 20th anniversary together. We’re having a wee trip away, and have booked a plush suite in a posh hotel.
Thank you for staying with us over the years. It means a lot.
How you are doing? I hope you are keeping well and your personal finances are heading in the right direction.
Ours are. Year over Year is looking very healthy, and over two years we’re nearly double our net worth.
But there are stormclouds on the horizon with the wider economy. With inflation looking like it’s going to run away, what are you planning?
Anyway, let’s see how the Money Mage household Saving and Investment performance was Q3 2021 (July 2021 through September 2021). You can get all Savings Reports at the best of Money Mage.
July - September 2021 Savings Rates
- SR = Savings Rate
- SRp = Savings Rate inc. Pension
Yet another quarter of consistenct >80% savings rate.
I said things were getting a little stale didn’t I? We’ve been hitting ~80% savings rate for a while now. Stale and boring, slow and steady is exactly what you need. 80% invested month after month means compounds wealth in a few short years.
But there are stormclouds on the horizon. Inflationary pressure on some goods and services is a worrying sign. The Gas Panic! and fuel shortages in the UK is telling.
I’ll show my age a little here but this isn’t the first petrol shortage we’ve lived through in the UK and it won’t be the last. I took my driving test at the height of the 2000 petrol shortage, which made it easy to pass as there was little traffic on the roads.
I barely use the car anyway. The other-MM can’t drive. I work from home now. It’s probably at around 3K miles this year. It’ll likely get replaced with a EV once it’s beyond economical repair.
Comodity prices and inflationary pressure lead me to believe we’re in for a bumpy 2022.
Coal prices are at all time highs. Aluminium is back to 2008 crisis levels. All signs point to inflationary squeeze. With equities dipping, cash savings a joke, we’re staring down some real term erosion of wealth.
Making me think it’s time to get into some debt again.
Towards Financial Independence
In November 2020 we hit our FIh number - which means we are Financially Independent if you include our primary residence.
This table shows the number of years to achieve Financial Independence in various cases.
- FIh = Years to FI based on Total Assets.
- FIp = Years to FI excluding the house, but including illiquid pensions.
- FI = Years to FI excluding the house and other illiquid assets.
Equity locked up in our primary residence means we are not truly Financially Independent. We’re working on our FIp number - Financially Independnt excluding our house.
We’re doing this by working heavily on our liquid investments.
We’re in an extremely fortunate position. Being mortgage free, living a modest lifestlye means we have low outgoings. This means we can make significant contributions to our S&S ISA, general investing accounts, and cash savings.
To put this into perspective: if we stopped work now we have a runway of 12 years of liquid assets at our current rate of spend. We’re 20 years from my retirement drawdown age - so need to just about double our liquid assets over the next few years.
Next year looks to be on track to be the year our liquid assets pass our house equity. But the best laid plans…
Everything is pointing to us achieving full FI in our early 40s:
- Our FIp (our FI number excluding our property) (~3 years)
- Monte-carlo simulations of our finances (~4 years)
- My poor-mans predictions in our monthly finance tracking sheet. (~3 years)
All three point to us achieving FI in the next ~3 to ~5 years.
July to September 2021
I’ve worked in software throughout my career. My first paid programming job I took whilst at sixth form aged 16. The other-MM has held down the same job for 17 years, working in a key-worker industry. He’s worked throughout the pandemic in a customer-facing office role. I don’t know how he does it.
We’ve both been fortunate with our work. Despite health scares (the other-MM more than I if I am honest) and working for some terrible companies. Life is working out just fine.
Some times I think “should I get out of the rat race sooner?
I’ve tried to start my own business a couple of times. I’ve seriously put in the hours both employed and self-employed. One business idea nearly worked, too. I’ve arrived at one simple conclusion: Working for yourself isn’t easy. It’s hard. Harder than employment, in my view. You might not have a “boss” but you are not “free”. You definitely won’t work less, at least in the early days. You still have customers to deal with. The taxman to deal with. You might end up with invetors and be in a more challenging position than having a “boss”.
I’d rather get to a point where I can retire, quit the “rat race”, and then have the option of doing some other work. Maybe contract part time. Maybe start to experiment with business ideas. Without worrying about consequence.
We’re fortunate. By intentionally living in a low cost of living city, being mortgage free, and intentionally chosing to dual income, no dependents we have very low outgoings.
In other non-finance news:
It’s the other-MM’s and I 20th “anniversary” this month. We’re going away on a wee 5 day city-break. Splashing the cash (and why not) on a suite in a posh hotel. We’ll do the toursit thing and kick back. Looking forward to it. We’re not married so it’s not strictly an “annivesary” but we track years together. Can’t belive it’s 20 years already.
I got away to see the family in August for the first time before the pandemic. It was lovely seeing everyone. I’m planning on going down again end November.
The other-MM and I had a wee holiday in July in a cottage right on the beach up north in Scotland. We do this as one of our usual “cost effective” get aways. This year with everyone else doing it everywhere was booked. The place we ended up in wasn’t up to our usual standard. It was nice enough, but it definitely made us say to each other: “we should just spend more next time”. I’m not-so-secretly hoping everyone gets back on Ryanair and heads off to Alicante next year.
Year over Year
Year on Year is up a very healthy 45%. I feel it is somewhat artificial though, given our equity asset holdings have increased significantly, during one of the biggest drops and rallies on the market, and we’re currently at all-time equity highs.
Since we started these savings reports 2 years ago, we’re up a very healthy 84%
Here you can see asset allocations this month compared to September 2020.
The rebalancing of our assets out of cash into investments is continuing apace.
Cash is up 9%, and it’ll increase a little next quarter too to rebalance back to a 10%.
Almost all of our investments are held in low cost globally diversified passive funds. We have a balance of bond to equity that suits our risk profile.
This chart shows our net worth growth since the other-MM started work and I graduated.
We’re mortgage free and on the path to take Early Retirement in our early to mid 40s. If we want to. Subscribe now and follow me on Twitter @moneymagery. I hope you like the charts, I am a fan of Tufte*.
How is your journey to FI going?