Month-End: February 2021

Anyone know why February has only 28 days? I think it’s because we can’t wait for March to begin and who can blame us? On the bright side it’s getting brighter now and February has been a month of extremes not just financially but for the whole family!

God, I hate winter with the long nights and lack of sunlight. It is unbearable here up north of Hadrian’s Wall but at least now the days are getting longer. We can now take the kids to the playpark after we pick them up at 5pm. That’s made life notably better over the last few weeks. It has meant that we’ve not had time to cook dinner, so we’ve opted for takeaway a few times – maybe more expensive but time in the playpark makes it more than worth it.

Of course, the big thing in February was that we were snowed in for a week!!! It was amazing to take the kids to nursery on a sledge instead of bike and the local park was full of people sledging, building snowmen and even an igloo!

Fun in the snow! Our local igloo.

So, with all the depression of the lockdown and winter upon us, a thick blanket of snow and some longer days with the kids in nursery and we are all feeling a lot better! We got to the beach as well at the end of the month and I love the beach! I’m going to invest in some decent sand digging tools this year to make some marvelous castles. Here’s a quick picture of a castle with moat and canal just as the tide comes to devour it.

A Gentleman’s Holiday Home is his Sandcastle

We also have a new bike for the Master – with gears! – hes only 4 but this is a totally big boys bike and I’m proper jealous. When I was growing up my bikes were all deathtraps like the Raleigh Budgie (which hasn’t aged well) which only had a front break great for going over the handlebars) This is an Islabike and I think it’s great.

The Little Lady’s bike and the Master’s new bike

Unfortunately, Isla are not paying me to promote their wares so I won’t say anymore. Anyway, onto the monthly summary:

Work & Income

Work and income are seldom the same thing, or equivalent. The Lady is working away very happily and doing a good job in her new company. My own job has been busy but I’ve not been able to book that many hours. I’ve also been told that the project is on a “go slow” meaning not much work (if any) until April.

I could apply for another job within the company I’m contracting for at the moment or at another company and I’ve seen a few listed. I don’t know what to do but my future income stream from employment is uncertain right now even if this month was decent.

I’ve also decided to invest in my own education through EdX and I paid £35 (of my own money) to do a course relevant to my current role. Money well spent? Who knows… (the lady laughs and says “NO!!!” but I disagree, I live in a panglossian fantasy though.

Outgoings

Outgoings hovered around £4,000 for the month again with £1,700 of that being the nursery – man, that’s a lot of money! Household spending was around £900 as usual and other spending was about £1,400. I did get a refund on some fraudulent purchases that were made which was nice.

I expect that since there’s not much to spend money on, our family spending is pretty steady at this level. Once the Master goes to school (later this year) we’ll spend even less and I’d expect that once the kids are in school our monthly average spending will level off around £2,000 to £2,500 a month. Which is more or less covered by one salary or free cash flow from investments.

Dividends & Side Hustle

Dividends were around £1,000 this month. The side hustle did well with a profit of £2,000 and it’s still a secret.

Assets

Net worth was up +0.7% on the month. The markets were a bit up and down, I don’t really follow them and I’m pretty passive so it doesn’t bother me. FIRE Assets were up too, despite me paying off some stooze money which depresses how I calculate things but for 30 months I had free money so, it’s worth it.

Looking at the longer view, our net worth was up 18% year on year which is as good as it’s been for a couple of years now. Looking even longer term, I never had a negative annual increase in net worth since I started working 15 years ago. But, 2020 came close! Things are now on the up and it’s not through getting lucky on a crpyto gamble of speculation on tech stocks, rather through boring earn, save, invest as spelled out by others like RIT and the Escape Artist.

VCT Focus

A surprise performer over the last year has been my VCT portfolio. I wrote a series on VCTs which gets a decent number of readers but in Part 5 I mentioned how VCTs have performed over time and they take-away was that they’ve actually been quite stable and if anything boring.

However, from the trough last May, my portfolio has jumped by about £25,000 in value or about 30%. I’m happy with the performance which isn’t quite as stellar as Tesla but I’m ok with it and long may it continue. One thing to mention is that my VCT investments are only about 10% of my net worth, and dropping – so just one part of a larger portfolio. The question for 2021 is; “do I want to invest more into VCTs this/next tax year?” I’m not sure to be honest.

Ratios

Our personal withdrawal rate was 4.5% which is in line with what’s sustainable according to this Monevator article on deaccumulation – that’s average annual spending as a percentage of net worth. The nursery costs make up about 1.9%, so we’re sitting at about 2.5% without childcare. For FIRE Assets, we’re burning through our cash much faster as we’ve so much tied up in pensions. Still, our Pre-Pension Fund Personal Withdrawal Rate (PPFPWR) was 10.7% and 6.8% without childcare. Given that I’ve got 19 years until I can touch the pension according to this great article, we need more money, or start spending less. Then again, childcare costs won’t last forever.

Summary

Getting a bit philosophical here but when you look at how different things are (month on month changes for example) or discrete activities (itemised spending) you spot the differences, think more about how things are changing and are disconnected.

But the longer view shows that not much changes and the changes seem to be pretty constant. The post I wrote on Origin made me think that I’ve been in a long drawn out process of accumulating money and maybe now’s the time to think less about money. It’s part of a natural progression really, moving along a competency path from having the wrong intuitions & analysis (spending too much) toward the right analysis and now the right intuitions about money/spending and investments.

And that’s why I like the days getting longer and playing in the park with the kids – because that’s the sort of joy that makes life worth living. And if we end up spending a bit too much on takeaways then so be it, it’s not showing off, it’s not bad parenting it’s making time for what’s important.

Thanks GFF.

P.S. I’m producing a series on Financial Independence in literature. If anyone has any books that are worth reading, let me know. Thanks

9 Comments

  1. Child care costs can be a significant drain on the finances. What are your thoughts on the budget ? The freezing of the pension LTA and income tax thresholds are pretty painful to my household. Logically I should greatly reduce my pension savings, but then I’d be in the higher income tax bracket and potentially lose child benefit. It’s rather galling as we didn’t get any of the “free money” but hey we’re all in this together.

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    1. Budget seems to be an illusion of calm before the shitshow.
      Nothing too important imo. There’ll needs to be massive changes (like adding NI to pension oayments) but I don’t think that the government want to deal with today’s problems today.
      I am privileged of not being either a burden on the tax payer nor a significant tax payer myself. So whilst free money sounds nice I’ve taken the choice to not grumble or punch down on those highly valued members of the benefits class.

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  2. One of our school’s rugby matches was against a school whose pitch was by the river. When we were hanging on to a lead I told my fly-half to kick the ball into the river so that we had a handy breather while their rowing boat crew retrieved it. Maybe we used up some minutes too. And the opposition had a slippery ball to handle.

    That’s the sort of Budget it’s been.

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  3. I was really hoping for a lot of snow, considering that I usually dislike the stuff because I have to drive in it but with us being cooped up at home, I wanted nothing better than to build a snowman but alas, it wasn’t to be! Love that igloo you built!

    Liked by 1 person

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