Time to Reflect on 2022 and Look Forward to 2023
I started this blog as we began transitioning to FIRE around March 2021.
It’s now almost two months into 2023. Like last year, I wanted to reflect a bit about how it went and how it looks like for the coming year. I wish I could spend a lot of time on this one. There’s a lot to unpack from 2022 relating to our FIRE plans and spending. I could potentially spend weeks trying to write and refine it. Rather than doing this, I’m going to opt for just pushing this post out and incrementally updating it as time allows.
For 2022, the only thing I expected that actually went right was the following:
- We finally went on a vacation somewhere out of state. We had a really fun and really expensive trip to Disney World.
For 2022, there were plenty of places where my expectations were just wrong. Here are some of them:
- Mrs. FD’s work: I didn’t expect my contract work would be converted to full-time. I didn’t know that I’d be grinding my teeth again, gaining ~10lbs, and having trouble sleeping again. On the plus side, I didn’t expect to be reminded so much of how work can be gratifying and fulfilling. And, employer-sponsored benefits (like health/dental insurance, hsa, 401k, bonuses, paid vacation, etc.) are really nice.
- Mr. FD’s work: I initially thought that Mr. FD would start to cut back on work even more in 2022, and we’d be even closer to fully retiring. Instead, he pretty much stayed the course. He’s kept on roughly the same number of hours per week as when he first went freelance.
- Spending: I initially thought we’d spend roughly $73k in total for the year. I actually thought we’d spend less. I didn’t think we’d spend close to $86k.
- We’re not FI: I thought we were financially independent. Instead, we inflated our lifestyle in 2022 in a way that we actually liked and appreciated. Our family had some positive experiences as a direct result of spending more. Looking back now, Mr. FD and I like the experiences we bought, and we believe 2022 might be closer to our desired lifestyle than 2021. (Granted, there is room to improve how we spend. The point is that we realized we want to spend more in retirement. It’s good that we realized this before fully pulling the trigger.) I didn’t expect we’d drop in net worth as much as we did. Given that we expect to spend more in retirement and now have less assets to work with, we’re not fully FI.
- Retire Early: I didn’t expect to be losing this much sleep about keeping my job. I thought we’d be done by now, but we’re further away than I thought. We’ll have to work more and put off full retirement to save more. It’s a trade-off. At the start of 2022, I thought we were just sticking to the plan of transitioning to FIRE. By the end of 2022, our plan is less clear.
- Grad school: I didn’t expect that I’d be considering dropping out of the program.
- War: I didn’t expect Russia to invade Ukraine.
- Tech Layoffs: I didn’t expect the job market in tech to have changed as much as it did. At the start of 2022, salaries were high, and terms like the “Great Resignation” and “quiet quitting” were news headliners. It was a good time to be looking for a job. By the end of the year, it was completely different. Many high profile companies were announcing mass layoffs, headed by the likes of Meta and Amazon. It even seems like the layoffs are accelerating through the start of 2023.
- Dental: I had expected to just resume regular cleanings and maybe fill a cavity or two. Instead, I got a crown and a root canal. I needed 3 cavities filled. I haven’t had that many since before high school. I didn’t expect that I’d visit the dentist so many times and have so much work done. Again, thank goodness for employer-sponsored insurance. Even with it, I spent close to ~1.5k on dental work in 2022. Mr. FD did much better, with no cavities and no dental work besides the regular cleanings and x-rays.
- Health: I didn’t expect that Mr. FD’s preventative procedures would cost close to $4k this year.
Annual and Monthly Stats for 2022
Here are some numbers from 2022:
|Average Monthly Spending||$7,151|
|Total Hobby Site Income||$5,512|
|Averagely Monthly Hobby Income||$459|
|Total Rental Income||$16,527|
|Average Monthly Rental Income||$1,377|
|Total Savings (Including Retirement)||$135,969|
|Average Monthly Savings||$11,331|
|Total Increase in Net Worth||-$46,638|
|Average Monthly NW Increase||-$3,886|
We ended up spending over $85k in 2022, or over $7k per month.
Once we do finally retire, we expect to keep our rental and hobby income. In 2022, if we were to offset our Total Spending ($85,816) with that of rental and hobby income ($5,512 + $16,527), we’d only have used up about $64k of our nest egg. Divide that by 12, and we’d have used up ~$5,300 per month on average.
Because Mr. FireDesired and I worked all year, we were able to save over $135k.
Finally, our Total Net Worth decreased by about $47k in 2022, which comes out to about -$3,886k per month. It’s tough to swallow that we saved $11k per month and still our net worth went down by $47k. But, it is what it is.
Expected vs Actual Spending vs Projected for 2022
Here’s a table of our expected spending compared to our actual spending in 2022. It also has our projected spending for 2023.
|MONTHLY||2022 Expected||2022 Actual||2023 Projected|
|Primary Residence – Property Tax + Assoc. Fees + Repairs||$1,100||$1,042||$1,100|
|Rental – Property Tax+Assoc. Fees + Repairs||$850||$1,041||$1,100|
|Cell Phone X 3||$60||$38||$85|
|Gas + Electric||$130||$124||$130|
|Car Gas + Maintenance + Tolls + Parking||$200||$449||$450|
|Health + Dental + Vision||$1,000||$574||$600|
|Everything Else (aka “Buffer”)||$686||$1,570||$1,200|
[I plan to update this section as I think of more things to write. Then again, it might not happen. We’ll see.]
- Internet: We expect 2023 expenses to stay the same compared to 2022: ~$40/month.
- Health/Dental/Vision: The health insurance and dental expenses were less than expected because we had employer-sponsored insurance for the entire year. Had we switched to the NJ Marketplace health insurance, we would have likely have had to spend over $1k per month for the premiums alone. The actual visits and procedures for 2022 amounted to less than that, so that’s a win for us. Going into 2023, we’ll expect to spend ~$600/month. It’s really hard to know what to expect here.
- Cell phone: We’ll look to consolidate our phone plans under one family plan in 2023. As of now, GoogleFi has a plan that’s roughly $25 per phone per month if we have at least 3 phones on the family plan. This would be for unlimited text/calls along with 5GB data per phone per month. I realize there are better plans out there, but we currently live in an area that can occasionally have spotty cell service. Having something like GoogleFi would give us better reliability for our cell phones, even if the trade off is higher cost. Once we’re all under the same plan, we’ll expect to pay $25/phone plus tax, which willy probably cost about $85/month.
- Food: For groceries + household expenses in 2022, we spent ~$100 more than expected. So, we’ll expect to spend about the same for 2023. For eating out, I think that we’ll keep with what we spent in 2022 as well and expect $725 per month for 2023. Food is something I stress about, so we’ll make this easy and give ourselves space here.
- For the following, we’ll expect to spend a little more in 2023 than what we spent in previous years.
- Property Expenses (property tax, association fees, repairs)
- Gas, Electric, Water, Sewer
- Car insurance
- All other insurance (life/home/umbrella)
- The Misc Buffer needs more thought; I don’t think I’ll be able to estimate this well. For now, I’ll say that I don’t think we’ll need the $4k Disney downpayment in 2023. I also don’t think the $2k technology refresh will happen either. If we calculate our spending for 2023 without those two big ticket items, our spending for the miscellaneous buffer will come around $1066/month. We’ll still want to go on some sort of trip in the summer, so I’ll bump that up to $1200/month.
On the whole, I expect we’ll spend about $7,100k per month in 2023, or close to $85k for the entire year.
So, there you have it. This is what our year looked like financially in 2022. I’m really looking forward to what this year brings us. I hope 2023 is a good one for us and you too!