2022 was a big year for us! We took some HUGE steps to continue designing our ideal life long before we reach FI.
In 2018, we articulated our “why for FI” as location independence. We wanted to take off and have many adventures traveling the world. And, we wanted to do this without needing to ask for permission to take limited time off. We also wanted to have the time wealth to focus on our health, hobbies, and relationships.
This year, we took many more steps to make this vision a reality.
In January, we went and picked up our brand-new 2021 Mercedes Sprinter Van from the dealership. A few weeks later, we dropped it off at our van-builders workshop.
The process of converting a cargo van into a comfortable tiny home on wheels took about four months.
In June, we picked up our completed campervan. The following week, we took a week-long trip up to Vermont and absolutely LOVED it! Later in the summer, we also took a 3-week trip to visit New Brunswick, Prince Edward Island, and Nova Scotia. We loved this longer format and can’t wait to hit the road for 3 months in March of 2023!
We also did a bunch of weekend trips, including Cape Cod, Rhode Island, a local campground just outside Boston, and Acadia National Park in Maine.
Early this year, we were also starting to plan for a big 2-3 month road trip in 2023. We were originally planning for Corey to take a sabbatical from work (and then go back to work afterward).
But, as the year progressed, things at work got more stressful. Corey started to experience burnout. In November, he decided to give his notice and quit his job. This was a huge decision because he’d been there for over 10 years. He’ll be wrapping up his work with them in February, and we’ll be hitting the road in our campervan in March.
Because he quit, this means that we don’t have a hard end date for our trip. Plus, we’re also planning to do another 2-month road trip in the fall (for the Slow FI Retreat in Colorado and FinCon in New Orleans).
Over the course of the year, I continued to spend about 25 hours/week working on the Fioneers, coaching programs, and planning the Slow FI retreat! I continue to love my work (and the amount of time I spend doing it). And, I’m excited to have more back-end support next year from Corey!
2022 Financial Update
As you might expect, all of these changes have had an impact on our finances in different ways. To be clear, we are okay with that. We are designing lives we don’t want to retire from. If we are living a joyful and fulfilling life right now, what’s the rush?
We simply want to make sure that we aren’t jeopardizing our long-term retirement plans.
So, let’s talk about how these changes have impacted our finances!
Corey gave his notice that he’s quitting his job, but he is still working through February of next year. So, we haven’t seen a significant change in our income yet.
In fact, in 2022, we actually increased our income by 6% from 2021. In 2022, Corey received a 4% increase in salary, so a portion of this increase comes from that. On the other side, our business income increased by 8% this year!
I’m proud of seeing an 8% increase in our net income from the business. I’m even prouder knowing that I did this while sticking to my goal of working no more than 25 hours per week. This allowed me to focus on so many other important things in my life as well, namely my health.
If we count ALL of our expenses from the year (including the camper van conversion costs), we spend 2.5% less than we did in 2021.
An important note is that the van accounted for 46% of our total expenses this year. Wow! This was a huge one-time purchase (~$150,000 spread over 2 years). Luckily, we won’t see these same costs in the future.
But, if we only look at our regular expenses (everything except the van), we spend 3.3% less than we did last year. In a time of rapid inflation, this is particularly surprising.
So, I decided to dig in and see where we’d spent more (and less) than in 2021.
Here are the areas where our spending remained about the same:
- Mortgage: We feel very fortunate to have bought a condo back in 2014 (and refinanced it a couple of years ago when rates were very low). Because of this, our housing costs have remained static for a few years.
- Utilities: I am surprised that this didn’t increase, especially given the fact that I’ve been baking all of my own bread this year. We’ve been more intentional about turning off lights and electronics when we aren’t using them and spent more time traveling this year, so it may have balanced out.
- Personal Care
- General Merchandise: Even with Corey experiencing burnout at work, we haven’t bought more random crap than in previous years (which is what we’ve seen in the past when one of us is burned out).
Here are the areas where we spent more than in 2021:
- Insurance: +$3,500. This increase was for the vehicle/RV insurance for our camper van. This will now be a regular expense that we need to incorporate into our budget.
- Healthcare/Medical: +$3,000. I had foot surgery in March and then did a ton of physical therapy. While I had met my deductible for the year, I still had to pay copays, and there were certain things not covered by insurance.
- Gas/Fuel: +$1,000. I attribute this increase to inflation and the fact that we took road trips in our campervan (which is less fuel efficient than our car).
- Pet Care: +$1,000. Our dog is getting older and now needs to go to the vet more often.
- Groceries: +$750. We didn’t change our buying habits, so I attribute this increase to inflation.
Here are the areas where we spent less than in 2022:
- Clothing/Shoes: -$3,000. We simply didn’t buy as many clothes this year. Plus, we didn’t have any weddings or other special events and didn’t need to buy special clothing.
- Restaurants: -$2,800. This was surprising to me. I still felt like we ordered take-out more often than I’d like, but we did it a lot less than in 2021. Unlike in 2021, we also didn’t go to Napa and buy a bunch of fancy wine, which fell into this category last year.
- Legal: -$1,800. We worked with a lawyer to create a will and trust in 2021, but we didn’t have any legal costs in 2022.
- Hobbies: -$1,200 less. I honestly don’t know how we spend so much less this year, but we have fairly inexpensive hobbies (disc golf, sourdough, homemade pizza, and board games), so this could be why.
- Home Maintenance: -$1,000. We didn’t have any large home projects or issues to take care of this year.
- Travel: -$700. Honestly, I was surprised that this was only $700 less because we traveled mostly in our van. But, we did travel a lot more this year than we did in the previous years and still spent less. So, I’ll call that a win!
Savings Rate is the % of your income (after taxes) that goes toward savings and investing. For many years, we’d been focused on increasing our savings rate, and we topped out by saving 63% of our income in 2020.
But over the last two years, we’ve dramatically (and intentionally) decreased our savings rate. Because of the van build, our expenses increased significantly, which left less money for savings and investments.
In 2021, we saved about 21% of our income. In 2022, because we spent slightly less (and made slightly more income), we increased our savings rate to 25%.
Given that we were expecting to save closer to 20%, I feel really good about this!
When you are in the accumulation phase (as we were until 2020), your savings rate is one of the most important metrics that you can track. A higher savings rate will allow you to build financial freedom, reach Coast FI, and build up your emergency savings and F-You Fund.
Now that we have solid emergency savings and have reached Coast FI, we feel very comfortable reducing our savings rate. Even if we never saved another dollar, our retirement accounts would “coast” to our full FI number by the time we reached 55.
In the next couple of years, we are expecting our savings rate to decrease even more. While we won’t have camper van build expenses, we will reduce our income by more than 50% when Corey quits his job.
Since Corey will be taking a sabbatical next year, it’s also possible that we could have a negative savings rate for 2023. By a negative savings rate, I don’t mean that we’d go into debt, but we may use some of our F-You fund to cover our expenses. We will see!
Net Worth Change:
This is the first year since starting these end-of-year financial reviews (in 2018) that this section is called “Net Worth Change” rather than “Net Worth Increase.”
In 2022, our net worth actually decreased by 1.2%. Given that the S&P500 is down by about 18% for the year (at the time I’m writing this), seeing a decrease of only 1.2% isn’t too shabby!
We continued to save and invest 25% of our income this year, which helped to dampen the effects of the stock market downturn on our overall net worth.
Invested Assets as a % of our FI Target:
At the end of 2021, we were 42% of the way to FI. At the end of 2022, we are now only 36% of the way to FI.
Not only did the stock market go down this year, but we also invested less. We put a significant amount of money toward our van build this year. Plus, when we realized that Corey might want to quit, we decided to funnel more of our savings into our F-You Money Fund (which lives in a high-yield savings account).
I’m not terribly concerned about this. I still have confidence that the market will continue to go up in the long term. I’ll share more about the emotional ramifications below when we talk about the changes to our FI timeline.
Timeline to Reach Full Financial Independence
If we were to keep our income and expenses (not including the one-time van-build costs) the same, we would reach full Financial Independence in 7-8 years. This would allow us to reach full FI by the age of 42 or 43.
At the end of 2021, our timeline to reach full FI was 6-7.5 years (or by the age of 40-41).
In just ONE year, our timeline has increased by TWO years. ?
When we made the decision to buy the campervan, we knew that this one purchase would increase our FI timeline by about one year. The market downturn has added another year to our FI timeline.
I feel very happy that we aren’t putting all of our eggs in the “early retirement basket”. If I were still working full-time in a toxic job and trying to get to FI as quickly as possible, I would be devastated. An increase to our FI timeline would feel like a huge setback.
But, we aren’t aiming for early retirement. We’re focused on using our financial freedom to design a life we don’t want to retire from. Since we are building our ideal life now, an increase in our FI timeline feels a lot less disappointing.
In fact, we are actually planning to decrease our savings rate even more in 2023 and beyond. In 2023, we’ll see a significant decrease in income (since Corey is quitting his job) and expenses (because the van build is complete). Our guess is that this will even out to somewhere between 0-20% savings.
We’d love to save 20% each year moving forward. If we do, we’d reach full FI in 15-17 years at the age of 50-52. To be honest, that sounds pretty awesome to us, especially since we’ll be doing (just enough) work we love to support the adventurous life we want.
I’m interested to see how the next few years unfold.
What we Learned in 2022
We learned a lot in 2023. Here are just a few things we learned:
- We continued to get more comfortable spending money on things that make our lives better. The biggest example of this is our campervan. Smaller examples include things like buying a laptop stand for my desk set-up and recently I ordered TWO oven mitts after burning my finger while baking bread.
- We worked through our fears of scarcity through Corey’s decision to quit his job. Because of his income, we were still financially comfortable despite all of the changes we’d made. This feels like a much bigger step, and we’ll need to pay attention to our mindset in 2023 to make sure we don’t fall back into a scarcity mindset.
- I also prioritized my health this year. In fact, becoming pain-free was my #1 goal. I articulated that it was more important than anything else, and I stuck to it. My physical health will continue to be my biggest priority in 2023.
- We’re learning about Vanlife! We built out and outfitted our campervan with everything that we’ll need to live out of it for months at a time. We took a bunch of trips to learn, experiment, and enjoy ourselves. I’m excited to see what we learn next spring when we are on the road for 3 months.
What did you learn in 2022? What are your goals for 2023?