Savings Report #93 - Cost of Living

A huge drop this month, pushing our portfolio back to the level it was at the beginning of the year. Trumps hokey pokey into Iran is causing turmoil everywhere. When will everything go back to being boring? Maybe it never was.

We continue to track our expenses every month and are shocked by the amount we spend on food. This is coming to around £500 per month which seems crazy to me. Before we left the UK - 6 years ago now - we averaged £150 a month, it was low even for back then as we always cook everything from scratch, but our habits haven’t changed and it’s gone up by a lot. We’re still trying to identify what it is, or if it’s just inflation.

Right now, we’ve averaged £2100 on essential expenses each month, £2200 when counting trips as we’ve just booked 6 nights in Scotland. I’m hoping that this year will give us a good insight into our true baseline expenses so we can be certain of how much we need to retire safely. It looks like we are financially independent in the traditional sense, but life is always more complicated, we don’t know how much we can spend on a house purchase, or if we’ll have more children.

It’s looking like to get the type of house we want with land, we’ll need to spend around £500k. I’m not sure if spending that much on a house will mean we’re financially independent anymore, a little extra buffer would definitely help, especially when considering the sequence of returns risk of being at a market all time high.

We’ll continue to track our expenses, invest, and look for our ideal living location / property, and then when the time comes to make a decision I’m hoping we have enough financial data and buffer to make a good call with how much to spend.

Investments

We invested another £40k into our ISA’s at the start of the tax year, we now have £120k in there. I’ve also sold VUAG and purchased EXUS. I wasn’t comfortable having £600k in a solely US tracker - VTI - I would prefer to be in a more balanced world-tracker, but to rebalance we would have had to pay a lot of capital gains tax when selling VTI as it’s held in a general investment account, so purchasing EXUS in the ISA means we came a bit closer to a 60% US 40% Ex-US world tracker which makes our pre-pension investments a bit more diversified.

I’ve also upped my salary sacrifice to the maximum and plan to contribute £100k this year into my SIPP using up the allowance from 2025. This should bring my salary below £100k, so I’ll benefit from saving 60% on tax by getting my personal allowance back. This may be the last year I contribute to my SIPP.

I really hope that the markets recover and we can see our pre-pension amount getting closer to £1m, I’ll feel a lot better about the prospect of retiring in our 30s if we can solely focus on our pre-pension investments.

Looking forward to start getting some sunnier days so we can experience the northern countryside a bit more!