December 2016 Dividend Income And Expenses


December has a reputation for being an expensive month, and around our house that definitely holds true.  There was budget Christmas gifts to gather, additional travel costs (to visit the Grandparents), and even some New Years celebrations.

That all adds up to a very expensive month … except we didn’t exactly break the bank.  Yes, this is the post where I discuss our dividends and expenses for the month of December.

And yes, it’s all real.  I copy the numbers straight out of our bank account statements and paste them right into my spreadsheets.  None of this is made-up or fudged for the internet.

As really real as Mr. Tako can really make it.

 

Expenses For December

Expenses for December totaled $5448.19.  Like I said earlier, it was an expensive month.  But, if you check out the table below you might notice something missing.  Can you figure it out?

December expenses

Missing from table is Christmas gifts, and we didn’t hide them in the “Other” category!

While many parents shower their little princes and princesses with expensive presents, we’re big believers in keeping our holiday spending minimal.  We’ve been collecting frugal Christmas gifts since the beginning of 2016.  Other than a few stocking stuffers from Daiso (which fell under the Food category), all of our gifts for the kids were either free, purchased from thrift stores, or homemade.

Tinkertoys
When asked what his favorite part of Christmas was, Tako Jr. answered “The tinker-toys!”.  Those tinker-toys happened to be Grandpa Tako’s from the 1950’s.  Who needs “new” toys?

Utility costs were significantly higher in December…mostly because it’s cold.

When the winter months hit, we fire up the furnace to 69F and we use the dryer instead of line-drying clothes.  We’ve tried drying clothes indoors during the winter, but it doesn’t work.  Our clothes end-up smelling moldy if we don’t use the dryer.

Sorry all you frugal-laundry Natzi’s, there’s just too much humidity and not enough heat in the Pacific Northwest.  

The “Other” category in December was actually take-out from a Chinese place.  We purchased this as a holiday “thank you” for friends.  Yes, we purchased food from a restaurant…  Try not to fall out of your chair.

Before you get on my case about spending $64 at a Chinese place, please remember:  This fed 7 people.  We also live in a very expensive area, with high sales taxes (10%-ish).  Eating out is a very expensive proposition. (Even at Chinese places)

Like other months, daycare was our biggest “optional” expense.  I consider it optional because we could have the kids stay home with me everyday and save ourselves that two thousand dollars.  Unfortunately, I would probably also lose my sanity…which is likely to be worth more than two thousand dollars (in the long run).

Anyone who thinks taking care of two rambunctious young boys is easy, really needs to meet my kids.

Without daycare, our “core” expenses were only $3,313.19 (and does include our mortgage).

 

Annual Expenses for 2016

I think it’s only fitting that we also review the entire year’s expenses.  Here’s the monthly breakdown for 2016:

2016 Expenses

Total expenses were $54,936.86 for the year, which could be considered high by some standards.  

When you think about it, that level of spending closely matches what the U.S Bureau of Labor Statistics says is the average expenditure per consumer unit  — $55,978.

I think we did a pretty good keeping our spending under control in 2016.  If you subtract out daycare costs ($2135 after September) and our mortgage ($2270), we only spent about $1200 per month.  This includes our wonderful vacation to Hawaii (part 1, part 2, and part 3), as well as numerous family road trips.

Hawaii Beach 3
Our “controllable” spending only amounted to $1200 and yet we still managed to take an incredible Hawaiian vacation in 2016.

 

Dividends For December

OK, now for my favorite part of the post — Dividends!  Where the actual dollars come in!

As expected, dividends in our taxable accounts were substantial in December, at $8,288.35.

December 2016 Dividends

This went a long ways toward making-up for the pitiful dividends in November.  They more than covered our December expenses.  It was our biggest month yet (for dividend income).  Wahooo!

So how much did we collect for all of 2016?  Slightly under what I projected at the beginning of the year — $47,428

2016 dividends

I originally predicted we’d collect about $48k in 2016.  We fell a little short.

To be clear: I don’t try to optimize my portfolio for the highest dividend yield.  On the contrary, I believe that optimizing for high dividend yield can result in lower long-term dividend growth.  What I’m attempting to do is match our 3% withdrawal rate with income from dividends.  This means no frictional costs from selling stock (or mutual funds) to fund our lifestyle, and very little portfolio turnover.  It also reduces sequence of returns risk.

If we pull this off, dividend yields from our assets are supposed to average out to 3% for the year.

Remember: This is only dividends from our taxable portfolio…we aren’t touching our tax-advantage accounts right now.  For all you peeps handy with a calculator, that must mean we have at least $1.6m in taxable accounts.  More on this in our upcoming “Net Worth” post.

 

Portfolio Changes in December

In December, we made no portfolio changes.  Honestly, who has time to monkey around with a portfolio in December?  Family, the holiday’s, and this blog sucked up 95% of my time.

After the election in November, I just kind of “let things ride”.  Thankfully, most of our portfolio responded in a positive manner.  In 2016 we made some big bets in the chemicals and energy industry; those investments responded positively to the election.  

It’s a whole new ball game out there folks, and I’m still learning the rules.  Anyone who thinks they know how to win the investing game in 2017 is probably fooling themselves.

 

Income Vs. Expenses

Things didn’t exactly go according to plan in 2016.  Expenses ended higher than I projected, and dividend income ended slightly lower than projected.  The net deficit between the two was: -7,508.52.

That’s a tiny portion of our overall net worth, but I still give myself a poor grade for annual planning.  I’ll try to improve for 2017.

The difference happened because of two major decisions:

  1. We couldn’t invest excess cash fast enough in 2016.  I don’t believe in putting money to work in bad investments.  If I can’t find a good investment with business like returns, I won’t invest.  That turned out to be the case for much of 2016.  We have roughly 15% of our taxable portfolios sitting in cash right now.
  2. Daycare costs were higher than projected in 2016.  Back at the beginning of the year, I planned to take care of our youngest son full time.  Normally childcare centers have waiting lists for new kids, and that was exactly the case for our fancy “language immersion” daycare.  In September there was an opening.  Mrs. Tako and I talked, and it seemed like the right long-term decision.  Despite the short-term economic challenge (daycare costs doubled), we decided to take the open spot.

Could we have avoided these high costs and lower income by making different decisions?  Absolutely.  But we might have sacrificed long-term success for short-term financial gains to “make” our numbers.

Sometimes the best long-term decisions aren’t ones made for financial reasons.  Quite the opposite in fact… Which is exactly why I don’t work a regular 9 to 5 job anymore.

Next Time:  We’ll take look at how our net worth grew in 2016!

 

[Image Credit: Flickr]

28 thoughts on “December 2016 Dividend Income And Expenses

  • January 7, 2017 at 12:48 AM
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    Hey Mr Tako,
    Considering the daycare cost will disappear in the coming years, you should be fine living of the dividends. Any net worth increase would just be a nice bonus. Think you did rather good for 2016. Good luck this year.

    Reply
    • January 7, 2017 at 11:14 AM
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      Thanks. I feel pretty good about it too. If you include capital appreciation, I made more NOT working this year than I ever did working.

      Reply
  • January 7, 2017 at 3:30 AM
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    I’m excited to see the net worth post! Working on mine right now too!

    I also had a “vintage” set of tinkertoys when I was a kid, and they were awesome. I’m betting they’re still in my parents’ basement and will probably be there for when the next generation comes along.

    Reply
  • January 7, 2017 at 5:31 AM
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    With only a 7k reduction from dividends I suspect your networth grew. It would appear your in good shape, though the true test would be the next recession. Are u finding the care worth it from a learning perspective? I imagine there are cheaper options then immersion.

    Reply
    • January 7, 2017 at 11:11 AM
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      Yeah, our net worth grew a lot. That post is coming next.

      Actually, the immersion daycare costs *less* than respective english speaking daycares and I believe the care is better.

      Go figure. I don’t understand why they aren’t more popular.

      Reply
  • January 7, 2017 at 8:00 AM
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    I really, really love your Christmas gift approach. Most people do a mad sprint for gifts November – December and their budgets reflect the last-minute planning. Kids go through so many toys to begin with that it’s so expensive to keep up with the latest and greatest–and like with your son and his tinker toys, the simplest toys will still keep kiddos entertained. Hell, I gave our nephew a spatula to play with and it was like handing him a brand new Paw Patrol action figure set. But it didn’t cost $25. 😉

    Sorry to hear you didn’t meet a few of your goals in 2016. It’s all about moving forward though, right? 🙂

    Reply
    • January 7, 2017 at 11:16 AM
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      Yep! I’m not really worried about it. Factoring in the capital appreciation, that $7k is small potatoes!

      But I prefer to be completely honest with my readers, present the facts, and hold myself accountable for my mistakes.

      Reply
  • January 7, 2017 at 11:34 AM
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    Very solid dividend income vs expenses despite income not exceeding expenses. Love your Christmas gift idea. Daycare is expensive but the expense will disappear in a few years. That’s what I’m telling myself regarding Baby T1. 0’s preschool cost.

    Reply
    • January 8, 2017 at 1:37 AM
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      That’s what I keep telling myself too. One day it will disappear.

      Or, one day maybe Mrs. Tako will tire of working and we’ll just grab the kids and head off into the sunset. You never know. 🙂

      Reply
  • January 7, 2017 at 2:20 PM
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    Great spending in 2016! You set a great example of how one can live a pretty luxurious life with vacations to Hawaii for not much money – even if you have kids.

    Reply
    • January 8, 2017 at 1:34 AM
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      Thanks Mr. CK! You’re pretty awesome yourself!

      Reply
  • January 7, 2017 at 5:59 PM
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    The daycare costs are high…but they’re only temporary right? Once your kids are old enough for school, that cost should go away. Unless you’re sending them to private school.

    Appreciate the practical, non-extravagant Christmas presents for the kiddos! That’s good parenting 🙂

    And I completely feel you on the whole dividend thing. Every time we get dividends I do a happy dance!

    Reply
    • January 8, 2017 at 1:32 AM
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      Private school? Hell no! Definitely a temporary expense!

      Reply
  • January 8, 2017 at 6:53 AM
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    Nicely done master squid!

    I have room to cut as I eat out WAY too much in FIRE. It’s a social thing with Dad.

    Also, I am human or cephalopod.

    Reply
    • January 8, 2017 at 11:02 AM
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      That’s funny, I always figured Velociraptors were dinosaurs.

      Reply
  • January 9, 2017 at 2:04 AM
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    Those dividends are good, especially when it cross over our expenses. It’s a feel good factor 🙂

    Reply
  • January 9, 2017 at 6:49 AM
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    Very nice dividend income. That’s way more than what we have.
    I agree with your decision on daycare. Kids need some social time with other kids. It’s fun to be a SAHD, but all day every day was just too much for me. The kid drove me nuts. Preschool really helped and we got along much better overall.

    Reply
    • January 9, 2017 at 8:27 AM
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      Yeah, I can absolutely relate. All day every day is just too much. I don’t know how some SAH parents do it. I end up getting irritable and less patient than I should be if it’s all the time. Dad’s need a break sometimes too.

      Reply
  • January 9, 2017 at 7:34 AM
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    Great work, Mr. Tako! Tako sushi is my go-to order at sushi restaurants and is irresistible.

    With the mortgage and daycare costs going away in a few years, it looks like you’ll be able to escape soon!

    Looks like you did great for 2016! Here’s to a great 2017 as well!

    Reply
  • January 9, 2017 at 1:58 PM
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    What is your interest rate return? That’s an enviable return or a huge portfolio.

    Reply
  • January 10, 2017 at 10:53 AM
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    Awesome Job.
    I have never seen such a huge dividend income in one month!
    I love this blog and try to comment more often! 🙂

    Do you plan to buy some dividend stocks to increase your november income?

    I am allowed to write about your income in my income post – community edition?! I think my german readers will be interested in such a huge dividend income. I write this post every month.

    Cheers

    Reply
  • January 15, 2017 at 1:20 PM
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    It is nuts how much day care costs, isn’t it? That is not an expense I am looking forward to once we have kids. But I love how close your dividend income is to covering your annual expenses. Something all aspiring dividend investors and FIRE enthusiasts should be envious of haha I love how you said you couldn’t invest excess cash fast enough…that is an amazing problem to have.

    Can’t wait to see what you do in 2017!!

    Bert

    Reply
  • January 17, 2017 at 7:40 PM
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    Impressive numbers, and I’m glad to see that some people will always try to be better. If your predictions did not match up to life, time to adjust. I also love that they have vintage toys. New things just fill up a house.

    Reply
  • January 21, 2017 at 8:18 AM
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    Hi Mr Tako,
    What a month. Well done on the dividend income and especially on those Christmas gifts.
    Regards,
    DIB

    Reply
  • January 21, 2017 at 3:27 PM
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    Awesome numbers. I could live off the yearly dividends like that LOL. cant wait till that happens time in the market will be my advantage.
    Doug recently posted…O dividend raise

    Reply
  • January 22, 2017 at 6:03 PM
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    I just started my journey and love seeing from others that have been doing for a while that its indeed possible. Can’t wait to get there. One thing that strikes an eye is Child Care costs.

    Reply

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