May 2017 Dividend Income And Expenses


Ahh May!  May turned out to be a very fine month here in the Pacific Northwest.  The clouds finally started clearing!  Near the end of the month we saw blue skies and temperatures that even exceeded 75F (24C)!  Usually wonderful weather like this is strictly reserved for the summer months.

Subsequently, we spend most of our free time working out in the garden during the month of May.  May also saw a visit to the zoo and a family road trip to southern Washington.  It was some great family fun.

playing at the zoo
May included a trip to the Woodland Park Zoo, which the kids thoroughly enjoyed.  Expensive, but worth the $30 it cost us.

 

Expenses In May

Our expenses amounted to $5702.97 for the month of May.  By category, the expenses broke down like this:

may expenses 2017

Food

Food expenses were ever-so-slightly higher in May at $537.39.  Usually we spend around $500 per month.  I guess this slightly more expensive month makes-up for our cheaper than expected April.  We didn’t eat out in May, but we still had some very nice meals.

cheap meal
We continue to eat well on very little money.  Here’s a meal I whipped up for the kids in May that probably cost less than $1 — Gyoza w/BBQ’ed mesquite chicken with a side of buttered sweet corn and furikake rice.  The side dish is cold udon w/egg in tsuyu sauce.

Fuel

Fuel costs were slightly higher in May due to our family road, at $130.37.  Without the road trip, fuel expenses were probably close to our long term average of $100/month.

 

Mortgage and Childcare

Mortgage and Childcare expenses are always the big expenses for the month, consuming $4,340.25 of our expenses.  We consider these costs entirely optional because we could eliminate them at any time — I could have the kids home with me 100% of the time (I’d probably have no time to blog), and we could pay off the mortgage at any time.

Outside those two major expenses, our core expenses were $1,362.72, which is typical for our family of 4.

 

Internet

Internet expenses (which were supposed to rise this year) are still being discounted because of Comcast’s mistake.  For the month, internet costs were only $40.03 for 100Mbit service.  In June, this will jump to $49.99, and remain there for the next 12 months.

 

Utilities

 Utilities were slightly higher because of two power bills in the month of May.  It seems strange to get two bills in one month, but that’s just how the billing cycles landed.  Our last power bill was $102.17.  With summer fast approaching power bills typically fall under $100/month.  Most people don’t have air conditioning out here in Western Washington, so summer utility bills are usually very cheap.

Our highest utility bill is the water bill at $229.20.  We do a lot of laundry with two boys, but the actual cost of the water is only $45.  The rest is taxes, fees, minimum charges, and a water meter charge.  That’s big city living for you.

Do we really use over $229 of water in a month?  Nah!  Most of it is bullshit fees and taxes.

Other

The Other category contained some interesting expenses for May — We signed-up for another new credit card for our travel hacking experiment.

The $75 annual card fee is paid up-front, but in-return we receive 30,000 miles.  This is the second mileage card we’ve signed-up for in the last couple months, so we’re already $150 in.

Hopefully this experiment works out.  We plan on spending the points on a “awesome-yet-low-cost” vacation to Japan.  A single ticket to Japan typically costs around $800 to $1000, so we should be able to save some money by travel hacking a free ticket.

Both Mrs. Tako and I also had to pay our annual cellphone bill of $12 each (actually $10, but taxes were an additional $2).  I’ll never understand why people put up with ridiculously large mobile phone bills.  We’re on a bare bones prepaid plan, and simply use Wifi and Google Voice for most of our telecom needs.

Look at it this way — 98% of your life you’re absolutely bathed in free Wifi.  Is the other 2% really worth thousands of your dollars per year?

Who needs to pay for a data plan when 98% of your life has free Wifi available?  Anything I need to do in the other 2%, I can either plan ahead or do it later.

Cumulative Expenses

We’re now 6 months into the year 2017, and we’ve spent about $27,659.  Most of that goes to paying for our mortgage and daycare expenses for the kids.

may net expenses 2017

This pace is roughly six thousand dollars higher than last year at this time.  We’re now sending Tako Jr #2 to the same language immersive daycare as his brother (three day a week), which is the bulk of the added expense.  Last year at this time, he was still at home full-time with me.

It’s a personal choice to spend those extra dollars, but we think it’s worth it to have kids fluent in multiple languages.



Dividends In May

Dividends in May were a meager $554.64.  This was expected, as May is one of those “unexciting” dividend months.  The bulk of our dividends get paid out in March, June, September and December.  Those 4 months comprise roughly $32k of our annual dividend income.

Dividends for the year have averaged $3,323.70 per month, which is considerably higher than our core expenses.

may annual dividends 2017

If we meet our Dividend Growth Plan, annual dividends should reach $53k for the year.

I’m not excited about investing all our extra cash when the stock market is at these “all-time high” levels, so we might not reach our dividend goals for the year.  We’ll see how it goes.

I truly believe the dividend tail should not wag the investing dog.

Our long-term plan is to eventually sell our current home in this expensive city, and move to a lower cost city where annual expenses are lower.  We’re in the process of looking for that new home — and have several exploratory road trips planned for this summer.

 

The Sleep Report

Now it’s time for the sleep report — the part of my monthly update I really dread.   As I wrote about back in March, I’m an absolutely terrible sleeper.  I average somewhere around 4-6 hours of sleep per day.  It’s probably not very good for my health.

To try to do something about it, I decided to improve my sleep hygiene by setting goals and tracking my sleep habits.

My sleep goal for 2017 is to:

  • Sleep a minimum of 7 hours per day.
  • Get to bed by 1AM (or earlier) every single day.

How did I do in May?  A tiny improvement — I met my goal only 12 nights out of 31.

This is better than I did in March or April.  I consider it a reasonable improvement.

Having the kids sleeping through the night was a big help.  Notice that I said ‘was’.  In May we decided moved both boys into the same bedroom, and this caused a few issues.  Both boys are now waking-up more frequently in the middle of the night (or early in the morning), and that means I’m sleeping less.

 

Investment Changes In May

Instead of investing capital in May, I actually went the opposite direction.  I sold shares.

I know, I know…I’m supposed to be investing our excess cash, not creating more of it!

After considerable thought and analysis, I decided to call it quits on our AEO shares.  While I do think the company is very well managed, the tide against traditional retail has definitely turned.  For a more detailed analysis on why I sold those shares, please check out the post Is Retail Dead?

Turns out, this was a smart decision.  Just a few days after I sold, the stock dropped nearly 30% when the company reported they would accelerate store closures… exactly what I expected to happen.

Big consumer brands are definitely in trouble — It’s now easier than ever for small companies to get products to market, and sell directly to consumers via the internet.  They can quickly build a brand that’s based upon true product quality, not marketing strength and store penetration.

This has me wary of investing in any major consumer brands.  Many of the supposedly ‘strong moat’ brands are actually eroding pretty quickly.

So, the hunt for good investments continue….  Stocks, index funds, preferred shares, bonds…I’ll considering anything.

While I do like investing in low-cost index funds, at these levels it feels like quite a stretch (even with low interest rates).  If the S&P 500 was at levels 50% lower, I’d simply throw most of our excess cash into index funds, and call it good…

But, the market is not 50% lower.  The earnings yield on the S&P500 is a mere 3.89%.  Dividends are half that at 1.91%.  Real revenue growth rates are under 1%.  The market is regularly at ‘all time highs’.  Any metric I can come up with seems to say “valuations are inflated”.

It has me cautious and thinking I need to be very selective with my investments.

Anyone who plans to live off investments using the 4% rule should be very careful investing new capital at these levels.  I’m even more conservative, and prefer the 3% rule.  Where possible, we try to live off dividends instead of capital appreciation.

That’s it for this month!  Stay tuned for more eight-tentacled fun.

 

[Image Credit: Flickr1]

28 thoughts on “May 2017 Dividend Income And Expenses

  • June 6, 2017 at 10:39 PM
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    A solid overview once more. Your expenses are pretty stable actually for the last 5 months. Not a whole lot of variations in relative terms. A slow month indeed on your dividends. Curious to see what your June will look like, will it be as good as March (or even better)?
    Seems a rather good move on AEO, do you always have such an impeccable timing?
    Team CF recently posted…May 2017 Savings Rate

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    • June 6, 2017 at 10:46 PM
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      Large stock moves typically happen after earnings reports, and I decided to sell a few days before AEO’s quarterly earnings. I’ve been watching retailers pretty closely lately, and decided getting out before the bad news hit was a smart-ish idea.

      I believe this is only the beginning of the retail ‘reformation’. We’ll get to see the network effects of retailers breakdown almost in realtime.

      Reply
  • June 7, 2017 at 4:37 AM
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    Wowza, I admire your ability to not eat out all month! Although it does help to have one person at home to help with meal prep. Ahhh. Sorry about that water bill. Ours isn’t that high (hopefully…), but I sympathize on the whole being-overcharged-with-fees-and-not-by-usage thing. Ugh.

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    • June 7, 2017 at 8:18 AM
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      Thanks Mrs. PP! Once you get into the habit of cooking frequently, eating out actually seems like *more* work than eating at home.

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  • June 7, 2017 at 4:39 AM
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    Nicely done. Groceries for us is always the final frontier – I think we’re doing well, and then I see your report. It’s good to have targets I guess!
    Paul recently posted…On Gratitude

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  • June 7, 2017 at 5:17 AM
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    Nice work on AEO. My risky retail holding is TGT and perhaps CVS but I suspect both will give AMZN a run for their money. We’ll see.

    Dividend income for May came in at $3959. Like you, the second month of every quarter is the weakest for us. June will be stronger, and this year total should likely and hopefully be just a bit above $70K.

    Still not quite covering expenses, which will jump again as our daughter goes to International school next year, but it’s getting there.

    -Mike

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    • June 7, 2017 at 8:15 AM
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      Wow Mike, that’s a great dividend income for May! 70k in dividends is really rolling in it!

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  • June 7, 2017 at 5:27 AM
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    Nicely done, sir. For us grocery and childcare are the top expenses as well, and we are trying to reduce our groceries bill.

    So, your annual cellphone bill is $12, not monthly but annual? Just WOW, I thought we are doing good with our $25/month for 2lines, but in this case we are definitely have a room for improvement.
    Friendly Russian recently posted…How to budget the Russian way

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    • June 7, 2017 at 8:14 AM
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      Unfortunately the prepaid plan is no longer available to new customers. We’re grandfathered in, and I see no reason to “upgrade” when we use the phone so little.

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  • June 7, 2017 at 5:34 AM
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    You’re the only person I know that has a water bill higher than mine! 🙂 Ours routinely runs $100 in low months and $120 in high months. That’s really the only bill that’s gone crazy over the last decade and as I’ve heard, it’s the city trying to push 100% of the cost of water/sewer/trash/recycling/stormwater onto the users. Ours is the same way – usage charges are only half the bill and the other half is the fixed cost charges. Even when we use nothing it still costs $50-60/month just for the connection. I actually investigated shutting the water off over the summer but it costs $50 to reconnect and they sometimes require a $50 deposit for new accounts, so I’d be out the same $100 and possibly have to wait several days for the water reconnection.

    What cell plan are you on? T-mobile gold grandfathered plan? We have an old dumbphone on that plan and it’s the same – $11/year which includes the dollar of tax. I don’t think we have data on the phone though. Not really sure how it works since we just use it for emergencies or as a reliable way to get roaming service overseas.
    Justin recently posted…May 2017 Financial Update

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    • June 7, 2017 at 7:59 AM
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      Yep, we’ve got the same T-mobile grandfathered plan. It doesn’t have data, but it’s easily the best plan for low-use phone users like ourselves. I probably only make 1 or 2 actual phone calls a month. The rest is all Google Voice and Skype on Wifi.

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      • June 7, 2017 at 11:07 AM
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        Cool. I guess we could pop that SIM in our smart phone and it should work too just like your setup. We’re on Freedompop for 3 smartphones and it’s $0/month for some light data and VOIP voice service (which is pretty good, honestly). They often have $0.99 or $1.99 SIM deals if you wanted to check them out sometime. They run on ATT and T-Mobile network from what I recall.
        Justin recently posted…May 2017 Financial Update

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  • June 7, 2017 at 5:58 AM
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    We have pretty high water bill in the summer time as well, mostly because using more water for the veggies we are growing in the garden. You guys’ expenses look pretty good if you take out mortgage and child care. I guess child care should go down quite a bit once they start school. 🙂

    Good points on small consumer brands able to get to mass market easier nowadays. This particular point is making me thinking a lot about some of these bigger retail brands and whether to continue holding their stocks or not.

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  • June 7, 2017 at 6:17 AM
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    Oh my I kept looking at the food photo! It looks absolutely delicious! I can’t believe it was made home. I would have totally thought someone was serving it at a Japanese restaurant!
    It’s amazing how your family can keep your food bills at around $500. Not eating out at all is a major achievement.

    Daycare and mortgage will also be our biggest expenses once we send Baby FAF to daycare. I can’t wait until Baby FAF can go to school for free!! 😀

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    • June 7, 2017 at 8:11 AM
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      Aww, your too kind Ms. FaF! It was just a meal I threw together at the last minute.

      Once you get in the habit, not eating out is pretty easy. Frankly, I can cook better food at home than most restaurants, in less time and at a significantly lower cost.

      It *is* nice to have a break from cooking some days. Mrs. Tako tends to cook a few meals on the weekend and I take the weekdays. That way, I do get a break.

      Reply
  • June 7, 2017 at 6:50 AM
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    Mr. Tako, your dividends are always impressive. Nice to hear you were able to sell off that stock that dropped 30% just days before!

    I don’t require a lot of sleep also. It’s okay if your body feels refreshed though. I’m convinced that some people just need more of it. 😉

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    • June 7, 2017 at 8:06 AM
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      I need around 7 hours of sleep, but usually end up getting less. The worst part is when I go to sleep and wake up completely unrested.

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  • June 7, 2017 at 6:55 AM
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    Great overview. Even for being such a low month for dividends, they are still vastly greater than they were in February if you are going by that payment schedule. Some big expenses there but well worth it. Hope the market dips a little more soon to make some more buys and see some greater value.

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    • June 7, 2017 at 8:03 AM
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      I hope so! All this cash is burning a hole in my pocket!

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  • June 7, 2017 at 7:04 AM
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    Mr. Tako read Marksdailyapple.com article from yesterday, TL;DR just go to the third part of the article. The stats in that part were an eye opener for me to pay even more attention to my own sleep.

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    • June 7, 2017 at 8:02 AM
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      Thanks for the tip Jeff. I definitely gained weight after we had kids. Sleeping less may have had a lot to do with it.

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  • June 7, 2017 at 8:09 AM
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    The childcare expense is high, but it’s worth it. You need some time for yourself. I’m dreading summer break already. Both of us get cranky when we spend too much time together. I’ll sign him up for some summer camps.
    Good luck with more sleep. I’m terrible on that front too. I get about 6 hours of sleep per night.

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  • June 7, 2017 at 8:21 AM
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    You should get a Beddit for sleep tracking… can give you some real insight into your sleep time, sleep patterns etc… might help you track your progress better / stay committed. I’ve been using one for a bit and it’s interesting. They were recently acquired by Apple.

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  • June 7, 2017 at 8:29 AM
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    Mr. Tako, I really like these income/expense reports =) you guys have some great dividend income. Childcare, for us as well, is a hefty expense. But we have only 1 kid, so I’m “looking forward” to when we have 2-3 kids. As far as the stock market goes, I’m concerned myself. I’m pretty big on PE10, and the valuation’s looking pretty high (in the US). So I’ve been rebalancing a bit and putting our new contributions into international markets. Both developed and emerging. They’ve performed exceedingly well, and I continue to foresee that part of our allocation to do well (we tilt pretty heavy towards emerging by the way, about $200K in emerging alone – but most of it is in our taxable account so I’m able to tax loss harvest).

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  • June 9, 2017 at 8:39 PM
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    Good work, Mr.Tako! I love the pictures of the Japanese food you guys made. Did you actually make the Gyoza from scratch?!

    Oh and good call on the wifi+Google voice to avoid expensive data. We do that all the time while travelling. We get free wifi at airbnb and Hotels and use Skype to call home.

    Btw, what do you think of the quality of Google voice? As much as I like Skype, it has a tendency of dropping calls every now and then, or the other side just can’t hear me. Has that ever happened with Google?

    Reply
    • June 10, 2017 at 2:20 AM
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      We typically make gyoza from scratch a couple times a year in big quantities, and then freeze most of it. It’s easy to pop out of the freezer and fry up in a couple minutes.

      Unfortunately for the kids, we were out of the homemade stuff that day.

      You could say I’m pretty experienced with Google voice — I used to use it for about 3-4 hours per day making work calls back when I was working.

      Google voice quality is usually pretty decent, although I have occasionally experience a few oddities where I missed a call (it didn’t ring) or the audio cut out. It’s not perfect, but it is free. The issues were infrequent enough that I conducted all my work conference calls through it.

      Reply
  • June 12, 2017 at 2:35 AM
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    Usually, living in the cold Northeast means our utility bills are higher than everyone else (propane’s $200 a month plus electricity) but wow! Your city water bill is high! We have a well so our water use is “free.” I was also impressed with your thrown-together meal. Buying (or making) gyozas is a great idea. My kids love those. I love when you include food pics! It’s cool to see what you guys eat. Always makes me hungry! 🙂

    Reply

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