April 2016 Dividend Income And Expenses
Yes, it’s that time again! That time of the month when I break down expenses and dividend income for your reading pleasure!
Ever have one of those months where you spent a ridiculous amount of money, but don’t have any outrageous expenses to account for it? April was like that for us.
We had a large number of small expenses that added up to a really big bill in the month of April. April also contained most of our Hawaii expenses, (not including airfare costs).
Expenses For April
The month of April had expenses of $6,587.67. They were way higher than usual. We have a budget goal of $4k per month for 2016. Unfortunately in April we were well over that goal. Ooops!
What happened in April? Did we give up frugality and spend with abandon?
I hope not! We had family visiting in March & April, which means we ate out more than usual, and spent more on food than usual. The Hawaii trip also made April kind of crazy.
April brought our average monthly spend a lot closer to the projected $4k budget we’re expecting:
Hawaii Expenses
In case you missed it, I did a series of blog posts about “Visiting Hawaii on the Cheap”. In part one of the series, we saved money on flights, lodging, and rental cars. In part two we saved money by eating delicious food in Hawaii. In part three we covered saving money with cheap vacation activities.
So how much money did we spend on our little vacation in paradise? Outside of airfare, our Hawaii expenses came to $1,392.96. In total we spent $174.12 per day for 4 people. Yikes!
Our largest expense was the rental house for $935.68. We went a little crazy and got a nice house with a private pool. This was a shared expense with other family members, so it represents our half of the lodging for 7 nights (and 8 days) – meaning we paid $133.67 per night for lodging.
We spent $40.45 per day for food, rental car, gas, and entertainment. I know I know…that’s a shameful level of spending. I should be cast out from the frugal multi-millionaire club for that kind of spending! I’ll try do better next time.
While this was a short family trip, we want to do a lot more slow travel once the boys are older. On a $4,000 monthly budget that gives us roughly $133 per day to spend. Clearly we overspent that amount in Hawaii.
If we do decide to take longer trips, we’ll need to do a better job of keeping the lodging expenses lower.
Dividends for April
Our taxable portfolio continues to produce a steady stream of dividend income. We had a solid dividend income in April at $5,443.
For 2016, our intention is to live off dividends from our taxable accounts, without selling equity investments. So far this year we’ve seen our dividend income bounce around significantly:
Currently our average dividend income is below our average expenses. Uh-oh! We’re in the red for the year!
OK OK, I know…but I’m optimistic. We have seven months for the dividend income and our expenses to cross back into the green. We don’t plan on going to any more exotic locales for the rest of the year. That should help.
I’m counting on expected dividend increases, and income from new investments to bring us back into positive territory. This is our first year trying to live off dividends alone, so it’s kind of a best guess.
April Investments
In April we made no new investments. We had family visiting, so I was too preoccupied to make any new investments. Just like in March, we stayed-the-course and just collected dividends.
That said, I need to get my butt in gear and do something with our excess cash. It’s burning a hole in my pocket; I really need to get it invested. The last time I put any money into the stock market was on February 29th.
I’m looking a several possible investments in the next month or two. The S&P500 is currently up 1.83% for the year, and has a PE ratio of 24.05 (or an earnings yield of 4.16%). While I’m not exactly thrilled with paying even high prices, an earnings yield of 4.16% is still better than the 0% I’m getting from money market funds.
A Sale of Endurance?
I’m contemplating a sale of some (or possibly all) of our ENH shares. If you recall the story from last year, we received these shares as part of the purchase of Montpelier Reinsurance.
Endurance reported earnings today, and the results were decent. I’m still concerned. Return on equity continues to shrink, and the market for insurance and reinsurance has been flooded with excess capital (primarily from hedge funds). On top of that, interest income has been terrible due to low interest rates around the world.
This all adds up to lower returns in the future for insurance and reinsurance companies. The situation shows no signs of resolving itself anytime soon.
Even Buffett mentioned this issue at the Berkshire Hathaway annual meeting. This was the first year with an online video stream.
Questions
What do you think? Did we overspend in April? Some of you readers are far more frugal than I am. Did we blow too much money in Hawaii?
[Image Credit: Flickr]
Given how expensive Hawaii is, I think you did a great job keeping costs under control! When it comes to Hawaii, a frugal amount to spend is normally the “normal” amount to spend on a vacation anywhere else in the country.
Our April was pretty normal – we had a few higher expenses due to some repairs around the house but overall it was solid!
Yeah, Hawaii *is* expensive. Milk, for example is twice as expensive! Costco was a huge help keeping costs down!
Even though your expenses were a little higher than normal, it’s not like you’re doing this all the time. I’m sure you have plenty of months where you’re not having family over and vacationing, and might even be under budget, so enjoy the splurge!! 🙂
— Jim
We really did splurge – I think I had steak twice in one month! Usually we don’t eat any beef!
Yes, you went a little over, but you have to enjoy life a little. While trying to just live off of the dividends is certainly a worthy endeavor, you do have other areas of income, correct? If you had an amazing trip and were mostly frugal, I really wouldn’t beat yourself up too badly. Well done. :O)
It’s true, Mrs. Tako still has some income. Crossing my fingers for those dividend increases this year.
$174 per day for 4 is pretty impressive. I’m sure that took some very careful planning. Good month with some solid dividend income!
Thanks Green Swan!
What do you do with the Mrs. income? Does it go straight to cash which you’re looking to deploy? 401k and IRA contributions? Thanks.
Yeah, we maximize 401k and IRA contributions. We also put money into a childcare FSA and a HSA. That’s all the pretax money. Post tax, we use some of that cash for paying the bills, and everything else gets put into Taxable Account 2.
Great job with the expenses on your Hawaii trip, you kept expenses down. It is easy to spend a lot more than that. Thanks for sharing your finances, it really helps me in learning and planning. You are a smart guy I can tell from this blog.
The expenses you made in Hawaii do not scream SPLURGE to me. You need to eat, have some fun and drive around. What else is the point of going on a holiday. Spending time with family is very important.
We had a weekend of as well and did spend way more on food than you did on average. Is this bad? Not necessary… as long as it does not become a habit, I find it acceptable.
The rest of the year will be the proof… I do think that if you have no major travel foreseen, that you will stay well below your 4K limit!
I hope so too!
I actually thought the Hawaii expenses were quite low, especially considering how much we are saving for our trip to Japan – just the flights are $4k.
But as you say you don’t do that every month and if you were travelling for longer the accommodation choice would probably be different.
Dividends are looking great.
Your dividend income is really something to be proud of Mr. Tako. You’re already set, but with the way you guys live below you means and invest, it will be awesome to see what your net worth looks like in 10 years.
Aawww, you say the nicest things!
It looks like you are on track to live off your dividends this year, fancy vacation or not. You are controlling your spending quite well. We are set to blow a lot of money in Hawaii in July. At least I plan on enjoying it!
Have fun in July! It’s a fantastic place!
Hey Mr. Tako,
Overspend in April, are you kidding? With your networth you could do this all year long and be fine! Plus, the occasional splurge is fine, especially if it is in Hawaii 😉
Maybe I’m too cautious! We’ll see how the year turns out!
Hi Mr. Tako,
just wondering how much does your property tax cost you each year?
Thanks,
I don’t have the exact figure in front of me, but roughly $8-$9k per year.
Thanks for the info Mr. Tako. Just trying to get an idea of housing costs in the PNW.
Hey – you went on holiday to Hawaii, one of the most beautiful expensive places to go on holiday. You spent a relatively small amount compared to what people normally could there. You enjoyed yourself, that’s the most important thing.
Tristan
Love the papaya shot! Make sure you eat them with kalamansi. The tang brings out the extra flavor. I’m going back in July for makalapa and white puree mango season!
Hawaii food is crazy expensive I agree. I try to eat as much fruit and poke as possible. Luckily, I don’t have living expenses there due to owning a home in Oahu. Every time I want to move back, SF draws me back.
Nice job living within your dividend income!
Sam
Is there a place that shows how much you have invested to get $5k of dividends each month? It has to be a substantial amount. A bit of math:
$5k per month * 12 months = $60k per year
$60k per year at 3.5% yield = $1.7 million
Perhaps you’re doing better than 3.5%, so you don’t need $1.7 million, but it’s a worthwhile question.
Can you point me to a post on your portfolio amount, stock investment lists, and dividend yield rates?
I’m trying to replicate the same myself and would appreciate any learning you could provide.
Thanks!
It’s not actually $60k per year. It’s probably going to average out to around $40k-$50k per year. Just check the 2015 Year End Update for our actual net-worth. Currently, I don’t disclose individual positions.
That’s helpful, thanks.
If you have all your non-tax deferred accounts invested in dividend stocks (which you probably don’t, but it’s an estimate), that’s $1,759k.
If you earn $45k per year on that, that would be a return of 2.6%, a very reasonable amount.
I have subscribed to your blog to follow your progress and would appreciate and thoughts on great dividend producing stocks, funds or EFTs as well as dividend strategies.
Right now I earn about $50k in income annually from rental real estate, another $10k from P2P lending, and am looking at dividend investing as my next income stream.
Cool. Glad to have you as a reader! I’m a huge fan of dividend income, so we’ll definitely talk about it more.
Hi Mr. Tako, I just found your site this morning, and really enjoyed reading it. I am also interested in learning more about your “great dividend producing stocks, funds or EFTs as well as dividend strategies.” Thanks.