Summer months are the fun months of the year — filled with traveling, birthday parties, water-fights, gardening, and beautiful warm weather. That’s what our summer looks like at least… and August is our peak summer month. It was a crazy busy month.
We had tons of fun, and it showed up in our expenses this August! We spent a HUGE amount of money, but none of it was unexpected.
Expenses In August
Every once in awhile we have a very expensive month, and August was one of those! We really blew past our regular budget numbers in August! Expenses came in at a crazy-high $8,743.49.
Woah! That’s around 50% higher than usual! Where exactly did we spend it all, and why was it so much higher in August?
Our Food costs were slightly higher in August at $596. This is roughly $100 higher than we usually spend in any given month, and I attribute the added expense to eating at restaurants during our Eastern Washington road trip. We ate 3 meals in restaurants for the month of August.
Most months we don’t eat at restaurants. If we do, it tends to be very affordable take-out. That’s next to impossible when you’re on the road. (Even though we brought a big cooler with a ton of snacks and drinks)
Don’t worry — we also did plenty of eating at home during the month of August! Did I mention we had a homemade sushi night? We love homemade sushi, even though the cost is generally higher than our usual meals. Sometimes good food is worth it!
Our economic garden is also producing crazy amounts of food right now, and we’re struggling to keep up. Lettuce, green onions, tomatoes, pumpkins, and jalapenos peppers are all plentiful right now
We get so much food from practically zero dollars invested — That’s what economic gardening is all about. Our garden might not look like a posh English garden, but it sure does produce a lot of delicious food.
Our green-onions (for example) were more than ready for harvesting. What do you do when life hands you a absolutely ridiculous amount of green onions?
In our case, Mrs. Tako made a Japanese pancake dish called Negiyaki. It’s probably one of the best Japanese dishes you’ve never heard of… trust me when I say it’s awesome! Mouth. Watering. Awesome!
This time of year the garden is always so plentiful. I’m amazed what we can produce from practically nothing.
Fuel costs were slightly higher in August, and I attribute this to all the extra driving we did for the road trip. We usually average somewhere around $80-$100 in a given month. Now that summer’s nearly over, I expect we’ll be doing less driving and this expense should return to its former “not terribly high” glory.
Mortgage and Childcare
Mortgage and Childcare expenses are always our biggest expenses for the month — in August they totaled $4,372. This is slightly higher ($32) more than usual because we needed some backup-care for our youngest son during a minor emergency. This was a temporary situation, and this expense shouldn’t show up again in September.
While our Mortgage and Childcare are very large expenses, we consider them entirely optional.
Because we could eliminate them at any time — We could take the kids out of daycare and keep them home with me (I’d probably have no time to blog), and we could pay off the mortgage with cash.
Internet expenses were our usual $49.99/month for 100mbit service. Yes, this is a promotional price. Normally I wouldn’t bother paying for such fancy 100mbit service, but Comcast offered us this great deal for 12 months. That’s the power of a phone call. I couldn’t pass a deal like that up!
When they try to jack-up the price in a year, I’ll either ask for the next promotion or downgrade our service to the slowest speed.
Utilities were very high in August at $353. Normally summer months like August are our cheapest utility months, but I needed to meet the spending requirement on a new credit card (Yes, we’re trying out travel-hacking). I prepaid $300 on our power bill in August, and the next couple of months shouldn’t have this expense.
At $3,265, the Other category is where most of the carnage occurred in our August expenses. Why? We bought our tickets to Japan!
We started planning this Japan trip back in March, but international flights aren’t cheap — so we decided to do some travel hacking in the remaining months. Points take a lot of time to build, but the biggest wins are in the sign-up rewards.
Ultimately we saved about $1,000 on the cost of our flights by travel hacking. The total for our family of four amounted to nearly $3,000. It’s going to be a great trip!
The Other category also included a few nights in a hotel during our Eastern Washington road trip at $223. There aren’t many good Airbnb places available in Eastern Washington, so a hotel room ended-up being the better option. The expense was $111 per night (after occupancy taxes) for two beds in a brand new hotel.
Yes, we could have saved ourselves $20 per night by staying at the ancient flea-bag motel down the road, but we opted for the nice hotel. I think it was well worth a good night’s sleep.
Cumulatives expenses for the year now add up to $46,957:
I won’t kid you — our expenses are high compared to other FI bloggers. We live in a very high-cost of living area, and our kids go to a language immersion daycare (big $$). These things don’t come cheap, but they won’t last forever either. Outside of those two optional expenses, we actually live a pretty frugal lifestyle — Our ‘core’ expenses amounted to only $12,203 for the year so far. (Yes, this includes travel expenses.)
Dividends In August
Dividends for August were nearly non-existent. August is one of those off-months, like February, when we receive very little in the way of dividend income.
One of the most frequently asked questions I get from readers is if we try to somehow “smooth” our dividend income from month-to-month. No, we don’t. We simply maintain a cash balance for lean months like August.
Yes, our dividend income is trailing our expenses this year. I’m behind on my Dividend Growth Plan, and I know it! It’s been hard to find good investments this year, but I won’t force myself to make bad investments for a little extra dividend income.
As I’ve always said, “The dividend tail should not wag the investing dog.” I firmly believe that, and refuse to make investments that aren’t in my favor for the long-term.
Mrs. Tako currently covers the difference (mostly daycare) with her job income. Eventually the kids are going to start school, and our expenses will fall well under our current dividend income levels. It’s all part of our Evil Master PlanTM. [Insert crazy octopus laughter here]
Please remember: This dividend income is from our taxable accounts only. We’re not touching our tax-advantaged accounts at this time. All dividend income in our tax-advantage accounts gets reinvested.
The Sleep Report
The month of August started out well in the sleep department, but just like July I got too busy and forgot to keep track of it.
If you’re not familiar with this project, normally this is where I would write about my attempt to get a decent amount of sleep. I’m a absolutely terrible sleeper — I average somewhere around 4-6 hours of sleep per day. It’s not very good for my health, and this project was an attempt to change all that.
Unfortunately, life just got too busy in August. We were traveling, I was writing extra guest posts for other blogs, and we had all the usual family summer activities (like swim lessons) to contend with. I didn’t do very well in the sleep department. I probably met my sleep goals less than 12 nights of the month.
Investment Changes In August
The month of August included two major investment changes. First, we had a partial call on some of our Ashford preferred shares. When the transaction happens, we’ll get par value for the shares, plus accrued and unpaid dividends in September.
If you remember from my post on Preferred Shares, we picked up a ton of hotel preferred shares back during the Great Recession. It was a good time to buy. These preferred shares were on sale then — trading at a 40-50% discount to par value. They turned-out to be a good investment — over the past 8 years we’ve realized dividend yields of 12%-16% on these shares.
Unfortunately this party has almost come to an end. Eventually most preferred shares get called, just like bonds. This call on the Ashford preferred shares will have the effect of reducing our dividend income a little, but as a consolation prize I’ll realize around $30k in capital gains. Oh well!
The second major investment change in August was a new position initiated in Southwest Airlines (LUV). I wrote about why I made the Southwest investment in a recent post. In short, I think it’s a great company. Basically as long as oil prices remain low, Southwest is going to do pretty well. They have a competitive advantage, good expansion opportunities, and plenty of room to grow the dividend (payout ratio is a mere 14% right now).
This investment in Southwest really isn’t an “income play”, nor is it an attempt to predict the future. There are several different potential outcomes for this Southwest investment — If we assume reasonable probabilities for all of these different outcomes, I should do OK for most of them.
It’s sortof a “Heads I win, Tails I don’t do too badly” kind of investment — a strategy straight out of The Dhando Investor. There are very few potential outcomes here which lead to losses or bad returns… so I’m happy to buy more shares if the price continues to fall.
Wish us luck!
[Image Credit: Flickr]