December is the time of year for food, families, and fun. Oh, and breaks from blogging too! I decided to take the last two weeks of December “off” from blogging, and focus on family this year. It was great to have a break from blogging and my regular stay-at-home-dad routine.
Like last year, we stuck to our usual modus operandi — having a rock-socking fabulous time all-the-while keeping our spending low.
Nobody felt “deprived”, and we all had a very happy set of holidays on a reasonable budget.
Just how reasonable? Read on to find out!
Activities In December
Our first adventure of the holiday was a day-trip to the Museum of Flight in Seattle. My kids are super interested in airplanes and spaceships right now, and the museum has over one hundred on display.
It’s a great museum, and a huge hit with the kids. If you’re ever in the Seattle area, check it out!
Undiscounted adult tickets cost $13, and kids under 5 years (like mine) are free!
It just goes to show (once again), that kids don’t have to be expensive. There’s plenty of opportunities for education and entertainment that’s extremely affordable.
December also included a road trip to Grandma and Grandpa Tako’s house for Christmas. We were lucky enough to see a white Christmas this year!
Snow like this is pretty rare in western Washington, so when you wake-up to white stuff like this…
You just have to take the kids sledding!
Expenses In December
Most people think December is an expensive month — synonymous with Christmas, holiday parties, gifts, big feasts, and plenty of travel. But there’s absolutely NO RULE that says you have to do those things.
The holidays don’t have to be expensive — Just trim the holiday waste! We had a great family Christmas with all of the trimmings, and very little of the waste. December happened to be one of our lowest cost months of the year!
(See our Cumulative Expenses for a comparison)
December expenses amounted to $5,457. Here’s the detailed breakdown:
Food was one of the areas were we spent slightly more than usual in December at $572. We do a little more ‘feasting’ during the holidays, and this showed up in our food budget.
Normally we spend around $500 on food in any given month, so this excess wasn’t terribly excessive. To keep food costs low, I made ample use of coupons at the grocery store.
(Yes, we’re worth over $3 million dollars, and I still use coupons. I even walk to the grocery store to save money. There’s no shame in saving!)
On the not-so-frugal side, I had the opportunity to try out one of those expensive Traeger pellet grills at a family member’s home during the holidays. These unique grills utilize wood pellets for fuel, and can either smoke or bbq food.
They’re pretty expensive grills. For my money, I don’t think they are worth the higher cost unless you’re really into smoking food.
The end result turned out good, but I felt it was a bit drier than just roasting in the oven. The smokey flavor didn’t really permeate the roast very deeply, so I was a little disappointed.
Fuel costs amounted to $74 for the month. This is fairly typical for our monthly fuel costs. That $74 covered all of our driving for the month, and included a 240 mile road trip to southern Washington.
Mortgage & Childcare
Mortgage and Childcare expenses were the usual amount for the month at $4,450. These are our two largest monthly expenses, but we consider them entirely optional.
Why? We could eliminate both expenses 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 our mortgage can be paid-off at any time with unused cash.
Time is going to eventually reduce these expenses — Starting next fall, Tako Jr. #1 will start kindergarten. This should free up a metric shit-ton of cash in our monthly budget.
I can feel the savings already!
Utilities & Internet
Utilities and Internet expenses came in at $53 and $49.99 respectively. Our electricity & gas bill was deceptively low this month because we still had a prepaid balance leftover from the Japan trip. Next month will be considerably higher.
Cable internet was our usual $49.99 per month. This is a promotional deal that provides us with 100mbps internet at a great discount. Once the promotion ends, I’ll simply call and get the next promotion. That’s the power of a phone call.
The Other category was fairly large this December at $257. This expense was almost entirely Christmas gifts for family members.
We spent more than I’d like on gifts, but saved where we could — making use of Amazon Prime “free-trial” promotions and Bing Rewards gift cards to save ourselves a little money. (We typically sign-up for the free trials every December)
Mrs. Tako and I tend to give used Christmas gifts to ourselves and the kids, but our other friends and family members aren’t quite as frugal… so we end-up spending a bit more in the “Other” category.
Cumulative Expenses for the year 2017 amounted to $73,173. The vast majority of that is the cost of our mortgage and the language-immersion daycare where we send the kids (a few days a week).
Without those two expenses, we spent a frugal $20,496 in 2017.
My goal was to keep our core expenses covered by dividend income, and we easily achieved that in 2017. Dividends covered 73% of our total expenses in 2017. The remaining 27% was covered by capital gains and/or Mrs. Tako’s job income.
Dividend Income In December
For the month of December, we collected $10,446 in dividend income. That’s a person best for any one single month (outside of special one-time ultra-huge dividends).
One of my goals for 2017 was to grow our dividend income by 10%. While that doesn’t sound like much, achieving this kind of income growth gets tricky once you start realizing the law of large numbers.
Thankfully, through a combination of new dollars invested and dividend raises, we managed to achieve 10% dividend growth for the year!
We made a total of $53,504 in dividend income for 2017. That’s a Christmas gift I really enjoyed seeing!
Investment Changes In December
Other than some research and reading, I made no changes to our portfolio in December. I was too busy goofing off!
It wasn’t entirely a dead investing month however — the U.S. government decided to make some tax changes that caused HUGE movements in our portfolio.
Remember those Southwest shares I bought back in September? They jumped by 20% in the span of two weeks. My LyondellBasell shares? Gains of roughly 10% in the same time period.
The general hypothesis behind these movements is that the new 21% corporate tax rate (instead of the old 35%) will provide a large boost to earnings. Sounds great in theory, right?
I’m skeptical that it’s going to work out as well as many investors imagine.
In competitive market systems, changes like this don’t always flow to shareholders. For example, Southwest recently announced that they would be giving all employees a $1,000 bonus because of the tax cuts.
With 55,671 full-time employees, that means Southwest is writing a check for $55.6 million to employees. That’s money shareholders definitely won’t see.
In the air travel industry, larger profits also mean there’s plenty of room to cut ticket prices. It’s a competitive industry with low margins. I wouldn’t be surprised if one airline cuts prices to gain market share, and all airlines follow suit to maintain their own market share…
Effectively erasing the hypothetical benefit of the tax cuts!
Whether you agree or not, it’s worth thinking about before you make any bets on improved profitability.
Regardless of the eventual outcome, many of our stocks rose in December. It was a month of big gains to our net worth. I can’t take any credit for the results of course — Mr. Market did all the hard the work.
I’m just along for the ride.
[Image Credit: Flickr Octopus]