Oh what a difference a month makes! Back in November the Tako family was blowing the doors off our regular monthly budget due to the purchase of a “new to me” car. Weak dividend income in November didn’t exactly help our cash-flow situation either.
December was a complete turn-around story however. It marked a return to normal spending and a chance for our cash to replenish itself with a very dividend heavy month.
How great was our December? Read on to find out!
Dividend Income In December
Dividends in December added up to a total of $12,500. While is not a personal record (September 2019 was slightly higher), I was still very happy with our passive dividend income in December.
The vast majority of this passive income comes from stock dividends, but there’s also a little from preferred shares and interest income from money markets. Every penny counts in my book.
While this might appear to be a high monthly dividend payout, it’s not unexpected. March, June, September, and December tend to have the biggest quarterly payout months of the year. December was no exception to this pattern, providing a very nice passive income.
As I’ve mentioned in the past, we don’t try to “smooth” our dividend income. We simply let our investments pay dividends on their regular schedule (usually quarterly), and then maintain a small buffer to deal with the “off” months when dividend income is lower.
For 2019, we received $58,576 in dividends. Our dividend growth goal for 2019 was to reach an annual dividend income of $57,000 and we achieved this. Year over year, dividend income increased by 14.4%. That’s a good increase, but please remember our portfolio is NOT organized around capturing high-yield.
Make no mistake — I don’t target high yield investments. Our dividend income is the product of fairly normal stock yields. Last time I checked, our portfolio only yielded about 2.6%. (It’s probably even slightly lower now.)
Expenses in December totaled $5,344. Essentially this is a return to normal after a ridiculously expensive November. This time around we didn’t have a new car purchase to contend with, but December tends to be an expensive month due to the Holidays, holiday parties, and gifts for friends and family members.
Here’s the spending breakdown in December by category:
Grocery expenses in December totaled $639. Normally we spend about $500/month on groceries. December had an exceptionally high monthly grocery total because we stuffed our faces with luxurious food for most of the month. We also had more mouths to feed in December because we hosted my family for Christmas.
I don’t think we sent them away hungry. They ate all kinds of fancy meals like this medium-rare ribeye roast I prepared:
It wasn’t a completely carnivorous Christmas dinner however — we also had a green salad, mashed potatoes, gravy, and a green bean casserole for our Christmas spread:
It was a great Christmas meal, and my visiting family definitely enjoyed it, but it was also pretty expensive. As I discussed in a previous post, the ribeye alone was $75. It’s also a lot more red meat than we’re used to eating.
Normally I try to prepare meals with a lot more vegetables and a lot less artery clogging red meat. Take for example this DIY springroll meal from December. Lots of veggies, herbs, and leafy greens to be found here:
That’s much closer to the “normal” in our house. Vegetable heavy versions of popular dishes (like phad thai) also made an appearance in December:
Mrs. Tako got into the cooking game this December, and cooked-up some wonderful meals like this bacon-cabbage stir-fry and lotus root burgers drizzled with a miso sauce. Mmmm…. yum!
They were so delicious I must have eaten about 8 of those lotus root burgers. There was no actual meat in the “burger” of course, it was entirely lotus root!
I also made several crowd-pleasing izakaya dishes like Izakaya Cucumbers, and one of my favorite noodles dishes ever: Yaki Udon!
In the end, was all this fancy food worth the $639 we spent on groceries?
Probably. The extra $139 spent this month won’t break the bank, but it will leave some lasting memories of good meals spent with family and friends. That seems like money well spent.
Fuel costs in December added up to $109. We didn’t travel anywhere during the Holidays, so this kept our fuel usage slightly lower than normal.
Under “normal” conditions we spend around $120 per month on fuel for our cars. Mrs. Tako did a little less commuting in December, but we still did plenty of short trips to Christmas parties and other gatherings, so fuel spending was roughly similar to average.
Mortgage & Childcare
Just like every preceding month, mortgage and childcare expenses were our two largest expenses in December. These two expenses totaled $3,945. This is where we spend the bulk of our money.
Unlike many families however, we consider these expenses optional. Using spare cash we could easily pay-off the mortgage. If I wanted to, I could take our youngest son (Tako Jr. #2) out of daycare, and wipe-out that cost too.
For now, we’ve decided to keep these two expenses as-is because of the flexibility they provide us.
On one hand, not paying off the mortgage means having plenty of spare cash to invest (should good opportunities arise). On the other hand, Tako Jr. #2 also gets to attend his language immersive daycare (It’s a completely non-English daycare).
Only time will tell if these two expenses are going to be good value for the money.
Our internet expense in December was $49.95. This is the normal amount we pay for “80 Mbps down and 5 Mbps up” cable internet access through Comcast.
For the past two years our monthly internet cost has remained exactly the same, and I’m hoping to continue this trend for at least another year. Cable internet access seems to be our only expense that hasn’t risen in 2019!
While some people might prefer faster internet packages, this Performance package has been plenty fast for our needs. I ‘m extremely happy with our current speeds/price.
Utility bills in December amounted to $0! Yep, zero! Again, the timing of our utility bills caused us to have no utility bills to pay in December.
Many of our utilities are billed either bi-monthly or tri-monthly, which caused the occasional month with no utility bills to pay. December was one such month.
It’s entirely a timing thing, so please don’t think I don’t pay my utility bills. I do!
Insurance in December was $0. Whenever possible, we try to pay our insurance bills for the entire year all in one go, to lower the total cost. For example, our car insurance is paid only once per year. The only exceptions to this are times when we add or change insurance policies like we did in November.
We purchased a new car in November, so policy additions needed to be made. Thankfully this means our car insurance is now paid up for another 365 days.
(For the curious: We do have home-owners insurance. It’s included in our mortgage. Call me lazy, but I don’t normally break that number out here in the insurance section.)
Other spending in December amount to $600. Over half of this amount ($353.74) was the cost of my new smart phone (covered in this post).
Additional items in the “Other” category included Christmas gifts from a variety of online stores ($147.19), several trips to Home Depot for home repair supplies ($68.91), and three take-and-bake pizzas from Pappa Murphy’s ($21.03).
Cumulative Expenses For 2019
For the year 2019, the Tako family spent $74,001. This includes the purchase of our new car for $10,400. Outside of our mortgage, childcare and car purchase, we spent $18,508 on what I call “Core Expenses”. That’s an average of $1,542 per month for a family of four in a high-cost of living area!
Note: That “core expense” number includes our summer travel and entertainment expenses, which can grow quite quickly when we travel a lot.
Despite higher spending in 2019 due to the car purchase, our core expenses remained very similar to 2018 and 2017. They did not grow significantly YOY. This means inflation remains in-check and our spending has remained fairly consistent from year to year.
Every year I set the goal of having all core expenses covered by dividend income. We easily achieved this and more in 2019. In fact, passive dividend income covered 79% of ALL household expenses in 2019. (Including the car purchase) The remaining 21% was covered by capital gains, Mrs. Tako’s income, and/or cash savings.
Without daycare costs included, dividends would have covered 106% of annual expenses. Only nine more months to go before I no longer need to write that damn daycare check!
December Investing Updates
Stocks continued to be optimistically valued in December, and I chose to primarily remain on the sidelines and watch the expensive show ensue. The only exception to this lazy behavior was a single option I wrote in late December that generated $213 in income. Should this option expire worthless in a month, I simply pocket that cash. In the event that the option is executed I’ll need to buy those shares at the agreed upon value.
While most people will never try option trading, I made it a goal of mine in 2019 to learn how it works. So far, this endeavor has been fairly successful, generating $3605.97 in income. That said, I do not consider myself an option trading expert. I’m simply learning the ropes and keeping my risked capital small while I learn.
I certainly would prefer to be buying stocks with our excess cash, but Mr. Market has decided to keep stock prices high. Oh well! I’m perfectly happy to keep our cash sitting on the sidelines earning very small rates of return. I also prefer to pay reasonable prices for stocks that I have a high degree of certainty in, but these investments are few and far between.
Sometimes in life, we don’t get exactly what we want. So, I continue to sit on more cash than I’d like. It’s an “OK” problem to have.
In my next post, I’ll be providing updated net worth numbers so readers can see just how much our portfolio grew in 2019!
That’s it for December! I hope you had a great Holiday season and a prosperous 2019!
[Image Credit: Flickr]