December 2020 Dividend Income And Expenses


Happy New Year!  It’s no secret that I’ve had this blog on ‘pause’ for the past few weeks.  I took some time off from writing to enjoy the Christmas and New Year’s holidays with the family.  It’s been fun.  I’ve spent a lot of time with the kids, playing board games, and ‘helping’ them test out their new toys.  There’s also been plenty of socializing (virtually) with friends and family over Zoom.

It’s certainly been a very different Holiday season (to say the least), but we still managed to have a good one!

Now the New Year is (finally!) here, and it’s time to get the blog rolling again! Let’s kick things off right in 2021 by doing a wrap-up of our December 2020 numbers…

 

Dividend Income In December

Dividend income in December was excellent.  We totaled $14,591 for the month, our highest of 2020.  That’s also 16.7% higher than last year, which I mainly attribute to some well-time stock buys back in March.

In other words, the money came gushing-in in December!  Woohoo!

Not every month is like this of course, some months dividends are low – Like May, August, and November.  Other months are gushers of cash.  That’s just how the dividend payouts happen (once a quarter), and we make no attempt to “smooth” our dividend income from month-to-month.

Most dividends end-up arriving in the months of March, June, September and December.  It’s lumpy, and that’s perfectly fine by me.

cumulative dividends Dec 2020

For the year 2020, we collected a total of $60,737 in dividend income.  This amounts to year-over-year income growth of 3.7% from 2019.  It’s not the greatest growth rate, but during a pandemic year when many companies were cutting dividends?  I’ll take it!

It’s fair to say we got pretty lucky in 2020.  Not only did very few of our holdings cut dividends, but those that did (the airlines), were relatively small components of our portfolio.  2020 could have been a lot worse, and I’m thanking my lucky stars for an “OK” year.

 

December Expenses

Household expenses totaled $3,424 in December for the Tako family.  This amount is right in-line with our average for 2020, and a return to “normal” after a very expensive November.  We did most of our holiday spending in November, and only a few gifts and ‘splurge’ purchases fell into the December basket.

Here’s the monthly spending breakdown by category:

expenses by category Dec 2020

Groceries

Grocery spending in December was $424.  This lower than normal amount I attribute mainly to shopping sales, and focusing on using what we had in the pantry.  Typically our family spends around $500 per month on groceries, so it’s pretty normal for our grocery expense to bounce around that $500 average.

Some people find it surprising that 4 people can eat for so little!  But really, it’s not that hard.  I just exercise my frugal superpowers to continuously cook delicious meals at low cost.

We’re not just eating rice and beans either!  We eat very well on this amount, and spend plenty on expensive proteins and unusual ingredients from specialty stores.

Take for example, this ultra-fancy steak salad with homemade ‘wafu’ onion dressing in December.  It was delish!

steak salad

Since we live in the Pacific Northwest, a region famous for seafood, fish tacos occasional hit our table (in this case, grilled salmon) – complete with homemade salsa and jalapeño sauce.

salmon tacos

Not every night is quite so fancy of course.  Some nights we don’t feel inspired to cook, and then a simple but nutritious homemade stew has to suffice.

white stew

While it may be cheaper to buy only domestic ingredients, at least once a week we eat Japanese recipes in our home, which means buying fancy imported groceries from our local asian store.

Japanese home cooking, (like this pork and sweet potato stir-fry, kimchi-natto-tofu, and tonjiru) might cost a little more, but it’s totally worth it to have good food.  I’ll gladly spend the extra dollars!

kimchi natto tonjiru

Of course, we don’t stick to just two cuisines!  The entire world has great recipes!  Take for example, this cottage pie (similar to shepard’s pie), a British classic that my kids absolutely loved!

cottage pie

I swear the two of them ate half of that cottage pie in one sitting!

Other nights we have to get creative with what’s in the refrigerator — using what’s on hand to make something good.  This meal of miso-chicken, bean-rice, and pumpkin soup is a perfect example of a “fridge cleanout” night.

miso chicken, pumpkin soup

Salads also make a frequent occurrence in our household… mostly because I like a good salad.  This taco salad was another delicious meal in December.

taco salad

I could keep going, posting even more mouth-watering food dishes, but I think you get the point — It doesn’t cost a lot for a family to eat very good food!  Just a little creativity, a love of good food, and all of it mixed with a touch of frugality.

 

Fuel

Fuel spending in December came to $49.  As in previous months, we didn’t do a lot of driving in December.  This is mainly due to the pandemic.

We’ve been staying home and spending a lot more time walking around our local neighborhood, which is a great change from driving the car everywhere.  It keeps us healthier, happier, and gets us outdoors more.

 

Mortgage

As usual, our largest single monthly expense is our home mortgage.  This amounted to $2,357.  If this seems like a lot of money, please remember that we live in a high-cost of living area, and real estate is expensive here.

While technically we could pay-off our remaining mortgage at any time, we’ve chosen to retain all that money and hunt for better investments instead.

This proved to be an excellent decision in 2020.  Several opportunities to invest appeared in March, and we took advantage.  We had the necessary cash-on-hand and were able to make good investments at just the right time.

All of our 2020 stock buys have since gone on to make phenomenal positive moves during the remainder of 2020, with YTD returns for those buys ranging from 50% to 143%.

If all of our money had been tied up in our home, it’s unlikely we would have had the ability to make those investments.

 

Internet

Our internet expense for the month was $45.  This is our regular monthly payment for 100Mbps cable internet from Comcast (XFinity) with 5Mbps upload speeds.  It might not be the fasted package out there, but it’s more than sufficient for our needs.

While it’s possible to spend less in this category, it didn’t seem like a good idea in 2020.  The internet became an essential service in 2020, for both work and play.  It makes good sense to pay for “decent” internet, rather than trying to scrimp and save a few dollars.

 

Mobile Phones

Mobile phone spending in December came to $0.  In prior months, I completely skipped over the cost of our phone service… because it’s almost nonexistent.

That said, I totally understand why readers want to see this category… people spend a lot on their cell phones!  Probably too much!

Why is it zero for us?

Typically we pre-pay our mobile phone service once a year.  This happened back in May of this year, and amounted to $35 for two phones.  Yes, that is our annual amount.  Google Voice handles most of our telephony needs for free, so why bother paying more than necessary?

Did you really need a fancy cellphone plan if you were stuck at home in 2020?  I certainly didn’t!

 

Utilities

Utilities totaled $140 in December.  This was our electricity and gas bill.  This is a high monthly amount, mainly because the cost of heating rises due to cold weather here in the Pacific Northwest.  Our electricity usage also rises slightly because we need to use more lights (during our dark winters).

Utility spending should continue to remain elevated throughout the winter months.

snowy december
Snow and cold winter nights mean larger heating bills!

 

Insurance

Insurance costs in December amounted to $0.  Yep, $0.  Most of our insurance expenses actually happen in October, when we pay our car insurance bill.

As usual, we prefer to pay very large once-a-year insurance premiums due to the slightly lower cost (given by our insurance company) when doing it this way.

(For the curious: We do have home-owners insurance.  It’s included in our mortgage, but I’m lazy, and I don’t normally break that number out here in the insurance section.)

 

Other

Other spending was $408.  The “Other” expense category is something of a ‘catch-all’ for all the expenses that don’t fit anywhere else in this monthly report.  Any expense that doesn’t fit into the other categories, I put it here.

In December we didn’t have as much “Christmas spending” as we did in November, but a couple of gifts snuck their way onto our credit cards.

Here’s the breakdown of our “Other” spending:

* $150 – Another month of swimming lessons for the kids.

* $39 – Some misc. parts and pieces from Home Depot for a home improvement project.

* $10 – Assortment of small M3 bolts and nuts for a project. (this kit from Amazon)

* $125 – A Christmas Gift from Home Depot.

* $54 – Drivers license renewal for Mrs. Tako.

* $13 – A few nice large photos of the kids for the grandparents.

* $5 – A pair of work gloves for Grandma Tako (a Christmas present).

* $12The Terrible Two Get Worse (a book for our nephew).

It certainly seems like a lot of things fell into the “Other” bucket in December!   I think we tend to spend more when we’re buying things online from Amazon.  When there is no-friction from having to drive to the store and shop, it’s almost too easy to spend!

 

Cumulative Expenses For 2020

How much did we spend?  In 2020, the Tako family spent $41,891.  This works out to an average monthly spend of $3,490.  With passive-income (mainly from dividends) of $60,737, our spending was comfortably less than our passive incomeThat’s an excess of $18,846.

That’s great!  We didn’t need to sell any stock when the stock market was “in a funk” either!

As long as we spend less than our dividend income, we’ll never need to sell-off assets to live.  Any excess cash that we don’t spend will eventually be reinvested by making additional stock/fund purchases.

net expenses Dec 2020

All-in-all it was a good year financially.  Our income held-up under difficult economic conditions, and our expenses were down.  Certainly there were some rough patches to 2020, but our financial plan pulled-through with flying-colors.

Hopefully 2021 will be a much better year — with a healthier world, and a lot more traveling!

 

December 2020 Investing Update

Once again, on the investing front it was quiet in December.  Stock prices were rising quickly, but I didn’t have much enthusiasm for paying high prices.  Oh well!

Instead, I wrote a few put options on Axos Financial (Symbol: AX) and made a little income on the side.  At a strike price of $30/share, I would gladly buy those shares if the option ever got exercised, but sadly that’s unlikely.  The shares of AX are trading at $37.53 today.  I’ll simply have to pocket the $246 of income received from writing those options.

With shares of Axos Financial up 50% since October, this investment has worked out very well so far.  The extra income from the options is just a added bonus on top of the capital gains I’ve already seen.  My preference (of course) is to own more shares, but sometimes Mr. Market comes to his senses and realizes that certain stocks shouldn’t trade at basement-bargain prices afterall.

While some people believe the stock market is currently in a bubble, I believe the bubble only exists in a few of the most popular tech companies (Tesla, Apple, Zoom, Facebook, etc).

There are plenty of good companies out there, at reasonable prices — Companies like Axos Financial, or J.P. Morgan Chase are good examples.  Excellent companies, trading at very ho-hum prices…  Not everyone will agree with me of course, but this is the beauty of investing — There’s a million different ways to make a buck!

Happy 2021 everybody!

 

[Image Credit: Flickr]

 

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32 thoughts on “December 2020 Dividend Income And Expenses

  • January 3, 2021 at 4:33 AM
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    Your year end net worth must have exploded for 2020. Do you ever look back at like 2015/16 and say wow? I do.

    Happy New Years to you and yours!

    Reply
  • January 3, 2021 at 6:50 AM
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    Which cell phone company do you use to get an annual cost of $12 a year? Does that include internet access? Also do you have a list of stocks that you own to generate that massive amount of dividends in a month published? And are they in a tax free account? If not, how do you account for taxes? I’d like to learn what they are and follow your footsteps. Thanks and keep on writing. I love following your monthly musings.

    Reply
  • January 3, 2021 at 9:52 AM
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    Boom! What a way to end the year. That’s amazing to see that your dividend income completely covers your expenses. Great work Mr. Tako.

    Reply
  • January 3, 2021 at 10:43 AM
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    I have the same questions as Andrew Wong, specifically the cell phones, do you have a limit on a number of mins/texts?

    Reply
    • January 3, 2021 at 4:58 PM
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      Please see my reply to Andrew Wong. All this has been covered before several times.

      Reply
  • January 3, 2021 at 10:49 AM
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    Also, how do you decide how much to allocate to a specific share out of your total portfolio amount?

    Reply
  • January 3, 2021 at 11:05 AM
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    Your expenses are so much lower than ours and I thought we were as tight as we could be. I need to study our expenses better. Thanks for sharing.

    And those food look seriously delish.

    Reply
  • January 3, 2021 at 11:54 AM
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    What insurance company do you have?

    Reply
  • January 3, 2021 at 2:51 PM
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    Awesome month and year-end, Mr. Tako! I slipped on over to your net worth page and you’re definitely crushing it! Obviously, that flows with the market, but it’s always comforting to see that regardless.

    Now I have to go eat dinner… your food pics made me hungry!! 🙂

    Have a great 2021!

    Reply
    • January 3, 2021 at 5:02 PM
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      That net worth page is a year old, I’ll do an update next week!

      Reply
  • January 3, 2021 at 4:10 PM
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    Mr Tako, your pictures made my mouth watery and I’m trying to keep up my new year’s resolution to lose 6 pounds, gosh darn it!

    In all seriousness, I wish I could get to a point where I get paid $16k in a single month. For doing absolutely nothing. Have to take the first step somewhere right?

    Reply
    • January 3, 2021 at 5:03 PM
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      Yep, it all started with just a couple dollars. It grows and grows over time if you do things right!

      Reply
  • January 3, 2021 at 7:27 PM
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    Mr. Tako –

    That food… incredible.

    Also – very smart move with the phone plan – did not anticipate that one! So cool. Smart, smart.

    Nice job finishing off 2020 strong, definitely harder to find undervalued dividend stocks, but they are out there!

    -Lanny

    Reply
  • January 4, 2021 at 7:52 AM
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    Wow, nice job with the dividend income. You’re set at this level of expense.
    I’m looking forward to the net worth post. Most investors did quite well in 2020.

    Reply
    • January 5, 2021 at 4:28 AM
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      We had some winners and losers (airlines), so it was an OK year. New investments in 2020 knocked-it out of the park!

      Reply
  • January 4, 2021 at 1:15 PM
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    Congratulations on a stellar 2020. I’m admittedly an infrequent reader and cross over to here on occasion after reading Joe’s blog. I collected my last steady paycheck in 2013 in my early 40s. Since then I’ve been managing my investments including diversifying into real estate. I consider myself semi-retired since I do “work” a few hours each day. Also, like Joe, my wife continues to collect a paycheck. I’m too lazy to write a blog and it seems you, Joe and Financial Samurai seem to have it covered.

    Also congrats on investing when the market was down in March. I was going to go big at that time as well, but the eviction moratoriums put a dent in that plan. I expected rent collections to fall of a cliff so as a landlord I was conserving cash like crazy. It wasn’t until August that I felt confident that most tenants weren’t going to stop paying. I missed the boat, but I did benefit from the Q4 rally.

    Reply
    • January 5, 2021 at 4:27 AM
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      Thanks for stopping by Money Ronin! I’m glad 2020 worked out OK for you!

      Reply
  • January 4, 2021 at 3:30 PM
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    I’m sorry if you mentioned this before and I haven’t come across it yet – do you consider the put income in your dividend income calculations? Characteristic is different for tax purposes, but I do agree that it is passive and can be a way to juice the returns on your cash balances when those puts are secured by cash. Thanks for taking the time to answer!

    Reply
    • January 5, 2021 at 4:26 AM
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      No, I don’t consider ‘put’ income as part of dividend income. They are two fundamentally different things.

      Reply
  • January 4, 2021 at 6:31 PM
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    Great job Mr Tako. I’m continually astounded by your monthly grocery bill. I also agree that a few tech companies are overbought. I’m sure there will be a few dips this year…hopefully to relieve some of this steam.

    Reply
  • January 5, 2021 at 6:02 AM
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    Fantastic stuff Tako.

    You are an inspiration to alot of people. Congrats on all your success.

    We are starting to improve our diet. Do you do alot of food prep?

    Also I know you dont like disclose your portfolio but would you disclose your top 3 dividend payout companies? Would be interesting to see.

    keep it up
    cheers!

    Reply
  • January 5, 2021 at 1:22 PM
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    3.7% dividend income increase is impressive. By comparison, my dividend income was down 6.9% year-on-year. I reinvested all of my 2020 dividends. December was particularly rough on my portfolio. Through November, my dividend income was down 2.4% YTD-on-YTD. In December 2020, I only received 72% of the dividend income that I received in December 2019. I was hoping to maintain the 2.4% decrease for 2020 vs. 2019 but December destroyed any chance of that.

    Reply
  • January 6, 2021 at 8:48 PM
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    Great to see you posting again, Tako! I’m largely aligned with your view of the market (FAANG/Tesla/etc. overpriced, but a lot of reasonable stocks out there). Given that view, why not buy shares in some of the companies you call out, like JPM? I’m seeing enough opportunities in companies I like to suck up all my free cash flow. Berkshire Hathaway is another great company where I’d be surprised to get hurt at today’s prices.

    Reply

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