December can be a difficult month. On one hand it’s the coldest, darkest, and (at least here in the Pacific Northwest) the wettest part of the year. It can be rather depressing. You also have a great number of “cultural holidays” packed into the month — Christmas and New Years being the primary ones.
Not only are you expected to splurge on expensive meals and parties during the holidays, but gifts are frequently expected as part of those celebrations too. Ugh! I’m no Scrooge, but I’m really not a fan of obligation gifts.
All the cultural expectations can make December something of an expensive month for many folks. It’s also not uncommon for people to do too much “merry-making” and regret it later. Spend too much on the credit-card in December? Woops!
On the other hand, December is a really good month because it’s my biggest month of the year for dividend income. For me, this is cause for celebration. All the dividend increases for the year finally begin to arrive into my brokerage account. It’s the best part of December IMHO.
So how much dividend income did we bring in this December? And how much of it did we spend? Read on to find out!
Dividend Income In December
Dividend income in December was $15,329. Yes, we finally broke $15k in a month! This was by far our largest dividend month for the year, and that fire-hose of cash hitting our brokerage accounts was pretty amazing to behold. It always makes me smile! 🙂
After a slow month like November, December’s dividend income really helped round-out our cash flows for the year! For the full year, we averaged $5,269 per month, which is beginning to feel like “real money” now.
Here’s the breakdown of our 2021 dividend income:
Clearly, this was an amazing month for dividends. Dividends are not smooth income however. As you can see in the table above, we do see large swings in dividend income from month-to-month. This is normal, due to the varying payout schedule of the different stocks and funds we own. Some months (like this December) the passive income stream is a veritable river of cash, other months it’s just a trickle.
Most dividend payments occur quarterly, with the bulk of our dividend payments arriving in March, June, September, and December. For the ‘in-between’ months, (when dividend income is low) we keep plenty of cash on-hand to pay our expenses.
This December our household expenses totaled $4,010, which was a surprisingly expensive month for us. Three factors contributed to our December being more expensive than usual — car trouble (more on this later), Christmas gifts, and much higher food spending.
Here’s the breakdown of our December expenses by category:
Historically, in a normal month we spend around $500/month on groceries. This December however, grocery spending was a whopping $662! What the heck happened?
Well, we splurged a few times on some fancier meals, and stocked-up on bulk staples like rice at Costco. Higher grocery costs may also have been a factor. All this combined to produce a much more expensive grocery bill for December.
It definitely has me concerned, and I’m going to be watching our grocery bill a lot closer in the new year.
So what kind of meals did we splurge on in December? The most expensive meal was probably this dungeness crab. It’s expensive, but so delicious!
We also splurged on plenty of other expensive proteins in December — Both beef and pork in this Japanese dish called sukiyaki. It’s kind of a hot-pot type dish that you eat from a bubbling pot of goodness in the center of the table. The thin-sliced beef in this dish is really expensive!
Most protein has gotten a lot more expensive in recent months, due to inflation. This didn’t deter me from using plenty of delicious bacon however. It’s one of my favorites ingredients to use in a side-salad, which I did with abandon here:
For our family Christmas dinner I made a “fusion” meal of sorts — A Japanese and American combo. Tonteki-style pork chops with crispy fried garlic on top, mash potatoes, gravy, and steamed broccoli. Honestly, it tasted amazing!! The combination really worked!
Another expensive-but-oh-so-delicious meal in December was tarako spaghetti. Tarako is a form of marinated fish egg (usually pollock or cod), that’s frequently used in Japanese and Korean dishes. It comes in two forms — plain and spicy. I prefer the spicy! Typically it’s very expensive, so we don’t eat it often. As a holiday treat, Mrs. Tako made it for me on my night off from cooking. It’s one of my favorites!
Even our less fancy meals were more expensive than usual in December. We eat a lot of salads in the Tako household, which are normally quite affordable… but I couldn’t resist adding a bunch of smoked salmon one night. Oops!
As you can see, we did a lot of feasting this December. This is why our food budget was way above “normal”. It’s totally my fault, but we certainly enjoyed ourselves, eating all these wonderful (but expensive) proteins.
Now that it’s January, it’s time to get our food budget back on track. Hopefully our food spending will return to normal again soon.
Fuel spending in December totaled $84. This was a very low fuel bill for the month, and amounted to 2 fill-ups of gasoline for our cars. In general, the weather was really bad in December, and being winter, it was also dark a lot. We didn’t do a ton of driving. Also, the growing number of COVID infections was a deterrent that kept us home more than usual.
As usual, our single largest monthly expense is our home mortgage. This amounted to $2,313 in December. This mortgage amount includes interest, principal, insurance, and taxes.
Depending upon where you’re from, this might seem like a lot, or a little for a place to live. In my view, housing is extremely expensive here in the Seattle area. Most single family homes in our area sell for over $1 million dollars!
While technically we could pay-off our remaining mortgage at any time, we’ve chosen to retain the money and hunt for better investments instead. So far this has proven to be a very effective strategy. U.S. stock markets have returned far more than our home equity during the life of our mortgage.
Our internet expense for the month was $45. This is the regular amount we pay every month for 100Mbps cable internet from Comcast (our local cable broadband provider).
For the price, it’s OK, but I just heard that Comcast will be raising prices in 2022. Dang inflation! While there are certainly faster and slower internet packages available, we’re pretty happy with the speeds and service we’re getting.
Mobile phone spending in December was $0. Yes, $0!!!
This might seem shocking to some people, but we choose to pay our mobile phone service once a year. We last did this in May of 2021, and it amounted to $34.50 for our two phones. (Note: This low cost service does not have a data plan)
When we do need a data plan (such as during a vacation), we use Tello. Pre-paid data plans from Tello are an extremely low cost way to get one. Sometimes as low as $5 per month (with 2 gigs of LTE data)!
If you’d like to a similar low-cost plan — watch for promotions. Tello seems to run a promotion every couple of months, and then go sign-up using my referral code: p3s4bkgq to receive $10 off. (That’s basically 1-month free just for using my referral-code!)
Utility spending in December amounted to $106. This amount was our electricity and natural gas bill. It was very reasonable, despite the cold weather. This was our only utility bill for the month.
If it seems strange that we only had one utility bill, please understand that most of our utility bills are NOT billed monthly — some are bi-monthly, and others are tri-monthly. This means our utility spending can vary greatly from month-to-month due to the billing cycle. December just happened to be a very low cost month for utilities.
Insurance spending in December was $0. This was expected. Most of our insurance spending regularly occurs in October, due to the annual billing cycle. We choose to have an annual insurance bill, due to it’s lower cost.
(For the curious: We do have home-owners insurance. It’s included in our mortgage, but I’m super lazy, and I don’t break that number out here in the insurance section.)
Other spending in December was $789. This was an unusually large amount of money, primarily due to some necessary car repairs. Unfortunately, one of the seals in our car’s rear-hatch failed, and it wasn’t holding back the Pacific Northwest rains anymore. During a big rainstorm it leaked-inside and fried some electronics. This caused a very expensive repair bill of $530 (which is the price I negotiated it down to from an initial $810).
Most of the other expenses in the “Other” category were swimming lessons for Tako Jr. #2, and a few Christmas gifts. This year, we primarily shopped for Christmas gifts online.
Here’s the breakdown of our “Other” spending in December:
- $530 — Car repairs, due to water damage. 🙁
- $119 — Swimming lessons for Tako Jr. #2.
- $140 — Various Christmas gifts for family members.
Cumulative Expenses For 2021
For the year 2021, the Tako family spent a total of $48,899. This works-out to an average monthly spend of $4,074 for 2021.
Here’s the breakdown of every month of spending in 2021:
This year, our spending was 1.4% of our taxable portfolio. When compared to our 2021 dividend income of $63,238 — This seems like a fairly safe “withdrawal rate”.
Frankly, I think we’re in great shape! We spent less than our dividend income! This is exactly where I wanted to be in 2021. My goal was to underspend our dividend income for the year, which we did by $14,339. This extra cash will probably be re-invested into stocks, funds, and other assets. Every bit of compounding helps!
That said, I think 2022 is going to be a lot more expensive than 2021. Our house needs a new water heater, and the outside needs a fresh paint job. Those items are going to be expensive. I also suspect we’ll be doing a lot more traveling in 2022 when the pandemic finally cools off (here’s hoping).
December 2021 Investing Update
December was a relatively quiet investing month compared to November. I made only one stock purchase for the entire month. I purchased another 300 shares of that medium-sized region bank I mentioned back in my November report. Same stock, I just added $30k more to our position.
As you might suspect from my recent stock purchases, I continue to believe that banks will do OK for the next few years (in 2022 and beyond). Bank balance sheets are (in general) in very good shape right now, and consumers are finally starting to put on debt again. Couple this with a few interest rate increases, and a little price inflation, and I think most banks will survive. Maybe even do better than just survive!
Perhaps I’m wrong about this, but lending standards seem much better than they were in 2008, and consumers are absolutely flush with cash right now (as evident from the incredible deposit growth at most banks). This seems like a great setup for banks, and I don’t see a repeat of the Great Recession happening anytime soon… despite last year’s massive increase in housing prices.
What do you think? Is there a better place to invest going into 2022? Let me know in the comments!
Thanks for reading!
[Image Credit: Flickr1]