It was the best of times. And, it was the worst of times. That pretty much sums up March in our household. It was definitely good times with the whole family at home, nice spring weather occurring, and enjoying life as best we can under lockdown. Meanwhile our investments provided ample income to cover our cashflow needs.
Conversely, it was the worst of times because the whole world got freaking sick. A black swan happened. Stay at home orders were issued, businesses closed, planes stopped flying, people stopped traveling, and the stock market tanked. We’ve been under lockdown for 5 weeks now!
Remember back in February when I said a recession seemed likely? Yeah, that recession is pretty well dialed-in at this point. No stopping the recession train now.
I won’t lie, our portfolio is down a bunch — it’s the largest single drop in net worth I’ve ever lived through. It probably won’t come back anytime soon either. Returns on investments are likely to be low for years, while the world recovers from COVID-19.
This isn’t the end of my financial independence journey however. My FI planning expected a black swan to happen… sooner or later. I’ve always used withdrawal rates much lower than is conventional, and held way more cash than necessary… knowing that one day something was going to go very wrong.
I just didn’t know what it would be, or when it would happen. “Expect the unexpected” as the saying goes.
Well, that black swan actually arrived in March. I’m not happy about the big declines, but our lifestyle still seems pretty secure (as secure as anything can be in this crazy new world).
Dividend Income In March
Dividend income in March totaled $12,525. Yes, that number is correct. It’s not a typo. March was a very good dividend month for our holdings, providing ample cash flow with which to live and spend. This number is up 12% from the prior year, so I’m extremely pleased to see this kind of income growth.
Will our dividend income hold as the recession hits? I have no idea! I have guesses, but nothing is certain at this point. It’s uncharted territory for the entire world. We’ll just have to find out as time goes on. I’ll definitely report the numbers here!
Expenses in March totaled $5,263. This number is a bit abnormally high, partly because of an extra utility bill this month, higher internet expenses, and a childcare payment when no actual child care occurred (more on these topics below).
Here’s the breakdown by category:
Food spending in March was a usual $488. We typically average about $500 a month for a family of four, and despite my concerns about higher food prices, our grocery bill remains normal (so far).
What can we eat on $488 a month? Pretty much anything we want! In our household, good food is an important part of leading a good life. We tend to indulge pretty heavily.
Our menu tends to be pretty heavily Asian inspired. With lots of Japanese, Thai, and even a few Vietnamese recipes. There’s also the occasional Western dish thrown in to keep things interesting.
Lately though, I find myself making a lot of lunch sandwiches with the kids home 24/7. Both kids are homeschooling now, so I don’t have a lot of time to prep lunch. Sandwiches tend to be quick and easy.
Kids also like sandwiches, so that helps a little.
For the evening meal I’ll usually prepare something a little fancier. One of my favorites this month was chicken katsu curry.
This is a very popular Japanese dish that involves panko fried chicken, and a Japanese curry (not extremely spicy). It’s not a fast recipe to make, but it tastes delicious!
Curries are actually pretty common in our household. We’re big fans of Thai, Japanese, and even Indian curries. The kids don’t like too spicy food, so we tend to make less-spicy versions.
Like this “coconut curry soup”, which uses a mild Panag-curry:
We’re not against “Western” food of course, sometimes we even make pizza! Like this bacon-sausage pizza:
We paired that lovely pizza with a Japanese tonjiru. It’s a kind of Japanese miso soup with added meat (usually pork).
It was a Asian-Western fusion meal!
Things like pizza and pasta tend to be problematic however. Mrs. Tako has a gluten allergy, so we don’t eat a lot of bread, pasta, or pizza. That pizza picture above? It’s actually made with almond flower.
Rice noodles, or konyakku are substitutes we utilize for her when it’s a good fit. For example, one night this March we had tarako spaghetti noodles (it’s a kind of Japanese spaghetti that uses fish eggs). A typical serving looks like this:
Meanwhile, Mrs. Tako has to substitute pasta noodles with konyakku. It’s a kind of asian yam (it’s like gelatin) that’s often made into noodles.
Her version of the same dish, looks like this. The noodles aren’t quite the same.
It’s not easy making separate batches of food, so I tend to shy away from recipes with gluten. Usually I cook with lots of vegetables. Salads are always on the table…
As well as a good stir-fry…
(bacon, radish, and asparagus in this case)
Most of the time it feels like we’re eating like kings! We take our pick of the world’s best recipes, and still manage to keep our food budget around $500!
Being locked down for most of the month, we did very little driving. Fuel expenses (gasoline) only amounted to $62 (half our typical number). Both of our cars can probably get through April without another fill-up at this rate.
If there’s one big advantage to this COVID-19 lockdown, it’s that there’s so little traffic these days. The air is better, people are walking outside more, and many people are saving time not commuting. Driving is now actually quite pleasant when we need to go out for groceries. No traffic, no delays, just smooth sailing down the road.
Mortgage & Childcare
This is the one category that really irked me this month. Like most months, our mortgage and childcare expenses were our two largest expenses in March. The two expenses totaled $3,945.
Unfortunately we paid our childcare bill for the month … and then all schools and daycares got closed. That’s right, we dropped $1585 for the month, and then got practically nothing for our money! Arggh!
I was unhappy about this turn of events, and we’ve been working to get a refund for most of the month. Unfortunately, the daycare hasn’t been “quick” to respond, so we probably won’t see a refund until April.
At this point, we’ve also decided to remove Tako Jr. #2 from his language immersive daycare. The original plan was to have him end daycare in the fall, but COVID-19 has moved up our timetable.
This is actually good news! Daycare has been a big financial drag that I’m happy to be rid of. Our monthly expenses are now officially $1585 cheaper every month!! That’s an annual savings of $19,020. This is going to be huge for our budget!
Internet expenses in March were higher at $57.70. It’s higher because we just rolled off of a yearly contract. I typically just call up the cable company before the bill is due, and then ask for whatever specials are going on at the time.
And that’s exactly what I did in February. It worked like a charm, but for billing reasons we still have to pay the $57.70 in March, with a lower bill in April.
Starting in May, our monthly internet bill will be $45 for 100mbit cable internet service.
Utilities in March were unusually expensive. A grand total of $532. We got hit with a water bill ($243) and two (yes two!) electricity/gas bills. ($147 and $143.)
This was a timing thing, and we got unlucky enough to have all three of these bills come due in March. It was no big deal of course, we have plenty of cash on-hand and ample cash flow from our assets to deal with these kinds of financial bumps.
Insurance costs in March were $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.
Now that COVID-19 has everyone locked down and not driving however, I wonder if annual payments were the right strategy. I hear many people are getting insurance refunds from their insurance companies because they aren’t driving.
I doubt we’ll see a refund (because we already paid for 12 months of insurance).
(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 expenses in March amounted to $177. Most of this amount was for tax preparation services $115, and a quick trip to Home Depot ($13) for some project supplies, and a trip to Michael’s ($19) for the kids’ shield project.
With Tako Jr. now engaged in “E-learning” at home, he’s also spending a lot more time on a tablet. I thought it made sense to pick up a durable case for the tablet he’s using. We purchased a Unicorn Beetle Pro case from Supcase. Yes, that name is absolutely awesome, and so is the case.
It’s an extremely durable tablet case, and yet not bulky! The kickstand is a big benefit for when Tako Jr. is doing a Zoom meeting with his class, or watching an instructional video. Totally worth the $26 in my opinion.
Cumulative Expenses For 2020
It’s going to be a bit of a crazy year due to the coronavirus, so I’m planning extra variability in our expenses for 2020. That said, during the first 3 months of the year we’ve been able to keep things fairly affordable.
For the year, we’ve spent $8,603. That’s better than 2019, but skewed because of the car sale in January.
Without daycare expenses going forward, I expect we’ll also see a decent drop in our annual expenses. Will it be enough to keep our expenditures under our dividend income? Here’s hoping!
March Investing Updates
The investing report for March has a little good news and mostly bad news (as you might expect). The bad news is that stocks are down. In some cases WAY down for some of our individual stocks. Travel related stocks like Southwest are in the dumpster, and nobody knows what’s going to happen with airlines.
Will airlines get a bailout? Will equity holders get destroyed as part of that bailout? It’s hard to tell, but I’d put even odds on either event occurring.
Thankfully, Southwest (LUV) made up only a small percentage of our portfolio.
The second bad piece of news, was that several of the put options I wrote back in February got called. This means I had to purchase additional shares of our holdings at less than ideal prices (DFS, DAL, and the WKEC). Right during the market drop. These purchases amounted to around $60k.
Shoot! While this was not idea, I couldn’t have foreseen the sudden and extremely rapid drop in the stock market. The timing was just bad luck I guess.
I consider myself a long-term holder and with a decade (or more) left to hold these stocks, the game isn’t over yet. There’s still ample opportunity to hold these stocks and earn money. It just might take awhile. Patience is a virtue.
The good news is that stock prices are now much cheaper than they were back in February. We started buying shares in our taxable accounts in March. As I mentioned in Week 3’s lockdown update, we put $135k into the market.
Prices have risen since then, but I’m still keeping plenty of spare cash “just in case” stocks fall further. In this kind of environment, having some spare cash is not a bad thing.
It’s been a rough month, but I’m extremely thankful that the Tako family continues to remain healthy, and on a solid financial footing. Life could be far far worse, all things considered.
Take care everybody! Hopefully this crisis will be over soon.
[Image Credit: Flickr]