Wow, it’s December already? The month of November absolutely flew by this year. Time flies when you’re recovering from a tiring month of overseas travel I guess.
At the beginning of every month, I write this regular post to review our expenses, dividends and investment changes for the prior month. Not only is this post a great opportunity to peek at all our gory spending details, but it’s the perfect opportunity for me to review our progress against annual goals.
Unsurprisingly, this year is going smashingly well because of the ongoing stock market party…
Activities In November
November was a month of frugal-fun family activities. As you know, we maintain a economic garden at our home. Few things grow in the colder months of the year, but some garden tasks must be done in the fall.
Due to our travels, we missed many fall gardening activities… the most important of which is planting next year’s garlic crop.
We were late, but finally found a dry day in mid-November to get the planting done.
Garlic is one of those funny things planted in the fall, not in the spring. We were late this year, so I’m not sure if we’ll have a long enough growing season for a good crop.
The kids were finally old enough to help with the planting this year, and they had a great time digging holes and filling them with bulbs.
Our garlic bulbs were from last summer’s harvest, as they have been for many years. This is part-and-parcel when operating an economic garden — The last harvest seeds the next one.
Late November also means the start of the holidays. We enjoyed a potluck Thanksgiving dinner with some friends, and the kids were super excited to setup this year’s Christmas tree.
Expenses In November
Expenses in November amounted to $5,959.17. Compared to what we spent in October, this was a refreshingly low(er) cost month. We haven’t had a sub-$6k month since July, so I’m very pleased to see our monthly expenses return to ‘normal’ after the big trip to Japan.
Food spending in November was higher than usual at $642.93. Normally our monthly food spending is about $500.
Why the higher food expenses? Did we suddenly start shopping at a more expensive stores? Eating more expensive food?
Nah! In September (before we left on our Japan trip), we avoided buying any unnecessary food. (No point letting food rot in the fridge.) Once we returned from the trip, that empty fridge and pantry needed some serious restocking…. thus our higher than average November food spending.
Fuel expenses were also higher than usual in November at $137. We didn’t drive any more than usual, so I’m attributing this increase simply to the timing of our gas-ups, and slightly higher fuel prices in November.
Mortgage & Childcare
Mortgage and Childcare expenses were normal for the month at $4,450. Yes, these are our largest two expenses for the month.
We consider these two expenses entirely optional. Why? We could eliminate both of them 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 could be paid-off at any time with unused cash.
In time, I expect both of these expenses will disappear or be greatly reduced. For the mortgage, our long-term plan is to sell our home in this HCOL location (realizing significant appreciation) and relocating to a location with a better quality of life.
The cost of daycare will begin to decline next year when our oldest son (Tako Jr. #1) starts kindergarten, and will be eventually eliminated when both kids are in school.
Utilities & Internet
Utilities and Internet expenses came in at $321.83 and $49.99 respectively. The utilities paid this month were our bi-monthly garbage and water bills. Both were expenses were higher despite our usage remaining roughly the same. (Utility monopolies… ugh!)
November would normally see a big seasonal swing in our power bill due to colder temperatures, but we haven’t had to pay a power bill this fall. We pre-paid $300 back in August to collect some credit card rewards, and some of that balance is still outstanding.
Insurance for November was $0. We paid our annual car insurance bill in September, and that was a doozy! We pay our insurance costs in one big annual lump sum to save money.
As long as you’re good at saving for that big annual bill, paying in one big lump sum can be a good way to save money. Check with your insurance provider to find out if they offer this option.
The Other category in November came to $356.59. Normally we try to keep our “Other” category small, but November included several small holiday gifts and a very large car licensing fee.
Car tab licensing fees increased by a HUGE amount this year (essentially doubling) to $292.75. The increase in 2017 was due to a voter-approved increase of RTA taxes. (Yet another reason why driving old-beater cars is just a better way to live.)
Cumulative expenses for the year have now reached $67,715. This is significantly more than what we spent in 2016, and can be attributed to higher daycare costs and more travel spending in 2017.
Outside of daycare and our mortgage, we’re pretty frugal people — core expenses for the year are a mere $19,489. This includes all of our travel expenses, including that month-long trip to Japan.
My goal for the year is to keep our core expenses at 50% of our dividend income, and it looks like we’re set to reach this goal in 2017.
Dividends In November
Dividends in November amounted to $198. Compared to previous months this was a weak showing for dividend income — but not an unexpected one. Most companies and funds pay out dividends quarterly. It just so happens that February, May, August, and November are the weakest months for dividends in our portfolio.
Some people ask if we try to “smooth” our dividend income from month-to-month. No, we don’t. We ride out the ‘bumps’ in income by maintaining a healthy cash cushion. Currently this cash balance can pay all our expenses for about 5 years.
In total, we’ve received $43,057 in dividends so far this year. Will we meet our 2017 dividend income goal? After the December dividend orgy, we should be very close!
Investment Changes In November
In November, our cash balance continued to grow. Every time I looked away, those little dollar bills must have been reproducing. By the time November was over, there was $338,872 of those buggers to invest.
Obviously I would prefer to have a smaller cash balance, but equity prices are elevated. As I mentioned in The Stock Market Holiday Party, the S&P 500 earnings yield is now 3.95%. That’s historically very low, which means prices are probably high.
Our November investing plan originally included buying more Southwest (LUV) shares… but the stock market went a little insane toward the end of November! Shares of Southwest went up over 10% in the span of just a couple days!
Why the sudden rise? Apparently in response to the proposed U.S. corporate tax cuts.
Most investors would be thrilled to see stock prices rise, but I’m a different kind of octopus. As a net purchaser of stocks over my lifetime, I prefer lower prices over higher prices whenever possible.
That’s OK though, I’m perfectly content to sit on my Smaug-like horde of cash until a better investment or price comes along, It’s times like this when I pick-up a good book and read instead of worrying about markets.
My current book is something of a treasure in itself… I was able to borrow a copy of Seth Klarman’s book Margin of Safety. This book is so incredibly rare that it retails for over $1000 on Amazon. Yes, really!
I have no idea if the book is truly worth the price, but I’ll let you know when I’m finished. Maybe I’ll publish a little “book report” if there’s interest.
In the meantime, Happy Holidays!
[Image Credit: Flickr]