It’s hard to believe that I’m already back here writing a monthly financial update for the blog so soon! It seemed like only yesterday that I was wrapping-up September, and now I’m doing it again for October.
Time flies when you’re stuck at home during a pandemic, with two kids! I do my best, but I think both kids would rather being going to school and seeing their friends instead of being stuck at home.
We tried our best to stay active this October, but it’s getting harder and harder as the weather gets cooler and wetter. On the rare dry days we did get this October, I tried to get the kids outdoors as much as possible.
At any rate, October was a little disappointing this year. Rather than taking the kids trick-or-treating on Halloween, (and potentially exposing ourselves to a nasty virus) we just decided to stay home and stay virus free this year.
Everyone managed to stay healthy (and cavity free I might add), but it sure didn’t have the same feel with out all of the traditional Halloween activities.
Oh well, maybe next year!
Dividend Income In October
Dividend income totaled-up to $704 in October. While this total is not nearly as large as the mega dividends we saw back in September, it’s always nice to have any passive income rolling in.
For those of you not aware, dividend income tends to be quite ‘lumpy’. Most stocks pay dividends quarterly, so this means most of our dividend payments will pile-up into to the months of March, June, September and December. A few stocks pay outside these usual windows, which is why we have much smaller totals in the off-months. October was one such “off” month with $704 of dividend income.
For the year so far, we’ve collected $46,077 in dividends. Most stocks in our portfolio haven’t cut dividends because of the pandemic-recession, and our passive income sources continue to fund our ridiculously nice lifestyle. We’ve been lucky.
With just two months left in 2020, there is still a small possibility that some stocks could cut the final dividend payment of the year, but this seems increasingly unlikely the closer we get to the end of the year.
At the start of 2020, I predicted a year of poor dividend growth. This turned out to be completely inaccurate, and I’ve never been happier to report, “I was wrong!”
Tech stocks remained quite expensive throughout the year, but a declining stock market in “non-tech” stocks allowed us to compound new money, and ultimately grow our dividend income for the year.
Household expenses in October totaled $4,370. That’s a pretty large total compared to what we’ve spent most months in 2020, but there were very good reasons for this big increase. Expense growth this month was mainly fueled by insurance, and car licensing expenses that only occur once annually (more on these later).
Here’s the breakdown of our expenses by category:
Grocery spending was $433 in October, which is slightly lower than average for our family. Typically the Tako family spends around $500 per month on groceries, so it’s good to see a lower cost month once in awhile!
This month included two rather expensive trips to Costco to stock up on items like spices, butter, heavy whipping cream, chicken, and other food staples. Typically we avoid all the high-cost process foods that are extremely common at big-box warehouse stores. This saves a ton of money, and we can still eat very well on a low monthly food expense.
What kind of food do we eat on $433? All kinds of good stuff!
Since the weather has gotten cooler I’ve started making more soups and stews. On of my favorites in October was this bean & sausage soup.
I’ve also started to incorporate spicier dishes onto the menu. I’ve been practicing my Thai Holy Basil recipe, and it’s really getting delicious!
Classics, like this bacon and brussel sprout dish make regular appearances on our table table, when we can find fresh sprouts at a reasonable price.
To keep things interesting, I always try to incorporate new recipes into the mix at our house. In October, Mrs. Tako challenged me to make “Au Gratin Potatoes” for the first time. The challenge was accepted, and I think it turned out OK for my first time!
In October, my mom gave us a couple of spaghetti squash. I’m no expert at cooking these, but it seemed the best way to eat these was to prepare the squash like gluten free spaghetti noodles.
This turned out to be a good idea when topped with a white sauce, vegetables, and ground pork. Very delicious!
Japanese “home cooking” recipes also make a regular appearance on our table. This month we had “Hayashi rice”. For those of you not familiar with this classic Japanese dish, hayashi rice tastes a bit like thick beef stew over rice. Not exactly, but that’s a close approximation of the dish’s flavor. It’s very “home-style” Japanese food.
Fuel costs amounted to $60 for the month of October. We aren’t driving as much due to the pandemic, and this is perfectly OK by me!
We spend a lot more time walking or riding bikes around our neighborhood now, which is a great change from driving the car everywhere. It keeps us healthier, happier, and gets us outdoors more.
Something which is sorely needed during the time of COVID-19!
As usual, our largest single monthly expense is our home mortgage. This amounted to $2357.15. 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.
While we technically have the financial resources to pay-off our remaining mortgage at any time, we’ve chosen to retain that money and hunt for better investments.
This decision has proven to be a good one in 2020, with several good investing opportunities appearing. We had the necessary cash-on-hand and were able to make those investments because of our mortgage. If all of our money had been tied up in our home, it’s unlikely this would have happened.
Typically, our internet expense is $45 per month for cable internet. This was not the case in October. During the month, our internet service provider (Comcast) messed something up and we had an all-day outage. I politely requested a reduction in our monthly bill as compensation. Comcast reduced our October monthly fee to $35.
While a internet outage is never ideal in this day-and-age, a reduction seemed fairer that paying full-price for the month.
If you’re curious, we pay 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.
In prior months, I skipped over mentioning the cost of our mobile phone service… mainly because it’s nonexistent. We paid $0 in October for our mobile phone service.
That said, I still get readers asking why we don’t include this item in our numbers… so I’m adding it now in all it’s boring glory! — Zero dollars.
Why is it zero?
Typically we prepay our mobile phone service once a year. This happened back in May of this year, and amounted to $35 for two phones. Yes, that was a annual amount. Google Voice handles most of our telephony needs for free, so why bother paying more than necessary?
Utilities in October totaled $61. This was our electricity and gas bill for the month. Yes, it’s quite low, but this monthly bill represents our energy use from September when the weather was still quite nice.
Now that cooler Fall weather is here, we’re using the furnace a lot more, and I expect our energy usage will climb to much higher levels next month.
Insurance costs in October amounted to $954. This was our car insurance (for two cars), which we pay once a year.
Why do we pay once a year? It’s cheaper! Our insurance company provides a small discount if we pay annually, so we’ve chosen to do it this way.
While $954 might typically be considered a large bill, please remember this only happens once a year. As long as we keep plenty of cash on-hand it’s not a problem to have a big bill in October.
(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.)
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. “Other” spending amounted to $470 in October, which is higher than normal!
Where did we spend all this “Other” money? Here’s the breakdown:
- $361 on vehicle licensing fees. This is our annual car tab cost for our two cars.
- $7 for a deep socket from AutoZone. This tool was need for some DIY car maintenance.
- $45 a small car part from Amazon.
- $33 for a Amazon Firestick 4k that went on sale starting Prime Day. This is a gift for a family member. (Sshhh, don’t tell!)
- $23 for miscellaneous fancy soaps and bathroom goods from Amazon.
Cumulative Expenses For 2020
For the year so far, the Tako family has spent $34,236. This works out to an average monthly spend of $3,423. With YTD dividends of $46,077, our yearly spending is $11,841 less than our total dividends.
Hey, that’s pretty decent! As long as we spend less than our dividend income, we’ll never need to sell stocks to fund our lifestyle. Instead, we can use that excess cash to compound even further by making additional asset purchases.
Generally speaking, the holidays (November and December) tend to be a bit more expensive than other months. We eat fancier food than usual, buy gifts for friends and family, and sometimes do a little traveling (unlikely this year due to the pandemic).
For the remainder of the year, I expect our average monthly expenditure will rise slightly from the numbers you see below, but we do intend to spend less than dividend income in 2020.
October 2020 Investing Update
If you’re a long-time reader of this blog, you probably know I’ve been hinting at a bank stock purchase for weeks now. This happened in October, when I finally did enough research and “put my money where my mouth is”.
Which stock did I end-up buying?
It wasn’t my first choice (we couldn’t get shares in my first choice), but I committed $30,800 to purchased 1200 shares of Axos Financial (Symbol: AX) in October for an average price of $25.66. Almost immediately thereafter the stock price rose quickly to where it sits today at $28.48. That’s a 10% gain in just two weeks!
Dang, that was fast! I only wished we’d purchased more shares before the price rose so quickly… but hindsight is always 20-20.
In addition to the share purchase, I sold a ‘put’ option for another 400 shares at $25. If the ‘put’ gets executed I’ll lower our average share price a bit. And, if the option doesn’t get executed I’ll collect $217 in income. Either way is a win-win in my book.
For several weeks leading up to this purchase, the low prices in many bank stocks had me considering buying a basket of banks all at once. However, as I did my research it became clear that some banks are going to compound a lot faster than others. Yes, when the tide rises it’s going to lift all bank stocks, but some banks will simply do better than others.
For now, I’ll leave the reasoning behind *why* we purchased this particular bank as an exercise to the reader. See if you can figure it out! As I mentioned in my post about bank stocks, not all banks are created equal. The differences are subtle, but should become meaningful over time.
That’s all for today! Catch you next time!
[Image Credit: Flickr]