September was another extremely busy month for the Tako family. Not only were we trying to get everything done before our big trip to Japan, but I took on some additional guest post writing in September.
I wrote these guest posts completely for free, because I like the people and the blogs involved. A little extra exposure for Mr. Tako Escapes never hurts either! The first post was written for DividendGrowthInvestor has already been published. The second post was for Mr. 1500, and should be published pretty soon.
I’m a fairly slow writer, so my thanks goes to DGI and Mr. 1500 for their extreme patience. It was certainly a stressful month trying to get it all done!
Now, onto the expenses!
Expenses In September
Expenses in September amounted to a ridiculously high $7,607! Nope, it isn’t Halloween yet… but those expenses were scary to see!
What caused the spike? Well, insurance is what happened! (More on this later)
Food expenditures for September were abnormally low at $336. I believe this was our lowest monthly food spending of 2017. Our average food spending is typically about $500 per month, so food expenses were very low in September.
Why? We did very little shopping the last two weeks of September because of our trip to Japan. We focused on trying to cleaning-out the fridge, and not on buying more food.
That was the plan at least… until we were gifted about 12 pounds of garden grown tomatoes.
Free garden-grown organic tomatoes are not something I can easily turn down, so I ended up being a tomato cooking-fool for a few weeks in September — I made pizza , huge batches of my roasted salsa, tomato juice, curries, and plenty of fresh salads.
Needless to say we were eating a ton of tomato dishes the entire month of September. The end result was an empty fridge, a freezer full of salsa and pizza sauce, and some very low food expenditures for the month.
Fuel spending at $97 for the month came very close to our average of $100/month. This was a slight surprise, because fuel prices were quite a bit higher in September because of the hurricanes. I guess we must have driven a little less because the high fuel prices appear to have had no effect.
Mortgage & ChildCare
Mortgage and Childcare costs were slightly elevated in September at $4570. This larger amount was mainly due to an annual fee increase at our daycare, and the annual registration fee for two kids…. grumble… extortion… grumble! The cost of childcare now exceeds our mortgage.
Meanwhile, our mortgage payment went down by $90 because of a escrow tax readjustment.
While our Mortgage and Childcare expenses are very large, we consider them entirely optional. Why? We could eliminate 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 we could simply pay off the mortgage with cash.
Our bi-monthly water & sewer bill came in at $290 for the two month period. This was larger than what we’re used to, but I have no idea why we would be using so much more water. At any rate, I expect our water bill to begin dropping now that fall is here, and electricity use should begin to rise.
Overall, I think these seasonal changes to our utility bills end-up being a wash over the course of the entire year despite the big swings in water use during the summer and natural gas in the winter.
Insurance was the real killer in our September expenses — we had to renew our auto insurance.
If you recall, last year we were involved in a lawsuit because of a car accident. Mrs. Tako was pregnant with Tako Jr. #2 at the time, and had a car accident. The other driver sued us for additional money outside what was covered by insurance policies.
To make a long story short, the case eventually went to a mediator and everyone involved settled. The amount wasn’t cheap, but we were glad to be done with the lawsuit.
I think it’s important to point-out something here: We don’t drive expensive cars, but other people definitely do. If you have a wreck involving a expensive car, the payouts can be large and will affect your insurance.
One year later after the lawsuit, our insurance company (Pemco) decided to increase annual rates by 58% to $1,932 because of the lawsuit and settlement amounts. That’s almost double what we would be paying if the lawsuit and accident hadn’t occurred.
I shopped around our auto policy before we left for Japan, but nobody was cheaper than Pemco. So screw-you Pemco and your ridiculous 58% increase, but thanks for being cheapest… I guess.
The ‘Other’ category contained a number of Japan-trip related expenses like — a tablet case and screen protector ($20.68 combined) for the kid’s tablet (to protect against damage while traveling), and two international driver’s permits ($22 each).
Rather than paying for airport parking for our trip, we also elected to take a shuttle to the airport. This is similar to taking a cab, but it ends up being a bit cheaper overall. The cost was $152 for the airport ride and the return trip home at the end of October.
Our cumulative expenses for the year are now $54,564, which is roughly what we spent in 2016. This means 2017 is going to be considerably more expensive, with 3 months remaining.
Outside of daycare costs and our mortgage, we’re actually pretty frugal people — core expenses have only amounted to $15,239 for the year. While our mortgage and daycare are quite expensive, those expenses certainly won’t last forever.
The cost of daycare in particular is going to be one expense that I will celebrate when it’s finally gone.
Dividends In September
While dividends in August were nearly non-existent, September turned-out to be a completely different story — we hit a new monthly high (not counting unusual circumstances).
Dividends for September amounted to $9,512 in our taxable accounts. This brings our annual dividend income to $39,271. Nice!
While this month’s dividend income was larger than our expenses, overall dividend income is actually trailing expenses this year.
But don’t worry, it’s all OK! Mrs. Tako currently covers the difference (almost entirely the cost of daycare) with her job income. This expense will disappear as the kids get older.
Eventually the kids are going to start school, and our total expenses will fall well under our current dividend income levels. It’s all part of our Evil Master PlanTM.
I’m also behind on my Dividend Growth Plan for the year. I fully expected to invest more cash this year, but good investments have been hard to find. Surprisingly dividend increases have been rather good this year, I expect to see a 5% growth in overall dividend income for the year.
Please remember: This dividend income is from taxable accounts only. We’re not touching our tax-advantaged accounts at this time. All dividend income in our tax-advantage accounts gets reinvested.
The Sleep Report
This really should be the “lack of sleep report”. With so much going on in September, I hardly slept more than 5 hours most nights. Some nights I even saw considerably less sleep than that… There was just too much to do.
I really need to get back on track with my improved sleep schedule, and I’m afraid that’s not going to be able to happen until November (after we return from Japan).
That said, I can already feel myself falling asleep faster now that we’re on vacation — all the extra walking seems to be really helping. Maybe I just need more exercise?
Investment Changes In September
We made no investment changes in September. After buying shares of Southwest (LUV) in August, I was on the lookout to buy more. Mr. Market didn’t agree to lower his price in September, so those addition purchases didn’t happen.
Which is totally fine, I’m not any hurry to buy some expensive stock. I’d rather wait for a fair price.
If I didn’t care about our long-term rate of return, I would simply dump the cash into an index fund and be done with it. It would be way easier.
But I do care — I care a lot about long-term returns. The difference could be the difference between early retirement success or failure.
Eventually this long bull-run party is going to end, and future returns will probably be lower than what we’ve seen over the past 9 years. If that happens, I’m preparing for small (sub 6%) or negative returns for the next decade.
P.S.: I’ll be starting our Japan Trip series next week! Don’t miss it!
[Image Credit: Flickr]