Saturday, May 16, 2015

April 2015 Budget

Staying on budget is easy I am finding when nothing breaks down with your house or your body.  All house systems kept on going and the family resisted all sorts of bacteria and viruses remaining healthy for the month.  I am very pleased to say we came under budget for the month.  How much did we save?  Let's take a look.

Income
There was nothing out of the ordinary in the income department.  2 paychecks and I did get a small tax refund from the state.  That money went into my house repair fund as we are using that and our federal tax refund to replace our 20 year old HVAC (furnace/AC unit).  We found this great guy who does scratch and dent new units so the price he gave us was half the estimates of other companies.  The warranty is still good for 10 years.  He just said there may be a scratch in the paint job or a small dent on the sheet metal.

Other income was from my lovely friend the dividend.  I wrote about that earlier this month.  The only change in that department was changing my taxed dividends to not reinvest automatically.  There are too many bad stocks in that account and I don't want any more of them purchased.  Instead I will build up and purchase stocks with little likelihood of a dividend cut.  These stocks will also grow there dividend at a rate that makes it worthwhile to be a dividend growth investor.


Needs
Category
Comments
Under K or Over J
Auto
No repairs and fuel was slightly over budget.  Money to the car fund!
K
Home/Personal Expenses
$383 under budget!
Only categories over budget were childcare and personal care.  We are still working on potty training the youngest with the goal of having her out of training pants before the baby is born.  Wish us luck as she is stubborn like her parents.  Also I am learning that haircuts for a family my size gets expensive.  When they were smaller we would just shave the boys heads with our home kit.  Now they want style and my wife and daughters won't let me shave their heads :-)
K
Utilities
I dropped Time Warner like a bad habit and am getting a better picture with Direct TV.  We will give this a go for 2 years and rethink getting rid of TV altogether.  For now I am saving $75/mo.  That combined with no water/sewer this month let me save $271.
K
Loans
2 Mortgage loans and 1 kid in braces.  Other than that debt free.
Fixed
Food
Saved $204 vs. my budget.  The food costs seem to have stabilized around $700/month for a family of 6 (for now).  I will most likely adjust the budget to reflect this mid-year.
K

Wants
We spent the whole budget here.  Hey what is life without a little chocolate and rocks.  I did not eat any rocks but we did buy several bags of them.  In an effort to reduce a reoccurring gardening expense I am slowly replacing mulch with rocks around my house.  First rocks last forever.  Second having rocks around your house deters ants from invading it every spring.  The other plus side is when it rains your house doesn't get splashed with mud.  All in all they look really nice and I will be adding more in the future.

Category
Percent
Comments
Dining Out
30%
Yearly visit to the Olive Garden.  We had some gift cards to use from my mom which helped.  Still expensive though when you add in dessert.
Gardening
22%
Fertilizer and Rocks
Misc.
34%
My wife still prints out photos for the kids photo albums.  When the apocalypse happens and there is no more electricity we will be able to look at our memories (that is what I tell myself to justify the cost.)
Candy
14%
My wife's monthly fix (yes I do eat some of it as well!)

Savings & Summary
February was my best month ever in my life.  I am proud to say it isn't anymore.  The DFG savings rate climbed to 20% this month.  That money was all socked away into the emergency fund and a new fund for the birth of the baby.  My healthcare kind of stinks and is a high deductible plan.  With that said the birth of a kid will max out the deductible so we are saving now to cover it all.  I am estimating at least $4000 to bring this child into the world.  Boy that would be sweet if healthcare was free and I could instead buy some dividend aristocrats instead to fund the baby's college.



I love pictures so above is a graph of my savings rates for each month since I started tracking things back in 2013.  It is not a pretty sight but I am definitely please so far this year.  The creation of a budget in Quicken has been a godsend to me.  Seeing how I am tracking against the month whenever I want has helped me make some good purchase decisions.  I hope your budget is doing the same for you.

Happy saving,

DFG

Friday, May 8, 2015

April 2015 Dividends

Doing better this month as it is only May 8th and I already know how much life I gained back last month.  Even without additional capital I am still working towards my end goal of financial independence.

Company
Held In
Dividend Paid (Qtr.)
Amount Received
Shares of Life
Note
CRWS
IRA
0.08
1.45
0.1786
Not sure why I bought this, no div increase since 2013
UBSI
IRA
0.32
32.93
0.8763

GPC
IRA
0.615
6.89
0.0739
%7 div increase
WIN
Taxable
0.392
30.3
N/A
Stopped automatic reinvestment
RSO
Taxable
0.16
18.58
4.1381
Div cut, time to sell
GE
Taxable
0.23
6.08
0.2269

WIN
Taxable
1.5
111.4
14.173
Div cut from reverse split
HRZN
Taxable
0.115
6.93
0.4964

VNR
Taxable
0.1175
0.26
0.0178

AGNC
Taxable
0.22
6.17
0.2853
Div cut for the June payout

I liked Dividend Life's view of the big picture so I updated my dividends page.  Most likely I will not retire until I can draw from my IRA so I am back to including that in my running total.  With that said my total for the month was $221 which isn't bad.  Almost could pay more quarterly water bill with that.   

The biggest change this month was the reverse split by WIN.  It was a 6-1 and the dividend was also cut.  I did get some shares of the REIT spinoff but we will see if that compares to the $.25 I was getting before the reverse split.

There is also some cleanup work I need to do with the dividend cutters.  Some are worthless and I will hold them as they are still paying something.  There are a few though I could sell and recoup some of my original investment.  Sentimental value is tough as I have never sold a stock yet.  I have to weigh the commission fee in any sale to see if it is even worth the $7 I would spend to part ways.

Happy dividend collecting,

DFG

Thursday, April 30, 2015

March 2015 Dividends

Well as the month of April comes to a close I finally got around to totaling up my dividends from March.  There were some increases most notably HMN with an 8% increase (see my review here).  Also upon review I came across some dividend cuts so now I have to decide on selling or not.  I should sell but if they are worthless and still paying a dividend I tend to hold on to them.  For example AGNC had a big sell off yesterday as the declared that dividend cut and now I missed the boat.

There was no additional capital put in March however my year over year dividends increased by 551%.   Checking out my dividends page the total dividends for March came to $63.48.  I am OK with that for now however I need to make further changes after using Dividend Life's cross-over calculator.  According to it I need to be saving 20% a year just to reach financial independence by the age of 65.  I still think the emergency fund should come first but now at least I know what I need to save and invest to reach my goal.  It was eye opening.  Check it out to see if you're on track. 

Company
Held In
Dividend Paid (Qtr.)
Amount Received
Shares of Life
Note
COP
Taxable
0.73
8.86
0.1359

AGNC
Taxable
0.22
6.11
0.286
Div Cut Declared for May
IBM
Taxable
1.1
4.43
0.0276

HRZN
Taxable
0.115
6.88
0.4811

VNR
Taxable
0.1175
0.26
0.0184
Div Cut in Feb, should have sold
NUS
Taxable
0.35
8.1
0.144
1% increase, slowed way down
CTL
Taxable
0.54
9.16
0.2628

FTR
Taxable
0.105
11.01
1.5041
5% increase, payout ratio  200%
HMN
Taxable
0.25
8.67
0.2528
8% increase


Happy dividend collecting,

DFG

Friday, April 17, 2015

Windstream Spin Off, dividend cut?

Windstream (WIN) is spinning off a REIT that will encompass most of its fiber/copper and real estate assets.  The goal of this appears to be a fancy way of ridding itself of debt.  The new company is called Communications Sales and Leasing, Inc. (CSAL).  As a stockholder will this be in my favor?  Let's take a look.

For every 5 shares of WIN I will receive 1 share of CSAL.  For example if I owned 1000 shares of WIN, after the spinoff completes I will own 1000 shares of WIN plus 200 shares of CSAL. 

The dividends will change from an annual $1/share for WIN all the way down to $.10.  The CSAL dividend is expected to be $2.40 per share annually.

WIN does mention it will sell its stake in CSAL to reduce debt.

I was confused by the next snippet in the letter to shareholders.  If you can explain it to me I would appreciate it.  The quote is "After giving effect to the interest in CS&L retained by Windstream, each shareholder at the time of the spinoff will receive the equivalent of a $.48 per share Windstream dividend per annum."  I am reading that as when WIN dumps it's shares of CSAL the WIN dividend will then go from $.10 up to $.48 per share annually.  Is that right?

So if a shareholder current owns 1000 shares they were receiving $1000 annually in dividend income (1000 * $1=$1000.00)

Initially after the spinoff the annual dividend income (total of both) will be
1000 * $.10=$100.00 WIN
200 * $2.4=$480.00 CSAL
For a grand total of $580.  This is close to half the current dividend.  A pretty major cut.

Even after WIN sells it stake and the dividend goes up a little it is still a cut.
1000 * $.48=$480.0 WIN
200 * $2.4=$480.00 CSAL
Total = $960

I understand why they are doing this.  With the current payout ratio trending to always be above 100% it would have been likely that the dividend would be cut (by a lot).  With this strategy they are able to keep the dividend close to the original but at the same time reduce debt.  Will this make the balance sheet better and get that payout ratio back to something sustainable?  Only time will tell.  Regardless the dividend isn't increasing so this is not a dividend growth stock.

Cut and run or hold?  What do you think?

Full Disclosure: I own WIN.

Thursday, April 16, 2015

March 2015 Budget

Argggg!  My first red month of the year.  No More Waffles wrote a post on to rent or own and you should read it (and the comments).  It really hit home last month (and this one too) as my home continues to fall apart.  The 20 year old furnace started acting up.  Winter was still in full swing in March so I couldn't just turn it off.   If I were single I could keep the house warm with space heaters and the ol' gas fireplace.  But the family demands comfort from me!  Such high expectations from 1st world citizens.

I have been putting a couple hundred dollars into it each year for the past 4 years.  Sure it provides my family with heat in the winter and cool dry air in the summer.  However it is one of my nemesis'.  I feel like the dad in the Christmas Story going down to the basement to do battle.  In this house and my last I could usually guess the problem and order the part online.  This time I had no clue and couldn't wait for a part to ship.  So I had to call my local repair man (the same one who put the furnace in all those years ago.

When he arrived he was pleasant as always (yes a big pay day from this guy).  Went down and after 30 minutes announced the main control board was faulty.  I can fix it for only $700.  I wept, I yelled (not really), and died some inside as my savings quickly disappeared for the month.  If I had a warranty or rented the bill would have been negligible or nil.)  Warranties run about $1000 a year or less depending on the age of certain things in your home (like a furnace). 

I have been gambling with the house devil a lot lately with no emergency fund.  Next month I will rant some more on this subject and hopefully you will either sympathize with me or have a good laugh.  For now let's see how the rest of the month went.

Income
I just wanted to mention my whopping 2 percent raise.  I guess that is what the average person gets within my department.  Seems kinda low doesn't it?  Compared to my last raise at my previous company (1%) it is double so maybe I should be happy.  This raise just doesn't compute as my company is doing well and the broader stock market easily beat 2% last year.  This is probably very similar to most of the working class out there.  I call it stagflation of my wallet.  Goes to show you can make more as a stockholder than you could as an employee.

Additional income was from those lovely dividends.  March treated me well with $63 of income.  While this couldn't cover any of my bills it will grow over the years.

Needs
Category
Comments
Under K or Over J
Auto
No repairs and fuel was under budget
K
Home/Personal Expenses
This was way over budget ($786) from a couple of things.
1) Still over budget buying diapers and clothes for the kids.
2) The evil furnace.
3) I even went over on buying things like toilet paper and toothpaste.  
J
Utilities
$200 over budget (quarterly sewer bill and high heating costs didn't help).  Should improve next month as warmer weather starts to move in.
J
Loans
2 Mortgage loans and 1 kid in braces.  Other than that debt free.
=
Food
Aldi's continues to save me money.  Saved $142.  This continues to be one of my biggest variable expenses.  Since I have control over this I am continuing to find ways to reduce this cost.
K

Wants
What happened DFG?  Went $50 over budget this month.  I don't recall eating out that much.  Ah I remember now.  We donated to my kids charity buy buying a truck load of candy bars at a dollar each.  I sold most at work but we kept about a hundred at home to feed the now pregnant wife with her favorite food over the next several months.  A price well paid and will give me months of hormone relief.  If your reading this my dear wife remember that I love you!

Category
Percent
Comments
Dining Out
8%
Only went out to eat with the family once this month.  Our best ever!
Charity
72%
Candy bars and a lot of them
Misc.
20%
Tax software and some movie rentals

Savings & Summary
It was a close month but the unexpected (and very expensive) furnace repair cost me my entire months savings.  My expenses exceeded my income by about $100.  Luckily I have built enough buffer in the emergency fund that I was able to cover the repair.

Savings rate for the Month = 0%  (well actually it was negative but 0 is the lowest I will go)

Congrats to all those who met or exceeded their savings goal for the month.  For those who didn't just keep on trying and don't give up.  Persistence is your luck.

Happy saving,

DFG

Wednesday, April 1, 2015

My Wealth Has Increased Dramatically

What is wealth to you? 
For most of the frugal and seekers of financial independence it means having more time to spend enjoying life.  Whether that is traveling or spending time with your family you have that choice.  Both my parents worked until they died (father) or retired (mom).  The time they spent with us kids was precious and my mom always says her happiest days in her life were raising us kids.

The problem I have is I also enjoy time with my family but between working for the man and the responsibilities of being a parent I find little time to spend having fun with kids.  With that in mind I guard my time wisely at work so that I don't have to bring it home while still doing a good job.  I also constantly look for ways to save more money at home to invest while not compromising our current standards of living.

Everyone values things differently.  For me wealth is time and who I spend that time with.  How do I increase that wealth?  Save as much as I can and invest it in dividend growth stocks purchased at attractive values.

Family is Wealth
This will become even more important when my next child arrives later this summer.  That is right, the DFG is growing again!  This addition to my wealth has caused me to drive even harder at reaching my FI goal.  The joy I experience when I come home and my kids rush to greet me is something I want to have more of.    The joy and happiness they bring into my life is way better than sitting in a political storm at work day after day and not accomplishing much. 

Sure changing diapers for 15 years isn't the most fun thing or cleaning up puke from yourself and the floor.  Buy hey you do crazy things for love.  I certainly would not do that at work.  Would you?

Thanks for stopping by,
DFG


PS this is not an April Fool's joke for you jokesters out there :-).  I really will have 2 boys and 3 girls come August.

Tuesday, March 24, 2015

February 2015 Budget

February is my best month so far this year and my best month ever since I started watching my expenses in 2013.  Between no more car payments and some other adjustments I was able to cut my spending and work towards my goal of rebuilding my emergency fund.  Let's take a closer look and see where I saved and where the DFG family went over.  Yes it is almost the end of March but better late than never.

Income
I have decided to follow some of my fellow bloggers and not look at any windfalls (bonus, tax refund, etc.) that might fall within the month.  I will look at my fixed budget (based on 2 paychecks in a month) and track whether or not I stay within that budget.  By keeping it simple I will have a consistent budget which will help me with my spending.

What about big purchases or travel?  That will come out of the emergency fund.  So if I do not have enough cash for it, it doesn't happen.

I liked the features of Quicken 2015 from Dividend Life's review so I decided to upgrade.  One of the features is virtual accounts.  You set it up and money is transferred from your checking to this savings account only in Quicken.  Say you have $1000 dollars in your checking account.  You transfer $200 to this virtual savings account in Quicken.  It will only subtract it from the Quicken account and not the physical bank's checking account.  Quicken will say you only have $800 in your checking account.  If you login to your banks website it would say you have $1000 still.

I may fire up a couple of those to help save for vacations and big purchases.  This will keep the funds in the emergency fund for what they were intended for.

Going forward I will be removing income from my posts.  The focus will be on my expenses vs. budget and how much I was able to save for the emergency fund.  Once I get my 2 months of expenses saved I will shift the savings over to my investment account.

Expenses
Another nice feature of Quicken 2015 is the Planning & Budget area.  In older versions of Quicken I never could get it to work properly.  That is why I started tracking my categories in Excel.  With 2015 it was intuitive enough where I was able to setup all of my categories just like my spreadsheet.  Then at the end of February I compared the two and the numbers matched!  Looks like I can retire the spreadsheet.

Another nice feature of the budget is you can set it up to rollover unspent money.  This is almost like having savings accounts for each category.  This is really helpful for the categories that fluctuates every month like your electric or gas bills.  Say over the course of the year you average $100 dollars on your gas bill.  For example, if I spent $50 in January because of a war winter the extra $50 would carry over to February ($150 to spend).  If February was extra cold and the bill was $150, I would have enough cash to cover it.

One of my discoveries is you need to start off the year with some kind of buffer of cash in each category.  If you don't have that buffer and go negative in January there will not be enough in your checking account to pay the bill.  So I started my budget with a one-time buffer.  This should not be an issue after this year as the budget will save that cash over the course of the year. 

Below is an example of my Childcare budget.



In last month's budget I wrote about all of clothes we bought our kids on clearance for the next year.  In the image above you can see in grey $132.  That is the average I spent on my kids per month in 2014 and is my budget for 2015.  In Quicken I can easily see I am still negative (red) in this category for February.  Without some initial buffer I would be in the hole and not able to pay my January bills.  So to balance it out my new goal would be to spend less than $132 to get that balance back to a positive number.  I did just that by spending only $82 in February.  If I keep that trend up I will rebuild my buffer to ensure there is adequate cash in my account to cover the bill.

So how did I pay that bill then you ask?   Well my buffer came partly from coming under budget in other categories.  For example my automobile budget includes saving each month for car repairs.  So I had some extra cash in my account because the cars didn't need repairs in January.  This is not ideal as that money was supposed to be set aside for when a repair is needed.  That is why it is important to have that buffer/emergency fund.

There were only 2 other categories that went over for the month.  The first was guilt free spending money.  Previously I had no budget for fun but with my car paid off I set one for February.  Unfortunately I set it after I spent more in this category than what I budgeted.  This should improve next month as I have a visual that I can look at any time to help me stay on track.

The second was utilities.  The cold winter where I live had an impact in January.  Both electric and gas were over budget.  These are rolling accounts so in the summer I hope to be under to build that buffer back up before next winter.  The other utility that contributed to the miss was my quarterly water payment.  Same applies to this and I will have 3 months to build that buffer up before the next bill comes.

Savings
So this was my lowest expenses for a month in 3 years.  Came in at $809 under budget.  All of that goes to build up my emergency fund.  Boy do I miss buying good dividend paying companies but as the sole income stream for my family I need that buffer.

One other extremely positive savings category was food.  My budget was $900 a month which does not include eating out.  The price of food was ridiculous last year so that is what I averaged.  This year something needed to change to rebuild my buffer and hopefully have some money to invest.

For February I came in $200 under budget. How you might ask?  Well I don't buy as much organic food as I used to but the big saver was from switching stores.  I am now a faithful Aldi's shopper.  I plan my menus around what the store has and pay in cash.  I actually feel good coming out of the store having some change in hand. 

Overall
I feel really good about this month and it gives me hope for the rest of the year.  There are some big changes coming to my family this year (still have to blog about that) so saving as much as possible is the key to a happy family and happy DFG (that's me).

Take care all,

DFG