Thursday, June 26, 2014

The Budget

Budget Organization

Some time ago I read a book (Name has been lost to me) that aligned how you use your money into five categories. If someone knows where this model came from let me know so I can give the person credit please. These categories fit into how most people could divide up their income.  I used to go overboard and categorize every expense in Quicken. This led to a messy budget I never adhered to. Last month I decided to start putting all expenses into one of these categories. That would be my budget going forward and hopefully help me save more. Let's take a look at each one and then I will share with you my target for each category.

Fixed

These are your needs. Certain essential items such as food, clothing, utilities and a roof over your head. I will go into more detail later on that roof piece. That is always a hot topic between my wife and I on our housing choices over the years. I even place things like diapers and basic necessities into this category. In other words I have to have this to perform some function in my life. I don't buy it to solely get enjoyment out of it. Believe me I even tried to save a buck and be green with cotton diapers on my first kid. I did not enjoy that and neither did the baby who got poked with those safety pins. So yes I do consider disposable diapers a need.

Long Term Investment

This is where this blog comes in. As an investor in quality stocks that will pay me a dividend, I budget so that I can invest monthly. This is the tough part because I am not doing so well here. When I show you what it takes to support a family of six these days you may choke a little and decide to keep the propagation of the human race in check at your house.

Savings

This is where short term cash goes. It includes things like your emergency fund. Savings for needs that are paid quarterly or longer intervals (think home insurance). If you are older it could be for living expenses that are held as cash. This is also where I stash cash until I invest it. I get a better rate than my money market fund. Both are in Capital One ShareBuilder accounts.

Guilt Free Spending Money

Some of the money you earn should go towards things you enjoy. This is a flexible area but whatever you choose to spend it on there should be no guilt associated with it. If you enjoy investing it could go there. If you enjoy dining out (especially on those nights you are too tired to cook after a long day of work) spend it there. Gifts for family and friends also come from this category. If money is short this is where you start to turn on the frugal side of your brain.

Charity

Why would I have a budget category for charity? You don't see that too often in most budgets. I live in one of the wealthiest counties in the world. What little I give to those goes towards their needs. This sharing of wealth teaches others to share and makes it a place worth living in. Charity doesn't mean just giving to the needy or your religion. I also give to causes I have a passion for (like The Nature Conservancy) and other charitable events at work and for family. This is probably the toughest one for me to stick to. I have to pay myself and the bills first. What is left gets split (unevenly) between GFSM (Guilt Free Spending Money) and this category. When I am older and pulling in more in dividends than I need to live off of I plan on catching up in this area. I am not perfect and neither is my budget. It is a guideline to try to live by.

The Breakdown

This is the breakdown from the book I read. I think it is geared towards the young and not someone older who needs to catch up on saving. This is applied to net income (after taxes and other deductions in my paycheck like health & life insurance.)

Fixed = 60%
Investment = 10% (I do not include pre-tax 401k in this 10%. This is in addition to my 401k)
Savings = 10 %
Guilt Free Spending Money = 15%
Charity = 5 %

Does this seem like an even split?  Is there too much in GFSM? 

Image courtesy of   Stuart Miles / FreeDigitalPhotos.net

Tuesday, June 24, 2014

Added Dividend Page

After working, getting the kids to the dentist, working some more, cooking dinner, playing with the kids, bathing and getting them to bed, I had a few minutes this evening to add a page to my blog.  It is dividends I have been receiving since I purchased my first stocks way back in 2010.  Do not laugh to much at my initial years.  Some money reinvested into more stocks that pay dividends year over year is better than no money. 

In some future post I will go over what stocks are generating these dividends.  I will say that in 2010 I new nothing about investing and just purchased some stocks I read about in an article.  Not such a good choice but I haven't sold them yet.  Maybe after taking a closer look at my portfolio with you I will be able to send some of those stocks packing.  It is late and I have to get up early to go work at a JOB.  Just saying that word makes me want to save more money.  I will go into more detail in the future.  

How do my dividends look?

Sunday, June 22, 2014

Something to Talk About


What will I be talking about in my blog?

Some of the stuff you may have seen on other sites. Things like what my finances look like and how much am I saving. My twist to that is a system I learned from a book I read many many years ago. I wish I would have written down the name and author so I could give him or her some credit. The only thing I remember is what I wrote down in a spreadsheet. This acts as a guideline for my spending and I will match up my world to it. I am still on the fence about disclosing my salary to the world. I will probably disclose my spending just to show people how much it costs me to raise a large family these days. My wife and I try to live frugally but sometimes our judgment isn't the best. Hopefully by sharing all of this with you will help me to be a wiser spending and saver.

I will also by posting my dividends each month and how they chart over the past few years. They are not much to speak of (yet) but I like to show others how the power of reinvesting dividends and adding to my portfolio work over time. If only I had truly believed in the power of compounding when I was younger. Speaking of younger I may even talk about how I am teaching my kids about investing. All that money they get from birthdays and other events I used to let them spend. Now part of it goes into the dividend machine.

Last and probably the most fun part is saving up some money (enough to make the fee worthwhile) and buying quality dividend stock each month that meets my criteria. What is my criteria? Well I will share that with you and the system I have come up with when I get to that first article. I have read quite a few books and come up with a screen that I hope will work for me. That screen gives me quite a few stocks to look at and research. To reach my goal of financial independence by age 55 I will have to be an aggressive saver and a wise stock picker. At this point I don't even know if I can achieve that yet. We will see!

I haven't come up with a fancy sign off so happy reading for now!

The Dividend Family Guy

 

Friday, June 20, 2014

A beginning...

All Are Welcome

Welcome readers to my story about saving and investing in quality dividend stocks.  This is my journey through life as I strive to save and invest so that I can retire before I am too old to enjoy an active life.  I am setting the goal at age 55 (fifteen years from now.)  Wow I can't believe I just wrote that down.  It feels good to get it out of my head and onto some paper (even if it is just electronic paper.)  

Who Am I?

I am the Dividend Family Guy.  Let’s break that down into how I came up with that name.  The first, Dividend, is my style of investing and why most of this writing is occurring in the first place.  The next part of my name comes from the love for my family.  I am a father of 5 kids and have been married to a wonderful wife for twelve years.  My family is one of my top priorities and providing for them is what I do.  Now I need to start saving and investing for them as well.  The last bit is also who I am.  I am a normal guy living a normal life (if you can call life that).

Our Journey

Why do I call this our journey?  I will be writing about finance, saving and investing in dividend paying stocks.  This I will share with you.  I also hope you will share with me some of your stories and even call me out when what I say isn’t matching up to what I do.  My goal is a pretty high one and I will need the support of not only my family but also all of my readers.  In future articles you can expect my finances broken down and my plan to save.  Lots of stock analysis I will be doing to help me determine which dividend paying stocks are ripe for the buying.  I may even share some of my personal life.  That is the main reason for all of this investing.  Some of my life has been good and some not so.  Allot of my past decisions I will share with you.  Those decisions will make more sense if you understand where I am coming from.  Through this sharing I hope my readers learn from my doings (both good and bad).  I also want to learn from others out there on the same journey as me.  I read allot of finance articles but I want to learn from others real life experiences as well.  So join me on this journey.

Happy reading,

The Dividend Family Guy