May 2014 Summary

May’s been a chaotic month as I sold my house which has required some re-budgeting now that I don’t have as many expenses. This month is the last one using my original budget and represents a small improvement over last month.

The Score

Living Expenses – this is essentially how much I pay myself and it includes budget for everything I spend money on, both essential (e.g. groceries, mortgage, insurance), and non-essential (e.g. music, travel).

Security Ratio – this is the percentage of my living expenses that is paid for by dividend income. It’s increased a little from last month because income was higher and I also reduced my overall budget a little.

Savings % – the percentage of my net income spent on savings. I don’t have high savings goals at present, although included in this category is my car payment which is paying an interest free loan over 4 years.

Retirement % – the percentage of net income spent on retirement. All my retirement plans are pre-tax and not covered by this blog. They contain several low-index mutual funds and as a rule I pay about 16% of my gross income into my 401(k).

Living Expenses % – the percentage of net income that’s spent on living expenses.

Investment % – the percentage of net income that I invest, this is everything left over after savings, retirement and living expenses are paid.

Overall, a small improvement on last month although the real improvement should be seen next month in June.

Dividend Income

May has better dividend income than April, 8 stocks paid divdends this month: T, DAL, AXP, PG, APD, LNT, GIS and RTN as shown below.

The yield calculations are annualized, or extended forward a year based on the current dividend payment against the cost basis or market value respectively.

Here’s the status of my taxable fund holdings this month.

Fund income was a little higher this month, and VFICX made further steps towards positive ground. I’m considering converting both VWESX and VFICX into stocks, but I plan on keeping VWEHX as a long term investment despite the looming interest rate risk.

Net Worth

Net Worth decreased this month by about 3% or $12,000. This is because I sold my house for less than its value. The net worth numbers don’t include payments I’m due from cancelled insurance and my company’s relocation package which will show up next month.

As an alternative to Net Worth, I’ve started to track my “Wet Worth” – I calculate this as the cost of my liquid assets minus debt. In other words, it’s my net worth assuming all physical assets are worth $0 and my pre-tax retirement account is $0. The house sale caused my Wet Worth to be positive; meaning I have enough liquid assets to pay my mortgage entirely if I chose.

My Portfolio gained about $3,000 and my pre-tax retirement account increased by about $6,000 this month.

Full disclosure: I am long T, DAL, AXP, PG, APD, LNT, GIS, RTN, VWEHX, VWESX & VFICX.

The easiest way to avoid wrong notes is to never open your mouth and sing. What a mistake that would be.

2 thoughts on “May 2014 Summary”

  1. Hi DL,

    I have to say I really like how you present your financial picture in your “Score” box. The security ratio % is a very visual way to see how much divs actually cover. Also, congrats on your net worth rising above $0. That’s a very big step. After digging out of the hole you can now focus on building and growth! Thanks for sharing.

  2. Hi DivHut,
    Thank you, I really appreciate your feedback! I find the security ratio very useful too (despite its low value at the moment!). It reminds me each time I look at it that there are two things I can do to improve it: reduce expenses and increase dividend income.
    I’m playing around with adding color and sorting to my Portfolio table too as I like visual feedback.

    And yes, it’s a relief to be above $0 now – it’s a weight off my mind and I can focus on growing my investments as you say.

    Thanks for your support!

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