September 2014 Summary

September’s usually a good month for dividends and this month wasn’t any exception. Here’s my summary of the month of September.

The Good

I received $682 in dividend income this month, which makes a year-to-date total of $3,830 or 77% of my target of $4,950. This is a 14% step towards reaching my goal, largely because the majority of my dividends are paid in the March, June, September and December schedule.

You can see the current and projected results on my goals page. I beat my projected dividend income of $3,826 for September due to higher dividend income from the mutual funds I hold in my Portfolio.

I’ve made some further adjustments to the projected dividend income values, and I’m currently on track to exceed my target by about $160.

The small decrease of $15 I made in my monthly budget starting in October has a side effect of making my goal slightly easier to reach as it lowered my yearly dividend target from $4,969 to $4,950. While the amount on its own is tiny, it means a $6,000 reduction in the capital needed for FI which is not such a small amount! $15 a month totals up to $180 a year, which at an average 3% yield requires $6,000 of capital to generate. This shows the power of reducing expenses compared to increased income – it’s much easier to save $15 a month than to increase your portfolio by $6,000.

The Bad

There were no major upsets in September; the biggest impact was the increased mortgage payment starting this month. So my new budget comes at the expense of reducing discretionary spending, which is probably a good thing all in all as I may not have forced myself to reduce my budget otherwise.

The Score

Living Expenses $ 3,960
Security Ratio 17 %
Retirement 0
Savings 14 %
Expenses 54 %
Investments 32 %
Wet Worth $ 21,667
Work Freedom Day 21 Nov

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).

Of my $3,950 total budget, I actually spent $3,844.52 so I was $106 in surplus this month overall. The annual home insurance payment of $1,323 was the biggest expense this month after the mortgage payment.

Security Ratio – this is the percentage of my living expenses that is paid for by my dividend income this month.

The number is actually 17.22%, much higher than last month’s 7.85% due to the increased dividend income in September. In March it was 12% and then in June it was 21%, so this month is worse than June. Income from the shares I hold in the VTIAX fund was much higher in June than September; this is an international fund and holds more companies with annual and twice-yearly dividend payments. So it’ll be interesting to see how December compares to June’s results.

Savings % – the percentage of net income spent on savings.

Nothing to see here this month. 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 for the next 3 years (1 year down, 3 more to go). I’m usually fighting inflation but with this loan, inflation is working for me.

Retirement % – the percentage of net income spent on retirement.

I don’t cover my retirement accounts (a 401(k) and Roth IRA) in this blog. They’re intentionally boring investments that I leave alone, so nothing to write home about – I follow a Boglehead approach for these accounts. They contain several low expense index mutual funds and I pay a total of 16% of my gross income into my 401(k).

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

This month’s 54.29% is lower than last month’s 57.47% due to the additional dividend income. June currently holds the lowest value at 53.42% so again I’m looking forward to seeing the numbers in December. The amount here is primarily changed by budget levels; increases in dividend income have a very small effect on the overall percentage at this time.

Investment % – the percentage of net income that I invest.

Any spare money left over after savings, retirement and living expenses are paid goes into my current income portfolio.

Wet Worth $ – my liquid assets minus all debt (excluding retirement and assets).

My wet worth increased $490 this month to $21,667. I was expecting an overall drop here due to the stock market dip at the end of the month. There’s a more detailed breakdown of this amount further below.

Work Freedom Day – the day in the year that I’ll have earned enough dividends to pay for the remaining year’s budget.

I’m estimating my Work Freedom Day to be 21st November this month again, after accounting for budgets and revised dividend income for the year. That’s only 47 days away!

Dividend Income

September is the one of the better months for dividend income. This month 6 stocks paid dividends: MSFT, PFE, XOM, LB, VPU, ROC, INTC, AWR, CVX, HD, JNJ, MCD, UPS, GXP, TAP, MAR, TROW and EMR 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.

Last month my dividend stock portfolio was valued at $23,452. This month it’s $24,546 – a gain of $1,095 or 4.6%. However I added $1,302 in new capital and I now have a 17% unrealized gain, down 2% from last month’s 19%.

I also hold several mutual funds in my taxable account that I consider part of my dividend income portfolio.

I added a total of $3,190 to my fund investments, $1,700 in VHDYX, $200 in VTIAX and $1290 in VWEHX.

In total across stocks and funds, my portfolio increased from $146,249 to $146,608; a gain of $359 or 0.25%. I added a total of $4,434 in new capital in September, and my unrealized gains decreased from $14,960 to $10,884 resulting in final unrealized gains of 8%.

Wet Worth

I’m showing my Wet Worth in this post – this is the cost of my liquid assets minus debt, I exclude assets and retirement accounts from this number. I prefer this over Net Worth since the equity in large assets (house, car) and retirement funds is hard to get at and not always predictable. I find this is a more honest view of where I’m at on my journey.

Here are the numbers for September.

The change in Wet Worth is caused by

Cash -$2,070 Most of this was due to capital investment
Debt +$1,923 Overall debt reduced by $1,923 (mortgage + car loan payment) and credit card balance payment.
Savings +$261 Monthly savings.
Emergency Fund +$17 Dividend income on my emergency fund.
Portfolio +$359 My overall portfolio grew this month as noted above
Total +$490

September 2014 Summary

So not a major increase overall, but at least it’s a still a step forward, and while the stock market may have decreased in value slightly, the dividend payments should keep on coming.

Next month is going to be pretty bad for wet worth as I’ve booked our flights back to visit my parents in the UK at around $1,200 a flight, unless the stock market is co-operative and has a major increase. I’ve been saving up for a year for the trip so it’s all budgeted for, but it’s still a significant expense.


Quote of the Day

Our battered suitcases were piled on the sidewalk again; we had longer ways to go. But no matter, the road is life.

2 thoughts on “September 2014 Summary”

  1. Hi DL,
    Still working on my post for September. But so far it is looking better than the last 3 months. I can’t recall if you ever mentioned this but does your girlfriend/wife have her own budget or is her income/expenses included in yours? Just wondering as some couples like to keep it separate. Also when do you think you will get to a point where you will stop investing in mutual funds? Just wondering. I may have asked that one already but my memory is poor.

    1. Hi DFG,

      Glad to hear that your September results are looking good! I’ve been busy too so I know what you mean about getting the September update out.

      My girlfriend and I do tend to keep our money separate; she works full-time and we’ve never gotten around to shared accounts. The mandatory portion of the budget that I discuss on this site includes all bills / payments / groceries for the two of us and she contributes a fixed amount of money towards that, around 30% of the total amount. It’s just her discretionary spending (gym membership) that isn’t included in the budget and her healthcare co-pay.

      I’m about 75% of the way towards earning $2 stock trades at Vanguard, so I’m likely going to keep buying funds for a couple years yet to reach that threshold – for now I plan to increase my individual stock purchases from year to year (currently $1200 a month). Most purchases are going into VHDYX which consists of many of the high yield dividend stocks that I own separately anyway and it’s a low expense fund so I don’t have any real issues with holding it.

      Best wishes,

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