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The spreadsheet says I am saving!
With the new year came a new budget.  I base my budget on 2 paychecks a month.  My current employer pays biweekly so I get a bonus 2 paychecks a year that go directly to savings.  This works in my favor not only because of those bonus paychecks but because it is helping me learn to live on less than I make.  That is always the way to a better life.  Live on less.

So what did I change in the budget?


2018.1 Budget

Category
Change
Notes 
Housing/
Insurance
$0
Still paying extra principle. 9 years to go
Investments
$0
Still maxing out 401k and IRAs
Utilities
-$110
Cell phone plan change
Transportation
$109
Cars are getting older so setting aside more cash
Education
$70
New category to save monthly for school fees when the kids start school.
Travel
$17
No travel plans yet but still saving
Gifts/Charity
-$25
That is on the gift side, still giving
Home Maintenance/
Supplies
-$161
Less mulch/more hardscape
Food
-$100
Less frozen/more homemade food
Less eating out
Less junk food
Healthcare
-$175
Budget was too high, based new on my average monthly spend
Shopping
$150
Most of the budget is for clothing for the ever growing children.  We still buy all clothing from clearance racks except for socks, etc.
Personal Care
$55
Now include toiletries in this part of the budget
Kids
-$50
Only buying diapers/no more baby food.  This category will probably go away soon!
Everything Else
$50
This is a new catch all for things like blog expenses and  broker/bank fees, etc.

Based on the new budget I will have a whopping $52 left over each month to put into my brokerage account.  I also keep a buffer in my checking account for bills that are quarterly and have separate savings accounts for travel and gifting.  If I go above the buffer threshold that money would also be transferred to my brokerage.

Taking into account only 2 paychecks a month and the new budget the DFG savings rate is forecasted to be 34% a month.  Not too bad and pretty much the same as last year.   Like I mentioned in my year end summary that rate won't get me to freedom until I am old and grey.  The goal was always to retire from the cubicle by 55.  More drastic changes are needed at the DFG household (and are in the works).

Do budgets really matter if your goal is to spend as little as possible each month?

For me they do.  I enjoy crunching the numbers and see how we are progressing to financial independence.  It also gives me a tool for talking about money with my spouse and kids.  While the conversations aren't always easy they are necessary for a good marriage and will teach my kids how to achieve what they want in life by saving a little dough.

What do you think about budgets?

Peace,
Dividend Family Guy

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The goal of dividend growth investing is to create an income stream from many companies that increase their dividend each year.  To protect the income stream they should also be a diversified set of stocks.  My portfolio has been a bit heavy in the financial sector which are usually the hardest hit in a recession.  Luckily last year was good and one of those stocks paid an extra dividend.

Old Republic International Corporation (ORI) has been on the DFG watchlist for some time now.  While the dividend growth rate is less than spectacular everything else looked good to me.  So overtime I have been picking up more shares.  At the end of January they paid a special $1 dividend.  It is probably the closest I will come to winning a lottery so I am very happy.

Here are the companies that paid dividends to DFG in January:

AmTrust Financial Services Inc
AFSI
$133.62
Cardinal Health Inc
CAH
$55.49
Gladstone Investment Corporation
GAIN
$6.50
General Electric Company
GE
$0.48
Old Republic International Corporation
ORI
$1,622.00
SCANA Corporation
SCG
$61.25
Whitestone REIT
WSR
$9.50

Total
$1,888.84


This additional boost of income has gotten the DFG family off to a great start this year and has definitely skewed the YOY chart so much that I can barely make out my 2017 January income.
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Company Name
Symbol
Industry
No. Years
Dividend Yield
Sector
EPS% Payout
+/-% vs. Graham
Chowder Rule
Principal Financial Group Inc.
PFG
Financial Services
10
3.02
Financials
33.44
(10.4)
22.7
Altria Group Inc.
MO
Tobacco
48
3.75
Consumer Staples
33.00
108.1
12.1
Brinker International
EAT
Restaurants
13
4.18
Consumer Discretionary
54.87
n/a
19.1
Old Republic International
ORI
Insurance
36
3.54
Financials
39.79
(22.9)
4.9
Edison International
EIX
Utility-Electric
15
3.87
Utilities
55.25
2.0
14.7
National Healthcare Corp.
NHC
Healthcare Facilities
14
3.08
Health Care
60.00
8.9
12.2
Meredith Corp.
MDP
Publishing
25
3.30
Consumer Discretionary
52.66
44.5
9.6
OGE Energy Corp.
OGE
Utility-Electric/Gas
11
4.13
Utilities
69.63
15.5
13.7
Verizon Communications
VZ
Telecommunications
13
4.36
Telecommunications
32.07
29.4
7.2
Muncy Bank Financial Inc.
MYBF
Banking
17
3.67
Financials
48.44
(18.6)
13.6

The Dividend Family Guy stock screen top 10 identifies dividend growth companies that have a yield of 3% or higher and have been increasing dividends for 10 or more years.  The information is gathered from David Fish's US Dividend Champions spreadsheet

Newcomers to the list include Principal Financial Group (PFG), Edison International (EIX), OGE Energy (OGE), Verizon (VZ)

I am pleased to see some utilities finally appear in the top 10.  I do not own any utilties and they would nicely balance a portfolio as the majority of companies growing and paying dividends for long periods of time are utilities.

 

Verizon is already in my portfolio and I am unlikely to add any more.  The company that really catches my eye is PFG.  That will be one for future research.  The Graham rule shows it trading at a discount and the Chowder rule tells me the 3.02% yield and 19.68% CAGR might be worth it.
Happy dividend hunting,
Dividend Family Guy
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June Camping
In this post we are going to take a peak into how the DFG family spending went for 2017.  The main points of interest are:

  • How did spending compare to last year
  • Were we frugal or cheap
  • Was savings on track for achieving financial independence

Last year we switched to using Mint to aggregate all of our data.  It also has a decent budgeting tool which I setup just to see how it works and how we do against it.  As events changed over the course of the year the budget was adjusted.  It has some nice features like adding your various savings goals  to it.  For example I added Travel and Retirement goals to the budget.  This allows me to save first for my goals and then budget the remainder.  The other feature I like is the ability to put in sporadic items like my insurance (every six months).  It will create a budget item and split the estimated cost over the time period you specify.  This ensures I am setting aside enough cash each month for the bill.



Car insurance budget in Mint
Spending vs. Last Year

Unfortunately since this was the first year of data it is unable to show a comparison of the previous year.  Below is my best match up of the categories.

Category
% Change
Notes
Mortgage
+29%
Reduced principal by an additional $6300
Insurance
-14%
Switched in second half to lower insurance
Utilities
+1%
Costs rising but saw decrease in water bill
Automobile
+52%
Long distance commute for 1/2 the year and maintenance for the 11 year old minivan (last year no unwarranted repairs)
Food
+13%
Spent more on dining out and junk food than would have liked
Everything Else
+13%
Since I didn’t split healthcare and travel out until 2017 I have just lumped everything together including miscellaneous.

With regard to Everything Else there are a few things that caused this large change.  First was my back issues which caused our near non existence out of pocket health care costs to jump significantly.  Second was home maintenance.  We replaced several windows in bad shape and remodeled the kids bathroom after finding water damage and rot.  While unplanned, it should add value to the home.  Last my wife and I purchased bikes.  I look at this as a long-term investment for health and family happiness.

Frugal or Cheap?

In the end our expenses were 25% higher than last year.  Considering the investments in the house and paying down the mortgage it puts my mind at ease.  Again I advise those wishing to buy a house, that it costs money to maintain it.  That, utilities and a mortgage will consume a large portion of your income.  Best to buy the smallest house you need and pay it off as soon as you can.

Looking back over the year I would say we were neither frugal or cheap.  We lived a grand year in an over sized house and took several vacations.  Food was plenty and we shared a decent portion of our income with those less fortunate.  We are not up to the 10% of giving I would like to be at but I hope to get closer to that this year.

Financial Independence

The IRA's were maxed out and the HSA was as well while under my old employer.  The HSA money is sitting part in investments and part in cash (to avoid fees).   I was only eligible for a 401k for half of the year.  Regardless I was shy by $850 to maxing it out.  The goal was to maximize contributions to take advantage of tax free investment growth.  The remaining cash saved was moved to my brokerage and I maintain a 3 month emergency fund.

So does all of this get me closer to financial independence?  Unfortunately it does not if I wish to quit the rat race by age 55.  Plugging the numbers into various calculators out there I am likely to get there by age 65.  So if saving 37% of your income isn't enough what is?  Well if I stay in my current home I need to save 60% of my current income.  This is because I will be relying on dividend income and not drawing down my portfolio.  Given my current housing expenses and the fact I will have children in the house until I am in my sixties, that will be a hard goal to achieve.  I am working with the rest of the DFG family (mostly my lovely wife) to figure out a game plan.  More to come on that in 2018.

In Summary


Life was good in 2017 but could be grander by living with less and giving more.  As always one should continue to learn and grow and become a better person.  The more who care the better this world gets so lets keep going strong in 2018.  I hope your year was good too.

Peace,

Dividend Family Guy
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December is the holiday season, a time of giving.  While I gave to many charities I find worthwhile companies gave to me (and hopefully you) in the form of dividends.  While it is usually one of the best months it was not for me because I did capitalize on some gains which reduced my dividend income slightly.

Stock
Dividend (USD)
ADM
36.13
CVX
2.16
EAT
8.36
FINL
2.75
FLO
5.44
GAIN
12.50
GME
38.00
HP
0.70
IBM
19.50
INTC
0.01
KO
9.25
MCD
0.94
MCY
31.25
ORI
74.67
QCOM
10.26
TGT
31.00
UHT
16.63
UL
2.50
VFC
0.46
WSR
9.50
XOM
87.01
TOTAL
$399.05

Comparing this to last December ($361.71) the DFG family had a YOY increase of 10%.  This includes dividend reinvestment, IRA contributions and any 401k rollovers.    When I look back the YOY increase for December 2016 was 14%.  While not as high this year, I did take some capital gains and reinvested the gains in other dividend growth stocks. With continued diligence the result should be even higher when we look at it next December.

Why capital gains if I am a dividend growth investor?  The way I look at it is if my YOC (yield on cost)and current yield have dropped so low from stock price increase then it might be time to evaluate that stock.  Some of the stocks had almost doubled since my purchase and if sold would be equivalent to 5 or more years of dividends.  By taking those gains and reinvesting in dividend growth stocks that meet the DFG stockscreen further yield and value can be gained.

This shuffling of resources was done mostly in my IRA where I don't plan on taking out anything but dividends when I retire.  I did sell some stocks in my brokerage account where it was only 1 or 2 stocks yielding a few cents of dividends.  The goal going forward is to buy larger, preferably 100, chunks of a stock.

When reviewing the dividends for the year it was a good percentage higher YOY compared to 2016.  Back in June  of 2016 I moved to a brokerage account where I get 100 free trades a month.  The goal there to reduce fees.  In doing so the portfolio was redone and the full effect of it came into swing in 2017.

Month
2016
2017
January
$64.97
$8.95
February
$191.28
$275.61
March
$352.10
$440.32
April
$72.44
$19.14
May
$133.78
$375.12
June
$1.64
$458.51
July
$2.07
$25.78
August
$266.35
$374.19
September
$353.09
$492.02
October
$10.82
$36.30
November
$270.28
$329.14
December
$361.71
$399.05
YTD Total
$2,080.53
$3,234.13

As you can see the area in that horrible non-green color was under my previous broker.  The areas in green are under the new broker.  While the dividends started out slow they quickly picked up steam.  The YOY growth of dividends received was 55%.  Now not all of that was from dividends reinvested.  In my next post I will go over how last year went which should explain some of the dividend boost.

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Company Name
Symbol
Industry
No. Years
Dividend Yield
Sector
EPS% Payout
+/-% vs. Graham
Chowder Rule
Archer Daniels Midland
ADM
Agriculture
42
3.19
Consumer Staples
60.09
3.9
16.0
Lazard Limited
LAZ
Financial Services
10
3.12
Financials
45.81
78.2
19.3
National Healthcare Corp.
NHC
Healthcare Facilities
14
3.15
Health Care
60.00
6.5
12.3
Old Republic International
ORI
Insurance
36
3.55
Financials
55.88
(9.2)
4.9
Altria Group Inc.
MO
Tobacco
48
3.70
Consumer Staples
33.00
111.3
12.0
Target Corp.
TGT
Retail-Discount
50
3.80
Consumer Discretionary
52.10
39.4
16.9
Muncy Bank Financial Inc.
MYBF
Banking
17
3.59
Financials
48.44
(16.9)
13.5
Williams-Sonoma Inc.
WSM
Retail-Home Products
12
3.02
Consumer Discretionary
44.19
56.2
14.9
Brinker International
EAT
Restaurants
13
3.91
Consumer Discretionary
54.87
n/a
18.8
Cracker Barrel Old Country
CBRL
Restaurants
15
3.02
Consumer Discretionary
57.90
143.7
30.4

As I write this Target (TGT) is up 4.64% for the day.  It has been on the DFG Top 10 list for some time now and I have ignored it in favor of buying other companies.  Bummer on my part I guess.  There are so many great companies I would like to buy in this list.  In retrospect I need to get my watchlist together and posted as soon as the month begins so I can decide on how to invest last month's savings.  Too much holiday slacking I guess with the kids at home and better things to do.

There are a few newcomers to the list this month.  National Healthcare Corp. (NHC) and Muncy Bank Financial Inc. (MYBF).  Regarding my Motif of this month, Muncy was not in the list of stocks to add to my Motif so it only has 9 listed.  Regardless my broker does have it so if I choose to buy I could.  Check with yours to make sure if you find it worth a buy.

National Healthcare Corp. is a skilled nursing and assisted living operations company.  The stock has only climbed this month however the yield is still 3% but the PE is now over 20 at the time of this writing.  Net income is down YTD however sales are up.  I imagine that is why it is getting picked up by my screen now. 

Muncy Bank Financial Inc. is a holding company for Muncy Bank in Pennsylvania.  It is trading at a discount now offering a decent yield and good dividend and growth prospects (Chowder Rule).  Banks aren't particularly exciting and they fall under the financials sector (which I am overweight in now). 

 

I will keep an eye on the newcomers however I am still favoring ADM and TGT for the month.  As a bonus ORI has long  been on my watchlist and I have picked up many shares over the years.  This month (January) they are paying a special dividend of $1 a share.  That will certainly help considering the slow dividend growth rate and overall stock performance. 

Any good dividend growth stocks out there worth mentioning not in my list?

Happy new year all,

DFG
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Needs work but only $45k
Back in September it was made known to our office that the mother company would be shutting us down.  No good reason was given other than they did not wish to renew the lease on our building??  That made no sense and no one questioned it at the time.  I have been through this before but had never seen the ax fall on my head in my 19 year career.  So in 2018 on April Fool's Day I will become job-less.

Following the stages of grief I was at first shocked, then angry, then freaked out and am now at a place of calm acceptance.  I haven't really bothered to look for another job yet as I wanted to enjoy my holidays stress free.

Stress free because they are giving me a very small severance but more importantly because I have savings and the ability to vastly reduce my expenses.  I have already halved my internet/TV, cell phone and car insurance bills.  In a tighter squeeze all unnecessary spending would be cut. 

I have confidence I can get a similar job unless the stock market tanks in 2018.  If it does tank I have never used unemployment insurance but I know it is there.  It would cover my basic costs but not all of my mortgage.

The mortgage monster has weighed on me since I purchased my first house.  Think about it…you pay all your interest up front and if you fail to make your payments they can take your house and you loose all your equity. 

We are on our 3rd house and if you total up all the interest payments, we have only lost money on owning each home.  In our current home we have already paid more than $50k in interest.  That is not a good deal for anyone but we have been brainwashed into thinking mortgages are part of the American dream.

With that in mind we am planning on downsizing to a smaller home this spring with the hopes of having little or no mortgage.  This can be easily accomplished in most parts of our country.  Houses under $100k are plentiful in my area.  If you save 50%+ of a 50k salary you can buy one outright in 5 or less years.  If you live in an area where house prices like this don't exist you could move.  There are always choices.

Once we no longer have debt, choices are plentiful.  If you have debt that should be your top priority for the new year.  Only then can you know true freedom.  Once debt free, I could choose to continue in my current field or I could try another career.  We live in a great country (contrary to the complainers out there) where choices are endless.

Happy new year,
DFG
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Cake I made for my son's 8th Birthday!
The holidays are upon us and I remembered this morning that I never posted my previous months dividends.  I was busy switching over to a new spreadsheet to track them.  It gives up to date statistics and I can now see my yield on cost.  I will share my new sheet and my financial statement sheet in another article.

October is a slow month for my portfolio.  There were $36.60 in dividends earned by my little workers.  That represents a 235% increase in dividends compared to the same month last year.  The majority of that was from additional purchases of dividend growth stocks made throughout the year.  However I also collected repeat dividends from great companies like KO who increase brought me an additional $.54 just by hanging onto the stocks.

Stocks that paid me dividends: MO, AFSI, CNQ, KO, GE*, and WSR

November was solid with $329.14 in collected dividends.  This represents a 48% YOY increase.  While there was some new stocks purchased this year that are paying me the majority of it was from dividend growth stocks.  While I do like capital appreciation I love getting real cash for owning part of a company.

Stocks that paid me dividends: ABBV, AHGP, T, BWL.A, CAT, DGICA, GAIN, LAZ, PG, UVV, VZA, VZ and WSR

At this point we have collected $2801.35 in dividend income for the year.  This is my best year yet and the nice thing is each year going forward will always be my best year.  The reason being is it is a dividend GROWTH portfolio.  It is not an index where stock weights change and the dividends received are inconsistent from year to year.  In fact with you are a dividend growth investor your dividends naturally grow each year.  Sorry for the redundancy but I just wanted to make sure you understand the key point (and also to remind myself why I do it.)

How is your portfolio holding up?  Are the dividends growing?

Happy holidays all,
Dividend Family Guy

Note:
I have found some discrepancies in my old spreadsheet so my graph needs some updating.  Therefore no graph this month…


*GE is no longer a dividend growth stock.  Not selling it just yet though.
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I write this after being up since 3 AM with 3 sick kids.  Sorry for the bad grammar.  I was watching a movie the other night while wrapping presents for the kids and it dawned on me that the movie is what I want to do for the rest of my life. 

The premise of the movie was something like a well-to-do family with a single income loses that income.  The spoiled kids loose everything and the family looses the house.  The father had been kind to a stranger and the stranger crosses paths with them while they are homeless.  He takes them into his house, he dies, and leaves his estate to them.  Through the process of being homeless and working for this guy they learn that things are not important in life.  Being kind is more important and the family heals and becomes super awesome.  The estate is basically a Christmas tree farm.  The guy was rich (but frugal) and gave the trees away for free to anyone who stopped by (and he also took trees those in need.)

I have always wanted a farm and in college I was a forestry major before switching to computer engineering (to pay those awful student loans.)  The problem is farms are expensive where I live.  That would be the best feeling in the world to be kind to people full time (and not have to worry about your next paycheck.)  Heck I even wanted to grow organic fruits and vegetables to give to food pantries and kitchens some day.

In a few months I will be open to new opportunities so if someone has a farm they don't want and want to give it to me, let me know.  It would be the best present I have ever received (besides my kids ;-)

Happy Holidays,

Dividend Family Guy
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 October was another merry Halloween.  I started using a new spreadsheet to track things more like a business.  It is like a balance sheet with income/expenses and assets and liabilities.  The big thing is it is a total picture.  Before I was only tracking after-tax items. 

With this spreadsheet everything is tracked.  The 2 most important cells on the sheet are the monthly cash flow and the net-worth.  These two indicators tell me whether I am saving every month and how things are tracking overall (am I getting closer to FIRE.) 

The good news is I am tracking the right way.  The bad news is I have had negative cash flow for the past 4 months.  This is contrary to my savings rate which was 26% for October.  All of that is in my 401k contributions.

Upon doing this I have discovered I am still spending more than my after tax income.  What a lie I have been telling myself.  I have accepted my financial mistake and learned from it. 

The new plan is to actually save after-tax income to boost my savings rate.  To help in this I am exposing the whole financial picture to the whole family.  The spreadsheet gets updated and posted every week on our family bulletin board.  Yep we still use the cork board to organize our lives.  It is BIG and it is VISIBLE.  By going over it with everyone I hope they learn the in's and outs of finances.
October

So what drove me to negative cash flow for the month?  First we took a trip so Amish Country and stayed in a hotel overnight.  That hotel plus eating out was several hundred dollars.  Not to frugal for the frugal master.  The second big ticket  expense was paying off some replacement windows that were on a loan.  It was a 0% interest loan but I got tired of paying a small monthly amount.  From now on I will just pay the cash and be done with it.  No more thinking about it and less stress. 

Front Yard Destruction

November starts the holiday season and with it the start of my budgeted holiday spending.  Thus gifts/charity is a higher percentage of my expenses than normal.  Other unusual expenses were the first brake replacement for my wife's 12 year old minivan.  On a unexpected note my water bill dropped by $20.  The toilet replacements are finally starting to pay off.  One more toilet to tackle next year and I should see another big drop in that utility.

We were on track for a positive cash flow for the month until the worse storm to hit the area happened.  We were without power for 3 days and my generator wouldn't start.  Luckily my neighbor went out and paid several hundred dollars for the largest one he could find.  He then kindly lent me an outlet.  Food saved and wife was able to take a hot shower!

November

The downside was I had several trees down in the yard.  The city came and removed the whole tree from my tree lawn.  I choose to purchase a chainsaw and cleanup the remaining trees instead of paying someone else to do it.  Free firewood and now I have a saw to trim in the future.  Because of that we were negative $50 in the cash flow.  Getting close to positive again.  Also on the plus side 27% of income was saved.


Those months are over and I hope you all had positive cashflow!

Dividend Family Guy
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