January 2015 Income and Expenses Overview

Welcome to my first-ever income and expense report. Actually this “report” is more akin to an overview as I experiment with format and continue to fight for precious minutes devoted to this blog, but it gets the idea across of what I’m trying to accomplish while providing financially for not only myself, but a wife and two kids as well.

The reason I waited until January, 2015 to start this ongoing and popular blog series is twofold. First, it’s the start of a new year and by the end of the year I’ll know precisely how much income I generated versus how many dollars went out the door.

Second, last month marked roughly a year since I began my dividend growth journey so it seems naturally appropriate to start sharing my monthly dividend payments now that the snowball is firmly in place and rolling along relatively smoothly.

Typical income and expense reports are all inclusive of money earned or acquired. My goal to resign from my rat race day job and live on a combination of dividends and web income until passive income fully supports my family dictates that I cannot and will not factor day job income into my report. Any income reported will be strictly generated outside of the day job so I can obtain a clear picture of the family financial situation if the day job didn’t exist.

The ultimate goal for this year is for a combination of dividends and web income to finish within 10 percent of expenses. This factors in a tax rate of 20 percent on all income assuming we fall into the 25 percent bracket and shave off five percent on business expenses related to my web income such as Internet access, phone, hosting fees, etc.

Without further ado, my January 2015 total household expenses were $3,675,12. I typically expect between $3,000 and $4,000 on average in expenses so this total is right in line, though it would have come in much lower.

Historically January is a slower month for expenses so my hope was to come in south of $3,000. However, my 14-year old car needed new shocks and some other minor maintenance that ended up setting me back $928 including tax. Had that repair not occurred then I my expenses would have been a more reasonable $2,700.

I also want to point out that expenses include $890 every month for family health and dental insurance through my work. Since I own my home outright and have zero debt, health insurance is my single biggest recurring expense.

In terms of web income, most of my January payments received were generated from web advertising in December — and that happens to be one of my best months of the year. As a result, my web income was $4,320.44 in January, or $3,675.12 after the 20% tax hit.

I cannot compare January dividends to a year prior as my first dividends received were in February, 2014. Here’s a breakdown of all January dividends received (please excuse the formatting that will improve in the future):

AI $140.00
AINV $5.60
BAX $26.52
BNS $31.52
DIS $57.50
FSC $29.34
GE $52.90
NLY $82.50
O $34.48
PEP $28.82
PM $66.00
PSEC $64.70

The grand total received in dividends for January 2015 was $619.88, which is absolutely stellar. Factor out the 20% tax and that comes to $495.90. That’s a lot of money to receive without lifting a finger, though there are some caveats in the total.

AI, FSC, NLY and PSEC are “juicer” stocks, meaning they are more risky and pay higher dividends that I use to feed my core long term holdings through Scottrade’s flexible reinvestment program. PSEC has already announced a dividend cut; FSC, a monthly payer, recently suspended dividends for February and will institute a 30%+ dividend cut starting in March ($10 a month for me); AI just reported miserable fourth quarter earnings; and PSEC late last year implemented a dividend cut. My tolerance for these “juicer” stocks is wearing thin and one of my goals for this year is to trim down my weight in this area and clean up the portfolio now that I have solid positions in many of the core stocks I ultimately will depend upon for ongoing income.

Here’s my finalized January 2015 income and expense report numbers including the tax withholding. I came out on top by a total $277,14, meaning for at least one month this year my web income plus dividends was able to support my family.

The first half of the year is far less profitable when it comes to web advertising revenue for me so I expect more negative months than positive as the year rolls along. The key will be the back half of the year when web income has the potential to dramatically eclipse expenses with a little luck and a lot of hard work.

Given this is the first entry in this ongoing series of articles I’m more than open to any recommendations or suggestions. By no means am I married to this format that’s literally the equivalent of a first draft with no tinkering implemented whatsoever.

I am long all stocks mentioned. This article is for entertainment purposes only and not an advertisement or solicitation to purchase any of these securities.