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.
Web | $3,456.35 |
Dividend | $495.90 |
Expenses | $3,675.12 |
Total | +$277.14 |
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.
DWC,
Wow your web income is fantastic! I am super impressed and jealous.
I am invested in some less than reliable dividend paying companies as well and agree that it is better to have higher quality companies for the long run. I really hope you reach your goal of 90% expense coverage.
MDP
Hey MDP,
Thanks! It takes a lot of effort and late nights to generate that web income. Unfortunately that number will steadily decline over the next eight months or so. December was the pinnacle. Still, the hope is that dividends steadily increase. In the end game I don’t want to have to think about generating web income every waking moment.
As far as the less reliable companies, February is a much “cleaner” month for me, even if the dividends received aren’t quite as high. My goal is to completely eliminate at least one of those over the course of this year, if not more. I probably own seven or eight stocks total that I don’t intend to hold for more than a couple years tops.
Best,
DWC
Wow these are fantastic numbers. I’m very impressed with your web income, care to explain how you are generating your web income as I don’t see any ads on the blog.
Tawcan,
I addressed the web income in the comments of a previous article. In short I’ve been a web publisher for well over a decade and the web income comes from display advertising on TheHDRoom.com. The best paying ads are in the fourth quarter so right now they’re paying a fraction of what they were a couple months ago, and likewise I’ve been slacking a bit with new content — especially with busy kid activities to attend of late.
If I put ads on this site then I’ll feel obligated to continually push to monetize it, and working late nights on one web property is enough for me
I look at this site as a way to share my thoughts when I have a moment to do so, as well as help keep me engaged in the community and my long term goals. If I ever got to the point of regular posts and traffic here then I’d consider sliding in a couple Adsense ads. For now I’m fine keeping it ad free.
Best,
DWC
Wow, over $4k of online income. Even considering it was coming off the peak season, that is still a heck of a supplementary gig to offset your day job and other income sources. Anything over that is pure cash in the bank and ready to go to work for you in the future.
As a note, you should probably more clearly state your gross versus net of taxes income. I think it is great you show the before and after, but changing the presentation to make it clearer on the summary. Something like: Gross, less taxes, subtotal, less expenses, net income (loss).
Either way, I’m excited for this ongoing post series! Best of luck finding the hours to devote to this side project!
Thanks for the idea and luck, W2R! The more I look back at this post, the more I despite the formatting. I’ll definitely put a little more thought into the numbers for February and break out gross vs net into some proper tables.
After doing the supplemental website gig softly from 2000 through 2005, I went hardcore with a new IP when my wife left the workforce a decade ago to make sure we could pay the bills. That effort, timed with a couple clever house moves that sent me across country into a lower cost of living area from a very high cost of living area, is the reason I’m a mortgage-free homeowner today and my wife is still able to raise the kids without having to worry about a job. That alone makes me smile every time I think about it
Best,
DWC
Really Impressive web income there and great dividend income as well with nice dividends from DIS and PM specially. I hold lot of these common stocks, though less in quantity. GE is my biggest holding though would like to add more DIS and PM. DIS has increased lately and waiting for it to drop a bit. PM is looking attractive right now at low 80s.
Thanks, DGI. Love all the stocks you mention. Since you brought up PM I’ll share my stance: I cannot STAND smoking. However, I cannot stop it either. So I figure why not be compensated for its existence
Sadly my media website was hit by a copyright claim on an image and the troll lawyer wants $1,800 to settle. So I either feed the troll and settle or get legal help and try to get them to go away for less. I’m option the latter option but it’s still going to eat into my capital big time.
Best,
DWC
DWC,
Great online income over there. Really fantastic stuff. I’m doing well with online income as well, but it’s a lot more hands on than what it sounds like you’ve got going on. If that’s reasonably and passively sustainable, that’s an excellent source of recurring revenue.
And great job with the dividend income. Some of those stocks are outside my risk tolerance/circle of competence, but I’m glad they’re working out for you.
Best regards!
Thanks, DM. Ironically my tolerance for those high risk stocks is waning by the day. They helped get me going to an extent, but I will be lightening my load as this year plays out.
Unfortunately the online income is anything but passive. I work multiple hours every day either responding to emails, researching, or writing content. I get out of it what I put into it, and in Oct-Dec I put a LOT into it while the ads were paying really well.
When the calendar turned the ad revenue took a dive. As a result I’ve pulled back on my workload to try and re-energize myself and spend more time with the family.
I assume you do a lot of freelance writing which, while time consuming, is always a fixed price. You won’t have the peaks and valleys, and that should help you make steady buys throughout the year.
Thanks for sharing your recent income and expenses with us. Nice to see a few common names for dividends between your account and mine for the month. You also own quite a few names that are way out of my league in terms of yield with those REITs as I have no place for those in my long term portfolio. Dividend cuts and/or eliminations are all too common with those high yield plays.
Divhut,
I used those high yielders to help get my account off and running with no intent of holding them long term. I’ve definitely maxed out on them and will commence trimming within the next few months or when the opportunity feels right.
I think you’ll find February’s dividends list much more safe
I just found your blog and will be a future reader. Thanks!
Thanks for stopping by, Nuno! My posts are infrequent right now as I struggle to find the time, but I’m slowly trying to improve upon that.
Have you done a post on your web income? It’s a stout number so curious on the details.
thanks!
CG, thanks for stopping by. The web income is a combination of Google Adsense and three different display advertisers all running on one aged website that I work hard on (TheHDRoom). The fourth quarter is always the best for web income and that number will be dropping over the next six-nine months. March especially will see a sizable drop despite the aggressive ad placements.
Unfortunately I can’t let the site go on cruise control or the traffic slowly goes away. It’s not passive income by any means. There have also been advertising and traffic hiccups in the past so I don’t consider that income reliable.
Best,
DWC
Awesome work on your online income, my goal is to get to $3,000 a month so its great to see someone over the $4,000 mark. These income/expense reports are always something I enjoy from personal finance bloggers, keep it up
Thanks for stopping by and the encouragement, Thomas! Yeah, the online income was great in Q4 and that money is paid in Q1 of 2015.
It’ amazing how the quality of ads can affect the income. I’ve seen my main ad network go from $2 a day to $70+ a day based solely on the quality of ads available.
I hope to get February’s income/expenses report up within the next week or so.
Will definitely check out your site. Thanks, and rock on!
Best,
DWC
Great work and thanks for sharing. I just checked out your HD website and will be revisiting. I also have added your blog to my list of blogs being followed. Michael
Thanks, DGC, for the follow and stopping by. Building out more pages is something I’ve yet to do. All in good time.
Best,
DWC