September 2012 Monthly Expenses

by FI Fighter on October 4, 2012

in Monthly Expenses

Last month was not one of my better months for savings as I recorded a year low savings ratio of only 42%. I kept that data point in mind heading into September. Now that the month has closed and all my credit cards have been paid for, it’s time to see how I did in September.

September was a great month for savings. I cut down on spending, and did not indulge in any new hi-tech purchases 🙂 By doing so, I was able to save 64% of my net income. After subtracting 401k contributions and the re-invested dividend payouts, I had $3000 remaining to invest. I used this tidy sum and took advantage of some of the discounts that Mr. Market presented to us. Although the market as a whole was still pricey, I scored bargains on: EXC, NSC, CSX, and INTC.

Coincidentally, each one of these holdings also pay out on the same month. By securing these purchases after their respective ex-dividend dates, I was not able to to make the cutoff to receive payment for September. As such, I will have to patiently wait until December before I can reap the benefits. I am expecting quite an increase in payout during that time, so that will be my Christmas present to myself.

In other news, the rental property has also been making good progress. I haven’t posted any news in awhile, which is definitely a good thing – it means things are going smoothly! *Knock on wood* I have set up the mortgage payments to auto-bill and I now receive rental income via direct deposit. It makes the whole process so much simpler! I haven’t yet had to pay for any property taxes, so for the time being, I am netting $800/month in rental income. Although I have to make sure to stash some of this away for taxes, emergencies, etc., I do now have an additional source of income at my disposal to use to generate more investment income.

Lastly, September was my best month for dividend payments year-to-date. I generated over $200 in a month for the first time. By year’s end, I expect to also reach my first $300 month payout. Good stuff.

Here are the dividend payouts:

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{ 6 comments… read them below or add one }

1 JC @ PassiveIncomePursuitNo Gravatar October 5, 2012 at 6:22 am

Great job on bouncing back after a slow month. $200 in dividends for the month is awesome. I think I might be able to hit that come the December payouts. I’m hoping to be able to get a rental property in a few years to help diversify the income streams more. Congrats on a great month!

Reply

2 FI FighterNo Gravatar October 6, 2012 at 12:29 pm

JC,

Thanks! It was definitely a great feeling to be able to get back on track after taking a slight detour last month. That will happen from time to time, I’m sure, but what I am shooting for is overall consistency.

I don’t want to be like that person who starts a fad diet and goes overboard for the first few months, gets bored and then gives up completely. So, I am trying my best to find the most sustainable approach. 60% to 70% is about right for me.

The rental property is definitely a great idea to help diversify income streams. Just like when investing in the stock market, my goal is to eventually own a few properties. This will probably comprise a blend of: condos, townhouses, and even single family homes.

In general, real estate is a lot more work. I wouldn’t dare call it passive income, even if you do hire a property manager. However, the ability to use leveraging is very powerful. If you can locate a cash flow positive rental, you get to build up equity and still have enough profits left over to either pay your own bills, or use for other investments. In time, you own the property completely, and that’s when the cash really starts to flow in!

Best wishes!

Reply

3 Dividend MantraNo Gravatar October 5, 2012 at 4:27 pm

FI,

Wow! Awesome job man. Monster savings rate. 65% is an awesome rate, and one I was shooting for on an annual basis, but will fall woefully short this year unfortunately.

That rental property is already paying you huge dividends. I’ve often thought about something like that, maybe owning a duplex and living on one side. That might be a great way to go. But, then again I really like renting and not having any real estate concerns. It seems like I might be leaving money on the table there. Great job!

Seadrill paid you huge this month. I’ve never really looked at it. I know it’s a driller, obviously, but that’s about it. What’s your thoughts on it?

Awesome month. I know that I feel great when I save a huge amount of my income and have a great month of passive income like I did in September. Makes me feel elated.

Best wishes!

Reply

4 FI FighterNo Gravatar October 6, 2012 at 5:57 pm

DM,

Thanks for the continued support. 65% savings is a pretty ambitious savings rate, and one that I will also probably fall short of reaching this year. My original goal was 70%, and that doesn’t seem possible now since I spent so much last month.

It’s ok though. We are setting the bar so high, that even if we fall short, we are still hoarding over 50% of our net income. That’s an insane amount of savings that wouldn’t be comprehensible to most everyday folks.

Shoot for the stars – land on the moon. As long as the income stream keeps on increasing and we set new personal records each quarter, I am confident we are on the right track.

I think the idea of purchasing a duplex is a tremendous idea. I have a friend who is contemplating doing the exact same thing. In some areas, it is entirely possible to rent one side and have enough rental income to cover the mortgage for both sides. How can you beat free rent? But like you pointed out, home ownership definitely carries an added burden of stress to the equation.

Seadrill is the largest offshore driller in the world as measured by market cap. Many consider it the industry leader since its fleet is very modern (especially when compared to say RIG), and commands record breaking dayrates. It’s chairman John Fredriksen is also well known for rewarding shareholders with liberal dividend payouts (lots of increases and special payouts).

The catch is that SDRL, and other offshore drillers run a highly leveraged type of operation. If you are a conservative investor, this is definitely not the right stock. The balance sheet is sure to have scared many off. However, if demand is high and dayrates maintain their premiums, the stock should do very well. It’s risky, but enticing since the dividend yield is like 7% or so. My YOC is over 10%.

I’m sufficiently allocated in this sector, so don’t have plans to add any more shares. Eventually, I’ll probably even stop DRIP for this investment. This is definitely one stock I have to monitor more closely.

Reply

5 Compounding IncomeNo Gravatar October 7, 2012 at 3:13 am

That rental property is going to be a gold mine! Holy crap! Get a couple of those lined up, keep building the portfolio and you’ll be set.

Note to self: get out of the military and become a real estate tycoon like FIF 🙂

Reply

6 FI FighterNo Gravatar October 8, 2012 at 10:13 pm

CI,

Thanks! The rental property is proving to be a solid investment so far. I would like to save for another one, but that will take quite the effort.

In the meantime, I’m doing my best to pick the brains and learn from more experienced real estate investors. I know a few who have made their fortunes through real estate. In the long run, you probably can’t go wrong, especially if you invest in highly desirable/coveted areas. When in doubt, location, location, location… that’s what matters most.

It would be nice to be able to create multiple snowballs: stocks and real estate. That should create a pretty steady and sizable income stream 🙂

Cheers!

Reply

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