Where Have I Been?

It has been about 7 1/2 months since my last post.  In that time, our finances have taken a turn for the worse.  That dividend investing plan is gone and our emergency money is dwindling.  In other words, we are in panic mode.  My wife and I are trying to be barebones on shopping and it is not easy.  We are reassessing our budget and trying to get more income.
I am constantly looking for a new job that will not only provide for us financially, but also put me in a happier mood.  My current job is in turmoil with team changes and load increases.  Unfortunately this does not translate into more pay.  Ideally, I would find a position that would let my wife continue to stay at home as much as possible.  She does fill in as a substitute teacher now and then, but I would like to be able to use that money to save for our depleted emergency fund.
That is all for now, but I will look to update the blog more often, I promise.

Dividend Play: Intel

Today, I switched Altria (MO) out for Intel (INTC) in my Roth IRA. It was more of a socially aware move than anything else. I have enjoyed some good gains over the years with Altria, but decided to do go a different route.

Intel is a good pick up as it has been depressed a bit lately because of the computer industry's growth slowdown. Because of this it has been playing out quite well with a current yield of 3.4%. It also just raised it's dividend by over 14% to $.18 per share. That is quite good and I foresee at least 10% for years to come. This will double the yield on cost every 7 years.

Intel Sale

Decided to get out of Intel early. I might get back in, but decided to take a little profit against a probable downturn tomorrow. I made $18.57 off this trade. So far, since Jan 25, I have earned $44.18 off an initial investment of $2052.07. My goal for the short term will be to average $25 per week, until I get to around $2500.

Different Strategy for the Non-Retirement Account

A couple of weeks back, I reported that I was changing my brokerage account and adding some money towards it. At first, I was looking to keep using the account as dividend growth account. It was going to hold stocks that would be growing their dividends or had high current yields.

That has changed for the time being. Last week, I bought Bank of America(BAC) on a dip with the intention to get out of the stock when it rose to my liking. Basically, I am looking to make $25 out of the stock and then move on, which I did today. BAC rose back to what would be a $25 profit for me and I sold it.

The proceeds from the sale have gone into Intel(INTC). It took a bit of a hit today with it announcement of a chip-set flaw, and I took advantage of that. Now Intel is a two pronged attack for me. If I can hold on till Thursday, I can take advantage of its dividend payout of $0.1812 per share.

The reason I have made this switch in strategy is because I wanted to see if I can eventually add to our income. With my wife having trouble finding a job that fits our children's schedule, I have been pondering different types of income stream. If I can succeed at this, I can hopefully free up that worry. I understand that this is a risky was of going about, but sometimes we have to increase our risk in order to succeed.

FSC Redux

Since I moved my Scottrade account over to TD Ameritrade, I decided ot kick in an additional $1000 to the $1060 that will be transferred. With that, I have been looking to stocks that I will be purchasing with those funds. Of course, I have limited myself to dividend plays as that is my current investment strategy. Until all debts are payed off, I am looking to build up a base of income paying stocks. I believe them to be safer plays for the near term.

I am looking split the $2060 into two stocks, one a dividend growth stock and the other a high income one. For the former, I have not committed yet, but have a short list that I am mulling over. For the later, I have decided to get back into Fifth Street Finance (FSC). I really like this company and management seems fully invested in its growth. Basically, it is a small to medium business loan company.

Currently, FSC is looking to pay out their dividends monthly and the yield is at 10.6%. This seems quite high, but it is in range with similar companies. A $1000 investment, should yield me around $100 a year for the near time and the stock does not fluctuate too wildly.

Cool Retirement Calculator

found a great spreadsheet calculator over at Dividends Value. I can track your earnings with your dividend investments for as long a period you want to chart. This will give a good indicator as to what you will be earning annually with dividends.

I decided to play with my two stocks in a Roth IRA, Altria (MO) and McDonalds (MCD). My initial investment in both is quite small, but looking at what they can do in the future is quite amazing. The first chart below basically shows what happens with my initial investment only with dividends reinvested:

This second chart shows what happens if I added $2000 per year to the account:

The results for both are quite amazing. After 25 years with my initial $2000 investment, I would be earning $1500 annually. That would mean an initial investment yield of 75%. That is quite staggering. Also, the investment would be at $35,000.

Now if I added $2000 per year, after the same 25 years, the value would be at $281000 and I would be earning nearly $13,000 per year on dividends. I like the sound of that.

For both charts, I used a 7% dividend growth rate, which is quite conservative for the 2 stocks. Both MO and MCD have been averaging over 10% dividend growth rate over the past decade.

This is quite a handy tool to use and I will be going use it as a tool in my investment research for dividend plays.

Changing Non-Retirement Brokerage Account

I made a decision yesterday to consolidate my accounts. The move is to the same institution as my current Roth IRA. It will make for better paperwork and and simpler transaction between portfolios.

In anticipation of the money transfer, I sold off my shares of Altria and Fifth Street Cooperation. I purchased both in May of last year and kept them for almost exactly 8 months. The results of my investments are attached.

The results include commission costs. Overall I made $48.34, excluding minimal taxes. This is not too bad of a result, for a $1,000 investment over 8 months. For a start into income investing, I consider it a positive, especially since it was held for such a short term. I am now researching purchases for the new account and am considering putting in an additional $1000, depending on how we do at tax and bonus season.

2010 End of Year Update

This has been one crazy year. The good news is that we are well on our way to killing off the credit card debt. The bad news is that we had to use up some retirement savings to get there. That is the problem with only having one income, and it is something I want to remedy this year. I did some calculations and found that either we were going to end up increasing our debt or start from scratch and build up our retirement accounts again. I opted for the latter because it would be less of a strain on us emotionally and we would save money in the long run. We were getting ourselves into a bad cycle if we did not cut this off.

So, here is where we stand from the beginning of the blog:

As you can see, 60% of that difference is due to the estimated loss in value of our cars. The rest is because of less income really. We have tried to really keep expenses low, but we have had some unexpected medical costs.

For 2011, I already stated our goals here. The key really is to get our retirement accounts back up and to finish off that auto loan. I have been considered looking into a home refinance to know the mortgage down a few years, while still maintaining our current payment level. That will now be until I feel the home value is up to a safe level.

Financial Goals for 2011

With the New Year right around the corner, I thought I would compile a list of what I would like to achieve financially.

1. Be rid of all credit card debt.
2. Earn $5000 in extra cash from side jobs.
3. Have $10,000 in non-retirement accounts.
4. Have $80,000 in retirement accounts.
5. Get total loans/debt below $200,000.

This will require some work on my part. We have to reign in our extra spending and work on creating some side income. I have some thoughts on the latter that I will share in the future.

New Goal for Paying off Auto Loan and Others

Back in April, I laid out our goals for paying off our debt. In there, I figured that after paying off the credit card debt, we could put all our resources towards the auto loan. The earliest I figured we could pay that off was August of 2014. Well, now that we have paid off the CC debt earlier, I believe that we can tackle the auto debt earlier. If all goes to plan, we will have it paid off by December of 2012. That would be welcome news, as we would then begin to tackle the 2nd mortgage.

By then, the mortgage will have about $56000 remaining. I would give us 3 years of accelerated payments to finish off that loan. That would be December of 2015. All that would remain now would be the 1st mortgage with $115000 remaining in principal. By throwing all that extra dollars($1350) into the principal every month, I see us paying off this debt within 3 more years. This means by December of 2018, the house will be all ours. This is one lofty goal, but if we can get back to two incomes next year, it will be totally doable. Also, I plan on working in some extra hobby income as well.

Mid December 2010 Update

It has been some time since my last update. I have been super busy and not had much free time to think about a post. Lots of stuff happening between work and home. We have made a big decision to use some of our retirement savings to level our debt. I know that this is number 1 on the list of things not to do financially, but with our situation (one income, mounting debt payments, chronically sick child), we felt this absolutely necessary.

Doing this is actually saving us money now, since we don't have a that 6% finance charge every month anymore. It is one less expense that we don't have to account for. Also, we are not having to set aside $380+ towards debt payment. It eases our monthly overage quite a bit, almost putting us in the black when we get some extra income in.

So with that said, here is our latest new worth statement.

So we see that our retirement accounts have taken a hit, but we have the up-tick in savings. Half of those savings will go towards finishing off the remaining credit card debt as well as another outstanding one. From here, we will see where our tax return and next years bonus put us. I would like to eliminate the auto loan next. Also, we hope to bring in some extra income with some ideas that I will go into later.

Rising Prescription Costs are Hurting Us

Our little one, requires a high dosage of vitamins that are compounded so that she can take them orally. She has feeding issues (not able to chew well) so we give them by oral syringe. There are 8 separate vitamins that are put into 5 compounds of varying tastes. These are to make up for her genetic/metabolic vitamin deficiency. She has been on the cocktail for a year and has shown improvement.

The problem is that the cost of the vitamins and compounding has gone up drastically in the past 6 months. At the end of last year, it was $10 per prescription, with 3 being twice a month. At the time, there we a total of 9 refills per month. That comes to a total of $90/ month. Then in January of this year the co-pays went to $30 so the grand total went to $270/ month. We worked hard with the pharmacist and neurologist to cut the total prescriptions down to 5 a month and the total was $150/ month.

Well, this month our health provider decided to upped the co-pays to $50 a month. That makes the total $250.00. I think they are trying to make our live miserable. We are currently working with the pharmacist and neurologist again to try and bring the cost down. Otherwise we are gonna go on the canned beans diet.

Dividend Play: Altria

On Friday, I decided to add to my position in Altria. I could not resist the 7% dividend this stock now offers. I was actually looking to add Chevron or Exxon Mobil, but settled back on Altria. The stock is down 10% since April, and I believe this to be unwarranted.

So, now I am done with my initial dividend portfolio. This portfolio currently makes up only 5% over my overall investment portfolio. The other are in mutual funds. The dividend portfolio includes Fifth Street Corporation (FSC), McDonald's (MCD) and Altria (MO). The later to are setup in DRIPs, so I look forward to seeing the shares grow over time. Also, when finances offer, I will add to these positions.

I am actually contemplating increasing this portfolio's value in my overall investment approach. I would like to to be at least 50%, so that it will produce a generous income when the time comes to live off our investments.

Net Worth Update: Ugly May

Here is my first net worth update. It just happens to be on the end of a bad month for the stock market.

The auto category comprises 2 cars, one which is paid out right. We plan to keep both fo many, many years.

As you can see, I paid off quite a bit this month on the credit cards. I am not sure how much I a can keep that up.

The taxable accounts comprise emergency funds and some misc savings.

Dividend Play: McDonald's

Yesterday, I started a position of McDonald's stock in my Roth IRA. It is only 15 shares at the moment, but I plan to use the dividend reinvestment plan there and let the shares grow over time. The company has been raising it's dividend each year at a pretty good rate and I don't see it stopping that anytime soon.

I am studying up on some other stocks to add, as I have left some dollars in my Roth account to make one more purchase. The sectors I am looking at are utilities, energy, consumer goods and some others.

A Great Dividend Portfolio for the Long Term

I have been researching stocks that would be great for dividend income. This would play into my eventual to be able to live off the dividends the stocks would provide, while still enjoying equity growth. Imagine, if you will, being in a position to be able to get $100,000 a year on income from the stocks in you portfolio.

If you want to do that today, you would need a $4,000,000 paying a 2.5% yield at the time of purchase. A more attainable option would be to build up a portfolio of stocks that not only pay dividends, but increase them on a yearly basis. If you were to reinvest the dividends back into the stocks, that 2.5% average yield could be more than 15% on your initial investment 20 years from now.

For example, in 1990 McDonald's paid a 3.49% yield. On that same initial investment, you would get a 25.6% yield today. In terms of dollars, in 1990 you would have received a $8.75 for every $1000 invest back then. Today, you would get $64 every quarter. That is just amazing and does not take in to fact that you would have more than the initial shares you purchased with that initial $1000. If those dividends were reinvested, then you would see over $300 per quarter.

With that in mind, I ran into a great list of dividend stocks for over at Dividend Growth Investor. Over there you will find great dividend growers such as Altria, McDonald's, Clorox and Con Ed.

A Different, Yet Ultimate Dream

I have mentioned in the past that our younger daughter has medical issues which has been making it tough for my wife to find some part time work. The little one has an odd school schedule (1/2 day) as well as a slew of therapy sessions during the week. On top of this, she has more than the normal doctor's appointments, some of which are out of state.

Another problem with the little one is that she only eats well with yours truly. Mom has a tough time feeding her and more calories are wasted than taken in. My work has been accommodating, but that can only last so long. By not being in the office as much as before, I lose that face time with my fellow coworkers. Even though I put in my best, the perception is that I am not putting in as much as I can. This is normal office politics.

This has lead me to think about what my long term goals are and where my priorities should be. Ultimately, I would love to be able to spend as much time as I can taking care of our younger daughter. The more we can work with her now, the better for her long term development.

So, my dream would be to free myself of the 9-5 work day. I think that by paying off our debts and earning passive income would be the best way to achieve that goal. Passive income would be in the form or website earnings and writing for sites such as Associated Content, as well as investment income. I would be ideal to gather enough dividend paying equities to be able to live off the payments.
Now I have to work towards that goal. I have setup my get out of debt plan already, but need to see if I can advance that somehow and in the meantime, build up my equity portfolio. Good luck to me!!

Secrets of Self-Made Millionaires

I found this Readers Digest article via Yahoo on the 5 Secrets of Self-Made Millionaires. It was quite an interesting read. Here is the breakdown of the 5 and my look at them.

1. Set your sights on where you’re going

So true. If you don't have a vision, then how will you know where you end up.

2. Educate yourself

Whether you want to be a finance guru or scientist, you will want to study, study, study.

3. Passion pays off

You have to love what you do, otherwise, you will not succeed.

4. Grow your money

Reinvest what you earn back into your business. Don't squander your earning frivolously.

5. No guts, no glory

Just like exercising, "no pain, no gain." You have to take a risk and sometimes it may seem tough, but you have to continue.

One Million Not Enough Anymore?

I just read an interesting article over at The Motley Fool. The premise is that $1,000,000 is enough for retirement if your are doing it today, but what will it bring 10, 20 30 years from now.

"But if your retirement remains several decades distant, you'll need to remember that inflation will eat away at your purchasing power. At 3% inflation each year, in 30 years that $40,000 you withdraw will buy as much as a mere $16,000 does now. Ouch.

So how much would you need to retire at age 65 with the equivalent of today's $1 million? Check out this handy chart:

Current Age	You'll Need This at Retirement
25	$3.26 million
30	$2.81 million
35	$2.43 million
40	$2.09 million
45	$1.81 million
50	$1.56 million
55	$1.34 million
60	$1.16 million"

According to this chart, we will need over $2 million saved up by the time we hit retirement. Currently we are on track to have $550,000 in retirement funds when we hit 50 years old, leaving us with 15 year to reach the the new goal. Yikes!

2010 Financial Goals

It being late in the first half of the year, I thought I would throw out some goals for the end of the 2010. This is all incumbent of my wife being able to find some part time work. If she doesn't soon, we are going to have to tap into the emergency fund even more and then lord knows what. I have been contemplating finding a second job, but my work sometimes requires weekend builds, so it would be tough to schedule. Lets hope we find something soon.

1. Emergency Fund: $5,000.00 (currently at $6200 and being taped into)
2. Taxable Investments: $2,630.00 (currently $1758.87)
3. Retirement Accts: $99,540.00 (currently $90980.79)
4. Credit Card Debt: $10,393.00 (currently $12793.42)

As I stated, if my wife does not find work soon, the emergency fund will really be dwindling, but I guess that is why we have it. I have started selling stuff on Craigslist and Gazelle, but that is going slowly.