The Noob’s Budget

In last weeks post,  I laid out an easy budget spreadsheet that anybody can use in order to get a hold of one’s bills and routine expenses. I only think it’s fair to show my current budget to you and explain what my line items are used for.  I’m hoping this will explain any issues one might have while filling it out as well as show everyone what I have to work with.

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Income – My income is the sum of my two bi-monthly paychecks. Currently, Mrs. Noob doesn’t work so we only have one income.

Bills – Here’s a list of our current monthly bills

    • Rent – We stay in a house that’s currently owned by my parents. We pay the mortgage and utilities that are bundled together.
    • Suddenlink – Our internet service provider. We currently pay for 200 Mbps down and 10 Mbps up. We also pay an extra $5 bucks a month for no data cap. We do a lot of internet in this house currently and this is a required expense.
    • Noob Car – I currently pay extra per month on my car loan. It’s normally around $400 a month but I allocated $600 a month to pay it off faster. This will let me save money on interest over the course of the loan.
    • Car Insurance – Both Lady Noob and I both have our car insurance through Geico.
    • Two phones – We currently both have plans at Virgin Mobile. It’s been the cheapest I could find for 5gb LTE and unlimited data, voice and text.
    • Roth – I take full advantage of maximizing my Roth contribution every year. When you calculate it, it’s around $458 bucks a month. Vanguard takes the payment out of my account automatically every month so I don’t have to worry about it.
    • Netflix/Hulu/Amazon/UFC – We don’t have regular cable tv so a lot of our entertainment is consumed by various streaming sites. I’ve been a fan of Netflix since they launched. We subscribe to Hulu whenever there is something we’d like to watch. I’ve been an Amazon Prime member for awhile now since we do a lot of shopping online and considering  they give free movies and books, it’s actually been quite a deal. UFC is a sport that I love to watch and their Fightpass has proved to be a good value so far.
    • Preschool – This is preschool for Noob Junior. It lets him interact with kids his own age twice a week and as a bonus, gives us 3 hours off for days he’s at preschool. Win, Win in our book.

Estimates for our Food, Gas as well as entertainment. We try to budget a little bit of play money every month for everyone. Happiness is worth it.

The only debt I carry is what’s left of my Jeep payment. When Noob Jr. was born, we needed a bigger vehicle and I went ahead and traded in my small car for a 4 door Jeep Wrangler. As noted above in the bills section, I pay an extra $200 a month to pay it off faster. It should only take fifteen more months to pay off now. Credit card balances are paid off every month. I suggest everybody does the same!

The retirement section includes my current balance in my work 401k. The company i work for currently matches up to 6% so that’s great. Also mentioned above is my current balance for my Roth account. As of right now, the federal government allows me to contribute $5,500 a year. The traditional IRA is a 401k that was rolled over from a previous employer.

But overall, I have a positive net worth which is an amazing feeling. It’s nice to see it down on paper (err..computer monitor?) and that’s all because of the budget.

I hope my budget shows people how easy it is to do!

The Noob’s Guide to Budgeting

What is a Budget?

A budget is simple. So simple, it’s only three words : In and Out. The money you have coming in (income) vs money you have going out (bills + expenses) is what you should be keeping track of. A budget gives you an idea of where your money is going and is helpful to figure out if there’s a way to save more of it.

We can use a simple spreadsheet to track it all or for the more tech savvy people, we can use budgeting software or money management websites like Mint. Whichever you are most comfortable with is fine. I suggest starting with a spreadsheet though because it’s quite a deal easier to learn.

Why a budget?

I know what you’re thinking. Budgets are lame and I know every single bill that comes into my home and how much extra cash I have at the end of the month. Let me just say this:

I still recommend that everyone take the time and carefully write down every bill that you pay. It’s easy to forget them!

If you’re trying to maximize your contribution to your dividend growth portfolio then knowing how much you’re going to spend in a given month is pretty paramount. If you have an extra $200 dollars a month to invest with, then you know you can safely deposit that into your account and not have to worry about any bill you forgot to pay!

The Noob’s Budget Spreadsheet

The spreadsheet that I provided tries to fundamentally be as easy as possible.

First off, go ahead and click the following link to download.

You can import it to your own Google Docs Account or just download it as a Microsoft Excel file. If you don’t own Microsoft Word/Excel, you can download the open source office software Libre Office for free and use that program to work your spreadsheets.

The spreadsheet has provided sample values for reference. You can simply change the values where appropriate and then delete the ones that do not apply to yourself.

 

  • Input your monthly income into Columns A& B – If you have multiple people with income (husband/wife, etc), go ahead and replace their names and income or delete what you don’t need. After you provide the value, the total in B:15 should update with the sum.

  • Input your monthly bills into Column D & E Remember, if you have an expense that’s paid quarterly or yearly, go ahead and calculate what it would cost monthly. Delete what you don’t need and after you’re done, the total in E:15 should give you the sum.

budget_ss_bills

  • Provide estimates for food and gas into Column G & Hif you’re unsure what this amount is, go ahead and take a guess. I’ve provided two additional sheets in the spreadsheet that will help you keep track of how much you’re spending. Right now, they are unlinked with this value. Once you get an average cost, go ahead and input the values into the Budget sheet.

  • I also provided columns to track your net worth if you feel like knowing where you stand with that. Just fill them in and your current net worth will be in K:18.

 

The extra income you have leftover will be calculated in H:18. Anything you have extra towards the end of the month can be added to your dividend growth portfolio!

Budgeting isn’t as scary as some people make it out to be. If you’re worried about not having “just in case” money, you should already have an emergency fund to help alleviate that before you’re investing anyways!

Need an example? Read up on my own budget.

Your budget can also answer some easy questions on whether or not you can afford something you’ve been thinking of buying. But no matter where you are in your life, it’s important to have a basic budget to help you!.

Living Frugal – Entertainment- Free Ebooks

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Introduction

Living frugal is a good way to increase the amount of capital you have to invest on a monthly basis. Small purchases here and there over the course of a month can add up to big money. Sometimes we’re talking enough capital to purchase an additional share or two, and when we’re talking about dividends, could mean adding dollars to your annual income. It definitely adds up.

People tend to spend a lot of money when it involves their entertainment.  In these series of posts, I’ll be highlighting what I do to provide entertainment to myself . First post up— books! Now the question is, where do we find free ebooks to enjoy?

Now I love to read. Both fiction and nonfiction, I find cracking open a good book just as thrilling as watching my favorite television show. I’m constantly reading no matter what I’m doing. There has definitely been a shift away from reading in general with the rise of television, movies and video games all fighting to take away your free time. But I encourage everybody to turn off their Game of Thrones or Assassin Creed game to enjoy a beautifull written book every once in awhile!

What are ebooks?

Chances are you already know what ebooks are all about. They’ve been around for years now and the ease/speed of acquiring them isn’t going away anytime soon. eBooks are just the digital form of books. There’s also been a big trend towards independent writers self publishing their own work on websites instead of going towards the traditional publishing route so I don’t expect it to go away anytime soon.

What Devices Can Free ebooks Be Read On?

You don’t need any special device in order to get into reading ebooks. There’s a good chance you already own a device that is capable of reading them. Most smartphones/tablets come with apps that will allow you to read them.

  • Apple Devices have iBooks
  • Android Devices have a bunch of apps in the Play Store.

You can also read ebooks from any Desktop or Laptop using Calibre.

I personally use a Kindle Paperwhite from Amazon. I feel it’s a good tradeoff between having a device that sort-of feels like a traditional book but with a much smaller form factor. I can store thousands of book on them and can pick what I want to read while out on the road.

Where Can I Get Free Ebooks?

There’s plenty of places online to find free ebooks. Be cautious though because not all books are available  legally free in your country and I’m a firm believer that copyright should be respected. The copyright laws vary by country so please take a little bit of time and figure out if something should be available to you. The following are all legal though and easy to download. Enjoy!

Local Library – A lot of local libraries are set up to allow ebooks to be downloaded to their patrons. Check for a local library location nearest you and support them! Libraries are great places to also pick up books, movies, etc. And the best thing about them, they’re always free!

Manybooks.net – This website was started in 2004 and has accumulated over 160 million books downloaded. It includes not only classic books but also releases newer titles from unknown indie authors.

Here’s a few titles I enjoy:

The Adventures of Tom Sawyer by Mark Twain

At the Mountains of Madness by H.P. Lovecraft

Project Gutenberg – The internet’s oldest digital library boasts thousands of public domain books in it’s archives. Public Domain basically means that the works are old enough to have left copyright and are available to everyone for free.project_gutenberg_logo

Their website is a little wonky to navigate and they use something called Book Categories as a way to divide the works up. They also provide shortcuts to view their most popular books and their top 100 books and authors for the last thirty days.

There are a lot of classics out there and no matter if you’re reading it for the first time or wanting to dust off a book you’ve read for high school, Project Gutenberg is sure to have something for everyone. Formatting wise, Project Gutenberg isn’t the greatest. Their process of creating their ebooks is automatic and not perfect. But we can overlook its faults because they’re free.

Here’s a few titles that I enjoy.

The Picture of Dorian Gray by Oscar Wilde

The Adventures of Sherlock Holmes by Arthur Conan Doyle

Metamorphosis by Franz Kafka

Amazon Prime – While not technically free— I find more and more people that I talk to have purchased Amazon Prime due to their free shipping and amazon instant watch but fail to remember that they also offer free books.

https://www.amazon.com/kindle-dbs/fd/prime-pr

They’re constantly adding and removing books in Amazon so I don’t want to link directly to anything specific. So for now, if you have Amazon Prime, just pick a genre and see what’s popular! I”m sure you’ll find something to enjoy.

NASA – I know this is a little weird and not totally expected but NASA (yes the government agency) offers free ebooks on Aeronautics, History, Science and other space things!

https://www.nasa.gov/connect/ebooks/index.html

This should get you started with finding something to read. If anybody has any recommendation, please feel free to leave a comment.  If I come across any other good sites, I’ll be sure to let you know as well!

Dividend Noob Portfolio Update for November 2016

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The goal of my dividend growth stock portfolio is simple and I contribute to it every month in order for it to continue returning passive income straight to my account. It currently returns over $1,500 a year and I, in turn, use that money to purchase additional shares of good, strong companies. This creates a snowball effect that piles up bigger and bigger the longer it happens. You might have heard of Dave Ramsay’s Debt Snowball? Well this is even better!

The biggest news item for the month of November was the United States Presidential Election where Donald Trump won the majority of the Electoral College votes but failed to win the popular vote. This will be the fifth person to become president despite losing the popular vote in America. This has caused a pretty divisive split between Americans and we’re far from seeing the last of the fallout due to it. But this blog isn’t about politics, it’s about making passive income in the form of dividend growth stocks!

Let’s see what happened to the portfolio for the last month and I’ll try and give you my thought process for why I did things.

Deposits

In order to help increase the funds available to purchase high quality dividend stocks, I set up for my Robinhood account to pull $150 from my checking account twice a month(7th and 21st).  I set up the withdrawal dates to coincidence on the dates that my paycheck clears into my account. This sets me up with $300 a month without having to do a thing.

I also scheduled a $500 deposit at the beginning of November. One of my goals was to keep adding additional funds to the account every month, on top of the $300 that’s auto-deposited. The amount of money is different every month and depends on how much free cash I have after bills are paid. $500 is a great amount and I continue to strive to meet and or beat this every month!

The next deposit was a speculative decision based off the presidential election. If you followed any of the media concerning the election, many media outlets said the stock market would “crash” or dip hard on a Donald Trump victory. If the stock market did dip then I would be in a good position if I had extra funds in my account to purchase stocks. I transfered $8k from my savings account over into my Dividend Portfolio in case it did happen. After Donald Trump won the election, the stock market ended up rallying and going to new highs which trumped my plans on buying these dividend champions on sale. Oh well.

.Total: $150 + $150 + $500 + $8,000 = $8,8000

Dividends

It was a pretty weak month in terms of dividend payouts with the portfolio only returning $55.67 in income. The following table lists them out.

 

T 25 shares @ $0.48 = $12.00
AAPL 5 shares @ $0.57 = $2.85
SDIV 100 shares @ $0.12 = $12.05
MAIN 77 shares @ $0.18 = $14.25
CLDT 132 shares @ $0.11 $14.52
Total for November:  $55.67


One of my goals in the future is to start looking at good quality dividend stocks that pay their dividends on the weaker months.

Purchases

I purchased quite a bit in November.

  • 5 shares AAPL @110.75

At a dividend yield of 2.06% and a p/e ratio around 13, I thought it was a decent entry point to start my position in AAPL. There were plenty of opportunities to pick up AAPL at the lower price but I was always cautious on their ability to deliver innovation. It’s hard to bet against this giant though and I decided to start a small position for the long term. I’ll be buying a few more shares on the dips as it transitions into a dividend growth stock (hopefully). This position adds $11.40 to my annual income.

  • 84 shares CLDT @16.95

Chatham Lodging Trust is an equity real estate investment trust with the majority of their holdings in upscale extended-stay hotels. One of the highlights of this REIT is the high yield (~7%) and that they pay dividends on a monthly basis. It trades around a Price/FFO ratio of 8.5 times. Hotels tend to not do very well during recessions and with the market at an all time high, I’m going to have to keep an eye on it but I’m pretty confident in them for the time being. This position adds $110.88 to my annual income!

  • 10 shares OHI @28.35

Omega Healthcare Investors is another REIT that invests in long-term care facilities located in the U.S. and U.K. The prime factors in my decision to purchase shares were the solid 14 years of increasing dividends, the current yield of 8.28%, and the latest price drop due to earnings.  This position adds $24.40 to my annual income!

  • 6 shares SO @ 47.10

The Southern Company generates and distributes electricity through coal, nuclear, oil, gas and hydro resources in the AL, GA, FL and Miss. They currently sit at a p/e ratio of around 17 with a current dividend yield of 4.78%. They are new to the dividend payout game and had only just started paying out in 2013. Energy sector has been getting hit pretty hard lately so I felt it was a good time to add to my position on the dip. This position adds $13.44 to my annual income!

  • 10 shares NGG @ 57.10

National Grid plc is another energy stock that distributes electricity and natural gas to the U.K and the U.S. It currently sits at a dividend yield of 5% and just like SO, has been paying dividends since 2013. This position adds $29.60 to my annual income!

  • 3 shares DUK @ 73.84

DUK is another energy stock that’s been getting hit pretty heavily lately which drove it’s p/e ratio to 17.7 and yield to 4.6%. I used my auto-deposit cash to purchase these shares. This position adds $10.26 to my annual income!

Sells

  • 25 shares TGT @ 71.67

I sold out of my shares of TGT after a big bump after earnings to lock in profits. It’s since skyrocketed even higher and I’m a little jealous that I pulled the trigger too early. Oh well, at least i made a decent chunk of profit from it regardless. This reduces my annual income by $60.00.

You can always view my current portfolio.

That’s it for the month of November! Coming up next month is Christmas and the spendthrift nature of the entire month. Here’s hoping I have some amount of money left at the end in order to keep adding to my portfolio!

~Noob

October Dividend Payouts and Portfolio Update

It was another good month for the dividend portfolio as I made $85.55 without doing a single thing. I love passive income, I really do.  It was a big month for purchasing stocks as I had nine buying transactions and only a single selling transaction.

October Portfolio Update

  1. Bought 4 shares of DUK @ $77.35.
  2. Bought 7 shares of KO @ $41.70.
  3. Bought 15 shares of CLDT @ $18.96.
  4. Bought 25 shares of SDIV @ $20.85.
  5. Bought 4 shares of DUK @ $76.07.
  6. Bought 25 shares of CLDT @ $18.15.
  7. Bought 15 shares of SO @ $49.30.
  8. Sold 30 shares of RAI @ 54.88.
  9. Bought 16 shares of TROW @ 63.28.
  10. Bought 10 shares of CAH @ 66.00.

In total, this adds an annual income of $211.96. The portfolio is now generating $1,505.78 a year in income!

October Monthly Dividend

KO 55 shares @ $0.35 = $19.25
RAI 20 shares @ $0.46 = $9.20
SDIV 75 shares @ $0.12 = $9.04
MAIN 77 shares @ $0.18 = $14.25
CAH 10 shares @ $0.45 = $4.49
STWD 40 shares @ $0.48 = $19.20
CLDT 92 shares @ $0.11 $10.12
Total for October:  $85.55

Next month, I expect to make a big deposit into my dividend portfolio account in order to prepare for the election month. I’m not sure exactly what to expect but if there’s a chance to purchase some quality stocks at a discounted price, I will do what I can to take advantage of it!

Until next time!

You can check out my portfolio to see my latest holdings.