January 2020 – Saving During Winter
I feel like saving during winter is always easier. After all, we live in the northeast so winters mean cold weather, darkness and snow. It’s not a fun time because it’s so hard to get out doors. However, it’s a fantastic time for saving money. That’s because winter is one of those seasons where it’s just easy to do nothing.
You get home at 5 P.M. and it’s already dark outside so where the heck are you gonna go? It’s much easier to just stay in, watch Netflix and snuggle up with the wife and pup. It’s the same thing on weekends. Most of our spending during warmer months is happens on nice day trips and it’s just really hard to take those during winter.
Who wants to go down to the coast when there’s a bitter skin drying wind blowing? Hell, who wants to go out anywhere during this weather. Not us, that’s for sure. We are just not cold weather people. That means most of our days are spent indoors avoiding the bad weather.
That sorta sucks since we’d like to do stuff but there is a bright spot to all this. Saving during winter becomes much easier when you have nothing to spend money on.
Overall, we’ve gotten pretty comfortable with this pattern. We stay in during winter, save up a bunch and then spend more when the weather improves. It’s a system that works for us and one that has led to some decent saving rates during winter months in the past.
It does put a damper on some of my 2020 personal goals like walking more since getting outside in the cold is a drag. However, we’ve done our best to still get some exercise in by walking at work or just walking indoors when we can.
I generally don’t go out of my way to be overly frugal in any month. However, it just naturally happens during winter. Things do come up here and there(like my dad’s 70th birthday this year) where expenses crop up but it’s easy to account for those in a month where our spending outside the home is low.
On the dividend side, January is always a small month. Some of my bond funds pay twice in December and then skip the January payment. On top of that, none of my individual stocks pay in January either. However, my M1 Finance account which does contain some January payers continues to grow so that will likely help these smaller months grow.
I’ve got a big year to follow up on. I’m coming off an amazing 2019 where I collected $12.9k in dividends. One of my goals this year is to grow that to $15,000 via investing and re-investing and that all starts now.
As a reminder, last January came in at $161.49.
January comes in with $211.48. That’s a 31% bump over last year.
That’s a nice bump and since January was my only sub $200 month last year, it’s possible that I’ll see $200+ in every month in 2020. That’d be a nice little milestone to hit.
You can see the continued growth since 2017 on this graph. It’s almost 4x the dividends I collected in 2017. That is after a decrease from 2016 but that was because I sold off some individual holdings and put them into index funds.
The trend in the graph is clear and speaks to the power of compound growth. It’s awesome to see these smaller months cross the $200 threshold and I’m hopeful I can start crossing $300 once the year progresses. It just motivates me to put more money into the market!
I’m always looking forward to my big quarter ending months but these small months add up as well.
The $211.48 re-invested will increase my forward annual income by $4.86. It’s not much but every little bit counts!
Steve, my dividend employee took a well deserved break after a record breaking December. His hourly wage of $1.27 for the month isn’t enough to live on but he’ll get there one day. In fact, that’s one of Steve’s goals in the long term. I think he’ll certainly be able to live off dividends eventually as long as I keep investing and he keeps working for me.
His hourly wage last year was $6.47 last year so hopefully I can get him a decent raise this year. One of my financial goals for 2020 is to hit $15,000 in annual dividends which would be right at the $7.50 mark and I think I can make that happen.
That may seem hard given the January results. However, as you can see below the large months are still ahead. That means the results won’t be decided until the end of the year since December is always my biggest month. With the current market turbulence, it’s possible I’ll be able to get some purchases in at lower valuations which means good things for yield.
Overall, January is off to a good start on the dividend front.
Any month where I see growth is a good one and 31% growth is pretty fantastic. Of course, it’s a small starting point but I’m not one to complain about 30%+ growth!
It’s always great to see this type of progress. Now that I am investing more into my M1 account, these smaller months will grow more as well. Last January my M1 finance account had $4.16 in January dividends and now this year it was $27.31. That’s pretty solid growth and should continue as I invest more money into that account.
January Total : $211.48
2020 Total : $211.48
Portfolio monthly hourly wage : $1.27/hr
Portfolio annual hourly wage : $1.27/hr
January Savings Rate – Saving During Winter
It’s time to see if any of this nonsense about saving during winter being easier holds water.
Last year’s savings rate was 51.36%. One of my 2020 financial goals is to hit a savings rate of 50%+ at least 8 times to match last year. That means missing January would make the path to that quite a bit harder.
Let’s see how I did in January 2020.
My savings rate for January was 51.24%. It’s just a tad below last year but still breaks that 50%+ barrier.
Adding in employer contributions brings that number to 57.94%.
On a gross income basis, I saved 40.9% of my income. That number jumps to 46.23% after employer contributions.
Those are some damn fine results give that January had a pretty big expense on the gift side.
It was my dad’s 70th birthday and we had a big family and friends dinner that I split with my brother. It was quite an expensive meal but a great time celebrating a big milestone for pops with the family. I also threw some additional things his way to celebrate his 70th including a nice winter hat to keep him warm and snug!
One of the things that makes saving in winter easier is the fact that 401k maximums reset. That means I can bump up my contributions to 25-30% to start the year and pay less in taxes which impacts the overall saving rates in these early months.
It’s always great to have some tax-advantaged help! I think it certainly made hitting 50% easier despite that big one-time expense.
On the expense side, Rent was #1 as normal followed by the gifts I got my dad.
Beyond that, nothing much was different than most months. Health insurance still surprises me every month given that it’s subsidized by my employer. It did go up a bit this year which is never fun to see. I wonder if my raise will even keep up with all these increases!
After that, expenses were low since like I said to start, we stayed in a lot. During winter, we rarely go out to eat preferring to stay inside when possible. After all, most of our favorite restaurants are a good drive away and making that drive during winter without the ability to hang out in the area just isn’t worth it. That leads to slightly higher grocery bills especially if we want a nice meal at least once a week.
On the entertainment side, I renewed my Amazon Prime subscription and on the pet side, I refilled some of her medications and food.
Really, we’re also still fancy eating’d out since our many high end meals in Atlanta so we’re not missing much. I’d rather save now and eat some nice stuff later when the weather is warm and we can spend a day around wherever we’re eating.
On top of that, we’re also planning a trip to Spain later in the year which will involve a lot of expensive food. It’s important to start strong because I know a few of those months won’t look as great as this one.
After all, you can see the trend below.
The winter months especially February(bonus month) kill it and then there’s often some struggles later in the year. However, last year I did pretty solid all year round so I’m hoping to repeat that trend in 2020.
However, there’s always unknowns. For one, it’s possible we finally buy a house this year which will mean bad things for savings later in the year so it’s great that I’ve gotten to a good start this year in case that happens.
Overall, it’s hard to find fault with this month. Dividends grew 31% to a new January record and possibly put me above the $200 mark every month going forward. I also hit a savings rate of 50%+ for the first time this year(I’m 1/1!) and that will help the portfolio grow as I invest those dollars.
Whether the market is up or down, I hope to have money flowing in every month and January is a good start to that for 2020. Here’s to a good start to 2020 for you as well!