I Owe Taxes – May Review

What happened in May? I don’t even remember. It’s been such a slow burn of sitting at home and being sad about the world. To get my mind off things, I estimated my taxes and I think I owe taxes, quite a bit in fact.

Beyond that, I sat at home, worked at home, didn’t really see anyone and played a lot of board games with the wife. I also tried to work out, after all, I have some goals to meet but it turns out I’m pretty lazy. Who knew?

That’s all while the world was going to shit all over the place. This year has kind of sucked right? Oh well, hopefully, it’ll lead to some positive change but we’ll see.

First, let’s get to the whole tax thing. I owe taxes. How much? I don’t really know exactly yet but I have a pretty good estimate. I didn’t actually file but I grabbed most of my forms and went through the process to figure out how much I owe.

I sold some stock from the company I work for in 2019(and more in 2020) so it wasn’t unexpected. However, the amount of taxes I owe was a bit of a surprise. I was having my employer take extra out of my paycheck but I guess I miscalculated a bit.

Most of the taxes were due on the state level so that’s probably where I missed a bit. It seems like my state doesn’t care if it’s a long term or short term gain like the federal government does. Way to suck state!

Oh, well, I owe taxes, no big deal. I’ll figure out exactly how much when I file and see if I owe any penalties. For now, I put aside most of what I think I’ll owe in May.

Beyond that expenses were normal. I did renew the hosting on my blog so you get to experience this crap for at least another year. OH YEA!

On the dividend side, it’s likely another month of decreasing totals. I sold some bonds to buy stocks during the March “crash”. That’s what you do when you have a certain asset allocation! Those bonds paid monthly so they’ve made these smaller updates more small. On top of that, bond and cash yields have reduced as well which doesn’t help.

I have been buying some individual stocks in my M1 Finance account which will help offset those reductions but it might take some time for that to impact these months in a big way. Still, I’m hopeful I can get back to growth in June and grow from there as well.

I’ve already started to see the dividends roll in for June which is nice to see. That’s one of my big months so it’s neat to see the bigger number. However, we’re not there yet so let’s talk about the May results first.

As a reminder, last May was at $251.58.

May Dividends

May dividends came in at $231.30.

As you can see, that’s a slight reduction from 2019 as I expected. The main difference is just lower cash and bond yields this year along with some bond sales.

That money has been redeployed into ETFs that pay quarterly but also stocks in my M1 account that pay whenever which impacts these smaller months. However, those dividends are still low and that account makes up a relatively small percentage of my overall portfolio.

Still, the growth in that account is happening as I got $34.88 in dividends there this May versus $10.66 last year. Due to those ETF buys, I think I can return back to growth in June which would be nice to see. However, it’s possible that some dividend cuts will impact my ETFs and cause growth to be stifled despite owning more shares.

Either way, small or big, it’s nice to see dividends continue to flow in each month.

It’s not a lot but re-investing that money will improve my forward income by $6.71 on an annual basis. That’s the power of compound growth and every little bit counts!

Despite the decrease, I’m still up about 0.6% y/y from last year and hope to grow that again soon. I think it’ll be hard to hit my dividend goals this year but that’s to be expected in a year like this. After all, who knew a pandemic would come that would reduce cash/bond yields and lead to a bunch of a dividend cuts. I think ANY growth in a year like this will be a win.

Steve, my dividend employee, had another slow month and earned himself $1.39/hr. That brings his annual wage to $3.55/hr this year but his best months are still ahead as evidenced by the graph below.

I’m 5 months into the year but 3 of my biggest 4 months are still ahead. That includes June which is almost over and I’ve already started to see the bigger ETFs payout which is always enjoyable as it gives me a bunch of new shares.

Overall, there have been a few months where growth has stopped but I’m hopping that ends in June. The starting point there is high so we’ll see how that goes.

May Total : $231.30
2020 Total : $2958.97
Portfolio monthly hourly wage : $1.39/hr
Portfolio annual hourly wage : $3.55/hr

May 2020 Expenses – I Owe Taxes!

May is usually a solid savings month. Last year my paycheck schedule switched to make this a 3 paycheck month and that led to solid results.

Of course last year, I wasn’t looking at a big tax bill so that was a plus too. As a comparison, my savings rate was 63.5% last May so let’s see where I ended this year.

My savings rate for May was 51.3%. Adding in employer contributions brings that number to 58.5%.

On a gross income basis, I saved 38.1% of my income or 43.4% after employer contributions.

I won’t complain about any month where I can save over 50% of my income and that’s despite a good chunk of my expenses going towards taxes. You can tell that if I didn’t have a large tax bill, I’d be sitting at a near 70% savings rate.

Of course, that would have impacted other months since I should have taken out more taxes in the past but that’s besides the point.

Beyond taxes, expenses this month weren’t anything out of the ordinary.

Rent and health insurance continue to be the top two expenses any given month followed closely by groceries. We really haven’t been going anywhere given the pandemic and shutdowns. The lack of discretionary expenses in the past few months has led to really solid savings rates and this month is no different.

This is the 4th 50%+ savings rate month and since we’re 5 months into the year, that ain’t bad at all. I think I’m in a good spot to really hit my savings rate goals although I know I have some medial expenses coming up(root canals!).

As I mentioned before, I did renew the hosting on this blog again and that cost hit this month as well. On top of that, my wife’s birthday is coming up and I got some gifts early to really make it a proper birthday. Most of it was nerdy stuff we like like board games but she’s also getting some other cool stuff I think she’ll like. Since we’re at home so often, it makes sense to spend a bit on things that make our home life more enjoyable.

However, overall, I’ve found that it’s pretty easy to just not spend money when you can’t leave the house. How about that?

Still, it’s pretty damn boring and I miss the ability to just go out and hang out with friends at a restaurant. I know a lot of that stuff is opening now but I still don’t know if I feel super comfortable about it all.

It’s weird that everyone is just so over the whole thing at the flip of a switch and no one seems to want to wear masks.

It’s possible that some type of personal lock down continues for a good period of time here which should mean good things for savings. That’s assuming I don’t lose my job which is always a risk in this type of environment. I do think that my job is pretty safe but who knows.

I mean, it’s not like we don’t go outside. We do plenty of hiking and spend time outdoors and I’ve even started going back to the office(my wife never worked at home so no change for her). Having to go back to work is a bit of a bummer since I love working at home but it’s also somehow a nice change of pace.

However, it also means costs will tend to trend up as I have to get gas again and pay for parking. Still, I’m not really expecting any major changes in purchasing patterns anytime soon which should mean the solid savings rates shown in the graph below might continue.

You can see the light blue months are looking really damn good. I have one month below 50% and that’s a 44% month in March.

I do know that I have some know expenses coming up that will lead to a few more sub 50% months. One of those is actually coming up today in the form of a root canal. Since I already had one this year, my insurance will be maxed out and I’ll have to pay full boat for the thing. Although the initial submission from the dentist to my insurance company was denied due to x-rays not being provided or something so I have to deal with that too. Gross, insurance crap is the worst!

It’s crazy how a root canal on a molar runs almost $2,000 in this area. How can people afford that? After that, I’ll need two crowns too so that’ll be expensive as well. My teeth suck!

Dental work really hits the pocket book but I’m glad to be in a spot where I can afford it. As I look at the amount of money I spend on health insurance and health costs in general, I still can’t help but think there has to be a better system than this that not only reduces costs but also provides for more.

I’d be happy to owe more in taxes if I didn’t have to care about health insurance premiums, deductibles and all that nonsense and could provide coverage for those that don’t currently have it. Just dealing

Overall, this was a pretty good month. Sure, dividends dropped a bit but I’m still up year over year. On top of that, I’m at a 50%+ savings rate in 4/5 months. That’s not bad at all. It’s crazy that it’s summer already and that June is almost done. Here’s hoping to a better second half of the year than we had in the first.

Thanks for reading and I’ll see you here again later!