Warning: Longer post than usual ahead!
Here are my automatic investments for this week.
- BP: 16.96 shares @ $41.28 --- Yield 5.81%
- RDS-b: 9.55 shares @ $73.16 --- Yield 5.14%
- CVX: 6.06 shares @ $115.42 --- Yield 3.71%
- XOM: 7.36 shares @ $95.03 --- Yield 2.90%
Total capital invested is $2800 ($700 in each company). The combined yield of this week's purchases is 4.39% and will add $122.92 to my yearly dividends.
$100/week Challenge --- Week 30 (Final Week) S&P 500: 2048 (Another all time high)
Since this is going to be the last week for my $100/week challenge I decided it might be a good idea to actually hit the mark. Energy stocks have been the focus of my purchases for several weeks and continue to be.
Thank God this gauntlet is over!
Why did I decide to tackle this challenge 30 weeks ago? I really don't know. It's kind of like asking Forrest Gump "Why did you starting running across America?" I woke up one day laced up my shoes and started running. I knew that I had written down a high passive income goal for 2014 and I was way behind. It just seemed like a good idea at the time to test my savings ability and more importantly my resolve. Win, lose, or draw I was going to give it my best effort.
Stretch goals OR just an alligator mouth overloading my hummingbird ass?
Back in April when I started this challenge I really had no idea what I was getting myself into. I may as well have said that I plan on running a marathon by then end of the year (but enough about next year's goals). Immediately after I made the post I realized that it was going to a sonofabitch and almost deleted it because of the extreme work commitment it would take to follow through with this goal. I had some cash in the bank so I knew that I could probably make it a month or two without too much difficulty. Not surprisingly, it didn't take long to burn through what little cash I had in reserves and by July I had exhausted all of my savings. Couple that with my wife wanting a new $4000 fence for the backyard and I was pretty much toast. LET THE REAL CHALLENGE BEGIN!
It sounds a bit crazy but there were a few times that I actually had less than $50 in my checking account. I'll never forget the time I tried to pay the bill at a Mexican restaurant a few months back and my debit card was declined. My first reaction was "Oh shit, I overcontributed to my Sharebuilder account and now I can't pay for a $7.99 tacos al carbon lunch special. Mr. Waiter will you take an IOU? After all I will receive a $10 dividend check from Pepsi in the morning. Better yet, how a about one share of ARCP!" Luckily the waiter re-ran the card and to my surprise and relief, it went through. At this point in my journey I knew things were starting to get a bit ridiculous and perhaps unsustainable. Ultimately these types of minor nuisances were not going to deter my efforts. I did make sure to carry cash with me when I went out to eat from that point forward.
Fortunately, I only experienced a few more inconveniences like this along the way. I guess I never was really in a dire situation as my credit card could have been used if there was too much of a financial pinch. Also I suppose that I could have stopped the investments, but I really wanted to accelerate my FI goals so failing was not a reasonable option for me. In the end, I am so glad that I didn't use any safety nets during this period. Investing while simultaneously accumulating consumer debt is not part of my investing or FI plans.
On the other hand, 70 hour work weeks were an unavoidable part of the equation.
Is it a good idea to work 301 days in one calendar year?
Hell no it's not! While many people have worked this many days and more, I sure as hell have not and don't plan on repeating this behavior again any time soon. If my calculations are right, by year end I will have worked the entire year except for 52 Sundays, 10 vacation days, Thanksgiving and Christmas and no sick days (knock on wood). Strangely enough, even though I am whining about this year's schedule, I have actually always worked long hours and working weekends is nothing new. In fact, I have always believed that the slight difference that exists between successful people and everyone else is what they do in their spare time. With that said, I am certainly not trying to win The Employee Who Worked the Most Hours and Still Lived Award! It was simply a means to an end for me....nothing more or less. Once emotion was removed from the equation things become more bearable.....for a while at least.
While I am glad that I was able to make enough money this year to reach this goal, I don't recommend this type of work schedule for many people. I am really lucky that I have a wonderful wife who fully supports our long term goals and makes many sacrifices herself so that we can continue to make progress with our dreams. Support from family and friends is certainly important when trying to achieve a difficult goal. However, many times while they can be supportive but I'm sure they are also thinking "What an kind of idiot would continue in that type of career situation?"
Haven't you ever heard about the frog that was placed in a pot of cold water before the burner is slowly turned up?
What did I learn during the last 30 weeks?
Nothing worthwhile comes easy.
While my savings rate has been high over the last 10 years, the past few and this one in particular have been insane. I really cranked things up reaching 87% in September which also happened to be my largest dividend month. While I still haven't had a 100% savings rate in any month and most likely won't for another year or so, it was awesome to be so close. After all if I can hit 100% consistently for twelve straight months, I feel highly confident that I will have reached FI.
I also learned that I will probably stick with more conservative companies going forward. I have a few holdings in my portfolio that are somewhat questionable.....ARCP anyone? I simply refuse to get emotional or sidetracked because of any one good or bad investment decisions. If I make a mistake I choose to learn from it and change course if necessary.
John Maxwell once said "It is easier to move from failure to success than it is to move from excuses to success." Sitting on the sidelines watching others play the game will not help your build your own dreams. While someone may never get burned with a bad stock selection they never make, they probably also will never experience the joy of the good ones. Ultimately this will lead to many regrets later on in life. Regrets suck!
$10-12k per month invested month after month......how is this even possible???
As recently as 2009, I would have said "Get the F$#% out of here with that S!@#."
Until four years ago, at age 39, I had never earned over $100k in a single year. In fact, the first 10 years of my career I averaged about $55k gross salary and the next five I averaged about $85k. So the idea is saving this much seems just as jacked up to me as it should to anyone else.
Having a relatively normal income for most of my career is the reason that I have been able to save as much as I have this year. I simply have avoided lifestyle inflation to the best of my ability. You see I had been trying to devise an exit strategy from the Rat Race much like Andy Dufresne was trying to exit the Shawshank prison. Similar to Andy, I was patiently using my little rock chisle to slowly dig myself out. Four years ago unexpectedly my mini rock chistle was replaced with a huge jack hammer. This past year a Caterpillar bulldozer was my digging machine of choice. If I can expedite my progress due to a substantially higher paying job so be it. In the future I may end up with that mini rock chisel again and so I will start digging with it no different than before.
While I have typically made above average income during my career, in 2009 (peak of the crisis) my income was back below $60k (don't get me wrong, this is still really good especially in Houston). That year provided the wet blanket to my otherwise happy go lucky life. Suddenly I realized that LIFE CAN BE DAMN TOUGH!
In 2009, while many people across this country were losing their jobs, losing their homes, and making less money (me too), I made the crazy decision to pay off my house. Talk about The Road Less Travelled. Again, with all hell breaking loose around the country and my income falling 35% I decided to put every dime I had towards paying off my house.
From March 2009 through September 2010 I literally kept no money in my checking account the entire year and a half while I cleared my mortgage. The economy obviously was very fragile (if not totally collapsing) at the time, but I knew FI can only truly begin when debt is 100% eliminated. Even though the market was climbing during the end of 2009, paying off my house was the best decision that I have ever made regarding financial independence. I was truly expecting to live through tough times for the next decade or so and wanted to lower my expenses and reduce all of debt to zero. After all, who cares what the economy is like if you don't have to worry about bills?
Amazingly enough, just as my mortgage was paid off at the end of 2010, the economy was rebounding here in Houston and I found myself with a great and unexpected job promotion. Over the next three years, my income has more than tripled. Here is the weird part, while it is nice that I was making more a lot more money, I never anticipated is lasting very long so I continued to spend very little. Now four years later everything at work is still in humming along and is even getting better except for the hours. Maybe I can summon my inner-Peter from Office Space and convince the higher ups that I need a 4 hour work week. :-) Very low probability
Moving along, in 2011 with a paid off house and a rapidly rising income, I was still preparing for the worst and focused on building up a cash reserve. I'm sure many people were doing the same as the coast was not completely clear at the time. Since the worst of the recession seemingly was in the rear view mirror, it was time to go on offense and start building my own dreams.
In 2012 with a pile of cash and no interest on savings from the banks, I decided to invest in mutual funds that focused on income and started making monthly contributions that would help alter my beliefs on total return investing, passive income, and early retirement. If you look at my 2012 dividend/interest totals, you can see the slow but steadily increasing income stream that was forming. Truly awesome stuff in hindsight! I am so glad that I took this path a few years back. By the middle of 2013 after experimenting with mutual funds I decided to buy shares of industry stalwarts like Microsoft, Intel, Atria, and AT&T. The rest as they say is history.
So now what?
Not surprisingly my first thought is to just suck it up and hit the $15k mark by January. After all it's a nice round number and it wouldn't take too much effort at this point in the journey. But then what? Do I give everyone $2.00 Christmas gifts, so that I can finish the year with a nice round number? I dunno....maybe! Wouldn't that be fun trying to explain to my nephews and nieces...."Uncle MDP is giving you a nice fruit cake instead of a cool Wii game because he needs to hit $15k in passive income." While I am frugal by nature, I am not interested in becoming the family Scrooge. There is plenty of time in the future for that. :-)
Ideally, I plan on cutting my current weekly investments by around 60-70%. My cash balance is way below my tolerence level and this became increasingly evident during last month's pullback. Don't get me wrong, I am very pleased that I was able to add to positions at lower prices. In fact, the reason why I wish to rebuild my cash position is so that future opportunites will not be missed.
Also, it is almost time to start planning for tax season (property and income). This past year I was not able to fully take advantage of the big Jan/Feb decline in the markets since I was in the process of paying 2013's tax bill. I want to be in a better position for next year.
If you thought the public library was great, try browsing DGI blogs.
I would also like to thank all the many bloggers that I visit regularly. Y'all are great researchers, educators, stock evaluators, and motivators. I do have to admit that I have ridden the coat tails of many of your purchases. Only the good ones though :-) In all seriousness, the DGI and FI community contains a wealth of knowledge that hopefully more people will take advantage of in the future. I know that I will! If I had stumbled upon some of the FI blogs 10 years ago...it would game, set, and match. Anyway, better late than never.
This rant has gone on long enough. Now back to business...
Here are some of the stocks that I will be considering for next week:
PX, ITW, PG, XOM, UL, GE, CVX, and KO.