Wednesday, January 29, 2014

Recent Buys

Last week was quite a busy week for both my FI Portfolio and my Roth IRA.  I made 3 purchases between the two accounts and while that hurts my capital raising for an investment property, I felt all 3 represented good value at the time so I went ahead and made the purchases.

The first purchase was using up the last of my capital in my Roth IRA.  I had raised some funds to try and have both of my BAC calls executed but I couldn't get there so there was around $1,000 left to invest in another company.  With that cash I purchased 12 shares of Phillip Morris (PM) on January 22nd for $83.15.  This was a new position for my Roth IRA but continued to build up the overall position in PM.  After commission, my per share cost basis comes out to $83.81.  Based on the current quarterly dividend of $0.94 per share these shares carry a YOC of 4.49% and will provide $45.12 in annual dividends before any reinvestment or increases.  My forward 12-month dividends from my Roth IRA are now $215.87.

Monday, January 27, 2014

2014 Goals

Last week I reviewed how I did on all of my goals for 2013.  From a financial perspective it was a resounding success without any huge misses.  The goals I'm most proud of was hitting an 80% savings mark for the year and the huge net worth increase.  The markets roared higher last year and with the high savings rate I was able to maintain I ended up with over a $160,000 net worth increase for the year.  Yeah, I didn't see that one coming.

If you're going to set goals, make sure they are something that is concrete.  Don't just set a goal to save more money.  Make it a specific amount whether it's 5% per month or $100 per month.  A big positive for setting concrete goals like this is that you can easily track your progress.  If you're like me you can even set up a visual cue that you can either hang up in your house or keep on your computer to see how you're doing.  Visuals really make it easy for me to see how things are going and what else I can improve on.  One last thing about goal setting.  Try not to be too conservative in your goals.  Make them something that is going to really push you to and past what you thought your limits were.  Whether that means setting some goals that are about on track with what you expect and then following up with stretch goals, be like the high school cheerleader.  BE AGGRESSIVE, BE BE AGGRESSIVE!  You don't want to reach you goals in June and then become complacent the rest of the year.

Well time continues to move on whether we want it to or not and the first month of 2014 is almost over so it's about time I release my goals for 2014.  Overall the goals will look similar to 2013, but with higher starting and ending points.  That's always a good thing.

Sunday, January 26, 2014

Option Expiration and a New Option Position

It's time to get caught up on some option moves that have gone through in the past week or so.  I had a call option get executed on January 18th and purchased 100 shares of Bank of America.  Also last week I sold a call option on Halliburton.  I'll detail the two option moves below.

I don't normally buy call options as my typical strategy is to sell put options and occasionally sell calls, but at the time my capital was low and I felt there was a huge opportunity to make some money.  I wish I could have made a larger bet but I'm happy with the way things turned out.  I purchased 2 $10 calls on Bank of America (BAC) back in March of 2012 for $2.11 each.  At the time Bank of America was trading in the $9-10 range so there still needed to be a lot of upside as BAC needed to be trading above $12.16 before I'd break-even.  That would have required a greater than 28% increase before I'd make any money.  Bank of America was still the bane of investors at the time, but since I was able to purchase a LEAP and had almost 2 years for the share price to recover that was fine by me.

Protecting your income

The global economy still isn't back on its own feet as central banks are continuing to prop up the economy by printing more money.  It seems like for the past few years all you've heard on the financial news is how the economy could slip into another recession.  Based on historical cycles, recessions come around every 5-7 years on average.  We're currently about 4.5 years removed from the "Great Recession" that dragged down the global economy and massive layoffs on a global scale.  There's still plenty of people around the world that haven't found meaningful work since the last recession.  If the economy stumbles and heads into another recession, will you be prepared?

Saturday, January 25, 2014

Weekly Roundup - January 25, 2014

It was a great week in both the work and blog world.  Though in the Investment world not so much as the markets have been much more volatile so far in 2014.  Heck the DJIA lost over 300 points on Friday.  But that's music to my ears as that brings prices of great companies into better value areas.  As far as work is concerned, we finished another well, this time in just 11 days which is pretty good.  We've had better wells but 11 is still a good time.

Thursday, January 23, 2014

Chevron (CVX) Dividend Stock Analysis

I last wrote up a stock analysis on Chevron back in 2012.  Really what happened to 2013?  I've still updated the values on my stock analysis page, but I just didn't get a full updated write up out.  Well, it's about time that I get an updated version out with the new year now on its' way.  Chevron (CVX) trading around $120.02 on Wednesday, January 22nd and was offering a current yield of 3.33%.

Company Background (sourced from Yahoo! Finance):

Chevron Corporation, through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. The company operates in two segments, Upstream and Downstream. The Upstream segment is involved in the exploration, development, and production of crude oil and natural gas; liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and processing, transportation, storage, and marketing of natural gas, as well as holds interest in a gas-to-liquids project. The Downstream segment engages in refining crude oil into petroleum products; marketing crude oil and refined products; transporting crude oil and refined products through pipeline, marine vessel, motor equipment, and rail car; and manufacturing and marketing commodity petrochemicals and fuel and lubricant additives, as well as plastics for industrial uses. The company is also involved in coal and molybdenum mining operations; cash management and debt financing activities; insurance operations; real estate activities; and energy services, and alternative fuels and technology businesses, as well as manages interests in 11 power assets with a total operating capacity of approximately 2,200 megawatts. The company was formerly known as ChevronTexaco Corporation and changed its name to Chevron Corporation in 2005. Chevron Corporation was founded in 1879 and is headquartered in San Ramon, California.

Wednesday, January 22, 2014

5 Tips for a Better Retirement

Saving for retirement is such a huge aspect of one's financial life.  It can mean the difference between eating dog food in a cardboard box or eating caviar on a beach.  I know which one I prefer.  Investing for retirement doesn't have to be difficult.  The key is to avoid the big mistake of not saving and investing.

Start as early as possible

Starting to invest as soon as you can is a big factor in determining the amount of money you'll have for retirement.  Every year you delay investing increases the amount you need to save in order to reach the same goal.  That's the nature of compound interest.  Time in the market is much more important than getting the perfect asset allocation.

Monday, January 20, 2014

The Ultimate Goal of Dividend Investing

The whole reason I started my journey towards financial independence stems from when I was laid off in January 2009.  At the time it was unexpected and came out of nowhere, but I thoroughly enjoyed the time that I was out of work and set out to learn as much as I could about investing and strategies to not be reliant on "the man" to decide if I get to eat that week or make my house payment.  That led me to dividend growth investing and it's been a great ride so far.  With every dividend payment, dividend increase, and new purchase I can see how much closer I am to the ultimate goal of dividend investing which is to be able to cover all of your expenses through dividends.

Saturday, January 18, 2014

Weekly Roundup - January 18, 2014

It was yet another busy week for myself.  I had to head back to work and away from home Monday afternoon.  And of course that meant lots of work right away and then drill then a break and then lots of work again.  But this just continues to reinforce how badly I want to reach FI as soon as possible, yesterday preferably, today would be nice, but tomorrow would be fine too.  Eventually that day will come when my passive income sources exceed my expenses with an adequate margin of safety, but until then I'll just keep chugging along and investing capital into companies that continue to pay higher dividends year in and year out.  Due to work being so busy there wasn't much in the form of blogposts this past week but things are settled down and I should get back to my regular posting schedule soon.  I did finally get to review how I did on my goals for 2013 and it was a big win in a lot of areas but there were some big misses as well.  I'm not discouraged though and this just helps to fuel my desire to do better in 2014.

Thursday, January 16, 2014

2013 Goals - Full Year Checkup

How is January already into the second half?  I guess it's high time that I get my 2013 goal checkup done and get some goals for 2014 posted as well.  I originally set my goals for the year back in January.  Last year saw a lot of changes, the biggest one being purchasing our house back in September.  It was a bit of a mixed bag as far as goals for the year as some were blown completely out of the water and other fell short.

2013 Budgeting Goals - Annual Results
Goal 2013 Amounts Status
80% take-home pay savings rate 81.31% average savings (Jan 85.35%, Feb 82.23%, Mar 84.41%, Apr 84.18%, May 81.40%, June 77.71%, July 79.71%, Aug 86.60%, Sept 84.49%, Oct 81.04%, Nov 78.82%, Dec 69.72%) Success
Less than $1,400 required expenses $1,616.73 average (Jan $1,304.19, Feb $1,500.33, Mar $1,314.30, Apr $1,361.56, May $1,399.65, Jun $1,442.76, July $1,454.40, Aug $1,489.46, Sept $1,640.97, Oct $1,595.79, Nov $2,351.98, Dec $2,545.32) Failed
Reduce Misc. Expenses by 15% (Exp. < $96.51 per mo) $120.22 Failed
Reduce Restaurant Expenses by 10% (Exp. < $128.31 per mo) $119.16 Success
Reduce Grocery Expenses by 5% (Exp. < $205.64 per mo) $225.89 Failed

Sunday, January 12, 2014

Weekly Roundup - January 12, 2014

The first full week of 2014 has now flown by and it sure was a busy one for me.  We finished drilling another well and I was able to head home early Thursday morning.  I finally got home around 4 am and promptly crashed in bed with my wife for an hour before she had to get up for work.  As usual I haven't really gotten a chance to relax the first few days as it was busy with taking care of things since I'd been gone.  I've paid property taxes, renewed my license, done paperwork for work, worked out, and my favorite was looking at rental properties on Friday.  Blog activity has been a little slow this past week but I'll get a chance to reply to comments and get some more posts up soon.  My wife and I went to the nearby drive in theater last night.  It's truly a great find and I love when we get to go enjoy 2 movies for the price of 1 as well as spend some time outdoors.

Thursday, January 9, 2014

Net Worth Update - December 2013

While cash flow is more important when it comes to financial independence, it's still good to look at the balance sheet too, which is why I provide these net worth updates.  The markets continued their march higher to close out the year which just serves the purpose of sucking more value away from me and my fellow dividend growth investors.  However, thanks to the rising tide lifting all boats and a solid savings from my income, I was able to notch my 10th $10k+ monthly net worth increase.  This was an amazing year as far as net worth goes and I didn't expect anything close to this kind of progress.  Some of the lifting was due to the markets rising around 30% for the year but I still did my part by continuing to save and invest in high quality dividend growth companies.  For December I ended up with a $12,115 increase with just over $950 in combined 401k contributions, $700 in ESPP withholdings, and over $5,900 in after tax savings.  The rest of the change was due to market changes and dividends received throughout the month.

Tuesday, January 7, 2014

Recent Option Transaction

My hopes with every option contract that I enter into is to let it go until expiration; however, sometimes other opportunities come up or you can close it out early for a profit.  I really like using both calls and puts as a means to add extra income from your investment capital.  Especially put options as you essentially get to set a limit order and get paid if it doesn't execute by a certain date.  Not exactly a bad situation.  If you're new to options or want calculator to run some different scenarios check out my Learning Center page or this link straight to the spreadsheets.

Monday, January 6, 2014

Income Update - December 2013

 I'm a big proponent of tracking every single penny that comes into your hands if you're really wanting to make a change to your finances.  Mental accounting is too difficult to keep track of and the mundane everyday expenses get forgotten.  Once you keep a detailed history you can see that you're really spending $400 per month on restaurants or $100 on coffee or whatever little expenses that are fine by themselves but add up quickly to destroy a budget.  This is why I like to keep track of all of my expenses to help keep myself accountable and looking to see what areas I'm just plain doing poor in.  If you want to improve your finances, then please track everything for a 3 month span and then take action to make positive changes.

Saturday, January 4, 2014

Weekly Roundup - January 4, 2014

What a week!  We said goodbye to 2013 and 2014 is now well under way.  The end of one year and the beginning of the next is a time for both reflection and looking forward.  It's a time where you'll see a lot of annual recaps and goals for the fresh year.  You'll notice a little bit of a theme in the links to follow.  I'll be aiming high when I officially set my 2014 goals in a couple weeks.  I like to try and set some aggressive goals to keep me motivated all year long.  If I know that I can hit my target with just steady as she goes, is the goal really serving it's purpose as a motivating factor to push you past where you think your limits are?  Aim high everyone.

Thursday, January 2, 2014

Dividend Update - December 2013

What can I say?  December has come and gone and with it we close the books on 2013.  It's been a great year as far as growth of my FI Portfolio, and most importantly the dividends I received and can expect to receive in 2014.  These dividend updates reflect all dividends that I receive through my investing pursuits and I hope can help inspire you to take control of your own finances and investing to build a passive income stream.  What you use that stream for is up to you, whether it's to fund early retirement, just provide some FI/FU money, or even to provide for an annual vacation; the key is that it can provide options and opens up all sorts of possibilities.  Since most of my ownership stakes pay on the March, June, September, December schedule I get great results when each quarter closes.  You can check my dividend income or progress page to see what dedication to an investment plan can give you.  I was able to set a personal best in dividends received during December which is great motivation and helps to keep me on track.