August Review / September Preview, 2019

Good Morning Gremlin here to talk about my progress from this past month and take a look into the future.  Life with a two year old never seems to have a dull moment, though there are tiring ones.  This summer we went to the beach on our annual family vacation, which was an excellent experience for our son.  And also a taxing experience for the rest of us.  Sadly, summer is now drawing to a close as kids return to school and life returns to normal.  So with that said, how did I do?

August:

This month I made one new purchase this month acquiring shares of 3M (MMM) in my taxable account.

I brought in a total of $338.97 in dividends ($113.48 taxable, $69.01 Roth, and $156.48 IRA).  This is an increase from last year (281.30 total) by 20%.

In terms of dividend increases, I realized*one raise from the Bank of Montreal (BMO).  The increase was 3%.  I have now realized 39 raises thus far this year.  I also realized one cut of approximately 33% by KHC.

Next month I will realize nine raises from the Hershey's (HSY), Kellogg's (K), Target (TGT), Union Pacific (UNP), Discover Financial Services (DFS), JM Smucker (SJM), Walgreen's Boots Alliance (WBA), Westlake Chemical (WLK), and Aqua America (WTR).  The increases range from just about 2% to 10+%.  In addition, Kontoor Brands (KTB) initiated a dividend and VF Corp (VFC) decreased their's, however these add up to the same respective amount so this stat will not be added in as this is due to the KTB spin off by VFC.

* I only count increases when realized, because until that money is delivered any statements or declarations are simply conjecture.

September:

The mortgage continues and I am putting extra cash towards the principal monthly - not a huge number, but every little bit counts. Our debts currently outstrip our assets (I choose not to count the house or cars as assets).  Outside of our house, we still have very low interest auto debt (1.5% for our car), which I am aiming to pay off by the end of the year.  Debt is being eliminated, and we are aggressively building and assets.

My next purchase will be in October or November.  Our focus is on eliminating the auto debt before next year.

Next month should produce around $448 in dividends, which is a 12% YOY increase.

My portfolio page is currently up to date.

Hope everyone has a great September.
- Dividend Gremlin
- Long all stock tickers

IRA to Roth IRA Conversion Part 1

Retirement Gremlin here to talk about a new long term process I will be undertaking to convert my IRA holdings to Roth over time.  For those not in the know, a person can have a Roth if they meet income requirements, and if you don't you can fund it via a 'backdoor' conversion option.  Even if you do meet the requirements you can still convert IRA funds into a Roth, which is where we are at today.  For more information on this process ask a professional or do what I do - use the internet.

The goal of this process is to lessen and draw out the tax burden of IRA to Roth conversions.  If done all at once it can be a hefty tax bill, if done piecemeal it will be small amounts each time.  Clearly, if I am doing something one way to avoid taxes there has to be a catch so I will highlight that now briefly (since other places do it much better).

IRA - This money can be pretax (as mine is - due to being 401k rollovers).  Additional post tax funds can be added.  Eventually these types of accounts, including 401ks, are subject to Required Monthly Distributions (RMDs).  Money is not typically accessible before 59.5 years of age without penalty.
Conversion to a Roth - this would create a taxable event.  The lesson here is if the amount lost by taxes now (compounded) is greater than the amount saved via future taxes thanks to the Roth the conversion should not take place.
Roth - the X factor here is that money in a Roth is 100% in the owner's control.  It is subject to no future taxes or required distributions, assuming the law and tax code stay the same.  Each dollar there is yours, theoretically.  Money is also not typically accessible before 59.5 years of age without penalty, excepting for a few special circumstances where no taxes are leveled.

Strategy: to avoid unnecessary taxable events, I will move around 1 to 2 "positions" a year.  At this rate I will be able to move the whole IRA to my Roth in about 25 years - perfect timing, to maximize growth and minimize taxes (pending changes in that and the law of course). 

Process: Since my accounts are all at the same brokerage, I can for no fee transfer single positions after a few mouse clicks.  Maybe its too simple, but works well for my needs.  If I want I can transfer partial positions down to the share.  This time I moved a whole position, but in the future I will likely be moving smaller pieces over to the Roth.

Part 1:

For my first / test conversion I moved my position in Matthews International (MATW), valued around $900 from my IRA to my Roth.  This was a reduction in initial investment value.  Taxes should be minimal.

Part 2 will happen next calendar year.

All changes will be reflected in my portfolio at the end of the month.

Are you planning on funding your Roth this way?
- Gremlin
- Long MATW

Gremlin Talks Adaptability

Pondering Gremlin here to talk about something that has been on my mind for a while.  If you read this blog, at all, you clearly are deeply involved with the online financial independence movement, so congrats to you. This post is about people who are in this group, and what I believe is a major trait that sets us apart from others.

What sets us apart are the double character traits of adaptability and drive.  Focusing on the drive real quick, it is our drive to be independent financially so we can spend our time as we see fit. That reasoning is par for the financial independence course.  We may choose different tools - indexing, DGI, renting houses, etc. to get there plus a generally frugal lifestyle.  That drive is well understood - it is what makes so many blog writers and financial freedom successful.  It is the adaptability part that receives far less attention.

A month ago the idea of adaptable people hit me like a ton of bricks while discussing music with my family.  Why are some people so adaptable, and able to find something they like anywhere or workarounds to their problems?  Why is it that I can count on specific people at work 200% of the time and others less than 50%?  Turns out, someone has already studied this, and the single trait of adaptability strongly can define the success of people - not just in adverse circumstances, but in seemingly positive ones.

Turns out, thanks to a study (link below), this can be measured to show that approximately 1 in 3 people are able to adapt to any circumstance.  There is no magical background that enables one person to be better suited than others, but it does appear that maybe having a tougher time earlier in life lead to that.  Thinking of other successful financial freedom writers several worked hard as young adults, had tough childhoods, or experienced something that set them mentally on this path to be able to, literally, tell anyone to 'take this job and shove it.'  Personally, I relate a little bit - not that my childhood was hard, but I was at the polar opposite of the end of the social ladder from the cool kids.  It definitely has led to thicker skin, and a more intense drive to achieve FI than those around me.  Still this is not an exact indicator.  I see people in my family who have had tough times and just dwell on them.

I could turn around and say how this might reflect reflect on people who are not adaptable, but they have a roll in life too.  Not everyone is adaptable, and I believe we who are in that 1/3 group need to take the biggest possible advantage of it to better ourselves - at least financially. So this is more of something to keep in mind, how we can work to adapt ourselves to the financial situation around us.

For me it means cutting out more things I don't need to buy or own.  It means digging for those extra dollars with my drive, while adapting my methods to be more successful.  It means most of all, steering my drive through the chaos of life.  We call can do it, cheers to us, keep it up.

Article for reference link.

Do you feel adaptable?  Or do you feel financial freedom is something so you don't have to be?

- Pondering Gremlin

Recent Buy, August 2019

Vacation Gremlin here to discuss a recent buy.  I along with my family are on a nice, mostly quiet, vacation.  We are at the beach so the ocean and waves is the real deal, that and getting sand everywhere.  While down here I made a quick buy, taking advantage of the volatility.

Yesterday, I added shares of 3M (MMM) in my taxable account.  I bought 7 shares, with a total cost of $1,175.04 ($166.87 / share, plus commission).  The current yield is 3.38%. For a detailed summary of their history, etc. please visit: MMM's Seeking Alpha Profile.  Had I been a bit more picky and waited a day, I could have shaved $60+ off of my cost.  D'oh!

I already own MMM in my IRA account, and it is one I definitely want more of.  What most people, and even the best investors don't realize is - that these guys make everything.  I would write more, but vacation calls...

This purchase will add $40.04 to my forward 12 month dividend income.

I will update my portfolio page at the end of the month.

What do you think of MMM?

- Gremlin
- Long MMM

July Review / August Preview, 2019

Somber Gremlin here to discuss last and next month.  July started as a great month with family events and USA bringing it home during the Women's World Cup.  Add to that fun swimming, enjoying time with my son, etc. - it was a great beginning to the month - so good I had no time for more posts.  Additionally, work has been busy and affording me opportunities that I am constantly saying yes to.  Unfortunately, not all is smooth.

Normally I would not announce that I am a dad for the second time until our next baby, who is due in November, is born.  In this case we will be putting in extra time because our baby will be born with a heart defect, so this is that notice.  Now the prognosis is very good, which I am incredibly thankful for, but it will be a long road to a healthy existence.  It is something that will be a struggle, but it looks like she will have a normal life - just a different path to get there.  Going forward I plan to keep posting on the major items - monthly updates and new buys, but I probably won't add more than that.

All of that news being out there... how did we do for income last month?

July:

This month I made no new purchases this month.

Last month I brought in a total of $133.34 in dividends ($99.79 taxable, $23.25 Roth, and $10.30 IRA).  This is an increase from last year (81.72 total) by 63%, this is partially higher because Broadcom (AVGO) decided to move its pay out back a couple of days into August.

In terms of dividend increases, I realized* three (3) raises from LEG, Realty Income (O), and Cardinal Health (CAH).  The increases are from about 1% to about 5% (0.2% bump from O, their 4th of the year).  I have now realized 38 raises thus far this year.  I also realized one cut of approximately 33% by KHC.

Next month I will realize one raise from the Bank of Montreal (BMO).  The increase was 3%.

* I only count increases when realized, because until that money is delivered any statements or declarations are simply conjecture.

August:

The mortgage continues and I am putting extra cash towards the principal monthly - not a huge number, but every little bit counts. Our debts currently outstrip our assets (I choose not to count the house or cars as assets).  Outside of our house, we still have very low interest auto debt (1.5% for our car), which I am aiming to pay off by the end of the year.  Debt is being eliminated, and we are aggressively building and assets.

My next purchase will be in August.  This likely will be one the last purchases of the year due to the concerns I have listed in the opening part of this post.  Also my focus is on eliminating the auto debt before next year.

Next month should produce around $320 in dividends, which is a 14% YOY increase.

My portfolio page is currently up to date.

Hope everyone has a great August.
- Dividend Gremlin
- Long all stock tickers