New 2018 Goal – $7,200 Forward Dividend Income for My Taxable Account

Time for me to put it on paper.  I have to do this and it will force me to stay on target.  I did not come out with a goal article this year.  I wanted to keep it simple and knew I wanted to place around $45,000 into the market this year.  However, things happen during the year that altered, not the amount, but how I get there.  Early on, quite a bit would have been through tax-advantaged accounts, but due to an event this year, I don’t have that option (which I will explain).  Therefore, I am aiming to achieve $7,200 in forward dividend income by December 31, 2018 in my taxable account.

Person, Mountain Top, Achieve, Mountain

new job, new life, new opportunity

Alright everyone, so what happened that altered the direction of my investments?  I haven’t written on it, yet, but I officially left the public accounting firm I’ve spent the last 7 years at!  It was on my mind for the better part of 18 months and an opportunity that I have been genuinely interested in arrived, that I wanted/needed to try.  I have been there since mid-July, actually.  Therefore, it somehow has already been quite a bit of time since I have been at my new place – which I am now the controller at a financial institution.  I am beyond excited about the new direction of what I do on a daily basis, and the ultimate goal of financial freedom remains completely unchanged.  What else is amazing, is their 401(k) plan.  We all know how I love the tax benefits of maxing out the contributions to such plan.  They offer 100% of your, more than likely, 4% and then, usually there could be a form of profit share contribution at their discretion.  It’s great, it’s almost twice as much from where I was at previously.  The question from my intro, though, why the change in a goal for my TAXABLE and not tax-deferred account?  There is one temporary wrinkle in the situation.  I cannot contribute, nor receive the match (due to not being able to contribute), until my six month or 180 day anniversary mark.  Agh!  I asked if they could immediately start it, but that was something they declined to do.  Therefore, my plans, allocation to accounts, tax situation (the list does go on) and strategy had to change.

new strategy & analysis

Even though this is a temporary adjustment, this definitely impacts what I planned on doing for the year of 2018 – maximizing the 401(k) and taking advantaged of the 25%+ tax savings, to essentially invest more cash.  I had maxed out my 401(k) through 6.5 months at my old employer, which equated out to be $10,008 (rounded).  I was investing, due to a one-time correction to a contribution, $1,542 per month into the 401(k).  Tax-adjusted (at 25%), this really only cost me $1,156.50.  Therefore, for 5.5 months, I need to make sure I invest $1,156.50 more/in addition to what I was investing without my retirement accounts.  After my last few purchases, I am currently at $6,514 in forward dividend income on my taxable brokerage account.  Since I have more cash that doesn’t automatically invest into a 401(k), it’s time to fuel that pot baby!

If I currently am at $6,514 and want to be at $7,200, that is a whopping $686.00 to add.  Now, I think that there is approximately $2,150 left of dividends to receive (i.e. September through December) and be reinvested at 3.20% (my current yield), causing an assumed add of $69.00.  Further, I am assuming 7 dividend stocks to increase their dividend, which could add 3% to my income from that or $195.  In total, $264 should be added without much capital investment from me (I don’t typically count dividend reinvestment as new capital, but I could see both sides of this discussion).

Therefore, since it is now almost the end of August, it looks like I still need $422 to be added through investment.  4.5 months remain for the year.  It appears, at 3%, that I’ll need to invest $14,000 from now until the end of the year.  That’s a sh*t ton!!  That is approximately $3,100 per month.  Now, I was almost on pace of $1,400 per month in my taxable account before leaving my firm.  I need to juice that up a whopping $1,700!  Oh man… with only $1,156.50 from my 401k shift, that equates to $2,556.50 that I’m “used” to doing.  I need to “find” that extra $550 to invest per month.  I can’t work around the math here, to wind down the total I’ll need, so… $3,100 per month it is!  Now, you can tell I am trying to stick true to it – with evidence of all of my consistent purchase articles that are coming in like hot cakes.

Why $7,200 as a goal?

I am sure/hoping some of you are asking – why $7,200?  For me, it’s a nice $600 per month from my taxable account that I’ll start to receive in 2019.  It truly feels like that “next level” type of income that truly comes in for minimal work on a go-forward basis.  The amount of bills $600 would cover is insane.  If I don’t include my property tax bill or house insurance (which is almost $5k/year), this would cover my mortgage payment and my house utilities, easily, per month.  Lastly, the other drive to achieve this – it would put me right next to $12,000 in total forward dividend income (see the current portfolio here), when including the retirement accounts, as the reinvestment and dividend growth from those investments, paired with me achieving $7,200 in the taxable account, could cause me to high jump over the $12,000 barrier!  Yes, I was a high jumper – you got that right.

I had to get this off my chest and in writing to everyone out here in the community.  I am going to be on a relentless pursuit to… drum-roll… make every dollar count!  I am sure you can tell, by me drilling out my insurance carrier to save money, not to mention my utility suppliers.  Now, with a goal like this, I am going to have to push hard on side hustles, bring in extra cash, try to eat that peanutbutter, bananas and oatmeal and push to a new height.  LET’S GO BABY!  Who else is in?  Ready to research, save and invest that capital?!  Let’s get it everyone, over and OUT.

-Lanny

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36 thoughts on “New 2018 Goal – $7,200 Forward Dividend Income for My Taxable Account

  1. Wow congratulations on the new job!! That forwarded dividend does sound like you have a lot of saving to do. Super happy that you were able to land a job that you were hoping to get. Best of luck to your new opportunity and to your new goal for the year!

    • Fiscal –

      Thank you very much. I do have a lot of work/saving/grinding to do, but that’s the fun part, right? Or am I Crazy? Thank you on the job note, it was a long road to get here, and I am only 6+ weeks in, so still evaluating how I am feeling about the switch! I am sure it’ll be 6-12 months before I can really make a conclusion, right?

      -Lanny

  2. We have a lot in common the last few weeks! I just started a new job myself with a 401k match that is infinitely better (because I had no match prior). Congrats to you! I think the year-end goals are just a little wrinkle for now. Next year at this time you’ll be right where you wanted to be originally. Keep making good purchases and don’t over reach for that tempting, juicy high yield!

    • Dozer –

      HELL YAH and congrats to YOU! Getting a 401k match – you’ll enjoy the heck out of that.

      You are right, this time next year – I’ll be earning at least a 4% match each pay period and that much closer to freedom. March on DD!

      -Lanny

  3. Lanny,
    That is a super cool goal. You got the big point of how much that can straight cover in bills. Though the way I see it, taxable dividend income is the most valuable. Sure Roth and 401k cash is softer on the tax side, but I would rather be able to have FI long before 59 years old. That is why your decision is huge.
    If I had your mortgage cost (DC is not as forgiving in that area), man that’d be sweet!
    – Gremlin

    • Gremlin –

      Thank you, thank you. Taxable is the most valuable, hands down. Obviously with the tax-advantaged accounts, there are ways to access early, but that is going to take even more strategy on my part.

      Gremlin, time to focus and charge forward, let’s do it.

      -Lanny

  4. Awesome Lanny, congratulations on your new job and better employment conditions! It’s always refreshing to start in a new and fresh environment (its already a year ago that I switched).

    I really love your calculations on capital that needs to be deployed and it again shows the power of the dividend reinvestment. Ambitious goal but I think you can make it!

    • Robot –

      Thank you and refreshing is the right word to use. I feel like my brain has to think and learn again, which just shows how much of a “comfort” zone I was in earlier. And nice – how long did it/has it taken for you to feel like you made the right choice in your new job??

      I appreciate that you appreciate the calculations haha, not many do! I like to put math to it – to show what it’ll actually fricken take. Further, one of my favorite quotes – “If you can measure it, you can improve it”.

      -Lanny

  5. Lanny,

    Congrats on the new job! That’s awesome and will improve your progress to FI. That’s too bad on the 401k this year. Good luck on meeting your goal. 12k total in forward income is awesome!

    • Brent –

      Thank you, thank you. I am pumped to get to the $1/k per month, but for some weird reason – $600/month in the taxable account sounds even fricken better. What a ride it’s been, to say the least.

      -Lanny

  6. Lanny,
    Congats on the new job and on the fact that you lasted a relatively long time in public accounting. The natural question that arises is how long until you hire Bert 🙂 (if you haven’t done so already)?
    Best of luck on hitting that goal of by end of the year! Make it easy and grab a few shares of T and IBM 🙂 , both of which have great yields and valuations.
    PIV

    • PiV –

      I know, 7 years felt like 50 to me. I absolutely laughed out loud on that last comment. I have made mentions that my new place has been looking for new roles, but we’ll have to stay tuned with what Bert does, as he is on year 6 in public accounting.

      I am starting to keen my eye on IBM, as Bert brought to my attention (as I didn’t go fully into their earnings), that things may start to look better going forward for them. I own a nice chunk of both, though, so hard for me to commit more capital! Love the yield and reinvestment when the price is low though : )

      -Lanny

  7. Congrats on the new job, and all the best to you in this new endeavor!

    I changed jobs a couple of months earlier than you, and while I was able to make contributions after 30 days to the new 401k, I have to wait 6 months for the employer contribution. Unfortunately, the new matching is not quite as nice as my old employer; however, the investment choices are better.

    Love the documented goal and the explanation behind the meaning of that number in the larger picture. You’ve been crushing it lately with the new capital and I look forward to the purchases that are yet to come. I’m confident that you’ll find a way to achieve this goal, and you have quite a group cheering you on!

    • DivvyD –

      Thank you for your comment and nice job on your career change. At least you can start contributing and lowering that taxable income, assuming you are doing pre-tax. What month will the match kick in? For me – it’ll be January.

      I have a big article coming up that I have to release on my recently deployed capital. I think there are a few purchases to talk about : )

      -Lanny

  8. Lanny,

    Congrats on the new job! It’s a bit unfortunate that there’s a probationary period on the 401k plan, but life is dynamic, and so is your plan. I have no doubt you’ll keep pushing, and make every dollar count to reach your goal!

  9. Go for it! I’m new to this group. Not sure if you have looked at or ever mentioned NLY It’s only around $10.60 with a .22 – .30 dividend. I’m not currently holding it myself but thought about adding a position when I get more money in my IRA. Any thoughts?

  10. Goal setting is definitely a great way to get what you want. I believe you can do it, Lanny! It is unfortunate that you cannot contribute to your new 401k. But if it is a job that you truly wanted, then I think that small sacrifice can bring you happiness in the long run.

    I’m looking forward to the end of the year to see your progress! For me, I’m just trying to break the $100 month goal. And then make $100 PER month goal. And then build from there!

  11. Wow congrats on your new job! I hope the busy season will be easier on you now that you do not need to manage all those clients, and just focus on the financials of one company. Maybe you’ll see synergies of this job change in your personal life as well 🙂

    • TBP –

      Thank you, thank you! That is part of the plan/side benefit, right? I cannot wait to see what it’s like to not have 12-15 different clients, 3-5 different partners and a plethora of others that need things from me all at the same time. I can’t wait to help make one organization better and if I am able to combine that with personal life benefits – I’ll be looking forward to it all.

      -Lanny

  12. Congrats on such a specific and ambitious goal! I’m a buy and hold investor myself, though I do have a dividend fund in Vanguard, so I don’t have any specific recommendations on juicing the dividend side. But a $600 monthly goal is a nice round number for an extra income-generating goal too. If you put together your frugal living tips into a book for $10, that’s 60 copies; or into an online program for $50, that’s 12 units; or into coaching for $100/ session, that’s just 6 units. When I try to hit a specific money goal, I play that money game to see how many of what would I need to sell to generate that goal. Sometimes it gives me ideas. Good luck!

    • Caroline –

      I love it and love those recommendations there. I love the ideas, your creativity, your open-mindness to all of this. It sounds like FIRE is right up your alley : ) I really am happy you stopped by and left a comment! I’ll have to check out your site.

      -Lanny

  13. Lanny,
    What an ambitious goal I love it. Having just bought a house I’ve been dealing with a lot of transitions and so costs like eating out at work and home have been creeping up. Also all those little homeowner house costs. But I think you inspired me to see what I can save and finish the year with a good final quarter.

    DS

    • Seedling –

      Thanks, I was hoping that this would indirectly get others pumped up as well. I understand that those type of new additions to your life, such as a new house, brings unexpected costs – the one off expenses to fix a room, to patch a driveway, to make a yard look better and then just any repair that happens – it all creeps up. Just need to make sure you pay yourself first, fight hard to keep your fixed costs low and get creative. You can do it, if I can. We at least have to try.

      -Lanny

  14. Congratulations on the new job! It’s always exciting and I’m happy for you that so far you feel a lot better while doing it! It sucks that the first 6 months you can’t contribute, but those months will fly by. Like the goal of $7200, $600 a month is a really nice milestone, good luck achieving every goal you set mate!

    DI

    • DI –

      Thank you very much!! I appreciate it and it already is flying by – as I am over 7 weeks in now! Only 135 days until I can contribute, haha (going conservative and using 184 days for some reason). Thanks again DI!

      -Lanny

  15. Lanny, Congrats on getting the new position at work. I’m glad you’re liking it and that you’re making more money. I’m in a similar boat in that I just transitioned into a new position at work. Granted it’s the same company I’m working for, but that required me to relocate with the added benefit of increased pay. I hope you meet your 2018 goals of reaching the $7200.

  16. Setting stretch goals is a wondrous thing! I set a stretch goal at the beginning of the year to grow my account from $50,000 to $100,000 by years end and I can’t believe that I just broke $89,000 with 4 months left to go! I can think of a lot of awesome companies yielding in the 3.5-5% yield range so it shouldn’t be to hard for you to hit your goal by years end! I can’t wait to see what buys you make and watch you blow your goal out of the water!

  17. Congratulations on achieving this milestone Lanny. $600 a month in additional income will definitely help in achieving your goal to attain FI. You are correct in saying $600 will help tremendously in paying off quite a few bills. Good luck on reaching that $1000/month mark. At the current reach you’re progressing, you’ll be there in no time at all. I look forward to watching your progress.

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