<![CDATA[The Dividend Pizza Guy - Blog]]>Tue, 22 Aug 2017 05:45:23 -0800Weebly<![CDATA[Step One Completed: Death To Credit Cards]]>Tue, 10 Nov 2015 07:46:43 GMThttp://dividendpizzaguy.com/1/post/2015/11/step-one-completed-death-to-credit-cards.htmlPictureImage courtesy of Stuart Miles at FreeDigitalPhotos.net
Well, it has been far too long since I posted here. :P Lets see...May was the last time I updated this blog. Since then, A LOT has happened. Basically, I took out a credit card to help me get out of credit card debt even faster (sounds backwards, right?), became super busy working as an assistant for a fellow in Real Estate, and ended up earning enough money to pay off all my credit cards in the process! 

Boy does it feel good to not have dumb credit cards accruing 20% or greater interest against me! Now technically, I still have $400 to pay down on my car repair credit card (this is a store card exclusive to my mechanic which gives me 5% off on all their services and repairs and 0% APR for six months whenever I spend more than $300 on car repairs). However I still have 4 months interest free on that card and, having set up an auto-pay transfer to bill me $50 a week through my bank, I'll have this paid off in December. :) 

Presently, I am able to tuck away no less than $300/month in savings and I've also jumped headfirst into investing. My first experiment into options trading ended with me losing 50% of my principle, however I've learned a few things about myself since then and I've worked out a plan to make a second attempt on some securities and am in the mean time testing my investing theories with a nifty feature my brokerage offers called PaperTrade, which allows individuals to trade virtually, without risking money (basically it simply provides you with a play account that doesn't actually trade options or shares, but mirrors the real market so you can see how your trades do). As I am able to validate my trading theories I'll begin to launch actual trades with the cash I've been saving up (literally nickel & diming my way along with over $300 in spare change saved up over the past year and a half from pizza delivery). 

My two main concerns for next year are A) Taxes and B) paying down my monstrous Line of Credit (presently sitting at exactly $14,000 of debt after my last payment). I'll be looking to eliminate it entirely through the combined effects of snowballing my extra cash from my credit card payments and transferring as much as a I can to balance transfer credit cards offering 0% APR promotional periods (I've successfully moved $2,450 to one card already!) which will help eliminate my interest payments and keep my total repayments high. Ideally, by this summer I want to have at least all the balance I am paying interest on paid down and out of my hair. This is of paramount importance as I would really like to devote all of my available finances towards investing in the current market environment which is offering savvy investors plenty of buy opportunities despite the higher prices among many blue chips. All the deals are, of course, in the oil industry at the moment. I've been busy going through the major stocks balance sheets, cash flows, and income statements, as well as tracking the opinions of writers on seeking alpha who have researched the stocks in depth. I intend to gradually dollar cost average my way into the oil industry on several of the big names in this field. Presently the stocks that I consider super deals are ExxonMobil (XOM), Royal Dutch Shell (RDS.B), and Oneoke Inc (OKE). I've initiated DRIP stock purchases with both ExxonMobil and Oneoke as they offered excellent low to no fee dividend reinvestment programs, however Royal Dutch Shell simply does not offer a great option for poor investors such as myself, charging $5/transaction through their transfer agent. For me, as I can only allocate about $100 to $50 at a time this is way too much. :P 

This is all just a glimpse into all I've been doing lately. I'll slowly begin to post more information regarding my goals for 2016 and my discoveries and investments over time. I'd like to eventually be able to get into a good regular writing routine, as lately I've been brimming over with all sorts of investing ideas and no outlets to share them through. 

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<![CDATA[May Budget]]>Sun, 10 May 2015 23:10:02 GMThttp://dividendpizzaguy.com/1/post/2015/05/may-budget.htmlPicturePhoto by Stuart Miles courtesy of freedigitalphotos.net
So I've been utilizing Personal Capital and I must say that it is quite convenient. :D I know it is a bit late in the month to be putting out a monthly budget, but I've been busy earning money so got a bit wiped out. I tried a few new gigs, one delivering flowers and the other article writing. Unfortunately the flower delivery gig won't work out with my schedule and will naturally have me driving my car all over the place. Not exactly ideal, given that all my other jobs require the use of my car. I have been looking for writing gigs as well, as I am a pretty decent writer. Thus I successfully landed one writing for a content provider, however that ate up a lot of my writing time and creativity, hence my lack of time to post on my blog.

I finally have some time to sit down and write without being too stressed out so I figured I'd get in a blog post and let everyone know how I've been doing the past week. It has been a busy first week and a half of May. I ended up scoring a freelance writing job as I just mentioned, pulling an all-nighter on my first writing project to make sure everything requested got submitted on time. I've already a second project from the same provider and, if I can keep up the pace, will be on track to net an extra $300 to $400. Simply to up the stakes I've decided to increase the odds and force myself to work harder and earn more. The goal is to pay down my credit cards this year and only have my student loans and Premiere line of credit by year's end. This will drop my total credit debt by one third and leave me with my highest interest rate at 11%, which is not amazing, but also much better than 23% interest. 

My short term goals for budget and debt in May are: 1) pay down $400 on my Capital One account to enable a second balance transfer which will eliminate the 23% interest I pay on my Chase card. This second balance transfer will mean I will successfully eliminate the interest I am paying on $2,200 (about 23% on all of it). 2) Increase my personal earnings by successfully earning an extra $400 writing content.

I've been keeping my budget tight. As such, I really have little to no extra money. Every single dollar has a job and they typically go towards paying down my debt, investing, or basic necessities. I do have some extraneous entertainment expenses, but I work hard not to spend money when I have fun. In any case, that being said, here is my May budget. 
So the primary changes to this budget are my successfully paying down the Emergency Line of Credit. So I've got that highlighted with a big "Paid Off!!!" as you can see. :D Motivation is huge when it comes to tackling tough debts such as credit cards. For this month I'll be needing in the ball park of $3,514 in order to fund my investing, savings, debt payments, etc. If that seems expensive for a single guy, its because I am paying down quite a bit extra on most of my debts. 

I tried to pay down all of my credit owed on the Firestone car repair card, but my car had other ideas. I did reduce the payments to $60 each and might reduce them further as presently, I pay no interest on the remaining $300 until October. I will likely reduce the later payments to $30 paid twice a month, which would pay down the balance well before the promotional interest free period ends and allow me to devote an extra $60 towards interest paying debt. 

I did increase my donations to c89.5 radio, as they do provide me with unique and awesome music every day while I deliver food whenever I am not listening to audio books. One other expense I was looking to eliminate previously but have not had the time to do yet is the storage unit I rent. I scored a deal on it though and I've been pondering some lifestyle changes that might necessitate off-site storage.

By the end of the month, I'll have eliminated the Chase card payments and will add the Capital One card into the budget. Presently, this month, they have no minimum payment listed, therefore it looks like I don't get billed on it until next month, which is fine as I'll be making anywhere from $400 to $600/month payments on it, possibly more. I will be scaling this indirectly with my increased online earnings from writing. Simply through the consolidation of my two outstanding credit accounts I free up about $180 and by increasing my monthly savings to $500, I can take $400 of that and use it towards paying down debt. I'll be calculating which bills will save me the most, once I've gotten all my outstanding credit cards consolidated and eliminated the interest I am paying on them.

Next time I will discuss my investing and spending from April. Will see if I can get some cool graphs from Personal Capital for you folks to check out. :D 
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<![CDATA[Transferring My Debts]]>Sun, 10 May 2015 22:31:17 GMThttp://dividendpizzaguy.com/1/post/2015/05/transferring-my-debts.htmlPicturePhoto by renjith krishnan from freedigitalphotos.net
Well finally getting the ball rolling on my new debt repayment strategy, which I believe I outlined briefly last week. This weekend was pretty freaky for me starting Friday with car troubles. Every delivery driver who provides their own vehicle's worst nightmare is car troubles. Fortunately it happened on a Friday, allowing me to take the vehicle in on my only day off, Saturday. The car repairs could have derailed my repayment plan, however God is gracious and let me off with a much smaller bill than I anticipated. 

The total repair bill came to $326, which I used my Firestone card on. My account with them allows me to defer interest for 6 months on repairs totaling more than $300. Combined with transferring $1,200 of the balance owed on my Firestone account, this left a total of $402 owed on it, $72 of which I'd be paying interest on. However, I just paid down $102 on that card and the rest is deferred until October, which will be completely paid off long before then. 

This move is the first major step in eliminating my high interest credit debts for the year. Over the month of May, I will be setting up my bank's bill pay to automatically pay down $400 on the balance transfer. Then, at the end of May, I'll be transferring another $1,000 from my final external credit account to the interest free promotional card I am using this year. These two balance transfers will save me approximately $500 in interest this year. The goal is to have the balance completely paid down by September by contributing approximately $600/month towards their repayment. This will be accomplished, as mentioned before by diverting a large part of my savings as well as the normal $200 I was already putting towards these accounts.

The medium term goal is to have absorbed all my 20%+ interest rate cards into the 0% balance card by September. This will lower my total interest payments significantly and free up a lot of cash to pay down debt. Then by December, my last credit card will be on the ropes if all goes well and I'll be focusing on stock piling cash to begin working on my line of credit and commence some serious saving/investing. 

To that end, I've been working on getting some odd jobs to earn extra cash. This will both help boost my ability to pay debts, but will help further diversify my income. I've been looking at writing jobs online as presently my income comes primarily from delivery driving. 

In any case, this is just an update on my progress towards debt elimination. :) I've managed to drop the total amount I pay interest on my $1,200 and looking to increasingly reduce it from there! Thanks for stopping in and stay posted for my May Budget! I know it is a bit late, but I finally have some free time today to sit down and pump it out. If I can get it finished before my evening shift tonight, I'll be uploading it. Otherwise, check back in tomorrow. :) 
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<![CDATA[My Networth - Implementing Personal Capital]]>Sun, 26 Apr 2015 01:11:27 GMThttp://dividendpizzaguy.com/1/post/2015/04/my-networth-implementing-personal-capital.htmlPicture
Reading through several of the blogs that have inspired me to document my own journey, I've begun to notice a trend. Both J-Money of BudgetsAreSexy.com and Jason from DividendMantra.com actively track their networth. This is intriguing and does serve a valuable purpose, thus I've decided to begin implementing this as well in my tracking. Of course at this present stage in my life, my networth is negative. :P So not exactly the most attractive figures to share, but I'm excited to continue rolling those negatives back. Last year was primarily spent getting on my feet financially. This year is primarily aimed at destroying the bulk of my high interest credit card debt. 

The recommended tool for tracking net worth and expenses at both Budgets Are Sexy and Dividend Mantra is PersonalCapital.com. I'd read about it several times and seen some of the charts and graphs being used on both blogs. It looked nice, but I didn't want to be bothered with it for the time being. I am busy working on a lot of my own projects and taking the time to figure out the passwords to my myriad of bank accounts and get things all synced seemed like an onerous task.

However, as I've been trying to figure out how to track and represent my expenditures for this blog, I realized I could probably benefit significantly from some of Personal Capital's tools. So I decided I would sign up and see what all the fuss is about. I spent about an hour and half syncing various accounts for tracking purposes and in the end managed to get all my main accounts synced. There were a couple I had to finish setting up the next day, but surprisingly, everything synced up except for three small accounts that I've been experimenting with. The accounts that haven't synced smoothly being Acorns.com, which I had to manually add (although this was a breeze), Digit savings (which I will get into on another post when I've been able to tinker around with it more), and surprisingly PayPal. This isn't really that big a deal as my paypal account is more of a pass through account anyway and my Acorns account still has a tiny balance in it. 

Of course all this account syncing meant that all my debt is finally visible in a single location. Presently, I have a negative and quite sobering net worth of -$42,650 and change. :P Not super fun to see how little one is worth. In any case, I'll be reversing this number by $7,166 by December 31st is the goal. That is the total of my high interest debt (with the exception of my Premier Line of Credit which has an 11% interest rate, much lower than all my other credit cards and hence I shan't be concerning myself with it until next year when the higher interest debt is gone). Once my high interest debt is gone, I'll have a Debt Repayment Snowball of approximately $1,000/month rolling into that Premiere Line of Credit. This is the human plan. We will see what actually comes to pass.

Now I am not at all surprised by the figures. I've known roughly what my net worth has been for over a year. Last year I was tracking my income and expenditures on spreadsheets that I updated almost daily. I don't track my expenditures as closely now (though i experimented last month with my Handy Dandy note book, which helped, however the overall budget restructuring helped me even more). Personal Capital has helped tremendously however in that it tracks all your expenditures and even automatically categorizes them for you. Essentially it does all the hard tracking work for you and at the end of each month spits out your income, expenses, and net worth in easy to digest reports. This simplifies things significantly! Starting next month, I'll begin using snap shots each month from this to provide readers with a quick look at my expenses from the following month in addition to the proposed budget for the coming month with adjustments and explanations for said adjustments listed. :) 

While Personal Capital is super convenient, I have noticed that it also failed to include one of my checking accounts. This isn't a big deal for me personally as I haven't used that account for much in the past 2 years. I have recently taken to using it as a clearing account, where I can deposit funds to ensure they are there for important transactions (at the moment my tax payments are sitting in it awaiting the IRS to withdraw them). Thus the money in the account will soon be distributed elsewhere, therefore no point in counting it.

My last little qualm with Personal Capital is the cash flow tracking features tendency to understate my expenses (I can't find a listing of my credit card payments). This is fairly minor and overall they list pretty much everything else. In any case, as the credit card payments I make aren't listed in the normal expenses section, I feel that my cash outflows are under represented by the program. I'll definitely be tinkering around further with it.

Overall, I've been extremely pleased with Personal Capital. The set up was much easier than I anticipated and it is extremely convenient to glance over your accounts and see where your cash is going. Editing expenses is also quite simple to do which ensures continued accuracy. I love that they track investment portfolios as well! I plan to continue utilizing them to monitor and track my spending and grow my debt snowball. Catch you next time!

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<![CDATA[Acorns - Investing Your Spare Change]]>Fri, 24 Apr 2015 22:30:17 GMThttp://dividendpizzaguy.com/1/post/2015/04/acorns-investing-your-spare-change.htmlPicture
While reading through J. Money's blog, I found a nifty investing app that he is reviewing. The name of this app is Acorns, as you might have surmised from the title of this post. The idea is to make investing in a highly diversified portfolio of investments accessible to everyday folks who are curious about investing but don't have the lump sums necessary to do so (that would be me). So how exactly does this work? 

Essentially, for a low fee of $1 a month, the app links to any credit or debit cards you use for spending. It tracks your expenses and then deducts the difference, rounded to the nearest dollar, from your checking account. Given my extremely limited budget, I decided to give this a spin and see how dollar cost averaging my way into the market works out over the next few months. Most of my free cash for investing is currently tied up securing the put option trade I sold, so this seems like the easiest way to invest in an automatically balanced portfolio of diversified assets gradually and build up some equity over the long term.

The transfers have been pretty painless. Indeed, even though I work my checking account out pretty rigorously, I've barely noticed the money leaving my account. I started with an initial deposit of $20, and since I linked it to my debit card which I use for EVERYTHING, it has already transferred an additional $48 in change this month. Who knew I collected so much change!?! (actually I have about $210 in actual change sitting in my room right now and trying to think of something epic to spend it on, if you have any suggestions I'd love to hear them).

Acorns quite helpfully provides users with the option to invest their assets in a variety of risk profiles, adjusting your exposure to stocks, bonds, and real estate according to your preferred risk amount. Typically, I'd just chuck all my cash into the stock market to maximize growth, however I discovered that the bond ETF's you can buy partial shares in provide monthly dividends, which naturally caught my attention. I therefore, switched over to the conservative, low risk portfolio with the intent of determining what sort of dividends I'll be receiving (given that I don't even have $60 in this portfolio yet I doubt I'll be earning much in the way of dividends). In any case, monthly dividends compound faster than quarterly dividends and they compound even faster than no dividends at all. So I aim to keep my portfolio in these and contribute all the roundups towards achieving some sort of dividend income. 

Handily, Acorns automatically re-balances your portfolio and reinvests all dividends. By re-balancing and reinvesting, you automatically capture any growth experienced in your holdings by selling them off while the prices are rising and purchasing the weaker performing sectors that are declining in price (selling high and buying low). I have apparently captured $0.06 in the short time I've been doing this solely through rebalancing. This is an extremely valuable service. On top of the fact that you pay no other fees or transaction costs outside of the monthly $1, this becomes quite a powerful wealth building program for folks who don't want to think about investing overly much. 

Now it is a bit too simple for me in that I actually enjoy researching stocks and definitely feel that, with the proper due diligence and understanding an investor can make better returns investing in individual securities with solid balance sheets and growing revenues, margins, and cash flows. That being said, this type of investing typically requires much larger cash outlays than I am able to put up presently. Therefore the Acorns app will serve quite nicely to store and grow cash while I pay down my debts. I may even access it to help accelerate my debt payments as it is essentially just extra cash that is being invested presently and they have it set up to be a highly liquid account making both contributions and withdrawals painless. 

If I do not need to access my balance in Acorns, I'll end up experimenting with their portfolio settings over the long term. My thought processes concerning this run along similar lines to the re-balancing concept explained above. Right now, the stock market is extremely expensive. So if you purchase stocks in a company, you'll in general be purchasing fewer shares for more money. On the other hand, the bond market is pretty cheap right now given everyone's concern over the Fed raising interest rates over the next year. This could lead to a drop in bond prices meaning more for less. So at the moment I am using the conservative portfolio as I want to A) preserve my capital B) purchase more bonds while the market is down and stocks are expensive. When we enter the next recession and stock prices decrease, I'll probably reverse this portfolio allocation and sell off my bond ETF at a premium as investors all seek to buy bonds and their relative safety driving up their prices as stocks tumble. I am uncertain to what extent the effects of the market are translated through the ETF's I am investing in via Acorns, but it should pose an interesting experiment at the very least. We shall find out if I have the guts to do this when everyone claims the stock market is doomed. :)
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<![CDATA[Another One Bites the Dust!]]>Tue, 21 Apr 2015 23:11:40 GMThttp://dividendpizzaguy.com/1/post/2015/04/another-one-bites-the-dust.htmlPicturePhoto by Stuart Miles on freedigitalphotos.net
Dun! Dun! Dun! Another one bites the dust!!! Today I had the extreme pleasure of completely annihilating one of my Lines of Credit. I was forced to draw on it a year and a half ago when my current employment failed to provide enough income to sustain me. Today, I have finally completely repaid the entire balance, unexpectedly realizing that I had enough to do so if I accessed my Short Term Savings account. 

Naturally I am quite thrilled about this surprise progress. I had worked the amount I owed down to $235 from about $1,200 at the start of the year. I went ahead and made it an even $200 today, and then happened to be studying my bank accounts when I noticed that my automatic savings transfer had occurred, transferring exactly $200 into my short term savings account. Rather than earn 0.25% interest, I figured I'd instead offset 21% interest by transferring the amount straight into my Line of Credit, thereby finally eliminating my third credit debt (the first two were my smallest credit card and a PayPal credit balance), second one for this year. 

I will now be fixing my sights onto the bill which in my budget is represented by the phrase "Car Payment". This is not actually a car payment in the traditional sense of the word. It is rather a credit card through Credit First who provides financing to the poor souls who cannot pay cash to have their car's repaired. This is actually an extremely critical account for me to pay off, given that my car is my primary income generator. While I am saving money in a savings account specifically devoted to the payment of car repairs, paying via the Credit First card provides an additional 5% discount, so the more liquidity I have on this account the better for any emergencies. I'll naturally continue building up the Car Savings fund so I can easily pay down the card each month, however in addition to this I'll be devoting the bulk of my extra cash towards payment on this bill.

Presently I have a $1,252.21 balance on this account. I currently make two monthly payments towards this amount, each at $75. In order to create a big enough snowball, I have not only increased these payments to $100 each (I was contributing a little more than $100 a month towards the Line of Credit I just paid off so this increase should be sustainable), as mentioned before I will also be diverting my usual $400 of monthly savings into paying down my line of credit. At this rate, I should have the Credit First Account paid off towards the end of June, contributing a minimum of $600/month. Given that I'll have 3 paychecks in June, this will allow me to make up the extra difference of any interest and the odd $52.21 extra.

This is, of course the human plan. I have no idea what will happen over the next couple months. Life is short and fragile and Lord willing, I won't have any accidents or get sick. Who knows what could happen. I just try to do what I can. :) Presently my budget is pretty bare bones. At the end of each month I am barely able to scrape together enough for rent, which I always find puzzling until I examine how much money I have been putting towards my debts, at which point it makes sense. 

In any case, I am extremely encouraged by my acceleration in paying down debt. Now that I've paid the taxes for this year, I can go ahead and begin throwing more cash at my credit cards. Total credit card debt is still sitting $21,425. I'll be dropping this amount below the $21,000 mark next month and, while I know I won't get it all paid off this year, I aim to do my best to eliminate all the higher interest accounts by December 31st. This would drop my total credit debt owed by a bit more than a third, setting up 2016 to be the year I pay down my formidable Premier Line of Credit. This will be a fair challenge as that account, costing me 11% interest presently is one of the keys to my rapid debt snowballing. I have been utilizing it to absorb some of the much higher interest cards, which halves the interest rate I am paying on many of them. I am excited for when I can finally devote a fully matured Debt Snowball exceeding $1,000/month towards the annihilation of this behemoth. 

I've calculated that once I've paid down all of my credit debt, my monthly living costs would be halved. At this point I'd either start investing quite aggressively, saving large amounts of money (for me) and, if by then I've figured out how to the whole options process works, "insuring" the shares of companies that I wish to purchase against loss for investors willing to pay a premium for security. In any case, one step at a time. I am getting ahead of myself. I am simply thrilled to be free one more debt. :D 
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<![CDATA[Options Plan, Tier 1 Implementation]]>Mon, 20 Apr 2015 21:28:06 GMThttp://dividendpizzaguy.com/1/post/2015/04/options-plan-tier-1-implementation.htmlPicturePhoto courtesy of Stuart Miles at freedigitalphotos.net
Ok so I left you all hanging with my initial post about my impending plans for options. Quick recap, the plan is to purchase stocks that I have researched and determined that I would like to acquire via the sale of cash secured put options. Essentially, this means I simply put the cash to buy the stocks at the strike price indicated by the put option I sell minus the premium I receive from the sale of the option. Clear as mud? So what exactly did I do and how did my experiments with these cash secured puts work out thus far?

Well I've spent quite a bit of time researching this strategy and then even more time attempting to identify a suitable security with which I could experiment and secure my first investment in this fashion. After much research, I identified that I wanted a stock that is priced in my budget, but looks to have some future potential (naturally I don't want to buy stocks that won't perform over time). Unfortunately, traditional stocks are WAY out of reach for me as I am constrained to a $500 budget with my investment portfolio presently. Since an options contract is for 100 shares, I can only sell puts on stocks that cost less than $6 a share. This is pretty limiting and typically these securities are considered inherently riskier than your typical blue chip stocks that seem to run in the $40 to $150 range. 

I also wanted a stock that would pay me a monthly dividend. Given that I'll have 100 shares, this will add up pretty quickly and assist in providing badly needed cash flow for reinvestment. Monthly dividends aren't super common however so that narrowed my options for stocks even further. 

Finally, I wanted a stock that would pay out a decently high yield and for whom I knew the reason it was priced below $10/share. Given the dramatic crash in the prices of oil stocks, I feel comfortable buying companies in this industry as the core reason for the depression in price is an over-abundance of oil in the market presently. Additionally oil producers have higher distributions, and there are a fair few monthly payers. Given the industry's highly cyclical nature, I am quite likely to see the value of anything I purchase rebound again in the next decade, assuming it doesn't go bankrupt first (always a concern).

The tricky part is finding a stock that has reasonable options trading volume and provides a decent sale price for my put options. Fortunately for me, Breitburn Energy Partners is highly enough traded that I can net a nice $15 to $50 sale (that is an immediate 3% to 10% return on a maximum of $490 of my own cash) per put option I sell with 30 to 70 days until expiration. Unfortunately, at the exact same time I discovered BBEP, the market decided that it also liked the stock and the price rocketed up from about $5.50 to nearly $6.40 by the time my cash transferred into my brokerage account. I almost gave up on the experiment as it was priced well out of my reach when the shares dipped the following day (last Friday) which increased the $5.00 put option expiring June 19 enough for me to sell. I managed to sell a put option at the strike price of $5.00 for a premium of $0.20/share (or $20). This netted me an immediate 3% return on my cash. This is astronomically higher than what I'd earn in my savings accounts. :) I am selling this put option with the intention of acquiring BBEP and locking a solid yield. However, if the option ends up expiring without exercise due to rapid price growth (which seems entirely likely), I might have to simply pocket the premium and pick a different stock to try the strategy out upon. 

If the option is exercised and I end up purchasing 100 shares at $4.90 each, I'll lock in a steady dividend, which is currently at $0.04/month. As oil prices fluctuate this will increase or decrease accordingly, which is fine with me. Any money I make without having to work for it is great news! Last year BBEP was paying out $0.17/month. If oil prices ever recover, that would provide me with a yield in excess of 30% annually on these shares. That would be FANTASTIC!! :) I doubt that will happen anytime in the next few years. But a fellow can always dream, right? In any case, stay posted for the results on this experiment. :) Presently I've set up a transaction to close me out of the position which would net me $15 profit (before tax of course) and free my cash to use for other put options, however I find it unlikely that I'll be able to close out of this position easily, in which case I'll simply end up holding the contract until expiration and selling a new contract if the price is around $6/share still. 
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<![CDATA[Options for Conservative Portfolios?]]>Sat, 18 Apr 2015 22:01:08 GMThttp://dividendpizzaguy.com/1/post/2015/04/options-for-conservative-portfolios.htmlPicture
Options. This word seems to evoke fear and revulsion among the investors I personally know (not so many) and is apparently the opposite type of investment that any truly conservative investor would utilize from what I've read through other blogs or inferred from the complete lack of coverage. I've been studying them in depth over the past month, familiarizing myself with their vocabulary (for example who knew you could be long and short at the same time??) and attempting to wrap my head around what makes them so great? Are options really that dangerous for investors?

Now I am only just beginning to learn more about the world of investing. In college I sat down and took a cursory glance through, including some basic reading on options, however I still hadn't completely wrapped my head around the basic fundamental analysis involved in analyzing companies and stocks. Recently I sat down and brushed up on my basic accounting, which suddenly unlocked the world of balance sheets for me (something I never quite understood before in spite of graduating with a degree in business). Once I realized the importance of balance sheets and the logic behind them, I began diving into stocks. Of course, not having enough money to buy stocks outright is something of an issue. This, in conjunction with one of my best friend's undertaking a study of exclusively option based strategies led me back to options for the second time. 

This time, armed with the ability to guess at a stock's approximate value slightly more intelligently than before and retaining some of my cursory self-studies into the world of options from the past, it made a lot more sense to me. I realized that there are two sides to an option trade. One person is buying the option and the other is selling. How exactly did a person sell options? If you sold options, did you need to own the stocks you were selling options for? How could this be combined with my personal goals to build a dividend portfolio and would this still be compatible with a conservative investing style?

Looking at the basic format of a short Put option (this means you sold the Put option to someone else), it is essentially a contract stating that you will purchase 100 shares of company XYZ at strike price $XX.XX if the price decreases below this strike price by an agreed upon date. Now, typically people that write options are portrayed as not wanting the contract to be assigned, preferring to keep the premium the buyer pays them for the contract without having to buy the shares upon or prior to expiration. But what if I were to flip this around and use a put option to secure my desired entry point for 100 shares in a company which I had already thoroughly researched and determined worthy of adding to my portfolio? 

In this case, I would be paid to purchase the company I wanted to buy anyway! For example, lets say I want to buy shares in Coca Cola (I actually really, really want to!). It is trading for approximately $40.70 today, but I would be much more comfortable purchasing it for less than $40. I could just put in a limit order and wait for it to drop to that price and buy it. Or I could sell a May 15, strike price $40 put option, collect $55 and wait for the price to drop or the option to expire. If the price does not drop by the time the option expires the following month, I can simply repeat this procedure the following month. If I do get assigned, I pay $3,945, which works out to be $39.45/share. The longer it takes for the shares to drop to my preferred entry price, the more I would make off of the underlying security and the less they will eventually cost me when I do get assigned. It is almost like earning dividends without even owning the stock! Basically you are serving as the stock "insurance agent" for that particular security. To determine if this strategy is viable I began digging into the ins and outs of selling options.

I found a cool book called "Options for the Conservative Investor" by Michael C. Thomsett which relates several key strategies where options can substantially boost a portfolio's performance and hedge against losses during market downturns. This book validated my original hypothesis and vastly expanded my primitive understanding on the use options. I learned about covered call writing, which can be used by folks that already own a stock to generate cash flow from their stocks during horizontal markets and used to offset the cost of purchasing a long put, which would insure the value of your holdings from short term price fluctuations.

Based off of this initial research, I have drawn the conclusion that, utilized systematically with a deliberate plan and careful analysis, a conservative investor will benefit from the usage of options within their portfolio, if only to hedge against concerns about the future of the market and secure desirable entry prices for stocks that they would like to add to their portfolio. I am now preparing to test this strategy with my own first options transaction, presently having transferred the appropriate cash to my portfolio to cover the put transaction costs.

If this initial strategy proves feasible in actual practice, I will then begin looking into the implementation of a second tier of strategy which will maximize cash flow from my portfolio, which being super tiny presently, definitely requires some serious growth. Unfortunately, due to my personal credit card debt, I will be unable to invest in the portfolio routinely as most of my expendable cash will be going into debt repayment for the duration of the year. Therefore any cash I invest will have to be generated by my portfolio rather than by me. Hence my focus on identifying assets that provide dividends and cash flow. Stay posted for the results of this first tier of my options cash flow strategy, which I will be putting up sometime next week. 
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<![CDATA[April Budget]]>Sat, 18 Apr 2015 21:49:04 GMThttp://dividendpizzaguy.com/1/post/2015/04/april-budget.htmlPictureImage courtesy of Stuart Miles at FreeDigitalPhotos.net
I am finally getting my April budget sorted out somewhat. This month has mostly been a work in progress. I am attempting to designate money for specific roles and tasks in general, but mostly I just have it set up so that I automatically save $400 a month from my paychecks and then the rest of the bills get paid out automatically. I restructured my savings however for the purpose of capitalizing on some investment opportunities. I found a decent buy that I would like to acquire if the price drops a bit more, but more of that later. April's budget (now that we are half way into the month looks like this.

Due to having to pay fairly high taxes, I had to reduce my short term savings drastically. I've also transferred a significant amount into my brokerage, as I mentioned above. I'll be building it up gradually, but last month I started a separate savings account for my car expenses, so I won't be maintaining as high a balance in my short term savings accounts going forward. Instead, I'll be contributing most of my monthly allotment that usually goes to savings into payment on my credit card debt. I've finally managed to total up all my outstanding credit debts and they total $21,670.21! My student loans :P Unfortunately I won't be able to pay all of this off this year as I don't make that kind of money. Indeed, last year was the first year I've ever been in the black since I started college 7 years ago (sad I know) and this ironically through beginning work at Pizza Hut. 

So far this year, I have managed to reduce my credit debt by almost $2,000 already this year and now that I have about a $500 buffer (soon to be $750 at the turn of the month) and my taxes are now out of the way, I'll be able to devote significantly more cash towards my credit cards. I have no other projects that require capital and investing and paying down debt are the top two arenas I would like to contribute cash towards. 

By the end of the year, my "Chase Credit", "Car Payment" (this is actually a credit card with Firestone for car repairs), Emergency Line of Credit (LoC) and most of my standard Line of Credit should be paid off. This will free up approximately $300 of cash flow and significantly drop my monthly cost of living. It should be noted that the payments listed above are not the minimums (I usually tend to pay slightly more if I can and in the case of the car repair bill, double).

This will allow me to increase my monthly debt payment accelerator from $400 (starting in May) to above $700 per month by next January, which will then be applied directly to my US Bank Credit and Premiere Line of Credit. 

I wanted to list out my final expenses from March, but have not had a good opportunity to sit down and compile them into a presentable format. I'll try to get something set up for April's final expenses, which should be simplified now that I've set up Personal Capital. 

Thanks for reading!
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<![CDATA[Taxes, Taxes, and More Taxes]]>Mon, 13 Apr 2015 20:35:54 GMThttp://dividendpizzaguy.com/1/post/2015/04/taxes-taxes-and-more-taxes.htmlPictureImage courtesy of Stuart Miles at freedigitalphotos.net
Lately I have been both struggling to figure out taxes (as an independent contractor for my day job they are more complicated than the typical tax return for the average joe). This is my first year having to deal with increased tax complexity. I can't say that I enjoy it that much. 

Interestingly, I am currently listening to a book entitled, "The Darwin Economy" by Robert H. Frank. His predominant theme throughout has been on the necessity of taxes for the continual operation of society. I guess he has a valid point. My taxes are technically paying for my usage of the public facilities here in U.S. This is a topic that I have, of course realized to some

degree throughout my life, but not something that is popular to talk about. Indeed, personally, I feel that lower taxes for myself would be awesome. It would leave more income for me to pay down debt with. :) Of course, for society as a whole, someone has to pay taxes. If everyone's tax burdens were reduced, our roads, utilities, and national defense would be compromised. This would be inherently harmful for me personally, as well as for society.

After all, I enjoy my freedom due to our armed forces, I make a living delivering pizza on public roads, and I survive thanks to the clean water provided by Seattle Public Utilities. These factors are all influenced by the taxes I pay and are freely accessible to all citizens of the U.S. So, despite having a hefty tax bill this year, I'll be doing my best to pay it down. 

Perhaps the most positive aspect of this entire experience is the recognition that I need to set aside even more money for tax purposes. Fortunately, I had plenty of billable expenses to help offset much of my tax bill, but it is still far larger than I have ever experienced before. Thankfully, my emergency savings will be able to kick in and absorb the entire tax bill. It will take a month and a half to rebuild the savings to their minimum threshold, but this is their purpose in my personal finances. 

Naturally, due to the tax payments, I've had to rework my budget for April, so I shall post this as soon as I've figured out how to work in the adjustments. In addition I will be posting a listing of my final total expenses for March. It is looking as though I shan't make a lot of headway on the payment of my credit card debts this April. Mostly I'll be aiming to keep my budget in the black and looking to cut a few more expenses to streamline. Keep an eye out for those updates!
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