THE PRINCIPAL GOAL IS TO COVER THE DELTA BETWEEN CURRENT EXPENSES AND CURRENT PASSIVE INCOME.
Our current budget is partly covered by my existing passive income. This includes rent income (4,000 ILS) and some blogging income (varying, ~2,000 ILS). I would like my dividend income to serve as a complementary source of dependable passive income that would cover the delta between our current budget and existing passive income.
I estimate our monthly expenses at around 10,406 ILS per month, or $2,955.21. To cover the delta (= 4,406 ILS) the Dividends from Scratch portfolio must generate $1,668.29 in pre-tax income. For that to happen, I must save and invest at least $500,487.43 or ₪1,762,291.31.
Interestingly, I already have this amount of money but most of it is invested in index funds. It is psychologically difficult for me to sell them all and go 100% the DGI route. I would like to build my DGI portfolio with new money and existing cash positions rather than liquidate my existing holdings.
This seems like quite a task so maybe I should break it to lesser, easier to accomplish goals:
Cover our Netflix subscription. We pay 32 ILS per month for Netflix (9 USD). To cover it, I would need a pre-tax income of 12.12$ per month. I aim for a 4% yield from my portfolio. I would therefor need to invest $3,635.18, or 12,800 ILS at 4%, to perpetually pay for Netflix for the rest of my life.
Cover my Cell Phone Bill – I currently pay 37 ILS per month ($10.51). To cover it, the portfolio must generate 14.01$ per month. That means I should invest $4,203.17 (14,800 ILS) at 4%.
Cover our Water Bill – We currently pay 90 ILS per month ($25.56) for the local water and sewage company. To cover it, the portfolio must generate $34.08 per month. This means I should invest $10,223.93 (36,000 ILS) at 4%.
Cover my Health Insurance – I pay 91 ILS for the National Health Insurance and another 31 ILS for complementary “catastrophe” insurance. To cover this expense ($34.65) the portfolio must generate $46.20 per month. This means I should invest $13,859.11 (48,800.00 ILS) at 4%.
Cover our City Tax Bill – We pay about 210 ILS per month ($59.64) for city services such as waste management, gardening etc. I need to generate $79.52 in dividend income to cover it. Therefore I must invest $23,855.84 (84,000 ILS).
Cover our Electricity Bill – We pay 210 ILS ($73.98) per month (on a bi-monthly basis) to the Israeli Electricity Company. To cover this bill, the portfolio should generate $98.64 on a pre-tax monthly basis. This entails an investment of $29,592.60 (104,200 ILS).
Cover my Business Expenses – I pay about 454 (129$) ILS in hosting and other internet related expenses. To cover this, the portfolio should generate $172 on a pre-tax monthly basis. This entails an investment of $51,600 or 181,691 ILS.
Cover GF’s Car Expenses – I don’t have a car but my GF does. Owning a car in Israel is crazy expensive. Gas money, insurance and maintenance amount to at least 1,000 ILS per month, or $284. To cover this I need to generate $378.66 per month – and for that I would need to invest another $113,599 or 400,000 ILS.
Cover our food expenses – We pay about 2,000 ILS per month for food. I would like the portfolio to take care of that. To cover this I need to generate $757.33 per month – which would entail an investment of $227,198.50 (800,000 ILS).
Cover Our Rent Payments: We currently rent a small flat and pay 3,200 ILS per month (908$). To cover this I should generate $1,211.73 by investing $363,517.59 (1,280,000 ILS).
Generate the minimum wage: It would be cool if my portfolio can generate an income equivalent to the current minumum monthly wage in Israel (5,300 ILS or $1,505.19 per month). I would need a pre-tax income of $2,006.92 for that which means I should invest $602,076 or 2,120,000 ILS.
Replace my existing salary: I currently get paid around 10,000 ILS per month for selling my time to my employer. I would need to generate a pre-tax income of $3,786.64 per month. I would need to invest $1,135,992 for that to happen (4,000,000 ILS).