This blog is a chronicle of my quest to achieve early financial independence via passive income, in other words becoming a rentier. I plan to achieve this goal by coupling a high savings rate with a dividend growth investment strategy.
Given how late I started in the game of actually having a career (thank you, needless amounts of education and training), I am to achieve financial independence by around age 45. Why 45? Because some quick back of the envelope math suggests that while this is an aggressive target, it is doable.
On how I aim to achieve financial independence
In order to achieve financial independence, one needs capital. In order to acquire capital, one must save money. A logical corollary of this is that the more money you save, the more capital you can acquire, and thus the faster you can can achieve financial independence. That’s why I aim to save at least 50% of my income.
Factors aiding this goal:
- I have a relatively high income. In the low six-figures.
- I am relatively frugal by nature.
Factors opposing this goal:
- I live in a high cost of living area. No way to escape that without quitting my job.
- I require a certain minimum standard of living to be happy, and thus have no desire to take extreme austerity measures.
- Material things are the only way to achieve status in society and be taken seriously by other people.
What do I intend to do with all this capital? First and foremost, three things:
- Create an emergency fund equivalent to one year’s worth of expenses.
- Consistently invest in dividend growth stocks.
- Learn about and potentially pursue additional varieties of passive income producing investments.
On the origins of my goal to become financially independent
I’ve always worked hard – through school, through more school (grad school), through post-school training (post-docs), and now at a real job. But, the simple fact is that hard work only goes so far. My salary could vanish in an instant with a round of layoffs. My job could rapidly transition from cool to craptacular with a reorganization or a new boss. But so long as someone else (my company) is paying the bills, I have no choice but to grin and bare it. Oh, and scramble like a headless chicken trying to find another job in the event of layoffs or if the work environment sours.
For me, financial independence is all about insurance and freedom. Not freedom from having to work, but freedom from the stress and worry that comes with career insecurity. Insurance against having to make a post-layoff mad dash to a new job that may not interest me, in some new city that I may not want to live, just to pay the bills.
In today’s economy insecurity abounds. Companies don’t really care about their employees. The government isn’t going to be there for you in any meaningful way. You’re basically on your own.
In one job that I worked at, I had a horrible boss. Had I been older and more experienced at the time, I probably could have gotten a lawyer and sued the company and my boss all different flavors of harassment and hostile work environments. But I needed the job, so I stuck with it. Wouldn’t it have been nice to just walk away, rather than hang in there until I was able to land another job?
In another job that I worked at, my continued employment was always in question. Maybe they would have the money to pay for me. Maybe not. And of course, they would never tell me if I was going to be let go until a week or so before my contract ended. So I’d get a month extension here, a three month extension there, maybe another one month extension, then a six month extension. Repeating until I finally moved on to another position. I liked this job and my boss, so wouldn’t it have been better if I could have just focused on doing good work, rather than living in a perpetual state of anxiety over my employment?
Currently, I have a great job and a great boss. But I’m always cognizant that those things could change, especially since I work in a potentially labile industry. Hopefully, by the time the change occurs, I’ll be financially independent, so the fallout will be on my terms and play by my rules.
Your Humble Blogger
If you want to, you can email me at myfijourney at gee mail dot com.