This blog is a chronicle of my quest to achieve early financial independence via passive income. In other words, becoming a rentier. The steps to reaching this goal are simple to understand. Namely, coupling a high savings rate with a dividend growth investment strategy.
How high of a savings rate? 50% of my net income.
Why dividend growth investing? Because it works with my personality and life situation. Other investment strategies, for example real estate, could work just as well, but aren’t currently a good fit for me.
Given how late I started in the game of actually having a career (thank you, needless amounts of education and training), I aim 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 Achieving Financial Independence
Every two weeks my employer kindly deposits money in my bank account for services rendered. Money is nothing less than raw potentiality. It can become whatever I want it to… a roof over my head, food on my plate, an adventure in a foreign land. But perhaps the most interesting of all is that, through investing money can become more money.
Every month I invest in stocks with a consistent history of increasing dividend payments. With each investment my dividend stream increases. Eventually, the cash flow from dividends will be large enough that it will be able to cover all of my basic living expenses. At that point, I’m financially independent. My day job has bcome an option rather than a requirement.
I’m Only Human
Despite my best efforts, I remain only human. Which is just a highfaluting way of saying that I’ve got both advantages and obstacles when it comes to my journey.
- Relatively high income, somewhere in the low-six figures.
- Zero debt.
- Naturally cheap frugal.
- I’m stuck in a high cost of living area. No way to escape this without quitting my job.
- I require a certain minimum standard of living to be happy. I have exactly zero desire to take extreme austerity measures.
- I’m fully aware that material things are the only way to achieve status and be taken seriously by a better portion of the population. I have no desire to be perceived as a bum or a weirdo.
- Not having a real job until my mid-thirties means that I started saving and investing relatively late.
Why Financial Independence
I’ve always worked hard. Through school, through college, through graduate school, through post-doctoral training. And now, finally at a real job. The simple fact is that hard work only goes so far. My salary could vanish in an instant with a round of layoffs (rightsizing!). My job could rapidly transition from cool to horrific with departmental reorganization or a new boss. So long as someone else (my company) is paying the bills, I have no choice but to grin and bare it. And scramble like a headless chicken trying to find another job in the event of layoffs.
For me, financial independence is 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 dash to a new job that may not interest me, in some new city where I may not want to live. Just to pay the bills.
In today’s economy insecurity abounds. Companies don’t care about their employees. The government isn’t going to be there for me in any meaningful way. I am on my own.
Long ago in one of my first jobs, I had a horrible boss. Had I been older and more experienced at the time, I could have gotten a lawyer and sued the company and my boss for all different flavors of harassment and creation of a hostile work environment. But I needed the job, so I stuck with it for far too long as I searched for new job.
In another job, my continued employment was always in question. Maybe they would have money to pay for me. Maybe not. To make matters worse, they waited just a week or two before my contract would end before they bothered to tell me if they found more money or not. I got a one month extension, followed by a three month extension, another one month extension, a six month extension. You get the point. This repeated until I finally moved on to another position. I liked this job and I liked my boss. I still feel bad that I wasn’t able to focus on just doing good work because I was living in a state of perpetual 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 labile industry. Financial independence means that what are existential crises to most people become mere annoyances to me.
I’m told that every blog needs a boring section outlining policies that should be common sense. I won’t be offended if you skip this section. All policies are subject to change without notice.
- Investment disclaimer. I am NOT an investment professional. I do NOT claim to be an investment professional. Everything I know about the worlds of personal finance and investing is the result of self-study. This blog is my attempt to share what I have learned with my readers. You, and you alone, are responsible for doing due diligence. You need to do your own research and analysis before making investment choices. If you aren’t comfortable with that, seek out a fee-only investment professional. I am not liable if you lose a bunch of money.
- Guest posts. I would be delighted to host your guest post provided that you are a blogger or commenter with whom I’ve interacted with in the past. Please don’t waste your time pitching “unique and original” posts that are nothing but spam in disguise. I will not dignify your request with a response. It’s not worth the effort.
Want to contact me?
Feel free to send questions, comments or suggestions. You can email me at myFIjourney at Gee Mail Dot Com. Or use the form below.