I will update this page periodically as new goals become present and old goals are attained.
2011 Goals:
*
*
*
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2012 Goals:
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*To save 65% of my net income earned in 2012, averaged monthly. Failed!
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*Weigh less than 190 pounds by the end of the year. Failed!
2013 Goals:
*To receive $3,500 in dividends during the year of 2013.
*To save 60% of my net income earned in 2013, averaged monthly.
*To weigh 185 pounds or less by the end of 2013.
*To diversify my wealth.
How close are you to your $1200 dividends/year?
ReplyDeleteIf your average yield was 3.5%, based on your account balance you should be around $1100. Are you this close?
me myself and I,
ReplyDeleteI'm very close in terms of the monthly figure ($100/mo), but the problem is my portfolio started off at a much lower figure at the beginning of the year and now I'm playing catch-up. I may end up reaching it, but I'd have to average around $125/mo in dividends for the rest of the year. We'll see. I'm excited!
I see. I was forward thinking your goal (i.e. by the end of 2011 having a portfolio that would deliver $1200 in dividends over the next 12 months). Instead of earning a total of $1200 by the end of 2011. I think your goal is much more impressive.
ReplyDeleteGreat goals. Have you though about how much money you are going to need to retire by 40 and live off your dividends?
ReplyDeleteBased on your Dividend Income section it looks like you're making great progress
Iain,
ReplyDeleteThanks. I'm trying to make progress every single month. This blog is keeping me honest!
As far as a portfolio value, I don't necessarily put a number behind it...as the passive income is what matters and I think I'll need something around $1,200 a month in passive income in order to "retire". That equates to $360k using a 4% SWR. I'd like to have somewhere around $300k-400k before quitting or going to part-time work.
Thanks for stopping by!
A very cool set of goals; I'm sure you'll be able to reach them.
ReplyDeleteDo you have a prospective timeline for when you're looking at giving up the 9-5?
Jack,
ReplyDeleteThanks for stopping by and I appreciate your encouragement!
I plan on giving up the 9-5 by 40 years old. I predict that I will meet/exceed expenses with passive income by then.
Keep in touch.
how long to go till you hit 40? I might've missed it, as I just found this blog...
ReplyDeleteWil,
ReplyDeleteI'm 29 currently and turn 30 in mid-2012. So, I have just over 10 years until I turn 40. I'm anxious to get to my goal, but I hope the time goes by very slowly as you only live once. We'll see.
Thanks for stopping by!
Did you get rid of your car or pay it off? I live in a rural part of the country, and I would find it hard to give up my vehicle lol.
ReplyDeleteHigh Yield Soldier,
ReplyDeleteI got rid of it. I sold it to a Carmax center over the summer and have been car-free ever since.
Living in a rural part of the country makes it incredibly difficult and likely impossible to get by without a car. I spent some time living in the country for quite a few years and I understand your pain. I've tried to design my lifestyle around not having a car, and even then it's still difficult.
Best wishes!
i think you are absolutely on the right track cause i have been doing this for almost 4 years now and i have also achieved much more that i thought possible - however i w ill make a comment about your stock picks - i like intel definitely - intel is the future - however i cant personally support either the killer cigaret industry or the war machine industry no matter now profitable these industrys are now.
ReplyDeleteAnonymous,
ReplyDeleteThanks for stopping by. Of course, if one has strong beliefs and certain ethics than one should stick to those beliefs and ethics and invest accordingly.
Best of luck with your investments!
I am excited about charting your progress, because I am in a very similar position: I am just over a year younger than you, and my goal is also retirement/financial independence at 40.
ReplyDeleteI have a lot of learning to do about dividend stock investing though, so keep putting out the informative articles.
The Money Monk,
DeleteIt's great to hear from someone in my age range with similar goals and the same mindset. It's difficult, as you probably know, to find people in our age range talking about "retirement" and "financial independence". It's exceedingly rare. Good for you for taking control of your financial future.
Dividend growth investing is the method in which I'm using to secure my passive income source, but there are many ways to achieve that goal. I hope you stick around and we learn from each other.
Best wishes!
hey just found your blog. great ideas and way to go on your progress! i am in total support and dont want to be a downer but as a reality check i wanna say that quitting or moving to part time at even 400K given your age isnt leaving you with a ton of room down the road to handle lifes unforseen issues. i know its about lifestyle to a great extent and learning to not "work just to buy things" but i live very frugally like you am still thinking i couldnt quit at 40 without having more like $750K or more.
ReplyDeleteagain great job and i will be following your progress. Eric
Eric,
DeleteGlad you found the blog! Stick around and hopefully we'll learn from each other.
I do feel comfortable leaving the workforce at an early age knowing that as long as I'm healthy able to get around I can always get a part-time job to make ends meet if I fall a little short. I'm willing to not only work part-time if necessary, but I'm also open minded to moving to a low-cost country overseas. I think passive income to meet/exceed expenses combined with my willingness to think outside the box should allow me to be a bit flexible in the future.
Stay in touch.
Best wishes!
sounds like you are indeed willing to think outside the box and moving to another (lower cost) country opens up a lot of possibilities (from what i have read). i am about 7 years in age ahead of you but share the same goals and as i said i have opted out of the earn to buy things lifestyle. i am hoping to be able to move to semi-retired/part time work at 45 at the latest. i got a really good start and i believe i am well on the way. again good luck! Eric
ReplyDeleteEric,
DeleteThanks for stopping by and offering up your support. It's greatly appreciated.
Best of luck in regards to your plan and your ongoing journey. I wouldn't mind just getting to the point where I only had to work part-time for the rest of my life. It would be amazing to have an extra 20-25 hours of free time every week to explore my life and enjoy my time. It wouldn't be complete freedom, but certainly would be wonderful.
Best wishes.
Hi Dividend Mantra, your goals are achievable. You'll make it. I did it before 40. But now I am married and have two kids. My retirement is solid but I am now working only for the kids and am the sole income earner. I am ok with that. Life changes as do the goals. I will keep coming back to your site.
ReplyDeleteAnonymous,
DeleteThanks so much! I appreciate the support. You retired before 40? That's pretty amazing. You are definitely in rare company!!
Life definitely changes and one has to remain flexible and open-minded to those changes. Sounds like you adjusted and you're very happy with doing so. Best of luck with your future.
Take care!
I concur with the previous posts...you should hit your mark- just be aware that life changes and you need to remain flexible:)
ReplyDeleteI am 52, a retired general contractor, but still manage our real estate properties, drip stock holdings and enjoy taking on small jobs for friends and family. This is pretty close to what I planned for when I was in my early twenties. We have two grown children and that slowed us up a bit, but it was all worth it! I make it a point to share my financial (goals) experience with our grown children- they are DRIP-aholics:) Like my wife and I...
Dividends are Fantastic
Best Wishes
Retired DRIP,
DeleteSounds like you ended up exactly where you wanted to be. Very interesting life there and although having children slowed you down...as you point out..it was all worth it. Being 52 and being flexible and having fun with life is a dream for most, so definitely enjoy it!
Thanks for the advice and thanks for stopping by.
Best wishes!
Hi Dividend Mantra,
ReplyDeleteI wanted to share with you a book I recently picked up and began reading The Intelligent Investor, written by Benjamin Graham. The books content is more about our emotions as investors rather than the act of investing itself. If you have not already read this book I would encourage you to do so. Much of what you and your fellow bloggers write about mirrors much of the content in the book, and that's a good thing:)
I really like the fact the your style of investing is focused on what your personal goals are and not what others are doing or how the Markets are behaving...Besides, who cares how much someone else is making or not- so long as you are on target to meet your goals...
You have time on your side, a really good portfolio of Great companies, a sound investment (living below your means, controlling debt) strategy, and your investments give you a pay raise every year...Now, that's what I call an Intelligent Investor!
Congrats to you and Best Wishes
Retired DRIP,
DeleteThanks for stopping by. I appreciate your comment and the support!
I did read "The Intelligent Investor" and I think it's the single greatest book on investing ever written. I agree that it focuses on the psychological aspect of investing, which is wonderful because controlling one's emotions is imperative to having a successful investment career.
I do hope that I continue to have the good fortune of having excess income to invest and retain the ability to live below my means. I'm very lucky right now in this time of my life.
Thanks again for following the journey and I hope you continue to prosper!
Best wishes.
I'm in the process of trying to formulate annual dividend income goals for next year and beyond. how do you set your own dividend goals farther into the future--do you increase them by a certain percentage year over year? I'd like to set goals for 10 years out, but am not sure what's reasonable based on my current dividend income. thanks!
ReplyDeletekolpin,
DeleteThanks for stopping by.
I don't really set goals so far out in the future to be honest. There is really no way for me to know exactly how much I'll be earning, how much I'll be able to save and how much my dividend income will then be.
Rather, I just set forth the goal to earn enough dividend income to retire on by 40 years old and I'm just doing my best to focus every single day on being as frugal as possible while still maintaining an acceptable quality of life, saving the difference and then trying to allocate that capital intelligently by purchasing shares in high quality companies that pay/grow dividends.
The furthest out I go is by the year. So, I always set a a goal for the current year in terms of dividend income. It's just too difficult to try and predict any further out. Market conditions also have something to do with this.
I'm sorry I couldn't be of more help.
Take care!
Hi DM, I have followed your blog for several weeks, and I am really inspired by what you have achieved. I have a question: you mentioned that you aim to retire at 40 years old, do you have a goal for the annual or monthly passive income when you retire at 40? Thank you.
ReplyDeleteQuin
Quin,
DeleteI'm sorry I didn't respond to your comment earlier. I missed it in somehow. My apologies.
I will consider myself financially independent when my expenses are covered by passive income on a regular basis. For instance, if my expenses are 100% covered by passive income for three months in a row, and the forward income is higher than forward expenses I'll consider myself in a position where I don't have to work any longer. However, I would also like a slight margin of safety so as to have a cushion for unforeseen expenses. I currently consider about $1,450/mo as a good target. That would mean I'd need about a $500,000 portfolio at a 3.5% yield.
On the other hand, I would consider it almost impossible to not earn some type of outside income once I'm financially independent. So, the margin of safety might not be as necessary as the dividend income will likely grow at a much faster pace than my expenses, creating a margin of safety over time even if I didn't expressly want/need it.
Hope that helps!
Best wishes.
I've got to tell you're such an inspiration to me, or rather your goals and means to achieve them. I've personally started doing the same than you. I'm now 29, soon to be 30, and I hope I can achieve my "freedom" before 40 as well. Although no one knows what happens in life but it's good to have goals and dreams. I'm determined to achieve mine.
ReplyDeleteGreetings from Finland. Here the tax for dividend income is around 25-32% depending from where you buy your stocks and how big the income is. Enjoy your low/non taxable dividends :)
Anonymous,
DeleteThanks for stopping by from Finland. It's so great to have readers and supporters from all over the world. Thanks for your well wishes!
I hope we both reach our goals to reach freedom before 40 years old. What a wonderful and amazing achievement that would be. It's something that I think a lot of people aspire to have, but few actually take the steps necessary to make their dreams come true because of some real or imagined impediment.
I wish you well on your journey. Please stay in touch and keep me informed.
Best regards!
I see your future earning a lot more as a paid TV personality giving financial and philosophical advise and comments on current economic events. You might enjoy the "work" along with the recognition and much higher income. Keep building your followers, interviews and, maybe get an agent.
ReplyDeleteShow your blog comments in reverse chronological order. Readers want to see the most current comments first.
Anonymous,
DeleteWow! That's an incredible comment. Thanks so much for the wonderful words.
I would certainly love doing something like that. I'm really here, more than anything, to inspire others as I chronicle a middle-class journey to financial independence. Wouldn't it be great to have a platform like that?
I've tried many times to show the newest comments first. As far as I'm aware, blogger does not allow that. I'd have to have wordpress, or install some kind of plugin that allows it. I haven't run across anything as of yet to make that something that could work on here, especially now with a custom template. If I can figure it out, I'll certainly do that.
Best wishes!
Jason,
ReplyDeleteJust saw your spot on the today show and decided to check you out. I was wondering if you can suggest a good way to get started investing. My personal mantra is healthy and cooking and I'm a chef and food blogger offer counseling and classes to those who want to learn how to eat better. I already love as simply and economically as I can manage but would like to become more comfortable. Any advice you could offer for newbies is great.
You can also check out my blog www.vegucatedkitchen.com for help with your weight loss goals listed above.
Staci,
DeleteThanks for stopping by!
My mantra used to be healthy cooking. I actually was a amateur competitive bodybuilder in my youth, and fitness was my entire life. While I still enjoy staying active and go to the gym 3 days per week most of the time, my diet could use improvement. I'm trying to strike a balance between eating healthy, being frugal and also enjoying my food. I have to admit that I don't enjoy the actual taste of health food for the most part, and used to eat so healthy just for the end result of the fitness aspect of it. The enjoyment was in looking great and possibly competing.
I'm actively monitoring this and trying to strike a balance!
Best wishes!
Jason,
ReplyDeleteI saw your story on line and thought I would check your site out. About 10 years ago, my wife and I set the goal of retiring at age 40. I turned 40 in July of last year, and retired in August. (I've been hiking and skiing almost every day since!)
The funny thing is, my wife loves her job so much, she has decided to keep working for now. In ten years' time, you may or may not find the same thing for yourself, but I like that your project is named the Freedom Fund. Whether you continue to work past 40 or not, there is a huge value is not HAVING TO work. You can't put a price on true financial freedom. Best of luck to you!
Anonymous,
DeleteWow! Congratulations to you for setting the goal and making your dreams come true. That's wonderful. We definitely need more examples like you in the community, because the naysayers can be overwhelming based on pure numbers.
I'm not sure if I'll continue working after I'm financially independent or not. I do quite enjoy the thought of philanthropy, but it depends on what exactly I'm doing for a living when I'm 40. If I'm still in the automotive business I can personally guarantee you I won't be working anymore.
You definitely can't put a price on financial freedom. Choice is absolutely priceless, and something that so few actually attain in life. Enjoy the fruits of your labor! :)
Best regards.
I admire your plan and wish you the best of luck in your desire to retire by 40. Do you find that living so frugally takes some of the joy out of things!? I ask because I am 7 months into a year-long self-imposed sabbatical and am enjoying myself tremendously, but have learned that dramatically downgrading my lifestyle is not gonna work for me (especially across 30+ years of retirement!). I am just curious about your thoughts on the topic.
ReplyDeleteRobin,
DeleteThanks for stopping by!
Actually, frugality has increased my overall happiness. At first, it was a bitch. I suffered through it all because of a greater goal of becoming financially independent, but it's no longer that way. Frugality is freeing. It frees me from trying to keep up with a subjective nature of success in society that is increasingly vague and fleeting.
You can read a recent interview I did that touches on this subject a bit:
http://dividendmonk.com/april-2013-how-to-achieve-financial-freedom-in-one-decade/
Keep in touch, and best of luck to you as you find your own balance between quality of life and frugality.
Best wishes!
This comment has been removed by the author.
DeleteWell said. Very inspiring.
DeleteMark Ryan,
DeleteThanks for stopping by! Glad you enjoyed the comment.
Stay in touch.
Best wishes!
Curious what you use to buy your stocks. Ameritrade, scottrade, etc?
ReplyDeletelibbyandellie,
DeleteI use Scottrade. I find the fees fair at $7 per trade and the ease of access to brick and mortar locations is reassuring if I ever have a need to go talk to someone in person.
Hope that helps!
Best regards.
FYI: later this spring Scottrade will start to offer DRIPs for stocks with a twist: the ability to reinvest dividends into any stock or ETF. I find DRIP investing a way to save on costs and stay fully vested in the market to let compounding work its magic.
DeleteCN
CN,
DeleteGreat news there. Thanks for the info! I appreciate it.
That's been one of the complaints about Scottrade: the lack of a DRIP program. Cool stuff!
Best wishes.
WOW! Just found your blog and you are living the dream. I too am trying to get to a place where passive income is a major part of retirement. I don't want to wait until I am 65 to retire, that would be extremely disappointing. The good news for you is you live in a part of the country that is reasonably priced. Have you thought of buying a rental property. I own such a place and the income is great. Additionally, you build equity in the property. Just a thought. Good luck, I will be following your progress.
ReplyDelete-Brian
Brian,
DeleteGlad you found the blog! Appreciate you stopping by.
Retiring at 65 would definitely be disappointing for me as well. Some people prefer it that way, but I want nothing more than to own my time and do as I please. Living my life my way does not really involve a 9-5 'till 65. That's just me.
I've thought about real estate. While it still may be in my future, I have a certain picture in my head of what life looks like when I'm financially independent. And it doesn't include me dealing with a management company and/or tenants. I'm not being sarcastic, I'm being honest. Investing in high quality companies allows me a lot of freedom that having a rental property or two won't. I'd like to be geographically independent once financially independent, and even if a management company is running a property or two for me (taking a good portion of my profits along the way), I'm still somewhat geographically tied down to an area.
I may change my mind on that in the future, but those are just some musings as of right now.
Best of luck as you follow your dreams!
Take care.
DM,
ReplyDeleteGreat blog. Great plan.
I really think you should take another look at putting 5K/year into dividend stocks under a ROTH IRA.
Not using a ROTH, you are essentially donating money to the government.
In 2013 you would like to receive $3500 in dividends, but 20% (or $700 !) of that goes back to THE TAX MAN before you can reinvest it.
So you really only have $2800 towards your living expenses. Anything earned in a ROTH is all yours.
At age 40 - you would like to access to the dividends? No problem!
You are able to withdraw up to the amount that you put in without penalty. That means (assuming you funded with 5,000/year) that $50,000 can be withdrawn without penalty.
Once you reach $50,000 withdrawn (tax and penalty free) you can continue to withdraw tax free and pay a 10% penalty.
You are paying a 20% penalty now (in the form of capital gains tax).
Clearly a ROTH IRA is the best option even if you intend to retire @40.
Math doesn't lie -
Using the assumptions -
stock return 8%/year which includes a 3.5% dividend
cap gain tax rate 20%
reinvest the dividends (minus the taxes in taxable account)
real rate of return ROTH= 8%
$78,227.44 after 10 years
real rate of return TAXABLE ACCOUNT = 7.3%
$75,183.95 after 10 years
- BEWARETHETAXMAN
BEWARETHETAXMAN,
DeleteThanks for stopping by. I really appreciated the detailed comment, backed up by concrete math.
The thing to keep in mind, however, is that in all likelihood I'll only be paying taxes on dividends for the next 6-7 years before I attain financial independence and then live off my dividends. At that rate I'll be on a low enough income base to where I'll likely be paying very little or no taxes at all on my dividends. By then, my dividends will actually be hefty enough to where taxes can take a pretty significant bite out of my income. Before then, while I'm still subject to taxes because of my income level, my dividends will be much lower. So just about the time I'll actually be receiving pretty hefty dividend tallies I'll be paying little or no taxes.
BTW, the dividend tax rate on qualified dividends is 15% rather than 20% at my income tax level (I'm not taxed at the highest bracket).
Best wishes!