Making Money Makes Money [April 2014]
Category : Uncategorized
I have a goal. Spend an average of $25 per day each month. Reducing my expenses to this level is what makes financial independence feasible in just a few years.
I invest roughly 80% of my after tax income on high quality dividend stocks. Most of these stocks pay between 3-5% annually, and have consistently raised their dividends each year for the past several decades.
So how is it feasible that I can be completely financially independent in just a couple years? Let me give you a reasonable best case scenario. I reduce my expenses down to $7000 per year and my average dividend percentage is 4%. Assuming my stocks will increase in value proportional to the rate of inflation, all I need to do is get $7000 per year from dividends…
$7000 / 0.04 = $175,000 invested.
How long will it take me to invest $175,000 at my current rate?
Less time than I spent in college.
March was the first month that I received a monthly dividend (shout out to Exxon Mobil). I received about $18 in dividends and spent close to $800.
Now the April 2014 update!
Dividend Income: $35.72
Percentage of Expenses paid by dividend income: 4.1%
A healthy dose of growth towards financial freedom. My budget for April was only $750, but after running a red light and dishing out $125, it was pretty difficult to recover and keep expenses under. For May, the budget is $775, I can hit it.