Hi, my name is spoonman and my wife and I have been aggressively pursuing ERE for almost three years. I’ve been a lurker in this forum for two years and wish I had found it earlier.
My background is in nuclear physics and I went into aerospace after grad school. My wife works for an internet company. We’re both 33 y/o and don’t have plans to have kids. With the exception of our mortgage and a small student loan (at 1.8%, which I can easily pay back in 2-3 months), we’re debt free.
We’re dividend growth investors. We currently own about 30 blue-chip companies across multiple sectors, each only comprising of less than 5% of our total DG portfolio. This style of investing has been thoroughly discussed by Dividend Growth Investor and other bloggers such as Dividend Mantra (DividendGuy in this forum). The portfolio is currently (as of 3/30/2013) producing about $9500 per year and we’ve managed to grow the annual dividends by about $4000 each year. That rate of growth will probably slow down given the fact that most companies we own are either overvalued or fully valued. If we were to stop making contributions right now, the dividends would grow by at least 8% each year (that’s last year’s weighted average growth, the 10-year weighted average growth is more like 11%).
The automatic dividend growth, which can easily outpace inflation, is one of the most attractive aspects of the DG investing strategy. The other awesome aspect is that it is incredibly passive: the dividends just keep coming in month after month and only requires a few minutes of time per week to monitor. These days I spend about 2 hours per week monitoring my companies, but that’s because DG investing is one of my hobbies.
About expenses. Our mortgage is by far our largest monthly expense. It’s $2350 per month, including HOA fees. It’s a 15 year loan at 3.875%, so about $1000 goes to the principal. The way I like to look at it is that our effective “rent” is about $1350/mo. Oh, and insurance (including earthquake insurance) is about $500 per year. We don’t eat out much, but I would say our monthly food expense is about $450 for the both of us. I’m confident we can do a lot better than $450/mo when we enter ERE. Since we live in Los Angeles, our monthly utility bills are quite benign (~$30/mo electric, ~$47/mo water, ~$18/mo for gas when not using the heater and $35/mo when we do). We cut cable 5 months ago, and we pay about $40/month for high speed internet. I pay $75/mo for my cell phone and my wife gets hers for free from her employer. I plan on reducing my cell phone bill to ~$10/mo when we enter ERE. I commute to work using public transportation and only pay about $25/mo for unlimited rides (my employer picks up most of that tab, which would normally be $75/mo). My auto insurance is $60/mo on a 2006 Honda that’s fully paid off, and I spend about $40/mo on gas. My wife drives to work with an old beater and spends about $140/mo on gas (her parents cover her insurance as part of a family plan).
Our plan is to sell the house in a couple of years (tentatively January 2015), sell/donate the great majority of our material possessions, and move to a place that we can rent for less than $600/mo. By then, our passive income from dividends should be around $16K per year. We currently have a high deductible medical plan with an HSA, in which we contribute the maximum amount. We plan to have a high deductible plan in ERE and continue to use the HSA.
Right now we have about $110K in retirement accounts. We contribute enough to meet the employer match of 4%. I will increase my contributions to 6% this weekend, mostly to offset tax liabilities. I must admit that our retirement accounts are only a peripheral component of our ERE plan because I believe in deploying money for near-term retirement. When we pull the trigger in two years, we’re gonna roll over the 401k’s into IRAs. At that point we’ll deploy the money into dividend paying securities. We haven’t decided yet, but we may try to set up a SEPP, even with the paltry interest rates currently available.
My wife is keen on retiring abroad, but I think for the first year of ERE we’ll just stay in North America and become thoroughly acquainted with the new lifestyle. Once we adjust, we plan on living abroad for a while in different locations anywhere from 6-12 months at a time.
In future posts I will talk about the sort of projects and activities that we plan on pursuing in ERE.
spoonman's Journal
#001 04/01/2013 -- Possibility Space
We are pursuing a path to FI powered by dividend growth investing. The goal has been to build a portfolio of dividend paying securities that will provide a source of income that continues to grow at a rate that outpaces inflation. This will give us the option not to work for a living.
There is an infinite number of possibilities that we can pursue in retirement. For example, we can decide to move to a state with a low cost of living, we could choose to live abroad, we could choose to live in an expensive city and work part-time to fill the income gap, or we could go RVing all over the country. The way I see it, the higher the income available from our portfolio the more possibilities we -unlock- from that infinite possibility space.
The attached figure shows our passive income as a function of time. The horizontal lines represent notional ERE possibilities. Since our passive income is currently ~$9500, we have unlocked the notional ERE-abroad possibility. We are hoping to unlock the notional ERE-cheap city possibility by the end of this year, and the the ERE-Pacific Northwest possibility by the end of 2014. Of course, there is a whole continuum of unlockable possibilities not shown in the figure. The possibilities could be unlocked with a lower passive income, depending on frugal skills and definitions of comfort. I love thinking about all these different scenarios...it’s quite intoxicating.
So right now, we could totally decide to run off to Latin America or Asia, but we’d rather hang in there for another two years to unlock some more possible outcomes. After we pull the trigger and decide to converge on a specific possibility, the ~8% dividend growth will automatically unlock more options as time goes on.
We are pursuing a path to FI powered by dividend growth investing. The goal has been to build a portfolio of dividend paying securities that will provide a source of income that continues to grow at a rate that outpaces inflation. This will give us the option not to work for a living.
There is an infinite number of possibilities that we can pursue in retirement. For example, we can decide to move to a state with a low cost of living, we could choose to live abroad, we could choose to live in an expensive city and work part-time to fill the income gap, or we could go RVing all over the country. The way I see it, the higher the income available from our portfolio the more possibilities we -unlock- from that infinite possibility space.
The attached figure shows our passive income as a function of time. The horizontal lines represent notional ERE possibilities. Since our passive income is currently ~$9500, we have unlocked the notional ERE-abroad possibility. We are hoping to unlock the notional ERE-cheap city possibility by the end of this year, and the the ERE-Pacific Northwest possibility by the end of 2014. Of course, there is a whole continuum of unlockable possibilities not shown in the figure. The possibilities could be unlocked with a lower passive income, depending on frugal skills and definitions of comfort. I love thinking about all these different scenarios...it’s quite intoxicating.
So right now, we could totally decide to run off to Latin America or Asia, but we’d rather hang in there for another two years to unlock some more possible outcomes. After we pull the trigger and decide to converge on a specific possibility, the ~8% dividend growth will automatically unlock more options as time goes on.
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My_Brain_Gets_Itchy
- Posts: 267
- Joined: Fri Mar 02, 2012 5:29 pm
Hehe, yeah.
But you know, some people are actually turned off by having so many options on their laps. They like the comfort of an externally imposed struture in their lives. I think the awesome thing about this community is that we are too strong to require the struture provided by a 9-5 job in order to find meaning in life.
But you know, some people are actually turned off by having so many options on their laps. They like the comfort of an externally imposed struture in their lives. I think the awesome thing about this community is that we are too strong to require the struture provided by a 9-5 job in order to find meaning in life.
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DividendGuy
- Posts: 441
- Joined: Sun Dec 05, 2010 9:58 pm
@spoonman,
Great job here! Love the strategy and the concrete goals. You're doing great!
Where abroad are you interested in? I've found Ecuador, Thailand and the Philippines to be on my short list due to cost of living, visa concerns and culture/food. Thailand would be tops if not for the difficulty of getting a long-term visa (have to do visa runs). Ecuador is attractive as they use the dollar and you can buy a permanent visa. The Philippines is nice because they use English and it's probably the cheapest of them all. Food, however, is not the best from what I understand.
Keep us posted on your progress!
Best wishes.
Great job here! Love the strategy and the concrete goals. You're doing great!
Where abroad are you interested in? I've found Ecuador, Thailand and the Philippines to be on my short list due to cost of living, visa concerns and culture/food. Thailand would be tops if not for the difficulty of getting a long-term visa (have to do visa runs). Ecuador is attractive as they use the dollar and you can buy a permanent visa. The Philippines is nice because they use English and it's probably the cheapest of them all. Food, however, is not the best from what I understand.
Keep us posted on your progress!
Best wishes.
Thanks for stopping by, DM!
Thailand, Ecuador, Peru, Dominican Republic, Italy (maybe 10 years down), Berlin, Argentina, Korea (Busan or Seoul), and Montreal are among the places we have in mind. In the near term, I think Peru or Ecuador are great because those are countries that have been well documented as good places to live on the cheap.
JeanPaul's journal (viewtopic.php?t=3113) has given me a great deal of hope that a low cost, near-term retirement is feasible. If we could replicate his expenditures, we could probably pull the trigger right this moment. I get a rapturous high just thinking about it =).
Thailand, Ecuador, Peru, Dominican Republic, Italy (maybe 10 years down), Berlin, Argentina, Korea (Busan or Seoul), and Montreal are among the places we have in mind. In the near term, I think Peru or Ecuador are great because those are countries that have been well documented as good places to live on the cheap.
JeanPaul's journal (viewtopic.php?t=3113) has given me a great deal of hope that a low cost, near-term retirement is feasible. If we could replicate his expenditures, we could probably pull the trigger right this moment. I get a rapturous high just thinking about it =).
#002 04/03/2013 -- Motivation
I haven’t yet laid out my reasons for pursuing FI. I tell people that I enjoy my job about 75% of the time, which is pretty darn good by general standards. At least I get the impression that’s a great percentage because most people just say “wow, that’s nice”. The problem is that I don’t think pursuing a career for the sake of just pursuing a career is the best thing to do with my time on this Earth.
As some of you may have guessed by the handle I use, “spoonman”, I am a Soundgarden fan. There’s this beautiful and slightly melancholy song they have called Boot Camp. The lyrics of that song pretty much capture the situation most people in corporate American are in:
I must obey the rules
I must be tame and cool
No staring at the clouds
I must stay on the ground
In clusters of the mice
The smoke is in our eyes
Like babies on display
Like angels in a cage
I must be pure and true
I must contain my views
There must be something else
There must be something good
Far away far away from here
Far away far away from here
Far away far away from here
Far away far away from here
And I'll be here for good
For good
The average lemming in our society will be singing the last two lines to their graves. Not me, I refuse to “be here for good”. I say fuck that shit, there’s a goddamn plethora of possibilities out there not involving trading 50 hours a week for money that doesn’t buy me happiness.
I haven’t yet laid out my reasons for pursuing FI. I tell people that I enjoy my job about 75% of the time, which is pretty darn good by general standards. At least I get the impression that’s a great percentage because most people just say “wow, that’s nice”. The problem is that I don’t think pursuing a career for the sake of just pursuing a career is the best thing to do with my time on this Earth.
As some of you may have guessed by the handle I use, “spoonman”, I am a Soundgarden fan. There’s this beautiful and slightly melancholy song they have called Boot Camp. The lyrics of that song pretty much capture the situation most people in corporate American are in:
I must obey the rules
I must be tame and cool
No staring at the clouds
I must stay on the ground
In clusters of the mice
The smoke is in our eyes
Like babies on display
Like angels in a cage
I must be pure and true
I must contain my views
There must be something else
There must be something good
Far away far away from here
Far away far away from here
Far away far away from here
Far away far away from here
And I'll be here for good
For good
The average lemming in our society will be singing the last two lines to their graves. Not me, I refuse to “be here for good”. I say fuck that shit, there’s a goddamn plethora of possibilities out there not involving trading 50 hours a week for money that doesn’t buy me happiness.
#003 04/06/2013 -- Expenses: Now and in the Future
Right now our monthly expenses are dominated by our mortgage payments ($1950), our HOA fees ($415), and food ($450). Everything else adds up to about $700 per month.
The HOA fees are embarrassingly high, but we do use the gym, hot tub (I know, I know...), and enjoy the security of living in a gated community. The problem is that this community is ideally suited for people that have families and genuinely make use of all the amenities. We’re not planning on having children. When we bought our condo we had a rather long horizon for achieving FI, something like 10-15 years, so at the time it made sense to buy this property.
In the past two years two things have happened: 1) We invested far more money that we thought we would, 2) Our idea of what constitutes a comfortable retirement changed drastically (thanks to Jacob’s ERE blog). Because of these two developments, our FI horizon has shrunk to 2-3 years (as of 4/6/2013).
Since we bought our place in late 2009 property values plummeted, but recently have experienced a robust rebound. We (and our realtor) are confident that we will be able to recover the majority of what we paid into the house in two years, probably sooner.
The plan then is to sell the house, quit our jobs, and adopt an inexpensive lifestyle. Our expenses will be far lower than they are now, specially in the housing department. I am confident that we can successfully reconfigure our lives because we are already acquainted with the cheap lifestyle. I lived just fine with an ERE-like budget in my childhood, college, and graduate school. In addition, the energy that we spend now in the 9-5 can be used to figure out how to maintain an inexpensive lifestyle.
Right now our monthly expenses are dominated by our mortgage payments ($1950), our HOA fees ($415), and food ($450). Everything else adds up to about $700 per month.
The HOA fees are embarrassingly high, but we do use the gym, hot tub (I know, I know...), and enjoy the security of living in a gated community. The problem is that this community is ideally suited for people that have families and genuinely make use of all the amenities. We’re not planning on having children. When we bought our condo we had a rather long horizon for achieving FI, something like 10-15 years, so at the time it made sense to buy this property.
In the past two years two things have happened: 1) We invested far more money that we thought we would, 2) Our idea of what constitutes a comfortable retirement changed drastically (thanks to Jacob’s ERE blog). Because of these two developments, our FI horizon has shrunk to 2-3 years (as of 4/6/2013).
Since we bought our place in late 2009 property values plummeted, but recently have experienced a robust rebound. We (and our realtor) are confident that we will be able to recover the majority of what we paid into the house in two years, probably sooner.
The plan then is to sell the house, quit our jobs, and adopt an inexpensive lifestyle. Our expenses will be far lower than they are now, specially in the housing department. I am confident that we can successfully reconfigure our lives because we are already acquainted with the cheap lifestyle. I lived just fine with an ERE-like budget in my childhood, college, and graduate school. In addition, the energy that we spend now in the 9-5 can be used to figure out how to maintain an inexpensive lifestyle.
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DividendGuy
- Posts: 441
- Joined: Sun Dec 05, 2010 9:58 pm
spoonman,
Would your advice to someone looking to retire extremely early be to avoid buying a place?
I often go back and forth on the buy vs. rent equation. I find that renting is not only cheaper in most major markets, but that even if it were more expensive (which it's generally not), the liquidity and flexibility would probably be worth a small premium.
The reason I ask is I currently rent a small 900 sq. foot 2 bedroom condo. I have sometimes thought about buying a condo in this same complex since I'm familiar with it and it's on the bus line. I could probably grab one for around $100k or perhaps slightly less. I currently pay about $900 for rent.
Thanks for your thoughts!
Would your advice to someone looking to retire extremely early be to avoid buying a place?
I often go back and forth on the buy vs. rent equation. I find that renting is not only cheaper in most major markets, but that even if it were more expensive (which it's generally not), the liquidity and flexibility would probably be worth a small premium.
The reason I ask is I currently rent a small 900 sq. foot 2 bedroom condo. I have sometimes thought about buying a condo in this same complex since I'm familiar with it and it's on the bus line. I could probably grab one for around $100k or perhaps slightly less. I currently pay about $900 for rent.
Thanks for your thoughts!
Dividend Guy,
Nice to see you here!
The thing about buying a house is that, unless you are willing to settle down in the house for at least 5 years, then it’s just an anchor. At least that’s the case here, in Los Angeles, because it is often cheaper to rent than to buy. When I bought the place back in 2009 I did not have the same level of appreciation for liquidity and flexibility that I do now. If it wasn’t for the house I would probably be 1 year closer to FI by now.
But the rent vs buy question is far more complicated than I make it seem. For example, you can live in a town where you can buy a house, live in it for while during the accumulation stage of your journey, and then rent it out. If the rent income you get is high with respect to the amount you paid into the house, then you’ll come out ahead. In my situation, if I were to pay off the house and then rent it out the “yield” on that investment would only be around 5% with a growth rate (if we can actually increase rent) of 2-3%. By yield I mean annual rent income divided by the amount you paid into the house, which would be the entire principal if you pay down the mortgage aggressively. The 5% yield is simply not good enough when compared to dividend growth stocks, which will easily beat that over time. Now, if you end up getting a place where the “yield” is around 10% or more, then you will probably come out ahead. The fellow “arebelspy” has some good posts in the MMM forums where he explains some of these concepts in good detail. Some people may say that you also get capital appreciation in your house, but the last 5 years have shown that prices don’t always go up.
In Florida where you live the situation may be more favorable for you. At 100K, a house might give you enough rental income to make it a worthwhile investment when compared to dividend growth stocks.
There’s one other thing. Jacob recently mentioned one scenario where you can buy a house in Oregon for 100K and have incredibly low property taxes, which would greatly enable ERE. If I didn’t have wanderlust then I would have pursued that possibility and reach ERE in a jiffy.
Nice to see you here!
The thing about buying a house is that, unless you are willing to settle down in the house for at least 5 years, then it’s just an anchor. At least that’s the case here, in Los Angeles, because it is often cheaper to rent than to buy. When I bought the place back in 2009 I did not have the same level of appreciation for liquidity and flexibility that I do now. If it wasn’t for the house I would probably be 1 year closer to FI by now.
But the rent vs buy question is far more complicated than I make it seem. For example, you can live in a town where you can buy a house, live in it for while during the accumulation stage of your journey, and then rent it out. If the rent income you get is high with respect to the amount you paid into the house, then you’ll come out ahead. In my situation, if I were to pay off the house and then rent it out the “yield” on that investment would only be around 5% with a growth rate (if we can actually increase rent) of 2-3%. By yield I mean annual rent income divided by the amount you paid into the house, which would be the entire principal if you pay down the mortgage aggressively. The 5% yield is simply not good enough when compared to dividend growth stocks, which will easily beat that over time. Now, if you end up getting a place where the “yield” is around 10% or more, then you will probably come out ahead. The fellow “arebelspy” has some good posts in the MMM forums where he explains some of these concepts in good detail. Some people may say that you also get capital appreciation in your house, but the last 5 years have shown that prices don’t always go up.
In Florida where you live the situation may be more favorable for you. At 100K, a house might give you enough rental income to make it a worthwhile investment when compared to dividend growth stocks.
There’s one other thing. Jacob recently mentioned one scenario where you can buy a house in Oregon for 100K and have incredibly low property taxes, which would greatly enable ERE. If I didn’t have wanderlust then I would have pursued that possibility and reach ERE in a jiffy.
#004 04/14/2013 -- The Big Reconfiguration
About a year and half ago I made the decision to commute to work by using public transportation. I was just tired of braving LA traffic and the constant fear of colliding with someone. By LA standards my commute wasn’t particularly bad, just 25 minutes each way in standard traffic. Nevertheless, I decided to go forward and commute by metro (a combination of bus and light rail). My commute increased to 50 minutes, but I was able to read, listen to podcasts, and play games on my cell phone. More importantly, the whole affair has been less stressful than driving and I was able to reduce gas, insurance, and maintenance costs on my car by several thousand dollars a year. It was a good decision despite the fact that I was commuting through one of the most notoriously rough neighborhoods in the nation. In other words, I was able to reconfigure an aspect of my life in such a way that led to substantial savings and a feeling of less misery (I say less misery because commuting tends to suck no matter what).
A year ago I decided to change my diet because I started to develop a gut. Now, I’m actually a really skinny guy, but I did not want to end up with one of those bellies that just stuck out and stared at me each morning. I implemented the new diet and two months later I lost 12 pounds and the size of the gut was reduced (and maintained) to an acceptable size. In the right lighting, at the right time of the day, I can see the faint outline of some sort of six pack in the mirror =).
There are other notable reconfigurations that have recently taken place in my life. I basically learned to say “no” at work and turned down some assignments and situations that I knew would be very stressful, which lead me to pursue more rewarding assignments. I even changed where I catch the bus in the morning to a stop that has less traffic and a little more fresh air. All I had to do was walk for an extra 4 minutes each morning, not a high price to pay at all.
All of these reconfigurations were met with some degree of reluctance on my part: Would I screw things up if I went forward with it? Is it really worth it? Would I hurt someone’s feelings if I actually spoke my mind? In the end, none of those negative scenarios materialized and I ended up in a better situation. The interesting thing is that after going forward with the reconfiguration and giving myself a few days to adapt, the new situation simply felt like the “normal” thing, like it had always been the way I did things and that whatever I was doing before looked ludicrous in retrospect.
Reaching FI and ditching the 9-5 will be the Big Reconfiguration. Sometimes I fear that I will simply miss the positive aspects of having a job: the camaraderie, the awesome feeling of being respected by very intelligent people, the opportunity of working with cutting edge technologies, etc, etc. I also fear the status anxiety(*) that may come with entering a lifestyle of very low consumption and few material possessions. But deep down I know that once we go through the Big Reconfiguration and give ourselves a few weeks to become acclimated with the new lifestyle, we will be in a better place and have epic experiences not possible while being chained to the 9-5. We will ask ourselves: “How the hell did we ever punish ourselves day after day with a horrible commute, a stressful job, and the lack of freedom that comes with it?”
(*) Check out the book “Status Anxiety” by Alain de Botton, it’s an excellent read.
About a year and half ago I made the decision to commute to work by using public transportation. I was just tired of braving LA traffic and the constant fear of colliding with someone. By LA standards my commute wasn’t particularly bad, just 25 minutes each way in standard traffic. Nevertheless, I decided to go forward and commute by metro (a combination of bus and light rail). My commute increased to 50 minutes, but I was able to read, listen to podcasts, and play games on my cell phone. More importantly, the whole affair has been less stressful than driving and I was able to reduce gas, insurance, and maintenance costs on my car by several thousand dollars a year. It was a good decision despite the fact that I was commuting through one of the most notoriously rough neighborhoods in the nation. In other words, I was able to reconfigure an aspect of my life in such a way that led to substantial savings and a feeling of less misery (I say less misery because commuting tends to suck no matter what).
A year ago I decided to change my diet because I started to develop a gut. Now, I’m actually a really skinny guy, but I did not want to end up with one of those bellies that just stuck out and stared at me each morning. I implemented the new diet and two months later I lost 12 pounds and the size of the gut was reduced (and maintained) to an acceptable size. In the right lighting, at the right time of the day, I can see the faint outline of some sort of six pack in the mirror =).
There are other notable reconfigurations that have recently taken place in my life. I basically learned to say “no” at work and turned down some assignments and situations that I knew would be very stressful, which lead me to pursue more rewarding assignments. I even changed where I catch the bus in the morning to a stop that has less traffic and a little more fresh air. All I had to do was walk for an extra 4 minutes each morning, not a high price to pay at all.
All of these reconfigurations were met with some degree of reluctance on my part: Would I screw things up if I went forward with it? Is it really worth it? Would I hurt someone’s feelings if I actually spoke my mind? In the end, none of those negative scenarios materialized and I ended up in a better situation. The interesting thing is that after going forward with the reconfiguration and giving myself a few days to adapt, the new situation simply felt like the “normal” thing, like it had always been the way I did things and that whatever I was doing before looked ludicrous in retrospect.
Reaching FI and ditching the 9-5 will be the Big Reconfiguration. Sometimes I fear that I will simply miss the positive aspects of having a job: the camaraderie, the awesome feeling of being respected by very intelligent people, the opportunity of working with cutting edge technologies, etc, etc. I also fear the status anxiety(*) that may come with entering a lifestyle of very low consumption and few material possessions. But deep down I know that once we go through the Big Reconfiguration and give ourselves a few weeks to become acclimated with the new lifestyle, we will be in a better place and have epic experiences not possible while being chained to the 9-5. We will ask ourselves: “How the hell did we ever punish ourselves day after day with a horrible commute, a stressful job, and the lack of freedom that comes with it?”
(*) Check out the book “Status Anxiety” by Alain de Botton, it’s an excellent read.
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My_Brain_Gets_Itchy
- Posts: 267
- Joined: Fri Mar 02, 2012 5:29 pm
@spoonman:
Good stuff, changes for the better.
I think its kind of rare for someone to decide to double their commute time in order to make 'healthier' gains, so kudos to you.
I'm also a skinny guy and had that skinny guy pot belly look. I followed a similar plan to you to get rid of it. It's pretty demoralizing to the male ego when you look like you're pregnant, lol.
Good stuff, changes for the better.
I think its kind of rare for someone to decide to double their commute time in order to make 'healthier' gains, so kudos to you.
I'm also a skinny guy and had that skinny guy pot belly look. I followed a similar plan to you to get rid of it. It's pretty demoralizing to the male ego when you look like you're pregnant, lol.
#005 04/21/2013 -- Wanderlust and Early Retirement
I think one of the best ways to achieve extreme early retirement is to identify a place with a low COL, buy a house there (preferably all cash), then settle down and minimize expenses by growing your own vegetables and/or other energy saving measures. Someday I may follow that route, but right now there is a great deal of wanderlust that I need to get out of my system.
Right now I am more enamoured with the idea of selling everything that doesn’t fit into a backpack and just buy a one-way ticket to an exotic location. And with information such as this viewtopic.php?t=3519, it is very easy to get excited about going abroad. Many people have demonstrated that it is not too difficult to live abroad in a financially sustainable way. Virtually everything is cheaper abroad, namely the big three: rent, food, and healthcare.
It’s very possible that once we’ve been traveling for a while we’ll get tired of the lifestyle or somehow get the urge to throttle it down a bit by only spending 50% time abroad. As with many things, we won’t truly know until we’ve put ourselves out there and experience things first hand.
I think one of the best ways to achieve extreme early retirement is to identify a place with a low COL, buy a house there (preferably all cash), then settle down and minimize expenses by growing your own vegetables and/or other energy saving measures. Someday I may follow that route, but right now there is a great deal of wanderlust that I need to get out of my system.
Right now I am more enamoured with the idea of selling everything that doesn’t fit into a backpack and just buy a one-way ticket to an exotic location. And with information such as this viewtopic.php?t=3519, it is very easy to get excited about going abroad. Many people have demonstrated that it is not too difficult to live abroad in a financially sustainable way. Virtually everything is cheaper abroad, namely the big three: rent, food, and healthcare.
It’s very possible that once we’ve been traveling for a while we’ll get tired of the lifestyle or somehow get the urge to throttle it down a bit by only spending 50% time abroad. As with many things, we won’t truly know until we’ve put ourselves out there and experience things first hand.
#006 04/27/2013 -- April Dividend Income Update
It’s time to update my dividend income progress for April. This month our dividend income increased by $359.42 to an estimated annual income of $9,877.48. That gets us very close to the 5 figure mark, a very exciting milestone in our journey.
The $359.42 is higher than the $333 that I shoot for every month in order to increase our passive income by $1000 every quarter. So far we’re on target to reach $12,000 in passive income by the end of the year.
Approaching the $10,000 mark is an important milestone, but the thing that has me even more excited is the manner in which we achieved an increase of $359.42. The contributions we made to our portfolio actually only increased our income by $218.08. The rest of the increase came solely from dividend increases from five of the companies that we own. So, $141.34 of the $359.42 came from the inherent power of dividend growth! We didn’t have to lift a finger to get that increase. Let’s think about this for a moment: my wife and I worked our asses off this month to contribute enough money to the portfolio to achieve a $218.08 increase in dividend income, but the dividends were able to achieve 65% of that on their own! It is as if a third person is making contributions to our portfolio, an estimated amount of $5000 (based on the current yield of the companies that increased their dividends).
A $140 increase in passive income in a single month from dividend growth is a long way from the $3 increase that I first observed when I started investing three years ago (which, by itself, was an incredibly exhilarating experience as well). This is the sort of organic growth that I’ve been looking for in our dividend growth investing strategy. Not only will our dividend income growth easily outpace inflation, but it will also provide an extra margin of safety.
It’s time to update my dividend income progress for April. This month our dividend income increased by $359.42 to an estimated annual income of $9,877.48. That gets us very close to the 5 figure mark, a very exciting milestone in our journey.
The $359.42 is higher than the $333 that I shoot for every month in order to increase our passive income by $1000 every quarter. So far we’re on target to reach $12,000 in passive income by the end of the year.
Approaching the $10,000 mark is an important milestone, but the thing that has me even more excited is the manner in which we achieved an increase of $359.42. The contributions we made to our portfolio actually only increased our income by $218.08. The rest of the increase came solely from dividend increases from five of the companies that we own. So, $141.34 of the $359.42 came from the inherent power of dividend growth! We didn’t have to lift a finger to get that increase. Let’s think about this for a moment: my wife and I worked our asses off this month to contribute enough money to the portfolio to achieve a $218.08 increase in dividend income, but the dividends were able to achieve 65% of that on their own! It is as if a third person is making contributions to our portfolio, an estimated amount of $5000 (based on the current yield of the companies that increased their dividends).
A $140 increase in passive income in a single month from dividend growth is a long way from the $3 increase that I first observed when I started investing three years ago (which, by itself, was an incredibly exhilarating experience as well). This is the sort of organic growth that I’ve been looking for in our dividend growth investing strategy. Not only will our dividend income growth easily outpace inflation, but it will also provide an extra margin of safety.
Last edited by spoonman on Thu Sep 18, 2014 12:45 pm, edited 1 time in total.
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DividendGuy
- Posts: 441
- Joined: Sun Dec 05, 2010 9:58 pm
@spoonman
Hear, hear! Fantastic progress, and I'm so happy to hear of the third person (dividend growth) contributing to your passive income in such a dramatic, and tangible way. Really great. That third person will eventually dwarf what you and the wife can do. Great stuff!
Congratulations, also, on approaching the $10,000/yr dividend income milestone. That's really, really great. I'm still a far ways from that level so do tell me how it feels in early 2015 to be living off your dividend income! You'll be sitting on top of the mountain.
Keep up the great work!
Hear, hear! Fantastic progress, and I'm so happy to hear of the third person (dividend growth) contributing to your passive income in such a dramatic, and tangible way. Really great. That third person will eventually dwarf what you and the wife can do. Great stuff!
Congratulations, also, on approaching the $10,000/yr dividend income milestone. That's really, really great. I'm still a far ways from that level so do tell me how it feels in early 2015 to be living off your dividend income! You'll be sitting on top of the mountain.
Keep up the great work!
Great work, spoonman!
I just crossed $6k, and it feels good. I haven't been as disciplined with my investments, as you have, though. I'm regretting my hesitation now, with the market near all-time highs and fewer opportunities available.
How do you track dividend increases? My brokerage doesn't have a very good option for that, and I'm curious to see how those numbers break down.
I just crossed $6k, and it feels good. I haven't been as disciplined with my investments, as you have, though. I'm regretting my hesitation now, with the market near all-time highs and fewer opportunities available.
How do you track dividend increases? My brokerage doesn't have a very good option for that, and I'm curious to see how those numbers break down.
Thanks for stopping by guys!
@DividendGuy
I look forward to the day I get to use my dividends in "anger", i.e., use them to pay for living expenses rather than reinvesting them. I owe some of this progress to you, DM, because I read your blog often and compare notes with you.
When I started this journey three years ago, it was one of my first companies, Automatic Data Processing (ADP), that first increased its dividend. The increase had been quite modest, but I got a real high out of watching the YOC tick up right before my eyes.
@m741
I'm honored to see your comment! I've been following your journey for years.
Over the years I've tracked my progress in a number of ways. At first I used to follow stocks with the help of a dividend master by the name of Dividends 4 Life (D4L). I used to pay for his newsletter ($65/year) and he gave frequent updates on dividend increases each month. These days I already know the time of the year my companies usually hike their dividends, so I just look up their current dividend profile in the dividendinvestor.com website.
It’s been difficult to find companies at reasonable prices these days, but there are a few dividend bargains out there if you look hard enough. DividendGuy has some great posts on the subject in his blog.
@DividendGuy
I look forward to the day I get to use my dividends in "anger", i.e., use them to pay for living expenses rather than reinvesting them. I owe some of this progress to you, DM, because I read your blog often and compare notes with you.
When I started this journey three years ago, it was one of my first companies, Automatic Data Processing (ADP), that first increased its dividend. The increase had been quite modest, but I got a real high out of watching the YOC tick up right before my eyes.
@m741
I'm honored to see your comment! I've been following your journey for years.
Over the years I've tracked my progress in a number of ways. At first I used to follow stocks with the help of a dividend master by the name of Dividends 4 Life (D4L). I used to pay for his newsletter ($65/year) and he gave frequent updates on dividend increases each month. These days I already know the time of the year my companies usually hike their dividends, so I just look up their current dividend profile in the dividendinvestor.com website.
It’s been difficult to find companies at reasonable prices these days, but there are a few dividend bargains out there if you look hard enough. DividendGuy has some great posts on the subject in his blog.