#019 11/05/2013 -- The Toil of Realization
In my last post I alluded to the pain associated with parting ways with a ton material possessions that rarely have any use in our lives. Most of the activities surrounding the sale of house are not that difficult. I mean, there’s lots of paperwork and the closing costs are obscene, but all that really involves is signing things and writing checks. The Toil (yes, Toil with a capital T) behind our house selling experience originated in the crap that we had to dig out of hiding places and then sell (dealing with craigslist people) or donate (arduous trips to Goodwill). You know that thing you’ve held onto all these years because you think it will be of use to you some day? There’s a high chance that it will probably just sit there and never do anything except take space. My wife and I agreed that we will never go through this experience again. She asked if leading a nomad’s lifestyle will be as harrowing as our moving experience. I told her that any Toil we experience in our nomad days will be minimal because we will only have a handful of possessions that will fit in a backpack. When we enter our traveling lifestyle, moving around will be trivial because our lack of possessions will make relocation easy.
Now that I have said a word about Toil, I will enumerate the positive aspects of our move. Places like the grocery store, shops, parks, libraries, bus routes, and the beach are all within walking distance. A place with a walkscore of 85 is fantastic. Before the move, we had to drive 10 minutes to get to the nearest grocery store. The rent is not fantastically low, but we are saving $400/mo compared to our previous living situation. Our social lives have been transformed because we now we can walk to our friends’ places and even hang out in the middle of the week. I haven’t had this level of proximity to my friends since college. The town that we live in takes bicycles seriously, so we plan to join the legions of bicycle riders in the coming weeks. Instead of just sitting at home watching TV during the week we can now just go for a stroll somewhere and enjoy the evening. The place that we moved to is centrally located between our jobs, so now my wife and I both take the bus to work. We hope that will save us quite a bit each month in gas expenses. My wife was very glad to say goodbye to her 1.5 hour commute to work. My own commute takes as long as before, but it is simpler and involves fewer shady characters.
Will we ever become homeowners again? I think it is very possible that we will. I think some day we will get all the wanderlust out of our systems and we will want to settle down somewhere. If we become homeowners again we will probably want do so in a single family home without some stupid HOA (or maybe with minimal HOA fees and intrusion). I think we will also try to buy in an area where there is very clear advantage to owning versus renting.
Right now my wife and I admit that we don’t fully understand ourselves just yet. The plan is to give the nomad lifestyle a try while we are young and see if it is a good fit for us.
spoonman's Journal
Re: spoonman's Journal
#020 11/10/2013 -- October Dividend Income Update
The month of October was relatively quiet in the dividend income front. We were busy trying to sell our house and we also needed some dry powder to pay for apartment rental expenses. We only increased our passive income from dividends by $129 this month, $4 of which came from one company increasing its dividend payout for the year. We’re just happy that our passive income is still monotonically increasing. We received $654 in dividends this month, which is less than half of last month’s record-breaking amount, but that’s perfectly understandable because payout schedules don’t always neatly align. When we pull the trigger we will ride these fluctuations by having a cash buffer in our account.
The good news is that the dividend income increase for November will be far higher, due in large part by the fact that we invested part of the proceeds from the sale of the house.
We are pretty much settled in our new apartment. We decided not to throw stuff in rented storage space because we wanted to force ourselves to downsize as much as possible. It’s very tough to handle a move without the benefit of a storage space to hold things. That decision is starting to pay off because we have downsized our possessions tremendously. Right now I am in the process of digitizing all of my undergraduate and graduate school work (I’ve been lugging this stuff around for years now, but I want to keep them in digital form because they contain some very awesome physics stuff). Eventually we will digitize a bunch of other paperwork and records. That will lighten our physical load even further. It will take several weeks to complete our digitizing campaign, but it will be worth it in the long run.
The month of October was relatively quiet in the dividend income front. We were busy trying to sell our house and we also needed some dry powder to pay for apartment rental expenses. We only increased our passive income from dividends by $129 this month, $4 of which came from one company increasing its dividend payout for the year. We’re just happy that our passive income is still monotonically increasing. We received $654 in dividends this month, which is less than half of last month’s record-breaking amount, but that’s perfectly understandable because payout schedules don’t always neatly align. When we pull the trigger we will ride these fluctuations by having a cash buffer in our account.
The good news is that the dividend income increase for November will be far higher, due in large part by the fact that we invested part of the proceeds from the sale of the house.
We are pretty much settled in our new apartment. We decided not to throw stuff in rented storage space because we wanted to force ourselves to downsize as much as possible. It’s very tough to handle a move without the benefit of a storage space to hold things. That decision is starting to pay off because we have downsized our possessions tremendously. Right now I am in the process of digitizing all of my undergraduate and graduate school work (I’ve been lugging this stuff around for years now, but I want to keep them in digital form because they contain some very awesome physics stuff). Eventually we will digitize a bunch of other paperwork and records. That will lighten our physical load even further. It will take several weeks to complete our digitizing campaign, but it will be worth it in the long run.
Last edited by spoonman on Thu Sep 18, 2014 1:05 pm, edited 1 time in total.
Re: spoonman's Journal
It's always nice to regroup. Sounds like you're making good progress, between downsizing and bumping dividends!
Re: spoonman's Journal
#021 12/01/2013 -- November Dividend Income Update
As noted in entry #018, we sold the house in late October. In the month of November we used a portion of the proceeds from the sale of the house to boost our dividend income. The proceeds of the sale, in conjunction with our regular savings rate, was used to increase our dividend income by an awesome $1,602.29, by far our highest increase in a single month. It’s good to see that unlocked equity actually working for us.
Of the $1,602.29, only $20 came from dividend increases. As far as dividends received for the month, the total came to $912.62.
So, all in all, things are proceeding at a nice pace. We probably won’t see this type of massive increase in dividend income again, but I think we can still maintain a good rate increase going forward.
We are fast approaching the third notional line (“Pacific Northwest”) in the possibility space shown above. My wife and I have started discussing our exit strategy from the 9-5 grind. The tentative plan is to call it quits two months or so before our apartment lease expires. The lease expires in October 2014, so we’re looking at calling it quits in late August or early September of that year. The idea here is that the two months will give us ample time to ease into our new lifestyle before we leave our apartment. In addition, we plan to sell everything that we own except for a handful of items that can fit into a carry-on bag (one each). The hope is to take our time selling everything in the two months before we leave our apartment.
By the time we say Adios to our jobs we would have decided a good first city to escape to. Right now we have a list of potential cities. Since we are pulling the trigger on the eve of winter, we’d like to go to a city that’s warm or not too cold. We are probably gonna first go to a place that will make it easy for us to stay within budget, so cities in South America look very attractive in that regard. Since our passive dividend income will grow each year by at least 7%, new cities and possibilities will become available each year and we’ll be in no real hurry to visit the Londons and Tokyos of the world.
Another thing we’ve started talking about is how we’ll deal with the temptation to keep working for another year. At this point we are positive that we won’t push things beyond the end of 2014. Since we are employing a dividend growth strategy, it’s not as if we’ll be stuck at the same income level forever and ever. We’re also thinking about using a SEPP to tap additional income from our 401(k)’s. Whatever the case, our current position is that we’ll be better off just calling it quits and start living our lives the way we want to.
As noted in entry #018, we sold the house in late October. In the month of November we used a portion of the proceeds from the sale of the house to boost our dividend income. The proceeds of the sale, in conjunction with our regular savings rate, was used to increase our dividend income by an awesome $1,602.29, by far our highest increase in a single month. It’s good to see that unlocked equity actually working for us.
Of the $1,602.29, only $20 came from dividend increases. As far as dividends received for the month, the total came to $912.62.
So, all in all, things are proceeding at a nice pace. We probably won’t see this type of massive increase in dividend income again, but I think we can still maintain a good rate increase going forward.
We are fast approaching the third notional line (“Pacific Northwest”) in the possibility space shown above. My wife and I have started discussing our exit strategy from the 9-5 grind. The tentative plan is to call it quits two months or so before our apartment lease expires. The lease expires in October 2014, so we’re looking at calling it quits in late August or early September of that year. The idea here is that the two months will give us ample time to ease into our new lifestyle before we leave our apartment. In addition, we plan to sell everything that we own except for a handful of items that can fit into a carry-on bag (one each). The hope is to take our time selling everything in the two months before we leave our apartment.
By the time we say Adios to our jobs we would have decided a good first city to escape to. Right now we have a list of potential cities. Since we are pulling the trigger on the eve of winter, we’d like to go to a city that’s warm or not too cold. We are probably gonna first go to a place that will make it easy for us to stay within budget, so cities in South America look very attractive in that regard. Since our passive dividend income will grow each year by at least 7%, new cities and possibilities will become available each year and we’ll be in no real hurry to visit the Londons and Tokyos of the world.
Another thing we’ve started talking about is how we’ll deal with the temptation to keep working for another year. At this point we are positive that we won’t push things beyond the end of 2014. Since we are employing a dividend growth strategy, it’s not as if we’ll be stuck at the same income level forever and ever. We’re also thinking about using a SEPP to tap additional income from our 401(k)’s. Whatever the case, our current position is that we’ll be better off just calling it quits and start living our lives the way we want to.
Last edited by spoonman on Thu Sep 18, 2014 1:06 pm, edited 1 time in total.
Re: spoonman's Journal
Thanks for posting the details of the Toil. Following your journal has been inspirational!
Re: spoonman's Journal
#022 12/07/2013 -- Digitization Task Update
In the past several weeks I have been engaged in converting all of my schoolwork to PDF format using a special scanning device. It has been a time consuming project but well worth the effort because I am unburdening myself of a ton of paper that I have lugged around for years. I have scanned around ten thousand pages by now, which translates several gigabytes worth of PDF files. It’s a time consuming task because the device can only scan around 20 pages per minute. In addition, before scanning the notes I have to prep them by removing staplers, paper clips, or unbinding them from notebooks. I estimate that I have about 10 hours left to finish scanning my school work.
The plan is then to move on to old paperwork, such as old tax returns. I will probably spend most of my time prepping the paperwork than actually scanning. My hope is to completely empty out our two-drawer file cabinet. In the future we will try to scan documents right away, which won’t be difficult because our mail forwarding service can scan our correspondence. Everything will be directed to our mail forwarding address and whatever we don’t want will be shredded for us.
Yup, we’re going all-digital. Physical mail will feel a lot like email. When we’re out in the middle of nowhere South America, it will all be taken care of.
In the past several weeks I have been engaged in converting all of my schoolwork to PDF format using a special scanning device. It has been a time consuming project but well worth the effort because I am unburdening myself of a ton of paper that I have lugged around for years. I have scanned around ten thousand pages by now, which translates several gigabytes worth of PDF files. It’s a time consuming task because the device can only scan around 20 pages per minute. In addition, before scanning the notes I have to prep them by removing staplers, paper clips, or unbinding them from notebooks. I estimate that I have about 10 hours left to finish scanning my school work.
The plan is then to move on to old paperwork, such as old tax returns. I will probably spend most of my time prepping the paperwork than actually scanning. My hope is to completely empty out our two-drawer file cabinet. In the future we will try to scan documents right away, which won’t be difficult because our mail forwarding service can scan our correspondence. Everything will be directed to our mail forwarding address and whatever we don’t want will be shredded for us.
Yup, we’re going all-digital. Physical mail will feel a lot like email. When we’re out in the middle of nowhere South America, it will all be taken care of.
Re: spoonman's Journal
I'm doing the same thing, but the machine I'm using is more like 20 pages a minut... (at work) doing a couple of rounds each day, it feels liberating to get rid of all the paper 
btw enjoying reading your journal.
btw enjoying reading your journal.
Re: spoonman's Journal
#023 12/13/2013 -- The anatomy of a bad day at work.
Warning: this is a bit of a rant post. I don't often want to give off negative vibes, but I felt compelled to write this to remind myself why I want to leave the 9-5 grind. There are many good aspects of the work I do, and I still enjoy what I do about 60% of the time (it used to be 80%). However, I believe I have a better future outside of the 9-5 format that so many people follow without question.
After almost 8 years at my current place of employment, I think I’ve come to an understanding of how and why I have bad days at work. I think the root cause of most of my suffering at work is our company’s relentless drive to grow. Gotta increase the earnings per share at all costs! In a way, I don’t blame the company because as a shareholder (of the company that I work for, and many others) I demand nothing less. The company is always competing with others for the same contracts and what often happens is that in order to maximize the probability of winning the company totally underbids. We end up winning the contract, but then have the arduous task of actually executing within budget. Oftentimes, the people that make the proposal are not the ones that actually end up executing it. That sets the stage for a bad day at work.
The project being executed is run by two classes of employees: the management class (those who issue orders and know how to bullshit their way through anything), and the worker class (those who are actually doing the work). I am a member of the latter. As the guy actually doing the work, I am often handed unrealistic deadlines that are based on ludicrous promises made in the proposal stage. The stress I experience in a bad day at work comes from the fact that after years of conditioning I can’t help but take those stupid deadlines seriously. The people in management drank the coolaid a long time ago and are not ashamed to crack the whip even when they know that what they are asking for is unreasonable. They crack the whip, I take what they say seriously, and then I end up having a shitty day because their demands are impossible to meet.
Why oh why do I bother stressing myself out over silly, unreasonable demands? Well, as noted earlier, after years of conditioning it’s difficult not to fall for the illusion that I have to acquiesce to unreasonable demands because “I actually need the money to make a living”. Even as I am knocking on FI’s door, it’s difficult not to get caught up in all the silliness and stress. I suspect that as I get closer to FI most of the stress will go away.
I will be leaving my job because I refuse to submit myself to all of these indignities. I also refuse to stoop as low as manager and actually pretend that my demands are reasonable. In FI I will undoubtedly have bad days, but they will be of a different nature. They will not be the consequence of putting up with indignities, but of factors I may not fully control, or just bad luck. In any case, it’s much better to be a shareholder than an employee: you get much better raises and you don’t have to put up with a lot of nonsense.
Warning: this is a bit of a rant post. I don't often want to give off negative vibes, but I felt compelled to write this to remind myself why I want to leave the 9-5 grind. There are many good aspects of the work I do, and I still enjoy what I do about 60% of the time (it used to be 80%). However, I believe I have a better future outside of the 9-5 format that so many people follow without question.
After almost 8 years at my current place of employment, I think I’ve come to an understanding of how and why I have bad days at work. I think the root cause of most of my suffering at work is our company’s relentless drive to grow. Gotta increase the earnings per share at all costs! In a way, I don’t blame the company because as a shareholder (of the company that I work for, and many others) I demand nothing less. The company is always competing with others for the same contracts and what often happens is that in order to maximize the probability of winning the company totally underbids. We end up winning the contract, but then have the arduous task of actually executing within budget. Oftentimes, the people that make the proposal are not the ones that actually end up executing it. That sets the stage for a bad day at work.
The project being executed is run by two classes of employees: the management class (those who issue orders and know how to bullshit their way through anything), and the worker class (those who are actually doing the work). I am a member of the latter. As the guy actually doing the work, I am often handed unrealistic deadlines that are based on ludicrous promises made in the proposal stage. The stress I experience in a bad day at work comes from the fact that after years of conditioning I can’t help but take those stupid deadlines seriously. The people in management drank the coolaid a long time ago and are not ashamed to crack the whip even when they know that what they are asking for is unreasonable. They crack the whip, I take what they say seriously, and then I end up having a shitty day because their demands are impossible to meet.
Why oh why do I bother stressing myself out over silly, unreasonable demands? Well, as noted earlier, after years of conditioning it’s difficult not to fall for the illusion that I have to acquiesce to unreasonable demands because “I actually need the money to make a living”. Even as I am knocking on FI’s door, it’s difficult not to get caught up in all the silliness and stress. I suspect that as I get closer to FI most of the stress will go away.
I will be leaving my job because I refuse to submit myself to all of these indignities. I also refuse to stoop as low as manager and actually pretend that my demands are reasonable. In FI I will undoubtedly have bad days, but they will be of a different nature. They will not be the consequence of putting up with indignities, but of factors I may not fully control, or just bad luck. In any case, it’s much better to be a shareholder than an employee: you get much better raises and you don’t have to put up with a lot of nonsense.
Re: spoonman's Journal
#024 12/18/2013 -- Life in the new apartment
It’s been a little over a month since we moved into our one bedroom apartment. So far it has been great. We have quiet and for the most part considerate neighbors (knock on wood). The part of town where we live now has been good to us, just about everything is within walking distance. We’ve enjoyed the convenience of walking two blocks to our grocery store and don’t mind making several trips each week. Our car has just sat there in its parking spot for weeks now. We’ve only used the car a few times since we moved here. It’s a real pleasure to realize the dream of keeping car usage to a bare minimum. The city is so darn walkable that we haven’t even bothered getting bikes yet, though I am considering getting a cheap bike off Craigslist and take it for a ride here and there.
Right now I just wish I could have more time at home so I can enjoy our place and surroundings. We are planning on taking two weeks off over the holidays, so we'll have a contiguous amount of time where we get to enjoy our place. Each day I get the feeling it will be incredibly delicious to call it quits less than a year from now and spend time in our apartment decompressing.
The one thing that I am not enjoying about our new place is the bathroom. The landlord did not bother to renovate it, so it’s equipped with ancient cabinets and a funny looking pink bathtub. The landlord renovated the kitchen, which looks great, but we wish we had a nicer bathroom. The landlord claims that most people would rather have a renovated kitchen than a renovated bathroom, I beg to differ. Since moving to this apartment I have come to realize how much I appreciate a decent bathroom. I think a good bathroom is the ultimate luxury item. In the future, we’ll pay closer attention to the condition of the bathroom before deciding on a place.
It’s been a little over a month since we moved into our one bedroom apartment. So far it has been great. We have quiet and for the most part considerate neighbors (knock on wood). The part of town where we live now has been good to us, just about everything is within walking distance. We’ve enjoyed the convenience of walking two blocks to our grocery store and don’t mind making several trips each week. Our car has just sat there in its parking spot for weeks now. We’ve only used the car a few times since we moved here. It’s a real pleasure to realize the dream of keeping car usage to a bare minimum. The city is so darn walkable that we haven’t even bothered getting bikes yet, though I am considering getting a cheap bike off Craigslist and take it for a ride here and there.
Right now I just wish I could have more time at home so I can enjoy our place and surroundings. We are planning on taking two weeks off over the holidays, so we'll have a contiguous amount of time where we get to enjoy our place. Each day I get the feeling it will be incredibly delicious to call it quits less than a year from now and spend time in our apartment decompressing.
The one thing that I am not enjoying about our new place is the bathroom. The landlord did not bother to renovate it, so it’s equipped with ancient cabinets and a funny looking pink bathtub. The landlord renovated the kitchen, which looks great, but we wish we had a nicer bathroom. The landlord claims that most people would rather have a renovated kitchen than a renovated bathroom, I beg to differ. Since moving to this apartment I have come to realize how much I appreciate a decent bathroom. I think a good bathroom is the ultimate luxury item. In the future, we’ll pay closer attention to the condition of the bathroom before deciding on a place.
Re: spoonman's Journal
I know what you mean about bathrooms. Our basement apartment is nice but when we built it we did splurge a bit on the bathroom. DW and I often occupy it at the same time so there are two sinks and a very small toilet room. Having an all tile (even the ceiling) shower is nice too as it makes it very easy to keep clean.
I am envious of your walking distance positioning!
I am envious of your walking distance positioning!
Re: spoonman's Journal
#025 01/07/2014 -- December Dividend Income Update.
Over the holidays we had two weeks off from work and had a great time with friends and family. We were so busy having fun that I neglected this journal a bit. We had the chance to have some people over at our place and they all agreed that our apartment and neighborhood are really cool. We were somewhat afraid that they would be very skeptical about our decision to move to a tiny one-bedroom apartment, but that wasn’t the case at all. I think most people are getting the drift that we are not going to follow the usual study-work-die script. We are also starting to slowly tell people that one of these days we might take off and travel the world. It’s all working quite organically right now, but we will still have to device a strategy for the best way to break the news in a graceful way. But now onto business...
This month we increased our passive income by a sporty $444.10, $12 of which came from dividend increases. Our 12 month forward dividend income is now $14,538. With the market reaching record highs of late, it has been a challenge to find good buys. We initiated positions in Target and Wells Fargo, both of which yield less than 3% but have great growth prospects. As we approach our passive income target of $16-18K/year I will start placing a greater emphasis on companies in our portfolio that have excellent dividend growth prospects, such as the companies I mentioned.
This month we received a record high $1437 in dividends! That’s an FI-caliber number! Yes, it’s a fluctuation---our current average monthly dividend income is less than that---but it’s still very encouraging to see that type of number. I remember three and a half years ago when we were only pulling in a few bucks a month, a number like $1437 looked nigh impossible to reach...ahhh, how time and persistence pays off!
On our way to the grocery store this past Sunday, we marveled at how awesome it was to take two weeks off from work. In those two weeks off we had tons of fun: hosted family at our place, hung out with friends, walked and played in our city, visited museums and parks, etc. etc. All that happened in the span of only two weeks. It was way more than usual due to the fact that it all happened over the holidays, but it still made us pause and think about how awesome it will be to have many more weeks off after we call it quits. Oh, how delicious it will be right after we pull the trigger!
Over the holidays we had two weeks off from work and had a great time with friends and family. We were so busy having fun that I neglected this journal a bit. We had the chance to have some people over at our place and they all agreed that our apartment and neighborhood are really cool. We were somewhat afraid that they would be very skeptical about our decision to move to a tiny one-bedroom apartment, but that wasn’t the case at all. I think most people are getting the drift that we are not going to follow the usual study-work-die script. We are also starting to slowly tell people that one of these days we might take off and travel the world. It’s all working quite organically right now, but we will still have to device a strategy for the best way to break the news in a graceful way. But now onto business...
This month we increased our passive income by a sporty $444.10, $12 of which came from dividend increases. Our 12 month forward dividend income is now $14,538. With the market reaching record highs of late, it has been a challenge to find good buys. We initiated positions in Target and Wells Fargo, both of which yield less than 3% but have great growth prospects. As we approach our passive income target of $16-18K/year I will start placing a greater emphasis on companies in our portfolio that have excellent dividend growth prospects, such as the companies I mentioned.
This month we received a record high $1437 in dividends! That’s an FI-caliber number! Yes, it’s a fluctuation---our current average monthly dividend income is less than that---but it’s still very encouraging to see that type of number. I remember three and a half years ago when we were only pulling in a few bucks a month, a number like $1437 looked nigh impossible to reach...ahhh, how time and persistence pays off!
On our way to the grocery store this past Sunday, we marveled at how awesome it was to take two weeks off from work. In those two weeks off we had tons of fun: hosted family at our place, hung out with friends, walked and played in our city, visited museums and parks, etc. etc. All that happened in the span of only two weeks. It was way more than usual due to the fact that it all happened over the holidays, but it still made us pause and think about how awesome it will be to have many more weeks off after we call it quits. Oh, how delicious it will be right after we pull the trigger!
Last edited by spoonman on Thu Sep 18, 2014 1:08 pm, edited 2 times in total.
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Gilberto de Piento
- Posts: 1950
- Joined: Tue Nov 12, 2013 10:23 pm
Re: spoonman's Journal
If you don't mind disclosing, how much total do you have invested to return $14,000 per year in dividends?
Re: spoonman's Journal
I'm curious, too. How much additional are you investing each month? I started looking at the numbers and right now my goal is to increase passive income by an average of $65 each month.
Re: spoonman's Journal
@Gilberto de Piento, m741
Those are the two numbers that my wife has prohibited me from posting =(. She said she would take away my GI-Joes if I disobeyed
.
But the average current yield in the portfolio is ~3.5%, so I'll let you figure it out =).
Those are the two numbers that my wife has prohibited me from posting =(. She said she would take away my GI-Joes if I disobeyed
.But the average current yield in the portfolio is ~3.5%, so I'll let you figure it out =).
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Gilberto de Piento
- Posts: 1950
- Joined: Tue Nov 12, 2013 10:23 pm
Re: spoonman's Journal
Thanks for the reply. I understand wanting to keep this confidential.
Re: spoonman's Journal
#026 01/17/2014 -- FI Journey End-Game
We are in our final months of our journey, and as we get closer to the point when we say Adios to the fast lane, we are thinking about our exit strategy. One of the things that we have been thinking about is where to spend our time in our first few months after pulling the trigger. Our preliminary plan is to quit our jobs two months before our apartment lease expires so we can spend some time easing into the lifestyle. That will give us two months to decompress and enjoy our apartment and city just like we did this past winter break. In those two months we will also make our final preparations, like selling all of our possessions save for two bags of clothing and some electronics (laptops, cell phones, chargers, etc). I especially look forward to selling the car.
We’ve started to seriously think about the first city that we will visit after we move out of our current apartment. (in case you’re wondering, we’re not planning to stay in LA because it wouldn’t be sustainable to live here with our target annual budget of about 16-18K/year. Of course, we could set aside a separate side fund to help us cover rent for six months or so and make things work. I’ve suggested to my better half that we hang loose in LA for a few more months after we pull the trigger, but she is set on going somewhere exotic.) Since we are hitting FI in the eve of winter, we will likely choose a city below a certain latitude, somewhere warm. My wife really wants us to go abroad, so that rules out a number of cities in relatively warm places like Florida, Texas, and other southern states. We’ve thought about an island in Hawaii, but a place like that will likely be expensive. Europe and Asia are simply too far for us to consider right now. The same applies to much of South America. That leaves Mexico and Central America as places to consider.
After much reading and thinking, I think we will settle for San Miguel de Allende as our first travel destination. I have to give much of the credit to Jeremy over at Go Curry Cracker for inspiring us select SMA. We have to do a lot of research still, but from what I gather it’s a charming little city that’s big enough to provide a lot of interesting activities and services. But more importantly, a place like SMA is very cheap and will allow us to stay within budget in that period of transition. Another comforting aspect of SMA is it’s proximity to the US; if we ever need to get back quickly for whatever reason we can promptly do so at a relatively low cost. A place like Lake Atitlan in Guatemala is also very inexpensive, but we are not quite ready to rough it out in the little towns surrounding the lake. Eventually we might make our way there, but we’ll take baby steps first.
As far as mail is concerned, most of our mail is already getting directed to a mail forwarding service. We just have to make sure that other important stuff is sent to our forwarding address before we move out of our apartment.
As I write all this stuff down I can’t help but feel some horror and excitement. I’m sure there will come a point when I will wake up in the middle of the night asking myself “what the hell am I doing?”, just like I did when we sold the house three months ago. But I know that eventually our new adventurous lifestyle will become the new normal and we will thank ourselves for embarking on such an awesome journey.
We are in our final months of our journey, and as we get closer to the point when we say Adios to the fast lane, we are thinking about our exit strategy. One of the things that we have been thinking about is where to spend our time in our first few months after pulling the trigger. Our preliminary plan is to quit our jobs two months before our apartment lease expires so we can spend some time easing into the lifestyle. That will give us two months to decompress and enjoy our apartment and city just like we did this past winter break. In those two months we will also make our final preparations, like selling all of our possessions save for two bags of clothing and some electronics (laptops, cell phones, chargers, etc). I especially look forward to selling the car.
We’ve started to seriously think about the first city that we will visit after we move out of our current apartment. (in case you’re wondering, we’re not planning to stay in LA because it wouldn’t be sustainable to live here with our target annual budget of about 16-18K/year. Of course, we could set aside a separate side fund to help us cover rent for six months or so and make things work. I’ve suggested to my better half that we hang loose in LA for a few more months after we pull the trigger, but she is set on going somewhere exotic.) Since we are hitting FI in the eve of winter, we will likely choose a city below a certain latitude, somewhere warm. My wife really wants us to go abroad, so that rules out a number of cities in relatively warm places like Florida, Texas, and other southern states. We’ve thought about an island in Hawaii, but a place like that will likely be expensive. Europe and Asia are simply too far for us to consider right now. The same applies to much of South America. That leaves Mexico and Central America as places to consider.
After much reading and thinking, I think we will settle for San Miguel de Allende as our first travel destination. I have to give much of the credit to Jeremy over at Go Curry Cracker for inspiring us select SMA. We have to do a lot of research still, but from what I gather it’s a charming little city that’s big enough to provide a lot of interesting activities and services. But more importantly, a place like SMA is very cheap and will allow us to stay within budget in that period of transition. Another comforting aspect of SMA is it’s proximity to the US; if we ever need to get back quickly for whatever reason we can promptly do so at a relatively low cost. A place like Lake Atitlan in Guatemala is also very inexpensive, but we are not quite ready to rough it out in the little towns surrounding the lake. Eventually we might make our way there, but we’ll take baby steps first.
As far as mail is concerned, most of our mail is already getting directed to a mail forwarding service. We just have to make sure that other important stuff is sent to our forwarding address before we move out of our apartment.
As I write all this stuff down I can’t help but feel some horror and excitement. I’m sure there will come a point when I will wake up in the middle of the night asking myself “what the hell am I doing?”, just like I did when we sold the house three months ago. But I know that eventually our new adventurous lifestyle will become the new normal and we will thank ourselves for embarking on such an awesome journey.
Re: spoonman's Journal
#027 01/23/2014 -- Dividend Growth Investing: The Good, the Bad, and the Ugly
I’ve known that I wanted to reach financial independence since I was 23, but I didn’t always have an investment path that I found intriguing. Then one day, nearly four years ago, I discovered dividend growth investing. I immediately fell in love with the technique and have been totally committed since. Although I learned about the basics from the Motley Fool website, it was a fellow by the name of Dividend Growth Investor that first opened my eyes to the full power of the dividend growth investing strategy. If it hadn’t been for DGI, I would have ended up wasting a lot of time chasing yield. In this post, I just want to take a moment to point out that dividend growth investing isn’t perfect, it has its good sides and bad sides. Below is my perspective on the good, bad, and ugly of dividend growth investing.
I’ll start with the good, which I addressed in the first few entries of this journal. What I find to be most attractive about dividend investing is the robustness of the strategy in providing a stream of ever increasing dividend income. The dividend income we get is tax advantaged, and we probably won’t have to worry about federal taxes for many years to come. Another attractive aspect is the degree to which the strategy is passive. I don’t have to worry about timing the market, worry about evicting bad tenants, or worry about repairing a rental unit (though I will admit that if you are lucky with rentals, you will be set). Although I am vigilant of the companies in my portfolio, I don’t have to spend that much time keeping track of them. Most of the time I just have to worry about a couple of companies in our portfolio.
When it comes to the bad side of dividend growth investing, I would say it’s the unpredictability of dividend growth rates (DGRs). Although the 10-year average DGR of a company might be, for example, something like 10%, in a given year they might decide to raise the dividend by just 5% or surprise you with a whopping 20% increase. In these last months of the accumulation stage of our journey, I’ve been placing a greater emphasis on companies with a high DGR so I don’t get disappointed. Another aspect of dividend growth investing that can make it less attractive than other income strategies is the low starting yield. Even if you can find some good companies that have a starting yield of 6%, that’s still not as high as what you would get with rentals, which can easily provide a yield above 10%. The low starting yield is something I am willing to accept because I know that in the long run my companies will provide me with inflation-beating dividend increases.
The ugly side of dividend investing is that every so often one of the companies in your portfolio will not live up to expectations. An excellent example is Intel (INTC), which I just had to jettison from my portfolio because it has failed to raise its dividend for several quarters. Two months ago I sold 2/3 of my stake in INTC because it failed to raise its dividend in 2013 (well, technically it did, but it didn’t raise it within the same year), but I kept 1/3 of my stake in case they at least decided to raise the dividend this quarter. I would have been satisfied with a symbolic dividend raise of 0.01%, which would at least send the message that management values the dividend increase streak. The dividend stayed flat, so I jettisoned the rest of my stake. With the proceeds of the sales I invested in other companies with promising prospects and I did it in such a way so the dividend income from INTC was completely replaced, thereby maintaining the dividend income level provided by the portfolio as a whole. Despite that ugly aspect, I was able to replace a failing company in my portfolio within minutes thanks to the liquidity of this investment vehicle. Compared to the weeks of toil and thousands of dollars I had to spend to sell my condo a few months back, I’ll take the ugly side of dividend investing any day.
I’ve known that I wanted to reach financial independence since I was 23, but I didn’t always have an investment path that I found intriguing. Then one day, nearly four years ago, I discovered dividend growth investing. I immediately fell in love with the technique and have been totally committed since. Although I learned about the basics from the Motley Fool website, it was a fellow by the name of Dividend Growth Investor that first opened my eyes to the full power of the dividend growth investing strategy. If it hadn’t been for DGI, I would have ended up wasting a lot of time chasing yield. In this post, I just want to take a moment to point out that dividend growth investing isn’t perfect, it has its good sides and bad sides. Below is my perspective on the good, bad, and ugly of dividend growth investing.
I’ll start with the good, which I addressed in the first few entries of this journal. What I find to be most attractive about dividend investing is the robustness of the strategy in providing a stream of ever increasing dividend income. The dividend income we get is tax advantaged, and we probably won’t have to worry about federal taxes for many years to come. Another attractive aspect is the degree to which the strategy is passive. I don’t have to worry about timing the market, worry about evicting bad tenants, or worry about repairing a rental unit (though I will admit that if you are lucky with rentals, you will be set). Although I am vigilant of the companies in my portfolio, I don’t have to spend that much time keeping track of them. Most of the time I just have to worry about a couple of companies in our portfolio.
When it comes to the bad side of dividend growth investing, I would say it’s the unpredictability of dividend growth rates (DGRs). Although the 10-year average DGR of a company might be, for example, something like 10%, in a given year they might decide to raise the dividend by just 5% or surprise you with a whopping 20% increase. In these last months of the accumulation stage of our journey, I’ve been placing a greater emphasis on companies with a high DGR so I don’t get disappointed. Another aspect of dividend growth investing that can make it less attractive than other income strategies is the low starting yield. Even if you can find some good companies that have a starting yield of 6%, that’s still not as high as what you would get with rentals, which can easily provide a yield above 10%. The low starting yield is something I am willing to accept because I know that in the long run my companies will provide me with inflation-beating dividend increases.
The ugly side of dividend investing is that every so often one of the companies in your portfolio will not live up to expectations. An excellent example is Intel (INTC), which I just had to jettison from my portfolio because it has failed to raise its dividend for several quarters. Two months ago I sold 2/3 of my stake in INTC because it failed to raise its dividend in 2013 (well, technically it did, but it didn’t raise it within the same year), but I kept 1/3 of my stake in case they at least decided to raise the dividend this quarter. I would have been satisfied with a symbolic dividend raise of 0.01%, which would at least send the message that management values the dividend increase streak. The dividend stayed flat, so I jettisoned the rest of my stake. With the proceeds of the sales I invested in other companies with promising prospects and I did it in such a way so the dividend income from INTC was completely replaced, thereby maintaining the dividend income level provided by the portfolio as a whole. Despite that ugly aspect, I was able to replace a failing company in my portfolio within minutes thanks to the liquidity of this investment vehicle. Compared to the weeks of toil and thousands of dollars I had to spend to sell my condo a few months back, I’ll take the ugly side of dividend investing any day.
Re: spoonman's Journal
#028 02/01/2014 -- January Dividend Income Update
In the month of January we increased our dividend income by $382, $4 of which came from a company that increased its dividend (it was a utility, that’s why it was only $4). Our 12 month forward dividend income is now $14,920, a hair shy of $15,000. We’ve got $16,000 in our sights now, which will unlock the region of possibility space notionally associated with the Pacific Northwest. Thinking about unlocking PNW gives me a warm fuzzy feeling because that is the region of the US that I always mentally pictured myself living in after becoming FI. Despite our enthusiasm about San Miguel de Allende as our first post-FI city, we might still end up going to PNW if the timing favors it. I’ll write a post on the subject in the near future.
We received $837 in dividends in the month of January, not the highest amount we’ve ever seen but very nice nonetheless. We channeled all of our received dividends into shares of companies currently available at attractive prices, such as CVX and TGT. We’ve continued to place an emphasis on companies with good dividend growth prospects.
I should note that in January we sold our last stake in Intel. It’s been something like 7 quarters since they’ve raised the dividend, as I explained in a recent post. Since we are so close to FI we need to see our companies increase their dividends now. This sort of drama is exceedingly rare in our portfolio, so I am not at all discouraged, especially when it only takes minutes to rectify the problem by putting our money in other promising companies.
In the month of January we increased our dividend income by $382, $4 of which came from a company that increased its dividend (it was a utility, that’s why it was only $4). Our 12 month forward dividend income is now $14,920, a hair shy of $15,000. We’ve got $16,000 in our sights now, which will unlock the region of possibility space notionally associated with the Pacific Northwest. Thinking about unlocking PNW gives me a warm fuzzy feeling because that is the region of the US that I always mentally pictured myself living in after becoming FI. Despite our enthusiasm about San Miguel de Allende as our first post-FI city, we might still end up going to PNW if the timing favors it. I’ll write a post on the subject in the near future.
We received $837 in dividends in the month of January, not the highest amount we’ve ever seen but very nice nonetheless. We channeled all of our received dividends into shares of companies currently available at attractive prices, such as CVX and TGT. We’ve continued to place an emphasis on companies with good dividend growth prospects.
I should note that in January we sold our last stake in Intel. It’s been something like 7 quarters since they’ve raised the dividend, as I explained in a recent post. Since we are so close to FI we need to see our companies increase their dividends now. This sort of drama is exceedingly rare in our portfolio, so I am not at all discouraged, especially when it only takes minutes to rectify the problem by putting our money in other promising companies.
Last edited by spoonman on Thu Sep 18, 2014 1:08 pm, edited 1 time in total.
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George the original one
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Re: spoonman's Journal
You're just a hop, skip, & jump away from the goal at this rate! Possibly end of Feb, definitely end of Mar?
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jacob
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Re: spoonman's Journal
Don't want to start a long discussion about the ugly side of [any] growth investing, but I'm glad you're aware of the risks. Companies that trade at a premium due to some growth aspect tend to take a big hit if they don't meet expectation, e.g. WAG on earnings a few years back, and GE on the dividend and earnings.