The following is a tale that I hope will inspire you to make changes in your life. As I wrote in “Living a Middle-Class Life is Stressful,” trying to keep up with life in America can be one of the worst choices you can make. Why is living middle class so draining? One word: Debt.
Debt is the silent killer of dreams. Lifestyle inflation is the loud killer of wealth. Putting both together will hollow out your life, drain your resources, and cause underlying stress that you can never seem to shake.
I say this today because we are debt-free and stress-free. But being debt-free is not enough. We created positive cash flow that helped us pay down debt fast and accumulate a dividend portfolio of $150,000. This money by itself doesn’t mean much, but the cash flow it produces means everything.
We Make $50/day in Passive Income
Our dividend portfolio pays us $500/month of passive income. This money will be there every month for the rest of our life, no need to work for it. Now, all we have to do is maintain it, add to it, and enjoy it. Financial education is what freed us, not earning and saving. Let’s start from the beginning.
How we got into debt. Simple, trying to live a middle-class life. We considered ourselves as “living a below-average” lifestyle. Our cars weren’t too fancy; our furniture wasn’t too expensive; kids went to public school— nothing was too crazy.
The problem was that we thought we deserved certain luxuries that we did not. In America, we all want to live our best life at a young age. We want nice houses and nice cars, in our 20s. We believe that working for money is okay. Wrong! You work for assets— assets that produce money that will pay for your nice things. But, I didn’t even know what an asset was until June 2019.
Our first house was way too expensive. Buying this house put an invisible drag on our expenses for the next ten years. Even worse, I put a $60,000 down payment into this home. Yikes! We bought in 2008 and proceeded to lose all of our equity and house value in the 2009 recession.
We already started poorly, but we could have quickly recovered if we had the financial education. But, when you are uneducated, you believe that making more money at work is the answer; it is not. I remember looking at the military pay chart and thinking, “once I pick up E-9, we will be good.” Nope, not the answer.
Do What You Love or Love What You Do?
We bought a nice car for Kris in 2013; it cost $30,000. Luckily we still own it, and we owe the bank nothing. If I had to do it again, we should have spent about $15,000. I bought a car for myself in 2017 for $7,000. I love my 2012 Ford Focus, and it was the correct price.
Credit cards are the devil. They don’t add any value to your life. Somewhere along the way, we racked up a combined $30,000 of credit card debt. Remember, the house was dragging us down, but we didn’t realize that as the source of our financial woes.
If I were a civilian and making the same money, things probably would have worked out a little better. Kris has a great job in Arizona, but then we moved to Japan. It took her a year to find a job in Japan, so all that time, credit cards were doing what they do best, accumulating interest.
The same thing happened when we moved from Japan to Florida. These lost years, along with the phantom house bills, really can add up. Again, we weren’t doing anything crazy, but we also weren’t taking POSITIVE financial steps.
The Insivible Budget
So the house was weighing us down; we just didn’t know it. We were sending money to family, trying to pay down credit cards, moving our family, Kris was changing jobs, our air conditioner in Arizona blew up, we had car payments, and we still had the everyday expenses of a family of four. Yes, living a middle-class life can be stressful. Oh yeah, and child care was destroying our wallet as well.
We begin to become more innovative. In January of 2019, we were planning a trip to visit Kris’s family in the country of Turkey. The trip would cost $12,000 for the two of us to travel, so we had a little planning conference and decided that something had to give.
We couldn’t afford the trip without making some adjustments. We had a beautiful guest room that Kris had set up, and it was just sitting there. We decided to take on a roommate. This decision is the life-changer that we needed to spearhead us in the right direction.
When we decided to take on roommate, we broke all the American propaganda that weighed us down for all these years. Where do we get the idea that we deserve to live in our own homes without sharing? Overseas, in third-world countries, multiple families share the same roof. Generations help each other and share the burden of living life together.
Here in America, we all want to be as far away from each other as possible. Have our own spaces and own lives. With this separation comes massive debt. I have a brother and a sister. We each have our own homes, our own bills, our own cars, and our own lives. What if we combined and bought a lovely ten-bedroom home? How much money would we save over our lifetimes by working together? We would be rich instantly; at last, that is not how America works. But, I digress.
Investing for Dividends 103: The Magic of Re-Investing
Back to the story, we took on roommates. The magic was starting to happen in life. The minute we received that $500, it was life-changing. It was cash flow in its purest form. While in Turkey, in June 2019, I was fascinated by the feeling of receiving $500 without conducting physical labor for it.
I wanted to live in Turkey without using my military retirement. How does one create income without working? I finally came across the two most beautiful words in existence, PASSIVE INCOME.
Once I had a name for my passion, it was off to the races. The first form of passive income I discovered was dividend-investing. I became obsessed with creating a great future for my family. I thought my obsession was wrong until I read “Be Obsessed or Be Average.”
Start a Home Business
We become smart as hell! Upon returning from Turkey in June 2019, we were on a mission to right-size our lives. First, we consolidate our credit cards into loans. Consolidation slows the growth of our interest and gives us solid progress per month. We finished paying off the cars.
With the extra money from the car payments, we continue to invest. Investing makes you intelligent and financially literate. Paying down debt is great, but if you don’t become competent in the process, you will repeat the same mistakes. We focused on making more income.
Things were going slowly, but we were making progress every month. I kept detailed spreadsheets on every penny of passive income we received. Recording your progress is vital to your success. “What is measured is managed.” Read “Investing for Dividends 102: Keeping Score.”
Our first dividend was $0.23 in August of 2019 from Papa John’s. From this point to receiving dividends of $30 and $50, you can truly appreciate the money as it comes in. But you have to start with just a few cents.
Things were going well when a beautiful house on acreage came up for sale. The house was in a neighborhood that we always wanted to live in because it wasn’t suburban. The land had trees and grass and a fully renovated home. It was expensive for our part of Florida, at $340,000.
But that’s the thing about building yourself financially; you become more confident. I didn’t let fear get in our way. We closed the house during the pandemic and on the lowest day of the stock market crash, March 23, 2020.
Cash Flow 102: Creating Passive Income for Retirement
Buying the more expensive house accelerated our wealth accumulation. We took on two roommates because the home had two huge master suites. We charge $800/month for each, and our roommates love their rooms. In fact, we have had the same roommates since moving in.
I received orders to go back to Japan in August 2020. After all the pain of our last moves, we decided for me to go unaccompanied, without the family. The choice was hard but necessary. If we wanted to get rid of this debt and get our financial house in order, this was a necessary evil.
Kris had a great-paying job working from home. Kids had school and friends, plus they got a dog. I had great living accommodations in Japan, plus all the extra pay. The choice has worked in our favor, and Kris and I have become closer than ever.
I start reading books, which changes my life. Once I got to Japan, I focused on the task at hand; debt repayment. I thought that making more money was the key; it was not. Becoming financially educated was the key. I started reading books. The first book I read was “I Will Teach You to Be Rich.” The next book I read was “Rich Dad, Poor Dad.” Two life-changing books and a great start to my career of reading.
Pick a Content Niche: Health, Wealth, or Relationships
Financial education compounds faster than your bank account. Reading allows you to connect dots that you never knew existed. You can see opportunities where others can’t. You learn not to say “I can’t afford” but “How can I afford?”
I learned how the rich make money, and more importantly, how they stay rich. The rich are not chasing jobs; they are scouting for investments. They do not exchange time for money; they make money even while they sleep. The more people they serve, the richer they become.
To be honest, I don’t know how the numbers go there so fast. We just kept trudging along, paying off debt violently. Remember that the stock market had a great run, dividends kept paying money, roommates pay rent, government stimulus, and other tax incentives. It all adds up.
Where do you start? If you are stuck and can’t figure out where to start, I would start with the two books that I started with; “I Will Teach You to Be Rich” and “Rich Dad, Poor Dad.” Your mindset and financial education are tens of times more valuable than money. Money is just the scorecard for your financial intelligence. “In order to have more, you have to be more.”
Taxes 103: Real Estate for the Win!!
For you all with families, you can do it. If we could do it, you can do it as well. I started my blog because I didn’t have all the information, and it was stressful. I thought making more money was the answer. It wasn’t. Becoming financially educated was the answer, and now my wife and I are rich. The $150,000 doesn’t make us rich; passive income from our pension, dividends, rents, and royalties makes us rich.
Yes, you can have it all. That doesn’t mean the fanciest cars and houses; that means family, love, wealth, and happiness. I cannot tell you how freeing it is to be financially independent. My wife and I have roughly $3,000/month of expenses, and we bring in $17,000/month. That is financial freedom.
Start reading now. I have two lists of books that I have completed. “20 Books That Will Make You Rich” and “20 (more) Books That Will Make You Rich.” From there, I have a schedule of when my Amazon eBooks will be free. They are also an excellent place to start, for cheap. I write about everything I have read and put into motion, such as tax benefits, retirement planning, stock market investing, real estate, business, royalties, and financial mindset. The rest is up to you. Good luck!
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https://www.pinterest.com/kingmarine/military-family-investing/Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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