Did you ever have a best friend that you could count on through thick and thin? Isn’t it great to be able to trust someone and make decisions based on that trust? Well, there is a way to rekindle that trust in the form of monthly income.
Having monthly income coming in consistently is like using a warm blanket inside a nice air-conditioned room in the desert. Even though you like to have the house nice and cool, it still feels good to have the choice to warm yourself with a blanket.
Dividends give you a choice on how you want to spend your income. If you have never received dividends before, then you are missing out on the magic. You see, receiving dividends is like receiving free money, at least to me. I’ll explain.
Boring Investing is Good Investing
I currently work hard for money. I go to my daily job in the military, quietly earning a wage. I use all of my earned income to pay expenses and fund my dividend portfolio. I have been doing this for two years, during which time I have decreased my spending habits.
When I started dividend investing, I was concerned about building a retirement portfolio to take into retirement. As I learned more and more about passive income sources, I created various income streams.
I started by investing with small amounts, but soon it became a passion. I reinvested all of my dividends back into the stocks that they came from. I opened more and more brokerage accounts. I now have five brokerage accounts, and my wife has four.
I also have a treasurydirect.gov account where I keep government bonds and a Fundrise account, a real estate investment trust that pays me quarterly dividends. I won’t even go into my rental income and royalties—I’ll save those for another article.
Needless to say, I stuck with my dividend investing over the last two years, and now my wife and I have amassed over $170,000 in our portfolio. I am forty years old, and I will be a millionaire (from my dividend portfolio) before turning fifty.
Don’t Gamble Your Retirement Away 2
The terrifying part is that our dividend portfolio is only part of our five-pillar approach to our cash flow retirement. The other pillars are becoming just as strong as dividends; the other pillars are retirement income (military pension, social security), cryptocurrency (capital gains, interest payments), rental income (homes, rooms), and business (royalties).
All of this is a long-winded way to say I can enjoy some of my dividends today. When you look up and earn passive income every day, it changes your perspective on things.
My wife and I put in the work to learn about passive income and build our dividend payments. By having five different dividend accounts, I can choose how I want to spend my dividends. And this is the magic of dividends: guilt-free spending.
If you are like me, you didn’t grow up with a lot of money. In your 20s, you were working hard for money, and you had to buy some items with your credit card. You are not a crazy spender, but you have to do what you have to do when you have a young family.
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But, the day finally comes when you have to pay off your debt, and that is when you start to feel it—the guilt. You begin to feel guilty when you spend money on yourself. You may see a videogame or jewelry and have an urge to buy it; then you think about how responsible you need to be.
You think about paying off your car loan, student debt, credit cards, etc., and you want to do the right thing. One day, you ultimately pay off your debt, but you know what remains? The guilt. You still feel as though you have to prepare for the future by saving and investing.
And then one day you realize you are rich! It kind of sneaks up on you. As I write in “From -$77,000 to +$150,000 in 22 Months,” it happens fast. All the money that you were paying towards debt now is going into your dividend portfolio. You receive a pay raise from work, your rents increase, and your royalties improve.
Also, your dividend payments have increased to a level that they are fun to receive. So you are relatively young (40 or 50), and if you continue on the same glide path, you will become even more prosperous. What are you going to do? You are doing everything right; all you have to do is continue on the path. Perhaps create more streams of passive income, because, why not?
Now, back to that guilt. For me, I looked at all that I have learned and all that we are doing. We are doing amazing things at a young age. Our kids have brokerage accounts, treasury bonds, and rental properties. Plus, I still go to work every day. Why do I still have this guilt?
Good Debt vs. Bad Debt
We are taught to work hard from money. Passive income is the exact opposite; it is thinking hard for money. When we don’t have to work 8-10 hours a day to earn a paycheck, it concerns us. This is how we are taught to build an income, by exchanging time for money. Bullocks!
It is time to enjoy our lives. We achieved the unimaginable. We paid off our debt, set up our kids for the future, have an emergency fund, own rental properties, created royalties from our creative works, and built an extensive dividend portfolio—what more do we need to do before we give ourselves a break?
So, my guilt is subsiding. When I receive dividends, I have every intention to spend them, at least in my Cash App. You see, my Cash App dividends arrive directly to my checking account and can be spent using my Cash App debit card—immediately when I receive them.
It is like receiving little paydays throughout the month, except now they are not so little. Last month, my total from Cash App dividends was $77. That is $77 of guilt-free money deposited directly into my checking account.
Compounding: The 8th Wonder of the World
If you haven’t received guilt-free money, it is a game-changer. To me, it may as well be $1,000 because you can buy anything you want and have zero remorse or worry. You know that next month, you will be receiving even more guilt-free money.
Remember, I am investing all of my earned income from my job. So each month, my dividends will continue to increase. I am also reinvesting 70-80% of my dividends, which leads back to guilt-free spending.
Have you ever walked through a store with $77 trying to spend it on something? You have zero guilt. You aren’t telling yourself, “Oh, I need to pay down the credit card,” or “I should save this for a rainy day.”
No, this is your money, and you know that your investments will continue to grow and keep paying you. This cash is just a small showing of appreciation from your investments to you. Thanks, brother.
If you have no idea what I am talking about, you probably haven’t got on the dividend bandwagon yet. That’s okay; you still have time. You can start now by reading my article “How We Plan to Retire on Dividends (book).”
I’ll be honest; your dividends will start with minimal amounts. My first month off dividends was a total of $0.25. For the entire month. You know what? I was incredibly proud of that quarter because it was my first taste of passive income. It started the fire that still drives me every morning.
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Now our dividends are roughly $500/month. I have a single monthly dividend that pays me $52 on the first of every month. I look forward to that money more than the paycheck from my job. It is truly magical to see money appear from the air—all the while your investments are still growing.
This article is probably hard to read and understand if you don’t know the feeling of dividends. The best thing is to jump in and get started. Start small, start large; you will have to overcome your learning curve. Everyone has their own risk tolerance; there is no investment style for the masses.
The only way to learn is by doing, so jump in. Trust me; the water is warm and guilt-free. The even scarier part is this. My wife and I have only been doing this for exactly two years. What happens when we get to $2,000/month or $4,000/month. It will be insane.
But all we can do now is keep grinding our accounts up. We can enjoy our small victories in the form of dividend payments. In the end, having $77 to spend guilt-free is all we need. Everything else is a bonus. Good Luck!
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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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