If you are like most people, you save for your vacations every year. The money you earn is the money you save. You can afford to pay for more elaborate vacations as you make more money from your job.
What if I told you someone else could pay for the rest of your vacation? Yes, the rest of the “holidays” for your entire life. Would you believe me?
Of course not, because it doesn’t seem realistic. What I speak is true; however, there is one catch: you’ll need to build your dividend portfolio for five years.
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The five-year plan. The magic of compound interest is that once you get it started, it can build anything you want. The hard part is making the upfront effort to create the snowball.
My wife and I now earn over $1,000/month in dividends. This money is like free cash from the sky. I woke up today with $41 for Altria on my Dividend Debit Card.
I am living in San Diego, California, and following my recession budget successfully. I am doing quite well living on $50/day. Then, out of nowhere, I get another $41 on top of my budget—that is the magic of dividends.
It took my wife and me three years to achieve our goal of $1,000/month in dividends. In two more years, we should be over $2,000/month.
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The question is, can you slow down your life enough to build your dividends over five years? If you can see the big picture, it could be the best five-year investment in your life.
Why dividends? So why take the time to build up your dividend income for your vacations? Why not just use your earned income to pay for your trips?
Dividends are versatile—you can use them for more than just vacations. More importantly, you earn dividends even when you don’t work. Dividends are one form of passive income.
My wife and I can now use our $12,000/year in dividends towards any trip we would like to take. The dividends keep piling up in our accounts until we want to use them.
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And once we get on vacation, they continue to drop into our account, which gives us even more cash flow during the trip.
Starting your vacation dividend journey. Okay, so how do you get started with vacation dividends?
Investing for dividends is an entirely new mindset for most people; therefore, start with “Your First Five Dividend Stocks.” This article will help you build your first dividend portfolio. Once you start growing your portfolio, investing every paycheck becomes second nature.
Your dividend payments will start small; in my first month, I earned $0.25. However, the key is to stick with it and celebrate small victories.
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Once you reach $100/month, you may want to take your family to Applebee’s and let them spend the $100. It’s moments like these that help the family work as a team.
Saving through the five years. You don’t have to forgo these five years or confine yourself to your house. You can tone down your trips and base them on your current dividends.
You may do a staycation near your home if you earn $100/month in dividends by the first year. If you live in Alabama, you might drive down to the gulf coast, Biloxi, or Pensacola.
Our first three years as dividend investors have flown by, and I was gone to Japan for two of them. Now, we emerged with no debt, better budgeting skills, and dividends on top of everything.
Build a Dividends Growth Nest Egg
We simply have to keep paying ourselves first, and our vacation dividends keep growing. But is it worth slowing down for five years to build your dividends to $1,000 or $2,000 monthly? Yes!
The promise of dividends. I cannot tell you how magical it feels to receive dividends or how dividends can change your life.
I woke up to $41 for Altria today, and tomorrow I will wake up to $41 from AGNC. That’s $82 I can put towards my $7 per gallon of gas.
But since I am budgeting well, that’s $82 I have entirely for myself and my family. I can set it aside for our next trip. I am telling you it is worth it to slow down for a season and emerge from the cave much wealthier.
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Dividends to supplement your vacations. You don’t have to go into a cave for five years; you can invest over time. Maybe you aim to build $500/month in dividends over five years.
Even having $6,000/year in supplemental dividend income is massive. It can pay for your gas or hotels. The only person that can tell you how to use your dividends is you.
The exciting part is that you can use your dividends to work towards your goal. So once a year, you may have $700 extra for your trip, and the next maybe $1,500.
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Each year, your dividends keep growing and compounding. I am living this lifestyle now, and I feel like I am receiving my social security check early (I am 41). It is like having a workplace pension before you retire.
Conclusion. It is going to become harder to save for your annual vacations. Inflation is eating away at our discretionary income, and the future isn’t looking brighter.
Investing for dividends is much easier when you have a specific purpose. Your family and friends will not know why you want to save and invest.
But as you start receiving your dividends, you won’t feel the same stress as everyone else. While inflation eats their cash flow, dividends will replenish yours.
Eventually, you will be the only one that can afford to go on vacation. Everyone will still be going, but they will fund their trips with credit cards.
How you currently pay for vacations will fail—it’s time to try something new. Yes, it will take a few years to get the snowball rolling downhill; however, the person at the bottom will reap the rewards. 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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