Every month, I receive a substantial dividend from AGNC on my Cash App brokerage account. This month (June 2025), the dividend will be over $200.
I remember a time when I would receive a credit card bill for $200 (or more). How did I go from paying interest to receiving it?
Welcome back to the “From Debt to Dividends” series (#1), where we discuss how to position yourself to receive interest, rather than pay it. Let’s begin.
Staying Debt-Free in Your 30s
Debt is not good. In America, we often try to normalize having debt; however, it is not a normal practice. Debt makes you do things you don’t want to do, like working a job you hate.
Although I believe we should avoid consumer debt at all costs, there is a window of time where it may be necessary.
Between the ages of 18 and 30, America tries to hook you on the concept of carrying debt. They try to hook you on student loan debt or on paying for a nice car (if you join the military).
By the time people get into their 30s, they are accustomed to having debt. At this point, they continue to recycle their purchases of homes, cars, boats, clothes, trips, and jewelry.
I accumulated a significant amount of debt in my 20s and 30s, totaling $77,000; it wasn’t my best financial look. That’s why I know that debt is extremely dangerous in most people’s hands.
The Publishing Chronicles #1
Avoiding debt at all costs. Besides student loans and car payments, you can get into debt by renting your home or apartment. Let me explain.
In America, they normalize living alone. I lived overseas for over 11 years, and people typically do not live alone; instead, they often live with family and friends.
Renting gets you into debt because it is perpetual, meaning it never ends. As a renter, you do not have the capability to earn money from your home. Let’s look at an example.
Lisa graduated from the University of West Florida in Pensacola, Florida, at age 22. Her parents also live in Pensacola, Florida.
She secures a nursing job and enters the workforce, earning $4,500 per month. She decides to rent an apartment for $1,500 per month, which is highly affordable in Pensacola.
Staying Debt-Free in Your 20s
Lisa gets married at the age of 30, and she and her husband decide to rent together to save for a house. Let’s do the math.
Lisa spent $144,000 on rent over the course of eight years. Therefore, let’s consider a different scenario: what if she had moved home instead?
If Lisa moved home and worked the same job, her life would take an entirely new path. If she invested at 10% via index funds, she would have $209,000.
If she invested at 10% through high-yield closed-end funds, she would earn $ 1,741 per month in dividends. Now, that’s a great way to get married.
Inflation Ate My Paycheck 105
Do you see the difference in her life? I am convinced that moving out and living alone is one of the single greatest financial mistakes most people make.
How to avoid debt. I focus on keeping housing costs low because they are the majority of your monthly expenses. If you can keep housing costs under control, you stand a chance of easily saving and investing lots of money.
However, I must mention the attitude that comes with living independently. This attitude convinces you to “look” a certain way and buy certain things.
Over the last five years, I have seen more people in their 20s saying they are buying their dream car than over the previous 25 years.
Why are people buying their dream cars in their 20s? Of course, they will dream of another vehicle and then purchase that as well.
Building an Audience 102
All of these consumer-related items can lump together: weddings, rings, jewelry, cars, houses, vacations, and gaming computers.
The best way to avoid debt is to logically (not emotionally) think of your needs and wants. It may be a tough pill to swallow, but you’ll be better off avoiding these items.
Back in the day, K-Mart had its layaway program. This program allowed people to take an item and give it to customer service. The person could then make interest-free payments on the item until it was paid off.
Once they paid it off, the person could pick it up and take it home. Think of layaway as a reverse credit card or “buy now, pay later” program.
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Layaway versus credit cards. What’s the primary difference between layaway and credit cards? The layaway program forces you to concentrate on that one item until you pay it off.
Conversely, credit cards allow you to purchase something as soon as you want it. Then, over the next 3-6 months, you’ll likely want something else.
Most people, including myself, don’t consider credit cards real money until their line of credit dries up. By that time, the power of compounding is working against you.
Getting out of credit card debt. Do you have a lot of credit card, student loan, wedding, and automobile debt? How do you plan to get out of it?
Don’t Work Hard for Money; Work for Income-Producing Assets
The most effective way to get out of debt is to reduce your housing expenses. That means moving in with your parents, getting roommates, Airbnb-ing your room or house, or becoming a roommate.
I’m sorry; that’s the best way. Everything else pales in comparison to living far below your means and paying off debt.
If you can cut your living expenses by at least 50% (preferably 100%), you’ll quickly pay off debt—the power of compounding works in your favor now.
It may seem like it may take 5-6 years, but in reality, it’ll probably take 2-3. That’s because you are lowering the amount of interest you are paying the bank. This greatly enhances the speed of your paydown.
Use Rents to Supplement Your Retirement
You can use the debt snowball or the debt avalanche method to reduce debt. Using the debt snowball method, we paid off all our debt in roughly 22 months (June 2019 to April 2021).
Remember, there are no shortcuts or handouts, only hard work and discipline. Write down all of your debts every month. This allows you to focus purposefully on your progress.
Conclusion. The goal is to eventually earn interest from the bank, not continue to pay the bank your hard-earned money.
The first goal is to recognize consumerism for what it is: a waste of money and time. Next, you want to write down all of your debts.
Choose Your Passive Income Adventure 3
Once you have a clear picture of your debt, take steps to lower your cost of living. This is the most challenging part for most people because it requires change.
My wife and I got two roommates who paid our entire mortgage for over three years. This span of time allowed us to pay off debt and build a nice nest egg.
We did what it took to get ahead; most people don’t. They think they can continue on the same lifestyle that got them there in the first place.
If you want to pay off debt and retire on dividends, something must change. That something is your mindset. Are you willing to do without for a few years? Trust me; things are good on this side. Good Luck!
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