I used to be afraid of the world. I worried about receiving a phone call containing unexpected bad news that required an emergency outlay of money.
I was scared because I didn’t know how money worked. The only way I learned how to make money was by working my job.
Luckily, one day in summer 2019, I stumbled upon the words “passive income” and “dividends.” This moment changed my life forever, allowing me to take control of my immediate, short-term, and long-term future.
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Today, I want to talk about the power of dividend investing and how it changed my life. My life would be pretty different if I hadn’t started investing in 2019. That’s why I want to explore my journey today. Let’s begin.
Life before dividends. My wife and I got married in February 2006 (almost 20 years ago). We had two boys and had bought a home. We were living the American dream, including having debt to our eyeballs.
The funny part is, we didn’t do anything crazy to accumulate $77,000 in debt. We bought used vehicles, didn’t travel much, and had a meager food budget.
Frankly, we just didn’t know how to manage our money. I want to dig into what our finances were like until 2019.
We didn’t have an emergency fund. We believed our 401 (k) was our savings account, and we could use it in an emergency.
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We also had credit cards that we could use in emergencies. We lived below our means, but we wasted any extra resources on unnecessary items.
For example, I would buy the latest Blu-ray discs and Nintendo games, even if I didn’t have time to watch or play them. I just assumed my purpose in life was to consume.
I learned how to spend money (and not save) when I worked at McDonald’s during high school (1997-1999). I continued being a spender until I had an actual emergency.
In January 2019, my credit card had $23,000 racked up on a $25,000 limit. I took my car to the shop, and the total cost was roughly $2,000.
I was barely able to afford my car maintenance, with only $10 remaining on my credit card limit. This was the exact moment that I realized things were not working.
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Learning about dividends and passive income. My wife and I traveled to Turkey in June 2019 to visit her sister. It was a fantastic trip, and it got me thinking about the future.
How could I live in Turkey without working? My military retirement was going to be nice, but it wouldn’t be enough to travel back and forth, or help our kids if needed. We needed to bring in more money.
I started googling ways to earn a living overseas without working a local job, and the words “passive income” kept popping up.
The first type of passive income that showed up was interest from a high-yield savings account. At the time, the prevailing interest rates were around 2%.
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If I saved $100,000, I would receive $2,000 annually. That was hardly enough to survive and thrive. I needed more income.
The next type of passive income I researched was dividends from stocks. Dividend growth investing piqued my interest. In fact, I opened my Discover high-yield savings account and my Wells Fargo Brokerage account on the same day in June 2019.
When I returned home from Turkey in late June 2019, I immediately began arranging my life to become a dividend investor—this is how dividends changed my life.
The magic of dividend investing. As a young dividend investor, I stopped spending money on stupid things and started getting my money into my brokerage account.
I became serious about my money. I followed a budget and tracked every single dividend I earned. I read about the stock market on Seeking Alpha and watched YouTube videos on how to save money.
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The more seriously I took my money, the more it grew. It’s amazing how that worked. I went from having a light budget, to having a hardcore one.
In addition to dividend growth investing, I became an income investor. I learned how to extract yields of 9-12% from the stock market.
I started receiving paychecks (dividends) outside of my regular job paycheck. By the end of the first year, I was receiving over $200 a month in dividends.
That was $200 I could spend on my movies and games, if I wanted. However, I was laser-focused on growing my wealth, assets, and passive income.
Investing for the long term. I have been a dividend investor for six years now. I was able to retire from the Marine Corps without having to work another job.
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I don’t have to work because I have passive income coming in from dividends and rents. Dividends played a huge part in my decision to focus on my family and not work another job.
As long as I stick to my budget, live under my means, and invest for the long term, my wealth will continue to grow without working a job.
At one point, I earned $3,000/month in dividends. Unfortunately, I used most of my dividend stocks to purchase a brand new home with cash. However, I still learn $700 a month and dividends.
I am looking forward to rebuilding my impressive dividend portfolio. It was challenging work because I had become quite comfortable with my large portfolio.
However, I am ready to do the work of rebuilding because I find the process to be the best part. It will be an honor to see my portfolio go from $700 to $3,000 a month again.
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How dividends changed my life. Dividends changed my life by giving me the confidence to face life on my terms, not its terms.
Before dividend investing, I felt like a punching bag waiting to be punched. I had no deep understanding of how money worked.
Now, I understand. My goal is to live below my means and invest the difference between income and expenses in dividend-paying stocks.
The more I invest, the faster my portfolio grows. My true discretionary income comes from passive income from rents and dividends.
Now, I can pass along this life-changing financial advice to my kids. I can prepare them to face the world on their terms.
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Conclusion. I was just an ordinary person before I started dividend investing. I went to work, took my licks, and was broke.
Now, I am retired and own five homes. My dividend portfolio will continue to grow, ensuring I can handle any emergency that arises.
I often wish I had discovered dividend investing in 1999, when I began my service in the Marine Corps. However, I believe that living through those experiences was essential to fully appreciate the life I have now.
The moral of the story is to start investing young. Learn about passive income and dividends at an early stage. Take these terms seriously, as they can save your life. And most of all, have fun while changing your life. Good Luck!
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