“I’m barely making it payday to payday, and looking to make money in stocks…”

Dear DTA,

I’m wanting to learn about buying and selling stock shares to make money. I’m 46 years old and have been a carpenter all my life and don’t have a dime to my name. I barely make it pay-day to pay-day. Am tired of missing out on things in life because I can’t afford to do anything. I live in Texas and have a girlfriend overseas that wants to move here and get married… but again I can’t afford things. I not only need retirement money but money in my pocket to enjoy life as well before retirement… like go on vacations, buy a new truck someday, prepare for a family with my new lady. I go back to work in June and will be looking to start investing. I’m not looking to get rich quick. But it sure would be nice to not have to work so hard and not have anything to show for it. Thank you… sincerely.

– Joe

Joe, thanks for writing. Your situation certainly isn’t uncommon. I think it’s something that plenty of people can relate to. So let’s go over some really great things you have working to your advantage.

First, you live in Texas. That’s a state that has a low cost of living, no state income tax, and warm weather all year. I personally moved to Florida back in 2009 (from Michigan) for these reasons (FL has a lot in common with TX). You’re living in a great spot.

Second, you’re still relatively young. People are living longer than ever. This gives you a nice runway to work with, whereby you still have a lot of time to “catch up” and put the Joe of 10 years from now in a wonderful position.

Third, you’re willing to reach out for guidance. That third point is why I’m writing this response to you today. We at Daily Trade Alert want to help you, inspire you, and motivate you. I’ll first recommend you read over my “blueprint” for early retirement.

That’s essentially the blueprint I built and followed in order to reach financial independence in my early 30s.

It’s a road map to retirement, and it’s a path that just about anyone out there can follow.

You, too, can follow along, Joe.

Now, while this blueprint is technically designed for people to retire early (or become financially independent), the end result is a strong and steady stream of growing passive income.

So while you don’t indicate you’re interested in retiring particularly early, many of the financial goals you’re interested in (buying that truck, taking vacations, building a family) will benefit and become more realistic if you have a substantial source of passive income being generated on your behalf.

You’ll notice that much of the blueprint is built around saving money.

That’s because you can’t accumulate and grow money if you can’t save what you’re earning. You can’t invest what you don’t have.

As such, you’ll want to take the time to start recording every penny you earn and spend. Do this over the next couple months. And don’t leave anything out. Record every penny.

It’s likely that you’re spending pretty close to what you’re earning. Perhaps you’re spending more than you’re earning.

The key is to figure out where you’re at. Because you can’t figure out how to get somewhere if you don’t know where you’re already at. You can’t follow a map if you don’t know your current location.

Once you have your total net (after-tax) earnings and net spending, you can determine your savings rate. This requires you to subtract spending from earnings, then divide the result by total earnings.

Say you earn $3,000 this month and spend $2,900. You saved $100. $100 divided by $3,000 means you have a net savings rate of 3.33%.

The savings rate is the key to your freedom.

I personally averaged a savings rate well above 50% for six years straight. And I’m still saving to this day.

If you want to really get serious about enjoying life before retirement, getting your significant other over here, and living a comfortable life with your partner, it requires some sacrifice up front.

You’ll want to see how high you can get your savings rate, Joe. The higher, the better.

That means you’ll want to cut as much fat as possible from your budget.

Can you move into a cheaper place for now? Can you get by with a cheaper/older car, or no car at all? Can you sell items you don’t need? Can you cut down on your food budget? Do you need cable TV?

You live in a cheap state with low taxes and great weather, putting you at a great advantage relative to people who live in expensive, high-tax, cold states.

But you’ll have to be honest about the difference between wants and needs. And you’ll have to make tough decisions.

In addition, the other lever you can pull in order to improve your savings rate is to increase your income.

That may mean getting a second job. Or you may have to develop a side hustle of some type.

Could you become an Uber driver? Work part-time at the local grocery store? Can you sell any extra goods you have lying around the house online?

Every additional dollar – be it one you save or earn – helps.

Spending less and/or making more will involve some hard work.

But anything worth having is worth working for.

And you have some goals that are definitely worth working for.

Once you start to save and accumulate capital, it’s time to invest it.

I personally invest in high-quality dividend growth stocks because I believe that investing in wonderful businesses that reward shareholders with growing dividends is a great way to have your cake and eat it, too.

That’s because you’re able to invest in a great company that’s becoming worth more over time as it sells more products and/or services, increasing the size of your investment in the process.

Plus, and perhaps even more important, you’re able to generate totally passive income that’s likely growing faster than inflation.

Dividends are simply a portion of the profit a company generates.

And when you invest in a publicly traded company, you become a part-owner of that company (along with many other people).

Well, when you own a slice of a business, you deserve your rightful share of the profit that business earns.

You can find a number of investment ideas via a series of weekly articles I write here, each of which feature a dividend growth stock that appears to be a good long-term investment candidate at the time of publication.

Joe, you can make things happen. 

But you have to work hard. You’ll have to make some short-term sacrifices for long-term gains. And you’ll have to stick with it for a long period of time.

This isn’t a get-rich-quick scheme. But I’m proof that you can become fairly wealthy over time – I now control a real-life, real-money portfolio that’s worth over $300,000.

That portfolio exists because I saved and invested just as I’m discussing here with you today.

So start budgeting. Track every penny in/out.

Be honest with yourself about what can go and what absolutely cannot. Cut every ounce of fat possible.

Try to make more money, if possible. This would be a second income source for you.

Once you have some excess capital saved up, put that capital to work. If you’re able to put that capital to work in a way that generates passive income – i.e., dividend growth investing – you’re able to generate yet another income source, amounting to three income sources (your primary job, your side hustle, and the passive income).

I can tell you that it might seem slow at first.

I only earned less than $270 in passive dividend income in my first year of investing (2010).

But I earned more than $10,000 in completely passive dividend income last year (2016)!

Over the last seven years, my dividend income has added up to more than $35,000.

And that passive dividend income should exceed more than $100,000 over the next seven years!

That’s the snowball effect.

Compounding is incredibly powerful once you get it working for you.

But you have to get that snowball rolling, Joe.

So go out there, get a ball of snow (money), and start rolling.

Once that snowball is big enough, and rolling at a fairly decent speed, you can reduce your own effort and start to enjoy many of the things you want out of life: vacations, building a family with your significant other from overseas, and getting a new truck.

Because you’re still relatively young, you should be able to have all of this while you’re still young enough to enjoy it.

But you have to start today.

I wish you luck and success.

Jason Fieber

Disclaimer: Jason Fieber is not a licensed financial advisor, tax professional, or stock broker. Please consult with a licensed investment professional before investing any of your money. If your money is not FDIC insured, it may decline in value. To protect the privacy of our readers, any names published in this article are under aliases. In addition, text may be edited, omitted or paraphrased for grammar or length.