Dear DTA,
My goal is to increase my savings and provide myself the option of when I want to retire.
-Bob R.
Hi, Bob.
Thanks for taking the time to write in to us and share your aspirations.
It’s an honor for me to inspire as many people as possible to reach for, and eventually achieve, their financial dreams.
And what I think perfectly qualifies me to reach out to you and offer some guidance and resources is, I once had the same exact goal as you.
I also wanted to have the option of when to retire.
More specifically, I wanted to become financially independent.
When you control money, you control time. You control your life and your options.
And when you’re financially independent, you can structure your life however you want – with or without a job, which means you can retire from your job as soon as it no longer suits you.
It wasn’t that long ago that I was completely broke.
Actually, I was below broke. I was deeply in debt thanks to student loans that trailed me like a ghost throughout my 20s.
But by living well below my means and investing my savings into high-quality dividend growth stocks, I was able to go from zero to hero – broke to financially independent – in six years.
Poor at 27. Free at 33.
I’ve recounted how that journey played out in my Early Retirement Blueprint, which is a must-read for anyone looking to retire early in life.
You say you want to increase your savings.
Well, that’s pretty much a necessity if you want to be able to retire when you want.
You can’t make money without first having money. You can’t invest what you don’t have.
In order to become financially independent in my early 30s, I routinely saved well over 50% of my net income.
I focused on the “big three” of my budget: housing, food, and transportation.
That’s because these are the areas where most people spend most of their money.
A strategy I employed on accommodation was renting a cheap, small, and dated condo.
Granite counter tops? Stainless steel appliances? Nice hardwoods?
Nope.
Laminate, a refrigerator almost as old as I was, and stained carpeting.
This saved me a lot of money compared to others who were renting or buying nicer, newer, and larger places.
As for food, I didn’t go out to restaurants very often. Eating out is a budget killer in the States.
I would almost always eat cheap and simple meals at home.
I also didn’t eat out at lunch with co-workers (while I still had a job).
While they were heading down to the local sub or pizza shop, I was back at work heating up ramen noodles.
Transportation was easily solved in one masterstroke.
I sold my car and instead rode the bus.
Boom.
That right there saved me hundreds of dollars per month that I was able to save and invest toward my future freedom.
Of course, it behooves you to try and save money across the board.
But focusing on housing, food, and transportation will yield you the greatest amount of change and savings.
The result of all that saving and investing?
I now own and control the FIRE Fund.
That’s a real-life and real-money dividend growth stock portfolio.
And it generates the five-figure and growing passive dividend income I need to cover my expenses in life.
Yes. You’re reading that correctly.
I’m talking about funding financial independence and early retirement through dividends.
Dividends might sound like something reserved for your grandmother.
Well, I can tell you something.
Dividends don’t care how old or young you are. They pay the bills all the same.
And they serve as a wonderful source of passive income that you literally don’t even have to lift a finger to collect.
I chose dividend growth investing as the strategy that would give me my freedom in life because the strategy is so simple and straightforward.
You’re essentially buying shares in some of the best businesses in the world, which is just such an obvious way to go about building wealth. But it’s also a great way to go about building passive income, which you’ll need if you don’t have a paycheck any longer.
Because these are some of the best businesses in the world, they’re prolific at producing profit.
That profit is regularly growing as these businesses are going about selling more products/services to more people, at ever-rising prices.
Because shareholders are ultimately the collective owners of any publicly traded company, they deserve their fair share of that growing profit.
Since a company can efficiently only do so much with its capital, you end up with a situation where a company is directly sharing its profit with its shareholders, via those dividends.
And as the profit grows, so do those dividend payments.
Voila!
You have a clear path to financial independence.
Fellow contributor Dave Van Knapp has put together a great series of articles that are designed to educate novice and experienced investors alike on everything related to dividend growth investing.
These are his Dividend Growth Investing Lessons.
And once you have some excess capital from those saving maneuvers, you don’t have to look high and low for investment ideas.
The late, great David Fish spent years of his life tirelessly and selflessly dedicated to the maintaining of the Dividend Champions, Contenders, and Challengers list, which contains invaluable information on more than 800 US-listed stocks that have paid rising dividends each year for at least the last five consecutive years.
And I take time every Sunday to reveal a high-quality dividend growth stock that appears to be a compelling long-term idea via the Undervalued Dividend Growth Stock of the Week series.
You can save and invest more so that you can retire when you want.
But it’s up to you to make those moves, Bob.
And there’s no time like today to put yourself on the path to greater wealth and financial freedom.
I wish you luck and success.
Jason Fieber
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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.