Dear DTA,
I’m trying to get ahead and get out of debt. I’d like to have some extra cash to play with and enjoy some luxuries in life.
-Jeff M.
Hey, Jeff.
Thanks so much for your readership. And thanks for writing in!
We do what we can to provide great content, improve people’s finances, and help our readers achieve some of their dreams.
It’s in that vein that I’m taking the time to respond to your feedback.
I’m the person tasked with this great responsibility because I believe some of my personal details and successes can translate well to some of your goals.
Specifically, the “extra cash to play with”. That’s basically my forte.
Of course, before you start worrying about extra cash to play with, you have to tackle whatever debt you’re looking at, especially if it’s the high-interest kind.
Fortunately, paying off debt and building extra investment income require the same basic best practices in life – good financial habits that allow us to improve our finances.
I’ve discussed quite a few of them in my Early Retirement Blueprint – a step-by-step guide that almost anyone (including you) can follow to their early retirement dreams.
Now, you didn’t mention an interest in retiring early. However, much of what I talk about in the Blueprint can be applied to paying off debt and building extra cash flow.
The Blueprint can help you to build the financial foundation in your life that you need to succeed.
While you didn’t mention retiring early, you did mention extra cash flow.
Well, that’s where my Blueprint really shines.
In fact, passive investment income is at the heart of that Blueprint. Indeed, it’s at the heart of my very life.
You can see what I mean by checking out my real-life and real-money stock portfolio, which I call my FIRE Fund.
That’s the name of the Fund because it allowed me to achieve financial independence and retire early (FIRE).
That portfolio, which was built by following the steps laid out in the Blueprint, now generates the five-figure and growing passive dividend income I need to pay my bills and live my life freely.
And if my strategy can provide enough cash flow to fully support a life, it can almost surely provide enough “extra cash to play with”.
The investment strategy I’ve chosen to accomplish FIRE, which I think could work very well for your situation, is dividend growth investing.
This is a simple and straightforward long-term investment strategy that prioritizes growing dividend income.
It basically involves buying up shares in fantastic businesses. These businesses are so fantastic, in fact, that they’re able to pay their shareholders growing cash dividends for years – or even decades – on end, by virtue of their ability to regularly and reliably produce increasing profit.
You can find almost 900 examples of dividend growth stocks by perusing the Dividend Champions, Contenders, and Challengers list, which is the most robust source of information on these stocks that I’m aware of.
It should be no surprise that you’ll find numerous household names on that list. These are often blue-chip stocks we’re talking about here.
That’s because it takes a special kind of business to pay those ever-growing checks to shareholders. It requires a certain set of circumstances that can set up the necessary growing profit, which is usually the products and/or services the world demands.
And that demand tends to hold true over time, meaning these companies are able to sell more of their products and/or services, to more people, at higher prices.
As you might imagine, building up your own portfolio of high-quality dividend growth stocks can, indeed, allow for that extra cash to play with.
It actually might allow for even more than you bargained for, as a dividend growth stock portfolio can quickly snowball due to the compounding nature of increasing dividends being reinvested.
For more on how this works, be sure to check out fellow contributor Dave Van Knapp’s Dividend Growth Investing Lessons, which is an overarching series of articles that are designed to educate investors on what this strategy is, why it’s so great, and how it works.
And then if/when you find yourself ready to invest and build out that extra cash flow, I personally highlight a compelling long-term dividend growth stock idea every Sunday.
That occurs via the Undervalued Dividend Growth Stock of the Week series.
The stocks featured in this series are high-quality dividend growth stocks that undergo a rigorous analysis and valuation process.
This series is full of long-term ideas when you’re ready to build out your own portfolio.
There’s no reason you can’t accomplish your goals, Jeff.
It just takes some planning and action.
And I believe the resources we’ve provided for you can help you plan and take action.
But it’s up to you to follow through on that.
The best time to get started is today.
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.