By: Dividend Sensei
I’ve been thinking a lot lately about my own financial life journey, and how it might apply to one of the largest problems facing Americans today. Specifically, the lack of savings that are resulting in a great amount of financial instability. For example, 33% of Americans can’t come up with $2,000 for an emergency expense within a month. This explains the lack of savings and investment that is why the average American couple has only $5,000 saved for retirement. And given that the average social security check is just $1,019.33 per month that explains why increasingly many people are giving up on the dream of ever achieving financial independence and a prosperous retirement.
What’s worse? Because of increasing fears about automation and AI disrupting the job market, many people, including my father (a 55 year old accountant), live in constant terror about the prospects of losing their jobs, something that most Americans experience 10-15 times over their lifetimes. In fact, the pace of job changes is accelerating, with a recent study showing that most Millenials will change jobs four times by age 32.
Now I happen to be a Millenial myself, and one that not just remembers the chaos and fear of the great financial crash of 2008-2009 but one that has an advanced degree from the school of hard knocks. A few years ago I was studying to be an Army doctor, a trauma surgeon to be precise. My future appeared bright, after a lifetime of striving and doing all the right things to serve my country, my society, and secure a financially stable and prosperous life for myself and my family.
However, then my life entered what I refer to as my “7 years of tribulation”. A series of non-stop disasters that destroyed everything I had spent 22 years building and working towards.
First my wife at the time (now ex-wife) had the first of five misscarriages, and still births. In addition, several close relatives were diagnosed with cancer, and I was involved in a car accident that resulted in high unexpected bills. Next a severe injury ended my military career, and forced me to abandon my dreams of ever becoming a doctor; effectively stripping me of not just my bright and secure future, but also my entire identity.
For the next five years I ended up living in a brick oven in Alabama, with no airconditioning in the 110 degree summers. Depression, job losses, and debts my ex-wife was taking on without my knowledge forced me to liquidate my portfolio (my entire life savings), all while ongoing family medical emergencies kept us on the edge of poverty. At one point things got so bad that I couldn’t afford to eat…for 3 straight weeks.
By the time my 7 years in hell were ended, culminating in a painful, and ruinous divorce, I had no savings, $50,000 in debt (that my ex took out in my name without telling me), and had just lost my new dream job at The Motley Fool due to the third corporate restructuring in 2 years.
In other words, I have lived the exact nightmare that all too many Americans fear, and face on a daily basis. Years of crushing uncertainty and a loss of faith in the future. Literally only the love of my dogs got me through it.
However, there is a happy ending to my story, and potentially that of tens of millions of my fellow countrymen. Throughout my 7 years of torment I was able to truly learn who I was, what I cherished, and most importantly of all, how I could once again achieve my dreams, both financially and of making a difference to my society.
For example, over four years of not being able to afford to eat out, go to the movies, or go on vacations, in other words, do all the things I had once loved and lived for, I was able to learn to be happy living on a pathologically frugal budget.
And I was able to not just convert my life long passion for investing, and learning about investing, into an even better career as an investment analyst and writer, but am now building a mini-empire for distributing my work across five different sites. Across five variable income streams I’m able to pay off my debts (just 3 more years and I’ll be debt free), and most importantly of all, invest into a fast growing high-yield dividend growth portfolio that not just pays dividends nearly every business day, but converts potentially volatile income into a perpetually, and exponentially growing stream of dividends that is the basis for my long-term dreams and aspirations.
Best of all? My ability to live beneath my means, and create my own private pension fund means that my lifestyle will gradually rise over time, allowing me to, eventually, do all the things I used to love (and still wish I could do), but experience a lifestyle that seems almost unbelievable to me. In fact, according to my calculations here’s how my future portfolio will look in the coming years and decades.
Currently: $72,148.36 paying $3,943.62 per year in dividends.
In 10 Years: $1,692,795 paying $101,567.7 per year in dividends =$8,463.98 per month (more than I make right now accross all my income streams)
In 20 Years: $8,249,259 paying $494,955.54 per year in dividends = $41,246.30 per month = $10,311.57 per week (about 2 months pay right now)
In 30 Years: $34,773,813 paying $2,086,428.78 per year, $173,869.07 per month, $43,467.27 per week, $8,693.45 per day in dividends
Now of course it’s possible that my numbers could be way off, due to lower market returns, or unexpected world events. But even if my estimates are off by an order of magnitude, the point is that, through hard work, living frugally, and saving and investing as much as I possibly can while still paying off my debts, I will be able to convert volatile income into an almost unbelievably large stream of safe and exponentially growing income.
Now don’t get me wrong, I’m not some greedy asshole, dreaming of a fleet of private jets, or an armada of mega-yachts. Like Warren Buffett I simply enjoy managing large sums of money, challenging myself to beat the “experts” on Wall Street, and knowing that I never have to worry about living in poverty again.
In fact, my long-term plan is to turn my future fortune into a perpetual charitable trust, called “STUFA CODS” for “Star Trek Utopia For All Courtesy Of Dividend Stocks”, because I never intend to spend so lavishly as to ever hope to spend even a fraction of my future dividend income (my favorite resteraunt is Wendy’s, my next car is a used Chevy Volt and my largest dream is to live in a comfortable, but frugal apartment in Dallas).
The point I’m trying to make is that no matter how hard your life is, dividend growth investing offers you hope for a brighter future. While you may not be able to live as frugally as I do, or achieve my high savings rate (currently 60% with an ultimate goal of 85% once my debt is paid off), the fact is that almost anyone can overcome the challenges in their lives, save something, and eventually achieve the true American dream; to be financially independent and able to spend their life maximizing the happiness of themselves and their family.