I made a big decision during the week-end. I have decided to fully disclose my financial situation and goals to you. I feel fully naked now!
People like to brag about their savings, about their income and about how rich they are… But, I can tell you that my job brings me to see credit reports constantly and most people carry a huge amount of debts, even while they are retired. Now that I’ve fully disclosed my financial situation, I won’t be able to brag anymore…
Next time, when you’ll see your neighbor bragging about the new luxury car he just bought and all the trips he’s made to paradise islands, remember that he probably has a lot of debts too.
I might make mistakes. We are all humans after all… But, I want this to be serious. We are talking about my financial freedom, the war I need to win to get my life back!
We like taking resolutions at the beginning of the year and when march arrives, we soon realize that we forgot them. This time, it won’t happen. I’m fully dedicated to my dream since 2008. And I’m fully dedicated to my blogs and my investing strategy since june 2013. It’s been almost a year already and I won’t quit. It’s my freedom that’s at stake.
Now, let’s look at those numbers.
The first thing I can say about it is that it is very small. Remember that I have just started in june 2013. Since then, I have learned how to invest in dividend growth stocks and I have learned how to create and manage a blog. I now own 3 blogs and 4 dividend stocks. I have also managed to save approximately 10k of my income in 2013 to invest it in my freedom fund.
I know it’s still yielding small income (less than 20-30$ per month), but hey! It’s income that wasn’t there before! And it’s going to repeat and increase over time, thanks to the dividend growth investing strategy.
At least now I can say that my cat is financially free! It pays for its food!
In 2014, I have received as much passive income in 3 months from my blogs than in the 7 previous months of 2013. I already can see the snowball effect. But then again, we are still talking about pocket-money to pay the everyday coffee.
I’d like to see this grow over the years. One of my dreams would be to live off my dividend and online income. I know a lot of folks out there who are making a lot of money with their blogs. But I don’t blog for money. I really blog for fun. I can spend at least 30-40 hours a week on my blogs. So, it’s really not passive income at all for now. It’s more like an obsession!
My salaried income
I have decided to show you my job income evolution over time since 2008. Why?
If you have read other blogs about dividend growth investing you probably have noticed that most of these bloggers are living very frugally. But, it’s not my case. While I will save a lot to make my freedom fund grow, I don’t plan on living in the basement of my mother forever or in a creepy apartment with my school buddies…
I want to live a “normal” life. I want to raise my future children in a respectable house located in a respectable neighborhood. I want to go on trips during my yearly vacations and I want to go to the restaurant once and then with my wife and friends.
After all, I could die before retiring… I hope not though!
My plan was to increase my salary at the highest pace possible. So instead of having to only cut costs all the time, I have now the possibility to maintain reasonable spending and still be able to save a lot of money year over year. I’ve been able to more than double my income since 2008. How? That’s the subject of another post, but simply by being strategic and by taking promotions.
I don’t even have a diploma in my field and I’m a manager… In fact, when I read job postings, I don’t care that they ask for a master degree or a MBA. I apply and convince them that I’m the guy of the situation! Sometimes it works, sometimes it does not. But, as you can see, I did quite great already.
It’s getting harder and harder to increase my salary now. Remember that the mean salary where I live is 35,000$ per year. I’m way over that already. But still. I plan on increasing my salary a lot over the next 5-10 years to make it reach around 115-120k per year. I hope I’ll succeed but competition is fierce! Time will tell. Anyhow, I’m still proud of what I have achieved and I’m on the good track already to reach higher levels.
I want to retire early over my passive dividend income and online income. But I won’t retire with a mortgage. It would be too risky.
If you look at the chart on your right, you’ll notice that my mortgage is quite reasonable. I bought a single family dwelling house in 2008 with my ex-girlfriend and still own it. In 2010, we split and I decided to keep the house. I worked so hard to make repairs and improvements on it that I couldn’t imagine selling it after so little time. Also, I would have had a lost (mortgage penalty, realtor commission etc…).
So, I kept it. And to keep it, I had to refinance to purchase the part of my ex. That is why you can see that my mortgage balance increased in 2010.
But now, my plan is to be mortgage free by 2020. I’m going to throw a lot of money in that dream. I still have a 167,000$ balance. I want to fully reimburse it in 6.5 years. Which me luck!
My personal debts
I hate debts. I don’t know who invented debts but it should never have existed.
I have a lot of personal debts. I bought a house in 2008 and since then, my personal debts have increased drastically. I used to only have a credit card which I was fully clearing at the end of the month. But, when I bought the house, suddenly it was like if life had decided to send me my share of problems.
I bought an old house. And I had to replace a lot of expensive parts of it faster than I thought. My roof was supposed to be fine for at least another 10 years, but… no! My shed was filled with mice nests… And even though I have a cat, he couldn’t handle it. Just these two things costed me around 6000$ and it’s because I made all the work by myself.
Then, my car got stolen. It was debt free. They found it and gave it back to me but it was not the same car… I would have had to invest another 2 or 3k to repair the damages not covered by insurance. So I sold it with a loss and bought my first brand new car, assorted with a 20k loan… Bad move. I don’t think I’m going to buy a brand new car again in my life. It’s way too expensive and after two or three years, it just looks like a normal used car.
I also had to support 2 girlfriends over the last 4 years. The first one was the one with whom I have bought my house. She was still studying at that time and had a part-time job. But then, she hurt herself and had to stop working for a while. She didn’t have salary insurance so I had to pay for her for a while. And then she left me.
I had another girlfriend after. But, as soon as she moved in, she lost her job… It took her a while to find a good paying job… in another part of the country. I did support her for a while and as soon as she found her job, we tried to keep our couple alive, but love and distance is not a good match… Bad investment again!
Maybe I’m stupid, but I was involved in a relationship with these girls and they were having hard times. So I supported them naturally. Maybe I shouldn’t have, but anyway… Been there done that!
All of this explains at least 80% of my debt burden. For the rest, I can explain it with the fact that I sometime overspend. This is a bad habit.
When you pay with a credit card you know that you probably don’t have the money to pay, but you also know that you will have money eventually… So you use it. Over a couple of months, these sums add up and you start accumulating debts.
My plan is to stop using my credit card. It’s too dangerous for my financial freedom. I’m going to start paying cash like I use to do when I was a kid. If I have cash in hands, I can spend it. If I don’t then I will have to find something else to do for free!
Over the past 6 years, my house increased in value. I plan on selling part of it to my new girlfriend eventually. While I feel stupid about it, I think I will use that money to pay my personal debts and be done once and for all with them.
I have decided to publish a chart about my savings. My goal is to save at least 10000$ per year and to index that amount with inflation.
In 2013, I have been able to reach my goal in 7 months. In 2014, with the bonus I received in april and the second bonus I will receive in may, plus my monthly savings, I will have reached this goal in 5 months.
I will continue setting money aside on each of my paychecks. I currently save 200$ per two weeks in my RRSP account (tax deferred retirement saving account) and 100$ per two weeks in my TFSA (tax free saving account).
But, since my goal is already reached and that I have to pay my personal debts too, I think I will reduce my contributions a little and focus on refunding part of my personal debts.
Generally, at the end of July, my paycheck takes a big increase since I have reached the maximum contributions to all our public plans. In august, I will re-increase my monthly savings accordingly.
This is my plan!
I want to retire early. I have a plan. No plan is perfect, but this is mine.
To be fully honest, I won’t only rely on my dividend and online income at retirement. Here in Canada, I also contribute to the public pension plan which I can claim at 60 years old. I also contribute to my private defined benefits pension plan that I have with my employer. But, I don’t plan to wait until I’m old enough to get it to its full potential ( I would have to wait until 60-65 years old).
I want to quit my job before 50 years old and preferably before 45 years old. I’m currently 32. This does not necessarily mean that I will completely stop working but at least I will have a minimal income to rely on and pay for my expenses.
Which me luck! But I will work hard to reach my goals also!
(By the way, the guy in the featured picture is not me!)
Image courtesy of ImageryMajestic/ FreeDigitalPhotos.net[author] [author_image timthumb=’on’]http://quityourdayjob101.com/wp-content/uploads/2014/03/ID-10050051.jpg[/author_image] [author_info]Hi, my name is Allan. I’m the masked blogger. Like you I’m a modern slave, prisoner of a 9@5 job in Corporate America. They told us when we were young that we would live in a society of leisure and that technology would permit us to work only a couple of hours per day. But we live in a society of stress and uncertainty. My situation could be a lot worse and I know it. So many humans are suffering on this planet. But a golden cage remains a cage anyway. At least, I have an escape plan. I will retire before 45 years old over my passive income. This is a dream that is so powerful that I will make sure it happens. To build my wealth, I mainly invest in undervalued dividend growth stocks. [/author_info] [/author]