I want to retire early over my passive income and as such, I have set goals for myself to make sure I’m on the right path. These goals had to be clear, realistic and measurable. That’s why I have put some graphs on the right side of my blog. They track my progress.
I think it’s about time I make an update here and see if things are going as planned!
The only assets I currently own are my house (less my mortgage), my car (less my car loan) and my dividend stocks portfolio. I don’t use any leverage to invest in stock.
At the same time last year, I had a mortgage balance of 172,350$. My current mortgage balance is at 161,850$. My house is evaluated at 225,000$ on a taxation basis. It might be worth a little more on the market but I prefer being conservative. My net equity in this asset is 63,150$. But, the problem with a single family dwelling is that it is not an investment. I can’t receive any income from it and I will only be able to get that money by selling the house or refinancing the mortgage. It is “stucked” money. But it is net worth anyway and someday, I will have the opportunity to live there for free. My plan is to be mortgage free by 2020 and I’m on the right path to reach my goal. I currently double up my mortgage payments and pay on an accelerated schedule.
|YEARS||PROJECTED MORTGAGE PRINCIPAL OUTSTANDING|
Cars are wealth destructors
My car is worth approximately 8000$. I still have a 12,100$ balance to pay on it. Cars are the worst financial destructor. They are expensive. Their maintenance is expensive and they depreciate at the speed of light. I only have that car since 2011 and it’s already a used car. So I can take 4100$ off my net worth, which brings it to 59,050$.
Finally, my portfolio is worth 30,264$ this morning.
My total net worth as of today september 30th 2014 is 89,314$! Woah not bad! Things are getting better since I’m fully dedicated to managing my personal finance.
A lucky guy with a defined benefit pension plan
I also own a defined benefits pension plan. Unfortunately I don’t know how much it is worth. It is currently only a promise to give me 70% of my salary if I work there for 35 years… There is no way I’m going to work there that long so when I’ll leave for early retirement, I’ll have choices to make. I will either keep my funds there and defer my annuity until normal retirement age or, I’ll cash out the actual value of my pension plan. The problem with that is that they will give me the possibility to transfer part of it into my RRSPs, but the rest might be looked at like taxable income and it will be taxed at my marginal rate which is somewhere near 48% right now… ouch! I’ll cross the bridge when I’ll be in front of the river…
Dividend income goal
My goal is to receive 24,000$ in growing passive income every year at or before my 45th birthday. This includes my online income from intellectual properties and my dividend income.
I hope to make at least 18,000$ in dividend and 6,000$ in online income by then.
This month, I have reached a milestone. I will make more than a 1000$ in forward dividend income every year. My goal was to get there by the end of 2014. I still have 3 months in front of me to invest and increase my forward dividend income and I now hope to add at least 200$ per year to my forward dividend income by the end of 2014.
I’m 33 and still have 12 years to reach my goal. I think it’s realistic given the time I have and my saving rates… as long as I can continue to save that much! But, we don’t control everything in life and my job might be in jeopardy right now…
There are a lot of bloggers out there… I think there are more than 400 millions blogs on the internet and this number is growing everyday. There are also a lot of great established bloggers in the dividend growth community. English is not my first language either and it is some kind of a barrier and a challenge for me to try to write good stuff in that language. But, I try to do my best and even though I do it for fun, it would be nice to see some passive income flow from my internet activities.
I currently own 3 blogs, 2 in french and this one. I get a lot of clicks and visitors on my french blogs but these clicks pay pennies. I get a lot less clicks here on QuitYourDayJob101 but each click is worth a lot lot more. I even had a 6$ click one time… That’s something we don’t often see on french blogs.
Between june 2013 and june 2014 I only earned pennies from my blogs. But during summertime, something interesting happened. I made 20$ in July, 92$ in august and 55$ in september.
It is still not a lot, but compared to my usual 3$ to 5$ per month it’s amazing! I heard from many bloggers that it takes at least 18 months to see some great improvements on online income… but some have been able to make great gains very fast. I don’t have an extensive network and I’m pretty new in the blogosphere so I’m gonna need to climb the ladder slowly.
Forced anonymous blogging
Given my current job, I won’t be able to publish my real name here and this might not help me… But I can’t afford to take that kind of risk right now… My employer has a strict policy about it.
Anyway, my traffic is growing slowly but surely. I know that to receive visitors we have to add great contents on our blogs. I do have interesting things to write about. I read a lot of great financial books, went through the CFA level 1 on investpedia.com (I did not took the exam though) and read all the 850 pages of Warren Buffett’s letters to shareholders more than once. I think I learned a lot of thing I could share here. I still need to complete my “Warren Buffett letters to shareholders” review. But this takes a lot of time and since february, I’ve been very busy with renovations I had to make to my house and I also got a new promotion that drains a lot of my energy.
I’ll add interesting stuff here pretty soon to help investors like me learn and get better at investing. Until then I’m pretty happy with my results but I know I can do better.
6000$ per year in online income would be great and I’m pretty sure I can reach that within 12 years. Time will tell!
When I first started this blog, I had a lot of personal debts, ±34,000$ to be exact. I had to make choices… Debts were costing me a lot of my monthly income. I decided that it was a bad idea to keep a lot of debts and many of these debts were not even related to assets I could sell.
I have to admit that I use to spend a lot on stupid things without counting at some point. When I was eating out at the restaurant (very often), I used to pay with my credit card. When I decided that I had to go to Cuba or Riviera Maya for vacation, I used to pay for these trips with my credit card… I even had a 12,000$ credit card balance at some point. I put medical expenses on it, clothes, groceries…
How I cleared most of my debts
To clear my debts, I decided to sell a lot of my extra stuff and some assets. With the profit, I paid my debts. I also used the snowball technique to clear my debts by being aggressive on paying them down. I now only own a 12,000$ balance on my car loan. I could sell the car but I would have a 4,000$ or more loss to handle and I would still need a car… So, I’m going to keep that car and that loan until it is fully paid. I should be done by 2018 and I will reach my planned goal.
I have decided to avoid using my credit card and to make sure I won’t, I put it in a Ziploc bag and I have put this Ziploc bag in another one that I filled with water and put in the freezer!! Ahah! Now, if I need my credit card, I’ll need to unfreeze it… which should give me the time to think about it! I could have cancelled it, but it is useful to keep a credit card to buy plane tickets and stuff on the internet sometimes.
When you own a company and you want to increase profit, you can do two things : control expenses and increase income. It is usually easier to cut expenses than to increase income and that’s why we always hear about restructuring. Most CEO don’t know how to increase sales, so they cut in the fat to make the balance sheet looks good!
I have decided I wouldn’t take the easy road. As the CEO of my life, I decied I would need to do both.
I already did a great job a cutting expenses and at growing my income. I had many promotions in the recent years and a recent promotion in july. My forward income with my current pay scale will be near 93,000$ this year, and should average 100,000$ within 2 years. Not bad!
I think I can still increase that income to 130,000$ within the next five to ten years if I play my cards well… but this would mean extra responsibilities and for now, I’m not sure I really want that… I want to take advantage of what I have and focus on my family life a little for a while. We’ll see.
Cutting expense is easier
I also did a great job a cutting expenses but I know I can cut even more! I still eat out too often and it is not good either for my health, nor for my wallet! Restaurants are getting more and more expensive these days! I really can cut on food.
I also could cut on transportation. I spend a lot on gas, parking, bus tickets…
The problem here is that I work a lot, my job is pretty stressful and was pretty busy with renovations recently. I also live far from my work. When I come home at night, I feel so tired that I don’t feel like making myself a lunch… and sometimes in the morning, it is hard for me to wake up motivated… So instead of taking the bus, I take my car and this costs a lot…
It is clear that if I would have more free time, I could probably save a lot. I love cooking and I consider myself a good cook. But I don’t take the time to cook as much as I’d like.
I’ll have to figure out something and the first thing I should do is exercise more. I would then have a lot more energy. Then I could eat healthier food… This is a cycle. If you eat well and exercise, you don’t want to destroy your progress by eating junk food…
I think I might add an health goal in 2015 to keep me focused! I’ll see.
Since I want to retire early, it is mandatory to control expenses. When you start investing, you soon realize that you need a lot of capital to create a very small source of income (10,000$ yields approximately 350$ per year). With compounding, this income will grow but it’s going to take years. Being able to live on less is not just a way to find extra capital to invest, it is also a preparation for early retirement. Early retirement is all about discipline. It’s like martial arts! One needs a lot of self-control to reach that goal.
A Dividend growth black belt?
I love martial arts and have practiced many of them and even taught karate back in the days. Last year at the same date, I was a white belt dividend growth investor. Now I think I can tell that I deserve my yellow belt! Reaching the black belt will take time, discipline and commitment, exactly like getting a karate black belt! I already had the patience to get my Karate black belt, I’m confident I’ll reach my Dividend Growth black belt one day!
Wish me luck!
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Image courtesy of iosphere & Stuart Miles & bplanet/ FreeDigitalPhotos.net