Financial freedom isn’t a theoretical concept but rather a lifestyle founded on real, hard math.
I believe one is financially free when they’re free from financial concerns. More specifically, being free of financial concerns would imply that one is able to generate enough passive income so that their basic expenses are effectively already covered.
Well, I can say that I’ve worked hard enough – along with receiving a little luck along the way – to get to this position, and it’s in these updates that I show the math behind the lifestyle.
I’m paid just to wake up and exist these days, which feels incredible!
Before I even think about taking on challenges or somehow exchanging some of my time for money, my core personal expenses are already covered. Whereas most people are “in the hole” every morning they wake up, I’m in neutral or positive territory. That means I’m in a position of power and control rather than a position of weakness.
I own my own time now. This was the one thing I set out to own many years ago, when I first started my journey to financial freedom. I could never understand why people want to own stuff and things if they don’t own their own time yet. Time is the ultimate and most valuable commodity in this world. And I’m now free to spend it as I please, which allows me to pursue happiness and live a purposeful life.
Keep in mind, however, that while my aim is to show the basic “infrastructure” of my financial freedom via these real-life, real-money reveals, I’ve come to realize that much of the math is moot. One is very likely going to go on to make much more money past the point of financial freedom, which means that one shouldn’t anchor their entire life on hitting $X in passive income. It’s just really not that vital.
Money shouldn’t be thought of in terms of having to live off of it but rather in terms of providing the flexibility and courage to live life on your terms.
Nonetheless, I think it’s still important to operate with all of the benefits (like that aforementioned flexibility and courage) that financial freedom confers. And so I present my passive income and core personal expenses, as you can see below.
The majority of my passive income is made up of the growing dividend income my Full-Time Fund generates on my behalf. The Fund is like an invisible worker, sending me the entirety of their paycheck. It’s a great relationship, but I can’t seem to shake this feeling that I’m really getting the better end of the deal. (Shh. It’ll be our little secret.)
The dividend income my Full-Time Fund generated for me in September 2016 can be seen in the table below. In the first column, you’ll see the name of the company and its ticker. The second column is the dividend paid. You’ll then see the total of all dividends paid to me this past month on the bottom right, in bold.
Without further ado:
|Viacom, Inc. (VIAB)||$11.00|
|Albemarle Corporation (ALB)||$15.25|
|The Coca-Cola Co. (KO)||$49.00|
|Reynolds American, Inc. (RAI)||$16.10|
|South Jersey Industries Inc. (SJI)||13.19|
|Illinois Tool Works Inc. (ITW)||$22.75|
|Diageo PLC (DEO)||$46.16|
|Altria Group Inc. (MO)||$48.80|
|Tiffany & Co. (TIF)||$9.00|
|Philip Morris International Inc. (PM)||$104.00|
|Main Street Capital Corporation (MAIN)||$22.20|
|W.P. Carey Inc. (WPC)||$73.88|
|EPR Properties (EPR)||$6.40|
|Pebblebrook Hotel Trust (PEB)||$24.70|
|Cardinal Health Inc. (CAH)||$6.73|
|Realty Income Corp. (O)||$14.14|
|Stag Industrial Inc. (STAG)||$12.74|
|Chubb Ltd. (CB)||$10.35|
|Medtronic PLC (MED)||$15.91|
|General Electric Company (GE)||$39.10|
|Cisco Systems, Inc. (CSCO)||$11.70|
|Chatham Lodging Trust (CLDT)||$12.65|
|Bank of Nova Scotia (BNS)||$44.25|
|Armanino Foods of Distinction Inc. (AMNF)||$27.00|
|Toronto-Dominion Bank (TD)||$24.60|
Another fantastic month.
More than two dozen of the best businesses in the world sent me checks in October.
And what did I have to do for these payments?
Nothing. Like I mentioned earlier, I’m paid just to exist. It’s a great arrangement, I must say.
This month’s tally pushes me to $8,668.20 in aggregate dividend income on the year. October’s total is 45.7% higher than what I received in October 2015.
In addition to the dividend income you see above, my book, The Dividend Mantra Way, earned me $84.87 in passive income this past month.
Lastly, I also occasionally receive cash-back rewards from credit cards. I opened a couple cards up earlier this year so as to take advantage of some bonuses that were offered for new accounts, as I knew I was going to spend more money than usual in the fall due to our planned trip to Chicago. My total cash-back rewards this month amounted to $360.02.
So my total passive income came in at $1,126.49 for October 2016.
Core Personal Expenses
That passive income is designed to cover my core personal expenses.
I define core personal expenses as all money I spend in a month, except that which is spent on the following:
- Business Expenses
- Student Loan Repayment
- Health Insurance
It’s quite simple why I exclude those specific categories.
Excluding business expenses is self-explanatory; business expenses are not personal expenses, and they wouldn’t exist if I didn’t have a business.
Philanthropic ventures are also fairly self-explanatory. I won’t/don’t give what I don’t have.
I started my philanthropic giving in early 2016 in earnest, just after realizing I’d become financially free. I see my position of strength as an incredible gift but also an incredible burden, as I believe it’s my duty to humanity to help those in need. In order to become the best version of myself, I need to transcend myself and make the world a slightly better place.
I see philanthropy much like investing, where I’m able to incrementally give to a diverse range of organizations. Over time, these sums will be substantial. Furthermore, I foresee the last 1/3 of my life dedicated almost exclusively to philanthropy. I hope to share more about these ventures in time.
I exclude student loan repayments and health insurance because these are expenses that wouldn’t exist if I were truly living off of just my passive income. Both would effectively be ~$0 at the income level my passive income alone provides.
Thus, core personal expenses are essentially just the essentials. We’re talking rent, food, transportation, internet access, mobile phone bill, household goods, etc. Everything except that which I just laid out.
Core personal expenses for October 2016 came in at $1,321.00 (rounded to the nearest dollar).
This past month’s core personal expenses were substantially higher than usual. This is solely due to our aforementioned trip to Chicago. And the additional spending was almost completely related to extra transportation expenses (to and from airports, along with bus/train travel within the city) and additional food costs (we ate out a few times in Chicago).
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My coverage level this month (passive income/expenses) was 85%.
This is obviously well below last month’s coverage level of 141%. But a trip to Chicago meant it was nigh impossible for me to stay at or above 100%. But it’s not really a goal of mine to stay at or above 100% in every single month. It’s really the average over a quarter (and a year) that I care about, as passive income and expenses are moving targets.
Other than some holiday spending, the next couple months should be pretty quiet on the expense front. Should be fun to see how things line up as the year comes to a close.
Some people may look at my passive income and core personal expenses and think it’s not enough. Well, that’s really an individual call. I have more than enough for me. I want for nothing. I’m for the most part living the life I’d live even if I had access to unlimited wealth. I’m doing what I want, when I want, with whom I want. I no longer worry about buying stuff I neither want nor need with money I don’t actually have to impress people I don’t care about. Now free from such silly expectations, I’m able to pursue happiness and live a purposeful life with reckless abandon. I’m honestly happier than I’ve ever been. I have the flexibility and courage to live life on my terms.
I could actually spend more than I do, as I earn money on top of the passive income I collect. And if I thought I’d be happier doing so, I would. Instead, I’m more interested in new challenges, writing, reading, exercising, spending time with my puppies, relaxing, and becoming a burgeoning philanthropist. These activities drive my happiness; money does not. Of course, I still invest here and there with any excess capital I might have, as that’s a passion of mine. And seeing as how I’m just barely financially free, I continue to grow my coverage level beyond what passive income growth alone will do.
But how much passive income you need is really your call. Your expenses are your own. Your life and happiness are unique to you and your worldview.
What I intend to show through these updates is simply what financial freedom, in purely distilled math terms, looks like for one man. Of course, financial freedom is so much more than math, with the math itself being largely moot anyway. But the basic infrastructure should still be as intact as possible.
That’s it for this month. I hope you enjoyed seeing what things look like on my end. And I hope you take away some inspiration here, knowing that it’s possible to achieve financial freedom quite early in life, even if you don’t start all that early.
Have a great October? What percentage of your expenses were you able to cover with passive income alone?
Full disclosure: I’m long all aforementioned stocks.
Thanks for reading.
Image courtesy of: bplanet at FreeDigitalPhotos.net.