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 November 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:
|Verizon Communications Inc. (VZ)||$40.42|
|Deere & Company (DE)||$12.00|
|AT&T Inc. (T)||$48.00|
|CVS Health Corp. (CVS)||$4.25|
|Yum! Brands, Inc. (YUM)||$5.10|
|American Express Company (AXP)||$6.40|
|Apple Inc. (AAPL)||$11.40|
|General Dynamics Corporation (GD)||$15.20|
|Raytheon Company (RTN)||$18.31|
|Air Products & Chemicals, Inc. (APD)||$17.20|
|Clorox Co. (CLX)||$24.00|
|ONEOK, Inc. (OKE)||$61.50|
|EPR Properties (EPR)||$6.40|
|Omega Healthcare Investors Inc. (OHI)||$97.60|
|AbbVie Inc. (ABBV)||$14.25|
|Stag Industrial Inc. (STAG)||$12.74|
|Realty Income Corp. (O)||$14.14|
|Procter & Gamble Co. (PG)||$34.14|
|Abbott Laboratories (ABT)||$9.10|
|Colgate-Palmolive Company (CL)||$19.50|
|Kinder Morgan Inc. (KMI)||$25.00|
|Main Street Capital Corporation (MAIN)||$22.20|
|Orchids Paper Products Company (TIS)||$24.50|
|Williams-Sonoma, Inc. (WSM)||$7.40|
|HCP, Inc. (HCP)||$29.60|
|Chatham Lodging Trust (CLDT)||$15.95|
|Fastenal Company (FAST)||$15.00|
|United Parcel Service, Inc. (UPS)||$19.50|
Boy, am I in a very fortunate spot. Collecting more than $600 from great companies for doing… nothing.
It’s a major turn of events from where I was seven years ago. The only way I was going to collect income from any company back then was if I worked for them. Period.
Now they work for me!
The dividend income I earned this month puts me at $9,299.00 for the year thus far. November’s tally is 6.1% lower than what I earned in dividend income in November 2015.
This is the first time that I’ve ever had a negative YOY comparison in dividend income, and I hope it’s the last time. The reason for the negative comparison is mostly due to lower dividends from HCP and KMI – both companies cut their dividends in the past year for different reasons (KMI took on too much debt and suffered a crisis of confidence in its capital structure; HCP spun off about 1/3 of its business into a new entity due to struggles from that area of the company). Moreover, I sold off quite a bit of HCP between then and now because it seemed likely the dividend was going to be severely impacted by their spin-off.
In addition to the dividend income you see above, my book, The Dividend Mantra Way, earned me $166.18 in passive income this month.
So my total passive income came in at $796.98 for November 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 November 2016 came in at $959.00 (rounded to the nearest dollar).
That’s my lowest level yet, and probably a bare minimum for me. I really don’t have any more fat to cut at that point, yet I’m still living a luxurious and happy lifestyle. I can’t begin to even put into words how much happier I am now than when I was grinding away for (and spending) much more money. It’s just not even close.
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My coverage level this month (passive income/core personal expenses) was 83%.
As expected, I came in below 100%. This is pretty typical for months that don’t mark the end of quarters. But I suspect that I’ll make up significant ground in December, averaging a ~100% coverage level for the quarter.
There’s minimal holiday spending this year, which is unlike what I’ve had planned for prior years. That’s largely because I’m not flying anywhere. I actually hate flying/traveling, so I’m pretty excited about that.
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.
How was November for you? At a good coverage level?
Full disclosure: I’m long all aforementioned stocks.
Thanks for reading.
Image courtesy of: bplanet at FreeDigitalPhotos.net.