Friday, January 2, 2015

The Golden Age Of Financial Independence

I’m probably one of the most enthusiastic supporters of the idea of retiring early, or becoming financially independent early enough in life to spend your time however you want. Whether you call it early retirement or financial independence matters not; it’s really all about ownership of your time and your life. I certainly don’t want to be beholden to an employer until I’m in the twilight of my life and I’m willing to bet you don’t either.
As such, I’ve done almost everything within my power to aggressively pursue that freedom since early 2010. I ate ramen noodles for a year straight. Wore holes through the soles of my shoes. Dealt with laughter after showing up to work at a car dealership by bus (the irony!). Spent countless hours of my time researching companies and investing, building my portfolio, and writing about my experiences. It wasn’t always easy, but I also know that it could have been a lot more difficult.
One thing I’ve realized as I’ve spent the last 4½ years of my life saving and investing my way toward financial independence is that we are currently living in what I believe to be the Golden Age.
And I’ll tell you why.


I’ve been blogging since early 2011. When I first started, there were only a handful of blogs that discussed dividend investing at all. And I don’t know of any that discussed dividend growth investing within the framework of trying to achieve financial independence relatively early in life. But in the last few years, there’s been this huge community built by like-minded individuals out there that see the value in owning time over stuff, and see dividend growth investing as a viable, realistic, and robust strategy to claim financial independence in fairly short order.
But imagine if you had this epiphany 20 or 30 years ago, and wanted to invest in high-quality companies that pay and grow dividends, to then use those growing dividends to fund your day-to-day lifestyle. Look around. Who are you going to share your ideas with? There was basically no such community back then which offered mutual inspiration, education through the free exchange of ideas, and support. We all knowhow difficult it is to share some of these ideas with people in our lives, which is why I think a lot of us find so much value in the online community that we’ve all built over the last few years.
While this community offers so many wonderful benefits, I also wonder if we sometimes take this for granted. But imagine for a second what our lives would look like if there were no blogs, websites, or forums. No support. No sharing of ideas. No inspiration from those that are also on this arduous journey. Just you alone in your own head.
The internet has allowed all of us to connect with like-minded people from all over the world, which has in turn made it easy to develop this ecosystem of sorts. You can read free stock analyses, who’s buying what stocks when and why, real-life journeys and their respective success thus far, how much others are spending and how they might be saving money, and how dividend income can actually provide the means to live life without regard to a day job. We know this strategy works because there are people all over the world implementing it and sharing the results.
This is truly a wonderful aspect of trying to achieve financial independence these days, regardless of your strategy. For every strategy, there’s a community of people all generally working toward a common end. And that creates a ton of value, as you’re combining the cumulative knowledge of an entire community, which can be used to help everyone within that community. It’s a type of infrastructure that strengthens everyone that uses it. I certainly wouldn’t have liked to do this 25 years ago, where I would have found myself walking down the path to financial independence completely alone. I consider myself incredibly lucky for being a member of this great community today, and I’m very grateful for it.

The Ease Of Investing

Think about being a dividend growth investor, or any type of investor, 25 years ago. You couldn’t just log onto your brokerage’s website and put in an order with ease, only to see it executed within a second. And all of that for a few dollars or so.
No, you had to look up stock quotes in the newspaper. Then you had to call your broker over the telephone and pay a good chunk of change for a stock order to be executed on your behalf. And this was only after having a few annual reports mailed to you so you could do the necessary due diligence. Time is money, but both were being sucked up a few decades ago.
Life for an investor these days is quite easy. I pay $7 to buy as much stock in a company as my bank account will allow. I can log onto a company’s website and access their financial reports, investor relations documents, annual reports, and presentations in mere minutes. And it’s possible to access professional stock analyses and valuation opinions with a click of my mouse.
Investing is easy in 2014. The costs are at a historic low. Information is more accessible than ever. Stocks can be tracked to the second during the course of day in the market. It’s almost silly that more people aren’t investing, as the barriers to entry have been almost completely removed.
Add in favorable dividend taxation and it’s easy to see why dividend growth investing isn’t just extremely robust, but even more robust than it used to be. Just as recently as 2002, dividends were fully taxed at an individual’s income tax rate. Now you can make over $40,000 in qualified dividend income as a single filer and pay $0 in federal income tax!

Living Frugally Has Never Been Easier

I spent almost my entire professional career working at car dealerships. Some people call them stealerships, but they’re only stealing what people give them. Either way, they’re basically a license to print money.
25 years ago, if you wanted to buy a car you had to march down to the local car dealership and pay a huge markup – on new or used vehicles. Used cars are especially profitable, though, as they can typically be purchased at a huge discount to what they can be sold for on the open market. Sure, you had your local newspaper to scan, or maybe a neighbor knew a friend of a friend selling a car, but otherwise you were beholden to the dealership. (New cars still require a dealership, but why in the world would you be buying a new car?)
Not any more. You can check out any number of auto websites or craigslist to snag a great deal on a local car from someone looking to unload what they have. For instance, I bought my Frugalmobile back in the day for just over two grand after finding it on craigslist. I then later luckily happened upon my 2006 Toyota Corolla with a bit over 20,000 miles for just $5,400 by way of word of mouth, but the key is to really avoid places that will attempt to charge you more than necessary for something that can be purchased elsewhere much cheaper. The point being “elsewhere” has never been more commonplace or easy to reach.
And this same phenomenon can be repeated for almost anything we buy these days, thanks in large part to the advent of the internet. Need something? Odds are good you can find it fairly cheaply online, new or used. Sometimes you can even find what you need for free! Just perusing the Sarasota craigslist free listings reveals sofas, firewood, a grill that simply needs cleaning, and a TV stand. Then there’s freecycle, which attempts to spread the joy of reuse. There’s so much abundance in our civilization that you could probably furnish almost an entire apartment for free if you gave it some time and lowered your standards a bit. You could likely also land a free bicycle and fulfill your transportation needs right there.
Of course, there’s also the rise of Wal-Mart Stores, Inc. (WMT) and discount shopping for everything else. Huge stores like WMT dominate retailing and have been able to lower prices on any number of goods for shoppers which allows consumers to not only buy goods on the cheap, but also get just about anything they need in one spot. I say that not just as a shareholder, but as a grateful customer. I’m certainly glad I wasn’t forced to go from store to store in the ’70s or ’80s and then also pay whatever was being asked without having a clear sense of value. Now it’s easy to grab what you need, scan for the same stuff online, and get a price match right inside of a Walmart.
Almost everything in our lives can be had extremely cheap nowadays. I spend $25 on my mobile phone. That was practically impossible just 10 years ago. Want to live in a mansion? That’ll cost you. But if you want to reach financial independence at a young age, housing can also be had for fairly cheap. Again, scanning my local craigslist pulls up a $495 one-bedroom duplex apartment a bit south of where I currently live. And this is in a veritable paradise where it’s routinely in the 70s in the wintertime and there’s no state income taxes! Furthermore, that’s if you have to live by yourself. If you’re willing to take on roommates, housing can be had for practically free.
It goes on and on, but it’s not difficult to live extremely cheaply if you really want to. And it appears to me that it’s never been easier to do so, no matter what the media will try to convince you of. Housing, transportation, and food can all be had for very little money. And these are typically the three categoriesthat most people spend most of their money on.


We’re in the Golden Age, folks. The community has never been bigger, brighter, or more supportive. There’s like-minded individuals that can be connected with in a real and meaningful way, even if those in our personal life don’t completely “get” what we’re talking about or trying to achieve. That kind of support is invaluable, and it would be a lot more difficult to attain financial independence without it.
And while it might not feel great to cough up a few bucks to buy a couple thousand dollars worth of common stock in a high-quality company, imagine spending five or six times that amount. $7 might be a frozen pizza or so, but $40 or $50 (25 years ago!) is a healthy chunk of change that’s being sucked out of your wallet. It’s never been easier or cheaper to invest, which makes it all the more unbelievable that more people aren’t saving and investing.
Lastly, if you’re looking to live below your means, you couldn’t have picked a better time to be alive. The personal savings rate is a bit above 5% right now, which is just embarrassing when almost everything you need in life can be procured for very little money. The problem is that wants are insatiable, and people have a hard time deciphering between wants and needs. The trick is to remember that we actually need very little. The list fits on the back of a business card. Meanwhile, a billboard isn’t a large enough canvas to list all of our wants.
Take advantage of this opportunity we have. It’s never been easier to attain financial independence than it is right now. All the information you could possibly want is right in front of you. And the costs along the way have never been less. Even better, you don’t have to walk the path alone. I’m right there with you!
Full Disclosure: Long WMT.
What do you think? Are we indeed living in the Golden Age?
This article was written by Dividend Mantra. If you enjoyed this article, please subscribe to my feed [RSS]


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