Reader Profile – MyFIJourney

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Today, in the ongoing Reader Profile Series, we’re getting to know reader and insightful commenter, MFIJ, from the site, My Financial Independence Journey. Let’s all give MFIJ a big round of applause for sharing his life with us and listen to his story. Enjoy!

Also, if you’re interested in sharing your own financial story/journey with us in a reader profile of your own, just shoot me a quick email, and we can get the ball rolling!  
 

1. Please tell everyone a little bit about yourself (background, education, family situation, etc).

Where to begin?  I’m currently an overeducated (I’ve got a doctorate) white collar professional with an exciting career in the sciences, pulling in a very respectable salary and well on my way to achieving financial independence.  But, things weren’t always such….  

I was raised in one of those households that sits on the border between frugal and cheap.  My parents were excellent at saving money, largely because they bought as little as possible and rarely did anything fun.  Not spending money is about the only real financial skill I picked up at home.  Learning everything else has been a sometimes painful and sometimes amazing journey of discovery.

Over the course of my very extended training, I have earned a variety of different salaries, ranging from sub $20,000 all the way up to my current six figures.  I’ve also lived in many areas of the country since each training position was located in an entirely different city.  I’ve learned a variety of things from these experiences.  For example, how to deal with lots of different kinds of people, the importance of not buying things that I would be unwilling to move across the country, and how to live on relatively little income.

Overall, I’m doing my best to remain an anonymous blogger.  This is necessary since I post my entire investment portfolio and dividend income on my site so that everyone can learn from my successes and failures as I work diligently to grow my wealth and income streams.




2. Describe your current financial situation (who works in your family, how your income is, your expenses, etc.).

My household consists entirely of myself as the sole breadwinner, my two cats that are only useful at looking cute, and an expanding army of plants who also contribute nothing besides breathable oxygen.  With so many freeloaders to take care of, I’ve got to work extra hard!  

Income streams:

I hold down a full time day job that allows me to pull in a nice six figure base salary (plus bonus).  I love the job, and I’ve got a great boss.  As a bonus, I get to use all of my scientific knowledge that I’ve spent years acquiring to do some really exciting work that will hopefully lead to innovative products that will improve the lives of millions of people.

My second job is that of personal finance and investing blogger.  But at this point, I’m only pulling in pennies, barely enough money to buy a gumball.   Note to aspiring bloggers: this is not easy, passive, or quick money.  But that’s okay, because more importantly, my blog is also a constant source of encouragement for me to improve my knowledge of personal finance and investing, which directly contributes to my third income stream – investments.

My third source of income is dividend stocks.   I consistently invest in companies with a history (10 plus years) of increasing dividend payments.  Ideally, these companies have wide moats to guard against competition, strong fundamentals, and are undervalued at the time of purchase.  My eventual goal is for my dividend income to be large enough to cover all of my expenses.

Expenses:

Out of my base salary, 50% of my take-home pay immediately goes to saving and investments.  25% of my base salary goes towards rent.  I live in a very high cost of living area at the moment, but given the specialized nature of my work, there’s no avoiding that.  And the other 25% of my base salary covers the rest of my expenses.  When I get a bonus, half goes into investments.  The other half is held in reserve in case I decide to take a vacation or have some other big-ticket fun.



3. What are the current financial challenges you are facing (saving, paying off debt, student loans, merging finances after recently being married, etc.)?

I am aiming to become truly financially independent by the time I’m 45.  In other words, I want to have all of my expenses entirely covered by investment income.  My primary means of achieving this lofty goal is to aggressively save money and invest it in a diversified portfolio of dividend growth stocks.

If I were to outline my financial independence strategy it would be as follows.

1) Save like a madman.  I direct six percent of my gross salary to my 401k in order to grab the full employer match.  After that, I aim to save at least 50% of my net income every year.

2) Establish an emergency fund equal to one year’s worth of expenses.  This will cover me in the event that I need to buy a replacement car or if I get laid off and it takes me a year to find a new job.

3) Regularly invest in dividend growth stocks with the intent of building a diversified portfolio of quality stocks that regularly and predictably throw off ever increasing amounts of cash.

4) Work hard and aggressively grow my career.  As my career grows, so will my income and thus the amount that I can save each year.

4. What are your plans for the future (retire early; build your career, etc.)?

A major goal of mine is to build up my career.  I’m loving my new job, not in any small part to all the amazing people that I work with.  This is my first job outside of the ivory tower of academia and I am working hard to prove myself, and to grow my career well beyond my current entry-level position.

Achieving financial independence as soon as possible is my primary goal.  I don’t have any specific desire to retire early since at present I really like my job.  However, I am well aware that I work in a labile industry and could be laid off at any point.  I’m also cognizant of the fact that I’m one reorganization at work from having my otherwise awesome boss replaced by someone I’d rather not be working with. 

As mentioned above, I’ve had to move all over the country in order to pursue my educational and professional development.  All of those moves have been based solely on the presence of a position that I desired.  I never really thought about whether I would be happy living in the area or not.  Some of those moves have been very sudden.  Here’s your new position, now uproot your whole life and move across country stat.  I’ve always had to work to make the best of every new location – sometimes I’ve succeeded admirably and sometimes I’ve failed miserably. 

I consider financial independence to be the ultimate insurance policy against layoffs, bad bosses, and urgent cross-country relocations.  It allows me to call the shots. From the moment that I hit financial independence, life will start to conform to my desires, rather than the other way around.



5. What’s your best piece(s) of financial advice and/or your general philosophy on personal finances?

If you want to hit financial independence, and do it early, you’re going to have to start saving a lot more than the standard sub-5% savings rate common in the US.  The math behind extreme saving is really easy.  Starting from nothing and saving 50% of your income will get you to financial independence in around 14 years, give or take depending on returns.

Living in such a way as to allow you to save 50% of your net income is rather difficult and involves a lot of tradeoffs and sacrifice.  It really forces you to decide up front what’s important to you and direct your money towards only those things.  Everything else gets kicked to the curb.

The real trick is finding the right balance in your life and knowing when to give and take in order to maximize your happiness.  I usually tend to be overly cheap and wind up missing out on things.  It’s something that I’m working on correcting as I try to find balance in my life.

Once you’ve got the saving part down, you need to work on investing.  There’s plenty of great ways to convert your savings into income producing assets, my favorite being dividend stocks.  Some take a lot less effort like index fund investing, and some take a lot more like real estate investing.  No matter which method you pick, learn everything you can about it, lay out an investment plan at the outset, and stick to the plan.

    ***Photo courtesy of gravatar.com

    Comments

    1. Pauline @ Reach Financial Independence says:

      thanks for sharing! it looks like there isn't a lot of room for fun indeed, you say work hard, save like a madman, but what is the ultimate goal? Get a 6 figure passive income? you don't need it since you live on half that. Retire at 45 and have a fun hobby? Start a family and stay at home? I got caught up in the numbers and obsessed with the mean and not the end but even though you think your parents overdid it it looks like you may be headed a similar path. Do you remember to splurge on yourself once in a while?
      My recent post 10 Things You Should Know Before Applying for a Personal Loan

      • myfijourney says:

        The ultimate goal is insurance. Graduating 2 months after Lehman Brothers collapsed and struggling to find a job as my industry shed jobs by the (literally) tens of thousands a week left a significant impression in my psyche. I just need 50% of my current base take home pay to be covered by expenses. I could actually live with only 33% covered since I could always move back to a lower cost of living area.

        I spend a lot of time wondering if I'm overdoing it. That's why almost none of my posts are in the vein of “I'm cheap and loving it. Look how much money I saved by not consuming.” but almost always have themes of “Here's the tradeoff that I'm making.” or “I wonder if I'm missing out on something.”
        My recent post McDonald’s Corp (MCD) Dividend Stock Analysis

    2. Thanks for sharing your bio. I like learning new things about other bloggers. I knew you were smart, but didn't know you're a doctor 😀 I think that 50% for 14 years is quite true. I've been saving roughly half my take home pay since I was 21 years old, hence the name of my blog.

      • myfijourney says:

        One of my few gifts is the ability to rack up superfluous amounts of education. I'm pretty sure that the 14 year estimate is accurate, although it does assume that your expenses remain basically constant over that period of time. I'm hoping I can accelerate things a bit by tossing my previous savings in the pot, saving over 50% of my total salary once bonuses and the like are considered, and maybe even making some additional money from blogging.
        My recent post McDonald’s Corp (MCD) Dividend Stock Analysis

    3. I didn't realize you were so educated! That's impressive. I wish I was in your shoes with the whole “liking your job” thing. My job sucks. It's sucked for years, and I need freedom to do what I want to do. To make money from things I that I like doing. Unfortunately I don't have the freedom to leave my job, as it is a contracted position.
      My recent post Discretionary spending from a frugalist’s perspective

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