how to cover your expenses with dividends

Welcome to the +22 subscribers who joined this past week and are now part of 6,212 millionaires, CEO’s and high-performing entrepreneurs who read the #1 financial newsletter on Substack.

My name is Alex and I love creating streams of passive income. My goal is to help you do the same.

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Announcement

If you’re a paying subscriber of The Profit Zone, I have some good news.

Recently I have been getting a lot of requests about sharing my portfolio and making it public. At first I was reluctant to do so because I didn’t want beginner investors blindly buying all of the same stocks I own just because I’m invested in them.

But after some contemplation, I have decided to make it public to become fully transparent.

Included inside will be:

1. A list of all of my positions

2. How many shares I own

3. The total value/cost

4. My dividend income per position

5. Upcoming dividends per month

6. A pie graph breakdown of my portfolio

Every full (paying) subscriber of The Profit Zone will be getting access to my portfolio for free tomorrow, so make sure you are checking your emails.

For everyone else, I will be releasing it in Tiers. See below for how it will work.

Covering your expenses with dividends

I’ve been a dividend investor for 6 years now and during those 6 years I’ve hit tons of roadblocks. Barriers that have been hard to overcome. The majority of them being related to consistency and discipline, two of the most important qualities of a long term investor. If you don’t have those two, you will not make any money in the stock market.

It can be hard to see the light at the end of the tunnel when your dividends are small in the beginning. It feels like you’re not making any progress. Like you’re not getting anywhere and that it’s just not worth it to be making $5 every 3 months.

But I’ve realized one thing that has served me very well, mindset is everything. The best investors are the ones who are optimistic about the future of their investments but at the same time are emotionally unavailable when prices drop. They don’t care about what the market is doing today. They care about what it will do 10+ years from now.

One trick I’ve found that has helped me stay consistent with dividend investing as well as make it more fun is setting a goal to cover one of my expenses at a time.

When I first started, I didn’t set any goals. I was navigating through this new thing called “investing” with no direction. I would contribute money where I could, reinvest all of my dividends and watch my income grow month after month. But after a while, I started to fall off. I was burning out.

Why? Because I didn’t feel like I was making any progress (although I was). Kind of like going to the gym. If you’re not tracking your workouts and pushing more wieght or doing more reps every week and you’re not seeing your body change in the mirror, it can be difficult to stay motivated.

So that’s what I did with dividend investing. I decided it was time to start setting measurable and attainable goals. Small milestones that I could check off along the way that would keep me on track towards my goal of financial freedom. I switched from having no plan, to trying to cover each one of my expenses with dividend income.

Here’s what I did:

I started with my smallest expenses first. I wouldn’t actually use my dividends to cover the expense (I reinvested them all) but I did create a game within the game. It was the peace of mind that came with knowing you could cover the expense at any time. That’s powerful.

The first one I started with was my phone bill. It was (and still is) $50/month. Once I was making $50/month in dividends, I moved to my grocery bill. I average about $200/month on groceries (I just buy for myself) and still have yet to hit this milestone but I’m getting closer every month. 

My next expense will be my gas bill, which is around $250-300 every month (I drive a lot). From there, you could try to cover your hydro bill. Then your rent. Then your vacations. 

All you need to do is work backwards. Figure out how much you need to make per month and what dividend stock will cover it. If you own a company that pays a 5% dividend and you need to make $200/month to cover your grocery bill, then you would need roughly $48,000 invested in that stock to cover it.

The whole point is to eliminate one expense at a time until eventually you can live for free. You won’t be physically taking your dividends out of your account to pay these bills, but the peace of mind of knowing you can at any given moment or if there’s an unexpected emergency is absolutely priceless. 

This simple trick has allowed me to stay consistent with my dividend investing journey. I’m constantly looking to hit the next goal and cover the next expense.

It’s fun to create little games like these to help you stay on track. There’s nothing like hitting small milestones on your way to the final destination. 

Keep knocking off those expenses one at a time. 

REMINDER FOR PAYING SUBSCRIBERS: Check your emails tomorrow for the free link to my portfolio. If you’re not a paying subscriber but want access to my portfolio for free, click below:

Some resources to help you make more money:

• Money Mastermind - the “Money Bible”. Myself and 29 other expert creators teamed up to create the most all-inclusive 280-page finance book on the market. Over 100 topics about money including real estate, crypto, budgeting, dividend stocks, online business, and more.

• The Complete Investors Accelerator Pack - everything you need to build a dividend portfolio that grows on itself. Learn more about dividend investing, how to analyze dividend stocks, what to do with your dividends and how to build a stream of passive income through the stock market.

• The Molina Letter - the only product that’s helped me grow my Twitter account to 30,000 followers. Fill in the blank templates you can copy to help you create viral content with minimal effort. A big following gives you the key to creating products and making money online. There’s a reason why 500 people are subscribed to this letter.

• TweetHunter - let the software do the tweeting for you. The only scheduler you’ll ever need. This tool makes me money in my sleep. Give it a try for free.

• Hipster Budget Guide - having trouble saving money? Learning how to budget is your solution. This book will show you ways to save money you never even thought of. Worth every penny.

• My 2 Cents - my other newsletter where I voice my personal opinions on life, money, and people. Beware: I have zero filter. But it might give you a good laugh.

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