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Friday, June 23, 2017

Income Matters

A lot of the talk on Dividend blogs is about frugality and investing a certain percentage of income. A quick look at the shared portfolios and other stories out there, will show incredible results. But I think it is equally important to look at ways of increasing your overall income. No matter how frugal you are, if your salary is capped, you will be limited. Last night I was promoted to a supervisor role increasing my salary by 50 percent starting in late August.

So how can you increase your investing pot? One of the safety officers in my school is famous for side hustles. He works during the day as a safety officer at a lower wage than the teachers. But he also works as a doorman at night and does Uber.  Overall he takes home a better salary than most the teachers around him.

For many in this world the DGI is the alternate income stream. Cut out unnecessary expenses and invest it in blue chip companies that grow their dividends. I'm 100 percent on board. But I have big ticket items like childcare and my wife's student loans that aren't going away in the near future.

I  have a career that I love. I'm not looking to retire in 5-10 years, I have too much left to give.  So my focus has been moving into a career in administration. Tonight that dream was realized when the Board of Education approved me as a supervisor.  A perk of this is that it comes with a significant salary increase.

Sadly I don't see it impacting my dividend growth investing too much in the near future. Though I do expect to make  increases. My wife has been paying more than her fair share of our bills.  With the salary increase it is time for me to step up here more. Additionally my pension payments, and health insurance spike with the increase.


So what is the plan. 

1. Pension boost -- I'm entering my 12th year as an educator. The magic number is 25 years. Once I have that service time, I'm guaranteed a pension with benefits starting at age 59.5. Now I won't be 59.5 in 13 years. But at least I will know that I have some sort of steady payments coming when the time comes. The formula for figuring out pensions for someone that started when I did is Average Salary of the last 5 years X # of years worked/55. This is a significant pension increase.

2. Double ROTH IRA. I haven't been taking enough advantage of tax free money down the road. I've been using Betterment here because it is simple. Once I have enough money, I may invest directly with Vanguard. Investing partially in index funds allow me to achieve a level of diversification that individual stocks won't allow.

3. Continue to build my DGI account. I don't think short term there will be a significant increase in my buying. But with a higher income, I'm sure I will be investing more as well.

But overall life is good. I'm moving into a challenging career that excites me, and I'm a lot more financially stable. It's nice when accomplishing career goals can also lead to better financial stability.

2 comments:

  1. This is an excellent post Seedling and I completely agree. I'm in a somewhat similar boat. I didn't get a promotion, but I'm filling a new position at my job, and because I'll be working overseas, there's a chance my income will be increased. I'll have to wait and see. Income is such an important part of the equation. I'm hoping to use any excess income to contribute to my dividend portfolio.

    Because I'm single, I don't get the benefit of the double Roth IRA. However, I'm already maxing out the Roth IRA and the Roth 401k at work. I have 16 more years to go before I get can a pension, but no guarantees I'm going to last 16 years. We'll see. Anyway, I can see a lot of similarities in your approach to mine. I wish you good luck.

    ReplyDelete
  2. Dividend Portfolio,

    Nice to here there is someone out there with a similar plan. Likewise good luck.

    ReplyDelete

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