Facing The Frugality Trap

Frugality is the art of resource conservation. In the financial arena, it’s the art of reducing expenditures in areas you don’t care about so that you can allot the savings to areas of your life that you do care about.

In our society, however, once we become labeled as “frugal,” people tend to lose their minds if you spend money for anything other than the basics. Frugality is lumped together with “tightwad,” “cheapskate,” and other derogatory terms to the point where people cannot conceive of the fact that a frugal person can spend money and will willingly spend in the areas of their life that they deem important.

I’ve spent the last few decades living an extremely frugal life. My goal was to work at a physical job as little as possible in order to spend as much time as I could being a mom to my children. In order to fulfill that objective, I reduced all of my expenditures to an extreme degree. About the only thing I would allow myself to spend on was on the computers and devices that allowed me to work from home and generate enough money to meet our living expenses.

Very few people noticed that fact. I didn’t advertise it, and since I kept the items I purchased for several years it slipped beneath the radar for most of my physical acquaintances.

My life has changed now. My children are now grown so I find myself in the position where I can work away from home as much as I desire in order to attain my new goal of a comfortable retirement, or at least a comfortable life until Covid or some other thing decides to end my time in this world.

In order to achieve my goal I wanted to maintain a simple existence, minimizing the amount of mental overhead and physical clutter while having the ability to travel with a minimum of fuss wherever I wanted to go. While my town is eminently walkable, I found I did not want to invest the time it would take to walk to the type of jobs I had decided to work. I wanted the monotony and security of a factory job. It would have taken several hours out of my day to walk to and from those positions since the public transportation options available in my area are riddled with imperfections.

I needed a reliable vehicle. Before I seriously began to shop for a vehicle to meet my need, my daughter offered me her old car. She had decided not to take it with her when she moved to California and it met my immediate needs, so I accepted her offer and purchased the vehicle.

Being an older vehicle (22 years old), I knew that, in time, that car would need to go to the shop for repairs. In order to avoid walking to work, I needed to acquire a secondary vehicle as a backup.

I did not want the headache of maintaining a second vehicle. Not only do cars need to be driven regularly in order to avoid falling into disrepair from disuse, they require extra space to park them along with the myriad needs that all vehicles require.

I prefer simple.

I realized that if I invested the money in a brand new vehicle with a very good warranty plan that I could limit myself to owning a single vehicle. If I arranged for said vehicle to have a “loaner” plan, I would be able to meet all of my transportation needs without issue in the event that my vehicle needed to be in the shop overnight, an essential need since that was the problem I wanted to solve.

For months, nothing stood out. Every vehicle I investigated lacked something on my mental checklist. If I was going to spend such a large amount of money on an item that would depreciate in value, I wanted to spend that money on a vehicle that would meet all of my needs. This vehicle needed to be a hatchback (this would allow me to haul the supplies from my stock-up trips home easily along with any larger purchases). It needed to easily handle winter driving, and since this was going to be the vehicle I owned for several years, it needed to possess a myriad of safety features. I also decided that it needed to possess features designed for maximum comfort because if I was going to spend so much money on a single item, by golly I would check off as many boxes on my “ideal vehicle” wish list that I possibly could because F it; in our current age I could die tomorrow so I may as well enjoy today.

One day I came across an advertisement from Cronin Hyundai in Nicholasville, Kentucky that indicated that they may have a vehicle that met every item on my list of features. I called them, explained my needs and received confirmation that yes, they had vehicles in stock within my price range that met my specifications. By the end of that day I had purchased a Crossover SUV with an extended service plan that I can only describe as “Apple Care” for cars, a service plan that would eliminate vehicular headaches for 10 years or 100,000 miles. The way I drive, that translates into almost a decade free of having to deal with the things I would rather not deal with. While I did take on an auto payment, it is well within my budget and easily affordable on both my current and projected income for the life of the loan.

This purchase was not only logical, it eliminated a huge concern that had been weighing upon my mind. It also met my need to have some sort of long-term payment plan on my credit report in order to boost my credit score even more. I have plans to utilize that in the future, and simply paying off my credit cards every month was insufficient for my plans.

It threw my inner circle for a loop, however. In their eyes, frugal folk like myself do not invest in new vehicles. They buy old cars, drive them until they drop, then move on to the next one. While that works for many, I realized that, for me at least, I would have ended up spending more money than I would by purchasing new. It would have also endangered my employment choices for the future because attendance is key when one works at a factory. You will get fired if you are late or miss work, after all.

I almost didn’t make this purchase. Despite the fact that the vehicle met every single criteria I had set, even my personal notion of frugality protested. It had been drilled into my head that frugal people buy used vehicles. Logic won out, however. Every person that I know (including myself) that purchases a used vehicle invariably encounters that time when their vehicle requires repairs; they not only face the financial headache of paying for repairs along with their financial obligation, they struggle to get to work while their car is in the shop. Even if I had paid cash, I would have been in the same position I was in with my current vehicle, rendering the financial expenditure moot.

Due to my decision, I now find myself dealing with questions from those who cannot conceive of the fact that frugal people do indeed spend money. While my family is overjoyed at the fact that I finally opened my “moldy wallet,” others who do not know my true financial situation are not so supportive. Their comments and questions have ranged from “midlife crisis” to demanding financial specifics that I have no desire to answer.

How does one handle this situation? Do you simply smile and ignore the snide remarks and invasive questions or is there a polite way to tell people that your finances are none of their business? While I did take the step of not advertising the purchase, it is rather difficult to conceal a new vehicle when your friends see you driving said purchase or notice it parked in front of your house.

Have you ever made a purchase that didn’t fit in with other’s preconceived notions of frugality? If so, how did you handle the invasive questions and snide remarks? Please share your stories in the comments below.

The Man Behind the Curtain

I generally take my dogs outside around the same time in the mornings. And each weekday morning, for a number of years, my dogs have decided to bark towards a neighbor’s yard across the field.

I’ve looked each morning, scolding them, because I saw nothing of importance. I thought they were just barking at the wind so I told them to hush and be still.

Today as I sat on my stoop I happened to be examining the clouds in the distance when the dogs started their routine cacophony. Out of habit, I turned my eyes toward the yard…

…but this time I noticed something different.

Just beyond and to the right of that particular yard happens to be the entrance of one of our local water treatment plants. Moving around that entrance was a worker, opening the gates for the day.

Had my eyes followed their normal routine I would have never spotted him. He was far enough out of my normal focus that he would have remained unseen. Yet by changing my routine, changing the focus of where my eyes habitually go that man came into view.

I’ve spent this past decade scolding my pets for barking at that hour and in that direction. I spent this past decade scolding my pets for barking at nothing.

But they weren’t barking at nothing. They just saw something that I didn’t.

The same thing happened to me after Katie became an adult a few years ago. To settle the lost feeling I felt, I began to change my routine. I took a job, I read new books, I researched articles that I’d never thought to research in the past. I even started college.

I changed the focus of my mind as a result of those actions. And when I changed my focus I began to see things about our society that had previously passed unnoticed. During my research, I stumbled upon something that has shattered me.

Remember when I launched my grand goal to demonstrate that even the poorest among the poor could become wealthy? Remember even earlier, when I preached that we all just needed to live within our means? Remember when I announced that anyone could change their circumstances if they only worked hard enough?

I was convinced, completely convinced, that each and every one of those statements were true. I devoted my entire past life to proving the veracity of my beliefs. I spent this last decade, even longer, preaching those beliefs to you.

But when I shifted my focus I realized that I was wrong. There were things happening in the distance that I had not seen from my viewpoint because I had failed to shift the direction of my focus.

When my eyes finally traveled the right path they revealed to me a truth I found horrifying. A truth that I didn’t want to admit. I tried to turn away, tried to do the “business as usual” routine but I couldn’t. Once I spotted the truth, I was so disgusted that I could not look away.

My daughters must believe that I suffered some sort of mental breakdown over these past few months. I know some of my friends do. Because I went from chasing it “all” to where I stand today.

I quit my job and I lied to you when I did it. I lied to everyone. I told you I had enough coming in from my book royalties to surivive but the reality is a bit different. I was so horrified, so frightened that I couldn’t even process what was happening. So instead of revealing that I’d quit my job to supplement my income with my savings, I lied to everyone and inflated my income. I desperately needed to think, and in order to think I needed to remove the pressure that would have been placed upon me if I had revealed the truth. I needed to not only process what I had uncovered, but to make a decision about what to do with my discovery.

That lie is the reason I have not completed the book I promised to complete. That lie stuck in my throat and the words refused to come. I do not regret that lie but it is time to come clean. While it was a matter of mental survival at that point, I find the burden of that lie to be unbearable. It is time to explain my actions and accept the consequences of my misdeed.

When I began to change my focus to study the wealthy, the nature of business, and the stock market, I realized that the game has been rigged. Despite my father’s assertion that I could be anything I wanted to be, despite the fact that I have heard time and again that I can change my circumstances if I try hard enough and do enough work, the fact is that these statements are false.

I have been lied to my whole entire life. I am horrified and heartbroken and more than a bit embarrassed at the fact that I’ve preached those lies to the entire world my whole entire life. And I am not the only one who has been lied to. I suspect you’ve been lied to as well.

That is why the tone of my posts have changed. That’s also why I have been more than a bit erratic, because the pain I feel is so raw right now that I’ve yet to calm down. I am so upset, so furious at the truth I’ve discovered that I want to destroy it all. I have become the cat who has noticed the vase and I want so desperately to knock it down and see it shatter.

We are not poor because we choose to be. We do not struggle because we choose to struggle. If we pare our expenses to the bone, as I have, there is only so far down they can go. While frugality does help, it is not the solution to the problem.

The reason that we are poor and scared and broke is not because we’ve not done enough to improve our circumstances. The reason we are poor and scared and broke is because we have been brainwashed into believing that we are somehow wrong.

Want to score a date with the right person? Get the cosmetic surgery, have the hair colored, get the right cut and style and you will be good enough for them to notice you.
Want to score the right job, the job that will allow you to pay all of your bills with money to spare? Get the degree, buy the wardrobe, speak and act in a certain way and your path will be golden. You’ll never have to worry about money again. Don’t worry about the debt you’ll incur as you do this; you’ll be able to pay it all off with ease once you earn your fortune.
Want to live like “normal” people live? Buy the six-figure house and the $50,000 car. Go out to eat at the fancy places. Wear the little boutique clothing. Watch your labels! Work the job, get the promotions, raise the kids, clean the house. Buy the tablets and the gadgets and the stuff. The person with the most toys wins. Anyone else is a failure.

Do you know why we’ve been taught to believe these things? We have been taught to believe these things because they keep us quiet. It is hard to protest against something when it’s our own damn fault we’re in our mess, isn’t it?

But it isn’t our fault. You see, when we spend our lives pursuing these things and believing those beliefs, our focus is so great that we miss the man operating just outside our line of vision. Just as I missed seeing that man open those gates each morning, we miss seeing the truth of what is happening.

We have been led to believe the things we believe not because they benefit us or are even true. We’ve been led to believe these things because they inspire us to take actions that keep that man behind the curtain in power. With each and every one of these actions, we work to make him richer and give him more control. From behind that curtain, he is using us in a plan that I can barely comprehend.

Let me explain.

Check into the names of the stuff you buy every day and you will discover that those brands are owned by corporations. Those corporations are owned by other corporations, which in turn are frequently owned by even another corporation and so forth. Like tiny little nesting dolls, this chain of corporate confusion is being used to funnel the money you give them to a very dark purpose.

It’s hard to track. I barely scratched the surface during my research but if you look closely you will start to see it. Companies take over other companies by buying up their stock; if one corporation buys below a certain number of shares they don’t even have to report the specifics. So if the person in charge of one corporation buys several other corporations, then uses those corporations to buy some more corporations, he can ultimately use all of the corporations in that chain to buy stock below the limit of what they have to report, in a method that is not only completely legal, but obfuscated to a degree that we don’t have a clue about what is happening.

It is by that method that a unknown number of people are trying to take over the world.

All of the money from all of those corporations is being funneled up the chain to one or more people who are so rich that they aren’t just after the money now. Their primary goal is to corner the markets to consolidate their power. They are currently using the funds to influence our politicians through lobbyists, campaign donations, back-scratching, and other methods of control.

I know that I sound like a conspiracy fanatic. This is why I went off the deep end for a time. I didn’t want to believe what I had uncovered during my research. I certainly didn’t want to be labeled a nutcase, so I tried to keep the knowledge to myself and just go on with my life but I can’t.

I can’t. I tried and I’m sorry but I can’t.

Because in this case to keep silent would be wrong. To keep silent would be to allow them to continue to grow their power until they manage to conquer the entire world. I don’t know what their plans are once they accomplish this but what little I discovered has left me terrified.

I don’t know how to fix this. It’s so far beyond my comprehension that I don’t have a clue. All I know is this. Every single dollar we use, every single purchase we make to the corporations in question is being used to fund their actions. And they have hidden their tracks very well.

This is why the rich have become so much richer these past few years. They are draining us, sucking us dry as they move to shift the pieces into place. This is why I began to beg of you to become more thoughtful with your purchases. This is why I have been acting erratic and have altered the course of my life.

I feel as if I’ve stumbled off a cliff and gone into freefall.

I hope you understand my actions a bit more now. And if you have any idea about how to handle this, I would appreciate it if you would let me know because, to be blunt, I am scared completely shitless.

Have I gone completely insane?

It is hypocritical to run a website about buying and living on less while begging your readers to buy your crap so I refuse to do it. That said, I live on the money I receive from book sales, so if you can find it in your heart to pitch in I would be immensely grateful.

I’ve written a lot of books sharing my odd view of life in hopes of helping others. My most notorious book is titled The Shoestring Girl: How I Live on Practically Nothing and You Can Too, but The Minimalist Cleaning Method is pretty popular as well. You can find them at the following places:

Amazon
Barnes and Noble
Apple iBooks
Smashwords (non-DRM)

Thank you for your support!

Desire and Frustration

I underestimated just how heavily it was raining as I left work yesterday afternoon. By the time I realized that I should open my umbrella it was far too late. I was soaked to the bone.

“I have got to increase my income,” I muttered as I sloshed my way home. If I acquired a full-time job making just $10 an hour, I would basically double my current income. I could afford the extra maintenance and insurance expense of a vehicle.

Unfortunately, I would have to work the same shift with someone I completely trusted to actually show up every day in order to earn the money to afford a vehicle, or sacrifice a lot of time walking to and from one of the local factories with my current transportation situation.

Basically, I’m caught in a Catch-22. I need to earn more money in order to afford a vehicle, but I need a vehicle in order to work a job that would provide that money.

That f*cking sucks.

So what can I do now, with what I currently have, in order to meet both short and long term goals?

I gave that a lot of thought last night.

I am already making progress. I’ve got an optometrist appointment scheduled for later this month. That is the first step in re-acquiring my driver’s license. Once I purchase a new pair of eyeglasses I will feel safe about applying for a driving permit. Once I attain that permit, I’ll have to wait around six months before I can even think of taking the driver’s test.

I am in the process of building my credit. To make myself feel better about my progress, I sent the credit card company $20 to pay off my current balance with money to spare. I’m doing everything I can do in that area, so after I made the payment I moved on to the other areas of my life.

Each day I restore at least one of my older posts to this website. Each day I work a tiny little bit on a new book that is in the works. It is still in the initial stages, but that book may provide a little bit more money to invest in the future.

Each night I read before I go to bed. I’ve got plans to attend the latest library book sale on my next day off in hopes of acquiring more books to further my education, so I’m doing everything I can do in that area of my life.

I am keeping up with reading the SEC filings on the companies I’ve invested in and plan to invest in at some point in the future. I pitch in a bit more money each month towards my investments. Other than pinching my pennies even further, I’m doing all I can do at the moment.

Since I’ve managed to reduce my smoking expense from 7-8 packs a week down to 3-4 packs a week, I’ve even managed to increase the amount I have free to invest. That means I’m making more progress in both areas of my life right there.

So what can I do now, on top of what I’m already doing, to meet my goals? I turned that question over a thousand times last night. I am busting my ass, burning the candle at both ends, just to do the things I’m currently doing.

Yet there are two tiny Baby Steps that I had missed.

I had yet to initiate my plan to stash half of my raise into my emergency fund. While I had established the savings account and transferred my emergency fund over in order to start receiving interest on the money, I had yet to sit down on payday, calculate half of my tiny raise, and transfer it over.

I pulled out the pay stub I’d received earlier in the day, calculated half of my raise, and transferred the money over. It wasn’t much, but it’s better than nothing.

Then, in order to signal to myself that I was serious about eventually acquiring a vehicle, I created yet another sub-account. I added $10 to that one.

It’s a measly amount, but at least it’s something. At least I am actively saving up, not only to purchase a vehicle, but to cover the cost of insurance, repairs, and maintenance when the time comes when I feel comfortable to buy. I’m not sure how much I’ll add to that fund each month, but as long as I do something, it will be better than nothing. It will be a lot better than bitching and complaining whenever I grow frustrated.

I will have something to show myself that I am taking steps to reach my goal.

But last night it just didn’t seem like I was doing enough. Ten dollars is a drop in the bucket compared to the amount of money I would require to feel safe to even consider purchasing a vehicle.

Depressed by that thought, I sat down and cried.

I gave myself a few minutes to feel sorry for myself, then I washed my face and got back to work. I am making progress, even though it doesn’t feel like it. All I have to do is keep working. The rest will come in time.

I pulled out my Success notebook, the book where I write down motivational passages and encouragement. I read every page. Motivated by that, I read one more chapter in my current business book and went to bed.

I can do this. I don’t know how I’ll manage things yet, but at least I’m making progress. I will channel my frustration into white-hot rage, converting it to the fuel I need to keep moving forward.

This is about more than me. I want to prove to the whole damn world that just because you’re poor it doesn’t mean you have to stay that way. I will learn how to run with the big dogs, and I will teach others how to do the same.

I’m gonna do that if it’s the last thing I do.

2019 Goal Update

I received a call on my day off from work yesterday, asking if I would come work for a couple of hours. I wasn’t thrilled at first but then I realized that those hours worked would take me a tiny bit closer to my goal.

I worked that short shift with a smile on my face.

I’ve made quite a bit of progress on my goals for this year. To recap, my goals were:

Have a will drawn up.
Get dentures
Get new eyeglasses
Get my driving permit/license
Determine job/career path for my next steps
Continue investing
Continue writing
Continue reading and learning
Change the stories I tell myself
Establish an official Emergency Fund account
Establish the habit of going to bed around 10pm and waking up around 6am

I placed one of my goals, acquiring dentures, on hold. I would like to avoid having my jawbone scraped (dentists occasionally have to level the bone so that dentures will fit properly), so I’ve decided to let Nature take its course for another year before I consider getting them. I’ve still got tiny little shards of bone working out of my gums; while normal, I’ve decided to wait as a result.

I’ve done some research concerning wills. I may be able to download a basic will on the Internet, make alterations as needed, and create one without the need to hire an attorney. A friend of mine is a Notary Public so I could make it official easily enough. That would save a small fortune should I decide to go that route.

I’ve made my optometrist appointment and gotten my insurance sorted. The place didn’t realize that they accepted my vision insurance at first, despite the fact that my insurance had them listed as a provider. I’ve reserved my copay from my income tax refund so I am on track to not only acquire glasses but to take the next step in my game plan–reacquiring my drivers license. While I don’t intend to purchase another vehicle at the moment I may have to at some point in the future. I want to be prepared for that eventuality.

Since I’ve recently received a promotion at work, I’ve decided to remain where I’m at for the moment. I want to see if I can eventually attain a full-time position there instead of finding another job. Since a full-time position there is only 35 hours a week, that would still allow plenty of time to pursue my other projects, which is a large concern should I find another job.

I’m still investing, studying, and writing. I’ve read 18 books so far this year; as long as I continue my progress throughout the remainder of the year I will consider this goal as attained.

Amazingly, the majority of my progress started once I began to change the stories I told myself. I allow myself to think about how my life will be once I attain my goals each night as I fall asleep; every morning before I climb out of bed I go through a small litany of affirmations as I restate my goal. When I begin to feel frustrated and overwhelmed, I take a moment to look at myself in the mirror to tell myself that I’m okay and that I can handle anything Life throws at me.

When I can’t look into a mirror I focus on the rage that has built up inside of me from decades of people who have called me worthless and crazy. I replay the day when Henry Walters, my old A.P. US History teacher, told me that I could do anything I set my mind to once I made the decision. I replay the times when my Dad encouraged me with those same words, then I pull out the coin from my very first investment and tell myself firmly that I will do whatever it takes to become wealthy just to prove the haters wrong.

The energy burst I receive from that helps me to power through.

While I’ve yet to completely acquire the habit of going to bed at 10 pm. and waking up at 6 am., I’ve managed to shift my bedtime to 11 pm. so that I wake up around 7 am. I’ve gotten to the point where I will begin to doze off if I try to ignore my bedtime so I’ve made a bit of progress in that area.

Yesterday I finally decided to bite the bullet concerning the Emergency Fund goal. I’ve been keeping the money in my checking account; I want to shift those funds into a savings account so that I can draw a bit of interest on the money as well as keep it completely separate from my primary account. I’ve had my debit card cloned in the past so I really needed to establish a financial buffer there. I started the process to open a savings account at my local bank yesterday to accomplish that goal.

Speaking of financial buffers, I’ve decided to take my Auntie’s advice since you agreed that it was a wise decision. I plan to acquire a credit card this year to not only build my credit but to use while making my daily purchases. I’ll keep you posted as I move forward on that plan.

To my surprise, I’ve made more progress on my annual goals so far this year than I have in any other year that I can recall. I’m not sure what the difference is but I’m definitely not going to complain!

How are you doing with your goals for this year? Nosey old biddies would like to know, so please share your stories in the comments below.

Hmm…that rhymed. I kinda like that :).

Have a nice day!

Income Tax Refund Report

I spent $296 at the grocery store the day before my birthday. The kid seemed nervous at our barren pantry so I sorted it.

I’ll not have her skipping meals because she’s worried that I can’t afford it. Just because she can’t chip in towards the grocery expense right now doesn’t mean that I’ll let her starve.

The food should last us for quite a while; more than enough time for her to get back on her feet and find a job. In the meantime I’ll have a bit less to invest but I can deal with that.

Food comes first. I may not spend much on extras like eating out but I’ll not have us starving.

I allotted the grocery money from our income tax refund. Along with food I purchased toner for our printers (we were on our last cartridges), some file folders and assorted office supplies, a paper shredder to keep on track with office upgrades, washable puppy pads, and leakproof panties. The last two were purchased to eliminate the need to buy two particular consumables: puppy pads and pantiliners. Now that I have a washing machine I can eliminate that expense.

I paid my annual hosting fee on this website, set the money aside to purchase new eyeglasses, and sent the remainder of my refund to my brokerage account.

Even with helping the kid through her current challenge, I am still making progress towards my goals.

I am content with that.

How did you spend your income tax refund? Did you choose to save or invest any of it? Please share your stories in the comments below.

2018 Financial Report

After a huge amount of struggle I finally located an online tax service that would handle the K-1 statement that was giving me so much trouble. I spent $95 to use the service but I consider it money well-spent. They not only managed to increase my refund, they saved me the bother of having to track down someone locally to do my taxes.

That said, I will definitely have to consider the merits of hiring a professional to do this stuff in the next few years, especially when I start investing in real estate.

Income Comparison

2017 Adjusted Gross Income: $5,631

Income sources for 2017: Part-time cashier at a grocery store and book royalties.

2018 Adjusted Gross Income: $9,964

Income sources for 2018: Part-time cashier at a grocery store, book royalties, stock market dividends and sale proceeds.

Income Increase/Decrease: $4,333 increase, or 77%.

Amount Invested in 2018: $2,153 (Includes reinvested dividends and sale proceeds)

Percentage of annual income invested: 21.6% of AGI.

2019 Income and Investment Summary

I did quite well last year! I knew that my public job income had increased due to my raise and additional hours worked but I had no idea that it had almost doubled.

My book royalty income took a serious hit last year but I only published a book or two of fiction. Those are under another pen name. I did them for practice and didn’t expect much. I can’t recall offhand if I published a nonfiction book last year but I doubt it. I’ve got a nonfiction book in progress at the moment that I’ll continue to tinker on as time allows. Hopefully that will give my income in this arena a boost. That income source is still pulling a profit so this website will remain active for yet another year. At this point I will probably keep it active whether it is pulling a profit or not, simply to chronicle my progress on this new adventure.

The current value of my stock market investments is laughable but I knew they would be. Not only am I still learning; I’m also using contrarian investment strategies and a long-term outlook to maximize my investment. I’ve not lost any money yet; based on my research that is what truly matters so I am satisfied.

Lessons Learned

I’ve learned the value of patience. I jumped too soon on my Corus investment; while I expected them to cut their dividends, I had no idea just how negatively it would affect their stock price. If I had waited until after the dividend cut I would have doubled the value of my investment when it slowly ticked back up; as it is I’m barely breaking even on stock price. While I’m not concerned (I’m still receiving dividends), it taught me a valuable lesson concerning how the market moves as well as the value of patience.

I’ve learned that while diversification is a good thing that right now I cannot afford to diversify too much. It is much better to own more stock in fewer companies than a little bit in a bunch of companies. As a result, I now locate a company that I like, work out the highest price I am willing to pay for the stock, and invest in it until it reaches my high limit before moving on.

This strategy not only maximizes the earnings potential of my investments, it greatly reduces my trading fees. It also drastically reduces the amount of research I have to do to locate potential investments.

I’ve learned from experience just how beautiful dividends can be. I have roughly a week’s wage coming in each year through dividends now. I repeat that feat 51 more times and I will be financially free once more. I don’t intend to simply focus on dividends, however. Before I will even consider quitting my day job I want to have at least two sources of passive income that will cover my living expenses. This will protect me if one of my sources takes a hit (like my book royalties have–lesson learned!), and will allow me to live on one income source while investing the other so that my income will continue in an upwards direction. I want to ensure that I have the inevitable cost of living increases covered with money to spare when I decide to retire from working a public job.

Plans for the Future

I want to slowly improve my quality of life over time. While I have no issues with living cheap, I want to grow my income to the point where I no longer have to out of necessity.

I’m also curious. Just how high can I grow my income since I’m starting at the bottom? Can an old woman with barely a high-school education, who brings in between $600-$700 a month from book royalties and part-time work become a millionaire?

Is that even physically possible? Can I read a few books and learn enough about investing to pull off such a feat? If so, how long will it take?

I don’t know, but I’m definitely going to find out.

Because if I can do this, if I can start from rock-bottom and work my way to the top, that will prove beyond a shadow of a doubt that the American Dream is not dead. It will prove that, no matter who you are and where you’re starting from, that you can improve your financial life as well.

On a personal note, it will prove that this “waste of humanity,” this woman who has been called crazy more times than she can count, isn’t quite as dumb as those around her thinks she is.

I don’t care if that’s childish; I still want a bit of vindication. I’ve been laughed at so many times over this past year that it’s starting to piss me off. I’m getting to the point that the anger inside of me is pushing me to work harder.

For now I’m going to take a break. I am going to enjoy the rest of my evening so that I can wake up bright and early tomorrow morning and get back to work. Have a nice night!

Taxes are a Pain

I have just discovered something the hard way: filing your taxes on investments can be a major pain in the butt.

I’ve not only discovered that my usual online tax preparation service can’t handle the forms I need to file, but H&R Block wants to charge me an arm and a leg to file this stuff online.

For now, I’m going to walk away, calm down, and think about this. If I’m going to have to pay around $100 to file them anyway, it might be best if I simply hire a professional to do my taxes locally.

There’s one just up the street.

I’ve got one online tax preparation service that I’ve yet to try that I’m aware of: TurboTax. I may try them tomorrow. If I can file online without beating my head against a wall, I’ll do that. If not, it will be time to make some phone calls starting Monday.

Wish me luck.

A Tale of Cowardice

This is the very first year that I will file tax forms in relation to my investments. The very first time in my life that I’ve actually had real, Big Dog investment income to report.

I’m having to fight the urge to turn tail and run.

The other day I received the small package with the necessary tax forms to file on one of my tiny little investments. I turned the envelope in my hands, shaking at the fact that it was my name, and my address on the envelope. It just didn’t seem real.

I went to open it and stopped. Surely something as important as this needed to be commemorated? I pulled out my camera and snapped a photo.

And then, like the big fat coward I am, I set the envelope aside. I just couldn’t bear to open it. Opening it would make it real.

I have sat at my desk, turning that envelope over in my hands for days now. I’ve debated upon the best way to open it. Should I open it at the top, or tear off the side like my dad did his letters when I was little? Should I use a knife, or invest in one of those fancy little letter openers that I imagine rich people use?

I’d debate for a time then set the letter aside once again.

Did my dad feel this way when he bought his first apartment building in Chicago? Did he feel this way when he made his lone investment in the stock market?

I wish he was alive so I could ask. All I can remember is that he stored his important papers in a combination of cigar and shoeboxes. He preferred Choice-branded pencils (new) whenever he worked up his taxes. I can still see his papers spread out upon the table as he scratched out his calculations, cussed a bit, and made some erasures before starting again. The sweat would bead upon his brow as he leaned over his work, laser-focused on Getting It Right.

This really shouldn’t phase me. I’ve been filing taxes on my book royalties for ages now. But this is different and new. This marks my first Baby Steps into the Big Leagues.

The forms from my broker sent me were easy to open. They were digital so I downloaded them to my computer and plugged them into my online income tax preparation software without a thought.

But these? These forms are old school. These forms are real, right here in my hands. These papers are concrete proof that I’m either completely insane or in the early stages of something brilliant.

Before I went to bed last night I picked the envelope up once more and turned it over in my hands.

“Screw it!” I tore a small strip off the side of the envelope, just like Dad used to do and slid the papers into my hands.

I grinned. A tear slipped down my face as I quickly scanned through the document. It came with an instruction booklet, which is good since I’m still learning this stuff.

I’ve got three days off this week. My goal is to enter in the information from this form and figure out how to handle the info related to the stocks I sold over the past year while I experimented. I’ve already entered my W-2 from work and the 1099s related to my writing business. I’ve got to double-check, verify that I’m doing this right before I screw up my courage, close my eyes, and file this sucker with the state and federal government.

Wish me luck.

(Not So) Light Reading

You see that gigantic stack of papers in the photo? That’s the latest SEC filings for BlueKnight Energy Partners, one of the dividend companies I’ve invested in.

That stack of papers is close to 300 pages of legalese, deliberately designed to be completely incomprehensible to the average person.

I have to don a business suit just to get the words to appear on the pages.

I’m kidding. But sometimes I wonder if it would help. As it is, I feel like I deserve a Dunce cap as I wade through this stuff and try to understand it.

A college education in law or finance would probably help but guess what? I don’t have either of those pretty feathers to stick in my cap…

…But that’s not going to stop me. I will read this stuff, and keep reading it, until the day the light begins to glow in my uneducated, poverty-riddled Hillbilly brain and I figure out what on God’s Green Earth they’re talking about.

Pieces of it I can understand already. This little company is designed to generate cash distributions for its stockholders in the Energy industry. It does stuff with asphalt and is a one-stop shop for oil well owners who want to transport their crude oil to refineries, regardless of how far away they are from the pipelines. BlueKnight sends in the tanker trucks, hauls it to their storage and pipeline areas, then works their particular magic with the stuff to send it down the line.

They also posted a major loss this past quarter and had their partner pull out of a pipeline project called the Cimarron Express. As a result, investors have fled from this company like rats from a sinking ship. At the close of day Friday that little company was trading for a measly $1.06 a share.

That price translates into a 32% dividend return, which is the reason I’ve spent the past few days wading through a stack of legalese that’s so obtuse a Geometry teacher couldn’t understand it.

I’ve got about $250 to invest this round. I’d initially planned to purchase more Valeritas shares but that dividend return is calling to me. They dropped their dividend rate a while back before the Cimarron Express was a thing. From what I can determine, they intend to keep their current distribution rate over the next year regardless. As a result, their dividend is relatively safe over the next year. Even the expert analysis my brokerage sends me agrees on that.

If I’m right, the reason that they posted a loss wasn’t that the company actually lost money but because they took what is known as a writedown on their assets that only made them look like they lost money. It’s a common trick businesspeople use to lower the taxes they pay. That was how they explained it in their conference call a few days ago; I just want to see it in writing before I put my money where my mouth is.

I may be crazy, but I’m not completely stupid. I don’t expect the price on this stock to go up much over the next year but at that price the dividend return would compensate for that.

It would also take me a tiny bit closer to achieving financial freedom.

For now I need a break. I’ve read this stuff until my eyes have glazed over so I’ve set it aside. I’m going to hang up this last load of laundry, soak in the tub for a bit, and call it a night.

Tomorrow marks the first official day of my management training. Next week will be filled with that and the mixed blessing of the kid arriving home from the Navy.

I’m dreading tomorrow. I’m going to miss my cashier’s smock.

Three Jobs?

Since yesterday was a maudlin day (as you could tell from my post), I called up my beloved Auntie early this morning for some much-needed encouragement.

“Well, it’s no wonder you’re exhausted and feeling emotional!” Auntie declared once I’d shared, “You’re working three jobs, taking care of your house, and studying like you were in an actual college class besides! I don’t know where you get your energy, but if you ever figure it out you need to bottle it cause I want some!”

“Three jobs?” Huh? How on earth did she figure I was working three jobs? I wondered.

“Three jobs, Missy. You’re working at that grocery store, you’re running your writing business, and you’re busting your butt to get your investment business going. Then on top of that, you study every night before you go to bed. You’re doing a lot!”

Hokay….

A bit flabbergasted, I concluded the call so I could sit and think. Was I really doing the equivalent of working three jobs?

I am. I really am.

I didn’t realize it, but the majority of my time is spent working. When I’m not writing, I’m researching companies, reading gigantic SEC filings as I brainstorm ways to come up with more money to invest and work out the best ways to invest given my limited funding.

When I’m not doing that I’m either working at my public job, studying nonfiction books related to business, investments, or my writing.

And somehow in the midst of all of that I manage to clean my house, take care of other personal business, and sleep.

How on Earth did I stumble into this?

More importantly…wow.

I hadn’t shared it with you, but I’ve got plans to incorporate my investments at some point. I’m not there yet but Annienygma Investments is a thing. It’s what I call it in my head, and it will eventually encompass not only stock market investments but real estate as well when I can manage it.

OMG. I’ve got a writing business that’s around a decade old (bit older, if I recall correctly). I’ve got my public job. And I’m in the very early stages of forming an investment company.

I had no idea.

It’s no damn wonder I’m so tired and moody.

What surprises have you encountered lately? Please share your stories in the comments below.

The Life of a Social Outcast

This past year has taught me that it is not socially acceptable to save money. It is not socially acceptable to want to educate yourself. And it is definitely not socially acceptable to spend your time pursuing your dreams.

With the exception of my auntie and a couple of friends I’ve been forced to go underground, to hide what I’m doing and who I truly am. The criticism has become too overwhelming. It’s gotten to the point where I’m forced to tell everyone that I am constantly broke just so they’ll leave me alone.

It’s no wonder so few people actually work towards their dreams. They are surrounded by a world that’s fighting to keep them down.

I don’t dare discuss my financial goals with my friends. I don’t dare discuss how I manage to save money every month to deposit towards my dreams. I stopped daring to discuss the books I read, since they look at me as if I’ve sprouted a second head when I mention books like Price Theory, Financial Management, or Sam Walton’s biography.

Most people around me read only fiction, if they read anything at all aside from Facebook posts. I’ve been called crazy to my face more than once for being happy that I scored a business book by checking the giveaways at the library.

Why is it crazy to want to educate myself and improve my life?

“You need to get your nose out of those books and start living!”

“You need to get away. Some friends and I are taking a trip to Florida. Why don’t you come with us? It’s only $700 to split the hotel room and gas. You can afford to cut loose!”

“Come out to the bar tonight after work. I’ll pick you up!”

“Ugh! You’re going to burn out your brain reading that stuff! Why do you even bother? You need to take your money and buy a car. Hey, wanna get your nails done? It’s only $35.”

“You work too much! All work and no play is making you boring! All you need to do is find a good man to take care of you; if you’d date for a change you wouldn’t have to work so hard! Seriously, you need to get a makeover so you can attract a man! And take that damned ring off your finger. You’re available!”

I find myself missing my former co-worker, Miss K, on a daily basis. She is a high-school student who noticed my inner battle.

“You’re going to be a secret millionaire.” She gazed at me with depthless eyes one evening as we shared a break together. “I can see it. They don’t understand but I do, and I admire you. And every day I see you sharing less because they just don’t get it. One of these days you’re going to make it, but don’t tell them that. You hide what you’re doing. It will make it easier.”

God I miss that child.

Perhaps in time I’ll make a friend who is as determined to succeed as I am, who is willing to do whatever it takes to achieve their goals but until then I’ll just go it alone. I’ve got to do this, not just for me, but to prove that even the poorest of the poor can achieve financial freedom if they truly want it.

Until then I’m just going to keep my fat mouth shut.

Do you have to hide too? Please share your stories in the comments below.

Patient Experience

Last year I invested in Corus Entertainment, a Canadian company I stumbled upon when I first began investing in the stock market. I could sense that they were about to make some serious changes to the company; based upon that and a gambler’s hunch I bought in.

Sure enough, just as I expected, the company slashed their dividend. However, I hadn’t anticipated just how that would affect the stock price.

It tanked.

I decided to ride it out. It hurt, watching one of my very first investments, one of the very first companies I’d invested in using my limited experience to drop so sharply. I counted it as the cost of experience. I would learn something from this; even if I lost every penny of my investment it would be worth the price of admission.

It would also test a theory of mine. Based on my studies, I believed that in a quarter or two that the stock price would rise again as the company used the money previously allotted to a dividend to improve itself.

I was right.

Over the past few weeks I’ve watched the price of that stock slowly tick upwards. Yesterday, in the excitement of a new earnings announcement I watched the company’s price briefly hit $5.41/share.

I only paid $4.94/share when I bought in.

So what have I learned? I’ve learned that dividend cuts can be a very good thing for shoestring investors. Wait until the cut is announced. Watch as the price of the company’s stock tanks, and then buy as much as you can afford. In a few quarters as the company uses the extra funds to grow stronger, the stock price will advance again.

I am currently using that method on another company I’ve discovered. I intend to buy until the stock reaches a certain price and then move on to my next target.

Patience is key. Just as a successful business isn’t built in a day, a profitable portfolio isn’t built overnight.

I have now discovered that I learn best through practical experience. I’ve learned to pay the price of admission, even if I don’t fully understand the game. I’ve learned that experts can be wrong, and the only way to discover that is to do your research and make your own decisions.

What have you learned lately? Please share your stories in the comments below.

Potential Paths to Success

The kid got her permit today.

She’s over the moon with the achievement. She intends to acquire her driver’s license, invest in a vehicle, and get a better-paying job.

Late last night she discussed her options with me. She asked if I would mind if she lived with me, splitting the expenses until some time in 2020. This would allow her to have a support system when her fiancée is deployed overseas this year.

While the mom in me was like really? the frugalista in me was cheering.

It opens another option line for my future.

If the kid remained living here my bills would continue to be low. I could piggyback off of her, using her vehicle to re-acquire the license I gave up while writing The Car Free Experiment. This would allow me to get one step closer to my long-term goals.

We discussed the option of getting a factory job together. We would both save money by splitting transportation costs. We could almost double our hourly income with this route; the extra hours we would receive would mean that our weekly income would more than double.

I could invest $500-$1,000 a month if we went that route.

In order to receive a base amount of money to live on ($500/month), I need to have $60,000 invested in dividend stocks at a 10% return. Not including rolling over my dividends and chipping in my royalties, I could have that socked away in less than 10 years by simply investing that minimum $500 a month; less than five years if I managed to invest $1,000 monthly.

I could work in a factory job for 10 years. It would be rough, but I could do it. I may not even have to work in one for that long, depending upon how my overall investments, my book royalties, and other options pan out.

No one knows the future, of course, but I find that exploring options is a worthwhile exercise. It allows me to brainstorm potential paths towards my long-term goal and to weigh potential pitfalls as well as what steps I would need to take in order to hedge my bets.

If anything, this path would allow me to turbo-charge my investments and allow me the income needed to acquire a vehicle of my own, as well as the money needed for any classes as I work out the best career to settle in for the long-term. I have no real desire to work in a factory until the day that I die.

What options are you considering to achieve your long-term goals? Please share your stories in the comments below.

The Stock Market is Tanking

Just as I suspected earlier this year, the stock market has continued to drop as the Fed increases their rates. Here is a quick screenshot of the S&P 500 demonstrating the phenomenon:

Just look at that line! It’s amazing! You don’t even need the numbers that I forgot to clip with it to see how far it has fallen.

Unfortunately, that means my Dad would be begging me to re-think my strategy if he could see the current value of my little investments.

I’m not even mad. I’m over here, cheering on the sidelines because the Fed announced two more potential rate hikes for next year.

By fishing at the bottom of the barrel I’ve limited my losses. There is only so low the values can go, after all. Before this is over my portfolio will end up looking much worse before it gets better but once prices begin to go back up I’ve no doubt that they will leap beyond the piddling prices I’m currently paying.

I’m basing my current strategy on historical information. In the past, the Fed raised rates until something broke in the economy. Occasionally we have entered a recession as a result of this break.

I will be fine if we enter a recession. I work in the discount grocery industry; people will need food regardless. Less money to spend means that more shoppers will visit my little store, so my job is secure regardless. I walk to work so I’ve no worries about fuel costs, and I keep my recurring expenses as low as they can go so I’ve got a bit of wiggle room if prices rise.

Even better on the financial front; Katie’s move has been delayed. We’re not sure when she will be able to marry her beau at the moment, so until she gets things arranged she will be staying here indefinitely. This means that my monthly expenses will remain low throughout most of the winter.

That will give me more money to invest. I intend to invest every penny I can to take advantage of this drop in prices.

Time will tell if my game plan will be profitable in the end.

When Life Takes A Left Turn

My life has taken a really strange turn since Thanksgiving. Not only has my ex-husband passed away but certain aspects of my personal life that concern the situation have also gotten very, very strange.

The worst part of the whole situation is that I can’t share what’s going on yet. Things are still in motion; I might jeopardize the outcome if I say too much online. I’m writing it all down in my journal because I want to share the story with you when all of this is over. Truth is much stranger than fiction in this situation.

Even with the chaos, I’ve got to regain my focus. I have something I want to achieve and I’m not going to do that if I allow my mind to keep thinking about a situation that is mostly out of my control.

With that in mind I’ve made myself start reading again. I’m not reading much, but every little bit of knowledge I glean will take me a step closer. I just need to focus on what I can do right now, with what I have, and let the rest fall into place as it can.

I initiated a transfer from my savings account today, emptying it for the next round of investments. That account only collects a portion of my royalties but it’s enough at current stock prices to increase my holdings a tad. That will allow me to make some more progress while I get through the holidays. Once those are over I’ll analyze my finances and invest a bit more.

I’ve also discussed having a will drawn up by a local attorney. I have a price now; I’ll work that money into my budget next year. I want to make sure that anything I leave behind goes where I want it to go, especially in light of what I’m witnessing since my ex-husband has passed. I may not have much right now but I’m no longer in the mood to take any chances.

Since 2018 is now waning I’m in the process of making a list of things I want to accomplish next year. The end of this year may be traumatic but it will pass. I see no point in allowing my current situation to derail me. I’ve waited far too long, had far too many false starts on a goal I’ve had in my head since I was a child to allow anything to stop me now that the fog is slowly lifting from my path.

I have a sneaking sensation that 2019 will be even more eventful than this year has been. I’ve grown so much this past year; I’ve experimented, made adjustments, and learned more about myself than I ever have in times past. I intend to continue that progress.

I will write more as time allows.

Financial Surprise

As I caught up on the task of logging the money I’ve spent this month I discovered that I’ve done a lot better than I anticipated when it comes to reducing my spending. Even with stocking up this month on pet food and supplies atop of saving some money back for the upcoming book/surplus sale the local library is hosting soon I will have more money left over at the end of this month than I anticipated.

Between that, the fact that I still have last month’s royalties stashed away, an extra paycheck coming this month, and a new round of dividends hitting my account I might be able to afford another round of investing. The stock market is down at the moment; prices on my favorites are at a delightful low. If I could afford to toss another hundred dollars into them that would allow me to inch a bit closer to financial freedom. The extra dividend income may come in handy once Katie moves out but if I don’t need it I would have that much more to reinvest once winter ends.

I’ll know more at the end of the month. For now, it gives me hope that I’ll be able to survive the winter without being forced to suspend my goal of financial freedom entirely.

It’s always a treat to discover that you’re doing better financially than you thought.

Have you ever looked at your finances and realized that you’re doing better than you thought you were? Please share your stories in the comments below.

Unjustifiable Luxury

I want a washing machine. I really do. I would like few things more than to be able to sit at home and do my laundry whenever I desire.

With this in mind I pulled out my trusty ledger and checked to see just how much I spend each month at the laundromat in hopes that I could justify the purchase.

I spend $15-$20 a month.

A new portable washing machine ranges in price from $100-$300 depending upon size and features. The cheapest model that I like (that would fit in the small space I have) costs $173.00. It would take approximately nine months of laundry savings to pay it off.

That’s not bad, not really. If the machine held together for a few years I might even come out ahead in savings. I could wash what I wanted, when I wanted. Of course, knowing me I’d eventually splurge on a little dryer to match. In roughly 20 months I would have paid for them in laundry savings and convenience.

But can I justify it in light of my goal? If I spent $300 on a washer and a dryer I would gain convenience, but if I invested that money I would be almost a day’s wage closer to freedom, even more as I reinvested the dividends.

In light of this I am forced to ask myself which do I want more? Do I want the convenience of washing my laundry at home, or do I want my freedom? As much as it stinks, I am forced to make this choice: convenience now or freedom later?

And you know what? I want my freedom. As much as I would love the convenience, I want to go back to the days when my time was my own once again. I want to wake up when I want to wake up. I want to immerse myself in my writing or my house cleaning without having to stop in the middle to go to work just to pay the bills. I want to work because I want to work, not because I have to work. If that means that I have to suck it up and drag my tired butt down to the laundromat and deal with a bunch of screaming kids then so be it. If that means I have to wash my laundry in the bathtub and dry it with a box fan then I will do just that.

I will do whatever it takes to achieve financial freedom. The rich buy assets; the poor buy liabilities. I have to remember that. As much as my tired, ornery butt dislikes dealing with my laundry I will suck it up and move on. I will allow the owner of the laundromat to deal with repairs, maintenance, and higher utility bills while I invest every penny I can spare to regain my freedom.

That said, there’s a spoiled little girl deep inside of me stomping her feet in frustration. She wants a washer, dammit! She wants a washer and a dryer and while I’m at it I need to throw in a couple of pink unicorns for her as well because nothing else will do. She’s tired of being poor. She wants to have at least some of the things that normal people have.

But the voice of logic reigns. I won’t be poor forever, not if I apply myself each and every month to my future. If I focus on my writing, rebuild my book royalties and invest the funds I will have a much safer, better future than the one in store for me if I surrender to contemporary pleasures.

In the meantime I’m not in the mood to deal with people today so it’s time to dump another basket of laundry in the bathtub. Mama needs a clean pair of panties.

Is there a desire in your life that you can’t currently justify or afford? How does that make you feel? Please share your stories in the comments below.

Two Hours Closer to Freedom

Today was the day for my latest stock purchase. My transfers had arrived at my brokerage and I had a day off to savor the experience of growing a tiny bit closer to freedom. I targeted Blueknight Energy Partners (BKEP), a tiny company in the Energy Sector that I’d been eyeing for months. I’d researched them, noting several things I liked about the company as I waited for them to officially slice their dividend. I’ve learned my lesson about buying stock prior to a dividend cut so I held my hand and waited.

Sure enough, the stock price tanked when the cut was announced. I watched it, waiting for it to hit bottom so that I could calculate the new dividend yield based on the lower price. When I was satisfied with both the price and the yield I began purchasing shares in the company.

This month I managed to buy 54 more shares. At the new dividend rate I will receive 32 cents a share per year which works out to $17.28 in annual dividend income thanks to today’s purchase.

I’m over two hour’s wage closer to my goal.

In total I now own 138 shares of Blueknight. I’ve spent $388.04 on the investment, which includes my brokerage fees. This investment will provide $44.16 a year in dividends.

For the moment I’ve decided that I absolutely adore companies that decide to slash their dividends in order to pare down debt or to expand their businesses. Investors hate companies like this so they flee in droves, allowing cheapskates like myself to sweep in and purchase shares at bargain basement prices.

I have finally found my niche.

What risks are you taking in order to achieve your goals? Please share your stories in the comments below.

My Stock Market Investment Strategy

After a lot of thought and research I finally settled upon a specific set of criteria to use while searching for stocks to invest in. While I do allow the occasional exception, for the most part this is how I locate stocks for purchase.

My Stock Market Black List

These are the reasons I pass up investing in a lot of companies.

Index Funds and ETFs. If the market seriously tanks I’ll reverse my decision but for now I avoid them. I believe that they are currently overpriced.
Non-dividend-paying stocks. My goal is to build passive income through dividends. With one exception (I’ll discuss this in a later post), I have avoided them.
Stocks in the Finance Sector. Finance companies make money through loans or investing in groups of loans bundled up in packages. I have personal issues with the use of credit. I’m also honest enough to admit that I don’t understand derivatives and other financial jiggery-pokery well enough to make investment decisions in this sector so I am avoiding them entirely. If I learn enough to feel safe, this limitation will be lifted as well.

What I Search For In A Stock

Companies with a history of paying dividends. A decade or more is preferred.
Companies with a large volume of insider buying. If insiders are purchasing on the open market it is usually a sign that the stock price will go up in six months to a year. I don’t include stock options that have been issued in this analysis, though I do investigate further if an insider is selling a large amount of stock.
Companies with a significant amount of major investors. I take note if I discover that the big dogs are scooping up shares. They have access to more information than I do so I like to ride on their coattails whenever possible.
Companies trading for $5 a share or less. This is a budgetary restriction.
Companies with excitement in the voices of their board members. I close my eyes and listen to their voices on their conference calls, noting the emotions. Any company that doesn’t display obvious hope or excitement for the future, who has board members that seem bored or disgruntled, are eliminated from my list. I do keep an eye on them, however. One company I recently invested in went from sounding hopeless to excited about the future as they described how they had managed to pay down millions in debt over the course of a single quarter. I jumped on that stock as soon as I noticed the change.

Since I am investing on an extremely limited budget I focus on companies that have fallen out of favor with investors. I search for companies that have reduced their dividends in order to pay off debt or expand their businesses. Investors hate companies that slash their dividends so this usually causes their stock prices to tank. Since major exchanges will only allow stock prices to go so low before they are de-listed, these companies are motivated to do whatever it takes to keep from slashing dividends further and will do whatever it takes to increase their stock price over time. I love locating companies that are reallocating dividend money to pay off debt. I take that as a positive sign of fiscal responsibility despite the fact that most investors disagree.

My criteria severely limits my stock selection but that’s okay. It’s a start. I’ll be able to lift some of the restrictions as I learn more and work out ways to increase the amount of money I have available to invest. It will just take time.

Do you have any specific criteria for your personal stock market investments? Please share your stories in the comments below.

My Financial Freedom Game Plan

Despite the fact that I spent more than I like last month I still managed to have money left over for investment. I took the $67 I received in royalties and added $63 from my paychecks to it in order to scrape up $130 to invest this month. I plan to stick every penny into a single stock I’ve targeted.

This will increase my annual dividend income by over an hour’s wage.

My Game Plan

Keep my expenses low to maximize the amount I can invest each month.
Invest in stocks that fit the criteria I’ve worked out (I’ll write more on this later).
Reinvest any dividends received.
Repeat.

In time this method will allow the annual dividends to grow to the point where they match the annual income from my day job. I mark my progress by my original hourly wage of $7.25 an hour. Every hour’s worth of dividends I receive takes me closer to freedom.

So far, factoring in the dividend cut from my miscalculation on the one stock, I’ve managed to build my investments to the point where the dividends are close to a single week’s wage. I only have fifty-one week’s worth of wages to go in order to achieve financial freedom.

Not bad for a beginner.

Do you have a plan to achieve financial freedom? Please share your stories in the comments below.