What Happens When You Self-Tax Yourself...?

What happens when you self-tax yourself 30% of your Income? | Dividendhack.com

What happens when you self-tax yourself 30% of your income, while chipping away at your debts, and living below your means? The results are not surprising, but difficult to implement! 

Robert Kiyosaki often says to "pay yourself first." Among everything out of his book, "Rich Dad, Poor Dad," that parable was one that stayed with me the most. It often drives me to continue along with the process, which I will get into later on in this article. 

Personal Finance is something that is never taught in school until you are either in college for finance or out in adulthood. After graduating business school with a finance degree in December of 2016, I was out in the world. Gradually the realization of the surmounting debt I had plus the paycheck-to-paycheck lifestyle I was in caused me to learn and grow. With all of the experiences I had, I learned at the expense of my mental well-being and I had to restart from scratch. 

I accumulated $6,500 worth of credit card debt, after experiencing numerous setbacks that were unaccounted for. I had a total debt amounting to $36,000 at one point; and then to a more manageable $27,000. 

I was conflicted with all of the information out there about how to tackle debt. Robert Kiyosaki says to pay yourself first and focus less on the debt; Grant Cardone says to 10x your lifestyle and 10x your output (which is what caused me to go paycheck-to-paycheck); Dan Lok adhered to the snowball method; Dave Ramsay preaches about paying off your debts first and cutting up all credit card debt. And the list goes on.Through trial and error, with the purifying aspect of the trial-by-fire approach, I started developing my own system that worked for me. 

The first thing I had to do was do a hard reset. In 2018 I focused on my mental well-being and I started to sleep more. I wanted to focus more on me and the thing I loved, which was very few by then.  I was, by then, a highly jaded individual and prone to fits of anger and I took it out on everything I loved. 

In 2020 I sought the counsel of specialists. After the one thing I loved passed away, taking 3 months of mourning time, I had nothing else to live for but day-by-day. If I had nothing else I loved, I was going to live to the fullest and take advantage of all that life had at its disposal. I was going to live day-by-day and experience all that life had for me. 

By this time, I had moved back in with my parents and so my overhead was far lower than before. I tested and tried everything. I tried day-trading, doing YouTube full-time, reading all of the self-help books, mining Crypto full-time; all this to spend more time with the one thing I loved (my dog). Then he passed...I swore to myself with a vengeance that I would never ever let money get in between the things I loved ever again. I applied for all of the work-at-home jobs I could, and I was interviewed for one temporary work-at-home job with the optionality to go full-time all things being considered. I took the job and did it day-by-day. I excelled after numerous setbacks: the feeling of being fired at any moments notice, and then I got my foot in the door. After 7 months I was promoted, and pretty soon my pathways were forming. 

By this time, money was of no concern for me. I was living day-by-day and I was focused on giving the most quality to the people around me. I was keen on performing to excellence and I wasn't comparing my income to others anymore. My discipline was starting to form. While others would focus on the wage or salary of a job, I was more focused on company culture and my output. Prior to this, I was focused on maximizing the most amount of income that I possibly can instead of providing and enjoining quality. 

Tony Robbins' parable of "it's now how much money you make, it's how disciplined you are at investing" was starting to unravel. There have been many success stories of dividend investors who constantly compounded their interest by investing in company stocks or other alternative investments on a meager wage. Former UPS worker Theodore Johnson for one, and Grace Groner being the other.

My Discipline Unravels

TLDR. Long story short, my own method starts to unravel. I focused on the aspect of "paying myself first", then paying off my debts second, buying stuff that I actually need and enjoy third, and then increasing my emergency cash fund last. 

Credit Card Debt:

I used 0% Balance Transfer offers for credit cards over the span of 5 years to eventually bring $6.5k (or more) down to a current balance of $568. When a credit cards promo rate would expire, I would apply for a new credit card with a promo rate at least 1 month prior to balance transferring it to maximize my chances. I applied for one credit card every year in order to be approved for a credit card every single year while increasing the available credit, and my credit score simultaneously. I was NOT focused on credit score, because I already was expectant of the scores ebbing and flowing. Credit score is a trap because when people focus so much on it, it consumes them and causes them to make irrational decisions. I would know. 

Student Loan Debt:

I focused on chipping away at my student loan debts individually, with the lowest segment balance first and paying towards the interest on all the other loan groups lastly. I used a modified version of snowball method to pay down the principal of the lowest dollar amount first, and then pitched in a little extra to maintain the interest to keep the principal balance from going over too much on the other balance segments. 

Lowered Overhead Costs:

Because of my lowered overhead, I was able to have more flexibility with time, money, and spending-investing power. Because of this, I was able to grow with my current company while focusing more on my future by compounding interest steadily over time. 

For example, I initially invested in M1Finance in 2018 and then liquidated it due to my paycheck-to-paycheck lifestyle. Then I re-invested in M1Finance again starting with $9.92 in November of 2018. It has steadily compounded to what it is now:

My M1Finance Portfolio YTD after liquidating - dividendhack.com


I shifted away from the perspective of higher salary to higher quality. I focused on providing the best value to any company that I possibly can, and I focused on work-at-home jobs rather than a brick and mortar position. I always envisioned working from home especially at an earlier age. I wanted to become my own boss, and in some ways this last ditch effort at a work-at-home position was in some ways letting me become my own quasi-boss. 

Wage or Salary didn't matter to me anymore. In a few short months I got promoted and I started excelling at my job. I did not have the stress of upkeep anymore. I was able to just wake up, go to work from home, and keep a steady flow of income. I then had more time to focus on my side careers and passions, such as blogging and real estate with my first deal coming this month after more than a year cracking away at it. 

Check out this article to see my April-end 2021 Income, Asset, and Debt Report:

Check out my blog at www.dividendraptor.com for recent April 2021 Asset-Income-Debt Report!

In Conclusion:

My journey towards financial freedom is more in-sight. My day-by-day approach helps me far less prone to anxiety and depression, and less apt to comparison with others. It helps me free up time to focus more on the things that endue fulfillment and it provides a streamlined approach towards investing, debt-deficiting, and income growth. Using the simple approach towards eliminating debts, increasing assets & income has definitely caused me to become more effective with all three areas of Assets, Debts, and Income. 

Automating all three processes, after learning the complexities of residual interest and compounding interest, has definitely aided to my system. More on credit card automation in the next blog post...STAY TUNED!

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