This Is Sabotaging Your Financial Freedom
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I have a friend here in Las Vegas who’s a videographer, and he does pretty well for himself. He’s worked hard for it too—I know he’s been through some incredibly tough times trying to get situated in his career.
One thing about him: he’s always driven a nice car. For as long as I’ve known him, he’s had this tricked-out Audi A5 with aftermarket rims and a matte blue wrap. It’s a sweet ride—only a few years old—and he takes great care of it.
Recently though, after landing a big new client, he decided to reward himself with an even sportier upgrade: a brand-new, matte white Audi R8 that looks something like this. I could tell this purchase was a really big deal for him, and it was his way of celebrating his success.
But it didn’t stop there. He upgraded his gym as well, going from a $10/month membership at EOS Fitness (where I go) to a $125/month membership at Dragon’s Lair, a prominent bodybuilding gym that’s big with the serious lifters in town.
All in all, my friend treated himself to some pretty big lifestyle upgrades (and there were more than mentioned here), and watching these unfold got me thinking about how easily we loosen our spending as our income grows. Whether it’s a nicer car, a fancier gym, or something else, we’re quick to justify these big financial decisions as a reward for our hard work.
Now while these purchases may be well-deserved, the concern is how easily they can open the gateway for lifestyle inflation to creep in.
The more you spend, the more you have to earn just to maintain that standard, and before you know it, the stuff you own starts controlling you instead of the other way around. This leaves you in a position where you're more dependent on the income from your job when you should be working toward the opposite.
Let me be clear though, none of this is to say you shouldn’t enjoy the fruits of your labor. Life’s too short to not have fun and treat yourself to some nice things along the way.
But if your income grows and your expenses are growing in lockstep, you may not be making as much progress financially as you think—especially if that spending eats into the money you should be investing for your future. It can really hold you back from being able to retire someday.
Of course, some increases in expenses are inevitable. We live in a world where actual inflation exists, and none of us are escaping rising costs for things like food and housing.
Plus, life happens. You might have kids (if you don’t already) and need a bigger home, or your car could break down and require replacing. Some things are just impossible to avoid.
But there’s still a lot about your spending that you can control. And by keeping lifestyle inflation in check, you can buy yourself something that, in my opinion, is much more valuable than any material possession: freedom.
I’m talking about the kind of freedom that allows work to become a choice, not a necessity. Investing is all about getting to this point—when you're no longer dependent on your job and can spend your days doing only what you want to do, not what you have to do.
Having said all of that, I want to hear from you: How do you balance enjoying the rewards of your hard work while avoiding the trap of lifestyle inflation? What’s your best tip? Write to me here and let me know.
And if you want to learn more about which stocks are helping me reach financial freedom, check out the video here where I'm telling you about my top 5 largest dividend stock positions.
Dividend Investing Democratized
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Overall, if you’re looking for something with more functionality than a spreadsheet, getquin is definitely worth checking out and is free to join.
Also, you can follow me on getquin (@ryne) to see all of my posts, check out my portfolio in real-time, and see all of my purchases + dividend payments as they come in.
IN MY PORTFOLIO 📈
Track your portfolio for free with getquin. You can also follow mine there (@ryne) to see all of my purchases, dividends, and other updates in real-time.
ICYMI 🎥
Reacting To Subscriber Dividend Portfolios | RISKY Stocks + Way Too Many ETFs
In this video, we'll take a look at three different subscriber portfolios. I’ll give my honest thoughts on what I like about each one as well as what I think could be improved.
CAREFULLY CURATED 🔍
📺 The MOST Important Investing Metric - A brilliant breakdown by Dividendology on the importance of Return on Invested Capital (ROIC), how it helps you gauge business quality, and how it influences the long-term performance of your investments.
🎧 Top-Shelf Stock Ideas - This episode of the We Study Billionaires podcast takes a deep dive into Old Dominion Freight Line (ODFL), which I think is an incredibly high-quality company that every investor should have on their radar. ODFL was actually my top dividend stock pick for June.
📚 A New Hope - An open letter from Brian Niccol, who is now in his second week as the new CEO of Starbucks. A must-read for all shareholders.
SINCE YOU ASKED 💬
"What is your advice for the possible coming recession? Would you sell shares and allocate money to utilities and healthcare ETFs? Would you hold your shares and buy the dip?"
- Neo | YouTube
That's a great question. The truth is, there's no way anyone can possibly predict if or when a deep recession (or correction) might happen.
However, some type of pullback is inevitable at some point—that’s just how market cycles work, especially after such a frothy period like the one we're currently in. My portfolio just keeps going up and up, which is exciting, but it also leaves me a bit concerned that a pullback will follow.
When faced with the reality that a correction will happen eventually, I always go back to that classic Peter Lynch quote: “Far more money has been lost by investors preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.”
With that in mind, my investment strategy will remain the same regardless of what's happening in the economy or the stock market. I plan to continue buying through the ups and downs, and a potential recession doesn’t change that for me.
I trust that my holdings will be able to weather the storm. And if prices do end up dropping in a meaningful way, I see that as an awesome opportunity to buy more shares at a deep discount.
Have a question? Ask me here to see it featured in an upcoming newsletter.
HOT TAKES 🔥
In last week's newsletter, I asked readers which types of dividend stocks make up the majority of their portfolios. Here are some of the responses:
James said: For me, high-growth stocks are my catch as they do a lot of good things for you. WMT and LOW are in this section making up the most.
Ivan said: Stalwarts - 12.2% total weighting, High-Growth Stocks - 29.6% total weighting, High-Yielders - 39.2% total weighting, Double Trouble - 19.0% total weighting.
Matt said: The top 5 I have is VFIAX (66.67%), VTI (7.54%), SCHD (3.82%), MSFT (3.09%), & ABBV (2.42%). Things are this way due to a hybrid approach with having both an index fund and dividend stocks/ETFs.
LAST WORD 👋
Exciting news! Tomorrow morning, I'm sending out a special demonstration video of Snapstock exclusively to everyone on The Investment Club waitlist. Plus, I'll be revealing the official release date!
If you're already on the waitlist, keep an eye on your inbox tomorrow morning—this is something you won't want to miss. And if you're not on the waitlist yet, there's still time to join.
Click here to get on the waitlist and stay up-to-date on The Investment Club's official launch.
