You read that right. Dividends pay my rent each month.
There is nothing better than knowing your housing costs are more than fully covered by your passive income.
Housing is often the biggest expense for most people, whether they rent or pay a mortgage each month.
In 2021, the average monthly mortgage payment was $1,427 in the United States (this varies by region and local area).
This varies greatly by region, but as of July 2023 the average median rent stood at $2,029 per month.
If you live in an expensive city, housing costs are even worse.
For example, in Manhattan, the average rent comes to $4,614 for a 703 square foot apartment (as of July 2023).
It really is crazy!
Keeping Those Housing Costs Low
I realized early on that the best way for dividends to cover my rent payments was for me to keep my housing costs as reasonably low as possible.
There are many ways to reduce you housing costs such adopting a more minimalist approach to housing and downsizing your home.
Often, it takes some creative and strategic planning on your part.
For example, I chose live in a studio apartment which keeps the housing costs low.
I could have got one bedroom apartment and paid more money, but why pay more if I don’t need it?
That is all money I could save and invest (thereby building up passive income).
I bought a Co-op apartment back in 2017. If you don’t know what that is, Investopedia has a good article on this type of housing.
Since I own a Co-op apartment, I pay what is called monthly “maintenance fees” (everyone in the building pays to cover the operating expenses of the building).
Basically, it is the same as rent.
Dividend Income Covers My Rent
When I bought my apartment in 2017, my monthly rent was $507 per month. (Really, extraordinarily low cost for NYC, even back then).
Back then I was making about $7,500 per year in dividend income (thus, an average $625 per month).
Dividends covered my rent costs even back then.
Today (2023), my rent has since increased to $614 per month. Therefore a 21.1% increase from 5 years ago.
However, my dividend income is now about $14,206 per year (an average $1,183 per month).
- 2023 Monthly Rent: $614.00
- Average monthly Dividends: $1,183.90
As you can see, my dividend income has soared passed my rent and provides almost double coverage!
Conclusion
Overall, I am extremely happy with the choices I made in regard to housing and keeping those costs low.
The end result of keeping costs low and investments high is the option that: dividends can pay my rent each month should I need them to!
In fact, passive income more than covers my monthly rent.
Dividends are close to covering double my rent and soon 100% of my total monthly expenses!
There is a peace of mind knowing that I can afford a roof over my head in the absence of a 9-5 job.
I truly am grateful for this great financial option that years of investing has made possible.
This is possible for anyone to achieve as well.
Check out my Getting Started page if you are interested in beginning your own journey into dividend growth investing and personal finance.
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So, what do you think of this post? How close are you to covering your monthly rent or mortgage with passive income?
Let me know in the comments below!
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