I am on FIRE. For readers who are unfamiliar with the acronym, FIRE stands for Financial Independence Retire Early. No I haven’t retired (yet) and I still work a 9 to 5 job but my dividend portfolio can support an early retirement at this point. In fact, my current Projected Annual Dividend Income (PADI) of $66,174.83 (and growing) surpasses the average Canadian annual salary in every province in Canada.
However, this year I want to live as if I’m retired. That’s right, on a monthly basis I’m going to track my dividend income as I normally do, but also my monthly expenses and see how I would fare living on my dividend income only.
In this way, it’s a trial run at early retirement. I won’t live any less frugally than I normally do and I will continue to spend money on things I value like coffees while working remotely from cafes, buying the occasional nice bottle(s) of wine, and going on several trips/vacations this year.
January 2023 Expenses
My total expenses this month were $1,646.91. Below I break down my spending into various categories that include housing, transportation, food, etc. Please note that my expenses below do not include the tax I may have to pay on dividend income (which is a lot lower than standard employment income).
| January 2023 Expenses | Total |
| Principal Residence Mortgage/Rent: $0 (my home is paid off) Condo Fees: $675.50 Electricity: $31.75 Property Insurance: $54.95 Property Taxes: $0 | $762.20 |
| Living Cell Phone: $61.62 TV/Netflix: $0 Music: $0 Home Internet: $45.19 Newspapers/Magazine: $0 Art/Museum: $35 Personal Care: $76.00 | $217.81 |
| Transportation Public Transportation: $50.00 Rideshare: $10.88 | $60.88 |
| Food Groceries: $387.28 Takeaway/Fast Food: $39.41 Restaurants: $24.50 Coffee Shops: $53.74 Alcohol/Bars: $22.00 | $526.93 |
| Gifts | $0 |
| Travel | $0 |
| Miscellaneous | $79.09 |
| TOTAL | $1,646.91 |
Dividend Income
My dividend income this month was $9,129.14. This is an all-time high monthly record for me. This total includes dividends in my RRSP, TFSA and Taxable accounts (For my American readers, an RRSP is equivalent to your 401K although 401K’s are primarily employer-based and the TFSA equivalent is your Roth IRA).
My income here does not include other sources of income I have currently and that I will have in early retirement including rental income, any income I might earn from contract work through a personal corporation, or any small amount of online income I currently earn.
Given that I would like to live on dividends in early retirement to account for sequence of return risk and pulling dividends from my RRSP is more challenging, I’d like to be able to live off the dividends from my Taxable and TFSA accounts only (thus avoiding early RRSP withdrawals). Taxable accounts are sometimes known as margin accounts or personal accounts – where you put investment money when you’ve maxed your RRSP and TFSA and want to continue to contribute (or you’re strategically under investing in an RRSP at a certain point perhaps).
For a quick primer on sequence of return risk, it is the risk that in early retirement, the stock market declines at the same time that you’re selling stocks at a low(er) price for cash to fund your lifestyle. This would result in lower principal left to live off going forward and a lower principal or base from which gains can compound off of once the stock market increases again (or bounces back) after a bear market. This is why living off of dividends only is attractive as you don’t spend down your capital or principal at all.
My dividend total from my Personal and TFSA accounts only is $6560.19. Excluding TFSA related dividends (ideally I’d like to keep reinvesting dividends annually in my TFSA as any income grows tax free in the TFSA), my dividend total from just my Personal accounts is $6,201.31.
Dividend Income vs. Expenses
Here is the breakdown of my dividend income and expenses and my profit or loss.
| Dividend Income | Expenses | +Profit / -Loss |
| $9,129.64 (RRSP, TFSA, Personal) | $1,646.91 | +$7,482.73 |
| $6560.19 (TFSA and Personal) | $1,646.91 | +$4,913.28 |
| $6,201.31 (Personal) | $1,646.91 | +$4,554.40 |
Conclusion
No matter how I cut it, my trial run at early retirement is in the green currently. Being hypothetically retired early in January 2023, is a success. Will this pan out for the rest of 2023? Follow along on my journey. I’ll update this on a monthly basis for 2023 with a new post each month.
What do you think? Am I missing something I should incorporate into my thinking here? Comment below. Thanks for reading.
Additional Reading
Hey DD,
Amazing totals and looking forward to seeing how your year progresses with expenses vs. passive income. Inspirational.
Also, kudos on keeping your eating out expenses so low. That’s a leaky faucet in on my balance sheet.
Take care,
Ryan
Thank you 🙂 When I go grocery shopping at a discount grocer, I try my best to buy whatever is on sale that day. So if the cauliflower is on sale, I’ll buy it even if I’d prefer something else. I also buy more of items that are on sale and that do not perish quickly such as canned tuna. I also freeze meat I buy when it’s on sale.
great update. your expenses are rater low, so congrats on that. are your expenses for 1 or 2 people?
Thank you. My expenses are for 1 person.
Your expenses are incredibly low…wow. Kudos.
That makes it a HUGE delta when compared to your income streams.
I think we’re about $4,500 or so per month, without debt, for expenses overall. Our property taxes alone are $6k per year + condo/maintenance fees are almost $9k per year (on 1% condo value) which means taxes and fees are $15k per year or more than 50% of your entire budget – for just two items 🙂
We are figuring we want/need $6,000 per month to semi-retire to cover all expenses and some extras.
Pull the plug now and enjoy some extra time. Life is short.
Well done.
Mark
Thank you. Expenses can fluctuate month to month particularly if I dine out or if I travel on a vacation that month. But overall, I keep my expenses low.
I love this post and your breakdown of monthly expenses. I am also jealous about your electricity bill! Do you ever turn on your heat?
And wow! The Jan income is fantastic. Congratulations. Looking forward to reading the monthly FIRE trial reports.