It’s been said that, in building wealth, the first $100k is the hardest.

But what if you could go from almost zero to $100k in about three years, all on a very modest salary?

That’s exactly what I did!

And I’ll discuss a little bit about how I did that.

In late 2009, I found myself broke at 27 years old.

Strike that. I was below broke.

My net worth – all my assets minus my liabilities – was actually a negative number. I like to tell people that I was actually worth less than a baby. If a baby is worth $0 (no assets and no liabilities), then I had spent 27 years on the planet – I also worked for a good portion of that time – going in the wrong direction, building up more liabilities than assets.

What to do? 

Well, when you find yourself in a hole, you better look for a ladder.

I found a ladder in dividend growth investing.

After opening a brokerage account in early 2010 with $5,000 that I had painfully managed to scrape together over the course of about six months, I started investing in funds and stocks that “sounded good”.

Hmm, something’s wrong with this picture.

I had no idea what I was doing.

So I quickly sold out of those initial purchases and hunkered down with books for months.

I read about various investing strategies, how wealthy and successful people got to their position, the concept of financial independence, and, perhaps most important of all, dividends and the power of dividend growth and dividend reinvestment.

Hallelujah!

I had some early misfires, but took that initial seed capital and started buying high-quality dividend growth stocks after performing due diligence.

Dividend growth stocks are what you’ll find on David Fish’s Dividend Champions, Contenders, and Challengers list. There are more than 700 US-listed stocks there, all of which have increased their respective dividends for at least the last five consecutive years. It’s just a tremendous resource.

I focused on these types of stocks for a number of reasons.

First and foremost, these are typically common stocks in high-quality companies.

Take Johnson & Johnson (JNJ), for instance. Here’s a company that has been paying shareholders increasing dividends year after year for 53 consecutive years.

That’s five decades, which stretches multiple wars, massive inflation of the late 70s and early 80s, 9/11, the financial crisis, and the Great Recession.

But Johnson & Johnson can continue to pay out increasing dividends because it has a great business model. After all, people aren’t going to stop needing medicine and/or surgeries simply because the economy isn’t doing well.

Their products are ubiquitous and they’re often necessary.

So if I want to achieve financial independence at a young age and live off of the income my portfolio generates, it seems to make sense to concentrate on high-quality companies that can afford to pay shareholders increasing dividends for decades on end.

And the dividends themselves are tangible. They’re real cash money. That makes it incredibly easy to accurately predict your cash flow. I knew that I didn’t want to rely on selling assets down the line to pay for living expenses. The market is far too volatile. But dividends aren’t typically volatile at all, as I mentioned above. They’re about as smooth and consistent as it gets.

So I know where to put my money. However, I don’t have much capital. $5,000 is a nice start, but I need a lot more than that if I want to climb out of a deep hole.

I decided to get aggressive. I knew that in order to have money to invest, I’d have to save money. I’d have to live below my means. But I was 27 years old and worth less than a baby that can’t even speak. So I didn’t exactly have a great track record at this.

Time to get radical.

I sold my car. Walking is free, healthy, and highly underrated. I also took note of public transportation in my city and designed a lifestyle that would fit within the bus routes/schedules.

I moved to a cheaper apartment that was also located on a major bus line. That’s called a “win-win”. I killed two birds with one stone by saving on rent and also maximizing usage of a cheap bus system.

Then the food budget changed. Steaks and potatoes were gone in favor of sandwiches and ramen noodles. Sure, it wasn’t the healthiest diet in the world. But people seem to underrate stress and its impact on the body. And I was stressed to the max not only working 50 hours per week as a service advisor at a car dealership, but I was freaking out at the thought of doing that until I was in my 60s.

I was making $40k or so per year acting as a liaison between clients with vehicles that needed repairs and the technicians who fixed said vehicles.

But much like people don’t like visiting the dentist, they also don’t like to pay money to fix their car. As such, I wasn’t the face that most people wanted to see at 7:30 in the morning. And running around all day compiling estimates, ordering parts, making sure repairs got done, and keeping in touch with customers isn’t the easiest or funnest way to make a buck in this world.

But my plan to get out was already working.

I finished 2011 with a portfolio balance of just over $51,000.

That means I was out of the hole. My net worth was no longer negative. Not only that, but I had a snowball of capital working for me, as that $51,000 was invested in 21 high-quality dividend growth stocks paying and raising dividends, which could be reinvested in to the portfolio, growing the balance and the income potential.

I finished 2012 with a portfolio balance of just over $85,000 spread out over 29 companies. Things are really moving now and the snowball is picking up pace. I’m not making that much money, but living below my means and wisely investing my excess capital is clearly working here.

And then it happened. 

In March 2013, I hit a portfolio balance of $100,143.75.

I crossed six figures. And I did it before my 31st birthday. 

From start to finish, I went from $5,000 to $100,000 in three years. And I did it on a modest salary working at a car dealership, which is a field of work about as far away from the financial markets as possible.

The vision is clear and I’m executing it. I’m determined to become financially independent by 40 years old. That means the dividend income my portfolio generates at that time will be enough for me to live off of. No selling stocks. No timing the market, or even worrying about the market. Over 50 companies will be sending me regular dividend payments to my brokerage account, which means the hardest “work” I’ll have to do for the rest of my life is figuring out how to maximize my passive income.

And you can do this too. Follow the steps I laid out – live below your means and invest your excess capital regularly and consistently in high-quality dividend growth stocks – and freedom could be yours.

Aptly so, I call my portfolio my “Freedom Fund”, because it’s my ticket to freedom.

So what’s my portfolio look like today? Check out the Freedom Fund for yourself to find out!

— Jason Fieber