Over the last few months I have been working on understanding what it means to invest. My ultimate goal is to be able to retire in about 10 years or so (right now I am 30). To break this goal into bite sized chunks I have decided to try and replace my monthly reoccurring bills paid for by assets rather than by my income. A good explanation of this is one of my most loved books Rich Dad Poor Dad, which explains the basic concept of how this cash flow works.

I want to first replace my cell phone bill. Currently I spend about $200/month on a cell plan plus various cell phones. This means I need a passive income that generates at least $2400 / year. I don’t think I will ever be without a cell phone so why not invest in cell phone company – like AT&T. They currently pay about 7% dividends per year. This is how the equation works out.

Total Amount Needed to Invest * .07 = 2400. This means I need to invest $34,000 total.

The next question I have is how many years does it take to equal that $34000. At $200/month this comes to 14 years. I just need to prepay my phone by 14 years in order to have a free phone for the rest of my life.