It's the middle of the month. This means that I have the final figures for September 2018 and that I can finally publish them.
September is always the "month of change" for us. The boys move from summer camp to school, which imposes a new schedule. It's also the busy season at work for my wife. I think there was a two-week period where she was at home four consecutive hours of one-time standby.
While my wife was away, I took the children to an extremely inflatable event on the military base. A dozen inflatable houses … and they bounced for hours. The kids also learned to swim! I'm not sure that "swimming" is happening at any given time, but the new swimming school is fantastic and it looks like swimming for me.
September was also the month of our entire family went to Fincon in Orlando. Financially, it was a less than ideal plan. However, my son who was going to be 6 years old will not miss me. It's strange, but sometimes plans that are not ideal give better results than one might expect. The children spent a lot of time with Mom, which was important after this busy time. They must experience Crayola and Legoland. We also spent almost a full day at the hotel pool with the family.
Unfortunately, we could not get on this Jet des Patriotes.
Rumors say that I wore my swimsuit a few sessions of FinCon. (It was dry.) One of the things that changed me when I was 40, was that I stopped worrying so much about what others thought. The FinCon sessions should have been in the pool anyway, right?
It's a set of TMIs (so many levels), so let's get on with the good things:
Update on Alternative Revenue: September 2018
For those who do not know the term "alternative income", I started using it about 12 years ago to be deliberately vague. I needed something to cover the small income I earned on blogs, as I developed my personal loan portfolio as a source of income. (P2P has worked for a while, but I'm fed up with it in recent years.) The income of a blog can be very erratic, but it also has a residual nature. Some popular bloggers still struggle to classify the nature of income. I think that alternative income was more passive in 2007 before social media, podcasting and video. Today, it seems that all bloggers talk about jostling (for example, acting fast, not embarrassing people) and by that, they mean "to be everywhere". I feel alone in being silly enough to keep writing blog posts … t have cool "pinnable" pictures.
Last month, I sowed for the first time images from last month. I have seen other bloggers do it and readers tend to like it. My only rule here is that I will show food images if the presentation is amazing, like a current size Leaning tower of Pisa made of grapes and toothpicks. (I will never understand why people take pictures of their food.)
In general, I call alternative income everything that comes from a passive investment and these jostling. The best way to think about it is income when you do not directly trade your time for cash. This report concerns all my alternative income. To include my investments in this paradigm, I have to falsify the numbers a bit. You'll see what I mean as you go along … or you'll see a more detailed explanation in January 2017.
Last month, in August 2018, my alternative income was $ 7,104.78. August was just a $ 25 deposit from July, which was a drop in the bucket.
In any case, August is an old story now, let's move on to the most recent history: September.
Alternative income of lazy man – September 2018
By examining our alternative income, I divide it into 3 main sources … each with its own caveats.
1. Blogging Income + Dog Sitting
My "real world" friends asked me, "What are you doing?" I'm not a fan of the question … because it's just rude. I think he usually sorts or ranks someone. My "software engineer" answers have received very different reactions from those of "dog guard". Nevertheless, an answer is required. I turn between all the things I do. What are these things:
I guess the best answer is that I'm a dad who stays at home. Children go to school about 6 hours a day. So, my "non-dad thing" is 30 hours a week. This gives me time to do some family shopping (shopping, cooking, washing up, laundry, walking my own dog, etc.) and dog sitting and blogging fill gaps.
Sneak a picture of the kids here, just to make sure you're awake. Southwest made them a crown with pretzel bags and spikes of dirty martini olives (it is not sure they carry a name). In any case: LUV, no? (No sponsored message and I am not a shareholder.)
At blogging conventions, a popular question is, "Are you a full-time blogger?" I answer yes, but then explain that I spend a lot more hours doing something other than blogging. I do not think most people understand the idea of not having a full-time job, but having a full activity. I do a lot, a lot more now than I ever did in a full-time job. If you really want to read a lot more, it gives you even more. I think everyone assumes that Boss Lazy Man will tell Employee Lazy Man to take a day off the blog to do things that are not blogs. It's not really how it works. People in standard jobs have a lot of isolation and can say, "You see, my boss says I am not available."
I've had too many words on it, but if you want a very short list of what I'm doing, check out my "Now" page.
I do not publicly publish the difference between the income of a blog and the income of a sitting dog. The one impacts the other. When I have a lot of dogs, I do not have as much time or interest in blogging. When I blog a lot, it's usually because I do not have too many dogs to sit down … and there's no other disaster going on.
You may be wondering now: "Is not alternative income DO NOT trading time for money? " TRADE time for money? It's a solid point. However, I do not do it directly. Let me explain:
Sitting dogs is not a job that takes a lot of time … at least with the number of dogs I have in general. However, there is a lot more overhead than you think between booking a dog and meeting a dog. The important difference with dog care is that I can "double up" and make money on the other hand, like blogs, at the same time. It's very different from being an Uber pilot. Police tend to frown while blogging and driving. (Hmmm, maybe if I had a voice recorder and translation software, I could write drafts … Nah … I'm sure customers would not want to go over my children's child seats. Studies also show that Uber drivers earn well below the minimum wage when accounting for their expenses.)
If you are interested in dog sitting, I wrote a very detailed article on the subject: Advantages and Disadvantages of Dog Sitting on Rover.
Blogs usually take a lot longer than sitting dogs. (The summer months are the exception). However, it is also not a direct exchange of time for money. If I write an article for the blog today (like this one!), I do not necessarily get substantial money. The money I earn by blogging now is the direct result of our reputation and our collection of nearly 2,500 items over 12 years.
September was a month of weak sitting dog. Labor Day was busy, but after that, people did not seem to leave much on vacation. I've also lost some business with Fincon and another weekend that I've got off the ground.
Blog revenues were above average in September. August was poor, so maybe the advertisers were just waiting for the end of the summer?
Regarding blogs, I would like to add that everything is not a question of money. I highly recommend personal finance blogs. I would not want to create the biggest blog in the world. Instead, I would think of it as a way to stay responsible. It worked for me. Here's how to start blogging with any type of blog that might interest you.
In August, these two categories combined for a high of $ 3,888.78. But for September it was …
Total blogging and custody revenue: $ 3,312.81
It is a decline, but it is very close to the average of the year. It's amazing with the two types of income that complement each other.
In addition to dogs and blogs, September was the second month in which I spent a lot of time on the two new independent jobs. Their income is similar to that of blogs and dog care, but I do not include them because there is really no alternative to them. I always feel the need to mention them because it is time that I do not blog anymore.
2. Rental income
Here's where I need to fudge the numbers. Sorry, but it's necessary.
We have three rental properties in our accidental "empire" of real estate. ("Empire" is quoted in quotes for a reason – it's a joke.) They all have a fixed mortgage of 15 years. That means we're not bringing in more money now, but we're paying off those mortgages faster than most people. In 9 years, we should be able to collect an estimated $ 40,000 a year (in today's dollars, after spending).
So here's why I have to fool the numbers. For the purposes of this report, it makes no sense to count properties as zero income. I do not want this report to push me to a bad decision. It might make me sell them and invest the money differently so that the numbers look better. For example, if someone offered you a million dollars in 10 years or 10 dollars a year now, you would expect the million (I hope). However, for this report, the $ 10 a year would give you better numbers.
This is an extreme example, but it shows how the short-term plan is sometimes the enemy of the long-term plan.
Here's how I decided to cheat the numbers.
I add all the values and equity of the properties. Zillow is accurate for these condos because it has many data points. Then I calculate a value / equity ratio. In short, it is the percentage of the value of the property we own in relation to the bank. Then I calculate the rents of all properties as if they belonged freely and clearly. Thus, we can say that we "trivialize" (in the purest sense of the term) a percentage of the rent that we might expect to have in the future (rents are generally inflation in the simplest sense).
If you're confused (and you probably are), this article on calculating cash flows from real estate without cash flow explains it in more detail.
Here are the numbers for September. We have 51.21% of the capital of our properties with an estimated combined rent of $ 3,350. (This figure includes insurance, property taxes and condo fees.) We were able to increase rents a little earlier this year because the rental market was good and we gave way to new tenants.
Yes, we own more than 50% of our rental properties.
If you multiply $ 3,350 by 51.21%, you get $ 1,703 of monthly "blurred" monthly income. At the beginning of 2017, we owned only 36.4% of properties and their rents were lower. The calculation worked at $ 1,174 at the time. So, in 20 months, we have seen the number increase by $ 529 / month. As the years go by, the ratio will rise to 100% of the $ 3,350 monthly rent, which is resistant to inflation. This brings us to the $ 40,000 annual I mentioned above.
In the previous report, rental income amounted to $ 1,685. This number is generally evolving slowly, so let's take the $ 18 increase. This number changes only if one of the following two things occurs: 1) The value of the properties increases. 2) We charge more for rent. I do not control the housing market, so I can not change too much here. Tenants are usually stranded for at least a year. The monthly mortgage repayment creates equity each month. That's where we saw the gains in September.
Slow and steady wins the race for real estate. In previous reports, I was hoping that by the end of the year, 50 per cent of equity would be $ 3,325 or $ 166,250 per month. As the properties appreciated, we exceeded this limit a little earlier. Perhaps we could reach 53% for $ 1,792.25 of fake money by the end of 2018 and reach 62% by the end of 2019.
Total income from rental properties: $ 1,703
3. Dividend income
As for the "income" of a rental property, I will play a number game. You can decide if the game is right. I always appreciate the comments!
We are not trying to put our money into dividend stocks, but I'm going to imagine we're doing it for this exercise. In fact, we have a large majority in index funds, but I select stocks with a small percentage of our portfolio. Although index funds pay dividends, this is not their main objective. I also simulate the numbers in another way. The money I'm talking about here is in our retirement accounts, so it's not something we would call "income".
Even though all this money is in retirement accounts, we could remove the money and use it. We would have tax penalties so we will not do it. However, like mortgages on the rental property, this is a real value that deserves to be taken into account. My goal here is to capture almost 20 years of pension contributions for the most part.
Just like rental income, we can pretend that the portfolio would win if we invest all the money in stocks or dividend indices. To pretend, I felt that we could earn 2.50% of dividends. Most people estimate a risk free withdrawal rate of 4%, but the withdrawal is not our plan here. We think only of the liquidity that these investments could bring back to our living expenses.
September was a poor month for our portfolios. The stock market has dropped a little. These figures are from October 6th. So before the big crash we saw recently. (October does not look good.) The end result is:
Total income from dividends: $ 1,522
Last month it was $ 1,531, so we lost $ 8 in theoretical monthly cash with theoretical dividends. Yes, it's boring, but it's the nature of this beast. As the number of the rental property, slow and steady wins this race.
Very close to passive income
Most people consider the income of a rental property as a rather passive income. This is not because you have to deal with tenants. However, when things are going well, there may be no "work" every two months. For the sake of argument, I think we can agree that it is "more" passive than writing blog articles and sitting dogs. I spend a lot more time on the last one than the old one.
Of course, the dividend income is completely passive, so I do not need to argue too much.
This "income very close to passive income" category is a combination of "rental income" and "dividend income". (Yes, that's a lot of quotes.)
It's interesting to me that these two figures are so close for us. It's like the debate on actions against real estate, but for our personal finances. I think it puts them in an arena to fight who is the strongest. Dividends began the year with an advance of nearly $ 50. In June, real estate revenues increased by $ 105 over dividends.
The stock market rises and falls, so dividends also fluctuate. Rental income continues to grow as mortgages are always repaid monthly. The stock market can evolve much faster than the real estate market. Anyway, I like that both work for us.
Income very close to September's passive income: $ 3,225
Last month, it was $ 3,216, so an increase of $ 9 in total. This rose from a total of $ 2,354 in January 2017. Since then, it has increased from an estimated annual income of $ 28,252 from these two sources to $ 38,700. It should be noted that once again, these are dummy figures that are not yet "real". However, in 9 years from the date of payment of the investment properties and the potential growth of the stock market (assuming a conservative exchange rate of 4%), this number could reach 80,000 euros per year . I estimate our long-term expenses around $ 35,000 a year (the house paid).
Yes, we ignored some minor (but important) details. Details such as our investments are in retirement accounts and our reluctance to sell some rental properties to pay for others. It is possible that these two can cover our future expenses (without relying on the principle).
Final alternative income
By adding "dogs and blogs" to "income very close to passive income", we have this month an investment of $ 6,537.81 in monthly "alternative" income. That would be $ 78,453.74 a year. I'm excited even though it's a bit fictional. This number is down almost $ 600 from last month. I could not have been so consistent if I had tried.
This largely hypothetical sum of $ 78,453.74 a year on investments, blog writing and dog care is fantastic. In the long run, we can get by with half that income, and that does not include the income of my wife's livelihood pharmacist, her pension if she retires, or any self-employment that I do Have already done. been doing.
This is the part of the article where I mention that I still hope to write a book to increase my alternative income. I had always thought it was an eBook, but if a reader knew an editor, I would appreciate the connection. Seriously … it seems that everyone in personal finance has a book contract other than me. I think I can make a convincing argument for a book that you would see in a bookstore … that is, if the libraries still exist when I finish writing it.
Update of net worth
Since I do not share the actual figures of our net worth, it's not very exciting. That's why it's just a footnote.
I sincerely believe that net worth is one of the most important figures in personal finance. It is therefore interesting to share it in one way or another. Showing relative growth can be useful, I think? (Let me know in the comments.)
I use Personal Capital to track my net worth, which makes the job easier. It's free and you should try. For full disclosure, I could earn a few dollars if you do it.
In September, our net worth decreased by 0.53%. Boo! This is the first time it has broken down for a while. This can almost be attributed to Zillow who changed his view of the value of our main home. In other words, nothing that really means anything to us in the foreseeable future.
For the year, our net worth increased by 9.76%. With the market facing south right now, the decline will probably be pretty strong if I look at how past October.
As a reminder, the percentages can be odd … Imagine yourself with a person with a $ 100 net worth found a $ 100 bill on the ground. Instantly, it doubles its net worth. As our net worth increases, the percentage of growth will also decrease.
How was your September? Let me know in the comments.