It's the middle of the month. This means that I have the final figures for November 2018.
November is often a rocky month. (This is the standard opening for all months.) Thanksgiving Monday / Black Friday / Cyber Monday is often the busiest time of the year, as it is the convergence of five things for me. This is the time I should spend with my family. This is the time of year when I should blog about the offers. This is the time of year when I like to make the most of these offers (online). It's one of the busiest days of the year with dogs, as it's an important travel weekend. Finally, my wife's birthday usually takes place a few days after Thanksgiving. So I have to prepare everything for that.
I'm exhausted, I summarize all that.
The rest of the month was spent on relatively boring activities. The children started ice skating and continued their swimming lessons. We saw a special family film (we'll talk about it later). The breaker of our solar panels having broken, we did not obtain credit to produce energy for a month. (It was easily reset and all the data was filled and replaced, so everything was normal.) My wife has pursued her most challenging MBA class so far.
I will randomly add other personal family events. In this way, you can choose what is most boring: the financial figures or random family events of the family.
It's not easy, so let's start:
Update on Alternative Revenue: November 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 a bit, but I'm fed up with it in recent years.) Blog revenues can be very erratic, but they also have 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.
The last few months, I sprinkled 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 only show pictures of food 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 October 2018, my alternative income was $ 5,710.83. It's a deposit of about $ 800 from September. It was well below average, largely because there were few dogs to sit without a big vacation in October.
In any case, October is an old story now, so let's move on to the more recent story: November.
Alternative income of lazy man – November 2018
By examining our alternative income, I break it down into 3 main sources … each with their 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 is used to classifying or classifying someone. My "software engineer" answers have received very different reactions from those of "dog keeper". 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.
At blogging conventions, a popular question is, "Are you a full-time blogger?" I answer yes, but then explain that I spend very little time 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 does not really work like that. People in standard jobs have a lot of isolation and can say, "You see, my boss says I'm not available."
I've spent too many words on it, but if you want a very short list of what I'm doing, check out my "Now" page.
Ice skating classes are going pretty well. They are better than me already. I do not know how to integrate all the activities that I would like to present to them. They seem to want to try everything.
I do not publicly discern 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 … and there's no other major disaster.
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 now blogging is the direct result of our reputation and our collection of nearly 2500 items over 12 years.
November was a great month of dog sitting because of a Thanksgiving holiday. One client said my prices were too low because the kennel was charging twice as much. I am satisfied with what I apply and it is competitive compared to other Rover goalkeepers in my area.
Blog revenue was a little below average. I think most merchants were focused on Black Friday / Cyber Monday sales and were not looking to place individual ads. It sounds counterintuitive, but it's the best I can find. It may be a problem, because the month of December looks very good so far.
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 October, these two categories combined for a total of $ 2,528.83, which was almost the annual low. But for November it was …
Total blogging and custodial revenues: $ 3,506.59
It's a little better than average, so I'm going to take it. Cue the New Year's resolution for 2019 to actively try to develop it. (I write that all the time and part of me should just be happy with what he considers when considering other responsibilities.)
In addition to dogs and blogs, November was the 4th month in which I spent a lot of time on the two new independent jobs. Their earnings have often been similar to those of blogging and dog care. However, I do not include them because there is no alternative about them. I always feel the need to mention them, because it's MUCH that I do not blog.
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 do not give them money now, but we pay 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.
We went to our first Fathom event, which was the American debut of Pokemon – Power of Us. Kids love everything that is Pokemon and it was a treat to see it on the big screen. It was a good movie if it's the kind of thing you like. The had an introduction with an interview with the director of all the Pokemon movies that was interesting.
Finally, we saw the trailer for I want to eat your pancreas. My wife and I were intrigued by what we saw, but it sounds interesting.
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 – he has a lot of data points to work with. Then, I calculate a ratio equity / value. 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 clearly and freely. Thus, we can say that we "trivialize" (in the purest sense of the term) a percentage of the rent that we could expect to have in the future (rents are generally consistent with 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 November. We own 52.41% of the net worth of our properties with an estimated combined rent of $ 3,375. (This figure takes into account 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 ones. tenants.
If you multiply the $ 3,375 by 52.41%, you get $ 1,768 of monthly "blurred" monthly income. When I started tracking this (early 2017), we only owned 36.4% of the properties and their rents were lower. The calculation worked at $ 1,174 at the time. So, in 22 months, we saw the number increase by $ 594 / month. It's like offering an annual increase of $ 7,138 until the end of time.
As the years go by, the ratio will rise to 100% of the $ 3,375 monthly inflation-resistant rent. This brings us to the $ 40,000 annual I mentioned above.
In the previous report, rental income amounted to $ 1,722. This number is generally evolving slowly, so let's take the $ 21 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 November.
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 earlier than expected.
Total income from rental properties: $ 1,743
3. Dividend income
Like the rental property "income", I'm going to play a numbers 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 equities 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 could 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.
We went to IKEA and bought two Kallax like that. We only optimized the space by around 30%, but that's still a big organizational difference. Once we have developed a plan, it will be really useful.
November was a very bad month for our portfolios. The stock market has dropped a bit. Our holdings are down from what we started at the beginning of the year. I think most people are probably in the same boat (until December 7). The final result is:
Total income from dividends: $ 1,417
Last month, it was $ 1,460, so we lost $ 43 in theoretical theoretical earnings per month. In the last two months, we have lost $ 105 / month. That's a lot, but it's just a drop in the bucket compared to what the stock market has given us in the last 9 years. I've also seen how fast it can bounce back.
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.)
At the beginning of the year, dividend income was slightly ahead ($ 48) relative to rental income. It's like the debate on actions against real estate, but for our personal finances. Now the difference is $ 326 in favor of "real estate income". Real estate has definitely won the battle in 2018.
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 November passive income: $ 3,159
Last month it was $ 3,225, so $ 24 less. It did not decrease during the first 18 months of reporting and now it has decreased twice in two months. However, it rose from a combined $ 2,354 in January 2017. Since then, it has grown from an estimated annual income of $ 28,252 from both sources to $ 37,908. It should be noted that once again, these are dummy figures that are not yet "real". However, I look forward to the fact that in 9 years, mortgages on investment properties will be repaid. Add to that the growth of the stock market (in the order of 4%) and this number could reach $ 80,000 a year.
I have ignored some minor (but important) details. Details such as our investments are in retirement accounts.
Final alternative income
By adding "dogs and blogs" to "income very close to passive income," we have this month an investment of $ 6,666.59 in monthly "alternative" income. That would be $ 79,999.02
a year (so close to 80K!). Last month it was $ 68,529.96. So it's closer to where I want to see it. The short-term fluctuations are just the noise of the performance of "dogs and blogs" in a given month.
It's largely hypothetical that it's about $ 80,000 a year worth of investment, blog writing and dog care, it's kind of like a dream (probably because it's the case). In the long run, we can get away with less than half of that income. It does not include the income of the pharmacist who earns my wife's bread, her potential military pension if she retires next year, or any self-employment that I have been doing for several months.
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 equity, which makes everything easy. It's free and you should try. For full disclosure, I could earn a few dollars if you do it.
In November, our net worth fell by exactly 1%. Ouch! It's been 3 consecutive months of decline. Do not the markets know they have to go up, so I only write positive and encouraging articles?
For the year, our net worth increased by 7.77%. It's easy to feel this negatively after seeing an average increase of 17% over a large number of years. However, with our inventories down for the year, it highlights the power of real estate diversification and overall savings.
I must always remember that the percentages can be odd … Imagine that someone with a net worth of $ 100 finds a $ 100 bill on the ground. Instantly, it doubles its net worth. As our net worth increases, the percentage of growth will also decrease. Do you prefer growth of one million dollars of 10% growth rather than 100% of 20%, is not it?
How was your November? Let me know in the comments.