Friday, March 9

How I will increase Passive Recurring Income by $2,300

This week I have established plans that will help me worry less about finances and enjoy life more.  By 2020 I want to increase passive recurring income by $2,300.  Here's how I will do this:

Real Estate

We're going to buy a new house.  I've started looking at new-home communities in the Tampa Bay area.  This will be our new house, not a rental.  Why?  I want to turn our current house into an AirBnB.  I'm intrigued by the potential income of short-term rentals and think it could be a good bit higher than renting out my house in a 12-month lease.  I also like the idea of being able to constantly maintain the house.  We've had some big surprises when tenants move out.  The house we worked on last month required close to $20,000 in repairs to make it rent-ready.  If my house is turning over on a weekly basis, I can keep it clean, fresh and maintained regularly.

Afterwards, I will decide what our next move should be.  If the AirBnB is a success, the next property I buy will be specifically for short-term rentals.  If it doesn't pan out, I would look at other options.

Investments

This is the truly-passive breed of investing.  The AirBnB will require a little effort, although most of that effort, such as keeping the place clean, could be hired out.  Investing in dividend-paying stocks requires almost no ongoing effort at all.  The plan is to regularly invest excess cash flow over the next two years into income-producing companies.


I'm really excited about the thought of moving into a new home.  It's always fun to look at houses and then start fresh.  I'll keep updating you guys on our home search.

Wednesday, March 7

Towards Prosperity

We're doing okay financially.  We have 10 rental properties, a six-figure stock portfolio, and we live in a mortgage-free home.  But we're not quite financially independent.  I couldn't stop working and just live off our assets.  It's time to change that.  I'm going to have fun doing so.

Having passive recurring income is the way I will reach financial independence.  I figure if I can consistently bring in $10,000 per month in passive recurring income, I will have enough to both live on and to add to the nest egg for future needs. 

Passive Recurring Income - Today

  • Dividends from stock:  $1,500/month
  • Fully occupied rental properties (including the ones held in my retirement LLC):  $8,200/month
At first it appears that I almost have the $10K/month I need.  The problem is, the rental properties are rarely fully occupied.  When they are, there is bound to be a tenant who is behind on rent.  Likewise, dividends can be cut, which is out of my control.  Therefore, I need a cushion above and beyond the stated $10,000 goal that guarantees I always make my monthly goal.

Passive Recurring Income - 2020

  • Dividends from stock:  $2,000/month
  • Rental properties:  $10,000/month
I'm giving myself less than two years to increase passive recurring income by $2,300/month.  Stay tuned.

Tuesday, March 6

Simple Finances

Why is it necessary to track every minute detail of my finances, down to the penny?  The big picture is this:  My net worth needs to grow so that my passive income covers my spending.

This year I will stop using Quicken.  Over the weekend I signed up for a site called Personal Finance.  It's a cloud-based tool that aggregates my finances.  I'll keep an eye on things using that site.  The plan is to build up my checking account balance so that there are always funds available to pay any bill.  As soon as I receive the bill, I pay it.  I've been using Quicken for so many years.  It's super robust, and I can find out just about anything I want to know.  But it's time to move on.  Here's the benefits:


  • I have a PC dedicated just to Quicken.  I can sell it, reducing clutter.
  • I'll save a little on upgrading the software every couple of years.
  • Having enough liquidity means not having to postpone paying bills, transferring funds from various accounts, and remembering to log transactions all the time.




What else am I doing?  Well, to make this work, my finances need to be super-simple.  I will eliminate Prosper (P2P loans) as an investment.  As money comes in, it will be withdrawn from Prosper.  I'm going to pay off my student loans and my car.  I won't be doing this to save interest (both charge less than 2%), but instead it's to eliminate recurring monthly expenses.   Next, I'm consolidating my spending to one or two credit cards.  Lastly, I will have a single financial goal:  increase passive recurring income.  I have a couple ideas already for doing this which I will share tomorrow.

Monday, March 5

Towards Happiness...

A few weeks ago, when Bitcoin was crashing, I read an article about Steve Wozniak, co-founder of Apple, and why he sold his bitcoin.  Bitcoin has been a volatile currency, trading between $1,200 and nearly $20,000 in the past year.  Wozniak sold because he didn't want to be obsessed with the insane price swings.

"I don't want that kind of care in my life. Part of my happiness is not to have worries"
My dad unexpectedly passed away at the age of 52.  I will be 52 in 11 years.  What if that's all the time I have left on this planet?  When I look at life like this, it makes me realize that there's a lot of stupid shit I shouldn't let bother me.  And since I have struggled with anxiety all my life, I'm starting to realize that most of what I worry about isn't all that important.  So, I'm changing.  I don't want to be bothered with the stress of things that don't matter.

Tomorrow I'm going to start outlining what this means to me...

Saturday, March 3

My Frugal Miser - February Expenses: $2,024


February was deceptively frugal.  Absent some large expenses, I only spent about $1,000 last month.   I bought a $250 gas gift card, and we drove to Birmingham to work on a vacant property, so gas was higher than normal.  I also paid the annual fee ($450) on my Chase Sapphire Reserve card.  $300 of that fee will be refunded after I charge some travel to that card.  Finally, I bought a new washing machine as well as tickets to the Smashing Pumpkins concert.  Besides these categories, everything was quite low.  When we do meeting jobs, our food cost is usually covered. 

February Expenses:  $2,024

$519 Auto ($240 for gas, $32 for service)
$450 Bank Fees
$0 Clothing
$0 Computer
$229 Entertainment (movies, gambling, alcohol) - gain this month
$149 Food
$0 Gifts Given
$461 Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)
$28 Health and Dental Insurance (prepaid a portion of 2018 health insurance)
$0 Investment Expense
$15 Interest Expense*
$29 Medical/Dental (income)
$7 Miscellaneous
$0 Personal Care
($35) Subscriptions income from refund
$0 Taxes
$27 Sharing Economy Expenses (tolls, car washes, etc.)
$0 Unreimbursed Employee Expenses
$145 Utilities
$0 Vacation

*Interest expense includes student loans and the loan on my car.  As both rates are below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off these loans.  In December, I paid $38 to E*Trade for "hard to borrow" interest on a short sale of stock. 

Thursday, March 1

My Frugal Miser - February Income: $9,218


Income was decent in February.  Rental income remained lower due to vacancies, but a new tenant is moving into one unit in March and the other vacant property, my most valuable one, will be rent-ready in the middle of the month. 

I worked several meetings in February and did a fair amount of Amazon deliveries.  We spent a week in Birmingham working on a property, which was a week of no income.

February Income: $9,218

($35) Mystery Shopping negative due to expenses not yet reimbursed
$2,407 Meeting Jobs
$453 Reimbursed Job Expenses
$59 Uber
$5 Lyft
$0 Postmates
$945 Amazon Deliveries
$5,327 Rental Income
$29 Interest Income
$28 Other Sources

Investment Accounts Change in Value:  -$3,478

My investments were down again, but not nearly as bad as January.    

Notes:  
  • I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.