July was, quite simply, the best month I’ve had in years financially. It’s a little surprising, because we’ve been trying to maximize the most amount of family and fun time possible. Living in Newport, RI that’s the focus for these short summer months.
As you’ll see from the pictures, we went out quite a bit. We did a local carnival, beach concerts, movies (Toy Story 4), a Hellenic Festival (with some Greek friends), a few sunset dinners at the local Navy Base, and 4th of July Fireworks. There’s probably more, but this is what I was able to remember from looking at the pictures on my phone.
We did a lot of spending for the month. The carnival wasn’t a good value as the rides were cheap and quick… but at least the kids had fun and it was easy. We ate out a lot more than we probably should to be frugal, but that’s our form of entertainment. We usually get good value because we take advantage of the base or other restaurant specials. The restaurants have a lot of ways for locals to save money at them. I expect the all the tourists don’t know about these deals, which is good for us.
(Lots of pictures to share this month, so starting early.) The Red Sox implosion isn’t going to spoil my dog’s groove. The hat was my 6-year old’s idea.
Oh, and as the title hints at, I had my best month making alternative/passive income ever.
I’ll mix in some pictures from the month throughout this financial update, because some people find numbers boring. (But not you or you wouldn’t be here!)
If you are a new reader, you’re going to want to refer to my Alternative Income FAQ as you’ll likely have a lot of questions about how I do these numbers.
Lazy Man’s Alternative Income – July 2019
I categorize our alternative income into 3 main sources that are largely represented in the passive income pyramid. I ignore the bottom section of career/job – that’s not passive or alternative at all. I combine dog sitting and blogging into one section of “slightly active” income. I leave real estate and investment income as their own separate main sources of very passive income.
My mother has been warning me about the shark attacks in Cape Cod, but this is the closest to a sighting we’ve had in Newport.
1. Blogging + Dog Sitting Income
The last month I reported, June, was a blockbuster. June is always a big dog sitting month in Newport, RI’s summer tourist season. It was one of our biggest months. At the same time we had our best blog income month. The combination of two was as close to perfection as I can think of.
Blogging income for July was almost as good as that record-breaking June. Some months advertisers love me and this is the second great one in a row. I can’t depend on that, so that’s one reason why it’s great to be diversified across all these income streams.
Dog sitting for July was an all-time record setter. It’s been a few years since we were close to these numbers. It helped that we didn’t travel much. We got so busy at a couple of points that I had to turn away some dogs.
In June, these combined for a total of $4,922.97. In July, it was:
Total Blogging + Dog Sitting Income: $5,713.84
The view from the Newport Navy base is incredible. The food and drinks are cheap too.
I’m going to enjoy this month for what it is. It’s not likely to happen again any time soon. August has been poor so far for advertisers and dog sitting. It doesn’t help that we haven’t been around for too many weekends. I’d love to continue to set new records, but it’s more important to spend time with the family.
Somewhat related to the month’s income report, my 6 year old had a summer camp at the local dog shelter. He already knows more about dogs than any other 6-year old I can imagine, but he loved spending time learning from the experts. My 5-year old is looking forward to camp next year when he’s old enough.
Here’s a historic chart with the red line being a 3-month average:
2. Rental Property Income
Zillow said our rental properties were worth almost exactly the same as last month. As with every month, we paid off a couple thousand of mortgage debt. That helped us gain around $2,000 in equity. It is boring, but in a great, slow-and-steady way.
We now have 56.90% of the equity in our properties with a combined rent of $3,325 after insurance, property taxes, condo fees, and estimated maintenance. I like to use that number, because it represents our net gain.
If you multiply $3,325 by 56.90% you get $1,892 in estimated monthly alternative income. When I started tracking this (beginning of 2017), we only owned 36.4% of the properties and they had lower rents. The math worked out to $1,174 back then. So in 30 months, we’ve seen the number grow $718/mo. That’s like giving ourselves an annual $8,616 raise until the end of time from where we were 2.5+ years ago.
As the years march on, the ratio will grow to 100% of the $3,325 monthly inflation-resistant rent. That’s what gets us to that annual $40,000 income I mentioned in the FAQ mentioned at the beginning of the article.
The Navy Base also has a fun annual event to slide into summer. Free bouncy houses and dollar sundaes.
In the previous report, the rental property income was $1,880. This number always moves slowly as it only changes if one of two things happen: 1) The properties go up in value. 2) We charge more for rent. We’re raising the rents a bit next month, but it mostly negates rising HOA fees, so I’m not going to count as increased rent.
Total Rental Property Income: $1,892
3. Dividend Income
The Tariff Man is back and the markets don’t like it. As usual, it was timed at the beginning of the month, right when I start to compile these numbers. The markets have still be great to us overall this year.
For this section, I generally assume we’ll be able to make a 2.5% dividend yield on our holdings. That could be from a high-dividend ETF or from simply holding strong companies that have a long history of dividend growth. For that we’ll look at making passive income with dividend kings. I’ll get Sure Dividend’s newsletter (this link has a special coupon code if you are interested) to try to get closer to a 4% average dividend yield.
When the kids are at camp, sometimes the adults sneak off to Castle Hill for lunch and drinks. It’s more expensive than the Navy Base, but it’s a good change of pace.
With this month’s market hiccup we have a result of:
Total Dividend Income: $1,692
Last month, it was $1,725, so we went back a good deal. However, if we made this $1,692 every month, we’d have more than $20,000 a year in dividends. If our mortgage was paid off, we could this could cover most of our expenses alone. We would have to draw some money out or make more than 2.5% in dividends to be sure.
Very Close to Passive Income
Our “very close to passive income” is a combination of rental property income and dividend income. If there were some royalty income from books, movies, or music, we’d include that here (but we don’t have that).
The stock market goes up and down fast which makes the dividends calculation fluctuate a bit. The rental property income keeps going up because the mortgages are always getting paid down every month. Unless there’s a housing market crash, this should continue to happen.
I have a great Greek friend from college, and we’re making new Greek friends here. Incredible food, dance, and fun!
Having both types of income working together for us is going great. The diversification gives me great confidence that we’ll be better prepared than most people in the case of an unfortunate event. We’ll still likely get rent checks if the stock market crashes. We’ll still get dividend checks if a tenant is late paying for awhile. Of course a bad economy may impact both at the same time, but people reliant on one passive income source will likely have a tougher time.
Very Close to Passive Income: $3,584
Last month it was $3,604, so it’s down $20. This is the first down month in 2019. As you’ll see from the graph, it’s not a big deal.
This was at one of the beach concerts. The kids spend a lot of time looking up to me. It’s good to look up to them (literally) sometimes.
It has grown from a combined $2,354 in January 2017. Since then, this has gone from an estimated annual income of $28,252 from these two sources to $43,007. It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet. However, I’m looking forward to 8 years from now when the mortgages on the investment properties (and our primary residence) are paid off. Add in stock market growth (of a conservative 4%) and this number could reach $85K/year or more.
Final Alternative Income
When you add up “dogs and blogs” to the “very close to passive income” you get:
July’s Alternative Income: $9,297.84
That’s a new all-time record! A few years ago, the blog and dog sitting were doing better and we’ve had another one of those months. Add that to the rising passive income and it’s a good recipe of growth.
Sometimes dog sitting doesn’t go great and sometimes blogging doesn’t go great, but growing rental and investment income can cover a lot of the imperfections there. Annualized, the $9297 in monthly income would be $111,574.08. I have been trying to get this number consistently over $100,000 and I’ve been able to do it twice in row now. When most of the month goes well, I can get there. However, for the year it looks like we’re closer to landing the $85-90K range.
Finally, a picture of the local carnival. Next time, I’d like to go to a higher quality carnival. Maybe something in Old Orchard Beach Maine or the boardwalk in New Jersey.
That largely hypothetical annual income for writing on a blog, taking care of dogs, and investments feels like a dream. In the long term, $90K+ would be a lot more income than we’d need. Here’s what our expenses for the next 45 years looks like.
None of the numbers here include my wife’s bread-winning pharmacist income, her vested military pension (more passive income), or some of the freelance work I’ve been doing over the last year.
As always, I’m still hoping to write a book someday – just to add some more passive-ish income. I’m may tip my toe into self-publishing sometime in the next year. I would love to talk to a real a publisher, but I don’t want to take on the “job” of writing. If you know someone who I could talk to contact me.
Net Worth Update
My net worth updates aren’t very exciting as I don’t share the exact numbers. That’s why it’s just a footnote here.
I truly believe that net worth is one of the most important numbers in personal finance so it is worth sharing in some way. Showing relative growth can be useful, I think? (Let me know in the comments.)
I use Personal Capital to track my net worth and it makes everything easy. It’s free and you should give it a try. For full disclosure, I might make a few dollars if you do. For more full disclosure, I haven’t made a dollar from that suggestion this year so I’m just suggesting it because I’m getting rich off it.
With the stock market getting hit hard, our net worth overall went down 1.35%. It’s just the second down month this year. Over the entire year it’s up 23.04%. A little more than half of that growth was from a large percentage of that was based on a website sale that I had at the beginning of the year. The rest has been simply investment gains and savings.
Some of our net worth going down was due to tapping our HELOC for some siding repairs. Every year we seem to have one really large expense and this going to be it this year. Hard work, good planning and very good luck has put us in a position where an $8K deposit and a $16K total job isn’t devistating.
I always have to remember that percentages can be weird due to the law of large numbers. Imagine someone with a net worth of $100 finds a $100 bill on the ground. Instantly it doubles his/her net worth. As our net worth grows larger, the percentage of growth will come down too. You’d rather have 10% growth of a million dollars ($100,000 gain) than 20% growth of a $100K ($20,000 gain), right?
Everyone is on a different place in their financial journey. I’ve been blogging about personal finance for 13 years, naturally, we may be further along in that journey. Don’t be discouraged by some of the numbers above if you are just starting out. Use it as motivation for what may be possible (depending on your circumstances.)
There’s a big wild card in calculating our net worth. Now that my wife’s pension is vested, it’s reasonable to ask Should I Include a Pension in Our Net Worth?. I decided that it does make sense to do it. It’s not easy, but I came up with some ways to figure out what a pension is worth. In the end, it seems my wife’s may be worth $2.3 million. However, like most of the money mentioned in this article, it isn’t immediately spendable cash.
That pension would ridiculously dominate our net worth, so I’ll note two separate numbers in our spreadsheet. Since I don’t share the numbers anyway, except for these hints, it shouldn’t matter much to you.
How was your July? Let me know in the comments.