Alternative Income Update: March 2017

It’s the middle of the month and that means it is time to review my alternative income. It helps me keep my mind off of mid-April of 2013.

For those that don’t know the term, “alternative income”, it’s purposely vague. In general, it is income that comes from passive investment and side hustles. I like to think of alternative income as anything where you aren’t directly trading your time for money.

Last month all that added up to $6,045.72, which was extremely exciting.

I have to “fudge” the numbers a bit to get them to fit into this paradigm. You’ll see what I mean as we go along. I gave a more detailed explanation back in January.

Lazy Man’s Alternative Income March 2017

In looking at our alternative income, I think I can break it down to 4 main sources… each with their own caveats.

1. Blogging + Dog Sitting Income

This my best answer to the question “What do you actually do?” It gives people the answer they were expecting, something financially related. It’s also a great way to pigeonhole people.

That question overlooks the that I’m mostly a stay-at-home dad. The kids do go to school for a few hours, but I usually have some other family errands (shopping, cooking, dishes, laundry, etc.) to run during that time. It can take hours for me to just catch up on email related to blogging. I think it’s hard for people to grasp not having a full-time job, but still having a full slate of activity.

I don’t break out the blogging income vs. the dog sitting income. One impacts the other. When I have a lot of dogs, I don’t have as much time or the focus to blog. When I’m blogging a lot, it’s usually because I don’t have many dogs to sit.

And while this area is trading time for money, I don’t view it as a “directly” doing so.

Sitting dogs itself isn’t a time-intensive job… at least at the number of dogs I have. There is considerably more overhead than you might think between booking dogs and meeting dogs for suitability. The important differentiation with dog sitting is that I can “double-dip” and earn money from another side hustle, such as blogging, at the same time. If it were active dog-walking that might be a deal-breaker, but even then I might consider that my exercise, which would be a different kind of “double-dip.”

Blogging is much more time-intensive. However, it still isn’t directly trading time for money. I write an article for the blog today, I don’t necessarily get money for it. The money I make from blogging now is a direct result of having built a reputation over 10 years of blogging.

The previous month I reported, February, was a pretty strong month with a good number of dogs for February vacation.

March was a different story. The alternative income from this area went from $4,369 to $3,691. The biggest reason for the drop in my opinion was that I went on vacation to San Francisco for a week. I turned down many dog sitting opportunities and didn’t blog much. When I got back, I ran the house solo for a few days while my wife was finishing up some work out there. Between pre-planning, the trip, and post-trip stuff, it felt like I lost half of the month.

This drop was to be expected… except that I thought it might be a bigger drop.

What really saved me is the new advertising platform from AdThrive . For the first time I had a whole month of it and it is performing as well as other bloggers have said.

Side note: I highly recommend pesonal finance blogging. It helped me stay accountable. Here’s how to get started blogging with any blog you might want.

Looking ahead to April, it seems like it is going to be a great month. We have a lot of dogs with the April school vacation. It will be interesting to see what happens when I have a full month to focus on dogging and blogging. I should be able to break $5,000, but I’d love to see $6,000.

Total Blogging + Dog Sitting Income: $3,691

2. Rental Property Income

Here is where I need to fudge the numbers. Sorry, but it’s necessary.

We have three rental properties in our real estate accidental “empire”. (“Empire” is in quotes for a reason – it is a joke.) They are on 15-year fixed mortgages. This means that we don’t make money on them now, but we are quickly paying off the mortgages and enjoying some appreciation (not a lot). In 10 years or so, we should be able to collect a nice income on them.

We could refinance those mortgages at a 30-year fixed rate. I’d refinance through LendingTree to get the best rates. Since we’d be taking the remaining 10 years and spreading it out over 30, our payments would drop. We’d then be earning alternative income from them.

Yep, I’m creating an alternate universe for the sake of math. Take that Stan Lee!

For the sake of this report, I am going to pretend that I refinanced them all to 30-year fixed mortgages. Zillow has a very good refinance calculator that allows me to see how much money we’d make each month if I refinanced.

Fortunately, I have all this information easily available in my free Personal Capital dashboard

I made some assumptions and the result is: $709. Last month the same exercise lead to $672.

This doesn’t change from month to month. The big flaw in this exercise is that interest rates are more now than they were 5 years ago. Also refinancing to a 30-year term is a higher interest rate on top of that.

Essentially, my undoing is that I did too well back then.

Total Rental Property Income: $709

3. P2P Lending income

This amounted to $22.65 because I don’t continue to put money into this. I feel it is better to max out my retirement contributions. I’m going to eliminate this in future reports. The $22 isn’t exciting and I don’t want to waste words on it.

Total P2P Lending income: $22.65

4. Dividend Income

Like the rental property “income”, I’m going to play a game with the numbers.

We don’t have our money in dividend stocks. Instead we have it in index funds (for the most part). More importantly, the money is in retirement accounts, so it isn’t something that we would tap as “income” anyway.

However, nearly 20 years of nearly maxing out retirement contributions is significant. It will be counted some day, right?

Just like the rental income, we can “pretend” what the portfolio would earn if we moved all the money into dividend stocks or indexes. For the sake of pretending, I estimated that we could earn between 2.30% and and 2.70% in dividends on the portfolio.

I am purposely keeping a wide range because I honestly don’t know what kind of dividends to expect. Also, it conveniently makes it difficult for people to reverse engineer and figure out our retirement portfolios (not that it is a big secret).

Each month, I’ll pick a random number in that range to derive this number. Since it’s “pretend” dividends anyway, there’s nothing lost in being a little vague. The focus is on calculating something that could be accurate if we needed it to be.

This month we have $1,255.90. It’s a couple of dollars less than last month.

Total Dividend Income: $1,255.90

Final Alternative Income

Adding up all the numbers it looks like we’d have $5,678 in monthly alternative income. That’s a slight drop from last month’s nearly $6000+. What could have been if I didn’t go on vacation, right? What’s the point of all this if we aren’t going to take some time enjoy life though, right?

Bonus! Net Worth Update

Last month, I decided to tack on a brief net worth update. Since I don’t share real numbers here, it’s not very exciting. After months of watching it go up significant due to stock market and real estate gains almost nothing happened in March. Everything was Even Steven, but we had some expenses. We actually dropped less than 1/2 of 1%. With our net worth still up 5.75% for the year, I’ll take it.