It’s the middle of the month, so that means that I have the final alternative income numbers for last month. It always takes awhile for the tenants to have their rent checks in and for us to get all the money moved.
April was another busy month for us. In addition to all the financial stuff below, there was a lot of family stuff going on. The kids are still taking swim classes and one moved up a level. We reached a crucial milestone where if they fell into a pool they wouldn’t drown (I think). The older, 6-year old was one of the stars of a school play, so we’ll probably be investing in children theater classes in a few months. The younger, 5-year old seems to have acting in his blood, but he’ll have to wait until he’s 7.
They accidentally got renewed in a cooking class after school, so we just rolled with that. It’s great money-saving skill to learn at a young age. However, it means that we have to miss the local chess club. In a text document somewhere I have some research into Android apps that may fill the gap as long as they are still interested.
This also happened:
Found a bunch of a games at a yard sale. Picked out 8 classics. The seller wanted a dollar a game. I offered a $20 and she was so excited. pic.twitter.com/15pn17PJew
— LazyManAndMoney (@LazyManAndMoney) April 28, 2019
Both kids asked me if they could learn Japanese so they can work at The Pokemon Company someday. We’ve got more than 20 straight days on Duolingo together. We’re also learning French because their school starts that in Kindergarten. We’ll have to plan a trip to Canada in a little bit.
I’ll mix in some pictures throughout the financial update, because numbers can be boring.
If you are a new reader, you’re going to want to refer to my Alternative Income FAQ as you’ll have a lot of questions.
Lazy Man’s Alternative Income – March 2019
In looking at our alternative income, I break it down to 3 main sources… each with their own caveats.
1. Blogging + Dog Sitting Income
This summed up our dog sitting in April:
I got 99 problems… pic.twitter.com/501wLKof1m
— LazyManAndMoney (@LazyManAndMoney) April 7, 2019
Sometimes it felt like we had 101 dogs during the month. It was just a tremendous month where we were at our limit for a little while.
Blogging income for April was far above average as well. For some reason, advertisers were coming out of the woodwork and business was great.
In March, we were on vacation and these combined for a total of $2,148.86. In April, it was:
Total Blogging + Dog Sitting Income: $4,975.38
That’s the best these categories have done since 2017 and it’s nearly double what I’ve been averaging for a long time. The only downside is that I don’t think I discovered a secret that could lead to sustained success.
Here’s a historic chart with the red line being a 3-month average:
2. Rental Property Income
Zillow kept the value of our rental properties about the same. Like every month, we paid off a couple thousand of mortgage debt. It was boring, but in a great, slow and steady way.
We now have 55.20% of the equity in our properties with an estimated combined rent of $3,325. The rent number is after insurance, property taxes, and condo fees. That’s so we can estimate what we’d really be taking home after expenses.
If you multiply $3,325 by 55.20% you get $1,835 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 27 months, we’ve seen the number grow $661/mo. That’s like giving ourselves an annual $8,000 raise until the end of time from where we were just 2+ 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.
In the previous report, the rental property income was $1,819. This number always moves slowly. This number only changes if one of two things happen: 1) The properties go up in value. 2) We charge more for rent. Later this year, we should be able to raise the rents a bit.
Total Rental Property Income: $1,835
3. Dividend Income
April did nothing for our portfolios. The stock market soared in April, but I didn’t get to take the numbers until May 11 – after Trump escalated the trade war with China causing the markets to give up their gains
Total Dividend Income: $1,659
Last month, it was $1,656, so we gained $3 of theoretical monthly money from theoretical dividends. Earlier in the month, I think this would have been $1,700 or close to it. This is an all-time new record for us, but obviously not exciting.
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 residual 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.
Having both types of income working together for us is 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 there’s a brief trade war in China. We’ll still get dividend checks if a tenant is late paying one month.
Very Close to Passive Income: $3,494
Last month it was $3,475, so it’s up $19. Last month was an all-time high, so we continue breaking records. 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 $41,933. It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet. However, I’m looking forward to 9 years from now when the mortgages on the investment properties 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:
December’s Very Close to Passive Income: $8,469.38
That would be $101,632.56 a year. I’ve been trying to get this number over $100,000 and we’re finally there. However, I don’t think we’ll stay over $100,000.
That largely hypothetical annual income for writing on a blog, and taking care of dogs, and investments feels a little like a dream. In the long term, that 100K+ would be a lot more income than we’d need. Here’s what our expenses for the next 45 years looks like.
These numbers don’t include any of my wife’s bread-winning pharmacist income, her NOW VESTED military pension or some of the freelance work I’ve been doing over the last several months.
As always, I’m still hoping to write a book someday. I’m probably going to tip my toe into self-publishing soon. 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 little more than 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.
With the stock market not doing much and Zillow valuing our rental properties the same, there wasn’t much to impact our net worth. However, a neighbor sold their home and I think it triggered to Zillow to update their math as the value of our home went up. Our total net worth went up 0.95%. For the year it’s up 20.76%, a large percentage of that was based on a website sale that I had at the beginning of the year.
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?
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. Later this month, I’m planning to write how to make such a calculation. It’s a big pension that’s potentially worth $2 million or more.
However, because that would ridiculously dominate our net worth, I think I’ll include it as two separate numbers in our spreadsheet. Since I don’t share the numbers anyway, except for these hints, it shouldn’t matter much.
How was your April? Let me know in the comments.