I usually begin this with a long personal life review. It’s going to be shorter this month. I wrote an extensive post on our trip to Hawaii. Even though that was only one week of the month there was a lot of preparation before. Coming back, the kids still had another week of school break, so I was effectively barely working for half the month. No wonder why I feel like I can’t get anywhere.

Kids hiking Diamond Head in Oahu. Perfect with the rainbow in the background.

While that’s worthy enough to be the highlight of any month, we did a lot of other things. My wife and I had our favorite bed and breakfast (where they shot the final season of How I Met Your Mother). They were having a discount and grandma was double vaccinated to take the kids.

First the Pacific Ocean, now the Atlantic. This was a hike while at the bed and breakfast. The path is hidden and most people probably don’t know it’s possible to get this side with the Pell bridge in the background.

On the kid front, my 8-year-old learned how to tie his shoes and got a cool pair of Pokemon shoes that he loves. He also started learning a little about money with a Money Time Kids class (I’ll review this later). The 7-year-old wasn’t left out as we did the Dole Plantation Maze together. Both kids earned their orange belt in karate. We went to a Hot Wheels monster truck drive-through. My wife said that we should never do it again until she learned it was $20 per carload, not person. That’s a price, especially if can’t do a real monster truck show and see them in action.

The 7-year-old was proud of completing the Dole Plantation Maze, 8-year-old opted out.

March always closes out with my birthday. My wife had a funeral to go to this year. (I didn’t know the person, it was out of state, and both of us can’t be too far from the kids.) She felt guilty about not being around, but I had some fun alone time. She came back with an overabundance of gifts and we had a good family dinner and a movie. The biggest gift was an inflatable hot tub spa like this one. I had a cheaper spa on my list for awhile, but it seems like the pricing has gone up with COVID. (In the interest of full disclosure, if you decide by a $1,000 spa-like that one, I’ll get a few dollars back from Amazon.)

My wife got these Adirondack chairs and moved our firepit. Now we go outside more and make s’mores by the fire and run and play.

It’s a good thing I don’t list all our spending here like many other personal finance bloggers. March wouldn’t have looked very good. We saved a lot of money over what it would normally cost to go to Hawaii, but Hawaii’s not cheap on any level. Throw in the bread and breakfast and the spa and we probably didn’t save any money this month. (That wasn’t a problem as our net worth still grew a lot – see the update at the end of this post). At least one vacation in 16 months doesn’t break the bank compared to what our typical vacation spending would be. I’m hopeful that the spa will help increase our quality of home life, maybe even our social circle once everyone is vaccinated.

That’s enough lead-in… let’s start the Passive Income report. I used to call this the Alternative Income Report, but everyone loves passive income better. While I transition to the new terminology, there may be some “alternative income” mentions including the FAQ. 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.

The way I calculate these numbers requires that long explanation – it isn’t intuitive at all. The reason why I do things a little differently is that this catalogs a journey. For example, we don’t have passive income from our rental properties while we are paying down their mortgages. Instead, I calculate the percentage of equity we have to show where on that journey we are. Each month you see that the bank owns less and we own more. When we get to owning 100% there will be no mortgages and all that rental income can be used for living expenses.

Lazy Man’s Passive Income – March 2020

I categorize our passive income into 3 main sources that are largely represented in my passive income pyramid. For this report, I ignore the bottom section, “career/job” – that’s not passive at all. (I do have some income in that area, but that’s not the focus of this report.) I combine dog sitting and blogging into one section of “somewhat active” income. I leave real estate and investment income as their own separate main sources of very passive income.

1. Blogging + Dog Sitting Income

Blogging income continued to rebound to March. I had a couple of articles that got attention from other writers and got a nice bump in traffic for a few days.

Dog sitting income started to return. We would have done even better if we weren’t in Hawaii for a week. While we were in Hawaii, I got more requests to sit dogs (over this summer) than I had gotten in the last year. It was hard to keep up with it and explain to people that I can’t meet their dog for a bit. In any case, we were able to get a few of those bookings and potentially some more since then. The next few months look good.

We’re a dog family because my wife and I are allergic to cats. The kids loved the idea of a cat cafe in Hawaii, so they went. 8-year-old is going to invent a senior dog cafe, which sounds like a winning idea to me.

Getting back to March though, we were still able to book a few dogs around the Hawaii trip.

In February, dogs and blogs combined for a total of $887.91 – the lowest in years. (Though some of that is due to the short month.) In March, it was:

Total Blogging + Dog Sitting Income: $1,176.09

I’ll take the $300 gain. It’s still a long way from the pre-COVID levels that were triple that, but we can see this starting to come back.

When dog sitting comes back my kids can pitch in to help. My 8-year old is extremely good with dogs at this point. He can feed them, let them out, and play with them in the yard. My 7-year-old is good too. This help means that I can pay them a legitimately earned income (a small percentage of the overall dog-sitting income). Because the income is earned they can save money in their kid Roth IRAs and it will be money that they’ll never pay tax on. I want to get them more involved in blogging, taking pictures and things like that, but it’s going slow. They get enough school work, homework, and extra-curriculars.

(Note: The blue line is the monthly number. It looks like the graph didn’t add in this last month’s uptick. I’ll have to fix it for next month. The red line is a 3-month average which helps smooth the curve.)

2. Rental Property Income

For March, Zillow’s estimates on the property values went up a lot again – nearly $15,000. We paid down the mortgages as we always do. Due to the growth, we’ve made over $45K in equity for the year. That’s a lot better than what I’d make a whole year in my software engineering career when I was starting out. The housing market is really moving.

It can be difficult to deal with tenants, but I like to think of those equity gains as a salary. The “work” for last year’s $60,000 of equity is pretty minimal. We had to work a little more for the $45,000 this year, but ~$11,000/mo. isn’t bad. Of course, equity isn’t really salary – we can’t spend the money, because it isn’t liquid.

8-year-old learning about compound interest in Money Time Kids. I believe rental properties come later. For helping me review their software, I’ll give him some money and we’ll put some in the kid Roth IRA that I mentioned above.

This month we went from 63.51% to 64.56% ownership of the equity in our properties. If we owned the rental properties with no mortgages (100% of the equity), I calculate that, after insurance, property taxes, condo fees, and estimated condo maintenance we’d make about $3,400 a month. That number represents our net gain.

If you multiply our expected net rent $3400 by the amount of equity we have (i.e. where we are on our journey), 64.56%, you get $2,195 in estimated monthly passive income. When I started tracking this (January, 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 a little more than 4 years, we’ve seen the number grow $1000+/mo. That’s good passive growth in ~4 years.

As the years march on, the ratio will grow to 100% of a rent that should net $3,400 monthly after expenses. Since rent is inflation-resistant, we can raise it as costs of living go up. We don’t have to factor in inflation like other investments. So we can think of it as around $40,000/yr. of income in today’s dollars buying the same value in the future. That should be enough money for us to live on with our own home paid off (plus our solar panels, frugal shopping habits, and military healthcare.)

In the previous report, the rental property income was $2,159.

Total Rental Property Income: $2,195

3. Dividend Income

For this section, I assume we will earn 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. There are some income investing ideas here. We can also look at making passive income with dividend kings. If I wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get closer to a 4% average dividend yield. That link to the newsletter has a special discount rate and in full disclosure, I make a few dollars if you sign up for it.

The market is still doing great. Last month there was a concern about the yield curve, but that seemed to disappear. Also, some of my satellite stocks have done really well, but they’ve been giving up their gains. I took my financial snapshot on 4/4, but the markets have even improved since then.

Identity Theft has to be the scariest monster truck name of all time, right? Skull Krusher is tame.

Last month, our portfolio hovered around all-time highs. As I mentioned, I was getting nervous that the markets were too high. I executed on my plan to continue to stay fully invested, but moving more money to bonds. It was small move of money from stock to bonds mostly for the psychological effect of being active. The small amounts seem to add up and when stocks dropped last March, I was able to buy in at lower prices by cashing in some bonds that didn’t drop as much.

With emerging markets dropping 10% from their highs, I started to move a little of that bond money to buy more of those shares at a discount. I hope most investors are not doing what I do and just leave the money where it is passively. That’s what we do with my wife’s retirement accounts. For investors who want to try to do a little better, I think I’m doing well in buying low and selling high.

The timing of buying the emerging markets seemed to do well. With most other major indexes near the top, we once again saw record highs in our equity portfolio.

We continue to get a profit-sharing check since I bought (a lot of) a company. The business was almost ideally positioned in this pandemic due to its virtual nature. The investment income from this is essentially the same as dividend income. It is taxed differently, but for the purposes of this report, it makes sense to group together all stock ownership in this bucket.

Total Dividend-ish Income: $3,601

Last month, it was $3,527. A gain of almost $75 is extremely good. This number rarely moves that much, but slow and steady wins the race. When I started tracking this in 2017 we were at $1180/mo. Wow, it’s more than tripled.

Annualized, this monthly $3,601 is $43,210. If our mortgage was paid off, we might be able to live on this by itself. However, because most of our investments are in retirement accounts, we can’t use much of this potential income for now. (We can use the profit-sharing check as it goes straight to our checking account.) We’ll probably let this investment continue to compound for another 14 years until we are age 59.5. Then we’ll have to see if we want to tap it or let it continue until we are required to take some of it at age 72.

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, I’d include that as well. I’m too tone-deaf to have a rockstar music career, but I keep the idea open that I’ll write a book someday.

The stock market has been steady since the drop and recovery when COVID first came around. The rental property income typically keeps going up because the mortgages are always getting paid down every month and they generally appreciate a little. Unless there’s a housing market crash, this should continue to happen.

I failed at finding Jack Johnson in his town, but the local Hard Rock had this 2008 album and a surfboard from it. I got the album two years ago for my birthday and it hasn’t left my car since. Last year, I featured the first song, All At Once on Earth Day to illustrate how his song about the environment seem to describe the COVID-19 epidemic.

I love having both types of income working together for us. I think everyone interested in FIRE should have stocks and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most people in the case of an unfortunate economic 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 that’s what an emergency fund is for.

We are a full year into the most ginormous unfortunate event that I can remember in my life. Stocks went down a lot, but then went back up due to government stimulus and money on the sideline. Real estate has simply just gone up. We’ve been lucky to have tenants who are still working and able to pay rent. Well, one couldn’t, but used the opportunity to sell at a market high and buy a property closer to us at a relatively low price. Overall, the plan keeps rolling along, even during COVID-19.

I’m starting to get very encouraged about the future. I know the variants are a major monkey wrench, but the vaccines are getting out there as well. My wife is away shooting everyone in the arm. There are so many more like her – seems like the whole military, not to mention millions of civilian health care workers. I can’t wait to see what everything looks like in 4-6 weeks.

Very Close to Passive Income: $5,796

Last month it was $5,686. The $5,796 extends our all-time high yet again. As you can tell from the chart below, it just keeps moving in the right direction. It had been the stock market driving the gains for awhile. However, real estate is starting to roll too.

Kids really love their karate class. I find it’s great self-discipline.

This would be almost $70,000 a year of almost completely passive income. What’s better is that there would be no need to touch the investments themselves. We wouldn’t have to sell stocks or get a reverse mortgage. Property maintenance and property taxes for rental properties are already factored in. We would still have all the underlying assets (property, stocks, etc.) and be able to pass these on to the kids for them to build on – unless we choose to draw them down for more fun, charity, or other spending.

This “very close to passive income” has grown from $2,354/mo. in January 2017. It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet (except for the profit-sharing check). We have gained more than $3,000 in passive-ish income in about 4.2 years. I wonder if we can get to $8,000/mo. in passive income by the start of 2025, another 4 years. That’s a little aggressive, but it would give us something to hope for.

Final Passive Income

When you add up “dogs and blogs” to the “very close to passive income” you get:

Passive Income: $6,972.09

Last month it was $6,565.91. For the first time in a while we’re moving this in the right direction. Let’s hope it’s just the start.

I’d like to see this average $8,000 this year. I don’t think dogs and blogs is going to get me there to average it for the year. It’s been down too many months. For now, I’ll just be happy that with four different income streams (and two consistent ones), there isn’t much room for everything to drop.

This ~$7,000+/mo income is nearly $84,000 a year. That largely hypothetical annual income for writing on a blog, taking care of one dog, and investing is really nice. In the long term, $78K would be a lot more income than we’d need – given our necessary expenses for the next 45 years. Of course, those necessary expenses aren’t going to cover all our spending, but it’s a large percentage of it.

As 2020 has proven, you never know what bad news is lurking around the corner. This preparation gives us the financial flexibility to fight it.

None of the numbers here include my wife’s bread-winning pharmacist income, her vested military pension (more passive income when she retires), or the freelance work I’ve been doing over the last couple of years (which isn’t passive at all). That’s the fuel that drives the passive income engine – it allows us to live well and invest. My income doesn’t match my wife’s, but I’m good at stretching a dollar in almost all our spending.

A really large tree at the Hale Koa military hotel in Hawaii.

As always, I’m still hoping to write a book someday. That would add some more passive income. My wife will probably get her book out first. She’s had an incredibly interesting life until she met me – I am so boring. I may tip my toe into self-publishing sometime this year. I would love to talk to a real publisher, but I don’t want to take on the “job” of writing. That’s probably a deal-breaker. If you know someone who I could talk to contact me.

My favorite thing about the graph below is that it doesn’t dip down too far. It’s been above $6,000 for a while now. It’s good that we are turning this ship around and moving it back in the right direction. If it dips below $6000 and touches $5000, we’ll have to examine some things.

(Once again, the blue line is the monthly number. The red line is a 3-month average which helps smooth the curve.)

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.

March was another great month for our net worth. We saw it jump 3.36%. For the year overall, our net worth is up 7.92%. It’s very odd to have these kind of gains when our numbers have been growing for so many years. In terms of dollars, sometimes the monthly gains are more than I’ve made in a year as a software engineer.

Diversification helps a lot in bad times. Even when the stock market was way down, we were still grounded with our real estate. We can’t control the market, but we can be happy that the amazing river of compound interest has been working well for us over the years.

I feel it’s important to acknowledge that everyone is in a different place in their financial journey. I’ve been blogging about personal finance for 15 years. FIRE wasn’t a “thing” back then, but it’s in the news a lot now. We naturally are further along in that journey than some younger readers who may be just starting out. If you are one of these readers, I hope you won’t be discouraged by some of the numbers above. I didn’t start many of these graphs until year 11 of blogging (year 13 of early retirement planning). Please try to use it as motivation for what may be possible (depending on your circumstances and market luck) over 10-15 years.

There’s a big wild card in calculating our net worth. Now that my wife’s pension is vested, it’s reasonable to ask whether to include it in our net worth. I decided that it does make sense to include it. She could have earned more direct monetary compensation if she didn’t work for the government. That would have boosted all the numbers across the board. Calculating pension value is not easy, but here’s the best way to know what a pension is worth. In the end, it seems my wife’s pension may be worth $2.3 million. However, like most of the money mentioned in this article, this isn’t money we can spend right now.

Because the pension would dominate our net worth, I’ll note two separate numbers in my personal spreadsheet. I don’t share the numbers anyway, aside from these hints, so I don’t think it should matter much to you. It’s not like I’m suggesting that you might want to make a financial-based decision on a pension.

How was your March? Let me know in the comments.

In January’s report, I mentioned that things weren’t looking much better in 2021 with the insurrection, but that seems a little on the backburner now. We’re getting a lot of vaccines in people’s arms. Things may not have run very smoothly everywhere, but it’s working and getting better. More vaccine is getting available, we’re getting more of it in people. COVID cases have dropped a lot, then plateaued, and maybe dropping again. I’m still optimistic that continued vaccines and summertime will be a more powerful combination than the variants.

The kids finished up their snowboarding lessons in February. The younger kid liked skiing better last year and the older kid liked snowboarding this year. I think I will try snowboarding next season, but I might need some lessons. The problem I have with a lot of these activities is that they don’t take adults and kids (such as a family) in the same lesson. The only instruction they had for adults was on a Wednesday evening, which wouldn’t fit my schedule.

We continued karate lessons and the kids are on the verge of their orange belt. It’s been really helpful for focus and discipline. The kids just love it too. They ran the second “parents night out” in two months, so the kids sword techniques should be getting better. If not, at least my wife and I got some time out. We went bowling a couple of times too. The alleys are running at low capacity so social distancing isn’t an issue. It’s almost like pre-COVID times.

My 7-year-old earning his third orange stripe on his yellow belt.

The kids also their 100th day of in-person school. It’s a bit of a celebration at our school in the lower grades as they use it to help with place value. At first and second grade, they phase out the celebration a bit. I think it’s a big accomplishment on everyone’s part (especially the school’s, but other parents as well).

That’s enough lead-in… let’s start the Passive Income report. I used to call this the Alternative Income Report, but everyone loves passive income better. While I transition to the new terminology, there may be some “alternative income” mentions including the FAQ. 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.

The way I calculate these numbers requires that long explanation – it isn’t intuitive at all. The reason why I do things a little differently is that this catalogs a journey. For example, we don’t have passive income from our rental properties while we are paying down their mortgages. Instead, I calculate the percentage of equity we have to show where on that journey we are. Each month you see that the bank owns less and we own more. When we get to owning 100% there will be no mortgages and all that rental income can be used for living expenses.

Lazy Man’s Passive Income – February 2020

I categorize our passive income into 3 main sources that are largely represented in my passive income pyramid. For this report, I ignore the bottom section, “career/job” – that’s not passive at all. (I do have some income in that area, but that’s not the focus of this report.) I combine dog sitting and blogging into one section of “somewhat active” income. I leave real estate and investment income as their own separate main sources of very passive income.

1. Blogging + Dog Sitting Income

Blogging income rebounded a lot in February. It had previously dropped so far that I’m tempted to say it had nowhere else to go. I won’t because it can always drop to zero.

Dog sitting income was very bad once again. It still feels like no one is traveling due to COVID, so they don’t need their dogs watched. I don’t expect this to change much until the summer starts. That’s when there is a chance that things open up and tourism gets going again.

Over the last couple of months, I picked up a new freelance client who has some blog editing work for me to do. This isn’t passive income at all, so I don’t include it here. I mention it only because even as these passive income sources are down, the overall total income is looking good.

My dog found a friend on the beach. He hasn’t been able to play with other dogs much in the last year because it’s uncomfortable to ask owners who you don’t know during these times. My dog is the darker yellow one, age 12, and the other dog is puppy golden. (Awwwww!!!!)

In January, dogs and blogs combined for a total of $957.59 – the lowest in years. In February, it was:

Total Blogging + Dog Sitting Income: $887.91

While that represents a new low, it’s actually a higher average per day. February’s 28 days gives us about 10% earning time than January, right? I think dog sitting will come back, so there’s room for this double fairly easily.

When dog sitting comes back my kids can pitch in to help. My 8-year old is extremely good with dogs at this point. He can feed them, let them out, and play with them in the yard. My 7-year-old is good too. This help means that I can pay them a legitimately earned income (a small percentage of the overall dog-sitting income). Because the income is earned they can save money in their kid Roth IRAs and it will be money that they’ll never pay tax on. I want to get them more involved in blogging, taking pictures and things like that, but it’s going slow. They get enough school work, home work, and extra-curriculars.

(Note: The blue line is the monthly number. The red line is a 3-month average which helps smooth the curve.)

2. Rental Property Income

The new condo this year is starting to get regular checks which is extremely helpful. Because we rolled over equity from the sale of an old condo our expenses are around $1000 a month, but we get a check for $1600. It’s nice to have cash flow on properties instead of just building equity that is very difficult to access.

As for February’s numbers, Zillow’s estimates on that new property went up 10%. That’s a big gain, but it is more in line with the comps that I had expected. We paid down the mortgages as we always do. In 2020, we gained around $60K in equity. So far this year, due to that growth, we’ve gained $30K. The housing market is really moving.

It can be difficult to deal with tenants, but I like to think of those equity gains as a salary. The “work” for last year’s $60,000 is pretty minimal. We had to work a little more for the $30,000 this year, but $10,000/mo. isn’t bad. Of course, equity isn’t really salary – we can’t spend the money, because it isn’t liquid.

We got to bowling a couple of times, first time in a year. The kids have more arm strength now and can get the occasional strikee – as in this frame of a video I was lucky enough to film.
This month we went from 62.12% to 63.51% ownership of the equity in our properties. In pure dollars and cents, we gained $23,370 in equity last month. That’s far, far from typical, but I think it is reasonable given what I’ve been reading about the markets.

If we owned the rental properties with no mortgages (100% of the equity), I calculate that, after insurance, property taxes, condo fees, and estimated condo maintenance we’d make about $3,400 a month. That number represents our net gain.

If you multiply our expected net rent $3400 by the amount of equity we have (i.e. where we are on our journey), 63.51%, you get $2,159 in estimated monthly passive income. When I started tracking this (January, 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 a little more than 4 years, we’ve seen the number grow $985/mo. That’s good passive growth in 4 years.

As the years march on, the ratio will grow to 100% of a rent that should net $3,400 monthly after expenses. Since rent is inflation-resistant, we can raise it as costs of living go up. We don’t have to factor in inflation like other investments. So we can think of it as around $40,000/yr. of income in today’s dollars buying the same value in the future. That should be enough money for us to live on with our own home paid off (plus our solar panels, frugal shopping habits, and military healthcare.)

In the previous report, the rental property income was $2,104.

Total Rental Property Income: $2,159

3. Dividend Income

For this section, I assume we will earn 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. There are some income investing ideas here. We can also look at making passive income with dividend kings. If I wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get closer to a 4% average dividend yield. That link to the newsletter has a special discount rate and in full disclosure, I make a few dollars if you sign up for it.

The market has been doing great, but it is taking a bit of a break due to the yield curve. Also, some of my satellite stocks have done really well, but they’ve been giving up their gains. I didn’t expect Snapchat, Pinterest, and solar panel ETFs to be up 5x, but they were and I was fortunate enough to lock in some of those gains. Overall, we are well-diversified with most of our money in index funds. The US total market has dropped about 5% and emerging markets nearly 10%.

The kids really like the Dog Man graphic novels and will put away TV and video games for them. Unfortunately, there are less than a dozen, so it only kept them busy for a week. Captain Underpants by the same author isn’t working quite as well.

Last month, our portfolio hovered around all-time highs. As I mentioned, I was getting nervous that the markets were too high. I executed on my plan to continue to stay fully invested but moving more money to bonds. It was a small move of money from stock to bonds mostly for the psychological effect of being active. The small amounts seem to add up and when stocks dropped last March, I was able to buy in at lower prices by cashing in some bonds that didn’t drop as much.

With emerging markets dropping 10% from their highs, I started to move a little of that bond money to buy more of those shares at a discount. I hope most investors are not doing what I do and just leave the money where it is passively. That’s what we do with my wife’s retirement accounts. For investors who want to try to do a little better, I think I’m doing well in buying low and selling high.

We continue to get a profit-sharing check since I bought (a lot of) a company. The business was almost ideally positioned in this pandameic due to its virtual nature. The investment income from this is essentially the same as dividend income. It is taxed differently, but for the purposes of this report, it makes sense to group together all stock ownership in this bucket.

Total Dividend-ish Income: $3,527

Last month, it was $3,549. We dropped $22, which isn’t that much considering. This number rarely moves that much, but slow and steady wins the race. When I did this exercise in 2017 we were at $1180/mo.

Annualized, this monthly $3,527 is $42,324. If our mortgage was paid off, we might be able to live on this by itself. However, because most of our investments are in retirement accounts, we can’t use much of this potential income for now. (We can use the profit-sharing check as it goes straight to our checking account.) We’ll probably let this investment continue to compound for another 15 years until we are age 59.5. Then we’ll have to see if we want to tap it or let it continue until we are required to take some of it at age 72.

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, I’d include that as well. I’m too tone-deaf to have a rockstar music career, but maybe I’ll write a book someday.

The stock market has been fair steady since the drop and recovery when COVID first came around. The rental property income typically keeps going up because the mortgages are always getting paid down every month and they generally appreciate a little. Unless there’s a housing market crash, this should continue to happen.

I love having both types of income working together for us. I think everyone interested in FIRE should have stocks and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most people in the case of an unfortunate economic 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 that’s what an emergency fund is for.

My 7-year-old is honing his culinary presentation skills with a little desert art.

We are a full year into the most ginormous unfortunate event that I can remember in my life. Stocks went down a lot, but then went back up. Real estate just gone up. We’ve been lucky to have tenants who are still working and able to pay rent. Well, one couldn’t, but used the opportunity to sell at a market high and buy a property closer to us at a relatively low price. Overall, the plan keeps rolling along, even during COVID-19.

While the stock market is doing well, the real economy is still bad. It used to be terrible, but people are getting back to work and jobs are coming back. We’ve got a president who is working to end the COVID crisis. We’re getting stimulus checks and vaccines in arms. He’s starting to try to reverse the climate change disaster that causes so many natural disasters. Even if you are a heartless soul who doesn’t care about the people losing everything in fires, you should be able to agree that American business works best when it literally doesn’t have to put out fires. Good climate policy is simply good economic policy.

Very Close to Passive Income: $5,686

Last month it was $5,653. The $5,686 extends our all-time high yet again. As you can tell from the chart below, it just keeps moving in the right direction. It had been the stock market driving the gains for awhile. It slipped up, but the real estate market took the ball and ran with it.

This would be over $68,000 a year of almost completely passive income. What’s better is that there would be no need to touch the investments themselves. We wouldn’t have to sell stocks or get a reverse mortgage. Property maintenance and property taxes for rental properties are already factored in. We would still have all the underlying assets (property, stocks, etc.) and be able to pass these on to the kids for them to build on – unless we choose to draw them down for more fun, charity, or other spending.

This “very close to passive income” has grown from $2,354/mo. in January 2017. It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet (except for the profit-sharing check). We have gained more than $3,000 in passive-ish income over 4 years. I wonder if we can get to $8,000/mo. in passive income by the start of 2025, another 4 years. That’s a little aggressive, but it would give us something to hope for.

Final Passive Income

When you add up “dogs and blogs” to the “very close to passive income” you get:

Passive Income: $6,565.91

Last month it was $6,610.59. It’s another drop, but it would have been growth if it hadn’t been a short month. It seems like this is going to be a consistent number for a little while.

I’d like to see this average $8,000 in 2021, but I need a plan to add something new – it doesn’t look like dogs and blogs is going to get me there. For now, I’ll just be happy that with four different income streams (and two consistent ones), there isn’t much room for everything to drop.

This $6,500+/mo income is nearly $80,000 a year. That largely hypothetical annual income for writing on a blog, taking care of one dog, and investing is really nice. In the long term, $78K would be a lot more income than we’d need – given our necessary expenses for the next 45 years. Of course, those necessary expenses aren’t going to cover all our spending, but it’s a large percentage of it.

As 2020 has proven, you never know what bad news is lurking around the corner. This preparation gives us the financial flexibility to fight it.

None of the numbers here include my wife’s bread-winning pharmacist income, her vested military pension (more passive income), or the freelance work I’ve been doing over the last couple of years (which isn’t passive at all). That’s the fuel that drives the passive income engine – it allows us to live well and invest. My income doesn’t match my wife’s, but I’m good at stretching a dollar in almost all our spending.

We got a lot of snow in February, so we went sledding a few times.

As always, I’m still hoping to write a book someday. That would add some more passive income. My wife will probably get her book out first. She’s had an incredibly interesting life until she met me – I am so boring. I may tip my toe into self-publishing sometime this year. I would love to talk to a real publisher, but I don’t want to take on the “job” of writing. That’s probably a deal-breaker. If you know someone who I could talk to contact me.

My favorite thing about the graph below is that it doesn’t dip down too far. It’s been above $6,000 for a while now. Though we are getting close to dipping below that $6,000 mark. If it dips below $6000 and touches $5000, we’ll have to examine some things.

(Once again, the blue line is the monthly number. The red line is a 3-month average which helps smooth the curve.)

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.

February was another good month for our net worth. We saw it jump 1.20%. For the year overall, our net worth is up 4.41%. We’ve seen our net worth over 30% in last 14 months. With the Rule of 72, we’d double our net worth in around 2.5 years. That’s probably too good to last forever.

Diversification helps a lot in bad times. Even when the stock market was way down, we were still grounded with our real estate. We can’t control the market, but we can be happy that the amazing river of compound interest has been working well for us over the years.

I feel it’s important to acknowledge that everyone is in a different place in their financial journey. I’ve been blogging about personal finance for 15 years. FIRE wasn’t a “thing” back then, but it’s in the news a lot now. We naturally are further along in that journey than some younger readers who may be just starting out. If you are one of these readers, I hope you won’t be discouraged by some of the numbers above. I didn’t start many of these graphs until year 11 of blogging (year 13 of early retirement planning). Please try to use it as motivation for what may be possible (depending on your circumstances and market luck) over 10-15 years.

There’s a big wild card in calculating our net worth. Now that my wife’s pension is vested, it’s reasonable to ask whether to include it in our net worth. I decided that it does make sense to include it. She could have earned more direct monetary compensation if she didn’t work for the government. That would have boosted all the numbers across the board. Calculating pension value is not easy, but here’s the best way to know what a pension is worth. In the end, it seems my wife’s pension may be worth $2.3 million. However, like most of the money mentioned in this article, this isn’t money we can spend right now.

Because the pension would dominate our net worth, I’ll note two separate numbers in my personal spreadsheet. I don’t share the numbers anyway, aside from these hints, so I don’t think it should matter much to you. It’s not like I’m suggesting that you might want to make a financial-based decision on a pension.

How was your February? Let me know in the comments.

It turns out that 2021 isn’t any better than 2020… so far. Well, it started our worse with the capitol insurrection, but it wasn’t all bad. Look at the COVID cases:

That’s a 40% drop in cases! It’s even gone down more through the first part of February. We’re doing really well. If we can keep this up, the summer and vaccines may get the numbers low enough for people to travel a lot. I could use that for more dog sitting income. Please keep masking, distancing, and doing your part!

This month, my youngest son turned 7. We couldn’t have a traditional birthday party, so we did a staycation at a local hotel. The kids really like hotel life, especially if we can reserve some pool time. We were able to get an hour to ourselves and it was fantastic.

The kids also took their first snowboarding lesson. Last year we tried skiing, but the older kid didn’t like it and wanted to try snowboarding. The younger one didn’t mind, so we switched to that. It’s working really well, but I think the younger one did better with skiing and the older one did better with snowboarding. We’ve got another lesson left for this year and then we’ll see what we can do after that. For now, we are just happy that they are having fun and not complaining.

The kids’ karate dojo had a parents’ night out. The kids got to learn sword technique with plastic “lightsabers” and my wife and I got to go on our first date in a year. It was a lot of fun, with my wife saying she felt like she was in college again.

Our older kid is a big chocoholic. My wife had been planning all these vacations to tour Europe (because she wants to go) and has been using chocolate to get him excited about it. So, I suggested that we do a chocolate tasting at home. We went out and bought a bunch of different chocolates to try. It went a little viral on my wife’s Facebook. I highly recommend it.

Chocolate Tasting! Cadbury was a favorite. Parcheesi got to be a little too competitive and adults may be banned from playing in the future. Oops.

We finally opened up the piano that we got at Christmas and set it up. I had bought this Yamaha P71 Digital Piano on a lightning deal for $299 in the summer of 2018. Other than that one magical deal, the cheapest it has gotten is $399. The reviews by professional musicians sold me on it. It’s the right size for our house and sounds like a real piano. The kids can plug in headphones and pound away on it. The whole family is interested in learning, but I’m not sure the best way to learn in a COVID-friendly way.

Finally, we got to do a little ice bumper boat excursion. It was only 10-degrees outside, but everyone had fun. We followed it up with a trip to Chick-fil-A. I’ve only been once before and the kids have never been. I’ve never lived near one, so it’s something you have to plan. It was on my oldest’s bucket list after some YouTube video he watched, so we thought this would be an easy one to check off. It was good, but for the $40 we spent, I think we could have had a better meal at Applebee’s or IHOP.

That’s enough lead-in… let’s start the Passive Income report. I used to call this the Alternative Income Report, but everyone loves passive income better. While I transition to the new terminology, there may be some “alternative income” mentions including the FAQ. 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.

The way I calculate these numbers requires that long explanation – it isn’t intuitive at all. The reason why I do things a little differently is that this catalogs a journey. For example, we don’t have passive income from our rental properties while we are paying down their mortgages. Instead, I calculate the percentage of equity we have to show where on that journey we are. Each month you see that the bank owns less and we own more. When we get to owning 100% there will be no mortgages and all that rental income can be used for living expenses.

Lazy Man’s Passive Income – December 2020

I categorize our passive income into 3 main sources that are largely represented in my passive income pyramid. For this report, I ignore the bottom section, “career/job” – that’s not passive at all. (I do have some income in that area, but that’s not the focus of this report.) I combine dog sitting and blogging into one section of “somewhat active” income. I leave real estate and investment income as their own separate main sources of very passive income.

1. Blogging + Dog Sitting Income

January was another very bad month for blogging income. It’s the second month in a row where my usual 6-8 advertising inquiries was just 1. Hopefully, the advertisements come back, but my traffic is growing for the first time in awhile. I’d rather have traffic growth at this point. I don’t know if you’ve noticed, but I’ve tried very hard to have at least two new high-quality articles a week with Friday being a revised article from the past. It’s a lot of writing, we’ll see how long I can keep it up.

As for dog sitting, I got a little lucky that a regular client went out of town for a week. I don’t expect to make much dog sitting money until this summer. I’m hopeful COVID cases will be down with vaccines and everyone getting more time outside. Summer is a big vacation and tourist season for us, so if that happens I can make some good money again. If not, it’s no big deal.

Celebrating a birthday at a hotel worked out well enough. The kids appreciated the different location and the swimming.

Over the last couple of months, I picked up a new freelance client who has some blog editing work for me to do. This isn’t passive income at all, so I don’t include it here. I mention it only because even as these passive income sources are down, total income is looking better.

In December, dogs and blogs combined for a total of $1036.52 – the lowest in years. In January, it was:

Total Blogging + Dog Sitting Income: $957.59

I want to do better in this area, but a lot seems to depend on market conditions. I’m starting to feel like I’m putting more effort into blogging than I’m getting out of it, in terms of income. However, I still enjoy writing, so it isn’t a big deal. The dogs that we are sitting are regular customers… and they are great dogs. I’ll just have to deal with the low numbers for now. I’m putting more of my time into more active work such as my freelancing that isn’t included in this report.

When there is some dog sitting my kids can pitch in to help. My 8-year old is extremely good with dogs at this point. He can feed them, let them out, and play with them in the yard. My 7-year-old is good too. This help means that I can pay them a legitimately earned income (a small percentage of the overall dog-sitting income). Because the income is earned they can save money in their kid Roth IRAs and it will be money that they’ll never pay tax on. I want to get them more involved in blogging, taking pictures and things like that, but it’s going slow. They get enough school work, homework, and extra-curricular activities.

(Note: The blue line is the monthly number. The red line is a 3-month average which helps smooth the curve.)

2. Rental Property Income

We recently sold a condo and bought a new one that’s closer to us. It’s much easier to manage. We got new tenants in January – it’s good to get rent checks in again. I’m very excited about these tenants. They volunteered to paint the whole place and do other improvements. It looks great now. We gave them a big discount the first month, I hope they’ll stick around for a long time.

As for January’s numbers, Zillow’s estimates of our properties were up – always a good thing. We paid down the mortgages as we always do. In 2020, we gained around $60K in equity. It can be difficult to deal with tenants, but I like to think of those equity gains as a $60,000 salary. We can’t spend the money, because it isn’t liquid. Still, the “work” for that $60,000 is pretty minimal.

The kids learned to snowboard. The older one was a natural. The younger was a natural skier last year. It’s kind of a pain that they could be good at the same thing, but I’m just happy they each found a similar thing they like.

This month we went from 61.55% to 62.12% ownership of the equity in our properties. In pure dollars and cents, we gained $7,185 in equity last month. (It’s always hard to measure the true gains because we have to supplement the real estate bank account to cover maintenance costs. We reconcile all this at the end of the year at tax time.)

That’s a really nice move forward. Previously, I calculated that, after insurance, property taxes, condo fees, and estimated maintenance we’d make $3,325 a month. That number represents our net gain. I recently updated this with the new property and it looks like we’ll be at $3,387.50 – a minor difference.

If you multiply our expected net rent $3,387.50 by the amount of equity we have (i.e. where we are on our journey) 62.12% you get $2,104 in estimated monthly passive income. When I started tracking this (January 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 exactly 4 years, we’ve seen the number grow $840/mo. That’s great passive growth in 4 years.

As the years march on, the ratio will grow to 100% of a rent that should net $3,387.50 monthly after expenses. Since rent is inflation-resistant, we can raise it as costs of living go up. We don’t have to factor in inflation like other investments. So we can think of it as $40,000/yr. of income in today’s dollars buying the same value of stuff in the future. That should be enough money for us to live on with our own home paid off (plus our solar panels, frugal shopping habits, and military healthcare.)

In the previous report, the rental property income was $2,085.

Total Rental Property Income: $2104

3. Dividend Income

For this section, I assume we will earn 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. There are some income investing ideas here. We can also look at making passive income with dividend kings. If I wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get closer to a 4% average dividend yield. That link to the newsletter has a special discount rate and in full disclosure, I make a few dollars if you sign up for it.

The birthday boy could fit in the bedside table and close himself in. He always seems to like doing stuff like that.

The market has been doing great – it’s just been a big bull market. Some of my satellite stocks have done really well. I wouldn’t have expected Snapchat, Pinterest, and solar panel ETFs to be up 5x, but they have. With our portfolio hovering around all-time highs, this section is looking great. I’m getting nervous that the markets at too high. I will continue to stay fully invested, but I will hold more bonds for now. Sometimes I move a small amount of money from stock to bonds for the psychological effect of being active. The small amounts seem to add up and when stocks dropped last March, I was able to buy in at lower prices by cashing in some bonds that didn’t drop as much.

We continue to get a profit-sharing check since I bought (a lot of) a company. The business is doing well. It’s actually almost ideally positioned in this pandameic due to its virtual nature. The investment income from this is essentially the same as dividend income. It is taxed differently, but for the purposes of this report, it makes sense to group together all stock ownership in this bucket.

Total Dividend-ish Income: $3549

Last month, it was $3,441 and we jumped up again, hitting yet another high. This number rarely goes up much (since it’s a small percentage of our nest egg), but slow and steady wins the race.

Annualized, this monthly $3549 is $42,585. If our mortgage was paid off, we might be able to live on this by itself. However, because most of our investments are in retirement accounts, we can’t use much of this potential income for now. (We can use the profit-sharing check as it goes straight to our checking account.) We’ll probably let this investment continue to compound for another 15 years until we are age 59.5. Then we’ll have to see if we want to tap it or let it continue until we are required to take some of it at age 72.

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, I’d include that as well. I’m too tone-deaf to have a rockstar music career, but maybe I’ll write a book someday.

We don’t get up to Providence from Newport very often, because traveling half the huge state of Rhode Island is a daunting task. However, 20 minutes of bumping each other was some good, COVID-safe fun.

The stock market goes up and down fast, even more so nowadays. That makes the dividend calculation fluctuate a lot more than it normally would. We don’t know if companies can reliably pay dividends anymore. Without customers and profits, many companies have cut their dividends. However, the stock market is looking ahead to summer 2021 with a lot of vaccine and outside time.

The rental property income typically 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. We haven’t seen any kind of crash… instead the housing market is booming.

I don’t know how to play the piano and I’m looking for tips. Got any advice on how to learn that’s COVID-safe?

I love having both types of income working together for us. I think everyone interested in FIRE should have stocks and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most people in the case of an unfortunate economic 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 that’s what an emergency fund is for.

We are a full year into the most ginormous unfortunate event that I can remember in my life. Stocks went down a lot, but then went back up. Real estate has held steady. We’ve been lucky to have tenants who are still working and able to pay rent. Well, one couldn’t, but used the opportunity to sell at a market high and buy a property closer to us at a relatively low price. Overall, the plan keeps rolling along, even during COVID-19.

When you are small enough to fit inside a bedside table, you are too big for an adult robe. Alas, that’s all we had to get him back from the pool.

While the stock market is doing well, the real economy is still bad. It used to be terrible, but people are getting back to work and jobs are coming back. We’ve got a president who is working to end the COVID crisis. He’s starting to reverse the climate change disaster that causes so many natural disasters. Even if you are a heartless soul who doesn’t care about the people losing everything in fires, you should be able to agree that American business works best when it literally doesn’t have to put out fires. Good climate policy is simply good economic policy.

Very Close to Passive Income: $5,653

Last month it was $5,526. The $5,653 extends our all-time high yet again. As you can tell from the chart below, it just keeps moving in the right direction.

This would be over $67,835 a year of almost completely passive income. What’s better is that there would be no need to touch the investments themselves. We wouldn’t have to sell stocks or get a reverse mortgage. Property maintenance and property taxes for rental properties are already factored in. We would still have all the underlying assets (property, stocks, etc.) and be able to pass these on to the kids for them to build on – unless we choose to draw them down for more fun, charity, or other spending.

This “very close to passive income” has grown from $2,354/mo. in January 2017. It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet (except for the profit-sharing check). I’m at four years of tracking this number, and we have gained more than $3,000 in passive-ish income. I wonder if we can get to $8,000/mo. in passive income by the start of 2025 (which will be another 4 years). That’s a little aggressive, but it would give us something to hope for.

Final Passive Income

When you add up “dogs and blogs” to the “very close to passive income” you get:

Passive Income: $6,610.59

Last month it was $6,562.52.

I’d like to see this average $8,000 in 2021, but I need a plan to add something new – it doesn’t look like dogs and blogs is going to get me there. For now, I’ll just be happy that with four different income streams (and two consistent ones), there isn’t much room for everything to drop.

This $6500+/mo income is nearly $80,000 a year. That largely hypothetical annual income for writing on a blog, taking care of one dog, and investing is really nice. In the long term, $78K would be a lot more income than we’d need – given our necessary expenses for the next 45 years. Of course, those necessary expenses aren’t going to cover all our spending, but it’s a large percentage of it.

My wife and I had a date night with the Stanley Cup. It’s not the real Stanley Cup, but we can pretend right? It’s nice to know that the classic art from hundreds of years was well-suited to remind people to wear a mask.

As 2020 has proven, you never know what bad news is lurking around the corner. This preparation gives us the financial flexibility to fight it.

None of the numbers here include my wife’s bread-winning pharmacist income, her vested military pension (more passive income), or the freelance work I’ve been doing over the last couple of years (which isn’t passive at all). That’s the fuel that drives the passive income engine – it allows us to live well and invest. My income doesn’t match my wife’s, but I’m good at stretching a dollar in almost all our spending.

As always, I’m still hoping to write a book someday. That would add some more passive income. My wife will probably get her book out first. She’s had an incredibly interesting life until she met me – I am so boring. I may tip my toe into self-publishing sometime this year. I would love to talk to a real publisher, but I don’t want to take on the “job” of writing. That’s probably a deal-breaker. If you know someone who I could talk to contact me.

My favorite thing about the graph below is that it doesn’t dip down too far. It’s been above $6,000 for a while now. Though we are getting close to dipping below that $6,000 mark. If it dips below $6000 and touches $5000, we’ll have to examine some things.

(Once again, the blue line is the monthly number. The red line is a 3-month average which helps smooth the curve.)

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.

January was another great month for our net worth. We saw it jump 3.17%. For the year overall, our net worth is up 3.17% (since it’s the first report). If you didn’t know better you might think 2020 and 2021 were boring, great financial years – a typical saving and investing plan for us. In fact, we’ve grown our net worth around 30% over the last 13 months. With the Rule of 72, we’d double our net worth in around 2.5 years.

Diversification helps a lot in bad times. Even when the stock market was way down, we were still grounded with our real estate. We can’t control the market, but we can be happy that the amazing river of compound interest has been working well for us over the years.

I feel it’s important to acknowledge that everyone is in a different place in their financial journey. I’ve been blogging about personal finance for 15 years. FIRE wasn’t a “thing” back then, but it’s in the news a lot now. We naturally are further along in that journey than some younger readers who may be just starting out. If you are one of these readers, I hope you won’t be discouraged by some of the numbers above. I didn’t start many of these graphs until year 11 of blogging (year 13 of early retirement planning). Please try to use it as motivation for what may be possible (depending on your circumstances and market luck) over 10-15 years.

There’s a big wild card in calculating our net worth. Now that my wife’s pension is vested, it’s reasonable to ask whether to include a pension in your net worth. I decided that it does make sense to include it. She could have earned more direct monetary compensation if she didn’t work for the government. That would have boosted all the numbers across the board. Calculating pension value is not easy, but here’s the best way to know what a pension is worth. In the end, it seems my wife’s pension may be worth $2.3 million. However, like most of the money mentioned in this article, this isn’t money we can spend right now.

Because the pension would dominate our net worth, I’ll note two separate numbers in my personal spreadsheet. I don’t share the numbers anyway, aside from these hints, so I don’t think it should matter much to you. It’s not like I’m suggesting that you might want to make a financial-based decision on a pension.

How as your January? Let me know in the comments.