Is everyone having a great June? We’re currently on vacation on Block Island. I love that it’s a good place to get away from technology. However, I needed to send some pictures from my phone for this article and the lack of internet connection is making it impossible. So the best I can do for now is publish this word soup.

If pictures did work you’d see kids playing with dogs and our old dog showing a rare bark. The kids were also in school plays, musical performances, and had an art show. The school does a lot at the end of the year to show off their work. My wife did a lot of traveling in May. She was running a conference of 6000 people and got back in time to fly to D.C. with my oldest kid to see the POTUS’ Memorial Day speech.

I’ve been working on Kid Wealth. As part of that, I’m learning about new bloggers. One that I’m really liking lately is Money Buffalo.

That’s enough of the personal stuff… let’s start the Passive Income report. I used to call this the Alternative Income Report because some of this income has an active component to it. However, that idea isn’t catching on and everyone loves “passive income” better. If you are a new reader, you’re going to want to refer to my Alternative Income FAQ as you may have some questions about the math.

The way I calculate these numbers requires that little explanation – it isn’t intuitive. I do things a little differently to show the journey. For example, we don’t have real passive income from our rental properties right now. We still have mortgages to pay off. Instead, I calculate the percentage of equity we have to show where on that journey we are. Each month, you’ll 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. When it comes to calculating the percentage of rental income, I take the rent (minus estimated expenses) and multiply it by the portion of equity we own. Think of it like you and a friend owning a property 50/50. This would be how you’d handle it with each of you splitting the profits at the end 50/50.

Lazy Man’s Passive Income

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 my “somewhat active” income. They are a little passive because I can make money even when I’m not immediately tending to them. For example, I’m writing this while boarding 2 dogs right now. I leave real estate and investment income as their separate main sources of very passive income. This way if you want to only count those you can do that.

1. Blogging + Dog Sitting Income

In May we took a step back in our dog boarding income. April had school vacations so many people were traveling leaving their dogs with us. Nonetheless, May was still our second best month of the year. We did have the benefit of Memorial Day which leads to some dogs staying the long weekend at holiday rates.

We averaged two dog overnights a day, which is only slightly more than average. We did a lot of day boarding though and that helped add to the income.

Blog income was slightly below average. This is to be expected when I’m more focused on dog boarding.

In April, “dogs and blogs” combined for a total of $7,664.90. In May, it was:

Total Blogging + Dog Sitting Income: $5,079.36

That’s about 20% above the average over the last year. By any measure that’s a good month.

My kids help with the dog sitting. My 9-year-old is extremely good with dogs at this point. He can feed them, let them out, and play with them in the yard. He’s spending more time in front of the clients as a helper at pick-ups and drop-offs. My 8-year-old was a little slower to develop dog skills, but he’s carved out a household niche of catering to the smaller dogs – he just loves them. He’s started to recently take an interest in feeding them.

Their help means that I can pay them a legitimately earned income (a 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. Learn why you should get started with a kid Roth IRA as soon as possible.

Someday, I want to get them more involved in blogging, taking pictures, and things like that. During school, they have too much to keep them busy. After school, there’s homework, becoming mini-ninjas, scouting, music, and sports to fill up their days. Being a kid is hard work!

(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

Once again the rental properties appeciated $20,000 according to Zillow. We’ve seen this quite a few months now. Zillow is usually fairly accurate because our rental properties are condos with many similar properties for comparisons.

We’ve been trying to sell one of the properties, but the old tenant wouldn’t leave. So now we have to go through an eviction process even though the buyer should already be moved in. Until the situation resolves itself, I’ll have to continue this report with the assumption that we had a tenant who was paying rent.

We went from 75.85% to 76.53% ownership of the equity in our properties. That’s another month of good gains.

If we owned the rental properties with no mortgages (100% of the equity), we’d make about $4,000 a month after insurance, property taxes, condo fees, and estimated condo maintenance.

I like to use an “expected rent” as we’re currently trying to catch up from years of very low rents. We liked our tenants (except the one that wouldn’t leave), so we’ve kept them at a discount.

If you multiply our expected net rent by $3,650 by the amount of equity we have, 76.53%, you get $2,793/mo. in estimated passive income. That’s a gain of $25 from last month.

When I started tracking this (January 2017), we only owned 36.4% of the properties and the properties had lower rents. The math worked out to $1,174 back then. So in 5.5 years, we’ve seen that number grow tremendously to $2,793. The forced savings of 15-year mortgages is extremely powerful.

Before we decided to sell the property, it was looking like we’d have $45,000/yr. of income. I’ll have to recalculate this when the sale closes. Rent is inflation resistant as we can raise rents over time. So this income will grow as things get more expensive. This was looking like enough for us to live on once our own mortgage is paid off, but I’ll have to revisit that too. Of course, that’s just one part of the plan as you can see.

Total Rental Property Income: $2,793

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. For example, HDV is currently paying about a 3.31% yield, but it has been less in the past.

There’s a chance we could do better than this. There are some income investing ideas here. We can also look at making passive income with Dividend Kings. If we wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get a 5% 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.)

Of course, we may not convert everything over to dividend income at all, it’s just a conservative way to think of our investment portfolio. If I used a 3.5% or 4% withdrawal rate, these numbers would be much bigger.

We saw a very slight gain in the stock market. For now, any kind of gain is a good gain. We’ll continue to buy in at these low prices and when the market recovers we’ll enjoy new portfolio highs. Since all of this money is in our retirement accounts, we’ll be invested for at least another 15 years.

We continue to get a profit-sharing check since I bought (a lot of) a company. The investment income from this is essentially the same as dividend income. It is taxed differently, but for this report, it makes sense to group all stock ownership in this bucket.

Total Dividend-ish Income: $3,548

Last month, it was $3,535. A gain of $13 isn’t a much. Maybe the markets will be more interesting by next month. When I started tracking this number in January of 2017 we were at $1,180/mo. It’s been a great last 5 years.

Our money has been working hard to multiply until this month. For a while, we stopped adding to our investments. Instead we had been focusing on saving money in cash for my wife to retire. Except that, now my wife got a new job and isn’t looking to retire. That’s a roller coaster of emotions. Some days she wants to retire and other days, it seems like she wants to work for many more years. Whatever she wants to do is fine with me. At least this new job is much better than the last one. She’s had time to bring the kids to school and do some things like that. Before they had a keyboard tracker on her.

Getting back to the monthly update, this monthly $3,548 would be over $42,000. As with the rental income number above, we should 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 started to see an estate planning lawyer last year, but they gave us a lot of paperwork to do before we can move forward. I haven’t had the time to convert our spreadsheet summaries to something they can use. I started the paperwork, but I don’t even know where it is now. Not great.

Very Close to Passive Income

Our “very close to passive income” is a combination of rental property income and dividend income. If we had any 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 may write a book someday. This is important to separate from the dogs and blogs’ income at the beginning. That takes some active work to keep up. Rental property requires a little work, but not nearly as much.

We made some slight gains this month. The stock market dropped and then recovered by the 8th when we took these numbers. (It has since crashed again, but we’ll see where that takes us next month.) I love having both rental property and stock market income working together for us. With the stock market dropping recently, our real estate is saving our net worth from dropping further. For much of the last decade, it was the opposite – real estate didn’t do much while stocks quadrupled. I think everyone interested in FIRE should consider having stock market and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most FIRE folks 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 a while. Of course a bad economy may impact both at the same time, but that’s what an emergency fund is for.

Very Close to Passive Income: $6,341

This would be over ~$76,000 a year of passive-ish income. We wouldn’t need to touch the investments themselves. We wouldn’t have to sell stocks or have a “withdrawal rate” – just live off dividends. We wouldn’t have to get a reverse mortgage on our home or the investment properties. 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. So in 5.5 years, we’ve added about $4,000 in monthly passive income. That’s nearly $50,000 – a lot more than the $34,000 I made as a software engineer out of college in 1998. This is one of the reasons why I went with the “Lazy” name, it shows that investing money can do more work (or somehow produce more value) than I did. It’s a crazy system. I’m just doing my best to work within it.

It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet (except for the profit-sharing check), because the money isn’t liquid. We can’t spend those retirement investments or the equity we have in properties. We don’t feel “rich” by any stretch of the word, even though we are relative to many people’s circumstances. We still have some day-to-day struggles with money. These are relatively minor compared to what most people experience I imagine. That’s one reason we are selling a rental property. It will help us feel a little more financial freedom right now. We’ll still have plenty working for the future.

I used to wonder if we can get to $8,000/mo. in passive income by the start of 2025. A year ago, it was a stretch goal… now it feels like it could go either way. We’ll have to see where the numbers are when we sell off the rental property.

Final Passive-ish Income

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

Passive-ish Income: $11,420.36

Last month it was $13,967.90. April was crazy with all the dog boarding and this was much more manageable. This was much closer to being passsive, but it still a lot of dogs

That’s over $135k a year. That (hypothetical) annual income for writing on a blog, taking care of dogs, investing, and landlording is very nice. If we manage $170,000 from all these sources we’d be doing quite well – given our necessary expenses for the next 45 years. Of course, those necessary expenses aren’t going to cover all our spending, but they are a large percentage of it.

None of the numbers here include my wife’s bread-winning day job as a pharmacist or the freelance work I’ve been doing over the last few years (which isn’t passive at all). When my wife retires we can count her vested military pension as more truly passive income. For now, those jobs (and the dog boarding) are the fuel that drives the passive income engine – it allows us to live well, pay off our mortgage, and invest. My income doesn’t match my wife’s, but the flexibility gives me the time to stretch almost every dollar in much of our spending. It also gives me the flexibility to bring the kids to school and after-school activities.

I love two things about the graph below. First, there’s a solid trend of the numbers staying high for several months now. Second, it doesn’t dip down too far. It seems like it should be at least $8,000 going forward. I don’t want to see a big market collapse, it would hurt a lot of people, but I am curious how bulletproof all these sources of income are when they work together. If this month is any indication, it’s possible to hit all-time highs when the economy isn’t doing well.

(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.

We saw our net worth grow 2.28% last month. That’s tremendous, but so much of it came from our the value of primary residence going up. That’s not useful for us unless we move or do a reverse mortgage. It reminds me that buying a home and locking in a mortgage in 2011 was a great idea. For the whole year, our net worth is up 3.89%. That’s really great when it seems like the economy is bad for a lot of people.

Recently for something new, I decided to share our liquid cash growth (or loss). I’ve been tracking it for some time, but never thought to share it. Many other bloggers break down their income and expenses in great detail. I’m too “Lazy” for all that, even if my credit card reports can do a lot of it. Looking at our liquid cash is a way to roughly gauge the bottom line, income minus expenses.

This month, we lost around lost $500 in liquid cash. We should try to do a little better in this area. It will have to wait another month or two because we just bought tickets for an expensive vacation later this year.

It’s important to recognize that everyone is in a different place in their financial journey. I’ve been blogging about personal finance for almost 16 years. FIRE wasn’t a “thing” back in 2006. We naturally are further along in that journey than some younger readers who may be just starting. Some of those readers are saddled with huge student loans that we didn’t have to deal with. 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 10 of blogging and early retirement planning. Please try to use it as motivation for what may be possible (depending on your circumstances and market luck) over 15-20 years.

There’s a big wild card in calculating our net worth. Now that my wife’s military pension is vested, it’s reasonable to ask whether we should include it in our net worth. I decided that it does make sense to include it. She could have earned more in immediate salary 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. However, like most of the money mentioned in this article, this isn’t money we can spend right now.

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

Is everyone having a great May? The weather is getting good in Rhode Island. We’ve even gotten some use of our inflatable hot tub. Perhaps I’ve been using it too much because April’s passive income update is later than usual.

Each month, I look back at the pictures on my phone and try to pick out the interesting moments to share. This past month there were a lot of dog pictures. As you’ll find in a bit, dog boarding was crazy.

In other news, I’ve been having some tenant troubles. We’re selling a condo. The tenant is upset that we decided not to renew the lease. She’s decided not to her rent for the rest of the lease. She doesn’t seem to be making any plans to vacate either, so this is becoming a big problem.

Aside from that, we had a successful annual Easter egg hunt. My 8-year-old had his first traveling soccer game. (It’s amazing how much better he’s gotten in just a couple of months). In April, the 9-year-old was just getting started in baseball – he might have had one practice. I’ll update how that’s going next month.

The kids earned another belt stripe in karate. They can use kamas now. They’ll be fine if they find themselves in a self-defense situation where they have a small sickle-blade-on-a-stick weapon handy. Last year that happened to me 7 times and I regret not having the kama skills to pair with the kamas that were nearby. We’re putting karate on hold for a couple of months because baseball and soccer were just too much.

I guess it’s boring times around here. That’s a good thing, I guess. It would be fun to share that we’re doing all this extra stuff.

That’s enough of the personal stuff… let’s start the Passive Income report. I used to call this the Alternative Income Report because some of this income has an active component to it. However, that idea isn’t catching on and everyone loves “passive income” better. If you are a new reader, you’re going to want to refer to my Alternative Income FAQ as you may have some questions about the math.

The way I calculate these numbers requires that little explanation – it isn’t intuitive. I do things a little differently to show the journey. For example, we don’t have real passive income from our rental properties right now. We still have mortgages to pay off. Instead, I calculate the percentage of equity we have to show where on that journey we are. Each month, you’ll 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. When it comes to calculating the percentage of rental income, I take the rent (minus estimated expenses) and multiply it by the portion of equity we own. Think of it like you and a friend owning a property 50/50. This would be how you’d handle it with each of you splitting the profits at the end 50/50.

Lazy Man’s Passive Income

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 my “somewhat active” income. They are a little passive because I can make money even when I’m not immediately tending to them. For example, I’m writing this while boarding 2 dogs right now. I leave real estate and investment income as their separate main sources of very passive income. This way if you want to only count those you can do that.

1. Blogging + Dog Sitting Income

April was our best month ever for dog boarding on Rover.com. Before the pandemic, we averaged about 1 dog overnight per day. After vaccines and everyone started traveling, we averaged 2 dog overnights a day. I raised prices to match other dog boarders. In April, we averaged 4 dog overnights a day. We also had many dogs for day boarding, but I don’t keep stats on these. (My spreadsheet subtracts the check-out day from the check-in day. When these are the same day, that number is zero, so it is like we didn’t care for the dog at all, except that the money still adds up.)

At 4 dog overnights and day boarding, it wasn’t passive at all! In fact, I was stressed out most of the month because people wanted to pick up their dogs after work. That’s reasonable enough, but that’s when I had to shuttle the kids to their after-school stuff.

Blogging dropped back down to average. I’m told by the advertising nerds that budgets get reset in April, so it takes some time for the spending to come in on adds

In March, “dogs and blogs” combined for a total of $4,295.77. In April, it was:

Total Blogging + Dog Sitting Income: $7,664.90

That’s an all-time record. We could have similar or bigger numbers over the summer as that’s our busiest season. I would like to see blogging income pick up because dog boarding doesn’t scale and we are maxed out there.

My kids help with the dog sitting. My 9-year-old is extremely good with dogs at this point. He can feed them, let them out, and play with them in the yard. He’s spending more time in front of the clients as a helper at pick-ups and drop-offs. My 8-year-old was a little slower to develop dog skills, but he’s carved out a household niche of catering to the smaller dogs – he just loves them. He’s started to recently take an interest in feeding them.

Their help means that I can pay them a legitimately earned income (a 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. Learn why you should get started with a kid Roth IRA as soon as possible.

You can tell I didn’t get a lot of good pictures of soccer. My son is #14 off to the side of the action.

Someday, I want to get them more involved in blogging, taking pictures, and things like that. During school, they have too much to keep them busy. After school, there’s homework, becoming mini-ninjas, scouting, music, and sports to fill up their days. Being a kid is hard work!

(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 rental properties had about $20,000 in appreciation this month according to Zillow. Last month it was $40,000 which was crazy, so I wasn’t prepared for another big gain. It seems like we’re back to the days of properties jumping up in value all the time. Last month, I said that we were finding that Zillow’s Zestimate for our condo may not be accurate. We were listing a condo and the real estate agent showed the comps and they were 10% less than Zillow. However, in the first few days, we got an offer that was 10% above our asking price – almost exactly Zillow’s Zestimate. So maybe Zillow does know best after all.

Each month, we pay down a couple of thousand dollars of mortgage debt. We build some equity each month aside from the appreciation.

We went from 75.10% to 75.85% ownership of the equity in our properties. That’s a month of good gains.

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 $4,000 a month. The expected rents have gone up a lot. However, we aren’t getting those kinds of rents yet. We’re keeping them low for now. So I’m going to average what we could make and what we are making, which is about $3650. It seems like low-lying fruit that we could get there and our tenants would still be happy that they are getting a bargain.

If you multiply our expected net rent by $3,650 by the amount of equity we have (i.e. where we are on our journey to 100% equity ownership), 75.85%, you get $2,768 /mo. in estimated passive income. That’s a gain of almost $27 from last month. That’s a very solid gain for one month.

This number will change a lot when we sell our condo. Our potential rental income will go down. However, we’ll have new money to invest that will earn dividends in the next section. It’s one less property to manage, so our income will be a little more passive.

Our teenager living his best life on one of our boarder’s beds.

When I started tracking this (January 2017), we only owned 36.4% of the properties and the properties had lower rents. The math worked out to $1,174 back then. So in 5+ years, we’ve seen that number grow tremendously to $2,768. The forced savings of 15-year mortgages have been a very powerful force.

When the mortgages are paid off, we would have had $45,000/yr. of income. I’ll have to recalculate that when the sale closes. Rent is inflation resistant as we can raise rents over time. So this income will grow as things get more expensive. This was looking like enough for us to live on once our own mortgage is paid off, but I’ll have to revisit that too. Of course, that’s just one part of the plan as you can see.

In the previous report, the rental property income was $2,693.

Total Rental Property Income: $2,741

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. For example, HDV is currently paying about a 3.28% yield, but it has been less in the past. We could also get that yield 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 we wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get a 5% 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.)

Of course, we may not convert everything over to dividend income at all, it’s just a conservative way to think of our investment portfolio. If I used a 3.5% or 4% withdrawal rate, these numbers would be much bigger.

The market rebound in March was short-lived. I took the numbers in this report on May 5th. The market has gotten a lot worse since then, but we’ll have to deal with that next month. It doesn’t look like the market is very good. For us, that’s fine as it has been great while we invested over the last decade. I had a larger than usual concentration of money in high-dividend index funds (the HDV mentioned above) and it is only down about 5% from its highs. I sold off a little and bought the Nasdaq index (QQQs) when it was down 30% from its highs recently.

I don’t know where the markets are going. The good news is that I don’t care too much. We’ll be invested for between 15 and 40 more years.

This bird found a nest that built outside our window in the early COVID days. It’s been sprucing up that abandoned nest

We continue to get a profit-sharing check since I bought (a lot of) a company. The investment income from this is essentially the same as dividend income. It is taxed differently, but for this report, it makes sense to group all stock ownership in this bucket.

Total Dividend-ish Income: $3,535

Last month, it was $3,762. A drop of over $200 is a lot. I’m almost positive it will only be worse next month. When I started tracking this number in January of 2017 we were at $1,180/mo. Instead of focusing on the month’s drop, I choose to look at how much growth we’ve seen in those five years.

Our money has been working hard to multiply until this month. For a while, we stopped adding to our investments. Instead we had been focusing on saving money in cash for my wife to retire. Except that, now my wife got a new job and isn’t looking to retire. That’s a roller coaster of emotions. Some days she wants to retire and other days, it seems like she wants to work for many more years. Whatever she wants to do is fine with me. At least this new job is much better than the last one. She’s had time to bring the kids to school and do some things like that. Before they had a keyboard tracker on her.

Getting back to the monthly update, this monthly $3,535 would be over $42,000. As with the rental income number above, we should 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 started to see an estate planning lawyer last year, but they gave us a lot of paperwork to do before we can move forward. I haven’t had the time to convert our spreadsheet summaries to something they can use. I started the paperwork, but I don’t even know where it is now. Not great.

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 may write a book someday. This is important to separate from the dogs and blogs’ income at the beginning. That takes some active work to keep up. Rental property requires a little work, but not nearly as much.

The Easter Bunny was a jerk this year – hiding eggs up in a tree.

We lost some of the gains here again this month. The stock market drop is too much for the real estate market to cover. I love having both types of income working together for us. With the stock market dropping recently, our real estate is saving our net worth from dropping further. For much of the last decade, it was the opposite – real estate didn’t do much while stocks quadrupled. I think everyone interested in FIRE should consider having stock market and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most FIRE folks 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 a while. Of course a bad economy may impact both at the same time, but that’s what an emergency fund is for.

Very Close to Passive Income: $6,304

This would be over ~$75,000 a year of passive-ish income. We wouldn’t need to touch the investments themselves. We wouldn’t have to sell stocks or have a “withdrawal rate” – just live off dividends. We wouldn’t have to get a reverse mortgage on our home or the investment properties. 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. So in 5.5 years, we’ve added about $4,000 in monthly passive income. That’s nearly $50,000 – a lot more than the $34,000 I made as a software engineer out of college in 1998. This is one of the reasons why I went with the “Lazy” name, it shows that investing money can do more work (or somehow produce more value) than I did. It’s a crazy system. I’m just doing my best to work within it.

It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet (except for the profit-sharing check), because the money isn’t liquid. We can’t spend those retirement investments or the equity we have in properties. We don’t feel “rich” by any stretch of the word, even though we are relative to many people’s circumstances. We still have some day-to-day struggles with money. These are relatively minor compared to what most people experience I imagine. That’s one reason we are selling a rental property. It will help us feel a little more financial freedom right now. We’ll still have plenty working for the future.

I used to wonder if we can get to $8,000/mo. in passive income by the start of 2025. A year ago, it was a stretch goal… now it feels like it could go either way. We’ll have to see where the numbers are when we sell off the rental property.

Final Passive-ish Income

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

Passive-ish Income: $13,967.90

Last month it was $10,798.77. This is an all-time high, but more than half of it came from dogs and blogs and the dogs were not passive this month. I’ll be happier if/when we can get to this number from investments. I enjoy working with all the dogs for now, but in the future, I’ll probably cut back.

That’s almost $170k a year. That (hypothetical) annual income for writing on a blog, taking care of dogs, investing, and landlording is very nice. If we manage $170,000 from all these sources we’d be doing quite well – given our necessary expenses for the next 45 years. Of course, those necessary expenses aren’t going to cover all our spending, but they are a large percentage of it.

None of the numbers here include my wife’s bread-winning day job as a pharmacist or the freelance work I’ve been doing over the last few years (which isn’t passive at all). When my wife retires we can count her vested military pension as more truly passive income. For now, those jobs (and the dog boarding) are the fuel that drives the passive income engine – it allows us to live well, pay off our mortgage, and invest. My income doesn’t match my wife’s, but the flexibility gives me the time to stretch almost every dollar in much of our spending. It also gives me the flexibility to bring the kids to school and after-school activities.

I love two things about the graph below. First, there’s a solid trend of the numbers staying high for several months now. Second, it doesn’t dip down too far. It seems like it should be at least $8,000 going forward. I don’t want to see a big market collapse, it would hurt a lot of people, but I am curious how bulletproof all these sources of income are when they work together. If this month is any indication, it’s possible to hit all-time highs when the economy isn’t doing well.

(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.

We saw our net worth drop by 1.73% in April (including up to May 5th). That’s not great, but it’s what we signed up for when we invested in the stock market. For 2022, our net worth is up 1.58%. There are a lot of people who have a negative net worth for the year. Not that it is some kind of competition, but it is reassuring.

Recently for something new, I decided to share our liquid cash growth (or loss). I’ve been tracking it for some time, but never thought to share it. Many other bloggers break down their income and expenses in great detail. I’m too “Lazy” for all that, even if my credit card reports can do a lot of it. Looking at our liquid cash is a way to roughly gauge the bottom line, income minus expenses.

This month, we lost around lost $1,500 in liquid cash. It looks like the main drop has come from the cash in our real estate LLC. We paid the tax preparer a lot and one of my tenants is a couple of months behind on rent. Some of it was just general spending as our joint account is lower than usual.

It’s important to recognize that everyone is in a different place in their financial journey. I’ve been blogging about personal finance for almost 16 years. FIRE wasn’t a “thing” back in 2006. We naturally are further along in that journey than some younger readers who may be just starting. Some of those readers are saddled with huge student loans that we didn’t have to deal with. 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 10 of blogging and early retirement planning. Please try to use it as motivation for what may be possible (depending on your circumstances and market luck) over 15-20 years.

There’s a big wild card in calculating our net worth. Now that my wife’s military pension is vested, it’s reasonable to ask whether we should include it in our net worth. I decided that it does make sense to include it. She could have earned more in immediate salary 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. However, like most of the money mentioned in this article, this isn’t money we can spend right now.

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

I hope everyone is having a great April so far. It’s been either rain or nice warm days, but I’m looking forward to the summer. Before I get that far ahead of myself, it’s time to take a look back at March.

March was by almost all measures a great month here. The big news was our trip to Puerto Rico. It got off to a rough start. Our flight was at 5AM on daylight savings. My wife and I each set our alarms (good to have a back-up) for 2:45AM – the hour that skipped over. Fortunately, I woke up at 3:11 and we were able to get to the airport just in time – to get the next that flight was cancelled. The next available flight would be a couple of days away from an airport a couple of hours away.

We were able to push out return flight, so we still got seven days in Puerto Rico. I had only spent half a day there once while we waited to leave on a cruise. I was surprised by how dominate Spanish is there. In the tourist areas, at least you had a 50/50 chance of English, but if you got off the beaten path it was 75% Spanish, maybe more. My Spanish is from school and good enough for reading, but not good enough for conversing.

The family loved the trip though. My wife still prefered last year’s trip to Hawaii, but the kids liked Puerto Rico better. There were better regional Pokemon to catch in Pokemon Go – LOL. The children’s museum in Puerto Rico was very good for them. The kids also made a point that they had better pool time (Hawaii had pool reservations due to COVID) and better beaches (the waves weren’t as dangerous). I think as long as the kids have new interesting “kid things” to do it will get the thumbs up.

In hindsight, I don’t what we did all week. For the first five days we were at the big Marriott in San Juan. We went out for mallorcas (kind of like fried dough in the mainland U.S.) for breakfast and then toured El Morro – an old fort that served as a mini-city. We went to a local natural water slide – it was literally a brook that had carved out the rocks for years making it a water slide. It wasn’t completely smooth as if it was man-made, but felt like a normal water slide. We went to the pork highway where mulitple restaurants have whole pigs on the spit and you get a fresh cut. It’s on the Food Network and those travel food shows. I couldn’t fully enjoy it because I was traumatized from the parking – a huge traffic jam and nowhere to park.

My family loved Puerto Rico – especially this Marriott pool

We got back from Puerto Rico just in time to drop the kids off with grandparents, so my wife and I could have our annual mini-honeymoon at the best local bed and breakfast, Castle Hill. It’s where all the celebrities stay when they are in town. It’s usually around $700 a night, but they have a Cyber-Monday deal that includes a free room with a highly discounted package of gift cards to the restaurant group.

That’s enough of the personal stuff… let’s start the Passive Income report. I used to call this the Alternative Income Report because some of this income has an active component to it. However, that idea isn’t catching on and everyone loves “passive income” better. If you are a new reader, you’re going to want to refer to my Alternative Income FAQ as you may have some questions about the math.

The way I calculate these numbers requires that little explanation – it isn’t intuitive. I do things a little differently to show the journey. For example, we don’t have real passive income from our rental properties right now. We still have mortgages to pay off. Instead, I calculate the percentage of equity we have to show where on that journey we are. Each month, you’ll 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. When it comes to calculating the percentage of rental income, I take the rent (minus estimated expenses) and multiply it by the portion of equity we own. Think of it like you and a friend owning a property 50/50. This would be how you’d handle it with each of you splitting the profits at the end 50/50.

Lazy Man’s Passive Income

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. They are a little passive because I can make money even when I’m not immediately tending to them. For example, I’m writing this while boarding 2 dogs right now. I leave real estate and investment income as their separate main sources of very passive income. This way if you want to only count those you can do that.

1. Blogging + Dog Sitting Income

March was a very good month for dog boarding. We were traveling for 10 days, so we were shut down for that. That’s one of the reasons why dog boarding may not fit well here. It’s not a ton of labor, but there are sacrifices – I can’t earn money while traveling. Those sacrifices are cuddly, though.

I have about a $6,500 headstart over the last year’s start before vaccines got rolling. April is looking like our 3rd biggest month ever. That’s big because the summer tourist season is always at the top of the earning bell curve.

Floating heads at the children’s museum

Blogging ramped up in March. The first quarter always starts slow as everyone is getting their advertising budgets figured out. With March comes the end of the first quarter and they seem to be spending. It was better than what the average month was in 2021, so we’ll take it.

In February, “dogs and blogs” combined for a total of $3,799.20. In March, it was:

Total Blogging + Dog Sitting Income: $4,295.77

I’ll take any growth in a month that we’re away for 10 days on vacation.

My kids help with the dog sitting. My 9-year old is extremely good with dogs at this point. He can feed them, let them out, and play with them in the yard. He’s spending more time in front of the clients as a helper at pick-ups and drop-offs. My 8-year-old was a little slower to develop dog skills, but he’s carved out a household niche of catering to the smaller dogs – he just loves them.

Their help means that I can pay them a legitimately earned income (a 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. Learn why you should get started with a kid Roth IRA as soon as possible.

Natural water slide!

Someday, I want to get them more involved in blogging, taking pictures, and things like that. During school, they have too much to keep them busy. After school, there’s homework, becoming mini-ninjas, scouting, music, and sports to fill up their days. Being a kid is hard work!

(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 rental properties had about $40,000 in appreciation this month according to Zillow. That’s crazy! It seems like we’re back to the days of properties jumping up in value all the time. However, we’re finding that Zillow’s Zestimate may not be as accurate as we expected. We’re very likely going to be selling one property. We just don’t want to manage the property from far away anymore. It’s disappointing that we probably won’t get the price we were expecting.

We also always pay down a couple of thousand dollars of mortgage debt each month. So even when Zillow isn’t showing huge appreciation gains, we still build some equity each month.

We went from 73.77% to 75.10% ownership of the equity in our properties. That’s another month of big gains.

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 $4,000 a month. The expected rents have gone up a lot. However, we aren’t getting those kinds of rents yet. We’re keeping them low for now. So I’m going to average what we could make and what we are making, which is about $3650. It seems like low-lying fruit that we could get there and our tenants would still be happy that they are getting a bargain.

View from El Morro fort

If you multiply our expected net rent by $3,650 by the amount of equity we have (i.e. where we are on our journey to 100% equity ownership), 75.10%, you get $2,741/mo. in estimated passive income. That’s a gain of almost $50 from last month. That’s a big gain for one month.

When I started tracking this (January 2017), we only owned 36.4% of the properties and the properties had lower rents. The math worked out to $1,174 back then. So in 5+ years, we’ve seen that number grow tremendously to $2,741. The forced savings of 15-year mortgages is a very powerful force.

When the mortgages are paid off, we’ll have $45,000/yr. of income. Rent is inflation resistant as we can raise rents over time. So this income will grow as things get more expensive. I imagine that $45k is enough for us to live on if we have our own home paid off (plus our solar panels, frugal shopping habits, and military healthcare.) Of course, that’s just one part of the plan as you can see.

In the previous report, the rental property income was $2,693.

Total Rental Property Income: $2,741

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. For example, HDV is currently paying about a 3.5% yield. We could also get that yield 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 we wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get a 5% 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.)

Of course, we may not convert everything over to dividend income at all, it’s just a conservative way to think of our investment portfolio. If I used a 3.5% or 4% withdrawal rate, the numbers would be much bigger.

Our youngest tries a bed of nails at the childrens’ museum.

The markets rebounded in March. It’s still down about 10% from its highs. I really have no idea where the markets are going with inflation, rising interest rates, and inverted yield curves. The good news is that I don’t care too much – we’ll be invested for between 15 and 40 more years.

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 this report, it makes sense to group all stock ownership in this bucket.

Total Dividend-ish Income: $3,762

Last month, it was $3,616, so we’re up almost $150. That’s a big move in this area. When I started tracking this number in January of 2017 we were at $1,180/mo. So in five years, we’ve grown this potential monthly income by over $2,500!

Our money is working hard to multiply, especially because we aren’t adding much to the investments. Instead we’re focusing on saving money in cash for my wife to retire. Except that, now my wife got a new job and isn’t looking to retire. That’s a roller coaster of emotions. Some days she wants to retire and other days, it seems like she wants to work for many more years. Whatever she wants to do is fine with me. At least this new job is much better than the last one. She’s had time to bring the kids to school and do some things like that. Before they had a keyboard tracker on her.

The view on our mini-honeymoon

Getting back to the monthly update, this monthly $3,762 would be over $45,000. As with the rental income number above (around the same amount) we should 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 started to see an estate planning lawyer last year, but they gave us a lot of paperwork to do before we can move forward. I haven’t had the time to convert our spreadsheet summaries to something they can use.

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 may write a book someday. This is important to separate from the dogs and blogs’ income at the beginning. That takes some active work to keep up. Rental property requires a little work, but not nearly as much as dog boarding and blogging.

We lost some of the gains here again this month. The stock market drop is too much for the real estate market to cover. We’re close to all-time highs though. I love having both types of income working together for us. With the stock market dropping recently, our real estate is saving our net worth from dropping further. I think everyone interested in FIRE should consider having stock market and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most FIRE folks 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 a while. Of course a bad economy may impact both at the same time, but that’s what an emergency fund is for.

I used to have a section here where I did a COVID update. Since everyone in the family got Omicron except my wife who seems to be immune, we don’t do anything about COVID anymore. The vaccines did their job for us. I haven’t brought a mask with me in Rhode Island for a month. Puerto Rico was very different. We needed a mask almost everywhere. Oh well, we’re the guests.

Very Close to Passive Income: $6,503

This would be over ~$78,000 a year of passive-ish income. We wouldn’t need to touch the investments themselves. We wouldn’t have to sell stocks or have a “withdrawal rate” – just live off dividends. We wouldn’t have to get a reverse mortgage on our home or the investment properties. 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. So in 5+ years, we’ve added more than $4,000 in monthly passive income. That’s nearly $50,000 – a lot more than the $34,000 I made as a software engineer out of college in 1998. This is one of the reasons why I went with the “Lazy” name, it shows that investing money can do more work (or somehow produce more value) than I did. It’s a crazy system. I’m just doing my best to work within it.

Kids playing with balls being sucked into tubes.

It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet (except for the profit-sharing check), because the money isn’t liquid. We can’t spend those retirement investments or the equity we have in properties. We don’t feel “rich” by any stretch of the word, even though we are relative to many people’s circumstances. We still have some day-to-day struggles with money. These are relatively minor compared to what most people experience I imagine. That’s why it might be nice to sell a rental property, pay off debt, and feel a little more financial freedom right now.

I used to wonder if we can get to $8,000/mo. in passive income by the start of 2025. A year ago, it was a stretch goal… now it feels likely. Although if we sell off the rental property and invest that in the stock market, this number will likely go down.

Final Passive Income

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

Passive-ish Income: $10,798.77

Last month it was $10,108.20. We’ll take the modest gains during a vacation month. It’s looking like we’ll see a big jump in April.

That’s about $130k a year. That (hypothetical) annual income for writing on a blog, taking care of dogs, investing, and landlording is very nice. If we manage 120K from all these sources we’d be doing quite well – given our necessary expenses for the next 45 years. Of course, those necessary expenses aren’t going to cover all our spending, but they are a large percentage of it.

None of the numbers here include my wife’s bread-winning day job as a pharmacist, her vested military pension (more passive income when she retires), or the freelance work I’ve been doing over the last few 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 the flexibility gives me the time to stretch almost every dollar in much of our spending. It also gives me the flexibility to bring the kids to school and after-school activities.

I love two things about the graph below. First, there’s a solid trend of the numbers staying high for several months now. Second, it doesn’t dip down too far. It seems like it should be at $8,000 going forward. I don’t want to see a big market collapse, it would hurt a lot of people, but I am curious how bulletproof all these sources of income are when they work together.

(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.

We saw our net worth grow 5.69% in March. That’s a new all-time high. Much of the gains came in equity in our primary residence. That kind of useless unless we sell our house or get a reverse mortgage. For 2022, our net worth is up 3.74%. Considering the markets haven’t been too hot, we’ll take the gains.

Recently for something new, I decided to share our liquid cash growth (or loss). I’ve been tracking it for some time, but never thought to share it. Many other bloggers break down their income and expenses in great detail. I’m too “Lazy” for all that, even if my credit cards reports can do a lot of it. Looking at our liquid cash is a way to roughly gauge the bottom line, income minus expenses. In the past, we haven’t focused much on this because we’ve been investing that money. However, our focus now is to build enough cash so my wife feels comfortable retiring.

This month, we gained around $5,000 in liquid cash. I hope that continues, but we registered for a lot of kid summer camps and those may be coming due on the credit cards soon. I’ll have an article about the cost of kid camps coming soon.

It’s important to recognize that everyone is in a different place in their financial journey. I’ve been blogging about personal finance for almost 16 years. FIRE wasn’t a “thing” back in 2006. We naturally are further along in that journey than some younger readers who may be just starting. Some of those readers are saddled with huge student loans that we didn’t have to deal with. 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 10 of blogging and early retirement planning. Please try to use it as motivation for what may be possible (depending on your circumstances and market luck) over 15+ years.

There’s a big wild card in calculating our net worth. Now that my wife’s military pension is vested, it’s reasonable to ask whether we should include it in our net worth. I decided that it does make sense to include it. She could have earned more in immediate salary 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. However, like most of the money mentioned in this article, this isn’t money we can spend right now.

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

Another month in the books and the books are looking… lighter than before. Actually, our books weigh the same amount no matter how much money is in them.

February was a big month for me. I gave up alcohol completely and made great progress on a lot of my goals for 2022. I hope to post an update on those next week.

February started very badly. Everything that could go wrong seemed to go wrong. I got a tax bill for unemployment money that I never claimed. I read something like over 60% of Rhode Islanders had unemployment fraud. I can’t believe that’s true, but I’m too lazy to fact-check it. It doesn’t matter, because I was one. Fortunately, since it was so rampant reporting the fraud is easy. I got a tax penalty from the state of California because it physically takes the mail too long to get there and the processing time is two weeks. Fortunately, when the final payment of the penalty on the penalty of the penalty was 9 cents, they just forgave it. Unfortunately, it was still 3 hours of calls.

Also, our kitchen ceiling sprung a leak and they had to cut out a whole section of it. There were some other things, but I don’t want to go through all the misery of the month.

It wasn’t a good month for our ceiling.

Things got a lot better after that first week or so. I hit my 1000 day streak of learning languages on Duolingo. That’s a bit of a fraud because I missed plenty of days in there, but I had streak-freezes to save me. I usually do the bare minimum every night rotating between Spanish, French, and Japanese. I’ve had years of Spanish classes, so that’s a refresher. I’m not good at Japanese or French, but I feel that I’ve got a base to start from for later travel.

The weather got a little nicer so I took my dog on walks at the beach. It’s nice to let him off-leash. We couldn’t do that when he was younger, but now that he’s 13, he’s not a risk to run into the street.

Last year we did bumper boats on the ice. It was so much fun, we did it again this year. I don’t know if that’s something that’s in your neck of the woods, but if so, give it a shot.

That’s enough of the personal stuff… let’s start the Passive Income report. I used to call this the Alternative Income Report because some of this income has an active component to it. However, that idea isn’t catching on and everyone loves “passive income” better. If you are a new reader, you’re going to want to refer to my Alternative Income FAQ as you may have some questions about the math.

The way I calculate these numbers requires that little explanation – it isn’t intuitive. I do things a little differently to show the journey. For example, we don’t have real passive income from our rental properties right now. We still have mortgages to pay off. Instead, I calculate the percentage of equity we have to show where on that journey we are. Each month, you’ll 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. When it comes to calculating the percentage of rental income, I take the rent (minus estimated expenses) and multiply it by the portion of equity we own. Think of it like you and a friend owning a property 50/50. This would be how you’d handle it with each of you splitting the profits at the end 50/50.

Lazy Man’s Passive Income

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. They are a little passive because I can make money even when I’m not immediately tending to them. For example, I’m writing this while boarding 2 dogs right now. I leave real estate and investment income as their separate main sources of very passive income. This way if you want to only count that you can do that.

1. Blogging + Dog Sitting Income

February was a very good month for dog sitting. The school vacation led to a lot of travel, so I got to take care of a lot of dogs. We didn’t have any significant dog boarding last January through March because vaccines weren’t widespread. We’ve got a great headstart this year compared to a year ago.

Blogging is always terrible in January. It starts to ramp up in February. This year is no different. It’s still early March, but it’s ramping up even more. Things are going great.

In January, “dogs and blogs” combined for a total of $2,397.56. In February, it was:

Total Blogging + Dog Sitting Income: $3,799.20

My kids help with the dog sitting. My 9-year old is extremely good with dogs at this point. He can feed them, let them out, and play with them in the yard. He’s spending more time in front of the clients as a helper. My 8-year-old was a little slower to dog skills, but he’s carved out a household niche of catering to the smaller dogs – he just loves them. This help means that I can pay them a legitimately earned income (a 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. Learn why you should get started with a kid Roth IRA as soon as possible.

My kids are great with dogs… and dogs love my kids.

Someday, I want to get them more involved in blogging, taking pictures, and things like that. During school, they have too much to keep them busy. After school, there’s homework, becoming mini-ninjas, scouting, music, and sports fill up their days. Being a kid is hard work!

(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 rental properties had about $20,000 in appreciation this month according to Zillow. That’s a great month! We also always pay down a couple of thousand dollars of mortgage debt each month. That’s a good combination. We obviously can’t expect this to happen every month.

We went from 72.92% to 73.77% ownership of the equity in our properties. That’s a tremendous gain for one month.

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 $4,000 a month. The expected rents have gone up a lot. However, we aren’t getting those kinds of rents yet. We’re keeping them low for now. So I’m going to average what we could make and what we are making, which is about $3650. It seems like low-lying fruit that we could get there and our tenants would still be happy that they are getting a bargain.

If you multiply our expected net rent by $3,650 by the amount of equity we have (i.e. where we are on our journey to 100% equity ownership), 73.77%, you get $2,693 in estimated monthly passive income. That’s a gain of $30 from last month. Yes, this growth is pretty slow.

My wife watching our kids at the end of a bumping good time.

When I started tracking this (January 2017), we only owned 36.4% of the properties and the properties had lower rents. The math worked out to $1,174 back then. So in 5+ years, we’ve seen that number grow tremendously to $2,693. The forced savings of 15-year mortgages is a very powerful force.

We reached an interesting milestone this month. If we sold our rental property with the most equity, we could use the money to pay off our primary residence and the other two properties. It would eliminate a $2700/mo. expense and create $2400/mo. income (since we wouldn’t have to pay those mortgages). It’s very tempting to do something that would give us $5,000/mo. ($60,000/yr.) in flexibility. However, holding and doing nothing has been working so far. It’s to know that’s an option if we need it.

In about 5 more years from now, the equity ownership will grow to 100% of that $3,650 rent. Since rent is inflation-resistant (we can raise rents as the cost of living goes up), we don’t have to factor in inflation like other investments.

So we can think of it as around $44,000/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.) Of course, that’s just one part of the plan as you can see.

In the previous report, the rental property income was $2,447.

Total Rental Property Income: $2,693

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. For example, HDV is currently paying about a 4.04% yield. It could also come 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 we wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get a 5% 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.)

Of course, we may not convert everything over to dividend income at all, it’s just a conservative way to think of our investment portfolio. If I used a 3.5% or 4% withdrawal rate, the numbers would be much bigger.

When you get older you get more freedom to roam.

The markets fell again in February. It’s getting to be a tough time for investors. There’s the Ukraine-Russia war leading to more inflation (higher oil and other goods) at a time that inflation is already sky-high. The federal reserve bank is going to raise interest rates, which will also hurt the markets (unless they’ve already priced it in.)

That said, the markets seem to be strong. The US market is down around 10-11% from its all-time highs and the international markets are down about 15-16%. Our investments are down about 8.5% from their highs. I’m not expecting great markets in 2022, but we’ll keep buying at these low prices.

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 business was doing so well they had some extra money to send out before the end of the year, but I didn’t include that here. Maybe if this bonus is consistent they’ll up the profit-sharing and I’ll be able to add more into this report from that. The investment income from this is essentially the same as dividend income. It is taxed differently, but for this report, it makes sense to group all stock ownership in this bucket.

Total Dividend-ish Income: $3,616

Last month, it was $3,727, so we’re down $111.

At the beginning of last year, this number was $3,441, so at least we’re still up a bit for a year. We still have 14 years until we get to 59 and a half. There’s a lot of time to grow before we start to think about taking this money out.

When I started tracking this number in January of 2017 we were at $1,180/mo. So in five years, we’ve grown this potential monthly income by over $2,500!

Small habits over time can turn into great things.

Our money is working hard to multiply, especially because we aren’t adding much to the investments. Instead we’re focusing on saving money in cash for my wife to retire. Except that, now my wife got a new job and isn’t looking to retire. Her long journey to make the rank of Captain (O-6) seems so assured that people are whispering about her being on a path to Admiral. Though for some reason she thinks she won’t get promoted this year, but maybe next year. Whatever she wants to do is fine with me. For now, she’s very excited about the new job. It’s so much better than the last one. She’s had time to bring the kids to school and do some things like that.

Getting back to the monthly update, this monthly $3,616 would be over $43,000. As with the rental income number above (around $44,000) we should be able to live on this by itself (once we are mortgage-free in a few years). 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’ve started to see an estate planning lawyer last year, but they gave us a lot of paperwork to do before we can move forward. I haven’t had the time to convert our spreadsheet summaries to something they can use.

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 may write a book someday. This is important to separate from the dogs and blogs income at the beginning. That takes some active work to keep up. Rental property requires a little work, but not nearly as much.

We lost some of the gains here again this month. The stock market drop is too much for the real estate market to cover. We’re close to all-time highs though. I love having both types of income working together for us. With the stock market dropping recently, our real estate is saving our net worth from dropping further. I think everyone interested in FIRE should consider having stock market and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most FIRE folks 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 a while. Of course a bad economy may impact both at the same time, but that’s what an emergency fund is for.

I used to have a section here where I did a COVID update. I will probably retire it after this unless something eventful happens. My kids and I have had COVID (my wife has avoided it thus far) and their school is now mask-optional. We went to a school play the other day – no masks and everyone is fine. It’s great that everyone can get together again. We’re going to Puerto Rico later this month and I’m so excited for the kids to experience a new culture.

Very Close to Passive Income: $6,309

This would be over ~$75,000 a year of passive-ish income. We wouldn’t need to touch the investments themselves. We wouldn’t have to sell stocks or have a “withdrawal rate” – just live off dividends. We wouldn’t have to get a reverse mortgage on our home or the investment properties. 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. So in 5+ years, we’ve added about $4,000 in monthly passive income – or $48,000 a year. That’s a lot more than the $34,000 I made as a software engineer out of college in 1998. This is one of the reasons why I went with the “Lazy” name, it shows that money investing can do more work (or somehow produce more value) than I did. It’s a crazy system and you can see that I’m doing my best to work within it.

It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet (except for the profit-sharing check), because the money isn’t liquid. We can’t spend those retirement investments or the equity we have in properties. We don’t feel “rich” by any stretch of the word, even though we are relative to many people’s circumstances. We still have some day-to-day struggles with money. These are relatively minor compared to what most people experience I imagine. That’s why it might be nice to sell a rental property, pay off debt, and feel a little more financial freedom right now.

I used to wonder if we can get to $8,000/mo. in passive income by the start of 2025. A year ago, it was a stretch goal… now it feels likely – except that I don’t know how much more growth we’ll see from the markets.

Final Passive Income

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

Passive-ish Income: $10,108.20

Last month it was $8,786.56. This is almost exactly what I averaged for 2021. That’s a good sign because dog boarding should ramp up a lot in the summer. I wonder if we can average $12,000/mo. a whole year.

The ~$10k+/mo. income is ~$120k a year (easy math this month). That (hypothetical) annual income for writing on a blog, taking care of dogs, and investing is very nice. If we manage 120K from all these sources we’d be doing quite well – given our necessary expenses for the next 45 years. Of course, those necessary expenses aren’t going to cover all our spending, but they are a large percentage of it.

None of the numbers here include my wife’s bread-winning day job as a pharmacist, her vested military pension (more passive income when she retires), or the freelance work I’ve been doing over the last few 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 the flexibility gives me the time to stretch almost every dollar in much of our spending. It also gives me the flexibility to bring the kids to school and after-school activities.

I love two things about the graph below. First, there’s a solid trend of the numbers staying high for several months now. Second, it doesn’t dip down too far. It seems like it should be at $8,000 going forward. I don’t want to see a big market collapse, it would hurt a lot of people, but I am curious how bulletproof all these sources of income are when they work together.

(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.

We saw our net worth fall .81% in January. Other bloggers seemed to have theirs fall more, but real estate helped us out. For 2022, our net worth is down 2.20%. It’s never good to see it go backward, but with the markets down so much this feels like a small drop in the bucket.

Recently for something new, I decided to share our liquid cash growth (or loss). I’ve been tracking it for some time, but never thought to share it. Many other bloggers break down their income and expenses in great detail. I’m too “Lazy” for all that, even if my credit cards reports can do a lot of it. Looking at our liquid cash is a way to roughly gauge the bottom line, income minus expenses. In the past, we haven’t focused much on this because we’ve been investing that money. However, our focus now is to build enough cash so my wife feels comfortable retiring. This month, we’ve lost around $3,000 as booked some trips and made some final payments on finishing our basement. We’ve been spending a lot of money recently, but we better get back to saving money soon. It probably won’t happen until after tax season – we want to make sure we max out our Roth contributions before the deadline.

It’s important to recognize that everyone is in a different place in their financial journey. I’ve been blogging about personal finance for almost 16 years. FIRE wasn’t a “thing” back in 2006. We naturally are further along in that journey than some younger readers who may be just starting. Some of those readers are saddled with huge student loans that we didn’t have to deal with. 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 10 of blogging and early retirement planning. Please try to use it as motivation for what may be possible (depending on your circumstances and market luck) over 15+ years.

There’s a big wild card in calculating our net worth. Now that my wife’s military pension is vested, it’s reasonable to ask whether we should include it in our net worth. I decided that it does make sense to include it. She could have earned more in immediate salary 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. However, like most of the money mentioned in this article, this isn’t money we can spend right now.

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