Who is ready for Spring! We’ve got the first quarter in the books. Tax day is just a few days away. We’re filing for an extension as we do nearly every year. Our tax people need the numbers a month ahead of time. Our kids school is always then, and I’m not the type of person who is going to get it done six weeks ahead of time. With two corporations (blogging and real estate) it’s more complicated than most people’s taxes.
Much of March was spent on our southern California vacation. After focusing on accumulation phase of money for years, we’re flipping the switch to spending more. That means more elaborate trips as well as hiring contractors for finishing a basement, painting the house, and new carpet. This was a month where we stress tested our money.
Since I’ve written about that vacation, I won’t write much else here. I’ll include a few pictures, but not too many – looking at other people’s vacation pictures gets old fast. The other big news of the month was our dog of 14 years crossing the rainbow bridge. I’ve got an idea for a full blog post about that. I promise it will be different than almost any other ode to a dog that you’ll read. I’ll also keep it on theme.
Other than that, my oldest got his red belt in karate. He’s about a year away from a black belt. My younger son is about 6 months behind him. The kids also got to be in the Newport St. Patrick’s Day parade representing the Cub Scouts. It’s a very big deal as this area has a huge Irish population. Think of it as a combination of College Spring Break and Mardi Gras, but at 9 AM.
The kids were supposed to show off their uniform, but it was very cold. They took turns wearing my coat, which – of course, was comically and ridiculously too large.
Let’s start the new and improved Passive Income report. I’ve streamlined this a bit, so hopefully, it will be a faster, easier read. I’ll try to continue to trim it down through the year.
I used to call it alternative income, but that idea didn’t catch on as it did when I used it back in 2008. 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 that I’m going to use in this post.
The way I calculate these numbers requires that little explanation . I do things differently to show the journey. Following the progress keeps me motivated. For example, we don’t have much real passive income from our rental properties. We still have mortgages to pay off. Instead, I calculate the percentage of equity we have to show where we are on that journey. Over time, the bank owns less of the properties, and we own more of them. There will be no mortgages when this number gets to 100%, and all that rental income can be used for living expenses.
When calculating the percentage of rental income, I take the rent (minus estimated expenses) and apply it to 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. If your friend is the bank and it owns 80%, you should only count on 20% of that net rental income. We used to be in that 20% range, but now it’s closer to 75%.
Lazy Man’s Passive Income

I categorize our passive income into three primary sources that are represented mainly in my passive income pyramid. For this report, I ignore the bottom section, “career/job,” – that’s not passive at all. (I 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. I can do other money-making activities while I board dogs. When I’m on vacation, some blog money still comes in. I combine real estate and investment income as their separate main sources of very passive income. This way, if you want only to count those, you can do that.
New for this year, my passive income is only going to be 50% of blogging and dog-sitting income, 80% of real estate, and 100% of dividend income. That rewards types of income that are truly passive and punishes my quasi-passive sources like blogging.
1. Blogging + Dog Sitting Income
March is always a poor month for dog boarding. It’s impossible to board dogs at home while we travel for two weeks. Besides that, there are no big holidays and Rhode Island’s public schools don’t have vacations. (During school vacations people tend to travel leaving their dogs behind for me to board.)
One of the last pictures I took of Jake. He’s at the vet about to get acupuncture. Always smiling!
I also didn’t blog much in March. Not only that, but I set up a vacation responder on my email, so I missed all advertising deals. There’s a silver lining, though. Those potential deals have been rekindled in April and we’re off to a fast start this month.
In February, “dogs and blogs” combined for $5,521.50. In March, it was:
Total Blogging + Dog Sitting Income: $2,073.09
The blue line is the monthly income. The red line is the 3-month average. Look at that drop!
Ouch, that’s not a good number at all. However, given the circumstances, I’ll have to settle for it. Last March, when we had the same obstacles, this number was $4,295.77. I’d be worried if April wasn’t already higher. With current dog bookings and blogging income already earned I’m looking at around $7,000. There’s a possibility or cancellations and advertisers not paying, but it’s looking like it will be very good month.
My kids help with the dog sitting. My 10-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 9-year-old was a little slower to develop dog skills, but he’s carved out a household niche catering to the smaller dogs – he just loves them.
Their help means 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. Kids should start a Roth IRA as soon as possible.
2. Rental Property Income
Our properties last month hit a hiccup. It turns out that the heating unit wasn’t properly vented when it was installed a few years back (before we bought the property) and it’s a mess to repair. A lot of it is determining who is responsible because it’s a condo with other units and the association’s walls. The Allstate claims adjuster calls when I’m not prepared and then fails to respond to any of my last five emails.
The Lego Robotics group used $100,000 of grant money to buy this Boston Dynamics robot dog. Spot went viral a few years ago because you can buy an optional handle that allows him to open doors. Hook him up to artificial intelligence and we’re finished as a civilization.
Rental income continues to be boring. We’ve had the big bubble of increase property value last year. Then the bubble let out some air. Now, it’s starting to inflate again. When the properties don’t appreciate, we pay down the mortgages and slowly gain more ownership of the properties that way.
In the last month, we went from 76.05% to 76.53% ownership of the equity in our properties. The move of half a percent is very good for just one month. If we owned both of our rental properties with no mortgages (100% of the equity), we’d make about $2,200 a month after insurance, property taxes, condo fees, and estimated condo maintenance.
If you multiply our rents of $2,200 by the amount of equity we have, 76.53%, you get $1,684/mo. in estimated passive income. Last month it was $1,673/mo. This month we added $11/mo in passive income. It doesn’t seem like much, but $100 in mostly passive income in a year isn’t too bad. It allows you to start eliminating some bills. If someone knocked $100 of your mortgage or car loan, you’d take it, right?
When I started tracking rental property income this way (January 2017), we only owned 36.4% of the properties, and the properties had lower rents. The math worked out to $1,174 of passive income back then. In six years, it grew a ton. We sold our biggest rental property last year and invested that money in the stock market. It’s much more passive now. That was a strong driver as to why I started to count certain passive income sources as less valuable than others in this report.
Eventually, these properties should bring about $25,000 after expenses. Rent is inflation resistant as it’ll rise over time. That means that even though this is $25,000 in today’s dollars, it will still have that buying power in the future.
Total Rental Property Income: $1,684
3. Dividend Income
For this section, I look at our stock market investments. I assume we could earn a 2.5% dividend yield on those investments. That assumption is a conservative number that helps us think about what kind of cash we can expect. It should be easy to get that 2.5% number as we could simply put all of our portfolios in a high-dividend ETF. For example, the high-yield ETF, iShares Core High Dividend ETF (HDV), is currently paying a 4.40% yield.
Disneyland and the 100th anniversary of Disney in general
With today’s interest rates, a 2.5% yield seems ridiculously low. I need to remember that interest rates could go back to where they were a year ago.
Most bloggers use the actual dividends they earned that month. I have quite a few accounts, and I’m too Lazy to add up the dividends on them. Even if we aren’t getting the 2.5% number now, we could always move the money around from growth to dividends if we needed to live off the cash flow. A vast majority of our money is in retirement accounts, so cash flow isn’t important to us now. I also combine all the taxable and retirement account numbers. It’s too much work to separate them out.
We continue to get a profit-sharing check since I bought (a lot of) a company. The company is doing well, and they occasionally throw an extra profit-sharing check to me. 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.
The markets barely moved, so this number didn’t move much either. Boring!
Total Dividend-ish Income: $3,950
Last month it was $3,960.
In January 2017, the dividend income was at $1,180/mo. Now, we’re almost at $50,000 a year – enough for us to live fairly well, especially if we paid off our mortgage.
For the 78th month in a row (?), we’re looking into estate planning, but they gave us a lot of paperwork to do before we can move forward. I’ve got to finish our taxes first before I can look into this.
Adjusted Passive Income
I used to combine real estate and dividend income into “very close to passive income.” However, now I’ll simply add up the 50% dogs/blogs, 80% real estate, and 100% dividend income. This makes things a lot easier.
Dog/Blogs: $2,073.09 – Adjusted to $1,036.55
Rentals: $1,684 – Adjusted to $1,347.20
Dividends: $3,950 – Remains at $3,950
Dogs/Blogs Blue Line
Rental – Red Line
Dividend – Yellow Line
Total Adjusted Passive Income: $6,333.75
Last month it was $8,059.15. That’s a big drop, but it’s a good number considering the travel. Even though I made the adjustment to count dog boarding as less passive, it is still location dependent.
This $6,300 number is about $75,000 of passive income annually. That wouldn’t cover all our expenses now, but it would after our mortgage is paid off and the kids are out of school. We’ll finish the mortgage in a couple of years and the kids’ school is still a luxury that we’ll choose to pay for.
It’s very useful to have different income streams. As blogging income becomes more difficult, dog boarding income has grown to supplement it. For a long time, real estate didn’t grow much at all; then, in the last couple of years, it grew a ton. The stock market grew for more than a decade from 2010 to 2021 but had a little setback last year. When something goes down, it seems another thing jumps up. Over time we are making consistent progress.
The chance of all the income streams falling on hard times is low, but certainly not impossible. If we had another event like the Great Recession in 2008, they’d all be impacted quite a bit. In that case, we’d have to rely more on active income (the other 50% of our dogs/blogs, 20% of rental income, and other jobs) or rely on savings for a while. Also, dog boarding went away completely with COVID, so something like that can be just around the corner.
It’s also important to remember that these numbers aren’t “real” because much of the money isn’t liquid. We can’t spend those retirement investments without penalties. We can’t access the equity we have in properties without selling them or opening a HELOC. We can do some things to get to this money, but it only makes sense when my wife retires and we are in a lower tax bracket.
You’d think we’d feel “rich” having “won” the money game. Most of the time we don’t feel rich at all. This month’s travel was one exception. Our social circle tends to have generationally rich people. However, we are “rich” relative to many people’s circumstances. Money is relative. It’s nice not to have to worry about emergency bills and make reasonable splurges.
(The blue line represents the total adjusted passive income. The Red Line represents the three-month average.)
The three-month average in March 2021 was $5,784.73. In March 2022, it was $7,609.36. Now in March of 2023, it is $6,956.89. Because our vacations, dog boarding, and blogging are seasonal I like to compare the same months. We’re on a downward trend for the first time. Closing the dog boarding in January for renovations and the longer vacation affected the numbers. Next month, the three-month average won’t have January and we’ll probably be back in the growth area.
I don’t know how long dog boarding will last. It was a lot of work last year. This year has been easier with the lighter schedule. I think that with dog boarding, either the market will change or I’ll change. Perhaps I’ll want to travel more. Perhaps, I’ll want a different challenge. I’m on my third career (software engineering, blogging, and dog boarding), so it would be naive of me to think it might be my last.
None of the numbers here include my wife’s bread-winning day job as a pharmacist or the minor freelance work I’ve been doing over the last few years – neither is passive at all. When my wife retires, we can count her vested military pension as more passive income. It looks like it might be worth around $68,500/yr. and includes access to a good health care plan. A pension is like a passive income cheat code. They are so rare nowadays.
Super Nintendo World and Bowser’s Challenge is awe inspiring. The Yoshi in this picture is probably somewhere between 6-8 feet tall to give you an idea of just how big this is.
For now, this active income (including the dog boarding) is the fuel that drives the passive income engine – it allows us to live well, get our kids a top education at a private school, pay off our mortgages, 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 allows me the flexibility to bring the kids to school and to after-school activities.
Net Worth Update
My net worth updates aren’t fascinating as I don’t share the exact numbers. That’s why it’s just a footnote, not its own article.
I truly believe that net worth is one of the most critical numbers in personal finance, so it is worth sharing in some way. Showing relative growth can be helpful.
I thought the kids were getting old for Legoland, but they really enjoyed driving with no track or guidance.
This past month, our net worth was up 0.97%. For the year it’s up 2.80%. We’re at 99% of our all-time highs. Any kind of positive market move should put us over the top. We’re in the best money situation we’ve ever been in. As Hannibal Smith used to say, “I love it when a plan comes together!”
I had been giving updates on on our liquid cash, but somehow it’s slipped out of the last few reports. Liquid cash is important to us because it helps us feel comfortable while the rest of our money is hard at work. For the month our liquid cash was down $1,400. That’s great considering the vacation and vet bills. Some of those were paid with credit cards though and will spill into April. For the year our liquid cash is down about $3,000. That sounds bad, but we put nearly $20,000 into the January renovations.
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. If the U.S. government didn’t back it like treasuries or FDIC, I may feel I should account for some uncertainty. I decided that it does make sense to include it. She could have earned a larger 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.
My wife and I had a date at a fancy bed and breakfast – where John Legend and Chrissy Teigan stay in Newport. This is their high tea.
It’s important to recognize that everyone is in a different place in their financial journey. I’ve been blogging about personal finance for 16 years. FIRE wasn’t a “thing” back in 2006, but that’s been my goal since the first sentence of this blog.
We naturally are further along in that journey than some younger readers who may be just starting. Many 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.
How was your month? Let me know in the comments.
Leave a Reply