Lazy Man and Money

Income Streams: The Forgotten FIRE Ingredient

by 2 Comments

income streams

Are you looking for a safe retirement? In these uncertain times, the best plan is to have multiple income streams. For the first time in 11+ years the stock market has fallen fast. (It’s recovered over the last few days, but I feel it is temporary.) The last time the market had this kind of drop it was 2008. While there was a concept of FIRE in the personal finance community, the acronym of Financially Independent/Retire Early simply wasn’t used. It was a lot like Kim Kardashian in 2006. She existed, but not many people knew who she was.

This is the first time that there’s a “trial by fire” of FIRE. Everyone is an investing genius when there is a decade-long bull market. This is the time that all those plans get put to the test.

I hope all the FIRE folks are doing well. I think the vast majority of them are. I haven’t heard any stories of financial ruin, yet.

I have faith that the FIRE crowd is doing well. I asked this question:


Only two people responded that they were only dependent on investments. I hadn’t followed or heard of either of either one. They seem to be doing okay.

Mentally, I thought of all the people I know who are FIRE and they all had one thing in common: an income stream other than stocks/dividends. Most are bloggers and earn an income from their blog (*raises hand*, though we’re not really FIRE). Some have books. Some are money coaches on the side. Even if I didn’t have this blog, I’d still make money dog sitting. And many bloggers have a spouse that still works. Even if they don’t necessarily need this income it surely comes in handy with health insurance and providing a safety net when the unexpected happens. (Not that we’ve had anything unexpected happen in the last few months, right?)

Income Streams, Income Streams, Income Streams

I’ve read that if you say something three times, people get it. The most popular example is the real estate mantra, “Location, Location, Location.”

However, my favorite one is this:

My memory failed me. I thought he only said it three times. Still, it’s too funny not to share.

It’s hard to understate how important income streams are to FIRE. They are the ultimate safety net. Most of the people in the FIRE community are very good at reducing expenses when necessary. By definition, they’ve been focused on their money for a long time. An extra $10,000 a year can go a long, long way.

What we’re learning with COVID-19 is that sometimes income streams go away. It’s hard to say anyone has a solid business now – unless you happen to own a toilet paper or a hand sanitizer factory.

I’ll use my income streams as an example:

  • I have zero customers in my dog sitting business. Usually people get dog sitters when they travel. No travel, no need for a dog sitter. It’s about as viable as a cruise ship business now. That’s one income stream gone.
  • The stock market has been down as much as 35%. This would be the wrong time to have to take money out to live on. This is why you want to have a strong emergency fund. We’ll count it as a half an income stream.
  • The blog income isn’t doing well. I wasn’t sure why until someone told me that companies aren’t spending on ads since their business is on hold until the coronavirus clears up. I’ll count this as losing another half of an income.
  • We have 3 rental properties, but in total they lose a little money each month. We took aggressive mortgages on them and they’ll be paid off in 10 years. However, when they are vacant or a tenant can’t pay, it causes a lot of stress. This isn’t an income stream now, but it could become an income drain in the near future. If we get the mortgages paid off, this will become around a $3500/mo. income stream.
  • One of the companies that I did freelance work laid off most of their staff (pre-COVID-19), but the other is still steady. That’s another half income.

When everything was working, I’d have a very good income, especially since I need the flexibility to take care of the kids. Now, after losing two and a half of my income streams, it is not as good. However, we can get by on it. Fortunately, we don’t have to depend on what’s left of this income, I’m one of the FIRE bloggers whose wife still has a traditional job.

Having multiple income streams is like having multiple back-up plans. A lot of people have told me that COVID-19 was worse than they could ever have imagined. Having all these back-up plans in place puts us in a much better financial position than most.

If you are looking to FIRE, have you looked at adding new income streams? Let me know in the comments.

Money’s 7 New Rules of Financial Security (Part 1)

by 6 Comments

Money Magazine’s big headline this month is the 7 New Rules of Financial Security… and Why You Need to Know Them. I have to admit it’s a pretty sweet headline – it certainly caught my eye. I flipped right to page 50 to see what I needed to know why. With that in mind, let’s take a look:

Rule 1: Risk

Old thinking: If you can stomach the ups and downs that come with risk, you’ll be rewarded.
New rule: Risk isn’t about your stomach. It’s about making or missing an important goal.

Money Summary: – Money notes that it becomes much more difficult to retire when you reach a bad stretch in the market. The money you have left over is not enough to build up to where it was. Since you aren’t likely adding new money in retirement, you can’t capitalize on cheap stocks. “This bear market’s lesson is… only risk how much you can lose and still meet your basic goals.”

Lazy Man’s Take:

I didn’t think it was new to only risk what you can lose. I thought that was a universal truth. I see people go into casinos with this mentality all the time (unfortunately not 100% of the time). I agree that it makes sense to bring down your risk exposure as you near retirement. However, the new question is how much? Previous philosophy said that even at age 65, you still may have 15-30 years left, so you need to make your money stretch that long. That requires risk exposure.

Perhaps part of that answer is diversified income streams? Don’t put all your eggs in the equity markets, but have a rental property as well? Perhaps build some businesses that deliver cash flow that can be used in retirement. I don’t know if this website will be around in 35 years (I hope so), but there’s a chance it could get me through some lean years. Just don’t look into selling MonaVie.

Rule No. 2: Cash

Old thinking: Keep enough money in ultrasafe accounts to cover life’s emergencies, but no more.
New rule: Relying more on cash can rescue you in an “asset emergency.”

Money Summary: – The old emergency fund needs to be re-evaluated. Instead you need to look at big potential future purchases in the next three years: “tuition, wedding, down payment on a house.”

Lazy Man’s Take:

I think this is fairly basic knowledge as well. That’s why they have 529 plans that re-adjust with the child’s age to reduce risk. It’s really not much different than the previous rule except it’s not focused on retirement. They could have just as easily said here, “don’t risk what you can’t lose.” I hate to be all bah humbug here, but in an emergency situation weddings can take a back seat. Also, I know few people who need to buy a house. Know what you are risking, and if you are risking too much than know you may have to cut back.

Rule No. 3: Human Capital

Old thinking: The longer your time horizon, the more stocks you should own.
New rule: Time isn’t everything. You must also consider your earnings potential.

Money Summary: – Think about your job security as part of your overall risk profile.

Lazy Man’s Take:

This is sound advice that I don’t often hear. My wife has the near equavalent of tenure at her job. It’s allowed us to be a little more risky than we might have been. I’ve been able to take some time off and work on building other businesses. Put another way, if you are going to be in a band and have a hit song, you might want to put a pile of that money in a safe place in case your the next Soft Cell.

Perhaps this goes back to Rule #1 and diversifying your income streams. You don’t want to be completely dependent on equity markets. In my personal life, I found that someone is willing to value my human capital more than my side businesses, so I switched back to take advantage of that situation. Six months from now, it may be different and I’ll go back to building out my side businesses more and more.

Working Two Jobs at the Same Time

by 26 Comments

CNN has an article that I find extremely interesting… some employees are working two jobs at the same time. This shouldn’t be a surprise to anyone. People are so used to multitasking nowadays that it’s hard to imagine people not working two jobs at the same time. I’m not much different. A quick look at my browser shows that I have 23 Firefox tabs open at this moment. That’s probably about the average for me.

I know at least two people who are working three jobs now. They have a full-time job that I suspect is near the six-figures and the nature of the work leads to downtime that can be used for the other two jobs. Is it ethical? That’s a tough call. What if I told you that their employers say that they are more than just getting their job done – they are excelling? That is the case with the two individuals that I’m thinking of. Their other two jobs aren’t exactly bringing in chump change either. I know that they are making them a combined two thousand dollars or more a month.

I’ve never been a big of fan of paying for someone’s time at a flat rate. If one can do the same job faster or more efficient than someone else then that person deserves the same amount of pay – regardless of whether they can do it very quickly or not.

I feel stuck in the middle of this issue. I see three things that I can’t quite resolve in my head:

  1. I think everyone should be looking to diversify their income streams. We don’t have the benefit of pensions, and some of us may be justified in assume no income from Social Security. Your current job doesn’t necessarily have to have any loyalty to you, but just their bottom line and their shareholders. People can develop these in their spare time, but let’s look at #2 and #3
  2. I can’t say that it’s ethical to agree to give your time to another company and then work another job during that time. I see the problem being that we don’t have a better metric for measuring “work performed.” Time might be better than anything else as it’s quantifiable, but it’s surely not a standard measure for all people.
  3. There are the cases of start-up companies that have a culture of effectively making you work excessive overtime with no guaranteed pay. You may get stock options, but these are not necessarily worth anything (and you usually give up other benefits like 401k matching to get them). If you have such a job, it’s going to be difficult or impossible to build other income streams.

As you can tell, I’m all over the place in this article. Perhaps some kind readers will have some insightful comments that will help put my Humpty Dumpty mind back together on this topic?

Alternative Income Streams – September 2008

by 4 Comments

Happy September! I’m pretty happy to see August to come to an end since I’ve had numerous problems getting my vacation going. No matter, let’s get to the business of reporting on my alternative income.

From a revenue standpoint it was a solid month. Like every month, some aspects of advertising go down and other aspects go up. This month a little more went down than up – my profit went from $2,234.76 to $2,108.94. However, when I look beyond the numbers, I find that my steady streams of income increased, but income that comes from one-time events like someone buying ads from my blogads placement.

As for what’s working, I seem to be finding better ad networks and learning how to optimize them a little better. I’m also bringing in more traffic – especially with Lazy Man and Health. It’s not exactly the big community that I’d like to see, but it’s getting there with traffic approaching near where Lazy Man and Money site is.

Since I’m looking to take a vacation this month, I expect a drop off for next month. However, I’m contemplating starting another site. If I do, it probably will not be under the Lazy Man brand. The reasons that I wanted to remain anonymous for Lazy Man and Money (protect myself from identity theft and allow myself to share very personal information) doesn’t really apply to golf – for example. Not that I’d write about golf since I don’t golf.

Alternative Income Streams – August 2008

by 9 Comments

It’s the first of month… that’s usually the time I go back and look at my alternative income from the previous month. As a refresher my definition alternative income encompasses some kind of passive component to it. It may be completely passive, like earnings from interest and dividends. Or it may be very active, but potentially passive, like blogging income. For instance, if I stopped writing tomorrow, I’d still be making some residual income from the previous days of blogging.

It was very much a banner month in alternative income. If I look at the blogging side for a minute. I managed to have over 97,000 page views between this site and Lazy Man and Health. That’s more than 30% higher than my previous record high. That amazes me because Internet traffic in the summer time is usually quite low with people enjoying the weather and going on vacations. Thinking how much traffic it might translate to in November gives me a bit of a head rush.

In the end it translated to an after-tax revenue of $2,246.60. I am still amortizing some expenses from previous month (the current logo design as well a theme I had developed a year ago that I no longer use). I’m looking forward to getting some of these one-time costs off the books. After those costs, I still end with $1,839.94 in gains for the month.

When I look at the $1839.94 number it really seems low. Sure compared to some, it’s probably quite good. However, as of now, this is very much my full-time job. Even if I look at the before tax numbers with no expenses, it’s $36,000 a year. According to Salary.com this would put me below the 25% percentile for the average teacher in the United States. On the plus side, I have much more control over the hours I spend. I also love what I’m doing.