September is here and the kids are in school. That means I should have fewer kids and dogs to care for, which will mean more writing here. Much like the July numbers, the August numbers were amazing because I boarded every dog in the world. We’ll get to that in a bit though. There’s a reason why it’s “personal” before “finance.” Let’s get to the personal part with a life update.

Life updates in this space are almost always positive. To write this section, I go through my phone’s pictures over the last month and I take pictures of the good times. Usually, when bad things are happening, I don’t stop to take pictures of them. So keep in mind that you are seeing a highlight reel and it’s not like everything is great all the time.

This August was so busy with dog sitting my wife ended up taking the kids to some of the events. They went to a local water slide that wasn’t great, so they went to a much better water park a little later in the month. My wife was helping run an event at a golf tournament and brought my 8-year-old. Of course, he won a big basket of chocolate in a raffle. Chocolate is his favorite thing in the world. She also brought the kids on their first fishing trip with her father and they both caught fish. I was a little sad to miss these events, but sometimes it was nice to be have some time to myself have some time with a million strange dogs. My wife works a lot, so it was good that she got this time with them.

The kids continued their specialty camps. My older boy (8-year-old) did another cooking class. My younger boy (7-year-old) did art. The 8-year-old wanted to switch camps at the last minute, so we canceled one and tried another. However, that camp canceled on us (not enough enrollment). With my wife and I were both working, we turned to some of what I call “fun home school“. He did a few worksheets, some Tynker.com programming, and MoneyTime Kids, with some breaks in between for TV or recess. The TV breaks were Science Max on YouTube. (The MoneyTime Kids was also a push for myself to develop Kid Wealth to be ready for official launch.

My favorite art of my 7-year-old. It always makes me laugh. A dragon coming out of another dragon’s eye, but he’s upset because his watch is broken.

We went to the beach a few times – sometimes in the evening for a concert or event, sometimes during the day. We got to the military base’s Officer’s Club a few times. It’s a restaurant with a fantastic view and very, very cheap prices. They had food trucks and fireworks to say goodbye to summer. My wife got us invited to a somewhat exclusive beach club for a pharmacy convention. My 7-year-old got invited to the most exclusive beach club, famous for the Vanderbilts and Astors memberships. It was so exclusive that we couldn’t go with him. He said it was boring as it didn’t have a water slide.

That’s enough of the personal stuff… let’s start the Passive Income report. I used to call this the Alternative Income Report, but everyone loves passive income better. While I transition to the new terminology, there may be some “alternative income” mentions including the FAQ. If you are a new reader, you’re going to want to refer to my Alternative Income FAQ as you’ll likely have a lot of questions.

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

Lazy Man’s Passive Income – June 2021

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

1. Blogging + Dog Sitting Income

I continue to see growth in the dog sitting business. That’s what happens when everyone gets vaccines and goes on vacation after getting a pandemic dog. Here’s the growth by month:

April: 447% (March was almost non-existent because of few vaccines and travel
May: 27% (Most I had made in a month in 5 years)
June: 65% – Destroying the May record
July: 49% – Destroying the June record (more than all of 2020)
August: 17% – almost half of all of 2019 (pre-COVID numbers)

Eight-year-old enjoyed cooking camp and knows his way around a kitchen very well now

We’ve consistently had dogs which has been a game-changer. In the past, I’ve averaged one dog a day. We’re up to 3.5 dogs a day on average now and I charge more (mostly to limit the number of requests). My wife encouraged me to print business cards a few months ago. However, during the summer months, I essentially have all the business I can handle and I’m turning dogs away. I’m not the only one though. Sometimes another sitter will text me if I have availability because they are too full as well.

In the past, I have written that dog sitting is passive-ish income, which is why it is on this report. When it is one dog a day on average, it is passive. At this new level, it’s active, active, work! Coordinating schedules with other dog owners and Meet and Greets takes a lot of time.

Dog sitting is starting to go back to being passive in September. It’s looking like we’ll get fewer dogs with kids go back to school and families traveling less. Beach town tourism disappears in the wintertime. We had a busy Labor Day weekend, but we’ll see what happens after that. I think I’m more popular than I was before this summer, so maybe I’ll continue to be busy.

That’s a lot of dog-sitting writing, but what about blogging? Blogging income is just going okay. It’s a little above average, but I need to put more time into it. Fortunately, if the dog sitting drops off, I’ll have more time.

In July, “dogs and blogs” combined for a total of $7,148.45. In August, it was:

Total Blogging + Dog Sitting Income: $7,138.91

I missed a new record by less than $10! Ouch. I actually had a some website advertising that was done in August pay me in early September, but I’m keeping it in September. This is still a great number.

My kids help with the dog sitting. My 8-year old is extremely good with dogs at this point. He can feed them, let them out, and play with them in the yard. He even got a $20 tip from a client! My 7-year-old is good too, but it’s more of a work in progress. 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. I want to get them more involved in blogging, taking pictures, and things like that, but it’s going slow. During school, they have too much to keep them busy. I thought we might make progress this summer, but their camps and our vacations kept them busy.

(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

Zillow’s estimates on the property values seems to have settled down after the big run-up of a few months ago. In fact, they even fell a tiny bit. I get nervous about bubbles when prices rise so much and so suddenly. I am happy to have a little pause. Of course, while this pause is going on, we continue to pay down the mortgages. We generally pay down $3000 a month in the real properties. Some months, like this month, that’s our only gain.

The kids built a hermit crab habitat. My 7-year-old was in charge of building. My 8-year-old fetched the hermit crabs from the ocean. At one point they had around 20 in this hole.

This month we went from 70.59% to 70.66% ownership of the equity in our properties. Yikes, that’s a small sliver. We are only a few years away from getting real profits from the rental properties.

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

If you multiply our expected net rent by $3,400 by the amount of equity we have (i.e. where we are on our journey to 100% equity ownership), 70.66%, you get $2,402 in estimated monthly passive income. I feel like the paperboy in Better Off Dead – “I want my two dollars!”

A friend had a foam platform for lakes and oceans. This was a big hit, so we might get one. However, they are fairly expensive at $300 or $400.

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 a little more than 4 years, we’ve seen that number double. That’s the power of 15-year mortgages.

In about 5 years from now, the ratio will grow to 100% of that $3,400 rent. Since rent is inflation-resistant (we can raise rents as costs of living go up), we don’t have to factor in inflation like other investments. So we can think of it as around $40,000/yr. of income in today’s dollars buying the same value in the future. That should be enough money for us to live on with our own home paid off (plus our solar panels, frugal shopping habits, and military healthcare.)

In the previous report, the rental property income was $2,400.

Total Rental Property Income: $2402

3. Dividend Income

For this section, I assume we will earn a 2.5% dividend yield on our holdings. That could be from a high-dividend ETF or from simply holding strong companies that have a long history of dividend growth. There are some income investing ideas here. We can also look at making passive income with Dividend Kings. If we wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get closer to a 4% average dividend yield. (That link to the newsletter has a special discount rate and in full disclosure, I make a few dollars if you sign up for it.)

Hurricane Henri hit us and we lost a tree branch. That’s not too bad. A week later, we got hit by Ida and the same tree lost a bigger branch. Strange, it’s a completely healthy tree.

The markets reached new highs yet again. I feel it can’t continue, but it does, so I guess I better enjoy it now. There will be a time when the markets go down. I’m preparing myself for that by focusing on all these gains now. I’m also trying to diversify money across industries and increase the amount in bonds in hopes that they’ll be more stable if a crash does happen.

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

Total Dividend-ish Income: $3,880

Last month, it was $3,821. This dividend-estimated number hasn’t historically moved that much from month to month, so this is a good return back to those times. When I started tracking this number in 2017 we were at $1,180/mo. Our money is really working hard to multiply, especially because we aren’t investing much, but instead focusing on saving money for my wife to retire.

The kids climbed a sizable rock formation at the beach. I probably won’t win Father of the Year since I was this far away taking the picture. I put a stop to it when they came racing down holding hands.

Annualized, this monthly $3,880 is $46,564. If our mortgage was paid off, we might be able to live on this by itself. However, because most of our investments are in retirement accounts, we can’t use much of this potential income for now. (We can use the profit-sharing check as it goes straight to our checking account.) We’ll probably let this investment continue to compound for another 14 years until we are age 59.5. Then we’ll have to see if we want to tap it or let it continue until we are required to take some of it at age 72. I still need to see an estate planning lawyer and possibly some other tax and financial professionals soon.

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 definitely takes some more work.

I would have probably got this MoneyTime Kids question wrong.

The big growth this month came from the stock market. Real estate was mostly flat. I love having both types of income working together for us. I think everyone interested in FIRE should have stocks and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most 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.

The Delta variant cases are starting to slow their meteoric rise. I guess that’s the good news. The bad news is that cases are still very high. My kids are starting school and I’m more nervous this year than I was last year. Their school did exceptionally well to stay in-person all last year without any cases of students (to the best of my knowledge). When they sent people home, it was always precautionary because a close contact of a student had tested positive. I think we are about 4-5 months away from vaccines for the 5-11 year-old group that includes my kids. If they get vaccinated and we get boosters, I think we’ll all be in sync for feeling as prepared as possible.

If you haven’t gotten vaccinated yet and you are eligible, please don’t put it off. Getting vaccinated can help kids and other people who aren’t eligible. There was thinking that kids were mostly immune to COVID, but Delta spreads a lot faster so getting a lot more kids means more hospitalizations. There’s some debate on whether should be mandated to wear masks in the classroom. Until they are vaccinated, the best way to get our kids unmasked in school is for the eligible people to choose to get vaccinated. As my kids are fond of saying about a number of things now, “you can’t have it both ways.”

Finally, I think it is quite patriotic to help America’s hospitals and health care by doing everything you can to avoid adding to the problem. Vaccinations are on the rise, so maybe people are starting to see that there’s been at least a billion worldwide doses administered and there’s no problem. I’ll get off my soapbox now.

Very Close to Passive Income: $6,283

Last month it was $6,220. The $6,283 is another all-time high. It seems like I can just leave that sentence in my template for when I write this article.

This would be more than $75,000 a year of almost completely passive income. What’s better is that there would be no need to touch the investments themselves. We wouldn’t have to sell stocks for the dividends are assuming or get a reverse mortgage. Property maintenance and property taxes for rental properties are already factored in. We would still have all the underlying assets (property, stocks, etc.) and be able to pass these on to the kids for them to build on – unless we choose to draw them down for more fun, charity, or other spending.

The Newport Officer’s Club event to send everyone off on a great summer. I know the picture is blurry, but that’s the best I had.

This “very close to passive income” has grown from $2,354/mo. in January 2017. It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet (except for the profit-sharing check), because the money isn’t liquid. We don’t feel “rich” by any stretch of the word, even though we are relative to many people’s circumstances. We have gained almost $4,000/mo. in passive-ish income in a little more than 4 years. 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 a certainty unless we have that major crash.

Final Passive Income

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

Passive Income: $13,420.91

Last month it was $13,369.45. That’s squeaking into another all-time. I started the year thinking that I was just going to lower and lower because the “dogs and blogs” weren’t working. Even though this is less passive with all the dog sitting, it’s great to have real earning power. When “dogs and blogs” isn’t going well, the passive-ish income can still keep me from getting too low.

I had set a goal at the start of the year for this to average $8,000 for the year, but I honestly didn’t think it was poassible. Dogs and blogs were not performing at the start of the year. However, it’s over $9,500 on average now, so I just have to keep things going through the leaner winter months.

This picture of the Newport Officer’s Club is better.

This ~$13,000+/mo income is more than $160,000 a year. That (hypothetical) annual income for writing on a blog, taking care of dogs, and investing is very nice. However, this amount of dog care isn’t something that I want to continue over the longer term. If we could manage 100K 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 it’s a large percentage of it.

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

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

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’s been above $6,000 for a while now. It seems safe to say that $7,000 or $7,500 should be considered the new floor.

(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.

One restaraunt near us had lunch boxes filled with action figures for the kids to play with while we waited for food. This is such a wonderful idea and I don’t know why no one else does it!

August was another good month for our net worth. We saw it jump 1.49%. For the year overall, our net worth is up 26.12%. That’s usually the best we do in any year and there’s still time for it to grow.

For something new this month, I decided to share our liquid cash. I’ve been tracking it for some time, but this is the first time that I thought I’d 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 can do a lot of it. This is a way to roughly gauge the bottom line. In the past, we haven’t focused much on this because we’ve been investing it. However, our focus now is to build enough cash so my wife feels comfortable retiring. We grew our liquid cash by $8,206.95 this month. For the year, we’ve grown it $27,026.51, so the average is about $3,000/mo. The dog sitting income has really made a difference.

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

Thank you readers for sticking through last week. I had three articles that were 90% done, but I couldn’t polish them enough to schedule before our vacation. I hit a stressful time just before the 4th with a lot of dogs to sit and a rainy/muddy backyard. It’s not a good combination. Anyway…

We’re well into July, so half of 2021 is officially over. It seems like every month lately has a major theme to it. April was the month my wife was deployed to get shots in people’s arms. May was a month of recovery and home clean-up/repair. June was dog-sitting month as you’re about to find out. Before I get to those financials, let me get some blog housekeeping out of the way.

If you read more than one personal finance blog, you’ve probably already encountered this, but it is Plutus Award nomination season. The Plutus Awards is the red carpet award show for personal finance bloggers. In their 12 year history, I’ve watched 100 bloggers win an award, but have never one before. Since Lazy Man and Money covers all the categories in personal finance (FIRE, military, investing, retirement, family, side hustle, children, current events), it isn’t a good fit to be “best” in any particular one.

My best chance at winning a Plutus Award is probably the Lifetime Achievement award. That may sound arrogant, but I’ve been a finalist a couple of times.

The Lifetime Achievement award nomination blurb says, “Ten years is a good rule of thumb.” I’ve got 15 years of consistent blogging, so maybe it’s time. In the meantime, I’ll continue to be the Jamie Moyer or Susan Lucci of the personal finance blogging world.

Click here to nominate me. They’ll take “Lazy Man” or “Lazy Man and Money” or anything that’s reasonably close to identifying me in that box.

With that shameless plug behind us, here’s the family update for the month. As always, these are the best moments, not the typical ones.

• We went on a boat tour of the harbor around Newport. It’s one of those things in your area that tourists always do, but you never do. The kids loved it. We learned a lot of local history.
• We went to the movies and saw Peter Rabbit 2. There were only a couple of other people there. It’s weird to go to the movies again.
• We went to the zoo to see the white alligator that they had on loan from another zoo. It feels like we might have hit peak zoo age at 7-8.
• We went to our local beach (5-minute drive) and had a day there.
• We went to Block Island, turned off technology, and went hunting for the glass orbs that they hide there. We came up empty-handed again, but it was still great fun.
• My wife got to throw out the first pitch at a New England Collegiate Baseball League for her COVID-19 service.
• My wife took the kids went to a local amusement park. I got some pictures that they had a great time. I stayed home and did a lot of dog-sitting and blogging. It was actually really relaxing to focus for a few hours.

Jake loves his trips to Block Island. It took me quite a while to get him posed with the flag in the background.

That’s enough lead-in… let’s start the Passive Income report. I used to call this the Alternative Income Report, but everyone loves passive income better. While I transition to the new terminology, there may be some “alternative income” mentions including the FAQ. If you are a new reader, you’re going to want to refer to my Alternative Income FAQ as you’ll likely have a lot of questions.

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

Lazy Man’s Passive Income – June 2021

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

1. Blogging + Dog Sitting Income

In April we had the best dog sitting month since long before the pandemic started. In May, we did a little better. In June, we doubled April’s dog sitting numbers. We averaged three dogs a day, if you factor in we were on vacation for a few days. It was our best month ever. That’s what happens when everyone goes on vacation after getting a pandemic dog.

In the past, I have written that dog sitting is passive-ish income, which is why it is on this report. However, to do the kind of numbers that we did in June, it was very, very active. Some of it was managing the dogs themselves, but a lot of it is managing the dog owners. We had a lot of Meet and Greets which take a lot of time and coordination of schedules. They are necessary and useful for all parties. In the ideal dog-sitting situation, we’d have 3 dogs who are all repeat customers each day. They’d be long stays with few dog pick-ups and drop-offs. We don’t always get that, especially because tourism is high in the Newport, RI area.

Our annual picture of the kids at the Block Island Labrinth meditation/circle. We’ve split into glass orb hunting teams the last couple of years and we dress the part.

Blogging income was a little lower than usual. Some advertisements were ordered and executed, but payment wasn’t completed in June, so I’m kicking the numbers to July’s report. I’m comfortable with this because the dog sitting income was so good.

In May, dogs and blogs combined for a total of $3,540.96. In June, it was:

Total Blogging + Dog Sitting Income: $4,334.71

We hit another record for the year, so the economic recovery from COVID continues. I didn’t think I’d make my goals this year, but it is looking like I might pass them now. I don’t want to get too excited.

With dog-sitting back, my kids can pitch in to help. My 8-year old is extremely good with dogs at this point. He can feed them, let them out, and play with them in the yard. My 7-year-old is good too, but it’s more of a work in progress. This help means that I can pay them a legitimately earned income (a small percentage of the overall dog-sitting income). Because the income is earned they can save money in their kid Roth IRAs and it will be money that they’ll never pay tax on. I want to get them more involved in blogging, taking pictures, and things like that, but it’s going slow. During school, they have too much to keep them busy. I thought we might make progress this summer, but their camps and our vacations are keeping them busy.

(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

Last month, I wrote, “Zillow’s estimates on the property values continued to skyrocket.” That was nothing compared to this month. Our primary residence jumped around 20%. Unfortunately for this report, our primary residence doesn’t count as a rental property since we need a place to live. I only mention the jump in our primary residence to give an example of how much the numbers are jumping.

Once again our rental properties went up tens of thousands of dollars – nearly $60,000 this month. I’m 100% sure that we are in a housing bubble. I expect it to last somewhere between 2 and 5 years. As exciting as it is to see the numbers go up, I’m trying to keep myself grounded. If the bubble pops and prices drop suddenly, I can say, “I called it!” If the bubble doesn’t pop, we’ll just continue to have great numbers here.

This is a picture of Clingstone that I took while on the boat tour. Google Photos really made the blues pop. Strange, but true, a pizza company delivers via a boat to the house… at least according to our tour guide. I wonder what they tip?

This month we went from 67.50% to 70.08% ownership of the equity in our properties. That huge growth in value of the rental properties gave us a lot more equity helping out the percentage. I don’t think we’ve had a month anywhere close to this last one! We are only a few years away from getting real profits from the rental properties.

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

If you multiply our expected net rent $3,400 by the amount of equity we have (i.e. where we are on our journey to 100% equity ownership), 70.08%, you get $2,383 in estimated monthly passive income. 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 a little more than 4 years, we’ve seen that number double.

The white alligator at the zoo. The kids thought it might be a robot for a bit.

In about 5 years from now, the ratio will grow to 100% of a rent that should net $3,400 monthly after expenses. Since rent is inflation-resistant (we can raise rents as costs of living go up), we don’t have to factor in inflation like other investments. So we can think of it as around $40,000/yr. of income in today’s dollars buying the same value in the future. That should be enough money for us to live on with our own home paid off (plus our solar panels, frugal shopping habits, and military healthcare.)

In the previous report, the rental property income was $2,295.

Total Rental Property Income: $2,383

3. Dividend Income

For this section, I assume we will earn a 2.5% dividend yield on our holdings. That could be from a high-dividend ETF or from simply holding strong companies that have a long history of dividend growth. There are some income investing ideas here. We can also look at making passive income with Dividend Kings. If we wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get closer to a 4% average dividend yield. (That link to the newsletter has a special discount rate and in full disclosure, I make a few dollars if you sign up for it.)

The market continues to hit new highs. I am starting to sell off my satellite stocks because the market feels too high to me. My risk tolerance of losing these gains isn’t very high, so I want to be more conservative in my investments. I continue to stay fully invested, but I’m moving more money to bonds, i.e. giving my stocks a shave. I like to move a little money from stock to bonds mostly for the psychological effect of being active. The small amounts seem to add up. When stocks dropped last March due to COVID, I was able to buy in at lower prices by cashing in some bonds that didn’t drop as much.

My youngest is kind of a nut in an awesome way. He’s got a lot of Robin Williams, Chris Farley, and John Ritter in him. I meant to focus on the physical comedy aspect, but I just realized they had something else in common. Ummm, let’s move on.

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

Total Dividend-ish Income: $3,808

Last month, it was $3,733. I’m spoiled by our investments going up month after month. After over 50 reports, I think there were only a few where it dropped… and it seemed to rebound right away. This dividend-estimated number hasn’t historically moved that much from month-to-month, but seems to be picking up a lot in the last year. When I started tracking this number in 2017 we were at $1,180/mo. Our money is really working hard to multiply, especially because we aren’t investing much, but instead focusing on saving money for my wife to retire.

Movie Time!

Annualized, this monthly $3,808 is $45,696. If our mortgage was paid off, we might be able to live on this by itself. However, because most of our investments are in retirement accounts, we can’t use much of this potential income for now. (We can use the profit-sharing check as it goes straight to our checking account.) We’ll probably let this investment continue to compound for another 14 years until we are age 59.5. Then we’ll have to see if we want to tap it or let it continue until we are required to take some of it at age 72. I need to see an estate planning lawyer and possibly some other tax and financial professionals soon.

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.

The stock and real estate markets just keep going up and up. COVID could only slow the stock market for a short time, but stimulus boosted it. Real estate seemed to jump more due to COVID. If you look at the charts, we had a small setback when we sold one property and bought another in late 2020. It was just a tiny hiccup.

I love having both types of income working together for us. I think everyone interested in FIRE should have stocks and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most people in the case of an unfortunate economic event. We’ll still likely get rent checks if the stock market crashes. We’ll still get dividend checks if a tenant is late paying for a while. Of course a bad economy may impact both at the same time, but that’s what an emergency fund is for.

My wife after throwing out the first pitch.

When it comes to COVID, last month, I said that I was starting to get very encouraged about the future in the United States. I’m less encouraged this month. There are still too many people who haven’t gotten the vaccine. The Delta variant is causing cases to rise quite a bit. I tell my kids that COVID last year was like Charmander, but this Delta variant looks like Charizard. (Pokemon evolutions seemed like a natural analogy.) They understand the good news in that we have vaccines to battle it now. Fortunately, Rhode Island is highly vaccinated. My kids are too young to get the vaccine, so we just have to be careful if they are indoors with strangers.

Very Close to Passive Income: $6,191

Last month it was $6,028. The $6,191 is another all-time high. As you can tell from the chart below, it is a huge jump. The stock market drove gains for a while, but real estate is the biggest driver now.

This would be almost $75,000 a year of almost completely passive income. What’s better is that there would be no need to touch the investments themselves. We wouldn’t have to sell stocks or get a reverse mortgage. Property maintenance and property taxes for rental properties are already factored in. We would still have all the underlying assets (property, stocks, etc.) and be able to pass these on to the kids for them to build on – unless we choose to draw them down for more fun, charity, or other spending.

Netflix and Chill, am I right ;-)?

This “very close to passive income” has grown from $2,354/mo. in January 2017. It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet (except for the profit-sharing check), because the money isn’t liquid. We have gained almost $4,000/mo. in passive-ish income in a little more than 4 years. 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 a certainty.

Final Passive Income

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

Passive Income: $10,525.71

Last month it was $9,568.96. That’s another big jump and an all-time high. I spent the last year thinking that we’d hit new lows. With most of the money coming from passive-ish income that seems to consistently grow, the difference is what I can earn from dogs and blogs. This summer dog season is always big. When we get October people will travel less and we’ll see that income drop off again.

I had set a goal at the start of the year for this to average $8,000 for the year, but I honestly didn’t think it was poassible. Dogs and blogs were not performing at the start of the year. However, it’s over $8,000 on average now, so now it’s a matter of just keeping things going.

This ~$10,500+/mo income is more than $125,000 a year. That (hypothetical) annual income for writing on a blog, taking care of dogs, and investing is very nice. In the long term, $125K would be a lot more income than we’d need – given our necessary expenses for the next 45 years. Of course, those necessary expenses aren’t going to cover all our spending, but it’s a large percentage of it.

The kids at our local beach.

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

None of the numbers here include my wife’s day job of bread-winning pharmacist income, her vested military pension (more passive income when she retires), or the freelance work I’ve been doing over the last 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 stretching almost every dollar in almost all our spending.

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’s been above $6,000 for a while now. It seems safe to say that $7,000 or $7,500 should be considered the new floor.

(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.

June was the best month ever for net worth… by far. We saw it jump 7.17%! I had to pause and think about it for a minute. If that happened every month for 10 months, we’d double our net worth. The big driver here was the real estate valuation of our primary residence, so it doesn’t show up in any of the passive income above. The growth in value of our primary residence doesn’t mean too much as we can’t sell it or downsize for some time. It’s just a number that lives on paper rather than in real spendable currency.

For the year overall, our net worth is up 23.62%. That’s usually the best we do in any whole year. I can’t remember ever seeing that kind of gain in 6 months. In terms of dollars, the monthly gain may be more than we make in a year as a couple.

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

There’s a big wild card in calculating our net worth. Now that my wife’s pension is vested, it’s reasonable to ask whether to include it in our net worth. I decided that it does make sense to include it. She could have earned more 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. In the end, it seems my wife’s pension may be worth ~$2.4 million. However, like most of the money mentioned in this article, this isn’t money we can spend right now.

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

We’re into June and that means it’s time to review how our passive income grew in May. Before I put you to sleep with boring numbers, here’s a slightly more interesting look into our last month.

The beginning of the month started with my wife still deployed getting 60,000 shots into people’s arms. The kids had a Cub Scout event and learned how to garden. It’s a good thing that I wasn’t teaching them, because I can’t keep plant life alive. We also went out for Mexican food for Cinco de Mayo to support the local Mexican restaurant. Turns out, any other day would have been a better choice.

Once my wife came back we did a lot more stuff. My 2nd grader is enthralled with Australia that he’s learning in school. We went to the zoo and Outback Steakhouse to help support that enthusiasm. We went to a food truck event that felt very, very normal. My wife and I took a day off to enjoy a picturesque lunch. My wife ran a half marathon. The kids and I helped run one of the water stations.

That’s a full month, especially when you read the financial update below.

That’s enough lead-in… let’s start the Passive Income report. I used to call this the Alternative Income Report, but everyone loves passive income better. While I transition to the new terminology, there may be some “alternative income” mentions including the FAQ. If you are a new reader, you’re going to want to refer to my Alternative Income FAQ as you’ll likely have a lot of questions.

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

Lazy Man’s Passive Income – May 2021

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

1. Blogging + Dog Sitting Income

Last month, April was a great month for blogging and dog sitting. I don’t know why the blogging came back, but dog sitting is back with vaccinated people traveling. I didn’t know if it would be sustainable. The only way to find out is to gather enough data points. This month we have another data point.

My 7-year-old struggled to read anything last year. Now he’s reading the 8-year-old’s books upside-down.

This month, May, blogging hasn’t been as good as last month. It was still very good, more than double the average from January to March. While I never like to see the income go down, I do like to see that April was just an aberration.

As great as April’s dog sitting was, May’s is even better. I’m writing this on June 4 and I have already booked more income than May (assuming no cancelations). It seems that the only limit to dog sitting income is… my willingness, space, and time to manage multiple dogs. It’s much more passive when you have one dog to sit. It gets a little more complicated when you have several and have to coordinate their eating times and spaces. At some level of income, it gets hard to call it passive-ish.

The 7-year-old is flexible too.

In April, dogs and blogs combined for a total of $3,584.48 – the start of the comeback. In May, it was:

Total Blogging + Dog Sitting Income: $3,540.96

It’s hard to get much more consistent than that. If only we had one more dog or a day of blogging we probably would have passed the previous month. This income is so much better than it was during COVID when I wasn’t sure if I’d make more than $1000.

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

(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

Zillow’s estimates on the property values continued to skyrocket. It seems like every month they go up by tens of thousands of dollars. In addition to that appreciation growth, we paid down the mortgages as we always do. Due to the growth, we’ve made over $90K in equity for the year. The housing market is really moving.

My wife and 8-year-old played “Chopped” and I choose a bunch of old food that we had around the house. It’s a great rainy day activity! You earn bonus Personal Finance credit if you remember BillShrink. (You can notice some Pokemon influence in the background.)

It can be difficult to deal with tenants, but I like to think of those equity gains as a salary. The “work” for last year’s $60,000 of equity is pretty minimal. We had to work a little more for the $90,000 this year, but ~$15,000/mo. is very good. Of course, equity isn’t really salary – we can’t spend the money, because it isn’t liquid. Also, it’s can’t continue like this. We’ll enjoy it while we can.

This month we went from 66.15% to 67.50% ownership of the equity in our properties. We are only a few years away from getting real profits from the rental properties.

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

If you multiply our expected net rent $3,400 by the amount of equity we have (i.e. where we are on our journey to 100% equity ownership), 67.50%, you get $2,295 in estimated monthly passive income. When I started tracking this (January, 2017), we only owned 36.4% of the properties and they had lower rents. The math worked out to $1,174 back then. So in a little more than 4 years, we’ve seen the number grow $1000+/mo. It’s almost double. That’s good passive growth in 4+ years.

The kids love our backyard summer splurge of a hot tub.

In about 5 years from now, the ratio will grow to 100% of a rent that should net $3,400 monthly after expenses. Since rent is inflation-resistant (we can raise it as costs of living go up), we don’t have to factor in inflation like other investments. So we can think of it as around $40,000/yr. of income in today’s dollars buying the same value in the future. That should be enough money for us to live on with our own home paid off (plus our solar panels, frugal shopping habits, and military healthcare.)

In the previous report, the rental property income was $2,249.

Total Rental Property Income: $2,295

3. Dividend Income

For this section, I assume we will earn a 2.5% dividend yield on our holdings. That could be from a high-dividend ETF or from simply holding strong companies that have a long history of dividend growth. There are some income investing ideas here. We can also look at making passive income with dividend kings. If we wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get closer to a 4% average dividend yield. That link to the newsletter has a special discount rate and in full disclosure, I make a few dollars if you sign up for it.

My 7-year-old goofs around quite a bit, but he was all business in helping at the marathon water station.

The market dropped a bit mid-month, but then it rebounded again. So you won’t even see the drop in this report. I have done well with my satellite stocks overall, but they’ve been giving up some of their gains. I feel good to have locked in most of the gains. Now when I lose money with them, I don’t feel bad. It’s always good to play with the house’s money. Taking profits and buying diversified index funds has worked well for me.

Our portfolio continues to hit new all-time highs. I get nervous that the markets were too high. So I continue to execute on my plan to continue to stay fully invested, but moving more money to bonds, i.e. giving my stocks a shave. It was a small move of money from stock to bonds mostly for the psychological effect of being active. The small amounts seem to add up and when stocks dropped last March, I was able to buy in at lower prices by cashing in some bonds that didn’t drop as much.

My 8-year-old completed a 365-day streak in Duolingo – most of it in Norwegian (his school friend is from there). Can I add this in his college application?

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

Total Dividend-ish Income: $3,733

Last month, it was $3,700. This is a fairly normal size gain – but it’s amazing that it has been continuing like clockwork through all these reports. After nearly 50 reports, I think there were only a few where it dropped… and it seemed to rebound right away. This dividend-ish number rarely moves that much, but slow and steady wins the race. When I started tracking this in 2017 we were at $1,180/mo.

Annualized, this monthly $3,733 is almost $44,800. If our mortgage was paid off, we might be able to live on this by itself. However, because most of our investments are in retirement accounts, we can’t use much of this potential income for now. (We can use the profit-sharing check as it goes straight to our checking account.) We’ll probably let this investment continue to compound for another 14 years until we are age 59.5. Then we’ll have to see if we want to tap it or let it continue until we are required to take some of it at age 72. I hope to see an estate planning lawyer and possibly some other tax and financial professionals soon.

Very Close to Passive Income

Our “very close to passive income” is a combination of rental property income and dividend income. If there were some royalty income from books, movies, or music, I’d include that as well. I’m too tone-deaf to have a rockstar music career, but I keep the idea open that I’ll write a book someday.

An evening at the beach after school is a great way for a kid to unwind. They had the help of about ten school friends in digging this hole.

The stock and real estate markets have been going up and for a long time. COVID dropped the stock market for a short time, but that’s the only hiccup. If you look at the charts, we had a small setback when we sold one property and bought another in late 2020. It’s taken a few months, but it’s back to new highs.

I love having both types of income working together for us. I think everyone interested in FIRE should have stocks and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most people in the case of an unfortunate economic event. We’ll still likely get rent checks if the stock market crashes. We’ll still get dividend checks if a tenant is late paying for a while. Of course a bad economy may impact both at the same time, but that’s what an emergency fund is for.

I’m starting to get very encouraged about the future – at least in the United States. Last month, I wrote:

[COVID] may not be 100% gone, but it could get to a point that it is rare enough to not have to think about it.

It’s starting to feel like it’s getting to the point that I don’t have to think about COVID. The kids aren’t eligible to get the vaccine yet, but there are large parts of the day where I don’t have to think about it. We are lucky to be in the United States – it isn’t like this in other countries.

Very Close to Passive Income: $6,028

Last month it was $5,949. The $6,028 is yet another all-time high – ho, hum. As you can tell from the chart below, it just keeps moving in the right direction. It had been the stock market driving the gains for a while. However, real estate may be the bigger driver now.

The local zoo had a few Australian animals. Unfortunately they didn’t have any kangaroos. We went to the zoo twice this month, once to see Australian animals and a second time at night to see the Asian lantern exhibit.

This would be more than $72,000 a year of almost completely passive income. What’s better is that there would be no need to touch the investments themselves. We wouldn’t have to sell stocks or get a reverse mortgage. Property maintenance and property taxes for rental properties are already factored in. We would still have all the underlying assets (property, stocks, etc.) and be able to pass these on to the kids for them to build on – unless we choose to draw them down for more fun, charity, or other spending.

This “very close to passive income” has grown from $2,354/mo. in January 2017. It’s worth noting that, once again, these are fudged numbers that aren’t “real” yet (except for the profit-sharing check), because the money isn’t liquid. We have gained more than $3,000 in passive-ish income in a little more than 4 years. I used to wonder if we can get to $8,000/mo. in passive income by the start of 2025, but I feel like we will get there now.

Final Passive Income

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

Passive Income: $9,568.96

Last month it was $9,533.48. That’s barely a gain, but any gain is good. More important than the gain is that it’s the second month we’re at all-time highs. I spent the last year thinking that we’d hit new lows. With most of the money coming from passive-ish income that seems to consistently grow, the difference is what I can earn from dogs and blogs.

Supporting the local Mexican restaurant on Cinco de Mayo

I’d like to see this average $8,000 this year. I didn’t think it was possible with dogs and blogs not performing, but now it’s starting to look like there’s a chance. It will take quite a bit of luck, as the number has been low for many months.

This ~$9,500+/mo income is almost $115,000 a year. That largely hypothetical annual income for writing on a blog, taking care of dogs, and investing is very nice. In the long term, $115K would be a lot more income than we’d need – given our necessary expenses for the next 45 years. Of course, those necessary expenses aren’t going to cover all our spending, but it’s a large percentage of it.

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

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

I love two things about the graph below. First, it continues to stay high like it did last month. Second, it doesn’t dip down too far. It’s been above $6,000 for a while now. It’s good that we are turning this ship around and moving it back in the right direction. I’d like to see $7,000 become the new floor.

(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.

May was another great month for our net worth. We saw it jump 3.80%! For the year overall, our net worth is up 15.28%. It’s very odd to have these kinds of gains when our numbers have been growing for so many years. In terms of dollars, sometimes the monthly gains are more than I’ve made in a year as a software engineer.

The view from our table at Castle Hill at a fancy lunch with my wife.

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

There’s a big wild card in calculating our net worth. Now that my wife’s pension is vested, it’s reasonable to ask whether to include it in our net worth. I decided that it does make sense to include it. She could have earned more 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. In the end, it seems my wife’s pension may be worth ~$2.4 million. However, like most of the money mentioned in this article, this isn’t money we can spend right now.

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

April is over and I think I can safely say that it’s become my new nemesis. In 2020, the kids came back from their planned March break to start distance learning. I think many parents were traumatized by that experience. This April, my wife was deployed to get vaccines in people’s arms. She led a crew that performed more than 60,000 vaccines in 35 days. It was the longest we’ve been away from each other by three weeks since we first met. I did well with the kids for the first few weeks (it helped a ton that school was in person), but it broke down from there. We had some people try to help, but I think it made things more complicated because I had to manage cleaning and preparing the house before the guest on their visits. The last two weeks were a roller coaster. She’s back now and we’re able to start moving forward again.

(Did you know that April is Military Child month? Ironic, don’t you think?)

Under those circumstances, my goal was to survive the month. Success would be determined by how many fingers and toes the kids retained. (Fortunately, we were perfect in that area.)

The kids started out the month breaking their first wooden board at karate class. They met the Easter Bunny at the military commissary (supermarket). They placed near (or at the bottom in one case) in their pinewood derby for Cub Scouts. They found a bunch of Easter Eggs on the front lawn on Easter morning. We watch all the How to Train Your Dragon movies. They also got into all the Dav Pilkey books (Captain Underpants and Dog Man). We found some tips on how to draw the characters on YouTube, so they spent a lot of time making up their own comic books.

My dog went for a routine vet check-up and ended up getting a cotton swap stuck in his ear requiring a trip to an emergency animal hospital. (He’s fine now.) We came home to a bunch of baby bunnies. You’d think they wouldn’t like living near all the dogs, but they are fast enough to get out of danger. (So far!)

I had big goals like getting some projects done around the house. I got a couple of things done, but not too much. The rest of the month’s story is written in the numbers below. It’s probably the exact opposite of what you think.

This month I don’t have a lot of pictures, because a video conference of the Pinewood Derby wasn’t worth it. Watching movies and reading books didn’t make for photo greatness either. I didn’t want to memorialize my dog’s visit to the emergency hospital either. We have less stuff to do without my wife around (and I have less time to take pictures).

That’s enough lead-in… let’s start the Passive Income report. I used to call this the Alternative Income Report, but everyone loves passive income better. While I transition to the new terminology, there may be some “alternative income” mentions including the FAQ. If you are a new reader, you’re going to want to refer to my Alternative Income FAQ as you’ll likely have a lot of questions.

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

Lazy Man’s Passive Income – April 2021

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

1. Blogging + Dog Sitting Income

Blogging income continued to rebound to April. Maybe the economy is getting better, but I got a lot more advertisers that I had gotten in some time. I’m not sure if it’s sustainable yet, but it still feels good to have it come back.

We were surprised by the Easter Bunny at the local military commissary. He gave out candy and a gift certificate for a free ice cream at the local ice cream shop.

We had our best dog sitting month since the summer of 2019. It seems that travel is back – especially during school vacation. Having all the dogs around definitely kept me busy.

In March, dogs and blogs combined for a total of $1,176.09 – the start of the comeback. In April, it was:

Total Blogging + Dog Sitting Income: $3,584.48

That tripling is back to pre-COVID levels! Even if it’s just for a month, it’s a welcome relief.

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

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

2. Rental Property Income

Zillow’s estimates on the property values continued to skyrocket. In March the properties when up nearly $15,000. In April, they doubled that and went up $30,000. We paid down the mortgages as we always do. Due to the growth, we’ve made over $75K in equity for the year. The housing market is really moving.

It can be difficult to deal with tenants, but I like to think of those equity gains as a salary. The “work” for last year’s $60,000 of equity is pretty minimal. We had to work a little more for the $75,000 this year, but ~$15,000/mo. is very good. Of course, equity isn’t really salary – we can’t spend the money, because it isn’t liquid. Also, it’s can’t continue like this. We’ll enjoy it while we can.

This month we went from 64.56% to 66.15% ownership of the equity in our properties. That’s close enough for me to call it 2/3s, which is a good milestone.

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

If you multiply our expected net rent by $3,400 by the amount of equity we have (i.e. where we are on our journey to 100% equity ownership), 66.15%, you get $2,249 in estimated monthly passive income. When I started tracking this (January 2017), we only owned 36.4% of the properties and they had lower rents. The math worked out to $1,174 back then. So in a little more than 4 years, we’ve seen the number grow $1000+/mo. It’s almost double. That’s good passive growth in ~4 years.

These bunnies visited way after Easter.

As the years march on (somewhere about 5 years from now), the ratio will grow to 100% of a rent that should net $3,400 monthly after expenses. Since rent is inflation-resistant (we can raise it as costs of living go up), we don’t have to factor in inflation like other investments. So we can think of it as around $40,000/yr. of income in today’s dollars buying the same value in the future. That should be enough money for us to live on with our own home paid off (plus our solar panels, frugal shopping habits, and military healthcare.)

In the previous report, the rental property income was $2,195.

Total Rental Property Income: $2,249

3. Dividend Income

For this section, I assume we will earn a 2.5% dividend yield on our holdings. That could be from a high-dividend ETF or from simply holding strong companies that have a long history of dividend growth. There are some income investing ideas here. We can also look at making passive income with dividend kings. If we wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get closer to a 4% average dividend yield. That link to the newsletter has a special discount rate and in full disclosure, I make a few dollars if you sign up for it.

The market is still doing great. The yield curve issue of a couple of months ago is behind us, but maybe they’ll be coming back. I have done well with my satellite stocks overall, but they’ve been giving up their gains. I feel good to have locked in most of the gains. Now when I lose money with them, I don’t feel bad. It’s always good to play with the house’s money.

Our portfolio continues to hit new all-time highs. I get nervous that the markets were too high. So I continue to execute on my plan to continue to stay fully invested, but moving more money to bonds, i.e. giving my stocks a shave. It was a small move of money from stock to bonds mostly for the psychological effect of being active. The small amounts seem to add up and when stocks dropped last March, I was able to buy in at lower prices by cashing in some bonds that didn’t drop as much.

The annual Easter egg hunt went well. The 8-year-old worked to help his younger brother find eggs and it turned out that they got almost exactly the same number. The Easter bunny’s helper put an odd number of eggs out there, not thinking it would be that close. Since the younger kid had an extra egg, they decided it was fair for dad to have one.

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

Total Dividend-ish Income: $3,700

Last month, it was $3,601. A gain of almost $100 is extremely good. This number rarely moves that much, but slow and steady wins the race. When I started tracking this in 2017 we were at $1180/mo.

Annualized, this monthly $3,700 is $44,400. If our mortgage was paid off, we might be able to live on this by itself. However, because most of our investments are in retirement accounts, we can’t use much of this potential income for now. (We can use the profit-sharing check as it goes straight to our checking account.) We’ll probably let this investment continue to compound for another 14 years until we are age 59.5. Then we’ll have to see if we want to tap it or let it continue until we are required to take some of it at age 72. We should probably see an estate planning lawyer soon.

Very Close to Passive Income

Our “very close to passive income” is a combination of rental property income and dividend income. If there were some royalty income from books, movies, or music, I’d include that as well. I’m too tone-deaf to have a rockstar music career, but I keep the idea open that I’ll write a book someday.

The stock and real estate markets have been going up and for a long time. COVID dropped the stock market for a short time, but that’s the only hiccup. If you look at the charts, we had a small setback when we sold one property and bought another. It’s taken a few months, but it’s back to new highs.

I love having both types of income working together for us. I think everyone interested in FIRE should have stocks and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most people in the case of an unfortunate economic event. We’ll still likely get rent checks if the stock market crashes. We’ll still get dividend checks if a tenant is late paying for a while. Of course a bad economy may impact both at the same time, but that’s what an emergency fund is for.

I’m starting to get very encouraged about the future – at least in the United States. Last month, I wrote:

My wife is away shooting everyone in the arm. There are so many more like her – seems like the whole military, not to mention millions of civilian health care workers. I can’t wait to see what everything looks like in 4-6 weeks.

The vaccines are doing their thing and cases are heading down. On April 10th, the US had 68,000 cases. On May 10th, we had 22,000. If we can get everyone who is medically able to get the vaccine we’ll beat this. It may not be 100% gone, but it could get to a point that it is rare enough to not have to think about it.

From a financial perspective, I think we might be past any kind of COVID-19 crash.

Very Close to Passive Income: $5,949.00

Last month it was $5,796. The $5,949.00 greatly extends our all-time high yet again. As you can tell from the chart below, it just keeps moving in the right direction. It had been the stock market driving the gains for a while. However, real estate is starting to roll too. Now they are both working at the same time.

This would be more than $71,000 a year of almost completely passive income. What’s better is that there would be no need to touch the investments themselves. We wouldn’t have to sell stocks or get a reverse mortgage. Property maintenance and property taxes for rental properties are already factored in. We would still have all the underlying assets (property, stocks, etc.) and be able to pass these on to the kids for them to build on – unless we choose to draw them down for more fun, charity, or other spending.

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

Final Passive Income

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

Passive Income: $9,533.48

Last month it was $6,972.09. That’s a break-out month! I spent the last year thinking that we’d hit new lows. This month we hit a new all-time high for a single month. With 2/3rds of this coming from passive-ish income that seems to consistently grow, the difference is what I can earn from dogs and blogs.

I’d like to see this average $8,000 this year. I didn’t think it was possible with dogs and blogs not performing, but now I wonder if there’s a chance. It will take quite a bit, as the number has been too low for too many months.

This ~$9,500+/mo income is more than $114,000 a year. That largely hypothetical annual income for writing on a blog, taking care of one dog, and investing is really nice. In the long term, $114K would be a lot more income than we’d need – given our necessary expenses for the next 45 years. Of course, those necessary expenses aren’t going to cover all our spending, but it’s a large percentage of it.

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

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

I love two things about the graph below. First, it’s the move up in the last month. Second, it doesn’t dip down too far. It’s been above $6,000 for a while now. It’s good that we are turning this ship around and moving it back in the right direction. I’d like to see $7,000 become the new floor.

(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.

April was another great month for our net worth. We saw it jump 2.91%. For the year overall, our net worth is up 11.05%. It’s very odd to have these kinds of gains when our numbers have been growing for so many years. In terms of dollars, sometimes the monthly gains are more than I’ve made in a year as a software engineer.

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

There’s a big wild card in calculating our net worth. Now that my wife’s pension is vested, it’s reasonable to ask whether to include it in our net worth. I decided that it does make sense to include it. She could have earned more 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. In the end, it seems my wife’s pension may be worth ~$2.3 million. However, like most of the money mentioned in this article, this isn’t money we can spend right now.

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

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

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

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

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

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

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

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

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

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

That’s enough lead-in… let’s start the Passive Income report. I used to call this the Alternative Income Report, but everyone loves passive income better. While I transition to the new terminology, there may be some “alternative income” mentions including the FAQ. If you are a new reader, you’re going to want to refer to my Alternative Income FAQ as you’ll likely have a lot of questions.

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

Lazy Man’s Passive Income – March 2020

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

1. Blogging + Dog Sitting Income

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

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

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

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

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

Total Blogging + Dog Sitting Income: $1,176.09

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

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

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

2. Rental Property Income

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

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

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

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

If you multiply our expected net rent $3400 by the amount of equity we have (i.e. where we are on our journey), 64.56%, you get $2,195 in estimated monthly passive income. When I started tracking this (January, 2017), we only owned 36.4% of the properties and they had lower rents. The math worked out to $1,174 back then. So in a little more than 4 years, we’ve seen the number grow $1000+/mo. That’s good passive growth in ~4 years.

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

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

Total Rental Property Income: $2,195

3. Dividend Income

For this section, I assume we will earn a 2.5% dividend yield on our holdings. That could be from a high-dividend ETF or from simply holding strong companies that have a long history of dividend growth. There are some income investing ideas here. We can also look at making passive income with dividend kings. If I wanted to simply retire on this dividend income, I would get Sure Dividend’s newsletter to try to get closer to a 4% average dividend yield. That link to the newsletter has a special discount rate and in full disclosure, I make a few dollars if you sign up for it.

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

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

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

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

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

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

Total Dividend-ish Income: $3,601

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

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

Very Close to Passive Income

Our “very close to passive income” is a combination of rental property income and dividend income. If there were some royalty income from books, movies, or music, I’d include that as well. I’m too tone-deaf to have a rockstar music career, but I keep the idea open that I’ll write a book someday.

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

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

I love having both types of income working together for us. I think everyone interested in FIRE should have stocks and real estate income streams. The diversification gives me great confidence that we’ll be better prepared than most people in the case of an unfortunate economic event. We’ll still likely get rent checks if the stock market crashes. We’ll still get dividend checks if a tenant is late paying for awhile. Of course a bad economy may impact both at the same time, but that’s what an emergency fund is for.

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

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

Very Close to Passive Income: $5,796

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

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

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

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

Final Passive Income

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

Passive Income: $6,972.09

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

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

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

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

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

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

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

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

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

Net Worth Update

My net worth updates aren’t very exciting as I don’t share the exact numbers. That’s why it’s just a footnote here.

I truly believe that net worth is one of the most important numbers in personal finance so it is worth sharing in some way. Showing relative growth can be useful.

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

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

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

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

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

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