Five Cent Nickel has expressed some concerns with my reliance on Prosper.com – and he is right to do so. I’m a little surprised that I haven’t come across similar comments.
I should clarify, by “passive income”, I’m not going to use the traditional dictionary definition. For the most part, I’m talking about all the other streams of income excluding my day job. So if this blog really takes off and 17 million people visit it tomorrow, I would count that as passive income, even though I have to devote time to it.
I do have other plans for passive income besides Prosper, but I think I am going to rely on them for the short term. I do believe in the personal lending area, and while it’s new here in the US, it’s pretty proven in England with Zopa.com.
And when I say that I’m relying heavily on Prosper, I probably not being entirely honest. In reality, I’m looking to put about 40% of my savings in that basket. I’m going to put another 40% into paying off a $12,000 HELOC. As my goal is to cover my monthly “necessary expenses” (housing, utilities, food, etc.), paying off the HELOC gets me closer to that by reducing that liability. So I’m really attacking the goal from both sides – increasing passive income and reducing liabilities. To me, one is just as good as the other.
Lastly, I am going to look into putting the last 20% in Zecco.com to buy a diversified portfolio of funds with low expense ratios. I realize that Zecco.com is new as well, but I trust they are well regulated (I will confirm before I start, trust me), so I’m not concerned about Zecco being too new to trust.
Since this goal is probably going to take more than a few years, I’ll eventually start to turn my cash flow negative property, into a positive (as rents rise) one. Read that post to understand how it will be positive cash flow in long term.
If other people have any other forms of passive income that they feel I should try, please, please, let me know.