Passive Income update 11-4-2018

I’m back at it with another update on my passive income. Two months have passed, and we’ve made progress since I last filled you guys in. To remind everyone I currently receive passive income in the form of interest payments from Lending Club, my savings account, stock dividends, and stock interest payments.

I have invested more money into my Robinhood portfolio, stash app and my lending club account since I last touched on this subject and the results speak for themselves. Two months ago, I had received $233.74 YTD in Lending Club payments, now I am at $343.72. Stock interest and dividend payments have also increased from $186.37 to $260.89. Overall that puts me at a YTD passive income of $604.61 or $60.46/month. This is in comparison to my September numbers of $420.11 YTD and $46.68/month. This shows a 29.5% increase in monthly passive income! Below is a screenshot of my Lending club interest payments by month as you can see we have a dramatic uptick through the fall as funds were added in late summer and early fall showing the strong passive income performance described above.

LC interest snip

Unfortunately, I do not think I will make it to my goal of $1,000 of passive income YTD. The progress I have made will continue to help grow my passive income year after year with the goal of my passive income exceeding my earned income one day.

My lending club portfolio has been driving much of this passive income growth and it has not shown its full strength yet. This month all my notes will be issues and generating income and we will see what kind of profits that machine can churn out. My stock portfolio has been extremely volatile during the month of October as many investors have experienced the wild ride with me. I am optimistic of my portfolio and believe I will be making some sales in the future and picking up dividend stocks and profits along the way. My Stash portfolio also grew with considerable size over the last several months and it is likely that some of those positions will be rewarding me in the future as well.

Exciting things are soon to come as the end of 2018 approaches! Expect another passive income update at the end of 2018 or beginning of 2019 to recap the full year and see my future and ambitions for 2019. With graduation, relocating, and adulting there are sure to be some interesting topics to talk about and interesting plans in my future.

I will also be using this post to apologize for my horrendous lack of posting in October, as highlighted in my November goal picture on Instagram I have been off my game to say the least and will be using this first half of November or so to get back on track. For those of you who are curious I only had 1 blog article posted and lacked on my Instagram game as well. This article is already my second of November and many more are to come!

Do you ever get in a rut like I did? If so, leave a comment on how you got out of it or what you did to wake yourself back up. I’m sure myself and everyone reading this could get some benefit out of your words of wisdom!

Thanks,

B^2

 

Passive Income overview 9/5/18

Passive Income is all the rage these days, with ecommerce blowing up, YouTube, podcasts, blogs, investing etc. there are lots of reason why it should be something to think about. Let’ s dive into it and see what it is all about!

Passive income is income resulting from cash flow received on a regular basis, requiring minimal to no effort by the recipient to maintain it. (Wikipedia)

That sounds amazing! Minimal to no effort and receiving cash from it, but its not quite that simple. Passive income often requires either initial upfront energy, effort, and time or initial upfront cash.

My expertise is with the initial upfront cash portion, so we’ll get into that. I have been collecting data on my passive income for over a year now. I currently receive passive income in the form of interest payments from Lending Club, my savings account, stock dividends, stock interest payments, and I guess money saving apps as well. I won’t go into that last one in depth as I am saving that for an article in the future. Hopefully if you’ve been following me for awhile or are at all familiar with investing you understand what a stock dividend is. Essentially you own a dividend paying stock a every quarter or for every month you receive a little gift from the company in the form of a monetary payout for being their stockholder. I also receive some interest payments from my stocks when people short the stocks I own. Between my savings account interest, stock interest, dividends from both Robinhood and Stash I have received $186.37 this year. Not too shabby most would say, but this does come at a price to the tune of ~$12,500 invested in the above-mentioned platforms. The other vehicle I use for passive income is Lending Club. Currently I have received $233.74 in interest payments this year through that platform and that is to the tune of about $4,000 ish invested. A little calculator work later and we are at $420.11 this year in passive income, or about $46.68 per month.

I’m proud of that number to say the least but there’s more to come and in fact my goal for 2018 was to make $1,000 in passive income this year. There is still along way to go to reach that $1,000 mark and less than 3 months till the ball drops and we are standing in 2019.

My plan to get there is already in the works, I have a sizeable position building in Lending Club, in fact there is quite a lot of notes (loans) that haven’t paid me yet because they are so new. When that all comes clicking together and I continue to add to that platform I expect my interest payment payouts to sky rocket. I think I’ll put in another $1,000 into that platform or so and will be reinvesting the principals and interest payments to snowball that passive income stream and make it larger.

The other side of the coin is my stocks and etf’s I own. I have added around $750 into my stash positions and most of those pay dividends. I’ve also added $1400 to my robinhood portfolio and a decent chunk of that has gone to dividend stocks. I plan to continue to add to both and make profits on my positions to reinvest into dividend stocks as well as reinvest the dividends back from where they came from.

The goal for this is to reach financial freedom. There are various definitions to this but for my purpose it is to create passive income streams that are greater than my active income (the money I make from working). When you reach this and assuming you account for inflation, cost of living increasing etc. you can effectively retire. Now of course I don’t plan to retire super early and go live on a beach or anything like that, my mission is much bigger than that, however that is the ultimate plan.

You might be taking a look at this and scratching your head like, “Brandon, you’ve got a long way to go to replace your standard income if you aren’t even at $1,000 a year yet” and you are absolutely correct. My stock portfolio currently yields around 3%, for a modest $40,000 a year to live on my portfolio would have to be around $1.3 million at that same yield to produce that. That’s a lot of motherfucking money to reach financial freedom if you ask me.

That’s why I am looking into investing in real estate when I build my capital up. With real estate’s monthly cash flow and leverage assuming a modest 5% return not accounting for increasing rents or refinancing or anything like that an $800,000 property would yield $40,000 a year and with a 25% down payment of $200,000 you could control that. That looks much more attainable to me.

Using Grant Cardone’s 40% rule, profits from my investments, and existing passive income streams that will grow that should be attainable within a few years if all goes right.

As Warren Buffett said, “If you don’t find a way to make money while you sleep, you will work until you die.”

Now are these passive income streams passive, no. I actively invest in the stock market, I do research on the positions I take, I check lending club frequently and hand pick my loans that I invest in etc. But all in all they are pretty passive. Real estate on the other hand isn’t very passive until you get to the big leagues and can afford a property manager.

Grant’s new real estate investing book is in route to my door in STL and I will be giving that a read very soon and I plan to implement his plan and to go big on my first deal. We’re talking 24-32 units costing $1.4- 2.0 million requiring a down payment in the neighborhood of $500-700k. Like I said large upfront capital or large up-front work, time, energy.

I should also mention what I am doing right here follows that other method that I haven’t gone over. This blog while it does not produce any income and actually never has produced any income for me may be able to one day. Consider how much time I’ve spent (10 months, 60 blog posts, advertising, Instagram etc.) to get it to this point and still haven’t made a dime with it. That’s what I am talking about in terms of up front time, energy, and effort.

It will not be easy whatever passive income route you choose, but with a good strategy and the work you need to put into it the prize is pretty frickin nice.

Let me hear your passive income journey!

B^2

Internship Finances Overview

I wrote an article titled “Personal Finance Overview 7/17/18” reviewing my expenses and spending through my internship this summer. Today I will wrap up how the summer went in terms of my spending and earning. Below is a master picture of the expenses.

finances2

If you haven’t read the previous post mentioned take 5 minutes to catch up and get familiar, the link is above. In term of the food column we brought the average down from $300 to around $265 ish this comes out to $60 a week or so. This has been very inline with my previous tracking throughout the summers. For those of you who are wondering how in the hell can I eat on $60 a week the answer is eggs, milk, brown rice, oats, chicken, ground beef, protein bars. That is pretty much all I ate all summer. Very simple very cheap. I also rarely eat out, and normally don’t purchase coffee while I’m out.

Gas money remained the same. Slightly under $200 a month, ~$45 a week. I never tracked mileage this summer, but I believe I drove over 5,000 and a decent portion of that was city driving. Not much I could have done about that, but I do plan to write off about half of my mileage for work.

Fun money! I mentioned last post about a party I was throwing and how this column was going to shoot up and it did. Landing at $260 a month or about $60 a week, which is inline with last summer. If you take out the party $115 a month in fun money. I plan to use a number around there as my benchmark for my budget for the school year. I’m sure this past week and all the drinking and partying we did we’ve already passed it but you can try your best.

For the gym I mentioned before that I had a large upfront cost and it would slowly work its way down and it has. It made it down to $65 a month. Not too bad considering the gym membership with tax came out to $35+ and going through tons of mass gainer all summer.

Girlfriend column came down as expected finishing at $200 and change. Not sure if this is an accurate number considering the plane tickets included and being further away from her this summer (aka not seeing her as often). I’m sure Christmas, birthdays and little surprises will keep this averaged somewhere around there.

Bullshit: Managed to bring this one down a bit, from $1150/month, to $1,000/month. Again had 2 rents being paid for a short period, utilities, speeding ticket and other essentials for my job. As of right now I still have not paid August electric nor have I received any money back from my deposit. I do go home Labor Day weekend so I may have a small check waiting for me when I get back.

finances3

I stopped tracking this spreadsheet on August 11th, the day after my last day on the job. I have since still worked a little in terms of answering phone calls, emails. Text messages and finishing up my last deal (got that one done today!). My cost of living came out to be $1993/month. I don’t pay for my insurance (thanks mom and dad) or anything like that so naturally its going to be lower than most other people. I don’t think that’s too terrible considering the average cost of living in the U.S is about $45k. I was at $2135 in the prior article. Now there is some skewed data, I try to finish the internship with little to no food left, usually no gas left, etc. it doesn’t account for the continuity of living and the average cost of living. However around $2,000/month wouldn’t be a bad guess.

finances4

My monthly conversion for what I was paid comes out to $3,700 a month. I do still have more money on the way and I should be able to finish out at a total of $17,000 made. A little bit of math later (13 weeks of work * 4 = 52 weeks, $17k * 4 = $68k year equivalent). My goal was to make over $60k salary equivalent and I should achieve my goal assuming all the deals go through and I get the bonus I was promised.

A little bit more math real quick to look at Grant Cardone’s 40% rule:

$68,000 * 0.78 = $53,040       (22% tax for single person 2018)

$53,040 * 0.6 = $31,824         (40% of your after-tax income goes to “saving to invest”)

Live on $31k a year, put $21k in the sacred accounts, 5 years till $100k the minimum Mr. Cardone advises to invest.

I’ve proven I can live at $24,000 a year or there abouts with my frugal living, and I have the willpower to stick to the goal. Now the average pay coming out of my school with my degree is around $65,000 but I am sure we can do a little bit better than that. Hopefully with a good job or a side hustle or two, perhaps passive income that I’ve been building we can accelerate the 40% rule and build real wealth!

If you’re curious I ran some more numbers with the 40% rule and the current tax brackets for a single person.

40 rule.JPG

As always let me know what you think and what you want to see more of!

The Last Splurge

If you follow Grant Cardone at all he preaches increasing income above all else. The 2nd step in the process is to reduce taxes. I have done a relatively good job of that thus far, my internship allowed me to dictate how much income I make because it was a 100% commission job. I have tracked all receipts and have started researching how to minimize my tax bill this upcoming spring as well. The third step in his cycle is to save specifically “save it all”. This requires you to live your daily life without increasing your cost of living while you increase your income.

We see people violating this rule every day, some guy gets a promotion at work makes an extra $10k a year and goes out and celebrates by purchasing a new BMW. That promotion and pay increase did not make any difference since he increased his cost of living. He probably would have been better off getting a $5k pay increase and not blowing the money on material things.

I never was into blowing my money, here and there I would “treat yo self” but nothing drastic. Last summer at the end of my internship which paid me quite well and was a decent increase from the previous year ($150 more a week) I bought my only watch and a piece of wall art. That was my form of treating myself which came out to be about $250.

This summer by the time it is over and with bonuses included as well as any lingering payments I should avg a pay increase of about $350 more a week (no living stipend though) than last summer. I should be able to reduce my tax bill because of my 1099 status this year substantially. (I received about $1300 back last year, but I also had taxes taken out every paycheck and I am not taxed under my current pay system yet.) So, check box 1 and 2 for Mr. Cardone. I should also note I didn’t upgrade my standard of living during this time. I currently live in the cheapest apartment my roommate and I could find that would be able to accommodate a 3-month lease. It is cockroach infested and is pretty hood for a $400 a person month rent ($450 for 3-month lease). I drive the same car, I wear the same clothes, I buy the same food, I buy the same beer, and spend the same amount at the bars.

Onto box #3 spending: Looking over my expenses which I track to the penny, we’re looking pretty good. I went over them in a blog post about halfway through the summer and you can check them out here. I spent some extracurricular on/with my girlfriend for the vacation and everything like that. I also spent some money at the bars and on booze and other non-constructive habits and vices, but that was minimal. Overall, I didn’t blow any of my money. That is until this upcoming weekend.

I plan to spend a bunch of money when I return to home and go shopping with the girlfriend Saturday. I WANT new clothes, new shoes, a new suit, and some other Knick knacks. I say want and not need because that’s just what they are. The clothes I wear are fine but perhaps a bit dated. Some of my shorts and shirts I often wear I purchased 3-4 years ago and some are not in the best condition. I’d still wear them though, so it isn’t necessary I purchase new ones. Essentially this shopping trip is to purchase my “adult clothes” things that I will need in the future after I graduate college. That is why I call it the last splurge. This theoretically should get me the next two years or so of my life in terms of clothing and what not and would be considered the “treat yo self” portion of my saving.

Some of these purchases have been a long time coming for example the suit I currently wear I’ve owned for about 5 years, and I received a gift card for the purchase of a new suit last Christmas. The watch I purchased previously was intended to go with this new suit I plan to purchase. With upcoming interviews for full time jobs and the networking, events and other occasions I plan to attend you could consider this an investment in my dated wardrobe.

So, what do you all think? A waste of time and money or a much-needed update to prepare myself for what comes in my future.

 

 

Personal Finance Overview 7/17/18

Have you ever taken a hard look at your personal finances? I mean a hard look, like track every transaction, every paycheck, every bill you pay? Two years ago, I started tracking my personal finances during my co-op and internships. It has really opened my eyes to what I spend money on every day and gives me a better idea of where I am at with my finances. Let’s look at how I’ve been doing this summer!

finances

Above is a snip of my master spreadsheet for this summer. It contains all my expenses, paychecks, investments, some of my goals etc. Let’s go over this briefly to get a sense of what is going on. In color coded column is a category, from left to right: food, gas, fun, gym, girlfriend, bullshit. Sorry you’ve got your own column Nikki, but you cost some money and I’m not going to put you down at the bullshit level.

Anyways let’s analyze each column starting with food. Obviously, this is critical as you need food to survive and it’s a very basic need, I have included any eating out (fast food, restaurants etc.) as well as coffee and energy drinks and things of that nature. I work from my car and my job is pretty demanding out in the heat and having considerable amounts of energy is vital to my success so while I could opt for cheaper energy substitutions (majority of my coffee is from Starbucks) it is a necessary evil for me to preform well. Considering all of that, I average just under $300 a month over a 2-month span for my food consumption and it will hopefully taper down to $250 when I near the end of the summer.

Next up is gas, again a very necessary portion of my job is I must drive a lot and I also travel back home and back to school on occasion (200+ mile trips one way). At just under $200 a month on gas, I do go back to STL this upcoming weekend but that should be my last trip home besides actually going home for the summer, hopefully we can reduce that expenditure a tad and I can drive more efficiently.

Fun money! This is the column I try to minimize the most, as you can see I have some of paid subscription services but in my defense, I pay for the Netflix for my whole family and my brother and I use Spotify and I pay for it all. But besides that, you see alcohol and tobacco costs taking up the bulk of this column, I will have a substantial increase here as I will be paying for copious amounts of alcohol this weekend. Its gonna be litty titty.  This column will make its way up to $200 a month without a doubt here shortly.

Gym: If you didn’t already know my health and fitness is very important to me as I am a rugby player and have been lifting all my teenage years. The gym membership was a large upfront cost and I should have enough supplements to get me through the rest of the summer, hopefully this column ends at about $60-75 a month in costs.

Girlfriend: Sorry not sorry but you cost me some money this summer babe. Mainly in plane tickets to vacation but also lots of food and nice little gifts. Again, I wasn’t going to put it in the bullshit column so it gets its own column. There probably won’t be any additions to this column for the remainder of the summer so hopefully ending around $200 a month on this one.

Bullshit: this one is a toughie. To preface, this isn’t all bullshit like obviously I need to pay rent and to live somewhere but that’s what I called the column even when I wasn’t paying rent, so I stuck with the title. As you can see we have a deposit and lots of rent, I am paying 2 rents right now, one for Rolla (college town) and one for here in KC this summer. That started in July and my KC august rent will be low and the Rolla rent will increase slightly so it’ll lighten the load overall, but July rent sucked up a lot of my money. We have electric and internet bills, they both had start up fees, so they have since flatlined and we’ll only need to pay another month of two of those. Some of my supplies for work cost me a decent chunk of change including ladders, shoes, clothes, but those can be tax write offs as well. I also got my first ever speeding ticket this year which cost me $220 to get it moved to a non-moving violation. Anyways this is the largest chunk of my costs but hopefully with august being a short month it will taper down, and I can get my deposit back and we can wash our hands of this.

As of today July 17, 2018, my monthly costs of living is $2,134.50, I’m not sure if that is a lot or a little compared to most of the people reading this. I don’t have kids, I live in a cockroach invested shit hole of an apartment, I am partially paying for two rents, I eat cheap, etc. My assumption would be yes this is very cheap cost of living. I would like to reduce it further though. As I’ve stated above for some of the columns they should not increase anymore and as father time keeps ticking my avg cost per month will reduce. I had the goal of $1500 a month this summer however that was way underestimated and simply won’t be possible, I would like to have a cost of living under $2,000 though I think that would be very reasonable considering the circumstances.

My monthly conversion for what I am paid comes out to $3,033 a month. To me this is extremely low and pisses me off, (salary equivalent = $36,400) because I made $50k salary + living stipend last summer, and I am working significantly harder than I did last summer. My numbers should bump up soon and I will get a bonus as well at the end of the summer which will help. My goal was to make an equivalent of $60,000 salary from this job and I am very very far behind that goal.

As always let me know what you think!

Do you keep track of your personal finances? Do you keep track like this?

Could you benefit from tracking like this?

How do your expenses compare with your income?

Thanks, B^2

 

 

Aspiration|Summit checking account

I just recently opened another savings/checking account through Aspiration. Aspiration has been in the news lately with its Glassdoor reviews and recent awards. I am using this new savings/checking account as my emergency fund. Aspiration is known for its high interest rates specifically, 0.25% APY for accounts below $2500, and 1.00% APY for accounts above $2500. My short-term goal is to reach the $2500 amount by the end of 2018. In the future I would like to use their IRA, and investment account options. Another perk of Aspiration is that they will allow you to use any ATM and they will pay the transaction fees. This proves extremely useful in the context of an emergency account. That along with the high interest rate gives Aspiration the dynamic duo I was searching for.

I will provide further review as I become more familiar with the platform and explore some of its other features and investment potential.

I encourage you to take a look at this great banking option.

Aspiration Referral Program

Every time a friend or loved one opens an account using your invitation link (linked below), you both will receive $25 Do Good dollars to donate to the charitable cause of your choice. So lets start the new year off right!

https://my.aspiration.com/app/token/referral/42IC50VR6ON2QX0B

Stretch Investing

I am currently using a method that I have called stretch investing in my current life and we will see how it turns out as I make it through this school year. In case you didn’t know.  I am a student and I have little to no income coming in from August to May every year. Fortunately I work as an intern/co-op in the engineering industry in the summer which is a very lucrative and rewarding experience. This past summer I was working at a large manufacturing company as an intern and decided I was going to try to maximize my returns and to stretch the money I made as much as I can. So here is what I did. I invested everything I made and I mean EVERYTHING.  I use excel spreadsheets to  track my income and expenses down to the dollar every summer when I work and as you can see I spared no expense to invest everything I made.

Date: Income: invested
6/2/2017 $1,438.95 RH $3,000.00
6/16/2017 $1,458.27 LC $1,500.00
6/30/2017 $1,453.97 Stash $1,450.00
7/14/2017 $1,533.03
7/28/2017 $1,472.80
8/11/2017 $1,400.00 .75 of paycheck
reimbursement $197.95
IN tax refund $22.00
ebay alternate  income sources
amazon $56.44
gas money $100.00
resell $3.00
total made: $9,136.41 total invested: $5,950.00
% invested of net 97.80%
% invested of tot 65.12%
net: $6,084.03 invested per month $1,878.95

How and why did I do it?

How: I use my credit card for all purchases, between the ease of keeping track of what I was spending and where I also received cash back rewards. On pay day (every 2 weeks on Friday) when the direct deposit hit my bank account I would pay off my credit card routinely. This kept my credit utilization low and prevented me from digging myself in a hole. The rest was invested as you can see nearly 98% of what I didn’t spend to live (food, gas, rent, etc). I didn’t really have any savings that summer, I didn’t intentionally stash away money in a savings account or anything, it all went to investment accounts (Robinhood for stock investing, Lending club for peer to peer lending, and Stash to invest in ETF’s)

Why: I believed that the returns of over investing and the hassle it created would outweigh the risks. I should also mention that a job as an intern is relatively secure, it would cost more to hire and fire me than it would to let me work the 12 weeks I was designated to. The pay was consistent, if anything big happened I had my parents I could rely on and a joint debit card between my dad and I. With all of that in mind that is why I assumed this risk.

What happened afterwards:

The plan was to use Lending Club payments to cover my weekly expenses and use returns in stash to cover larger expenses that came up. Again my parent’s cover my living costs at school and what not so I have relatively little financial obligations during the school year besides what I do myself (going out to eat, bar, etc). Unfortunately I do the latter quite often and the $100 a month I was receiving a  month from Lending Club just couldn’t keep up. That and added costs of things like winter break trips etc required me to pull money from stash more often than I liked to. Overall I think it worked out alright, if you can stick to a stricter budget and can forecast your expenses well then the returns you receive from your investments will benefit you. An example is while I was pulling money out of Lending Club from September to November 15th, my immediate average return increased 2.8% in 2.5 months. Which is clearly better than sitting in a savings account earning a measly .1% interest annually.

I plan to keep updating this method that I have created and give my results and feedback from it. I would also like to point out that this is not for everyone by any means. I took a calculated risk with a safety net of my parents should anything go seriously wrong with my investments.