Friday, October 21, 2016

Q3 Review! Dividends, Rental Cash Flow, Babies, and Basketball

Wow, time flies. This blog was created in the beginning of July and though it feels like yesterday, almost four months have already gone by. I guess a 3 month old and a 2 year old will do that to you!

This post will highlight my 3rd Quarter Review, covering my passive income earned during the months of July, August, and September, my savings rates. my goals progress, and other key highlights in my life.

I like quarterly reviews because they allow you to pause and perform a serious analysis on your progress.  How often we fail to do this in life, and so a built-in reminder (as a quarterly review) makes it much easier to stay consistent!


Passive Income Received
Passive Income this quarter was definitely dampened by several costly real estate repairs, but overall I am happy with this quarter's final number. My Q3 tends to be a smaller number comparatively to begin with, (in terms of the order, the largest quarter is always Q4 (more than double), then Q2, then Q3, and finally Q1...in calendar quarters that is: Jan-Mar, Apr-Jun, etc, not fiscal quarters), and so the real estate repairs these last few months made this number even lower, but that is all a part of the process I suppose.

Therefore, in total, from July through September, I earned $1,615 in completely passive income....income in which zero work was required, and yet $1600 still came into my accounts.  This is an amazing accomplishment in my opinion, one that I have worked very hard for and has taken many years of discipline to develop; and so I am very thankful for this blessing. And here is why:

One of my favorite things to do when looking at my passive income streams is to equate these monthly, and quarterly, and even annual totals, into more granular 'per day' totals...essentially, how much passive income did I receive on a linear 'per day' basis.  This is fun to know because it helps me better understand the actual impact of passive income in my life.  For example, for this quarter, my per day total was $17.55. That means, that without ever trying to grow my passive income or adding more funding etc., that I will receive at least $17.55 each day for the rest of my life (in general of course, assuming no div cuts or even more repairs than were already factored into this quarter's number from my rental properties).  But once you know the number, it is fun to see what that can "at least get you____", if in fact that is all you have.  For example, I know that $17.55 can at least get me SIXTEEN dollar-menu cheeseburgers from McDonald's, that it can at least get me a haircut, that it can at least get me close to a half a tank of gas, that it can at least get me a cheap shirt or a pair of shorts, etc.  One of those items, at least, each day.

You get the idea.  To me, it is a fun exercise to know that in essence my "floor of existence" without working or without any governmental support, is at least $17 a day.  Here are the details:


Clearly, September's rental cash flow made a pretty big dent.

Savings Rates
This was an okay quarter for our family's Savings Rates.  I am typically happy when we hit anything over 25% per month, and so we came in for this quarter slightly above that standard at an average of 26% saved per month.

One thing I will note, however, is that my savings rates, as calculated above, do not include my 'mortgage debt paydown' or (equity achieved) each month.  Some people include this number to their savings percentages since your mortgage actually can be perceived as a type of 'forced savings' that increases each month by the amount of principle paid, I suppose, but to keep this number as pure as possible I simply do "Total Income - Total Expenses" to generate the Savings numbers reported above and below.  Were I to include mortgage debt paydown across my three properties, I imagine our savings numbers would be closer to 45%.

It's also important to keep in mind that 'scale' is not represented when discussing savings rates.  For example, a person with an income of $1,000 per month saving 20% only saves $200, whereas a person with an income of $10,000 per month, who saves the exact same 20%, saves $2,000.  That may be very trivial or an obvious statement, but I would argue that the $1,000 per month person's savings rate is actually much harder to achieve and is therefore much more impressive than the $10,000 person's. On the other hand, I would also argue that the $10,000 per month person perhaps does not need to achieve as high of a savings rate, since his number is nominally much greater.  For example, as one's nominal number increases, the importance of their particular monthly savings percentage (perhaps) decreases.  For instance, I imagine Bill Gates could save 0.01% of his income and still be just fine each month, while saving A TON.   Most of us, cannot do that by any means, but the point about scale not being represented in savings rates still stands.  Here are the details for the quarter:



Goal's Progress
This was an exciting quarter for our goal's progress.  As many of you know, I recently took on a lot of debt to fund my third rental property purchase, to the tune of $34,000 plus some credit card debt.  As a result, each month whatever we have left over goes immediately to repaying that debt.  Well, I am happy to report the following:

My family debt is now down to only $10,000! That is a huge accomplishment for me and my wife, since we started this year at over $29,000 in debt.  Since the start of the year through September, through diligent saving we've been able to fully fund both of our Roth IRAs ($11,000 total; and two goals complete!), reach 52% of our passive income goal of $10k for the year, and pay down $19,000 in family debt.  It feels great, and as I have mentioned before, I CANNOT WAIT for our passive income system to step into the next gear once this debt is fully paid off and we turn our third property into a rental property.  Exciting times ahead I hope! These are the reasons why I believe next year's passive income total of $15,000 is challenging, but achievable.  Stay with me to see how it goes!

Key 'Life' Highlights
In this section I'd like to share some of the random things that happened in my life that I thought were in general significant. This section isn't intend to do much more than to provide you with some entertaining context of who I am and hopefully to show you that I'm just a regular guy trying to be a good husband and dad, while pursuing FI. 

The most important highlight was the birth of our second son, Jonathan, pictured below (3.5 months old currently).  He's a great little baby, with some crazy hair.




Another highlight was that I won (via the infamous Duke Campout lottery) Duke basketball season tickets.  Very excited to go to the Duke/UNC game this February.  Here is a stat from a few years back now (from the 2014 season), but still....this is a crazy rivalry between Duke and UNC:



Finally, I started this blog, PassiveIncomeDude and wrote 40 articles!  That's not too bad for three months!  It has been great getting to meet and follow some of you other dividend bloggers, and I appreciate your guys' support!




I think that's it!

Thanks for reading!

Passive Income Dude

10 comments:

  1. Wow, what a quarter. Babies, basketball, and daily income. Congrats on winning the season tickets. I like how you have broken down your dividends to a daily amount. I'm going to start doing the same. It's an interesting way of looking at dividends. Heck you can live in several countries on less than $20 a day. time to pack-up and move ;-).

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    1. Hey thanks IH. Yea, it was a good quarter for sure. Such a blessing from God with our second son, Jonathan. Really hoping to be a good dad to him.

      And the daily div income is great. It tends to be more of an accurate portrayal for how much income you're actually receiving, thanks to the smoothing it forces. For example, most of my div income comes in december, but were I to actually 'need' it for expenses, I'd be using it on a daily basis, which is why I like it. Thanks for commenting, and I'm loving your options moves.

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  2. congrats on a new baby, he is very cute! its' always nice to win something. what kind of rental properties you have? I am thinking to get another rental property but still in process. Best wishes.

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    1. Hey HHWG, thanks for stopping by. Jonathan is a joy to have as a part of our family!!

      As for rental properties, they are all single family currently. I have tabs at the top of my site highlighting them in detail, by each property, in which state they are in (Missouri, Colorado, North Carolina). I think 4-plexes are probably the best rental investment in most areas, but they take a decent amount of capital to get started and you usually have to live in one of the units at first, which we haven't been able to do. I think I will pursue a few more single family properties before moving to something else. Take care,

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  3. Great quarter, Dan. Congrats on the passive income. Keep piling on those and compounding that income for the future.

    Congrats on the birth of your second son...haha that is some crazy hair indeed. We just had a daughter (first child) 6 months ago and our life has changed so much. We cant imagine a life without her now :)

    Best wishes
    R2R

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    1. Thanks R2R! CONGRATULATIONS to you, on the birth of your daughter. It is amazing how much kids change things. I absolutely love being a dad, but life is definitely different!! Hoping I can have my own business some day that these two boys of mine work for. Take care

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  4. Nice passive income! You're making great progress. And congrats on your second son! He's a beautiful baby. Keep up the great work.

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    1. Thanks Christian Investor! Psalm 127:4-5 :)

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  5. Great update PID!
    My wife is trying to get me to have our 4th kid! I'm like Nonononononono :) I love kids and you got a beautiful one there.
    Also, as you know, I hate debt! Congrats on bringing yours down! Knocking off nearly 20g is no small feat.

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    1. Haha, my wife is the opposite. 4 would be great some day. That's funny. :)

      lol, and I do know you hate debt. I hate MOST kinds of debt as well. This last property purchase just took so much more of my own money (than OPMs) and so I'm looking forward to finally having that debt only left as 'mortgage' that I can outsource to a tenant. You crushed in September!

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