I’ve ranted about this before. You are not wealthy, you are not rich, you haven’t made it if you are living pay cheque to pay cheque with no savings or investments. MONEY IN THE BANK is what makes you wealthy and only money invested can make you that sweet sweet passive income.
Passive income is what you need to have money independent of a job (so you can stick it to the “man”) and there are lots of ways to generate it. Here’s what I got up to over 2016
Last years (2016) income streams
Peer to Peer Lending $159 (Squirrel) +$75 (Harmoney)
Renting out a room $6500
Rental Properties tax refund $5200
Casual work/side hustle income $1067
So the part time work wasn’t passive, obviously I had to trade some of my life force (time and energy) for money. However I only side hustle things I enjoy and things I can learn from so its a win for me. This is work I would quite happily continue if I was retired from my main job. If you can find something you love, that adds value to your life and pays a bit of cash then this is the low barrier way to earn extra income. Other methods like investing require cash up front, side hustles just demand your time. The strain from working so much can take it’s toll so I recommend investing that extra money in income producing assets or paying down debt.
Annnnnnd on to the tax refund, technically that means we made a loss on the rental properties. Ouch. Some of it is a loss on paper only as we had a bit of depreciation this year. Some of it is real loss as the rent doesn’t quite cover the costs of holding (mortgage, repairs and maintenance). I’m still happy with the investments as the properties have increased substantially in value and we should be able to sell one this year and pay down the mortgages on the other properties to the point where we are able to generate actual income.
The renting out a room income comes from a friend of the family staying with us. A youth of 19 years trying to make their way in the big city (well the biggest in NZ anyway). So we have offered a low cost place to stay, all expenses (full board) for only $125 a week. I’m thinking over time we may have to increase that amount so its inline with what they would pay out in the “real” market so that we can encourage them to become self sufficient and manage a budget that reflects the real cost of living in Auckland. We’re just waiting for a little more success on their part with employment. It’s very tough out there for young people just starting out.
Alternative income for 2016 was way higher than 2015 thanks to having a full time boarder. I’m doing my best to invest all that extra income because they will definitely move out at some stage. I’m hoping to add more funds to the P2P lending this year as Squirrel is working out very well with no defaults and an excellent caliber of borrowers. So hopefully 2017 will see another increase in passive income, stay tuned!