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Passive Income Results – August (2010)

John S. — Fri, 03 Sep 2010 11:34:19 +0000

What a hot summer it has been here in the southeastern portion of the United States! We registered our two highest electric bills since moving into our home over 2 years ago. The increase was a direct result of record high temperatures in our region along with several house guests who came to visit this summer. Hopefully the cooler weather that is on the horizon will help us get back on track with lowering our monthly expenses.

As the kids start back to school and football begins, it is time to report out my August passive income earnings. The past month was spent reinventing PFI by getting back to the basics of discussing the goals of how my wife and I plan to become financially independent. By paying down our debt, adopting a more frugal lifestyle, and creating multiple streams of income – we feel that we can eventually reach financial independence. As each month progresses we plan to continue to make progress towards our ultimate goal.

Here are my results for August.

Niche Sites

I have not spent a lot of time on either of these sites recently, but I also didn’t completely abandon them either. As I mentioned last month, Niche Site #1 has been turned into an article directory. I spent a total of about 30 minutes working on the site proofreading and approving posts that other writers submit. If the income grows overtime to even $25 per month, I think it will be worth keeping it going.

My second niche site is starting to earn enough income to cover the costs of running it each month. I have been building some external links back to the site which is somewhat encouraging as I am seeing my content start to climb in rankings on Google. I plan to just keep adding more and more links when I get time, but I won’t stress over it either.

Here are my monthly income results for the two niche sites I maintain -

Niche Site #1 – $ 2.61
Niche Site #2 – $ 9.37

eHow

My monthly eHow earnings dropped by (7%) in August compared to the prior month. This type of movement in earnings has been consistent since I stopped writing content there back in March of this year. Since I am not adding any new content to the site, my income has ranged between $150 and $180 per month in pure passive income.

Here are my eHow earnings results from the past two months.

August (2010)
- Earnings – $166.90
July (2010)
- Earnings – $179.60

GRAND TOTAL eHow EARNINGS (24 Months)

Earnings – $3,024.38
Articles Published – 270
Articles Moved – 7

Over the past couple of months I have removed a total of 7 articles on eHow that were not making any money. I revamped the content in these articles and published them elsewhere. I did not remove any new articles in August from eHow, but will continue to monitor my lower performing content as time goes by.

High Yield Interest

Last month I reported how I was working on building a CD ladder through our credit union that could start earning passive income. I am happy to say that all the CD accounts have been opened and I am now earning some significant income. It is important to note that my wife and I had this money invested in several CD’s that were just not earning very much interest. Since switching over to our credit union, we are now earning a much more competitive rate.

Here are the results of interest earned from our CD ladder as well as some from our high yield savings account.

High Yield Interest

August – $80.34

I hope to discuss more about building this CD ladder in future posts and highlight some goals that we have to grow this income stream.

Web 2.0 Tools

Web 2.0 tools have always been a part of my overall plan to build alternative income streams. While the income is not huge, they still provide some earnings each month. I hope to start adding some more content on Info Barrel this month to increase my overall earnings as well as drive traffic to my sites.

Here are my monthly results.

Web 2.0 Tools

HubPages (AdSense) – $6.37
Info Barrel (AdSense) – $3.87

Web 2.0 Tools TOTALS – $10.24

Passive Family Income

As I mentioned earlier, I have started to focus more on reinventing this site. I will continue to work to build this site by focusing on my experiences working towards financial independence. In the meantime, I will try and earn a little income along the way when I can.

Here are my results from the past two months on PFI.

Passive Family Income (AdSense)

August – $8.61
July – $10.93

Passive Income Totals

The majority of my documented results are forms of passive income. However, there are some activities such as writing for this site that are not passive at all. In some regards, these figures are more like my alternative income totals.

GRAND TOTAL August – $278.07

September Outlook

During September I am actually going to work on building my CD income (even though rates continue to remain low) as well as work to build up enough money to start a dividend paying stock portfolio. One such way to get this capital will be to start writing freelance articles. This activity is definitely not passive but will allow me to earn additional income doing something I really enjoy.

Have a wonderful September!

How are your passive income results for August?

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P2P Loan Status – September (2008)

John S. — Thu, 19 Aug 2010 11:55:17 +0000

I took out a Prosper Loan almost 6 months ago in an effort to increase my family’s monthly cash flow. The strategy in taking out this loan is to borrow money at a low interest rate in order to purchase higher yielding investments so they can be added to my portfolio of passive income streams. These passive income streams will allow my family to reach our long-term goal of financial freedom.

Today I would like to provide the monthly status on my Prosper loan that I took out earlier this year. For a history of activity, please check out the following post – P2P Loan Status. When I last posted the status of my investments using this $1,000 Prosper loan, I had accumulated the following assets -

Stock – I purchased 46 shares of HTE (Harvest Energy Trust).
Cash Generated – As a result of selling Covered Call Options against my HTE (Harvest Energy Trust) position, I have generated $40.20 in positive cash flow. It is important to note that selling a Covered Call Option contract requires 100 shares. I have combined my $1,000 Prosper loan with additional funds to meet the 100 share requirement.
Remaining Cash – I had $14.55 remaining in leftover cash after making the purchase of HTE (Harvest Energy Trust).
Dividend Shares – I have received 1.167 shares of HTE (Harvest Energy Trust) stock through dividend DRIP payments (June & July). The total number of shares owned as of July was 47.167.

Current Status
This morning, I received the monthly dividend payment for August which was reinvested back into the stock using DRIP -

August Dividend Payment – I received approximately .625 shares of HTE (Harvest Energy Trust) as a result of the August (2008) DRIP payment. This brings the total number of shares owned up to 47.792.

As of the close of the market yesterday (September 16, 2008), I estimate that value of the assets listed above at -

Shares – 47.792 @ $17.34 per shares = ~$828.71
Cash – $54.75
GRAND TOTAL – ~$883.46

With the drop in price of oil and natural gas, I saw a very large decrease in the asset value of my loan. The value of these assets dropped by (16.7%) compared with last month. The total payments required over the course of the 3 year loan are $1,095.07, so I am now ($211.61) behind. Obviously I have some catching up to do, but still have over 2.5 years on the life of the loan. Since I have 30 months left on the loan, I would need to make up about ~$7 per month over the next few years. Assuming that HTE does not cut their dividend, I should be able to accomplish this by using DRIP.

Originally posted 2008-09-17 10:38:18. Republished by Blog Post Promoter

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How to Get Topics for Blogging

John S. — Thu, 19 Aug 2010 11:55:16 +0000

I have been asked several times by other bloggers – How do I get topics for blogging when posting articles on PFI. For some reason, that is one of the easier things for me to come up with in regards to maintaining a blog. Sure, there are times when I have writers block or don’t have a good “feel” for a post – but those times are very few.

As most long time readers of this site know, Passive Family Income is a blog focused around personal finance with a heavy influence of passive income and family related topics thrown in. I decided to put together a list of ways I get topics for blogging that hopefully you can use and that I may look back and remind myself about when ideas become thin.

Here are different methods that I use to generate ideas for my posts -

Radio – I guess I am getting old, but I listen to National Public Radio when driving in my car to and from work. This is a great place to get topics for ideas on blog posts. Be sure to keep a notepad and something to write with in your car or office if you listen to the radio. That way you can quickly write down your idea so you don’t forget it later.
Newspaper – While the newspaper industry is struggling, I still find a lot of value in reading them. I subscribe to the weekend edition of our local paper and scan every section front to back as soon as I get it. While I may not read every article, anything that appears to be an interesting topic gets written down for later.
SEO – When researching a set of keywords for my niche site or other affiliate marketing campaign, I often come across ideas for new topics for blog posts. Keep that notepad handy so that you can jot down anything that you may come across that seems interesting.
Other Blogs – I am not saying to go and steal other ideas from your peers, but look at what they are writing about. See if you can take a particular topic and expand on it or focus on a certain area of the article for a post on your site. I don’t use this method as often as I should, but whenever I come across an interesting post from another site I make a note of it for a possible future topic.
Every Day Experiences – This is my favorite source to get topics for blogging and is where about 50% of my topics come from. Since PFI has a family focus and I have two young boys – I am able to generate probably five decent topic ideas each week just around things they do. Even if it is a small event, I try and be creative and use that event to spawn a post. Another good practice is to become observant when you are out shopping or at a restaurant. See what people are doing and how they are acting. You would be amazed at the ideas you can generate just by people watching.
Status Posts – I also try to sprinkle in updates or status posts to fill up days of the week. I write a weekly updates post to link back to blog carnivals I have participated in over the past week. I also include other status posts to report passive income results and personal finance goals.

Once I have generated my list of ideas for a blog post, I always try and add my own experience to the topic so that I can put that personal touch on the post. I believe that this is a very important step so that I can be honest and truthful with my readers. It is also important not to copy or steal great work from other sources like newspapers and blogs. Instead, be creative and make the topic your own. Not every idea you write down on that notepad will be used or make for a good post. However, the collection of those topics can provide endless amounts of material to write on that will get you through those difficult writers block times and make your blog a success!

What methods or ideas do you use to get topics for blogging?

Originally posted 2009-04-29 07:14:10. Republished by Blog Post Promoter

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Peer Lending – Review of 2008 Prosper Rate of Return

John S. — Thu, 05 Aug 2010 11:30:24 +0000

Early in 2008, I set out to create a new passive income stream using peer lending as a tool to generate some extra income. I used Prosper to setup my account after reviewing their site as well as their competitors. My goal for 2008 was to fund around 50 new loans at $50 each using peer lending. Any passive income earned was to be recycled back into funding a new loan. My long-term goal was to setup my Prosper account to be self-sufficient by earning enough interest every month ($100) to fund 2 new loans. Unfortunately, the economy started to slide and my goals changed.

In order to limit my risks, I opted to bid only on loans where the borrower was working to consolidate credit card debt. My belief was that individuals with multiple credit cards could take out a Prosper loan at a lower interest rate in order to consolidate much higher credit card rates. The other types of loans I funded were for borrowers with AA or A credit that had a loan amount of $1,000 (minimum loan limit for Prosper).

I have detailed the results of my 2008 Prosper investment below -

Capital Invested
I had planned on investing around $2,250 throughout the course of 2008 into my Prosper account. This would have been enough capital to fund 45 loans at $50 each. I stopped just short of this investment goal in order to free up some extra cash during this recession. In addition, Prosper stopped the creation and funding of any new loans late in the year – so I stopped investing any new capital at that point.

Investment – Over the course of 2008, I invested $2,213.09 into my Prosper lending account. I actually stop putting any new money into my account starting in November because of Prospser’s suspension of any new loans due to the process to register promissory notes with appropriate security authorities.

Income Earned
The following items detail the breakdown of income earned and fees paid during 2008 for my Propser loans.

Interest & Collected Late Fees – I earned $235.81 in interest from over 50 funded loans during 2008. I also collected $1.39 in late fees from a few of my loans.
Paid Fees – I incurred $13.34 in service fees paid to Prosper as well as $1.53 in collection fees for going after late loans.
Income less Expenses – I earned a total of $222.33.

Return on Investment
Factoring in the capital used to fund over 50 loans during 2008 with interest earned less fees paid – I saw a nice return on my investment (see below).

Rate of Return – 10.04%

Adjusted Return on Investment
A rate of return over 10% would have been an excellent return for the capital that I had invested with Prosper for the prior year. That rate would have been very hard to meet in any other form of investment – especially with the drastic drop in the stock market. Unfortunately, that rate of return was too good to be true and the struggling economy had an impact on a few of the loans I funded. I had 5 loans that went into a charge-off status which basically means they are over 4 months late. Several of these borrowers have declared bankruptcy and the chances of recouping any of the principal on these loans is slim. I lost $148.43 as a result of charge-off loans which brings my Prosper income from 2008 down to $73.90. I have included my adjusted rate of return factoring in these write downs below -

Adjusted Rate of Return – 3.34%

Analysis
An adjusted rate of return of 3.34% is not the end of the world. Considering, my 401k was down well over 30% for 2008 – I will take any positive return I can get. While I am disappointed in the charge-off loans that were in my loan portfolio, I still earned money during the year. Is this investment worth it? I don’t know at this point as I could have probably earned a higher return from investing this same money into a certificate of deposit. Once Prosper opens up new lending again, I will continue to bid on new loans. I have enough cash in my account to fund 8 new $50 loans, so I will start with that money and not invest any new capital until I feel more comfortable with the economy.

I have actually learned a lot in the year that I have been funding Prosper loans. As always, I believe it is important to learn from mistakes and this is no exception. I will be altering my search criteria for loans that I bid on in the future to try and limit my risks. I have also recognized that a rate of return over 10% is probably not very feasible. If I can change my lending practices and shoot for a return between 5% – 10%, I can bid on more secure loans and lower my overall risk.

Do you participate in peer lending? Did you notice an impacts from the credit crunch on any of your loans?

Originally posted 2009-02-27 11:00:27. Republished by Blog Post Promoter

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How to Make Over $400 per Hour in Passive Income

John S. — Wed, 04 Aug 2010 11:44:22 +0000

Do you own a home that you are paying a mortgage on? What about other forms of debt that you may have? Wouldn’t you like to pay off your debts sooner so that you could use that money on other things? Think of all the extra cash you would have coming in each month just by eliminating your mortgage payments!

What if I said that you could make $400 per hour or more by building passive income streams? Sounds to good to be true – I know. However, if you break down the numbers (as I have below), you can see the power of passive income and the importance of paying down your debt early.

We are going to look at an example of how we can devote some time and hard work upfront creating a passive income stream that will pay us over and over in the future. Each month after we have received our passive income earnings, we will use that money to make additional payments on a mortgage which will show the importance of paying down debt and how much money it can actually save us!

Hypothetical Mortgage

The following is a hypothetical mortgage payment that we will use as an example. All of the numbers are fictitious and are simply being used to show the importance of passive income and paying down debt.

Total Mortgage Amount – $250,000
Interest Rate – 6.5%
Length of Loan (Years) – 30
Monthly Payment (Principal & Interest) – $1,580.17
Total Amount to be Paid on the Loan – $568,861.20

Passive Income Stream

For the purposes of this article, we will be using eHow as our passive income stream because of the low barriers to entry with this tool. If you are just starting out or don’t know anything about eHow – all you need is a computer, internet access, and a creative mind. If you don’t like eHow, then feel free to plug in any passive income stream of your choice.

“How To” Articles to Write – 100
Total Estimated Hours to Complete – ~75 hours
Estimated Months to Complete – 2 months
Estimated Earnings per Month – $50

Are you looking for some ideas on how to maximize your eHow earnings? There are people just like you earning over a $1,000 each month on a recurring basis from eHow. Here is a great resource that can help – How to Earn Passive Income on eHow.com: Maximize Your Online Earnings. I purchased this resource several months ago and have made my money back within the first month using the guidelines laid out.

I have estimated that it would take an average person approximately 45 minutes to write 1 eHow article. For more advanced eHow contributors, it may take as little as 15 minutes to write one article compared to 60 minutes for someone who is new to the tool.

Based on spending 45 minutes per article, I am estimating it will take approximately 75 hours (4,500 minutes) to write 100 eHow articles. In addition, I am estimating that publishing 100 quality eHow articles should allow you to make at least $50 per month (.50 cents per article per month). This number is definitely on the low side and some authors earn several dollars per month per article.

I am also estimating that it would take an average person between 2 – 4 months to publish these articles if they remain dedicated. That would translate into about 5 – 10 hours spent per week over the course of a couple months.

Pay $50 Extra per Month on Your Mortgage

Since we now have spent around 75 hours building our passive income stream, we can sit back and start watching the money flow in. The only thing we need to do at this point is to funnel our earnings from eHow into our monthly mortgage payments.

Updated Monthly Payment (Principal & Interest) – $1,630.17
Length of Loan – 27 years & 5 months
Total Amount to be Paid on the Loan – $535,950.18
Total Savings – $32,911.02

Assuming we can maintain at least $50 each month in passive income earnings that can be including in our monthly mortgage payment, we would save $32,911.02 over the lifetime of the loan. If we calculated out how much we made back by dedicating that 75 hours upfront, we would have made $438.81 per hour for our time spent.

Assumptions

We obviously made some assumptions in figuring out our calculations and savings noted above. Here are some of those assumptions we made.

We can maintain a $50 per month passive income stream until the mortgage is paid off. This is probably unlikely using eHow – but you never know.
The $50 additional payment is made on your mortgage starting in the first month.
Your passive income earnings don’t exceed $50 per month. This is also somewhat unlikely as your earnings from eHow should increase month to month.

Final Thoughts

The example of earning over $400 per hour above is based on a ficticious mortgage and passive income stream. However, based on personal experience, these numbers can be achieved with some upfront hard work and dedication. As stated earlier, the mortgage can be replaced with any type of debt (i.e. car payment, credit card debt, etc.) and the passive income stream could be anything you have found success with. There are obviously some passive or alternative income streams that can earn you thousands of dollars each month. The key is what will you do to maximize your earnings from this income?

Do you use your passive or alternative income to pay down any debt? What has your experience been doing this?

Originally posted 2009-06-16 08:46:02. Republished by Blog Post Promoter

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