Income can be earned in two forms: active and passive. Active income is money you earn during your job; you have to actually be working to receive the money. Passive income, on the other hand, is earned by the money you have invested (cash, stocks, etc.). Even if you are not working, this money is still working hard for you, and earning money for you even while you sleep! Or while you are playing video games. Or watching TV. You get the idea.
It’s been just over 13 months since I last had a job, so I haven’t earned any active income from a day job during that time. As a result, my main source of income I have these days is earned passively. I thought it would be interesting to document this going forward, as it may help me set up some financial goals for this year, as well as determine whether or not my current asset allocation is ideal. Who knows, I might even get a real job or something crazy like that. 🙂
So my income for December is as follows (rounded to the nearest $10):
Active income from financial consulting: $100 (Cheap labour people! Get it while you can!)
Interest income from my savings: $80
Interest income from my investments: $760
Dividend income from my investments: $500
Total income: $1,440
Some notes on the above:
– This is not a normal month as a lot of my investments have either annual or quarterly payouts, and December is definitely one of the higher (if not the highest month). An annual summary would be more useful as my monthly income will fluctuate greatly, but it is still interesting. (For me anyways! :))
-My investment income is automatically set to reinvest in more shares. If the money is not sufficient to buy additional shares, then it will increase my cash balance.
To actually be financially free, my passive income should be enough to cover my monthly expenses. I still have a ways to go to get there, and this will always be my long term financial goal. Now.. how to do that without having a 9-5… 🙂
What do you think? Do you think of the money you earn as being active or passive? Is this something you would want to start tracking?
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Vix's Money 
Jan 25, 2012 @ 18:21:25
Holy hamburgers miss V, that’s like $16K p.a. of passive income. I hope to reach that level one day as well. Thanks for the motivation. Do you plan to diversify your income streams in the future, for example, adding in a rental income?
Jan 25, 2012 @ 18:50:49
Hahaha, like I mentioned, December is definitely the best month for me, and not the average. I would love to be able to reach that on a monthly basis. I would like to diversify my income streams, and rental income is something I have thought about. Definitely in the future though; I am a real estate bear for my current market. Thanks again for dropping by!
Jan 25, 2012 @ 22:39:01
I would be more curious to see what your January passive income looks like 🙂 But $1,440 is pretty awesome, congrats!
I’ve actually started tracking investment changes versus employment income. I should add a column for expenses there as well because I doubt my passive income will ever reach the level of my employment income!
What do you do with all your free time while not at a 9-5 job? How do you acquire clients for financial consulting?
Jan 26, 2012 @ 18:03:09
You do make a great income! I think your passive income could eventually meet your level of employment income if you continue with your aggressive saving skills. A expense column would be great as well, as I can imagine your passive income will match your expenses pretty quickly!
I spend a lot of time reading and researching information for both myself and my clients. Lots of time is spent with both my immediate and my extended family and helping out with transportation and translation for them. I am currently finding most of my clients right now through referrals from previous clients, and a couple have resulted from starting the blog.
Thanks again for dropping by!
Jan 26, 2012 @ 07:53:34
That’s pretty awesome 🙂
How much is your dividend portfolio worth?
$500 of dividend income is amazing.
Jan 28, 2012 @ 03:19:03
Only because my VTI holding had its annual dividend payout. 🙂 My portfolio is worth about 80K depending on the day.
Jan 29, 2012 @ 23:05:53
Thanks for the mention Leigh!
Jan 28, 2012 @ 22:57:07
$500 in dividend income per month is awesome.
Great work. Keep it up!
Let’s have a friendly competition, who can generate more dividend income in 2012. I’ve got some catching up to do I think.
What are your thoughts about MFC? Trading below $12.
Jan 29, 2012 @ 23:05:39
You’re on! Although once we do the January update, I’m sure I’ll be the one catching up! 🙂
In regards to MFC, the whole sector has dropped quite a bit in the past few months. I haven’t added to my position in SLF, and have kept that position since 2009. I haven’t looked into MFC too much; I have talked to people who are working for direct competitors and there is talk in the industry about the company’s stability. Could just be talk, or could be something more. Are you thinking of purchasing?