AirBnB November Performance

AirBnB - November 2018

In our third month operating an AirBnB home we were cash-flow positive.  Nightly rates are moving higher (still have a ways to go I think).  I did have 3 available days that were not rented.  This is bound to happen, but in December I am playing around with rates on these orphan days to try to get a booking.  See, what happens is I will get a multi-day booking that might end on a Saturday, and then have another multi-day booking that begins on a Tuesday.  Getting that Sunday and Monday booking has been a bit of a challenge.  So far in December, I have managed to fill 4 "orphan" days by lowering rates just for those days.

I have a list of large projects (new water heater, new HVAC, new siding, etc.) that will need to be done over time to maintain this old house.  It's nice being able to defer these expenses so that I generate some cash flow.  The plan for now is to hold off on big projects during the busy season (January-June) and use the slower summer months to make improvements.

Financial Performance

It's just my third month, and I am cash-flow positive!

Occupancy Rate:  76.7% (4 days blocked by me, 3 days vacant, 23 days booked)

Payments Received:  $1,670

Expenses:  $1,543

Net Income:  $127

Monthly expenses will be much lower in the future.  In November, I spent $453 on bills.  This includes electricity, water, Sling TV, trash and lawn service.  I also spent $250 on cleaning service.  The roughly $800 remaining was spent on supplies like extra linens, and this is the part that will ease up a good bit.

My Frugal Miser - How I'm Preparing for 2019

I'm super optimistic that 2019 is going to be the best year ever.  There are a few things I'm doing to make it happen.

Health Insurance

I'm switching from Florida Blue to Liberty HealthShare.  I'll be paying $379/month ($299/month for the Liberty Complete plan and $80/month for HealthTrac, which is basically a "fat" premium until I lose some weight).  This is an alternative to health insurance that costs less but provides better coverage.

Managing Finances

As mentioned a few times this year, I'm switching from managing my money in Quicken to using spreadsheets.  This has been a major undertaking, and I'm sure there will be some hiccups.  To minimize problems, I'll be keeping a little extra money in my checking accounts as a buffer.  It sounds like a small thing, but what I am looking forward to most is ditching the Quicken-only PC I have to be able to manage my money all from one device, and be able to review my finances remotely.

Since 2018 was a very expensive year, my plan for 2019 is to be in accumulation mode.  I've had to dip into savings a few times to manage our rental property portfolio.  It started back in January with two turnovers, one which required major repairs.  Then we converted our old house to an AirBnB.  Between outfitting that property and furnishing our new home, we've spent a lot.  In 2019 I plan to make monthly deposits back into my savings

Becoming More Focused

I've seen first-hand the benefits of not getting lost in the weeds.  Can you believe for four years we didn't pay for garbage pickup?  Just to save $20/month, I had to deal with the inconvenience of disposing of our trash.  For $20!   I used to buy Groupons for restaurants that were 20-30 minutes away.  To save $10.  That's not saving!

As cash flow returns (in 2018 I spent a ton of money rehabbing rental properties and moving to a new home), I will be more nimble and better able to choose the best use of my time.  This means turning down work that doesn't pay well - think small meeting jobs, mystery shops, and Uber driving (though I've practically stopped that already).

Frugality is a wonderful virtue - as long as it is exercised intelligently.  In 2019, I will continue to find ways to make our lives better, and to find time.  I can make more money, but I can't replace wasted time.

Taking Control of My Health

My new health plan costs an extra $80 because I am overweight.  My feet hurt all the time.  My clothes don't fit.  All these warning signs - what am I waiting for?  I say this every year, but I really want to make 2019 the year that I become healthier.

My Frugal Miser - November Expenses: $7,628

It's hard to tell, but our expenses are stating to settle down to what will be a normal level.  I still need a few things for the new house, but it is pretty much furnished now.

Looking at my spending categories, some notes:

• I paid 6 months of auto insurance ($533).  With gas prices down to nearly $2 it is making a noticeable difference in my spending.  
• Food spending was a bit lower.  I think $500/month for the two of us is a reasonable amount but would like it to be lower.
• I continued furnishing our new home.  Last month we bought a dining room table, 2 TV's, and security cameras.
• I booked a December trip to Chicago to visit a friend.  We also spent a week in Las Vegas.

November Expenses:  $7,628

$724 Auto (service, gas, insurance, AAA, etc.)

$0 Bank Fees
$20 Charity
$93 Clothing

$127 Computer

$1,695 Entertainment (movies, gambling, alcohol, concert tickets) 

$513 Food

$355 Gifts Given

$3,027 Household/Mortgage Payment/Home Repair

$171 Health and Dental Insurance

$0 Investment Expense
$11 Interest Expense*

$0 Medical/Dental

$0 Miscellaneous

$15 Personal Care

$0 Subscriptions

$0 Taxes (Quarterly Tax Payment)
$25 Sharing Economy Expenses (tolls, car washes, etc.)
$231 Unreimbursed Employee Expenses

$297 Utilities

$312 Vacation

*Interest expense includes student loans.  As the rate is below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off this loan.  

My Frugal Miser - November Income: $12,020

November was another solid month for income.

• I worked two meetings and was paid for a third I did at the end of October.
• We spent a week in Las Vegas; otherwise Amazon delivery income would be higher.
• Every property was rented and paid.
• AirBnB income was solid - better than if I was renting the house long-term.  I had a handful of vacant days, and am still tweaking rates.  Converting to an AirBnB was the best financial decision we made this year.  
• My investment account declined slightly.  In November it declined almost 1% (versus the S&P's gain of almost 1%).

November Income: $12,020

$423 Mystery Shopping
$1,547 Meeting Jobs
$685 Reimbursed Job Expenses
$0 Gig Apps (Uber, Lyft, Postmates, Doordash)
$1,234 Amazon Deliveries
$6,472 Rental Income
$1,670 AirBnB Income
$23 Interest Income

$165 Other Sources

Investment Accounts Change in Value:  ($2,614)

Notes:  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

AirBnB October Performance

AirBnB - October 2018

We converted our home to an AirBnB in September.  I've had no problems at all getting bookings, but rates need to be higher.  When I went live I offered super low rates and a 20% discount to the first three bookings.  One of those bookings was for 28 days in October.  The guest paid a super low rate (less than what I would have earned if it was a long-term rental).  This of course impacted my income.

My business plan for now continues to be to maximize bookings, even if that means the nightly rate is lower than it needs to be.  In October I was going to have one night vacant, so I adjusted the rate by 5% to get it booked.  I want to generate more guest reviews, get a good system in place for turning the property over, and stay high on AirBnB's search results.  The strategy I'm going with now is to offer a competitive rate (but higher than when I started in September) and then make adjustments on vacant days if it looks like no one is going to book for that day.

Expenses should start to go down.  In October, I had to remove a very large oak tree that was hit by lightning.  I also stocked up on extra linens and other supplies.

Financial Performance

My 28 day booking took up most of the month, which lowered my income considerably due to it being heavily discounted.

Occupancy Rate:  100% (31 of 31 days booked)

Payments Received:  $1,489

Expenses:  $2,731

Net Loss:  $1,242

My Frugal Miser - October Expenses: $4,525

It's hard to tell, but our expenses are stating to settle down to what will be a normal level.  I still need a few things for the new house, but it is pretty much furnished now. 

Looking at my spending categories, some notes:

• I use a lot of gas making deliveries for Amazon.  
• Food spending was too high.  Need to work on that.
• We took a quick vacation to the Los Angeles area.
• I bought expensive tickets to see Cher in Louisville, KY.  I also bought airfare for the two of us.  Why Louisville?  I looked at several cities that were easy to travel to from Tampa, and Louisville had the best seats available.
• Utilities won't be this high usually.  I had to make a large deposit to get the power turned on at the new house.

October Expenses:  $4,525

$430 Auto (service, gas, insurance, AAA, etc.)

$2 Bank Fees
$0 Clothing

$0 Computer

$646 Entertainment (movies, gambling, alcohol, concert tickets) 

$732 Food

$0 Gifts Given

$756 Household/Mortgage Payment/Home Repair
$0 Homeowner's Insurance (annual payment)

$121 Health and Dental Insurance

$0 Investment Expense
$11 Interest Expense*

$0 Medical/Dental

$0 Miscellaneous

$0 Personal Care

$16 Subscriptions

$1,819 Taxes (Quarterly Tax Payment)
$25 Sharing Economy Expenses (tolls, car washes, etc.)
$55 Unreimbursed Employee Expenses

$596 Utilities

$1,135 Vacation

*Interest expense includes student loans.  As the rate is below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off this loan.  

My Frugal Miser - October Income: $11,920

October marked another outstanding month.  Including both income and investment account gains, I made over $25,000.  Here are some highlights:

• Sears filed for bankruptcy, resulting in a pop in the value of the Put Options I have.
• Every property was rented and rent payments were received on them all.  
• The first full month of AirBnB income was good.  I'm still figuring out optimal nightly pricing, and expect to earn even more as time goes on.
• Meeting work and Amazon deliveries represented solid earned income.

October Income: $11,920

$33 Mystery Shopping
$1,178 Meeting Jobs
$31 Reimbursed Job Expenses
$37 Uber
$0 Lyft
$0 Postmates
$18 Doordash
$2,128 Amazon Deliveries
$6,856 Rental Income
$1,489 AirBnB Income
$19 Interest Income

$132 Other Sources

Investment Accounts Change in Value:  $13,875

Notes:  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

AirBnB September Performance

Our goal is to generate enough passive recurring income to be truly financially independent.  We are getting super close to reaching this goal:  the first milestone I'd like to hit is to consistently receive $10,000 per month in passive recurring income.

Passive Recurring Income (PRR):  Money I receive with minimal effort.  Meeting jobs, Amazon deliveries, etc. are NOT passive.  Stock dividends, long-term rental income, and our new AirBnB property represent the bulk of our PRR right now.

AirBnB is Live!

Last month we moved to our new house and went live with the AirBnB.  I expect this short-term rental to be an important contributor to our financial independence.

I want to nurture this business to give it the best chance of being hugely successful.  I went promo-heavy, offering a 20% discount for the first 3 bookings, and I kept the nightly rates super low to attract reservations.  I did this to generate traffic, which helps in several ways:  

• First, most guests want to see reviews before they reserve a vacation rental.  I needed to lure in my first guests to generate reviews.   In September the home received 4 reviews, and they were all 5 star ratings!
• Second, AirBnB uses an algorithm to decide which listings are prominently displayed in search results.  My home is in Largo, FL, adjacent to Clearwater, which I suspect is the city most people use when searching for a home in this area.  Keeping it prominent means my Largo home shows up on the map when a guest is looking at Clearwater homes.  
• Another benefit (not sure if this is helpful or not) is that, since I generated so many reservations early on, my home is already considered a "Rare Find" on AirBnB.

My business plan for now is to maximize bookings, even if that means the nightly rate is lower than it needs to be.  I want to generate more guest reviews, get a good system in place for turning the property over, and stay high on AirBnB's search results.  Secondarily, I'm going to keep testing rate increases to determine the true market value of my home.  Some of the first bookings were incredible bargains:  $38/night for a 3 bedroom, 2 bath house.  But I have already begun increasing rates.  The latest bookings have been averaging close to $70/night.

Financial Performance

September 11th was our "go live" date.  From the 11th through the 30th, I blocked 4 days from being available (we were out of town).  Every other day was occupied.

Occupancy Rate:  100% (18 of 18 days booked)

Payments Received:  $736

Expenses:  $3,072

Net Loss:  $2,336

Like I said, early reservations were at bargain-basement rates.  Also, the house was only available for 18 nights.  The monthly income from this home will be much higher moving forward.  Expenses were very high because I've never been an AirBnB before.  We bought multiple sheet sets, pillows, and supplies to stock the home.  Expenses will decrease over time.  In fact, in October I expect to receive more income than I spend.  Profit in the second month?  I'll take that!

I plan to do a monthly post about this exciting new income stream.  If there is something I have left out that you would like to see, please let me know in the comments.

My Frugal Miser - September Expenses: $8,956

September?  Expensive as usual!  One new ongoing expense will be the mortgage on our new home.  It is important to note that the AirBnB income from our old home should more than offset the new mortgage expense.  I also made a quarterly tax payment, and bought some furniture for the new house.

Most of the other categories were reasonable.  I spent over $600 on gas, but half of that was for a gift card I will begin redeeming this month.  We spent a good deal on groceries and restaurants. I'd like to think this is because we were moving.  Between stocking up at the new house and eating out when our groceries ran out at the old house, a lot of cash went to food in September.  On the fun side of the equation, I am planning a 6 day vacation in Las Vegas for November.  All of the vacation spending in September was in anticipation of this trip.

September Expenses:  $8,956

$1,034 Auto ($374 for service, $136 for AAA, $82 credit for canceling cycle policy, $606 for gas)

$0 Bank Fees
$0 Clothing

$39 Computer

$350 Entertainment (movies, gambling, alcohol, concert tickets) 

$811 Food

$0 Gifts Given

$1,242 Mortgage
$2,587 Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)

$28 Health and Dental Insurance

$0 Investment Expense
$11 Interest Expense*

$0 Medical/Dental

$0 Miscellaneous

$0 Personal Care

$0 Subscriptions

$1,819 Taxes (Quarterly Tax Payment)
$25 Sharing Economy Expenses (tolls, car washes, etc.)
$219 Unreimbursed Employee Expenses

$346 Utilities

$445 Vacation

*Interest expense includes student loans.  As the rate is below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off this loan.  

My Frugal Miser - September Income: $11,795

September was a great month.  Every property was rented and rent payments were received on them all.  We moved to a new house and converted our old residence to an AirBnB, which will be a reliable stream of new, nearly-passive recurring income.  I also had decent income from making deliveries for Amazon.  We worked a meeting the last week of the month that we haven't been paid for.  Otherwise, income would have been even better.  August was okay.  I did just a little meeting work; most of my active work was making deliveries for Amazon.

September Income: $11,795

$67 Mystery Shopping
$69 Meeting Jobs
($90) Reimbursed Job Expenses
$0 Uber
$0 Lyft
$0 Postmates
$1,892 Amazon Deliveries
$9,000 Rental Income
$736 AirBnB Income
$19 Interest Income

$102 Other Sources

Investment Accounts Change in Value:  $2,617

Notes:  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

We've Moved! So many changes...

So much has been going on - so many positive things!

We Moved

At the end of August I finally closed on the new house. We relocated to a fast-growing area on the other side of town.  There were several reasons we moved.

• The new house is closer to 3 of the 4 warehouses where I pick up Amazon deliveries.  My favorite warehouse is now 20 mintues away; it used to take up to an hour or more from the old house.  We are also closer to Orlando, where we do a lot of meeting work.
• This has traditionally been the way I add to my real estate investments.  Since 2006, I have moved 5 times, and each time we've converted our residence to a rental.  
• Moving motivates me.  We made several improvements/repairs to the old house that have been sitting on my to-do list; that sense of accomplishment is wonderful.  

Opened our first AirBnB

I went live with listing our old house on AirBnB.  The first available day for check-in was a week ago and we already have several reservations.  This is the first time I have rented a home in the short term rental market, but I wanted to give it a try since the house was only a few miles from the beach in an area where tourism is the main industry.  This was an easy decision; if it doesn't work out, we only have to pack up the furniture and hire a management company to oversee it as a long term rental.

Looking at Keeping Things Simple

My life energy comes from streamlining.  I'm always working towards a more simple life.  Here are a few things we are doing to simplify:

• For the AirBnB I am creating a workflow checklist.  Each time we turnover a guest, in addition to cleaning I have a list of small projects to continuously improve the rental.  We are using this checklist to ensure we work quickly and efficiently.  I am identifying the time killers (doing laundry) and am shortening the time they take (having a second set of everything and taking home some of the laundry).  
• I've had a moped for several years.  Haven't used it in a year.  It only goes 35 miles per hour, which isn't very useful at our new suburban home.  Today I canceled the insurance policy on it.  It needs some repairs so I have to decide whether I sell it as-is or make the repairs first.
• I've been tinkering with the spreadsheet I will use in 2019 to replace Quicken.  It's close to ready.  Once I stop using Quicken, I can get rid of one of my computers.  I can also update my finances remotely versus having to be at home with this dedicated computer now.
• I'm also playing with the idea of selling some of the Birmingham rental properties.  If this AirBnB is successful, it makes more sense to add additional properties here in Florida while removing some of the hassle of being an absentee landlord.

My Frugal Miser - August Expenses: $5,978

August follows the recent tradition of gluttony.  I had some closing costs on our new house, pre-paid for some future travel, and purchased new tires for my car.  We had too many restaurant meals, too. 

August Expenses:  $5,978

$1,310 Auto ($1,014, $306 for gas)

$95 Bank Fees
$76 Clothing

$20 Computer

$225 Entertainment (movies, gambling, alcohol, concert tickets) 

$655 Food

$56 Gifts Given

$1,176 Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)

$28 Health and Dental Insurance

$0 Investment Expense
$54 Interest Expense*

$0 Medical/Dental

$15 Miscellaneous

$0 Personal Care

$0 Subscriptions

$0 Taxes
$25 Sharing Economy Expenses (tolls, car washes, etc.)
$177 Unreimbursed Employee Expenses

$248 Utilities

$1,762 Vacation

*Interest expense includes student loans.  As the rate is below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off this loan.  

My Frugal Miser - August Income: $8,612

August was okay.  I did just a little meeting work; most of my active work was making deliveries for Amazon.  Rental income was decent - one of the management companies paid the August rent in September so it didn't make it into this report. 

August Income: $8,612

$88 Mystery Shopping
$327 Meeting Jobs
$0 Reimbursed Job Expenses
$26 Uber
$0 Lyft
$0 Postmates
$2,584 Amazon Deliveries
$5,285 Rental Income
$21 Interest Income

$282 Other Sources

Investment Accounts Change in Value:  $3,258

Notes:  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

My Frugal Miser - July Expenses: $5,362

July was really expensive.  A few expenses were prepaid items:  $500 towards health insurance premiums, $99 for annual moped insurance, and a quarterly tax payment of $1,819.  I booked a 6 day all-inclusive vacation in Playa del Carmen.  For $1,564 I purchased two round-trip flights, transportation to the resort, and six nights at an all-inclusive resort.  Last, we spent way too much on food.  We've developed a bad habit of eating out.  I think after we move we will be eating at home more often.

July Expenses:  $5,362

$64 Auto ($96 credit for changing insurance coverage, $99 for moped insurance, $61 for gas)

$49 Bank Fees
$20 Clothing

$34 Computer

$118 Entertainment (movies, gambling, alcohol, concert tickets) 

$631 Food

$0 Gifts Given

$0Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)

$528 Health and Dental Insurance (prepaid a portion of 2018 health insurance)

$0 Investment Expense
$109 Interest Expense*

$8 Medical/Dental

$7 Miscellaneous

$25 Personal Care

$0 Subscriptions

$1,819 Taxes
$52 Sharing Economy Expenses (tolls, car washes, etc.)
$52 Unreimbursed Employee Expenses

$283 Utilities

$1,564 Vacation

*Interest expense includes student loans and the loan on my car.  As both rates are below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off these loans.  

Getting Simple, and the Hidden Benefit of Paying Off My Car Loan

I decided to pay my car loan early!  Besides dressing up my credit profile for the mortgage underwriters, I wanted to eliminate the comprehensive and collision coverage from my car.  I have so many miles on the Sonata that it isn't worth much, so why pay to insure the replacement value?  Once I updated GEICO, I saw a savings of close to 20% on my policy.  GEICO automatically and immediately refunded my credit card to reflect the savings.

Speaking of underwriters, we still haven't closed on the house.  Originally it was going to close by the end of July.  Getting a mortgage isn't as easy as it used to be.  Apparently the hold-up is the condo association at a property I rent in Birmingham.  I have complete records of every monthly payment I have ever made for the condo dues.  However, the underwriters want a statement from the association showing the payments being applied to the dues.  It's a small association managed by the owners, and all of them are elderly.  They don't create monthly statements.  In fact, the last time the dues went up, I got a phone call from a resident asking if I was okay paying an extra $10/month to cover increasing costs.  It's a very informal association, but the underwriters are hung up on it and want paperwork.  Talk about losing sight of the big picture!

More Simplifying

It feels great to eliminate things and processes that don't add joy to my life.  Here's what I've been working on:

Cutting out Recurring Costs

• In preparation for the move I canceled my car wash plan.  That was $26/month.  I have a pressure washer and plan to use that at the new house to wash the car.
• Getting rid of the car loan eliminates one large recurring monthly cost.  Finding other costs I can eliminate is a priority.
• After we close on the house I'm going to consolidate credit cards that charge an annual fee.  This will simplify data entry (fewer accounts to keep track of in my new spreadsheet - see below) in addition to reducing expenses.

Saving Time and Eliminating More Stuff

• I'm creating a spreadsheet to track all my finances.  It's fairly robust and I am building it from scratch.  Once I am happy with it, I will stop using Quicken and sell the computer I have dedicated to my finances.
• I've been selling a few things on ebay.  We also have filled another box with charitable donations.
• I've cut way back on mystery shopping.  When you account for preparation (studying guidelines, printing stuff out) and report time, the pay is simply too low.  I'll still do a few shops when it makes sense.

Keyless and Cardless

• In preparation for converting our house to an AirBnb, I installed keyless locks.  Once we move into our new house, I'll change those locks as well.  
• I'm using up my stash of gift cards and getting rid of plastic loyalty cards when I can store the card on an app.

More Focus

• For the same reason I've cut back on mystery shopping, I also plan to focus my energy on work that moves the financial needle.  If the AirBnb is successful, I will do more of it.  This means I will do less of the myriad other jobs I have.
• With meeting jobs specifically, I will take a closer look at each opportunity.  Some, for example, require unpaid preparation, which can be very annoying.  A job next week has already required a dozen emails, a conference call, and a couple of phone calls.  The pay looks okay when all I think about are the hours I will be onsite.  It's much less if I include all this other time and effort.
• I'm going to reduce choices in my life.  This is part loyalty to fewer companies and part paying for time savings.  I need more routine, less shopping around for the best deal.  

My Frugal Miser - July Income: $7,242

July was only a mediocre income month.  As meeting season slows, I took some lower paying work.  Rental income was somewhat higher than I reported, as I am netting out the expenses I had on 4 of my properties.  I had some expensive repairs including replacing a water heater, a large A/C repair, and some plumbing repairs.  I also did not receive rent on two occupied properties.

July Income: $7,242

$193 Mystery Shopping
$983 Meeting Jobs
$40 Reimbursed Job Expenses
$64 Uber
$53 Lyft
$0 Postmates
$2,027 Amazon Deliveries
$3,830 Rental Income
$23 Interest Income

$31 Other Sources

Investment Accounts Change in Value:  $340

Notes:  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

I've Paid Off ALL My Credit Card Debt

In less than two weeks I should close on the new house.  That's the biggest change in our lives, but there's many BIG things coming...

Credit Card Debt No More

Last year I decided to pay off one of the rental property mortgages using 0% credit card advance checks.  Then earlier this year I spent a significant amount rehabbing another rental property.  Finally, we've been spending big bucks getting our current house ready for AirBnB.  It's been a great year for my stock investments, so I sold quite a bit of stock and paid off all my credit card debt.  As an aside, I also eliminated my margin debt in the brokerage account.  That will save money on margin interest.

About to Pay off the Car Loan

I owe about $4,000 on the Sonata, and the interest rate is less than 2%.  So why pay it early?  I want to change my insurance coverage by eliminating the full coverage portion.  I haven't priced it out yet, but there's bound to be some savings.  I intend to use cash flow from August rents to pay it off.

An Upcoming Vacancy

At the end of August I have a tenant moving out from one of the Birmingham townhouses.  I am happy about this because I haven't been charging enough rent.  This is my lowest rent property, at $595 a month.  I have similar townhouses that I rent for $700.  I'm thinking about experimenting with this property.  The kitchen is due for an upgrade and I want to eliminate the dishwasher.  I also want to see if sprucing things up makes any difference in the rent I can charge and the length of time the next tenant stays.  More on that later.

Vacation!

Saving the best for last.  I found a great deal on a Playa del Carmen all-inclusive, so we are going there in August.  I've been working a lot in 2018; now it's time to relax a little.  

My Frugal Miser - June Expenses: $4,001

June was an average month.  Half of my spending was for two irregular charges:  my annual homeowner's insurance payment and a $1,000 purchase of IHG Rewards Club Points.  IHG was doing a 100% match promotion on the purchase of points and I decided it was worth the purchase.

I spent too much on food again.  About $300 went to restaurant meals.  I also lost some money gambling while we were working in Las Vegas.

June Expenses:  $4,001

$89 Auto (all for gas)

$0 Bank Fees
$0 Clothing

$0 Computer

$941 Entertainment (movies, gambling, alcohol, concert tickets) 

$501 Food

$0 Gifts Given

($100) Household/Housing/Home Repair
$942 Homeowner's Insurance (annual payment)

$28 Health and Dental Insurance (prepaid a portion of 2018 health insurance)

$0 Investment Expense
$41 Interest Expense*

$0 Medical/Dental

$0 Miscellaneous

$3 Personal Care

$0 Subscriptions

$0 Taxes
$27 Sharing Economy Expenses (tolls, car washes, etc.)
$248 Unreimbursed Employee Expenses

$228 Utilities

$1,054 Vacation

*Interest expense includes student loans and the loan on my car.  As both rates are below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off these loans.  

My Frugal Miser - June Income: $11,183

June marked another great month for income.  Last month set a record thanks to a put option I exercised.  I was able to squeak out another gain this month.  My largest investment for the last few years has been in a REIT called Vereit.  It's been stuck near $7/share for some time, but in June it did fairly well.

I worked a lot in June.  There were two solid weeks of meeting work and a fair amount of Amazon deliveries.

I received rent from all my properties.

June Income: $11,183

($15) Mystery Shopping
$2,056 Meeting Jobs
$682 Reimbursed Job Expenses
$13 Uber
$3 Lyft
$0 Postmates
$810 Amazon Deliveries
$7,411 Rental Income
$22 Interest Income

$200 Other Sources

Investment Accounts Change in Value:  $2,668

Decent month.  Vereit is starting to go up.

Notes:  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

Moving: The Perfect Excuse to Simplify

All these gas cans... gone!

In a month we are moving to our new home.  Unlike previous moves, I'm converting my current house to an AirBnB.  It won't be necessary to move every piece of furniture to the new place:  some of it will stay put for our guests.  This has motivated me to pare down unnecessary possessions.

This week we took three oversized boxes of clothes and knick-knacks to Salvation Army.  I also posted for sale all but one of the gas cans I had.  I used to mystery shop dozens of gas stations and needed to store all the free gas I was getting.  I've moved away from that - it's not part of the big picture that will get me to financial independence.  What an exhilarating day - less than an hour after posting the 15 gas containers on Facebook Marketplace, I had a buyer.  I deposited the $100 cash into the bank.  The next day, we cleaned the utility room where these were stored - so much room now!

Getting rid of things feels great.  All these unnecessary material things require cleaning.  The clutter is a distraction.  Try looking for something when you have to move everything around to find it.

There's one area that I've been struggling with:  my rental property supplies.  Right now, a good part of a bedroom is filled with containers, everything from screws, tools, cleaning supplies, parts and more.  I barely use these things, but I do use them.  I'd like to pare down to the essentials, especially since I only use my tools when there is a vacancy.  For everyday repairs, I usually pay someone to fix things since I am an absentee landlord.  This is the next area I'd like to tackle.

I'm Buying a New House

This is our new house!

Three months ago I updated my plans to include increasing recurring income by $2,300/month.  The first phase of the plan is in action:  we are moving to a new home.  This week I signed a contract on a brand new home on the other side of Tampa.  The house is about 40 miles from where we live now, but it's in a high-growth area where real estate is significantly less expensive.  My preference was to stay near our current home, but the few new houses we looked at cost nearly twice as much as the house I am going to buy. 

Our new home is in a master-planned community that features fiber optic Internet and is smart-home ready.  There is a beach entry pool and cabana as well as miles of walking trails.  The lot is 50% larger than the lots we looked at in other neighborhoods.  There are no houses directly behind the one I am buying.  Instead, there is a pond with a beautiful fountain.

On the surface this would not seem to be a frugal decision, but since 2006 I have built my real estate portfolio by moving into a new house every few years.  It's the way I've been growing my net worth.  But this time, instead of finding a long-term tenant, I will try AirBnB.  From the research that I've done, I am confident we can rent our current house on AirBnb for an amount that will more than cover the mortgage on the new house.

I should close on the new house by the end of July.  In the meantime, we are preparing our house for rental.  Such an exciting time!

My Frugal Miser - May Expenses: $2,524

Only one category concerns me in May:  spending on food.  We continually spend more than we should.  Last month I spent about $170 on groceries.  That's not bad.  What's bad is that I spent almost $300 eating out.  Part of this is due to the meeting jobs we worked in Orlando.  Often we are provided a breakfast and lunch during work, but we are on our own for dinner.  Since we were out of town, and a friend was with us, we spent more than I would back home.   We also ordered pizza twice, ate twice at Studio Movie Grill, and ate at a festival we attended.  Those were the more expensive meals.

Besides food, alcohol was on the expensive side.  I also bought tickets for two summer concerts.

May Expenses:  $2,524

$690 Auto ($612 for insurance, $36 for gas, $42 for service)

$0 Bank Fees
$76 Clothing

$0 Computer

$187 Entertainment (movies, gambling, alcohol, concert tickets) 

$464 Food

$53 Gifts Given

$79 Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)

$28 Health and Dental Insurance (prepaid a portion of 2018 health insurance)

$0 Investment Expense
$167 Interest Expense*

$0 Medical/Dental

$0 Miscellaneous

$0 Personal Care

$0 Subscriptions

$0 Taxes
$27 Sharing Economy Expenses (tolls, car washes, etc.)
$105 Unreimbursed Employee Expenses

$304 Utilities

$344 Vacation

*Interest expense includes student loans and the loan on my car.  As both rates are below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off these loans.  

My Frugal Miser - May Income: $11,906

May was my best month ever.  It seemed so obvious to me that HMNY, the company that owns MoviePass, was not going to do well.  I had purchased put options, which are a bet on the shares of stock going down.  Boy, did they.  I closed out my options in May and made a huge profit.  In total, my brokerage account balance ballooned by $29,000.

My regular income was also healthy.  I received rent from all my properties.  I also had decent work income from Amazon, meeting jobs, and even a small amount of rideshare driving. 

May Income: $11,906

$61 Mystery Shopping
$2,409 Meeting Jobs
($99) Reimbursed Job Expenses
$98 Uber
$21 Lyft
$0 Postmates
$1,343 Amazon Deliveries
$8,041 Rental Income
$23 Interest Income

$10 Other Sources

Investment Accounts Change in Value:  $29,138

This was the best month I have had.  Even better is the fact this is a realized gain, as I closed out my HMNY put options.  

Notes:  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

Recipe for a Frugal Getaway

Burnt out from all work and no play?  Don't want to bust the budget?  Yes, and yes.  We'll have to delve into why I don't find fulfillment in my line of work later.  For now, let's talk medicine.

Travel is my elixir.  It's the escape I need to come back refreshed and ready for more.  But I hate spending tons of money unnecessarily.  We needed a quick, CHEAP getaway.  We decided on Philadelphia.

The Process

For the most part I was location-agnostic.  My needs were straightforward:  fly non-stop on the cheap for a quick, inexpensive trip.  I looked over my emails for deals on the discount airlines, including Spirit, Frontier and Allegiant.  I compared a few cities, including Richmond, Chattanooga and Philadelphia.  For whatever reason, flights to Philly were super-cheap and abundant.  Then I checked the weather to be sure nothing crazy was going on.  Then, before booking, I pulled up Expedia and played around with dates and airports to be sure I got the best deal.  Good thing I did:  flying out of Orlando, 90 miles away, saved us even more.  I settled on Spirit because I've fallen in love with their Big Front Seat.  Sure, it costs extra.  For $47 extra, we will travel in a first-class seat (just on the way there,  on the way back we will sit at the back of the plane).  Total roundtrip for two, including upgrading our seats:  $218.  Can you believe that?  The roundtrip ticket was $50 each (not a typo!).  Upgrading our seats cost more than the flight, but still well worth it.

Free Hotel

I use hotel-branded credit cards, and never intended to pay for our room.  That was part of the game:  sleep for free.  Hotels in Philadelphia tend to be expensive, even on weekends.  I compared Hilton, IHG and Choice Hotels websites and found an incredible deal:  10,000 points/night for a newer Cambria Suites in the heart of Philadelphia.  

Next Steps

Now that we have a flight and hotel, the real fun of planning our trip begins.  Philadelphia is a walk-able city, no need to rent a car.  I'll look into public transportation and rideshare to get around.  Then I'll research activities.  Most of the sites are super inexpensive.  Booking them online in advance saves even more money.  For example, I booked a guided tour of the Eastern State Penitentiary.  Booking online saves $2, plus I googled for a promo code and received another $5 off, which nearly halved the cost of admission.  The only other expense will be our food.  Might look online for deals on that, too.

Update on Simplifying

Several weeks ago I posted about wanting to eliminate unnecessary stress in my life.  We as humans tend to over-complicate a lot of things, and I am on a journey to do my part in living more simply.  Here's a progress update on my road to the simple life.

Cutting Back on "Deals"

I have always enjoyed getting a "deal", but sometimes these deals have too many hoops to jump through or they aren't such a great deal after all.  As an example, we tried to use a Groupon to a restaurant last month, only to discover after ordering that the Groupon was not valid before 5 PM.  I had to pay full price for our lunch and, since the Groupon was about to expire, I felt compelled to squeeze in a second visit to the restaurant later that week.  I've also let bonus offers on gift card purchases expire (I'm talking about those $10 bonus when you buy a $50 gift card deals you see around the holidays every year), and last week I misplaced a gift card.

Progress:  I've been deleting the daily Groupon/Living Social emails I receive.  Next I will opt-out of the emails altogether.  I may still use those deal sites from time to time, but mostly for same-day deals, like when I need an oil change.  At one point I had close to 20 vouchers sitting on my account, and trying to redeem them before they expired would cause unnecessary stress.  I've also been redeeming some of the gift cards I've had sitting around.  I'm always scared I'll lose one (just happened!) and would prefer not to have to keep up with them.

The Financial BHAG

Next, cleaning up the balance sheet.  I've set an aggressive (big, hairy, audacious) goal of paying off all my credit card balances by September 30th.  Ultimately I want to consolidate my spending, maybe to 1-2 credit cards.  It will be easier to keep up with my spending that way.

The other goal, to increase Passive Recurring Income by $2,300, remains.  Part of the plan includes putting my house on AirBnB.  I have a few repair projects to do, and am postponing these until my credit card balances are lower.

Dejunking

A couple times a year we load up the car with donations and take them to the Salvation Army.  I love the feeling of getting rid of things we no longer use.  During May we will make our first donation of 2018.  We already have a couple of large boxes ready to go.  It's nice being able to find things more easily.

Saying "No"

I used to take every job opportunity I was offered.  I'm learning to forego the ones that aren't worthwhile.  This will be easier when my credit card debt is paid.

My Frugal Miser - April Expenses: $7,555

Can we just pretend April never happened?  It was expensive.  I paid the annual management fees for my self-directed retirement account ($500).  I made a quarterly payment to the IRS.  I spent too much on concert tickets - second row seats with the meet and greet package!  I also lost a lot of money in Las Vegas.  And we ate like kings, with too many overpriced restaurant meals.

All I will say is, I have to be more frugal.  I'm losing site of the big picture, which is to grow passive recurring income to $10,000 per month.  I have set nothing aside for savings this year.  This has to change.

April Expenses:  $7,555

$231 Auto ($211 for gas, $20 for service)

$533 Bank Fees
$0 Clothing

$10 Computer

$3,644 Entertainment (movies, gambling, alcohol, concert tickets) 

$576 Food

$0 Gifts Given

$105 Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)

$28 Health and Dental Insurance (prepaid a portion of 2018 health insurance)

$0 Investment Expense
$87 Interest Expense*

$22 Medical/Dental

$0 Miscellaneous

$0 Personal Care

$0 Subscriptions

$1,819 Taxes
$52 Sharing Economy Expenses (tolls, car washes, etc.)
$127 Unreimbursed Employee Expenses

$186 Utilities

$134 Vacation

*Interest expense includes student loans and the loan on my car.  As both rates are below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off these loans.  

My Frugal Miser - April Income: $6,725

My April income was light.  Lower rental income was the culprit.  I did not receive rent for two properties.  One was the home I just rented, so I'm not worried about that.  The other was up for renewal, and the management company charged me a renewal fee, but I did not receive any rent.  Now I have to confirm the tenant did not move out since the management company has not said anything about it. 

April Income: $6,725

($30) Mystery Shopping
$911 Meeting Jobs
$157 Reimbursed Job Expenses
$164 Uber
$185 Lyft
$0 Postmates
$1,095 Amazon Deliveries
$4,049 Rental Income
$24 Interest Income

$171 Other Sources

Investment Accounts Change in Value:  $3,540

My investments did good.  A put option for the company that owns MoviePass is currently up 159% from my purchase price.

Notes:  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

My Frugal Miser - March Expenses: $10,598

I paid my 2017 income tax at the end of March.  I was supposed to make quarterly payments so there is also a penalty built into the tax.  I also spent a lot on food in March.  Much of that was at the grocery store, but we ate out more than we should have also.  Lastly, I bought $800 worth of gas gift cards to take advantage of my credit card's 5% cash back. 

The $200 spent on vacationing was to upgrade to Big Front Seats on Spirit airlines.  I redeemed points for two flights to Las Vegas in April.  Since the flights and hotels cost nothing out of pocket I decided to splurge on larger seats at the front of the plane.

March Expenses:  $10,598

$1,857 Auto ($980 for gas, $877 for service)

($73) Bank Fees
$0 Clothing

$0 Computer

$82 Entertainment (movies, gambling, alcohol) 

$507 Food

$0 Gifts Given

$75 Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)

$28 Health and Dental Insurance (prepaid a portion of 2018 health insurance)

$0 Investment Expense
$16 Interest Expense*

$19 Medical/Dental

$27 Miscellaneous

$0 Personal Care

$35 Subscriptions

$7,447 Taxes
$77 Sharing Economy Expenses (tolls, car washes, etc.)
$0 Unreimbursed Employee Expenses

$301 Utilities

$200 Vacation

*Interest expense includes student loans and the loan on my car.  As both rates are below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off these loans.  

My Frugal Miser - March Income: $14,072

Income was excellent in March.  Rental income was strong.  A new tenant moved into the empty townhouse.  My most expensive property is still vacant but is now move-in ready.  Rideshare income was strong.  On St. Patrick's Day, between Uber, Lyft and Amazon deliveries, I grossed over $750!  Because I live in a tourist area, I benefited from the number of events taking place in Tampa Bay as well as spring breakers.  I did not do as many meetings last month; most of my job income came from rideshare and Amazon.

March Income: $14,072

$109 Mystery Shopping
$622 Meeting Jobs
$104 Reimbursed Job Expenses
$1,246 Uber
$1,296 Lyft
$0 Postmates
$2,632 Amazon Deliveries
$7,655 Rental Income
$30 Interest Income

$378 Other Sources

Investment Accounts Change in Value:  $11,253

My investments did great.  A put option for the company that owns MoviePass is currently up over 130% from my purchase price.  I also made over $1,000 on a short-term investment in a beat-up mall REIT. 

Notes:  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

How I will increase Passive Recurring Income by $2,300

This week I have established plans that will help me worry less about finances and enjoy life more.  By 2020 I want to increase passive recurring income by $2,300.  Here's how I will do this:

Real Estate

We're going to buy a new house.  I've started looking at new-home communities in the Tampa Bay area.  This will be our new house, not a rental.  Why?  I want to turn our current house into an AirBnB.  I'm intrigued by the potential income of short-term rentals and think it could be a good bit higher than renting out my house in a 12-month lease.  I also like the idea of being able to constantly maintain the house.  We've had some big surprises when tenants move out.  The house we worked on last month required close to $20,000 in repairs to make it rent-ready.  If my house is turning over on a weekly basis, I can keep it clean, fresh and maintained regularly.

Afterwards, I will decide what our next move should be.  If the AirBnB is a success, the next property I buy will be specifically for short-term rentals.  If it doesn't pan out, I would look at other options.

Investments

This is the truly-passive breed of investing.  The AirBnB will require a little effort, although most of that effort, such as keeping the place clean, could be hired out.  Investing in dividend-paying stocks requires almost no ongoing effort at all.  The plan is to regularly invest excess cash flow over the next two years into income-producing companies.

I'm really excited about the thought of moving into a new home.  It's always fun to look at houses and then start fresh.  I'll keep updating you guys on our home search.

Towards Prosperity

We're doing okay financially.  We have 10 rental properties, a six-figure stock portfolio, and we live in a mortgage-free home.  But we're not quite financially independent.  I couldn't stop working and just live off our assets.  It's time to change that.  I'm going to have fun doing so.

Having passive recurring income is the way I will reach financial independence.  I figure if I can consistently bring in $10,000 per month in passive recurring income, I will have enough to both live on and to add to the nest egg for future needs. 

Passive Recurring Income - Today

• Dividends from stock:  $1,500/month
• Fully occupied rental properties (including the ones held in my retirement LLC):  $8,200/month

At first it appears that I almost have the $10K/month I need.  The problem is, the rental properties are rarely fully occupied.  When they are, there is bound to be a tenant who is behind on rent.  Likewise, dividends can be cut, which is out of my control.  Therefore, I need a cushion above and beyond the stated $10,000 goal that guarantees I always make my monthly goal.

Passive Recurring Income - 2020

• Dividends from stock:  $2,000/month
• Rental properties:  $10,000/month

I'm giving myself less than two years to increase passive recurring income by $2,300/month.  Stay tuned.

Simple Finances

Why is it necessary to track every minute detail of my finances, down to the penny?  The big picture is this:  My net worth needs to grow so that my passive income covers my spending.

This year I will stop using Quicken.  Over the weekend I signed up for a site called Personal Finance.  It's a cloud-based tool that aggregates my finances.  I'll keep an eye on things using that site.  The plan is to build up my checking account balance so that there are always funds available to pay any bill.  As soon as I receive the bill, I pay it.  I've been using Quicken for so many years.  It's super robust, and I can find out just about anything I want to know.  But it's time to move on.  Here's the benefits:

• I have a PC dedicated just to Quicken.  I can sell it, reducing clutter.
• I'll save a little on upgrading the software every couple of years.
• Having enough liquidity means not having to postpone paying bills, transferring funds from various accounts, and remembering to log transactions all the time.

What else am I doing?  Well, to make this work, my finances need to be super-simple.  I will eliminate Prosper (P2P loans) as an investment.  As money comes in, it will be withdrawn from Prosper.  I'm going to pay off my student loans and my car.  I won't be doing this to save interest (both charge less than 2%), but instead it's to eliminate recurring monthly expenses.   Next, I'm consolidating my spending to one or two credit cards.  Lastly, I will have a single financial goal:  increase passive recurring income.  I have a couple ideas already for doing this which I will share tomorrow.

Towards Happiness...

A few weeks ago, when Bitcoin was crashing, I read an article about Steve Wozniak, co-founder of Apple, and why he sold his bitcoin.  Bitcoin has been a volatile currency, trading between $1,200 and nearly $20,000 in the past year.  Wozniak sold because he didn't want to be obsessed with the insane price swings.

"I don't want that kind of care in my life. Part of my happiness is not to have worries"

My dad unexpectedly passed away at the age of 52.  I will be 52 in 11 years.  What if that's all the time I have left on this planet?  When I look at life like this, it makes me realize that there's a lot of stupid shit I shouldn't let bother me.  And since I have struggled with anxiety all my life, I'm starting to realize that most of what I worry about isn't all that important.  So, I'm changing.  I don't want to be bothered with the stress of things that don't matter.

Tomorrow I'm going to start outlining what this means to me...

My Frugal Miser - February Expenses: $2,024

February was deceptively frugal.  Absent some large expenses, I only spent about $1,000 last month.   I bought a $250 gas gift card, and we drove to Birmingham to work on a vacant property, so gas was higher than normal.  I also paid the annual fee ($450) on my Chase Sapphire Reserve card.  $300 of that fee will be refunded after I charge some travel to that card.  Finally, I bought a new washing machine as well as tickets to the Smashing Pumpkins concert.  Besides these categories, everything was quite low.  When we do meeting jobs, our food cost is usually covered. 

February Expenses:  $2,024

$519 Auto ($240 for gas, $32 for service)

$450 Bank Fees
$0 Clothing

$0 Computer

$229 Entertainment (movies, gambling, alcohol) - gain this month

$149 Food

$0 Gifts Given

$461 Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)

$28 Health and Dental Insurance (prepaid a portion of 2018 health insurance)

$0 Investment Expense
$15 Interest Expense*

$29 Medical/Dental (income)

$7 Miscellaneous

$0 Personal Care

($35) Subscriptions income from refund

$0 Taxes
$27 Sharing Economy Expenses (tolls, car washes, etc.)
$0 Unreimbursed Employee Expenses

$145 Utilities

$0 Vacation

*Interest expense includes student loans and the loan on my car.  As both rates are below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off these loans.  In December, I paid $38 to E*Trade for "hard to borrow" interest on a short sale of stock. 

My Frugal Miser - February Income: $9,218

Income was decent in February.  Rental income remained lower due to vacancies, but a new tenant is moving into one unit in March and the other vacant property, my most valuable one, will be rent-ready in the middle of the month. 

I worked several meetings in February and did a fair amount of Amazon deliveries.  We spent a week in Birmingham working on a property, which was a week of no income.

February Income: $9,218

($35) Mystery Shopping negative due to expenses not yet reimbursed
$2,407 Meeting Jobs
$453 Reimbursed Job Expenses
$59 Uber
$5 Lyft
$0 Postmates
$945 Amazon Deliveries
$5,327 Rental Income
$29 Interest Income

$28 Other Sources

Investment Accounts Change in Value:  -$3,478

My investments were down again, but not nearly as bad as January.    

Notes:  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

My Frugal Miser - January Expenses: $1,621

January was a decently frugal month.  There were a few large expenses:  I bought a discounted gas gift card ($240) and prepaid for a year of satellite radio.  I also started tracking a new category that added to my expenses.  I also bought a new pair of work shoes.

New this year I added a category for unreimbursed employee expenses.  Last year, the primary company I worked for meeting jobs paid me as a 1099 contractor, and I could deduct expenses like hotels and meals.  Now I am a W-2 and if I choose to take a job that doesn't provide meals or hotel rooms, I am responsible for the expense.

January Expenses:  $1,621

$272 Auto ($240 for gas, $32 for service)

$0 Bank Fees
$159 Clothing

$0 Computer

$223 Entertainment (movies, gambling, alcohol) - gain this month

$272 Food

$0 Gifts Given

$50 Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)

$28 Health and Dental Insurance (prepaid a portion of 2018 health insurance)

$0 Investment Expense
$14 Interest Expense*

$4 Medical/Dental (income)

$0 Miscellaneous

$0 Personal Care

$0 Subscriptions

$0 Taxes
$52 Sharing Economy Expenses (tolls, car washes, etc.)
$176 Unreimbursed Employee Expenses

$397 Utilities

$0 Vacation

*Interest expense includes student loans and the loan on my car.  As both rates are below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off these loans.  In December, I paid $38 to E*Trade for "hard to borrow" interest on a short sale of stock. 

My Frugal Miser - January Income: $8,707

It's 2018 and I am making some changes to how I report things.  I want to stop tracking every investment transaction in Quicken.  I don't use that information anywhere except this blog - capital gains, dividends and interest expenses are all tracked in spreadsheets for tax purposes.  This year I will report the increase or decrease in the value of my investment account, net of any withdrawals or deposits I make.

As for income, it was okay.  Rental income continues to suffer, but this is about to change.  My handyman finished the repairs at my townhouse, and the day it was listed for rent the management company approved an application.  I had to evict another tenant, and I believe she moved out at the end of the month.  A third tenant did not pay rent in January. 

I worked several meetings in January and drove a little for Uber and Lyft.  I also worked steadily at Amazon.  Income from these jobs was solid.

January Income: $8,707

$71 Mystery Shopping
$1,246 Meeting Jobs
$50 Reimbursed Job Expenses
$235 Uber
$163 Lyft
$0 Postmates
$2,236 Amazon Deliveries
$4,475 Rental Income
$29 Interest Income

$202 Other Sources

Investment Accounts Change in Value:  -$17,969

My investments performed horribly in January.  I shorted shares in the company that operates MoviePass (HMNY) and quickly lost a ton of money.  I covered that position, taking a steep loss.  The Hard to Borrow interest rate charged to short that stock is ridiculously high.  In its place, I have a put option that will become profitable if the company tanks.  I also lost a lot from Vereit.  REITS have been way down lately.   I'm not planning to sell anytime soon, so this doesn't worry me at all.  In fact, I bought more shares today.  The dividend on that REIT is close to 8%.

Notes:  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

How I am Avoiding Creeping Recurring Expenses

Just as passive recurring income contributes to a higher quality of life, monthly recurring expenses - usually subscriptions of some kind - can eat away at cash flow.  This is why I audit my expenses on a regular basis.

Satellite Radio

I practically live in my car.  While many people consider satellite radio subscriptions a luxury, I value the commercial-free stations, and the ability to listen to my stations wherever I go.  I was on a month-to-month plan with SiriusXM which included streaming in our home.  By agreeing to a 12 month contract, I was able to upgrade to the best plan available and keep the streaming option while almost halving the cost of the subscription.

Estimated Savings:  $200/year

Newspaper Subscriptions

A while back I redeemed airline miles to gift a subscription to Barron's to a friend.  After the first year, my credit card began being charged a monthly fee.  It was only $13.00, easy enough to ignore every month.  Today I canceled it.

Estimated Savings:  $156/year

Internet

I pay $45/month for home Internet.  This is something we have to have, and when you consider how much bandwidth we use, it's not that expensive.  But relative to our other bills, it is on the high side.  Put into perspective, the electric bill during winter months is around $60.  I power the entire house for a little more than I pay just for Internet.  I called my provider, Wow, to see if I could lock in a lower rate.  By agreeing to a 12 month contract I was able to reduce the monthly cost to $31/month.

Estimated Savings:  $168/year

Well, that was easy.  It took me less than 20 minutes to save $500 in 2018.  Companies are eager to retain their customers, and I don't mind agreeing to remain a customer if it means saving money.  I'll continue looking for ways to save money without sacrificing.  What tricks have you used to save money?

Passive Income from Rental Properties

In 2006 I became a landlord, mostly by accident.  I was living in a 2 bedroom townhouse about 30-45 minutes away from my job.  I wanted to be closer to work, and I found a brand new subdivision merely a 10 minute drive from the office.  The market in the area where my townhouse was located was weak for sales, and my best friend and his wife were looking to move back to Birmingham.  I suggested he rent my townhouse, and the rest is history.

Passive income - income that requires relatively little effort on my part - is a huge part of my plans for financial independence.  I began buying up rental properties, mostly foreclosures.  In 2008 I moved from the house I bought in 2006 to another new house and rented that house out.  Fast forward to 2018.  I have 10 rental properties.  I've held all my properties except one, which I sold in 2015.

Today I'm going to take a look at how I'm doing.  Below I have included properties I own as well as the two held in my retirement account.



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	2014	2015	2016	2017
Income	$95,076	$93,305	$83,874	$91,728
Expenses	$34,553	$36,689	$44,861	$33,919
Cash Flow	$60,523	$54,616	$39,012	$57,809

Maximizing Income

Last year was a solid year for income.  Every year I will experience vacancies, but in 2017 most of the properties were occupied and rent was paid.  I haven't added any new houses to my portfolio since 2014.  I look at how much I am charging every year and, if warranted, I raise the rent.  I try not to be too aggressive because it is better to keep existing tenants than find new ones.

Minimizing Expenses

I have some control over my cash flow by deciding how much money I will spend on my properties.  The townhouses are in a declining area, and I am especially careful not to overspend.  My single family homes have more potential, so I try to make those very nice to attract the best tenants.  This strategy seems to work:  across the 3 nicer homes I own, one tenant has stayed 9 years, another 8 years, and the third is in her second year. 

What do I do to keep expenses low?  Over time I've simplified things.  I am currently working on a vacant property, and my handyman is repainting the entire house, walls and ceiling, white.  I have removed carpet and replaced it with vinyl peel and stick tiles.  I'm thinking about removing dishwashers from these properties, and I have already removed most of the garbage disposals.  The goal is to minimize service requests by using more durable products and eliminating anything that can break.  I'm also deferring some maintenance.  For example, the wooden fences around my townhouses have been in bad shape for years, but I have put off replacing them. 

One last note about expenses.  I don't include depreciation in my calculations because it is not an actual cash outflow.  If I included depreciation, which basically amortizes the cost of the property over its useful life, my income would be much lower.

Passive Income is Awesome!

Becoming a landlord is one of the best decisions I have made.  Everyone needs shelter, and the properties have dependable cash flow regardless of how the stock market performs.  Over time I'd like to not be an absentee landlord, because being so far away increases my costs.  Having a steady stream of income while I am doing other things is so important to my financial independence.