Can I Collect Unemployment Insurance If I Have Passive Income?

My friend and I have both developed a healthy amount of passive income over the years.  We are talking true passive income where we don’t have to do anything to make money.  It gets us excited thinking about passive income because we have the optionality of quitting our jobs, moving to some tropical paradise, and not die alone if we don’t want to!

My definition of passive income comes directly from CD interest income.  With an average yield of 4% (7-yr CD’s), my passive income isn’t sexy by any means.  But, it’s a great feeling knowing the principle will still be there and then some years from now.  Collecting dividends is not my idea of generating passive income, because you have to actively manage the portfolio as you could blow yourself up in a downturn.

We got to talking about the article, “Don’t Quit, Get Laid Off Instead“, and we began to wonder what if we successfully did engineer our own layoffs?  Would we be able to collect the ~$1,800 a month in unemployment income while generating five figures a year in passive income?

After speaking to people in human resources, a couple unemployed folks, and doing some searching online, I’ve come to the conclusion that it doesn’t matter if we make $100,000 a year in passive (unearned) income, we still get to collect unemployment insurance.


Let’s say you work for 20 years and diligently save a majority of your after tax income every year. You somehow amass $2.5 million and decide to go really conservative and buy ten, $250,000, 7-year CD’s with a 4% interest rate. The reason why you buy 10, $250,000 CD’s is because of the $250,000 FDIC guarantee limit ($500,000 for couples per account). Fair enough.

You love your job, but due to a restructuring, you are let go. The $100,000 a year you earn in passive income has no bearing on your ability to collect unemployment benefits since the $100,000 a year is a result of your past work.  You are no longer working to make that money, as that money is now working for you. Your company could technically refute the unemployment benefit claim upon realizing you earn six figures in interest income, however, you don’t have to reveal your personal finances to your employer. And if they do deny you, you have recourse.

The more interesting question is, “Should you collect $1,800/month in unemployment benefits if you have enough passive/unearned income to live on?” My answer is, absolutely yes. Just look at your W2 and see all the federal and state income taxes you pay.  Mine makes me absolutely sick. Your employer is happily paying you less than you could truly earn so they can pay for unemployment insurance.

There really isn’t a moral question to taking unemployment insurance while earning enough money passively to survive.  You and your company have paid for it after all those years you’ve worked, and if you’ve found yourself out of a job for reasons no more than performance related, then you deserve to collect some money back for once!

Finally, if you can, always try and get laid off rather than quit. You’ll receive severance, unemployment benefits, and ongoing training. If you quit, you get nothing!

Passive Income X Factor – Starting A Website

It’s been around six years since I started Financial Samurai and I’m actually earning a good passive income stream online. The top 1% of all posts on Financial Samurai generates 31% of all traffic. The average age of the top 1% posts is 2.3 years old. In other words, after putting in the hours to write some very meaty content over two years ago, 10 posts consistently generate a monthly recurring income stream that’s completely passive.

I never thought I’d be able to quit my job in 2012 just three years after starting Financial Samurai. But by starting one financial crisis day in 2009, Financial Samurai actually makes more than my entire passive income total that took 15 years to build. If you enjoy writing, connecting with people online, and enjoying more freedom, see how you can set up a WordPress blog in 15 minutes with Bluehost. Who knows where your new adventure will take you?

Contract For A Ridesharing Company

I’ve recently tried out driving for Uber because they are currently giving up to a $300 bonus after you make your 20th ride. After 25 hours and 53 rides, my gross pay is $32/hour, which is not too bad! I can see how people can easily make an extra $2,000 a month after commission and expenses with Uber or any ridesourcing company. I’d definitely sign up and drive until at least the bonus . Every time I plan to drive somewhere, like my main contracting gig down in San Mateo, I’ll just turn on the Uber app to try and catch a fare towards the direction I’m going. Why not make extra money?

$32/hour is a huge pay cut for me and it’s a humbling experience as well. But discovering the whole ridesourcing experience first hand is fascinating! I’ve got so many stories to share in the future about my experiences picking up random people. You can make $40,000 a year easily if you work a normal 40 hour a week shift based off my experience. The process is so easy to make money as they pay every week and you can start getting fares immediately.

Photo: Jitsu Relaxing At The Four Seasons, HK.  SD. Updated on 6/25/2015



Should I Get Long-Term Care Insurance?

Old Man In SantoriniI spoke to my father yesterday and curiously asked him about his thoughts on assisted living facilities.  “Absolutely depressing!“, he said.  I couldn’t agree more that assisted living programs are depressing given it reminds us everyday about our mortality.

Who wouldn’t want to stay put in a home they’ve lived in for years instead?  I know I would.  Home is a special place that makes us feel comfortable and warm.  Ideally, you own your home outright in retirement and no longer have payments.  However, this is a topic for another post.

We can only hope that we remain healthy for the rest of our lives, but we’ll eventually need some help thanks to injuries or illnesses.  Some of us will have the financial strength to comfortably pay for our healthcare in retirement.  Others might have wealthy children to rely on.  But what if you do not want to burden anybody, and don’t have that much money to last?

Buying long-term care could be an ideal solution for your retirement years.


The Right Amount Of Life Insurance

Inner TubeIf you haven’t done so already, calculate your net worth to assess how you did this past year.  Hopefully, you’ve grown your net worth, despite the stagnant stock markets through aggressive savings, retirement company matches, a diversified investment portfolio, rental property cash-flow, and an increase in your start-up’s value.

Wait, all you have is your savings?  Then you better start diversifying your income stream so you’re always moving forward, no matter how rough the economy.  Once you’ve calculated your net worth, make sure your life insurance levels equals this amount, especially if you have dependents, or a spouse who makes much less than you.  If you die, and want your loved ones to maintain a similar standard of living, consider matching your life insurance amount with your family’s net worth amount.

Some might not agree with this life insurance guideline and wonder whether it would be better to have insurance that equals a family’s debt level only.  Having enough life insurance to pay off all of your family’s debt is better than no life insurance at all.

If you’re single and have no dependents, do you really need life insurance?  Probably not.  If you die with a million bucks in debt, you’re living large!

Consider the Robinson family in San Francisco with two children ages 8 & 7:

Car Insurance Basics For Dummies

Car Wreck

Make sure you have insurance because accidents happen!

One of the key decisions in deciding what car to buy is assessing how much all the other costs are that come with ownership.  The purchase price and/or the car payments are just the most obvious of costs.

There are two main ownership costs to consider: maintenance and insurance.  For new cars, maintenance costs are quite minimal, unless you have a lemon and have to waste all your time going to and from the dealer.  For used cars, maintenance costs are a much bigger issue that can quickly eat into any savings you’ve made from not buying new.  We can talk about maintenance costs in more detail in another post.  For now, let’s talk about insurance costs.

I received my semi-annual car insurance premium bill the other day, and I was pleasantly surprised to discover it only costs $285 every 6 months to cover Moose. However, by not telling you the full details of what $285 gets, it’s hard to understand whether $285 really is good value. Let’s breakdown the line-items to better understand what car insurance options I get for my money.


Resolving My Insurance Company Home Premium Scam

Pacific Heights MansionIt’s been two weeks since I found out I was being scammed by my insurance company. I sent in my 8 month old house appraisal to Tricky Dick, who is trying to raise my home insurance premium by 45% since their inspection 7 months ago.  Their shady inspector made my house 50% larger than it really is, so they could raise my premiums by a similar magnitude.  It’s so easy to prove what my house’s square footage is, it’s not even funny.  It’s like saying Lebron James is 10 feet 5 inches instead of just 6 feet 8 inches tall.  Utterly ludicrous.

The recent appraisal I sent in contains perfectly drawn outlines of my house’s layout and square footage.  It matches up to within 50 square feet of what the SF County Assessor’s has on record.  I’ve had two other appraisals in the past 7 years, and both are also within 50 square feet of the real size.  Clearly, this case is as slam dunk as convicting Elliot Spitzer for messing around!  Not so!

If you’re curious, here’s the e-mail exchange I had with them with names, figures, and dollar amounts changed that mimic the same percentages.  All of this takes precious time.  In this post, you will learn what the tricky “Home Protector Insurance” product is.  You’ll also learn whether the rebuild cost premium you pay trumps the square footage size they have in their documents, and what you get to rebuild if your house blows up.


The Fittest People Have The Lowest Self-Esteem

I’m somewhat obsessed with physical fitness right now.  It’s surprising, because the new year’s health push usually dissipates by February!  Just yesterday I thought, “What’s the point of being thin if I don’t have four pack abs?”  And then I started thinking what kind of person thinks about these types of questions?  Pretty unproductive and pointless if you ask me.

I’ve come to the conclusion that those with the highest self-esteem are the least fit and most indebted people on Earth.  Meanwhile, those who constantly think about their looks, and who are always at the gym exercising and pumping iron have the lowest self-esteem.  They are constantly checking themselves in the mirror to admire their physiques, even though they already know they look fine.

Think about the extreme case of anorexia.  Despite being thinner than the average person, the person who is inflicted with this disease doesn’t have the self-esteem to recognize their own beauty and stop punishing themselves.  Now think about the morbidly obese person.  Is this also a disease as well?  The person doesn’t really care what you think of him or her.


How Insurance Companies And Appraisers Scam Their Customers

House On Golf Course In HawaiiI’ve always trusted my insurance company, which I’ll call TRICKY DICK in this article, to do the right thing. After all, I’ve been a client of theirs for almost 20 years. They’ve benefited from my growth in assets and I now have auto insurance, homeowner’s insurance, valuable personal property insurance and an umbrella policy with them.  Furthermore, I’ve got a relatively large chunk of change in CDs deposited with them as well.

I had a unwelcomed change in my credit card the other day and had to call Tricky Dick to cancel my existing card on file and add a new one. Imagine my surprise when looking over my previous statement that they were billing me 45% more a month in premiums!  What the hell, I thought to myself.  Clearly there must be a mistake.  Oh how wrong I was.