Welcome to my annual passive income update. I don’t do these updates more often because nothing changes too much on a month-to-month or quarter-to-quarter basis. Do you really want to see that I increased or decreased my passive income by $1,000 from the month before? I think not.
Here are some immediate reasons I can think of for why building passive income is a good idea:
1) You likely won’t want to work forever, no matter how much of an eager beaver you now are.
2) Unfortunately bad things happen all the time e.g. layoffs, financial meltdowns, theft, etc.
3) It’s nice to provide as solid a financial foundation as possible for your family and loved ones.
4) You broaden your knowledge and expertise across various topics so you can seem erudite but remain a little dumb.
5) You’ll reduce financial stress and feel happier that not all your income is tied to one main source.
6) You will decrease your chances, your spouse’s chances, and your children’s chances of ever having to depend on the government to survive.
7) You will have more freedom to do things you truly want to do. This feeling becomes more intense as you grow older given you become more aware of the finality of life.
8) You can push yourself financially beyond what you think could ever be possible. Who doesn’t love a good challenge except for the people who have everything handed to them?
This is my third annual passive income report where I have a goal of making $200,000 in relatively passive income by mid-2015 after leaving my job in early 2012. I started off with roughly $78,000 a year and I’m currently up to a projected ~$150,000 a year if all goes well after renting out my old primary residence. Life is uncertain, and I’m sure things will change.
To clarify the meaning of passive income, I do not include income from consulting, freelancing, asset sales (stocks, bonds, real estate, baseball cards etc), and business income. I’ve got other targets for these revenue streams that I might discuss in a future post, but probably not. The goal of passive income is to have the income largely come in without doing much work at all. But in order to not do much work for money, we’ve first got to work very hard for our money!
One thing to note is that I started my passive income journey before writing about Stealth Wealth. $78,000 a year is roughly the median income in SF, so it wasn’t a big deal. But I promise that if I ever breach $200,000, I will go dark and never write any specific figures again. If I do, you’ll know that I’m lying to blend in because that’s what Stealth Wealth is all about.