2008 year-end summary and 2009 goals

January 13th, 2009 · No Comments

I started this blog in the last quarter of 2008 for a couple reasons.  One of them was to act as a record of progress toward our geographic independence goal, so it seems appropriate to post a summary of how we’ve progressed in 2008 and what some of our goals for 2009 are.

Summary of 2008

Image (c) svilen001 http://www.sxc.hu/profile/svilen001

Image courtesy of http://www.sxc.hu/profile/svilen001

It wasn’t until the last quarter of the year that we decided to make a concerted effort to increase the income we earn from GI (geographic independent) sources.  Prior to this, almost all of our investments were focused on asset-growth and done in a retirement-advantaged account.  Thus, any sort of GI-qualified income prior to Q4 2008 was more of an accident than an active decision.  Since then, we have established a number of accounts to deal with GI income and goals plus put together plans and processes to try and increase our positive GI cash flow.  Here are some of the major achievements:

  1. Earned a total of $1,969.94 from GI sources during 2008.  This is an average of $164.16 / month though it was heavily weighted toward the last quarter of the year.  35% of it came from earned interest, 45% from dividends and cap gains, and 20% from blogging revenue.  The interest number includes a non-recurring bump due to an inheritance that sat in a savings account for about 30 to 45 days before being distributed elsewhere (pay-off debt, retirement contributions, investments, home repairs, etc.)
  2. Our weighted monthly GI income was $358.69 in December, 2008.  This was a huge jump over the nicely increasing trend throughout the rest of the year (I went and created historical data for the year.)  The jump is mostly due to a number of dividend and cap gains distributions from various mutual funds and ETFs that only distribute such things once a year.  The weighted monthly income for November was $189.39 which is probably closer to what we’ll start out 2009 with.
  3. Increased our emergency fund savings to 6 months of living expenses.  We’re also half-way done positioning it into a 6-month CD ladder to increase its ROI in an attempt to lose less to inflation.  Our average interest rate, as of December 31, 2008, on the CDs is 3.17% APY versus an average savings rate on the rest of the funds of 2.70% APY — just a little short of earning half a percentage point better in the CDs.  I think the CD ladder was a good idea as a result.
  4. Paid off all outstanding debt except for the mortgage and a small amount of my wife’s student loans.  No more car payments or carrying debt on credit cards.  Somehow the latter had sneaked in for a month or two during the middle of 2008 as a result of some unexpected medical bills.
  5. Reviewed our 2008 expenses and established a budget for 2009, including a number of dedicated savings accounts to smooth out cash flow needs when paying irregular expenses.  This area still needs some work as the complexity of what we have may cause us to avoid keeping it current.

Goals for 2009

According to our current GI plan, where we’re aiming for a consistent annual growth rate of about 64% in GI income over a 10 year span, we need to end 2009 with an average income of $131.95/month where $163.77 comes in during December.  However, our Q4 2008 tracking puts us over both numbers already so we could either adjust the plan immediately or simply aim higher and wait to see a longer track record of staying ahead before feeling safe adjusting the plan.  Given the psychological benefits to seeming to be ahead of the plan, we’re choosing the latter, which means we’ll aim for 2010’s end-of-year goal for 2009.  That goal is to produce an average income of $216.09 per month with a weighted average income for December 2009 of $268.20.

But there are more than just income goals we’ll need to hit if we’re to be able to meet our 10-year GI goal.  We’ll need to find ways to grow income much faster than what we can earn in interest or dividends, and most likely in capital gains.  The solution we’ve identified is to invest time in starting new businesses.  My wife has two ideas that we will be pursing seriously in 2009.  One is a tech start-up that didn’t get going in 2008 due to my own inability to put much time into it.  The second is a potential way to grow her photography hobby into a GI-income generation activity.  Another possible success, assuming our portfolio gets large enough, is to try our hand at new equity trading activities.

Here is the list:

  1. Continue to invest all GI income into income-producing assets, plus contribute a minimum of $100/month from our active income.  For the rest of this year, that will most likely continue to be purchases of stocks or ETFs via ShareBuilder, though it is not inconceivable we’d transfer our portfolio to Zecco before the end of the year.  Focus these investments on producing income, not asset growth (use our “traditional” retirement portfolio for the latter.)
  2. Go live with my wife’s technology start-up.  This requires me to spend nights and weekends helping to develop the website’s code but it could contribute a huge amount to income in future years.  The idea is one that particularly plays into the GI goal of traveling and not needing to be tied to a specific location to produce income.
  3. Increase blogging revenue to $300/month.  This is a potentially aggressive goal given that we only earned a little over $400 in all of 2008.  However, our current cash flow is a little over $100/month and we think we can grow this by growing the audience for our existing blogs, plus my wife is thinking of starting yet another one.
  4. Determine whether we can increase our ROI on our GI funds by using more active trading strategies such as covered calls, automated trading, etc.
  5. Finish establishing easy-to-stick-to processes for sticking with our budget and moving cash around for all of our goals.

Tags: Geo Ind Goal

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