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February 2007 Income Update

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I guess it’s about time that I deliver my report to you all on my streams of income. The format for these reports is very flexible at the moment, as I go on with these reports, I hope to standardize the information more. However, I’ll present the information for February in the same way as January.

Well first, I have to restate January’s results by an additional $7.99. I missed an $8 payout for a posting from Payperpost. And I ditched Adbrite permanently. I had hoped that they would provide an additional source of income and alternative to Adsense, but after nearly four weeks of total inaccessibility (except through a proxy server) and no ads on my website, I finally mailed them to find out what was going on. They tweaked their ‘settings’ (whatever that means), and I ‘tweaked’ mine. Now Adbrite is history, I took a 1c bath on that!

February 2007.
Payperpost $149.00
Google $5.65
ReviewME $0.00
Other Blogs $15.00
Adlinks $10.63
Stockbroker $57.35
Hosting $107.69
Bank Interest $14.74
Journal $37.64
Business $307.69

The total for this month was in fact much higher: $705.39 altogether. I guess there were several new items:
a Chinese New Year bonus from my business (small, though welcome!), I finally sold a copy of my journal (a subscription, no less), and a customer from my hosting service renewed his hosting with me for another 12 months. Other changes included selling less text links on the top left ( perhaps a result of my blog dropping one PR placing from 5 to 4), I didn’t have any new clients for February at all (March is different!) on that count. Also, income from Investments dropped this month, as end of year capital gains distributions and bonuses were not included in February. On the bank interest front, I’m now making more as my CDs are renewing at higher and higher interest rates, currently approaching 2% (local rates here).

How is March shaping up? Well, I already sold two links for the year which will produce a nice bump. Interest income will increase somewhat as will dividend income. I’m increasing holdings in both areas from cash holding and cash in low interest bearing accounts.

A general overview will look at the range of income and the range of types of income. I’m not looking to only create an income from online activities, but also from ‘real’ world activities. In fact, there are 10 types of income in the statement. However, the general arrangement is below (for six months average)

Blog $168.36 46.07%
Stocks $66.37 18.16%
Hosting $32.12 8.79%
Bank $10.70 2.93%
Business $87.91 24.05%

General notes: Interest rates in Taiwan are different from U.S or U.K rates. All of these figures given are Gross Results – not including any taxes.

Anyway, the averages are much more favorable and suggest that I’ve reached about 30.4% of my target over the last 6 months, but February, it was nearly 2x that, at about 58.8%!

There are still two challenges ahead, though. #1 how to increase the total income to the minimum of $1200 per month and #2 how to stabilize the income over a longer period!

This is the Year of the Golden Pig (Boar)! I wonder if that will bode well or not for InvestorBlogger!

Assets vs. Liabilities

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A reprise of Rich Dad Poor Dad. There has been much discussion of the authenticity of RDPD’s and the background of the author. You can read about that at other blogs: Rich Dad, Poor Dad, Liar Dad, Thief.  However, one criticism of the book is below along with my own interpretation of RDPD’s theories.

Jeff writes – “You tried to demonstrate that a house is a liability because you pay property tax on it. That is irrelevant. You also have to pay a tax on your car (license fee). Does that make your car a liability? You pay taxes on your income. Does that mean that earned income is a liability?”

Actually, RDPD clearly defines an asset as something that puts money in your pocket and a liability as something that takes money out of your pocket. So, if you live in your house, you pay a mortgage, taxes, etc., it is effectively a liability because the money comes out of your salary to pay this stuff. In other words, the house is costing YOU money.

Whereas if you rent out a house to someone who pays rent, as long as the rental income covers ALL expenses (inc. taxes) plus a little, the house becomes an ASSET, ie. it is making money for you.

In truth, this is a simplification of the situation, as in a balance sheet, a house with a mortgage would be recorded twice, as an Asset and a Liability. Anyway, he makes an interesting point that our passion for buying houses to live in really isn’t such a great way to make wealth (except through capital gains) as it produces no regular benefit.

But I do think he makes an interesting point: somethings that we attribute as having asset value aren’t really assets at all. A Car is a quickly depreciating asset, and if you are paying car loans, some of the time, the net difference between the value of your car and your outstanding loan may turn it into a clear liability on your personal balance sheet, esp. in the first six months where you haven’t paid anything off, and the car has suffered the sharpest decline in its value.

“A house is an asset, period. ”

Another point that RDPD makes is that yes, the house is an asset, but the question is whose? If you buy a house and its price decreases, your mortgage (assuming you have one) shifts into negative equity position, ie. if you sold, you would still have to repay the amount of the loan beyond the sale price of the house. Could it be said to be an asset then?

And if you don’t believe, do you honestly think that housing prices will keep heading up as they have been doing so ‘Mmm’.

Does this clarify things a little?

What I admire is RDPD’s ability to string simple observations out to a whole book! That’s quite an achievement. I did enjoy playing the game, though it is pricy.

Kenneth