The Importance of Passive Income

I wrote an article a short time back about Passive Income, and my desire to be a millionaire before I’m 40, or to at least retire by the time I’m 40. As long as you have enough money to survive with and pay your bills you are effectively “retired”, and the more time you have the more free time you have to use. For those wondering, the reason I want to retire is because I’d rather volunteer (preferably working with animals) because I love them, and having the time/money to focus on my personal projects which better humanity, I would feel ashamed personally if I worked all my life and achieved nothing. This may seem like an impossible task to some, but I believe it’s possible and quite easily done You just need focus and commitment.

Why is it important to me, well basically, you earn money whilst you sleep. Even if you just earn 1p per hour whilst you sleep, it all adds up over time and multiplies quickly

There are various sources you can use for “Passive” income. Also I refer to the income being Passive in the sense that once I set it up, or have put some work into it. I don’t touch it thereafter. I may primarily change setups from time to time as experiments, but other than that once they’re setup they become a source of income

Now. The maths so that people can understand it. At this moment in time, I use (or have) at least 5 sources of Passive income that I can use to make money from. Here are some examples that I use or have looked into just to give you some examples and why I use them. Much like compounding, the power comes from the sources you have and the fact they run continously without touching

  • eBay Partner Network
  • Google Adsense
  • Youtube
  • Amazon KDP (Bookshelf for authors)
  • Website Store (currently not activated yet)
  • Amazon Affiliates (not using, but an option for some)

I’ve tried to give realistic figures here rather than make believe ones.
Each source “earns” you £0.01 per hour in passive income (£87.60 per year) or £7.30 per month
£0.01 (P/H) x 24 (Hours per Day) x 365 (Days per Year) = 24p per day income

Now, you have a total of 6 sources below – they’re all earning a total of £0.01 per hour
6 x £87.60 (per year) = £525.60 (£43.80 per month)

Now, let’s say you have a let’s say you have 30 sources of income each earning you £0.01 per hour
30 x £87.60 (per year) = £2628 (£219 per month)

Or, how about you have 5 sources of income each making you £0.12 per hour
You’re now earning £2.88 per day per “source” of income – or £14.40 per day overall (£5256) per year (£438 per month)

As you can see, it doesn’t take much to boost your income for a relatively low amount if you have a large number of sources of passive income. Or you have a small number of sources that gain large income.

Just some optimistic calculations, to put things into perspective (how a little can turn into a lot)

You’re a heavy content creator on Youtube. You have a large base of followers who like your videos, maybe you make VLogs. You run adverts on your videos. Each of those videos only make you £0.001 per hour, but you’ve amassed over 300 videos, and about 10% of them are watched often (earning you £0.72 per day – 24H x 0.001P/H x 30 Videos)
This source earns you £0.03 per hour or £262.80 per year

You’re a creative bookwriter, you’ve got lots of books for sale on Amazon KDP. You have written 100 books, but only 30% of them actually earn you £0.005 per hour (or £3.60 per day – 24H x 0.005P/H x 30 Books)
This source earns you £0.15 per hour or £1314.00 per year

As you can see, I’ve only listed two sources of income above, and these could earn you £131.40 per month more in income given my two situations above. Combine that with a website, you can run Google Adsense / eBay Partner Network ads on it for some more income (I personally don’t make much via Google, but EPN I earn between £20 – 50 per month) which I reinvest mainly (my webhosting costs me about £100 Per Year)

Even if I could use the 6 sources above that I mentioned all it would take for me to make almost £1400 per month would be for those sources each to make me £0.40 per hour or £9.60 per day. When you look at the price of a minimum wage job in the UK £8.72 per hour for my age currently. You realise that when you have passive income sourcs, the money you earn doesn’t matter, because it all adds up over time. I actually have about 30/40 sources of “income” that I’ve been thinking of (both active / passive) which I’m currently researching as methods to boost earnings.

Additionally, you should also focus on debts. No point earning £1400 per month passive income and not putting it on debt, because once the debts are paid, you’re then freeing up more income and lowering you’re outbound expenses.

Maybe the next time you think of Passive Income, it will get your mind thinking about how you can have another source of income. Put your mind to use when you have 10 mins free time, and make it work for you in the long run. I think most people would love the luxury of not having to worry about money when they wake up each morning, knowing how their next bill will be paid, or like me, being able to retire when I’m young and enjoy life.

Pay calculator for financial management

One of the things I did when taking control of my financial expenditure and budgeting my money was created an Excel spreadsheet. I used this as a Pay Calculator for my financial management. It helps when you’re tracking every single penny you spend, because you can see all the figures at a glance. Where you’re spending too much, where you aren’t spending enough. Where you can save.

When filling this file in, you have to be 100% honest, and input every single number. If you’re lucky, you’ll have most things on a direct debit, it makes things easier. If not you have to manually input them into the pay calculator.

Please find attached this Microsoft Excel file. Which you can use for budgeting and sorting out your finances.

http://andrewhope.co.uk/~downloads/wordpress-files/financial-calculator.xls

It’s fairly self explanatory

  • Standard household bills input into the left column
  • Any extra money in right-hand side column
  • Your standard wage / benefits goes in the middle section

The pay calculator will then work out the rest for you, and also show you what money you will have left over for the month.

For me personally credit card / loans where my main issue. I’ve been working on restoring my credit rating so I could get a consolidation loan to free up £100 per month off my wage. It doesn’t seem like much, but when you’re counting pennies and budgeting, an extra £100 that you no longer spending is a hell of a lot of free money to play with. Also I paid off one of my credit cards.

This has helped me with financial freedom, I’m slowly getting there.

money saving – changing bulbs to led

I’m always interested in saving money at home. I’ve known for a while that changing my household LED bulbs would save me some money. I’ve finally finished changing all of the bulbs in the household to LED now, so thought I’d write this article to document the prices. A lot of people who aren’t converted believe LED lighting isn’t good. It’s very good and can produce crystal white light in the house. I’ve also converted my mother to use LED lighting now she has found out how much it saves me.

One of the first things that I tackled was my lighting. Traditional (Halogen) lights in the house are very power hungry, times have changed and modern lighting (LED) is now available, which normally uses around 25% of the power that a “Traditional” light-bulb uses.

A 60W Halogen light uses around 60W in power. An LED equivalent uses around 10-15w in power. It doesn’t seem much, but when you add up how often the lights are used, and apply some basic maths formulas. You realise just how bad your household bills are affected by the smallest change in cost.

You can see in the table below, that over the cost of an entire year the bulbs cost me approximately £1.45 per month to run, compared to £13.88 to run per month. For reference, if you want to Calculate just how much your bulbs cost you over the year, this is the formula below

(W x H x 365)/1000 – Multiplied by electric cost per KW/h

An example bulb (15W LED, that is used for 2 hours per day, but used 90 days of the year)
You can work this out for any number of bulbs, just break it down by each bulb per fitting

15 x 2 x 90 = 2,700W of power – divide this by 1000 to convert to KW/h = 2.7 KW/h
Multiply by your cost of electricity (for me it’s £0.14 per KW/h) – excluding the standing charge
Cost to run this 1 LED for above time period = £0.378 per “year” (2.7 x 0.14)

In total I have spent around £30 to replace all of the bulbs (the ones I buy are from ASDA). As you can see below, the costs are made back within the first year of ownership.

If you also take into account the lifespan of the bulbs (LED – 25,000 hours) vs (Halogen – 1,000 hours). It usually costs you even more because you have to buy more bulbs to replace the Halogen ones as they fail.

Hopefully the information below should help you convert to LED. It’s a great money saving tip and simply adding an extra £2 per month onto your shopping bill buying 1 or 2 bulbs at a time can have a lasting effect for you over the years.

LED Lighting Comparison

ROOMORIGINAL BULB (Wattage)

( ) = Total power usage
NEW BULB
(Wattage)

[ ] = Equivalent power
WATTAGE
SAVING
Approx usage (Hrs/year)

( ) = Hours per day
Annual KW/h

Formula =
(Bulb Power (W) * Hrs per Day * 365) / 1000

( ) = Halogen KW/h
Annual Electric Cost @ 0.14 per kw/h

LED listed

( ) = Halogen Cost
Bedroom 13 x 50W (150W)3 x 5W (15W)
[ 50W ]
135W2920
(8)
43.8 (438)£6.13 (£61.32)
Bedroom 24 x 30W (120W)4 x 3.7W (14.8W)
[ 40W ]
105.2W182.5
(0.5 - 30 Min)
2.701 (21.9)£0.37 (£3.06)
Bathroom1 x 20W (20W)1 x 9.4W (9.4W)
[60W ]
10.6W365
(1)
3.431 (7.3)£0.48 (£1.02)
Landing3 x 50W (150W)3 x 5W (15W)
[ 50W ]
135W365
(1)
5.475 (54.75)£0.76 (£7.66)
Stairs3 x 30W (90W)3 x 5W (15W)
[ 50W ]
75W365
(1)
5.475 (54.75)£0.76 (£7.66)
Kitchen (Main)4 x 50W (200W)4 x 5W (20W)
[ 50W ]
180W1095
(3)
21.9 (219)£3.06 (£30.66)
Kitchen (Sink)3 x 40W (120W)3 x 2.9W (8.7W)
[ 40W ]
101.3W730
(2)
6.351 (87.6)£0.88 (£12.26)
Living Room4 x 50W (200W)4 x 5W (20W)
[ 50W ]
180W1460
(4)
29.2 (292)£4.08 (£40.88)
Rear Door1 x 20W (20W)1 x 9.4W (9.4W)
[ 60W ]
10.6W182.5
(0.5 - 30 Min)
3.431 (7.3)£0.48 (£1.02)
Downstairs Toilet1 x 20W (20W)1 x 9.4W (9.4W)
[ 60W ]
10.6W182.5
(0.5 - 30 Min)
3.431 (7.3)£0.48 (£1.02)
TOTAL£17.48 (£166.56)
PER MONTH£1.45 (£13.88)

Fraudulent bank activity

One of the benefits of having a smart phone, I tend to be very religious when it comes to checking my bank statements through the app. As I’m working on reducing my outgoing expenses and paying off debts; I always tend to track my money.

I always have done it, but there was a recent activity on my credit card statement that made me a bit suspicious, it looked as if it was a fraudulent bank activity. It seemed that someone cloned the card.

I was about to call the bank today when I realised what it was. I made an on-line shopping order with my card for Tesco’. The store they were delivered from was the one which the purchase was made, I didn’t know this at the time however.

I only just realised whilst I was ringing my bank to let them know they may have to cancel my card. Good thing I remembered at the last minute

So while the action was completely unnecessary, it always helps to be vigilant and keeping an eye on your expenses. As sometimes the most normal action could lead you to horrible consequences without realising. In this instance my finances were fine it was just me being an idiot.

 

So, further forward, if you have a memory like a sieve like me, it may be worth jotting things down as a backup in a diary. So if you make a purchase, you can go back to it. I’m thinking of using a calender of a sort, so if I do something I can write down the value and go back to it at a later date.

We live in an age where it’s easy for people to steal your card details without you even realising it, better be safe than sorry.

Clearing debt

One of the problems I’ve experienced in the last year is I’ve accumulated a large amount of debt. I had my own debt anyway, but after taking out some car finance my credit rating with my existing debt went from Good to Poor. I’m now left with the long struggle of clearing down my debts and restoring my credit rating

Surprisingly the bank I’m with has now never been more than happier to contact me continuously because I have more funds going out than coming in.

Typically, all companies now use your credit score. The banks even use it when applying for loans. I’ve only been with them 20+ years so it’s not like they know how much I can afford or anything. It’s just “bam” and you’re done. No face to face with my bank now, just that’s it and get lost

I’m very religious when it comes to my finances, I know exactly what I owe, it’s all written down and where it goes how much comes out. So I know the exact figures I need

Part of the problem I experienced is I made the mistake on my birthday of taking some extra money out to celebrate (as I wasn’t paying a loan) but I forgot about the car finance. So the past few months I’ve been overdrawn with my bank by around £400 each month. Resulting in charges.

When my annual review comes for my overdraft, I think I’ll be increasing it.

I tried getting a Wonga payday loan to fix my short term issues. Paying the extra £100 each month is better than paying £300 + fees. Which would give me time to correct my finances. Alas, no! Wonga now uses credit scoring as they’re a “responsible lender” (with fucking high APR’s still) and because my credit rating is … shit they wouldn’t lend me it.

So high and dry with no source of help. I refuse to go bankrupt or anything of the sort. I just need to put my head down, get my thinking cap on and sort bills.

Currently I’m also overpaying 3/4 of my credit cards by £25 extra per month. It’s not much, but when your bank goes in negative the interest you pay off on the cards works out cheaper than with the bank. Plus I know I’m guaranteed to pay off at least £300 more each year from my cards.

I do actually win money gambling, I just don’t do it often. Even just £1 per day is £30 per month extra off my balances, which helps in the long term. Just slowly building it up and hoping for some luck. I’ve had a really bad string lately so looking for a change. I’m always for the positive attitude.

Along with my debt problems, I’ve recently changed energy suppliers as they were extortionate, I just checked my Gas and found I was over £250 in credit when they closed the account. I asked for a refund which should help with my bank charges and interest. I’m also going to close down all the accounts I don’t use to help recover lost expenditure alongside my credit cards. As currently it’s showing I have 5 open credit cards. I use 4 of them but it’s more source of borrowing. So I’m going to close it down and hopefully rebuild my credit a bit more. As I actually forgot I owned one card which would damage my rating.

I’m going to update the post more as I go, hopefully things will be more positive in the summer time. Need some stress free days for a change

Changing gas supplier

Recently after having extortionate gas supply bills and trying to reduce my outgoing expenditure I decided it was about time I started looking into changing my gas supplier

I’m currently with British Gas – lived in this house for the last 3 years with no change in circumstances other than cold winters. When I first moved in my gas supply was around £40 p/m and over the course it’s been building and building where it is now an average of £82 p/m with British Gas on their flexible payment scheme

After inputting my yearly usage according to British Gas (around 17,912kw/h) on uswitch.com the cheapest provider I liked the look of was Scottish Power.

 

With all the charges everything brought in worked out around £57 per month saving me a nifty £25 p/m or £300 per year in savings.

Plus after buying through quidco which redirected to uswitch I am also eligible for a £10 cashback from changing gas supplier for a single fuel (£20 or £30 if dual fuel)

 

 

Madbid

Overtime you may have heard constant references to “madbid” and how you can earn items at a fraction of the price of their real value. Is this possible at all, it’s certainly possible, you just need a bit of luck when using the madbid website.

 

The way the system works is that you pay for credits to bid on auction and then you are doing a live auction like eBay for the item. Each time you bid it allocates a set figure going up in pennies until everyone stops bidding.

 

So if 1000 people are watching an auction and each time someone “bids” when the timer reaches zero, it adds a few more seconds to the clock uses a few more credits and starts the ball rolling again. So when people finally win the item people have used maybe a few hundred to a few thousand credits (say £25-200) each per person, and then paid for the price they won the item at (say £50) then delivery. Madbid certainly doesn’t lose out, their site works in the same principals as the high APR companies on credit cards. They make a decent % on each sale (probably a few thousand %) so either way they don’t lose money

If you’re willing to take a gamble why not try out madbid for yourself and see if you can make a deal or two

 

Please note the above links use my referral code, it doesn’t harm you. Just helps me. So I’d appreciate if you register on the site you retain my code 🙂

 

I’ll make a post at a later date if I win any good stuff for cheap 🙂

Thank you

Gambling with Betfred

Every now and then I like to try out new forms of gambling and one of the sites I like to use a lot of is Betfred. It’s a good site, just watch out for all the welcome bonuses. I made that mistake. It’s best to start off with small amounts and work your way from there.

 

Now, my experience with this site, is it’s sort of OK and user friendly. Although at times the menu options can be a little confusing. I tend to like the virtual games more like roulette and greyhounds, mainly because I’m impatient. Roulette is definately my fav game though, just always remember never to bet more than you are willing to lose

 

Retire at 40

Something I thought of the other night, how much I hate my job, and it had me spurred on. I would really like to work hard, so I can retire at 40. Now, this is no easy challenge. I’m talking proper retirement, not working a single day again in my life and living the life I want with it’s luxuries until I died.

Now, I manage a rather generous guess here on how much I’d need to save up to retire at 40. I worked on the basis of my current expenditure, I guesstimated I’d need around the region of £20,000 per year to live off based on current spending and finances.

I wouldn’t actually need this much, but thought it better to over estimate than under estimate. Also, I want to start this plan when I turn 30, so it’s not a short term plan, it’s a long term plan over 10 years.

Drum roll please…. in order to retire I think I’d need around £3,000,000 (3 million)

Now, this figure isn’t purely for living. I don’t expect to live beyond 70 years old but I would be putting money aside. Around £1.5 million of this is to build my very own custom house. I’m talking about a large plot of land (maybe 0.5 acre) where I have no close neighbours and a house custom built to my requirements to live in until I die. I’m talking things like home cinema, home computer room, gym, swimming pool, games room, etc.

The actual figure I worked out for retirement would be around £1 milllion. At £20,000 per year before inflation, this would work out around 50 years of no employment I could live off. The other £500,000 would be for a safety margin that I could live off if the shit hit the fan

So, how am I making this money. Working and gambling with roulette. Some say gambling with roulette is stupid, but it’s not. Just a case of using your brain and knowing when to quit and knowing your limits. The technique I’m using is very slow, but it has a very high success rate (nothing is 100% on roulette)

To make £3,000,000 in 10 years to retire at 40 years old (playing every day for 10 years). If I work on the basis of 365 days per year, I need to average £821 per day in order to make this amount.

Short of winning the lottery. Roulette will be my next go, it definately works, just a case of perservering. The method I’m using basically returns the original bet you made when you gamble. If you lose, you need to double up the bet. So for a stake of £1 you win £1 back. If you lose you need to bet £2, and then £4, and then £8, etc.

This method is slow, but the money you earn picks up when you have large figures.

I’ll keep adding more posts the further I go, but even using this method of £30 per day you can still earn yourself £900 per month. As for the money on £20,000 per year. Part of this plan is to pay off the mortgage and all debts and buy myself an evo. That way I have a disposable income of £600 per month towards adding into ISAs or high interest accounts. I leave these with a large deposit (say the 500k safety money) compounded interest over 20 years, probably puts this in the region of 1 million more

So, it’s a dumb plan, but something I intend to achieve. Hopefully I’ll take pictures when I save up the money when the house is built 🙂

Good Karma

I like to think I’m a good person sometimes and deserve rewards. I’ve had a hard life, but I don’t tell everyone about it. It’s my problems to deal with, I’m a grown man so I like to cope with the problems myself

I recently had problems with my car resulting in me having to spend about £400 on top of my normal pay. Had to get a wonga loan to fix my pay. Long story short, I applied for a loan of £1000 which I was going to use to fix my finances. Not the best approach but desperate times

I lost my temper on the phone today with loan company (sorry Paul if you’re reading) because they wouldn’t give me it. Checked my bank balance to find there was a whopping £4000+ sitting in there

Remember that good karma I was speaking about. Well, I got an early pension I put in for, so I’m far more calmer as such I don’t need to worry and my finances are now back on track to start paying off debts.

I had a credit card balance of £4000, I’ve paid £3500 off and kept the other amount left in my bank. I should have about 300-400 leftover at the end of the month which I’ll clear my card with

I’m much happy. I’m not arrogant, but sometimes I feel I deserve a little reward, I always make sure I give money for cancer, dogs, children and soldiers. They’re all close to my heart.

 

Moral of the story. If you can do something small to help make a difference, do it. Eventually when you’re in need of a hand down something will come your way for the good karma you have provided to someone elses life.

:o)

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