As you can surmise from the title, last week was atypical and unique. Early in the morning hours on the Saturday following Thanksgiving, my father passed away. He had been suffering from Alzheimer’s disease with some serious memory impairment for the past 2 years, but eventually got bad enough that my mom could no longer care for him at home. Physical decline accompanied his mental decline such that the last six weeks of his life, things went downhill fairly quickly. At least it wasn’t all drawn out.
If you have been reading the blog, you know that we went out and pre-paid for the funeral in order to spend down assets to help my dad qualify for medicaid while allowing my mom some money to live out the rest of her life. Her mother lived to 94, so she could have another 25 years left and is still in good health currently. Ultimately, he died before the application was even ready so it really didn’t matter, but it did open up the door for financial discussions.
Do I Have Enough Life Insurance?
Of course during these times, we always reflect and confront our own mortality so I have been looking at some of the financial aspects of my life and other aspects as well. I am pretty well convinced that I have enough life insurance. If something were to happen to me today, the amount of life insurance that I would receive would pay for the funeral, would pay off every liability (including my portion of a commercial building) plus leave enough left over that my wife could easily live for the rest of her life without working.
Passive income from the rental properties should be enough to live off without even touching the extra cash left over from life insurance. Of course assuming I survive today, my plan is to get some of that debt paid off which would make the numbers look even better. Which brings me to the next point.
I will give my parents kudos for not having any debt at all. My mom lives in a paid for condo, has two vehicles and has some cash set aside along with a death benefit that she will receive. Unfortunately, it is not all that much, but will help out. Her biggest issue is that she operated on the belief that retirement means saving what you can and living off the savings.
When we looked at her budget, it worked as long as my dad was alive. Now that he is gone and looses his pension and social security, her budget will be somewhere between $500-$1000 short per month. Looking at that kind of burn rate, she could probably make it for 15-17 years. I suppose we will need to reassess her budget at the beginning of the year after everything has settled down a bit.
But it still gets me to thinking that savings are not enough. I want some passive income.
Finding Passive Income
I am clearly not at the point where I can retire, but I also don’t want to spend the next 25 years working full-time either, especially if I might be in line for getting Alzheimer’s. I would like to be in a much better position in the next decade. That is going to involve eliminating a lot of debt. Once that is done, then I will be looking into purchasing assets that will throw off cash so I can meet expenses without having to work as hard.
Real estate and dividend stocks will be my main focus, but the first step will be to free up the cash by eliminating debt payments. I look at all the money I spend on mortgages, student loans, auto loans, credit lines, and credit cards and figure that I could be in such great shape if I wasn’t working so hard for others.
I will probably put together a little blog on debt so I can record my thoughts and keep myself accountable. Once I get it together, I will let you know, but I really want to get this debt thing under control in the next 5 years so I can start looking at slowing down. I am putting together a plan and will execute it accordingly.
Obviously, I have had plenty of other thoughts over the past week. I am glad that my dad didn’t have to suffer any longer than he did. It could have been worse. The service was nice. It was good to see all the people. And getting back to work was difficult. At least, it is a slower time of year.
Anyway, thanks for reading. Hope your December is not too crazy with the holidays. I am looking forward to another year coming up counting on the Mayans being totally wrong.
Here are the carnivals that included articles from my blogs in the past week or so:
I wrote a little blurb about passive income over at Penny Thots explaining how it really isn’t all that passive initially as building a business or creating something does take a lot of work before the income becomes passive. That is what happened for me online. July has been a busy month with a week of vacation, catching up from vacation, and playing softball two nights per week.
As you may have noticed, I haven’t done squat this month on this blog and have struggled to keep up with the others (although I haven’t been doing all that well). That’s OK, since I do feel that everyone needs a little break now and then. Besides, I figure most people will be paying attention to the Olympics over the next several days anyway so I can gradually work my way back into the content creation mode.
Nevertheless, despite my lack of accomplishments (I last published here on July 2nd and mid-May on HubPages), I still managed to earn some money with the blogs and HubPages. So by definition, I am considering the income passive and am thankful for what I was able to earn this month. It is certainly not enough to quit my day job and become financially independent, but it is better than a stick in the eye.
Since I have been such a slug, I have failed to keep up with my carnival inclusions so I will be making up for that now. I have four weeks’ worth of links so bear with me. I also have over 800 articles in my reader and will skim titles quickly for the best ones. When the weather gets cold, I won’t be wanting to get out for softball or golf so my online activities will increase again.
Anyway, here are the carnival links:
I am really excited to write this dividend income report especially after having put together the numbers. As you know (or maybe you don’t), it has been my goal to increase the dividend income coming into my retirement account and get familiar with dividend investing as a prelude to retirement. It has been my belief that I shouldn’t be saving with the goal of living off my savings when I retire. Rather, I plan on investing in assets that produce income and living off that income.
My goal for the first quarter was $1500 which I was able to meet. For this quarter, that amount was increased by $300 meaning that I was supposed to make $1800 during these past 3 months. I planned on being able to increase the dividend payments because I am moving from stocks that don’t pay dividends to stocks that do and increasing the amount that I have invested in those stocks by selling covered calls and using the proceeds to buy more stock.
First, check out the graph of the results:
As you can see, there has been a great increase since making a conscious effort to focus on dividend income. You can also see that I met my goal of $1800 for the quarter. In fact, I crushed it with $2143.23! That is over $700 per month in passive income during a time when the stocks in my portfolio didn’t do all that well.
But it really doesn’t matter if the stocks do very well or not. When it comes to retirement income, I am looking for solid companies that will be sending out a steady income stream. I just need to make sure that the worst case scenario (company bankruptcy) doesn’t hurt the portfolio too much. Otherwise, I should expect some ups and downs in the value of the portfolio, but consistent dividend payments.
Now this quarter, I have a goal of getting $2100. It seems like that should be pretty easy, but I did get two dividend payments from Silver Wheaton during the quarter (not exactly sure why) and an extra small dividend from Seadrill. Those payments will have to be made up with additional shares. But I did add some Nucor stock which should help with that. I am fairly confident that I can make it to my next target.
I can’t wait for the next report!
- Summertime is dividend time, research shows (mysanantonio.com)