Supply and Demand, Baby!!! Don'tchoo forget it!
- Income from Hourly Wage / Salary
- Income from Piece-Work
- Income from Capital
The enemy of all three is rising expectations. They tend to rise faster than income, leaving us racing to fall behind.
- Do something you love, or at least like, even when it pays less.
- Do what pays best; don't have to like it, so long as you can tolerate it.
The first is slower, but less odious; the second may be odious, but ends sooner.
Income from Piece-Work
- Create art to sell, income secondary.
- Create what sells, art secondary.
Income from Capital
- Monetary capital (lending at interest (banked funds, bonds, direct loans), securities, etc).
- Commodity capital (trade goods, exchange goods, property).
- Intellectual capital (copyrighted material, patents, licensing).
Both YMoYL and Voyaging on a Small Income both choose government bonds as being relatively stable and relatively easy to liquefy (cash out).
Note: Thanks to various economic crises, the interest returned by gov't bonds has tanked, crippling the compound interest aspect of this type of investment.
Compounded returns grow one's assets exponentially. That is, if all returns are employed as capital.
Compounded capital doubles (roughly) by the Rule of 70:
For example, any compounded pile of capital returning 5% in a year will double in about 14 years (70 divided by 5), all things being equal, and ignoring units.
Trickle (or Micro) Streams of Income
- Cash - Ready assets (cash) to cover monthly overhead and expenses (budgeted).
- Cushion - Readily liquifiable assets to cover living overheads for, say, six months.
- Capital - Income producing assets.
Over 20 some years, we've averaged expenditures of about $5K (recently showing alarming signs of abrupt increase). This includes cost of living plus out-of-pocket medical, boat-building offset by their sale, and frequent trips to Europe to visit Anke's family, as well as travel to visit mine. We pay all assessed taxes, but AK has no income tax and we fall well below the level of federal income tax, most years.
Our approach favors micro-streams of income:
The first (actually pretty macro, on our scale) is the AK Permenant Fund Dividend. This is a yearly, per capita dividend from public revenues from oil sales (of a public resource) that have been invested on behalf of resident's of Alaska. Between us, it accounts for about 60% of yearly expenditures. That leaves about $2K/year (40%) to generate in other ways.
Sales of TriloBoat plans are just ahead of breaking even, and just venturing into a substantial contribution... say 10%. In the longer term, I've got several writing projects that we hope will eventually cover the slack.
Odd jobs are still necessary. We've done childcare, flipped pizza, landscaping/gardening/farmwork, boatwork, trailwork, and lately winter care-taking. If we can clear $10K on a given job, that averages to $2K (40%) over a period of five years.
This totals 110%/year... with the extra going into 'cushion'. More or less.
One important factor, I believe is savings. Not in the sense of 'money in the bank', but in moneys NOT given out.
And where do we invest these thousands upon thousands we avoided having to earn? In free time, of course. Low-stress lives and consequent good health are paying propositions. We think. When our time comes, we intend to have left full lives of creative indolence in our wake, and consider ourselves already well into our gravy years.
And yet, full financial freedom eludes us. Part of that is begrudging time poured down the rathole of income. We have not chosen efficient means of earning money, though we're pretty good at saving it.
Work in progress...