A New Chapter in Life

In July, 2017, I finally made the call. I’d have never imagined that I could do it, but on a Monday afternoon, I submitted my resignation letter. I officially got off the rat race once and for all. No longer do I need to kiss my boss’ ass, or constantly live in fear that I’d be laid off. Now I can do whatever I want, enjoy or feel meaningful doing.

I’m very grateful that my wife is fully supportive of my decision. We have a new born daughter as well. So our family expense would have to be covered by the passive income. As of August 2017, our passive income is 5k/month. Monthly cash flow is barely making even, but we managed a saving of $120k. It’s not a lot at all in the world of investment, so I intend to make every penny count.

My latest investment, renovating a sunroom then rent it out, has generated an annual ROI of 343%, which pays itself off in 3.5 months. My wife really doesn’t like the idea of sacrificing our life style for the passive income. I would argue that the freedom and liberation that financial freedom grants you far outweighs the CONs of cutting into your living space. Of course, different people have different preferences.

I would say the biggest thing to have a minimum effect on your lifestyle by renting out your own space is to make sure there is enough privacy. For example, I’ve made sure to put on walls that are thick (4” wall) and sound-proof. If you’re looking into buying properties for yourself, make sure the lay-out of the house is suitable to separate into zones for renting out later. Another advice is that the number of bathrooms is quite important. A private bathroom can add tremendous amount to your room rental income. Especially on platform such as Airbnb, room with a private bathroom can add about 50% more in your rental price.

Regarding Airbnb, the money is lucrative, but I believe it’s going to get saturated soon. I always considered the old craigslist room&share should be the bedrock when you plan out your monthly cash-flow when considering room rentals.

Update 12/8/17:

Achievement so far since quitting the rat race in terms of cash flow:

Aug, 2017: Airbnb room2   + $1500/month,  invested: ~$7k

Sep, 2017: Weee group. +$50/month, invested $50. Weee is a food service business that my wife is looking into partnering with. It promised to generate $1000 per month by using your garage as a distribution center for food items to your neighbors. So that they don’t need to waste time driving to the grocery store to buy their weekly grocery. Instead, they simply order online and pick up the food item at a nearby location. This is a pretty ingenious idea. Also, it’s pretty much zero risk for us, so that’s why we gave it a try.  However, so far our group is still pretty small. It’s kind of far away from the $1k/month promise. But hopefully it can grow into a much larger group soon.

Oct, 2017: Cutting down expense, paid off student loan, migrate my money to a saving account  +$1050/month, invested ~$10k.  In month 3 of quitting my job, I was getting a little impatient. I realized the quickest, if not by cheating a little bit, is to simply cut my expenses! I worked with my wife closely on this one, and made sure we agreed to stick with it. Our current spending on grocery and leisure is about $2000 a month, if we can simply reduce it to $1500/month, there’s the $500/month cash flow right there. $1500 would mean $750/month for grocery and $750/month for leisure. We will see how it goes~

Paying off my student loan is also a pivotal moment. But again, that’s cheating a bit, but since Trump is no longer supportive of using student loan interest for tax deduction, I was glad that I made this decision. Another $450/month out of my way.

Finally, I migrated my saving to an online saving account. It’s only 1.25% ROI, but 10x better than leaving it in your checking account. I was stupid not to put it in earlier (probably because I was a really good employee; I spent literally 100% of my brain for the company and totally ignored my personal finance back then)  By putting 100k into my saving account, I got another $100/month in cash flow. Not too bad, enough to cover a week’s grocery

Nov, 2017: Got hooked up to invest in a foreign fund. ROI 7%, which is not too bad. + $290/month. took out 60k in saving account (ROI 1.25%)to invested. Other than that, not much is going on in terms of passive income. I still considered 7% as just parking my money. Wife complained the lack of cash flow to really buy a lot of luxury goods. Which triggered me to think of going back to work. It will suck to go back into the rat race again. I made a principal that whatever I’m working on next has to be something I’m really interested in, and passive income should continues to take priority.

Dec, 2017:  Applied for medi-cal because it’s the end of year and I still couldn’t find a suitable job yet. This cuts my expense down quite a bit. +$570/month. Got an offer, but declined. The job requires 50% travel, which is a deal breaker since I have a family now. Gotta continue to resist to temptation to buy into Bitcoin. Bitcoin is purely a gamble, not an asset. This thing is going out of control. I foresee a financial turmoil and a deep recession is going to happen if this mania does not get stopped soon.

Leave a Reply

Your email address will not be published. Required fields are marked *