Blog Income Review

I don't expect to get rich from blogging (or even earn a similar amount of income per hour spent blogging compared to my day job) but it does provide a (very) small stream of income and has practically no monetary cost (if one ignores pre-existing overhead costs such as my PC and broadband connection). I no longer do any paid posts - it's not that I'm against sponsored posts (if they are flagged as such) - but simply that there aren't any opportunities coming through from PayPerPost, Blogsvertise etc. that aren't totally crass and/or for something I don't want to be promoting on my blog. My blog income this year is mostly from the handful of text link sponsor ads in my sidebar (LinkWorth) and from the banner ad clickthroughs (Google AdSense). The text link ads are relatively lucrative (around $0.50 per day per text link ad) compared to Google Adsense income (around $0.50 per day), but I have to wait for advertisers to request a text link ad to increase this revenue stream (and advertisers can "pull the plug" at any time). Whereas Google AdSense revenue could be boosted through my actions, as it depends on blog traffic volumes (ie. what I post, how often, and how I promote this blog) and on click-through rates (ad relevance/post content and blog audience composition I suppose), but my natural level of daily page impressions is fairly static. Some attempts to boost traffic (eg. Traffic Swarm) are counter-productive (as they are considered 'spam' links and can lead to page rank penalties from Google etc.), and others just increase traffic without producing any long-term increase in readership or clicks on ads (eg. StumbleUpon), as seen last October.

Overall I receive about $2-$3 per day income from this blog, which corresponds to an 'alternate stream of income' equivalent to about 1% of my wage income. If I could increase this by an order of magnitude (either boost quality blog traffic ten-fold, or establish ten similar blogs that are low maintenance/post frequency) the extra 10% income stream would become significant, especially if it was all directed into additional savings and investments ;)

Then again, I may be too busy doing a MoA next year to worry about setting up new blogs!

Subscribe to Enough Wealth. Copyright 2006-2009

Salary review time

Last week the annual salary reviews were distributed at my workplace - since I'm already at the top of the salary range for my position I just received the standard across-the-board "inflation" adjustment, which was 4% this year. The chart below shows how well the "inflation" rises have tracked the headline CPI rate over the past few years - the figures for 99/00, 01/02 and 03/4 can be ignored as I changed roles and received pay increments in those years. Overall, it appears that my company has been pretty good at increasing salary in line with inflation. Of course, the AWE (average weekly earnings) rate tends to increase by more than inflation, so the company policy of making the basic pay rise track the inflation rate isn't particularly generous. However, although I want my salary to keep pace with our living expenses and provide enough income to fund my savings plan, the annual "pay rise" is rather insignificant compared to other influences on our wealth and standard of living. Compared to the effect of RBA rate rises on the monthly payments for our home loan and margin loans, and the impact of real estate and stock market valuations on my net worth, it matters very little whether my pay rise is 2%, 4% or even 10%!

Subscribe to Enough Wealth. Copyright 2006-2008

I want to Lose weight and Gain income

A recent meta-study confirmed what many overweight and obese workers probably suspect - that they are discriminated against in the workplace. The meta-analysis of 25 studies showed that obesity could lower a woman's annual earnings by as much as 6.2% and a man's by as much as 2.3% - and that's if you manage to get past the job interview. However, the statistics also show that employers have good reason to be wary of employing obese workers. One study showed that between 1997 and 2004, obese workers filed twice the number of workers' compensation claims, had seven times the medical costs and lost 13 times the days of work from work injury or illness compared with other employees. And the study of 11,000 Duke University employees found that the average medical-claims costs per 100 employees amounted to $US51,019 for the obese, compared with $US7,503 for the non-obese. That's an extra $435.16 in medical costs per obese worker. So in one sense the lower annual earnings for obese workers are largely offset by extra medical benefits from being employed.

Even if being overweight doesn't directly reduce your income, the extra calories required to maintain a higher BMI cost considerable amounts of money. For example, when I last changed jobs nearly ten years ago I had been eating a healthy diet and regularly going to the gym for a couple of years. My BMI was around 24 - probably the best it had been since High School. Since then my weight gradually crept back up until my BMI was back into the obese range (around 31) the past couple of years. And although I'd stopped going to the gym since changing jobs (it was no longer conveniently located on the way home from work, and I had less time available once we started our family), I think most of this weight gain was simply due to eating too much junk food. The core of my diet is still the same as when my BMI was under 25, but I'd started snacking on confectionery in the afternoons and eating ice cream for dessert almost every day. This year I'm attempting to stick to my basic, healthy diet plan and get some regular exercises - but I quite regularly lapse into eating some extra junk food. For example, the confectionery and ice cream I ate yesterday cost around $8.80 and added an extra unwanted 1,200 calories. If I did this every day for a year it would cost me over $3,200 and add around 65 kg to my weight! Fortunately today I've avoided ANY junk food (so far), and went for a 45-minute walk at lunchtime. One day down, 364 to go (again)...

Subscribe to Enough Wealth. Copyright 2006-2008

Reverse Mortgages can be a Wealth Hazard.

A recent phenomena in the finance industry has been the increased marketing and availability of "reverse mortgage" products for retirees to access the equity tied up in their family home, without having to sell their home. However, such loans are poorly understood by many retirees. A recent ASIC survey found that almost half of those with a reverse mortgage product did not know how much the loan would eventually cost. As there are around 31,500 such loans at present in Australia, worth around $1.8 billion, this could become a big issue. Retirees often have never had access to such a large lump sum of cash before, and can be in danger of spending it all and then having to radically cut their expenses when the money runs out. The loans are not particularly cheap (around 1% more than the standard variable home loan rate) and because the lender is taking on the longevity risk (Reverse mortgages are a form of equity release that allow retirees who own their own home to borrow against the property but defer all repayments until they die or the home is sold) the loan is often fairly small compared to the value of the property. If the lump sum is poorly invested or rapidly spent then the wealth tied up in the family home can easily be consumed by accumulating loan interest long after the initial loan has been spent.

For example, one retired man in his 70s spent more than $135,000 he obtained through a reverse mortgage in only two and a half years."I've been in business all my life and never had to budget. I might have to budget now.", Another woman borrowed $50,000 "in anticipation of needing it over the next three to five years", but then invested the money in a term deposit at a lower interest rate than the loan was charged. Other retirees were recently encouraged by financial planners (who were getting commissions of up to 10%) to take out home equity loans and invest the proceeds in mezzanine financing products that offered double-digit returns. The recent collapses of Westpoint property group, Fincorp and Australian Capital Reserve left such investors with nothing. While a reverse mortgage can be a good way to provide retirees with some extra income without having to sell their only significant asset (their house), it can be dangerous given the relatively poor financial literacy of the retirees being sold these products.

Copyright Enough Wealth 2007

PickingBabyNames.com

Well, sitting here watching TV I thought I'd check out if KidsNames.com was an available domain name. Turns out it was already taken (no surprise there), but trying out a few variations I came up with PickingBabyNames.com that was available and seems to have potential. So I registered it for one year. Probably another $14.95 down the e-drain, but I imagine it can be used to create an e-Business.

Business Plan
1. Rego domain name - done
2. Collate a list of baby name info - meanings, origins etc.
3. Setup a website with this info organised in various lists
- alphabetical
- by origin/culture
- by most popular
- by "type" - animals, flowers, stones, famous people etc. etc
4. Do SEO. Having the phrase "picking baby names" in the domain name should help it get a good ranking for relevant searches
5. Monetize the site using text link ads and possibly some sponsorship.

Looks easy enough on paper, just requires a lot of hours of "spare" time to implement! Getting the name info shouldn't be a problem as there are a host of "baby name" books and sites out there, all with similar information and no referencing. Therefore it should be easy to create my own baby name database without creating any copyright issues. There's scope for adding features such as mapping mashups, forums etc. but I'll look at the cost-benefit of the extra work if the basic site gets up and running.

We'll see how it pans out. I have lots of other irons in the fire (family, GradDipEd coursework, DFS(FP) coursework) so I may not get around to it. In fact, although I may spend some time fiddling around with it when I'm bored it's unlikely to become the next google - I'm just too lazy to be a great entrepreneur.

There are lots of titles such as the "automatic millionaire" and the "accidental millionaire" already in use - perhaps my epithet should be the "lazy millionaire" or "mediocre millionaire" ;)

Copyright Enough Wealth 2007

Dividend Season has Arrived

After the long weekend my post box was stuffed full of dividend statements and proxy voting materials. I organised most of my stock holdings to pay dividends into my credit union online savings account, where I let it accumulate until I prepay 12 months interest on my margin loans each June. The interest on my margin loans more than offsets the dividend income, but seeing all the dividends arrive in my bank account gives me a feel for what retirement might be like, living off investment income. In just the past week or so I've received the following:

19/09/2007 ASX DIVIDEND       $  183.00
19/09/2007 ANSELL DIVIDEND    $   67.20
21/09/2007 TELSTRA DIVIDEND   $1,120.00
21/09/2007 QBE DIVIDEND       $  345.99
21/09/2007 TELSTRA DIVIDEND   $  280.00
27/09/2007 WOODSIDE DIVIDEND  $  107.80
27/09/2007 NEWCREST DIVIDEND  $   15.00
28/09/2007 SYMBION DIVIDEND   $  144.00
28/09/2007 APA DIVIDEND       $  327.95
28/09/2007 BHP BILLITON DIV   $  251.55
01/10/2007 FOSTERS DIVIDEND   $  487.63
01/10/2007 SUNCORP DIVIDEND   $  529.65

Where there are two dividends from the same company it's due to holding the same stock in two of my margin loan accounts. There are still a few dividends that are deposited into a different bank account or arrive via cheque - I'll slowly weed these out by sending in the paperwork required to have the dividends paid into the one account.

Filing of all this paperwork is quite simple - I just slip the dividend statements into next years tax folder and throw out all the proxy voting forms and an marketing materials that may be included (such as the wine selection from Fosters). When I was single I used to enter all the dividend information into quicken as it arrived (as well as all my other daily expenditure), but nowadays I'm either too busy with the family or too tired to make the effort required to keep quicken up to date. It makes life easier in the short term, but makes capital gains calculations a real pain at tax time if I've sold any shares (especially those where I've participated in a DRP for many years).


People who can’t purchase their own home can get easily mortgage loans from banks. This will help people to build their own home or purchase it. There are many banks now in competition and have different mortgage rates as well as terms and conditions. Many people also not satisfying with different interest rates so they go for mortgage refinancing in order to satisfy their financial needs. Banks are always looking to give loans those people who have sufficient resource to payback loan in future. The new insurance policy is an important factor while purchasing a home.

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Copyright Enough Wealth 2007

It's not What You Know but When You Know It.

Recent research reported in the SMH suggests that the IQ test score acheived by a five-year-old can predict if they will complete high school and go on to university, which is a signficant factor affecting earning potential. Michael Keane, professor of economics at the University of Technology, Sydney, reports that "If you know the kid's IQ test scores at age five, that is a better predictor [of future earning capacity] than the parents' IQ or income,". This suggests that good-quality preschoolling can be more cost-effective than later attempts to boost intellectual performance, and casts doubt on whether spending money on private schools for primary and secondary schooling is an efficient allocation of your financial resources if good-quality free education is available.

Personally, I have DS1 and DS2 booked on the waiting list of a good private school (Sydney Grammar) for their secondary years, but they may not end up going there. At $20,826pa for school fees (non-boarding) they will only be attending if I win the lottery, or, more realistically, if they score well enough on a scholarship test to obtain a half or full-scholarship. I'm sure that there are some "networking" benefits of attending such a school (if they end up pursuing a business/finance career in Sydney), but I imagine the effect would be marginal in the long run - once you complete a university degree which high school you attended no longer seems very significant, and once you have several years work experience where you obtained your undergraduate degree isn't very important either (for most people - it may matter if your are applying for a job as a merchant banker). For most private schools there would be lots of "old boys" who went on to mundane careers in middle management, which hardly justifies spending $125,000 on private school fees. Then again, I'm probably biased by the fact that neither of my sons is very likely to be selected for one of the 18 full scholarships that is available each year.

Copyright Enough Wealth 2007

Wage Rise

I got my annual salary review letter yesterday and it turned out I got a 3% increase. Nothing spectacular, but it's slightly more than the past 12 months inflation rate so I can't complain. DW returned to work from maternity leave a couple of weeks ago - just in time to also get the annual rise of 3%. She had originally planned to return to work at the end of July but her boss advised her to return to work a few weeks earlier so that she'd not miss out on the annual rise. As a one-off rise it's not that substantial, but it will boost all future year's pay by 3%.

Copyright Enough Wealth 2007

Annual Wage Rise

Late June (just before the new financial year starts) is when my company does it's annual salary budget. Unless you're getting a promotion, have done an exceptional job, or were recently employed and just coming off your probationary period the salary review tends to be a somewhat disappointing experience. The default rise is a "cost of living" adjustment, which is allegedly based on the previous 12 months CPI increase. Given that inflation for the past year has been around 3%, and the fact the the NSW minimum wage was just increased by 5.3% (from $504 to $531 a week), this year's standard rise should be around 3%-4%. Last year I got the default rise (3.5%), and I expect about the same this year, as I'm in the same role and already had a large rise two years ago. Anyhow, although a big rise would be a nice surprise it wouldn't have a material impact on my net worth. After all, a 5% salary increase this year is equivalent to my net worth increasing by just 0.35% - even less after tax! However, it would increase the value of my accrued annual and long service leave (around 16 weeks altogether) and compounds with any future rises - ten years of 3% increases leaves you in a much poorer position than ten years of 4% rises. Ah well, I'll find out the good (or bad) news in a couple weeks time... It's a bit like waiting to open a Christmas present.

Enough Wealth