A New Direction

Halfway through prtojectDon’t let the title fool you into thinking I’ve had some crazy idea of forming a teen boy band sensation to make my millions. Things are not quite that desperate. However, those of you with a rudimentary grasp of mathematics will notice that I am fast approaching the halfway stage of this challenge. The goal has always been to turn my £10 into the equivalent of a salary – or £22,800 – in the space of one year (I have since been advised by several people that this is a relatively high estimate of an average graduate salary, but that is where I set my marker, and that is where it will stay). No mean feat by anyone’s measurement.

By putting those basic math skills into practice once more, you will realise that I am not halfway towards my monetary goal. It should be said, that it was always likely and expected that earnings would start slower and grow as time went on, so this in itself isn’t a disaster. However, the distance from halfway is worrying ; to reach my goal would now require earnings each week of over £700. So far I have not had a week that has approached being close to that figure (though I recommend you keep an eye out for this weeks update…).

You may by now be wondering where I am going with this. Am I throwing the towel in? Let me assure you I am not. I never expected this to be easy, and it was never all about the money either. How much I earn is of course a pretty essential part of this project, and by far the easiest way to measure it and make it interesting. However, there are many other reasons for doing it, such as a commitment to see what is possible, discovering what I can do and what is achievable and the many, many valuable lessons and skills I’ve acquired already.

This project is most similar to a business start-up, and the vast majority of new startups operate at a loss for their first year – so the fact I am well into profit should provide some form of encouragement. These are just a few points to note, I’m not intending to get the excuses in or pat myself on the back – the fact of the matter is that I am behind schedule. As far as I see it, there are two choices now: ignore the problem and carry on as usual – some might call this the Lehman Brothers approach – or, I could identify the issues and seek to do something to address the problem.

Lehman Brothers Collapse

The tragic results of option one

Having already done some maths, throwing some history into the mixer is probably a bit much for one day, but we can safely say that the Lehman approach didn’t work out all that well for them (though mercifully my shortcomings are unlikely to contribute to thousands of job losses and a worldwide financial crisis). So that leaves me firmly in the camp of identifying what can be done about the problem.

I’ve given this some thought. What can I do to tackle my predicament? I don’t want to take the ‘cop-out’ route and say, well I will just have to work harder. This isn’t much of a solution, more like empty rhetoric – if it was simply a case of this I would have done it long ago. The fact is I already work quite hard at it, and whilst of course I could always do better, simply saying this isn’t going to make much of a difference.

Instead I have decided that the best course of action to ensure that this project continues to be worthwhile, and remains interesting for you readers, is to introduce a secondary goal (if you don’t know what the original goal is, check this out). This secondary goal is going to be: to have a passive income of £100 per week by the end of the project (1st March 2014).  This new dimension focuses more on the long term, which is something I perhaps neglected when I originally set out on this experiment. Earning £22,800 in a year is fantastic, but if I can find a way to earn £100 a week in passive income, then each year that I can maintain that means I am earning £5,200 alongside whatever else I end up doing. And if I can get to £100, what’s to say I can’t then reach £200, then £400 and so on. This is the way to achieve financial independence and be drinking from a coconut in Hawaii on my retirement income at the age of 30. That is clearly an exaggeration, and to be honest probably not what I would do even if I did end up in that position, but it is an illustration of how that passive income allows freedom of time, which is surely what everyone is ultimately after. If you want to see a bit more about my view on passive income, and part of the journey to me arriving at this goal, then week 22 is worth a quick read.

I will aim to have a passive income of £100 per week by the end of the project

Passive Income

If only it were this simple, but this goal should be a start

So what are the details? I estimate that my passive income on average, per week currently sits at around £15. A decent amount, but there is a long way to go. I am going to define passive income as any income source that is not directly related to the amount of hours I spend on it. So, this doesn’t mean it is activities that require zero work, but instead income sources that go on giving even when I don’t invest any time, or do not increase the time I invest in the activity.

This slight change in mentality doesn’t mean that I am getting rid of or ignoring my original goal, that is still the main objective. Neither does it mean I’ve given up on the idea of reaching the target of £22,800. I have to accept that every week I do not come close to the necessary £700ish now, the goal becomes less and less likely. However that doesn’t mean it cannot be done. £700 a week, whilst a high figure, is not beyond the realms of reality, and the possibility of coming across a real gem in the course of  this project that can take me there is not out of the question. However, the introduction of this secondary goal means that if none of those things happen, then there I still have a target to aim for throughout, and my time is not wasted. This secondary goal can work hand in hand with my original target, as they are very much intertwined.

Excited woman

Doubtless this is your reaction after having read this post

I have some plans in mind of how I intend to increase my passive income which will become apparent over the coming weeks, so you may begin to notice a few small changes in the strategies I take. I will also begin to report my progress slightly differently, making clear what income is passive and so allowing you to see how the goal is progressing along the way. These are exciting times for The Shoestring Investor!

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  1. I can’t believe this, I think your new target is even harder than your original! If you require a 10% return on your investments then you would need an investment of £50,000 to pay you £100 per week or £5000 per year! Your whole project would therefore be valued at this much!

    • I have considered that, and I thought about setting it lower, perhaps around £50-£75 a week, but decided to aim high. The reason is that traditional investment income only covers a small part of the plans. Things like income from this and other blogs, trying to expand and outsource dog walking (could easily become an automated £20/week if done right), and other business ideas like that are all part of the big idea. I’ll admit £100 is ambitious, but I’d rather aim high, then if I only get to £50 then that is still a huge accomplishment. I’m already 10% of the way there without having focused on it much.

      “The future you see is the future you get.” – Robert G Allen

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