Friday, January 26, 2018

Multiple Streams of Income as a Hedge Against Disaster

My working life these days is as a one-man show in the pest control industry, which is an endeavor that is currently in the middle of its seventh year.

Yesterday was one of my "on" days working at my business, which started dark and early. I have a particular client that requires I be on-site and ready to go at 06:00 when I head there for my weekly rounds, so into the cold and black morning went I.

When I left my house, there was no ice. When I got to my destination, there was also no ice.

In the middle of the trip, in a low spot on the highway I was traveling, there was ice. Black ice.

I hit it coming out of a curve, and my truck just kept going the wrong way. It began to fishtail, so I took my foot off the accelerator and tried to turn into the spin, but the truck wouldn't correct. It then spun 180ยบ around and began sliding sideways across the on-coming lane and off the road.

I was traveling past a wheat field, so there wasn't much to hit, except for an old wooden fence running perpendicular to the road. I slid into the field going backwards, and I think my rear bumper must have taken out the one post that got knocked down, because other than a busted exhaust line hanger and a slightly bent tailpipe, there wasn't any body damage. What luck, eh?

I started the truck back up, put it into 4-wheel drive, drove out of the field and up to the nearby farmhouse that I assumed was where the owner lived. Turned out that it was his fence that I hit, so I gave him my business card and said I'd be back later when the sun was up so we could figure out what to do about it all.

I went on to my first job site, took care of business there, then went to a local specialty muffler shop in town to get the only apparent damaged repaired. They were able to straighten the exhaust pipe and replace the broken hanger, which was done in just twenty minutes and cost me $50. Not bad!

I drove back to the farmer's house to see what the fence looked like in the daylight and to take some pictures. All in all, the damage was not great. It was just a post that got broken down, a few rails maybe, too, and a "goat fence" panel was pushed over. Definitely not anything that was worth engaging with my insurance company and my $1k deductible over, so I went up to the farmer's house to talk it over with him.

He didn't seem too concerned about the whole affair (I think he was just happy that someone owned up to it; he said that his fences had been hit several times this winter, but most people had just driven off...). That section of fence wasn't meant to keep any animals in, mostly it is just a property marker of sorts is what I gathered from our conversation. I told him my insurance deductible was easily way too high to make it worth it to go through them, so he asked if we could just handle it with cash between us. I said "sure!" and offered him $250, figuring that beyond materials I should pay for his time or the time of whomever he might hire to rebuild the fence. He liked my offer, we shook on it, and I promised to come back on my way home at the end of my day and bring it to him. Then he said, "you should give it to my wife, that'll make her happy." I got a bit of a laugh out of that.

What does any of this have to do with multiple streams of income? Well, two things. For one, if I had been injured and unable to work, I'd still be earning through some other means. The other thing is that what came in yesterday from my other streams helped to offset the loss my pest control business incurred yesterday.

So between the exhaust line repairs and the farmer's fence, I was down $300. However, yesterday my other income streams contributed:
  • $110.49 in dividends from the stocks I hold for income in my Robinhood account
  •  $35.64 daily average rent was earned on the various pieces of property I have let out
  • $3.20 of daily interest was paid into my cash value life insurance
  •  $1.58 worth of Bitcoin came in from my Hashflare mining contracts
  • $0.58 daily interest was credited to my Forex account from certain currency long positions
  • $0.50 daily dividends were earned on my land deeds in Entropia Universe
 So that's a total of $151.99 that was earned from other sources (passive sources!), and these are just the ones that kicked in something yesterday (a few others, like my Acorns account, just didn't happen to have any payout activity at the time). That wipes out slightly more than half of the loss I suffered thanks to that one patch of ice. Total revenues for my pest control business yesterday were $665 and change, so even without the passive sources, I finished the day "up" anyway. And then at the end of the day, an unexpected piece of new work fell into my lap with a potential revenue amount of $245. Bonus!

Like I said though, had I been injured and taken out of the game, those other revenue streams would keep going, because they don't require me to put my time into them (or at least, very little). Short of that level of disaster, they at least took some of the sting out of the whole affair. Yesterday morning's mishap also underscores for me the importance of continuing to build these streams. There is data out there that shows how becoming disabled is the main cause of a majority of personal bankruptcies. You can hedge against this by carrying a personal disability policy, but unlike building multiple streams of income, particularly passive types, a disability policy will only pay if you do in fact become disabled, while passive income streams pay in sickness and in health. Thanks to building these other sources of income while also paying down debts, at this point I only need to net $15k USD per year to keep my household budget funded (the roof over my head, lights, food, and a little money for fun, basically). If I were already across that threshold, where my passive income sources at least meet or exceed my annual budget, work would be optional.

And if work is optional, then there won't be any benefit in taking risks like traveling to job sites in the dark in the dead of winter...

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