My Acorns+Lolli Cash Back Stack: How to Invest with Literally Zero Room In Your Budget

I wrote recently about the power of investing "little bits" from your earnings/income to get ahead, in particular to leave behind the need to work. 

I acknowledged in that post that there are those out there who literally do not have those little bits left over in their budgets. I know you're out there. 

I have a way around that dilemma you can use. This is how I build up my investments with cash I must spend on essentials, which for this example is food and fuel (this is a real example, I do this all the time).  

There are a few things you will need for this:

• A checking account
• A debit or credit card (ideally, a card that features cash back in some form)
• An Acorns account (this link will get you a $5 sign-up bonus to get started)
• A Lolli account (this is how you are going to get free Bitcoin)
• Optional, for enhanced earnings later on: A BlockFi account (this is how you earn Bitcoin on your Bitcoin)

Set-Up:

1. In your new Acorns account, link up your checking account and the credit and/or debit card you make regular purchases with (you can link multiple cards)
   
   
2. Install the free Acorns browser extension (important: if you use any kind of cookie blocker, turn it off for the Acorns.com site and any merchant site where you shop with the plugin, or when using the Found Money portal on Acorns.com)
   
   
3. Install the Lolli browser extension (also turn off cookie blocking for the Lolli.com site, the extension itself if prompted, and the merchant website where you are shopping with it)
   
   
4. The BlockFi account will not require any additional set-up at this time (there is an Acorns offer there that the extension will alert you to though!)
   
   
5. Shop for necessities!

*quick note about these browser extension links: these are for the Chrome/Brave version, but other browsers are supported, you may have to search separately for the correct extensions; I recommend you check out the Brave browser, you can earn the Basic Attention Token just for using it!

If you dig through the offerings in both Acorns and Lolli, you'll see that most of the options are in the "consumer discretionary" categories: mostly wants, few needs. For a tight budget, this is a deal breaker.

This is where adding the browser extensions comes into play: they will alert you when you are on a website that offers a kickback, and it may be with merchants you would not have expected. 

My example from today in this regard: the grocery store I usually make curbside pick-up purchases with.

Food. A basic need.

Here's what I did:

First, I went to my grocer's website, like usual. Only this time, the Lolli app alerted me that they've partnered with my grocer. That means I could get Bitcoin back on this purchase. The alert terms and conditions stated "at least 1% back".

I'm also earning fuel discount points with this grocer, redeemable at Chevron or Texaco stations, and I used a 2% cash back credit card. 

Today's purchase came to $38.69. I received:

• $0.77 cents of cash back from my card
• 38 fuel reward points, potentially worth $0.95 cents (more on that later)
• $1.35 worth of Bitcoin (approximately .000041 satoshis at today's BTC price) -- 3.5% back!

So totaling this up, I spent $38.69 on necessities and received kickback benefits of $2.12 (not including the fuel rewards at the moment, the reason why will become clear below), an immediate return of 5.48%! 

This is just the start, however. 

Depending on what merchant you are spending money with, they may be partnered with either Lolli or Acorns, neither, or sometimes both. You can only use ONE of the programs at a time, so if both offer  you something, look each over and activate the option with the greater reward. Don't get greedy here because merchants will only honor one reward program at a time, and possibly will grant neither if they detect you activating multiple offers at once. 

Anyway, I said that this example would also include purchasing fuel, another necessity, so here we go...

I buy fuel for my car and my work trucks at Chevron/Texaco, because in my experience their fuels are superior products to that of their competitors, and because they offer a bonus investment for Acorns account holders: spend at least $20 on an Acorns-linked card at the pump and you'll get a .25 cent bonus investment.

Right now, the best-priced Chevron station near me is selling 87 octane unleaded at $2.57/gallon. To buy $20 worth, I would purchase 7.78 gallons (roughly). 

However, I have fuel discount rewards from my grocer of 3.8 cents/gallon from my example purchase (the actual terms are 1 fuel reward of .10 cents/gallon per $100 spent with my grocer, so these numbers are hypothetical, just to demonstrate how this all works based on this one grocery purchase I made today). The discount per gallon is available up to 25 gallons per redemption, but to this example within the context of a smaller budget, I will detail this with a fuel purchase just large enough to get the Acorns bonus.

Because this lowers the price I pay at the pump before fuel is dispensed, it gets me a little more fuel for $20: 7.89 gallons (and that gets me a bit further down the road for the same amount of money...). 

I'm again using my 2% cash back card. 

So, with the purchase now complete, I have spent $58.69 on necessities and received:

• $0.77 cents of cash back from my card for the groceries
• 38 fuel reward points
• $1.35 worth of Bitcoin (approximately .000041 satoshis at today's BTC price) for the groceries
• $0.40 cents of cash back for the fuel
  
• $0.28 cents of additional fuel (difference of available gallons @ $20 with/without rewards discount @ $2.57/gallon
• $0.25 deposited by Chevron into my Acorns account

That makes for an all-in kickback total of $3.05 on $58.69 spent on necessities, for a final return of 5.2%. All without a penny of additional money out of my budget!

So that's then $1.35 of Bitcoin in the Lolli "wallet" and .25 cents invested into my Acorns account directly, leaving the $1.17 of cash back not invested (a total of $2.77; the other .28 cents of kickback value is in your gas tank). When my card's statement closes and that cash becomes accessible, I can either apply it to the statement balance for an effective discount of 2% on my purchases, or since it's "free money" at my disposal that is not a part of my budget, I'm free to plug it into my investments (one good use for cash back: since your Acorns account will draw "round-ups" from your checking account, unless you turn them off, let your cash back cover rounds-ups in part or in full).

(Again, the fuel rewards terms are that 1 reward of .10 cents/gallon becomes available for each $100 of qualifying grocery purchases, so in practice this has to be taken into account in the actual workings of this spending approach. However, because it is valid on up to 25 gallons of fuel per transaction per my grocer's program, if you invest in a few gas cans like I have, then the kickback return on the total outlay assuming $100 spent on groceries and 25 discounted gallons of fuel purchased at $2.47/gallon actually pushes the rate of return to 5.86%, $9.49 of total rewards/discounts received on $161.75 spent.)

Final boost to the whole thing: once you have $15 worth of Bitcoin in your Lolli wallet, you can withdraw it to another Bitcoin wallet elsewhere. This is where BlockFi comes in: I store part of my Bitcoin hodl (Bitcoin lingo for your stash) there where it presently earns 6% annually, paid in Bitcoin. Not only am I getting free Bitcoin by buying my wants and needs, but my collection of satoshis is growing passively, too. 

Times are rough right now for a lot of people, no denying that. What I'm hoping to do here is show everyone, whatever their current situation, that there are ways to drum up those powerful little bits with spending you have to do anyway and put them to work building you a better tomorrow. This is but one way I do it, and there are tweaks out there to make what I've shown you here generate even better returns (I wanted to keep it relatively simple today). 

The referral links you need to set this up, several of which will give you bonuses to start:

• Create an Acorns account with this link, get $5
  
  
• Create a Lolli account with this link, get bonuses for referring others
  
  
• Get the Acorns browser extension (this is the Chrome/Brave version, other browsers are supported)
  
  
• Get the Lolli browser extension (Chrome/Brave version)
  
  
• Create a BlockFi account with this link, various bonus programs available

So someone told me recently that I should start a blog...

...and, yeah. 

He's right, mostly: I should start to blog. This one is just here waiting for me, after all. 

It was a discussion about bee keeping in which it came up, actually, it wasn't about blogging. My bee keeping exploits have been growing, I'm now managing six hives, and some folks are looking to me now for pointers. I could certainly turn that into content. 

If you want to see something cool (I think this is cool, anyway), check out my latest colony acquisition, a colony I cut out of the trunk of a standing tree last weekend.

That's certainly a place to start dusting off this blog of mine, and a topic to revisit in the future since bee keeping is becoming more of a thing with me. 

Otherwise in the last year+ I've been up to my usual, investing, and getting in more travel. I finally checked Belize off of my list of places to visit this past February. Let me tell you, it was nice:

Did some real estate shopping while I was there, found some good stuff but unfortunately the world went to Hell two weeks after I flew home so nothing has come of it as of yet. Definitely a place I'll go back to one day. Lots of other places are on my list though, so I'll keep exploring before I double back on any of my foreign excursions.

It's looking like Nicaragua is next on my list, and that also has to do with my investing and ex-pat aspirations (I also hate being cold, so I usually take these trips when the northern hemisphere is in winter). Primarily it's just plain curiosity that has me checking out other parts of the globe, but there's also business and tax considerations, plus my growing skepticism at the future prospects of the United States. On that note, I was supposed to be heading to Nomad Capitalist Live in Playa del Carmen, Mexico, next month. It's now in May of next year instead (virus stuff). As such, I may end up planting a flag overseas somewhere before I even attend the conference, we'll see.

There's definitely plenty to write about on my investing activities, especially over the past six months. In February, I had my entire household budget covered with passive income. By the end of March, I got knocked back to needing to come up with $232 per week. Not a bad place to end up in, all things considered, but disappointing none the less. Generally when I'm faced with stuff going wrong, I start rethinking my paradigms and adapting so I can keep moving toward my goal. That led me to not worry so much about "passive" income per se, shift my focus to "location-independent income," and explore approaches to that beyond dividend investing. I still have a healthy portfolio of dividend payers, but lately I've been using simple options strategies to generate income. In particular, I am a fan of "The Wheel":

Anyway, that's it for today I think. Like I said at the opening of the post, I agree with the suggestion that was made to me that I blog. I seem to have a collection of hobbies that people are really interested in. Also, considering what I just said about working on creating location-independent income, this is a good thing to put some effort into. This activity can become that, location-independent income, if I put the time in, so here we go. I think I'll just have to make sure that I stay consistent, but maybe keep things on the shorter side so I don't burn out on it. That said, thanks for reading!

Postscript:

Indeed!

Alternative Investing: Arkadia Moon Deeds in Entropia Universe

At the beginning of last year I wrote about Arkadia Moon Deeds within the MMO game, Entropia Universe. They are an alternative investment I have, one of several within the Entropia Universe, that make up a tiny sliver of my investments.

That post can be found here.

I wanted to write a quick update on the status of this investment, quick because I have to get on the road for a two-to-three day business project (on a weekend... ugh; as I say, "it has to be like this for now, so that it won't be like this forever).

As I predicted, the income from these deeds would be erratic at first, then stabilize and perhaps eventually grow. As of late, they have begun to pay 1 PEC daily (a Project Entropia Cent) daily. In the Entropia Universe Web Shop,  the minimum number that can be purchased at once is five deeds for $30 USD, or $6 USD each.

Project Entropia Dollars (PED) are pegged to the USD at 10:1. As such, $30 invested would yield .05 PECs daily, or 18.25 PED annually, which is roughly $1.83 USD, a yield of 6.08% annualized (before adjusting to find the tax-equivalent yield, that is, which is individual; in my case it comes out to 7.8%).

The deeds do not yet trade in the secondary market in-game, which will begin after all of them are sold via the web shop. The latest news I have seen on the number sold puts the remaining unsold inventory at 54k deeds out of 200k. The other deeds in the game that these are modeled on went on to appreciate significantly in price in the secondary market, the first deeds ever introduced to this day trading at roughly double their par value, and the second issue to follow, Arkadia Underground deeds, presently sit at a premium of roughly 50% over their par value.

$24k Net to "Structural Financial Independence" and the Test Drive I Took in January

One thing that never ceased in my absence from blogging over the past year is my efforts toward getting myself to the point where passive income sources could sustain me. That is, my annual household budget funded without working.

I keep track of all of that stuff and plan my strategies for getting there with the aid of several spreadsheets I've built. Basically, I have them set up to show me where I am now versus where I would be if I were to cash out of everything that is a) not already in my dividend income portfolio (excluding retirement accounts and real estate), and then b) move all of the resulting funds into that portfolio and plug it in.

This gives me a running tally on where my assets stand in terms of their value versus their yield potential, such that I can pursue non-income investments while still aiming for a passive income goal.

To bring it all down to a simple bottom line, the spreadsheet culminates in the net amount I need to earn from work each week, assuming I've moved everything into my income portfolio. When that number reaches zero or goes negative, it means I have hit what I call "structural financial independence," the point at which I am positioned to flip that switch and make it happen, even if I have not.

At that point, radically changing my financial life (my entire life, really) becomes "when I want to" rather than "when I can afford it."

As of this morning (while I type here and use my blog to procrastinate a bit before I do my weekly business and personal accounting...), I am $24.3k net away from hitting that "zero point" (precisely, as of this moment it would flip to -$1.68 per week that I would need to earn). The source of this income will be my business; thus, achieving structural financial independence later this year is practically a fait accompli as my existing book of business is worth far more.

I doubt that I'll drop everything and stop working once I reach this point. There's still a lot of things I can and should do to make my passive income machine robust, and continuing to operate my business is the best source of income with which to do that.

However, it will become optional rather than necessary, and the metric by which I decide how to use my time will change dramatically: it will be about what I'd enjoy doing more, rather than what I need to do.

Keeping track of everything as I have has made it possible to see the light at the end of the tunnel and know where I stand in relation to it, and as such, I took advantage of that knowledge and went off the path early this year for a little bit of play: in late December and into the middle of January, I was in Brazil.

Hanging out on the island of Ilha Grande, Brazil

One of the general outline, "fuzzy" goals I have for my financial independence is to stop putting up with winter. I hate the cold, I hate the snow, I hate the ice. I hate the added danger they bring to everyday activities. I get zapped by static electricity all the time. I can't keep the skin on my hands from drying out to the point that it cracks and bleeds. The endless gray days just suck the life out of me.

Fuck winter. Bottom line: Fuck. Winter.

So, knowing that I'm reaching the point where I can ease back on the work throttle a bit, I did. Last summer a friend invited me along on this approximately three week trip, so I jumped at the chance. It was the first time I've gone overseas in a non-military capacity (other than Canada and Mexico, that is), giving me the opportunity and the necessity to get my passport, finally.

And so a bit more than a month ago, there I was, in the southern hemisphere, experiencing summer in January. I was also there secure and relaxed in the knowledge that everything was paid for, that my affairs were continuing to run and fund themselves without me needing to be at work or looking in on them every single day, and that I had earned it. I finally experienced a dream, escaping from winter, and I was able to enjoy doing it, to be there basically without worries about how to sustain it.

And then something more happened, something that I haven't experienced in decades: I lost track of time. I'd find myself forgetting what day of the week it was, and other than where the sun was in the sky, not entirely sure of what time of day it was. Where I was and what I was experiencing began to take on a feeling of stretching out forever, and it was awesome!

This is the best of what I could have hoped for with this little test, that I could break away from work, not financially, but mentally. For a number of years I've been worried that when I get to this point that I'd be so addicted to working that I wouldn't be able to let myself stop. I'm aware of a "workaholic" tendency within myself, but I feel like this little test went so well that I may just be a bit over-pessimistic about that topic, and maybe it's just a case of not knowing myself as well as I think I do. Now, I think I'm going to do just fine.

And I think that very soon, not only will I be working if I choose to, but I'll also be cold if I choose to... :)

Budgeting for Peace of Mind and Resiliency with 70/20/10

Bitcoin and virtually all other cryptos remain in a murderous decline today, with coinmarketcap.com showing that only three are in the green over the past 24 hours (yesterday there were just two).

I realized it is a good day to reiterate something I tell interested parties often, especially at times like these: for every dollar you put toward investments, put two toward your debts.

Why do that? I'll explain (strap in, this is a long one).

I've been using a budgeting strategy for nearly two decades now that was inspired by the book, The Richest Man in Babylon by G.S. Clason. I've been using it all of these years because, frankly, it works.

I blogged about it here years ago, too, though upon review of that post this morning I discovered that the flow chart I had created to illustrate how it all works became lost forever on an image hosting site I once used. No matter, it's easy enough to recreate (and retain a copy of on my hard drive, this time...).

First, the basics:

The budget prescription given in the book breaks one's income down three ways by percentages. Wages and "windfalls" (tips, money you find on the ground, prizes, etc.) are all part of your income, and for most people will start out as their sole source. 70% of this goes to your living expenses, 20% to your debts, and 10% into investments.

From there, I customized things a bit, which this flowchart illustrates:

(click to enlarge)

Clason's original work recommended a strict adherence to these categories; basically, once funds entered one of the three categories, they and all funds subsequently generated by them stayed in that category. Living was strictly that, the maintenance of one's day-to-day life. Debt repayments were strictly confined to that category, and the income generated by investments was to be retained and compounded.

It would be perfectly fine to do things as such, but the reasons I don't are these:

1) Debt payments essentially have two components, a required monthly minimum (most of the time) and a discretionary additional payment on the principal balance. I think the required monthly servicing should be part of one's "living" expenses, because:

• this will make them less comfortable to carry, and
• this gives the 20% debt category far more impact as it's then entirely additional payments on principal

2) Compounding dividends and interest is a great thing, but any amount of passive income can improve one's life now. For most people the 10% put into those investments will have far more impact on their growth than reinvestment of the income they produce, and the additional funds to apply to debt will have a greater impact still. That said...

3) Combining points 1 and 2, the amount that debts cost an individual in terms of their minimum obligation have a huge impact on the sum total of their required income, such that eliminating the debts and their corresponding required minimum payments will typically propel someone toward financial independence (no longer needing to work for money) faster than investment growth usually will, so this ought to have a greater priority.

Therefore, as you can see by my flowchart, I have my budget set up in this way, with my passive income redirected back to the "top" of the chart so that it may filter down through the three categories (as such, there is some compounding of my passive income, but it's not prioritized). This both makes life more comfortable now, and it moves me closer to not having any debts faster while still building assets.

That leaves just two other tweaks to the system, one of which was actually suggest by Clason: if you have no debts, the 20% allocated to them could be broken up between the living and investment category as you see fit. When I get that far, I plan to just dedicate all of it to investments; since I'm feeding the income they produce back into the budget anyway, I figure that doing so will grow the living category with the resulting additional passive income plenty enough to keep me happy, so why not?

The other tweak is that when I do have a capital gain from my investments, I reinvest the full net amount of it, typically into something offering a higher yield than what the gain resulted from (one exception to this are those rare occasions where cashing something out and eliminating a debt with the proceeds could yield greater over-all cash flow, which was the case when I sold some REIT shares this past spring and then nuked my student loans in one go).

I have my investments spread out over lots of different asset classes, markets, and industries, far too many to list here without it becoming a blog post of its own. Among all of the options out there, I think dividend stocks are the easiest to access. Costs in the form of commissions can greatly hamper initial efforts and the resulting yields, which is why I recommend using Robinhood for this. Robinhood offers commission free purchasing and the interface is a smart phone app. Not having to pay investing commissions is huge, because it makes small purchases reasonable to do and profitable (you can literally buy just one share of something and not have your future capital gains and yields killed by commission expense), and it puts this avenue for generating passive income within easy reach of anyone.

Edit 28 January 2021: DO NOT USE ROBINHOOD, THEY ARE A CAPTIVE BROKERAGE OF ENTRENCHED "ELITES" AND HELP THEM MANIPULATE MARKETS AGAINST RETAIL TRADERS

Lastly, depending on your spending habits and inclination to frugality, the constant input of 70% of your income into the living category can result in a hefty balance building up within it. You could just let it do so and take comfort in it as a "cushion" against uncertainty, but past a certain point it might come to represent some missed opportunity just sitting there as "idle cash." What I do is set a limit on how much I allow this category to build up, which for me is five months of living expenses (five months is the typical duration of the slow season in the work that I do). When the balance of that category exceeds five months of my budget, I put the surplus toward debt, as getting rid of them removes their payments from my budget, thus shrinking the sum total of five months of living expenses, creating more surpluses...

This has become a long one. So to sum up then, this is what I have been doing for nearly twenty years now, and it works. My liabilities are shrinking, my assets are growing (and my net worth is positive, something that's unfortunately becoming increasingly rare these days), my passive income is also growing, and most importantly, the amount of money I need to earn from working is rapidly approaching zero.

And these severe down days in the crypto market, or any market, not that big of a deal. In fact, when one's affairs are arranged like this, these events take on the appearance of opportunity rather than calamity...

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One more time, here's my referral link to Robinhood, where you can buy stocks with zero commission cost, and by signing up both you and I get a free share of a randomly chosen stock: Robinhood, the easiest, cheapest way I know of to build passive income from stocks

Edit 28 January 2021: DO NOT USE ROBINHOOD, THEY ARE A CAPTIVE BROKERAGE OF ENTRENCHED "ELITES" AND HELP THEM MANIPULATE MARKETS AGAINST RETAIL TRADERS



Further reading:

Passive Income from a Video Game: Arkadia Moon Deeds in Entropia Universe

I have a small holding in the MMO game, Entropia Universe, which is now undergoing another expansion of the investment opportunities that exist there. What follows is a posting I made elsewhere in an investment forum I'm a member of, with a few updates to bring the information I'm presenting current to today. Not familiar with this game? Then please, read on...
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First, a little background.

Entropia started off over a decade ago as "Project Entropia." It was then what it is now, a futuristic SciFi online game. What was new about it among others was the full incorporation of a real cash economy in-game. Rather than merely tolerating secondary markets popping up outside of the game for in-game items (such as with World of Warcraft, for example), the creators of Project Entropia, MindArk, made it a key feature of the game, establishing a system where a player could deposit real world currency at an exchange rate of 1 USD to 10 "Project Entropia Dollars," AND vice versa.

The game took place on a planet, Calypso, and players began depositing, playing, and withdrawing. Some even began to make a living through the game.

Fast forward several years...

MindArk began to expand upon the in-game ownership opportunities by creating a new continent on Calypso, with a major new feature: player ownership of plots of land. These player-owned land areas featured a tax system on two key activities, mining and hunting, which generated revenue for the land owner.

The first major land area was put up for auction and quickly sold for around $27,000 USD. The buyer later reported that he recovered his initial investment in under one year...

Several years later, MindArk began to develop space, outside of Calypso's atmosphere. This opened up a whole new area for players to travel through, hunt, mine, and even hunt and loot each other. It also became the platform upon which MindArk created the first destination off of Calypso: a space station.

This space station later went to the auction block, too. It was purchased by a player who goes by NEVERDIE, who in real life is a DJ, producer, and amateur filmmaker. He took out a mortgage on his home and purchased the space station for $100k USD, then transformed it into a hunting, mining, virtual real estate sales (apartments were offered for sale to other players), and nightclub destination, CLUB NEVERDIE.

Nightclub? Yes, a nightclub.

NEVERDIE arranged things with MindArk such that DJs spinning in a sound booth in the real world would have their music piped into a club setting on the space station, complete with virtual turntables and an avatar to represent them. Players could purchase tickets to the venue and catch the shows via their own avatars.

NEVERDIE sold the station in pieces several years later (if memory serves, the total of the sales approached $750k USD), after reportedly having earned millions in USD from revenues over a period of about three years.

Sometime around this period, MindArk created "Calypso Land Deeds." These are essentially shares of Planet Calypso, notes that a player can hold ownership over that pay a weekly dividend derived from revenues earned by MindArk on Calypso. These debuted at a par value price of 1000 Entropia Dollars each ($100 USD). They trade in the in-game secondary market, too, the current in-game asking price sitting at an average of 1984 ED, an increase of nearly 100% over par, with an average annual yield at present of 7.49%.

MindArk then continued the expansion of Entropia by expanding on space in a brilliant way: the creation of new planets. But these were not planets created by MindArk; rather, MindArk created the opportunity for outside investors to set up new worlds incorporated into Entropia, with their own visions, themes, unique creatures, items, etc. At this point, "Project Entropia" became "Entropia Universe."

Several new worlds were created (NEVERDIE owns one of them, "Rocktropia," which is apparently where some of his profits from selling CLUB NEVERDIE went). Players were now able to travel space between the original world of Calypso, the space station, and these new worlds (in fact, several transportation businesses sprung up in-game after this, all owned and operated by players, not MindArk or other investing firms).

Then along came Planet Arkadia.

Planet Arkadia is owned by a company outside of MindArk, Arkadia Studios, just like most of the planets in the game now. It started off as just another world with its own backstory, unique creatures, minerals, etc. But then Arkadia Studios created a new area within the planet itself, "Arkadia Underground."

But this planet owner, unlike the others before them, sought outside financing for this project. To do this, they worked with MindArk and created the "Arkadia Underground Deed," which distributes daily dividends from the revenues generated by players hunting and mining within the area.
200,000 of these deeds were then created and offered for sale, just like the Calypso Land Deeds years before. They went on sale through the Entropia Web Shop (outside of the game) at a par value of $5 USD each. All of them were sold about a year later.

Today, they are worth an average of $8.40 USD each, a gain of 68%, and at present offer a 4.35% yield.

Now the current news...

Arkadia Studios is doing it again. A new moon is to be added to the orbit of Arkadia, and deeds are now on offer that represent the entire area of the moon. They will function the same as the Arkadia Underground Deed, paying daily dividends, which will come from a uniform, fixed tax rate of 5% on all activities that take place on the moon.

A key difference this time is that the deeds will have a par value of 60 ED, but until the end of January are on sale for 50 ED. The moon will be launched in-game by the 3rd quarter of 2018.
Details here: https://www.entropiauniverse.com/bulletin/buzz/…

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Like I said, this is a small holding I have within my entire portfolio. My avatar has a cost basis of approximately $1400-1500 USD, and is at present worth just shy of $2900, not counting on-going revenue it earns from Calypso and Arkadia Underground deed holdings.

There's four reasons I hold this as an investment:

1) The fixed exchange rate of ED to USD, 10-to-1, gives this holding liquidity and stability of the in-game currency (for those of us living in the U.S. anyway; players from other countries must still contend with FX fluctuations). If I liquidate everything I own in-game and convert it all to ED, I know precisely how much I would then be able to withdraw from the game.

2) Because capital gains and revenues generated in-game are in an unrecognized currency, "Entropia Dollars," none of the capital gains I might realize, nor the revenue I receive daily and weekly, create taxable events. It would only be upon withdrawal of funds from the gain above my cost basis that I would owe any taxes to Uncle Scam. Thus, the revenues I'm earning in-game can be assessed on a "tax equivalent yield" basis, how an investor can gauge the worth of the yield of a non-taxable instrument, such as a municipal bond, versus a taxable alternative, like a dividend paying stock. As such, in my current U.S. income tax bracket, 25%, the yields I stated above for the Calypso and Arkadia deeds are the equivalent of taxable alternatives yielding 9.99% and 5.8%, respectively.

3) This is a unique diversification opportunity given that it's virtual property, but specifically it offers two things in that regard: it is about as non-correlating as you can get to things like stocks, bonds, precious metals, etc, and being international in nature, it is receiving cash inputs from players all over the world in numerous currencies, which confers some benefit from purchasing power entering the game through currencies that have greater or lesser amounts of relative strength at different points in time.

4) It's fun! I own property in a freakin' video game and I get paid to do it! lol!

Entropia Universe is but one more example among many of the investing opportunities that now exist, all thanks to cyberspace, that simply could not have existed earlier in our lifetimes. It's new, it's weird, people who don't understand it mock it, but it works. And it will keep working, and growing...

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(What I wrote to my fellow forum members, just this morning)

I've started accumulating the Arkadia Moon Deeds I wrote about a few weeks ago. I decided to make them a "January project" since they're on sale at about a 17% discount until the end of this month ($5 each currently, par value is $6).

As of this morning my avatar had a value of $2918.82 and is yielding $182.96, 6.29%, or 8.06% tax-equivalent yield in my new tax bracket of 22% (yeehaw!).

The income from these deeds will not kick in until the new moon launches sometime around May. I'm willing to wait though because if the price appreciation of two other types of deeds I own is a reliable guide, then from their inception to the present, I could be looking at 60-100% price appreciation of these new deeds once dividends start to flow.

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If you're feeling intrigued by this, take some time and check out the game. Entropia Universe is free to play, depositing is 100% optional. Enjoy!

https://www.entropiauniverse.com/index.xml

My Cash Flow As A Flow Chart

I use a method of cash management that I've cooked up over several years of trial and error. It was inspired by a great book I found referenced in the footnotes of a terrible Robert Kiyosaki book (that said, I haven't read a good Kiyosaki book...) called, The Richest Man in Babylon by G.S. Clason. In that book is described a method of personal financial management that is very simple: take your entire income, allocate 70% of it to "living," 20% to paying off debts, and the remaining 10% is directed to investments that are "inviolate" - you never cash them out or spend that money.

I ran with the basic system for quite a while and it worked wonders for me. My consumption came under control, my debts began to shrink and my net worth steadily increased. Little by little I began personalizing the system though. I had questions about what to do with "left over" amounts - should one keep separate ledgers for each of the three categories and roll over remaining balances in each when the next pay day rolls around? What about the investments? Clason preached reinvesting all interest and dividends and only tapping that income stream when one is too old to work - what if one doesn't live that long? Why not tap the income now while leaving the principal alone?

Little by little, these questions led to the development of my hybrid Richest Man in Babylon personal finance management method (I haven't come up with a snappy name for it yet). It's a bit difficult to explain quickly, which sometimes frustrates me when I'm trying to explain it to people. I was thinking about that today when the idea occurred to me to flow chart my method.

So, here it is:



As you can see, at the core of the method is Clason's idea, the three categories broken down by his recommended percentages. The investment and debt categories are obvious; "living" encompasses everything you do in day-to-day life - eat, go to the movies, drive your car, etc., and all of the related expenditures. Clason's prescriptions really did end at this point, however, so I added some features to tie up what I saw as loose ends. The result is something that I believe can push itself past the point of requiring inputs (new capital) and can continue to grow on its own, barring human error.

So, the flowchart explained...

It all begins on the left with wages, money from blogging, "windfalls" (found money, lottery winnings, legal settlements, etc.), which are the "inputs" into the system from outside sources (not cash generated within the system loop itself - more on that later). Initially, the system will not run without regular, steady inputs (sorry, you've still got to go to work for a while!). Together they enter the system as "income."

Income then gets divided into the three categories already mentioned.

When it comes to the living allocation, after using Clason's original method for a few months, I found myself at a point where I had cash left over from a previous pay period in this category when the next pay period rolled around. At first it seemed great that I could just roll leftover cash into the category in the new pay period, but I noticed "boom and bust" cycles developing in my spending habits - when this category swelled, I started living it up, and eventually I would find myself reduced back down to just the 70% of my latest pay period. This is fine in one sense because I had created no new debts, but I didn't like being able to have fun one week and then be "in the black" but stuck at home anyway in the next.

That's when I came up with a notion of creating my own "paychecks" out of remaining balances from this category. My idea was to shuttle remainders off to a money market account if a remaining balance existed in the living category each pay period. Then, in between normal pay periods, I would divide the balance of the money market account by 26 - the number of pay periods I have per year currently - and draw the resulting amount, which then gets sent back to the income stage of my cash flow process and allocated among the three categories. The result is that irregular periods of plenty get spread out over one year's time rather than feeding boom and bust cycles, which have been all but eliminated from my financial life by this, and my debt and investment activities get a small boost since a percentage of these money market account withdrawals is allocated to them. Additionally, if something unexpected comes up that would exceed the cash in the living category - car repair, Christmas gifts, a new electric fireplace for your living room (yeah, I want one) - this account can be raided to provide for such things. This account is, after all, a pool of money that exists because of and for deferred consumption (but don't use that as an excuse to constantly raid the account!).

In the debt category, the only question I've ever had is, "what does one do with this category when there is no debt to pay off?" One couple in Clason's book who wrote about their experiences using his method desribed reallocating their income into just living and investing, at 80% and 20% respectively. This idea makes sense given Clason's admonitions to never touch the principal nor the interest and dividends of one's investments until old age, but for the way I treat that category (more on that in a moment), it made no sense at all - it gives one an increased standard of living from wages, but what about investing more while simultaneously having more money for living and potentially working less now? (Not to mention that one's wages might be stagnant for an extended period of time, meaning no increasing standard of living in the present). Instead, my plan is to divert the full debt category percentage into investments, achieving a 70% living and 30% investment cash flow allocation split, which will slowly increase the actual amount of the living category over time, as I'll now explain.

I like investing for income. I understand and appreciate compounding, and I know the advantage and benefits of pursuing capital appreciation; as such, I have accounts where that goes on, namely my IRA account that I have through work. Outside of that though, I prefer to pursue passive income investments that pay me now. My reasoning for this is rather simple: though the long term gains of such investing may be smaller relative to longer term, non-income oriented investing such as growth investing (and this is frequently the case), I am alive now, I may not be tomorrow, and I can boost my income and standard of living now by pursuing such investments whereas the other type offers a payoff at a point in time in which I may not be here anyway. Plus, pursued regularly and systematically, passive income investing can within one's lifetime reach a level where it continues to grow on its own even as it throws off more income than what is required to sustain one's day to day living.

So that's how I arrived at the last box in the chart, my brokerage account box where 10% of all of my income goes. I draw the interest and dividends generated by my investments from my various brokerage accounts and "send" them back to the income stage of my method. Thus, 70% of my passive income supports my daily living, 20% takes care of debts (if any), and 10% goes right back into my passive income investments (or 30% if there are no debts as I mentioned before). I achieve an increasing standard of living now while still getting some benefit of compounding, which increases my income, standard of living, and available cash for investing...

(If you haven't noticed, other than expenditures from the living category, and debt servicing, if any, all cash in my method eventually flows toward my investments, thus feeding the growing snowball...)

I think you see by now where this is going. Done right, I believe my method builds an ever-increasing income and standard of living, and my own experiences prove to me that this is the case. When I say "done right," however, I mean that, as there are several things that can derail this method: overspending in the living category increases debt; increased debt can lead to a situation where 20% of one's income is not enough to cover the payments, and having debt in the first place slows the growth of one's passive income; rash investment decisions can compromise your passive income stream and/or wipe out your capital, etc. This is no "autopilot" method; there needs to be an engaged human brain involved, a willingness to delay gratification, and patience.