Need help understanding these numbers? Visit our first monthly income report for more information. Or you can (and we recommend that you do!) start at the beginning and read through all of the Income Reports.
Our Goals for August were:
- Grow the equity base of the businesses by $2000
- Grow our share of earnings from equities by 1% (For a new monthly total of $238 passive income)
- Our total income goal (both active and passive) for August is then: $2238
Online Earnings
We made very little progress in growing our Amazon business this month. Actually we made no progress whatsoever.
We have a system in place that normally keeps us abreast the search for new items to carry in our store. This usually gives us a steady stream of new brands/manufacturers/distributors to talk to, and plenty of potential leads to choose from.
So why did fail to contact even one of these brands/manufacturers/distributors?
We didn’t want to.
We used August (as we often do) to cut back on business activities. We go through our product catalog and only choose the best-performing items and brands. Everything else gets cut.
Why are we shrinking our business? To free up the most valuable resource we have: time.
During these cut backs, we have slashed upwards of 70% of our catalog. And doing so has always lead to a dramatic increase in our profit-per-hour.
In fact, this year, we cut about 50% of our catalog (and we may be dropping one brand altogether). We estimate that these cuts will increase our hourly rate by about 30%.
Why do we do this in August? Several reasons:
- Sales tend to be slow (August is the bottom of the summer lull for us)
- School’s about to start up, so our focus is about to shift to our ‘normal’ jobs
- This makes sure we do our holiday-season-stock-up for only the best performing products.
So how’d we do?
We increased the equity of our store by $2,052 (We define the increase in our equity base as: Inventory + Cash – Credit – Monthly expenses – what we take out as income. Put another way, it’s the dollar amount that our business grew). Our goal was to grow by $2,000.
We met our goal!
Passive Income from Investments
*See Getting our Fair Share for an in-depth explanation of what we mean by this section and why it’s important to your investing psychology.
Earnings in our individual stocks continued to fall this month. Even with a healthy investment in our usual VOO, we could not buy enough earnings to make up for the lost earnings.
LET THIS BE A LESSON TO YOU
Had I just bought VOO (or another low-cost index fund or ETF) I would have easily met my goal this month. Why? Because the earnings of the broad market did not change, while the earnings of my individual stocks fell.
I had bought airline stock years ago. Who would have guessed a pandemic would cripple their earnings? Had I just bought the broad market ETF, the airline sectors would have still fallen, but the tech sector’s rise in earnings made up for it.
That is the beauty of buying the market instead of buying individual stocks.
In short, we failed to meet our goal for this month because past me was an idiot.
That being said, it was real close: August’s share of stock earnings: $237.43
Total Online and Passive Income
Total online and passive income for August 2020: $2289
Our Goals
Our goals for September:
- Grow the equity base of the businesses by $2,100
- Grow our share of earnings from equities by 1% (For a new monthly total of $240 passive income)
- Our total income goal (both active and passive) for August is then: $2340
Find out if we met our goals in the Income Report for September 2020.
