Mortgage Free in 5 years: half of every invoice goal

Having announced my intention to return to 100% freelance from October, it might therefore be surprising to hear that I’m also going to be attempting a pretty radical goal to try and drastically increase the amount saved to use against my mortgage balance: I am going to try and put away half of every paid invoice each month for the foreseeable future.

I don’t know if this is entirely sensible with the cost of hot desking to think about, my car insurance due in November and the dreaded bank-draining event that is Christmas just around the corner but I’m becoming increasingly aware that I’m not doing enough just bumbling along tucking away passive income. However, with something in the range of £1600+ worth of bills at the beginning of every month, after contributions from Gaz towards his half of the utilities and Karl towards childcare, I’m going to need to earn £1800 as a minimum (per month) to be able to cover the bills and put half away. That’s not including irregular and/or business expenses.

To get me off to a head start, last week I tucked away £500 into my ISA. It wasn’t quite half of the weeks income but with travel to and from Brighton and the inevitable cost of food etc while I was over there, I knew I’d need a bit more in my current account to get by. However, I did what I always do when I go somewhere “new” and I over-spent on stuff I didn’t need, so I need to start setting myself a budget for these occasions too. There has to be a happy medium between radical frugalism (is that a word) and free spending…

Earning ‘passive’ income

I talk about passive income every now and again on my blog, so I thought I’d talk about what it means to me.

What is passive income?

Passive income is money I ‘earn’ without the need to specifically do anything to get it. That is, income that just drops straight into my bank or PayPal account without having to intervene or work or any other unpleasant and/or boring activity.

Why do you need passive income?

As I’m now (mostly) self-employed again, I don’t have the stability of a guaranteed monthly salary to depend on. Passive income is important to me because it allows me to build an emergency pot — while I’m busy doing actual, billable work — to fall back on should I be unable to work for any reason, e.g. kids, health (physical or mental); it also means that if an unexpected bill or the like comes in I have something to draw from. Eventually when this ‘pot’ is big enough it will be used to pay a lump sum off my mortgage as part of my goal to be mortgage free in five years. At the moment, all passive income goes straight into this ‘pot’ (it’s an ISA, not a literal pot).

How do you earn passive income?

I have two sources of passive income at the moment:

  1. Income from my premium mail form sales
  2. Income from adsense advertising

(I earn dribs and drabs from affiliate marketing which many see as passive income too, but more often than not the effort required to get to this point far outweighs the pennies I get back.)

Of these two sources, advertising is obviously the easiest. I dropped the provided code from Google into my blog sidebar, mail form site, WAHMweb etc and watch the pennies trickle in. Making money from my mail form is rather different; although I generally don’t do anything month to month to drive those sales, obviously I had to write the form in the first place. I also occasionally have to drum up sales, which I’m not particularly great at (because of laziness, not necessarily lack of skill). The required initial effort and occasional shameless plug are not “passive” but in terms of overall work I don’t do a significant amount month on month.

How much do you get?

It’s taken me a year to earn £60.10 through adsense so it’s hardly lucrative, but £60 is better than nothing.

adsense-payout

The mail form makes the most money out of the two (although still not making me rich): I’ve had 12 completed sales since it launched in February, totalling £228. After subtracting fees (£11.63) and ‘software’ costs (£107.32) there’s a total ‘profit’ of £109.05.

Clearly I’m not going to be retiring off the back of this passive income any time soon, but it’s income I otherwise wouldn’t get.

Are you going to do more?

My grand plan is to open up a member’s only section on my mail form site, which will give users more customisation options and the ability to generate custom forms and add more/better functionality. This requires effort and energy and at the minute I’m struggling to drum up either, because I’m about as low as the time I cried into my wine.

I also have a couple of other content-focused sites which I may or may not choose to work on over the course of the next year which should bring up my income from advertising.

In an ideal world, by the end of 2015 I’d like to be making at least £100 per month in passive income so that I can increase my mortgage overpayment by that amount. I have a lot of work to do to get there…