In November 2007, I signed up to participate in the . My goal was a resolution to average $1000 per month in alternative income in 2008. I updated my financial goals in July 2008, too. So how did I do?
I’ll throw in a few caveats here. I do have a few “alternative income” streams like dividends and capital gains that I didn’t include in this analysis. I make a few bucks here and there through other sources that are too small and irregular to mention. I also did not figure out income on an accrual basis, but instead relied on cash basis accounting. If you aren’t familiar with that, it works this way: imagine you receive $600 in May for a 6-month advertising campaign. If you use accrual basis, that means you make $100 per month for six months; but a cash basis says you made $600 in May. So this is an inherently inaccurate look at my alternative income.
I did not meet my goal of making $1000 per month during 2008. However, because of my cash basis approach I did exceed $1000 twice, and the average steadily increased over the course of the year. If I did factor in dividends and other capital gains I would have been close to $1000 for most of the second half of 2008. Regardless of my fuzzy accounting, I believe that my goal – while not met – is not even close to unattainable, and I expect to exceed it easily in 2009.
Since I’m between contracts in my “main” job right now, the level of alternative income is more important to me now than it was when I set the goal. I am experimenting with QuickBooks (again) to better manage my income now that it’s not coming from a single source. Understanding the exact amount of income you are receiving is a key component of personal finance – the fact that I don’t have that number in front of me indicates to me that I’m doing something wrong.
Good news, bad news. I think I did all right in comparison to my goal, although I didn’t meet it according to the standard I set. I’ll set a goal for 2009 – I’ll average $5000 per month in “non-salary” income. That’s an ambitious goal, but one I need to meet if I plan to stay self-employed; and in all honesty, I need to make more than that if I stay self-employed. I’ll probably try to make more independent consulting work part of my income, rather than the contract consulting I’ve relied upon. But my confession is this: I am both terrified and excited that 2009 might be the first year where my non-salary income exceeds my salary income. I might just break free of my salary – it’s happening now and it’s nerve-wracking, but it’s exciting, too.