Pedal2Petal's post-ERE life

[Pedal2Petal]

Today a bit on my online "business" and where it's going.

I've basically been taking an extended sabbatical from working on my projects, the last time I spent any real time on them was October 2014. Of course I'm still doing little things, like upgrading a server to have more resources, or approve comments, or when a website goes down I have to sing to the server to comfort it or something. Probably "working" around 2 hours a week if I had to guess.

However - Lately Adsense has been performing a lot poorer for me than it has historically. This experience seems to be shared by a lot of youtube partners with the onset of a new revenue scheme called "youtube red." I've also noticed that Google is promoting its Adsense program a lot more heavily than it used to, maybe it's a sign they are making the program more "profitable" for themselves and less so for their Adsense partners. Hard to say but I've always sought to be diverse in my online income sources so these new developments have not actually affected me much at all.



Above: revenue by week, over the last year. Recently they've been lower than average.

Lower revenue along with some new hobbies is prompting me to try a few new things. Also my site is #104,000 on Alexa so I'm hoping to get it to 100,000 and be in the 100k alexa club (ERE is 39,000 btw)

My two main online projects right now (aside from this ERE journal) are my electronics videos on one of my youtube channels, and the mushrooms vancouver blog. Well the electronics videos are not getting a lot of traction, but the Mushrooms VancouverTumblr blog, wow! A lot of reposting, following, the account is growing very quickly.

It reminds me that youtube really is not as good a traffic source as it is a revenue source.

Anyway my most popular mushroom post so far is the crown-tipped coral mushroom, which has over 100 "notes" total. (notes are a sum of all your reblogs, likes and comments) I've started embedding non-intrusive amazon affiliate links into each post so that as the posts spread around, so do my Amazon links. Surprisingly, as Adsense revenue is diminishing, Amazon payouts are increasing. Yesterday I deposited a $1300 CAD (980 US) payout of commissions for a single month, my biggest one yet. So I want to encourage that trend and grow my base of affiliate links.



Daddy Day Care

One big new development is that my wife will probably be promoted soon to a middle management position at her radio station. She is on maternity leave right now but will go back to work early if she gets the job. So I could be primary caregiver starting as soon as December.

Since we're already on the subject, here's that baby dressed up as a pumpkin for Halloween.



I'll be going in sort of blind here, but I have some ideas about making parenting easier. Like maybe I can find some parent friends and work out deals where "I'll watch your kid one day, you watch mine the next day, then our kids grow up to be friends" - sounds good for everyone doesn't it?

Also I got one of these bike trailers off Craigslist but haven't used it yet because it's hard to find a baby-sized helmet that isn't a TOTAL RIPOFF in price.

[Gilberto de Piento]

I've seen a similar trend with AdSense income decreasing and amazon increasing. In my case it's more due to Google algorithm changes sending more traffic to one of my sites and less to another.

You are FIRE on AdSense and amazon alone? That's awesome. Are you worried about your income slowing down? I don't trust it at all.

Aren't you worried about revealing lucrative niches and ending up with a lot of competition? Maybe I'm paranoid.

Did you figure blogging out yourself or do you learn from other blogs? I'm always looking for good resources.

If you feel like chatting in more detail send me a pm. It might be fun to talk shop.

[Pedal2Petal]

You are FIRE on AdSense and amazon alone? That's awesome.

Not exclusively those 2 sources, but combined they are well over 50% of my total income. I have a few other sources of money to have as diverse an income as someone with a low net worth can have.

Are you worried about your income slowing down? I don't trust it at all.

In time I do expect the gravy train to slow down or even derail completely, so I use my very substantial free time to learn new marketable skills, especially ones that don't depend on the internet. Like bike mechanics, practical electrical engineering, etc. Other alternative forms of capital especially social capital make a great safety net too.

At my current earnings:savings ratio, every day I pull income I actually earn enough to live for 1-2 additional days. So the longer I hold on the safer I am. Currently if my income dries up I have minimum 2 years of savings I can burn through in finding another revenue source. I consider myself rich now, but I've been poor and it doesn't really frighten me. Read Possum Living for a really great perspective on that.

Aren't you worried about revealing lucrative niches and ending up with a lot of competition? Maybe I'm paranoid.

No, not really. My website ideas aren't really worth very much, it's the actual implementation of them that takes years of work. If someone wants to spend 2 years building a better site than I have, rather than fill one of the many voids that exist out there, let them try.

Did you figure blogging out yourself or do you learn from other blogs? I'm always looking for good resources.

I figured a lot out by trial and error so I have a lot of techniques and ideas that you won't find on "smart passive income" or whatever. A lot of my ideas came from Early Retirement Extreme, and from an SEO internship I had after college in 2010. I actually got a lot out of Ed Dale's 30 day challenge, but I don't think it exists in the form it did in 2013 at all. I might still have some of the materials I downloaded though.

Changing Gears a Bit

I don't have anything to report right now as I've been spending a lot of time lately playing a hideously complex roguelike zombie survival game, but here's an ERE story from two years ago.

When we first moved into my in-laws' basement suite, my mother in law just could not accept the fact that I was neither working a job nor looking for one. She probably thought I was mooching off her daughter (my wife) for money. She bugged me about it a lot, trying to suggest different jobs I could apply for. Like once I mentioned I used to work retail and she suggested I go apply for some retail sales jobs (ugggggggh I'd rather freeze to death in the streets actually thanx! .) Or she would see me working on my bike and suggest I go find a part time bike mechanic job.

So my response was simply to stop checking the mail, and make her deliver my mail to me. Since I don't have any bills, my mail is generally checks. Like 3 or 4 a month. After a couple months of delivering me a check every week, she stopped asking or bugging me about "getting a job" altogether.

This was another great idea stolen from Jacob actually, I remember a blog post where he started posting all his dividend checks to facebook and pretty quickly his family members stopped trying to offer him "resume advice" or whatever, and left him alone. It worked like a charm for me too!

[Gilberto de Piento]

Thanks for your detailed response. I placed Possum Living on hold at the library.

[simplex]

I'm also using amazon a bit, although in the EU. My experience is not that good. They change advertised prices depending on the country of the buyer, and some get (rightfully) annoyed by this. This combined with the fragmentation of the EU market makes amazon less attractive.

[Pedal2Petal]

I'm also using amazon a bit, although in the EU. My experience is not that good. They change advertised prices depending on the country of the buyer, and some get (rightfully) annoyed by this. This combined with the fragmentation of the EU market makes amazon less attractive.

Is your site targeted at people in the EU? I'm in Canada but I target the US and only sell stuff from the USA amazon. I don't even have a canadian amazon affiliate account. Obviously if all your traffic is coming from within the EU, using the US amazon won't do you any good. You'd know by checking your analytics account.

Here's where my visitors came from over the last 30 days. It's 74% US which is actually lower than it used to be last year (95%) I've gone global!



What I'm Doing Lately

My wife is back at work, as of tomorrow - so I'm full time baby caretaker now. There was a thread here about overcoming stigmas of being a stay-at-home Dad which I found really interesting. My response to nosey nosers who want to know if and how I earn federal reserve debt tickets is usually just that I'm a "business owner" which I think just about everyone understands. I'll also use "self-employed" but tend to avoid "work-at-home." All are socially pretty acceptable.

Here's a stay-at-home-dad related chart from my "charts" folder. It shows how much the family earnings landscape has changed since 1976 in canada. I think the chart on the bottom is really misleading, it seems to suggest there are now more stay at home fathers than mothers, but really it's 55,000 stay at home fathers compared to 400,000 stay-at-home mothers. A 1:8 ratio still, although in 1976 it was a 1:65 ratio.



Applying to Housing Co-ops

For my wife's sake, we'll be targeting some housing co-ops downtown, to cut down her commute. Housing co-ops are easily half the price of market-rate rentals, in exchange for taking part in running the co-op. I think our favorite thus far is the 4-sisters co-op. Downtown isn't a great place for kids, but paradoxically a housing co-op is. This one in particular has rooftop playgrounds and gardens. It's about 100$ more per month than our current place. Being closer to her work will buy her around 90 minutes of extra time each day, or ~400 hours per year. That's also 400 hours per year that I'm not alone with the child by myself. That reclaimed time will cost us $1.50/hr each.



The Battery Project

My 18650 salvage operation is coming along great. I made a compact test bench in the mudroom, it's a normally open hallway which I turn into a workshop with a folding chair that hides beside the washing machine.



I primarily use the tiny laptop as a 5 volt power supply but it also doubles as a browser when I need to look something up

I've done full charge/discharge tests on 40 cells so far out of my total 131 (I used to have 120 but I keep finding more and getting more donated) I've been very impressed with their capacities, only 2 so far have given me less than 1 amp hour.



My best cell so far is my "scientific control" cell which I took out of a brand new backup battery bank, which tested at 2196 milliamp hours.





Buying a Knockoff Go-pro

I think this is the first time ever that I've bought something intentionally on black friday! It was an SJ4000 for 45$. I take a lot of video, and even monetize some of it, so it's pretty easy to justify getting a camera that blows my moto g's camera out of the water.

Here's an image sample from the internet, showing it side-by-side with the much more expensive gopro. The consensus seems to be the SJ4000 is more vibrant yet tends to underexpose, and the gopro is better at correct exposure and has more "true-to-life" colors.



Like everything else, it runs off lithium ion batteries so I can easily attach an external 10,000 mah battery pack to replace the dinky 900 mah battery it comes with and have a camera that records all day long and charges off solar panels, if I wanted to.

[simplex]

The housing co-op sounds great. I'd advise to try to hang around a bit with your child on the playground. This allows you to get a feeling of the neighbors, and if you seem to fit in.

re:amazon: my customers are nearly exclusively EU, it is an item of no direct use for US customers.

[Pedal2Petal]

My pig fat source has dried up recently, so I've had to rustle up a new one. Talked to three local butchers and found one who will give me beef fat. Lard made with beef fat instead of pork is called tallow - and I've always wanted to try it.



How do you like that price tag? In case you can't read it, it says "NO Charge - Just beef fat"

And to my shock, those butchers are pretty sloppy about cutting off the fat, and leave big chunks of meat on it. So naturally, I've been carefully slicing these slivers of meat off and feeding my whole family with them. I estimate for every 8 pounds of fat, I'm getting about a pound of free meat.

I threw up an article on my own site about it, so instead of repeating myself I'll just link it here.

Forced to do some Work

Two of my websites lost their CSS yesterday, so I had to make a bunch of panicked emails to my host to get them working again. Turns out it was their fault (usually it's my fault) due to rolling out a new caching server called Varnish. Whenever I have trouble with my sites, I stop everything to fix it. Fortunately it only happens once or twice a year, and often the site ends up better for it. Other than that I really do no maintenance work on my sites other than approving comments and keeping plugins up-to-date. I'm probably earning in the thousands of dollars per hour of work I put in now. When I was building my sites I was earning around 50 cents per hour of work.

Meeting new People, Building up Social Capital

I am a real proponent of thinking in terms of multiple forms of capital. Now that my financials are where I want them, I'm ignoring it for now and focusing on the six others. You know, the ones that will be there for me when the internet collapses, or the price of tar sands bitumen craters, or the banks fail forcing a "bail-in" or a solar flare toasts the electrical grid.

Off the top of my head, a few of the other capitals are intellectual, ecological, physical, cultural and social.

So I've been making an effort to meet people, especially self-employed work from home types - or those aspiring to be. With no automatic network of people like you would get from a job or a church, you have to build your social capital the hard way. I've made the most IRL friends from Reddit, and the second most from this website. Honorable mentions also go to Youtube and Mr Money Mustache.

[simplex]

Social capital and meeting new people are both worthwhile. In my experience these are not really connected, unfortunately. Mostly meeting new people gives me new ideas and energy, whereas social capital is build up mostly through longer term relationships.
I'd be interested in a practical experiment to build up social capital remotely, e.g through skype.
I feel there's already some social capital between longer term forum users, but I'm not sure how strong (or valuable in capital terms) this social capital is.

[Pedal2Petal]

Social capital has been extremely valuable for me. It's really kicked the ass of financial capital in the last few years. I'll try to list a few of the benefits I've seen so far.

Cheap rent. In a city where average rent for a 2-BR is $2300 per month, we have been paying $900 by living in the rental suite of my in-laws. And if we get into a co-op it will most likely be through the people we know living in the co-op, and our rent will go up to around 1100$/mo, still miles short of the "average"

Free kid's stuff. Hand-me-downs are great. I think we've only bought one toy, very few clothes, a few diapers here and there. Stuff we've gotten free from family, co-workers, friends include 2 car seats, 2 strollers, half a ton of clothing and toys and diapers, and quite a bit of cash too. Of course we fully intent to "keep the karma train rolling" by helping out our pregnant friends with a nice big donation of hand-me-down baby infrastructure when the time comes.

Business deals. I made a big website purchase a couple of years back, but only had to put up 10% of the money for it, although I will end up owning 50% of the site. It was through connections made here that I found someone with cash to invest in something "risky" and it was through other channels that I met someone who shops around for websites who sent me a really top notch one. Then I got favorable treatment from the seller by making friends with him too.

Why Social Capital matters more than Ever

Watch out, because this is going to be a lot of my own opinion on how I see the world, rather than just the facts.

I hinted earlier that financial capital has been getting its ass kicked by alternatives in the last few years. Money is even becoming a liability, now that governments worldwide are flirting with negative interest rates. The world is running out of productive uses for excess money, which polarizes investing into either low risk, super shitty return, or super shitty risk, adequate return. The root cause is probably limits to growth, due to strain in ecological and energy systems. There will always be "edge cases" like the websites I buy at a P/E ratio of 2 or 3, but stuff like that doesn't package well into a global capitalist system so it hasn't been "colonized" by big banking.

There's always been tolerable risk factors with the usage of financial capital to grow more financial capital, but what if there's a more existential risk to the financial system itself? Money as debt won't work with a steady state or shrinking economy. Can you even live off the returns of paper assets at all in a contracting economy?

ERE is great because it's resilient in today's growing economy, and in tomorrow's shrinking one. The form of capital doesn't matter. I'm trying to shift the bulk of my portfolio into something I control, namely NOT money. Relationships are the new blue chip stocks. Daily eggs from a chicken sharing scheme are the new dividends. Knowing how to cook and garden and use a bicycle pays better than that second part time job. Fruit trees are trust funds.

[themodernchap]

I enjoyed the stuff about social capital. I agree. People used to know that too, people who werent religious used to go to church to get that social capital.

Very interesting reading.

[Ego]

Great post about social capital! Like you, building and maintaining a network has paid great dividends for us. A few years ago we began looking at each of our expenses and asking one another how we might eliminate them one-by-one while still enjoying the benefits as if we had paid for it. It's funny how solutions began to present themselves when we started asking that question. Most of the solutions where the result of social capital.

[Ydobon]

An interesting post and while I largely agree re. social capital, how is getting a rent reduction from relatives as the result of the application/creation of social capital?

It may be that my understanding of the concept is deficient, but I was of the belief that social capital was essentially how networks leveraged their skills and assets to meet mutually agreeable outcomes for all. Surely you're just being given what amounts to a gift?

Not knocking the value of in-laws (we lived with mine practically rent free for several months after moving 600 miles for work), just not sure how it fits into your wider hypothesis.

[vexed87]

I would regard a gift as a dividend from social capital. Put simply your social capital is access to resources through the human connections you have. Whether that's free labour fitting a kitchen from a family member, or a couch to stay on, it's all the same to me.

Great post P2P.

The way I see it, the stock market isn't going to provide the reliable returns to retire early, so my focus has shifted more from financial capital towards my knowledge and productive assets, by investing in myself I will be able to provide the things I need in retirement, whether that's furniture, or vegetables to put on the table. I figure I will stay productive until the day I die and the preconceptions I had about idle retirement when I first discovered ERE were naive.

Personally I think the free ride of eternal economic growth is over for the same reasons you mention, the tried and tested strategy of a 4% safe withdrawal rate is perhaps drawing to a close and I worry for all the MMM folk who blindly believe that the markets will always deliver for them. If you can have a few million in the bank, I'm sure they will be ok, but I bet a lot of people will be drawing down their principle, rather than living off the cream. Focusing on the other forms of capital adds resilience, and that's what I like about them.

[Pedal2Petal]

An interesting post and while I largely agree re. social capital, how is getting a rent reduction from relatives as the result of the application/creation of social capital? I was of the belief that social capital was essentially how networks leveraged their skills and assets to meet mutually agreeable outcomes for all. Surely you're just being given what amounts to a gift?

Vexed87 said it better than I could have, a gift is a dividend from social capital. Does that mean that a 30-year old NEET still living at home mooching off his parents is using his social capital to support his own sad little ERE?

I would argue yes.

To me there is a similarity between the "loser" basement dweller, the public sector worker who got his job through connections, and the trust fund kid who happened to be born into the "right family." They all are benefiting from their social capital in one way or another. Just because you were born into it, or married into it, doesn't make it something else. It just makes it unfair

I also take exception to describing the NEET life as "sad" and "little" and "loser." I use the words tongue-in-cheek but don't believe them myself. I think NEETs are a logical result of, again, a shrinking economy that has no room for new entrants. I find myself identifying with them. If I were a bit stupider and a bit lazier and a bit less lucky, I think I'd probably be one myself.

I worry for all the MMM folk who blindly believe that the markets will always deliver for them. If you can have a few million in the bank, I'm sure they will be ok, but I bet a lot of people will be drawing down their principle, rather than living off the cream. Focusing on the other forms of capital adds resilience, and that's what I like about them.

Again you've said it much more eloquently than I could. I too remain skeptical of the more "straightforward" MMM method. When my parents were my age, they were greatly influenced by the authors of "Your Money or your Life," who counted on a similarly optimistic rate of return. And I believe they are back to working again now? Speaking tours last I heard?

I'll leave you with a quote from Daniel Suelo, which I think of often. He has lived without money for 20 years, and is sometimes asked when he will go back to living like a typical American. This is his response:

The more I live this way, the more absurd it seems to go back to living in the prison of money. I was unhappy under money and I'm happy free of it. Why would I trade happiness for unhappiness again? Why would I trade freedom for slavery?

[jacob]

@vexed87 & Pedal2Petal - +1... actually many more pluses. The fashionable 4% rule is too optimistic compared to history and most countries ... especially when it comes to the long run. A diligent paper-manager should aim for 3% in the 21st century environment while a passive paper-manager ought to aim for 2% or less. Paper has gotten rather overrated in recent decades compared to historical means.

[Pedal2Petal]

@vexed87 & Pedal2Petal - +1... actually many more pluses. The fashionable 4% rule is too optimistic compared to history and most countries ... especially when it comes to the long run. A diligent paper-manager should aim for 3% in the 21st century environment while a passive paper-manager ought to aim for 2% or less. Paper has gotten rather overrated in recent decades compared to historical means.

Now here's a related chart from the most recent post on Our Finite Earth. It looks a lot like a graphical representation of what you just said.



Do you think this chart has any relevance here? Returns on paper assets are predicated on GDP growth, right? At least to a point. What happens to paper assets once GDP growth goes permanently negative?

[black_son_of_gray]

@P2P: data here

I generally agree with the argument that the future will see less returns, but I'm not sure that fit line is too reliable. Very dependent on starting/ending points.

[7Wannabe5]

I absolutely agree in the importance of social capital. However, the other way to look at the same situation is in terms of human resources. Besides the usual reasons, my kids would be loathe to come crash in MY basement because they know that I would put them to work to earn their keep. When my peers complain about grown loafing dependent kids, I think that they are either afraid of their own children, not valuing the potential of their own children, or thoroughly lacking in the bit of imagination necessary to invent some work for them to do. How many people could live off the natural resources and energy inputs to my 3/10ths of an urban acre and other free inputs available within human (lentil?)powered travel distance? Kind of depends on how many of them have the ability to do something like "construct a wind turbine from dumpster scraps."

Another way to look at why, or in what situations, social capital will increase in value relative to money is that you only need money to trade with people you don't know or trust. So, the most important skill to have if you want to benefit from social capital is the ability to behave as though you trust other people. This is actually more valuable than behaving in a trust-worthy manner because more rare.

[vexed87]

WRT growth;

Globally, the trend is definitely down, CHS nailed it in his lastest book - A Radically Beneficial World. Under the current regime, some localities may still see increasing growth rates, but not the west.

IIRC, there are 3 key inputs that drive long term economic and job growth, capital, labour and technology.

Capital - We have likely reached a point of diminishing returns of financial capital as proponents and beneficiaries of N/ZIRP and QE have picked all the low hanging fruit with their nearly free money. Other forms of capital, like natural capital are being depleted i.e. EROEI in oil is falling, high yielding ores are consumed leaving inferior lower yielding ores. These are the real upper limits to growth. Ecological collapse which translates to lost opportunity with the added the cost of cleaning up after industry lowers that ceiling of growth further.

Labour - Changing population demographics, i.e. falling worker population, or more importantly, workers relative to retirees and other dependants means reduced economic growth and output, however this can be confusing when you consider the amount of people out of work yet willing to work... but here's the kicker...

Technological advancement - Automation and globalisation is now destroying jobs faster than the western service sectors can create them. Couple technological advancement with erosion of jobs with an oversupply of labour and you have depressed wages, which on the face of it is great for business, but when you realise it means your customer base is being eroded, not so good. This is why we see growing wealth inequality, the benefactors of automation and globalisation (top 1-10%) get richer, while the 90% see worsening living standards as there niche jobs are slowly automated or outsourced to cheaper regions. No one can afford to remain uncompetitive in terms face of globalisation and automation. Adapt or go bust.

WRT paper-assets when/if growth turns negative;

In short to medium term, probably lots of volatility!

If growth remains negative >5 years, index investing in that market probably goes out of the window as a long term strategy. Individual companies may still do well, so you would need to get good at value investing, or revert to safe haven assets such as PMs etc. A long term negative growth.

Long term negative growth is a SHTF scenario where debt can no longer be serviced and has to be inflated away, or financial markets collapse completely. Alternatively massive wealth destruction of paper assets via debt jubilees. Socio-economic policies need to be changed to support sustainable practices, otherwise paper assets will become worthless in long run.