I have been reconfiguring my assets to put my plan into effect as detailed in a recent post about Cash Flow over Capital Gains. As I cannot rely on my job to provide pay raises that keep up with inflation, I am taking responsibility to build my own fixed income assets. For now, HBD Savings is a great vehicle for that purpose. It is important in any plan to have milestones to mark your progress.
I have decided to make my milestones in $10 HBD interest income increments. For every $600 in HBD savings, I will get an additional $10HBD/month. The maths are quite easy in this case. However, when you see it charted out, it makes a different impression.
Saving $600 HBD is rather reasonable. Even saving $1200 HBD is within reach for most Hivers. But, when you start looking at what target income you want, it can be discouraging. This is why milestones are important, to keep you from losing momentum.
My goal is $250 HBD interest per month. To earn that much I would need $15,000 HBD in Savings.
I generally put in about $100 per paycheck into HBD Savings in an alt account. That works out to about $200 HBD per month deposited. This does not include any earned HBD from posting. Per year, that amounts to about $2600 HBD. At that rate, I can expect to earn about $50 HBD in monthly interest income.
If you work that out, I'd be adding roughly $40 HBD in monthly income each year. This is a little discouraging. It would take roughly 5 years to earn $250 HBD monthly in interest.
But, that's where having these milestones is helpful. You can work out the what-ifs.
What if I put in $200 per paycheck? That means that I'd have $6200 in savings next year, yielding about $100 per month. In two years, I'd be close to my target.
What if I earn fairly good HBD rewards from posting? This could move my timeline up.
Not Compounded
One thing that will slow down my savings growth is that my interest earnings will not be compounded. I intend to cash out the interest to spend. My breakeven point is $12000 in HBD savings where I would be saving as much as I would be earning in interest.
But, just because the earnings are not compounded, does not mean that I won't realize other advantages. For example, by having a regular stream of business income, I could use it to pay off my business credit card rather than pay it from salary. Once my Hive interest can pay my monthly business expenses, then I can reallocate my personal income to other expenses. In addition, having HBD earnings and HBD Savings pay for my business expenses means that I can legitimately make content creation on Hive a business.
One of the things holding me back on making Hive into a business is lack of capital. By this I mean that my Hive stake and HBD income are too small. If my Hive stacks were larger, and my HBD savings were larger, then they would produce enough income to be a decent side-hustle.
I recognize that this may seem odd to some readers. For context, in the USA, you need to earn about $2000 per month just to scrape by. If you earn $3000 per month, you start to have a little breathing room. Well, the total value of all my Hive accounts does not exceed $5000 USD. So, even a generous 15% return on the value of my Hive would only yield $62 per month. This is very far from what my monthly expenses require.
Given the numbers, Hive can only be a hobby as I would be blogging at a loss for years at this organic rate. My overarching goal is to make my Hive blogging a fair side income which can at the very least pay for some business expenses.
But, to do this, I need to invest money into Hive, and particularly HBD Savings in order to scale up my income. In order to generate $3000 per month in interest income, I would need $180,000 in HBD savings. Obviously, that's going to take a few years to achieve. Or, the combined value of my Hive accounts should be around $200,000 to generate enough income where I would not have to deplete my stake.
Except that I don't need that much at the moment. Between pension and social security, I only need about half of that. In today's dollars, I only need about $150,000 worth of Hive and HBD.
Let's not get lost in the weeds. The point of all this is that having the income milestones above gives me short term savings goals, which are smaller. Thus, they are more achievable. Every $60 in HBD savings buys me $1 in monthly income. Every $600 HBD in savings buys $10 in monthly income. It's simple. Predictable. Totally unsexy. But, it's the easiest passive income you can make for yourself.