What, exactly, is a millionaire?
Well, duh, somebody with a million dollars, right? Technically, yes, but let’s consider what it means to be a millionaire. To most folks, Millionaire = Rich. But is it? Let’s do a little thought experiment.
Let’s say you are in your 20’s and you can conservatively expect to live until you are 80. If you start out at age 20 with a million dollars, you could spend a little less than $17,000 per year for the next 60 years before you ran out of money. Hmmm… That doesn’t really seem like the style befitting a millionaire, does it?
Surely, we can do better than that. Let’s invest that million dollars in a completely passive 6% 60-year annuity. With today’s economy, 6% might be a bit of a stretch, but this is just a thought experiment. The result would be an income of about $77,000/yr. Well, that’s better, for sure. $77K is enough money to live fairly comfortably, if you are pretty good at budgeting, and don’t let yourself get snagged by running up credit card debt. However, that’s not really what comes to my mind when I think “millionaire.” Plus, as soon as you reach the age of 80, that $6416/month suddenly stops. Oops.
If you could find a straight money-market instrument paying 6% (unfortunately, that’s even more of a stretch than a 6% 60-year annuity), and just live on the interest, that knocks you down to $60,000/yr. $5K/month is liveable, and you could continue to collect that no matter how long you live. Still not exactly what you might have in mind for millionaire status, but you could squeak by, right? Well…
Consider what inflation will do to that income. Assuming a modest 3% inflation, that $5K/month income is going to look like less than $500/month in 60 years, and 3% inflation isn’t just a stretch, it’s optimistic wishful thinking at it’s worst. Oops.
In order to keep constant purchasing power at a measly 3% inflation, we’d have to only take out $30,000/yr (for the first year, then you could increase that by 3%/year), so that the principle will grow at the rate of inflation. Ouch.
But looking at that another way, if you have an asset that generates $30,000/year, you can consider yourself a millionaire.
There’s still another problem (aside from the obvious one, which is how you come by a million-dollar asset in the first place). Since I’m leading up to the title of this piece, namely millionaire blogging, I suppose that if you were getting $30,000/year blogging, you could consider yourself a millionaire. $30,000 a year blogging is certainly doable. There are several bloggers who manage to hit that level or better after two or three years. But, unlike the prior example of living off of interest, it’s not passive. You quit blogging, and the income drops off. It might not go away immediately, but it will decay until it essentially goes away. So you could only consider yourself a millionaire as long as you keep pumping on the handle. You might as well have pretty much any sort of job that pays $30,000/year (hopefully with cost-of-living raises). By that definition, I’ve been a multi-millionaire for some time — but working for somebody else doesn’t really make you feel like one.
There are ways to increase the passive aspect of the income from blogging. One of those is to run a blog where somebody else writes all (or at least most) of the content. I have a few such blogs myself. However, that still isn’t 100% passive. I still spend a couple of hours every week managing those blogs, and occasionally, I have to spend a bit more time than that. Typically, there are lull times in which the amount of content submitted isn’t enough, and there are also times when the quality isn’t high enough, and I end up writing some content myself. Not that I mind writing — I actually enjoy it, but it’s very time-consuming. Especially if you aren’t willing to slap together some junk and call it a post (I’m seeing more examples of that every day).
Another way is to have several “blogs” that are really only mini-sites. I have several of those myself. You still have to put in some work to get them started, but then they will coast… for a while. They, too, will decay. Perhaps slowly, or perhaps Google will decide you have too much traffic and cut you off abruptly. Either way, in order to maintain a particular level of income, you must constantly evaluate your sites, make adjustments, and build new (or revise old) sites as the old ones become less relevant.
You might be asking yourself at this point whether I’m a Milionaire Blogger, even if only by the $30,000 criterion set above.
The next question is, why blog about it?
The short answer is that blogging is only a tiny part of my internet marketing, but it’s an important part, which I use to boost my other activities. For the longer answer, well, that’s what this blog is about.