Year-to-Date Passive Income

This is definitely the first time I ever checked the total passive income generated in the middle of the year. I usually crunch the numbers once a year when I fill the tax returns. Out of curiosity, I spent nearly an hour last night and summarized the money that are generated by money for 2006 (that’s my definition of passive income, price appreciation of stocks or mutual funds is not considered because the gain is not realized). At the end, I was surprised to see that without doing anything, nearly $4000 of passive income has been added to our accounts so far this year! Here’s the break down of that 4000 dollars:

Interests:

I have four credit cards with Chase and from time to time, they sent me 0% balance transfer offers from four months to six months for a maximum fee of $75. These deals are not as good as I will otherwise get when I open a new credit as I recently did with Discover (no-fee 0% BT for one year), but I take them whenever they are available. So throughout the year (actually started from last year), I always have about $25000 borrowed money in our bank accounts. At an APY of 5.05% (EmigrantDirect and HSBC), the interests generated from these borrowed money make the $150 balance transfer fees a price worth paying. However, I will not take any BT offer that doesn’t have a ceiling on the fees, as Bank of America offers for some of its credit cards.

Dividends:

Except ADVDX and PEY which distribut dividends on a monthly basis, I didn’t really go for the dividends when I bought those income-generating mutual funds, stocks, and ETFs on concerns of the tax consequences coming along with the income. On the other hand, since most of the $2241.54 are either divdends or long-term capital gain, they will be taxed at the maximum rate of 15% rather than my income tax rate.

The idea of letting money work for me on its own is great, even it’s borrowed.

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