10 Ideas on How to Earn Passive Income

All I remember was that we had been talking on the phone for a while. I am not sure any other girl ever called me. At the end she was asking me to go to the movies with her. I was too stupid to understand what she meant. I wasn’t very good at social relationships in middle school. Was anybody? Yes. But not me.

At that time I didn’t even like Courtney. Later in high school I was regretting that. But that doesn’t matter now because I have a wonderful wife.

So today’s ideas are just like my middle school dating life, passive.

Day 13 of Claudia’s book Become An Idea Machine.

Let me begin by establishing a few definitions and guidelines and perhaps a warning or two. For this post I will define passive income as anything that is not trading time for money. I know that these ideas require some setup time, or time in some ways, but ultimately it is not working for an hourly wage. A quick Google search for passive income, if only getting it was as easy as finding it right?, turned up a website with a few key notes: “You may do a lot of work up front to get the ball rolling”

And also: “Passive income doesn’t mean perfectly 100% passive with no maintenance required. With any income source, you may need to do a little maintenance to keep it going.”

So it’s gonna take a bit of work. But you can make money in other ways than just punching a clock. Read why I think punching a clock sucks. Even though it is some work, remember that the premise is that it is not trading hours directly for wages. This opens up you to higher incomes because there are a finite amount of hours but some of these ideas will have the potential of generating infinite income.

Which leads me this next comment:

“Passive income doesn’t mean permanent income.”

Be realistic on what you are trying to achieve with your passive income. Want quit your job money? You won’t find that here. This is no get quick rich (or is it get rich quick?) guide to wealth building. However, there is no shortage of those if you are interested. Seriously.

That is why avoiding scams is critical. As the NON-BIBLE saying goes “A fool and his money are soon parted.” So don’t be foolish. Be skeptical of things that suggest they can make you rich with little or no prior knowledge. With little or no work. And little or no idea what you are doing.

James Altucher suggests in his podcast, Ask Altucher Episode 185 Find Your Unfair Advantage, how he learned everything he could about a subject to have an unfair advantage. James says how the first time he really studied was when he had a job as a computer programmer. He was passionate about computer programming so he read the history of computer programming. About compilers and operating systems. About all the different computer languages. He even studied biographies of famous computer programmers of the time.

This might sound like a lot to do. And it is. If you want to make money doing something, you have to understand it. And to do that you have to study and research what is out there first so you don’t give away your money. I think that is why Claudia suggests the time table of 3 months for this day’s ideas.

I have two examples on how I gave away money because I didn’t know what I was doing.

And a helpful story too.

Caveat Emptor: “Buyer Beware”

The first one I gave away several hundred dollars to Summit Climbing Gym. Now to be clear I didn’t just get ripped off. And it was entirely my fault I gave them so much of my money. I live close enough to go to any of their three great locations. Sarah and I enjoyed going there so much we decided to take advantage of their membership offer. The same offer that ended up taking advantage of us.

In the deal we signed up and got a discount on membership and a gear package. We love indoor rock climbing and always have a good time when we go. The discount was worth it and the deal was good. However we signed up to pay $50/person to have a recurring monthly membership with unlimited visits per month.

The deal in Texas is that we are close enough to go to all 3 locations. But this is Texas. We can drive there, but it wasn’t like it was only 15 minutes away. All of the locations happened to be approximately the same distance and similar 45 minute drive. This is important.

In order to go enough times to cover the cost of membership (instead of just paying each time we went) we would have to go 5 times a month. So once a week and one additional time. Great! Sound fun!

But that 45 minute drive once a week wasn’t gonna happen. Let alone twice in one week. Plus we have busy schedules of rushing around doing who knows what. Plus at the time we were doing P90X3 and that was in the home. Making going somewhere less attractive.

Here we were paying for a gym membership and never going. We went a few times but at a cost of $100/month and only going once or less a month. We were giving our money away.

The Second bad decision we made was to give our money away to Banfield Pet Hospital. It must have something to do with fear or worry. Or just the ease of mind in setting up something you “pay less” for. Like insurance. And you don’t ever need or use. We had just got our first puppy, Tex.

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Tex would get his shots covered by the shelter fee but we needed to take him somewhere for boosters. Enter Banfield. They have easy to set up plans to pay them money for unlimited visits. That unlimited word is what gets me. It seams to have and hold a sense of value that is not really there. If you never go you are just giving them your money. And that’s what I did. I gave them about $30/month for nearly nothing. It paid for the booster shots and probably the vet’s second home.

Quick aside. We filled out forms online. Then re-filled them out there. Stupid. I hate when I call some company and have to enter all my account numbers and other personal info. Then when they get me on the line with a real human I have to do it all over again! Stop wasting everyone’s time!

When we got our second dog, Duke, we looked into signing up him too. I thought it would only be $5 more a month to add him to our plan. I mean come on offer a discount to people who are foolishly singing up to pay you monthly for something they never use.

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I misread their website and it was a $5 off one time sign up fee. And then he would be about another $30/month to add him to the plan. No thanks! We had to pay for his shots out of pocket. And then here is where it gets good.

We moved and decided to close that account because we were trying to save money. And to stop giving it away is a good start. When I called to cancel I had a balance of positive $150 or something that I had paid into the account and not used. They then told me when I cancel I will not be eligible to receive that money back. Thieves! But it was in some small print somewhere I’m sure. So I just swallowed the loss. And I just got frustrated that I had paid them money but they wouldn’t use that for my other dog!

Don’t give your money away! Lesson learned.

Finally the story from my suggested reading The Richest Man in Babylon has a chapter as follows:

THE FOURTH CURE : Guard thy treasures from loss

“Misfortune loves a shining mark. Gold in a man’s purse must be guarded with firmness, else it be lost. Thus it is wise that we must first secure small amounts and learn to protect them before the Gods entrust us with larger.” So spoke Arkad upon the fourth day to his class.

“Every owner of gold is tempted by opportunities whereby it would seem that he could make large sums by its investment in most plausible projects. Often friends and relatives are eagerly entering such investment and urge him to follow.

“The first sound principle of investment is security for thy principal. Is it wise to be intrigued by larger earnings when thy principal may be lost? I say not. The penalty of risk is probable loss. Study carefully, before parting with thy treasure, each assurance that it may be safely reclaimed. Be not misled by thine own romantic desires to make wealth rapidly.

“Before thou loan it to any man assure thyself of his ability to repay and his reputation for doing so, that thou mayest not unwittingly be making him a present of thy hard-earned treasure.

“Before thou entrust it as an investment in any field acquaint thyself with the dangers which may beset it.

“My own first investment was a tragedy to me at the time. The guarded savings of a year I did entrust to a brickmaker, named Azmur, who was traveling over the far seas and in Tyre agreed to buy for me the rare jewels of the Phoenicians. These we would sell upon his return and divide the profits. The Phoenicians were scoundrels and sold him bits of glass. My treasure was lost. Today, my training would show to me at once the folly of entrusting a brickmaker to buy jewels.

“Therefore, do I advise thee from the wisdom of my experiences: be not too confident of thine own wisdom in entrusting thy treasures to the possible pitfalls of investments. Better by far to consult the wisdom of those experienced in handling money for profit. Such advice is freely given for the asking and may readily possess a value equal in gold to the sum thou considerest investing. In truth, such is its actual value if it save thee from loss.

“This, then, is the fourth cure for a lean purse, and of great importance if it prevent thy purse from being emptied once it has become well filled. Guard thy treasure from loss by investing only where thy principal is safe, where it may be reclaimed if desirable, and where thou will not fail to collect a fair rental. Consult with wise men. Secure the advice of those experienced in the profitable handling of gold. Let their wisdom protect thy treasure from unsafe investments.”

Find this and more at http://www.ccsales.com/the_richest_man_in_babylon.pdf.

One note on this is that it seems sound and reasonable to only invest where your principle is safe and secure but that is only an illusion of safety. There are definitely better options than giving your money to people who have fanciful unproven ideas. However, sometimes you have got to take a risk and maybe you invest in something you don’t know anything about at all and it works out.

Or sometimes it is worse. Giving your money away to get no real content in return. This one irks me most. I have listened to countless commercials, online videos and even been to a seminar that all have different goals or purposes. Flipping houses. Selling eBooks. Making investments in the next big thing. Dating. All these “content-less” sellers swindle you by starting with flashy numbers of money to be made. One million dollars! Selling you the dream that money you make can buy. Vacations. Beachfront property. And so on.

Next they tell you that you can do it too. In easy steps that they will tell you about shortly. But first let them break out the un-confirmable testimonials. This grandmother did this for $2 million dollars. This one-time homeless man now has a 401k because of this. This guy got the girl because of this. All the while they keep you watching, listening and wanting more.

Then just when you are getting fed up. They probably have done studies to find out exactly how long they have before you get to this point. They finally deliver some “content”. Here are the vague steps that don’t give specifics. And you have to wait and listen more to hear them explained.

Throughout the process they throw out websites and resources that you can you use. These sites or services a are often NOT FREE to use. And are probably owned by the presenters or they get some sort of profit for referring you to them. So here is the RED FLAG. Look into these before sending them money and paying to get more of nothing. They’ve given you nothing so far. You gave them money for nothing. Why would they stop now?

They might be legitimate businesses. They might be real but just suck. A quick google search for reviews will make it easy. Proving Peter Shankman’s point that “Leaders who exert traits such as accessibility, loyalty and being customer-service centric will not only succeed at building a environment where people actually enjoy coming to work every day but also positively impact the organization’s bottom line.”

peter
Nice Companies Finish First: Why Cutthroat Management Is Over–and Collaboration Is In

So with that small preamble out of the way and without much further ado, here are my ideas for today with 2nd steps and explanations. Many of these are similar to each other but variations. But I suppose that is most things in life. Also I have not tried all these ways and cannot specifically endorse them for you.

Last warning, again from James:

“The most important three words in investing is: “I don’t know”. If someone doesn’t say that to you then they are lying.”

THE IDEAS

1. Yurt Lodge Experience:

This one I am most excited about. Sarah and I have discussed this and we are going to plan on doing it. We won’t hit the 3 month timeline but I’ll explain. We want to get some land and live in a yurt. We saw it on TV. We want to have less stuff. We like the outdoors. We have a plan to make money.

yurt

The idea is to get enough land to have several yurts and rent out the ones we are not living in. Also the total cost will be less than our house payment so we will save money there also. But this is why it will not be in three months. We just recently bought the house and need to build equity. Then we will sell it when the time is right and BAM! Yurt time! More on that in the future.

So passive income. Rent yurts. We want to put in a cool outdoor common space. Have a retreat type setting. It will be good.

2. eBay old books and items:

I’ve recently started doing this and have made a little bit of money. There is some work listing and packaging and shipping the items. But ultimately you are not trading hours for money. Make sure to look into shipping costs and how to price your items right to sell and actually make profit.

Be wiling to part with your stuff. Somethings are easier maybe than others. Take your time.

3. Write and sell an eBook:

I want to do this and there seems to be a few different ways.

The first way is the same way that James did with Choose Yourself and Claudia did with Become An Idea Machine. I want to do this too. I want to write a book myself and self-publish in the new internet way and help people. This is a longer term goal behind my blog.

The second way is something I learned partially from one of the aforementioned “content-less” sellers. The ideas are fine. But I’m not paying that guy to do it his way though.

Here is a basic outline of what he suggests:

  • Check Google AdWords for key search terms that might be content that people are willing to pay for
  • Hire freelance writers to write about the topic
  • Hire out cover design
  • Hire out eBook conversion (whatever that means?)
  • Hire out traffic building (to get people to your site to buy your book)

Make sure these add up to less than the profit you hope you will make from sales of the book.

This way seams okay. Hiring out somethings makes sense for sure. But I’m thinking this much is a little cheaty. But Cheat to Win, right? Maybe not so much…

The last way leaves a bad tastes in my mouth.

Selling public domain books repackaged. I would love your thoughts on this.
One source of the Public Domain.

The scam, I mean steps:

1. Take the public domain book from Project Gutenberg or Google Books,
2. Reformat it as PDF,
3. Mark it with a copyright date,
4. Register it as a new book with an ISBN,
5. Submit it to Amazon.com for sale,

Not sounding all that good.

So eBooks make you money. You do work first. Get paid later. A little bit at a time. Over time. Hopefully for a long time.

Buy Claudia’s book. I wouldn’t be writing this without her.

4. YouTube reviews and selling ads for income:

I don’t know how to do this or if it works like I think.

  • Make YouTube videos reviewing products.
  • Sell ads on your videos.
  • Don’t know how to do this? Me either. Google search it if you have time/interest. I don’t.

5. Sell ad space on your blog website:

Get a blog. Get a template with ad space. LEARN HOW TO GET ADs. Probably from Google or something. My wife knows more about this than I do. She just hasn’t done it yet on her blog. If you need a blog site, WordPress.org is a easy place to start. The CMS is easy to understand and there is a great community online of help. The DOT ORG is important if you want to sell things like ad space. My current blog is WordPress.com which doesn’t allow that. But I’ll probably migrate when the time is right.

6. Sell ad space on the side of your vehicle:

I’ve seen this. Maybe it is was in the 90’s or early 00’s. So yeah. There were/are companies that will pay you to put an ad (presumable a magnet?) on the side of your car. I looked into it once. I didn’t drive far enough for them to want to let me have it on my car. Search and you will find it. Or it is no longer real. Meh.

7. Rent out a room in your house:

This is self explanatory. Use AirBnB or Craiglist to find people. We live relatively close to a few college campuses so that might be a good place to search for a roomie/tenant. If you already have the space it is an easy thing to do. Just know that there might be other unexpected costs like higher water bills if they take two hour showers and stuff like that. Food costs. Just be aware. Be aware!

8. Rent out your car / Uber drive people on your trip to pay for the trip:

I’ve heard of some company or place that you rent out your car while you are at work. Makes sense. It is just sitting around anyways. But there is cost in wear and gas and mileage and maintenance. But it might be worth it. Or not.

Or be an Uber driver but that kinda is time for money. So to make it worth it be selective (if they let you). Only take passengers when you are taking a longer trip and so their fair pays for you trip. You were going anyways so it is not really trading your time for money. It is redeeming it.

9. Have a subscription web service and contract out the work:

There is this guy online who will sell you a template to post to craiglist. The idea is then you get respondents to the ads and hire the work out on www.fiverr.com/. It didn’t work for me because I didn’t work for it. The guy said most his clients end up talking to him on the phone to convert the sale. The coordination of projects like this for small side money were not as passive as I thought they would be. But it is not hours for dollars. So it might work for you. Let me know if you are interested and I’ll give you the guy’s info.

This leads to the last idea.

10. Don’t make passive income. It’s too much work for too little return.

Seriously. An idea not to do something is a great idea too some times. Everyone is running around trying to side hustle this or leanstartup that. Maybe just stop. Be grateful for what you have. Examine why you want more income and if you really need it.

Want more possession? Why? Where are you going to put them? Are you going to move them from house to house for the next 30 years? Will they last that long? Are they worth the price you pay anyways? Are they worth making a side income to pay for them? Do you want to realize a bigger income and have a higher tax bracket? Really there is a ton to think about.

Or maybe you need to pay down debt. It might be worth it. It might work out swimmingly.

All I remember is that I was supposed to come up with ideas for passive income. Instead I gave more of a warning against getting screwed online. I don’t regret not going to the movies with that girl. I wouldn’t have known what to do next anyways.

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