This is part three of my Living The Dot Com lifestyle series. It’s based on a presentation I gave at Third Tuesday Vancouver call how to run a million dollar business on two hours per day. Previous posts: Part 1. Part 2.
Rule 3 – Make Passive Income
Passive income is money that you make without having to put in additional time. An example of passive income would be buying a bond or T-bill. You do it once and the interest payments come in every month or quarter without any more time input on your part. Another example is you’re an author who gets royalty from a book. As the author, you get paid a percentage on every book sold. If you’re a best selling author like Stephen King, those royalties go into the millions of dollars.
If your priority is to have both time and money and not trade time for money, then passive income is the way to go and everything you do should be geared to the generation of passive income. When you generate passive income, you’re not trading time for money. Yes, you may spend some time to set this up but once it’s done, the money keeps coming in without any more time input on your part. It’s really the ultimate way to make money.
A Blog Can Have Both Passive & Active Income
A blog can make both active and passive income. Most blogger go after the active income. They spend many hours per day churning out the content so they can get more traffic so they can sell more advertising or land the next consulting job. My blog has active income but it’s really geared for the creation of passive income.
An example of how the blog makes passive income is its referral system to the recommended money makers. I deal with many ad networks and all of them have a referral program where I would get a one time fee or recurring percentage of income. It’s the recurring percentage of income deals that I promote the most. For example, one of the ad networks I deal with gives me 10% of whatever the person I referred makes for life. So if i referred a new blog to this network and they run the ads and made $100 per month, I will make $10 per month. Now $10 per month isn’t that much but if you referred enough people, it can add up to a nice chuck of change. Over the years, I’ve referred thousands of sites to these ad networks and I make a small percentage of each one of them.
Passive Income Offers Great Security and Growth
What this gives me is tremendous security. I am not relying on just my own work. My income is being generated by thousands of people. And it’s cumulative. Everyday I add more people to these ad network so the income keeps increasing. A year ago, the blog made about $20,000 per month. Today it’s over $40,000. However, I haven’t increase my ad prices or added any new ad spot in the past year. The new income is not coming from the blog’s advertising sales, it’s coming from the monthly royalties from those thousands of sites it referred.
The really nice thing is this type of income is it continues whether or not the blog is here. If for some reason, my blog gets shut down tomorrow and never comes back, it would still make five figures every month. I would lose the direct advertising income but the passive income will continue.
Passive income is why I love affiliate marketing so much. It’s so much easier to do than running a normal business. You don’t have to worry about dealing with rude customers, credit card fraud, inventory problems, bad employees, etc. Just refer the customer and collect the fee. And if the fee is recurring, that’s even better.
Passive Income Is The End Income Goal
Let’s face it, passive income is what we’re all trying to achieve in the end. That’s why we’re saving for retirement (at least I hope everyone is saving for retirement). We know that there will come a day when we can no longer work and when that day comes, we better have a passive income source to keep us going. Otherwise we’re in big trouble. Well, there’s no rule that says you have to wait until you’re 65 to live on passive income. Why not do it now? It really doesn’t take that long if you focus your mind on it.
Look for rule 4 tomorrow.