Why We All Need Passive Income (Even If Just A Little Bit)
Crystal posted this on July 9, 2008
Note: If you were expecting the article on how companies, vendors, and industry experts are offering certifications for passive income, look for it on Friday…
Since last summer, US gas prices have gone up by something like 50%. For those in Maryland, so did our power utility costs. No matter where you are you’ve likely felt/seen that groceries cost a bit more than they did 6 months ago.
I feel sure that 99.99% of us are affected by these increases, and there’s no doubt some of us are more critically affected than others. I’ve been more and more troubled about this since yesterday afternoon. Here’s what happened—
I met a friend for our monthly lunch. Halfway through her salad she said, “Girllll, I’m starting to feel the money squeeze. My car’s paid off and my mortgage is manageable, it’s the rest of it!”—
- The grocery trip that used to cost $65 now costs $75.
- Her electric bill (for lights, central air, and stovetop) was $150, now it’s $210.
- The estimate-based propane bill (for central heat, water heater, ovens) has been $220 monthly, but it’s time to settle up based on actual usage and they’ve billed her an additional $1400. Due, like, now.
- And since the propane bill’s estimate is based on the previous 12 months use…starting next month her monthly bill will be $330.
- In addition, the cost of propane is going up something like 15¢ a gallon, so she anticipates owing them another huge chunk this time next year.
She went on to say that because of these there’s no wiggle room in her budget for extra saving. Along with regular additions to her 401K, she’s saved a year’s salary so far. However, unless she changes jobs, gets a raise, or prices go down, there won’t be any more cash socked away in CDs and her IRA.
The thing is, she’s a well-educated person in a management position with a solid company. She has always handled her money well, with a solid savings, an affordable fixed-rate mortgage, and no other debt.
Barring a layoff, she’s pretty much immune to minor shifts in the economy—but she’s feeling it now.
This is what’s troubling me.
That and lunch was expensive. Not the food…the 60 minute round trip drive. Driving to and from lunch cost more than the lunch itself. My other monthly lunch date, Chris, has established a “You Drive, I’ll Buy” lunch policy to defray my meeting up expenses.
Admittedly, these are relatively luxurious frets of lower-middle to middle-middle class Americans: not saving enough, spending too much on gas, and who’s buying lunch.
What’s been troubling me is if we’re fretting, what’s everyone else doing?
What Everyone Else Is Doing
If I’m worried about affording gas for lunch dates twice a month, someone else out there is worried about affording gas to get to work every day.
If my girlfriend can’t save extra, then someone else out there can’t save at all.
Which means that someone who was just barely covering their credit card or student loan debt, now can’t afford to pay it.
Which means that someone who wasn’t covering their debt, now also isn’t covering their utilities.
Which means that someone who wasn’t covering debt or utilities now can’t afford their medical bills.
Someone else can’t afford their mortgage
Someone else is behind on their rent.
Which means someone else isn’t eating as well.
Which means someone else isn’t eating as much.
Which means someone else isn’t eating at all.
The Big Diff
It doesn’t take alotta money to make alotta difference. An additional $400 each month is a big help regardless of where you are socio-economically.
Think about it: The difference between saving and not saving, eating and not eating—or something in between—can be a $47 ebook that sells 2 or 3 copies each week.
But Why Passive Income?
If we earn our living as an hourly or salaried employee, or bill by the hour, we weren’t gifted with more time to cover these increased expenses. The days didn’t increase proportionally…they’re still only 24 hours long.
We can’t make time to earn more, we can only take time away from something else, so unless we got a comparable cost-of-living increase or successfully raise our rates, we’re going to continue coming up short.
At least, that’s true for those of us that don’t have something running in the background: A published book with a royalty payout. A useful and affordable ebook. A membership site. A directory site. A niche content site with some ad revenue.
For God’s sake, not a blog…too much hands-on time required.
We just need to create a little sumpin that will pay us back for a year or two…or twenty. Something that doesn’t need our hand in to continue making a buck or two…or four hundred.
That’s all I’m sayin’.
Tagged with: passive income
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39 Responses to “Why We All Need Passive Income (Even If Just A Little Bit)”
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I finally decided to write a comment on your blog. I just wanted to say good job. I really enjoy reading your posts.
I read somewhere that most people could change their life completely with just a a 10% raise in income.
Once I worked that out passively, I saw that it was true. It took a while, but it was worth it.
Good article, Crystal. A nice follow up is Clay Collins “income snowball” article:
The Income Snowball & Funding Your Freedom: A Four-Part Guide
That is why I started my blog. With a focus on sales training and mentoring eventually I will have a book, e-books, we do online webinars, and continue to look for passive ways to monetize our IP.
Also, I have joined forces with a great mind and started http://messageslinger.com
Most important all of this is now managed from home, the 150 mile a day commute, gone.
That alone is saving me hundreds of dollars a month. We all need to find ways to get our talents to make us a little money while we sleep. Otherwise this recession is going to bite a bit.
Nice read. I am trying to get my blog to pay for my health insurance. Hope I don’t get sick soon.
The Masked Millionaire
Fantastic post! My sister said she had a panic attack while reading it. So did I, but it’s because you’re totally right, and I need to put in more effort and determination with regard to passive income. My hubby is all about this idea (I’m going to send him this post) is working on that now. You’ve touched on a very important subject, especially for freelancers like me who don’t make regular money to begin with!
Great food for thought. This certainly applies to most middle to upper class people. And its a great prelude to many enterprising ideas offered both online and in the franchise world.
Recent blog post from Stephen: Twenty Five Bullets
Crystal,
I agree. Especially the “not a blog” part, not because many people shouldn’t have one who don’t yet, but because it’s not passive!
The Big Diff is big in any times, but in squeeze times like these, the Big Diff is enormous.
Think think think…
Regards,
Kelly
Recent blog post from Kelly: Road Trip: Guest Post at Just Creative Design v 2.0
We need passive income in able for us to survive
Recent blog post from John Smith: Elton Brand is a Sellout
@Aaron, John, and Stephen—Welcome and thanks for your comments!
@Dave—I hadn’t heard that about the 10%, and when I do the math for my girlfriend, myself, and anyone else who’s numbers I know, it works out just right! Freaky that it could be that simple and such a small value.
And that Income Snowball thing of Clay’s was just terrific. We all know the Debt Snowball works a treat, so it’s fab to see the theory turned on it’s head. I made my own list yesterday and was surprised at what was on it!
Thanks again
@Karl—You brought up another important point with your commute: cutting back a bit on expenses. Making a bit more is important, but spending a bit less also helps widen the gap.
My girlfriend found that she was leaving lights on when she shouldn’t, and setting the A/C to 78 was just fine…still cooler than outside and saves a mint. If nothing else, the bit of belt-tightening is making us aware of the small changes that make a big diff.
Thanks!
@Masked Millionaire—Me too! Having that particular bill as a checked box every quarter will be wunnerful.
@Kelly—Howdy! And blogging really is the opposite of passive. Dangit *sigh*. Think think think!
@Steph—Oh dear! I don’t mean to scare anyone with it, but I was pretty scared when I wrote it and I guess that leaked out around the edges.
Big hugs to all of y’all over there…we’re getting to it and it will get us through it.
Dave Navarro, I am totally agreed what you said. I think nothing can compete these rising prices other than increasing our income. I am working 2-3 more hours to earn some extra money and that extra work enable me to cop with all that high increasing bills.
Recent blog post from John M: 1
In the classic personal economics book “The Overspent American” by Juliet B. Shor, she states that most people believe that a 10% increase in their income will change their life. The key point is ‘believe’ and that it holds true whether the person earns 15,000 or 150,000. Part of this is mindset, and part is the ‘life I have become accustomed to’. These little increases sure are cutting into my comfort zone.
I look forward to seeing your follow up with more passive income tips!
Recent blog post from Christy: 1
@John—Welcome and thanks for your comment!
@Christy–_Welcome and wow
I so love knowing where the 10% increase idea came from. I’ll have to get my hands on it because I’m as guilty as anyone else of overspending.
And whether it is belief or fact or magic ;), that 10% changes a lot…for everyone, like you said.
The numbers do work out, though. For my small family, and also my friend’s, 10% more each month would be like all the increases of the past year didn’t happen—even though her household earns…hmm… 3 or 4 times than we do. Weird, huh?
And I should have had a new post yesterday, but got so involved in other work that I didn’t finish it
So sorry about that, I’ll aim for Monday.
Thanks again for the book!
I’m really enjoying your posts about creating passive income. Everyone seems to be feeling the pinch these days. I’m looking forward to learning more!
Recent blog post from Kimberly Ben: Setting Rates You Can Live With
Thankz for the post.
Its really helped us.
@D Tenen and Kimberly—Glad I could help, thanks for your comments!
Your post is exactly right. People are experiencing a downward shift in their social/economic status. Everything is costly more but wages aren’t going up to compensate. Something has to give. Even an extra two hundred a month would help a lot of people, or at least cover the increase in fuel spending.
Recent blog post from Jacqui: How rising gas prices are effecting the real estate industry
Ah yeah, passive income is my holy grail. I have a few small projects that have trickled in income for many years, but this year I’m putting focus on 3 projects to generate passive income. Don’t know if they’ll work yet, but I’m counting on it.
Hope to read more about your journey towards passive income, and hopefully borrow lots of good ideas from you.
I believe that the world leaders do not understand what the people are going through, here in Syria all the president did was raise the salaries of the people 20%. Now the businesses are forced to raise the prices of there products and little business have started to suffer.
Absolutely true.
Filling up my car with a full tank costs me $80 instead of the $45 it used to cost me around a year ago…
Now when I go to the store I spend about 40% more than what I used to spend. What is wrong with this economy?? From gas, to food prices, to real estate, to daily life, everything has durastically changed all due to an uncalled for war. I can’t wait until we have a new president…Btw check out my new website,
http://www.businesscashadvanceloan.com
Great post!
Lurve the pic at the top
Andy
Creating passive income on the side is definitely a key to financial freedom. I have been generating passive income online for a couple of years now and does it ever help. I contribute all of my passive income into savings which further compounds the effect.
Spot on. I’ve felt the crunch lately as well. Finding ways to keep your bills down is part of it, but passive income is a great idea as well.
Would love some passive income tips on my website’s tips area.
Recent blog post from lower bills: Stuck in a bad cell phone contract ? Negotiate !
My passive income is what has been saving my butt this past month. With no new projects on the horizon, and finishing a BIG project taking way longer than expected - it’s been the passive income that’s put food on my table and gas in the car.
PLUS - just had a baby! So that passive income has just become even MORE important! Amazing what having a kid does to get my butt even MORE in gear.
Great Post Crystal. Long time no read - great one for me to come back to your site to!
oh how i wish i had a tree like that one
-Jerry
i wish i had a tree like that! @_@
Couldn’t agree more with this. blogs are far, far too much work for the possible financial returns.
blogging comes in handy, but it requires time and effort to earn big money.. theres a lot of various on earning in blogging though you can have google ads text link banners pay per post and so on.. that depends on how you manage your blog..
@Jaimie Anderson: I agree with you. However, it’s also true that blogging comes to most as a passion (at least for the more popular blogs), the money is a second hand accomplishment. Personally, I can’t stand blogs with adsense.
Nice..I enjoyed reading your article.Thanks for the post.
I would love to build up some passive income to pay for a vacation each year! Only time will tell if that is possible.
I’ve been working on a few different passive income streams. It sure helps during the slow times, and helps prevent the feast or famine that sometimes goes with being self employed.
Many salaried and hourly workers are getting squeezed by the ability of companies to shift production to countries where labor costs are lower. While that is good news for these countries it is a problem for the U.S. since human resources are now competing globally…increased supply of human resources and slowing demand results in a tough time for many households. Passive income, especially when it is derived from an endeavor that you enjoy and makes you feel fulfilled, is a really good thing…nothing wrong with some diversity in our income stream.
Whatever time is not spent as billable time to clients or marketing your services is spent trying to find another source of income. Sleep and football don’t even fit anymore.
Recent blog post from Murph: Oktoberfest Flashbacks-Baltimore beer festivals just aren’t the same
I agree, we all should be generating passive income. I have site up a site tracking my monthly goal of $2599.95. I list “how” and “from where” I’m generating my passive income. The site is http://www.ysdata.com/passive.html
I think, as you wrote, days are not enough long for us to earn the income. Also people are tired of fighting for money all day long and try to find easier way to earn.
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Having a passive income is really important. Everyday, the price of our necessities go higher, thus our income should go higher too.
Good read.
If you start monitoring your income sources & your business expenses, You would be surprise to find out that some of your current projects doesn’t deserve all that time you used to give it while there are other projects that really pay very well but they need more work from your side.
this information is usefull to us
Passive income is the right way to go.
It’s just trying the find the most effective way to invest your time to get the best return.