Today I’d like to introduce you to a new concept of mine. This is something I’ve been working on recently: Snowballing Income.
I guess you are already aware of the snowballing concept to pay off your debts. You start with a small amount; let’s say $100/month, to add as a principal payment to pay off one debt. Once this debt is paid off, you use your $100/month to pay another debt but you also add the amount of the previous payment. If the payment on the previous debt was $100, you are now with $200/month to pay the next debt. If you do this on all debts you have, you finish the last one with a huge principal payment each month. This is a snowball effect.
Instead of using the snowballing concept to pay off debts, imagine using it to generate additional income? Imagine you are making an additional $100/month this month, you use this money to generate more income the next month and so on.
Yes… this is also called reinvesting in your company. By reinvesting your profits every month, you end-up making a lot more in a year. You can’t do that at work since you can’t reinvest your hours worked to generate more hours every month. You would simply be running towards a burnout if you do it this way.
The key is to find a way to generate more income through a business or sideline but to find how it can be scalable. I would never invest my time and energy in something I can’t scale. By scaling your effort, you do not reset your income at $0 at the beginning of the next month of the next quarter; you are building on what has already been built during the previous period.
As I mentioned previously, my wife and I are entering into a phase where we are willing to work a lot harder to make more dough and reach financial freedom faster than expected. Her first move was to open a daycare at home. Within a week, she has completed 4 applications and is in discussions with another parent to fill her last two places. When she opens in September, she will be making $3,000 in gross income per month. I expect she will net between $1,500 and $2,000. The problem with this idea is that it’s not scalable. It’s impossible to think of making another $500 the following month (unless we bring another kid into the equation, which would be ridiculous). So the addition of income is great, but we need more afterward.
The point with the daycare was to create an entry point. By generating extra income upfront, we are able to use this income to pay a part of our debt… or to build more small money making machines. Once a money making machine is built, it is set to produce a specific amount of income every month. For example, if I create a site generating $50/month the first month, chances are it will continue to generate that much money the following months too. So if I want to generate $500/month, all I need is to create 10 sites per month generating $50/month. The next month, I just have to rinse & repeat my process to make another $500. Following this plan, I’ll be making an additional $6,000 per month next year.
I obviously don’t have the energy, or the time or the inspiration to create 10 small sites per month. The point is also that you need to update them and build some links if you want traffic at one point. Therefore, unless someone goes full time on such a project, he won’t be able to create that many sites.
Not so long ago, I listed what I would do if I didn’t have a job. Here’s a list of 12 ideas to make $500/month online. From this list, the key point is to spend one month per idea. Most of these ideas would continue to generate money forever after I’ve completed the work. For example, I launched my book Dividend Growth back in September 2012 and I receive a check from Amazon every month since then. If I spend a month to write a book (this is what it actually took me in terms of hours), I would be able to generate $6,000 in a year from it (or $500/month). I guess the sales will eventually fade, but maybe not!
This is pretty much the same concept to be applied on each idea: you need something that is scalable and that once it is built, it continues to generate income. Last year, I spent about 20 hours to build my EMT resource site. A year later, with no link building strategy, no comments, no guest posts or any work, the site is earning roughly $40/month. So from 20 hours of work, I’ve now made roughly $600 in the past 15 months. I’m now at $30/hour and still counting. Next year, chances are that I’ll be jumping to $60/hour since I will not work on it and it will still continue to earn money. It’s beautiful isn’t it? This is exactly what you need to find.
Technically, if I wanted to put in 40 hours a week on building niche sites, I would generate 2 sites per week, 8 sites per month and generate a very interesting income after a year of hard work. The key is also to be diversified so if one of my sites is gets hit by Google, I have the remaining ones ensuring a base income.
I’m currently working very hard to plan, in detail, my 12 ideas to make $500/month from each of them. I hope that my plan can be put to work for 2014. Have you ever thought of building so many money making machines that you would be rich within one year?
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