September 20, 2011, 5:00 am

Why We Talk So Much About Passive Income While You Still Have To Work Your Ass Off To Make it Happen

by: The Financial Blogger    Category: Alternative Income
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This is a big debate among many bloggers and readers; is blogging considered to be passive income? I know that many people will tell you that it is not because you need to write on a constant basis to keep your readership and traffic and consequently, your monthly income.

 

On top of that, there are several other tasks that are required on a monthly basis:

–          Doing technical updates (such as wordpress updates)

–          Following up with advertisers

–          Testing different ways to monetize

–          Connecting with other bloggers (for pleasure or business)

–          Doing research for your blog posts

–          Optimizing your site and content to be SEO (Search Engine Optimization) friendly

–          Answering the 150 emails you receive daily

–          Etc, etc, etc.

All right, blogging is a lot of work. In fact, if you look at it from this angle, it is far from being passive income! But when you think about it, if you start any kind of side business regardless if it’s online or not, it can’t really make money while the only thing you do in life is to go at the bank to cash your checks, right?

 

This is where the perception of passive income must be redefined. I think we need to go back to what makes passive income different from your day job. Do you have any clue? I have my own point of view about it:

 

When I work at my day job, I earn an hourly rate + a year-end bonus. Unfortunately, I’m even capped on the numbers I can work  and get paid in a week. I’m paid based on 37.5 hours of work per week. Considering the fact that I exceed my vacations and I would like to take an additional week off during my year, I would not get paid for this week off. Therefore, a regular day job income calculation is:

 

Number of hours worked X Hourly wage = Total Income

So if you want to increase your total income, you need to either work more or increase your hourly wage through getting a promotion or a salary raise (click here to find out about my tricks to increase your salary). But in the end, if you work less, you earn less. On top of that, when you are not working, you are not making any money.

 

What’s the Passive Income Equation?

Building what I call passive income requires a lot of time, energy and knowledge. However, it is done through leverage instead of earning money for each hour worked. It is more like the equation is actually exponential.

 

(Numbers of hours worked + a base of passive income multiplied by your business structure ) X Hourly wage multiplied by your talent & knowledge = Total Income

As you can see, the equation is not that different besides the fact that you have factors that push your income to another level. It is your business structure that will multiply the hours you work as if you were working 24 hours a day and even more!

 

For example, this very morning, I earned $250 through paypal while I was golfing. I didn’t work a single hour today but my business structure did it for me! It is the same way that I have earned almost $8,000 from my online company last month while both my partner and I were on vacation for half of the month.

 

So passive income doesn’t mean that you don’t have to work to earn money, it means that you don’t have to work DIRECTLY to make money. The number of hours you work keeps producing income even when you are done working because it is supported by a business structure. Just like money never sleeps, neither does your business!

 

When I work at my day job, I know that I have to start all over again each Monday morning as the work I did last week doesn’t count for next week. When I work on my company, I know that the work that I have done last Monday will continue to generate value (e.g. income!) for days, weeks, months or even years! This is how you can reach a 6 figure income while working less hours!

 

Are you looking to build a passive income structure? Do you think you can get out of the rat race simply by working at your day job? Tell me about your strategy to earn more income without burning out.

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Comments

I like the distinction. Certainly blogging is not 100% passive income… but it is close. Especially if it starts as a hobby. Why not do something you like doing for money?

There is honestly little true “passive income” as even CD’s and dividend stocks must be found and researched. There is “low maintenance” income that requires an initial investment of either capital, time, or a combination of both. Once you establish that system, though, the income can be “low maintenance” while you build the system bigger or build others.

Blogging is absolutely not passive income. But it’s the most fun I’ve had earning income of any kind so that makes it all worth it.

a blog is by no means passive – but i see the relationship you are trying to draw. for me, niche sites are as passive as you get with an online model, especially with an e product syndicated through various sales channels.

I like to see it as blogging is more passive than working a traditional 9 to 5. Just like you said, you can make money while not doing something directly. I got a $140 payment while I was out of town, not even connected to my computer. There’s no way I could’ve done that at a regular job.

the problem is that there is nothing that is PASSIVE income. even niche website, if you just do them and let it flow, they will slowly die… with you income 😉

real estate or owning your own company is no different.

I see building up niche sites as a future passive income earner. Right now I have about 3 sites in the works and my main blog. The goal is to work my butt off now so that when I take a vacation, I can really relax.

I am writing in a blog and hoping to attract a niche audience. I want to help people and share my experiences and research about anxiety and depression. I have looked into monetization, affiliate sales and other things but I would love an opinion and tips on my site and plans!

Thank you 🙂 ( I enjoyed your post!)

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