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Making “Passive” Income Isn’t Hard - Here’s the Backdoor System to Do It

by | Nov 7, 2022 | Money, Passive Income

Passive income is an R-rated topic online.

If you even mention it you’ll get slapped across the head with a brick. How do I know? I accidentally walked over the tripwire and did it.

Oopsie.

Passive income is controversial because it assumes you sit on your ass and let magic do the work for you while your bank account overflows with dollars. The brutal truth no one wants to hear is passive income is nothing like that.

If you’re looking for a free ride then forget passive income.

The lottery is a better option.

Why you need to bend over for the passive income gods

There’s a reason passive income is the holy grail.

It’s not because it allows you to flex with Rex on Instagram with ya luxury life Gucci suitcase. No.

If you have no passive income you have no leverage.

Leverage is a lever where you insert hours into a project or type of work, and over time you get more money for less effort.

When I worked a crappy job for a crazy dictator, I had no choice but to stay because I had zero leverage.

I needed that job or I couldn’t pay rent. Simple. Then I got fired out of nowhere. I instantly went into survival mode and worried about buying food and paying for shelter. I couldn’t think about anything else.

So I became possessed by the idea of passive income.

I spent much of my free time figuring out how I could create it. Eventually I did. Now I’m free from the dictator’s shackles.

Without passive income you’re stuck in a prison. You can learn about it or complain about it. But passive income has always been the only path to freedom. The choice is yours. I encourage you to learn then earn.

Why most of society fall on their ass when it comes to passive income

This is perhaps the greatest comment I have ever seen on a Youtube video.

Image credit: AliAbdaal via this tweet

The most important part of passive income is your attitude. Like I said at the start, passive income has a branding problem.

Too many people see the phrase “passive income” and instantly think “get-rich-quick-scheme.”

LOL.

The reality couldn’t be further from the truth. It’s possible to earn passive income with the right mindset and attitude — like most things in life.

If you have a bad attitude then no amount of advice will assist. Actively avoiding doing the initial work to earn passive income won’t help either.

After studying Noah Kagan’s $ 350,000-a-month passive income, writer Joseph Mavericks concluded his income streams are the result of years of hard work that have turned into passive income.

Takeaway: Passive income requires work upfront.

(Don’t make me say “do the work” like a hustler bro.)

The first hidden step of passive income

Let’s get to action.

You don’t wake up tomorrow and magically have passive income. So, you’ve got to carve out time to pursue the goal.

Think of it like this:

Your job allows you to have a side hustle / side project. Your side hustle is eventually how you’ll generate passive income. The goal is to have your side hustle over time make more money than your salary or hourly wage.

At that point your job is an option not a necessity.

If you quit the job and go all in on your passive income — that’ll probably still require some active work — technically, you have reached financial freedom.

The important part for me was to understand there’s probably never a world where I earn all my money from passive income and do zero work.

I think of it like this. Over time the same amount of effort should compound your earnings if you’re doing it with a passive income mindset.

So part of your income will be passive, part of it will likely be active. I’m okay with that, although the subtleties in definitions naturally piss fact-checkers off. (Don’t live and die by unpaid fact-checker critics.)

The common ways to make passive income

The goal of passive income is to have income streams that don’t need your time. Some will deliver on that promise, some partially do it.

Here is a list of active versus passive income streams to choose from:

Active income streams

  • Salary
  • Gig work
  • Hourly work
  • Coaching/consulting
  • Solopreneur businesses

Passive income streams

  • Royalties
  • Book sales
  • Real estate
  • Crowdfunding
  • Stock dividends
  • Interest income
  • Crypto dividends
  • Peer-to-peer lending
  • Information products (like courses)
  • Multi-person business (where others do the work for you)

My two best passive income streams have been crypto and stock dividends. Once I did the active research work after I got home from my job, the rest of the income was entirely passive & has been for a long time.

Formula for investing: Research once. Invest monthly. Earn many times.

My friend Kenny says it best:

Wealth creation is the process of converting your active income into passive income.

The goal in life isn’t to make passive income

Wait, what?

Let’s say you start with some active and passive income. Then eventually you convert all your active income into passive.

Now you can go retire and sit on a beach drinking tequila shots all day. The problem is this life is boring as hell — and the hangovers suck ass. You’ll last 30 days, tops.

What I learned from 20-something year old Sahil Lavingia is that passive income isn’t the goal in life.

The goal is active income doing what you like.

Because when you have the freedom to do work you enjoy (thanks partly to passive income), you won’t care how much you get paid. The fulfillment and sense of progress you feel from the work will be payment enough.

That’s the no B.S. truth about passive income no one else talks about.

This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.

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