Building your Passive Income and Getting in the mood....
 

Hi Rick :)

You already got a lot of good answers, but I'll add my voice to this noisy chorus.... :)

> 1. How do you manage your active income
> streams to allow time to develop your
> passive income streams? Or do you not manage
> your active streams? Do you just sleep less?
> *g* Remember too that most of us also need
> to give time to our families, communities,
> churches, etc. How do you make all of this
> work?

Well, passive income doesn't *have* to take time.... As I see it, it usually takes time (at the beginning to set it up) *or* it takes money.

For example, if you just leave your money in the bank and collect interest, that's a passive income stream. (Not a very high-paying one, but it's still one....)

Or if you save up (or borrow) money and buy property, then rent it out -- as long as the money coming in from rent is greater than the money your paying on your borrowings (if you borrowed), then this is a passive income stream too.

It's like Monopoly. In Monopoly, you buy houses, then hotels.... You first spend your money, then you get that money back when people pay rent. (In Monopoly, they have to land on a square you own, while in real life you have to have tenants.)

Some people say that owning houses etc. is extra work, because you have to fix toilets or whatever. In fact, you can contract that out to someone else who will manage your property for you. If you bought a pretty good property, you can still make a profit even after paying for those services.... (I'm not a property guy, but I have this on good authority from someone I know who is now looking to buy his 3rd piece of property....)

The trick is to live simply, don't be too extravagant so you'll have extra money to invest....

Some people *prefer* to borrow the money than to save, because it's often psychologically easier to pay back the money you borrowed than it is to save it. When you have money sitting in your bank account, it's easier to spend it than to save it....

So, you don't need to spend *time*. You can alternatively use your *money*. But I think you may have to have one or the other.... at least either some time or some money, to get your passive investments going....

I've spoken about my own stock market investments before.... I spend a little bit of time at the beginning, finding good long-term growth stocks that I believe are undervalued. But once I invest the money and buy some stock in a company, I do nothing.... I just sit back and watch the money grow.... (I'm not a day-trader, I'm a long-term investor, and I always look to invest my money for at least several years at a time.... I try to follow a "Warren Buffett"-ish "buy and hold" approach.....)

> 2. How do you find the get and up and go
> when it feels like it got up and went? *g*
> IOW, after you've given all you've got to
> your active income streams, how do you have
> anything left to give to your passive income
> streams?

Rick, here's my "secret".... I use different types of *music*!

I find music can put me in certain moods.... one type of music puts me in a very focused, hard-working, sort of technical-thinking mode.... Another type of music relaxes me, and puts me in a more relaxed and conversational moood. But I use music all the time to motivate myself.... Not just one type, but many different types of music depending on what sort of mood I need to be in (when it's necessary)....

I don't know if this works for everyone, but it might be worth trying. However, you have to experiment a bit with different types of music.... Don't just listen to one sort, but listen to several types of music and see what sort of mood that music puts you into....

I hope that helps :)

Cheers,

Dien

Further clarification....
 

I wrote....

> (I'm not a property guy, but I have this on
> good authority from someone I know who is
> now looking to buy his 3rd piece of
> property....)

I just realized that this doesn't mean very much without more background....

This person only works part time (the rest of his time he is completing his studies). He only got interested in property about 2 or 3 years ago. However, in that time, using only his *part-time* income, he has bought himself two properties (using bank loans). These properties give him a positive income stream, and he's now looking towards acquiring his third piece of property....

The main trick is that he purchases places he's sure he can get a positive income stream on.... That is, places where he's sure the rental income he gets will pay off the bank payments PLUS give him something extra. So, apart from the down payment and some time fixing the place up, he doesn't have to spend any more money or time.... The rest is profit.

Not every property will have these characteristics, but if you look hard enough and do your homework, I've seen from him that it's possible to do....

Cheers,

Dien

From one ELO fan to another.... :)
 

Hi Michael,

I thought you gave excellent general advice... Even though Rick sounds like he's a pretty hard worker, I know sometimes I fill my time with useless stuff.... then I've got to focus on dropping some of those things so I have more time to achieve my goals. :)

Success Secrets of ELO....

Chapter 1 was given by Michael Ross....

> Hold on tight to your dream
> Hold on tight to your dream
> When you see your ship go sailing
> When you feel your heart is breaking
> Hold tight to your dream.

Chapter 2 -- Don't lose sight of the other important things in life.... :)

People walking hand in hand,
Everybody's singing to the band,
I want to be where the stars shine bright,
And hear sweet music on a summer night.

I want it so fine
I want it so fine
I want it so fine

(From "So Fine.)

Chapter 3 -- Advice if your life gets too hectic. :)

You gotta slow down SLOW DOWN sweet talkin' woman SLOW DOWN
You got me runnin' RUN RUN you got me searchin'.
Hold on HOLD ON sweet talkin' lover HOLD ON
It's so sad if that's the way it's over.

(From Sweet Talkin' Woman)

Chapter 4 -- Customer service....

O.K. so no--one's answering,
Well can't you just let it ring a little longer
I'll just sit tight, through the shadows of the night
Let it ring for evermore.

Telephone line, give me some time, I'm living in twilight
Telephone line, give me some time, I'm living in twilight

(From Telephone Line)

Chapter 5 -- Prepare your marketing pitch....

Do ya do ya want my love
Do ya do ya want my face
Do ya do ya want my mind
Do ya do ya want my love

(From Do Ya)

Okay... that's probably plenty of Jeff Lynne's wisdom for now! :)

- Dien

The Derivation of Passive Income and the Limitations of Time
 

Dear Rick,

Let me start by saying that your post highlights the importance of passive income in creating wealth by showing that active income can consume all or most of your time, and by doing so leave less time for more important things (health, family, etc) and at the same time provide you with an upper income limit.

The first issue that comes to mind from your post is really one of time management – that is, ensuring you’re not using your time wastefully, but from other posts its clear this is not the case, so I won’t comment further on this issue at this point in time.

You also mention that you need to have your passive income going before you can stop your active income, that is, you need to eat. What might be helpful here is a thorough review of your expenditure – can you cut it down in any ways? Something to note is that although so far I’ve only mentioned active and passive income, there is active and passive expenditure also. Do you have recurrent monthly charges on your credit card that you don’t really need? Perhaps there are a few unnecessary things you could cut out.

Now with those two issues out of the way, let me focus on what I think are the real issues at hand – the derivation of passive income and the limitations of time.

Passive income always comes from an asset the person deriving the passive income owns or controls, and there are many different types of assets which can give you passive income. Stocks and real estate can give you passive income, but so can writing an book and starting a business. All of these assets have different costs, which consist of two main components: a monetary value, and time.

For someone in your situation, with no time, the most appropriate source of passive income would be from an asset that takes little time to set up, as your current time situation limits you from the other sources of passive income. Perhaps you should look into investing in stocks or real estate, or if you don’t have the time to analyse the investments, trust a professional investor by investing in a mutual fund or property trust.

In regards to the business ideas you have and are interested in pursuing, it is difficult to do with your big time constraints. It’s basically a question of priorities. With your current job taking up most of your time, you’re right, it doesn’t leave much time for other things. The main way to free up more time would be to take a job with less hours, and possibly less pay, in order to free up more time to pursue building your passive income through business ideas.

One way this can be helped is through the use of joint ventures and partnerships. I’ll give you an example from my own life. One of my income sources is from Chattel, that is, buying and selling second hand goods for a profit. My time, however, is fairly limited and I decided I didn’t want to take the time to meet with people, take phone calls, and so forth, as I found doing those things often stopped me from doing other work as I waited for people to show up and so forth. Rather than stopping my Chattel trading, or spending my time doing these things, what I instead decided to do was find a friend who would be willing to do those things for me for a generous cut. Now what happens is I look for goods online (mainly notebook computers) that I think I can sell for more, purchase them, give them to my friend, set the price, and he handles all the calls and meeting people, which frees up some of my time. Perhaps you could use a partner to assist in the implementation of some of your business ideas.

The bottom line is, time is limited, and most things in life have two types of costs: a monetary cost, and a time cost. If your time is completely full with your active employment, then there’s not much you can do to free up time except change the status of your active employment. With a little more free time (perhaps from a job with less hours), you’d probably have more time to arrange partnerships or joint ventures for your product ideas.

Alternatively you could try to sell your ideas to somebody else, but I don’t really know much about this.

Good luck with your future decisions!

- Thomas.

Re: The Derivation of Passive Income and the Limitations of Time
 

Thomas -

Good post! As we speak here, my neighbor is having a yard sale and I've put some of my old stuff out to add to hers. The deal is that she'll manage the sale and (IMHO) waste her Saturday hanging around the house handling the lookers for a cut of my profits.

She enjoys it so it's win/win. I'm going to spend my day searching for chattel to sell and will follow your lead by finding a partner to handle the details, as in the yard sale and your process.

Thanks, Bob

Re: finding more time...
 

Sandy wrote -

> Hope some of these ideas are helpful or at
> least give you something to look at...

Several good ideas. What I liked about your post was the fact that you presented some fresh ideas instead of the standard time worn time management answers.

Thanks.

Rick Smith, "The Net Guerrilla"

Re: Building your Passive Income and Getting in the mood....
 

Dien wrote -

> .... I try to follow a "Warren
> Buffett"-ish "buy and hold"
> approach.....)

My own general stock philosophy as well. Are you familiar with The Motley Fool, (www.fool.com)?

> Rick, here's my "secret".... I use
> different types of *music*!

Another *excellent* idea!

Rick Smith, "The Net Guerrilla"

Re: Building your Passive Income and Getting in the mood....
 

Hi Rick!

> My own general stock philosophy as well. Are
> you familiar with The Motley Fool,
> (www.fool.com)?

I haven't really checked out The Motley Fool in detail, mostly because I found a great proven system (Warren Buffett uses something similar), so I'm a bit afraid of "corrupting" it! When you're trying to follow the methods of the US's richest investor, you don't try to deviate too far from the Master because he's proven that he knows what he's talking about by his long-term success. ;)

Thanks Rick for your post, I've loved your input and you've always had excellent and stimulating things to say! :)

Cheers,

Dien

Re: Building your Passive Income and Getting in the mood....
 

Dien,

If I may ask, where did you get the information about investing like Warren Buffett? I've read a couple of books about him, and really like his down to earth manner. Being one of the world's most successful investors hasn't gone to his head.

By the way, did you happen to catch the Warren Buffett and Bill Gates appearance fielding questions from college students? It's been on PBS at least a couple of times.

Bruce Arnold