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.