Every since I read Rich Dad, Poor Dad, I’ve been thinking about passive income and additional revenue streams more and more. Up until that time, I had been content with maxing out my retirement savings and saving money where I could. This weekend, it got me thinking that I need to get a plan together to get myself out of my day job. After Reading Rich Dad, Poor Dad is such an inspiration here.
My first goal will be to become financially independent on passive income alone. That means that my passive income needs to cover my monthly necessary expenses. If I get there, is it time for me to quit my day job? Probably no. I’m going to need more income to grow and cover the fun and other surprise expenses. It will still be a time a time to celebrate though as if I lose my job, I will be able to get by.
I’ve got to answer three natural questions right now: “Where do I stand as I start this goal?”, “How am I going to get to my goal?” and, of course, “What is the goal number?” The goal number is the easiest. My monthly necessary expenses are about $2063.75 a month. I’d like to round that up to $2000, but it sounds better to go to the real number instead of the rounded one. I’m currently making $16.23 a month from my Prosper account, which I’m really trying to crank up. By this time next year, I’m hoping to see my passive income from Prosper to total around $300. That would be excellent as it would cover my groceries and utilities.
Jane Dough says
While you try to build up your passive income also look at ways to reduce your fixed monthly expenses. Generally this will not happen in a year or so. Rather it might take you a decade or more to build the income – the trick is as you increase your passive income try not to use that to increase your life style.
Rather the excess income should just be put back to work producing even more excess income.
Lazy Man and Money says
Jane, I’ve been you reading you long enough to know not to do that ;-). Seriously, though, as my Prosper.com loans get paid off, they go into my Prosper account. As the payments are scattered throughout the month, I may get $7 one day and $3 the next. As that builds, I’m going to compound it into other Prosper.com loans. At least that’s the plan for now. As you say, it may take a decade, and by that time there may be better investment opportunities for me.
As for not increasing my lifestyle, that’s always a goal, but I do plan to start a family in the next ten years, so the costs of living will go up.
Do you have other potential sources of passive income? It sounds like you’re relying pretty heavily on Prosper, and personal lending is still just a grand experiment. If it ends up having staying power, then great. If not, then you’d be a lot better of if you had a backup plan.
Won’t this blog become passive income? Sure, you update it regularly, but eventually the quantity and quality of the content should bring you more revenue. Right?
Just wondering what’s your opinion?
I’ve been thinking about that and even created a post discussing it. The blog isn’t really passive as it’s something that I have to devote time and effort in. However, if it got to be super huge, there’s the potential of the work to be very minimal and income high (at least in relation to the amount of work). So over time and with enough effort, I think it will become closer and closer to true passive income, but will never be there unless I can start hiring writers, managers, etc.