Passive Income Walkthrough

I think we’ve all waited long enough. Let’s begin the walkthrough of creating a new stream of passive income from start to finish.

If you haven’t already been following the passive income series that I started in April, I encourage you to begin with the first post and get caught up when you can.

The process of creating new income streams is different for everyone, so you won’t necessarily want to model my approach exactly because your knowledge, skills, and resources may not align with mine. Even so, I’m sure you’ll learn something from this walkthrough.

So let’s dive right in and get started.

Your first step is to pick an idea. Hopefully this is fairly obvious.

One of the simplest ways is to grab a pen and paper, and brainstorm a list of ideas. Keep writing down ideas until you run out of ideas. Then look over your list, and pick one that seems decent.

If you need help generating ideas, read Generating Ideas for some advice on how to do it.

Many people get caught up trying to pick an idea. If you get stuck here, you can’t progress. So whatever you do, don’t let yourself get stuck here. Make a decision no matter what.

One of my favorite ways to choose among different options is simply to ask, Which option is the most me? That usually narrows it down quite a bit.

Worst case if you can’t decide, flip a coin or roll a die and let chance decide. You’re better off getting into action quickly than suffering useless delay and self doubt. You’ll progress much faster by getting a few projects under your belt than you will be trying to dream up the perfect idea in advance. Some creative people will advise you to fail faster, which is good advice.

Notice that picking an idea is not the same thing as whining about why you can’t pick one.

It’s also not the same as saying you don’t have any good ideas.

And of course it’s not the same as saying “I don’t know how” when you think about your favorite idea.

The truth is that good income-generating ideas are a dime a dozen. Coming up with ideas is the easy part. If you’ve been stuck in the corporate world for too long, then perhaps your creative impulses have been squashed to make you a better slave, so if that’s the case, then go ask a nearby child what you can do to make the world better for people, and listen to what s/he has to say.

Now if you’re really and truly stuck and can’t come up with a decent idea, then I’d be delighted to pick one for you and assign it to you, but you may not like it unless you’re Canadian and very submissive.

My initial idea was to create some kind of digital product and sell it. That seems simple and straightforward, and it’s an approach other people can model if they so desire. I can sell something through my own website, and other people can sell digital products through Amazon, iTunes, and other online stores, depending on the format.

Depending on the nature of your idea, you may have some details to decide next.

For my product idea, I need to determine a topic and a format.

Once again, you can brainstorm possibilities. Then pick something, and keep moving forward.

Don’t get caught up in vacillating. Just decide. Your decision won’t be perfect, and it doesn’t have to be. Just pick an idea that seems pretty good, and run with it. You’ll get better at picking ideas once you’ve completed a few projects and saw how they turned out.

For the format I decided to create an ebook and an audio program, so I’ll actually have two different products in different formats, but the underlying content will be the same. I might sell them separately or as a bundle or both, but I can decide that later.

For the topic I settled on Subjective Reality.

Why SR? For starters people have been clamoring for a more in-depth product on that for years. We had the Subjective Reality Workshop in 2011, but not everyone can make it to a 3-day workshop.

I also think this would be a fun and interesting product to create. Based on what I’ve seen, there isn’t a lot of quality material available on SR. Most of it is either very shallow or very woo woo, and it fails to explain why we seem to have the various limitations and constraints that we do.

I doubt that SR is the topic that would make me the most money. It’s a niche topic, and many people don’t care to learn about it. But for those who do care, they tend to care a lot. So this is the kind of product that should have strong appeal to a certain core audience, and beyond that most people will just think it’s weird. For whatever reason, this sort of product really appeals to me. I’d rather make some people really happy than lots of people only moderately happy.

So I’m choosing this topic because I think I’d enjoy it, I think enough people would appreciate it, and it’s an area where I feel I can contribute something unique and worthwhile.

SR is also a timeless topic, so this product could easily sell for many years to come.

The next step is to fall in love with your idea.

A mistake people often make is that they look to their ideas to give them confidence, as if an idea itself can provide that. In reality almost all ideas are going to feel fuzzy and uncertain at first. It’s your job to inject them with confidence.

Your relationship to your idea will largely determine how far you get with it, and this relationship is under your control to a great extent.

Where does your relationship with another person exist? In your mind. Where does your relationship with an idea exist? In your mind.

If you start thinking ill about your relationship partner and succumb to doubt about your future together, what does that do to your relationship? It kills it. On the contrary, if you hold lovey dovey thoughts towards your relationship partner, does that not improve the relationship? Of course.

With an idea it’s even easier. Treat your idea as if it’s the most amazing thing ever. Respect it. Honor it. Fall head over heels in love with it.

Don’t look to your idea to provide you with inspiration and motivation. Don’t try to suck your idea dry like you’re sucking an orange. You must let the inspiration flow the other way. You must feed and water and nurture your idea, helping to give it form and substance. You’re the creative conduit here, not the idea.

If you don’t fall in love with it, why would you expect anyone else to? An unloved idea will lead to a crappy result that no one will want.

Have fun with this. Be playful about it.

By way of example, I’m making myself fall in love with my subjective reality product. It’s going to be the coolest, deepest, and most mind-blowing product on the topic that anyone has ever seen.

Who cares if that’s actually true? It’s fun and motivating to inject your idea with positive expectations. Self-doubt is only going to slow things down, so don’t even go there.

Once you’ve selected your idea, the evaluation period is over. Like a newborn child, you’ve named it and claimed it and taken it home with you. It’s too late to decide whether or not it’s a good idea. It’s yours now, and you’d better learn to love it.

Some ideas are easy to adapt to income streams. Others require a bit more finesse.

In the case of an ebook and audio program, my intention is to package these as digitally downloadable products and sell them directly via my website.

Later I may sell them through other sites like Amazon, but for the purposes of this demonstration, I want to keep it simple.

What if you don’t have a high-traffic website like I do? Then you’re not likely to generate many sales if all you do is post it on your website.

When I released computer games before I had much web traffic, I spent a lot of time marketing them. Basically this involved uploading the free demos to hundreds of download sites, buying some online ads, sending out press releases, and more. For one game I spent about 6 months marketing it after it was released. This made a big difference, increasing the sales by 10 times.

If you’ve fallen in love with your idea, you’ll have a lot of motivation to do this part. But if you don’t love it, I’d bet money that you’ll drop the ball here.

I see a lot of would-be online entrepreneurs create and release products they clearly don’t love. They’ll usually spread the word for a few weeks, and then they give up and let the income stream die. People can tell it’s a me-too product, so they don’t buy. With an unloved product, this is enough discouragement to call it quits. With a product you really love, however, you’ll be able to push through and keep putting the word out.

It’s not enough to just create a cool product and hope people will buy it. You have to let people know about it. Once you build enough momentum, your sales may become self-sustaining, but don’t assume this will happen automatically just because you created something and put it on the Internet.

In my case I own some marketing vehicles that I can use, like my website and newsletter. I can also use my Twitter and Google+ accounts to get the word out. Blogging about the development of this product along the way can also be seen as a way of marketing it. Many people who are following the passive income series won’t care about an SR product, but some will. So there will probably be some decent interest in the product when it launches.

I can share more ideas about marketing later in the series. For now, let me just say that you can expect to spend as least as much time marketing your new product or service as you do creating it. If you don’t love your creation, that’s a headache. If you love it, then getting the word out won’t be so bad.

The good news is that you don’t need to design your own income-generating process from scratch. I’m certainly not doing that here. You can borrow someone else’s fully developed system, such as the ones I shared in Passive Income Systems.

Your next step is to outline the idea. What do you think you’ll include?

For my SR product, I came up with a rough chapter outline:

Part I – Understanding Subjective Reality

IntroductionWhat Is SR?Lucid DreamingSR. vs. OR / Equivalency PrincipleUnderstanding Beliefs / Observing or Causing RealityChanging BeliefsLiving Subjectively

Part II – Applying Subjective Reality

The Law of AttractionCreating Your RealitySubjective Reality and MoneySubjective Relationships

Part III – Integrating Subjective Reality

Merging Subjectivity and ObjectivityReality as StoryFinal Wisdom / Closing

Now this is only a rough draft, not necessarily the final outline of the completed product, but it gets me started and helps me see what I want to include. For example, I know I’m going to cover the Law of Attraction in this product.

The idea is to create something to help guide you in your development process, but don’t let this part bog you down. If you’re spending more than an hour on it, I think that’s too long. Just aim for something that looks halfway decent. If you can’t manage halfway decent, then settle for indecent. You can always change it later.

It’s pretty easy to get stuck in this stage, so that’s why I like to move through it quickly. If you’re building a space rocket or a hospital, then it makes sense to invest in careful planning. But for a flexible digital product, overplanning tends to be a much greater risk. We just need a general idea of the main sections, so we can start filling in the content.

Now that we have an idea and a rough outline, how are we going to get this done?

The previous steps in this article are pretty straightforward. You can do them in less than an hour. If it takes longer than that, you’re probably getting stuck in vacillating. Just make a decision at each step and move on.

Lots of interesting ideas die somewhere between here and full completion. So let’s pay some attention to how you’re going to complete this and get it done.

For one-person projects like this, it doesn’t make sense to get bogged down in overplanning. Some people spend more time planning a project and getting ready to begin, when it would have taken less time to just dive in and do it.

I favor the dive in and do it approach, which has worked beautifully for blogging, but since this is a larger work, I want to make sure I have a process that I trust will converge on a completed product.

Here’s my basic action plan to move this project forward to completion:

Each day until the ebook is complete, I’ll create a minimum of 5000 words of fresh content, and this will be edited content of publishable quality. This includes weekends.I’ll keep adding 5000 or more words of content to the product until I’m satisfied that the content is complete.For each section I’ll jot down some quick notes for the key points, stories, and examples I intend to include. Then I’ll use the built-in dictation on my MacBook Pro (dictation is part of OS X Mountain Lion) to speak the content aloud into a Pages document. If I don’t like this process or if the dictation quality isn’t good enough, then I’ll fall back on just typing the content like I do with blog articles.After I dictate a section of content, I’ll do an editing pass to correct errors, add subsection headers, and improve coherence and flow.At the end of each day, I’ll bring all of the existing content to a publishable level of quality, meaning that it would meet my standards for something I could publish to my blog. This is an important lesson I learned from writing software — always bring the code to a publishable level of quality at the end of each day. Fix mistakes and low quality work as soon as possible since it takes much longer to fix them later.Once I have the first draft done, I’ll give it another editing pass and have a few others check it for typos and mistakes. I may keep doing rounds of this till I’m satisfied we’ve got the final content good to go.Once the ebook content is done, I’ll have someone who’s more aesthetically minded format it to look nice, including creating a cover page.After the ebook is complete, I’ll use it as the script to record the audio program. Since the initial content will have been spoken for dictation, it should make for a natural sounding script for the audio. I may not record it word for word exactly, but the core content will be the same. I think this will yield a more polished audio program than if I try to use the initial, unedited dictation sessions. I’ll probably use the same recording equipment I used for podcasting.I’ll have someone help me edit the audio files, add intro music, turn them into MP3s, and help package the results into a completed audio program.Once these products are complete, I’ll create a sales page for them, add them to the online shopping cart, add links through my website, and announce them on my blog, newsletter, and Twitter and Google+ pages.

So that’s the basic plan.

Now all sorts of things could go wrong with this plan. Maybe maintaining 5K words per day will be too much. Maybe I’ll need to take weekends off to regain my sanity. Maybe the Mac dictation won’t be good enough, and I’ll have to fall back on typing all the content. That’s okay. The plan can always be adapted as needed. The point of planning is to envision a path to completion. What I have above looks good enough to me.

I also have some travel coming up, so I’ll need to work around that. The first trip is less than 3 weeks away, and I’ll be gone for nearly 2 weeks. Then I’ll be back for a few days, and I have another short trip after that. It’s doubtful I’ll want to keep working on this while I’m on the road, so in that case I’ll probably put this work on pause and continue where I left off when I return. Travel is a big part of my lifestyle, so I’m fine having this project take a bit longer to work around these trips.

I know that if I hit a certain content quota each day, and if I bring the existing content to publishable quality at the end of each day, I’ll eventually have a completed ebook. And using that to record an audio version should be pretty straightforward. So even with some travel breaking things up, this will eventually converge as long as I stick with it.

How long will this product be? I don’t know… maybe 60-100K words (6-10 hours of audio), but it could be a lot more. I’ll create as much as it takes to do the topic justice and feel satisfied with the end result. The length doesn’t really matter since it’s going to be digital. I’m not planning to make print books or CDs since physical media is all but obsolete. If some people won’t buy it because it’s digital only, I’m perfectly okay with that. Most of my website visitors are under age 30, and past surveys showed that most of them prefer digital products anyway. Less than 2% said they wouldn’t buy something with no physical media, and dealing with physical media isn’t worth it to capture an extra 2%.

Price-wise I’m leaning towards $15 for the ebook, $15 for the audio, and $25 for both together. I think that’s very reasonable, especially for a niche product. I’m sure I could sell this for more, but I don’t want people who want it to feel that the price is a barrier for them.

My initial intention, which I shared earlier in this series, was to create a new income stream of $2K or more per month that lasts for 10 years minimum. If the average sale is $20, I’d have to sell 100 copies per month, which is just over 3 copies per day. For all the outlets I have available, I think that’s an achievable goal.

There are lots of ways to set up an income stream, so let me caution you to be careful what you optimize for.

Many people try to maximize income or profits, but this often involves sacrificing other things in exchange for more money, such as your ability to communicate as a real human being. For instance, you may need to be a lot pushier and more aggressive with your selling process if you want to squeeze more money out of people who are on the fence about buying. To me this is a big turnoff.

My motivation is to do something creative that I’ll enjoy, to contribute something of value to people’s lives, and to share it in such a way that some financial support flows back to me. For me a homerun is what I do on the creative side.

Another important factor for me is to avoid creating headaches for myself. I really don’t care about fighting piracy, so if people want to steal a copy without paying for it, that’s their choice. I don’t think $15 or $25 is too much to ask for a cool and interesting product like this.

As for whether or not to keep this product copyrighted or make it uncopyrighted, I decided to keep it copyrighted, at least initially. All my blog posts are uncopyrighted, but for a product such as this, I’d rather keep ownership of the copyright. This intuitively feels right to me. I can always uncopyright it later if I so choose, but once I do that, it’s irreversible. I’m still observing the ongoing ripples of uncopyrighting my articles, so I want more time to see how that turns out. It’s only been a couple of years so far.

During the past 8 years, I’ve given away a lot of content for free. The payment I ask in return is that I’m allowed to enjoy my life — to be happy and fulfilled in living how I wish to live. I like creating passive income streams because they make it easier to center my life around learning, exploring, connecting, and sharing.

Your priorities may be different than mine, so it makes sense to adapt your passive income stream to suit your own desires. Just don’t assume that maximizing income is necessarily the best approach for you. It’s not an approach I’d be happy with.

If you’re going to follow along with your own idea, then I encourage you to pick an idea, create a quick outline, and determine how you’re going to move it forward to completion. There’s no time like the present!

Please don’t feel pressured to follow me in real time with the creation of your own income stream. I obviously have some advantages and experience that many others don’t. This walkthrough will be available indefinitely, so feel free to go through it at whatever pacing works for you.

Incidentally, this summer was my 20-year anniversary of not having a job. That’s 20 continuous years of unemployment. Booyah!

Steve Recommends
Here are my recommendations for products and services I've reviewed that can improve your results. This is a short list since it only includes my top picks.

Getting Rich with Ebooks - Earn passive income from ebooks
Sedona Method - Free Audio - Learn to release blocks in a few minutes
Site Build It! - Start your own money-making website
Lefkoe Method - Permanently eliminate a limiting belief in 20 minutes
Paraliminals - Condition your mind for positive thinking and success
The Journal - Record your life lessons in a secure private journal
PhotoReading - Read books 3 times faster
Life on Purpose - Discover your life purpose

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Passive Value

I wanted to share this photo I took because it depicts a nice example of providing passive value.

Coming up with the idea and adding this wall art required a one-time investment of time and energy. But once it’s shared, it can continue to provide value in the form of laughter and amusing conversations for visitors year after year.

Could this be monetized? Indirectly, sure. It could potentially cause more guys to talk about it… or to encourage their friends to use this restroom because of the silly surprise inside. Outside this restroom are several restaurants, and it’s just down the hall from a big casino, which offers plenty of opportunities to spend money.

If you’re curious to know, this restroom is located inside the Las Vegas Hotel (formerly known as the Las Vegas Hilton), next to their conference center. This would be one of the main restrooms used by convention-goers.

A common mistake people make in trying to creating passive income streams is that they focus on monetizing before they have anything to monetize. This is like fishing in a dry riverbed. It’s wasted energy. And people do this ALL THE TIME!

I dare say that most of the passive income failure stories I hear involve people trying to monetize a non-existent value stream. They try to go straight for the money, and their results are predictably weak. They’re doing the business equivalent of begging, and so they generally earn no more than beggars do.

You can’t produce a stream of passive income until you’ve have a stream of passive value, just as you can’t catch fish until you’ve found some water where fish are swimming.

Focus on creating the value stream first. Then when you know you have a healthy stream going, you can work on monetizing it.

If you focus on monetization first and foremost, that’s equivalent to saying, “Where are all the frakkin fish? Maybe some are hiding behind these cacti… or perhaps under that boulder. There must be some fish around here somewhere. Dammit, I paid good money for this fishing rod. Now, fish, listen up! I hereby command thee… come out from your hiding places, and skewer yourselves upon my hook!”

Stupid as this sounds, this is pretty much what people do when they get all gung ho about passive income with nary a concern for passive value.

Once you’ve integrated the mindset of creating passive value, and it feels like second nature to you, then you can think about monetizing earlier because you’ll know where to look for monetization opportunities. But until that becomes a habit, I encourage you to think deliberately about creating passive value streams first, before you give any thought to monetizing them. Get good at finding water first. Then work on your fishing skills.

My challenge to you now is to do something simple that can provide some passive value for others. Remember that even a photograph can do that. Where can you share this little piece of value such that a year from now, people might still be receiving the value you provided? Don’t worry about monetizing it. Just put something out there for free. Make it so.

How do you know if you’re really providing value? Feedback. Your attempt is only a guess. Other people are the ultimate judges of whether or not you provided value to them.

When I saw the men’s restroom mentioned above, I laughed and smiled. I snapped a photo. I shared it. For me this provided some value. If it does that for a lot of other people too, then whoever created this did a good job of creating a passive value stream.

If you do something that you believe will make people laugh, and no one laughs, then you didn’t provide value. You didn’t create the stream. That’s okay. It happens. In your attempts to provide value, you’ll often miss.

There is a skill element to value creation. It takes time to discern what people receive and appreciate as value, and it takes time to adjust your aim. I’m sure I’ve written many articles that few people cared about. But this helped me get better at understanding what people desire and how that matches up with what I can provide.

The more you condition this habit of looking for ways to create and provide passive value to others, the easier it will be for you to enjoy streams of passive income.

I wonder what the women’s restroom looks like…

Steve Recommends
Here are my recommendations for products and services I've reviewed that can improve your results. This is a short list since it only includes my top picks.

Getting Rich with Ebooks - Earn passive income from ebooks
Site Build It! - Start your own money-making website
Lefkoe Method - Permanently eliminate a limiting belief in 20 minutes
Paraliminals - Condition your mind for positive thinking and success
The Journal - Record your life lessons in a secure private journal
PhotoReading - Read books 3 times faster
Life on Purpose - Discover your life purpose

If you've found Steve's work helpful, please donate to show your support.
Follow Steve on Twitter  -  Add Steve on Google+  -  Get Steve's Free newsletter

View the original article here

Passive Income From Real Estate

Real estate investing is one of the most common ways that people become wealthy.

You can buy real estate such as houses, apartment buildings, office space, retail space, etc. and rent it out. You can also make money from the appreciation, assuming that real estate prices rise while you own the property.

When renting a property, it’s nice if you can create a positive cashflow, meaning that your monthly rents provide enough to cover your mortgages, upkeep, property taxes, and other expenses and still leave you with some profit. Note that as you pay down the mortgages (which is essentially being done by your tenants), you will gradually own more equity in the property. You can then borrow against this equity to fund more investments, or you can sell it and cash out.

Real estate investment has some tax advantages too. One role of government is to help ensure access to housing for its citizens, and so tax laws encourage real estate development and investing.

While real estate investing can be done in ways that require a lot of cash, with some creativity you can do deals that don’t require tying up a lot of money — and still generate passive income for yourself. In this capacity you can also act as a real estate dealmaker, putting deals together that other people will execute. For instance, you could assemble a proposal for a new shopping center, help get key tenants interested, and then sell the deal to a real estate developer in exchange for a cut of the revenue. This is way beyond my current expertise, but I’ve heard of people making good money doing these kinds of deals.

Many businesses and organizations hold a great deal of wealth in the form of real estate. For example, McDonald’s not only makes money from selling dead cows; they also own many valuable street corners around the world. The Catholic Church is also a major land owner.

As your investments increase in value and your equity increases, you can borrow against your equity to buy more property, thereby increasing your holdings over time. Of course there’s a risk of overextending yourself. Many real estate investors have gone bust when their over-leveraged investments sank in value, and they ended up owing more than their properties were worth while also dealing with tenants who could no longer pay the rent.

I can’t share much about real estate investing since I’ve never been into it. I’ve read several books on the subject out of curiosity, but providing housing and office/retail space to tenants just doesn’t excite me. I think this would be a decent way to generate passive income for someone who is patient, can be disciplined enough to stick to a long-term plan, and who knows a lot about property and is good at assessing what a property is worth.

If this type of investment interests you, please don’t let my personal preferences dissuade you from investigating it fully. Libraries have plenty of books on how to invest profitably in real estate, and I’m sure there are plenty of websites and forums where you can find good advice from experienced investors.

Even though it’s not my cup of tea, I wanted to mention real estate investing as part of the passive income series since it’s a common path that people use to generate passive income and long-term wealth.

Steve Recommends
Here are my recommendations for products and services I've reviewed that can improve your results. This is a short list since it only includes my top picks.

Getting Rich with Ebooks - Earn passive income from ebooks
Site Build It! - Start your own money-making website
Lefkoe Method - Permanently eliminate a limiting belief in 20 minutes
Paraliminals - Condition your mind for positive thinking and success
The Journal - Record your life lessons in a secure private journal
PhotoReading - Read books 3 times faster
Life on Purpose - Discover your life purpose

If you've found Steve's work helpful, please donate to show your support.
Follow Steve on Twitter  -  Add Steve on Google+  -  Get Steve's Free newsletter

View the original article here

Commit to Your Passive Income Goal

Now that you’ve set a specific passive income goal (as per the Set Your Passive Income Goal post), it’s time to strengthen your connection to this goal.

The idea here is to begin believing in your goal so that it becomes more real and solid, not just some airy fairy fantasy.

Try this for starters. Grab a piece of paper, write your goal on the paper in a positive, personal, present tense format, and then post this piece of paper somewhere that you’ll see it every day, such as on your living room wall or your bathroom mirror. You can even post it in multiple locations if you like.

Based on my goal from the previous post, I came up with the following goal/intention statement:

I am now successfully creating a new stream of passive income by September 30, 2012, that generates at least $2000 per month on average and endures for a minimum of 10 years, and I’m doing this in a way that delivers strong value for many others around the world.

To make my goal more real and concrete, I copied and pasted the text above into a blank document, increased the font size to fill up the page (46 pt font in this case), and printed it out in landscape view. Then I tacked it up on the cork board in my home office. Now whenever I sit at my desk, I can’t help but see this goal since the paper is within my field of view. Even if I don’t acknowledge it consciously, my subconscious mind will be exposed to this goal repeatedly. I will keep the paper there (or use some other goal reminder) until this goal is achieved.

Feel free to embellish your goal with language you find attractive. I find it more motivating to set goals that provide value for others, so I added that phrase to the end of my goal.

This step is important because the natural tendency after setting a new goal is to drop the ball very quickly. Many people lose sight of their new goals within a week after setting them. They get sucked into various distractions, and the goal doesn’t take root. To prevent your goal from fizzling out, you have to keep giving it some attention, just as you would keep watering a plant.

I’ve written about this topic previously, so for more ideas on how to solidify your goals, read Keep Your Goals in Front of You.

Another thing you can do to make your goal more solid is to create consequences for dropping the ball. Since I’m blogging about this along the way, it will be difficult for me to lose sight of this goal. If I quit or flub this up, there will be some negative consequences. Humiliations galore and that sort of thing.

If there’s no negative consequence for quitting, it will be easy for you to quit. That’s bad. We want to create more resistance to quitting, so that once you get going, it’s hard to turn back.

How you do this is a very personal choice, but if you’re not willing to do anything of the sort, then how committed are you really? If you’re committed to your goal, then it shouldn’t be a big deal to line up some extra sting for failure.

Quite often people will find the avoidance of the negative consequences more motivating that the positive benefits they’ll achieve. Instead of winning, some people become more focused when they really want to avoid losing. If the positive motivation for passive income was enough for you, wouldn’t you have already achieved your goal by now? You could have done this a year ago, such as by using the SBI service that I’ve been recommending for years.

If you’ve been interested in this goal for a while but you’ve been putting it off and you’re now telling yourself that you’re finally going to do it and that this time things will be different, why should anyone believe you? Do you even believe you? Or are you just trying to act confidently to convince yourself?

If the only consequence of failure is that you continue to experience more of your old reality, that isn’t much of a consequence, is it? After all, you’re already tolerating that kind of reality right now, so there’s no reason to believe you can’t keep right on dealing with it for another decade. But if turning back somehow looks nastier than going forward, you’ll very likely make some serious progress this time.

One suggestion is to find your biggest doubter and make a bet with him/her that you’ll succeed in achieving your goal by the deadline. If they’re willing to bet against you, this can  engage your competitive spirit and boost your motivation significantly. And if they refuse to bet, it can give more confidence since maybe it means they believe you’ll succeed. You can bet money, or you can make the consequences something more creative.

If you’re into politics, another idea is to promise to donate money to a candidate or political party that you hate if you don’t achieve your goal by the stated deadline.

Your ability to do this is partly a test of how confident you are in achieving your goal. If you struggle to make this sort of commitment, then what does it say about your level of confidence. If you’re truly going to achieve your goal, then the negative outcome will not happen.

When you do this, be careful not to create too much of a counter-force to your goal by mistake. You want to engage your competitive spirit if you find that helpful, but you don’t want to go so far as to incentivize others to sabotage your success. So if you promise a nice benefit to a bunch of people if you fail, you may motivate people to root for your failure and to withhold help they might otherwise have offered.

One more way to increase your commitment to your goal is to involve others in its achievement. Instead of engaging your competitive spirit, you can create a spirit of cooperation and teamwork. This is the approach I’m choosing to use for my new passive income goal.

I believe that we can all achieve our goals together and help and support each other along the way, so I wish to create a spirit of cooperation. I wouldn’t find it helpful to have people wishing for me to fail. I’d rather see all of us intending each others’ success as well as our individual success.

By creating and sharing a public series of blog posts on how to create passive income, I’m engaging other people in the achievement of my goal. A positive side effect is that I’m creating a resource to help others achieve similar goals. People generally appreciate this sort of thing, and I’m already seeing a lot of positive feedback on this series. I do appreciate the encouragement, which is very motivating to me.

If I did this as a private pursuit, I might find it harder to achieve my goal since I’m the only one who’d care about it. But by doing it in a way that invites more social support, it becomes easier. Yes, it’s more work to publicly share the steps along the way, but it also turns a solo project into a social one, which makes it more fun to work on. I also have more accountability to keep moving this series forward week after week.

Last week I took a mini-vacation that included a trip to Disneyland, and I didn’t do any blogging during that time. But I saw people posting on Twitter that they were looking forward to my next post in this series. By announcing this series publicly, I’ve invited others to hold me accountable and make sure I keep it going. I’m always free to take mini-vacations when I want, but other people are going to nudge me to move this along since they’re motivated to receive the value from it. I believe this makes it harder for me to fail. Making it harder to fail means making it more likely to succeed.

If you look at my situation and how I’ve set this up, you’ll probably agree that I should have some good motivation to complete this series and achieve my goal. Time will be the ultimate judge of course, but in the meantime, have you set up your goal with a similar amount of motivation and pressure? If not, this is the time to make those adjustments. If it’s too easy for you to drop the ball, you probably will. I’ve actually won money betting against people when I could see that they weren’t putting enough pressure on themselves to succeed.

We know that too much stress is a bad thing. But we also know that too little stress is bad as well. There’s a sweet spot of stress between the extremes where you’ll feel motivated to take action. This positive form of stress is called eustress.

How else can you strengthen your commitment to your goal? How can you keep it in front of you? How can you make it more real and solid? How can you add more negative consequences for failure? Whatever ideas you come up with, act on them right away. It’s okay to be a bit impulsive here. As you do this more and more, you’ll learn what works best for you.

It often takes time for a new goal to sink in, so I encourage you to take this step seriously. This is not a difficult step. Creating and posting my goal reminder in my office only took a few minutes. You can do a lot with a short status update on your favorite social media site, such as by promising a negative consequence if you fail to achieve your goal by your deadline.

Surely you can spare a few minutes to strengthen your commitment.

If you decide to skip this step, my honest expectation is that you will fail to achieve your goal. If you make it easy and safe to fail, you probably will.

At this point you may be wondering when we’re going to get to the action steps. Where’s the how-to part? Well, we’re already into the action steps. This is very much a part of the how-to. We have to set things up so that you’re very likely to take action. How are the other steps going to benefit you if you only read them but you don’t actually do them? How many times have you read how-to info, said to yourself “I should do that,” and then dropped the ball? We need to avoid that kind of outcome.

My intention for this series is not to teach you the steps to generate passive income. That would be a waste of everyone’s time, and it’s already been done. My intention is that you actually create a new passive income stream for yourself. That’s the end result I want you to achieve. I’m writing this for the people who are finally ready to begin receiving some passive income this year. I’m not writing for the ones who are just curious about it. If you’re merely curious, that’s fine, but please don’t get in the way of us doers.

This is the point where you must now decide: Am I going to follow this series as an active doer or not? Am I going to follow along with action and create a new stream of passive income, or am I going to sit on the sidelines and watch other people do it?

If you aren’t sure, then you’re not a doer… at least not yet. Either get sure and commit to this, or this boat will sail without you. You may tell yourself that you can always come back to this series later, but will you? There’s some great energy in doing this in real-time with lots of others. That energy won’t be around six months from now. So I think it’s fair to say that it’s now or never.

You may wonder what this commitment will entail. Shouldn’t you learn the action steps before you have to commit? Nope. That’s not how it’s done. You commit first, and then the steps appear. What more do you need? I’m personally coaching you through this whole thing for free. I’ve already done this multiple times, and countless others have done it as well. It’s obviously a possible and achievable pursuit. And if you’re really committed, then even if I dropped the ball, you’d just continue on without me and learn what you need to learn elsewhere (just like I did).

Do you really have to commit in the dark? You’re not actually committing in the dark though. You’re the one who’s ultimately going to move this goal forward, not me. You’re the light source here. I’m just the helper you’ve summoned into your reality to help you create this now.

What’s the worst that will happen anyway? Even if you commit and fail, you’re still going to learn some amazing things along the way. You’ll see what you’re made of. Worst case you’ll suffer some negative consequences like a little embarrassment. Big deal. You’ll live.

So are you in, or are you out? If you’re not sure that you’re in, you can be sure that you’re out.

A year from now, what decision will you wish you made today?

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Is It Fair to Earn Passive Income?

Some people have asked whether it would be sustainable if everyone tried to earn passive income, so let’s get that out of the way before we continue with this passive income series.

I think the supposition here is that certain jobs don’t adapt well to passive income strategies, and therefore certain work is best suited to active income. Let’s suppose that’s true for the sake of argument.

Passive and active income strategies compete in the marketplace. People are free to choose either strategy. Most people choose active income. Why? I think the main reason is that they’ve been socially conditioned to choose this strategy. They probably make this choice without much knowledge of passive income strategies. Schooling, parents, and peers help train most people to chose active income.

Even if a lot more people started earning passive income and fewer people were willing to earn money as active income, I believe the market would adapt without skipping a beat. For critical tasks that could only be performed with ongoing labor, prices would rise, and therefore more people would be willing to perform those tasks.

Presently we have an oversupply of people who are looking for jobs, and we have a shortage of jobs for those people. So is it really wise to keep training more people to look for jobs? No, that would be foolish and will only make the problem worse. It will also cause salaries to drop, lowering people’s standard of living.

I think a better solution is to teach passive income strategies and help some of those people make different choices. Passive income is a great choice in this economy since you won’t need to find a job. In fact, you can actually help to stimulate more job creation.

Passive income has the effect of creating more jobs as well as supporting existing jobs. Whenever I create new passive income streams, I create income for other businesses. These generate revenue that helps cover the salaries of many employees.

Remember that passive income methods involve delivering value to more people than you probably could with an active income strategy. I see no reason to hold back on providing value. You may be providing different forms of value with a passive income strategy, but it’s still a net gain for others if you increase your contribution.

If you license your book to a book publisher and receive passive income in the form of royalties on sales, the publisher may in turn pay people to perform specific jobs to keep their system running, and those employees may receive active income in the form of a salary. Your book deal helps to facilitate this and creates and sustains jobs for others.

Passive and active income strategies are mutually supportive. They are not opposites. I think it’s healthy for both to co-exist.

I don’t personally want a regular job, but I understand that many people do, sometimes desperately so. I may poke fun at the regular job mindset now and then to get people to think about this more consciously and to consider alternatives, but I respect people’s ability to make their own choices.

As for whether it’s fair to earn passive income, I’d say it’s more than fair. It’s downright generous. As I’ve shared in previous posts, passive income tends to be more heavily rewarded (and less taxed) than active income. But passive income strategies can also add a lot of value to the economy, and so it makes sense to reward these strategies more heavily. By helping to create and sustain more jobs for others, you can actually generate significantly more tax revenue than you would if you earned the same amount via active income.

It’s not uncommon for active income earners to think of passive income as a greedy strategy. The irony is that it’s just as easy to regard active income earners as holding back and making a lesser contribution… contributing to just one employer when they could be serving many more people. The truth is that both strategies seek to contribute, just in different ways.

In the next several posts, I’ll cover some specific passive income strategies. I’ll even demonstrate some of these strategies with specific examples from my own business, so you can better understand how they work.

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You Earn Passive Income by Being More Generous

Now that we’ve covered setting your passive income goal and a bit about the mindset of passive income — I hope you enjoyed the humor in the last post — let’s explore the details of how to actually create passive income streams. We’ll start out fairly high-level here and then drill down into the specifics in future posts.

Here are the 3 basic parts of an income generating method:

Value creationValue deliveryPayment

Notice that these same 3 aspects can be applied to any basic income generation method. When you work at a regular job, for instance, you’re probably going to create and deliver something of value to your employer, and then you receive payment for it.

So what’s different about passive income? The difference stems mainly from the second aspect: how value is delivered.

When you generate active income such as with a regular job, your value delivery is usually done just once. Whatever work output you’ve created gets handed over to your employer.

The same goes for contract work. You do some work for a client (value creation), hand over that work (value delivery), and get paid.

With a passive income strategy, however, the idea is to deliver this value multiple times. Then you get paid multiple times, once for each delivery.

So the heart of a passive income strategy is found mainly in the approach to delivering value.

The words “passive income” suggest that it’s the third aspect (payment) that defines the difference between passive and active income, but the main differences are usually found in the value delivery methods.

With an active income method, you hand over your work product once and get paid for it once. With a passive income method, your work product is delivered multiple times, and you get paid multiple times.

The passive element means that this value is being delivered without your direct personal effort. So you’re using a method to get your work output into the hands of multiple customers, but you don’t have to be the one personally delivering it. For example, when I publish a new article to my blog, it gets delivered to people all over the world automatically, but I don’t have to personally send it to everyone. The value delivery is automated.

Now here’s a good question to ask yourself: Why do you only have one customer?

A person with a job is just a business owner who sells to only one customer. If you take a passive income strategy and apply it to just one customer at a time, you have an active income strategy. One boss. One employer. One client at a time.

A person who generates passive income usually prefers to deliver value to multiple customers simultaneously. Another option is to repeatedly deliver value to the same customers over and over, but without having to create that value anew each time. A good example of this would be renting out property that you own. You can generate passive income this way even with a single customer since that customer can keep paying you rent every month.

When people shift from an active income to a passive income mindset, they usually start thinking about how to deliver value to more people. Instead of having just one customer for your work output, why not have 10 customers… or 100… or 1000? Why not have 1,000,000 customers?

How many people are you capable of helping?

Note that with an active income strategy, income is a function of value creation. If you only have one employer, one client, or one customer for a particular work product, then in order to increase your income, you have to work harder, or you have to charge more for your creations.

But with a passive income strategy, you have an additional leverage point. You can deliver the same value more than once and get paid for each delivery. As it turns out, this is a powerful leverage point.

When you start thinking about how to scale your work, you’ll often find that you could do the same core work but also serve more people than you do now. You’d simply need a different way to deliver your value.

For example, you could write software for one company and get a paycheck from them, but you could also develop and release your own software that lots of people can download and use.

You could work as an attorney and see one client at a time, or you could create and sell books with your best legal advice, thereby helping many more people.

Think about the work you do right now. How could you modify your work so that you can provide your value to many more people?

Chances are that your employer is already taking your active labor and applying a passive incomes strategy to it. You do the work one time, and they leverage it to generate long-term streams of income. Or you may be working to support the system your company developed to deliver passive income and capital gains to its investors and founders.

Sales are the lifeblood of any business. If you sell to only one customer, that isn’t much blood, so you don’t have much of a flow going there.

To enter the realm of passive income, start questioning the wisdom of running a business that sells to only one customer. And start thinking about how you could scale up the work you do, so you can deliver the value you’re already capable of creating to more than one customer simultaneously.

Generally speaking, the way to create streams of passive income is to deliver your value to multiple customers simultaneously and to get paid multiple times. If you’re going to work anyway, then you’re already creating value for someone. Why sell to only one customer? Broaden your horizons, and realize that if one employer is willing to pay you for the value you’re producing, chances are that someone else would be willing to pay you too — if only you weren’t so clingy with your one and only customer.

I tend to regard people who use active income strategies as being more selfish and self-centered than those who use passive income strategies. That may sound harsh, but the truth is that active income earners aren’t very good at sharing. They share their value with just one customer at a time, which in a world with billions of people is rather limiting, wouldn’t you say?

People often refer to this as loyalty, but it’s really just limited thinking. Besides, your employer may already be using this limited thinking against you as it generates passive income for others based on your active work output.

Passive income earners are constantly looking for ways to put more value into the hands of more people. They want to be as generous as possible. They love to share. And so society rewards them with streams of passive income, so they get paid even when they aren’t working.

Society doesn’t care how hard you work. It doesn’t care how creative you are. It only cares about the value you’re actually getting into people’s hands. That’s what you get paid for — for value delivery — not for your ideas, or your long work days, or your intrinsic value as a human being.

We’ll cover the details of how to do this in future posts. For now, your homework is to start thinking about the value you’re already delivering to people, and consider how you could scale it up to deliver this value to multiple people at the same time. It doesn’t matter whether you have a job or not. What value do you deliver to your friends and family? Why do people bother spending time with you? What other forms of value could you provide if you made an effort? Hint: you don’t actually have to be the one personally delivering this value. You just have to ensure that the delivery occurs.

Begin to step into the mindset of becoming a more generous provider of value to others. This is ultimately what passive income is all about.

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Passive Income Systems

To generate passive income, you need a way to maintain your income without having to do so much grunt work to keep it going. If you have to keep working each day to avoid seeing your income drop, then you’re earning active income, not passive income. Passive income continues to flow even when you aren’t actively working.

Many forms of passive income still require daily or weekly maintenance activities, such as fulfilling orders or handling customer service, but this doesn’t mean that you have to perform those maintenance tasks yourself. You may delegate such tasks to other people, to businesses, or to technology. For your income to be passive (meaning that you don’t have to do much to maintain your cashflow), you need to remove items from your plate, but those items still need to get done.

A passive income system is a form of delegation. What is being delegated, and to whom? How will the necessary active tasks being handled if you won’t be doing them yourself? Your passive income system must provide these answers.

I love delegating to technology because it’s fast, efficient, consistent, and inexpensive. Technology also tends to scale well, meaning that you can add more computing resources, which generally requires little more than paying for those resources. This works well for an Internet business.

For example, I’m delegating the distribution of this article to my web server. I’ll post it to my server when I click the “Publish” button, and then various hardware and software will do the rest. Without this technology I would have to use some other distribution method. Technology is so ubiquitous these days that it’s easy to overlook what it does for us and take it for granted, but it can perform a vital role in any passive income system. Without this technology what would it take to distribute copies of every article I’ve written to millions of monthly readers around the globe every month? It would be a massive effort if this had to be performed by human hands.

Notice then that when you rely on technology to communicate, you’re already taking advantage of passive systems. Your messages pass through equipment that’s designed, built, and maintained by others. You may not be paying those people directly, but they’re working for you every day. You’re already taking advantage of these systems now. So if you currently rely on such systems for your communication needs, then why not leverage them to handle your income as well?

You can also delegate tasks to other people and to businesses to get them off your plate. In a typical affiliate deal, you may delegate the order processing, fulfillment, and customer service to another company. For example, if you use Amazon’s affiliate program to sell items, you’re effectively delegating a significant portion of the work to Amazon. From your perspective an affiliate sale may seem very passive, but that’s because Amazon provides the active labor to make your affiliate commissions possible.

To employ your own passive income system, you have several options:

You can design and build your own passive income system from scratch.You can learn how other people earn passive income and try to copy their approach.You can use someone else’s system as-is (usually by paying for the privilege).You can do a combination of any of the above.

I’ve used all of these approaches at different times. I can’t offer a general recommendation for one of these above the others though. The most intelligent choice depends on a variety of factors including time constraints, budget constraints, personal strengths, and personal goals.

If you’re up for a real challenge, it can be very rewarding to design and implement your own passive income system from scratch. The upside to this approach is that you invented it, so you know its inner workings, and you can customize it all you want. The downside is that this method can take a lot of work, and it may be quite a while before the first income streams start flowing. Innovation is risky. Sometimes the risk pays off. Sometimes it doesn’t.

More commonly, people borrow ideas from each other. Why reinvent the wheel? Learn what works for other people, and use similar methods for yourself. There are plenty of books and systems authored by entrepreneurs who are happy to teach you how to do what they did. Some people are willing to share details of their systems for free, while others only share this info for a fee. Even when there is a fee, buying someone else’s system can save you a tremendous amount of time and energy.

When I was trying to build some sales for my computer games during the 1990s, I bought a book called How to Sell Your Software by Bob Schenot. Bob shared the details of his system, and I was able to adapt much of his advice to my own business, which saved me a lot of time. That system would seem very dated today (it was largely pre-Internet), but it got me off to a good start in building my own direct sales system.

A seemingly inexpensive approach is to use someone else’s system as-is. An example of this is licensing your book to a book publisher or selling your book via Amazon. This may seem like a good deal since you don’t have to pay anything up front, but it can be a lot more expensive if you do well because you may have to give away a significant percentage of your sales to the system provider. This approach tends to be the easiest for getting started. System providers in this category may be very good at processing orders and handling customer service, but they usually don’t provide much marketing assistance, so it may be hard for you to get noticed with them. That said, they can do an awful lot of work for you, making your income streams very passive.

The good news is that you don’t have to understand how to build a passive income system from scratch in order to use one, just as you don’t need to know how to build a computer from scratch in order to use it.

My personal favorite is the hybrid approach. I pick up many good ideas from others, but I like to put my own spin on things and keep tweaking my passive income streams as I go. I rarely use other people’s systems as-is, often because I find their marketing methods a mismatch for my audience, so at the very least, I still need to tweak the marketing elements even if the underlying product or service is a good fit.

One question that will surely come up for you is whether or not you should buy into someone else’s system, such as by paying for their knowledge or resources.

Generally I do think this is a good idea, especially when you’re first starting out, but only if you’re cautious about it. You can waste a lot of money buying low quality money-making systems from random Internet marketers. On the other hand, paying for a good system can also deliver tremendous value. You can learn in a short period of time what took someone else years or even decades of painstaking work to piece together.

I used to be a bit over-eager in paying for what seemed like premium knowledge in this area, and I wasted money on what turned out to be fluffy or outdated info. Then I cut back massively and became very stingy, which caused me to miss some easy opportunities. And finally I settled into what I feel is a more practical and realistic attitude. I’m willing to pay for systems know-how if I think I’ll be able to apply it effectively and if the info comes from a quality source. For me a quality source is someone who seems to genuinely want to help people understand and apply the methods they teach, rather than just selling low-quality info to make more money. Also, a quality system is one that’s already been proven to work under real-world conditions.

Usually when I pay for systems knowledge these days, I’m not looking to implement someone else’s system as-is. I’m simply looking for a few fresh ideas I can use to upgrade my existing systems. What are the latest and greatest ideas I might otherwise miss?

I know that when it comes to marketing, the people who sell these systems may try to push my emotional buttons and offer extra incentives to get me to buy. I do my best to ignore those sales tactics and look at the potential value more objectively.

Since I know people are going to ask me this, I’ll share a couple of specific recommendations for systems you can use to generate passive income streams online today.

I’ve been recommending Site Build-It (SBI) since early 2008, referring thousands of new customers to them. I still wholeheartedly recommend this service today for its outstanding mix of technology, tools, hosting, and education. They sought to be an all-in-one solution that helps people build successful online businesses (not just websites), and they really deliver on that.

SBI continues to update its technology, and they had a major update not long ago, so now it’s even more robust and modern than it was when I first began recommending it.

SBI also hosts an active discussion forum where its members share tips and strategies on a daily basis. That alone is a treasure trove of useful information… not to mention an ongoing support resource for SBI members.

SBI charges a very reasonable subscription fee for its service. The annual cost for an SBI site is less than what I pay for a single month of web hosting for StevePavlina.com. SBI sites are certainly capable of generating at least as much passive income as I do, and many SBIers own multiple sites. This is a very cost effective solution if you’re interested in generating passive income with a website that you own.

I recommend SBI especially if you have a topic you’re very interested in, or you have some knowledge you’d like to share. Instead of constantly sharing ideas on your Facebook page, you could be sharing them on your own website and using that to generate traffic. Then you can monetize that traffic in various ways to generate income.

I recommend SBI because people are making real money with it, they provide a solid all-in-one solution, and it’s very inexpensive relative to the value they provide.

For details on SBI, read my original SBI review, or see my latest SBI update.

You may want to follow SBI on Facebook too since they post tips, updates, specials, etc. on their Facebook page.

My book publisher Hay House informed me yesterday that ebook sales are expected to nearly double this year. We’re in a unique time where the demand for ebooks is growing so much faster than the supply, partly because tablet computers have been selling like crazy. There’s a hungry demand for ebooks that can be read on these devices.

I spent the past week in Canada, and during my flights I did some ebook reading on my iPhone. Despite the small screen, I found it very pleasant to use for reading, and I know I’m not alone. The people in the aisle across from me on one flight were reading ebooks on their iPads. This trend towards ebook mobility is only going to continue.

Last night I was discussing the inevitable contraction of print book publishing with my friend Stewart Emery. Stewart co-authored Success Built to Last, and he’s an influential figure in the book publishing industry. A while back he predicted that either Borders or Barnes & Noble would be out of business within two years. Two years later (almost exactly) Borders went bankrupt, and Barnes & Noble was saved by shifting their focus to ebooks with the Nook.

For my own book, I can also see that sales of the Kindle version are exceeding sales of the paperback and hardcover versions combined. I expect this gap to widen even more over the next five years.

This situation creates some unusual opportunities for ebook authors. Eventually the supply will catch up, but for now the demand is increasing at a much faster rate. There are still far more print books than ebooks on the market, but the sales momentum is all on the ebook side. This is creating something of a gold rush for ebook authors.

Vic Johnson noticed this trend, and he jumped on it. To date he’s earned more than $7 million from ebooks. He offers a very thorough course on how to do what he does, appropriately named Getting Rich With Ebooks.

I’ve gone through this course myself and learned quite a lot from it. I also spoke to Vic directly. He was broke and selling ebooks became his ticket to wealth, which explains why he’s so passionate about them. I recommend checking out Vic’s course and his system for creating and selling ebooks. This unusual demand-supply situation won’t last forever.

This trend is similar to the advantage I capitalized on when I started my blog in 2004; back then the demand  was growing so much faster than the supply, and many people who started blogs around the same time I did saw significant traffic growth as public interest in blogs grew and grew. If you’re just starting a blog today, however, you’re pretty late to the game since now the field is much more crowded.

The interesting twist here is that Vic doesn’t even write most of the content he sells. He’s earned quite a lot of money from repackaging public domain works and from using ghostwriters to create content for him. He explains how to do this in his program, including how to identify opportunities for new ebooks you can sell.

Take note that if you use Vic’s system, you can even use any of the articles or podcasts on my website to create your own ebooks since they’re all uncopyrighted. If you search on my name at Amazon.com, you’ll see that dozens of ebooks based on my content have already been released by others.

I can see that people are making a lot of amateurish mistakes in trying to repackage and resell my content, however, and that’s going to hurt their sales. They’d likely be doing much better if they went through Vic’s program first since he shares many optimization tips to increase sales. It’s fine with me if people want to turn my content into ebooks to sell, but I’d love to see them do even better since it means the ideas will spread further.

Vic’s system is a good choice if your writing skills aren’t so great or if you have doubts about your ability to create high quality content on your own. If, on the other hand, you love to write like I do, then you can also use Vic’s program to help you research, market, and sell your own ebooks effectively. I think it’s well worth the money, and Vic sells it with a try-before-you-buy model that makes it easy to get started.

I’ve already written a book (published by Hay House), so I’ve been through the whole publishing process and know what it’s like. Nevertheless I still picked up some golden nuggets from Vic’s program that I wasn’t previously aware of. I also got a kick of out his enthusiasm, and I liked his down to earth style.

I think Vic’s program will appeal to a lot of people who are following the passive income series since it does not require that you have a website, nor does it require that you create one. Vic teaches you how to earn income using other websites to sell your ebook for you. You can still create a website to help sell your ebook, but that part is optional.

I like that Vic is very generous with his content, so he includes tons of extra bonuses and resources to help you with the practical details. He even tells you which specific service providers he uses and gives you their contact info.

You can learn more about Vic Johnson’s Getting Rich with Ebooks program by watching this video.

Vic’s program and SBI can complement each other quite nicely, so this isn’t an either-or situation. You could easily create an SBI site and an ebook on the same topic. Your SBI site can help sell your ebook, and your ebook can help promote your SBI site. I enjoy this type of relationships between my book and my website, for instance — they both help to promote each other.

I used a similar combo strategy when I ran my computer games business. I sold the games through my own website, but I also posted my game demos to hundreds of software and game download sites. The download sites helped drive traffic to my website, where people could buy the full versions of my games. Vic uses a similar strategy, using inexpensive ebooks to drive traffic to his websites. He makes good money from the ebooks, and he also makes money from his websites, which can sell other products and services in addition to ebooks.

My goal in this article is to get you thinking about what kind of system you’d like to use to generate your own passive income streams. Do you want an income-generating website? Are you leaning towards having a product to sell on other people’s websites? Would you like a system that incorporates both? Or do you want to do something wildly different?

Think about your strengths. A good system will allow you to leverage your strengths while delegating the areas where you’re weakest. Are you a content machine like me where you need a system to provide an effective publishing platform and a way to monetize your work? Would you feel more comfortable selling someone else’s product or service? Does selling turn you off, and would you prefer to delegate the selling aspect as well?

When it comes to passive income systems, the key test is whether your system works in the real world. You can dream up whatever you like, but dreams aren’t streams.

A good passive income system generate results. If you’ve never created your own system from scratch, I recommend borrowing someone else’s system if you want to reach your goal quickly. Otherwise if you prefer a bigger challenge and don’t mind investing a lot more of your time and energy up front, you’re always free to roll your own.

Once you’ve had the experience of working with someone else’s system, you may decide to keep using it, you may experiment with different systems, or you may tackle the challenge of rolling your own system. There’s no right or wrong way to do it. But I’d suggest that for your first stream of passive income, it’s much easier to simply borrow and apply someone else’s system, even if you have to pay for it. A good system looks simple, but that’s because it hides so many implementation details. For passive income, this is a good thing. Handling too many details yourself throws you back into the realm of active income.

A good passive income system will normally employ many different income-generating strategies simultaneously, weaving them into a congruent tapestry. This is similar to how a computer integrates many different hardware and software components that function well as a unit.

We can also learn a lot by breaking out and studying the individual components of a passive income system, and that’s what I’ll be sharing in the weeks ahead. While I still recommend borrowing someone else’s system to get started, learning the details of how the different elements work together is still very helpful since you’ll probably want to tweak and extend what you learn from others.

At this point you don’t have to commit to a particular passive income system approach just yet. You’ll eventually need to make such a commitment, but for now I want you to familiarize yourself with some options and start giving this some thought.

Poke around SBI’s website and get a feel for what they provide. Watch Vic’s video, and note that the video is actually part of his system for selling his program.

Which aspects of these systems appeal to you? Do they play to your strengths? Do you expect they’d work if you were to use them? How might you adapt and extend them?

It’s important to cultivate a healthy relationship with the passive income system you’ll use. If you love your system, you’ll use it. If you don’t like it so much, you’ll procrastinate.

I don’t do real estate investing to generate passive income because it would bore me to tears, and I wouldn’t feel like I’m contributing much. Some people may be very passionate about real estate investing, but it’s a bad fit for my personality and values.

On the other hand, I love blogging. I love that when I have an idea, I can get it out of my head and share it with thousands of people that same day. I love that my work is permanently archived and accessible 24/7 to anyone with an Internet connection. I’m not very patient, so when I have an inspired idea, I like to share it immediately. I love the passive income system that supports my blogging because it allows me to provide a tremendous amount of value for free without feeling I have to hold back or to charge money for every little thing. I like sharing, and the system I use allows me to do that abundantly.

I don’t want you to make the mistake of adopting a passive income system that you merely tolerate. I want you to have a system that you truly appreciate. Offload the work that you don’t enjoy, so you can do more of what you love. When you do what you love, you’ll contribute more, and that’s better for everyone.

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Jobs vs. Passive Income

Many people have the limiting belief that passive income is weird, unusual, complicated, or confusing. As I’ve mentioned previously, passive income isn’t particularly difficult in practice. In many ways, earning a living through streams of passive income is easier than earning a living through a job or as an independent contractor, especially in the long run.

The difficult part has to do with getting comfortable with a passive income mindset.

To tackle this mindset issue, let’s turn this around and look at it from the other side.

Suppose you were already very comfortable with passive income, just like I am. Imagine that you had many thousands of dollars coming in every month, more than enough to cover all your expenses. Whether you work or not, fresh income keeps flowing to you month after month and year after year, based on streams you set up years ago.

Imagine that this is your normal everyday reality. You’ve already been living like this for more than a decade.

Now imagine that a friend with a regular job tries to convince you that what you’re doing is weird or unusual and that you should adopt his mindset, give up your passive income lifestyle, and get a regular job instead.

If a job-loving friend did this with me, here’s what such a conversation might look like…

Friend: You know… you should join the world of real people and get a regular job. This passive income stuff you’re doing is just too strange.

Me: It seems to work well enough. What’s wrong with it?

Friend: Well… it’s not what most people do. Most people get jobs.

Me: How does that work?

Friend: Basically you go to work for some other company, usually a corporation. You do the work, and they give you a paycheck.

Me: Ok. Is my paycheck somehow based on the value I contribute?

Friend: More or less.

Me: So will I receive a fair amount relative to my contribution?

Friend: Depends on what you mean by fair. Obviously they’re not going to pay you 100% of what they think you’re contributing. They have to make a profit as well.

Me: Well do I get 80% of it or something like that?

Friend: Realistically it’s probably closer to 30%, but it’s not tracked that precisely. They don’t really know how much value you’re contributing relative to everyone else. On larger teams it’s especially difficult to know how much value any individual is contributing. So salaries invariably involve a lot of guesswork.

Me: Where does the rest of the value I create go?

Friend: It gets distributed in many different ways — as income to investors and stockholders, to company profits, to corporate taxes, to higher pay for officers, to various perks like company picnics, and so on. That’s for the higher-ups to decide, so it isn’t really up to you.

Me: Do I at least get a share of those company profits?

Friend: Not usually, although some companies do have a profit sharing plan, but even then they won’t share all the profits… usually less than half. Sometimes you’ll indirectly get a small cut, like in the form of a bonus.

Me: Hmmm… Do I have to work every day?

Friend: Usually just weekdays, but it depends on the job. You may also get a few weeks per year for vacation time.

Me: Only a few weeks? What if I want to travel for a month or two?

Friend: Well, you usually can’t. Maybe if you save up vacation time for a few years, then they would let you, but it’s not good to be gone so long at a stretch.

Me: Why does vacation time need to be saved up? Time passes on its own. If I can afford to go on vacation, why can’t I just go?

Friend: Because they need you to work.

Me: What if I’m burned out and don’t feel like working?

Friend: There’s free coffee.

Me: Good coffee or bad coffee?

Friend: Depends on the job, but there’s always a Starbucks nearby if they only serve Folgers in the office.

Me: Can I take my laptop to the Starbucks and work there?

Friend: Depends on the job, but usually not.

Me: Can I go on more vacations if I work from the road on my laptop now and then?

Friend: Not usually.

Me: Why not?

Friend: Well, they probably wouldn’t trust you to work if you’re out of the office too much.

Me: So they have to watch me work?

Friend: Basically yes. But also some jobs are collaborative, so they want everyone together in the same place.

Me: I often do work now that’s collaborative. We collaborate over the Internet or by phone.

Friend: Yup, some jobs are moving in that direction, but most employers still want you to show up each day.

Me: Where do I get to work?

Friend: That depends heavily on the type of job. For many office jobs, you’ll work in a cubicle.

Me: What’s a cubicle?

Friend: It’s a subdivision in a larger room, delineated by short fuzzy walls. You should have enough room for a desk and a chair. Typically you’ll have 50-80 square feet of space for yourself.

Me: So it’s like the Shire?

Friend: Pretty much, but usually not as green.

Me: My home office is about 200 square feet, and it has its own bathroom and shower. But I can work wherever I want, so I’m not confined to that space.

Friend: Yeah, you won’t get a space that size as a regular employee most likely, unless you work in management or some other high value job that warrants its own office. That isn’t what most employees get, but it isn’t out of the question. It just depends on the job.

Me: Do I get to pick my own job title?

Friend: Usually it’s assigned, but sometimes you can. It depends on the company.

Me: Can I pick Master?

Friend: Mmmm… probably not.

Me: What about the pay?

Friend: Well, you’d probably earn a lot less than you do now for doing the same kind of work. Just to give you an idea, the average salary for a blogger is about $17-38K per year (source).

Me: Wow… that’s a lot less than I earn now passively, even when I’m on vacation. How would I even live on that?

Friend: Other people get by on that much. You’d have to cut back quite a bit, especially since you’ll need more money for commuting (gas, car maintenance), professional work clothes if required, and various other expenses incurred by employees. But you might get a free company t-shirt and coffee mug and maybe a mouse pad if you’re lucky, so it sort of balances out.

Me: Ouch. But what if I could somehow earn the same amount I do now, but from a job instead of from passive income?

Friend: That would be very unlikely, but if you did manage that, you’d pay a lot more in taxes since this would all be W2 employee income. You can’t use your business like you do now to lower your taxes.

Me: How much more in taxes are we talking?

Friend: The extra taxes you’d pay would be enough to buy a new car every year.

Me: That doesn’t sound too appealing. Seems like it would be harder to get ahead if so much of each paycheck goes to taxes.

Friend: Yes, but the government understands this, so they make it look less painful by hiding a portion of those taxes, so it doesn’t seem like your income is being taxed as heavily. You never receive that part of your salary in the first place. Some of your taxes are disguised in the form of taxes paid by your employer, like the employer’s contribution to Social Security and Medicare for having you on the payroll. So even though your paycheck stub will report a certain base pay, your actual base pay (from your employer’s and the government’s perspective) is higher. You can bet that your employer is wanting to recoup those extra taxes from you in extra value you must contribute.

Me: I’m aware of this. U.S. tax laws are clearly hardest on regular W2 employees, who pay the highest taxes of anyone relative to their income. So why would people want to have their income allocated as W2?

Friend: Most people don’t know any better. Besides, they wouldn’t know what to do with all that extra money anyway. Lower pay keeps them out of trouble, and it ensures that they keep showing up for work. Gotta keep the economy going.

Me: Alright.

Friend: There are some job perks too.

Me: Like what?

Friend: You get health insurance.

Me: I have that now, but I hardly ever use it since I prefer to just stay healthy.

Friend: Well, you could afford to be less healthy if you had a job, and you wouldn’t have to pay for it.

Me: Hmmmm…

Friend: Free coffee too.

Me: You said that already.

Friend: Did I mention that you can have as much as you want?

Me: Ok. So what kind of work would I do at a regular job?

Friend: That depends on the job, but big picture… it’s usually something that supports the company’s goals.

Me: Who sets these goals?

Friend: At a well run company, the officers figure them out, with input from board members, key investors, and sometimes from employees too.

Me: Where can I see those goals?

Friend: Usually you don’t get to, but sometimes they’ll share snippets in the form of a company mission statement, a list of objectives, or perhaps a memo. But you’re not really going to know what the company’s true goals are. That’s normally shared on a need-to-know basis only, and most employees don’t need to know.

Me: Ok. So how do I know which goals to work on?

Friend: Usually your boss determines that, so you just do whatever your boss tells you.

Me: I have to have a boss?

Friend: Yup, everyone does. Even the CEO is accountable to the board and the shareholders.

Me: Ok, so what if my boss doesn’t do a very good job of telling me what to do?

Friend: That often happens. You muddle through. Just make sure you look busy when you’re being watched, and you should be ok. Personal accountability tends to be pretty low, so as long as you don’t stand out as being obviously idle, you’re probably safe.

Me: What if the boss and I disagree on how to achieve the company’s goals?

Friend: That’s where you start getting into company politics, which can be messy. Some people do what the boss says anyway, even when they know it won’t work. Other people try to push back or negotiate. Sometimes that works, but sometimes they get marginalized or even let go if the boss doesn’t like it. Usually people compromise somewhere in the middle.

Me: Are these compromises normally intelligent?

Friend: Not usually.

Me: If I do a good job of helping the company achieve its goals, do I get extra rewards for that?

Friend: Yes, sometimes. You might get a raise, a bonus, or a promotion. Or you might get intangible rewards like praise, appreciation, and recognition. Sometimes, however, you don’t get anything more than your base pay.

Me: How do promotions work?

Friend: You get a new job title and have more responsibility, which usually comes with higher pay. Sometimes it means longer hours too.

Me: What if I come up with a really great idea, but it’s not part of my assigned duties?

Friend: Umm… yeah… don’t do that.

Me: Why not?

Friend: You’ll just be a rabble rouser. The other employees won’t like it if you try to upstage them, and they’ll make your social life at work unpleasant till you back down.

Me: So if I try to work harder or smarter and get promoted faster, the other employees may try to hold me back?

Friend: Probably. Your boss may not like it very much either.

Me: My boss wouldn’t like it? Why not? Isn’t it part of his job to cultivate good talent?

Friend: Perhaps, but he wants to look good too. It’s not good for him if one of his underlings is outshining him.

Me: That doesn’t sound like an environment where I can really do my best work.

Friend: Yeah, but it’s all good. Fortunately your best isn’t required. You just need to get by. It’s actually easier this way.

Me: But if I know I’m not doing my best, then won’t I feel worse about myself? Won’t that lower my self-esteem?

Friend: Sure, but you get used to it. Everyone adapts.

Me: So what is it like to work with a group where no one is doing their best, and everyone thinks less of themselves and their coworkers because of it?

Friend: Pretty boring actually. But again, you get used to it. The free coffee helps it go down easier.

Me: Ok. So what about the sex?

Friend: What are you talking about?

Me: Well, if I’m with a female coworker, and we both get horny, then where do we go to take a shag break? Are there special rooms for that?

Friend: Oh no no no. That would be very much frowned upon. You could both get fired for that sort of thing.

Me: Fired? Why? What if it’s just a quickie and we still get all our work done?

Friend: Yeah, don’t do that. The company could get sued.

Me: Sued by whom?

Friend: Probably by the woman you had sex with.

Me: So if we have consensual sex, she would sue the company? For what?

Friend: Sexual harassment I guess. People have won millions of dollars doing that sort of thing.

Me: Ok, so I have to settle for blowjobs only then?

Friend: Goodness no. That’s just as bad.

Me: So what do people do if they get horny at work? People still get horny at their jobs, don’t they?

Friend: Sure… they get horny all the time. But they suppress it and pretend they’re not. Then they take care of themselves later, usually with Internet porn.

Me: People look at porn at their jobs?

Friend: Oh no. That’s frowned upon too. People could get fired for that as well.

Me: So basically while they’re at work, people still get horny, but they pretend to be asexual till they can take care of themselves later… like at home.

Friend: Yup, that’s pretty much it.

Me: Seems easier just to have a quickie, maybe take a short cuddle nap, and then go back to work refreshed and happy.

Friend: I’m pretty sure that’s illegal in a corporate setting.

Me: Ok, but those positive after-sex feelings make collaboration easier. Trying to suppress one’s sexual desires every day seems like it would be very distracting.

Friend: It is distracting of course, but remember that you aren’t expected to be too productive anyway, so it works out okay. And again, the free coffee helps with this as well.

Me: Ok, so let me get this straight. You’re suggesting that I shut down all my passive income streams, go to work for someone else, get a boss and do what he says even if his decisions are unintelligent, do mediocre work instead of my best, socialize with people who also do mediocre work, work longer hours for less pay, take fewer and shorter vacations and ask permission to take them, pay a great deal more in taxes, and on top of all of that… no sex?

Friend: Pretty much, yes. But you’re overlooking the security aspect.

Me: What’s secure about it?

Friend: Well, you’ll get a steady paycheck.

Me: How steady? Does it ever end?

Friend: Well sure it can end. You could get fired or laid off.

Me: Can I prevent myself from getting fired or laid off?

Friend: Not necessarily. It could happen due to circumstances beyond your control. Or you might just make a mistake. Or someone higher up may not like you.

Me: So how is that secure?

Friend: Well, it’s mostly secure.

Me: So if I get fired or laid off, how much residual income will I continue to get?

Friend: Usually none. You might get a severance package for certain jobs, but that’s only short-term for transitioning. For the most part, once your job ends, you stop getting paid.

Me: But currently I get paid whether I’m working or not. And I can’t be fired or laid off.

Friend: Yeah, that’s weird.

Me: Just feels normal to me.

Friend: Well, I know you’re kind of set in your ways, but jobs are very popular. They obviously work for lots of people.

Me: What about finding a job? Does everyone get one automatically?

Friend: Oh no. People have to seek them out them and apply for them.

Me: How do they find jobs? Do they decide what they like doing and then find a job that lets them do it?

Friend: Usually it’s not that simple. Most of the time they have to see what’s available, and it probably won’t match perfectly with what they really like.

Me: And once they find a job and select it, then they get hired?

Friend: No. Again, it’s not that simple. It’s a competitive marketplace. They have to apply, but they probably won’t be chosen. They may have to apply to many jobs before they’re offered one, and it may not be the one they most wanted. Also, millions of people who want jobs can’t seem to get hired at all.

Me: This sounds very time consuming and stressful. What do they do if they can’t find a job?

Friend: Well, they have to mooch off someone else to get by… off the government, off a relationship partner, off a friend or family member.

Me: And what if they still can’t find a job, and no one lets them mooch anymore?

Friend: Then they might become homeless.

Me: That doesn’t sound too secure to me.

Friend: Well, most people don’t end up there. So it works okay overall. And being homeless isn’t as bad as it seems. People cope.

Me: Do most people like their jobs?

Friend: No, at least 80% don’t.

Me: So why do they keep going to work?

Friend: They need the money. And what choice do they have?

Me: They could earn money without a job.

Friend: Yeah, maybe… but who does that?

Me: I do.

Friend: Yeah, but you’re weird.

Me: I appreciate your sharing all of this, but in a world that considers this job thing normal, I think I’ll stick with my current approach, even if you think it’s weird. I enjoy the work I do, I get paid well whether I work or not, I can travel whenever I want, I don’t have a boss, I can’t be fired or laid off, I don’t feel I’m overpaying on taxes, I can do my best without feeling pressured to be mediocre, and if I’m working with someone and we get horny, we can shag the dickens out of each other and then go back to work with a smile… and no one gets sued. Best of all, I get to use Master as my official title.

Friend: Sure, that all sounds good, but most people can’t do it.

Me: Why not?

Friend: I don’t think most people are smart enough.

Me: There are lots of not-so-bright people earning passive income. You’d be amazed at how much mental capacity is freed up when you don’t have to deal with a boss or company politics… and when you don’t hold yourself back doing mediocre work instead of your best… and when you aren’t stressed about being potentially fired or laid off or having to be celibate.

Friend: True, but those people are weird too.

Me: Perhaps.

Friend: Also, passive income is way too complicated for most people.

Me: If people can handle all the complexities of jobs, I think they’ll find it a breeze to earn passive income. There’s no job hunting, no resume, no application, no boss, no company politics, no need to save up vacation time, no risk of being fired, no commuting, and lower taxes. Yes, there’s a different learning curve in the beginning, but if people can handle working for someone else, I think they can easily handle setting up passive income streams. And once they’ve done it once or twice, it’s pretty straightforward after that.

Friend: Well, I’m still skeptical, so I suggest you give this some further thought. Again, jobs are very popular. I think you should give it a try.

Me: Do you think I’d like it?

Friend: No, but you’ll get used to it. Trust me. It will all be fine. Again, it’s very popular.

Me: Maybe for the free coffee.

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