Happy Friday. Everybody was that I'm channeling my nineties spud wise over here.
Then it feel like spring I feel like after Easter. After well, it's spring break for us. So the reason we've got this bestie here is should I should be saying happy spring break to everyone, even though for you.
It's not a spring break and that's going to Panama City.
It has been for us. We have been spending time with family, with friends. But that being said, we didn't want to leave you in the lurch without any hon of money content there in your podcatcher, So we.
Figured we would replay an episode that we actually referenced last Friday flight because we're talking about the vending machines and the flipping of houses and how passive income is is something that so many people desire in the personal finance kind of feels like.
This holy grail that once they achieve it, it's gonna solve all of the problem.
It's the elixir of life. And there is some truth to being able to generate passive income, but there's also a lot of a lot of myths, true mistruths, a lot of lies in that space, especially coming from influencers. I want to sell you something, or who want your view, want your eyeballs, want your attention, and so we want to give kind.
It's so ironic because they're oftentimes taluting the different passive forms of passive income on a platform that they are working hard at creating, right, and so it's a slide of hand trick. What's going on there is like they're showing you they unlock the thing and they pull the little the bucket out with all the quarters, and you will maybe fooled into thinking that, oh, that's passive income.
But if they are a little more truthful, what they would be pointing to is the fact that they are a content creator on let's say TikTok or YouTube, and those are part time to full time jobs.
That those folks have exactly right. And that's what some people in the Fire community have been criticized about. It's like, oh, I retired early, but I'm creating so much content around Fire to try to get you to, you know, sign up for this and such service. And that's how I'm going to actually make my living. As I write about the lifestyle that I kind of sort of am living but not quite because I have this part time job
at least creating content. So this is hopefully an episode that offers a sobering approach to passive income and helps you think about how you can generate passive income in your life. But typically that means frontloading the sacrifice a little bit more so, Yeah, it's not actually passive income there always involves a little bit of work. Although there
is one form of truly passive income. You'll hear us talking about that, but even still it still takes a little bit of upfront cash in order to get started. But yeah, we hope you enjoy this besty episode. Welcome to Out of Money. I'm Joel and I am Matts, and today we're asking the question is passive income a myth?
Yeah, Joel, I am so excited for us to tackle this concept of passive income. It's something that you and I that we are striving towards when we have to a certain extent ourselves personally. But it's something too that I feel like is that we hear more often, like when in social media you hear it being talked about. It's something that you can easily attain some passive income in your life. Kind of sounds like maybe a pyramid scheme.
This is like, how can I automate money? I want money coming towards me with very little effort, And so don't we all? Yeah, And I'm glad that we're gonna We've dedicated an entire episode to talking about how passive income is a legit, a true, honest thing in the ways where maybe it's it's a little more shady, or that it's just not true exactly to the way it's being marketed.
Or sold to folks. Yeah, I think sometimes when we talk about passive income people at least I think of like the Leprechaun and the pot of gold at the end of the rainbow, And that's kind of how the passive income conversation feels to me At times. I'm like, Okay, this video or this this article is gonna teach me how to make passive income in just a few minutes. It's gonna be it's gonna be so simple. And yet at the end of the day, there is no pot of gold at the end of the rainbow, and you're
you're sold to Billy Goods. That isn't actually true. So we're gonna try to kind of actually talk about what is true about past to income and what's not true. Separate the myth from the reality here, that's right.
Yeah, But first, dude, I wanted to talk about coffee. You know, and I've everybody who listens to the show knows that I like Aldi.
Dude.
We save so much money by getting our groceries there at Aldi, and in particular, we've been fans of the whole being coffee that you can get there, specifically the Peruvian blend.
And of course, you know, you and me are opposites. I get my coffee at Costco, That's.
Right, Yeah, which is totally fine, But Dude, lately I feel like the Aldi coffee hasn't been cutting it for me. Recently, Kate brought home a pound of some local coffee. Well it's sold locally, but it's like it's an Ethiopium blend.
Dude.
It is so good, so much better than the cheaper stuff that I get at Aldi, that I'm not sure that we're gonna be able to go back and continue buying the cheap o Aldi beans. But the problem is is it costs more, and I don't know how. I don't know if our budget can absorb the increase in cost. Right, So, at Aldi is like four or five bucks for a pound. This new coffee costs ten bucks a pound. I'm looking to double the amount of money I'm spending on my coffee.
How much so the stuff you buy at costco how much do you spend?
I think, yeah, usually it's about a little over five bucks a pound. I think it's eleven dollars for a two pound back. And you like it, right, I mean it works well for y'all. Yeah, it's good. I don't have like high follute and taste when it comes to coffee. I like my coffee to be run of the mill average, Like I.
Feel like that's what I've enjoyed up until now, but until I've had a taste of the good stuff. Once you taste it, yes, And now that we've kind of gone back to our standard all these stuff, I'm trying to decide whether or not it's worth it to me. And you know, this is one of those areas where I feel like, if I continue buying the cheap stuff,
it's gonna feel cheap to me. And I can literally taste a huge difference between the Aldise stuff versus this nicer Ethiopian blend, and so I guess I'm mentioning it because I think we are going to just budget for it.
We're gonna plan for.
It because this is something that Kate and I are both appreciating. It's something that we can tell the difference. We appreciate the nicer stuff, and honestly, in the end, you know, we're looking at increasing our coffee budget by you know, five dollars a pound roughly. On one hand, it feels extravagant, But on the other hand, I'm like, Okay, this is not a big deal. Leave it to money nerds like us right to obsess over something so small. But I guess my question for you is as would you judge.
Me for for effectively doubling my coffee budget? Not at all? Actually, yeah, no, I think you're you should totally go for me. You
should spend a little bit more on this thing. And I think coffee is one of those things that in your life literally every day of the year, and if you can thoroughly enjoy your cup of coffee versus just kind of, yeah, mildly enjoying your cup of coffee in the morning, I think that extra what ten bucks a month in your budget, I'm sure you can find a way to cut back ten bucks in some other in some other part of your budget in order to be able to pay for a nicer coffee or find a
way to earn ten extra dollars, you know, by giving a lift ride or something to somebody.
Yeah, I guess I wanted to share that because I want folks to know, in a sense, I want to give individuals out their permission to spend money towards the things that truly like bring you joy or you know, bring you value. But just know that you can't spend money on every single thing out there, like you can't upgrade everything in your life. But in this case, I think we are going to spend a little bit more every month on coffee.
Yeah, sometimes ignorance is bliss when it comes to see a budget.
I wish I would have never had it, because I think I would have been totally fine with the Aldi coffee.
That's the way I feel about the nicer new pizza joint We've been hitting up sometimes these days, and I truly love it, Like it's delicious, pizza, really good, it's really expensive, And now when I go back to the other neighborhood joint, I'm like, it's good, it's fine, the inferior pizza. Yeah, but I wouldn't have thought that before it until I tasted the super good sof's so true.
It's kind of one of those things that happens every once in a while, and you you have to put blinders on, yeah, in order to stay the course, exactly like a horse in a race. But but I hope you enjoy your new coffee, my friend. Thanks man. But let's move on mention the beer that we're having on this episode. The reason we have a beer every episode is because that is a place we choose to put our money on purpose. We like craft beer a whole lot.
The beer that we're drinking on today's episode is called raid X is by Halfway Crooks, which is a brewery in our neighborhood that we absolutely love. So looking forward to us to drinking this pilsner with you, man. Yeah all right, Well, let's move on to the subject at hand. We are asking the question is passive income a myth?
On today's episode, and Matt, when we were kind of deciding how to tackle this topic, it made me think about relationships and I feel like I don't know why passive income and relationships they don't necessarily go hand in hand, like you and me. Yeah, well, I was thinking more about like a love relationship. I feel like the messaging that we often get is that finding the right one is the hard part. Right. Once you find the right one and settle down, you're good to go, and life
is easy from there on out. Now that you've got that perfect partner, things are smooth for you in life. And when you find the person that you can truly be yourself with, it is a gift. Like I'm not trying to diminish true love. I think. I think it's really good, and I am in love with my wife,
and I'm thankful for our relationship. But still, even when you make a lifelong commitment to someone else that fits you like a glove, it really does still take work to keep that leve alive and to stay deeply connected to one another. You know this, Matt, You've been married for what Yeah, dude, it'll be fourteen this year. Nice, Okay. And I feel like this is a great analogy for passive income, because passive income sounds so easy and similar
to you know, a great relationship. It's not that passive income isn't a great thing. It is, but passive income also takes work. So yeah, in this episode, we're going to try and give an accurate definition of what passive income looks like and then the best avenues for pursuing it, and maybe, just maybe along the way, Matt, you're gonna sprinkle in some relationship advice. I feel like you've probably got a lot to offer on that front.
Well, yeah, I mean relationships, like passive income requires a little tender love and care, right, But I don't Yeah, I don't have any tips. I will say Kate and I started dating when I was a senior and she was a freshman in college, and so all I'm saying is like, use the strengths that you have going for you.
So obviously, Kate, like the older guys so worked out for me, and you know, when you know you found the right person, stick with it like you did. Yeah.
Absolutely, man, I'm looking forward to I've already mentioned the show before fifteen years next year.
I feel like that's going to be a huge milestone.
Not to discount fourteen, but yeah, like in the same way that relationships, you know, continue to require that input and that attention. Almost all of the quote unquote passive income opportunities that we hear about. These are maybe the ones you know, getting all the views on social media. They also require a meaningful degree of work, and so a better term I think to use instead of passive
income is probably leveraged income. You know, there are very few purely passive sources of income, and so that's why we are, you know, dispelling the myth that there's a source of passive income around every corner, right, Like, you aren't missing out on the passive income that everyone else is enjoying because it doesn't exist.
Is that where you can go and sign up for free money?
Most of these opportunities could probably be considered a side gig, or even a part time job, or even a full time job. We'll get to some of those scenarios later on in the episode.
Yeah, I think sometimes when we're talking about passive income, there is that fomo. People are like, I feel like everybody's like making this passive income. I see it out there online, where's my passive income? And like so the golden ticket exactly. But a lot of what's considered passive income isn't necessarily passive. And I like what you said Matt about leverage income. I think it's a better way
to think about it. You know, we'll continue to use the phrase passive income in this episode, but leverage is really an important part of this equation. To gain passive income, you're often putting in more time and effort now to
reap greater rewards later on in your financial life. But the reason people are so desirous of generating passive income streams is that it's better to have your money working for you than to have to work for your money decade after decade after decade, right, sometimes five decades of work, and at some point you want passive income to kind
of help carry some of that load. Making money while you're a sleep sounds pretty phenomenal, but generating regular income that doesn't come via a paycheck from your employer takes intentionality, takes sacrifice, and takes the ability to delay gratification.
Yeah, it takes work, essentially as what you're saying, and sometimes the understanding that it takes effort to generate passive income that gets lost in the discussion about how to get there. To be able to make money without lifting a fingers in something that I've ever experienced, but often that is the passive income pitch that we hear. Even to make money, you know, based on what you know, like that takes a lot of dedication and getting that
knowledge just in the first place. You know, it takes quite a bit of time to see any meaningful passive income. You're not going to build three passive income streams, you know, just in the course of a few days. Even just amassing the knowledge to know which routes to take like that alone can require a ton of reading, a ton of information gathering, and implementation of that knowledge doesn't happen quickly either.
Yeah, so you mentioned that it takes time to see meaningful passive income. Yeah, it's not something that's done quickly, which is true. And also too, it takes trial and error on that front to see which passive income routes work well for you. You might think that one route is going to make sense, and you might decide, no, that's actually not in my wheelhouse. Check something else out. It also takes money to build up any sort of passive
income stream. All of the different passive income streams that we're going to discuss today take varying amounts of money to get into. So, like the down payment on your first rental property. Well, that requires quite a bit of cash. Starting a blog though, isn't going to take nearly as much money to get going, of course, But to start earning income that flows while you sleep, it often takes money in addition to hard work. It takes a little bit of both, sometimes a lot of both, right.
Yeah, yeah, And different sources of passive income are going to have varying degrees of time and work involved. Right At a very elementary level, passive income can literally, you know, be as simple as having money in a savings account and earning interest, although that's not going to earn.
You much, especially these days, so yeah, exactly.
But that method could you know, just take a few bucks and virtually none of your time.
It's super simple, super easy.
Or on the other hand, passive income could be as complex as building this massive business with you know, hundreds of employees that you eventually you are able to step away from. This is an example of a form of passive income that's going to take a lot of time
and a lot of money. And of course, you know, there are different approaches to passive income all along the way in between those two extremes, and so we're going to cover some different methods of passive income that are going to kind of run the gamut between those two extremes.
Yeah, so let's start kind of maybe on the easy end of the spectrum, and let's set the easy button and talk about one of the simplest ways to make passive income. And this one, I'm gonnadmit this first one that we're gonna throw out there. It's a little bit random. It's not one that you're going to see touted in most of the YouTube videos. But yeah, one way that you could make money is just using an asset that
you already have. You can generate passive income by doing the actions that you're already doing, but doing them in a different way. And wrapping your car in an advertisement is actually the easiest way, I would say to do that. It's actually something Matt that I have done before personally done this, right, It's the easiest way I've ever made money doing the thing I was already doing. Right, So I had to have the car slightly embarrassing to your wife, Yeah,
to my wife, not to me. I didn't care, but some people would be more embarrassed than others about it. I have no sense of shame, but yeah, I already had the car, and I was driving it already to work on some days and around town on other days, and so making money without having to really change up anything in my daily routine was pretty nice. It's a chill way to make some extra dough. And the company I went through was called Rapify, and they're still around.
And I will say too, there are lots of scams when it comes to car wrapping, so you want to be careful which company you go with, but Rapify will link to it in the show notes. Is a legit one could be a good way for a lot of people to make hundreds of extra dollars every month literally by driving the miles they were already driving. So that's a cool way of making passive income without having to put in too much effort. Also, too, running out that car that you aren't using is another way to score
a bit of passive income in your life. Cars are idle, Matt somewhere close to ninety five percent of the time, especially these days if we're working from home. A lot of us have been using our cars way less than we used to, and so why not turn that car that spening their idol into some passive income and you can do that at a site like Toro, where you can rent out your own car for other people to use, and you can make some decent money doing that.
That's right, Yeah, that's super easy. Although I guess there's a difference between rapify and turo Right. With Touro, it does take a little more managing, you know, of your vehicle, making sure it's maintained, making sure it's in the right place at the right time.
Right responding to people who are trying to book their car to.
Yeah, exactly, whereas like truly rapify, I mean, you didn't change anything about about what you're doing except for having to go and get it wrapped and then taking it back there once the campaign was over.
Yeah, right exactly.
But yeah, similar to Toro, where you're renting out your vehicle that you are owned. Baby equip is another example of this, and you know we've mentioned this on the show before, but you can make money by renting out baby equipment that you already own that you aren't using. So if you've got like that extra pack and play sitting there in the closet, why not put it to use? So using assets that you already own more efficiently, that can be a really easy way to kind of generate
some passive income. But we're going to talk about the pros and cons of other passive income methods, ones that have the potential to generate way more money, and what get those right after this break, all.
Right, we're back. We're going to keep talking to you about passive income. And it's our goal to point you in the right direction for how you can make money on your money or on the items you already have, or with the skills that you already have, without selling you a bill of goods that isn't actually real. And so, Matt, let's talk about probably our favorite method of passive income. Investing in the market is one of the best ways for anyone to get started building up an eventual source
of passive income in their lives. That's what saving for retirements all about, right, saving in your four oh one gay, your four h three B or your IRA. You know, some folks attempt to take a more active role when it comes to investing, picking individual stocks, making frequent trades.
But that's really the opposite of passive income. That sounds like work, that sounds like you're having to figure out which company you think is going to perform well over the next six months, year, two years, and allocate your investments accordingly. But you and I, we actually pursue the truly passive dollar cost averaging buy and hold strategy that truly takes almost zero mental bandwidth. Like the time that it takes for us to invest is almost nothing. And
I do appreciate that about investing in the market. But even if you're all about finding multiple ways to pursue passive income, like you want to get involved in some of the other things we're going to talk about on this episode today, investing in the market is one route that we believe that basically everyone should be participating in. It's one of the simplest methods to building a passive income stream that will fund decades of your future expenses
later in life. Even if you start with just a really small portion of your income going in that direction, it doesn't take a whole lot of cash, but those little amounts of cash over a large number of years are going to have just this incredible impact in your ability to have passive income in your later years in life. Yeah, that's true.
Yeah, investing your money in the market, it's really the only way to have a truly passive source of income. But you know, it does require a lot of money in order to eventually generate enough money in interest to live on.
Right.
So, for example, if you have the typical expenses of an average American, that means you have around sixty thousand dollars in expenses, right, And using some quick math, we know that by multiplying that amount by twenty five, you'll have a good idea of how much you'll need to have invested in order to live off that nest egg. And so in this example, if you multiply twenty five by sixty thousand, that leads to one point five million dollars.
That is a lot of money.
That sounds daunting, it is, dude, yeah, but that's why it often takes an entire working career in order to have enough saved to become financially independent. But it is easy in that it doesn't take much re search indexcelence, that's all you need to know. But it does take
a long time to get there. But because it doesn't require much money upfront, and it's something that you can easily get into, and it doesn't require that specialized knowledge or time, it's something that everybody can take part in.
Yeah, so investing in the market is almost like Rapify level, almost car wrapping level. Simple. It just takes the money and the dedication to continue putting that money in consistently. Yes, all right, let's talk about some other ways Matt, that people can make passive income in their lives. One of the ways that is often touted is affiliate marketing. It's supposed to be a fairly easy method, pretty huge online.
You hear people talking about it. Yeah. Yeah, they're like, hey, start a blog and pop in some affiliate links and you're going to start developing passive income in no time, like overnight, right, And so, yeah, I think this is one of the things maybe that's over promised and anybody that's actually tried doing this realizes that it's much harder than it seems. Right. The way this works is that businesses will pay you a commission for sending costs roomers
their way. A lot of different sites rely on affiliate marketing like they're getting sales when bloggers link to them and then you know, readers click through to make a purchase. Right. And while this is a legit way to make money starting a blog, finding your tribe of readers. You gotta have enough readers to actually make it make it worthwhile to actually get click throughs and see sales.
Yeah, if it's just your mom clicking through, that's not going to generate enough income.
Now that passive income might be like a dollar, you know, and that's not going to that's not going to do it for.
You to say, hey, honey, let me just take you out to lunch, Like I'm not going to click the link. That's not even cover the hosting fees, right, So true, yeah, not worthwhile. But yeah, it's it's just not as easy as it sounds and as easy as some of the folks on YouTube make it sound. So Yeah, generating income online is much more complex and competition for page views
is stiff online. You really have to learn a lot, develop a good niche online and then be able to actually attract the readers that are going to be able to support your endeavor.
You say niche, I say niche. I know, I don't know which one I think. I go back and forth.
Well, talk about writing a book, right, because self publishing a book is often another way to pursue passive income, and many times that blog that we just talked about that is used as a way to market that book. But just remember that getting the knowledge actively writing the book, marketing, touring, interviews associated with promoting your book. I don't know about you, but this all sounds like a lot of work to take.
Does not sound like passive income.
Does not sound like you're just kicking back in a hammock after having like come up with a good idea. And so you know, while it may not require a lot of money in order to publish a book or to get your blog going, it does take a fair amount of time on the front end in order to start realizing some of that income.
Yeah, ask anybody who's ever self published a book. I've never heard anyone say that was simple, that was easy. And I crushed it. Like, it's not that you can't make money publishing a book. It's just that it's not really a form of passive income in our minds. It really truly is a form of work, and it's a form of like what we talked about earlier, leveraged work. Sometimes you can write a book and it can sell
for years to come. You can make money for a long time on that book in all iightlihood, though for most people it's just not a lot of money that they're going to be making. True. And Matt, let's talk about podcasts here for a second. Let's get a little metal with it. That's another thing that people point to these days as a way to make passive income. Yeah, they're like, Joel and Matt do it. Why can't I?
It's so simple, And they just keep back in their hammocks and so yeah, they're just sitting there drinking beer. I will be honest, which is true. If we can do it, then other people definitely can do it, because we're not the smartest guys in the world or maybe even in this room.
There's not other people in this room, so I know there's nobody watching us. But it takes work, and that's what we're talking about here, right. But obviously podcast super popular these days, and a lot of people are churning out new shows like There's No Tomorrow. The amount of new podcasts on the scene has skyrocketed over the past few years. But just because you get an idea for a show doesn't mean that you'll be able to generate any income from it.
Right. We just saw a recent stat Matt, twenty six percent of the two million podcasts that are available to listen to via Apple Podcasts, and then you know, through all the other podcasters, accordingly they only have a single episode, so one episode, one episode, and then there's a huge percentage that have fewer than ten episodes. So there's a lot of people that give it a shot, that put out a few episodes and try to see what sticks, but they don't find much traction in the beginning, and
so they quit pretty quickly. So it's a really high number of folks who don't keep it up after they get started. And it's obviously a relatively cheap medium to get into. It's not that expensive to start a podcast, and I think we've talked about on the show. We literally have four hundred dollars worth of equipment. The hosting when we initially started out was like ten dollars a month. I think it was a free for the first three free, yeah,
because we did enough. We didn't have enough content, yeah, or listeners and so yeah, and we still use the same equipment that we used back then exactly. Granted, the room is different and we you know, we have soundproofing and you know, ways to acoustically treat the space. But literally we are using the same microphones and the same little zoom recorder right here. It's true, it's kind of ridiculous. So yeah, obviously, yeah, people might hear that and be like, okay, cool,
it's a few hundred bucks. I can get into it and start making money too, low overhead. But podcasts similar to you know, affiliate marketing with a blog or writing a book. It takes a lot of work to create something that people actually want to listen to and to reach the audience that you're trying to reach.
Yeah, and of course, you know, the way that we generate income from the from the podcast are from the ads that you hear. But even with a super small listener base, it's it's now possible to make money, and you can do that via platforms like Anchor. Like literally on their website and I wrote this down, it says that you can quote unquote, create, distribute, and monetize your podcast all for free. Like it's crazy like it they almost make it sound like like because it says all
for free. I think the trick is that they make you think that, oh, that first part even creating it, like that's going to be free, Like it's almost like it's automatic but no, like it does take hard work. And in addition to that, you know, some shows have gone the route of getting like support directly from listeners via sites like you know, Patreon. But again it's important to note that, you know, putting out great content consists, it's not easy, and it's hard to consider this business
model as passive income. You know, it's it's it's literally our job.
It's what we do.
It's not something that we're uh, you know, doing without hardly even thinking about it.
True, podcasting for us takes a lot of thought, uh and a lot of time. But let's talk about another another way that you could potentially make some passive income online and maybe let's see if this one is is
a little bit better. Similar to running a side or a blog or self publishing a book or a podcast, there are plenty of other platforms out there that allow for you to create a course online that you can sell, and platforms like you to me and Coursera are specifically there for you to be able to upload some of those courses and make some side money. You upload that course once and hopefully those residual passive income dollars just
keep flowing your way. Right, Let me see those royalties. Yeah, royalties sounds so nice, sounds good because it's royalty's it makes you think that like, oh no, no, that's just money.
That's it's nothing beyond just money. But because it's called royalties, it has this the peel. It makes me feel like I'm a king or something. Yeah, exactly, at least to Prince.
Yeah, it makes me want to write some sort of like hip hop song or something like that for Taylor Swift and then you know, collect some of those royalties. But you should, Okay, I can see you're performing a song that you wrote. I have never written a song before, but maybe I'll give it a gout. See if I can get that passive income from royalties. But let's get back to online courses, and it is fascinating to see people who are able to monetize their unique wisdom, insight,
their personality, or even their basic but practical knowledge. We all have access to so much incredible knowledge these days that we previously couldn't access without paying money to go to college or spending years getting advanced degrees, and online courses have made that more of a reality. Like what we can learn now for free is just incredible but people are getting paid in order to disseminate that information.
And so yeah, it's cool to see that some people are making passive ages in that way.
And I mean, it's no wonder that folks are willing to pay for that because you get to learn about something completely niche, like I like to say niche.
For very little money.
Who spend five or twenty bucks to learn how to do something completely unique?
I still want to take that Aaron Franklin barbecue master class that's gonna happen. One of these masterclass that's a bit more. It does cost a little more. Yeah, we'd have to go in and split that one, buddy. Yeah.
And you know, when it comes online courses, the argument goes something like that of writing your own book. Right, Just figure out what you want to teach or what it is that you want to communicate to others once and then you can kick back while the profits start showing up.
The royalties and the royalties.
If feels that easy, then everybody would be doing it. And so you realize that it could take years of work, years of research and planning before you're able to have a product that that folks are going to be willing to pay for and so you know, while these knowledge based methods of passive income don't require much money to get things off the ground, they're going to take a lot more time and energy before they can be considered
passive income. It's making me realize too, Joe, Like, I mean, all of these things that we've that we're talking about here are different platforms that are that have very low bars of entry, right that they make it really convenient for you to get plugged in and you're trying the thing out, but they don't do the work for you. They make getting started easy, but they don't necessarily make being successful easy, Like you still have to put in the hard work. They get their foot in the door,
and then the rest it's still up to you. And I think that's why, for instance, with podcasts low barrier to entry, you're going to see a lot of podcasts that have only one episode. There're gonna be a lot of people who are who have an account on Uber because they tried it out being a driver once. It's very easy to try it out once, but beyond that, it's up to you to follow through and to put in that hard work.
Yeah, man, I love what you said too about how it might take years to become viable and to make one of these products sticky to where you can actually make money from it. And I think that's true. I think there's a big learning curve to a lot of these platforms, even though they are super simple to get started.
Like what you put together, what you package, what you offer to the world, that's the thing that takes time to craft and to grow your knowledge base to where people actually want to tune in and check out what you're putting out there into the world. So, if all the ones we've covered so far, investing in the stock market is the easiest route to passive income, although it
takes a while. But there are other ways, including we got to talk about real estate, Matt, because that is one of the most effective routes to building up passive income. We'll get to that and more right after this break.
All right, we are back from the break in Joel up until now. You know, the examples that we've covered are pretty easy to get started. They mostly require a little bit of money and a good amount of work, you know, and luckily a lot of those platforms make it easier to kind of get plugged in and to get started but let's crank things up a little bit. If you're really looking to increase your income, specifically your passive income, getting into rental real estate is an example
that will take quite a bit of upfront work. Right, Like, every real estate investor I know makes a good rookie mistake here there, or even twenty or so.
We've all anybody who's gotten into real estate has made some mistakes, and they cost you money and time and a lot of like some headache care pulling.
But eventually, right, over time, rental properties can become one of the best ways to earn residual, mostly passive income. I know, I'm happy with my hourly rates as a real estate investor. In particular, though, to make real estate truly passive over time involves acquiring a handful of properties and getting to the point where you can turn them over to a property management company. That at that point is when it becomes purely passive.
Yeah, you and I were mom and pop landlords, and we still manage our own properties, and so there is work involved when it comes to that. But I will say it is more passive if we're talking about a scale of passivity, which which you kind of mentioned at the beginning of the episode. It is more passive than almost any other way that I make money at this sort time besides the stock market. And so I think real estate is a good way to make passive income
over time. But like you said, yeah, the way to make it the most passive is to have somebody else manage that property for you. That eats into the profits though. That's right.
Well, And like you said, though you say, anytime you see mom and pop landlords or real estate investors, it makes me think of like an old farmer, like pulling up to the house with like a straw hat and a like old beat up pickup truck. I like to I don't know, I don't know why it makes me think that, but I like to have my corn cob pipe in my mouth when I, you know, run by my my property to check it out.
Neither you or I have pickup trucks. I'll say that true thought.
I would love to have, like as just an old small, like little Toyota pickup truck, just to be able to throw stuff in the back.
Oh, dude, I would love that. They're prettyweet. Dude. Yeah, I kind of still want a Ribbean electric pickup truck.
One of these days, like the opposite a small toyo a pickup truck you want.
Like like literally the fanciest, most expensive one they make that are also the sweetest looking trucks. Cyber truck can eat it. Yeah, so maybe like maybe ten years from now, I'll be able to afford one of those. Maybe so yeah so So. Getting into real estate is also difficult though, because it typically requires a pretty large sum of cash. That I need is a down payment, right, So there's more of a barrier to entry for that because it can take years to save up that down payment in
order to buy your first rental property. There are other ways to go about it, Matt, We've talked about this before. Living in a property and then buying another property to live in and then renting out that first house makes it a little bit easier at least, But yeah, that's something that you need to consider. It takes sacrifice right as you cut back and work to save up enough
money to buy that first house though. That's part of the reason I think why a lot of people look to airbnb as an easier method to trying out rental properties, and it definitely can be a great way to get a taste. Yeah, but when you decide to rent out a room in your home or even buy another place to list on Airbnb, it's more of a hospitality play than just a purely real estate investing play. Your part real estate investor and part hotel manager when you start
hosting on Airbnb. That being said, there are systems that you can put in place that can make your Airbnb listings function more like passive income, and we talked about that more on episode two fifty three with Ziona McIntyre who has literally made her living owning properties and ding them out on air and b helping other people do the same thing. It's amazing it's what she does now. Yeah, she's turned it into a career. But I will say, yeah, a lot of that income is passive, but some of
that income is very active on her part. But Airbnb is definitely something that's worthwhile to consider if you're looking to generate more passive income in your life and to use again, like we talked about earlier, some of the assets that you already have on hand. If you have a house and you have a room that you could run out, or you have a basement that you could outfit, make it a little bit nice and rent that out
on a nightly basis. You can make some real returns doing that, that's right, man.
Yeah, And so as we kind of graduate too higher levels of difficulty, let's talk about starting.
Your own business.
That's the Starting your own business is probably going to be the most difficult way to generate passive income. You know, it's often going to be the most risky, as creating your own thing from scratch will will require the most time and the most money, but it also has the upside to potentially generating the most income. And you know, I think that's also a fair trade. You know, like there's actually no risk involved, say with earning interest from your money in a savings account.
But there's also virtually no reward. It's appropriate that those who are committing the most time and the most money towards something that isn't necessarily proven, that they have the potential to realize that the biggest profits the biggest rewards. Yeah, we have talked about that. There are ways to start your own business with even less money, but still you're going to require a ton of time to start any business that you're looking to launch. But for a lot
of businesses, we're talking about both. And yeah, while we don't see owning your own business as a way to earn passive income, because like we said, it's going to take a lot of energy on your part, it is a method to generate income by trading time for money, which is what a lot of us have to do
for a lot of our lives. But if we do it well with good planning, you can eventually step back from the day to day operations of that business and you can turn it into an avenue that produces income without you having to commit to working on that business every day, right, and maybe even depending on what kind of business you start, you can potentially even sell that business someday in the future, or sell part of the ownership, or hire someone to do the day to day managing
while you take more of a back seat role. I mean, there are all these ways when you start a business that you can use it to generate income for a whole lot of years and then find ways to kind of pull back in order to make that business income a little more passive than active. Matt. It makes me think of a friend I have much older friend, and he had his own business that he ran four years. He and his wife, and they cleaned houses and they did great work. They built up a large list of
clients in the town where that they served. But eventually he wanted to retire. And it's not that that business had to fold just go away completely. He not only made money for all of those years running that business, but that business was worth a lot at the end of the day, so he was able to sell that business to someone else. And that points a finger to the fact that you can eventually score pass income based on the business you built, and.
At the same time doesn't have to be a super sexy tech startup you know exactly something you know where you're just offering a service to folks, did one other thing,
you know. One of the myths about passive income I think is that if you get your fingers in enough money making ventures that you'll essentially be getting paid in enough different ways that if one of your businesses maybe isn't doing so hot, you're still going to do okay financially, right, But oftentimes I think you might be spreading yourself too thin and you won't make enough money if you're kind of going this, you know, jack of all trades route
to generating multiple streams of income. Now being said, there's nothing wrong with trying out some different approaches and seeing what works for you, but you know, just don't forego diving deep when when times get a little rough, you know, when you don't immediately start making money, don't immediately try to hit the easy button and kind of switch over to the next opportunity where you think it's going to be easier.
It does require work.
And again, this is one of the reasons that I feel like the platforms, the different apps, the different you know sites where you can log on, create an account, offer a course, or start publishing a podcast. I feel like that they almost do a disservice to people digging in deep to whatever it is that they are pursuing, almost as if they're making it too easy for folks to try things out and they kind of.
Give up maybe a little too easily.
I like it because it gives a lot of folks a taste of it, but at the same time, it's sort of I almost see it as a negative because it's kind of like, well, that didn't work out, well, this didn't work out, and it sort of, I don't know, it creates this perpetual like hopping from one thing to the other and in search of a golden goose, something that's going to be able to significantly provide them with some income.
Yeah, if you just create one podcast episode, throw it up there and you hope to see that the passive income rolling in, that's just not how it works, right. That is truly the myth behind passive income. It really does take a lot of work. So you really have to go into your pursuit of passive income with eyes wide open, knowing that it'll take real effort to establish something that you can benefit from for years to come.
It's the opposite of strike it rich quick. Ultimately, the truth about passive income is that it's never one hundred percent passive except for investing in the markets regularly via your paycheck or ach from your bank account to an IRA.
But it is possible to work harder now in order to gain and share your knowledge with others by creating content that they're willing to pay for, or to study your local real estate market and save up enough to purchase that first rental property, or even to identify a need in the market where you can step in and fill the gap with your service or product with the business that you create, money will always flow to creative
problem solvers. So leverage your hard work now and it'll pay dividends as steady income for years to come, and that we would say is worth pursuing. That's where the reality of passive income can actually be realized in all of our lives. Right. I think we need to maybe avoid some of the clickbait headlines and videos that we see and realize that passive income, it's not a myth, but it is much harder to achieve than a lot of people out there want you to think that.
It is one hundred percent true. Dude, All right, let's shift gears. Let's get back to our beer. On this episode, you and I we enjoyed. We each enjoyed a Ratix, which is a German style pilsner from the folks over at Halfway Crooks here in Atlanta. Dude, what were your thoughts on this beer?
So I always thought that I didn't really like pilsners very much. I think it was because the only pilsners I'd ever had in my life were the giant macro brewers. Yep, right, Like had my fair share of high lives and PBRs back in the day, and yeah, they were fine, Like I didn't mind drinking them at a show, you know, at a concert. They were fine for the times. Yeah, but I didn't realize that I actually like pilsners. A Kraft pilsner can actually be really tasty. Yes, and Halfway
Crooks did an awesome job on this one. It's super clean, super delicious. This is actually the exact kind of beer I want while I'm sitting on my porch on a fine summer say, oh yeah, dude. Yeah, as we poured it.
It's got a nice golden color to it with a nice fluffy head, which kind of gets me to the flavor. I feel like it almost drinks like a like a kind of fluff light biscuity.
Ye, kind of like.
Flavor profile going on really delicious. While at the same time, though, because it is kind of a local craft brewery who's making this, it doesn't have that metallicky just old stanky pilsner flavor that we associate.
With Metallo is the exact best way to put it. Yeah, with like the Macro.
Beers, yes, like you can expect that at this one as we have that and this one like it's got all those biscuity flavors going on, but at the same time, it's still really fresh and kind of kind of green tasting. I'm glad you and I got to enjoy one of these today, and dude, that's gonna be it for this episode. Listeners can find our show notes up on our website at howdomoney dot com. Will make sure to link to any of the previous episodes we've referenced or any of the resources as well.
Yeah, if you're new around these parts, don't forget to hit the subscribe button so that you get notified of each episode that we release. We release Monday, Wednesdays, and Fridays, and we'd love to have you on board as a part of the how to Money community. So all right, Matt, that's going to do it for this episode. Until next time, best Friends Out, Best Friends Out.
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