April 5, 2024 • 42 mins
Just like how we can idolize ‘finding the right one’ when looking for a partner or spouse, the same can be true of passive income as we’re talking about our personal finances. We can be tempted into thinking that if we only find the right person then it’s smooth sailing. But as anyone who has been in a long-term relationship knows- the work has only just begun! The same is often true of the different passive income opportunities that we hear pitched in social media or hawked in YouTube videos. Passive income is a legit and real concept, but the way it’s often presented doesn’t include the full story, or they leave out some crucial details. There are very few sources of 100%, purely passive income and so that’s why we are dispelling the myth that there are opportunities around every corner, but have a listen because there are ways you can begin establishing your own future streams of income, today.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Happy Friday. Everybody was that I'm channeling my nineties spud
wise over here.
Speaker 2 (00:05):
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.
Speaker 1 (00:15):
It's not a spring break and that's going to Panama City.
Speaker 2 (00:17):
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.
Speaker 1 (00:26):
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.
Speaker 2 (00:40):
This holy grail that once they achieve it, it's gonna
solve all of the problem.
Speaker 1 (00:45):
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.
Speaker 2 (01:03):
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.
(01:23):
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.
Speaker 1 (01:31):
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
(01:52):
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
(02:12):
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?
Speaker 2 (02:46):
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.
(03:08):
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
(03:29):
being marketed.
Speaker 1 (03:30):
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
(03:52):
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.
Speaker 2 (04:04):
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.
Speaker 1 (04:11):
Dude.
Speaker 2 (04:11):
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.
Speaker 1 (04:20):
And of course, you know, you and me are opposites.
I get my coffee at Costco, That's.
Speaker 2 (04:23):
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.
Speaker 1 (04:35):
Dude.
Speaker 2 (04:36):
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
(04:57):
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?
Speaker 1 (05:03):
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.
Speaker 2 (05:17):
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
(05:39):
nicer Ethiopian blend, and so I guess I'm mentioning it
because I think we are going to just budget for it.
Speaker 1 (05:44):
We're gonna plan for.
Speaker 2 (05:45):
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.
(06:05):
But I guess my question for you is as would
you judge.
Speaker 1 (06:07):
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
(06:29):
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.
Speaker 2 (06:45):
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.
Speaker 1 (07:03):
Yeah, sometimes ignorance is bliss when it comes to see
a budget.
Speaker 2 (07:07):
I wish I would have never had it, because I
think I would have been totally fine with the Aldi coffee.
Speaker 1 (07:12):
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
(07:32):
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.
(07:54):
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
(08:15):
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
(08:37):
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
(08:57):
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
(09:20):
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.
Speaker 2 (09:35):
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.
Speaker 1 (09:50):
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.
Speaker 2 (09:58):
Absolutely, man, I'm looking forward to I've already mentioned the
show before fifteen years next year.
Speaker 1 (10:02):
I feel like that's going to be a huge milestone.
Speaker 2 (10:04):
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
(10:25):
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.
Speaker 1 (10:43):
Is that where you can go and sign up for
free money?
Speaker 2 (10:45):
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.
Speaker 1 (10:53):
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
(11:15):
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
(11:37):
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.
Speaker 2 (11:57):
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
(12:19):
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
(12:41):
quickly either.
Speaker 1 (12:42):
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
(13:03):
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
(13:24):
money in addition to hard work. It takes a little
bit of both, sometimes a lot of both, right.
Speaker 2 (13:29):
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.
Speaker 1 (13:43):
You much, especially these days, so yeah, exactly.
Speaker 2 (13:46):
But that method could you know, just take a few
bucks and virtually none of your time.
Speaker 1 (13:49):
It's super simple, super easy.
Speaker 2 (13:52):
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
(14:13):
to cover some different methods of passive income that are
going to kind of run the gamut between those two extremes.
Speaker 1 (14:19):
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
(14:39):
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,
(15:02):
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
(15:24):
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
(15:47):
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
(16:10):
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.
Speaker 2 (16:17):
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.
Speaker 1 (16:27):
Right responding to people who are trying to book their
car to.
Speaker 2 (16:30):
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.
Speaker 1 (16:39):
Yeah, right exactly.
Speaker 2 (16:40):
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
(17:01):
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.
Speaker 1 (17:23):
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
(17:46):
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
(18:09):
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
(18:32):
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
(18:53):
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.
Speaker 2 (19:12):
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.
Speaker 1 (19:24):
Right.
Speaker 2 (19:24):
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.
Speaker 1 (19:47):
That is a lot of money.
Speaker 2 (19:49):
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
(20:11):
or time, it's something that everybody can take part in.
Speaker 1 (20:14):
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.
(20:37):
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
(20:57):
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.
Speaker 2 (21:20):
Yeah, if it's just your mom clicking through, that's not
going to generate enough income.
Speaker 1 (21:23):
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.
Speaker 2 (21:27):
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,
(21:48):
develop a good niche online and then be able to
actually attract the readers that are going to be able
to support your endeavor.
Speaker 1 (21:55):
You say niche, I say niche. I know, I don't
know which one I think. I go back and forth.
Speaker 2 (21:59):
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.
Speaker 1 (22:20):
Does not sound like passive income.
Speaker 2 (22:21):
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.
Speaker 1 (22:36):
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
(22:58):
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
(23:19):
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.
Speaker 2 (23:29):
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
(23:49):
a show doesn't mean that you'll be able to generate
any income from it.
Speaker 1 (23:53):
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
(24:15):
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
(24:35):
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
(24:56):
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.
Speaker 2 (25:15):
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
(25:37):
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
(25:57):
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.
Speaker 1 (26:06):
It's what we do.
Speaker 2 (26:07):
It's not something that we're uh, you know, doing without
hardly even thinking about it.
Speaker 1 (26:11):
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,
(26:32):
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.
Speaker 2 (26:55):
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.
Speaker 1 (27:04):
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,
(27:25):
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.
(27:48):
And so yeah, it's cool to see that some people
are making passive ages in that way.
Speaker 2 (27:51):
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.
Speaker 1 (27:58):
For very little money.
Speaker 2 (27:59):
Who spend five or twenty bucks to learn how to
do something completely unique?
Speaker 1 (28:03):
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.
Speaker 2 (28:14):
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.
Speaker 1 (28:25):
The royalties and the royalties.
Speaker 2 (28:27):
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
(28:50):
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
(29:11):
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.
Speaker 1 (29:31):
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
(29:51):
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
(30:11):
one of the most effective routes to building up passive income.
We'll get to that and more right after this break.
Speaker 2 (30:25):
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
(30:45):
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.
Speaker 1 (30:59):
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.
Speaker 2 (31:07):
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
(31:29):
is when it becomes purely passive.
Speaker 1 (31:31):
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
(31:51):
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.
Speaker 2 (32:01):
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.
Speaker 1 (32:17):
Neither you or I have pickup trucks. I'll say that
true thought.
Speaker 2 (32:21):
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.
Speaker 1 (32:26):
Oh, dude, I would love that. They're prettyweet. Dude. Yeah,
I kind of still want a Ribbean electric pickup truck.
Speaker 2 (32:30):
One of these days, like the opposite a small toyo
a pickup truck you want.
Speaker 1 (32:35):
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
(32:56):
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
(33:16):
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
(33:39):
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
(34:00):
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
(34:21):
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.
Speaker 2 (34:34):
Yeah, And so as we kind of graduate too higher
levels of difficulty, let's talk about starting.
Speaker 1 (34:39):
Your own business.
Speaker 2 (34:40):
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
(35:04):
your money in a savings account.
Speaker 1 (35:05):
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
(35:26):
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
(35:46):
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,
(36:08):
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
(36:29):
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,
(36:50):
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.
Speaker 2 (37:02):
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,
(37:24):
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
(37:46):
to hit the easy button and kind of switch over
to the next opportunity where you think it's going to
be easier.
Speaker 1 (37:52):
It does require work.
Speaker 2 (37:53):
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
(38:15):
to try things out and they kind of.
Speaker 1 (38:17):
Give up maybe a little too easily.
Speaker 2 (38:18):
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.
Speaker 1 (38:36):
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.
(38:58):
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
(39:20):
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
(39:41):
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.
Speaker 2 (39:57):
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?
Speaker 1 (40:13):
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
(40:36):
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.
Speaker 2 (40:50):
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.
Speaker 1 (40:59):
Ye, kind of like.
Speaker 2 (41:00):
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.
Speaker 1 (41:13):
With Metallo is the exact best way to put it. Yeah,
with like the Macro.
Speaker 2 (41:16):
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
(41:37):
the resources as well.
Speaker 1 (41:39):
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.
Speaker 2 (42:00):
The
Happy Friday. Everybody was that I'm channeling my nineties spud
wise over here.
Speaker 2 (00:05):
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.
Speaker 1 (00:15):
It's not a spring break and that's going to Panama City.
Speaker 2 (00:17):
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.
Speaker 1 (00:26):
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.
Speaker 2 (00:40):
This holy grail that once they achieve it, it's gonna
solve all of the problem.
Speaker 1 (00:45):
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.
Speaker 2 (01:03):
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.
(01:23):
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.
Speaker 1 (01:31):
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
(01:52):
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
(02:12):
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?
Speaker 2 (02:46):
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.
(03:08):
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
(03:29):
being marketed.
Speaker 1 (03:30):
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
(03:52):
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.
Speaker 2 (04:04):
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.
Speaker 1 (04:11):
Dude.
Speaker 2 (04:11):
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.
Speaker 1 (04:20):
And of course, you know, you and me are opposites.
I get my coffee at Costco, That's.
Speaker 2 (04:23):
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.
Speaker 1 (04:35):
Dude.
Speaker 2 (04:36):
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
(04:57):
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?
Speaker 1 (05:03):
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.
Speaker 2 (05:17):
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
(05:39):
nicer Ethiopian blend, and so I guess I'm mentioning it
because I think we are going to just budget for it.
Speaker 1 (05:44):
We're gonna plan for.
Speaker 2 (05:45):
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.
(06:05):
But I guess my question for you is as would
you judge.
Speaker 1 (06:07):
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
(06:29):
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.
Speaker 2 (06:45):
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.
Speaker 1 (07:03):
Yeah, sometimes ignorance is bliss when it comes to see
a budget.
Speaker 2 (07:07):
I wish I would have never had it, because I
think I would have been totally fine with the Aldi coffee.
Speaker 1 (07:12):
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
(07:32):
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.
(07:54):
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
(08:15):
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
(08:37):
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
(08:57):
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
(09:20):
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.
Speaker 2 (09:35):
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.
Speaker 1 (09:50):
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.
Speaker 2 (09:58):
Absolutely, man, I'm looking forward to I've already mentioned the
show before fifteen years next year.
Speaker 1 (10:02):
I feel like that's going to be a huge milestone.
Speaker 2 (10:04):
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
(10:25):
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.
Speaker 1 (10:43):
Is that where you can go and sign up for
free money?
Speaker 2 (10:45):
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.
Speaker 1 (10:53):
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
(11:15):
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
(11:37):
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.
Speaker 2 (11:57):
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
(12:19):
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
(12:41):
quickly either.
Speaker 1 (12:42):
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
(13:03):
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
(13:24):
money in addition to hard work. It takes a little
bit of both, sometimes a lot of both, right.
Speaker 2 (13:29):
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.
Speaker 1 (13:43):
You much, especially these days, so yeah, exactly.
Speaker 2 (13:46):
But that method could you know, just take a few
bucks and virtually none of your time.
Speaker 1 (13:49):
It's super simple, super easy.
Speaker 2 (13:52):
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
(14:13):
to cover some different methods of passive income that are
going to kind of run the gamut between those two extremes.
Speaker 1 (14:19):
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
(14:39):
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,
(15:02):
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
(15:24):
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
(15:47):
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
(16:10):
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.
Speaker 2 (16:17):
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.
Speaker 1 (16:27):
Right responding to people who are trying to book their
car to.
Speaker 2 (16:30):
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.
Speaker 1 (16:39):
Yeah, right exactly.
Speaker 2 (16:40):
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
(17:01):
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.
Speaker 1 (17:23):
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
(17:46):
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
(18:09):
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
(18:32):
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
(18:53):
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.
Speaker 2 (19:12):
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.
Speaker 1 (19:24):
Right.
Speaker 2 (19:24):
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.
Speaker 1 (19:47):
That is a lot of money.
Speaker 2 (19:49):
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
(20:11):
or time, it's something that everybody can take part in.
Speaker 1 (20:14):
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.
(20:37):
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
(20:57):
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.
Speaker 2 (21:20):
Yeah, if it's just your mom clicking through, that's not
going to generate enough income.
Speaker 1 (21:23):
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.
Speaker 2 (21:27):
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,
(21:48):
develop a good niche online and then be able to
actually attract the readers that are going to be able
to support your endeavor.
Speaker 1 (21:55):
You say niche, I say niche. I know, I don't
know which one I think. I go back and forth.
Speaker 2 (21:59):
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.
Speaker 1 (22:20):
Does not sound like passive income.
Speaker 2 (22:21):
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.
Speaker 1 (22:36):
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
(22:58):
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
(23:19):
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.
Speaker 2 (23:29):
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
(23:49):
a show doesn't mean that you'll be able to generate
any income from it.
Speaker 1 (23:53):
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
(24:15):
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
(24:35):
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
(24:56):
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.
Speaker 2 (25:15):
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
(25:37):
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
(25:57):
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.
Speaker 1 (26:06):
It's what we do.
Speaker 2 (26:07):
It's not something that we're uh, you know, doing without
hardly even thinking about it.
Speaker 1 (26:11):
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,
(26:32):
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.
Speaker 2 (26:55):
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.
Speaker 1 (27:04):
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,
(27:25):
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.
(27:48):
And so yeah, it's cool to see that some people
are making passive ages in that way.
Speaker 2 (27:51):
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.
Speaker 1 (27:58):
For very little money.
Speaker 2 (27:59):
Who spend five or twenty bucks to learn how to
do something completely unique?
Speaker 1 (28:03):
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.
Speaker 2 (28:14):
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.
Speaker 1 (28:25):
The royalties and the royalties.
Speaker 2 (28:27):
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
(28:50):
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
(29:11):
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.
Speaker 1 (29:31):
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
(29:51):
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
(30:11):
one of the most effective routes to building up passive income.
We'll get to that and more right after this break.
Speaker 2 (30:25):
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
(30:45):
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.
Speaker 1 (30:59):
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.
Speaker 2 (31:07):
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
(31:29):
is when it becomes purely passive.
Speaker 1 (31:31):
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
(31:51):
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.
Speaker 2 (32:01):
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.
Speaker 1 (32:17):
Neither you or I have pickup trucks. I'll say that
true thought.
Speaker 2 (32:21):
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.
Speaker 1 (32:26):
Oh, dude, I would love that. They're prettyweet. Dude. Yeah,
I kind of still want a Ribbean electric pickup truck.
Speaker 2 (32:30):
One of these days, like the opposite a small toyo
a pickup truck you want.
Speaker 1 (32:35):
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
(32:56):
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
(33:16):
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
(33:39):
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
(34:00):
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
(34:21):
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.
Speaker 2 (34:34):
Yeah, And so as we kind of graduate too higher
levels of difficulty, let's talk about starting.
Speaker 1 (34:39):
Your own business.
Speaker 2 (34:40):
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
(35:04):
your money in a savings account.
Speaker 1 (35:05):
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
(35:26):
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
(35:46):
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,
(36:08):
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
(36:29):
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,
(36:50):
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.
Speaker 2 (37:02):
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,
(37:24):
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
(37:46):
to hit the easy button and kind of switch over
to the next opportunity where you think it's going to
be easier.
Speaker 1 (37:52):
It does require work.
Speaker 2 (37:53):
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
(38:15):
to try things out and they kind of.
Speaker 1 (38:17):
Give up maybe a little too easily.
Speaker 2 (38:18):
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.
Speaker 1 (38:36):
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.
(38:58):
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
(39:20):
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
(39:41):
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.
Speaker 2 (39:57):
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?
Speaker 1 (40:13):
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
(40:36):
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.
Speaker 2 (40:50):
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.
Speaker 1 (40:59):
Ye, kind of like.
Speaker 2 (41:00):
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.
Speaker 1 (41:13):
With Metallo is the exact best way to put it. Yeah,
with like the Macro.
Speaker 2 (41:16):
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
(41:37):
the resources as well.
Speaker 1 (41:39):
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.
Speaker 2 (42:00):
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