My Passive Income Journey

After high school I found myself – as do many adults – working 40 hours a week to earn a living. But like many adults, the paychecks seem to go out as fast as they come in. Even with careful saving, budgeting and cutting expenses, it never seems to be enough to really get ahead.

A full-time job is a good start, but for most of us, a single source of income is rarely enough to meet daily expenses, have a comfortable lifestyle, and save for the future. What if there was a way to earn a stream of income in addition to your regular wages? A lot of people refer to this as a side hustle, or something you can do on nights, weekends, or in your spare time. A little activity to earn some beer money or pizza money. Something that you might even enjoy doing!

Over the years, I have tried numerous different ways to supplement my income. Some of them worked, many of them did not. The reason for this post is to document my experiences in chasing the dream of a steady, reliable passive income stream. It’s a long read, but I hope you will find it useful in some way.

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Before we go any further, I must offer a disclaimer: I am not a financial advisor or expert. I am telling the story of my own journey to try and create a passive income stream for myself. The situation I am in may be different from yours, and the things I have tried may not work for you. Everything in this article is shared for entertainment purposes only. If you should find yourself on a similar journey, I hope that you can learn something from my experiences and mistakes.



Recycling Aluminum Cans

One of my earliest money-making ventures was something I learned at a young age, riding bikes around the neighborhood with my dad. He showed me that you could pick up discarded aluminum cans from the side of the road, and during our rides he would stop to put a few in his bike basket. He stored them in a container in the backyard and added to it over time. Once the container was full, he took the cans to a recycling center and received a few dollars in cash.

It didn’t take me long to realize the potential of this idea, and to scale it up. Soon, I would stuff a couple of kitchen trash bags into my pockets and set off on my bike. I hit upon the idea that construction sites had lots of cans, and there were plenty of them in the area. Construction sites were full of discarded aluminum soda cans, juice cans, and even beer cans.

Collecting the cans from construction sites was messy, disgusting work. I climbed into dumpsters and ripped open plastic bags. I’m sure my parents wouldn’t have approved, if they had known what I was doing. All they knew is that I disappeared for an hour or two and came back with bags full of cans. It took a LOT of cans to make just $5 or $10. I did this off and on for much of my childhood until about age 14 or 15.

One time, I had snuck into a construction site through a chain link fence and was inside gathering cans when the police showed up. In my shaky pre-teen voice, I answered their questions and was scared that I was in big trouble. Once they discovered I was just looking for cans and was not there to steal tools or building materials, they let me go with a warning. I felt embarrassed and humiliated when one of the officers asked if I was homeless. I gave up on can recycling shortly after that experience.

Lessons Learned: Making a few bucks from recycling cans was a good way to learn about entrepreneurship at a young age, but ultimately I decided that it wasn’t worth my dignity to be digging through the trash looking for cans and began looking for other ways to make some money on the side.


Early Internet Ventures

I was already familiar with the Internet by the time I reached the seventh grade. In 1998, I set up a personal website on Angelfire.com, a free hosting service that gave users 2 MB of web space in exchange for placing a banner ad on your site.

Banner Ads
I learned about affiliate programs before I ever had a bank account or debit card or anything like that. I was a kid with no savings other than a few dollars in my dresser drawer for the ice cream man. But I was excited by the idea that you could place banner ads on a webpage and if enough people clicked on them, you could get paid!

Re-creation of my personal homepage on Angelfire from 1998. This was my first foray into Internet advertising, at age 13.

I signed up for LinkShare, Reporting.net, and Go.com (an early search engine) and filled my personal homepage with advertising. I may have even clicked on my own ads a few times. When Go.com closed down their affiliate program, they paid out the balance on my account. I received a money order in the mail for 50 cents U.S. currency.  I quickly learned it wasn’t worth my trouble.

AllAdvantage
Another venture was a company called AllAdvantage.com. This was in the dial-up days when AOL, Earthlink, Mindspring, Prodigy, and other ISPs were competing for market share. AllAdvantage was a startup company that began in March 1999 and lasted until February 2001 – barely two years.

They had a unique business model – if you installed a toolbar on your computer that tracked the websites you visited, they would send you a check. The premise was that you would “get paid to surf the Internet.”  I begged my parents to let me participate, but they wouldn’t allow it. Within 18 months of launch, the company had grown to 10 million users, but was ultimately a victim of the dot-com bubble. They experienced an incredible rise and fall in just two years, and I missed out on the chance to get paid to surf the web.

Lessons Learned: The return on investment of Internet ads is very low, and the return on investment for schemes that your parents try to protect you from is zero.


Learning the Basics of Personal Finance

In my early 20s, I decided that I was going to take my finances seriously. I was going to educate myself about money and break out of the debt trap that many adults fall into. I began making time to study and learn about personal finance. Over the years, I read a number of books about finance and money management, including:

  • Rich Dad, Poor Dad by Robert Kiyosaki
  • The Automatic Millionaire by David Bach
  • New Guide to Financial Independence by Charles Schwab
  • The Motley Fool: You Have More Than You Think by David & Tom Gardner
  • The Millionaire Next Door by Thomas J. Stanley
  • The Millionaire Mind by Thomas J. Stanley
  • Buffett: The Making of an American Capitalist by Roger Lowenstein

Collectively, these books have a lot of great advice on things like making a budget, establishing an emergency fund, reducing your expenses, whether to rent or buy, paying down high interest debts first, and wise ways to invest (hint: index funds).

Lessons Learned: Reading these books provided me with an understanding of money, credit, debt, saving, investing, and other financial topics that I did not learn in school. A big takeaway for me was that in order to achieve financial independence, you should have multiple streams of income.


The Automatic Millionaire

I started to get serious about this “passive income” idea in 2006. I had just graduated from community college with an Associate’s Degree, and a family member gave me a book called The Automatic Millionaire by David Bach. This book was an eye-opener for me.

The premise of the book is that you don’t need to beat the stock market to retire a millionaire. You can invest wisely in mutual funds that track an index (index funds) which appreciate in value over the long term – 30 to 40 years, and come out with a healthy nest egg for retirement.

The book introduces the concept of Paying Yourself First, instead of saving what is left over at the end of the month. It stresses the importance of setting up automatic withdrawals into a savings or investment account – no matter how small. David Bach recommends keeping your emergency fund in a high-yield money market account, which earns more interest than a traditional savings or checking account. And he recommends bi-weekly payments for homeowners instead of monthly payments.

This book changed the way I think about money, and if I had to recommend just one book from my list above, this would be it.

Lessons Learned: You don’t have to beat the market to retire comfortably, you just have to make smart choices with your money and invest for the long term.


High Yield Savings Account

After reading The Automatic Millionaire, I was eager to put my money to work for me. I searched online for high-yield savings accounts and came across a bank based in the Netherlands called ING Direct. They had expanded to the United States in the year 2000 and pioneered the concept of a direct bank – meaning that everything was done online. There were no physical branches and no ability to make a withdrawal or deposit in person. As a result of not having to pay for physical buildings and employees, ING advertised great rates on savings accounts.

I opened an ING Direct account in April 2007 with a deposit of $100.00. At the time, they were paying a staggering 4.410% on deposits, compared to my bank which was paying 0.75% interest on savings accounts and 0.25% on checking accounts. I scheduled automatic deposits just as David Bach had instructed, setting aside $50 from each paycheck.

Unfortunately, the Great Recession of 2007-2009 hit just six months after I started my high-yield savings account. As Lehman Brothers and other Wall Street firms collapsed, so did the annual percentage rate (APR) on my account. I watched as the rate tumbled from 4.4% all the way down to 0.74%. Then ING Direct announced in 2011 that they would be selling their U.S. direct banking division to Capital One, which they completed in 2013.

My dreams of getting rich by parking my money smartly were over almost as quickly as they had begun. Still, I had earned $102 in interest within that first year after opening the account. In 2017, I opened a Money Market Account which offered a better rate than the high-yield savings account.

Lessons Learned: If something sounds too good to be true, it probably is. The world is ever-changing. Be flexible and keep your eyes open for a better deal elsewhere, if it exists.


Roth IRA Account

The Automatic Millionaire stresses the importance of saving for retirement, especially if your employer matches your contributions. While my employer did not offer any contribution matching, reading the book got me excited about the idea of saving a small amount of money and through the power of compounding interest, retiring with millions.

I spent some time researching investment companies and eventually picked Vanguard. The minimum to open a Roth IRA was $3,000 and it took quite a while to save up that much, but I was able to reach my goal in 2007.

With the account open, I set it up to make small automatic deposits. Vanguard’s website offers a variety of funds to choose from, and I really liked the Target Retirement funds, which automatically re-balance the asset mix as it gets closer to your retirement date. This is truly a “set-it-and-forget-it” option with much lower expense ratios than an Actively Managed fund.

I have been with Vanguard for 13 years and through many ups and downs in the market, and yet my rate of return is 7.2% – a number I am satisfied with. I would definitely recommend them for anyone thinking about starting a retirement fund.

Lessons Learned: Pay yourself first, invest in your future. You don’t have to beat the market, you just have to grow with the market, which gains value over the long term. Passively managed index funds are a genius idea for the average person seeking to retire comfortably.


Freelance Writing

The opportunity to become a paid freelance writer was something that happened completely by accident. Or did it? In 2005, I explored the abandoned Phoenix Trotting Park with some friends. This was an old horse racing facility at the edge of town which had been abandoned for nearly 40 years. I had taken some photos and written a short summary of the adventure and posted them online.

Some months later, I got an email from a guy who was working on a book about abandoned places in Arizona. He wanted to know if I would be able to help write some articles and take some more photos of abandoned places for the book. Of course I said yes, and that project was Weird Arizona, which came out in 2007.

While I wasn’t seeking out freelance opportunities, this one found me because I had demonstrated a passion for documenting my experiences exploring abandoned and unusual places. The key was that I had shared my photos and writeup online, where it could be found by others. What talents or hobbies do you have? How do you share them with the world? Is there a skill or hobby that you have that makes you unique?

Lessons Learned: You never know what opportunities might come up just by putting yourself out there. Share your passion and good things will come your way.


Can You Really Make Money Blogging?

In 2008, I decided to get in on the latest trend and start a blog. The idea was to create a stream of passive income by writing articles, which would contain advertisements from Google AdSense.

They say the key to being a great writer is to “write what you know.” So I started North Phoenix Blog, which would feature current news that was focused on one specific neighborhood of the massive sprawl that is Phoenix. Well there were a couple of problems with this approach.

The first problem was that I worked a full time job and did not have time to invest in researching and writing high-quality, original and timely news articles. The second problem was that I knew absolutely nothing about journalism, blogging, or even creating a content calendar. Finally, I realized far too late that I had picked too niche of a topic for the blog. There just weren’t that many people who were interested to read about a new library or gas station opening up in one specific neighborhood. You could say that the “total addressable market” for the blog was hilariously too small.

Eventually I expanded my focus to include state and local history. While I wasn’t making money, I enjoyed writing in my spare time. It took three years from the time I started the blog until the time I received my first AdSense check in 2011. I made $100.53 for three years of work. Obviously, not a great return on the amount of time I had invested.

AdSense Check Date Amount
7/27/2011 $100.53
5/23/2013 $101.15
3/23/2015 $101.73
8/21/2016 $103.17
2/21/2018 $102.81
4/21/2019 $105.13
6/22/2020 $104.42
Lifetime Earnings: $718.94

Lessons Learned: First, pick a subject or topic for your blog that has broad appeal. Don’t make the mistake I did and pick something so niche that there is basically no audience for it. Second, you need to have time to create and promote great original content to your large audience. This is a lot of work and definitely not “passive.” Third, you need to support your blog with more than just ads. Sell an eBook, a premium membership, consider doing sponsored posts, or start a Patreon account. You really have to work hard to make money by blogging.


Laser Toner Cartridge Recycling

While I was in college, I landed a job working in a warehouse. I noticed that the company had lots of these Brother laser printers throughout the warehouse and around the office. A laser toner cartridge could print about 2,500 pages before needing to be replaced, and I noticed the company went through a lot of them.

I found a company that paid money for empty Genuine Brother cartridges, which they would then refill and refurbish to sell as generic/compatible toners. I asked everyone at work to save their empty cartridges – which would have otherwise been thrown in the garbage – and sent them in to a recycling company. Once I had collected 20 cartridges (the minimum amount needed), I would box them up and send them off using prepaid labels the recycler provided.

In 2006, the bounty was $5.00 per cartridge for empty Brother TN-350 and TN-460 cartridges, and they also paid a few dollars for the Drum units as well. I was making some good side money for very little time and effort on my part.

Check Date Amount
7/13/2006 $30.00
11/7/2006 $43.00
4/16/2007 $98.00
11/27/2007 $140.00
6/2/2008 $122.25
1/12/2009 $99.50
7/9/2009 $78.00
3/11/2010 $81.75
7/3/2010 $25.50
4/7/2011 $27.00
1/3/2014 $39.25
3/5/2015 $74.25
Lifetime Earnings: $858.90

Then came the Great Recession of 2007-2009, and the value of the toner cartridges plummeted, from $5.00 to $4.25 to $2.50 and finally all the way down to $0.50 cents a piece. Due to the Recession, my employer was looking for ways to cut costs and began buying generic laser toner cartridges for half the cost of the Genuine Brother ones. Both of these conditions meant that my scheme had run its course by 2015.

$858.90 in 9 years isn’t much as far as side income goes; I made about $100 a year. But it was very little effort to collect, box, and ship the cartridges to the recycling center every few months. And I guess it was good for the environment, too.

Lessons Learned: Though it wasn’t my most profitable venture, I am proud of myself for recognizing an opportunity where others did not. I got lucky and rode the toner cartridge wave until it crashed. Know when to hold ’em and when to fold ’em – timing is important.


Investing in the Stock Market

Let me preface this section by saying that I am not an experienced financial professional, and I understand that conventional wisdom about investing does not recommend trying to generate income by investing in single stocks. But for some reason, the temptation was too much for me to resist.

I began in 2008 with ShareBuilder, which was later sold to ETRADE. It would not be valuable to recount every investment I have ever made, but I am going to share a few highlights as well as lessons that I learned.

Grand Canyon University (NASDAQ: LOPE)
I bought my first stock on November 21, 2008, purchasing 21 shares of Grand Canyon University at $12.62 per share, for a total investment of $265 dollars. I was enrolled as an undergraduate student at the college, which was undergoing a major transformation from a sleepy Christian teacher’s college to a powerhouse for-profit University.

I held it as the stock continued to climb over the next decade, peaking at $127/share in 2019. At the time of this writing, the stock is around $90/share, and my initial $265 investment is now worth about $1,890. That is an unrealized gain of 613% – incredible! Call it beginner’s luck, but the first stock I ever bought was a huge success.

And yet, if I were to sell, that would be a net profit of $1,625 for 12 years, or $135/year. It’s certainly not enough to make a meaningful impact on my annual income.

Freeport McMoran (NYSE: FCX)

Freeport McMoran is an Arizona-based mining company with worldwide operations, and one of only five Fortune 500 companies headquartered in Arizona. In September 2011, workers at one of the company’s mines in Indonesia went on a labor strike. I speculated that this would cause the stock value to go down below its intrinsic value, and that the share price would bounce back when the strike ended.

I purchased 7 shares of FCX on 10/31/2011 at $41.06/share, for a total investment of $297.37 plus a $9.95 trade fee. The labor strike lasted 94 days, finally ending on December 17th, 2011. I rode a tiny wave and sold all 7 shares when it hit $46.71, for a profit of $39.55. Once you subtract the $9.95 trade fees, I walked away with $19.65 in my pocket. Getting out of the stock was the right move, as illustrated by the chart above.

AutoZone Inc. (NYSE: AZO)

AutoZone is a chain of auto parts stores with more than 6,000 locations in the U.S. I had considered investing in the company in the early 2010s, but did not follow through. I wish I would have, as their share price has seen tremendous gains from 2009 to 2019.

While the Great Recession of 2007-09 was terrible for many businesses, a lot of people chose to keep their cars on the road instead of buying new ones. This increase in demand for auto parts, along with smart leadership and supply chain management, sent the company’s profits soaring. As the old saying goes, you miss 100% of the shots you don’t take. Wish I could go back and invest in this one.

AliBaba (NYSE: BABA)

In 2014, the buzz around Chinese ecommerce giant AliBaba had reached a fever pitch. It was the story on everyone’s mind as the company prepared to launch the largest initial public offering in history at that time, and I got caught up in the mania of it.

I bought 5 shares of AliBaba at $92.93/share on IPO day (9/9/2014), for a total investment of $471.60. I watched as the stock plodded along for weeks, and then months, trending downward through all of 2015, falling to a low of $59/share. Then in 2016, things started to turn around. The share price began slowly creeping back up. In August 2016, the share price finally nudged above what I paid for the stock and after holding it for nearly two years, I could break even on it, so I sold all five shares at $98.25 and made $26.60 in gains, not including the cost of trade fees.

Had I held on to the stock for just one more year, I would have had a great return as the share price hit $171/share in August of 2017. But there was no way to know that it would go up so much: what if it had just kept plodding along as it had been? Timing is everything, and in this case, I bailed out too early.

Redfin (NASDAQ: RDFN)

Redfin is a real estate brokerage and listing website that was founded in 2004 and went public in August 2017. The real estate market in the U.S. had been recovering nicely from the depths of the 2007-09 financial crisis, and I figured that more and more people would be using sites like Redfin to buy and sell homes.

I bought 18 shares of RDFN on 8/4/2017, just after the IPO date. I paid $26.09/share, for a total investment of $469.65, plus a $6.95 trade fee, bringing my out-of-pocket expense to $476.60.

Well as it turns out, a rising tide may raise all ships, but the same does not hold true for stocks. Though the company has revenues in the hundreds of millions, it is not profitable. Despite the growing demand for housing, Redfin seems to be unable to compete with other brokerage and listing sites like Zillow.

After three years, I sold all 18 shares on 2/24/20 for $31.51/share. My gross profit was $97.56, not including my trade fees. I was glad I sold when I did, as the share price fell off a cliff in early 2020 as the Coronavirus pandemic rocked the nation’s economy. But, then it came roaring back at the time of this writing. You just never know what’s going to happen in the future!

Visa Inc. (NYSE: V)

Visa is a financial services company and payment processor, and one of their main products is consumer credit cards. I purchased 6 shares of VISA on 11/19/2015 at $80.46/share (plus $6.95 fee), for a total of $489.71. My thought was that people’s usage of credit cards is only going to grow over time, not shrink.

There was no way I could have known, but two things helped to drive the price of VISA stock up shortly after I invested. In late 2015, Visa Inc. announced that they would be acquiring Visa Europe in a $23 billion deal, which was finalized in mid-2016. This added more merchants and more cardholders to the Visa empire.

The second thing was that in summer 2016, Costco and American Express ended their exclusive partnership after 16 years. Visa was chosen as the new partner for the Costco card, which helped to drive Visa’s sales and number of cardholders even higher.

My intuition about VISA has been right, as the share price has increased to $215.71 as of 8/28/2020, worth $1,308.71 for an unrealized gain of 160%. This was a smart buy, and was helped along by external events which I could not have anticipated.

Home Depot (NYSE: HD)

Home Depot is a big-box home improvement store with more than 2,200 locations in North America. In 2017, I had spent the past nine years making small $250 and $500 investments into various companies with small time returns. I started looking for companies to make a bigger investment in, and I came across Home Depot. After reading the company’s 10-K SEC filings, I was very impressed with what I learned.

Home Depot has very smart leadership. Instead of expanding and opening more stores (which saddles a company with a lot of debt), they have not opened any new stores since 2007, and are instead focusing on improving same-store sales with things like a mobile app, curbside pickup, self-checkout lanes, and other areas.

My thinking is that Home Depot is as close to an “Amazon-proof business” as you will find. What I mean is, it will never be practical to ship a 4×8 sheet of plywood or 2 tons of tile flooring via Prime. When you need an extension cord or a new blade for a saw – you need it to finish a job that day, and it cannot wait for next day shipping. Home Depot also serves multiple customer segments, from the DIY homeowner to the tradesman to the professional contractor. Furthermore, I reasoned that when the economy is good, homeowners and flippers will be fixing up houses to sell, and when the economy is down, homeowners will fix up their houses to live in.

With this in mind, I purchased 32 shares of Home Depot on 5/2/2017 at $154.67/share, plus a $6.95 trade fee, for a grand total of $4,956.39. The share price continued to climb throughout 2017, 2018, and 2019.

By early 2020, my $5,000 investment was now worth $7,500. I decided to pull some money out, and sold 20 shares on 2/26/2020 at $238.48 per share, for a sale price of $4,769.49. I had basically gotten back all of the money I had invested, plus I still had 12 shares to “let it ride.”

Home Depot stock took a big tumble the week after I sold my shares as fear of the Coronavirus rocked the market. However, at the time of this writing, HD has recovered it all and then some! This stock was one of the smartest decisions I have ever made, and I still have about $2,500 in unrealized gains – a real profit!

Lessons Learned: The main takeaway I have from investing is that if you want to win big, you have to bet big. Return on Investment is nice, but you are not going to produce a stream of passive income by making small investments of $250 or $500 at a time. Look for stocks that pay good dividends and buy for the long term.


Meteorite Hunting

In 2007, I read an article in WIRED about a man who makes a living hunting for meteorites across the Midwest U.S. It piqued my interest in this niche industry. Though it sounds like a silly idea, I decided to give it a shot.

A quick eBay search confirmed that meteorites do indeed go for big bucks. I read about how to identify stony, iron, or stony-iron meteorites and learned that most of them are magnetic. A friend and I built a magnetic object locator out of PVC pipe, magnets, epoxy, and rope – though an actual metal detector would have been better. We also picked up a single ceramic tile for performing a “streak test” in the field.

While there are a few places in Arizona where meteorites have been found, they are not open to the public. We simply went out in the desert and hoped to find something – and all we found were iron filings. This was an interesting way to spend a day, but we did not seriously expect to find anything.

Lessons Learned: Before you go on a wild goose chase of an idea, you should research it first and put together a rough plan before diving in.


Selling Surplus Computer Parts

At the same job where I recycled toner cartridges, I also got involved in selling surplus computer parts. I volunteered to stay after hours to help repair and upgrade PCs around the office and in return, I got to keep some of the old hardware that would have otherwise been thrown away.

I took this hardware and after cleaning and testing it, sold some items on eBay and at a local computer swap meet. It was a lot of work to box up your items, set up early in the morning, and sit outdoors in the sun for a few hours while people peruse your items for sale. Some months I made as little as $30 dollars, other months as much as $300. I usually made enough to cover the cost of admission, but some months after buying breakfast and putting gas in the car, I broke even or came up short a few dollars.

Lessons Learned: There is good money in computer parts, but it takes time. Between acquiring, cleaning, testing, and selling parts, I easily had hours into this endeavor to make a few bucks. You need a secure place to store the parts where you won’t have to look at them all the time. While it can be fun if you enjoy the work, it’s certainly not “passive.” And you need to have a reliable supply of parts and provide good customer service, or else your business won’t last very long.


Selling Items on eBay

eBay is an amazing online marketplace and perhaps the only side hustle that has ever put a substantial amount of money in my pocket. The number one question people ask is: what do you sell on eBay? The answer is, I look for opportunities.

At my job, the company had a high-end HP printer that they ended up replacing with a newer unit from Konica Minolta. They had a pile of unused cartridges for the HP in a storeroom. I talked with the company owner and we worked out a deal where I would sell the remaining inventory on eBay and keep a percent of the profits for myself.

I ended up doing similar deals with coworkers who had boxes of unused gadgets or appliances in their closets and garages. An old laptop can be wiped and reloaded quite easily, and someone will buy it. The best situation is when a friend or family member has items that have value, but they don’t have the time to list them. That is an opportunity for you!

I have also looked for clothing and electronics items at thrift stores to re-sell on eBay. The trick is to specialize in a few types of items and get knowledgeable about which items have value and which ones do not. Over the years, I have found a number of items which looked unremarkable and ended up being worth some good money.

  • Regular men’s polyester neckties are not worth much, but a 100% Italian Silk necktie has some resale value.
  • I have occasionally found Callaway golf clubs mixed in among junky golf clubs.
  • Vintage stereos, radios, receivers, toy keyboards, drum machines, and similar items can be worth money if they WORK or if you know how to fix them.

Lessons Learned: Selling on eBay can be lucrative if you find a profitable niche. But it is very time intensive, each item you sell is unique and doing a quality listing takes time. You could make some real money if you can streamline the picture taking and listing process. It takes time to photograph, list, pack, and ship items – this is a side hustle but it is definitely not passive. You have to invest your time – after work and on weekends – to be successful.

Even if you are extra careful, you will still run into non-paying bidders, returns, lost/damaged shipments, and other headaches. You WILL lose money on a deal, it is bound to happen as your sales grow. Deal with it and move on.


Scrap Metal Recycling

Let me just start by saying that scrap metal recycling is a volume game. To make money, you need to be moving truckloads of material. My computer recycling scheme meant I would dismantle non-working equipment and save the high-grade aluminum over time.

I was not able to get a large volume of material, but scrap recycling did provide a trickle of passive income over the years.

Lessons Learned: Unless you have an entire truck bed or trailer worth of material, scrap metal recycling is probably not worth your time. If you spend 10 hours rounding up $18.00 worth of metal, you are wasting your time. You could be earning more per hour by doing almost anything else.


Selling Used Books on Amazon

I felt like I was late to the game when I decided to try selling used books on Amazon in 2013. The idea is to scour thrift stores and yard sales looking for books to re-sell on Amazon, the world’s biggest e-commerce website. The right title can bring a big return, but like many other passive income ideas, this one is mostly about making a low margin on a high volume of sales.

This seemed like the perfect side business because unlike eBay, book sellers do not have to take photos or write descriptions. Just scan the ISBN code, enter your price, and it’s listed on Amazon – a huge time saver! I read about retired people sending books to the Amazon Fulfillment Center and living off the sales for months at a time and I was dreaming about checks coming in as I built an empire of paperbacks and hardcovers.

Yet another advantage of this business model is that a used book is a very simple item to list. As long as you accurately describe the condition, there is little chance of a buyer complaining about the item not working or being damaged during shipping. Books are far less complicated than selling electronics or clothing or other categories of goods.

Amazon charges a $0.99 cent per-item fee for individual sellers, and they take a 15% commission on all books sold (effective January 15, 2013 – it was formerly an 8% fee for many years).  I enjoyed the activity of scouting for books at my local thrift store, and soon had a bunch of titles listed in the SellerCentral dashboard.

Initially, I was losing money until I discovered the 3X Rule. If you buy a book for $3.00, you need to be able to sell that book for three times your cost ($9.00) in order to make a profit. This simple formula takes into account your seller fees, shipping, cost of materials (such as mailing envelopes, packing slips, tape), and as long as you follow it, you should come out ahead.

I had a couple of good scores, but I would end up with books on my shelf that did not sell for months and I would donate them back to the thrift store. Amazon is an EXTREMELY competitive marketplace with many other “passive income” gurus promising riches by making money flipping books. I would buy a book that was selling for a lot and then the re-pricers would jump on it and drive it to the bottom.

Results: from 2013 to 2015, I purchased 81 books and sold 37 books, which is a sell-through rate of 45%. My best success story was a factory service manual for a Toyota Land Cruiser, which I bought for $3.99 and sold for $100, with a net profit of $71.51 after fees and shipping. Early on, I actually lost money ($2 to $5 per book) because I was shipping them First Class instead of Media Mail – whoops! All told, I spent $241.48 on books and after all of my expenses, had earned a net profit of $340.88.

Lessons Learned: Selling used books on Amazon is highly competitive. You are going up against Power Sellers that have been in the book business for years. They are using automatic re-pricing software to always undercut your lowest price. It can be hard to break into the platform as a newcomer, where other sellers have tens of thousands of positive ratings.

If you live in a dense urban city with lots of thrift stores, flipping books may be a good option. If you live in a rural area or small town with few thrift stores, this may not be a good side hustle for you. Finding the right books to buy and sell is a skill that you must refine over time. At first, you are going to be bad at it and end up with a lot of unsold books. Hopefully you get better with time and can find a niche that is profitable for you. This is a business built on volume – you need to have a LOT of books flowing in and out to make money.


Credit Card Reward Points

For most of my life, I paid for my expenses with cash or a debit card. In late 2007, I decided to look into a rewards credit card. I originally applied for a Chase Slate card but did not use it much. I was very afraid of credit cards and knew that people got in big trouble with them.

A couple of years later in 2011, I did a bunch of research and found the Chase Freedom Visa. It seemed like the best fit for me with no annual fee, 1% cash back all the time and special 5% bonus categories every quarter. I resolved to use it for ALL of my purchases, and stick to buying things I would normally buy anyway.

The card came with 20,000 points just for signing up – which I quickly redeemed for $200. There are options to redeem your points for gift cards, but I always took the cash option. The table below shows a summary of the cashback amounts I have redeemed over the years:

Date Amount
3/23/2012 $200.00
9/27/2012 $100.00
8/18/2013 $100.00
4/10/2014 $100.00
4/1/2015 $200.00
11/14/2015 $200.00
1/16/2017 $200.00
6/1/2017 $200.00
12/26/2017 $200.00
10/14/2018 $200.00
8/21/2019 $200.00
5/31/2020 $200.00
Total Cashback
$2,500.00

Lessons Learned: Credit card reward points can be a good way to get paid for things you were going to buy anyway – as long as you don’t fall into the trap of spending more to increase your points.


Future Passive Income Ideas

This is a list of passive/side income ideas that I would like to try at some point in the future, but have not yet committed the time or resources to pursuing.

  • Property Rental (vacation property on AirBNB or tenants)
  • Renting a PA system for events, weddings, etc.
  • Flipping bicycles on classifieds
  • Flipping cars on classifieds (craigslist, autotrader, Facebook Marketplace)
  • Boat slip rental
  • Flipping websites with Flippa
  • Write and sell an eBook on the Kindle store
  • Amazon Mechanical Turk
  • Deliver Packages for Amazon
  • Amazon Mechanical Turk
  • Resell designer clothing items online
  • Gold Panning/Nugget Hunting

Bad Passive Income Ideas

There are a number of income-generating ideas which I have specifically chosen NOT to pursue. Many of these are too competitive, very low margin, or involve things like high pressure direct sales. I am not interested in pursuing these ideas:

  • Any kind of affiliate marketing or MLM scheme
  • Domain Broker
  • Set up a network of MFA (Made For AdSense) websites
  • Selling Stock Photography
  • Freelance Writing/Blogging
  • Freelance Web Design, Computer Repair, or other Digital Services
  • Storage Unit Auctions

Conclusion

For me, the goal with passive income was to find something that required low effort and would produce a steady side income – perhaps $50 to $100 per month. That money could be used for fun (beer money, pizza money) or it could be used to pay down debts, save for a vacation, or whatever you like.

I have tried a number of different ideas over the years to generate passive income. Some of the ideas such as selling items on eBay and investing in stocks put some real money in my pocket. The majority of these ideas ended up taking a lot of time to produce very little money. What I have realized is that there is no “set it and forget it” model which generates income without any effort.

All passive income or side hustle gigs will require some effort on your part, whether it is initial setup or maintenance. The trick is finding something that you enjoy, something which does not feel like work to you.

Maximizing Your Earnings per Hour
The one resource that you have a large supply of is time. It is both finite (as you will not live forever) and infinite, as you can choose how much of it you allocate to various parts of your life.

Think of time in one-hour units. You spend 8-9 time-units a day at your full time job or school, another 8 time units sleeping. That leaves you with about 8 time units each day for cooking meals, shopping, cleaning, spending time with family and friends, watching Netflix, etc.

If you can manage to accomplish all of those things in 4-5 hours, you might have an extra hour or two a day to yourself. If you are on the journey to passive income, these few hours a day are what you have to invest.

Think about this: you can spend your time on leisure activities, which are relaxing and essential for a healthy work-life balance, but earn zero income. Watching movies or shows, playing computer/video games, hiking, and other activities, while fun, do not put money in your pocket.

You can spend your time on Amazon Mechanical Turk and make pennies per hour. You can spend time writing blog articles, scraping content, and building affiliate links to make *MAYBE* a few hundred dollars a month. You can edit and article or design a logo on Fiverr and make a few bucks. You can do freelance work such as design, coding, editing, or writing blog articles. Dollar amounts vary wildly. You can sell something on eBay and potentially make a hundred dollars for your time-units.

Find the activity that makes the most money for you and do that. Don’t step over a dollar to pick up a penny. All passive/side income projects will take some degree of effort to get started at first. Are you spending your time on something that will make tens of dollars or hundreds of dollars?

Do it over and over. Ramp up your efforts and push the machine to its breaking point. By then it will either become unsustainable or wildly successful!

The Best Side Hustle is to Earn More from Your Day Job
After all of this, I believe that the best use of your spare time is not finding the right side hustle – it is focusing on ways to earn more from your main source of employment. Yes, I am serious. I got an $8,000 a year raise by switching jobs. Do you know how long it would take to earn that much money by writing blog articles or recycling toner or selling domain names? A ridiculously long time.

Learn a new skill, a new software program. Get a certification or something that will take your job to the next level. If you are topped out in your current position, build that resume, network on LinkedIn, send out applications, and go on interviews. Getting a raise or landing a higher paying job could bump you up to a level of earnings where you woould not need a side income to survive.

Each of us only has so much time on this earth, and you can either spend it doing things you enjoy, or spending all of your evenings and weekends on menial tasks for little pay. Don’t force yourself to be productive every waking moment – this is a sure path to burnout. Remember to balance your work with your leisure time – how many minutes per week do you set aside for self-care? You don’t have to “always be hustling.” Being bored occasionally and letting your mind wander can be good for your creativity.

I hope this post has been helpful to you, no matter if you are just starting your passive income journey or whether you have been generating steady income on the side for years.

About the author

Trevor Freeman

Trevor Freeman is a writer, photographer, and maker who loves learning new things. His favorite food is pizza. He received a Bachelor's Degree in Business Management from Grand Canyon University. He lives and works in Phoenix.

You can follow Trevor on Twitter @TrevorFreemanAZ, on Instagram at @arizona.dreamin, and on YouTube: TheRealTrevorland.

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