Passive income vs NONpassive income [and 7 ways I earn passively]

I remember thinking, “You mean you can actually do work one time and get paid over and over again?”

And as someone who knew nothing other than working for an hourly rate, earning passive income was a truly fascinating idea.

It was 10 years ago, and it was the first time I was presented with the idea of passive income streams…

and it blew my mind.

So, immediately after discovering what it was, I began searching for passive income strategies and ideas and quickly realized that this wasn’t going to be quite as easy as I had hoped. While I was excited by the prospect of getting paid over and over again AFTER the work was done, I quickly realized that the work itself:

often was harder
paid little or nothing on the front end
normally had a risk of failure attached to it

But, I have learned to get excited about opportunities that are difficult – because if they were easy, everyone would do them. And when there is a modest level of difficulty attached, it greatly reduces the competition.

Passive vs. nonpassive (active) income

What is active income?

So if the definition of passive income is getting paid over and over for work that you only do one time, then non-passive income is essentially trading hours for dollars.

Any type of work where you get paid by the hour is a perfect example of NON-passive income.

Even a salaried job would be considered NON-passive or active income because if you quit today, you very soon wouldn’t be getting a paycheck.

On the other hand, songwriters can do the work to write a song one time and continue getting royalty checks the rest of their lives!

It’s worth the effort

Fast forward 10 years and I am so glad that I put in the work to create some passive income streams. In March I returned from my annual 30-day Sabbatical that would not have been possible if it weren’t for a good portion of our income being passive in nature.

Not only does it provide me opportunity to take time off and still get paid, but it allows me to focus on other projects and build other streams while still having money come in.

Even if I had never gotten to the point of being able to pay our bills with passive income, I would still be thrilled to have just a couple hundred dollars of passive residual income coming in each month.

Know what I mean?

The Snowball Effect

Additionally, as you continue to reinvest the income into other passive income streams it builds bigger and bigger.

For example, we were able to use passive earnings to acquire a rental property that is now generating passive monthly income and we will be looking for ways to take those earnings to generate even more.

As the snowball gets bigger and bigger, you just keep getting further away from the days of trading hours for dollars – which I don’t know about you, but that gets me excited!

Even more important

The thing about many ways to create passive income is that they often involve creating something.

And when you create something, you have the opportunity to use your God-given gifts to make the life of someone else better.

And when you use what you have been given to improve someone else’s life it adds meaning to your life. And even if your efforts didn’t make you money, at least you would be helping someone else!

Zig Ziglar taught me that “You can have everything in life you want, if you will just help other people get what they want.”

I have found that when it comes to passive income, this tends to hold true as well.

Ways to make passive income

These are my 7 passive residual income streams

So here is a look at all of my current and past passive income methods that I have used.

Hopefully some of these ideas will get your brain spinning about how you can start generating some passive income this year.

1. Dividend passive income

As far as I remember, buying a dividend paying stock yielded my 1st dollar of passive earnings. For those who don’t know, some stocks pay dividends (quarterly payments to shareholders) and some don’t. My first stock purchase was Ameren (AEE): a local utilities company.

They paid a 3% dividend at the time and so my $500 investment yielded me about $3.75 every 3 months.

Nothing too exciting, but it was a seed sown and has continued to pay out for the last 10 years WITHOUT any additional work on my part.

(Since I have received so many questions about investing, I created an entire course about it called 10x Investing Course. Check it out if you are serious about pursuing this passive income stream.

2. Blog articles

This one has, by far, been the biggest one for me. The website you are reading has provided me a full-time income for the last 8+ years and while not all aspects of it are passive, much of it can be. I have generally worked around 40 hours a week for the last 8 years, but most of that time is spent on growth – not sustaining it.

And when I would like to take a little time off, I can pretty easily do that with most of the income being passive in nature.

The most exciting part of blog earnings is that I have articles that I wrote 7+ years ago that are still getting passive traffic from Google and still earning me money each month. That is why I love this whole blogging thing. 😉

If you are interested in finding out more about all this, you can get my book (for FREE) that will be a good primer for you.

3. Writing for hubpages

This one is similar to the previous one, but requires less commitment.

Basically hubpages (and there are others like it) is a website that allows you to create your own pages on the site about any topic of your choosing. So you could create a page about potty-training 3-year olds, or your love for artisanal dark chocolate (like me), or for Silver Needle tea (my fave), or anything else you can imagine.

I wrote extensively about how I made money with hubpages with more detail, but to date I have created a little over 100 of these and earn almost $200/month from them still. If you can write about topics that others might be interested in, it can be a decent passive income strategy.

4. Kindle books

My 1st Kindle book I wrote was a complete experiment. I had no idea what would happen. And now years later, I still sell books each month and spend maybe 5 hours each year updating them. And if it wasn’t such a timely topic, I might not need to update them at all.

At this point it is a little less than $100/month, but has been much higher in the past.

5. Music/Youtube

I spent about 10 years leading worship at my church before moving to Nashville. And a few years ago I decided (with my wife Linda) to record a few worship songs we loved and (like so many things I do) just see what happened.

It has proved to me just how difficult it can be to make money as a musical artist. Even still we earn about $30-50/month from Youtube/iTunes/Spotify earnings.

6. Selling Stock Photos

As a blogger, I am always looking for good stock photos to use in my blog posts, but sometimes it can be hard to find a good photo that works. So one day it dawned on me that I had a DSLR camera and might just be able to take some of the pictures I needed – and sell them on stock photo sites to earn some passive royalty income.

Mind you, I wouldn’t even call myself an amateur photographer. I have a decent camera and know enough to be dangerous and that is about it.

So I took about 400 photos, selected the 40 best and uploaded them on:

And of those 40, I think they approved 5 of them. After a month I think I had made 50 cents, so I threw in the towel on that one. We still might make $1/month from those photos.

That said, someone who can learn what these sites are looking for in stock photos can probably do far better than I did.

7. Rental property passive income

As I mentioned earlier, we have been able to turn our 1st home into an income generating rental property.

Renting out your house by itself is not necessarily a passive activity. I don’t want to be the guy who gets called at 3am when the plumbing screws up. So, we hired a property manager who takes 10% of our earnings to handle finding good tenants, keeping them happy, and sending me the check each month.

UPDATE: We recently did a comparison of our rental property vs. Fundrise (a truly passive investment) to see which performed better.

Alternatively, while definitely not passive, renting out your home or a room on Airbnb can be a way to earn some extra cash.

Other passive income ideas

Creating apps

I know nothing about creating apps. My hunch is that some apps you could build might not be passive at all – requiring lots of maintenance and upkeep. On the other hand, I would guess that certain very simple, utilitarian or informational apps might be passive.

For example: a basic calculator for young children or an app that lists all the state capitols, rather than a very complex one with lots of moving parts. You get the picture.

Stock music

Amateur video creation has been growing exponentially the last few years. Do you know what goes hand-in-hand with video? Music.

Often times when I am making a video I have background music and so do tons of other people making videos.

Remember who really got rich during the gold rush 160+ years ago? Very few of the ones actually mining for gold, but the guys selling tools the miners needed did very well.

In the case of stock audio I typically pay $10-$20 (the going rate) for a 2 minute instrumental audio clip when I buy stock audio.

That cost is more than most whole albums that many artists and bands create. And it is just a 2 minute instrumental clip. So it pays about 10x and takes way less time to create vs. what we did in #5 up above.

At this point this isn’t a game I will be getting into, but if you can record something decent, this might be a great way to generate some passive earnings as a musician.

There are lots of sites you can sell to, but check out some of the samples on Audiojungle.net to see how others are making it work.

Maintaining Passive Income Streams

Almost every item listed above would greatly benefit from a small amount of maintenance. And the ones that I have actively maintained have done far better than those that I didn’t touch for years.

So my approach has been to focus my time on growing and maintaining the most profitable income streams. The rest I view as experiments that have the additional benefit of continuing to earn money years later – even if it is slowly declining.

Just like a seedling requires more care and attention than an established tree, so it is with many of these ideas.

4 Things that no one tells you about Passive Income

I chat more about this in the video below – check it out!

Final thoughts

The name of our site is SeedTime and I would be remiss if I didn’t mention the fact that we see this in nature all the time.

An old apple tree that keeps bearing fruit year after year, a hedge of blackberries that just keeps producing without any effort, or a perennial herb garden that comes back year after year.

Each of these require more work upfront than say going to the grocery store and buying a pack of apples, blackberries, or rosemary. But the rewards of that upfront work FAR exceed the effort expended.

If you find a passive income stream that works for you, I believe the same holds true as well.

Bottom line: we live in the best time in the history of the world to start some sort of income generating business.

And if you can do it while you have a full-time job and focus on strategies that will make you money passively rather than actively, your future self will thank you.

Here are 30 passive income ideas for 2021!