How to Create Wealth
New Forums, and Some Resources for Getting Started with Passive Income
Good news: I have just added forums to the site. I’m hoping they will encourage folks to give the game a try themselves, and share their experiences. We can learn a lot more about achieving financial independence together than any of us could alone.
I have kicked things off with a post of some resources for folks who are just getting started with passive income online. These are free or very cheap resources to help you get going on a tiny budget.
I’ve also set up a revenue sharing program for the forums. You might have seen similar programs on sites like Digital Point. In brief, you’ll be able to earn a share of ad revenue from the forums just by posting there. It’s a great way to start your stake for the Million Dollar Dime game — and there’s no need to hunt for change in the street. All you need to do is join the conversation.
I hope to see you all there.
Hobbies that Make You Richer
If you’re like me, your spare time is precious and in short supply. We all know that there are only so many hours in the day, and there’s never enough time to do everything we want to do. So, every day, we must make choices. But even the most insignificant seeming choice can have a major effect on your wealth.
When it Come to Building Wealth, Every Choice Matters
Think over all the various activities and hobbies you love. Chances are that some of those activities make you poorer, while others actually make you richer, whether you know it or not! Here’s a brief sampling of hobbies than can help you grow wealth:
- Gardening - Growing a vegetable patch, an herb garden, or some fruit trees is fun and relaxing, and will also save you money on your grocery bills.
- Exercise - Pick your favorite kind. The health benefits cannot be overstated, and they will save you enormous sums in medical expenses over the course of your lifetime.
- Fishing - Catch a free dinner from time to time. I’ve recently taken up crabbing, myself. There’s nothing like homemade bisque, especially when you caught the crabs yourself!
- Crafts - Make your own furniture, drapes, blankets, quilts, or anything else you enjoy making. You’ll save a bunch of money, and love the stuff you make far more than anything bought in a store.
- Blogging - Most any blog with a decent readership can earn at least a little income from ad placement.
- Hiking - pick up a book on edible plants
and harvest some free food while you’re out in the field.
- Brewing - If you’re a beer lover like I am, make your own.
- Cooking - Cooking is very relaxing, and home-cooked meals are almost always cheaper than prepared foods or restaurant fare.
- Online Poker - It can be very profitable if you’re good.
This list is by no means exhaustive. Chances are you can think of many other fun things to do, that don’t feel “financial” at all, that nevertheless make you wealthier in your pocketbook as well as your soul.
Now here’s a sampling of activities that make you poorer:
- Video games - They cost money and eat up precious time. (This one is a personal weakness of mine. I am working on giving them up.)
- TV - There was a great article published recently called How to Earn a Million Dollars by Not Watching TV. Tell your cable company to shove it, and throw your TV in the trash where it belongs.
- Movie Rentals - They may be cheap, but they’re not free, and take up a lot of time.
- Eating Out - Expensive and unhealthy.
- Online Poker - Very expensive if you don’t have the skills or discipline.
Now I’m not saying you should give up every single activity that you love that also costs money. But it comes down to this — when faced with a choice about how to spend your limited free time, why not give preference to your hobbies that actually make you richer? You’ll still be doing what you love, while taking one more step on your path to personal financial freedom.
How to Create Passive Income Online
As you’ve no doubt noticed, passive income is a major part of my wealth building strategy. Passive income in general is one of the best forms of leverage available, especially for someone with limited resources to start with. Online passive income is where the real magic is, however, as the potential for leverage is all but unlimited.
Creating Passive Income Online
Many people think that to build wealth online, you need strong technical acumen, along with serious marketing skills, and you need to build up a huge site that gets millions of visitors. The truth is that none of these is necessary, and shooting for massive traffic is rarely the right decision, at least at the outset. I prefer a different approach.
The early stages of the game are all about thinking small. That’s a good thing - it’s easier to have confidence in yourself and stick with it when your goals are modest. However, I personally believe that the entire game can be played by thinking small. In fact, that’s precisely what I intend to do.
How to Get Rich Off Pennies
I’m sure you’ve seen about a million ads and sites proclaiming near-instant wealth online. Most any regular Internet denizen has to be pretty jaded at this point. But set aside all that breathless marketing language about making millions overnight. Instead, ask yourself this: Do you think you can make a site that earns $1 per day, on average?
That seems attainable, right? You don’t need a lot of traffic to reach that goal. A few tens of visitors a day will often be sufficient to earn that much from Adsense. If you do affiliate promotion, you may need even less.
The truth is that most anyone can build a site in a day or two that will likely end up bringing in $1 a day in revenue. All that is required is for you learn a few simple techniques and put them into action. (More details on these soon.)
The Magic of the Passive Income Business
So if you can make a single $1-per-day site in a day or two, what’s there to stop you from making a hundred? Answer: Nothing at all. Just repeat the process a hundred times. It may take several months, but so what? If you own a hundred of these sites, you’ll be pulling in $100 a day, which is a passive income of $36,500. Who couldn’t use that?
And of course if you can make one hundred, then why not three hundred? This may take a couple of years, but again, so what? $300 a day equates to over $110,000 a year. Imagine if you earned a six-figure passive income online. Imagine the freedom and independence that would bring.
You may now begin to see the seeds of my plan to earn a million dollars . Build a site, collect the income, and reinvest it in more sites. My first is already up, and I have the funds for at least two more. The snowball is rolling…
So why isn’t your first site up yet?
What is Passive Income?
Passive income is a hot term nowadays. No doubt you have encountered all kinds of hucksters touting all sorts of spurious “passive” income business opportunities online and in your daily dose of junk mail. But what is passive income, exactly?
Passive Investment Income
Passive income in brief refers to revenue earned without any active participation on your part. The most familiar forms of passive income are investment revenue - for example, interest earned by a bank account. You need do nothing more than park your money and receive your payments. Rental real estate is another oft-cited example (alhtough considering the amount of ongoing work it takes to manage rental properties, it’s hard to see what is “passive” about this income stream.)
The Best Passive Income Opportunities
The best passive income opportunities focus on investing your time, rather than capital. The key is that you must find a way to work once, but be paid many times. A novelist, for example, works a great deal up front to produce a book, but can potentially earn a lifetime of passive income in the form of royalties once it’s finished. Similarly, residual income from sales of services like credit card processing is a great way to build up a steady stream of passive income. Each sale pays over and over again for as long as the customer stays with the service.
Passive Income Online
Of course, as you might imagine, my personal favorite way to build passive income is online. I’ll write more on how to do this in my next entry.
So now what?
I have grown tired of reselling used books. While I’m quite certain that I could easily use this method to get up to a pretty big stake, it’s a hassle to find, post, wrap, and ship them, and it’s getting boring, so it’s time to move to something new.
I have $6.04. In a sense that’s a pretty extraordinary sum - I have increased my starting stake by over 6000% in a very short period of time. That’s the power of trading value for value. But as you can see, I’m starting to run up against one of the inherent limits of any business - time. You see, if it takes me an hour to do all the work necessary to buy and resell a single used book, I am really only earning an hourly wage for doing so, and a pathetically small one at that.
The Magic of Leverage
So how do we get around this problem? The answer is leverage. We must find a way to work once, but be paid many times for it. There are many ways to achieve this. Having people work for you is one - you do the management job once, while being paid for the work of many. However, $6.04 is not going to get me very many employees.
Another method is to use debt - you borrow someone else’s money, and invest it in a way that generates more profits than the interest you pay. In a sense this is another way of profiting from the work of others, in the form of the money they have been paid. Using debt is not against the rules, but you must be able to pay the interest out of your stake, and again, I don’t see any banks lending against $6.04 any time soon.
The Ultimate in Leverage
So how can we create leverage with so small a stake? The answer lies in the Internet. The vast fortunes that it has created are due to the fact that it is the most efficient creator of leverage in the history of human civilization. How does this work?
The answer is that if you write something once, then publish it on the Internet, you can create and distribute what is for all intents and purposes an unlimited number of copies at little to no cost. If you provide advertising or promote a product on that page, then so long as some non-zero percentage of your visitors clicks or buys, each page view is worth a certain amount of income (on average). Now it may be (and probably will be) a very small amount of income, but the power of leverage is such that even the tiniest amount of income can make you very, very rich if it’s leveraged sufficiently. In other words, if you can grow your traffic sufficiently, a single Web page can generate practically unlimited income. Don’t believe me? Check out Million Dollar Homepage. The creator of that site found a way to work once, and be paid $1 a million individual times for his efforts.
Archimedes famously said that with a large enough lever, he could move the entire Earth. We need not be so ambitious. We’re only trying to double a $6 stake, here. And I have a plan for how to do it. More to come soon.