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My Struggle with Active vs. Passive Income

Passive vs Active IncomeKidgas’ comment on the recent Exceeding Minimum Wage post is the inspiration for this post. If you haven’t read his comment, please go back and do so (also, check out his Cash Flow Mantra blog – he’s got some great stuff there).

His comment inspired me to back up a bit and outline my inner struggle with residual vs. up front income. You see, early on I realized the value of residual income but real-life situations made it impossible for me to jump 100% into the residual income arena. I’m sure you all understand. We all have bills to pay, mouths to feed and children to clothe.

It’s impossible to pay bills, buy clothes or food on future promises. You need cold hard cash and you needed immediately.

Squirreling Away Time

When I came to the decision that residual income was way to go, I had to give up a few things. I had to give up some immediate cash. I also gave up a higher income. I know for a fact that I could have earned a lot more money early on if I had continued to write for up front pay. Eventually I would have sought out higher earning gigs and spent my time seeking and writing.

On the flip side, I chose the residual path because I didn’t want to continue writing more and more. Writers tend to get burned out when they’re not following their passion. I’ve found I could write for money for a certain amount of time but eventually I hit the wall. When faced with the wall, it’s impossible to write another word.

Residual income is a nice blanket to have when facing a wall.

Time and Patience

Below are numbers taken from my spreadsheet, which tracks my passive/active earning percentages. This section shows how I wrestled with passive vs. active income from 2007 to November 2011. You will note 2010 was a particularly tough year for me. I spent way too much time on active income.
Active vs Passive Struggle

At the end of 2010 I made a vow to myself. In December of 2010 I wrote the following on my spreadsheet and have held true to it, sort of:

My 2011 Vow

eHow is no longer an option and Suite has been Pandalized, so now I concentrate exclusively on my own sites.

I know the year is not over yet but I do want to share some numbers. The numbers below outline my income/article count from January to mid November 2011:

# Articles Written Earnings Per Article Rate
Active 19 $339.50 $17.86
Passive 350 $24,952.07 $71.29
Total 369 $25,291.57 $68.54

In case you haven’t figured it out, the active income came from Demand Studios. As you can see, it’s really foolish for me to write for up front pay unless I get a minimum of $71.29 per article. I’m also at the point in my freelance writing career where $71 to write for someone else is just not enough. Remember, when you write for somebody else you don’t get to set the rules. When I write for myself I make up the rules.

A Personal Decision

You can float around the Internet reading forums and blog posts about the dangers of writing for content sites. It’s nice to read what other people think, but until you make your own decision and choose your own path, you’re burning valuable time.

While $25,000 in residual income may not be enough for a family to live on, but as my dad would say, it’s better than a stick in the eye.

Things to take from this post:

  • You have to decide what kind of freelance writing career you want.
  • You have to implement your plan of action and follow it (tweak it when necessary).
  • Track your progress. This helps you to know whether or not you’re moving in the right direction.
  • Keep planting residual seeds.
  • Be patient.  Residual income takes time.
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About the author: Felicia A. Williams is a freelance writer and blogger. She spends the majority of her time with her family and writing. If she’s not writing or commenting on NJFM, she’s either outside smelling the roses or writing articles for one of her other sites which include Tidbits and Stuff, BLULOW, A Dose of Health and a few other sites/blogs scattered around the internet.

Comments on this entry are closed.

  • Crystal June 26, 2012, 5:28 pm

    It’s interesting to see how the numbers for active vs passive blogging have flip flopped with each passing year. Definitely inline with my blogging strategy!
    Crystal recently posted..Humans now one step closer in quest to understand canine thought process.

  • Juan June 9, 2012, 1:59 pm

    It is rather a pain that developing a true passive income base takes so long. Though, it is better to be realistic and say that it will take 4 years to create a true passive income base than to over estimate and say it will only take 1 year.
    Juan recently posted..$.75 off On ONE Duracell CopperTop, Ultra Power, Ultra Photo Lithium or Specialty Batteries (excludes trial/travel size)…

  • Ellie December 16, 2011, 7:39 pm

    Felicia,

    I found your post very encouraging. I admire your strength and courage to persevere. I recently started up a WP blog on anxiety attacks. I suffer from anxiety and thought it would be good therapy to share my experiences with the world.

    Ellie
    Ellie recently posted..Symptoms of Panic

  • Maria (Work at Home Mom) December 9, 2011, 7:35 am

    Numbers like these are precisely why I switched from freelance writing (active) to writing only for myself for residuals … while some months I have very little time to do anything, overall my monthly income is much, much higher than if I were constantly writing for someone else. I haven’t looked back!
    Maria (Work at Home Mom) recently posted..Beating Panda with Affiliate Sales, not Adsense

  • Grandma December 2, 2011, 8:24 am

    Ha ha, Felicia…and you know I just moved from sunny Oklahoma (and shaky with earthquakes lately in addition to tornadoes and heavy rainfall…now a sinkhole) to snowy mid-Michiagn for the winter. Sunny is definitely better…but maybe up in Colorado instead – less windy.

  • Grandma December 1, 2011, 4:16 pm

    Using several sources for income is the best idea because a person never knows when one good kettle will stop boiling or run out of water. Always keep a couple on the front burners.

    It is so disappointing when one good source of income, no matter if it is active or passive, dies out or disappears. You watch and wonder what the heck happened, but really the thing to do is stop watching and find another “tool” to use to get that income back and then some.

    Also, sometimes a new resource becomes an amazing resource, bringing in far more than expected or even wished for. That is fun.

    A writer is often on a lonely path, sitting alone in a room listening to music while awaiting inspiration or a hint of a new thought with which to begin a new piece of written excellence. The writing life does not have to be passive, always waiting for an opportunity to appear – from a place that others have created. The writer can be active – create their own opportunity, any time they want to work at doing that.

    This is an exciting time, and at the same time a little sad. Sad to see things like print convert to electronic publishing…but exciting because the scope of what can be done with electronic publishing is greater. Plus, you can do it yourself, not always needing some other editor or publisher to give you a green light to go ahead and make money.

    Oh darn, must the the end of the year blues again…or S.A.D. time of decreasing sunlight. Maybe I will go buy myself a sunlamp for a gift this year! And have it on while composing brilliant works like this!

    • Felicia December 2, 2011, 7:05 am

      I agree, Grandma. Several sources is key. I also feel this is an exciting time for writers.

      Just think, Grandma. When the money starts rolling in, you never have to worry about decreasing sunlight again. You can always travel to bright sunny areas where the days are long and the weather is good.

  • Dianne November 26, 2011, 5:53 pm

    I think I would like to be 50% active and 50% passive. The Google Panda updates have me a bit paranoid. It reminded me that passive income can be wiped out in an instant.
    Dianne recently posted..Fashion Photographer, Peter Lindbergh, Recreates Paintings with Julianne Moore: Art Depicting Women’s Liberation

    • Felicia November 27, 2011, 6:44 am

      Dianne, Google Panda should really teach you to diversify so your earnings won’t be wiped out in an instant. ;)

  • Deanna November 26, 2011, 1:33 am

    I think it is wonderful how you’ve built up such an impressive income (yes, for passive income yours is impressive) over time with your own blogs. It really isn’t that easy to do, but you somehow found the right formula and it is working for you. I hope your income continues to grow! :)
    Deanna recently posted..Happy Thanksgiving – Tips to Watch Your Weight During the Holidays

  • Kellie November 24, 2011, 8:50 am

    I just wanted to say that your blog is fantastic! It is rare when I come across a blog where I actually click on some of the other posts just to see what the author has to say. You have an amazing flow to your words.

    Anyway, I have been in the freelance game for a couple of years. Most of my writing is for paid to blog companies. I really want to expand but i’m not sure how.

    Thank you for the inspiration!! Have a very Happy Thanksgiving!! :)

    ~Kellie
    Kellie recently posted..Homemade Pampering with Scrubs!

    • Felicia November 25, 2011, 11:13 am

      Welcome to NJFM, Kellie. If you haven’t done so already, download my free ebook, So You Want to Be a Freelance Writer (I have a link to it in the right-hand column). It might help give you a few tips on how to expand your writing career.

  • Gip @ So Much More Life November 24, 2011, 8:39 am

    I tend toward active income because I need a steady income now, but I’m trying to build my stable of passive income.

    I know you’ve addressed this here in bits and pieces before, but I’d be curious about your formula for writing a high-paying set of passive income articles for your own site. Do you follow something close to the One Week Marketing idea? (I haven’t purchased the full product.)

    And what are your requirements for keywords? Do you need to see 500 monthly searches or 40 or 40,000? Or does that matter to you?

    It’s a lot of questions for a Thanksgiving morning, but I don’t remember you addressing any of the specifics and I’m curious.

    Happy Thanksgiving!
    Gip
    Gip @ So Much More Life recently posted..Letting Things Go Means Two Things

    • Felicia November 25, 2011, 11:11 am

      Gip, I believe somewhere here on NJFM (or maybe even in my ebooks), I address how I go about finding high-paying articles. At one time I tried following the keyword formulas, but that just didn’t work for me so I no longer use keyword tools.

      There are certain categories that pay well such as business, finance and insurance. Given my insurance background, some of my earlier articles are still paying well.

      I also analyze what I write and reader response. If I find certain articles are money makers, I then explore that topic further. It’s a lot of trial, error and experimentation.

  • Trent Adams November 23, 2011, 8:44 pm

    I’m happy to find this today. I wish I hadn’t waited so long to spend more time on rev share and build niche sites — I finally took the leap. I appreciate your posts — you’re helping me stay on track.

    Happy Thanksgiving.
    –Trent
    Trent Adams recently posted..Pyramids of Giza Facts: The Great Pyramid of Ancient Egypt

  • Tiffany November 23, 2011, 2:54 pm

    Very Interesting! I started freelance writing 4 years ago and the first year I would say just about 85% of my content was for active income. After doing that for two years, I decided that I had enough and was going to concentrate only on passive income(hence my blog.

    This year I would say that my income is 99.5% passive as I will take on a paid article every great once in awhile if we need money for something. The nice thing though is that we didn’t need the money I was making from freelancing to pay bills so I could easily make the transition from active to passive without hurting our finances. Not everyone has this option, but I definitely recommend that freelancers try to start getting at least some passive income from their own sites or even things like selling PLR.

    I have several plans in the works for 2012 and one of them is actually going back to offering a service, but it is going to be almost 100% passive which I am hoping will increase my income substantially. Get creative and find different ways that you can build your business and not have to worry about writing your little fingers to the bone for the next 15 years.
    Tiffany recently posted..Recommended Reading – The Barefoot Executive Book by Carrie Wilkerson

  • Jen November 23, 2011, 12:32 pm

    Great post and very inspiring for me to keep on doing my own thing. I also just opened up a website selling PLR articles and that’s been going well so far, too!

  • Crystal November 23, 2011, 10:50 am

    Thanks for sharing your real numbers, which clearly show your earnings progression and transition over the years – very impressive and encouraging. And I love that you wrote a reminder to keep you focused right on your spreadsheet. I have a severe tendency to get sidetracked and need to do the same thing.
    Crystal recently posted..Live to Be 100: Should You Take Baby Aspirin Every Day?

  • Ken Muise November 23, 2011, 8:12 am

    To quote McDonald’s: “Na, na, na, na, naaaaaaa…..I’m loving it!”

    To quote some song whose title I can’t think of right now: “You give meaning to my life. You’re the inspiration.”

    To quote Boom Boom..”Oh my gawd!”

    Seriously, though, these kinds of posts are why I hang around here! Have a good Thanksgiving. I’m hitting the road tonight for Mass!
    Ken Muise recently posted..HubPages: Irresponsible Content And Why They Won’t Make It

    • Felicia November 23, 2011, 8:22 am

      LOL!!!!

      Safe travels and have a Happy Thanksgiving, Ken.

      My daughter always knows when I’m reading one of your comments. :)

  • cashflowmantra November 23, 2011, 7:41 am

    Felicia,
    That is a very nice per article rate which should only improve over time since all that work in 2007 is still paying off.
    You have made a nice transition from active income to passive income. Congratulations.
    cashflowmantra recently posted..For What Are You Thankful?

    • Felicia November 23, 2011, 7:55 am

      Most of the 2007 work is paying off. The stuff I have on Suite 101 is dead in the water, but the rest of the stuff seems to be doing just fine.

      There’s something to be said about diversification.

  • Anne Baley November 23, 2011, 6:42 am

    Another thing many people don’t realize is that, if you’re the sole source of income in your family, you’re going to have to give up some personal pleasures and free time for a couple of years. If you’re supporting a family, or even just yourself, you’re still going to have to write for clients to pay the bills every month. The only way to switch to residual income is to spend an extra couple of hours a day working on your own sites, or your residual sites. This means giving up that relaxing two hours watching tv in the evening and possibly working six and seven days a week. It will pay off in the end, but it’s a sacrifice many people aren’t willing to make for an extended time.