Philosophy of Passive Income

This post may contain affiliate links. For more details, please view our full disclosure.

A few weeks ago, I woke up to this pleasant email in my inbox:

pleasant email to receive unexpectedly

It took me a minute to figure out what I was looking at. It was money I wasn’t expecting, and I was really hoping it wasn’t a mistake or phishing tactic.

Then I remembered that years and years ago, I opened up a shop on Zazzle. I designed t-shirts which very few people bought. The payout threshold was either $50 or $100, and I didn’t think I’d ever meet it.

I guess they got sick of holding onto my money, or–more likely–there’s some type of rule about how long they can hold onto payouts.

My income situation is a heck of a lot better than it was back then, but I’m in no way, shape or form above getting excited about an unexpected $24.43!

It’s the opposite of the sunk cost fallacy. The original fallacy is that you feel like you’ve already invested too much in something to give up–even when you’re clearly not going to come out ahead.

In my inverse fallacy, I had already given up on getting ahead–so much so that my current self is grateful to my past self for spending hours designing t-shirts so I could have $24.43 six years later.

It doesn’t make sense. Twenty-four forty-three isn’t a good return on my time investment. But because I’m so far removed from the experience temporally, I’m totally cool with that return. Because I had given up on ever receiving anything for it.

On Passive Income

This post was originally going to be titled, My First Passive Income. But then I realized this was not, in fact, my first experience with passive income.

I pull in a decent amount of money with this blog. It’s nothing to retire on, but it does help support my family. Some of that money comes from advertising. And some of it comes from affiliate sales.

I generate affiliate sales when a reader clicks on one of my affiliate’s links and makes a purchase. It doesn’t cost them anything extra to use my link. The affiliate has just arranged to pay me a commission when I refer a customer their way. I only do this with companies I like and trust.

I’ve had a mixed bag of experiences with affiliate sales. I’ve spent hours on a post, only to have it generate nothing.

I’ve had others perform ridiculously well, but they have to be updated at least once a year. I spend about the same amount of time updating these posts as I did writing them. The return is great and worth it, but I’m putting in a decent amount of maintenance hours in order to achieve that result.

I’ve had others perform pseudo decently without having to touch them after the first writing. The sales–and therefore commissions–aren’t as explosive, but they are steady and it’s almost zero maintenance. These are the posts on my blog that I consider truly passive income.

That’s probably why so few pursue passive income.

All of this got me to thinking about my philosophy on work. I grew up with the notion that you always spent your time at your labor, and were compensated commensurately.

Even after I started blogging and meeting a bunch of people who had great financial success with passive income endeavors, it all felt a little pie in the sky to me. Duplicating that success seemed less like a model and more like striking a vein of gold.

I don’t think my knee jerk reaction was wrong. Yes, there is a science you can apply to some passive income tactics, but there is always a chance you will fail.

There is always a chance you will bring in a boat load of money, but to maintain that income you’ll have to work your tail off. Which means you haven’t created passive income; you’ve created a job.

But still, there is that enticing chance that you’ll hit that vein. That steady stream of income that requires zero maintenance.

There’s a relatively high amount of risk involved when compared to traditional, time-for-money work. You can invest a lot of time into something that turns up nothing for you. If this happens, you run the risk of falling into the original sunk cost fallacy. You might wait too long to give up.

If you had just traded your time for money in the first place, you would be way further ahead.

Hm good food for thought in here. My personal economy is probably mixed, too, when it comes to passive income.

My Current Philosophy on Passive Income

I’m not against building passive income streams. I know people who have achieved success in this manner, and believe others can do it, too.

But I’m keeping my personal economy mixed. I might not strike that illusive vein of gold. Or, after I do, there may be an algorithm change that robs me of traffic and therefore that income. I’m more than pleased with and grateful for the moderate amount of success I’ve found with passive income through this site.

But I’m not putting all of my eggs into one basket. I’m simultaneously supplementing and hedging that income with time-for-money work. At the end of the day, while I like those surprise PayPal messages, I’m not comfortable enough to expect them.

 

Related Post

Spread the love

7 thoughts on “Philosophy of Passive Income

  1. Money Beagle

    I’ve been blogging for years and have heard this so many times, and unfortunately have never taken full advantage of it. #fail

    But I do enjoy reading the stories of others. Thanks for sharing.

    Reply
  2. Penny @ She Picks Up Pennies

    Your philosophy is so important. Multiple income streams (active or passive or both) is so vital. I imagine that it will become increasingly more so. And that’s so fun that you can earn money on Zazzle. I’ve used them for invitations before but I never thought about it from a selling perspective!

    Reply
    1. femmefrugality Post author

      Yes–unfortunately in the gig/1099 economy we’re in and digging into more deeply, multiple streams are going to become necessary. Not that I mind getting money from multiple sources, but dang, can hustles get exhausting.

      Except this one lol. I wouldn’t recommend it unless you’re going to invest some time into marketing and you don’t suck at graphic design like I do. Have gotten a bit better since six years ago, but not much.

      Reply
  3. JoeHx

    I’ve heard passive income also referred to as “residual income” – which means it isn’t tied directly to how many hours you work. Yes, you might have to put more hours in to get better results, but in the end it (potentially) keeps delivering. It’s unfortunately not as guaranteed as active income.

    Reply
    1. femmefrugality Post author

      Have heard that, too! And yes–it’s so awesome when it works out. It’s just a matter of how much time you have to invest upfront knowing that there’s a risk it will amount to nothing.

      Reply
  4. Matt @ Optimize Your Life

    I like the idea of a mixed personal economy. Having multiple different types of income coming in from different places means that if something happens to any one of them, you aren’t going to be lost. Multiple streams give you a stability that you can’t get from relying solely on passive income.

    Reply
    1. femmefrugality Post author

      AMEN. This blog ended up being that stability a few years ago. I should have been more terrified about my financial prospects than I was, but it was so easy to shift to just doing this all the time since I had already spent time building it and a freelance writing hustle. Never intended it to turn into my full-time job. I’ve been thinking of things I can do to supplement all this online PF stuff lately, too. Because you just never know when you’re going to need that income diversity. And Zazzle isn’t cutting it. 🙂

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *