I was talking with some colleagues at work last week, and discussion swung around to topics along the lines of “are you going to do this forever?”. Most were answered in the same vain:
Colleague 1: “I’ll have to. I can’t afford to take a pay cut.”
Colleague 2: “I’ll have to. I’m £2k overdrawn as it is.”
Colleague 3: “I’ll have to. I have kids at college.”
When it came my turn to answer the question, they all scoffed, laughed and told me I was a dreamer. I said “I intend to work for another 10 years, and retire from the mainstream rat-race when I am 38.”
There were a variety of replies. Some profane. Some full of mock-encouragement. All disbelieving in some way. I was so shot down that I didn’t even really get a chance to explain how I hope to do it, and their cutting remarks actually made me wonder if it is just a pipe dream to be able to give up mainstream work and live a dream instead.
What is Passive Income?
Before I delve further into my dream perhaps it is worth spending a moment explaining just what a passive income is, as not everyone will quite understand.
In short, a passive income is something of which you have applied resources to, and which continue to provide resources in return now and later. (Thanks to Trent @TheSimpleDollar for the premise).
If that sounds a bit vague, it is. An actual example would be buying dividend-producing investments (using a current resource – cash) which will provide a resource now and later (dividends). Another example would be to write a book (resource – time) providing a royalty revenue stream long after the time ceases being spent on it.
My Passive Income Plan
It was probably a good thing they didn’t ask what my plan was, because I’m not sure I could have explained it there and then and kept their attention at the same time. But I got thinking – what IS my plan? It needs to be a half decent one for this to work.
Amongst my own plans in general, I’ve taken a hint of inspiration from @FinancialSamurai’s Plan, which he discusses in quite some depth.
Time Rich, Not Cash Rich
It’s important to note that I don’t intend to become ‘cash rich’ from my dreams. What I want to be is ‘time rich’. I’d like to step off the hamster wheel of normal work, and instead focus on things I find rewarding such as charity and volunteering. If my standard living costs can be all but covered by passive streams of income then the time I’d ordinarily spend labouring away for an employer can instead be redirected towards giving.
I’d like to drive my passion in blogging further and become a ‘professional’ at it. Quite where the line between an ‘amateur’ and ‘professional’ blogger is drawn I’m not sure, but to be able to count your blog as a significant passive income source would be a good start on crossing that line.
Stocks & Dividends
I subscribe to the ‘Oblivious Investor‘ mode of thinking when it comes to investing in stocks and shares. My current holdings pay pittance in dividends, and my banking sector is particularly dismal at this moment in time. But, because I’m playing the stock market for a longer-term goal, I’m not actually bothered that I’m losing (on paper) 5% a month. At some point things will rebound as they always do, and we will go from bust to boom once more and I can cash in on that.
The principle of Pound Cost Averaging is also in my favour, as I mostly started buying when the market was on its way down.
One thing I do need to do is begin a dividend pool. At the moment while some of my holdings will provide an income of sorts either through sale or unintended dividends I need to start actively thinking about options that will provide a sustained, regular high dividend stream.
Shout out and thanks to @Monevator for the Lazy Portfolio write-up as well. There are some great ideas within.
One of my many passions is writing. I like to think that I can get across complex concepts and ideas without actually giving people brain ache. It also pains me to still see that despite attempts last year, there is still no compulsory school-level education on managing personal finance and money.
I’d like to combine the two and write a book aimed at the 16-21 year old market about doing just that.
Is It Just A Dream?
Assuming I need £800 to ‘live’ per month, then a passive income stream could bring me most of the way there, with careful planning. A part-time job of say, 16 hours a week could provide money to ‘live’ with. As with all dreams, anything is possible; you get out of it what you put in.
If it stays a dream then yes, it is just a dream. But if you work to make that dream a reality, then who is to say you cannot succeed?
What’s your plan?
If you have a plan for jumping off the hamster wheel too, come share it in the comments.
Tags: Dividend, hamster wheel, Income, Passive Income, Volunteer, Volunteering
Category Blogging, Employment, Investing, Money Management, Stocks & Shares, Strategy
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