When Passive Income Ideas Turn Out To Be Active Income In Disguise

by Scott on February 19, 2009

cell tower in disguise #1
photo credit: miheco

Have you had a dream of writing or blogging where you write a few articles a week and have the potential to earn a good amount of passive income instead of active income? What is active income exactly? I would define it as a form of compensation where you get paid for your time spent on an activity. Maybe you are paid to work in an office, serve food, or construct a building where you trade a service for a wage. You won’t receive residual payments or passive income from a completed building or a meal you served last week. You would receive passive income if you wrote a cookbook or if you leased the building you helped build. What are some passive income ideas you’ve tried that have turned out to be active income in disguise?

Are you a blogger? Maybe you are an active blogger or thinking about starting a blog. Do you consider a blog to be a source of passive income or active income? I guess you might argue that it’s passive income if you are making money from ads on your site and only writing one article a week. But most bloggers try and post several articles a week, if not daily to create an active community. What happens when you stop writing blog articles? Do you think your income will stop? The same would happen if you left your active job at the office at quit.

Multi level marketing programs.
Have you researched or been approached by a friend involved in a multi level marketing programs that sell juice or makeup? Many of these companies offer some great products that millions of Americas use each day, but are they truly passive income opportunities? The brochures to become a representative at these companies might promote certain levels to earn passive income, but does it require active income too? Some programs offer passive income opportunities and others require a fee to join the program. Will you recoup your initial fee through future passive income payments? Will the multi level program require training or classes where you must invest your time?

Gold panning or treasure hunter. Wouldn’t it be amazing if you were walking down a dirt path near a river in California and looked down to notice a 3 pound gold nugget. It’s happened in the gold country, but chances are you would walk for years before finding one. What about gold panning? Gold is valuable, a precious metal, and can increase in value. Yes, gold is almost back to $1,000 an ounce, but it also takes hard work to get it out of the ground and into cash. You might be fortunate to find some gold flakes over the course of a few minutes, but to earn a full ounce it could take days, weeks, or even longer. Gold panning can be fun and you might want to consider it as a hobby before making it a source of active income.

Selling items on ebay. Watching late night infomercials about sellers making six figures drop shipping might make you think of ebay as a source of passive income. Well, for some it might be true, but for many it requires active income. Listing items around your house or for friends will require time and you aren’t paid for future sales without effort. Even if you find a reputable and dependable drop shipper, you still need to spend time listing items and interacting with customers. If you stopped selling on ebay today, would you continue to earn a source of passive income?

Chain letters. These certainly can prey on unsuspecting individuals and offer a way to make fast passive income. Last year I received a letter in the mail with two crisp $1 bills. The letter came addressed in a hand written envelope and even had a hand written return address, but I didn’t know this person. Inside was a canned letter explaining this very complicated system where I was supposed to continue the chain letter and make a million dollars. Sounds like the perfect source of passive income, right? Imagine having letters full of cash coming to my doorstep each day. The letter contained names and addresses of 5 people, of which I needed to send money. The letter asked that I add my name to the bottom of the list and mail it out to 5 friends to repeat the process. If this was done enough times I would earn over $200,000. I googled the person who sent me the letter and found them listed on several sites about pyramid scams. Not that this influence my decision not to participate, but I found it interesting that they had spent a ton of money sending out crisp $1 bills.

In case you are wondering, I have tried many of the methods above to earn passive income and failed. I’m glad I failed because it made me appreciate working hard for my money, but more important, having my money work hard for me. Have you attempted to find a passive income source, only to find out it was active income in disguise?

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1 Miranda February 19, 2009 at 9:17 am

There are some that argue that there is no such thing as truly passive income, since in order to get anything substantial without SOME sort of outlay of energy. Many things that people think are “easy” actually turn out to need some thought, planning and effort.

2 asithi February 19, 2009 at 10:57 am

“Have you attempted to find a passive income source, only to find out it was active income in disguise?”

Oh, do you mean like blogging? Sometimes I can stop for a week or two still earn a couple of bucks from Adsene, but those are usually the posts that I already spent a large amount of time researching and writing. The conversational posts usually earns nothing because no one is searching for them.

3 Craig February 19, 2009 at 12:43 pm

I never considered blogging passive, takes a lot of time and effort to not only create content, but build relationships in your niche to try to get the content out there and to be seen. Very rarely can income become strictly passive unless lucky. Unless you own a book/real estate, difficult to fully just sit back and collect a check.

4 Maria @ Residual Income Web February 19, 2009 at 3:43 pm

I don’t think that blogging is passive income, either, but it can help boost your passive income streams, such as niche sites or downloadable products with backlinks and traffic.

I tried becoming a Mary Kay consultant in college, forgetting that I don’t like sales. I paid $100 to start and never sold the first tube of lipstick.

5 Manshu February 19, 2009 at 8:19 pm

I do think there is such a thing as – Profession or Business (From the book – Cash Flow Quadrant)

A profession is like a doctor who needs to be physically present to make money. While a business is like owning a hospital – where the system makes money for you.

To that extent blogging can start out as a profession where you churn out hundreds of posts over a number of years and are engaged actively.

Then at some point you make enough money to hire bloggers for you and make money out of the system. Like most Professional blogging networks.

I seriously doubt you can get passive without being active first.

6 Fabulously Broke February 21, 2009 at 8:14 am

I agree with Miranda. There’s no such thing as truly passive income. You have to put out some sweat and tears to get something back, or at least, set up the whole deal with a lot of hard work and then reap the benefits later.

I don’t make any money off blogging to be honest. I kind of blog just for fun, but now with 1300+ readers I should consider monetizing it in some way…

7 J. Money February 21, 2009 at 11:32 am

yeah, blogging sure does take a lot more work than sometimes people give credit for. i look at it as a nice hobby/2nd job ;) if only i can figure out a way to make it my 1st job now!

8 Steve February 27, 2009 at 3:30 pm

Passive income only comes after you have planted the seeds, sweat in the sun, weathered the storms, and worked on the harvest. It takes patience, persistence, and vision. But often, it is work that you can love, and in time, it will bear fruit. But there is no thing as quick passive income. It took Robert Kyosaki at least 10 years! :)

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