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If you work as a team, can you build more passive income with family and friends? Passive income by definition requires an upfront investment and little to no time requirements spent managing the project. The pure example would be stock dividends, the passive income is not actively managed by the investor and no time commitment is required. Sure, you might spend time researching the stocks, but your are not actively managing the day to day operations of the company. What are some ways that you can pool resources and work together with friends or family to make passive income investments?

1. Real Estate. Investment in real estate requires a significant cash down payment and pooling resources with friends or family could offer you an opportunity you normally wouldn’t have. Coming up with 20% down payment might seem impossible, but if several people pooled resources together, it wouldn’t be as overwhelming to invest in real estate. Consider whether or not you could work together with family and who would manage the property. Could you afford to hire a property management firm to oversee the tenant relationship and maintenance?

2. Book. Do you have a friend that has talked about writing a book for years, but never got around to it? Maybe a parent or brother that has a buried passion, but needs a little help. You can work and create a book together and also help market the published product. Maybe the book would be better suited for an ebook or electronic book format. If the book has instructional material or is a “how to”, an ebook might be the perfect opportunity. Is an ebook passive income? Well, it’s not like stocks or real estate, but after you have written the book the royalties are passive for life.

3. Blog. You’ve read this blog post and are wondering if this blog medium is considered passive income. Well, it’s not. It is writing income and it requires large amounts of time to write, network, and market your blog. Is it fun? It certainly is and can be very rewarding to meet new people who comment and ask questions. Do you make money while your sleeping with a blog? Yes, but you still wake up the next morning and write another blog post for the following day. I wouldn’t start a blog with the thought that you will make consistent passive income day after day writing just one post a week. Most bloggers write daily content and also contribute to other communities throughout the week. You can make a good income blogging, but I would still consider it writing income.

4. ehow. You may enjoy writing, but don’t think you have enough material for a novel or ebook. How can you get friends and family involved in a writing project and create passive income. ehow offers writers the ability to create articles and earn passive income through ads clicked on the site. Say you write an article about “How to make homemade grape jam”, you will earn income each time someone reads your article and clicks on an ad. ehow is perfect if you enjoy many hobbies or have experienced life to the fullest. Maybe you raised 4 boys or climbed Half Dome in Yosemite, you can probably think of at least 10 articles about these topics. The best part about ehow is it’s free to join and you can probably write your first article in under 20 minutes. Be sure to add me as a friend when you join. How do you get your friends and family involved in ehow? Maybe you have a parent or grandparent that experienced the depression or a recession. Call them on the phone and ask detailed questions and start writing posts about what they experienced. How did they earn money in the depression? Did they make clothes? Did they learn how to stretch a grocery budget even further? Did they raise chickens? Offer to split your income with your source and have fun creating articles.

Are you currently making passive income through any of these methods above? Have you ever worked with friends or family to create a passive income stream?

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photo credit: Paul Keleher

You just received your 2008 tax refund, do you have an eye on the new 24″ iMac or will you put it towards your emergency savings account? Will you use the tax refund to pay off credit cards, save for a vacation, or maybe start investing in the stock market? I wonder if the current economic recession will cause people to set money aside for a rainy day or start an emergency savings account that can pay for car repairs or doctor bills. Maybe you will use the tax return to fund your child’s 529 college savings account this year. Here are several changes my family is making in 2009 with our tax refund:

1. Change tax withholding amount. We have received a refund for the past two years and we need to adjust our return so that we don’t continue loaning the government “free” money.

2. Add funds to our emergency savings account. Our goal is to have 1-2 years of savings in our ING Orange account for emergencies in case we lost our jobs for an extended period of time.

3. Add additional funds to college 529 plans. We chose Vanguard for our 529 college education plan as they have low fees, great funds, and an easy to use website. Since our children are young they can benefit from the current prices of S&P 500 stocks.

What is tempting to do with our money:

1. Buy a new imac 24″ computer for my home office. Yes, I love macs and have had my eye on the new imac for several months. I’ve visited our Mac store several times and asked dozens of questions, and I think I’ve impressed my wife that I still didn’t buy one. My plan is to convert my Powerbook into a desktop by finding a separate LCD monitor and external mouse. Total savings $2,000

2. Buy a new vehicle. It’s tempting to upgrade to another SUV or minivan that would give our family some more legroom, but it just doesn’t make financial sense right now. Many of our friends swear by the Toyota Sienna, but we have yet to make the purchase. Our vehicles run great and they both have over 100,000 miles, but are both paid off. It’s hard to make another car payment just for a little extra leg room.

3. Buy a new refrigerator. Kind of strange that I would even put this down as one of the things I would buy with our tax return, but our fridge is driving me crazy. Each time a guest comes over to our house, they say that it’s annoying to open up. When we bought our first home our GE refrigerator fit perfect, and in our current home it’s not a counter depth model. It sticks out a good 4″ and the right door hits our kitchen door each time you open it. Very annoying, but our refrigerator works fine. How can I justify spending $800+ for a new one?

So how will you be using your 2008 tax refund? Emergency savings account or 24″ iMac?

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Today my blog is in the first round of a basketball tournament against giant The Street.com blog called Main Street. Well, not actually basketball. Free Money Finance is holding a March Madness personal finance blog tournament and my post 10 Ways To Make Your Stuff Feel New Again is competing. I’m honored to be able to participate in the March Madness tournament and am thrilled that some new readers are able to visit my blog. If you are visiting from FMF, welcome and I hope you take a few moments to read some of my blog posts about passive income ideas. Feel free to leave a comment and join in the discussion at The Passive Dad. Thank you.

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I recently wrote about Mint.com and how I started using the site to track our personal finances. After a few weeks I am still very impressed with Mint and the ability to track daily transactions for our bank accounts and our credit cards. In fact, I think it has already saved us about $500 a month in our living expenses. I actually enjoy games and challenges and have started to establish some tight restrictions on spending categories. My goal is to be more aggressive and start saving more money with our grocery budget. I feel that with a little work I can make some smarter decisions with our grocery item and still buy quality food for our family. I’m not willing to sacrifice quality, but I will drive a little further for a bargain.

How did we save $200 on groceries in January? Since I abandoned my old excel spreadsheet I was able to watch our transactions hit Mint the very next day. This allowed me to track spending more closely and defer or hold off on several purchases. For instance, our grocery budget was set to $500 which might seem a bit high for a family of 4, but still well below our average of $600-$700. As we approached the $500 in our food budget I would buy only the necessities to make it through the end of the month. Milk, eggs, cereal and some basics helped stretch our budget to $500 for groceries in January. I didn’t buy large containers of fresh fruit from Costco and stayed away from store bought cookies or soda. In fact my wife bought an ice cream maker and we have been enjoying some wonderful treats. Could I save even more each month? Sure. You might be feeding your family of 4 for far less and I would love to hear your feedback on your personal budget. Could I be using the cash envelope system to help lower my grocery bills? Probably, but I’m happy to see the progress so far with over $100-$200 in grocery savings.

We didn’t use coupons and I’m actually very bad at clipping coupons from the newspaper and trying to find coupons for products we actually use each month. I remember when we were first married that I would fall for buying items just because we had a coupon. I think I bought a huge bottle of Tums when we were 25 years old. I think I ate two of them and finally threw the bottle away. Some of you coupon clippers could probably help me shed another $40 or more of my monthly grocery budget. I would appreciate any tips you might have. Any fun and easy website you would recommend would be appreciated.

We bought 90% of our groceries from Raley’s supermarket. This is not a discount grocery store like Walmart or FoodMaxx, but a regular grocery store chain. Could we save more by shopping at a deep discount store like FoodMaxx? Probably, and in February I plan to do most of our shopping at Foodmaxx. Why haven’t I done this before? Foodmaxx is about 10 miles from my house and it’s not convenient. I know I should probably buy more bulk items and go twice a month to save more money. Believe me, my frugal friends who have a $350 grocery budget remind me all the time. In case you are wondering, the other 10% of groceries are purchased from Costco. I mostly buy coffee and paper items from them. What is my food budget going to be for February? I’m hoping to spend $450 on groceries from Foodmaxx.

How about you? Are you making any changes to your grocery budget next month? How have you saved money on groceries? I would love to hear some of your stories.

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This isn’t the game Monopoly where grandma would give you a written IOU if you couldn’t afford her red hotel on Park Place, this is reality in 2009 where a California tax refund could be paid via IOU. What does this mean for Californian’s? We could be receiving an IOU or note from the state government that will be paid when funds are available. How long could this take? We don’t know, as the state doesn’t have a budget and county workers are having to take unpaid leave in order to bridge the budget deficit. According to an MSNBC article, back in 1992 the State of California went through a similar IOU with state workers. In 1992 the workers were paid back the salary and it also included a 5% interest rate. Sounds good, right? My ING Orange account is only paying 2.4%. But wait, how will California’s pay bills that are due? You can’t write an IOU for your rent or mortgage. And last I checked, Costco doesn’t take an IOU either.

What are your options right now?

1. Hope that California passes the 2009 budget within the next few weeks.

2. California receives emergency funds from the U.S. Government.

3. You start or add funds to your emergency savings account.

4. Buy a California lotto ticket.

5. Borrow money from a relative to pay bills.

6. Charge bills to your credit card.

7. Ignore your bills.

8. Get an extra job or increase hours.

Of the choices above, the only one that I am counting on is #3 and #8. I’ll keep adding funds to my emergency savings account and continue to find ways to cut expenses each month. Trying to find additional sources of passive income will also help in the long term. I sure hope this budget mess is resolved quickly in California and we can again focus on growth.

You are probably also wondering why someone would provide a tax free loan to California and receive a tax refund. Well, some taxpayers would rather receive a refund than owe the state. Maybe you received some additional income or did not adjust your exemptions after having a child. If we receive an IOU from the state, I can guarantee that we will be updating our exemptions immediately.

What measures are you taking to ensure you have cash available through the tax refund season? Do you count on a refund each year?

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