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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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photo credit: Graffiti By Numbers

How do I earn free Nike shoes by playing tennis? No, I’m not a ranked tour tennis professional or even a club player. I’m actually a weekend hack that has found a way to cover the cost of shoes while playing tennis. I received an email from a reader of TPD and basically thanked me for my articles and found them interesting. But they had an issue with how practical it is for an average person to invest in passive income opportunities such as real estate or dividend paying stocks. We exchanged emails and this family doesn’t have a lot of money to invest in stocks or purchase an investment condo as they are barely making ends meet. The reader went on to say that they could use a little extra money to pay for baseball cleats for a child’s little league program. I wanted to address her question about finding a source of extra income to cover baseball cleats and maybe a few extra dollars for pants and a uniform. The reader also shared that she was an ebay seller and has sold used clothing, books, and dvds in the past.

This was going to be a fun challenge because I wanted to address this readers question and also share how I have found a way to receive free Nike tennis shoes for the last 3 years. So, how do I earn free tennis shoes? I’ve shared before that I love playing tennis and enjoy the physical exercise it provides as well as being a frugal sport. When I play tennis I often times would find used tennis balls left on the court. One day when I was listing an item on ebay to sell and decided to do an ebay search for used tennis balls. I don’t know if you’ve ever searched for something out of the ordinary on ebay, but it can really be fun. Try it next time you’re on ebay. Any given day you will find 20 or more auctions for used tennis balls and they can range from 18 to 48 cents each. Yes, buyers actually will spend up to 48 cents per tennis ball. Amazing, considering that a can of 3 can cost $2.50 or 83 cents a ball. I’ve sold tennis balls as far away as Alaska. I don’t know the buyer, but I envisioned a group of sled dogs playing with the tennis balls.

I play tennis twice a week on average and in the summer I can get out as many as 4 times. On average I’ll find about 3 used tennis balls each time I play. Look for them under bushes, under tables, benches and under trees. You’d be surprised how many people leave behind tennis balls after they are done playing. Collect them and you could be on your way to a free pair of tennis shoes or some extra cash. You don’t even need to be a tennis player. Next time you’re at a park or see a tennis court, get out a look around for green gold.

For a free pair of tennis shoes I need to collect 200 tennis balls. If I average 3 used tennis balls it would take 67 tennis outings to collect 200. You can also visit different public tennis courts in your city to try and find more tennis balls too.

Once I have collected 200 used tennis balls I would create two separate ebay listings a week apart. Once the auctions close, I have about $42 left after ebay and paypal fees to cover the cost of my tennis shoes. The tennis shoes I’ve purchased the last two years are pretty basic and are the Nike city court shoes for $39.99. Yes, these are basic frugal tennis shoes. I purchase them from Sports Authority and I’ll show you how I save even more money later on.

Sports Authority has a website as well were you can purchase shoes and tennis gear that can be shipped to your house. Currently, they have a special if you spend $99 you’ll receive free shipping. Sports Authority always runs ads in the Sunday paper where you can find coupons for $10 and even $25 off your purchase. I use the $10 off a purchase of $50 or more frequently for my Nike tennis shoes and a case of Penn titanium tennis balls. The Nike tennis shoes are $39.99 and a case of Penn Titanium balls run $19.99 for a total of $59.98. With the $10 off coupon the total cost is only $49.98.

In this example you wouldn’t have to buy tennis shoes but could just keep the money in your paypal account and earn interest or use the money to pay monthly bills. I’m sure you have a $42 bill that you would love to have paid. This isn’t technically passive income because you are spending time and resources looking for the tennis balls. Even though it only takes a few minutes a day to look for used tennis balls, it still isn’t considered a source of passive income or residual income. If the used tennis balls appeared magically at your home, that would be passive. This is a creative way to earn extra money and can be fun to get your entire family involved in finding the green gold.

Let’s have some fun and figure out how many tennis balls you would need to make $100. At 25 cents each you would need to find 400 used tennis balls. You could also get lucky and have someone use the buy it now feature and pay up to 48 cents a ball making it necessary to old find 210 balls. Might sound impossible to collect 400 if you don’t play tennis, but next time you go to the park ask your kids to help you find Easter eggs. Look for fuzzy green Eater eggs and you can turn them into green gold.

What are some creative ways you are earning extra money? Do you have a hobby that pays for itself?

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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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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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My wife has a friend coming over tomorrow to discuss our personal finance goals for 2009 including life insurance and I believe our investments as well. I’ve never heard of Primerica, did a quick google search, and found that they have been in business for years selling life insurance policies. Primerica also is part of Citigroup, so I’m surprised I’ve never heard of them before. My wife did not give me any other info other than we are meeting with her to discuss financial goals. Since I’m a “hand on” personal finance type, I’m curious what she will want to discuss. Since it’s the beginning of 2009, I figure now is a good time to review our insurance policies for home, autos, and life. Not sure what she can do with our investments, but won’t hurt to ask.

Has anyone used Primerica for life insurance or investments?

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