This post is part of a 30 days series called the 30 steps program to financial independence. You can check the list of other posts here.
So yesterday we were talking about having several sources of income. You can take freelancing job, register on Elance or sell your craft on Etsy, the thing is, you are still working.
Financial independence to me is a state where it doesn’t matter whether you work or not, you have sufficient passive income to put a roof over your head and food on the table.
What is passive income? Simply put, it is an income that you receive even though you haven’t done anything, or haven’t done much to get it. Like interests getting paid into your savings account. Or rent from properties you own. Sure you have to maintain the property, and go after tenants if they don’t pay, but I still consider it pretty passive.
The day all those streams of passive income will be higher than your living expenses, you will be financially independent. No matter if you work or not, you will still be able to maintain your lifestyle.
There are many ways to get passive income.
you can receive interest from savings… though it’s not much those days
you can invent something and get intellectual property rights
you can start a company, though that requires a lot of work before you can resign and still receive money from it
you can invest in real estate and as long as your property generates positive cash flow, that is passive income
you can start a blog and put ads and affiliate sales on it
and so on. Again, the more sources of passive income you have, the less vulnerable you are to one of them stopping. A tenant moves out? Time to cash some stocks.
I would consider passive income something you do so passionately that you don’t consider it work, too. Like playing guitar and getting paid for it, or selling your art…
Though if you get sick and can’t play or paint anymore, then that income is gone.