Living off passive income has always been my goal. Sharing some things I learned along journey, which I am still on:
1. The key is to live simply. I define "simple" as a standard of living that is equal to only 50% of my income. To me, that is being able to work at home (so no expenses for commuting and an office wardrobe), being able to bike/ride a motorcycle to the places I frequent, and being entertained/maintaining health in the most natural ways. That's going to the nearby beach, walking my dogs, and biking around vs. going to the mall, spending to watch a movie, and paying for gym membership. I moved out of the city because I find it difficult to achieve this lifestyle in an urban setting.
Why only 50% of my income? Because in doing this, working for one month can cover the next month, working for one year will cover next year, and so on. I cut my working-for-money years in half, and if I invest my savings properly, I can basically live off passive income in under a decade.
2. Always have your antenna out to tune in to money-making opportunities, preferably those that require little or no capital. My favorites so far:
- An acquaintance sold us a piece of land for cheap because he thought it wasn't worth anything. Four years later, that same piece of land is now selling 3000% more than our buying price.
- A friend who wanted to get rid of repossessed motorcycles gave us a 0% annual interest offer on them. We took the bikes, had them rented, and now get recurring rental with no money out.
- A relative had a time deposit maturing. I offered 1% more than the time deposit's rate, which, at that time, was 5-6%. I put the money in an investment giving 20% per year, gave the promised 7%, and pocketed the difference.
- I bought into a hot stock on Monday, which jumped 50% on Tuesday. Not my most recommended way of making money, but it was by far the easiest.
3. When savings get bigger, it gets harder to find ways to invest it. It does lighten the load, though. Instead of looking for investments like the ones above, I can just do the boring but safe thing of putting it in a bank time deposit. Because the money is big enough, the interest is considerable enough. I can even sleep well at night. Eventually, this is where I want my finances to be -- at Sleep Well At Night stage. But I have a feeling I will always be looking for excitement from time to time.
4. When you live on interest, your expenses can actually be even less. No need for a car, gas for the car, and office clothes to go to work. No inventory, employees, or equipment to buy/maintain for a business. Heck, you don't even need life insurance because it is already money and not you who is generating income. And when you do die, there's one less person to divide that passive income by. Passive income is actually a great legacy/gift to leave to your family.
