Different kinds of Income?

Okay Ladies and Gentlemen. Let’s get on track to begin building wealth. As I hope that all of you realize, you will NeveR get rich off of your day job. Now, I’m not saying that through disciplined saving and investing you may not retire wealthy, but a salary will never make you wealthy on its own.
So in this post we’ll be covering Active Income and Passive Income.
We’ll go over what each of these are and a few ideas as to how to increase generating each of them. Then in the days and weeks to come we’ll go through investing techniques, etc.

So, your Active Income is any income that you exchange work or time on a regular basis for money. Examples of this would be working 40 hours a week at Walmart as a Cashier for a preset salary of $7.00 an hour.
Your Passive Income is any income that does not require work and time on a regular basis, yet still continually feeds your income. An example of Passive income can be anything from interest yielded from a bank account or mutual fund to a small business that “practically runs itself”. We’ll get into more examples soon.
We run into a few problems with these definitions, and in all honesty you will need to define for yourself what each of your income streams should be classified as.

After analyzing your income streams, if you’re as novice as I often find myself to be, I’m sure that you’ll find two things. 1. I only have three(or fewer) seperate income streams. and 2. Almost all of my income is active.

So how can we go about increasing Active Income? This is a much simpler sector of your income to grow than your passive income. You can go about doing this by getting a new job, starting a new business, or investing in the stock market. Why do I include investing in the stock market in Active Income? What work does that involve? We’ll get further into that in the days and weeks to come, but according to Jim Cramer (a stock Guru) you should be spending a minimum of one hour per week per stock you own. Definitely active in my book.
So a few very simple Active Income Ideas:
1. Get a second or third job
2. Start a small fundraising business
3. Start selling cold water bottles at large outdoor events (braves game, etc.)

How can we increase Passive Income? This becomes a bit more difficult, only because it takes more creativity. Passive income, in my book, is really the American Dream. Earning money with little to no work. This includes things like mututal fund yields, bank account interest, a guy who is afraid of you and pays you $40 a week not to beat him up (this is a financial idea, not a moral one….).
So then what are some realistic ideas to increase my Passive Income?
1. Start a blog and sell advertising on it with Google Adsense or others (this blog has no ads).
2. Invest in Mutual Funds or Index Funds (we’ll get more details on these later)
3. Purchase real estate and rent it.

You will never truly begin to accumulate wealth until you’ve increased your Passive Income. This is how the rich get richer. The ideas on here are decent, but excellent ones are to be made by the entreprenuer(you) themself. Thats how you get rich — Passive income is an idea game, so get started! I’ll share more as time goes on- Feel free to comment with your thoughts on this entry or with your own ideas!

Maranatha!
–Michael