The Content Authority is a fantastic content provider that I have been using, in addition to Textbroker, for my outsourcing needs. As I’ve mentioned before, a large part of internet marketing is publishing content, and outsourcing the writing of the content you need is a great way to multiply your efforts.

Writing For The Content Authority

As with Textbroker, you can sign up with TCA to be a writer if you are looking to make some quick cash. You receive topics and articles to be written from the clients that use TCA, and each article will include the specific instructions you need to write the article. You will most likely be asked to write on a wide range of topics, and while you’ll never be required to write on a topic you’re not comfortable with, knowing how to do some quick research online will allow you to write on a wider range of subjects. Learning to do research quickly and becoming able to write a quality article on a topic that is new to you are the core talents you’ll need to develop in order to actually make some money writing articles.

If you are interested in writing for TCA, there are a couple of things that you should know beforehand. First, all of the writing that you’ll be doing will be in English, so you’ll need to have a very good command of English grammar, spelling and punctuation. You don’t have to be a native English speaker, but a high level of fluency is to be desired. You’ll also need to be comfortable working on a deadline (48 hours seems to be the regular turn-around time for their articles). You can find the TCA writer’s application at their website, if you are interested in writing for them. The application is not super complicated, and you could probably complete it in 20 minutes or so.

Using The Content Authority For Content

I’ve used TCA several times over the past few months and have always been very impressed with their service. I’ve gotten to know two of the guys behind TCA, Shawn and Draanor, through the Keyword Academy, and they are both very focused on providing top quality content for their clients. As of writing this post, I’ve ordered over 80 different articles from TCA, and I’ve only had to send 1 back for revision. That’s a pretty good track record.

The main thing that sets TCA apart from Textbroker, from my perspective as a content publisher, is that Textbroker is more of a freelance marketplace, where clients post articles that they want written, and the writers can pick and choose which articles they want to write. This means that you might get super quick turnaround on your articles, if they are on a popular topic and get chosen quickly, but it can also mean that your article never gets picked for completion. I’ve ended up writing at least a few articles myself that I had originally posted at Textbroker.

TCA works a bit differently than that. As far as I can tell, TCA sends out the article orders it receives in the order that it received them, and their writers are required to finish the articles that they are sent. From my perspective, this means that your orders are guaranteed to be completed, but it also means that you have to wait your turn in line – and if the person just in front of you put in a large order, that line can be quite long.

All quibbles aside though, The Content Authority is a great place if you want to write for money, or get good quality content written for you. Definitely check them out.

In this post (and possibly the next couple as well) I want to take a look at the reality of making money online and discuss how it’s different from what most people think. We’ll also talk about what you should know if you are interested in making money online, and what you should look into before you start.

Why Make Money Online?

To start off, let’s talk about why the Internet is such a great opportunity for people who are interested in making some money on their own. I can sum it up in four points.

Little to no money required – You can start up a website for under $20, or even for free if you want to. If you wanted to start up a traditional business, you’re going to have a significant amount of expenses before you can really get going – start up costs, legal fees, office space, employees, advertising, etc. But you can start putting up a website right after breakfast and be done by lunch.

Easy access – Just about everyone has access to the Internet. All you need is a computer and a phone line, and if you can’t get those on your own, your public library will probably let you use theirs for free.

Huge audience – According to the latest data, there are now more than 1.7 billion people online across the world. That is a staggeringly huge potential audience for your website. If you could get your product, service or ad in front of one-half of one percent of those people, you could be extremely wealthy.

And lastly, the number one reason that the Internet is so great is that it make it easy to establish passive income systems. If you set up a website and then go eat a sandwich, the website doesn’t stop working while you’re eating. No matter what you’re doing – sleeping, playing, working, whatever – your website is still working to generate traffic. That’s an incredibly powerful tool for your business that you should not pass up.

So How Do You Make Money Online?

There are several ways to go about making money online (far too many to sum up in one article) but let’s talk today about the most popular method. It’s actually fairly simple in theory, and it goes a little something like this: You make a website, people come visit your website, and then you sell them something. In this regard, having a website really isn’t that much different than running a traditional, brick and mortar business. Not everyone that comes by will buy your product or services, but if you get enough people coming in you’re going to start making sales. Let’s take a look at each of those three steps in greater detail.

Make a website – This step is really much easier than people usually think it’s going to be. You can set up a simple website using free tools available online in just a few hours. If you want to own your website, you’ll need to purchase a domain, get a hosting plan and then get some content up on it (use WordPress for getting content on your site). You can also go the free route and get a website up with Blogger or another similar service, but you won’t own your site. It’s probably better to spend $10 or $20 and get your own site set up.

Get traffic – There are several options for getting traffic to your website. You can pay for it (using Adwords or another ad network), you can use social media (such as Stumbleupon or Digg) or you can to try increase your visibility in Google and other search engines. If you are trying to make money from your website, the best traffic generating method, by far, is to rank as high in the search engines as you possibly can for your niche.

Sell them something – As with generating traffic, you have several options for monetizing your website. The quickest and easiest solution is to use Google Adsense on your site. You can also sell someone else’s product (called affiliate sales) or sell your own product directly. Adsense is a popular choice for many webmasters, but it may not provide the best long-term solution for monetization.

There’s a quick intro to making money online. I think I’ll explore this topic more fully in my next few posts.

Go to the extreme. Selling your unused household goods in a yard sale has got to be the most frequently given advice for how to come up with a few bucks quickly. It’s on everybody’s top ten list. The average, run of the mill yard sale will probably net you a few hundred dollars. In the grand scheme of things, a few hundred dollars is not going to make much of a difference to anything.

However, if you were to sell everything in your house that was not an absolute need then you could effect quite a dramatic change in your circumstances. First of all, you could raise quite a bit of money, particularly if you take the time to sell items on Ebay, Craigslist, and through the classifieds. You would also find that you have a lot more time and energy to devote to your money making ideas once you’ve sold your TV. With fewer household goods you will also be able to be more flexible in your living arrangements. You won’t need as much square footage; you’ll feel more free to move because you won’t have that much to move. In other words, you’ll find a lot more freedom in your life.

Be the best. You may have thought that your babysitting days were over after you graduated from college, but you can actually earn a lot of extra money with this job at any time in your life. Most child sitters earn approximately $10/hr and get new jobs through word of mouth recommendations. You can do much better than that though.

If you pursue this idea with all of your energy and ingenuity then you can get more sitting jobs than the average competitor and earn a higher rate per hour. First, be the best sitter that your employer has ever used. If you’re sitting for children, then bring toys for the children to play with, teach the kids new games, clean the house when the kids are in bed. Do everything that you can think to do to give the kids a good time and make your employers return home as pleasant as possible. Then, give your employer several of your business cards so that she can refer you to others. Also give your cards to friends and family members. Post your availability on Facebook and Twitter. Post colorful ads on community bulletin boards. Get your name in front of people as much as possible, and then when they call be ready to give them references from people that will tell them what a wonderful sitter you are. If you follow these suggestions and any others that you can think of, you will have lots of sitting jobs and and can charge a higher rate per hour because you are providing so much value.

Be smart. You may have heard blogging touted as a great way to make money. There are definitely some bloggers that are able to make a living through their blogging. But you can also follow their advice and spend two years creating a great blog that only makes $50 a month. It’s very discouraging to spend so much time and energy on a project and never get any fruit from it.

I’ve done this exact thing. I spent tons of time and money building up the readership for my gluten free recipes blog, creating a community, and building my “name authority”. Once I’d done this I attempted to monetize the site by selling a product, and ended up spending a thousand dollars of saved earnings on a business that ultimately failed.

After this we finally took a class that taught us how to bring traffic to a blog and actually make money from it. Knowledge was the key. We were then able to take my existing blog and increase the earnings by 600% in just a few months. This same concept could apply to any money making idea. If you go into it without knowledge and understanding then you are likely to lose your shirt. You also need to be careful who’s advice you follow. You don’t want to ask a life-long employee for advice on how to start a business. They’ll likely tell you it’s impossible. Instead, look for people who have already done what you’re trying to do, and follow their advice.

Open your mind. If you’re suffering from a lack of financial abundance then you may have trouble believing that you can actually make lots of money. However, believing that you can do it is the first step. If you don’t believe that you can do something, then you definitely can’t. Remember the Little Train that could? In order to get yourself in the right mindset, check your local library for books on how to become a millionaire. You may not end up following many of the authors’ suggestions, but it is always interesting reading and can be very encouraging and mind-stretching. One particular book that I would recommend is Jack Canfield’s Success Principles. You can also get a list of recommended personal development books from Steve Pavlina’s site.

Build your Skills. If you’re in the midst of a long job search, there are many more productive things that you can do besides sending in hundreds of resumes and working part-time jobs that have no relevance to your desired career. For example, the twins featured in this New York Times article should focus on finding ways to be journalists even though they aren’t employed as journalists yet. A year’s portfolio of articles, blog posts, and newsletters that they had written would set them ahead of their competition who have all probably been working as waitresses for the past year.

If you work in a field that isn’t a good fit for freelance type work, look for opportunities to work for free. You may have to do other paid work at the same time to make ends meet, but be proactive and find ways to keep current and in practice with what you do. Working for free will show future employers how dedicated you are to your profession or craft. Think creatively and find ways to do your work even when the job opportunities seem few and far between.

In the end, you can make money. And you can make more money than you have in the past if you pursue your goal with all the smarts, guts, and energy that you have. Make your money making goal your primary focus until it is time to move on to something else. If you suffer setbacks, do not be discouraged. Learn from it, and then try something else. It will be worth it. I promise.

Textbroker is a fantastic website that offers ghostwriting services to anyone needing an article, blog post, or term paper written quickly. (Please note that I just mention term papers as an example. I am not suggesting that you hire Textbroker to do your homework for you, thereby freeing up your time for more fun and/or important things. That would probably be against the rules. It definitely would be if you got caught.)

There are plenty of websites out there that let you hire someone to do your writing for you, but Textbroker is unique in that it allows you to sign up as a client, to get writing done, or as an author, to write for other people. Both services are great, but being able to sign up as an author is especially handy if you are looking to make money online fast.

How It Works

I’ve used Textbroker numerous times to have articles written for me and I’ve nearly always been pleased with the results I’ve gotten from the Textbroker writers. Here’s how the system works.

Pricing for Textbroker articles is per word, and there are 4 different price/quality levels:

• 2 Star (Legible) – $1.00 per 100 words
• 3 Star (Average) – $1.40 per 100 words
• 4 Star (Excellent) – $2.00 per 100 words
• 5 Star (Professional) – $6.70 per 100 words

Let’s say I need a 500 word article written on the subject of socket wrenches for a new website that I’m working on. I generally go with the 3 star service for content that I put on my websites, so I would be looking at a cost of $7 for that article (500 words x $1.40 per 100 = $7). To get the article written, I would log into my account at Textbroker, and give them the information on the article – the desired length, the article keyword (socket wrenches), the quality level, the deadline for delivery, and anything else that I want in the article.

Textbroker then takes the information I’ve given them for the article, and posts it in their article database for authors. Every author that is signed up with Textbroker can search this database for articles that they want to write. Authors can search for specific keywords, to look for articles that they have some expertise on, or they can browse by topic or category. When an author finds an article they are interested in writing, they can get additional information on it such as the deadline for delivery, the desired quality level, and any special requests the client has.

Once an author selects an article to write, the clock starts ticking on the deadline set by the client. You obviously only want to select articles that you know you can fulfill by the deadline. You don’t have to only write on topics that you have expertise in – you can research new and unfamiliar topics and keywords easily on the Web – but make sure to set aside time for research if you are going to write on a new topic for the first time.

When you have the article written, you submit it to the client via the Textbroker website, and the client is able to review the article before he releases payment. If the article is not up to the client’s standards, he can request that it be revised. If the client is happy with it, then he accepts the article and releases payment.

How To Make Money Fast With Textbroker

Now that you know how the system works, let’s look at what sort of strategies you should have if you’re going to try and make some fast money with Textbroker. Firstly, to make any money at all with Textbroker, you have to be in their system and be registered with them as an author. This process can take a couple of weeks to complete, so if you like the idea of making money by writing articles for clients, then go ahead and sign up with them.

The next thing to know is that there are going to be far more short, low quality articles (SLQA’s) available to be written than long, high quality articles. This is true for a couple of reasons: number one, internet marketers (the largest segment of Textbroker’s client base) outsource far more SLQA’s than they do long, high quality articles (I’m not going to get into the why of that here; just trust me, it’s true), and number two, the few long, high quality articles that do make it into the Textbroker article database are going to be highly contested and snapped up quickly.

Your best bet, if you’re looking to make some money quickly, is to write as many short, 2 star articles as you possibly can. You’re going to be making about $2 to $3 per article, so you may initially feel like you’re not seeing much in the way of results, but all of those articles will add up.

As an internet marketer, I outsource lots and lots of these SLQA’s via Textbroker, and here’s why you should focus on these articles: the quality of the article I get back doesn’t matter to me one bit. Here’s what I’m looking for: 1) unique, original content (i.e., not copied from some other source), 2) quick delivery, and 3) an article of the length that I specified. That’s it. When I get articles like these back from Textbroker, as long as those three rules have been followed, I immediately accept the article and release payment.

To give you an idea of how many SLQA’s you can complete in an hour, I wrote one myself this morning that I needed too quickly to be processed through Textbroker, and it took me all of 7 minutes. It was even a topic that I’m not incredibly familiar with. You could conceivably write 8 to 12 of these articles an hour, which works out to an hourly wage of $16 to $24. Not too bad for part time work.

Other Benefits of Textbroker

Besides the opportunity to make fast money online, Textbroker also lets you build a client base over time, and form relationships with clients that like your work and want to hire you directly. This can lead to some exciting things, not the least of which could be a full or part time business that you can run from home.

1) Do you value financial stability? Income from jobs tends to be steady. You get paid the same amount twice each month and then once a year, you get a raise if all is going well. Income from other money-making systems tends to vary. It may go up and down each month. However, it might also go up every month.

If you freak out at the thought of not knowing how much money will be deposited into your checking account next month, then you should probably choose to make money as an employee. However, if you are excited about the possibility of your income going up each month, and are comfortable that you can still make your finances work if your income dips, then you should consider other ways to make money.

2) Do you value freedom? Some people hate to be tied down. Whether it’s staying in the same city or having to be somewhere at a certain time, the lack of freedom grates on their nerves every day. These people should not have a job; or at least not a typical job where you don’t get paid unless you do certain tasks in certain places at certain times.

If you are one of these people, then you need to find a way to make passive income. Money-making systems that create passive income work for you while you’re doing other things. That way you are free to go anywhere at any time without disrupting your business. You still have to do work, but since you own the system you can decide when and where that work is done.

3) Do you want to be the boss? I know some people who really do just want to go to work every day, do a particular job or task, and collect their paycheck. They thrive on the accountability that a job provides. And they like that they can just “do their job”. They like that they are not responsible for making the decisions for the whole business. If this sounds like you, then you should choose to make money as an employee

Others would rather rub their skin with sandpaper than have to deal with a boss that checks to see if you’ve done your work, asks how you did the work, and tells you what to do next. These people need to find some other way to make money or they will grind their teeth to nubs before they are forty. Now don’t get me wrong, other systems of making money require work. There’s just no one telling you what to do and when to do it except you.

4) Do you have a pre-existing health condition? Unfortunately in our country, you have to be extremely healthy to get health insurance as individual. Even if you’re just receiving maintenance care (e.g., seeing a chiropractor) to prevent big problems down the road, you will probably not qualify for affordable health insurance except through an employee group plan. In this case, you may have to suck it up and work as an employee until you are creating enough income through other sources to be able to self-insure or buy very expensive coverage.

5) Are you living the life that you want to live? This is the most important questions of the five, so take a few minutes to really think about this one. What would your daily life look like if you didn’t have to consider finances? Would you still choose to go to your job every workday? Or would you stay at home and play with your children? Would you write a book, or start a business? Would you stay up late every night and sleep till 10?

Now, is there a away that you can achieve the life that you want while funding that life through a job? It doesn’t have to be the job that you have now. It could be any job that you can think of.

If you can’t live the life that you want to live while working in your current job, then it’s time to leave. Based on how you answered the first four questions, you may need to find another job. Or, you may need to find other ways to make money. Either way, don’t hesitate to live the life that you want to live. Don’t fear the changes that you’ll have to make. You only get to live each moment once. Make the most of each one that you’re given.

The only thing that I didn’t like about Office Space is the message about work that it ultimately sends. At the end of the movie, the main character decides that he’s never going to enjoy his job, so the important thing is to find something else in his life that makes going to a job he doesn’t enjoy bearable. And although this is painted as very happy and respectful in the movie, I disagree with the message. It strikes me as a cop-out. What that message ultimately says is that mediocrity in one area of our life is OK so long as another area balances it out.

I’m not going to get into a rant about how society teaches that mediocrity is acceptable – not today, anyway – but let’s spend some time examining the the idea that it’s hopeless to try and find the perfect job. I think the underlying belief here is one that says A) the perfect job does not exist, and B) even if it does, you’ll never be able to find it.

So let’s discuss. What is the perfect job? Does it exist? Can you find it?

The Perfect Job

I think there are three criteria that would determine the perfect job: money, enjoyment and fulfillment. Any job that you have is going to provide you with varying amounts of each, but the perfect job will provide you with all three. Let’s look at each in turn.

Money – The perfect job absolutely has to provide you with a significant amount of money. The specific amount will vary from person to person, but it has to be enough to allow you to live the lifestyle that you want. If you constantly worry about money, think about what you would do if you had more of it, or are forced to borrow money in order to do the things you want, then your job fails in this area.

Enjoyment – This one is pretty easy to understand. Do you enjoy the day-to-day activities of your job? Do you like going in to work? Do you enjoy talking to others about what you do? Are you constantly thinking about new things to try at work and thinking up other things you can improve on? If so, then you enjoy your job. You pretty much know whether your job meets this criterion without having to think about it too much. If you don’t enjoy your job, you know it. Even if perhaps you won’t admit it, deep down you know that there’s something better out there.

Fulfillment – Fulfillment is somewhat related to enjoyment, but it goes much deeper than the superficial feeling of having fun. Fulfillment is when you know that you are doing the work that you were put on the Earth to accomplish. This is definitely the most rare of the three criteria to find in a job. I would say that most people have no concept of being fulfilled in their jobs and some probably don’t ever think about being fulfilled at all. I would also go so far as to say that fulfillment has to come from helping other people in some way. I don’t think you can be fulfilled in any job where you focus solely on your own goals.

Job Situations

So what does all this mean? Let’s discuss some potential job situations where you have some combination of the three criteria, and see what you would need to do to improve your situation and possibly find your perfect job. The first thing to note is that if your current job only meets one of the three criteria for you, it will probably be quicker and easier to find a new job. And to be perfectly honest, if you think your job only meets one of the three criteria, chances are good that it really doesn’t have any of them.

Too Good Of A Person
Money – No; Enjoyment – Yes; Fulfillment – Yes

If you enjoy your job and are truly fulfilled by the work that you do, but aren’t making enough money, you definitely have a real problem on your hands. Your choices are pretty simple, I think: find a way to keep doing what you’re doing but for more money (for example, moving to a new position or a new company), or keep your current job and start up a business on the side. Starting your own thing on the side definitely has much greater long term potential than just getting a new job, but it’s also much more involved.

People sometimes feel self-conscious about saying they need more money, but there’s no need to feel that way. Money is simply something that you have to have in our society. If you leave a job for another position that pays more, you should be proud of making a positive change in your life.

Needs An Assistant
Money – Yes; Enjoyment – No; Fulfillment – Yes

This is sort of a tricky job situation, as there are not many people who are fulfilled in their job but don’t enjoy it. I could see it happening, however, with someone who starts a business they believe in, and the business grows, and as it does their responsibilities change. Instead of being able to focus on the core aspects of the business – the things they loved; the reasons they started the business – they’re now forced to deal with employees, clients, salaries, benefits, time sheets, schedules, sick days and layoffs.

If this description fits your job, then you need to delegate or outsource all of the non-essential things that are taking up your valuable time. If you’re familiar with Covey’s 7 Habits, you need to refocus on the Quadrant 2 items instead of spending your time on Quadrant 3 things. Doing this will allow you to start spending your time again on the things that you both enjoy and are fulfilled by, and this will help your company grow even more.

The Puzzler
Money – Yes; Enjoyment – Yes; Fulfillment – No

This job situation is one of the more difficult problems to have. If you are making good money and enjoy your job, a lot of people would say that you’ve found the perfect job and you shouldn’t ever even consider leaving. I think there’s something more to it though. I think if you spend your time helping other people, helping them improve some small aspect of their lives, you’ll feel a little bit better when you go home for the day than you would if you just sat in an office making money.

Conclusion

I hope you’ve found this look at jobs and work helpful. I think the most important thing to take from it is that you are never permanently tied down in a job situation. Even if you’ve been in a career for years and years and can’t see any way of improving your situation, you can always start taking small steps towards your goal, whether it’s making more money, enjoying your work or working to find fulfillment.

This article was selected to appear in the Carnival of Personal Finance. Check out the rest of the entries at SimplyForties.

Earned vs. Passive Income

Most people make money by trading their time for a salary. You work 40 hours a week, and your employer gives you a paycheck a couple of times each month. It’s a pretty simple deal. You come in and work, and you get paid. Stop coming into work, and you stop getting paid. This is called earned income. The amount you get paid is directly related to the amount that you work. (There are always some exceptions to this rule. For instance, vacation and paid leave allow you to not work and still get paid, but the rule still stands. If you stop going into work, you will stop getting paid.)

Passive income (or its cousin, residual income) is different from earned income in that it doesn’t require you to trade your time directly for money. Passive income is generated by systems that earn money constantly, regardless of whether you are working on that system or not.

When most people first hear about passive income, a lot of these terms don’t really make sense. “What exactly do you mean by a “system”? “How does it earn me money when I’m not working on it?” Let’s take a deeper look at some passive income systems and exactly how they generate income.

Passive Income Systems

A passive income system is simply any business, job, or property (physical, intellectual or otherwise) that continues to produce income for you even when you are not working on it. Here are some examples.

Investments – Probably the most “pure” example of passive income is having a large amount of money invested in the stock market, and living off of the interest generated by your investments. This leaves the principal free to be reinvested, generate more income, and the cycle repeats itself. Unfortunately, this option needs large sums of money to make it work, so unless you are already independently wealthy this is not really an option.

Owning a Business – Owning a business can be a great source of passive income. Hire a manager to take care of the day-to-day operations, and your business will generate income even when you’re not there to run it. You can even start a franchise – such as a fast food restaurant, shipping store or janitorial service – and you won’t have to come up with the basic idea or business plan by yourself.

Rental Properties – Have you ever rented a house or apartment? Did you notice how your rent was due every month, regardless of how often you saw the landlord? That sounds suspiciously like passive income. If you own the property, your tenants pay their rent on a regular basis, whether you are there working on the house or not.

Running a Website – Running/owning a website or blog is another great source of passive income. Once you have a decent amount of traffic coming in, there are several methods of monetizing the site: putting up advertisements, charging for content, selling a product, etc. The point being, readers/users are still coming to the site even when you’re asleep, thereby helping you make money.

The common factor in all of these systems is that your time is not tied together with the amount you get paid. This is unfortunate at the beginning because you’ll be working long hours for very little pay. But after while, if you keep at it, your income will start to increase. At some point your income will be roughly approximate to what you would expect to get paid in a similar salaried position. At that time you can decide whether to invest more of your time into your business to increase your salary even higher, or whether you want to lower your hours to spend time on other projects.

Maintenance

There’s one other thing to mention on this topic and that is the maintenance you’ll need to do on these systems. No matter what sort of system you set up or how well it’s done, you’ll always have to spend some amount of time maintaining the system to keep it going. If you have several million dollars in the stock market, you (or your financial advisor) will have to keep an eye on how your investments are doing to make sure you’re still making money. If you own rental houses and you never maintain them, before too long the roofs are going to be full of holes, the gardens will be full of weeds and you won’t be able to find anyone to rent them from you.

Don’t confuse maintenance with being tied to the clock like a real job. You still get to choose when to work on your business(es), you get to choose whether to do the work yourself or pay someone else to do it, you get to decide what needs to be done about problems that arise, etc. You’re still in charge.

So what other passive income systems are there? I always love hearing about how other people are using some creativity to make money. Let me know in the comments if I’ve missed any.

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This is Part Two in my series on passive income. Check out the other parts below.

1) All Income Is Not Equal
2) Using Passive Income Systems To Make Money

While making money as an employee is a good option for many people, most of us (including myself) never made a conscious decision to make money from employment. We just fell into it by default. And that’s the problem. If you’ve never evaluated the benefits and risks of being an employee and compared them to the risks and benefits of other ways to make money, then you may have set yourself up for some avoidable displeasure.

In this post, we’ll begin to step back and take a fair look at employment. First we’ll discuss the basics of the system and then we’ll look at some pros and cons of employment. We’re also going to introduce some criteria that we’ll use to evaluate any income system, whether it’s being an employee, making money online, or investing your money. The criteria we use to evaluate income systems are as follows: The Asset – what exactly it is that is making money in this system; The Cash Inflows – specifically how income is received from this system; The Taxes – how the system and the income it generates are taxed; The Cash Outflows – the expenses and debts created by the system; and lastly, System Control – who exactly controls and runs the system.

Looking at these criteria allow us to systematically examine any method of making money and determine what the pros and cons of that system are. Let’s now take a look at employment as a system for making money.

The Asset:

All systems of making money fall into one of two categories:

1)trading the use of an asset for money, or
2)creating or adding value to an asset that you then sell.

Employment falls into the former category since you are the asset that is being traded for money.

Think about that for a minute. Does that seem a bit Orwellian to you? “You are the asset that is being traded for money.” If you strip away all of the emotional and human aspects of your job and just look at it from a financial standpoint, that’s exactly what is happening. Or, if we want to be more specific, your time is the asset being traded for money. You go to work, give eight hours of your life to your boss, and he or she pays you a salary. If you stop giving him your time, he stops giving you his money.

The Cash Inflows:

Typically an employee agrees to perform specified tasks or meet certain goals in exchange for cash pay and non-cash benefits. Wages are generally received on a weekly, biweekly or semi-monthly schedule. Benefits may include paid vacation, paid sick-days, subsidized health and life insurance, and training.

The Taxes:

Wages from employment are generally subject to federal, state, and local income taxes as well as payroll taxes (FICA and Medicare). These taxes are withheld from each paycheck so there is minimal opportunity for tax planning or tax deferral. This is important to note since taxes on wages are generally higher than on other forms of income.

For example, if I were making $400,000 a year (I’m not yet) then I would pay tax at the following rates:

Federal: 35% of taxable income
State: 5% of taxable income
County: 1% of gross wages
City: 0.5% of gross wages
Payroll: 7.65 of gross wages

That’s a total of 49.15%. So for every additional dollar earned I only get to keep 51 cents. However, if that additional dollar of income came from a rental property then I could keep 60 cents. And if the additional dollar came from a capital investment in a business then I could keep 80 cents.

Cash Outflows

Working as an employee also causes you to incur expenses. You will probably have automobile expenses due to a commute, and could possibly even need to purchase an additional vehicle. On top of that, additional costs for clothing, medical treatments, food, and insurance should be expected.

System Control

When you work as an employee, the system that is generating your money (the business that you work for) is going to be owned and controlled by one of several people – it might be your boss, it might be a group of partners (such as a law firm) or, in a large company, it might be the shareholders. The important thing to note here is that in all of these situations, the system is not controlled by you. You will generally have little to no say in the operation of the business, the clients it takes, or how much money it makes.

This is part one of our look at employment as a system to make money. Hopefully this has helped you think about having a typical job in a new light. In our next post, we’ll examine employment further and see when it’s a good idea to have a job and when it’s not such a good idea.

One of the neat things about Fable is the ability to play either a good or an evil character. Good characters perform civic duties, protect citizens against bandits, support their families, and generally don’t break the law. Evil characters rob people, kill indiscriminately, take what they want from shops and stores, and wreak havoc on society in general.

As fun as all of that is, there is one thing illustrated very well in Fable that is a valuable insight to helping you make money. Several times in the game, you are forced to choose between morality and money. For instance, you may be hired by the city guards to go rescue some villagers that have been kidnapped by bandits. When you get to the bandit camp to free them, you find that the bandits will offer you more money than the guards are paying you to let them keep the villagers as slaves. So you’re faced with the dilemma of whether to do the “right” thing and and free the villagers, or take the money and let the bandits do as they wish.

There are several other examples of this in the game. If a shopkeeper has a fancy new sword that you want, but you don’t want to pay the full amount for it, you can threaten him to get a better price. If he doesn’t drop it low enough, you can even kill him and get a much better rate from the new shopkeeper that takes his place (who is inexplicably rather terrified of you). In another instance, you can buy properties in the game and rent them out to tenants. Raising the rent means more money, but it counts as an evil act as you are unduly burdening the townspeople.

So what does this have to do with learning to make money?

Here is the single most important thing you can ever learn about creating wealth: Your beliefs about money determine whether you will ever become wealthy or just be average. In fact, it’s bigger than that. Your beliefs about money determine your entire financial reality.

What does that mean exactly? Whether you realize it or not, your beliefs determine the large majority of your thoughts and actions. Have you ever put your keys down on a desk and worried that they would float away? Of course not. Your belief in gravity is unshakable. Do you believe that the only way to make money is to have a job and work for someone else? Then you will never investigate or seek out other opportunities for creating income.

Here’s where this ties into the examples from the videogame. If you believe that you are generally a good person (and nearly everyone does), and yet, deep down, you believe that money is evil, you will never create any sort of real, lasting wealth in your life. If you believe this sort of thing, then whether overtly or subconsciously, you will repel wealth and the things you need to create it – the people, the things, the knowledge – from your life, instead of attracting them to you. Why would a good person need or want something evil?

Let’s look at some negative beliefs you can have about money. Maybe you don’t quite believe that money itself is evil, but you might believe that, in order to make money, you will have to engage in activities that are morally shady or that violate your values. Do you believe that you’ll have to sell out or change who you are to make money? If you meet a wealthy person, do you assume that they will be stuck-up or arrogant? Do you assume that the wealthy acquired their money by exploitation and dishonest means? Do you identify with Robin Hood, who stole from the rich and gave to the poor, or do you see him as a thief who took what was not his and gave it to those who had not earned it?

The more you consider your beliefs about wealth, the more you will probably realize that you do have negative beliefs about it. That’s OK for now. Don’t try and change everything at once, just try and identify the beliefs as you come across them.

We were pretty proud of cash flow that we had created, but our friend was clearly surprised that the amount was so low. Why be excited about something that makes you only $20 or $30 a month? The answer lies in the difference between earned and passive income. Let’s take a look at that difference, and see why even small amounts of passive income can be so great.

Income

Let’s say I got a job that paid me $1,000 a month. Is that a good or bad job? Most of you probably said it’s a bad job. However, the astute (and amazingly polite) among you said “I need more information before I can answer that question, please, sir.” And you’re right, you do need more information before you can answer.

As it happens, the job I just got pays me $1,000 a month in exchange for 40 hours of work each week. It’s a typical full time job. So is it a good job or a bad job? Well, it’s not too good. Work a full time job for an annual salary of $12,000? No, thanks.

But now let’s say that the job only requires 20 hours per week. The income has stayed the same, but now the job is a bit better. I could get two of these jobs, work 40 hours a week, and double my yearly income to $24,000. Things are looking up a bit, right?

Now let’s say that the job only requires 8 hours of work each week, and your time will be spent testing the comfort levels of various hammocks while on a beach in the Caribbean. Now, that’s a job! You could get 5 of those gigs, spend all your time on the beach, and make $60,000 a year. Not too shabby.

But as good as all of this sounds, there’s still one problem with each of these jobs. They all require you to trade your time for money. Your earnings potential is capped at the amount of time you have available to spend on the job. If you want to take some time off, if you want to scale back your hours to spend more time with your family, or if you leave for a new job, your income is going to decline. Ultimately, if you quit working altogether, your income will stop completely. I’ve yet to hear of a job where they’ll pay you to *not* work.

Talking about income and work in this way probably sounds a bit silly to most people. Of course you have to work to get paid! It’s as basic a fact as saying that the sky is blue or that sticking your finger in a light socket is bad. But the truth of the matter is, this is not the only way to make money. In fact, this is not even the best way to make money. To be perfectly honest, it’s just about the worst way to make money!

Passive Income

Just about anyone who has access to CNBC or the financial section of a newspaper has probably heard about passive income. But let’s take a minute to discuss exactly what it is.

Passive income (and I’m using a practical, working definition of it; not the official accounting definition) is simply income that you earn while you are not working. Or, to be more specific, it’s income from a system or project that is earned even when you are not working directly on that system or project. It is differentiated from earned income, which requires you to be working directly to generate money.

I’m not going to delve too deeply into passive income systems today, but I do want to talk about why passive income is so great. Remember the website up above? Let’s say that it makes $25 each month, with little to no attention from Mary. That means her website is earning her money when she’s watching TV, asleep, feeding the baby or whatever else she wants to do. It also means – and this is the important point – that her website will continue to plug along and make money even when Mary decides to start up a new website. And in a few months, that new website is making $25 a month. And so she starts up another one, and another one, and another one. Before long she’s got a couple hundred coming in each month (or more) and it’s all passive income.

Do you see why we were excited about making $20 from her website now? We’ve since gone on to start several new websites, and her gluten free site is still plugging along for us. That’s the power of creating passive income systems. Instead of being limited by the amount of time you want to spend actively working, you’re only limited by the number of systems you want to create. Right now, my goal is 20 different systems. When I hit that goal, I’ll probably shoot for 50. Why just have one job?

If all of this is too much to digest at once (or if it totally blows your mind), don’t worry. It’s a big paradigm shift, and it can take some time to sink in fully. In some future posts we’ll explore passive income and the systems that produce it more fully, but for now, just give some thought to the strength of passive income and what it could mean to you.

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This is Part One in my series on passive income. Check out the other parts below.

1) All Income Is Not Equal
2) Using Passive Income Systems To Make Money