We sat down with residual income maven Trent Hamm to talk about his experience building a regular stream of passive income.
Trent started personal finance site The Simple Dollar in 2006 after going through a “complete financial meltdown.” Within eight months Trent was able to pay off of all his credit card and car debt, as well as establish an emergency fund.
1. Why did you start The Simple Dollar?
In 2006, I was struggling with my own financial issues. My family was in a lot of debt - car loans, student loans, credit card debts - and we were struggling to keep the bills paid. I have always figured out my problems most effectively when I brainstorm on paper and write out solutions. As I worked through many of my personal finance issues, it occurred to me that sharing this advice might be useful for others. Thus, The Simple Dollar was born.
2. What is your #1 piece of financial advice for a new investor?
Spend less than you earn, every week, every month, every year.
3. How much is pursuing passive income a part of your overall portfolio strategy?
My passive income mostly comes from initial investments of my own time and effort rather than my own money. I write ebooks and create Youtube videos and do some promotion of them around their release date. Any additional promotion that I do is mostly “groundwork” for my next release - once a new ebook or video is released, I view it as being a passive stream at that point and I move on to building the next one.
4. How has your passive income grown over time?
It grows slowly but steadily. I find that it is like a snowball rolling down a mountain, starting small but constantly increasing in size. The projects I work on gradually build a fanbase over time, and new people that join that fanbase often “discover” all of the old items that I’ve produced, which is where the passive income comes from.
I can invest more time in new content at my own discretion if I want to build a new stream, but the things I’ve already built keep generating a pretty steady income on their own. I keep creating new things because I enjoy doing so.
5. What’s been the hardest part?
Finding the free time in a busy life to launch new things.
6. What are “money free weekends”?
It’s simply a pledge to avoid spending any money over the course of a weekend and live on what you have on hand for food, entertainment, and anything else. During a money-free weekend, the only “spending” we do is to use services we already pay for. We don’t go out to eat. We don’t go out for entertainment or buy any new entertainment. We don’t even drive the car, as that uses fuel. The goal is to reinforce that we usually have everything we need on hand.