For many people, the ideal financial future means being able to live off only their residual income (a.k.a passive income or recurring income), in other words, the earnings they receive without having to do any new work.
There are lots of different ways to build residual income (we’ve outlined a few of the main ones here), ranging from investing in real estate to royalties from publishing a book. Below we’ve profiled eight amazing individuals who’ve been able to turn their passive income ideas into consistent, reliable residual income streams and proven that the dream of financial independence is absolutely possible with the right approach and little bit of effort.
1. Pat Flynn
31-year-old Pat Flynn is the unofficial king of passive income. Faced with an impending layoff during the 2008 financial crisis, Pat turned to blogging, a hobby he’d taken up in his free time. Pat tells Forbes that he built an online study guide which sold for $19.99. By the end of the month, Pat had brought in over seven thousand dollars – significantly more than he’d ever earned in a month. Today, Pat has more than 100,000 email subscribers, and his podcast episodes, Smart Passive Income, have been downloaded more than 9.5 million times!
Both on his blog and in his podcast, Pat emphasizes that building a residual income stream is not for the faint of heart and often requires 80+ hour work weeks early on. Once up and running, however, some income streams demand very little maintenance. In fact, one of Pat’s sites only takes about five hours a month to maintain but generates $250,000 a year – you do the math.
2. Mr. 1500
Carl, better known as Mr. 1500, has more than doubled his net worth since starting his blog, 1500 Days to Freedom, in January 2013. While he still is still earning active income as a software developer, Mr. 1500’s goal is to build an investment portfolio of $1 million by 2017 and then retire to live off of his passive income. Since 2013, Mr. 1500 has documented every step of his quest for financial freedom, including full transparency about spending and the value of his investments.
3. David Ning
After two successful careers as an IT manager and the top salesperson at a B2B corporation, David Ning chose to forgo his 9-to-5 routine and build a lifestyle based on residual income from writing and other entrepreneurial efforts. More than seven years later, David runs top personal finance blog MoneyNing, which sees more than 500,000 visitors a month, as well as PF Buzz, a social media site specializing in personal finance.
4. Sam Dogen
Sam Dogen’s primary goal has always been to achieve financial freedom as quickly as possible. From his first job out of college, Sam began planting the seeds for a passive income stream, saving over 50% of his after-tax income to buy rental properties, stocks, bonds, and CDs. In 2009, Sam started personal finance blog Financial Samurai – and three years later, when Sam decided to leave his corporate job to pursue writing full-time, the site was already bringing in $80,000 a year. Today, Sam earns more than $200,000 a year from his passive income streams and will very likely never need to work a day job again.
5. Joe Udo
Joe Udo started Retire By 40 at the age of 38. A software engineer by trade, Joe left his job at Intel after 20+ years to pursue alternative income streams. He wanted to bid farewell to his days in a cubicle and become a stay-at-home dad. More than 3 years later, Joe is still “retired” and his family lives off one paycheck from his wife’s job and passive income from dividend stocks, rental properties, peer-to-peer lending, and other online ventures. Joe has not only lived up to the goal he set in 2010 when he started Retire by 40, he’s also proved that he can maintain the same lifestyle without his engineering income.
6. Mark Ferguson
Focused specifically on earning residual income through real estate and real estate writing, Mark Ferguson owns 16 long-term rental properties and aims to own 100 by January 2023 (in addition to flipping 10-15 homes a year). Mark’s income is a mix of both active and residual though he hopes residual will begin accounting for a larger proportion of his income each year – after five years, he’s been able to create roughly $8,000 of passive income a month.
Mark’s favorite part of owning rental properties is that “they are passive and take almost no work to see consistent income every month. I have a property manager who takes care of the headaches.” However, Mark reminds us that owning rental properties, just like other residual income streams, are best for “the long-term and building slowly… If you can be patient and disciplined, it will pay off in the end.”
7. Robert Farrington
Robert Farrington began to pursue residual income streams because he wanted to move away from a lifestyle where he largely “traded dollars for hours.” As early as high school, Robert started investing savings from his first part time job, starting with about $100. Since then, Robert has continued to invest. Last year, he earned over $10,000 in residual income, primarily through passive real estate investing and his site, The College Investor.
Robert’s goal is to build a passive income portfolio that he’ll soon be able to live off of entirely. He admits that sometimes it’s tough to be disciplined about investing so he’s set up systems to help ensure that he makes smart choices – automatically maxing out his 401(k), IRAs, etc. Robert’s advice for new investors? “Start small. The cool thing with investing today is that it’s low cost and low barrier to entry. You don’t need huge sums of money to start building a passive income.”
8. Kyle Taylor
The name of Kyle Taylor’s site says it all - The Penny Hoarder. Kyle Taylor employs hundreds, if not thousands, of unconventional methods to support himself and grow his savings while, as he puts, “never having to answer to a boss.