{"id":376,"date":"2021-08-23T12:00:00","date_gmt":"2021-08-23T12:00:00","guid":{"rendered":"https:\/\/moneywithkatie.com\/realizations-about-how-to-increase-your-income\/"},"modified":"2025-09-05T16:58:19","modified_gmt":"2025-09-05T16:58:19","slug":"realizations-about-how-to-increase-your-income","status":"publish","type":"post","link":"https:\/\/moneywithkatie.com\/realizations-about-how-to-increase-your-income\/","title":{"rendered":"The Truth about Passive Income"},"content":{"rendered":"
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If there were one overwhelming theme that characterizes the online personal finance space, it\u2019d be passive income. <\/p>\n

I see it constantly: <\/p>\n

\u201cPassive income strategies!\u201d<\/p>\n

\u201c7 reasons why you need passive income!\u201d <\/p>\n

\u201cHow passive income helped me fix my marriage and lose 40 pounds!\u201d<\/p>\n

The way gurus talk about it, you\u2019d think there were untapped money streams hidden in the wild like a lucrative, frantic game of Pok\u00e9mon Go \u2013 just wander around enough online spaces and you\u2019re sure to stumble upon one, right?<\/p>\n

I receive DMs to the same tune: \u201cCan you help me come up with a passive income side hustle?\u201d <\/p>\n

Ugh. No! I can\u2019t. You know why? Because the expectation we\u2019ve all set around passive income is false.<\/p>\n

I have yet to find a single \u201cpassive income\u201d opportunity that doesn\u2019t require a fair bit of work<\/h2>\n

Even in my own life, I\u2019d consider Wealth Planner and Masterclass sales to be somewhat \u201cpassive\u201d \u2013 I can be sitting around on a Saturday doing nothing and make a few hundred dollars if a couple people purchase my digital products.<\/p>\n

But were those passive<\/em>? Did I just wake up one morning, flip on a switch, and start the cash flow? No.<\/p>\n

\u201cYeah, Katie, you had to create<\/em> the products\u2026 but after that, it\u2019s passive!\u201d<\/p>\n

I disagree. Sure, it took many hours of front-loaded work to create the products. But let\u2019s not forget one crucial piece of the puzzle here:<\/p>\n

The audience buying them<\/em>.<\/p>\n

Why are people coming to Money with Katie in the first place? To read the blog. How do I drive people to the blog? By creating time-consuming content on both the site and on Instagram. <\/p>\n

If I cold-turkey stopped posting content, eventually, people would stop coming, and products would stop selling. While I\u2019m not actively working on those products themselves, I spend 20-30 hours per week on Money with Katie \u2013 it\u2019s practically a full-time job, except I love every second of it.<\/p>\n

(A few months ago, I decided to actually log my hours spent on Money with Katie to see how<\/em> I was spending my time \u2013 after three days, I had already clocked 12 hours, which really surprised me \u2013 Do I really spend that much time on this?<\/em>)<\/p>\n

The point? That income may not be directly tied to an hour of writing a blog post, but it\u2019s certainly correlated to it. It\u2019s not \u201cpassive\u201d in the way that aggressive Instagram handles like @WEALTHBUILDING101 would suggest.<\/p>\n

But there\u2019s another component that makes this example especially perfect: <\/p>\n

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I didn\u2019t realize I had spent that much time on it because I enjoy it so much. This is my hobby.<\/p>\n<\/blockquote>\n

And that, my friends, underscores the main point of this article: Every passive income strategy requires hustle. You just have to figure out which \u201chustle\u201d you enjoy the most.<\/p>\n

Strategy #1: Finding ways to increase your income, and then aggressively investing in the stock market<\/h2>\n

Surprise, surprise: This is the path I\u2019ve chosen myself. <\/p>\n

Between my full-time income, freelance work, and Money with Katie, my total effective compensation is higher than it\u2019s ever been (though I have chronic other-shoe\u2019s-about-to-drop syndrome, like it\u2019s all going to be taken away from me). <\/p>\n

But just two years ago, my total effective compensation was around $65,000. <\/p>\n

It didn\u2019t happen overnight (and I do work 7 days a week), but it\u2019s possible. <\/em><\/p>\n

After a few years of working 9-5 for a salary and experimenting with different ways to make money (and going through plenty of interview processes for contract work), I finally found a mix that works for me: Keeping a full-time job with good benefits, freelancing in lucrative industries (like tech), and starting my own business that\u2019s totally under my control. <\/p>\n

Like I said: It took trial and error. There was a point where I was teaching group fitness in the mornings, working all day, and then working on other stuff until 9 p.m. \u2013 regularly<\/em>. It was nonstop, and I realized it wasn\u2019t sustainable.<\/p>\n

Now that I\u2019ve found something that works, I just keep my expenses low ($3,000\/mo. or less) and invest the difference. <\/p>\n

Where the \u201cpassive income\u201d comes in with strategy #1<\/h3>\n

Nothing about the way I earn money right now is passive \u2013 instead, I\u2019m working a little harder than I\u2019d have to be right now in order to eventually<\/em> have the passive income I need.<\/p>\n

With this strategy, you invest until you hit a ludicrous number in the stock market (say, $1M) and then withdraw 4% to live on indefinitely.<\/p>\n

That, my friends, is actual<\/em> passive income. You don\u2019t have to do anything<\/em> to keep collecting your $40,000 per year to live on (tax-free, if you set it up correctly!). <\/p>\n

But the road to get there isn\u2019t passive. <\/p>\n

I\u2019ve chosen this path for two reasons:<\/p>\n

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  1. \n

    Right now, I like the jobs I\u2019m doing \u2013 sure, it still feels like work, but I\u2019m learning and I enjoy my coworkers. It\u2019s not so demanding to the point that I\u2019m miserable. Plus, Money with Katie is a blast. <\/p>\n<\/li>\n

  2. \n

    I like how \u2013 once you have your \u201cnumber\u201d \u2013 you\u2019re done. You truly have passive income from your investment returns. You don\u2019t have to perform any maintenance, upkeep, or odd jobs to keep it going \u2013 the compounding returns do literally<\/em> all of the work for you.<\/p>\n<\/li>\n<\/ol>\n

    So it can be a bit of a tough road to get there (working multiple medium-to-high-paying jobs, keeping your expenses low, getting strategic) \u2013 it doesn\u2019t happen overnight. But if you can get your total income up to $100,000 and live on around $2,500 per month, you can do it in about 10 years. <\/p>\n

    The more you make or the less you spend? <10 years.<\/p>\n

    Strategy #2: Rental property investing<\/h2>\n

    For the sake of transparency, I should disclose that I don\u2019t own any rental properties. My entire portfolio is in equities, so I don\u2019t have personal experience with rental property investing. <\/p>\n

    That\u2019s not to say I never will or think it\u2019s a less tenable option (more on that later), but there\u2019s something that bothers me about the way most<\/em> personal finance gurus present rental property investing:<\/p>\n

    \u201cIt\u2019s so passive! I don\u2019t do anything! I make thousands of dollars per month! I put $20,000 down and now I\u2019m rich!\u201d<\/p>\n

    It\u2019s the type of content that makes you go, \u201cWait, back up a step \u2013 this sounds too good to be true. How<\/em> are you doing that?\u201d<\/p>\n

    Because yes, being a landlord means you\u2019ll get money every month just for owning the unit that someone lives in \u2013 but there\u2019s a catch. <\/p>\n

    You may be expecting me to dive into the \u201cproperty management\u201d argument, but that\u2019s actually not what\u2019s kept me out of the rental property game (though it\u2019s certainly a consideration). <\/p>\n

    The reason I personally<\/em> haven\u2019t pursued this path is because it\u2019s not something that you can achieve by simply owning one<\/em> rental property. <\/p>\n

    According to BiggerPockets<\/a>, you can expect (or aim for) about $100 of cash flow per month on every unit that you own. If you own a duplex, you should expect to net about $200\/month. A fourplex? $400\/month.<\/p>\n

    (That\u2019s how they define a good deal\u2019s outcome.)<\/p>\n

    In order to be netting thousands <\/em>of dollars per month (i.e., to fund your lifestyle and be work-optional), you need to own several properties. Anecdotally, I have a friend in this space who owns seven properties and he nets about $3,000\/month.<\/p>\n

    Where the \u201cpassive income\u201d comes in with strategy #2<\/h3>\n

    This one might be more self-explanatory \u2013 when you own a unit, your cost breakdown might look like this:<\/p>\n