I'm a Money Grubber

I first heard of the term “pay yourself first” when I read the book Rich Dad, Poor Dad, by Robert Kiyosaki. And I thought I knew what it meant – basically save your money instead of spending it on frivolous purchases.

But What Does “Pay Yourself First” Really Mean?

I THOUGHT I knew what it meant, that is…until I read this great article by Brian over at Genius Types. Brian call this concept an “equity goose” and he explains the idea of “paying yourself first” much better than I do. But the basic gist behind an equity goose is:

Equity Goose: an asset or group of assets you own and contribute to on a regular basis that rewards you with passive cashflow.

Contrary to popular belief, “paying yourself first” does NOT mean…

• Buying yourself a nice present once you receive your paycheck
• Buying a house or making a mortgage payment. It’s important in this instance to distinguish between an asset an a liability. (most primary residences should be considered liabilities)
• Investing in a 401K account, at least not if you ever take a premature distribution.

According to Brian, and I totally agree with these rules – paying yourself first means creating an asset that:

1. Cannot be tapped into
2. Does not lose value
3. Has positive cashflow

You should all checkout his website because he dives into a lot more detail and does a great job explaining this concept.

But after I read his post, it made me sit down and think about the different ways I could create my own equity goose. So here is my list of top 5 equity goose assets that I could start today:

Top 5 Methods to Pay Yourself First

1. Writer Compensation Programs. As some of you know from my previous post. Infobarrel has a great writer compensation program that gives authors a percentage of advertising earned from any articles written.

2. Mobile Phone Applications. This is an idea that I’ve been toying around with a lot recently. I’ve heard of a lot of people that have made some significant sums of money off of a simple iphone app. For example, you might have heard about the incredible success of the iFart mobile app, which was able to generate $9,198 in a SINGLE DAY!

3. Vending Machine Business. This isn’t exactly a passive business, but this business is much more flexible than a regular day job. Startup costs are minimal, as a large food and soda vending machine costs maybe $1,000 – $2,000. And you could get started in candy vending, buying a machine for as little as a $100. The biggest hurdle that I foresee is finding locations for my machines. After I got turned onto this idea, I started noticing how many candy vending machines are really out there. No wonder America is so fat. Candy vending machines are EVERYWHERE.

4. Real Estate. The important distinction here once again is cashflow. This automatically discounts your primary residence. You need to be buying real estate at wholesale pricing and making money by collecting rent. It is the method favored by many wealthy people to pay yourself first. And now seems to be a pretty good time to buy real estate at a wholesale price and ensure that your equity goose delivers cashflow.

5. Stock Investing. Brian actually does not qualify stocks as paying yourself first, because stocks can decrease in value. But since rule #1 states that the money can never be withdrawn from your cashflow asset, I think stocks are actually a pretty safe bet. Historically, investing on the index has provided an annual return of 11%, and your risk can be greatly minimized by dollar cost averaging over time. Then it is only a matter of identifying dividend paying stocks and buying them at discounted prices.

So that basically sums up my top 5. Do you have any to add to this list?

It is very unlike me to feel inadequate about anything. In fact, one of my major faults is being overly confident and then falling flat on my face.

I’ve always felt like I was doing OK for myself but reading this post over at I Will Teach You to be Rich just left me feeling kind of blah.

Blog author, Ramit writes

How many of you earn over $100,000 / year?

How old are you?
What do you do for a living?
How did you feel once you earned $100k?
What, if anything, changed?
If your friends earn a lot less than you, does that ever present problems when hanging out?

You should check out some of the comments.

I have always felt like I was making decent money. But to be honest, I was a bit surprised to see so many young people earning at such a high level, especially in jobs that did not entail slaving away in management consulting or investment banking. Reading this post kinda crushed my self esteem a little, but I guess it just goes to show that success can be found anywhere.

On a side note, I do think it is really cool that alot of these people haven’t let their high incomes impact their lifestyles too much. This is how the rich get richer.

I’ve heard from numerous sources that people were able to make a living from just writing online and was intrigued by this idea. I stumbled onto this very comprehensive post over at the Smart Passive Income blog and found out that one of the best writer share sites available today is called Infobarrel.

If I told you that you could make $1000/month passively, for the rest of your life….would you believe me? If someone said that to me, to be honest, I would have probably called them crazy. But I did some research and the idea doesn’t seem so far fetched after all.

How You Make Money From Infobarrel

Like many writing compensation programs available, writers submit content, which are published on Infobarrel. Infobarrel then displays an assortment of ads on the articles, which consist of adsense, amazon products, and chitika ads. Infobarrel retains ownership of the articles, but distributes a percentage of the earnings from the advertising they earn from the author’s article.

While this model is certainly not groundbreaking, what makes infobarrel unique is the revenue share program they have in place. Infobarrel shares a whopping 75% of the article advertising revenue with the article authors. This is significantly higher than the majority of other writer compensation sites available today. Infobarrel also shows pretty decent growth rate. The site currently has a Page Rank of 4 and an Alexa ranking of 10,466. The following graph shows the steady growth in infobarrel traffic since 2009.

The steady growth in traffic is definitely a good sign indicating the infobarrel is an up and coming revenue share site. And the page rank will help any published articles rank more highly in the google search engines.

My Infobarrel Expectations

I’ve read other blogs, where people claim to make around $3/month per article written. I’m going to call bullshit on this claim because it just seems too easy. I will make a very conservative assumption that I can make $0.30/month per article written. If I have 100 articles written in one month, this mean that I’ll be able to generate about $30 in revenue a month.

If I reinvest these earnings by hiring a ghost writer and continue to write for Infobarrel myself at a greatly reduced schedule, I should be able to steadily improve my monthly earnings.

My articles will mature and improve in ranking over time, and add to this the fact that if I add backlinks to my articles, my monthly earnings should improve even more. Once I had enough articles posted, I could theoretically just leave my articles alone. And for the rest of my life, I would earn passive income.

With that said, I want to see if it is possible to generate $1,000/month in passive income from Infobarrel.

My Infobarrel Plan

My plan is to write 100 articles in Infobarrel for the month of September. If I can generate around $30/month from this first batch of articles, I will reinvest this money and hire a ghost writer to continue to write articles for me at an approximate rate of $5/article. (I browsed through elance and this number seemed like the current market rate for decent ghost writers)

I know that I won’t be able to maintain the intensity in cranking out 100 articles, so in the coming months, I’m going to relax and strive to write 10 articles a month, or about one article every 3 days.

I crunched some numbers, and as you can see, with some very conservative estimates, in about 4 years I’ll be able to take kick back and enjoy a sweet recurring paycheck for $1,000/month. After about 2 years, the beauty of compound interest kicks in and growth seems to become more exponential. Of course, I will be diligently working on backlinks, among other SEO related tasks. And I hope that I can reduce this four year time-line significantly – to about two years or less.

But my research shows that infobarrel is indeed a possible source for passive income, so I’m going to move forward with my infobarrel plan. I will update everyone with the results on a monthly basis.

I would be interested to see how anyone else is approaching my infobarrel experiment. Please share some of your comments and insights below!