Questions to answer before thinking about passive income

When I talk with friends or family about passive income, I usually get the same kind of questions. So I thought it would be a good idea to answer them now, at the very beginning of our adventure!

“I don’t have enough money to invest in passive income”

That’s a fair point. If you can’t find any spare money…  it’s difficult to even start. At this point, you can always keep your 9 to 5 job, push harder and hope to get a promotion that will increase your salary (active income). Or you can still keep your job (which I recommend at this stage!) and find more creative ways to get a small amount of savings that can help you out. I would like to share some of my personal experiences:

 Last September we decided to sell our second car. There’s no point in having two vehicles when you have been mostly working from home the last 18 months, and your main trip of the day is the school run (that by the way, we could do by walking or biking when it’s not raining). Plus we still don’t know where COVID and restrictions are leaving our life. In addition to this, the second-hand car market was booming, so we went for it. As our Ford C-Max was an old car (2010), and it had a few scratches, we decided to use the popular website autotrader.co.uk. I have to say, service was quite good!

On this sell, we got some cash, but we also got some future savings and our first passive income:

Cash in September 21Amount
Car (Ford CMAX 2010)£1,750
Insurance claim back£212
TAX Road devolution£95
Total cash received£2,057
Savings in 2022Amount
TAX Road devolution£210
Insurance£400
MOT£50
Annual service£250
Total savings 2022£910
Passive income from Oct21Amount
Rent parking bay (per year)£360

These tables above show quite a lot of money for an old, rusty car that lost its battery twice because we were not using it during the past 18 months. This small business gave me some takeaways:

  • I got rid of an asset that I wasn’t using, and it was costing me at least £910 per year for normal maintenance. To top things off, I got over £2,000 in cash for it!
  • I had an underlying asset: a parking space, that I couldn’t monetise, due to my C-Max occupying it. 
  • Since last October I have been renting this parking bay. You might be thinking: “come on man, it’s only £30 per month”. I agree, but £30 is better than £0, isn’t it?

I believe this is an excellent example of how you can find some savings (if you look hard enough!) to start investing in passive income.

But let me share another example. During COVID I’ve spent a lot of time at home, same as everyone really. Since March 2020, I have found myself some evenings or weekends trying to free space in our storage room, by getting rid of stuff that we don’t really use anymore. Guess what? My wife and I started selling those second-hand things! We have been using Facebook marketplace, and it works very well. Below you will find some examples of items we sold in 2021:

ItemAmount
Toy house£10
Muscle massage foam roller£5
Kitchen trolley storage£10
Train Thomas£5
Pressure fit safety gate£10
Piano keyboard toy£10
Fellowes Shredder£10
Babolat tennis racket£25
Samsung TV 32″£50
Yoga mat£5
Iron Russell Hobbs£10
Floor lamp£20
Ikea wardrobe£90
2 Ikea small beds£50
Total£310

We have sold quite a few more items, but you get the idea don’t you?

Between the cash received for our old banger, the savings in 2022 of not having the car anymore, the passive income generated from the parking bay, and all the junk sold last year, I now have £3,637 more than before doing this exercise! Plus I found my first passive income: I am now renting my parking bay, as I am not using it anymore for myself.

The point of answering this question is simple: just challenge yourself and find where you can get some savings. It’s easier than you think, and as soon as you start, you won’t want to stop!

In my next post I will be talking about another couple of recurrent questions:

Okay Antonio, I’ve got some money, but I don’t have the time to find ways to grow it”

Thanks a lot for taking the time to read my thoughts, please don’t hesitate to contact me if you have any questions or feedback. And don’t forget to subscribe to the newsletter so you can find out every time there is new content on my blog!

Until next time…

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2 thoughts on “Questions to answer before thinking about passive income

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