Putting together the foundation of any travel money strategy.
ASTORIA, NYC- I can remember in my early days of travel living with the constant threat of going broke. This wasn’t a hypothetical … it actually happened sometimes.
My financial strategy at that time was to work on various archaeology projects around the USA for a few months and then go abroad for as long as my funds would last. Sometimes I pushed it. When I would inevitably go belly up I would either return to the USA for work, return to university (where I could study in some foreign land and live off of financial aid), or find a job wherever I was.
That realization that I could spend all of my money was always there, and the opportunity to make more on the spot was never a given. I lived and traveled dirt cheap then. Oftentimes, I couldn’t even afford to sit back at the end of the day and enjoy a couple bottles of beers … or if I did I’d feel guilty about it. I was obsessed with the perceived value of life-time, and ironically ended up strangling that very resource while trying to preserve it.
I didn’t really know what passive income was then. My mindset was oriented around active income: work, spend, work, spend, work, spend. My bank account flow was binary: it would go through periods of filling up and then periods of depletion. The idea that I could do some work and get paid for it in perpetuity or that I could invest some cash and get paid back for it forever were foreign to me. The idea of using present travel funds to invest in future travels would have been discarded as ridiculous.
But then I began this blog in 2005 and my mentality started shifting:
So I can work today, publish a webpage or two, and then I can make small amounts of money from it forever?
What would happen if I published 100 webpages? Or 5,000? I liked the sound of that. So I published and published and published. I started making videos for YouTube. I wrote a book. All three of these produce revenue indefinitely. If I continue working on them, I get money; if I do nothing, I get money.
At the time, this was a risky fiscal move — I could make WAY more money doing archaeology or another active income job. I didn’t really understand the proper balance between active and passive income, and tried to make all my money off of a strategy that should have been viewed as a generator of passive, long-term income. I went from one extreme to the other when I should of shot for 50/50
While this was a rather irresponsible move, it did enable me to produce a massive amount of content which eventually grew mountainous enough to produce decent returns … ten years later.
As with most passive income strategies, the money dribbled in at first. But nickles eventually turned into dimes, which turned into quarters, which became dollars. Few passive income strategies produces significant returns overnight … or even over the first year(s). But this is exactly why they’re important to start up as soon as possible …
… and to always be starting up new ones as you go.
I’m still working on this today. I have multiple streams of income coming in each and every month whether I do any work or not, but I still want to develop more.
Dividend paying stocks
Dividends are perhaps the purest form of passive income. You put your money in stocks that pay good yields and then do nothing — each month or quarter money will be deposited in your account that you can choose to pocket or reinvest.
I’m currently a little aggressive with my dividend strategy — aiming for a 10%-12% annual yield average across my portfolio — so I need to monitor things a little more closely than if I was only investing in steady blue chips that pay out at a paltry 2.5% clip.
But that’s the case with any kind of investment: bigger potential gains generally come with bigger potential risks … and the risks here are, relatively speaking, not very extreme. If it’s looking like a company will significantly cut their dividend I move my money or just ride it out in hopes that the next cycle is better. If a company rapidly goes to zero — possible, though unlikely given what I’m investing in — then I have dozens other positions across an array of sectors that are still generating income.
What I stand to lose depends on the P/L at the time of sale + the dividends that were paid out. One quarterly payout on a stock with an 18% yield is worth a year and a half of a 3%’er.
As of now, I’m up to $4,513.37 in annual estimated dividend income. I’m aiming to be over $6,500 by the end of the year.
$6,500 per year for doing nothing. That’s almost half of what I used to make each year working my ass off in archaeology, and once I spent that money it was gone. If I spend my dividend earnings they will just replenish themselves in one to three months … and such is the beauty of passive income.
My five-year goal is $100 per day in dividend earnings. Then the financial pressure is off my day-to-day endeavors … and I can go back to writing books and filming documentaries.
Sometimes I wonder what my position would be if I began this passive income strategy when I first started traveling in 1999. What if instead of working three months per year I worked four and invested one month of earnings? What if I invested $100 per month when I was living off of VBJ? What if I wrote a couple more articles per month when I was working as a journalist over the past few years …
What you need:
- A brokerage account, which you can get for free from just about everywhere now. Choose one that doesn’t change commissions on trades, which many now don’t. I use Ameritrade for investing and Tastyworks for trading.
You don’t really need much money to start. $100 would do it. Add more money to your account when you can, reinvest your dividends, watch it grow.
Knowledge of how to trade and how markets work. Use online resources to learn the lingo / culture, use books to gain a deep understanding of the underlying mechanics.
You’re not going to make squat until your account gets up beyond $20,000. Even then you’re still not going to make much. To make $30,000 per year at a 10% yield you’d need to have a $300,000 portfolio. But don’t let this be daunting: add to it a little by little, reinvested dividends, compound, compound, compound.
If you don’t have a large clutch of cash to get started with and you make a working class income, you’re probably looking at five to ten years of dumping in funds until you’re making any real returns. As with any passive income strategy, building dividends take time, so the earlier you start the better.
This is going to be a tough sell for the audience here, as you all know that while my first book Ghost Cities of China sold well, I didn’t make much from it. I went the academic publisher route with this one, as the authority gained was more valuable than what I could make from the direct sale of books (I’ve banked tens of thousands from speaking engagements alone, not to mention opportunities in journalism). However, I also sell this book myself, which results in a $5 profit per book, which isn’t that bad. (Get a signed copy here).
Theoretically, writing a book can be a good source of passive income. The paradox is that self-publishing often makes it more viable as a financial strategy. The reason for this is simple: if you self-publish you cut out the middleman. Let’s say it costs $5 to print and ship each book and you sell them for $15 each. That’s a $10 per unit profit, and you’d only need to sell 1,000 to make $10,000. But even if you only sell 100 per year, that’s still $1,000 extra dollars coming in that you don’t have to do much additional work for — that’s two months of living on the beach in Mexico.
What you need:
1. A good, saleable topic. A book about your life or, ESPECIALLY, your travels probably isn’t going to do it because nobody cares. The greatest story on earth is now worth about as much as a bunch of bananas. A book about something that you think is cool probably isn’t going to do it either. Travel books still can work, but make sure you’re traveling in search of something more saleable.
To find a topic, answer the question: What do people want to know that will make their lives better?
Ask yourself: Why would they be willing to pay for this information? Will it make them money? Will it make them happier? How will it equip them to better perform in life?
Choose a topic that’s going to help someone achieve something. You’re doing this for money, not to create a beautiful piece of art. Make art on your own time — passive income is about making money (to give you the time to make art).
How-to books work well … especially when they pivot around lifestyles, making money, or high-value hobbies.
2. Get an editor. No exceptions. Pay for this.
3. A willingness to invest time and money into promoting the book. Just putting a book up on Amazon is going to result in zero sales … if you don’t count your mom. You need to go out and give talks about your topic, get media attention, get people talking about you. This takes legwork and elbow grease.
Keep your expectations tempered: most books don’t sell well. Shoot for selling 100-1,000 copies a year that can bring in a continuous dribble of small amounts of income. Don’t plan on writing one book; plan on writing five. Write multiple books allows you to scale this passive income stream. Shoot for making $500 per month as your ultimate goal — anymore than this and you’re in the 99th percentile.
This is completely up to you, but, realistically, plan on one book per year for five years.
Websites / blogging
My main source of passive income comes from this blog — it’s passive income because once a page is published it will generate income in perpetuity without requiring additional labor. Last year, VBJ made $25,000.
Picking a profitable niche rather than having a generalist site is advisable. I didn’t do this here, so my model probably shouldn’t serve as an example. Rather, like with writing a book, focus on a high value topic that’s going to pay. Teach someone how to do something or operate in a hobby niche.
However, if you want to do a generalist travel site, go for it — you’re just going to have to work 10x as hard.
Remember: cools shit is cool, but being useful sells. Focus on creating pages that answer questions:
How to ___
What is ___
These are all good ways to structure headlines and content. Keep it simple.
Be prolific. When first getting started blogging is a numbers game. Increasing the incidents of publication is the most important thing that you can do — in the beginning, quantity trumps quality. I don’t mean that you should go out and publish crap, but just be aware that five pages a day is going to get you a lot farther than one high quality, time consuming page a week. A voluminous publication strategy results in more pages for ads to run on; it increases your reach, which increases the chances of getting in front of people, which increases your readership …
Use services like Substack and Medium as auxiliary platforms for additional reach and earnings.
What you need:
- You’re own url and web hosting package. Be sure your content management system is hosted on your own server. Self-hosted WordPress is good. There are others that are good too. Don’t use sites like Weebly … and only use Medium, Substack, etc… to republish content for additional reach and revenue or if already have an audience and aim to run a subscription site.
A laptop, a good camera, and a robust, modern smartphone. Don’t cut corners here.
Spend more time producing content than promoting content. Social media can be a good way to get your blog in front of people, but it’s not as good as additional content. You publish a blog post and it can last forever (or at least as long as the site); you publish on Twitter and it’s gone in five minutes. Many bloggers overestimate the importance of social media and they spend all their time tweeting, liking, and scrolling rather than creating content. It becomes a distraction rather than a tool. When it comes to blog promotion, social media is 90% a waste of time.
If you don’t love blogging then it’s not worth doing as a passive income strategy. While you can generate respectable earnings from blogging, it takes a massive amount of time and the rise to success is slow. If you go this route, pair your blog with other revenue streams — sell products and services to your audience.
It took five years of full-time work before VBJ started making much of anything, and even then earnings were generally under $1,000 per month. Now, 15 years after we began, we’re doing a little better. But let this timeline sink in for a moment. As with most passive income streams, this is about the farthest thing from a get rich quick strategy.
Even though I haven’t published a video on YouTube in over a year I still get $100 a month from them. It’s not much, but I take it.
I once tested the YouTube publishing route to find if it could be a viable full-time income strategy. For a year I published videos regularly. I put a massive amount of time, effort, and money into it, and after that year I sat down and did the math. I found that even though I had over 25,000 subscribers and would attract hundred of thousands of views per month, it wasn’t adding up. YouTube simply does not pay enough for the niche I was publishing in. It would take too many YEARS (if ever) to get to where I wanted to be.
However, my niche was general travel / current events. Like with writing books and publishing a website, topic is king when it comes to making money. Some topics attract more interest and higher ad revs than others. If you’re niche is built around something that can be sold, then you’re good. If you’re niche is built around something that people want to learn, that could work. If you’re niche is about how to do something, then you’re golden. If you’re topic is you traveling the world … unless you’re Insta-hot and traveling in luxury it’s probably not going to work out.
What you need:
- High quality gear. Get a good camera (not a smartphone), a good shotgun mic, and a lav mic. High quality video is important, but clean audio is vastly more important. Get a laptop that can edit high resolution video. Your startup costs are going to be $2,000 minimum.
A willingness to put thousands of hours into studying and practicing. Filming and editing is way more complex that it at first seems.
Good editing software. I use Davinci Resolve, but Final Cut is good too. Avoid Adobe Premiere.
If vlogging, you’re expectations should be appropriately matched to who you are and what you look like. Are you an attractive 20-something woman? Are you a fit, educated white or black guy in his 20s or 30s? Are you from the United States, Canada, Europe, or Australia? Do you speak fluent English? Do you have money / know how to make money? Are you at the cutting edge of consumer tech? While many people will counter me and say that this is all superficial, the proof is in the data.
If you’re making other types of videos, then it is very possible to make good money from them if you choose a high-value niche.
Don’t expect to make much the first couple of years. While there is a chance that your channel will take off, you’re more than likely going to have to stack thousands and thousands of videos get the amount of traffic and revenue that would make this a viable passive income strategy.
Courses / Webinars
Video Powerpoint presentations are making some people a lot of money right now. It’s almost ridiculous. I’ve watched a few of these lately and I am often left in disbelief how lo-fi and barebones many tend to be. This is truly a passive income strategy where content is king.
What you have to do here is to teach people how to do something that you’re an expert at. Just put together a Powerpoint, put a camera and mic on you, record your screen, give your presentation, edit it all together, and then upload the course to a site like Gumroad and promote it.
As with most of the other strategies here, your topic is going to determine how successful you can be. Courses about making money or improving your life seem to work well. Take what you know and then spin it into something that can be sold.
What you need:
- Knowledge of something that people are hungry to learn.
A following of people who want to be like you.
A laptop and a camera.
From what I’ve observed, the amount of money that you can make from this is pretty surprising. However, it is very much contingent upon how much you’re willing to promote it and how popular you are on social media. I’d say if you have a decent following, a good topic, and a small advertising budget, you could aim to make around $5,000 per year. If you have a large social media following, what you can make from this is virtually unlimited.
If you’re already a master at your topic you can put a course together and have it ready to ship in a matter of days. This is one passive income strategy that doesn’t have a long runway.
While a little top heavy, owning rental properties is another excellent way to generate passive income. There are plenty of travelers out there moving through the world living off of other people’s rent. A few rental properties would probably pay 100% for your travels, and on top of that you still have an ever-appreciating asset that you should, theoretically, be able to sell for a profit if you ever want a way out.
Now, there are some obvious caveats here. First, you need some startup capital. Then there’s property taxes. Then there’s maintenance costs. Then there’s dealing with tenants.
Do you really want to be calling the plumber for some prick who keeps clogging the toilet when you’re floating down a river in Cambodia? Do you really want to be dealing with a potential eviction when you’re sipping a beer on a Caribbean beach? Do you really want to be tethered by such illiquid assents when you could otherwise be freely traveling the world? There is an ugly side to landlording, but $500 to $5,000+ per month of pure passive income is pretty attractive.
What you need:
- Startup capital and / or credit. Some say that the minimum is $20,000 but I tend to think it will actually be double or triple that. You’re probably going to have to take out a loan unless you have a big bag of money laying around somewhere.
Knowledge about what to look out for when purchasing a house and a sense of rental markets.
A willingness to find and deal with tenants.
The range of expectations varies too much to give an estimate. Some travelers make thousands every month, but I don’t believe this should be taken as a given. If you come out $500 ahead per month, per property I’d say you’re doing pretty well.
I’m not sure, but I imagine that you could get a rental property set up in a month or two. However, mileage varies according to how much you need to fix the place up / how long it takes to rent out.
Passive income is essential for the traveler. It’s not just a form of revenue, but a safety net. It takes the pressure off your day-to-day financial forays, it gives you the opportunity to take chances, to dive into big projects, to occasionally swing and miss, to take a break, to do the things you otherwise would be hard pressed to do if all you had was a limited amount cash in a rapidly depleting bank account. If you’re aiming to travel long-term, start cultivating passive income now.