Words Of Wealth

According to Robert Allen in his book “Multiple Streams of Income” (and later “Multiple Streams of Internet Income”), setting up multiple streams of income is one of the best ways to accumulate wealth. Afterall, you have multiple streams of money flowing out of your hands, so why not create multiple streams for it to flow in as well?

I’m a firm believer in creating multiple streams of income, but I also like to add “Residual” or “Recurring” in there as well. Residual income is income that keeps flowing in long after you’ve finished the initial work. Book royalties, software licenses, photography licenses, and ongoing memberships are a few examples.

Since 1997, I’ve had a variety of income streams. The bulk of these came from affiliate sales commissions, royalties and advertising revenue.

Affiliate Marketing
Affiliate Marketing has grown in popularity over the last ten years, mainly because it’s so prevalent on the Internet. It’s easy too. Anyone can start today and make money immediately. Depending upon the systems you set up and the products or services you choose to promote as an affiliate, you can continue earning sales commissions for years into the future.

Affiliate marketing is very much like a comissioned sales job. Instead of making cold calls or knocking on doors however, most affiliate marketing is done online. Some affiliates choose to advertise products and services directly through services like Google AdWords, while others choose to set up websites to advertise products.

This website mixes affiliate marketing as one of its income streams. Some of the books I talk about here are linked to Amazon with an affiliate link. Anyone who clicks an affiliate link from this site and buys a book or other product from Amazon within a day or two will generate a small sales commission for me. And the beauty of this is that those links will stay in place as long as I want them to. Someone could come along ten years from now, click the affiliate link, make a purchase, and earn me a little more money.

Now with regular affiliate income, new sales have to be made in order for new commissions to be earned. Residual income comes from the same person. If an affiliate marketer generates a sale that involves ongoing fees–such as monthly website hosting or quarterly subscriptions to a newsletter–that affiliate will continue earning money from the one sale as long as that customer remains paying for the service.

In both examples the income can be considered residual. The one off affiliate links to books here have the potential of generating sales for years to come, just as the ongoing customer could continue to pay for a given product or service for years to come.

Royalties
Royalties are another way to generate ongoing income for many years into the future. And I consider these residual streams of income as well since you normally do the work once, and continue earning money from it for as long as the product is available for sale.

Writing a book is a well known way to create royalty income. It may take three months or even three years to finish an entire book but once you get it out to the public for sale, it can continue earning money for the rest of your life.

Photography is another income stream I’ve used over the years, and it also generatesa ongoing royalties. Even selling microstock photography for a few dollars per photo can generate substantial income over time. I have one photo that has generated just under $50 in less than one year at one location it’s licensed through. That is one photo out of over 1000 that I have available at multiple places for licensing.

Not all of my photos make as much money, and a few make more than that but the point is: I did the work involved with setting up and taking that photo once. I then submitted it to several of my online portfolios and it has continued to sell regularly ever since.

Royalties can be earned from software licensing, and I’ve done this as well. They can be earned from music licensing, video creation, even by licensing patents and inventions.

Advertising
I personally consider advertising very much like royalties, because I earn most of my advertising income from writing and photography I’ve created.

I enjoy making websites. I started designing, developing and programming for them back around 1996. I used to do it as a service for clients, then I moved into Internet and Marketing consulting instead. I continued making websites for myself though.

In the past 5 years or so I’ve been exclusively making websites for myself, and earning money from them with advertising. My favorite means of earning advertising income is through the Google Adsense income. I’ve done nicely with specific advertising contracts but those inevitably ended after awhile, or the client got too demanding for my taste so I ended it.

Google AdSense however, is much more like earning royalties in my mind. I don’t have to chase advertisers, convince them to buy more, chase down unpaid invoices, or put up with unreasonable demands and attempts to control how I run my sites.

I create my websites the way I want them to be, with the content I feel is best for the audience, and Google takes care of all the administrative headaches for me.

Yes there are base rules my sites must follow to be eligible for the program, but these are general “common sense” rules any good website or online business follows anyway.

In my mind, a website can often be like a book: You write the content once and it can live on for years. And that’s why I think of advertising income like a residual royalty income stream.

Now just having many different streams of income doesn’t mean you’re automatically rich. You can have 1000 different income streams but that doesn’t do you much good if they’re all earning a penny each.

The same goes for websites: You can have a thousand different sites but if they’re not earning even a dollar a day, you’re spinning your wheels.

This is a mistake I’ve personally made in the past. I enjoyed creating websites so much that I just started making lots of them, hoping that each would earn a little bit of money to contribute to a larger overall haul. The problem of course was that I spread myself too thin, and didn’t concentrate nearly enough time or effort onto any given site. So most of them fell flat on their proverbial faces while barely earning a dime.

One of the habits I’m working on this year is to improve my persistence and consistency. And as part of that habit improvement, I decided to choose one to three projects to focus fully on for the year. The goal is to get these projects earning a respectable amount of money for themselves regularly.

This website for example, must start earning me a minimum of $35 per day by the end of 2010 in order for me to justify spending the time and attention on it that I want.

The catch of course is that I must spend time and attention on it to generate traffic and interest, otherwise it will not be able to earn even that small minimum goal I’ve set for it.

The success book I’m reading this week is “Million Dollar Habits” by Brian Tracy. In it he talks about how hard you need to work in order to become truly successful. Being lazy, wasting time and doing the minimum won’t get you very far very fast. Hard work will though, and that’s what I intend to focus on. Doing more with my multiple streams of income, so I can increase those streams at much faster rates, and make them into rivers over time.

Back in January 2010 I read “The Richest Man In Babylon,” and as a result, immediately made myself start saving the first 10% every time I received a payment for something.

Regardless of how small or large the payment was, I stuck to my guns and pushed 10% of it into a savings account before allocating anything else to other categories in my budget.

I have income arriving on average twice each week. Some of my income streams pay monthly while others pay twice a month, but all told I get payments of some kind about twice every week. I think this helped me instill the savings habit more easily.

If I were paid just once each month, I’d have an entire 30 days to forget I’d made the commitment. Too much time between repetitions would make it easier to forget, make excuses and slack off.

In the beginning I found myself looking at my budget every single day, even on days I didn’t receive income of any kind. This helped me reassure myself that I was on track with finances and hadn’t overlooked anything important. This also helped me remind myself that I was committed to making the financial changes I’d set up for myself at the beginning of the year.

Now I did find myself plowing into the budget a couple of times–allocating funds to groceries or truck maintenance before remembering I hadn’t removed the first 10% yet. When that happened I made myself back up, reallocate money to the savings plan, and remove money from other categories if I’d already gone too far. I forced myself to stick to the plan and fixed it immediately if I’d initially forgotten. I took the “no excuses” approach to making sure it happened, and it worked like a charm :)

Now that I’ve been doing this for a solid two months I’m fairly confident the habit is decently strong. Just to be on the safe side I’m not making any assumptions though. I plan to stay diligent and very aware of the savings plan to ensure I get the habit so strongly in place that I won’t be able to not do it in the future.

I’m feeling sure enough about it now that this month I’ve added a second 10% habit: Putting the second 10% to debt.

Out of each and every income payment I receive, I will put the first 10% to savings, the second 10% to debt, and all other living expenses will be drawn from the remaining 80% of funds available… no matter how little or how much money comes in.

I’ve been re-reading “The Power of Focus” and just picked up “The Success Principles” by Jack Canfield, plus I decided to revisit Steve Pavlina’s site to read some of my favorites there today to help motivate and re-center myself.

About 5 or 6 years ago I started losing focus in my business. I’ve been a freelance writer, website developer, programmer, consultant and several other things since 1997 but in 2005 I had a big reality hit home for me: My kids were growing up.

Until that time, all of my focus in business had been about taking care of the kids. Making sure they had good food, clothes to wear, a decent roof over their heads and all the basics that come with being a parent. Looking back at things now, I seriously believe that raising the kids well was my “purpose” during the last 20-odd years.

Once they started becoming adults though, I was completely disoriented. I didn’t know what was supposed to be next. What I was supposed to do. I couldn’t fathom what I should be working so hard for once that particular job was done.

I struggled to keep myself going anyway I could think of because I had several more years before all of the kids were grown. I did ok during that time but it was a definite struggle.

Last May our youngest moved out.

My response was to sell everything I could think of, put the important stuff in storage, and hit the road.

We camped in a tent the first month, then bought a small cargo trailer and we’ve been turning it into a pseudo camper. It’s tiny and has it’s drawbacks, but it’s enough for now.

Since I’d struggled so hard with business stuff for several years I didn’t have a lot of business or client obligations to worry about when we started traveling. But I also didn’t have as many solid, reliable income streams as I should have either. Static bills of just $200 a month was a huge help, and I’ve always been good at generating more money as needed so I didn’t worry about it too much.

Over the months since however, we’ve had a lot of ups and downs financially. The sluggish economy has been a contributor but the real reason is me. I’ve been sluggish, moody and unfocused. I’ve been struggling to figure out what my “purpose” in life now should be.

As I explored these new issues and started my journey towards studying success and self improvement I realized I’ve developed some bad habits over the years: Like trying to make money.

Trying to make money is itself a distraction. When you focus on making money, too many things will catch your eye. You’ll run around like a chicken with its head cut off, chasing down all sorts of things that look like opportunities. You’ll waste a lot of time and energy if you chase dollars.
Steve Pavlina: How to Make Lots of Money During a Recession

I’ve frequently “chased” and been distracted by money. I’ve also worked myself back into jobs multiple times. Yes as a freelancer and yes working from home, but they were jobs all the same.

The last several months are a prime example: I’ve been making ends meet by writing articles for another company. And as Steve points out in the article quoted above, I’m trading my time for dollars in that scenario too. I’m creating content for that company, getting paid just once, and letting them make money with it for years to come.

I know better than this. I’ve been a strong proponent of residual and royalty income streams almost from the start. Sometimes it feels easier to let someone else make the decisions and do the promotions than wearing all the hats myself. So I fall back into the “give me an assignment” mode… aka JOB.

This is a habit I need to break. Fast. I don’t want a job, even if it’s a job that lets me set my own hours and work from where ever I might be. I want to create and deliver the kind of value that generates income month in and month out, year in and year out. I want to do the work once and earn from it again and again. I need to stay focused on this particular desire–regardless of how tough things may be and how tight the cash flow is from one week to the next–and really make a break through for myself this year.

One of the success habits I’m working on this year is to get up when the alarm clock goes off instead of snoozing it several times. Even though I work from home and can work whatever hours I choose, my most productive time of day is early in the morning. When I get up at 4 or 5am I get an amazing amount of solid, productive work done just in the first few hours, and I usually have outstanding overall days too.

At the moment I’m not trying to get back into that early rising program. Instead I’m simply trying to take small steps to correct some bad habits I’ve picked up in the last year. One of those is sleeping until noon. For the moment I’m working on forcing myself out of bed at 8 or 8.30am. Once I’ve gotten that solidly on track I may try for an hour or two earlier.

Today I found this strange yet interesting post from Steve Pavlina:
How to Get Up Right Away When Your Alarm Goes Off

It sounds strange and maybe even a bit silly because he advocates training yourself to get up immediately when the alarm goes off–much like you’d train yourself to do other things like lifting weights: With repetition.

The idea is to create a regular training session for yourself that involves jumping up out of bed immediately after the alarm goes off. And instead of trying to do this in the morning when you’re not coherent enough to have the self discipline… you do it during the day when you’re wide awake and fully aware of–and in control of–your actions.

By practicing multiple times each day for several weeks, Steve says you can train yourself to react the way you want automatically, without thinking about it. I have to agree with him. Repeating an action or process enough times ingrains it into your mind and body, so that eventually you do it “without even thinking.”

It may feel really silly to get ready for bed in the middle of the day and play pretend for a few minutes, then jump up and turn the alarm clock off–then repeat the process several times for many days in a row–but if you can handle the laughing and teasing from family (or even yourself) long enough, I bet this would really work well in the end.

So now I need to dig up enough courage to try it myself ;)

The first chapter of “The Power of Focus“–Your Habits Will Determine Your Future–is important enough to spend a lot of time and attention on. It’s so powerful in fact, that I could study it weekly for an entire year and still have progress left to make.

This chapter is all about habits, and how everything we do throughout each day is a combination of small habits that make up our daily routines.

“Your everyday normal behavior has a lot to do with the results in your life. If you’re not happy with these results, something has to change.”

Changing habits takes time and concentrated effort. And as the book rightly points out: Some habits are more deeply ingrained than others, so they may take more time and effort to adjust than others. Small, simple habits can often be changed in about a month but the larger, more complicated ones can take much longer.

The good news of course–and the primary focus of this first chapter–is that habits can be changed. And by changing bad habits into good ones, you’re able to create the success you want in life.

“By systematically improving one behavior at a time you can dramatically improve your overall lifestyle. This includes your health, income, relationships and time off for fun.”

The chapter goes on to discuss common bad habits and provides excellent techniques to help you replace them with good habits. Weaved in are personal stories about both simple and complex bad habits people have tackled and successfully changed.

Bad habits are a personal sticking point for me. I’m pretty good at changing them once I’ve put my mind to it, but I have the bad habit of waiting until a habit starts really annoying me before I decide to do anything about it.

When my kids were small and I was first starting my own business, I found myself constantly losing track of what needed to be done, when. Things got bad enough at one point that I was even forgetting to make sure the kids got their baths. When I realized this I got fed up and decided it had to change. Now. So I implemented the habit of scheduling and that solved the problems pretty quickly.

At another point in my life I was in the habit of checking email every 15 minutes because I’d been providing customer support services for a client. When that contract went away and I refocused my business on writing, the habit of checking email was a huge distraction and problem for me. I had spent several years in customer support roles, so the habit of constantly responding to others quickly was entrenched really deeply. It took many months of focused effort to break that habit and even today–many years later–I will sometimes find myself checking email off schedule and for no apparent reason.

Late last year I implemented the basic financial success habit of paying myself first. I’ve talked previously about my bad habits with budgeting so for me this was an important first step. Technically I implemented two new habits at once: Making and keeping a budget plus putting away 10% of my income first, then living off the remaining 90%.

Trying to change too many habits at once is risky because you can become overwhelmed. This is the biggest problem with New Year’s resolutions actually… people make lots of big plans, they they try to do them all at once.

The Power of Focus–and many other success books for that matter–strongly advise you to focus on changing just one bad habit at a time. This lets you get a solid hold on one new success habit–let it become routine enough in your life to become a true habit–before attempting to add another.

I need to update my list of habits, reprioritize them and create the habit of making new positive habits so that I can continue making progress towards my own personal and financial success. Two big ones I seem to be constantly addressing are:

1. Sporadic Consistency
and
2. Snoozing the Alarm Clock

If you struggle with bad habits too, I strongly recommend you spend some time studying Chapter 1 in The Power of Focus, and implementing The Successful Habits Formula provided at the end.