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.

a.k.a. “The Dangers of Having Just One Stream of Income”

If all goes well in the next week or so, I’m going to accomplish a goal that I’ve had for many years: Buying land. Doing this is one of the biggest steps towards achieving a dream I’ve had most of my adult life. But it’s change, and change is sometimes scary.

I’m not paying 100% cash upfront for the land and this is an unusual thing for me. I usually buy everything–including big stuff like vehicles–outright. Having something fully paid for right from the start is a tremendous source of security for me. I don’t have to worry about whether I’ll have a short cash flow month or how I’ll keep up with payments during a lean year.

In this case though, I’ve decided to finance it for 10 years. And that’s where the topic of this post comes in: Currently my income streams are out of balance. One of my sources provides about 75% to 80% of the total at the moment, and that’s a bad thing.

When too much of your income comes from just one source, you are carrying a heck of a lot of risk. In fact, your entire life is at risk. If that one source of income goes away–like it has for so many newly unemployed people in the last couple of years–you could find yourself losing everything. That is high risk.

That’s one of the reasons I don’t like the concept of a “job.” Companies decide what’s best for them… and that’s not always in line with what’s best for the people who work there.

A company can go out of business, be restructured, put automation in place the eliminates people positions, be merged with or incorporated into another company. Any number of things can happen that leaves workers out on the street. And for most people that means their only source of income disappears overnight.

Working for yourself–whether as a freelancer, solo entrepreneur or small business owner–puts you more in control. Unfortunately I see a lot of small business owners and freelancers working themselves into a home based job instead of an actual business. They land themselves a big client who writes fat checks and they end up letting everything else fall to the wayside. They effectively turn themselves into an employee for that fat check writing client and when the contract ends or work dries up, they’re back at square one with no other income to fall back on.

In Robert Allen’s book “Multiple Streams of Income” he explains the difference between linear and residual income. I’ve been a huge fan of residual income for close to 13 years now and one of my biggest goals in the next several years is to grow those residual streams ever larger and more reliable.

In Multiple Streams of Income, Allen talks primarily about establishing three different types of residual income: Real Estate, Investing, and Marketing.

I’ve personally concentrated on marketing so far. I have about 30 websites at the moment and over the last ten years that’s been as high as 100 at any given time. I occasionally sell websites and domains and I’ll sometimes let others fall by the wayside because the project didn’t pan out as expected.

With the web sites I have income streams primarily from advertising and affiliate marketing. In a few cases I have software, books, articles and reports for sale as well. I also sell books and reports for the Amazon Kindle, and I still provide writing services on a contract basis here and there. Last but not least, I have several stock photography portfolios with more than a thousand photos available for license online.

So I have multiple streams of income that are primarily internet and marketing based. I’ve held off on the real estate and investing side of things while concentrating on those marketing pieces.

Watching the fiasco with the economy and bailouts and such over the last year has kind of soured me on the idea of stock market investing for now. A part of me knows that really great deals can be had before everything starts turning up again but I’m a bit annoyed at the entire system at the moment so the plan is to hold off on that for now.

My second “Money Mountain” as Robert Allen calls them, I plan to put into place before the end of this year. Instead of flipping houses or buying and holding strategies though, I plan to jump into tax lien investing.

Before I get there though, I need to shore up my current streams of income. Seventy-five to 80% of the income coming from one source is way to unbalanced. About the only time that might be acceptable is if your lifestyle won’t be affected by the loss of that much money. Even then though, it should be a temporary thing.

Having replacement income streams in place before disaster strikes means you don’t have to start anything from scratch if and when things fall apart. It’s the equivalent of having an emergency fund or a first aid kit. Be prepared before it’s needed.

Related:
• Multiple Streams of Income: How to Generate a Lifetime of Unlimited Wealth!

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.

“Getting Things Done” is a book that teaches you how to do just that: get things done. If you’re like most people today, you’re busy trying to juggle business, family and personal items all at once, and sometimes a ball (or two) gets dropped.

In this book, David Allen provides a complete system to help. The process itself, affectionately referred to as “GTD” by loyal followers, is one of the most useful I’ve personally found.

The problem is almost universal: Knowing what you want or have to do in life is one thing, but actually moving forward with it can be a huge challenge. This is especially true for all of us that have never-ending task lists and/or large, long-term projects on our plate. Looking at the mile long task or project list can be overwhelming — and cause you to simply not do anything at all. In this book, David explains how to break projects, goals and tasks down into single item, doable, actions.

Now this is an extremely simplified explanation of the GTD process, but it is comprised of a few key items: The Project List, The Someday/Maybe List, and the Next Actions list. Integrated into these key items is: Inbox, Outbox and File Cabinet management.

While all of these components are integral and useful parts of the entire system, the Next Actions list is where the majority of your productivity takes place. In short, a Next Action is the very next thing you need to do in order to move something forward. So instead of looking at a project and wondering how you’ll ever be able to handle it, you simply break off a very small chunk — the very next thing that has to be done — and focus on that chunk by itself. Once that chunk is completed, you then break off another — the next thing that has to be done — and so on.

I won’t try to explain all of the intricacies — David did that with over 250 pages in this book — but I will tell you this: David’s system is extremely useful and easy to learn.

You can start reaping the rewards of “Getting Things Done” before you’ve even finished the book. I’ve also found it very handy to keep on the reference shelf for further consultation as I’m refining and customizing my own enhanced productivity system.

I am a fan of practical, informative books with examples — this one really fits the bill and I highly recommend it.

Getting Things Done: The Art Of Stress-free Productivity
David Allen
Viking Books
c/o Penguin Putnam Inc.
375 Hudson Street, New York, NY 10014
ISBN: 0670899240, Hardback, 267 pgs

Kathy Burns
Reviewer

The above was originally published October 2002 in The Midwest Book Review

Added Feb 23, 2010… Eight years later and I still find myself referring back to my original–well loved and dog eared–hardback version of GTD. At the very least I include it as part of my yearly review process because it helps me get back on track when I’ve strayed, and helps me reflect on both sides of the coin… both from the “what did I accomplish this past year” and a “what do I want to accomplish in the new year” perspective.

I, like many others across the web, have gotten side tracked by the latest gadgets, gizmos, cool tech toys and software that’s all supposed to make life so much easier. I’ve had my short jaunt with trying to link and control everything in my project lists and I’ve gotten frustrated enough with it all to go back to plain paper planning too.

With so many restarts along the years though, I’ve really become much more comfortable with the whole GTD process. And I’ve decided it’s not rocket science. It’s not some passing trend. And it’s not meant to be a micro management ‘track every crossed “t” and dot every “i”‘ project planning or project management tool either. It can be as simple or as complicated as you want it to be but in the end, it’s all about helping you keep track of commitments you have in life.

People stress out about how to track all of the different actions for a project when they first start using the GTD system for example, but it’s not needed. The “Next Action” list isn’t about breaking down every single action needed on a project, it’s just about helping you “bookmark” where you currently are in the project. The project planning and individual steps belong in your reference or project support files. The only action that needs to be on the next action list is the very next thing that can be done: Plan, review, talk to, call, write, etc.

I’ll be the first to admit I still haven’t completely adopted every single part of the GTD plan over the years. I’ve been very weak on keeping up with the weekly reviews for example, and I’ve found myself with “Projects” on my next action lists too… where they stagnated until I realized it was a project that still needed processing. It’s only in the last few years that I’ve gotten much better at keeping my inboxes at empty as well–email particularly. I’ve gone through times of putting something on the projects list that needed to be on the Someday/Maybe instead, and I’ve gone for months without updating my lists too.

In the end though, when it all gets overwhelming or I start feeling out of control and off track–as soon as I go back to my lists I start feeling much better about everything.

This has been the case so often for me that I’ve decided GTD is ultimately a book about success and wealth building.

“Nothing happens until something moves.” This may be a mis-quote off the top of my head but it’s true. You can’t become a success in this world and you can’t build wealth without taking action. And it’s difficult to take action when your head is crowded with everything it’s trying to keep track of. It’s also difficult to take decisive action when you can’t find the files and reference materials you need for making progress on important projects, or worse: Forgetting you have an important project to work on.

Getting Things Done gives you a step by step, practical approach to keeping everything together while freeing up your mind to do the really productive work needed to become wealthy.

A followup book to GTD is “Making It All Work: Winning at the Game of Work and the Business of Life.” I just purchased the Kindle version of this one last month and plan to write a review on it soon. It covers much of the same material as GTD does, but where GTD is a hands on step-by-step system, Making It All Work covers the philosophy and science behind why all of the steps work and how they all work together. This difference in approach really helped me understand much more about GTD overall, and helped me start fixing some of the areas I’ve been weakest in over the years.

Bottom Line: Whether you need to start taking more action on important projects, stop forgetting to buy milk, or start new wealth building habits I highly recommend both “Getting Things Done” and “Making It All Work.”

Other Perspectives:
- The Simple Dollar: Getting Things Done Summary
- 43 Folders: Getting Started With Getting Things Done
- 20 Something Finance: A GTD Summary & Review of Allen’s Getting Things Done
- Wired: A Guide To Getting Things Done

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.