The Keyword Academy has this absolutely infantile, ridiculous scheme where you can apply for badges to match your (verified) income – I mean its like pre-primary school right? Except for some odd reason it does seem to matter to me – and today I made it – I made the next badge up – in the last month I earned $2500 in passive online income and I have nice pretty badge to prove it. Half of that was from Adsense and that figure represents a 50% increase over December’s Adsense figures. So how long does it take to make at total of $4000/month of online income? So in answer to the question “Can You Make $1000/month with Adsense” (written almost exactly 2 years ago) – is YES, I DO. And yes at the time, I really didn’t think it would be ME that did!
In fact I blame Mark Butler (from the Keyword Academy – yup you can get a personal consult for free within the Academy – its smart move by them – but unbelievable good value for members) – I had a consultation with him a few weeks ago – and I wrote on my white board – make $2500 by April 2011 (my anniversary date with Keyword Academy and my birthday). Oops looks like I will have to revise that LOL. Even my long-time goal of US$5500/month is starting to look reasonable – that would mean about US$4000/month in passive income. I can now see that happening this year – so long as I stop my obsessive stat’s checking and go back to work! Especially when I consider that my income has jumped while I’ve been on holidays – I thought I might resent working while I was travelling but instead
Why that figure – it would cover all our regular household expenses (so long as the US$ doesn’t completely collapse). That’s called freedom – for both my partner and I. Coincidentally it would also be about what I earned as a highly paid, bored, stressed out, IT professional – that would be sweet revenge!
So How Can You Make $2500 / month in Passive Income?
I don’t flipping know – I don’t know you – but I can tell you what has made a difference to me:
understanding I wanted a business not a job. Freelance writing is a job. Developing websites for other people is a job. Developing your own websites which produce more income even when you are on holiday – that’s a business.
outsourcing. Hiring a writer not only freed up my time – it made me become more organised because I had to tell him what to do – like duh!
having a range of sites in totally unrelated niches – sites I thought would be winners – no traffic. Sites I thought no one would EVER buy THAT online – they buy – go figure. I’m too stupid to figure this out in detail – my fool proof method of knowing if there is traffic for a keyword – get to page 1 and see if there is!
learning to believe my own stats – rather than what people are saying about the death of SEO, Google changes, Supersite, niche sites are dead, etc, etc. The best information on how to grow your business will always be found in understanding your own statistics – maybe I should write a post on that!
I don’t know how to say this without sounding like a paid placement – but I really do credit the forum over at TKA for being part of my success – I really don’t think I would have have hung on this long without the help support and I get there. I rarely ask for it – but just seeing people going thru the same stuff as I am is so incredibly useful and encouraging. Lets face it – few of us have anyone in the “real world” who understand why we play on the Interwebs all day – its nice to have some online friends who do.
Thanks for listening – now I have a lot more work to do…
There was a recent thread in the forum at TKA regarding managing your Internet Marketing income which I added my 2c to. I then got quite a number of PMs from people asking me follow up questions – given the thread wasn’t even mine – I guess my commonsense approach to record keeping and taxes are not so common. So here’s what I think is important – your mileage may vary.
My approach is quite simple – I’m not an accountant – though I did pass ACCY101 a million years ago. I have never found a “system” which manages multiple currencies the way I need to – so I developed my own. I use an OpenOffice spreadsheet – but any spreadsheet program which can sum figures and do the odd bit of multiplication will do just fine. The system has evolved over the years – but I’ve never had to start again. If I didn’t have some complex real estate investments I could do my own taxes off these figures – as it is I give them to my accountant.
Having a system to record your expenses and payments is what’s important – once you have that you can do your taxes – or give the figures to someone else to do. But either way you need to provide the basic figures.
Online Income and Record Keeping
Ignoring taxes to start off with – the first thing you need to have in place is a way to manage your online income. Long before I was making enough to worry about tax – I used to track my monthly income – it kept me sane and motivated. If you don’t know what you are earning how do you know how to improve it?
Tracking Income as You Earn it.
So my first spreadsheet was very simple: each column across the page is a month – and ever row was a source of income. As a I got more sources of income I simply added more rows in.
I split my income three ways:
truly passive – ie advertising and affiliate sales
not at all passive income – freelancing – one row per a client plus some more general one off stuff I do like hosting other people’s site and generic SEO consultancy.
one-off income – from selling domains or websites – which tend to really be windfall income while the other two groups are more ongoing.
Initially I thought that my three biggest earners would be Adsense, Amazon and eBay and that’s why they are highlighted – its never really worked out that way – I generally suck at eBay and Amazon – but I keep the highlighting …I don’t really know why 🙂
This spreadsheet is dead easy to maintain – near the start of the month I login to all my major affiliates and check what I earned for the previous month – note I won’t have been paid yet by most of them – but I look at the earnings.
Managing Passive Income in a Foreign Currency
American readers can probably skip this section. I don’t live in the US but most of my income is made in US$. I decided early on to manage all my income for planning purposes in US$ – I have my goals in US$ I worry about whether my income is going up or down in US$. Now this is different to whether my income is going up or down in my local currency – but I can’t control the exchange rate so I don’t worry about it to much – I focus on the US dollars. Note my paypal account is in US$ – its my cheap foreign currency account really.
To come back to the currency that matters to me – ie the currencies I pay taxes in and spend money in – I have an conversion line to my local currencies. I use a conversion published by my local tax department to keep thing consistent
Tracking Income as You are Paid It
The above spreadsheet worked for several years. Yes I didn’t track expenses (they were too low to mention, as was my income) and yes I recorded income when I earned it not when I was paid it (again something I couldn’t control). But then I started earning more passive income – and I needed to add a second sheet to my spreadsheet – to record income as I was paid it (this is what the accountants call an cash basis). Certainly in Australia and New Zealand if you are a small business or individual you can chose to pay taxes only on what you have been paid – not what you have earned – that’s what I do.
So I added a second sheet to my spreadsheet it looks like this:
Although most of my income is earned in US$, Adsense then pays me direct into my local bank account i.e. in NZ dollars – where I get a payment (or make a payment) in NZ$ I account for it as such. The US$ payments and expenses have to be converted to NZ$ for my tax records.
I also do work for local clients – who obviously pay me in NZ$. We have a local tax (GST, like VAT or other sales tax) which I need to apply for local clients but not for overseas income.
My local tax department allows you to chose my own conversion rate – so long as its believable and consistent – they also publish monthly figures for major currencies – I use their’s – fewer room for arguments. Whatever you do – be consistent – for your own sanity if nothing else.
Of course if you are earning enough to earn tax you really need to start tracking your expenses – after all why pay more tax than you have to?
All of my direct business expenses are paid via Paypal in US$ including domain registration, membership site subs, backlink services (Advertising), software etc etc.
However there is also the whole other bunch of expenses which are at “home”. These include both paying my contractors (when its from a local bank account), books I buy locally, electornics and furniture for my home office, a percentage of my ISP expenses, my house insurance, my Council rates, home maintenance, power, parking (for local clients) paper and printer supplies – it adds up – and it all comes off the profit BEFORE I pay tax.
I keep records – well I keep the receipts and throw them in an envelope a month – if I needed them I could prove these expenses. (I do expect to be audited one day by the tax department – my business is so “odd” in terms of amount of overseas income and low local expenses I am sure it will blow an automatic whistle at some point).
At the bottom of the page I do a couple of things – I project my annual profit – I take the last 4 months of my NZ$ profit/loss – divide it by 4 and multiple it by 12 – thus projecting an annnual income – its useful a) to shut up those who still think I just play online and b) it gives me an idea when I will have to start paying provisional tax.
The YTD NZ$ is just my total net profit for the tax year. Our tax year end is 31 March – so at the end of March I use the blue column to total all figures for the year and for the tax return.
Online Income and Tax Residency
Tax residency is not always the same as where you live. Often it is – but not always. For example if I – a New Zealand tax resident – decided to move to somewhere with very low taxes (e.g. most of the oil rich nations) – I may be resident in Saudi or Dubai – but I would still be a tax resident of New Zealand. That’s because New Zealand taxes me on my income – wherever in the world I might live. You can in fact be tax resident in two different countries at the same time – but that’s rare.
The above spreadsheet takes me about an hour a month to maitain. I download the figures from my affiliates, I download the month’s data from PayPal and allocate it to the various expenses/income categories that I use in the spreadsheets. I look up the figures on the household bills and use a separate sheet ot itemise them and work out the % that I am claiming.
I have been pretty much off grid doing the holiday (vacation) thingy. But I am beyond angry so I need to blog about it – if you don’t like bad language – back button now!
A few days ago Grizz made an interesting post about how he became one of the good guys in the Make Money Online niche – and why he walked away from it. Go ahead and have a read – a genuine apology – even though many of us considered it completely unnecessary – after all I’ve never paid Griz a cent and he’s partly responsible for the decent online income that I make these days.
To be honest his original post freaked me out a bit – maybe I was delusional that my little mini-sites with lots of links would make me money. But Google keeps sending money to my account – the evidence told me that his original methods work just fine – for me anyway. Griz’s business has changed – he appears to have found a way to combine golf with making loads of cash – good on him – but no amount of money is worth learning golf as far as I am concerned.
He wants to change the direction of his business and has decided to share that info with the rest of us. For free as usual – as I said Griz owes no one an apology.
But I am not angry with Griz.
What has been out of the pub in Ireland and online is the comments on his post – specifically several comments from Ken Evoy. For those who haven’t been around for a couple of years – you may may not know who the hell Evoy is – he’s the owner of Site Build It!
For the back story – Griz summarises it quite nicely here: Site Build It Review.
I wrote a post a review of Site Build It – it wasn’t a good post (I’ve tidied it up a bit over the years) – it wasn’t well researched – hell it wasn’t spell checked. I would have been turned down by 1/2 of the owners of Postrunner sites!
That post ranks #1 for “site build it scam” to this day.
It ranks because of the backlinks to it – the back links orchestrated by Vic and Grizz. The entire exercise taught not just me, but many others the strength of relevant backlinks to promote content on the web.
Evoy’s initial comment was congratulating Griz for turning to the “content is King” side – whatever you want to believe, but everyone should note carefully what Griz does and read very carefully between the lines. (Note I have my own views but the Guinness is calling so that will have to wait).
I’m not furious at that comment.
What I am furious is his his next comments (well more like essays really)- which rapidly turns into a defense of SBI’s outrageous pricing structure ($300 per a Website/year).
The justification for the pricing is – (much paraphrased) – this is how Site Sell makes it money. My business model requires it. Yeah make your own choices about supporting Evoy’s lifestyle. (Oh and yes they do fire people who don’t get on in the group hug of the forums – as mentioned by Evoy).
I could debate this again – but frankly if you aren’t prepared to learn how to install WordPress on a hosting account – then you really should probably look for a different scheme to make money online.
Its not just that this is the same old, repetition of the SBI! marketing ptich – its the fact that all of this is happening on Griz’s apology post! That’s why I am not debating this on Griz’s post – its not appropriate. So Ken Evoy – here are some simple blogging etiquette hints – you may want to incorporate them into your training manuals – I am sure you can expand these into at least 2000 words of content.
commenting with and disagreeing with the post is fine – so long as its not abusive;
taking the comments totally off topic and promoting your own financial interests is not. Yes I know you didn’t start it but you sure has hell escalated it;
shorter is better – writing essays on other people’s blogs is the equivalent of being the grandstander at the wedding reception who won’t shut up after a 30 minute speech when 10 minutes would have been more than enough.
Enough said I think – I’ve seen outrageous comments before – but Ken you beat the lot of them – and you claim to teach people to build a business – that’s just tragegic!
If you found this post because you were googling “sit build it review” – then please consider what Ken’s own online behavior tells you about him and his company ..
Bugger – didn’t work still angry – more Guinness is the only answer . Find my original Site Build It Review here