Get my FREE insider newsletter that is helping 400,000+ people MAKE MORE MONEY!

How to make residual income (I made $10,000 while on a 3 week vacation)

Making residual income is all about setting up the right systems. I'll show you the systems I set up that made me $10,000+ while I was on vacation in Asia.

Ramit Sethi

I took a vacation to Southeast Asia for 3 weeks — all over Vietnam, Cambodia, and Thailand. Nobody on this site knew I was gone. Yet while I was abroad, I earned tens and tens of thousands of dollars while completely off the grid. In this post I’m going to show you how I earned residual income that gave me that freedom  (aside from some really cool pictures of myself):

  • Why you need a solid system in place (to actually make residual income)
  • Why working passively is a LOT of hard work
  • What the business of passive income actually thrives on

Ready? On to the pictures.

the author at the beach in southeast asia

Taking a break from eating before eating again

The author in front of an "e-book shop" while on vacation


picture of the hotel the author stayed at while earning money from residual income while traveling

I always wanted to stay in a hotel room with a pool. This was my back yard in one of my hotels in Thailand. It was a very romantic time with my brother: “Welcome, Mr. and Mr. Sethi.” Classic.

the author on a scooter

This is the second vacation where a white friend crashed his scooter. What is it about Americans that they can’t drive these things.

the author with a water buffalo in southeast asia

Didn’t smell too good.

In all that time, you continued to get emails and blog posts from me. My business grew: 1 day’s sales would have paid for all my meals and airfare — many times over. I rarely checked emails. And when I came back, I had a detailed status report of exactly what I needed to know.

To a lot of people, this is the holy grail of passive income.

Yet why do I still tell my readers that passive income is largely a myth for 99.9% of people?

I’ve said this over and over, including in 7 Lies We Tell Ourselves About Money and Why Most People Fail at Online Products: Passive income is unrealistic for most people. They see some guy go on a 3-week vacation and continue earning money, and say, “I can do that!”

What they don’t see are the systems that took years to put in place.

To make Residual Income, you need a solid system in place

Honestly, I couldn’t have taken this trip last year, and I’ve been writing this blog since 2004! But dreams are more powerful than reality. Here’s a classic example from a guy who emailed me:

Hi Ramit:

I love your psychological insights on changing our minds.

One of the products I have been looking at is how to make money buying penny and small stocks that ballooned to 15,0000% within a year.

I am only interested in a business that makes residual income like Paris Hilton.  Every time someone stays at a Hilton Hotel, she gets $1 per room because his granddaddy left her stock in the company.

Why work for money? or work until 65 years old or older?

If you unleash and are interested in this area that would create MAXIMUM VALUE for your customers, I will be first to sign up.



Unfortunately, this guy is doomed. He is so focused on a dream that he has spent close to zero time understanding the realistic universe of options to improve his finances.

In fact, if you asked him to break down the risks/rewards of 5 different ways of improving his finances (negotiating a salary, investing in the stock market, buying real estate, freelancing, etc), he would have no clue.

Instead, he’s developed tunnel vision around the idea of penny stocks, no doubt hastened by scammy penny-stock pushers who suggest you can live a ridiculous lifestyle while working 3 hours/day from your house dressed in your terrycloth robe.

Why earning residual income is a lot of work

I have a lot of friends making 6- and 7-figure incomes. Some of them even make it “passively.” All of them work harder than you would ever imagine, even the passive guys. In order for me to go on a 3-week vacation, it took nearly a year of building systems, hiring people, and systematically testing how far we could push it to remove me from day-to-day management.

And finally, when I felt ready, I vanished, stuffing my face with unimaginably large, spicy meals. Thank you, Asia.

Would you call that “passive”?

Would most people be willing to put in the work and go through failure after failure to learn how to earn “passive” income like this? (Not to mention that a lot of success is pure luck.)

Look, IWT isn’t just about simply making money. It’s certainly not about cutting back on lattes. It’s about deciding what “Rich” means to you and using psychology and systems to get it.

For me, two years ago, I decided that one of the markers of success would be taking a long trip where I would be off the grid — totally out of touch with people — and my company would still run without me.

Two years later, after a lot of failures, I had finally built the systems to be able to handle it.

What the business of passive income actually thrives on

This is what frugality zealots and passive chasers don’t get. They believe that cutting back is a virtue in and of itself, or that making $200/day is the end goal. I believe that cutting back teaches good values, but I also know that most of us want MORE — we want to travel to more places, buy more rounds for our friends, try nice restaurants.

I believe that making money without doing work is great, but I know there really is no such thing. The amount of work I put into building the systems that power IWT is gigantic — and I continue doing that work today.

You can’t out-frugal your way to Rich. You can’t fixate on earning passive income without trying the low-hanging fruit — negotiating your salary, automating your investments, freelancing — first. You can try, but you will almost always fail. I’m telling you the truth as a guy who earns a lot of money “passively!” In fact, I’ve left millions on the table by not teaching that very class:

A confession: I’ve left millions of dollars on the table by not developing a course about how to build your own online product and sell it on the Internet. My courses have sold well over $100,000 in one hour, and I get asked about how I did it over and over.

It would be relatively easy to teach. I could build a product teaching you how to build a product (now we’re getting meta), including sharing actual sales data, the tactics I use for product launches, my sales copy, the biggest mistakes I’ve made, and conversion rates for various techniques. The product would handily make me 7 figures.

Unfortunately, the blunt truth is, I don’t believe most people will ever be successful in building online products. This isn’t just a condescending “I can do it but you can’t” view. No, the data backs this up. The vast majority of people who try to create online products fail — like 99%+. This is the elephant graveyard where the dream of passive income goes to die.

See, to succeed with an online product, not only do you have to be extremely good at your area of expertise and know the basics of marketing — including identifying your niche, pricing, finding customers, etc — you then have to learn all about productization: packaging, upsells, cross-sells, advertising, email funnels, JVs/affiliates, refunds, customer service, sales-page construction, A/B testing, continuity programs, etc.

Unlikely. If we’re being honest, most people have enough trouble mastering the first part of the equation (creating something other people will pay for), much less learning the rare skills of productization. Think about it: Would a personal trainer have you do 400-lb squats on Day 1? No, he would start you off with light lifting to perfect your form.

Why would I sell something — even if it could make me millions of dollars — when I know the vast majority of people won’t be successful? The money does not motivate me if you’re not seeing measurable success. Remember, IWT was never about making me money. It was and is about behavioral change. There are tons of ways I could make easy money, but I have no interest in creating a product about creating a product when the vast majority of people will fail. (I encourage you to read The $75,000 Email, a story about turning down easy money because I simply wasn’t interested in it.)

But you can use other proven methods to make more money and give yourself the freedom to do what you want.

Maybe that means finding a dream job. Or finding your first profitable idea to earn more money. Or even just automating your finances.

Each of these is far, far more likely to give you the lifestyle you want. You may not be able to brag about it on some random internet blog, but you will be able to do the things you really want to do.

Besides travel, I’ll give you an example of how money has changed my lifestyle. In a recent interview, Andrew Warner of Mixergy asked me exactly that:

Andrew: What’s the best part of having made it? You’ve done really well. This is on the sidelines, we’re all studying your sales copy. A lot of us are on the sidelines trying to evaluate how much revenue you’ve done. Estimates are pretty high. Higher than Fortune Magazine seemed to say so maybe people are exaggerating. But on a personal level what do you get to do? Do you get to travel somewhere interesting? Tell me about that.

Ramit: Well, I’ve always said money is a small part of being rich. I’ve said that from day one and I genuinely believe that. For me, there are so many other things with being rich. In fact, I wrote a post years ago ‘what does rich mean to you?’ Helping your parents with their retirement. Being able to travel and visit your friends.

I’ll tell you a couple of things that I guess I’m able to do now that I wasn’t able to do before. The first thing is I’m a cognitive miser. We’re all cognitive misers. We have limited cognition. I always wanted to be able to go and just, if I see something in a grocery store, or I want to take a taxi instead of a subway, I didn’t want to have to think about it. That doesn’t seem like that glamorous of a thing but it really matters to me. I think it’s the freedom thing, the flexibility thing, on a very micro, day to day level. If I see, let’s say I feel like ordering a drink or if I feel like getting an appetizer. I never got appetizers when we were kids. I can do that.

Also, by the way, things don’t change that much. We were a very middle-class family and we had a lot of kids in the family. We would eat at Taco Bell sometimes and we would never, ever order the Mexican pizza…We go there but we can never order the Mexican pizza because it was too expensive. I still remember it was $3.45…To this day I have never ordered a Mexican pizza. I could walk in there and order it without a problem. My friends are like come on, I’ll get it for you. I’m like no. I had that mentality (inaudible).

The big thing, besides just like if I want to get an appetizer I can do that, is, you know, I’m a little bit flexible so I can travel. I guess my one big luxury would be that I have two apartments. One in San Francisco and one in New York. I can travel back there and I can decide that I want to go tomorrow and go to San Francisco. That is possible. Before I would have never dreamed of doing that. I would have been checking on the prices all the time.

Aside from that, it becomes less about money. I have a huge platform to be able to test my ideas and see if they work. To me, that’s a rich life.

I’ll give you another example of living a rich life:

One of the things I always told my friends was, “When I make it, I’m bringing everyone with me.” So when I finally realized I could leave for 3 weeks this year, I came up with a new motto: “My villa is your villa.” I invited my friends to come, hang out, take a room in one of the hotels I was staying at, and come chill. I flew my brother out. I used my money to live the kind of life I wanted.

To me, the idea of living a rich life transcends passive income, or blogs, or what software you’re using. Instead of being driven by the tactical, you’re deciding how to live. You’re deciding on your values (e.g., frugality and cutting back vs. growth and an abundance mentality).

And here’s the biggest thing I can share with you…

You don’t have to wait until you’re making $100,000, or $500,000, or $1,000,000 to do this. You can decide today. Take out 3 pieces of paper and break it down:

  1. Where do I think I’m spending my money?
  2. Where do I want to spend my money?
  3. Where am I actually spending my money?

This simple exercise will shock you.

For those of you who claim that “family is everything,” how much are you actually spending on visiting your family? If you claim health is important, how much are you spending on a gym/trainer/food/health books?

You can do the same exercise with time, btw. This opened my eyes years ago and I’m still not even close to where I want to be.

This post is different than the ones I usually write, but I think it’s important to sit back and think about why we’re striving to live a rich life. It’s not just to master “passive income” (whatever that is) and sit on a beach and do nothing. To put it bluntly, anyone who has the skills to actually earn a substantial enough passive income to do that would be bored out of his mind after a few weeks of that.

It’s about deciding what money is for. What a rich life means. And how you can start today, instead of a distant “someday” in the future.

If you’re interested in more on this, I recorded an interview with my friend Derek Sivers (who used his skills in systems-building to build the ultimate distributed company…then sold it for $22 million). You can get that interview here.

You can also browse this site or my email list for the “secrets” to living the life you want. My savviest readers will laugh since there really are no secrets. I’ve laid it out, both for free and in my premium material, and the information is out there. Now it’s up to you.

Do you know your earning potential?

Take my earning potential quiz and get a custom report based on your unique strengths, and discover how to start making extra money — in as little as an hour.

Start The Quiz


  1. avatar
    Andrew Warner


  2. avatar

    Well said Ramit !

  3. avatar

    Great post! I love the picture of the pool.

  4. avatar

    Good write up–inspiring and B.S.!

  5. avatar

    now I want to open an e-book store. Brick and morter, FTW!

  6. avatar
    Justin Sherlock

    Ya know Ramit, I’d rather you be honest than spew some BS. It’s also not a bad thing to point out that you succeeded where many other’s simply won’t.

    I liked the post

  7. avatar

    Well, that was refreshing. I think the opposition you build up between frugal living and a mentality of abundance is rather constructed – and of course I’d have to say that since what I write about is better living that’s also better for the world (which bicoastal living is not) – but that’s about the height of nitpicking I can get to right now.
    The important, and refreshing, thing is that 1) you get to the heart of the matter: What do you want to live like? What is a good/better life? How can you make the money for that (and preferably, enjoy the work and your life), not How much money can I make?
    There’d be lots of easier ways, maybe not with world travel, probably even with that. Maybe learning that you don’t need to visit every country in the world to find your self-worth.

    Any way, though, happiness is hard work, not slacking off and wishing to be Paris Hilton 😉
    Thank you for being, uhm, straightforward enough to just simply say that.

  8. avatar
    Jeffrey Trull

    I’m glad I read this because I got much more out of it than what the title conveyed. The most powerful thing for me is the 3 questions that you pose at the end. Everyone must answer these questions before making any important decisions on money and their lives.

  9. avatar

    Loved it.

  10. avatar

    I think you’re right about a lot of this. Having done the “build a product and launch it” thing, there is a piece that the frugality zealots can teach us. You have to work a lot of hours to learn the 1000 random things need to launch products for example. This is close to impossible for most people (mentally) to do while also working a full time job. Reducing expenses to the maximum can allow you to just freelance sooner, putting your closer to that point where you can dedicate full time to the big projects that will pay off with things like passive income. All the stuff here about maximizing rates, making money on the side, etc. is spot on, but freeing up your time precludes any of the big stuff in my experience.

  11. avatar

    Some really good points made here. Too many people thing of “passive income” as “money for nothing”, without having the slightest clue as to the work that’s required to get to that point. I’ve run my (small, online) business for about 10 years now (since high school). Some people will see me “not working” because I can take time off whenever I want, but no one sees the 10-12 hours a day I am doing work, research, customer service, etc. I left for a 2 month (working) vacation a month ago (eastern Europe), unfortunately, I can’t go completely off the grid yet, but this is close enough… for now. I know when I get back home, I’ll be back to the 10+ hour days in no time though.

  12. avatar

    This is why I subscribed to your email lists! Great post. I’m currently taking three months off to be with my 6 months old daughter. Financially, there’s no problem: I’ve been saving for it. In 2010 me and my gf hitchhiked from Poland to Pakistan. That was an adventure, and it didn’t cost much at all. Hope you’ll make more trips like this in the future, and that all your friends will join too!

  13. avatar

    i think a lot of people rush the product process and that’s why they fail. courses will tell you that you can make and ship your product to launch in a week or even over a weekend.. but that’s IF you know what you’re doing and have the following to back it up. i would love to sell products but i don’t think i’m there yet.

  14. avatar
    Dave Victorine

    Super inspiring…

    Thanks for the great reminder that the “rich life” is not really all about money, but also the decisions that we make with our time.

    I can not wait to try the exercise.

    Thanks for sharing

  15. avatar

    Definitely a great post. I especially like how you have proven unequivocally that “passive” income is such a misnomer by sharing your own business results. Sure, you are “passively” collecting that income now so to speak, but only after front loading an enormous amount of work.

    Also, those are fantastic questions. I actually already know where my money is going thanks to having automated my finances after having read your book. I checked out my account to confirm my answers, but flipping those questions around in regards to time… haha… that’s going to be the fun part.

    Changing the topic of the questions to time rather than money is also going to take me a little while longer to answer and will require a bit more thought. Thankfully, I’ve started keeping a time diary so that I’ll know precisely where I spend (and otherwise waste) my time. The results ought to be very interesting.

  16. avatar
    Desi Doll

    I did like the post, although I didn’t think I would at first. The title made me jealous/frustrated because I don’t expect that I’ll ever make passive income. I’m not an “unwashed mass” or part of the “lowest common denominator,” but it’s just really hard. But then I read the post and it was more soulful than I expected. And I like the pictures. Especially the one of you on the scooter w/ the glasses. Just like a Bollywood hero!

  17. avatar
    Johnny Mean

    Great post Ramit!

    I also combined three systems from above to achieve my goal.

    IWTYTBR-Taught me how to build a a financial system that meets my objectives and increases my net worth monthly.
    Earn 1K-Taught me how to test and develop multiple income streams.
    Dream Job-Gave me the flexibility to take off for several months and come back to better employment options.

    So I decided to sell everything and head to SE Asia in September with my wife. We’re planning to travel the same region over several months.

    If you can share any of your recommendations from your trip in a separate forum or email, that would be Awesome!

    Inspiring, and achievable!

  18. avatar

    This is the “real Ramit” (ok maybe you are a bit more crass in person!)

    Beautiful post, and love that you are modeling what rich is really about.

  19. avatar
    Greg Miliates

    My favorite definition of an entrepreneur is: someone who’s willing to work day and night so they can make money while they sleep.

    It takes mindset, hard work on the right tasks, measuring & optimizing your progress, persistence, and patience.

  20. avatar
    Desi Doll

    I am reading Ramit’s book! Chapter 1 – Optimize Your Credit Cards
    I called my credit card company to lower my APR. They lowered it from 16.9 to 16.2. FML! But they cryptically told me to call back in August because APR’s are “dependent on several factors, including the market.” So this isn’t final? We can just call back another time?

  21. avatar
    Kimberly Houston

    The 3 questions exercise is genius. I did in my head and was surprised by the results — one quick look at my bank statement and checkbook register told me what I’m *really* prioritizing!

    Totally agree that money is a small part of being rich. I’ve had this conversation with a couple of my closest friends a few times over the years and it’s enlightening, and often surprising, to find out what your nearest and dearest define as “living rich.”

    For my best friend, it’s having things to wear that “match.” Yep, when she has a purse or a headband or some other accessory that’s made of the same fabric as her dress, she feels positively wealthy! She said when she was growing up there wasn’t alot of money for clothes, and she used to look at catalogs with models who were dressed “matchy-matchy” and thought that was the height of “being rich,” and wanted to be able to do that herself someday. Now as an adult, she’s a stylish and hip dresser most of the time, but still has the powerful urge to dress matchy-matchy on occasion, even though she knows it comes off as less than fashionable to the outside observer.

    For me, feeling rich comes from a host of factors, but one of the most significant ones is has always been having a fully-stocked refrigerator — overflowing with all the best kinds of food and beverages, enough to never run out of good things to eat and drink. I think it comes from growing up with not alot of money and the grocery budget being pretty tight, so it was always the staples, and not much else. Though there were the exciting trips to Krispy Kreme Donuts from time to time! ; )
    So interesting, isn’t it?

    Great post, as always Ramit.

  22. avatar

    I couldn’t agree more. Being rich means different things for each person, and it’s important to ask ourselves what we want, but most importantly, be willing to pay the price for it. If you don’t know where you want to go, you’ll end where you didn’t want to be.
    To me, being rich means having a career that allows me to afford good things, but most importantly, allows me to spend time with my kids by the time I am 35. I have to say, I don’t have any kids, and I’m not even married yet. But, that was the goal I set up when I was 20, and I’ve been working with that purpose in mind since. Now that I am 28, I am successful at my job, have paid all of my student loans, I’m back in school for a Masters degree, and even saved enough to buy my own home.
    While I am far from achieving my goal, I’ve made the sacrifices necessary to get there. And having a specific purpose, makes life a lot easier.

  23. avatar
    Mr. Everyday Dollar

    You could probably call me a frugality zealot. I like to live a low impact lifestyle by living in a sub-1,000 square foot place, cooking most meals at home, walking and biking when possible, brown bagging my lunch and not drinking soda. Most of these things are good for my health and my wallet.

    I would disagree with you in that cutting back is, in fact, a good thing. Americans are consumers and it hurts their wallets, their retirement age, their waistlines and health, plus the environment.

    You can want more, like you said, and that’s a good thing. But learning to balance both frugality and wanting more is entirely possible because I’m doing it.

  24. avatar

    Ramit, you rock. Thank you for the inspiration. xoxo

  25. avatar

    This is a much more thoughtful example of why most people won’t be successful in earning passive income rather than what I’m used to hearing from some online personalities: “I did it, but you can’t and I’m not going to explain why. Just accept it.” I think many people with aspirations of earning “passive income” would be well served to find a mix between passive income and the many negotiations and automation techniques you teach. Trying to get something for nothing is where people go very, very wrong and you did a great job of showing how much you’ve poured into your company to make this recent trip a reality. Great pics!

  26. avatar

    This is a great post, Ramit, though I’m not one of the readers who dreams about passive income. I bought your book and used your automation advice to max out my and my husband’s IRAs–and also to save $1K/month for travel since we both really value seeing new places and visiting our friends and family. Using our money toward goals that matter to us, rather than frittering it away mindlessly, makes me feel wealthy.

    There’s a great Zadie Smith quote from her book “On Beauty” that goes, simply, “time is how you spend your love.” It helps steer me toward spending time with the people that really matter to me.

    Thanks again for this thoughtful post.

  27. avatar

    Epic post. Soap box worthy.

    This definitely isn’t the norm around here, but I don’t think it’s out of place at all. I honestly like reading things like this. Its genuine as hell. I think it’s important to lay it out like you just did. I admire you for sticking to your values and sharing exactly why with us all. A lot of people would have just cashed in.

    To be honest dude, the lessons you teach about discovering your dreams, your motivations, and living how you truly want to live are way more valuable than yet another Internet marketing course. There are plenty of those around. To me, the true success in life comes with first figuring out what it is that is truly important to you, then chasing that dream through whatever means you decide. Skills without direction will get a person nowhere fast.

    I dig it bro. Looking forward to the next life lesson.

    PS – I now know what my next purchase will be. For some reason I now want a Vespa.

  28. avatar
    Mike Carroll

    Straight to the point and no BS. This is why I read every email and every post. Even if it’s the second or third time – its always relevant and is a nice refresh in my mind.

    The next 5 years are going to be so eventful, working my butt off trying to get systems in place to do exactly this.

    It’s hard living away from family abroad, but I keep telling them it is goig to get easier each year, as I can see then more and more regularly. But it won’t happen without me putting the graft in now to make it happen.

    Now back to work…

  29. avatar

    “Why would I sell something — even if it could make me millions of dollars — when I know the vast majority of people won’t be successful? “.

    You are right. Not a single product in the world can help everyone. Even iPhone has competitors. But 1 or 2 people will become hugely successful. Why? Maybe they needed that extra piece of information from someone like you to propel them to something new or take that business to the next level and their efforts might help a few other people (not millions) so yeah.

    Even this blog has tremendous information but I guarantee you and you know this yourself that most people who will read this blog won’t follow the information on it. Guess my point is if you know something amazing than share it because it might help those super ‘dying for financial freedom’ people like myself. People WHO WILL follow good advice.

    PS: If I’m wrong, feel free to put me in my place with your gut wrenching put downs which are ever so hilarious. No problem 🙂 Cheers!

  30. avatar

    Great post. I think too many of us are lead to believe rich is having lots and lots of money in the bank. But like you said being rich means different things to different people.

  31. avatar

    What do you mean it passive income is a myth? I make tens of dollars every month from the world’s greatest cheese website. By the end of this year I’ll be a hundredaire!

  32. avatar

    Perhaps I’m not aiming as high as many people. I’ve no objection to working hard. I don’t even mind putting in long hours, since I love what I do (writing). I’m willing to accept that I won’t make millions, since I put more into creation than marketing, but I do need to learn enough of the marketing side to create a reasonable income.

    So far, I’ve done some freelancing and negotiated income. No investments to automate just yet.

  33. avatar
    C Small

    Good post. I think it’s always important for people to understand that “passive” doesn’t just happen, and in most cases it never really happens. For most, it just feels passive because door are opened that were once closed and most of the time you are doing something you are acutely interested in.

    Would love to hear more about the journey. Those stories are not only inspiring but provide a wealth of information for us to use.


  34. avatar
    Barbara Saunders

    I love this, Ramit. I hear people talk about “passive income” who don’t even understand what “profit” is. For that matter, a whole lot of “passive” income isn’t passive at all. So what if the transaction takes place while I sleep; if I work all day to get the sales, that’s still active. It’s not like major products you have or dividends from the grandparents’ stock gift.

  35. avatar

    Wow Ramit,

    I really like the honesty. All of us (myself included) always see the end results of things, and ignore all of the hard work it took to get there. Passive income seems to be a by product of what you call living a rich life. Big picture thinking and staying true to one’s vision I feel can sort of overtake everything else, where the little things don’t matter as much. Great post.

  36. avatar
    Adam LoDolce

    Great stuff Ramit

  37. avatar


  38. avatar

    I love the cognitive miser stuff, I remember when I was in high school I went to a get rich quick seminar on either stocks or real estate. I was smart enough to recognize the get rich quick part for what it was, but the one thing that I kept with me, to this day, was a line from part of their sales pitch. The guy mentioned that his life goal was “to live on the left side” and he explained that when you go out to a restaurant, all the meals and descriptions are on the left and the prices are on the right. He wanted to live a life where the information on the left side would drive the decisions he made, not the information on the right. I think that’s exactly what Ramit is getting at with the cognitive miser stuff and it’s a concept I’ve been chasing my whole life. I’m nowhere near Ramit’s level, but I’ve largely built a life I’m completely happy with and short of the really expensive stuff, I live on the left side in the day to day. Hopefully I can keep hacking my life to move that bar that allows me the freedom to live on the left a little higher.

  39. avatar

    most important line of the article:

    “The amount of work I put into building the systems that power IWT is gigantic — and I continue doing that work today.”

    Maybe you can say more about that, explicitly emphasizing TEMPORARILY passive income from the imaginary always-passive income that the doomed dreamers are shooting for. What you are actually saying is not that 99+% of people fail at temporarily passive income, it’s probably half or so provided you are only counting the people who get their acts together to try, but that 100% of non-heiresses fail at always-passive, no-background-work income, and that because there are more lazy people out there than workers, that’s why it looks like 99% overall.

  40. avatar
    Sheyi |

    I can’t believe there is a blog post that will catch my attention and make me abandon what I’m doing online to read word for word. ramith, you are always on point and thanks for this manifesto.

    Many people do not know what been rich is and how to spend the money they have.

    My part here is to check what you have and where you are spending it.


  41. avatar

    Classic Ramit. First ,he utterly trashes the “Passive Income” hysteria. Then, he questions some of your deepest held beliefs about life and money. Finally, he takes the 50,000 foot view and inspires you to evaluate your behaviors versus your values.

    Well done sir.

  42. avatar

    Hey Ramit,
    Loved this post – not your usual, but enjoyed it all the same. I know I used to be one of those people that thought it would be easy to get filthy rich via online passive income. Now I’m going at it ‘the hard way’ but I know it’ll be far more rewarding to genuinely help people with my skills than to come up with something that’ll only profit me. Thanks Ramit, I know you were one of the people that inspired me to change!

  43. avatar

    Before I got to the end of the article, I had the epiphany that I could do this without being ‘on baller status’. What ever my wildest dream is, all it takes is careful planning, a can-do attitude and nothing is too far out of reach. It was even more powerful to continue reading and hearing Ramit say the same thing. Great post!

  44. avatar

    Loved it :). I’m such a futurist, and it’s these kind of dreams that inspire me to take action.

  45. avatar

    Ramit, you’ve said everything that I’ve hoped a few people in my circle could understand for quite some time. Passive Income isn’t for everyone and many times, industries where some excel are not good candidates to become Passive Income.

    Also, it’s important to mention multiple streams of income. This doesn’t mean that people should stretch themselves thin. Not by any means. However, certain skills can be niched to a particular target audience through several service offerings.

    Say Celine, an unemployed and divorced 32 year-old woman is starting over. She’s excellent with writing, public speaking, marketing, graphic design, and has kept deep relationships within the luxury automotive and hospitality industries within her locale. Her Saturdays are spent reading up on luxury accessories, travel, and luxury real estate. She makes jewelry and leather accessories on Sundays. She could offer copywriting services, special event planning (partnership marketing), and/or web and print design, along with selling her “hobby results” online and in a few upscale boutiques. The key would be to narrow down one target for her service offerings and go from there, tuning as she goes along (yes, I’ve been studying).

    Most of the time, people need to be honest about what they want to do, what they’re NOT willing to do, and what they can mentally and physically handle. Some see “fortunate” stories and believe that’s their destiny too, without understanding the vast amount of work and failures that resulted in the person’s success.

  46. avatar

    You have personalized it deftly.

    What does being rich/having time/being successful mean to ME?

    If I achieve YOURS or someone else’s idea of those things, then it will never feel like MINE.

    Thanks, Ramit.

  47. avatar
    Bruno A. Pradal

    Hello Ramit! I’m Bruno, one of your 1k students (I’m in module 2 currently).

    Thanks for sharing your vacations highlights, it motivates me to keep on track.
    I agree with you that being rich is more about flexibility and freedom and less about staying in a hammock the whole day. When I think about passive income what comes to my mind is being able to travel to visit friends without having to look into my savings and oddly enough, to be able to get into bigger projects (like jumping form freelancing to developing information products).

    So keep moving forward because each time you do it, you help me to move forward too.

    Have a good one!

    p.s Did you get my birthday greeting? I couldn’t record a video so I left it in one of your surveys.

  48. avatar

    Okay seriously buddy – I love your stuff, but you know everyone can see through to exactly why you don’t want to teach people to do that, right? I mean come on, do you think your readers are really that stupid? Why not just be honest?

  49. avatar
    Stephanie Biscardi

    Wow…This is Ramit completely uncensored! Right here in this post, you’ve opened up to your readers about what is important to you and why- and this is what really intrigues me about your success.

    From what I see- whether it’s you, or any of these successful online business owners or bloggers- there’s an over arching purpose and reasoning behind what you do. You find your life’s purpose and achieve it.

    While suiting your abilities and interests, you influence those around you and share your talents with the world. This in turns gives you fringe benefits that make your soul happy.

    It’s admirable to see people in the world who can find that place where their strengths, interests, and smarts overlap with something that makes their soul content. That IS success, no matter how much money is made after all the bills are paid.

    By the way, I feel that this is a good time to mention that I’m a teacher, who has had to find interesting ways to use your negotiation, financial, psychology/systems advice in ways other than intended. I’m not interested in “advancing” in my job to earn more money- I like working directly with children as opposed to being principal, curriculum coordinator, etc… but the help in creating systems that outsmart myself, negotiating techniques, and other philosophies I’ve learned on here have put me in the best position possible to continue working in ways that suit what I believe to be my life’s purpose most effectively.

    In addition to being in the right place in my ‘day job’, I’ve also used your tactics to help me build a tutoring business that over the past few months has funded my leap into the ownership of a children’s art studio business. I just launched this summer, after many years of dreaming and reading this blog… so, thank you for that!

  50. avatar

    I’ve recently built a passive income stream of $500/month doing what I absolutely love and am passionate about, selling knitting patterns. It didn’t require setting up all of the things Ramit suggested – I don’t know if it will make me millions, but at the moment it’s a great supplement to my freelancing income! When reading this I got a very negative stigma attached to the idea of “passive income”. Sure, it takes lots of work initially to set up, and I will continue to work on it to build and maintain that income, but I believe anyone who is committed to making it work will succeed. I’m just not clear why Ramit is so hesitant to teach it – the teachers I’ve found do it an a very authentic “build a business around your passion” way. I don’t think you need to promise people they will be making 7 figures while surfing to sell a passive income course, just like earning 1k on the side, anything extra is great.

  51. avatar

    Instead of negociating a raise I have asked my boss to have more paid vacation (to make a long story short). I now have 6 weeks where I don’t work but get paid. Does this qualify as passive income ?

  52. avatar
    Dave Hilton

    The thing I like most about your view on money and psychology is its simplicity. The behavioral and financial change techniques you share are so complex, yet you’ve honed your ability to break them down into bite size chunks.

  53. avatar

    I couldn’t agree more with the notion that once you have it, if you sat on the beach and sipped on piña coladas you’d be bored out of your arse! But the fact is that everyone is striving to have just that. Society, upbringing, everything… is egging us to achieve in monetary terms. The few who realise that happiness or time is not a byproduct of money (eventhough money can cause happiness) are richer than those who jump on the hampster wheel till they fall off. Like your style of writing, thanks for the post ramit.

  54. avatar

    Excellent post!

    Thanks for the look over your shoulder – including the holiday snaps 😉
    and the eye opening “money/ time spending exercise” – EPIC!

  55. avatar
    Stanley Lee

    Thanks for sharing your personal journey to “passive income paradise.” Totally didn’t have to do this, but I think those who are serious enough about residual income could rub off some inspiration from this post.

  56. avatar

    Great stuff Ramit.

  57. avatar
    Lucy Ra

    I really like how you used real pictures in the post. You know, not the typical vacation ones where you flip on a perfect smile and hug a monument, but the real ones like the one with a cow.

    You said it – it really is up to the person.
    A small example: when people hear I have a blog a lot of them say, “Oh, I really want a blog too and thought about making one” but they never did. Actually I was that person too. But one weekend I decided that I didn’t care if I was going to be the only one reading my blog, I just wanted it made and out there. Now I like reading comments (even if it’s just a few) and knowing that someone besides me reads it and people do respond when they like what they read/see. Now it’s up to me to take it to the next level, if I want to. Like you’ve said, it’s up to you. 🙂

  58. avatar

    Very true. Going through Rich Schefren’s BGS 2.0, and it definitely is hard work. But glad I have DreamJob and Earn1K to cover all my bases before I even finish off uni (have multiple jobs lined up, side income, and starting the entrepreneurial path). great work ramit. keep it up.

  59. avatar

    The 3 question on money and time… I find handling time is much harder than handling money but more important for living a “rich” life.

  60. avatar

    Yeah, that felt like a honest post there, it’s true that being selective and thinking about what you really want to do makes a difference. The difference has always been being able to do what I want when I want to. Nothing else really matters. If you know what that is that is a gold nugget.


  61. avatar

    And yeah making passive income is nearly impossible. I agree.


  62. avatar

    99.9% is no exaggeration!

    I’m HUGE into online marketing and have read every book and blog post I can get my hands on (viperchill, mindvalley, marketing experiments, sherpa..on and on) and a year ago I decided to finally make an online product. It was learning how to create a WordPress theme from scratch (php for wordpress).

    I Did Everything; landing pages (one for each traffic source, tested), a sales funnel ( with over 40 emails in the autoresponder), paid a good bit for someone to write a sales letter, used different price boxes (“only $27” or “2 payments of $15) had in my opinion a great upsell and of course, it should go without saying, I spent months putting together the product itself.

    I Had Luck: I was telling everyone on the message forums I went to and was not afraid to tell everyone about my project. I found someone who had a web designer mailing list and we made a deal for him to promote my launch.

    The Result: The launch brought in about $500 and after 90 days it brought in a total of slightly over $1,100. After expenses, with paying the copy writer, web site hosting and other small expenses I made a whopping $30-40 profit.

    I worked harder on that then I had on anything in my life. I did this in college and for a good 5 months I spent every waking hour on it, even skipped important exams and blew off my friends and family. I felt so depressed over the results that I cancelled the site and cut off my aweber account (with a small sized buyers list). Its only now I realize that what I did was amazing in the realm of internet marketing because, as Ramit said, 99.9% will never make a dime doing it. Even after all that reading I should have known that I never calculated the long-term value of a buyer or I didn’t realize that a good conversion rate is 2% I was at 7% I could have raised my prices(!!!)….even after all the work and studying I still didn’t know enough.

    I’ve since tried to duplicate my success but no luck.

  63. avatar
    Alexander Cash

    Thank you so much for sharing this. It looks like you had an amazing time on your vacation. I wish that I could take vacations like that and not have to worry about money and be making money while I was away. Thanks for the inspiration. Someday I hope to become as successful as you!

  64. avatar
    Annie-Pat Hopkins

    if you want to know a person’s priorities, see where they spend their thoughts, their time, and their money.
    And you have a wicked good sense of humor. Love it all.

  65. avatar

    This post hit the nail on the head. I think money is important, especially for basic survival needs like food and shelter, but having more money does not make you “rich”. Having the abundance of time, or making choices, or doing the work that matters or the work that YOU want to do is being rich.

    I am now going to do that exercise to answer the three questions.
    Thanks Ramit!

  66. avatar

    Being rich means

    – having extreme flexibility with my time and the ability to travel extensively, and
    – being able to spend in a way that helps (or doesn’t harm) others.

    The first I get from my job. The second means I pay the full cost of my consumption. It means that when I fly, I can buy carbon offsets. It means I don’t bat an eye paying “extra” for fair trade or sustainable goods. It means I can live in a nice apartment in a central location to reduce mindless commuting. I can give to causes when I have to participate in corrupt markets, which happens all the time when traveling.

    Your point about being a cognitive miser is also wonderful. I need to ramp that up.

    This was a great post. The more you disclose your own position, the easier you are to understand and trust.

  67. avatar

    i had to comment on the email of the guy who wanted to only make money like paris hilton. the granpaddy reference is what got me off the fence and into the comment box.

    i have nothing worthwhile to say about it other than it genuinely made me laugh with delight.

  68. avatar

    Yes, that’s how I would see success too; to be able to buy something without having to worry about it, and it would be little things like you mentioned, extra food or a taxi ride.

  69. avatar

    Really enjoyed this post! Also the first one I’ve read in a while or where I didn’t glance at the subject and body of the email and say, ‘Why the hell does Ramit think I have time to read this much?!’ It made you human and real. It also helps us connect with WHY you worked so hard(not just the how like normal) and made sacrifices, which also makes it relatable for us. Bravo!

  70. avatar

    Am I the only one here having a problem with this post? Reading the title on Facebook made me kinda curious. As soon as I hit IWT and read through the article it was just another example of Ramit showing off his exaggerated self-esteem. Don’t get me wrong, I hold great respect for what he has achieved and he’s free to do whatever he wants with his money or his time. However, “I will show you what you can do as soon as you’re rich (because you drew so much money out of all the desperate souls who were looking for a better life)” would sometimes be a better title for this site.

  71. avatar

    From the school of the four-hour workweek, I was naive to believe that signing an eBook with a stellar contract (50/50) to a $6 million+ company with direct access to distributing to the best possible market for the book would be a road to a massively passive income. However, this is not the case at all and far from it. At the end of the day guess who’s still responsible for the marketing? I just want to further dispel the notion that passive income or thinking that someone will take care of you in any way shape or form is a total fantasy. The income I’ve received so far wont even cover my yearly Starbucks bill.

    That being said, I wouldn’t trade the experience for all of the money in the world. I wrote a book (hardest thing I’ve ever done in my life because of associated insecurities, perfectionism etc, harder than college) that made into the hands of some of the most famous people in my field. I’ve also partnered with a company that others would only dream of working with. So I can check those off of the bucket list. Am I rich now? No. Was it a rich experience? Definitely. To quote KRS One, “Wealth is not about what you have. True wealth is what you can live without.”

    Love the blog, the newsletter, and I’m obsessed with Indian food now. Ramit, you da man!

  72. avatar
    David Hunter

    Very inspiring, but how many people will actually take action? 3% of the readers?

  73. avatar

    David, thanks for sharing “the left side” remark. It completely crystallizes how I was NOT raised…My mom is still a right-side person and can’t enjoy a dinner out (even when we’re paying!) without trying to pick chicken or some other less expensive dish rather than the filet mignon she’d really enjoy.

    Because of my upbringing (and my accountant-tendencies!), my husband has worked YEARS on converting me to be a left-side gal. We just returned from a 3-week trip to Spain and Portugal with our 3 sons. Expensive? Hell yes! But so worth the memories we were able to have as a family, giving our sons a view of the bigger world out there, esp. that other countries do some things better than the good ol’ USA (gasp!). Of course, they also do some half-ass backward stuff, too 🙂

    Anyway, cheers to both of us for our steady march further to the left-hand side!

  74. avatar

    Perhaps Grandpappy is rolling in his grave, seeing what his heirs have done with their time and talent 🙂

  75. avatar

    Nice and inspring

  76. avatar

    C’mon, dude. Let me buy you a Mexican Pizza.

  77. avatar

    Great post, as always the true things in life comes from the simple truths.

  78. avatar

    Possibly because he wants people to succeed from his courses? Even the most dedicated people may not succeed with a passive income course. Look at all the different ways to get there.
    It is much easier to make progress from the E1K course and the steps to go from 0 to 100 to 1000 are all easy enough to start, then you tune it up. The ideas there as also much easier to fall fast while a passive income one takes a very long time for that to happen.

  79. avatar

    You’re absolutely right. Can’t reap what you didn’t sow.

  80. avatar

    Ramit- Nice post. Recently I took my freelance business to a new level, I cut my hours from 60 a week to 15 a week and decided to work it while I travel the world. It sounds like an ideal lifestyle, but it’s not all rainbows and unicorns. To save money we tent camp most of the time, and well, as you can imagine internet access around the world can be sketchy at best.
    Recently I’ve been looking into ways to make a passive income and increasingly the advice has been the same as those that want to have a freelance business. You do have to work hard and you do have to seriously consider what you want to get out of the business. It took me 9 years from when I started part-time freelancing until I could become a digital nomad. Although daunting, I’m glad to read that passive income follows the same steady path. There is no get rich quick scheme. Thanks again Ramit!

  81. avatar

    Nice to see someone talking truthfully and candidly about the passive income grail [it isn’t what most people think] and laying out steps that most people can use to actually improve their lives and begin to get what they really want. Great job Ramit.

  82. avatar

    I want to ask a question.

    I get what you’re saying that it’s very hard to earn passive income and that realistically, most people won’t be able to do that.

    However, what puzzles me a bit, is you saying that you couldn’t have taken this vacation last year.

    The reason why it’s puzzling for me is because there are people who are earning a lot of passive income themselves, yet they portray it as something much less complicated (Steve Pavlina from, for example, who’s currently doing a blogposts series on the topic of passive income).

    What is the reason that although you seem to be doing really well, you couldn’t have taken a vacation like that last year, meanwhile there are other people who seem to earn much less passive income than you (I assume), but they’re able to take off anytime they want (and generally live the “passive income lifestyle”)?

    Is that related to your living costs, commitments, business ambitions, etc?

    I really hope my question makes at least some sense, I struggled a bit with phrasing it.. 🙂

  83. avatar
    Desi Doll

    @ David…you’re reaching a lot of people…I even have a mantra for you – LOL “live on left” 😉 If I didn’t have to think about the cost, I would go to my Bollywood dance class. Now, I just went last week, so don’t cry for me Argentina 😉 But I would like to be able to go whenever, without thinking about the cost. My homework is to find new opportunities that bring in a cash flow so I can dance like Aishwarya Rai in Dhol Bhaaje – look it up!

  84. avatar

    I feel it’s the same with passive income, there are always ways to tune it up. Both take a lot of research, hard work, and dedication to succeed. With both you are providing value, with freelancing you get paid for that value up front, and with passive income it may not be up front, but you continue to get paid on a recurring basis and it doesn’t go away which is pretty sweet. There are plenty of teachers who break down the steps to passive income, ie pick a topic you’re passionate about, create content and a following, promote related affiliate products, build your own product to sell – I just think Ramit is being narrow-minded about how to teach it and over-complicating it, and while I am a follower and appreciate his work, I don’t appreciate the negative beliefs he’s projecting about passive income.

  85. avatar

    This post puts everything else you’ve ever written into a very clear philisophical context. This post should be a mandatory first read for anyone who is interested in your teachings. Thank you for everything!

  86. avatar
    Marlon Briscoe

    It dawned on me that everyday I go to bed and then wake thinking how and when will I get that pivotal opportunity to thrust me into the realm of success for which I envision. I then watch motivational videos, read blogs and realize that I’m a fool, a fool because winners such as yourself are sharing the proven method. And if I simply take a step back and gather myself and FOLLOW the directions, I can be there soon enough. By the way I’m a personal trainer who took the step to make my side job my bread and butter. Maybe when I’m back in New York we can workout together? Thank you for always sharing.

  87. avatar
    Kristi Cornwell

    Wonderful vacation! My favorite posts from you are the ones about psychology and persuasion, although these days it is hard to find one that doesn’t mention that. Your work inspired me to search for my dream job – to believe it DOES exist and to find it, even if that means creating it myself. In the meantime, we have automated our finances while we save for starting our own business. Thank you for the priceless “free” advice you choose to share with your audience and the countless hours you put into your craft!

  88. avatar
    Glen Craig

    You’re three steps at the end nail it. And goes with a lot of what you teach here – you have to be able to track your real results. And with this article – what do you want those results to really do?

    I incorporated earlier this year. As a result I now pay myself a salary and have to track EVERYTHING in accounting software. Now I see where my money truly comes from and where it goes. Very powerful. But important as well is what the money is for and how my time is used. Those are my next steps.

  89. avatar
    William @ Drop Dead Money

    What you said about the freedom to do things that have meaning to YOU without having to hesitate really resonated with me. The amount needed to do that differs from person to person.

    I’ve come to call it Drop Dead Money: having enough money to tell anybody to drop dead 🙂 One of the things it is for my wife and I is the freedom to take a road trip anywhere for no reason other than I want to. I had a business appointment in Montreal in April, so we took two weeks and simply drove all over the Northeast. Never stayed in fancy hotels or anything excessive, but we did what suited our tastes.

    Felt rich, just like you said.

    Congratulations on arriving at the place where you had the freedom to successfully step away from your business and savor the reward of all that hard work! And thanks for sharing.

  90. avatar

    One of your best posts ever. What does being “rich” mean. Thiught provoking exercise too.

  91. avatar
    Andrew @ Credit Card Andy

    Great story Ramit,

    Sounds like you aren’t making passive income, but reaping the benefits of active work.

    So what’s your outlook on life now that can live life without second guessing that Mexican Pizza and have reached your goal of getting away for 3 weeks unnoticed? Do you see money differently now than when you first started out?

  92. avatar
    Judith Rosenberg

    A great post! I particularly like your three questions.

  93. avatar

    What a great post. My favorite takeaways are 1, make sure your spending reflects your values & priorities. 2, set big goals and enjoy the ride towards achieving them because it will give your life a lot of meaning and purpose. Thank you for this post!

  94. avatar

    I think that understanding the psychology behind why I want to be rich in addition to narrowing down my actual goals to sizable hunks makes them all the more manageable. It’s easy to say I want to save money but I only earn so much at my job. I’m currently interviewing for a second job and while it’s certainly isn’t the sexiest way to earn money and doesn’t use buzz words like ” hedge fund” or ” penny stock” I feel like it makes the most sense on a logical level. I also like how you incorporated your philosophy on conscious spending and applied it to prioritizing what makes you feel rich. Great post!

  95. avatar
    Vangile Makwakwa

    Awesome article. I have been traveling and living in different countries for over 7 years now and have yet to stop working on my travels. I went to Madagascar a few months ago and my business almost came to a standstill because I had no access to Internet. I believe my lack of processes was to blame for that major mistake

  96. avatar

    I agree with you. I cannot imagine even if I had enough money not to do something. It would be so boring. I always wanted just to have enough to live without debts, have a vacation once in a year or two years and to have enough time to spend it with my family and friends and do things I like.

    I’m glad you were able to take your vacation. Photos are great.
    Thanks for all your articles.

  97. avatar
    Alex Perez

    Excellent article. Cajones, massive gruntwork, your time will come. Sounds like lovemaking!

  98. avatar

    Great post, Ramit. Vietnam is gorgeous, and totally under the radar compared to its SE Asia cousins.

    For us, richness is being able to spend freely in the things we love most: travel. We took off 4 months for our honeymoon, traveling all over North and SE Asia – with our jobs *and* benefits still active in a recession (you never know until you just ask for it!), all our bills covered and then some by ‘passive income’ (rental income). Much like your well deserved 3 week vacation, our honeymoon too was years in the making. Only most people just see the awesome beach photos, and not all the hustling that went on behind the scenes to make such trips happen.

    So when people say to us “Man, I wish I could take that kind of time off and travel!”, I say, “You totally can, if you really wanted to.”

  99. avatar
    Mike L

    I love the post, Ramit. Thanks for the reminder of what “rich” should truly mean and how we all need to have a paradigm change 🙂

  100. avatar

    There is so much difference between rich and poor and it is the ability to create passive income ‘

    I remember how incredible it felt to earn money for something i did years ago .

    I wrote about this on my blog

    Unfortunately , most people does understand the types of income and seem to think creating passive income is like waving a magic wand and poof you got money

    Doesn’t work that way

    Thanks for sharing


  101. avatar

    true, it all depends on our grit yah.

  102. avatar
    Boise Kids Dentist

    Quality content is the main to be a focus for the viewers to go
    to see the website, that’s what this site is

  103. avatar
    boise bath remodeling company

    What’s up everyone, it’s my first pay a visit at
    this website, and piece of writing is in fact fruitful in support of me, keep up posting these articles or reviews.

  104. avatar

    What hotel was that in Thailand?

  105. avatar

    Inspiring I too am just now reaching the point where I can travel and earn passive income, please check out my blog