Unlike your paycheck, which you earn for actively working, passive income is money you earn or receive for minimal day-to-day effort, such as rent you receive from your tenants if you own rental property. Although age-old strategies like real estate investment continue to lead countless investors toward financial independence, the digital age has opened the door to new ways of generating passive income, including P2P investing, e-book publishing and even blogging. Like a lot of passive income streams, some work will be required of you upfront, but once established, you can let the income come to you with little to no work on your part.
When you’re saddled with debt that your regular income can’t seem to erase, it might be time to look for a source of passive income, which will work overtime for you while you’re at your real job.
Click through to learn how passive income can help you get out of debt.
1. Open a Savings Account
Virtually anyone can open a savings account, and — through the process of compound interest — earn passive income on their deposits. Savings accounts don’t come with the potential for big earnings like stocks, but since they’re FDIC-insured, they also don’t come with the risk. Take the money you don’t immediately need out of your checking account, put it into an interest-bearing savings account and before long, you’ll have even more money to pay down your debt.
2. Buy a CD
Financial institutions issue certificates of deposit for terms ranging from a few months to 20 years; when the term is up, you cash in your CD for the principal plus interest, which you can use to invest and pay down your debt. Like savings accounts, CDs are insured so they’re virtually risk-free, but they pay higher rates.
3. Buy Bonds
Instead of paying down your debt right away, consider investing in bonds to passively grow the money you have. Then when the bond term is up, you can cash out the principal plus interest and pay off debts. No investment is foolproof, but — with the exception of riskier high-yield bonds — bonds are considered “safe” investments.
4. Become a Dividend Investor
Dividend stocks are stocks issued by companies — like Coca-Cola, McDonald’s and AT&T — that pay a portion of their profits back to investors. When you buy a share, you generate passive income as the stock appreciates, same as you would with any other stock. But you double down on your profits when the company issues periodic dividend payments, which you can use to pay down your debt without selling any of your stock.
5. Buy a Rental Property
Buying an investment property and renting it out is by no means an easy process, and it’s not a passive income stream for everyone. But if you have or inherit a property — or you have the means to purchase one — an investment property can be one of the greatest generators of passive income imaginable. Even if you just break even, the renters will still be paying down your mortgage and building equity for you as the value of the property appreciates over time.
6. Rent a Spare Room
Owning an investment property is out of reach for many, but if you’ve got an extra room, the space can become your ticket to a reliable stream of passive income. Don’t worry — the days of rolling the dice on a creepy roommate with a classified ad or a post on Craigslist are over because of services like SpareRoom and Cozy that help you advertise your space and screen tenants. Once you find a match, you can take some or all of your new roommate’s rent and put it toward paying off debt, like your mortgage.
7. Buy Into a REIT
When you can’t or don’t want to be a landlord or roommate, you still have options in real estate: Among the most simple are real estate investment trusts or REITs, which own income-producing commercial or residential real estate. They are traded in shares on the open market just like stocks, so you can buy as little or as much as you want. The reason they’re great for passive income is that by law, REITs must distribute at least 90 percent of taxable profits as dividends to investors like you, which you can then use to pay down debt.
8. Invest in Real Estate Crowdfunding
Real estate crowdfunding offers strong historical returns with less volatility than the stock market. Sites like RealtyShares and FundRise allow investors to contribute fairly small sums of money into a pool of funds that investors borrow to flip houses or buy rental properties. The investors pay back the loans with interest, and that’s where you make money — but like all investments, some risk is involved.
9. Make Money From P2P Lending
Consider getting in on the person-to-person lending boom if you like the crowdfunding model but are not interested real estate; investors like you pool small sums of money for borrowers who are looking to secure loans without going to a bank. Lending Club, Prosper, Funding Circle and Upstart are among the most popular P2P platforms. You collect passive income to pay down your debt when the borrower pays back the P2P loan with interest.
10. Invest in Storage Lockers
Americans have a lot of stuff — so much, in fact, that the country is home to 50,000 storage facilities. Many of these facilities are owned by large companies that you can invest in with just a small amount of money, same as you would a traditional REIT. Just like regular REITs, they pay dividends, which you can use to satisfy your creditors.
11. Wrap Your Car
You can earn hundreds of dollars a month to pay your creditors if you’re willing to turn your car into an advertisement. Sites like Wrapify pair drivers with major companies like Petco and Microsoft, which pay big bucks to turn cars into moving billboards. No upfront investment is required, and your car won’t be harmed.
12. Rent Your Car
Sites like Turo let you rent your car for a daily rate that’s much lower than what traditional rental companies charge — that’s because the cars are owned by people like you. Consider signing up as a car host if you own a car that you use infrequently or if you know you won’t use it on certain days. Turo provides insurance and claims you can cover your car payment by renting it out just nine days per month.
13. Buy a Vending Machine
Vending machines are one of the only recession-proof investments in the world — and if you own one, they can also be a fantastic stream of passive income. Sites like Gumball.com can hook you up with your very own vending machine. Just keep it stocked, and watch the money roll in as the hungry and thirsty insert cash all year long, which you can use to pay down your debt.
14. Buy or Lease an ATM
Those annoying fees you wish you didn’t have to pay when you withdraw money at an out-of-network ATM could be going in your pocket. Companies like ATM Money Machine can put you in charge of your very own ATM, whether you choose to lease, buy or even start your own ATM business and put the revenue toward finally getting out of debt.
15. Buy a Billboard
When you go for a drive, you’ll notice big advertisements towering high above the freeway. Advertisers pay good money to place their ads on billboards — and you can buy one of your very own. It’s important to understand the market and make sure all the permits are in order, but once you’re up and running, you can rent your billboard space to marketers for as long as you own it — or until you’re out of debt.
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16. Get a Cash-Back Credit Card
The best cash-back cards literally pay you to shop: You can earn passive income by putting purchases you’d make anyway on the card. As long as you pay in full on time every month, you won’t be hit with a finance charge, and you’ll collect points that you can use for purchases, pay your balance or even convert into actual cash. Either way, you can use the money you save to pay your creditors.
17. Sign Up for Cash-Back Sites
When you shop through sites like Ebates and Swagbucks, you can buy the things you would ordinarily purchase at the stores where you normally shop. The difference here is that you earn points, gift cards and even cash — all of which can be applied to future purchases. Then you can take the money you don’t spend and give it to your creditors.
18. Create an App
Some apps you buy and others you download for free — the catch with the latter is that they usually come with ads. You can also sell your own app or give it away for free, and then use it to sell ad space for passive income. No technical know-how or coding experience is needed; sites like Bubble make it easy for anyone to create professional apps.
19. Make YouTube Pay
From silly pets to skateboard tricks, viral videos race across the internet at incredible speed — and they earn big bucks for the people who made them. You, too, can create a profitable YouTube channel and monetize it with advertising, merchandising and other ways to earn passive income that you can use to pay your debts. Find out how by visiting the YouTube Creators Academy.
20. Start a Blog
Starting a blog is easy; making it pay, not so much. But it is possible if you’re willing to put in the work, and that work could eventually lead to a steady stream of passive income that can help you pay your debts. The basic steps are picking a topic you love, choosing a platform like WordPress and creating interesting, funny, useful or otherwise compelling content so that your blog can generate cash through revenue streams like ad sales or subscriptions.
21. Buy an Existing Blog
As previously stated, launching a blog has a steep learning curve — and blogs can be hard to monetize. Sites like WebsiteBroker.com let you purchase existing blogs that have already been built, established and monetized. One self-updating website that claims to earn $300 a month is currently on sale for $99; another that claims to earn $3,000 a month is on sale for $15,000.
22. Flip a Website
Go beyond blogs by buying a fully functioning e-commerce website and then use the profits to satisfy your debts. Sites like Flippa offer marketplaces for everything from dating websites to sites that sell watches. You can buy a site and use it for passive income or, if you have the savvy, improve upon it and flip it for more.
23. Sell Your Photos
Instead of wasting your photo-taking talents on Instagram, make your hobby pay by selling your photos online and generating passive income that streams in when people buy them — your creditors will thank you. Major photo distributors like Shutterstock accept submissions; just be sure to follow all the guidelines.
24. Publish an E-Book
Several competing companies offer writers the chance to publish their own e-books, but none have the reach of Amazon. Amazon’s Kindle Direct Publishing service allows authors to self-publish both digital and paperback books and also provides the platform to sell the finished product again and again. That scenario begins with you downloading the free KDP self-publishing kit.
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25. Buy Royalties
One of the benefits of being a rock star or movie star is that royalties pay dividends for as long as the public consumes your work. You can buy royalties on sites like Royalty Exchange, which lets anyone purchase the rights to someone else’s intellectual property. The returns can be as safe, reliable and lucrative as stock dividends — all without the risk.
26. Write Greeting Cards
Whether your draw, write poems or take pictures, your artistic inclinations could earn you passive income and help you escape the trap of debt. Companies like NobleWorks and Calypso accept submissions and pay for the best entries. Your words or images could end up on cards and the card company’s money ends up in your bank account.
27. Buy a Patent
Even if you feel like all the good ideas are already taken, you can still make money off those ideas. The Patent Marketplace gives people like you the chance to buy an existing patent, sell the idea and earn passive income — all from someone else’s idea. The rights to the hygienic doorknob, air-cooled umbrella and thousands of other inventions could be yours.
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28. Publish and Sell an Online Course
Perhaps you have skills such as writing code or constructing a backyard deck. Platforms like Digital Chalk and Click4Course offer the tools you need to sell your knowledge by helping you develop and publish your own online course. Create your tutorial, publish it and get paid — over and over.
29. Rent Your Stuff
When you own something cool, like a nice camera or a pinball machine, you can choose to rent it out to someone who needs it for an event or a party but doesn’t want to buy it. That’s where sites like PeerRenters come in. You photograph and list your rentable item, and then sit back and collect the cash when someone needs your fog machine or electric guitar for a day or a weekend.
30. Rent Your Bike
Don’t let your perfectly good bike sit in the garage and gather dust. By signing up for Spinlister, you can rent your bike to somebody who needs two wheels but doesn’t want to buy a bike of their own. You can make up to $500 a month renting your bike — or even your surfboard or skis.
Click to find 30 more ways to make money online.