I am passionate about making money online, and my first step towards doing so was to try my hand at blogging. I started with what seemed like the equivalent of a hobby, but over time, my writing and my blog as a whole have become more and more profitable. That’s right, I started a blog that makes me money.
Online income and passive income is a hot topic these days. People are becoming more and more interested in earning passive income through the internet, and the best way to do so is blogging. I’m going to give you a step by step guide on how I earned over $90,000 in passive income. I have been blogging for 8 years now, but the first couple years were spent just learning how to do it. I’m going to teach you how to earn thousands of dollars a month without actually writing a blog post.
I started with a $300K in debt. I lived in the city, and didn’t know any better. My student loan payments consisted of $800 a month plus $350 in car payment, so that was my monthly bill. I was spending $400-$500 a month on housing, and then $500 on food. I was living paycheck to paycheck. My wife and I sold our house and bought a $1400 dollar a month apartment in the city to save money. We put everything into savings, and had an emergency fund for at least 6 months. 2 years later, I had $500K in passive income. I saved $30 a day, and made over 1M in a year.
I always thought saving and investing was only for the rich. Sure, I saved, but in a savings account (the interest rate was barely above 0%), and if I was really lucky, I invested in a short-term CD and made a few bucks. Nothing that will help me get rich or bring me closer to financial security. I thought it was a way to save money. I didn’t have much money. Sure, I was making a decent income and not living from paycheck to paycheck, but I didn’t have the money of a Warren Buffett either, so investing wasn’t in the cards. Turns out I don’t, and I wish I had started sooner. Still, I’ve saved $90,000 and now make $300 a month in passive income from my habits. I’m sharing it here so you don’t have to repeat my mistake and wait so long. Start saving today, whether you have $100 or $10,000, there is an investment for everyone. The good news is that it’s easy to get started, even with $100.
How I saved $90,000
1. I opened a Vanguard account online.
When I say it’s easy to open a Vanguard account online, I’m not exaggerating. You choose the account type (I chose an individual taxable account), then you fill in your personal information. I have provided my name, social security number, date of birth, address and employer. Vanguard does not share or sell my information, so I felt comfortable providing it. I then linked my outside bank account – the account I would use to fund my Vanguard account – and transferred a few hundred dollars. I was ready to invest – it was pretty simple. One of the main reasons I chose Vanguard to save money was the lack of commission on transactions. All ETFs have no commission fees, which means more money in my pocket.
2. I set up automatic contributions to save money each month.
At first, I was making $100 a month, but after analyzing my budget and changing a few things (turning off the internet, canceling unnecessary memberships, and changing insurance companies), I was able to save $500 a month. I’ve set up automatic translations. I highly recommend it. If you are like me, it is easy to forget to transfer money and save. Before you know it, a few months have passed and you still haven’t recorded anything. I put it on autopilot and stopped thinking about it.
3. I took Buffett’s advice and put my money into index funds.
I know this part is scary, but I did some research. I followed Warren Buffett’s advice for personal investors, and it worked out pretty well for me: Warren Buffett believes that index funds are the best way for ordinary investors to grow their money. Buffett is considered one of the most successful investors in the world, and you can’t go wrong if you follow his advice. Warren Buffett recommends index funds to individual investors. 
An index fund is an investment that tracks a market index, such as the DOW Jones or the Nasdaq index. Vanguard even has the ability to invest in the entire US stock market. This is the Vanguard Total Stock Market Index Fund. Other stockbrokers also offer general market equity funds, including Fidelity with its Fidelity Total Market Index Fund.
How does an index fund work?
I kept most of my investments in this total equity fund. You can see the chart below, which shows that things have been going very well since 2010. A $10,000 investment in 2010 could hypothetically grow to over $35,000 by 2020. It’s not bad. 
I did this for 10 years and voila – I had $90,000 in my Vanguard account in no time, all because I automatically transferred $500 to my Vanguard account every month. **Warning – These results may not reflect what you will get, especially if you start now, in a booming economy. The Dow Jones has performed well over the past 10 years, but there is no guarantee that it will continue to do so.
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How I made $300 a month in passive income
And this is the best part. I had $90,000 now, which is great, but I can’t retire from that money – I need much more to retire, but it was a good start. But I wanted my money to work for me. In other words: I needed passive income. Specifically, the monthly income. Since I am not yet an equity expert, I have mostly chosen Vanguard funds, which have not disappointed me so far. That’s the difference. I focused on dividend funds rather than index funds. This is where passive income begins. Dividend funds pay me a dividend (a portion of the company’s profits) every month or quarter, depending on the fund. I have bought several funds from Vanguard, including VHYAX, VYM and SPYD (this fund has a higher yield). These investments keep me in the stock market, but pay me back every month or quarter. I earn an average of $300 a month in dividends, which means more buying power in the market. I still pay my usual $500 a month, but if I can get it to $800, imagine where I’ll be in ten years. Will it work for you? It depends on your determination, your risk tolerance and your ability to transfer money regularly. Remember, you may or may not get the same results I did – the market is unpredictable. You will also learn how to manage your money and increase your savings to invest more in the stock market.
How to reduce your risk
Some of you may be afraid of losing money in the stock market, and that fear is well-founded. In any given year, the market can go up as well as down. If you want to limit your risk because you don’t like losing money every year, or because you think you’ll need the money in a few years (to put a down payment on a house, for example), you should take a more conservative approach. For example, you could invest 70% in a general equity fund and 30% in a cash reserve fund like the Vanguard Cash Reserves Federal Money Market Fund (VMMXX). This protects your investment in the event of a recession. Anyway, being consistent always wins, even if your account goes through ups and downs (due to pandemics and elections), if you persevere, you should see progress similar to or near mine. 
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In finance, it is a common saying that “money is not everything”. In my case, I have never had money be my priority, and I have managed to get by, even when I was earning less than $10,000 a year.. Read more about first 100k is the hardest and let us know what you think.
Frequently Asked Questions
Is 50k in savings good?
In a past blog post, I wrote about how I quit my job and started my own business, and I mentioned that I had no idea how much to save for the future. After all, I was in my 20s, and I had no idea what my life would look like in 30 years. Saving for retirement is a lot more difficult when you’re 26, so I started putting aside my money in CDs instead. I started with $5,000. I’m not going to say this is going to be easy, but let me share the exact plan I followed to save $90,000 in a few short years. If a little math scares you, don’t worry—just check out my bankthon.com website and you can read my story there.
Is having 100k in savings good?
After saving $90,000, my wife and I wanted to know what the best way to invest our money would be. We looked into the typical options: stocks, bonds, ETF, and mutual funds. We quickly learned that investing is very complicated, and that it requires significant time and research. So, we decided to learn how to invest in the stock market ourselves. (The personal finance blog post is just a summary of the full blog post series.) Let me preface this by saying that I’m not a guru or financial expert. I’m just someone who figured out how to save a lot of money, and I saw just how much I was spending on things I didn’t really care about. This led me to make some sacrifices and change my habits to save money. Then, I started thinking about how I could save more money and earn more money, and that led me to create Bankthon, which is a resource for people like me.
How can I save 100k fast?
I’ve been looking for a “get rich quick” scheme for the past three years. Or, at least, a way to cut my expenses by 100k. I’ve tried to get rid of my cable TV, and my internet, and my cell phone, and my car, and my groceries, and my coffee, and my gym memberships, and everything else I can find that won’t kill me. [1] I’m a college dropout with a Bachelor’s degree in Finance. The last six years I’ve been working full-time in small business consulting (at a large company) and have put aside $90,000, which I would have blown in the first six months of my career, when I started investing. Lets get on with the actual content, which is: Immediately after my last post, I decided to write another post as it was getting a pretty high amount of views. I planned to write about my saving habits, but then I thought it’d also be great to write about a topic I wish I knew more about: passive income.
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