The Lesson to Learn About Active Income

Interesting Lessons from my own Career

I did calculation the other day to add up my total working career income. In all my years of dedication to advancing my career up through the corporate business world (20+ yrs) I estimate that I made just over $1.01 million in total income.

What these working years looked like

This number may sound good however if you spread that out over all those years many of which we scraped by raising a family, many years included applications to banks for consolidation loans and lines of credit, and even one year I had to declare bankruptcy as the debts became insurmountable and my marriage had ended badly.

The interesting thing to note about this is the two significant times in my working career when my income advanced significantly in short periods of time. First, was when I was officially promoted to senior management role in that company is when my salary jumped and the second time was when I left that company for another significant career move.

However interesting to note, during this span of 22 years I only ever worked for two companies…something that is not very common in todays world. Even more common is the situation of layoffs, downsizing.

Doug Collins

Income Salary Scale during the Career of Doug Collins

Late 30’s and early 40’s is when you hit the wealth earning years….its supposed to be!

The most interesting point to note is that I made almost 50% of the total income in the last 4 to 5 years of my career. Yet, still, these were the were the years I was in bankruptcy. These are the years we should be hitting our strides in our working careers, making the largest income and positioning ourselves for retirement. How are you doing with that path?

Why become an Entrepreneur?

Now when I calculate my total income over the past two years since leaving the corporate world and becoming a full-time Entrepreneur (my story here). I see a much different financial picture. Its a picture that has allowed me to create passive residual income, make significant financial investments for my future as well as begin to life a lifestyle that an active income did not allow me.

Becoming a successful Entrepreneur affords the opportunity for anyone to accumulate cash flow in much shorter timelines. Interesting perspective…yet being an Entrepreneur is real WORK and you have to develop NEW skills…but knowing what I know now everyone should consider it even just as a part-time thing. Especially those in their 20’s….if only I could get a “career do-over”. But still no regrets…and I look forward to the future.

Active Vs Passive Income

Most people have a hard time understanding difference between “active” and “passive” income.

“Active” income is income generated by actively participating in the money earning activity. The disadvantage is that usually people who generate a large amount of active income, end up without much spare time. In many cases, they have no short-term security (meaning that if they couldn’t go to work for 3-6 months, then they would generally end losing that income).

“Passive” income, on the other hand, can allow considerable amounts of money to be generated, but because it involves the principle of “leverage” (either time leverage or money leverage), you can generally end up with an abundance of time at your disposal. The profession of Network Marketing does not involve a large money investment and therefore has little risk involved with it. Once a network marketing business is established the income generated is residual, and if done correctly can become passive income irrespective of whether the entrepreneur is directly involved or not.

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