A 30-something who used a side hustle to pay off $100,000 of debt explains what we get wrong about passive income

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• A passive income stream can be a great way to generate extra money to pay down debt or save. 
• Melissa Jean-Baptiste learned first-hand that passive income is not that "passive," especially in the beginning.
• To maximize your chances of success, she recommends finding a side hustle that uses skills you already have.

Passive income seems like a financial dream come true. The ability to make money in your sleep and have multiple streams of income with little effort is definitely money goals, especially as inflation is making everyday life more expensive.

But the term "passive income" can be a bit of a misnomer. According to Melissa Jean-Baptiste, who used a side hustle selling lesson plans to help pay off $100,000 in student loan debt, there is a catch. "There tends to be a huge initial investment on your end," she writes in her book, "So … This Is Why I'm Broke."

Jean-Baptiste learned for herself that "creating a stream of passive income is hardly ever simple or passive." She writes, "One of the most popular passive income suggestions is to start a blog or create a digital product. But honestly, it is not as easy as YouTubers and social media influencers make it seem. There are many active foundational steps that must occur first before you are generating significant passive income from a blog, digital product, or rental property."

So, what is the best way to generate passive income, and how do you get started?

Find the right side hustle for you

I think that everyone needs a side hustle, especially in today's economy. But how do you find the one that's right for you? The wrong place to start is side hustles lauded by internet or social media influencers.

Instead of leaning into the side hustle of the moment, take stock of the skills you already have and try to monetize them. During the time that Jean-Baptiste was a teacher, for instance, she created a side hustle selling her lesson plans online.

Jean-Baptiste writes in her book, "Many people think side-hustling requires new skills and it doesn't. Look at what you are already doing and expand that into a side hustle. At the height of my lesson plan-selling era, I had forty to sixty assets in my digital store and was making $10,000 to $12,000 a year. This allowed me to use my teacher check for expenses and saving, while the side-hustle money went to my debt."

The main reason many side hustles fail is that they're outside your skill set, and that makes the startup phase more difficult. "Your side hustle will only thrive if it fits your skills and lifestyle criteria, [so] look and see what you are already doing and start there," Jean-Baptiste writes.

Determine your ROI

As you seek to increase your income streams, ask yourself: What is my return on investment? Jean-Baptiste advises, "Once you've taken the time to assess your skills and outline your criteria, you have to determine the impact. Map out what the entirety of the side hustle will entail on every level and how it will impact your financial goals."

Next, Jean-Baptiste writes, "determine the skill set required, the demand for what you are offering, how convenient will it be for you to do and, most importantly, the monetary goal you are trying to reach with this side hustle."

Although passive income is often not 100% passive, at least at first, the value of a side hustle or an additional income stream is undeniable. Jean-Baptiste writes, "the passive income I generated was critical in my debt-payoff journey because I could pay more towards my debt and it gave me more options."

This article was originally published in August 2023.