The Importance of Passive Income
A late realization from a veteran Software Engineer, but better than never.
I have worked as a Software Contractor for over 20 years, with a relatively good income. Nevertheless, for my family, which relies on a single income (and many others can relate), it has felt like a rat race.
Housing
The Australian Government makes housing more expensive while politicians yell “improving house affordability” during the election campaigns. The reality only worsens. The numbers do not lie (see below).
I found it hard to comprehend. Australia has plenty of land but not many people.
“Australia is one of the toughest places in the world to buy property. The 2023 Demographic International Housing Affordability Scheme report found that all five of Australia’s major property markets — Sydney, Melbourne, Brisbane, Adelaide, and Perth — had been ‘severely unaffordable’ since the turn of the millennium” — Nine News, 2023–03–21
Childcare, School and University Fees
I am not complaining about those fees, even though they consistently rise well above the inflation rate year after year. My family received little government childcare subsidies, the reason, as my accountant told me, “Your income was high”, while I have been paying ~40% income tax. Our tax system favours some cunning ones who reduce their tax income using the controversial ‘negative gearing’ scheme (the self-living house has no tax incentives, but investment houses are, crazy, right? This boosts house prices, pushing young people out of the property market) and get the government’s all sorts of subsidies.
After knowing how much I pay for income tax, my father (living overseas) said: “You must get a lot of government benefits”. I answered: “No, actually, the opposite”. Our country seems to have a system to discourage people from paying taxes.
“The average Australian would need to earn over $300,000 a year to consider themselves as officially ‘rich’, new research has found”. — Nine News, 2022–01–18
Frankly, based on my circumstances, given my 20-year nearly full employment record as a software contractor, I don’t think continuing to earn money this way (9–5) will make a substantial difference in our lifestyle.
One book totally changed my view on earning income: “The 4-Hour Work Week”, a NY Times Bestseller, in ~2010.
The key is passive income. I realize that the lifestyle I aspire to can only be achieved by passive income (here, I mean average people like me, not born-rich type).
I am a doer.
Authoring more books
I started one already, but since 2010, the desire for passive income motivated me to author 12 more.
Besides selling my books on Leanpub and Amazon, I also have a book with a traditional book publisher and an interactive course on Educative.More software that offers ongoing income
I developed TestWise in 2007, then motivated to do more:
- ClinicWise, a practice management software
- BuildWise, a Continuous Testing Server, won the 2018 international Ruby Award
- SiteWise, a content management software
- WhenWise, a service-booking app
- TestWisely, a cloud-based testing platform (this is still experimental; no commercial customers yet)Writing Articles on Medium, Substack, and recently Vocal.
Medium members, I might get a few cents after you read this article. :-)
Please note that all the above work was done in my spare time until 2021.
I don’t discourage anyone quit or skimp on the job. In fact, I performed my day-time contracting job very well, why? because I could focus more my own work when back home.Some readers might wonder, “How could you program one language at work, and a different one at home?” I don’t, even coding the same language (in day-time and night-time) won’t be good either, as with different frameworks, code base, …, etc. There is always a way, mine is switching my day work from programming to E2E Automated Testing.
Yes, from a respected 10X contract developer and tech lead to an automated tester. Most IT professionals would understand the differences. Hey, in order to gain something, you need to let go others. During the day, I observe calmly the JS-vs-TypeScript debate among developers, the teams making all kinds of mistakes, such as Microservices and Docker, wasting time in JIRA & silly user story points. I just perform good E2E testing using the exact formula since 2011.
Frankly, this was the one of best career decisions I made. Why? for passive income.
The passive income mentioned above still falls significantly below the earnings potential from consulting or contracting work, even two of my apps are internationally acclaimed. IMO, this is mainly because I don’t do any marketing for those apps or writings (that's a different story, which I will cover in the “lessons learned” sections of the upcoming Micro-ISV series). However, the sense of satisfaction derived from receiving passive income, even if not much, is truly remarkable.
The above spare-time work also made me a better engineer with high morals and integrity. I said NO to
A few businessmen tried to convince me to sell TestWise at 10X+ price so that they could promote TestWise by all sorts of ‘marketing methods’ such as bribing.
All commercial proposals to promote or say nice things about test automation products in my writings (to exchange money).
‘Technical leads’ requested me to slow down by implementing a 3-month test automation proof of concepts (POC) within three days.
Work with less-optimal solutions. I am an open-minded engineer, writing five selenium recipe books in five languages. My automation and CT tools (TestWise & BuildWise) are pretty much framework-and-language-neutral, for example, supporting Playwright, Pytest, and Cucumber. But I only suggest raw Selenium WebDriver + RSpec. This means a significant loss for a Test Automation Consulting business. Why do I do that? Because raw Selenium WebDriver + RSpec offers the best chance to succeed in E2E Web Test Automation, a rare achievement.
Why? I guess that’s because I have a bigger goal and have some freedom. Imagine a fake test automation engineer somehow gained a ‘Cypress Ambassador” badge. Would he be against the apparent shortcomings and limitations of Cypress? Or is acknowledging Cypress.io is dying despite hard evidence? Of course, he won’t (until the end, like Protractor), as his sole income is from faking test automation with Cypress. If Cypress later dies, he just alters his Resume and switches to Playwright or another, like he has done previously from PhantomJS -> WebDriverIO -> ProtractorJS -> TestCafe(JS), … etc.
Long-time readers would know I have correctly predicted (with proven records) the failures of many test automation hypes, such as Record-n-Playback tools such as QTP, PhantomJS, Cucumber, Selenium Grid, ProtractorJS and Cypress .. and software framework/architecture hypes such as AngularJS and Microservices.
Within this article, I recounted a genuinely liberating and free vacation experience — one enjoyed by a veteran software engineer like myself.
One day, during a holiday in China this year, I came to the realization that, given my current passive income, I may sustain a decent standard of living in a developing country. A great feeling of money not diminishing each day while I don’t work for others. A taste of somewhat FINANCIAL FREEDOM!
For the benefits of Passive Income, I recommend you read “The 4-Hour Work Week” book if you haven't already. Here, I will share one of my personal experiences. One morning in 2007, as a veteran Apple fan, I woke up early to watch Steve Jobs's keynote speech, in which he introduced the iPhone. I instantly knew it was going to be big. I told my wife, “We should buy some Apple shares”. At that time, we could not buy US shares directly in Australia. Otherwise, I would have done that on the day. Later, the conversation with my wife quickly changed to “We shall save money to buy a house; the contracting market is no good ”.
Shortly after, the global financial crisis. While I managed to get hold of my next contract renewal (with some rate cut), investment was totally out of the agenda. Sigh! Of course, it is myself to blame, and I still kick myself now for not taking more prompt actions. If I had the current passive income as a safety net back then, my approach would have certainly been different.
As a permanent employee or contractor, I get paid for coding or testing for others for most of my working life. I don't get a cent if I don’t show up on that day (for whatever reason) as an IT contractor. Here, I am not belittling active (as opposed to passive) income, which I lived by for 20+ years. In fact, I still do that by offering active-income-type services, such as Training, Coaching, Short-term Contracting, and even testing services, but with fewer inclinations. Generating passive income, even with a significantly smaller amount, brings a much greater sense of satisfaction.
If you’re an enthusiastic IT specialist with marketing skills, integrity and a keen interest in software test automation, my upcoming marketing partner program could present you with a chance to generate a source of passive income. DM me on LinkedIn.
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