Cash Flow from Book Advances

I’ve heard a lot of great success stories when it comes to personal finance over the years. But some of the successes surprise even me. A friend of mine told me this week that she received a $500,000 dollar advance for her “how to” book. It has been published and she is obligated to write one more book. This cash advance is in addition to the royalties she receives! I learned about this because I’m very good at asking open ended questions about money strategies, while not prying. It is a skill that I recommend all readers hone because it will help you. More about this serious cash flow and how it helped this woman jump start her retirement planning. She choose a subject that was generic enough to help everyone but included very specific steps on how to be master the subject. I would love to tell you the book name but this information was given to me in confidence. The take away here is she wrote this book while working full time and turned her passion into a very nice life style. Is there something that you are passionate about that could jump start your cash flow? Good Luck!

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Steve Mertz
Cash Flow Ideas

5 Responses to “Cash Flow from Book Advances”

  1. Jane Dough says:

    Thanks for sharing Steve! I have an Uncle who is an author and while I don’t know how much he has made off his books, I do know he made enough to have a lovely home, raise four children, and travel the world.

    I would love to be able to write a book and have the royalties roll in for years and years – If only I was able to write well…

    Thanks again!

  2. Steve Mertz says:

    Jane, I have good news for you. Did you know that over 50% of non-fiction books that are on the NY Times bestseller list have Ghost Writers? Here is an excellent source for overall publishing info:
    Dan is the King and offers great tips for free. Get writing Jane 🙂

  3. Madame X says:

    Usually an advance is not “in addition” to royalties, it is an advance “against” royalties. Unless your friend’s book sells extremely well, I doubt she will be entitled to additional money until her sales “earn out” the advance. I’m pretty sure most books never earn out the advance. If the $500k advance is for a 2-book deal, it will probably be a long time before her royalty statements start showing a positive balance. But if your friend sells enough copies, then yes, she will start earning more money on top of the advance.

  4. Steve Mertz says:

    madame X, you are absolutely correct. I may have misspoken but will get clarification and post it here. Thanks for the catch!

  5. Tim MMF says:

    Yeah, as Madame X said it’s against royalties…same thing in the music business (of which I am a small part). Like when 50 Cent got that $1 mill advance it came out of his royalties. Also, musical artists often get charged for limo rentals, alcohol, and other such amenities without realizing it comes out of their royalties. Good info though. Shoot, I’d write 2 books for $500k!!

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