Here's how I see the various levels of passive income and where I am at now:

1. Level 0 - no passive income. (Like putting your already low savings in a savings deposit with almost zero interest. In real terms, your savings is actually losing value.

2. Level 1 - passive income that allow your savings to keep pace with inflation, that is, your savings is able to maintain its value each year. For eg. Buying a stock that pays dividend of 3% to your investment amount.

3. Level 2 - passive income that exceeds inflation and complements your income in some way.

4. Level 3 - passive income that equals your monthly or yearly expenses. This is the stage where technically, you are financially free.

5. Level 4 - passive income that equals your income / salary. This is financial independence - independence from work (income!)

6. Level 5 - passive income that exceeds your work income. At this point it pays to focus your energies on your investment than your day job.

I am at level 3 currently. I can survive solely on my passive income now, but I continue to work, save and invest my work income to achieve Level 4 passive income. It looks daunting although it is just another level away. :-(