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What if you had two separate sources earning you $250 paychecks ($500 total) per month without you doing additional work. And these sources simply paid for your automobile expense.
Perhaps you have beaten this concept to departure at this point Good. Rich Dad Poor Dad tattooed this concept onto my brain. The concept is what Real Estate Investors call Cashflow.
Again, I understood that I DID NOT want to become rich when I was 65 when it cost me my lifestyle during my younger years... I'd rather have a wholesome amount of cash coming in every month from various resources and retire early. Or do WHATEVER I wanted after the army without having to consider the paycheck coming from my new hobby, job, or even job as a portion of this equation.
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Both conditions"residual income" and"passive income" try to capture the identical concept of,"making money mechanically." For the sake of brevity, I will only be using both terms interchangeably.
After hearing the words"passive income,", many of us instantly begin having romantic visions of lounging on a yacht in the Caribbean Sea and occasionally checking our growing bank account. You quickly snap back into it, have a sip of your Monster Energy drink, and try to remain alert while on your 24-hour duty at the barracks. .
An asset is something which puts money in your pocket every month. It's a lifestyle and wealth multiplier.
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A liability is something that takes money from you each month. It might be a temporary lifestyle enhancer, however a long-term lifestyle and prosperity killer.
Teach yourself to the point that you can find and buy American Real Estate which you rents at a higher cost that all of its expenses and there's still a significant amount left over. The residual money is that stream of income or cash flow.  Finally, when we begin looking at such income streams collectively, it becomes known as"residual income." .
Ironically, setting up your own Real Estate Investing Business is NOT simple... however, with the correct education, Real Estate Investing does NOT have to be difficult. But you have to learn and behave.
Now, in case you all of the above makes sense, a funny thing will begin happening. When you begin talking to people about finances you will soon begin to realize that there are two different kinds of people in the world: those who understand the difference between an asset and a liability, and the ones that will NEVER be wealthy. .
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Each of those entities are money making systems. They produce income while costing very minimal personal work or time. Even if one of those ended up costing me a million dollars each month but made two million dollars each month, it's an advantage.
Honestly, who cares how much You're spending on an asset every month if it earns you more than what you spend Now let's take it one step further... what if the spending was automatic and so was the earning
If there was a machine that spit out two dollar bills after you gave it a single dollar bill, you would be glued to this machine all day! Moreover, you wouldn't care if that machine charged you 50 percent interest on your buck prior to generating you the two dollars it spit out. .
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Because passive income inherently means that I do not need to spend the most expensive thing in life, time, in order to earn a certain amount of residual income.
Because some people who hear the term get disappointed when they realize there's a great deal of education and a few significant set up needed on the front end of the journey to financial freedom (our"Why"). Again, this isn't a get rich quick scheme, but it's a hell of a lot better than what I had been taught by a number of my army and veteran mentors. .
As members of the army, we often think it would be very difficult, or maybe even impossible, for us to find time to earn additional income. As far as our professional priorities, our military service must be at the very top. So how can we ensure that we're setting our new real estate investing business up for massive success How do we make certain it doesn't produce more stress than pleasure.
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They key is to his response leverage our VA benefits, minimize our personal housing expenses, and concentrate all our savings towards producing assets... a.k.a. rental properties.