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What if you just had two individual sources earning you $250 paychecks ($500 total) each month without you doing extra work. And those sources just paid for your automobile expense.
Have I beaten this concept to death 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 wealthy when I was 65 when it cost me my lifestyle during my younger years... I would rather have a wholesome amount of cash coming in every month from various sources and retire early. Or do WHATEVER I wanted after the army without having to consider the paycheck coming from my new hobby, project, or even job as a portion of the equation.
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Both conditions"residual income" and"passive income" try to capture the identical concept of,"making money automatically." For the sake of brevity, I will only be using both terms interchangeably.
After hearing the words"passive income,", many of us immediately start having romantic visions of lounging on a yacht in the Caribbean Sea and occasionally checking our growing bank account. You immediately snap into it, have a sip of your Monster Energy drink, and try to stay awake while on your 24-hour duty at the barracks. .
An asset is something which puts money in your pocket each month. It is a lifestyle and prosperity multiplier.
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A liability is something that takes money away from you each month. It may be a temporary lifestyle enhancer, but a long-term lifestyle and wealth killer.
Teach yourself to the point which you can find and purchase American Real Estate which you rents in a higher price that all of its expenses and there is still a significant amount left over. The leftover cash is that stream of income or cash flow.  Finally, when we start looking at these income flows collectively, it will become 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 must learn and behave.
Now, if you all of the above makes sense, a funny thing will start happening. When you begin talking to folks about finances you will soon begin to realize there are two different kinds of people in this 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 effort a knockout post or time. Even though one of those ended up costing me a million dollars each month but produced two million dollars each month, it's an advantage.
Honestly, who cares how much You're spending on an asset every month when 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 that machine all day! In addition, you wouldn't care if that machine charged you 50 percent interest on your buck prior to generating one of the two dollars it spit out. .
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Because passive income inherently means I do not have to spend the most expensive thing in life, time, in order to earn a certain amount of residual income.
Since some people that hear the term get disappointed when they realize there's a great deal of education and a few significant setup needed on the front end of the journey to financial freedom (our"Why"). Again, this isn't a get rich fast scheme, but it is a hell of a lot better than what I was taught by a number of my military and veteran mentors. .
As members of the army, we often think it would be exceedingly hard, or maybe even impossible, for us to find time to earn additional income. So far as our professional prioritiesour army service must be at the very top. Just how can we ensure that we're setting our new real estate investing business up for enormous success How can we make certain it doesn't produce more anxiety than pleasure.
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They key is to leverage our VA benefits, minimize our personal housing expenses, and concentrate all our savings towards producing resources... a.k.a. rental properties.