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Imagine if you just had two separate sources earning you $250 paychecks ($500 total) per month with no doing additional work. And those resources just paid for your automobile expense.
Have I beaten this concept to departure at this point Great. Rich Dad Poor Dad tattooed this concept onto my brain. The concept is exactly what Real Estate Investors call Cashflow.
Again, I realized that I DID NOT want to be rich when I was 65 when it cost me my life during my younger years... I'd rather have a wholesome amount of money coming in every month from various sources and retire early. Or at least do WHATEVER I wanted after the army without having to consider the paycheck coming out of my new hobby, project, or even job as part 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 immediately snap into it, take a sip of your Monster Energy drink, and try to stay awake while on your own 24-hour responsibility in the barracks. .
An asset is something which puts money in your pocket every month. It is a lifestyle and prosperity multiplier.
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A liability is something that takes money from you every month. It may be a temporary lifestyle enhancer, however a long-term lifestyle and wealth killer.
Educate yourself to this point which you can find and purchase American Real Estate which you rents at a higher cost that all its expenses and there is still a significant amount left . The residual cash is that stream of income or cash flow.  Finally, when we begin looking at these 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 need to be hard. However, you have to learn and behave.
Now, in case you all of the above makes sense, a funny thing will start happening. When you start talking to folks about finances you'll soon begin to realize that there are two different kinds of people in the world: those who understand the difference between an advice asset and a liability, and those 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 these ended up costing me a million dollars each month but made two million dollars a month, it is an asset.
Honestly, who cares how much You're spending on an advantage 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 that 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! In addition, you wouldn't care whether that machine billed you 50% interest on your buck prior to generating one of the two dollars it spit out. .
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Since 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.
Since some people that hear the term get disappointed when they recognize there's a great deal of education and some significant setup required on the front end of their journey to financial freedom (our"Why"). Again, this isn't a get rich quick scheme, but it is a hell of a lot better than what I had been taught by a number of my military 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. So far as our professional prioritiesour army support should be at the very top. Just how can we ensure that we are setting our new real estate investing business up for enormous success How can we make sure it doesn't create more anxiety than enjoyment.
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The trick is to leverage our VA benefits, minimize our personal housing expenses, and concentrate all of our savings towards producing assets... a.k.a. rental properties.