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Imagine if you just had two separate sources both earning you $250 paychecks ($500 total) per month without you doing additional work. And those resources just paid for your automobile expense.
Perhaps you have beaten this concept to death 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 understood that I DID NOT want to be wealthy when I was 65 if it cost me my life during my younger years... I would rather have a wholesome amount of money coming in each month from various resources and retire early. Or do WHATEVER I wanted after the army without having to consider the paycheck coming out of my new hobby, project, or even occupation as part of the equation.
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Both terms"residual income" and"passive income" attempt 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 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, have a sip of your Monster Energy drink, and try to stay awake while on your 24-hour responsibility in the barracks. .
An asset is something that puts money in your pocket each month. It's a lifestyle and wealth multiplier.
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A liability is something that takes money away from you every month. It may be a temporary lifestyle enhancer, however a long-term way of life and prosperity killer.
Teach yourself to the point which you can find and purchase American Real Estate which you rents at a higher price that all of its expenses and there's still a significant amount left . The residual money is that flow of income or cash flow.  Finally, when we start looking at these income flows 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 hard. However, you must learn and act.
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: these details those who understand the difference between an asset and a liability, and those that will NEVER be wealthy. .
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Each of these entities are money making systems. They create income while costing quite minimal personal effort or time. Even if one of those ended up costing me a million dollars a month but made two million dollars each month, it's an asset.
Honestly, who cares how much you are 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'd be glued to that machine all day! In addition, you wouldn't care if this machine charged you 50% interest on your dollar 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.
Because some people that hear the word get disappointed when they realize there is a great deal of education and some significant setup 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 was taught by a number of my military and veteran mentors. .
As members of the military, we often believe it would be exceedingly difficult, or maybe even impossible, for us to find time to earn extra income. So far as our professional prioritiesour army service must be in the very top. Just how can we ensure that we are setting our new real estate investing business up for enormous success How do we make sure that it doesn't produce more stress than enjoyment.
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The trick is to leverage our VA benefits, minimize our personal housing expenses, and focus all of our savings towards producing resources... a.k.a. rental properties.