This post is a bit of dummy spit from me. Not a nice start, I apologise for that. I get very annoyed by the main stream financial advice available in personal finances magazine or even on TV. The main advice you get from the experts is to cur your expenses,save your money, put it into your superannuation, or 401K if you are in the USA and have an emergency fund.
Whilst they are not wrong I believe they are missing the point. Think about the following scenario:
A family of 4 with two children children and both working parents. They earn the average family income of about $80 000. They are trying to save as much as possible to go on holidays, to build an emergency fund or to save for the children's college fund. Nevertheless with the increase in the cost of living they are finding hard to find ways to save more.
As the interest rates keep on going up, in Australia anyway, they continually struggle to pay for all the bills on time and afford the mortgage payment and they are doing all that they can to keep their house.
As mentioned above thy have already cur their expenses as much as possible. So what now?
Their income barely meets their expenses and they have already cut as many expenses as they can. So the advice they get from the main stream media is not achievable. One of the parents can find a weekend job but the pay will not make much difference.
In this case they need to make more money, Not through extra employment or short term solutions. they need a long term solution to increase their income so they can achieve their financial dreams.
The answer is in passive income. Passive income is income earned without someone having to work for it. Once the passive income stream is setup all you need to do is sit back and watch the money come in.
It is not very easy to acquire passive income, that is why not many people have passive income sources. Nevertheless with the right education, time and persistence, anyone can have a few sources of passive income that bring in a few hundred dollars, or even thousands every month.
The first step towards having passive income is learning about it. The following articles will give you an introduction of what passive income is and how to setup different streams of passive income:
Showing posts with label passive income. Show all posts
Showing posts with label passive income. Show all posts
Thursday, December 2, 2010
Monday, November 29, 2010
Financial independence compilation, habits of successful people, get rid of debt and make money
Welcome to the November 29, 2010 edition of financial independence.
Your Financial Independence Articles
Ten habits of highly successful people - There are many different sayings that reinforce the importance of learning from others with more experience than ourselves. This can save a lot trouble and can help us to achieve our objectives faster.
I have compiled a list of 10 habits, or qualities, of highly successful people. I honestly believe that anyone can develop these habits and progress to achieve anything in life.
Maybe I am a little naive but hey, it worked for them so it will probably work for me as well.
How to make some extra money - I have read quite a few articles about how to make some extra money. There is a wide range of advice that goes from saving, to keep the money in your pocket, to using your credit card to make money through rewards.
Here are a few of my favorite tips.
Personal finances management for when you are broke, debt consolidation home equity loans - It can be very difficult to budget when you are under financial stress. The following tips are aimed to us to budget when lacking a bit of cash.
Reasons to say NO to credit - It is very easy to get credit these days. Many credit card companies offer introductory rates that are very attractive, combine it with a culture that encourages to spend money then there is potential for a personal finances disaster.
Our society seems to place value on the things we have and not who we actually are. I observe this whenever I go. People compare the cars they drive, the school the kids go to or the clothes they wear. It is ridiculous. This encourages people to purchase stuff using credit.
Here are a few reasons why you should say no to credit.
Videos on how to be successful - The following videos provide quick and valuable tips on how to be successful.
Reader’s Articles
Jason Vincion presents How to Invest posted at For the Love of Creativity, saying, "A blog post that offers suggestions on how to find sound investments that accrue interest over the rate of inflation."
Rosetta presents Cash Flow Notes posted at Stock Tips, saying, "Cash flow notes are similar to an IOU for debts that can either be purchased or sold. Get some investment tips if you wish to have smooth transactions with potential note buyers."
Everything Finance presents The Top 3 Ways to Entertain your Business Clients posted at Small Business Resource, saying, "When it comes to business, it is vital that companies form good working relationships with their clients. Trust is invaluable to fostering a successful partnership; socialising with your contacts outside of the office environment can be a great way to build it. If your clients are based far away from you and you only have the opportunity to meet every so often, you need to make the most of this time in order to get to know each other."
Silicon Valley Blogger presents PenFed Credit Union Credit Cards Review posted at The Digerati Life, saying, "Have you thought about getting a credit card from a credit union? Here's a review of cards from PenFed."
Ryan @ MFN presents How to Find Unclaimed Property and Money posted at The Military Wallet, saying, "Tips on how to search state records for free to find missing money, such as paychecks, tax refunds, and other money you are owed."
Tim Chen presents Get $100 With the New American Express Blue Sky Preferred posted at NerdWallet Blog - Credit Card Watch, saying, "American Express just rolled out a spanking new offer, introducing the Blue Sky Preferred credit card, and they’re giving away $100 to boot."
Ray @ Financial Highway presents Car Maintenance: 8 Tips to Cut Down on Costs posted at Financial Highway, saying, "Maintaining a car can take up a large chunk of your income, here are 8 tips to help you cut down on your expenses."
Highest CD Rates presents Choosing the Best CD for You posted at Highest CD Rates Info, saying, "A certificate of deposit can be a low risk part of any investment portfolio."
Odysseas presents ‘Money is Not Easy, but It’s Simple’ posted at Wallet Blog, saying, "Hey, taking control of you financial future takes patience, but it does not have to be complicated when you set appropriate goals and know what your priorities should be."
Jeff Weber presents Who Can and Can't Benefit from the Citi Platinum Card posted at Smart Balance Transfers, saying, "The Citi Platinum select card is good for consumers who can benefit from low rates, but not ideal for those who pay their balances every month and could realize greater benefits with a rewards credit card."
Andrea McDougal presents Follow the Money:12 Big Public Works Projects Funded by US Stimulus Money posted at Masters in Project Management, saying, "Big public works are being funded by US stimulus money. These things range from major road and public transportation revamping to smart grid projects throughout the country."
BWL presents Is it Smart To Borrow Money To Invest? posted at Christian Personal Finance, saying, "A look at whether or not investors should be borrowing more money to invest..."
Mitch Archuleta presents Roth IRA CD Laddering posted at RothIRA.com's Retirement Planning Blog.
Michael Pruser presents Citi $50 Cash Back Student Holiday Offer posted at The Dough Roller, saying, "thanks for the inclusion"
Michael presents 20+ Christmas Gift Ideas Under $100 posted at Consumerism Commentary, saying, "A great list of Christmas gift ideas"
PT presents 2010 Tax Brackets: What Is My Tax Bracket? posted at Prime Time Money, saying, "Know your brackets and know how to plan to pay fewer taxes."
Alexander presents A Defensive Stock With A Generous Yield posted at Dividend Stocks, saying, "Value investors looking for a long term stock with a dividend that is likely to increase over the next few years should turn their attention to Lockheed Martin."
Moneyedup presents What About Savings Bonds? posted at MoneyedUP, saying, "These investments are perfect for everyone from infants to the elderly. Savings bonds have been around forever and are still as popular as ever."
freefrombroke presents Building Credit From Scratch – Are Young Adults Doomed for Financial Failure? posted at Free From Broke, saying, "Do young adults have the cards stacked against them as they try to build up new credit? Temptation and student loans make it difficult for young adults to get ahead."
Ryan @ CML presents How to Calculate the Yield on Cost of a Dividend Stock posted at Cash Money Life, saying, "Tips on calculating the yield on cost of a dividend stock, an important indicator of how your dividend portfolio is performing."
Ryan @ MFN presents When Should You Start Receiving Social Security Benefits? posted at The Military Wallet, saying, "Choosing to delay receiving Social Security Benefits can increase the amount you receive. These tips can help you maximize your Social Security Benefits."
Stretching the One Income Dollar presents Stretching the One Income Dollar: 10 No Money Down Ways to Buy Real Estate posted at Stretching the One Income Dollar, saying, "Thank you for consideration of my article."
MoneyNing presents How To Teach Your Kids To Budget posted at Money Ning, saying, "How would you teach your kids how to budget? Do you think it's important?"
Arjun Rudra presents Discussing the investment case for Kinross Gold (K:TSX) with Bruce Campbell of Campbell & Lee Investment Management posted at Investing Thesis, saying, "While many have argued that gold will continue to outperform going forward, there are equally as many who argue against an investment in gold , including the Oracle of Omaha. While there are valid points on either side of the argument it is you who has to judge on which side of the debate you fall. Having said that, if you happen to fall on the side that calls for an investment in gold , you’ll likely enjoy the following interview."
Money Crashers presents » What Is Divorce Insurance Coverage? posted at Money Crashers, saying, "One of the latest products to be rolled out by the insurance industry is divorce insurance. Yes, you heard me correctly, divorce insurance. The question is, what exactly is it and should you consider it?"
Youdondour torres presents Quick sameday advance posted at Pay Day Loans For You Today!.
Youdondour torres presents Payday loans online and how they work posted at Quick and easy payday loan!.
That concludes this edition. Submit your blog article to the next edition of financial independence using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.
Thursday, November 11, 2010
10 tips for financial security
Many people strive to achieve financial security. It is however very difficult to deal with the pressures and expenses of the normal daily life and at the same time try to achieve financial independence.
However, being financially independent can deliver many benefits including peace of mind. Nowadays, in Australia, it takes two incomes to raise a family. Recent financial reports also indicate that many young families, with two incomes, will not be able to afford to own a property in Sydney.
These reports are very alarming to me. It shows how the cost of living is increasing and how many people will be negatively affected by it.
It is therefore important that we all take responsibility for our financial affairs and strive to achieve financial independence. This process does not need to be a torture nor an exercise in self-deprivation.
I found these tips by searching on the internet and from personal finance book I have recently read. They are designed to help you to achieve financial independence.
However, being financially independent can deliver many benefits including peace of mind. Nowadays, in Australia, it takes two incomes to raise a family. Recent financial reports also indicate that many young families, with two incomes, will not be able to afford to own a property in Sydney.
These reports are very alarming to me. It shows how the cost of living is increasing and how many people will be negatively affected by it.
It is therefore important that we all take responsibility for our financial affairs and strive to achieve financial independence. This process does not need to be a torture nor an exercise in self-deprivation.
I found these tips by searching on the internet and from personal finance book I have recently read. They are designed to help you to achieve financial independence.
Thursday, November 4, 2010
Top 10 money tips to become debt free
One of the purposes of this blog is to help myself to learn more about money in order to help me to become debt free and, hopefully, financially independent.
Being debt free is almost a dream for me at moment, with the power of compounding interest working against me I keep on paying my credit card debt every month and it doesn’t seem to go down no matter what I do.
This post is a result of my own research around the internet on 10 strategies to help me to become debt free.
#1 Stop using the credit card
If you are liking me you have a bit of credit card debt hanging around. No matter what you do you don’t seem to get ahead those monthly payments. Every month interest is credited back into the account and part of your effort to reduce the balance on the card is absorbed by the interest.
The first step towards getting rid of credit card debt and being debt free is to stop using those cards.
Put them away, cut them up if necessary, do whatever it takes for you to stop using those cards.
Some of us are in a situation that you use your credit card to pay for your monthly bills. This means that you probably don’t have enough cash flow to pay for your living expenses and then you use the credit card to supplement your income.
If you are in the situation above then you need to get on top of your cash flow and ensure that you spend less than you earn. Keep reading to find out how to get on top of you cash flow.
The following article discusses how credit card debt can be avoided:
#2 Get on top of your cash flow by spending less than you earn
In order to get rid of your debt you need a debt management plan. You need to take a hard look at your cash flow and come up with a debt management plan to ensure that you spend less than what you earn.
If you continue to spend more than what you earn you will never be able to get out of debt, it is as simple as debt.
The are two ways to take control of your cash flow, cutting the expenses or increasing your income. The next tip relates to reducing your expenses.
With regards to increasing your income, I believe that the best way to impact your financial life in the long term is to have streams of passive income. The tip #4 relates to passive income.
To learn more about the importance of cash flow in personal finances have a look at the following articles:
The key to financial independence is to manage your cash flow. You need to ensure that you spend less than what you earn. The first step to achieve a positive cash flow is to reduce your expenses.
If you don’t have a budget it is a good idea to create one. Once you have it you can have a look at your expenses item by item and find out where you can save.
Take a look at my article about creating a budget, it contains detailed, step by step instruction on how to setup and use a budget to help you to manage your personal finances:
#4 Passive income, the key to financial success
Saving alone is not enough to have a positive cash flow. In order to take control of your finances you need to increase your income. My favourite way to increase income is also the hardest one, passive income.
Passive income is income that you earn without working for it. Once the passive income stream is step all you need to so is to sit back and watch the money come in.
Passive income to me is the key to achieving financial independence.
The following articles will helps you to understand passive income and will provide you with some tips on how to generate passive income:
Debt consolidation is another debt management strategy that you can employ to get rid of debt. You do have to be careful before consolidating your debt though.
When you are pressured by debt you may get emotional and look for easy ways to get out of debt. Organisations that offer debt consolidation loans are very clever in how they offer their products. They present the information in such a way that it is very convincing and attractive if you a buried in debt.
Before consolidating your debt take a hard look at how much interest you are paying on your debt and compare it with the interest you will pay if you get the new loan (don’t forget to include fees in your calculation).
I have often come across debt consolidation loans with interest rates so high that it would not be advantageous to consolidate my debt.
Do research debt consolidation loan, do your homework and make sure the numbers make sense before you sign any papers.
#6 Home equity debt consolidation. Refinance you mortgage to pay off the debt
Refinancing your mortgage to pay off your unsecured debt makes sense. Interest rates on mortgages are usually much lower than the interest rates you pay on unsecured debts such as credit card.
If you do have enough equity in your home loan consider refinancing your mortgage and use some of your equity to pay off your unsecured debt.
Don’t forget that once you refinance your property and take the money, your mortgage payments will increase. Make sure that you plan ahead so you can afford your mortgage payments in the short and long terms.
#7 EBay is your friend
Take a good look around your house, you can probably find many items laying around that you don’t need. Consider selling them on eBay and use the profits to reduce your debt, every little bit helps
#8 Get an extra job
The fastest way to increase your income is to get a second job. It is very hard to find sustainable, alternative sources of income. If you do want to fast track your debt payments then consider getting a second job to boost your income and pay off the debt a little faster
#9 Make money through blogging
Blogging can be a very enjoyable way of increasing your income. These days you don’t need to be a computer programmer to have your own blog.
I did not write a single line of computer code to have this blog up and running and although it does not generate a significant income at the moment it is helping me to learn more about personal finances and, with the benefit of time, has the potential to put some money in my pocket.
Blogging can be fun because you can choose whatever topic you like. It is fun to write about the things you love. It is a way of making a little income doing doing something that you like.
I will finish this section with a little warning. It takes time and persistence to get a good amount of traffic into your blog so if you decide to start one make sure you stay motivated and stick with it.
#10 Setting goals
Getting rid of debt can be very long process during which you may loose focus and motivation.
Goal setting is a strategy that can help you to remain motivated as you achieve small goals that one day will help you to get rid of your debt.
The following links refer to some very interesting articles regarding goal setting:
Stay motivated and take action
One of the most important tips I can give you is to stay motivated.
Being in debt is very frustrating, you work very hard and you you sometimes have the feeling that you are not getting anywhere. It is very important to remain motivated, focus on your goals and believe that you can achieve your objectives.
One of the most influential books to me, and in fact the book that started me on the road to financial independence, is the The Science of Getting Rich. one of the most valuable advices I got from the book was to believe in myself, focus on my goals and to remain motivated.
You can get rid of your debt if you remain motivated and take action. Stop taking about the things you want to do and do something. You are the only one that can do something to take control of your personal finances.
Friday, August 6, 2010
The most important money advice
There is only one rule that should direct your personal finances. If you are able to understand and apply this rule you have mastered all that you need to achieve financial independence.
The rule is:
FINANCIAL INDEPENDENCE = PASSIVE INCOME - EXPENSES
If you are able to earn passive income and spend less than you earn you are not only financially independent but you are also wealthy.
You probably have seen this formula before in terms of cash flow. To manage your cash flow well you need to spend less than you earn.
The challenge in becoming financially independent is how to earn passive income.
Passive income can be simply defined as money that you earn without working for it. There is a very famous author in the personal finances space that says that you have to setup several streams of passive income to minimise your risks and increase your potential for income. In other words, don't put all of your income eggs in one basket.
But how exactly can you earn passive income? A basic list of potential sources of passive income follows:
- Rental property
- Shares and bonds
- Businesses
- Royalties (on inventions or artistic work)
The list above is by no means complete. Have a quick look on the internet and you can find many sources of passive income.
Earning passive income is the hardest item in the formula. Nevertheless many people struggle with the second component, spending.
Spending less than you earn is essential. In some ways it is so basic that it goes without saying it. Nevertheless, our society is impregnated with credit card debt, individuals and organisations filing for bankruptcy. So maybe is not that simple.
If you really want to achieve financial independence, you must spend less than what you earn. Even if you have passive income you still have to spend less than what you earn.
The last component in the formula is FINANCIAL INDEPENDENCE.
Financial Independence should be your ultimate goal. Being financially independent means that you have enough passive income to cover your expenses. Once the passive income is setup, you don't have to work for it. In addition, if you have more passive income than what you spend then you are financial independent.
Sunday, July 25, 2010
Why invest your money
Investing and finances independence means something different to everybody: being able to retire at 50, setting up your own business, paying the mortgage, writing a novel or traveling the world. To achieve your goals consider how much you will need, and then think about how you can invest your money to help you achieve these goals.
There are a few different strategies to invest your money, this article will look at 2, investing for capital growth or investing for an income.
Investing for capital growth
Capital growth occurs when the value of your investment increases. Most people invest for capital growth to build their wealth over time and protect themselves against inflation.
Investing for income
People can seek an income stream from their investments in order to supplement their primary source of income. Many retired people live off the income from their investments (e.g. dividends from shares and rent from property). Fixed interest products such as bonds and hybrids offer a potentially regular income stream.
There are some investment strategies that will give you capital growth and regular income. An example is properties. In the long term property values generally go up in value. If you are investing in properties and you have tenants you will also have rental income. Properties therefore have the potential to give you income and capital growth.
Before investing, think about your short and long term objectives and devise a strategy to support you in achieving your objectives.
There are a few different strategies to invest your money, this article will look at 2, investing for capital growth or investing for an income.
Investing for capital growth
Capital growth occurs when the value of your investment increases. Most people invest for capital growth to build their wealth over time and protect themselves against inflation.
Investing for income
People can seek an income stream from their investments in order to supplement their primary source of income. Many retired people live off the income from their investments (e.g. dividends from shares and rent from property). Fixed interest products such as bonds and hybrids offer a potentially regular income stream.
There are some investment strategies that will give you capital growth and regular income. An example is properties. In the long term property values generally go up in value. If you are investing in properties and you have tenants you will also have rental income. Properties therefore have the potential to give you income and capital growth.
Before investing, think about your short and long term objectives and devise a strategy to support you in achieving your objectives.
Monday, May 3, 2010
Generating Passive Income
For about 10 years now I have been researching and applying ideas regarding generating passive income. The internet has a countless amount of information regarding this topic, some trustworthy, some not.
I have spent a lot of time and effort going though the researching and learning process, as a result I have been somewhat successful in generating passive income.
The purpose of this blog is not to give you a formula that will make you rich, it is rather to encourage you and to share my experience on how to do it.
I have always been a dreamer, I love movies and books that encourage you to achieve great things> I love those movies that say that you can do anything.
In fact I think that you can do anything. I am here to say that YOU CAN DO ANYTHING and this includes generating passive income.
The first step towards generating passive income, or achieving anything for that matter, is to believe that you can do it and remove any fear or doubt you may have.
There is catch, as always. It takes effort, and that is what prevents people from achieving their dream. It takes effort, persistence, and believing that you can do it. It is not going to happen overnight, you are going to have to learn about it and to really dedicate a lot of time and effort to achieve it.
It is worth it. Every morning when I take my kids to school people look at me as if I am an alien. Other father are usually dressed for work and are in a hurry. Not me, I always go running on the beach after taking the kids to school. There is nothing better than being able to be with my children whenever I want and not to have to go to work. It is worth it.
If you want to be financially independent start believing now. Make that your first step, believe in yourself. You can do it.
I have spent a lot of time and effort going though the researching and learning process, as a result I have been somewhat successful in generating passive income.
The purpose of this blog is not to give you a formula that will make you rich, it is rather to encourage you and to share my experience on how to do it.
I have always been a dreamer, I love movies and books that encourage you to achieve great things> I love those movies that say that you can do anything.
In fact I think that you can do anything. I am here to say that YOU CAN DO ANYTHING and this includes generating passive income.
The first step towards generating passive income, or achieving anything for that matter, is to believe that you can do it and remove any fear or doubt you may have.
There is catch, as always. It takes effort, and that is what prevents people from achieving their dream. It takes effort, persistence, and believing that you can do it. It is not going to happen overnight, you are going to have to learn about it and to really dedicate a lot of time and effort to achieve it.
It is worth it. Every morning when I take my kids to school people look at me as if I am an alien. Other father are usually dressed for work and are in a hurry. Not me, I always go running on the beach after taking the kids to school. There is nothing better than being able to be with my children whenever I want and not to have to go to work. It is worth it.
If you want to be financially independent start believing now. Make that your first step, believe in yourself. You can do it.
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