Monday, October 13, 2008

Passive Income

Money working for you.

You start to generate passive income when you begin investing money. Always remember, that you have to get to the point of generating passive income by firstly earning money, which you can secondly manage, and thirdly invest, to make passive income.
So this is income created by putting your money to work for you. Financial education precedes residual income. You may be getting that from seminars, books, mentors, someone that you know, maybe your parents if you’re lucky, real life, or even trial and error. Myself and other successful people can guarantee you that will be a big part of the process, trial and error! This is ongoing, from the time you become aware of the concept, and never stops. A large part of your education occurs while you’re working at your job earning the money that you’re going to send out to work for you. It’s a good time to do it. Someone else is footing the bill, you’re putting some money aside, and you have the extra time. You only have to work from 9 to 5, the rest of the time is yours. You have the weekend and evenings to attend seminars, read books, an generally get the education.
Putting your money to work for you requires that you actually have money to send out to work for you. That’s what residual income is. Taking the value that you’ve created and sending it out to work for you. There are ways of creating passive income without using your own money. I used some of them - but they are done through leveraging other assets, for example your expertise or your collateral. If you have to use something other than your own money you need more than a strategy you learned in a seminar. You need to have earned the right in the eyes of others to be able to use their money.
If you need someone else’s money to get yourself started, you have to ask yourself, who is going to interact with you if your life is in chaos? Who is going to interact with you if they can see, from the way you’re living your life, you don’t honor money or respect money? If you handle your own money poorly, you won’t be able to get others to lend you theirs no matter how brilliant your strategy is. For years and years I went through this. I had a great, brilliant strategy, and I couldn’t figure out why nobody would give me the money to get it going. Obviously, I didn’t have any of my own to put in it at that time, maybe that was part of the reason. Anyway, that’s passive income, sending your money out to work for you.
One other thing you can send out to work for you is your value, your expertise, what you’ve created from your education, what you have between your ears. If you can make that deal, find it and make it happen, go ahead and do it. If you’ve never done it before, you’re $50,000 in debt already, and they’re going to repossess your house, it’s going to be awful tough to make that deal come through. Remember the sales negotiation principle. If you are in this situation, you might want to focus on something a little more guaranteed.

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