Michael and his wife stayed home with their three children. 3 bedroom house in a middle class neighborhood and try to live within the limits of their capabilities. Michael works full time in the printing industry, while his wife is responsible for the household and the children.
She collected a number of credit card debt and have about 2 years on a car loan. They try to stay away from debt as much as possible and together they managed to get a total of $ 32,000 to contribute to Pension fund itself. It will be held in time deposits receive a 5% interest per year.
Two years earlier, the couple bought an old house which they occupy and rent for $ 850 per month. After paying the mortgage and taxes $ 300 left per month. It went into their savings account each month.
At Christmas, the family bought myself a new computer and decided to start a home business. Things started very slowly, but after 8 months they get a stable check for $ 400 per month that also go into their savings account. These part-time business will continue growing effort they devote to.
This company also offers them some very lucrative tax savings. By using these tax strategies they are able to storing an additional amount of $ 300 per month for taxes payable deducted from the salary of Michael in the workplace. This monthly income is also added to the savings of the couple.
Every Sunday the couple took the drive to stay familiar with the property market in their area. They are looking for another property, a "handyman special" fix-up and leased. They have saved enough for a deposit and their credit to pay with a bank established.
Family total monthly cost $ 2000. Now, this is Questions:
Is Michael's family have Wealth?
To properly answer this question, you must first understand exactly what "wealth" means.You to achieve wealth when: * You Passive income is equal to or greater than your Expenses .* So What does this mean?
First, what is passive income?
Passive income is money you get paid again for a job you only once. (This does not apply to the use of a gun or finding cash on the street) Some examples of this would be royalties for writing a book or a song, commissions that you receive for sales that others make and interest from bank savings or the dividend on shares / options that you have.
Second, what costs are we talking about? This is somewhat easy to understand. Last is the amount necessary to Run your household and your life. This includes, rent, mortgage payments, car insurance, food, credit card and loan payments, etc..
Let us look at Michael's family a little closer. Does Michael have a passive income? Yes he is. Michael's salary is not considered passive income. That's because he works 40 hours per week just to get the basic amount. If Michael does not work then he is not paid. His overtime also does not count as passive income.
Interest on their pension fund is not heard. Paid month after month as long as he remains in that account. Yes, $ 32,000 at 5% is $ 1,600 per year. Divided by 12 months of the same $ 133 per month in interest. Ok ... what else? ..
After the mortgage and expenses are paid with the rent they received their house is left with $ 300 per month. This is passive income. As long as tenants stay and pay rent monthly.
How bout that $ 400 of home-based business and tax savings. Is this Passive Income? Well, the wife of Michael's sure they choose a company where she could sign new business Business part-time. So yes, the second $ 400 and $ 300 in tax Savings would apply as passive income. Let us add Michael total Passive Income.
Interest income Rental $ 166.00 $ 300.00 Home Based Business tax savings $ 400.00 $ 300.00 Total $ 1,166.00
Not including salaries of Michael's work, his family Passive Revenue $ 1,166.00. Not bad. Every month this amount flows into the family bank account, no matter what they do.
We say that Michael's total monthly cost of $ 2,000.00 per month. And we also say that your Wealth when: * Your Passive Income is equal to or greater than your Expenses .*
$ 2000 cost deduct $ 1166 Passive Income = $ 834 per month balance needed for prosperity.
Michael to more than their Passive Income so they are not rich first. But they're more than halfway. This kind of knowledge a family can know exactly where their financial attention.
Home-based business will definitely help to achieve more Passive Income. After Michael's Passive Income is more than load and then Michael's family can begin to have more freedom. He may even choose to quit his job and continue to develop passive income.
Look at your finances. What is your monthly Cost? Do you have more Passive Income than your expenses? Congratulations you're doing. You're rich! If you do not. This Time to get started and start adding passive income from other area as soon as possible.
If you really understand this principle, you're well on your way to become rich.
No comments:
Post a Comment