Last time, we offered some tips for networking your way through your upcoming holiday parties. Today, we want to talk about one of the most important gifts you can give yourself – a passive income.
Not along ago, we asked you to visualize your dream life – a life where time and money were not an issue. You may think that’s just for fun. It’s not! We’re serious. You can spend your time the way you want. You can be free!
You’re free when your passive income equals the costs of your desired lifestyle.
For the sake of clarity, we define passive income as your money making you money. If you have enough passive income, you can spend your time however you want. You don’t have to work at all, if you don’t want. Or, you can work on your passion.
So, let’s look at the four steps you can take to get aggressively passive and create a passive income that sets you free. The key is to constantly keep your goals in mind so you make the best choices each and every day. For example, if you want to be free sooner, rather than later, you may choose to spend your money differently. Now you have a reason to do so – that dream life you visualize.
Step 1: Purchase with purpose
What if buying that awesome plasma television that you just saw advertised on sale in today’s paper means you have to postpone your new life by a year? That status car may not mean as much as getting to spend your time how you want.
Step 2: Look at the cumulative effect of your decisions
Review your daily routine. $5 here, $5 there soon adds up to a lot of money. Do you eat out every day? Buy a cup of coffee? In his excellent book The Automatic Millionaire, David Bach calls this your “Latte Factor”. Find one thing that you’re willing to give up now to get to the future you want sooner.
Step 3: Pay off debt
The reason for the first two steps is to get the money to pay off your debt. Pick one account – ideally it’s your debt on which you’re paying the highest interest rate. Take the money you’re no longer spending from Steps 1 and 2 and use it to pay off your debt.
Don’t stop now … take the money you were using to pay off your first debt, plus the extra money you have from Steps 1 and 2, and use it to pay off your next debt. Repeat until all your debt is paid off.
Step 4: Jump start your passive income
Historically, the two best ways to do this are through owning your own business and investing in income-producing real estate. We’ll look at each of this, respectively, in our next two blogs.
Our quote today is by Groucho Marx.
“It frees you from doing things you dislike.
Since I dislike doing nearly everything, money is handy.”
Next time, we’ll look at how to build a passive income through your own business. Until then, here’s to your bigg success!