Money Smart Skill: How to raise your monthly gross income without working more hours
Raising your monthly gross income without killing yourself overworking is a valuable money smart skill. I was raised with the belief that if I wanted more money the only way to have it was to work more hours. This is the classic time for money trap that can lead to overwork.
The person who is an employee or is self employed understands well the concept of working more hours to make more money. The challenge is when you run out of hours you can work and you still need to increase your monthly gross income to make ends meet or enjoy the lifestyle you desire?
To increase your monthly gross income without working more hours you have to master the money smart skill of generating passive income. When I was growing up I never heard the term passive income so I did not even know such a thing existed. The first time I read the Robert Kiyosaki book, Rich Dad Poor Dad, light bulbs started going off like fireworks in my head. The whole concept of having money come to me that I did not directly trade my time for was mind boggling.
First, I want to say that the term passive income can be a bit deceptive. It kinda sounds like you don’t actually have to do anything to earn the income and nothing could be further from the truth. Building a passive income producing asset is hard work. The secret to passive income is doing the hard work up front and then reaping the rewards for your efforts on an ongoing basis.
For example, I have been working of building an internet product sales site into my veterinary website for over 5 years. My goal has been to provide holistic products to my customers and generate passive income from repeat sales. Sounds easy but in reality it has been a huge challenge and learning experience. After 5 years of effort, my partners and I are beginning to see an increase in our monthly gross income and for the most part we are not having to put significant time in. If someone were to look at our current business they might conclude that we were making profits without working for them but in reality we have worked very hard for those profits through past effort.
So, what I am saying is to raise your monthly gross income without working more hours initially you have to work more hours. You also have to learn new money smart skills and stay focused on your goals even when you do not have a boss or customer breathing down your neck.
A few possibilities for raising your monthly gross income without working more hours indefinitely include:
Build an internet marketing business
Write and market a book
Invest in rental property
Grow a stock portfolio that focuses on raising your monthly cash flow
Join a network marketing company and build a network of customers who order monthly
Of all these options, network marketing is by far the most accessible to someone who does not have significant money to invest. A company that offers a solid product, business plan and long term vision will save you years of time and learning curves. Raising your monthly gross income without working more hours is a money smart skill that will serve you for the future and allow you to live your dreams. Madalyn
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Interested in starting a home business: Contact me
Recession Economy: Inflation is a hidden tax
This recession economy has been with us for much longer than most similar periods in the past. Words like deflation and inflation are thrown around but few actually understand the implications each of these has on our lives. Our understanding is complicated by the fact that we can have one or the other in different sectors of the economy.
At this time we have deflation in the housing market, but inflation in the cost of energy, consumer goods and health care. Our interest rates are still at record lows but starting to rise. The challenge with deflation is that businesses have such low profit margins that they can’t afford to expand and hire new employees. At some point, continued deflation in prices will put many companies completely out of business. Increased energy costs also drive up the cost of raw goods further eroding profits.
The federal reserve is attempting to combat deflation by keeping interest rates low to encourage people to borrow more money and spend it. They are also printing massive quantities of dollars in an attempt and create controlled inflation to shift us out of the recession economy. The problem with both of these strategies is that interest rates will eventually have to come up and, controlled or not, inflation eventually lowers the value of the dollar.
To summarize:
Deflation of the dollar increases its purchasing power but too much can slow down expansion of the economy and jobs
Inflation decreases the purchasing power of the dollar but supposedly helps with growth and expansion in our economy( I don’t believe this)
This is where the hidden tax concern shows up. The government can take a portion of your income in the form of a obvious tax or they can use printed money from the federal reserve to sell as bonds which lowers the value of the dollars you have. In other words, the government gets the printed money before it goes into circulation and loses value. For more on this concept check out The dollar is not money.
The fact that we are printing money to lower the value of the dollar is not lost on the foreign nations we have loans with. They have no desire to be paid back with dollars that are worth less than what they were when the loan was made. Based on our actions, future loans will come with much higher interest rates, if they come at all.
What we can do to protect ourselves from manipulation of our currency during the recession economy:
Elect officials to all levels of government who will be fiscally responsible and curb spending
If you foresee a need in the next year for a product, make that purchase now to support our businesses
Do not spend money on non necessities
Do sell stuff now that you do not need
Do not hold savings in the bank in the form of dollars
Do hold your savings in products that have real value such as real estate or precious metals, such as silver
If you invest in the stock market, focus on commodities that people must have for survival, such as energy and food
Pay off all debt that does not have a fixed, low interest rate
Educate yourself on economic and financial issues
Do not depend on elected officials or proclaimed financial advisors unless you see positive results from their actions
Do look into starting a home based business that will give you additional cash flow
I make these recommendations based on my research but you should do your own study to determine what is best for you. I have a good books section of my blog that can help you get started. I believe our recession economy will right itself based not on government action but the actions of each of us as individuals. I believe the American people will get it right and lead the rest of the world back to prosperity. Madalyn
Check out this video on the Fed Printing Money
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Rich Dad Education: Where does your cash flow monthly come from?
One of the most important money smart skills a Rich Dad education teaches is to know where your cash flow monthly comes from. When I first began studying the financial education of Robert Kiyosaki, I learned to understand the cash flow quadrants.
The cash flow quadrants are:
E for employee
S for self employed
B for business owner
I for investor
The E and S categories are on the left side of the quadrant and the B and I are on the right.
In the E Rich Dad education quadrant your cash flow monthly comes from your salary. Salary is the money you get by trading your time for dollars. Assuming your salary covers your monthly expenses then you maintain a positive cash flow but should your expenses increase for any reason you have little ability to increase your salary to meet the extra need. Money shortage is often a concern for those in the E quadrant.
In the S quadrant your positive cash flow monthly is based on the profit you generate over and above the operating expenses of your business. If your business does not generate a profit then your cash flow monthly is negative. In the S quadrant, which includes many storefront business or professionals such as doctors, you work in your business. To raise your profit level to generate positive cash flow monthly often means working more hours so you give up time freedom. Time freedom is often the concern for those in the S quadrant.
In the B and I quadrants your cash flow monthly comes from passive income. Passive income is based on previous effort and it comes in monthly without the ongoing time for money trade. A B quadrant leverages the time of employees and works off a proven system rather than the individual effort of the owner. In the I quadrant, passive income flows in the form of stock dividends or options, interest payments or real estate rental income. In the B and I quadrant you have money and time freedom.
To summarize, cash flow monthly can come from:
Salary from the E quadrant
Profit from the S quadrant
passive income from the B or I quadrant
I was frustrated in my life because I wanted money and time freedom but could not understand how to have both. My Robert Kiyosaki, Rich Dad education taught me first to understand where my cash flow monthly came from and how to move from the left side of the quadrant to the right side. This simple concept has changed my life immensely. Madalyn
For a similar topic, check out: Money in your mailbox
Do you want to earn passive income? Contact me.
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Book Review – 13 Bankers The Wall Street Takeover and Next Financial Meltdown
13 Bankers, written by Simon Johnson and James Kwak goes a long way toward explaining what has happened to our financial system. The authors take a very complex subject and make it understandable to those of us who are not math wizards. Once explained, the financial meltdown should have been predicted and prevented. Lack of basic financial education and common sense are more behind the problems than evil intent.
This book makes the case that with banks, bigger is not necessarily better. While large banks are more able to handle big international transactions, these same deals can be done by using several smaller banks and in fact this is done all the time. The evolution of many small banks into a few huge banks has led to the “too big to fail” scenario we are faced with now.
The authors admit that allowing the damaged banks to fail would have resulted in a much larger problem but the sweetheart deal the banks ended up with has only encouraged more risky behavior. If the large banks are deemed too big to fail then they are guaranteed to be bailed out each time they get in trouble then there is no down side to going for risk. If the risk works out the banks make huge sums of money and the investors are happy but if the risks turn out badly the taxpayer is on the hook for the losses. Not a bad deal for everyone but the taxpayer.
High returns of high risk investments also fuel the high pay packages to executives. When the banks were bailed out no restructuring or firing occurred so the same people who got the banks in such trouble were able to keep their jobs and continue the same behavior. The authors of 13 bankers explain why regulation will never work to control the excesses. The financial system is too complex and players will always be able to find a way around the rules or pass on fines or penalties to the customers.
The solution offered in 13 Bankers is to break up the large banks into too big to exist. If a bank grows to over a certain percentage of the Country’s GDP then it would have to be broken into smaller companies. Then if risk taking resulted in failure all parties would lose and the bank would be allowed to fail. This is the true capitalist system.
13 Bankers does suggest that greed played a part in the financial meltdown but we allowed it to happen because as a nation we are financially illiterate. Consumer protection laws can only do so much if people don’t read before signing and make some effort to understand how the money deals work. I am much more educated after reading this book. If we do not get a financial education ourselves then how are we going to elect politicians who will take the right steps to correct the system and prevent another even more drastic financial meltdown. Madalyn
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Rich Dad Education: Reducing debt burden secret to increasing cash flow monthly
Played a wonderful game of CashFlow last weekend and was reminded how critical it is to reduce my debt burden as a step to increasing cash flow monthly. I selected the doctor card on purpose because I feel it is one of the most challenging professions when trying to escape from the rat race.
My friend, Jeannie, and I sat down to play with anticipation of a great learning experience. Jeannie drew the police officer card so her cash flow monthly started out much lower than mine but her expenses were also much less. Both of us focused on reducing our debt burden and every time we passed the pay check space we used a portion for this purpose. This strategy did not leave either of us much money for investing in deals to raise our cash flow monthly but our expenses went down which had the same effect.
The whole point of CashFlow is to get your passive income higher than your expenses so reducing debt burden would not seem like the fastest way to win since it creates no passive income. What Jeannie and I both found, however, was our emotional state improved dramatically as our expenses went down. We had less fear of the downsizing space and we felt we were controlling what we could control.
Soon our debt burden was not an issue and we started getting excited about finding some deals. Jeannie bought a stock at a discount and sold it for a nice gain. This gave her a next egg to buy a nice little 3/2 rental house. I was also able to make a similar purchase. We hit a market card and both sold our houses. Now we could really have fun with some big deal cards.
Almost immediately Jeannie drew a great deal with wonderful cash flow monthly. She was frustrated that she did not have enough money to cover the down payment but when we did the math we found she could borrow the down payment from the bank and her additional cash flow monthly would cover her payment. Not only that but the passive income from this deal was greater than her expenses so she was out of the rat race.
I had to play on and do several big deals in an effort to get my cash flow monthly higher than my expenses while Jeannie gallivanted around on the fast track. Despite being downsized 3 times and hitting the baby and doodad spaces repeatedly, my cash flow monthly continued to grow. As my cash flow monthly increased I lost all fear of the bad spaces and continued to invest in big deals every chance I got. I got out of the rat race just as Jeannie won the game.
This was the best game of CashFlow I have ever played for several reasons. By using the strategy of reducing debt burden I got out of the rat race faster than ever before and with the least frustration. This is where I am in my life right now. I am making some sacrifices to pay down my debt burden and I am making significant progress. Patience, discipline and focus on cash flow monthly is getting me to the place where I can take advantage of any small or big deals that come my way. Madalyn
For more on reducing debt burden check out Money Smart Skill number one.
Ever feel like you are all alone with your money challenges? I am not a coach but I invite you to have a look at what has worked for me to increase my cash flow monthly. Contact me.
Money Smart Skills: Resisting impulse buying
Nothing will derail your money smart plan like impulse buying. There you are on track to reduce your debt burden when your dream horse(car, house, farm, saddle) becomes available at a great price. My friend and I both had this experience last week and together we managed to resist our old impulse buying habits.
My friend is moving cross country and had just reduced her horse herd to 2. She got a call from a neighbor who was forced to sell his good horse at a very reduced price. Knowing that the same horse would cost about 5 times as much under normal circumstances she was very tempted. As she and I discussed this we tried hard to stay rational in evaluating the pros and cons.
Pros
Great horse
Great price
Cons
Extra horse to haul cross country
Extra bills for feed and shoeing
Money out or her emergency fund
Extra chores to care for new horse
Sanity prevailed and my friend spent the afternoon appreciating her 2 current horses.
In my case, I did not find a horse but a saddle. All last year I looked for a saddle just like this one and it was very fairly priced. I really wanted this saddle but I knew I was not willing to increase my debt burden or dip into my emergency fund to get it. I thought about what I could do to afford the saddle without derailing my money smart plan. I determined that I could sell another saddle that only fits one on my horses and I recently sold one of my goats and I had that money.
Unfortunately, as I was making all my plans, the saddle sold. I am disappointed and at the same time certain that sticking with my money smart plan will allow me to buy as nice or a nicer saddle in the future. Having friends who support you in becoming money smart is important. Disappointments today will become celebrations in the future. Madalyn
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Money Smart Skills: The Power of a Mastermind Group
A coach can be essential in developing money smart skills but a different kind of power can the found in creating a mastermind group.
“Economic advantages may be created by any person who surrounds himself with the advice, counsel, and personal cooperation of a group of men who are willing to lend him wholehearted aid in a spirit of perfect harmony.”
These are the words of Napoleon Hill in his classic book, Think and Grow Rich.
Coaching is one person working to help another achieve his goal but when two or more minds come together with the intention of a single goal then according to Hill, this creates a psychic power known as the third mind. With the mastermind group each person contributes his or her knowledge which creates a vastly greater overall sum of intelligence.
It is this process of working together in harmony, towards a common objective, that opens up the mastermind group to the source of Infinite Intelligence. Although Napoleon Hill did not say this I choose to call this power, God.
God wants us to turn to him for guidance but we can only receive from Him through the information we have accumulated in our life experience. By getting a money smart coach, God can give you additional information through your coach and this can be valuable expert knowledge. When you create a mastermind group you increase the intelligence of the third mind and increase the power of intention on the single shared goal. The mastermind group allows God to work through a wide range of intelligence and the increased energy moves an intention forward.
A mastermind group can:
Expand the knowledge base
Increase the power of intention
Shorten the time required to reach a goal
Open many channels for God to work through
Results from a mastermind group may not happen instantaneously but they will happen if you stay together, organized and focused. Ask yourself who shares your common goal and get a mastermind group working. You will be amazed. Madalyn
To join one of my passive income mastermind groups contact me
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Money Smart Skills: Understanding good or bad debt burden
Yes, some level of debt burden can be valuable when understood and managed well. There are some clear rules for good and bad debt burden, but also some gray areas. Pretending debt is not important or that it is all bad is not money smart thinking. Although it takes some effort, our quality of life is hugely affected by how well we understand these differences.
Rules for bad debt: What money smart people avoid
Do not accrue debt burden for the purchase of liabilities such as a car or other non income generating item such as a vacation, swimming pool etc.
Do not use credit to cover monthly living expenses.
Do not use credit to gamble or make risky investments
Rules for good debt: What money smart people use to their advantage
Do use debt to leverage your money when investing in income producing assets such as rental property or a home based business
Do use debt when avoiding it could end up costing much more. For example, use credit to spread out repair expenses such as a leaky roof or a leaking radiator.
Do use debt for the purchase of inventory that can be sold for a profit before the debt becomes due.
Do use debt for the purchase of equipment that generates cash flow well over the payments.
Gray areas between good and bad debt: Even money smart people struggle here
Mortgage debt burden is a true gray area. Money spent of rent does not generate any equity but home ownership has more responsibility attached than simple mortgage payments. Mortgage interest is tax deductible and equity does build over time with home ownership. There are formulas available to help you evaluate all the expenses involved with home ownership. Be sure and do your homework before taking on mortgage debt.
Business expenses that don’t directly generate income such as continuing education, licenses, legal fees and client entertainment are gray areas in debt burden. In theory these expenses should be budgeted for but there are occasions when accepting short term debt is offset by the value of the expense. For example, late fees for licensing can be quite high and legal advice or services can save significant money down the line.
Home improvements that increase property value. Spreading this debt over the life of a loan may pay off big time when you put your property on the market. Make sure the entire expense, including interest, is covered by the increase in sale price.
Debt burden is a complicated subject and our lives would be much simpler if we did not have to worry about it. Unfortunately, burying our heads in the sand won’t make debt burden disappear. Evaluate debt burden and set a course to eliminate that which is bad. Life will improve dramatically. Madalyn
Hope is not a strategy when it comes to reducing debt. Increasing you cash flow monthly can help your pay down a bad debt burden. Contact me for thoughts about how you can create passive income and get out of debt.
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Wealth Building 101: Principle verses preference
My Kiyosaki, Rich Dad education coach has been teaching me about the difference between a principle and preference. He has helped me understand that there are certain common sense principles about financial education but people have different preferences as to how to put these principles into action. For example;
Sound financial education principles:
Have a budget and plan for saving for a rainy day
Get out of bad debt
Invest in assets
Use the cash flow generated by your assets to make purchases
Unsound financial principles:
Having no plan
Making impulse purchases using credit cards
Investing in liabilities such as a fancy car or house without adequate cash flow monthly in place
Spending your income on what you want now rather than waiting for the cash flow monthly from your assets to buy you what you want
Financial preferences:
Saving in the form of precious metal rather than cash
Paying one credit card off at a time or consolidating debt into one lump payment
Investing in real estate verses the stock market as an asset class or building a home based business to generate cash flow monthly
Buying a big home, new car or other material good verses using cash flow monthly to work fewer hours and have more free time
The point is the sound financial education principles don’t change. A person’s preferences determine what is the best fit for them. Not everyone is cut out to build a home based business but for others this is a perfect path to financial and time freedom. Any preference is fine as long as it fits within the sound principles of good financial education.
Just so you know. I have violated many of the sound financial principles in my life and paid the price. Most successful people I know have made similar mistakes and overcome them by refocusing on sound financial principles. Now I am learning through my Kiyosaki Rich Dad education coaching how to apply these principles consistently in my life.
For me, a home based business in addition to my professional skills has worked well to generate cash flow monthly. Some of my partners prefer to work at their own pace to build a consistent $500 cash flow monthly. Other partners prefer to work quickly and build towards much larger cash flow. Either preference is fine with me. Madalyn
To see if what I am doing is a fit for you contact me
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Refinance Now! – Ensure an Honest Mortgage Lender
Guest Post: Gina Pogol
Everyone expects their mortgage lenders to check up on them. But how many borrowers investigate their mortgage lenders? The cases in Florida show that even people convicted of violent felonies or crimes like money laundering and fraud can worm their way into mortgage lending. You don’t want felonious financial fraudsters messing with your refinance mortgage or new home loan, do you?
No worries–just use these top tips to make sure that your refinance lenders are on the up-and-up.
Tip #1: Don’t Be Paranoid
Even if you do nothing, the odds are good that you’ll get an honest mortgage lender or broker. If you check out the FBI’s Web site, you’ll see that your lender has more reason to be afraid than you do–the vast majority of mortgage fraud at the federal level was committed by borrowers against lenders. Real estate experts concur:guru Robert Bruss and industry news site Realty Times both state that, while there are bad guys out there, in most cases you’ll end up with an honest mortgage lender.
Tip #2: But Don’t Be Stupid
Doing nothing is easy, but doing something isn’t that hard. And identity theft is such a buzz kill. So smart shoppers (that’s you, right?) take a little time and vet their lenders before they refinance a mortgage or buy a new home.
Tip #3: See How Tough Your State Is
Some states are vigilant about who gets into mortgage lending and who doesn’t: they conduct background checks and require that loan officers take classes, including ethics training, and pass exams before they can be licensed. Continuing education is also likely to be required every year. Other states license anyone with a heartbeat who can pay the fee. TrainingPro provides loan officer licensing training and lists state-by-state requirements for mortgage loan officers and brokers. If you live in a “heartbeat and fee” state, know that a license means very little and that you will probably want to dig deeper.
Tip #4: Check Your Lender’s Licensing Status
Most states offer lender databases, which you can find online. You can check these databases to determine if your lender is licensed to do business with you, and to see if there are pending investigations, code violations, or consumer complaints. Your local Better Business Bureau may also have information on your mortgage lender.
Tip #5: Get Quotes from Several Mortgage Lenders
This is the most reliable way of making sure that you are being offered a fair and realistic interest rate. Making lenders compete flushes out the ones who routinely overprice mortgages or steer borrowers into more expensive loans. You’ll also be able to spot abnormally low rates; just know that until you have an interest rate locked, nothing these low-ballers tell you represents a commitment to refinance your mortgage.
Tip #6: READ Your Disclosures (Your Eyes Won’t Fall Out)
Anything in writing trumps the word of a loan officer or mortgage broker. Starting on January 1 this year, disclosures became easy to interpret–everything you need is front and center, with no burrowing through piles of riders and boilerplate to find nasty fine-print boogers. In addition, whatever terms are on that final disclosure (usually received when you lock in your interest rate) are the terms you close with, within certain tolerances. Ugly surprises at closing are now illegal.
Tip #7: Use the Right of Rescission
Mortgage refinances on primary residences don’t close until three business days after you sign your final documents. You have that time to back out of the loan if you get buyer’s remorse–just do it in writing. Use that time to make sure your refinance loan is what you expected.
Tip #8: Be Nice to Your Lender
A good mortgage professional is someone you can trust with a large financial transaction. You’ll discuss personal stuff–money, credit, life plans–and take advice from this person. You’ll expect a high level of service–promptly returned calls, careful explanations, expert guidance–and hopefully together you’ll celebrate the successful conclusion of a profitable mortgage refinance.
Article originally published at HSH.com
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