| That's the best way to get started on a path to becoming rich Keep doing that, and your asset column will growFocus on keeping liabilities and expenses downThis will make more money available to continue pouring into the asset columnSoon, the asset base will be so deep that you can afford to look at more speculative investments Investments that may have returns of 100 percent to infinityInvestments that for $5,000 are soon turned into $1 million or moreInvestments that the middle class calls "too risky The investment is not risky It's the lack of simple financial intelligence, beginning with financial literacy, that causes the individual to be "too risky,"
If you do what the masses do, you get the following picture
Income = Work for Owner
Expense = Work for Government
Asset = (none)
Liability = Work for Bank
As an employee who is also a homeowner, your working efforts are generally as follows:
1You work for someone else mahina bag by louis vuitton Most people, working for a paycheck, are making the owner, or the shareholders richerYour efforts and success will help provide for the owner's success and retirementYou work for the governmentThe government takes its share from your paycheck before you even see it By working harder, you simply increase the amount of taxes taken by the government - most people work from January to May just for the governmentYou work for the bankAfter taxes, your next largest expense is usually your mortgage and credit card debt
The problem with simply working harder is that each of these three levels takes a greater share of your increased effortsYou need to learn how to have your increased efforts benefit you and your family directly
Once you have decided to concentrate on minding your own business, how do you set your goals? For most people, they must keep their profession and rely on their wages to fund their acquisition of assets
As their gucci canvas bag assets grow, how do they measure the extent of their success? When does someone realize that they are rich, that they have wealth? As well as having my own definitions for assets and liabilities, I also have my own definition for wealthActually I borrowed it from a man named Buckminster Fuller Some call him a quack, and others call him a living genius Years ago he got all the architects buzzing because he applied for a patent in 1961 for something called a geodesic domeBut in the application, Fuller also said something about wealth It was pretty confusing at first, but after reading it for awhile, it began to make some sense: Wealth is a person's ability to survive so many number of days forwardor if I stopped working today, how long could I survive?
Unlike net worth-the difference between your assets and liabilities, which is often filled with a person's expensive junk and opinions of what things are worth-this definition creates buy chloe paddington handbag the possibility for developing a truly accurate measurement I could now measure and really know where I was in terms of my goal to become financially independent
Although net worth often includes these non-cash-producing assets, like stuff you bought that now sits in your garage, wealth measures how much money your money is making and, therefore, your financial survivability
Wealth is the measure of the cash flow from the asset column compared with the expense column
Let's use an exampleLet's say I have cash flow from my asset column of S"J,000 a monthAnd I have monthly expenses of 52,000What is my wealth?
Let's go back to Buckminster Fuller's definitionUsing his definition, how many days forward can I survive? And let's assume a 30-day monthBy that definition, I have enough cash flow for half a month
When I have achieved $2,000 a month cash flow from my assets, then I will be wealthy
So I am not yet rich, but I am wealthy I now imitation chanel handbag have income generated from assets each month that fully cover my monthly expensesIf I want to increase my expenses, I first must increase my cash flow from assets to maintain this level of wealthTake notice that it is at this point that I no longer am dependent on my wages I have focused on and been successful in building an asset column that has made me financially independent If I quit my job today, I would be able to cover my monthly expenses with the cash flow from my assets
My next goal would be to have the excess cash flow from my assets reinvested into the asset column The more money that goes into my asset column, the more my asset column growsThe more my assets grow, the more my cash flow growsAnd as long as I keep my expenses less than the cash flow from these assets, I will grow richer, with more and more income from sources other than my physical labor
As this reinvestment process continues, I am well on my way to being chanel classic bag ri |
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