Residual Income Through Real Estate

Content
Part 1, 2	Disclaimer, Introduction
Part3	Getting Rid Of Expenses And Debt
Part 4	Buying Discounted Mortgages
Part 5	Buying Foreclosures
Part 6	System for Picking Foreclosures
Part 7	What You Can Expect on Your Investment
Part 8	Tax Liens
Part 9	Rental Income
Part 10	Tax Implications
Part 11	Online Real-Estate
Part 12	Selling Your Home
Part 13	Start Your Own Online Real Estate Company

Part 3

Getting Rid Of Expenses And Debt

If you are like most people, your cash flow is simply flowing through your hands every month. Because most of it is spent on your monthly living expenses, this means that if you have only a linear-income you must keep working every single month to pay your monthly bills.

Take a look at the following rules, to get a better idea of what things should be like:

• Cash pays for the goodies, or "Happiness is a positive cash flow!"
  
  
• Cash inflow must be greater than cash outflow.
  
  
• Residual cash flow is better than linear cash flow.
  
  
• While we say time = money, assets are what produce money. The greater the assets, the greater the cash flow. Feed your assets so your assets can feed you!
  
  
• Wealth is a function of cash flow over time.
  
  
• Cash must be generated from more than one source of wealth. Income must feed wealth-producing assets, which in turn produce more cash flow.
  
  
• Taxes are cash flow's nemesis. Use the tax code to increase cash flow. Don't allow taxes to use your cash flow.
  
  
• You can't create more time, but you can buy it back.
  
  
• Financial independence does not equal financial freedom. Owning your own business does not necessarily make you free!
  
  
• Positive cash flow must not depend on your efforts alone.
  
  
• Associate with successful, cash-flow producing people. Ask them to take you under their wing. Learn what they do and step into their shoes.

Money does not make you happy, however, money is ONE of the stumbling blocks of achieving happiness, along with knowledge, faith, time and health. This list is a list of truths that, once learned, will help you on your way to financial freedom.

The essence of successful cash flow management is regulating the money flowing in and out of your wallet. Sounds simple doesn't it? It really is, but very few people take the time to keep track of what actually comes in and goes out each month.

Do you know how you spend your money?

I don't just mean the big purchases, but every single penny? In order to succeed, you must! In fact, you need to be vicious. Let's look at this another way. Let's say that you receive a paycheck every week for $1000. You open the envelope each week and there you find the $1000 check. But one week, when you open the envelope, you find only $900.

What would you do? I suspect that you would be on the phone and finding out where the missing money went. I want you to become as attentive to your outflow as you are to your inflow!

The first thing you will need to do is take the time to list out your fixed and flexible expenses. Fixed expenses are items such as rent, mortgage, car payment and other regular installment payments that basically stay the same each month and for which you are committed for a period of time. Flexible expenses are the expenses that change from month to month such as food, clothing, and utilities. You have a bit more control over some of these items.

In order to create residual income, you are going to have to create an asset base, and to do so, you will have to consider reallocating your expenses. You will need to pay yourself first and NEVER dip into your asset money. Never, ever spend the principle. Don't say you don't have enough money. If you do, shame on you! Do something about it. Make more or spend less. This needs to be a zero sum game to some extent.

This means that you are going to have to take a look at how you are spending your money. Yes, every penny. As a people, Americans over consume. I am not suggesting that you should take draconian measures and live like a pauper for the rest of your life, but it may be necessary to make some adjustments.

Once you begin to create your mini asset base, what kind of return on your assets should you expect? I say at least 10% to overcome the major stumbling blocks of purchasing power: taxes and inflation.

Don't let fear control your money! There are many ways to produce residual income and each one has a different amount of risk. Look for those vehicles that suit your risk level. Use your time and knowledge wisely so that you can work smarter, not harder. Consider buying no load funds or low-fee investments. Be sure to get money market rates on your checking balances and cash management accounts. Simple changes will make large differences in your cash flow situation.

Keep in mind that delaying will cost you. Take a look at the following IRA comparison chart. Tom began putting in the maximum amount into an IRA at 18 years of age. When he retires, he will have over $150,000 more than his counterpart, Linda, who began at the age of 26, just 8 years later!!

Money doesn't grow on trees, but you can make your money stretch further if you realize that saving money on expenses is like getting free money. I don't know about you, but I NEVER turn down free money!!

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