Have you ever asked why and how society funnels money, eventually leaving 15% of families poor, 80% as middle class and 5% of the population as wealthy? Have you ever wondered why the rich get richer? Or why is it that by age 65, 90% of the population is working or dependent, 5% is wealthy and the other 5% deceased?
What is inflation? Well, inflation is used so that the money people stuff under their mattress eventually becomes useless. It is a 3% funnel back into society.
What are taxes? Taxes are a chunk of income used to return a portion of what people earn to pay for government expenses. It is another 35% residual income for society.
What is a credit card? Well, it a 3% service charge funneling your money to credit card companies with each swipe.
What is a mortgage? A mortgage is a 30 year contract to remove the residual income from rent. By the way, financially speaking, the ability to have control over possibly reducing rent may be more valuable than having the mortgage.
What is a grocery store? It is a residual expense to keep you fed, despite the fact that you might be able to handle your own food production.
Now, if that weren't enough, companies became smart and started adding to the list of expenses that you need each month. You have mortgages, rent, electricity, water, gas, telephone, cable, internet, newspaper/magazine/gaming/online subscriptions, property taxes, fitness memberships, health insurance, home insurance, whole life insurance, and car insurance/registration/gasoline.
Some families are very happy because they earn over $200,000 with a combined income. However, this is no match for a simple cable bill, which is paid $120 per month for the entire life of most people. Using the average age newborns live to, which is 80, this becomes $115,200 of payments over one's life. If I factor in compound interest, paying $1440 annually at a 5% interest rate, this becomes $1,468,498. Wow, looks like the $200,000 just went out the window when you decided to own cable throughout your entire life, costing $1,468,498!
The wealthy know that high salaries mean very little. Just look at the lottery winners and athletes that have gone broke after 5 years (there are other reasons of course and this may be a whole blog in itself). It is those who eventually have more residual income flowing in than out that win over the long run. Wealthy people probably didn't purchase cable until they had enough passive income to cover it.
Now, if you have gotten a chance to create a solid passive residual income stream, how would you feel knowing that legislation existed to ensure its stability?
What is really interesting is if we look at how each of the previous decades has brought an additional product or service to market which introduced an additional passive income stream for a new company.
Another interesting concept is looking at what it would take to accumulate $50,000 of passive residual income rather than looking at what it would take to accumulate 1 million dollars which might indirectly be used to bring $50,000 of passive residual income.
Dedicated to Adam Ward.
This post was reposted from http://sizuservices.blogspot.com/2012/12/residual-income-dream-killer-or-dream.html, originally written on December 26th, 2012.
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