The Wealth Conversation...

The Wealth Conversation!
THIS SECTION IS ON HOW TO BECOME WEALTHY....
created March 2006...

I want to offer some encouragement/perspective on being wealthy!!!!!!! It is one of my passions to spread financial wisdom.

WEALTH...Do you want it? Is it for you... if so read on...... men/women... its yours just increase your knowledge...*** We all need to grow in our financial education at all ages. I am committed to that goal and you will understand why after you read this page... knowledge is priceless! But only if you use it!!!

The mentality of being wealthy!
- acquire assets not liabilities (asset = anything that will generate income for you. example: rental property, businesses, stocks/bonds/mutual funds; etc. liabilities = anything that doesn?t generate income for you and loses value the minute you purchase it; examples: cars, cloths, jewelry, etc We really need to get hold of this difference because we are quick to purchase some cloths, cars, etc. but those "things" are not building wealth.. yes we should treat ourselves sometimes but we should first have a plan to acquire assets!!.. Let me ask you this.... Do you want to work for the rest of your life? Do you want to be free to do whatever you want or better yet.. Do you want to leave a legacy for your kids?... more on this later

How can you define wealth?
Many may think it is defined as the "things" that we can afford to purchase or how much money we have in the bank, but I would like to submit to you this definition.... Wealth is defined in terms of how many days I can live the life I want to live without having to "work" for that money. Ok.. really its not a riddle.. lol. What I?m saying is this: how many days in the future can you survive off the money you have generated or currently generating without having to get up and go to work again?????

How UNwealthy most of us are today.
There are three categories you can fit into: Safe/secure; comfortable; Rich/Wealthy. Now to be considered to be safe&secure one qualification is to have six.. thats right 6 months of cash saved up (preferably in a Money Market Account so u can get a lil interest and still have access to it).. but saved up as an emergency fund to cover all your expenses should something happen to you like, lose your job, get injured, etc. Here is the irony of this situation..... Safe and Secure is really the beginning/bottom of the "true" middle class lifestyle!!!!! So I ask you this.... How many people do you know that are anywhere close to being rich/wealthy?????? They may 'front' with some things?.. but really..?? See, we confuse the ability to "make" money with wealth, but in reality if you pay attention to demographics, you would know that even most of the people that "make" over a $100,000 a year are flat out broke!!!!! Living pay check to pay check!!!!! That's broke in my book!!! Buying liabilities first is middle class and poor thinking.

How to become wealthy and pay for liabilities:
What we should do is purchase an asset that will pay for our liabilities!! Now that's wealthy thinking. example... u saved up or someone died a left you $15,000. U really want to buy a new car. Car cost $30,000 with down pay of $2000 lets just say payments of $600. Instead of going and buying that car why don't u purchase a 4-unit rental that cost $100,000 down pay of 10% = $10,000 with rents of $600 each = $2,400 income a month. with loan payment of $650 plus insurance and taxes = $900 a month and add $100month for maintenance fee = $1000 a month total cost. Stay with me.... so after you purchase the rental unit you now have an asset worth $100,000 and income every month of $2,400 - $1,000 building expenses. Therefore, you have $1,400 left over of income. Now go get your car you wanted for $600 a month. You still had $5,000 left over from the initial amount of money. Put your down payment of $2,000 and your rental property income can pay for it. When its all said and done.. your rental income pays for the building ($1,000), pays for your car ($600), AND STILL provides $800 in income to your pockets!!!!! NOW that?s how u think like a rich/wealthy person!!!!! The rich buy assets that will pay for their liabilities!!!!!!!!! Just think about it.......

Different forms of income:
Earned, Passive, Portfolio. Now if you really going to play the "wealth game" right, you have to understand how the money should come in!!!... if you have earned income meaning you exchange your time/talents for money, you are only working for half your money. The gov..t is taking out their money before you ever see the check and on top of that the more you "earn" the more they take. We all know this game... just look at your pay stub every month- you lose 35%-50% of your money before it ever hits your pockets. If you really want to be rich you must have Portfolio and Passive income. Portfolio income is income from investments such as stocks/bonds/mutual funds,etc. At least this form of income is only taxed at about 20%. But you really need to be educated in this before you blindly go out and lose everything you have in the market.

Now the BEST INCOME is Passive... for several reasons.
Passive income is from Real Estate and Businesses. This income is taxed at the lowest rate of around 15% and furthermore you have the ability to determine how you get taxed. In real estate your have 3 to 4 streams of "income"... 1. rental/lease payments 2. appreciation 3. depreciation 4. lowering your tax base (interest from loan is deductible, etc.) We can talk more about this later. Now about business ownership... the best of the best... real quick- one of the best money savings strategies is to "own" a business 1. it should provide income for you 2. there are numerous expenses that are business expenses.. and the key here is that a business pays for its expenses FIRST and then gets taxed on what is left. so here is the example... your earn $50K on your job. get taxed $15k upfront so then you pay for your "expenses" with what is left. so $35k-$20K expenses= $15K left over. Now look at...You get paid through your business and the business a good portion of your "expenses" are business expenses that you pay before taxes so $50K-$20K expenses = $30K left over then pay yourself and get taxed on $30k instead of $50K. See how that works????.... its easy math and logical!!! So the point is get passive income, build some sort of business and then invest in portofolio income, etc. .. but now that you know how to make it... you need to know how to spend it!!!! later on this.
PASSIVE INCOME GETS YOU OUT OF THE RAT RACE AND GIVES YOU FREEDOM!!! PASSIVE INCOME IS WHERE YOUR MONEY IS WORKING HARD FOR YOU, NOT YOU WORKING HARD FOR YOUR MONEY!!! YOU SHOULD ALWAYS DIVERSIFY YOUR INCOME!! HAVE MULTIPLE STREAMS OF INCOME!!!

There is a great game you should play. Its kind of like monopoly but a real life version that teaches you how to get out of the "rat race" of life and how to make decisions to become rich!!! There are groups across the nation that gather and play this game every week for free. - http://www.richdad.com/Club/CashflowClub.aspx
I believe Kiyosaki and his team have done a great job of making information understandable. I believe you should pick up free versions of his books/cd/etc at your library and go play the CashFlow 101 game as often as possible. It will change your perspective!

We have to switch our perspective on money and wealth.... we have to understand "the game" of wealth in America. Our problem is we are rarely exposed to the proper information. Its not a question of intelligence, it is a question of Financial I.Q. !!! In the interest of time, I have to stop for now... I will add more info later.
I encourage you to change your life and the lives of everyone around you FOREVER!!!!

IN summary.... we all can become wealthy!! You just have to change your mind/perspective and have the courage to go do what others won't do!! If you want what most won't have... you must do what most won't do.... and that is TAKE ACTION!!!
The biggest obstacle is FEAR and DOUBT!!! It does not matter what stage of life you are in, you can achieve your dreams if you overcome your fears! THink about this...fear in everyway is nothing but a thought!! Not even real... so why let a thought hold you back???? Why not replace it with another thought??? You must have a plan because a plan will give you direction and help