Yesterday I blogged about focusing on the 5 Key Steps you can take to create wealth. I sent you the first 2 steps, and today I will continue with 3 more.
Here they are…
> 3. Develop Multiple Streams of Income
Multiple Streams of Income are a great way to create wealth by adding several extra sources of income that flow in on an automatic and consistent basis, and preferably of a ‘residual', ‘passive' or enduring nature.
In other words, being paid over for work you do once, or on the work of others, that keeps producing with or without your direct efforts, making your assets work for you and multiply.
Most people only have one source of income… Their job.
Here's something most investors, especially in real estate don't realise. When you have property, even one, you have a multiple income stream right there. The rent, the capital growth, depreciation, tax credits. 1 property, 4 income streams.
Hmmm… Interesting, isn't it?
Other examples include investing in the stock market, information marketing and internet marketing. You can access information and resources on some of these areas at www.knowledgesource.com.au.
Today, everybody can participate in multiple streams of income without leaving their job. It's called the Internet.
So, if you never thought it possible before, you my friend can have your own business.
Within your business, you could look for ways to leverage on your business activities, products and services. Diversifying within your business is a far wiser, savvy strategy than running all over the place setting up diverse businesses or pursuing unrelated business opportunities.
For example, in an Information Marketing business, you could produce more information products on related themes that satisfy the needs of your market, such as adding more e-books, workbooks, audios, e-courses, coaching programs.
Insider Secret: Information businesses are the most cash-rich, margin-rich and profit-rich businesses anyone can ever be involved in. Don't take my word for it, ask Billy-Boy Gates.
The best part of information businesses is that make money while you sleep! For example, create an information product once, set up the sales web page and marketing and sales process once, and it keeps on generating multiple sales.
Do your research and choose wisely.
> 4. Get Yourself Clued Up on the Difference between Good and Bad Debt
Debt can be a complex subject. It's wise and smart to get yourself clued up and understand the difference between good and bad debt.
Debt is not all bad, nor is it all good. When used wisely with intelligence, it can greatly assist you in creating and building wealth.
Bad debt is when you purchase ‘things', gadgets, status symbol items with a credit card on high interest that depreciate immediately with no potential to increase in value.
Good debt produces cash flow, while bad debt does not.
Your goal is to get as much ‘good-debt' as you can afford and be so very careful on bad-debt.
Access to short-term business credit gives you the flexibility to grow your business faster, pay off debt from sales, save you headaches, even be a business life saver and is therefore good debt. A business credit card or a line of credit also establishes a business credit record that comes in handy for future growth planning.
Refinancing from home equity to get a lower interest rate, or escape from exorbitantly high credit card interest rates is also good debt, as is generating debt to buy high return stocks, bonds and other investments.
The best kind of debt is that which builds wealth over the long-term, for example an investment property – while you borrow money, the property produces income, you get tax deductions and write off interest on an asset that appreciates over time.
Insider Secret: For nine years, I've never owned my own home, until recently. Why? You can rent a spectacular home at 2-3% cost and you can own an investment property that is returning 5,6 or 7%. However recently, I bought my own home, even at 50% LVR, the debt on that home is non tax-deductible, which is painful for me. That's the sort of debt that you need to get rid of as fast as you can.
…But here's the thing. Don't spend 20 years paying off your home and then start investing. That's dumb. Full leverage your available equity in your own to begin a real estate or share portfolio and continually work on paying down your home loan.
Some more tips:
Eliminate Debts – Set up an automatic payment system for your credit card payments and other debts so it's on auto-pilot. This way you're taking care of what you owe, you free yourself from thinking about debt, and spend more positive, precious, productive time focusing on manifesting money and more abundance.
Create a Budget – On a piece of paper, word document or spreadsheet, record your monthly income and expenses/costs in separate columns. Set some financial targets and prioritize them. Then create a reasonable budget you can handle, while at the same time – –
Cut Down on Unnecessary Expenses – Make a list of things you can do without – take away meals, eating out less often, avoid impulse buying, make a list of what you really need before shopping.
> 5. Get into the Savings Habit
OK, I'm not a massive fan of saving, but for many folks, this is the place to start. That doesn't mean that I don't save. Let me give you a quick insight into what I do.
I have an automatic debit that comes out of my business account, straight into a cash management account on a weekly basis. This saving process started 8 years ago with a humble amount of $100 a week.
Today, it 20 times my humble beginnings and it's totally comfortable.
A Savings Habit is learned, just as not saving is a bad habit you develop. It's vital to cultivate your money management skills and harness the power of regular saving and investing.
David Bach, author of ‘Automatic Millionaire', ‘Finish Rich', and others, calls it the ‘Latte Factor' where you identify the potentially unnecessary things you spend money on each day you can dispense with and save that amount, in this case $5.00 a day.
Items such as the cafe latte, soft drinks, bottled water, snacks, parking fees (try using public transport).
The idea is not new. Robert Allen, author of ‘Multiple Streams of Income', ‘Nothing Down' and ‘The One Minute Millionaire' talks about saving $1.00 a day and using the leverage of compound interest to make the sum add up to a million dollars in a lifetime.
Whatever you can save, whether it's $5.00 or a bit more, or even $1.00 or $2.00 a day, you're ahead of the game. Alternatively, set a weekly or monthly amount and commit to it. You'll be amazed how the dollars accrue.
OK great, now you're cultivating the Savings Habit Mentality. But that's not enough.
You need to take the next step and make that saved money work for you. You must develop a plan on what to do with the money you're saving and turn it into a passive cash producing asset. Shop around for the best way to invest your money in a high interest account.
Then over time, look at investing your money further in real estate, the stock market, mutual funds, businesses, and similar avenues.
I wish you success on your wealth creation journey.