John, a truck driver and his wife Sandra who is a part-time nurse have 2 young children.  Between the mortgage, car payments, daycare since they both work, credit card debt, and other miscellaneous costs, monthly expenses are about $3500.  They had been able to keep up with the payments, and had $5000 in savings.

After 15 years of working for the company, John was then notified that they were downsizing, and he had 2 weeks notice.  He was devastated because of the state of the economy, jobs being so scarce, and that he was the main wage earner for the family.  He had been investing in his 401(k), but in following the popular advice of keeping all of his money in the account even when the mutual funds were plummeting, he lost everything.

Two months went by, and still could not find work.  Even with unemployment checks coming in, savings were almost gone.  Their home equity line of credit was maxed out, and his bank would not lend any more.  He was looking at having to sell the house or face foreclosure.  But, nobody was buying real estate, because the banks just were not lending with the state of the economy.  How did everything that seemed like it was going so well, get so bad?  What went wrong?

How would this situation have been different if they had passive income coming in every month from positive cash flowing rental property, or a side business?

Can anyone learn to invest?  Will you invest differently at 47 than at 18 years old?  If you invest primarily for cash flow rather than capital gains (buy low and sell high), the strategy will be the same for both age groups.  The only difference will be the one that starts at 18 years old will have the advantage of time.

When investing for cash flow, money comes in every month from acquired assets.  Remember, from the previous post, assets put money in your pocket.  Liabilities take money from your pocket.

There are many ways to get started in acquiring and creating assets.  Information products sold on the internet are extremely cost-effective to create, and can provide passive income.  For example, if you write an eBook, it costs nothing but your time, and can bring infinite returns if a proper marketing strategy is used.

Other examples of assets you can create utilizing the internet are becoming an affiliate marketer (where you sell other people’s products for commission), writing a song, patents, trademarks, membership websites, recurring commissions from products, and drop-ship e-commerce.

Another business with low start-up cost is network marketing.  The main strategy is to get a strong down-line that are selling for you, and you are providing good up-line support.

Real estate investing can be an excellent choice as well, though proper training is recommended.  As you saw from the last post, one major advantage is that passive income from real estate, if done strategically, can be taxed at 0 %, legally!

The investment plan is this.  Whatever money you invest in your assets, including further return on the investment, you re-invest, no exceptions.  This is where time becomes your friend rather than your enemy.  The more money you make from assets, the more there is to re-invest in new assets.

At 58, 18, or any age, there is no reason not to start.  With discipline and dedication, one can begin the path of attaining passive income within a short amount of time.

What is the effect of having one’s monthly passive income exceed their monthly expenses?

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