BiggerPockets

How true! It's unfortunate that most of us are tied to our social/earnings strata as a result of upbringing, and it's a vicious cycle from which most cannot break out.

The even richer buy low and don't sell and a job can be an extremely effective temporary tool to get rich.

Jon , you hit the nail right on the head . I have always spent less than I make . From the first dollar I made and to this very day . It wasn't taught to me at school . My parents definitely didn't teach me . I guess I was born with what I call " The Cheapskate gene " .

Michael:

There's a lot to be said for 'job security'. Most people are simply not suited to become entrepreneurs, especially those with real-world responsibilities. I believe there are plenty of careers that provide high levels of personal satisfaction and are not part of the so-called rat race.

If you find yourself in 'job hell' there are several avenues out, none of which involve gambling your time and money on building a business which statistics say will probably fail.

Living below your means is a tried and true method of building wealth. So, too, is creating something of value: a useful invention, a popular book, a musical recording, and so forth.

Selling dreams works, also; though one is simply acting as a middleman peddling old truths wrapped in new words surrounded by breathless enthusiasm.

Spending less than you make does not generate wealth, but makes for a nice savings account.

Investing that money into investments that generate income streams is what generates the wealth.

I really liked Jon's example here:

Wholesaling - job
Fix and flipping - job
Real estate agent - job
Developing - job
Property management - job

I think that most folks confuse the "multiple streams of income" theory. There is active and passive income streams. When you start on the path to wealth, you will start with active, then move to a balance, and hopefully end up with all passive streams to retire.

Like Tim said, a job could be a valuable tool, as it is an active income stream. Just do not get trapped by the false sense of security people think that a job provides.

If this economic downturn has taught me anything, it was that most of my income was from active streams, and I did not give it much thought until it was almost too late!

I went through an income drought where I spent much more than I made, my wife got hurt and I had to take care of her and the kids, and the real estate market took a volatile turn that took some time to figure out. All of the steps forward that I had achieved were quickly wiped away. The hill I was standing on suddenly became a sink hole!

Many of the people I thought were my friends, and trusted business partners, turned their back on me and left us for dead! (You find out a whole lot about peoples character when times get tough!). However, I never gave up, and kept fighting! The good news about tough times is that it weeds out the people in your life that do not deserve to be there. It makes you dig deep, and it forces you to form the long term habits needed to succeed.

So, in order to never let the above happen again, I now use a very easy test to see if I have a job (active stream), or if I am creating real wealth (passive stream).

If I were to get hurt, and did not have the ability to work for a few months, would checks still come in?

When we can answer "YES!" to this question, we will either be well on our way, or already living the real American dream!

These jobs can become passive streams if you do it right:

- Fix and flipping - You fund, Let others do the work!
- Property management - let others do it. Your time is worth more than 10% to 12% a month.
- Commercial Real Estate Portfolio (Especially Triple Net Leases!)

Good Luck!

Harrison, once again, you really seem to understand the point of my post and you did a great job at articulating some excellent points. Thanks again!

Jeff,

I agree that most passive income programs are a sales pitch for something that sells 'the dream'.

There seems to be some confusion (both through this post, and in the minds of common folk), that passive income means no work.

We could split hairs about the definition all day long.
Fact is, passive income is more along the lines (to me) of not trading time for money. You still have to put in some work and effort, but when you step away from the work, the program still functions/sells/brings in money.

I put in work when I find/research/and buy an income property. I put in work to clearly define my policies and procedures that I require my property managers to execute. But once the tenants are in, and the property managers manage the property (not me) I'm not trading my time for money. I just manage the manager which takes minimal time. and they put in the time. Again, it's not no work, but it's less time put in and more financial reward that comes in whether I'm working on another business, on a vacation, or doing nothing.

I also agree that if you ned someone to motivate you then you are toast. When I use to be a specialized HR consultant helping clients improve their staff, they'd offer me big money to spend a day doing a motivational seminar. I refused every time. I told them I would get them Tony Robbins, but in a week or two they'd be back to their same unproductive habits. Motivation is important but it must come from the inside (passion/interest). Someone lighting a fire under your butt or dangling a carrot shouldn't motivate a human adult. Enjoying the process of what you do (I love real estate investing) and a genuine interest in continually learning more and continually doing what already works well and practicing new skills and techniques is my own motivation - not someone else's.

Originally posted by Jeff Tumbarello

Passive income is generally a sales pitch.

Yes, this is another area where the guru-sleeze has bastardized a phrase through marketing.

Please name one that requires no work?

good old motivational fluff, great words no substance.....

Let's clear up some confusion.

For the purposes of the tax code, there is passive and active INCOME and it is in your best interest to have as much of your income be PASSIVE as possible. Passive income, as defined by the IRS is only subject to income tax, it is not subject to FICA or Mediscare. As an aside, you want as many of your deductions to be active income related as possible.

But, the way most people talk about passive income is really not passive. The example Harrison gave still requires work on his part. However, it is work that is not manual or menial in nature. The work relates to using his mind instead of his physical labor.

If you need someone to Motivate you, you are toast

This is true to an extent. But, I look at from the perspective of how much continual motivation one needs. Helping someone push past an obstacle be it fear, lack of knowledge, etc is far different than having to remind them over and over again to do the basic things one must do to succeed. Things like, getting an alarm clock and learning how to use it come to mind.

Originally posted by Harrison Painter

Negativity is just plain lazy!

1. Passive income is a sales pitch?

Sure it is! So is hope, greed, love, wealth, refreshment, and salvation! That does not mean these things don't exist. :lol:

2. Please name one that requires no work?

I named 3 already! It was stated clearly that Income streams usually start active (work) and flow into passive. (little to no work).

3. If you need someone to Motivate you, you are toast?

This has been hammered away at in other threads. Everybody needs motivation at one time or another. It is human nature. All the greats have a coach, wife, team, book, and/or mentor that keeps them going.

How is telling the truth as you see it Lazy or Negativity?

I guess I should be quiet so the Lemmings can be introduced to the looters :lol:

The key to success is to be cognizant. If you strive to be good at what you do, you will make money. 90 percent only want to make money and see the business side of things as "not fun" "boring"

Hence they are willing to part with what little "powder" they have left to not have to work/be good at something. Most seminars are being taught by the same kind of person.

It boils down to, those that can do, those that cant teach.......

The "I am giving something back" notion, is a load of horse hockey.