6 Viable Passive Income Sources

July 26, 2021

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Rich & Kristina Messenger

Rich & Kristina Messenger

Senior Vice President



McKinney, TX

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July 26, 2021

6 Viable Passive Income Sources

6 Viable Passive Income Sources

The idea of having a passive income is something that many people dream about.

That’s because it means you can earn money above and beyond physical hours of work that you might put in! And there are plenty of ways to establish a passive income. In this article, we’ll discuss 6 different sources of passive income and how you can take advantage of each.

1. Rental income. This could come from renting out a room in your home, a basement, or a property you’ve purchased. The income from your tenants can help cover maintenance costs and provide you with a reliable, consistent source of income. It’s a simple, classic cash flow creator.

But it’s not perfect. Buying properties may require you to borrow money, which can create risk. Furthermore, managing unruly tenants can be time-consuming, taking the “passive” out of passive income.

2. Affiliate marketing. What if you could get paid to sell someone else’s products? It doesn’t get much more passive than that. Affiliate marketing is where you simply place a link to a product on your social media feed, YouTube video, blog, or website. You get a cut of the profit every time that link leads to a sale.

Just know that affiliate marketing works best for those with some measure of online following—more eyes on your affiliate link means more potential clicks!

3. Create ebooks and courses. Online educational content isn’t the purest form of passive income—it requires upfront work to research and create. But once they’re published, they can provide regular extra cash. Just be sure that you’re creating content on a subject matter you’re familiar with!

4. Blogging. Overwhelmed by writing an entire eBook? Start with a blog! It’s a simple way to get your ideas down on (digital) paper AND generate some ad revenue at the same time. Just remember, blogging may have a long lead time before it becomes profitable.

5. Peer-to-peer lending. Investing in loans has been around for ages—and with peer-to-peer platforms like Lending Club or Prosper, investing can be done quickly online. It’s a simple, quick way to earn interest on the fly.

But be warned—putting money into this type of service could be a substantial risk. There’s no guarantee that your creditors will repay their debts, which could leave you out to dry. So while it’s a viable option for passive income, it may not be 100% safe.

6. Start flipping! And I don’t mean doing gymnastics in the park (though that could earn you some cash—maybe). Instead, hit up a local thrift store. If you see a find that catches your eye, check to see how much you could sell it for on eBay or Craigslist. You might be surprised by the price difference! Buying at the thrift store and selling online could result in a serious profit.

This isn’t a fully passive income—it requires some investment and time searching and shopping for items. But it’s far more fun and feasible for most than real estate or writing an eBook.

So what are you waiting for? If you have the skills, time, and patience for it—then go for it! You might be surprised by how much you can earn with minimal effort.

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July 21, 2021

Strategies to Beat Inflation

Strategies to Beat Inflation

Inflation can creep up on you and take your money before you know it.

In this article, we’ll be talking about strategies for beating inflation and protecting yourself from its effects. We’ll start by clearing up what inflation is, then talk about the best ways to protect against it (you’ve got options!).

First, what is inflation? Simply put, inflation is the increase of prices over time. This means that if something is worth $100 today, it will probably cost more than $100 dollars in the future. That means the value of your money will probably decrease over time. $1 million may be all you need to live comfortably today, but it may not get you as far as you’d like during retirement if prices continue to rise.

Inflation primarily impacts cash value and money that sits in low interest bank accounts. Since those assets don’t grow at all—or grow very slowly—inflation can torpedo your purchasing power.

The key, then, is to find assets that grow at the same or a faster pace than inflation. That includes things like physical commodities (oil, grain, etc.) and real estate. While they’re not guaranteed to keep up with inflation, they typically increase in value as prices rise.

Investing in the market follows the same logic—the value of stocks typically rises as inflation increases. Again, it’s not a perfect solution, and stock values aren’t guaranteed to rise in value. But they’re options for those seeking to protect their wealth over the long-term from the slow decay from inflation.

Meet with a licensed and qualified financial professional about inflation hedging strategies. They can help you identify vehicles and accounts that may grow at the same (or faster) pace as prices.

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Market performance is based on many factors and cannot be predicted. This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Any examples used in this article are hypothetical. Before investing or enacting a savings or retirement strategy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

June 28, 2021

Habits of Successful People

Habits of Successful People

Successful people come from all types of backgrounds.

But did you know there are certain habits they tend to have in common? What’s better yet, they’re mostly practices that don’t require a huge budget to start doing. Here are three concrete ways that you can imitate the wealthy—starting today!

Wake up early (but also get enough sleep) <br> Let’s establish right away that most people shouldn’t wake up at four in the morning if you’re going to bed at midnight. Lack of sleep can exacerbate or cause dozens of health and mental issues ranging from obesity to depression (1). That’s the exact opposite of what rising with the sun is supposed to do!

The primary perk of going to bed early and waking up early is that it helps give you control of your day. You’re not simply rolling out of bed forty-five minutes before work and coming home too tired to do anything useful. Instead, you get to devote your most productive hours to something that you care about, whether that’s meditating, working on a passion project, or exercising. Speaking of which…

Exercise <br> Exercise is something that the successful tend to prioritize. One survey found that 76 percent of the wealthy devoted 30 minutes or more a day to some kind of aerobic exercise (2). It seems obvious, but working out doesn’t just improve physical health; it can help ward off depression and increase mental sharpness (3). It’s no wonder so many successful people make time to exercise.

Read <br> Almost 9 out of 10 wealthy people surveyed said they devote thirty minutes a day to reading. Why? It turns out that it can improve mental awareness and helps keep your brain fine-tuned (4). But reading can also be a valuable way of expanding your perspective, learning new ideas, and drawing inspiration from unexpected places.

Some of these habits might seem intimidating. Switching your bedtime back three hours so you can wake up before sunrise is a big commitment, as is working out consistently or reading books if you’re just used to scanning social media. Try starting off small. Get out of bed thirty minutes earlier than usual for a week and see if that makes a difference. One day a week at the gym is much better than zero, and reading a worthwhile article (like this one!) might pique your appetite for more. Whatever your baby step is, keep expanding on it until you’re an early rising, iron-pumping, and well-read machine!

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June 23, 2021

Begin Your Budget With 5 Easy Steps

Begin Your Budget With 5 Easy Steps

A budget is a powerful tool.

No matter how big or small, it gives you the insight to track your money and plan your future. So here’s a beginner’s guide to kick-start your budget and help take control of your paycheck!

Establish simple objectives <br> Come up with at least one simple goal for your budget. It could be anything from saving for retirement to buying a car to paying down student debt. Establishing an objective gives you a goal to shoot for, and helps motivate you to stick to the plan.

Figure out how much you make <br> Now it’s time to figure out how much money you actually make. This might be as easy as looking at your past few paychecks. However, don’t forget to include things like your side hustle, rent from properties, or cash from your online store. Try averaging your total income from the past six months and use that as your starting point for your budget.

Figure out how much you spend <br> Start by splitting your spending into essential (non-discretionary) and unessential (discretionary) spending categories. The first category should cover things like rent, groceries, utilities, and debt payments. Unessential spending would be eating at restaurants, seeing a movie, hobbies, and sporting events.

How much is leftover? <br> Now subtract your total spending from your income. A positive number means you’re making more than you’re spending, giving you a foundation for saving and eventually building wealth. You still might need to cut back in a few areas to meet your goals, but it’s at least a good start.

If you come up negative, you’ll need to slash your spending. Start with your unessential spending and see where you can dial back. If things aren’t looking good, you may need to consider looking for a lower rent apartment, renegotiating loans, or picking up a side hustle.

Be consistent! <br> The worst thing you can do is start a budget and then abandon it. Make no mistake, seeing some out-of-whack numbers on a spreadsheet can be discouraging. But sticking to a budget is key to achieving your goals. Make a habit of reviewing your budget regularly and checking your progress. That alone might be enough motivation to keep it up!

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June 14, 2021

Getting a Degree of Financial Security

Getting a Degree of Financial Security

The financial advantage gap between having a college degree and just having a high school diploma is widening!

As of 2019, the average college graduate earned 75% more than the average high school graduate.¹ When you crunch the numbers, it’s actually a more robust investment than stocks or bonds.

This income difference is making saving for retirement difficult for millennials without a college degree. According to the Young Invincibles’ 2017 ‘Financial Health of Young America’ study, millennial college grads – even with roadblocks like student debt – have saved nearly $21,000 for retirement.² That’s quite a lot more as compared to the amount saved by those with a high school diploma only: under $8,000.

However, a college grad may encounter a different type of retirement savings roadblock than a reduced income – student loan debt. But the numbers show that even with student loan debt, the advantages of having a college degree and a solid financial strategy outweigh the retirement saving power of not having a college degree.

Here’s an issue plaguing both groups: more than two-thirds of all millennial workers surveyed do not have a specific retirement plan in place at all.³

Regardless of your level of education or your level of income, you can save for your retirement – and take steps toward your financial independence. Or maybe even finance a college education for yourself or a loved one down the road.

The first step to making the most of what you do have is meeting with a financial advisor who can help put you on the path to a solid financial strategy. Contact me today. Let’s get your money working for you.

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¹ “College grads earn $30,000 a year more than people with just a high school degree,” Anna Bahney, CNN, Jun 6, 2019, https://www.cnn.com/2019/06/06/success/college-worth-it/index.html

² “Financial Health of Young America: Measuring Generational Declines between Baby Boomers & Millennials,” Tom Allison, Young Invincibles, Jan 2017, http://younginvincibles.org/wp-content/uploads/2017/04/FHYA-Final2017-1-1.pdf

³ “Retirement Plan Access and Participation Across Generations,” Pew, Feb 15, 2017, http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2017/02/retirement-plan-access-and-participation-across-generations

June 7, 2021

How to Make the Most of Your Life Insurance Policy

How to Make the Most of Your Life Insurance Policy

Your life insurance policy is one of the most important things you’ll buy in your lifetime.

Knowing how to make the most of it will help you sleep better at night and more easily plan for the future. We’re going to cover the aspects of life insurance with a focus on making those numbers work for YOU!

Choose a policy with enough coverage. As a rule of thumb, a life insurance policy should provide a death benefit that’s at least 10X your annual income. Why? Because the benefit can serve as an income replacement for your family if you pass away. A payout above 10X your annual income can provide your family with a generous financial buffer to recover and make a plan for their future. Buying enough coverage helps ensure your policy fulfills its function—to financially protect your family when you pass away.

Choose the right type of insurance. There’s no one-size-fits-all life insurance policy. They each have different strengths and shine in different circumstances.

Term life insurance, for instance, is typically better for families who need protection on a thin budget. That’s because term is often an affordable option for securing a large death benefit.

Permanent life insurance might be better if you’re looking for an investment that grows over time. It’s also a good choice if you need lifelong protection for your spouse and children, but don’t want to be burdened by higher premiums as they age. That makes it particularly attractive to families with permanent dependents or who are interested in wealth-building vehicles.

Choose a policy that fits your budget. Life insurance shouldn’t consume your income. Rather, it should protect your income in case of disaster. Get as much life insurance as your family needs, but don’t add all the bells and whistles if you can’t afford it!

You want a life insurance policy that protects your family, aligns with your goals, and doesn’t break your budget. If you’re not sure what that looks like, meet with a licensed and qualified financial professional. They can help you hammer out goals and find policies that help you meet those goals!

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This article is for informational purposes only and is not intended to promote any certain products, plans, or policies that may be available to you. Any examples used in this article are hypothetical. Before enacting a savings or retirement strategy, or purchasing a life insurance policy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

May 19, 2021

The Advantages of Survivorship Insurance

The Advantages of Survivorship Insurance

A survivorship policy pays out only after two people pass away.

Why does that matter? For many families, it doesn’t. They need more traditional forms of life insurance that protect income for their spouses and children.

But there are specific situations where survivorship insurance might be critical for your legacy. Read on for the advantages of survivorship insurance!

First, survivorship insurance can be an invaluable tool for estate planning. If one spouse dies, they can pass their assets to their spouse without facing federal estate taxes.¹ Not so for wealth left to future generations! For some couples with substantial assets to pass on to children, survivorship can leave a sizable death benefit that can offset the cost of estate taxes.²

If this strategy appeals to you, reach out to an attorney and a financial professional. You’ll need their help to get your estate in order and navigate your state’s tax system.

Second, survivorship insurance can cover ailing or elderly couples. As a rule of thumb, survivorship insurance is a good option for those who don’t qualify for term or permanent life insurance due to health or age. That’s because the rates are based on two life expectancies, potentially lowering rates and increasing your likelihood of qualifying.³ This is especially useful if the couple has children who are still dependents or will need special care.

In conclusion, survivorship insurance can be a powerful tool for specific people in specific situations. That’s why it’s best to collaborate with legal and financial professionals to make a decision that will be right for you and your family.

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¹ “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

² “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

³ “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

May 10, 2021

How Inflation Impacts Your Savings

How Inflation Impacts Your Savings

It’s time to wake up and smell the coffee!

The reality is that your retirement savings might be losing value every day. It’s because of something called inflation, and it may result in your finding yourself retiring with less than you anticipated. In this blog post, we’ll discuss how inflation affects your savings and what you can do about it.

First, what is inflation? Inflation is a measurement of how much prices are rising over time. And it’s not just that the price of gas is skyrocketing or some other commodity—inflation affects everything.

That may not necessarily be a problem for you, so long as your wages are increasing with the rate of inflation. Commodities might get more expensive, but your rising paycheck means you can still afford what you need. But if income isn’t keeping up with inflation, an upper-class income today may only afford you a middle-class income tomorrow!

But there’s another danger that inflation poses.

Let’s say you have $1 million dollars in the bank that you’ve put away for retirement. Good for you! You’ve probably already dreamed of how you’ll use that cash once you retire. A new home, a new car, worldwide travel, you name it!

But here’s the rub. Over time, the cost of those items (most likely) will steadily increase. So will the basic cost of living. By the time you retire, your $1 million has far less purchasing power than it did when you first started saving. You haven’t lost money, exactly. Your money has just lost value.

So how can you combat the slow decay caused by inflation?

Start by moving your money away from low, or no, growth places. Your Grandma may not like to hear this, but hiding money in your mattress is an easy way to torpedo its value over the long haul!

Find investments that actually grow over time and help beat inflation. Over the last 100 years or so, the average inflation rate has been 3.1%. That’s the bare minimum rate at which your investment should grow, if you’re using it for long-term wealth creation.

A licensed and qualified financial professional can help you with both of these steps. The sooner you start the process of protecting your wealth from inflation, the more you insulate yourself from the danger of waking up with less money than you’d thought!

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April 26, 2021

Pay Yourself First!

Pay Yourself First!

Pay yourself first!

Why? Because it can help you take control of your finances and reach your goals. But what does it mean to “pay yourself first?” It means the very first thing you should do with your paycheck is put money towards saving, then use what’s left for bills, and then finally for personal spending. Let’s break down how—and why—you should pay yourself first in 3 steps!

Step 1: Figure out your goals. What are you saving up for? Knowing what goal you’re trying to reach can help guide how much money should go towards it—saving for retirement would look different than saving for a downpayment on a house. Having a goal can also give you the motivation and inspiration you need to start saving in earnest. Write down your goal or goals, and start planning accordingly.

Step 2: Make a budget that prioritizes saving. When you’re creating your budget, the first category you should create is saving. Then, figure out how much rent, bills, food, and transportation will cost. Whatever you have left can go towards discretionary spending.

Your focus should be to treat saving like a mandatory bill. It’s a simple mental trick that can help you prioritize your financial goals and help make it much easier to say no when you’re tempted to overspend. You actually might literally not have the cash on hand because you’re saving it!

Step 3: Automate your saving. Once you’ve got your savings goal in place, automate the process. Whether it’s through an app or automatic deposits from your checking into a savings account, automating saving helps make building wealth so much easier. You can start building wealth without even thinking about it! Just be sure to automate your deposits to initiate right after your paycheck comes in. It removes the temptation to cheat yourself and overspend.

Remember, this doesn’t have to be all or nothing. Just because you can’t save a massive amount each month doesn’t mean you shouldn’t try! It’s about saving as much as you can. And paying yourself first with your paycheck is an easy way to start!

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April 19, 2021

How Do Checking Accounts Work?

How Do Checking Accounts Work?

You probably use your checking account every day, but do you really know how it works?

This article will explore exactly what a checking account is and how it works!

A checking account is a simple way to store your money. You can make deposits and withdrawals whenever you need to. They’re easy to access with checks, the ATM, your debit card, and online payments.

The checking account advantage? It’s liquid. You have instant access to those funds at all times without penalty if needed. That makes it ideal for daily expenses like buying groceries, paying for a babysitter, or making an emergency car repair. That’s why they’re so common—there are a total of 600 million checking accounts in the United States!¹

The disadvantage? Low (or no) interest rates! Because many checking accounts come with various fees and minimums to maintain them (usually elevated monthly account balances), the average interest rate is only about 0.04% APY on these types of accounts,² which may not be worth it in some cases if you’re saving up money without investing funds elsewhere as well.

Another downside? Overdraft fees. You might be liable for an overdraft penalty if the money in your checking account doesn’t match what you’ve spent! This could lead to some hefty fees. Thankfully many banks have overdraft protection policies which will prevent these charges, but not all do so check before signing up for a new checking account.

You should probably have a checking account if you don’t already, simply for the ease of living life. They’re not the most exciting thing in the world, but they can be hugely helpful for daily transactions. Just be sure you’re not relying on one to build wealth!

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¹ “Checking Accounts Shrink by Nearly 100 Million Accounts Since 2011,” Tina Orem, Credit Union Times, May 8, 2018, https://www.cutimes.com/2018/05/08/checking-accounts-shrink-by-nearly-100-million-acc/

² “Average Checking Account Interest Rates 2021,” Chris Moon, ValuePenguin, https://www.valuepenguin.com/banking/average-checking-account-interest-rates

April 14, 2021

The Time Value of Money and College

The Time Value of Money and College

College is one of the most expensive things that you can spend your money on, but it might not always be a good investment.

College graduates make much more than high school graduates over their lifetimes.¹ Some people think this means going to college is worth the cost because they’ll be able to pay off the loans with their higher salaries after graduation. But as you’ll see in this article, there’s another critical factor you should consider before going off to school.

Which career path will empower you to start saving sooner? The longer your money can accrue compound interest, the more it can grow. Working an extra four years instead of attending school could result in retiring with more. Let’s consider two hypotheticals that illustrate this point…

Let’s say you land a job straight out of high school at age 18 earning $35,000 total annual salary. You’re able to save 15% of your income in an account where the interest is compounded monthly at 9%. Assuming you work until 67, or 49 years, and consistently save the same amount each month over that time period at the same interest rate, you would retire with almost $4 million!

What if instead you attend college and graduate after 4 years? You land a job that pays $60,000 annually and are able to save 15% of your income. If you also retire at 67 after 45 years of work, saving 15% every month, you’ll retire with $4.7 million. That’s almost $700,000 more than the non-graduate!

But what if student loans prevent you from saving for 5 years after graduation? You’d retire with $3 million. In this hypothetical scenario, losing 9 years of saving results in a college graduate actually retiring with less than someone who diligently works and saves right out of high school.

The takeaway isn’t that you shouldn’t attend college. It’s that you should carefully weigh the costs of higher education. Is there a career path you could take right out of high school that would have you saving right away? Will your degree land you deep in debt and behind the 8-ball for building wealth? Or do the benefits of the degree substantially outweigh the costs? Don’t attend a college just because it’s what your peers are doing. Consider your passions, weigh the benefits, and calculate the costs before you make your decision!

This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Market performance is based on many factors and cannot be predicted. Any examples used in this article are hypothetical. Before investing, enacting a savings or retirement strategy, or taking on any loans or debt, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

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“The College Payoff,” Georgetown University, https://cew.georgetown.edu/cew-reports/the-college-payoff/

April 5, 2021

Why Gold Is More Than Just a Shiny Metal

Why Gold Is More Than Just a Shiny Metal

Gold has been a symbol of wealth and status since the dawn of time.

In ancient times, kings would have gold coins minted with their faces on them so that they could be exchanged for goods. Today, gold is commonly viewed as an investment. But… why? This post will explore how gold may help you achieve financial security for your family during today’s difficult economic times.

Gold is a valuable resource because it is rare—but not too rare! There’s a fine line between rare and too rare when it comes to currency. Some materials don’t have high value because they’re too common. That may seem obvious. But other materials are too rare—it would be almost impossible to widely circulate coins made out of platinum or rubies because they’re too difficult to find.

Gold strikes that perfect balance. It’s common enough to create a steady money supply, but rare enough to hold value.

Gold has value because it doesn’t corrode. Other metals like iron and copper eventually will corrode. That attribute won’t do for a currency—the treasury of a state would slowly decay into nothing!

Gold is excellent for storing value because it lasts. Gold jewelry, bars, and coins are far more likely to be in good shape in 100 years from now than other metals.

Gold has value because… well, because it’s always had value! Let’s face it—gold has been worth so much to so many people for a long time. They’ve used it to create beautiful jewelry, altars, decorations, and anything else that communicates luxury. It’s been the basic means of exchange for countless societies, civilizations, and empires throughout history. It’s the default, the original, the classic. And because it’s been considered valuable for most of human history, it’s a fair bet that it will continue to be valuable into the future.

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March 17, 2021

What You Need to Know About NFTs

What You Need to Know About NFTs

Are you sitting down? Because some memes are officially worth money. Lots of money.

And it’s not just memes. Digital art has exploded in value recently, leading some to scratch their heads and others to jump on the bandwagon.

Here’s how Non-Fungible Tokens, or NFTs, work, and why you should care!

At their core, NFTs are simple pieces of digital art. They range from illustrated portraits of punks to “CryptoKitties” to the influencer equivalent of Pokémon cards—vlogger Logan Paul made $5 million in a weekend by selling one-of-a-kind trading cards featuring animated versions of himself.¹

Think of an NFT as a combination of a bitcoin and a trading card. They exist digitally and are sold online, but their value is totally dependent on being originals!

Each one has a unique blockchain ID, making them impossible to duplicate or forge. You can know beyond the shadow of a doubt that the digital artwork you’re buying is the real thing.

That makes every NFT a rare one-of-a-kind. And limited supply cranks up demand.

Where did NFTs come from? They started in niche internet subcultures. But they’ve made their way closer to the mainstream. Some people have even started viewing them as investment items. It’s easy to see why—a CryptoPunk drawing recently sold for $69 million.² There’s always a (very very small) chance that the simple NFT you buy today could be a rare collector’s item in 5 years. But it could also plummet in value the day after you buy.

Realize that the NFT market is uncharted territory. Predicting which NFT will be valuable is nearly impossible. There’s nothing wrong with dabbling in digital art here and there. But it’s best to stick with more stable and time-tested strategies if you’re aiming to grow long-term wealth!

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¹ “What Is An NFT—And Should You Buy One?,” Abram Brown, Forbes, Feb 26, 2021, https://www.forbes.com/sites/abrambrown/2021/02/26/what-is-an-nft-and-should-you-buy-one/?sh=7335a47824b2

² “Beeple NFT becomes most expensive ever sold at auction after fetching over $60 million,” Robert Frank, CNBC, Mar 11, 2021, https://www.cnbc.com/2021/03/11/most-expensive-nft-ever-sold-auctions-for-over-60-million.html

March 1, 2021

How to Find Your Net Worth

How to Find Your Net Worth

Usually when we think of net worth we imagine all the holdings of a wealthy tycoon who owns several multi-million dollar businesses.

Net worth is just a balance sheet of a person’s assets and liabilities, not unlike the balance sheets used in business. You also have a net worth, and it’s important to know what it is.

Calculating your net worth is simple. First, you’ll want to tally up all your assets. These would include:

  • Personal property and cars
  • Real estate equity
  • Investments
  • Vested retirement plans
  • Cash or savings
  • Any amounts owed to you
  • Cash value of life insurance policies

Next, you’ll calculate your liabilities (what you owe someone else). These would include:

  • Loans
  • Mortgage balance
  • Credit card balances
  • Unpaid obligations

Your total liabilities subtracted from your total assets equals your net worth.

The number could be positive, or it could be negative. Students, for example, often have a negative net worth because they may have student loans but haven’t had a chance to build any personal assets.

It’s important to realize that net worth isn’t always equal to liquid assets. Your net worth includes non-liquid assets, like the equity in your home.

Measuring your net worth regularly can be a strong motivation when saving for the future—it can mark progress toward a well-reasoned financial goal.

When you’re ready to put together a personalized strategy based on your net worth and (more importantly) your future goals, reach out! We can use your current net worth as a starting point, while keeping focused on the real target: your long-term financial picture.

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February 24, 2021

2 Strategies to Build Credit When You’re Young

2 Strategies to Build Credit When You’re Young

The sooner you establish your credit score, the better positioned you’ll be for financial success.

Why? Because your credit score touches every aspect of your financial life—a high score can help you obtain a lower interest rate on mortgages and car loans, insurance payments, and even your rent!¹ That can help free up more cash for building wealth.

So, where do you start?

Apply for a credit card… and then use it responsibly! Credit cards are excellent tools for building your credit history. If you attend a university, you might be able to score a student credit card. However, just remember that credit cards are not free money. The less you use your credit card, the higher your credit score. Choose a few recurring expenses, and limit your credit card usage to those. Then make sure you pay off the balance every month, on time.

Use automatic payments on all your debts. Missing payments on your debt obligations can torpedo your credit score. It’s absolutely critical to pay on time for your credit card bill, student loan payments, and anything else you owe.

Consider automating all of your debt payments. It’s a simple, one-time move that can steadily reduce your balances and help boost your credit score.

As you build your credit history, you’ll be able to apply for credit in larger amounts, and you may even start receiving pre-approved offers. But beware. Having credit available is useful for certain emergencies and for demonstrating responsible use of credit—but you don’t need to apply for every offer you receive!

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February 17, 2021

Spend Less or Earn More?

Spend Less or Earn More?

What’s the most effective way to meet your financial goals—increasing your income or cutting your spending?

The answer? It depends on your situation. While both strategies can be useful, they’re not interchangeable. Read on to discover the advantages and limitations of each approach… and which one may be right for you.

Spending less: An immediate solution with a fixed floor. There’s no doubt that cutting expenses is the fastest way to move closer to your financial goals. Canceling a streaming service, clipping digital coupons on your phone, and carpooling are simple lifestyle adjustments that take only seconds or minutes to accomplish.

But stricter budgeting can only go so far. Moving back in with your parents, walking to work, and never having fun again may still not be enough. There’s only so much you can cut before you seriously decrease your quality of life!

Earning more: High effort, massive potential. On the surface, increasing your income can seem like a daunting task. Developing your skills, working an extra job and starting a side hustle or business can be labor and time intensive. Furthermore, some of those investments may not pay off immediately—a business or side gig may not generate significant income for weeks, months, or even years!

But those investments also have massive payoff potential. Once you’ve mastered a skill, your earning power is only limited by the market demand for your abilities and your time. And as you grow more and more competent, your potential to earn only increases.

The takeaway? Spending less is a quick and simple move towards your financial goals. But, over the long-term, earning more has far more potential to create the wealth you desire. If you need to quickly increase your cash flow, create a budget and reduce your excess spending. But when your financial situation stabilizes, take inventory of your skills. You might be surprised by how many money earning talents you have, if you take the time to cultivate them!

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February 8, 2021

3 Steps to Reduce Debt with Limited Income

3 Steps to Reduce Debt with Limited Income

Is your income holding you back from paying down debt?

It may feel like necessities such as housing, groceries, and transportation are consuming your cash flow. So how can you pay down debt if you feel like you’re struggling to put food on the table?

Reducing debt with a limited income is certainly a challenge. But if you know the right strategies, it’s an obstacle that you can work to overcome. Read on for tips that can help you pay down debt, regardless of how much you earn.

Budget debt payments first. The next time you sit down to budget, start by allocating money for reducing your debt. It should be your number one priority. Then, budget for essential living expenses like housing, utilities, and groceries. If you need more cash flow, cut down on non-essential spending like dining out and purchasing new clothes.

Start a side gig. If cutting expenses alone doesn’t free up enough cash, explore ways to make more money. That doesn’t always mean starting a second job—after all, this is the golden age of side gigs! Here are just a few hustle ideas for your consideration…

■ Resell books, clothes, and shoes you might pick up from the thrift store on eBay ■ Rideshare or deliver groceries and food ■ House sit, baby sit, or pet sit for friends and neighbors

Ultimately, your ability to earn income is only limited by your creativity in solving problems. What other opportunities are there for you to help others and earn extra income?

Make more than minimum payments. Your debt will linger if you make only minimum payments. That’s because minimum payments are nearly erased by interest. You make a payment, but the interest may put you almost right back where you started.

Instead, choose one debt to eliminate at a time. You should start with the one with the smallest total balance or the highest interest rate. Keep making the minimum payments on your other debts, and target that one debt with the rest of your available financial resources. Once it’s gone, choose the next smallest balance. Rinse and repeat until your debts are gone.

The biggest takeaway is that if you’re working with a limited income, paying off debt has to become your number one financial goal. Devote as much of your budget towards it as possible and increase your earnings if you have to. But it’s well worth the effort—once your debt is gone, you’ll have significantly more income for building real wealth!

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January 11, 2021

Simple Ways to Streamline Your Budget

Simple Ways to Streamline Your Budget

Is your budgeting system slowing your financial progress?

It’s not hard to tell if it is. Consistently ignoring your budget and failing to see results like increased cash flow and reduced debt could be indicators that something’s wrong.

Fortunately, it’s not hard to streamline your budgeting process. Here are two simple steps you can take to make your budget more manageable and more effective.

Prioritize your short-term budgeting goals <br> Splitting your cash flow between non-discretionary spending, savings, your emergency fund, and debt reduction may make you feel like you’ve got all the bases covered, but spreading yourself too thin might actually be diminishing the power of your money. It creates a house of cards that’s waiting to collapse!

Instead of trying to knock out everything at the same time, your budget should reflect your current financial situation. Prioritize where you put your money for the goal you’re trying to achieve. Start by putting all your excess cash flow towards an emergency fund. Then, target your debt. And finally, start directing your income towards building wealth. You’ll more effectively clear the obstacles that block the way towards financial independence.

Automate everything <br> What if there were a way to automatically make wise financial decisions without even thinking about it? That’s the power of automation.

Once you’ve determined your short-term budgeting goal, set up automatic deposits that move you closer towards achieving it. If you’re building an emergency fund, set up an automatic transfer from your checking account to a high-interest savings account every payday. You can do the same with essential bills and utilities as well.

Once you prioritize and automate your budget, there’s a great chance that you’ll see real progress towards your goals. And once you see progress you’ll feel empowered, maybe even excited, to keep pushing towards building wealth and creating financial independence.

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December 30, 2020

The Millennials Are Coming, the Millennials Are Coming!

The Millennials Are Coming, the Millennials Are Coming!

Didn’t do so well in history at school? No worries.

Here’s an historical fact that’s easy to remember. Millennials are the largest generation in the US. Ever. Even larger than the Baby Boomers. Those born between the years 1980 to 2000 number over 92M.¹ That dwarfs Generation X at 61M.

When you’re talking about nearly a third of the population of the United States, it would seem that anything related to this group is going to have an effect on the rest of the population and the future.

Here are a few examples:

  • Millennials prefer to get married a bit later than their parents. (Will they also delay having children?)
  • Millennials prefer car sharing vs. car ownership. (What does this mean for the auto industry? For the environment?)
  • Millennials have an affinity for technology and information. (What “traditional ways of doing things” might fall by the wayside?)
  • Millennials are big on health and wellness. (Will this generation live longer than previous ones?)

It’s interesting to speculate and predict what may occur in the future, but what effects are happening now? Well, for one, if you’re a Millennial, you may have noticed that companies have been shifting aggressively to meet your needs.² Simply put, if a company doesn’t have a website or an app that a Millennial can dig into, it’s probably not a company you’ll be investing any time or money in. This may be a driving force behind the technological advancements companies have made in the last decade – Millennials need, want, and use technology. All. The. Time. This means that whatever matters to you as a Millennial, companies may have no choice but to listen, take note, and innovate.

If you’re either in business for yourself or work for a company that’s planning to stay viable for the next 20-30 years, it might be a good idea to pay attention to the habits and interests of this massive group (if you’re not already). The Baby Boomers are already well into retirement, and the next wave of retirees will be Generation X, which will leave the Millennials as the majority of the workforce. There will come a time when this group will control most of the wealth in the US. This means that if you’re not offering what they need or want now, then there’s a chance that one day your product or service may not be needed or wanted by anyone. Perhaps it’s time to consider how your business can adapt and evolve.

Ultimately, this shift toward Millennials and what they’re looking for is an exciting time to gauge where our society will be moving in the next few decades, and what it’s going to mean for the financial industry.

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¹ “Millennials: Coming of Age,” Goldman Sachs, http://www.goldmansachs.com/our-thinking/pages/millennials/

² “May We Have Your Attention: Marketing To Millennials,” Kelly Ehlers, Forbes, Jun 27, 2017, https://www.forbes.com/sites/yec/2017/06/27/may-we-have-your-attention-marketing-to-millennials/?sh=2f3cb7cb1d2f

November 11, 2020

How Much Should You Pay For a Car?

How Much Should You Pay For a Car?

Cars will drain your wealth.

In 2019, Americans were spending about $773.40 per month on their vehicles, or $9,281 annually.¹ That’s like owning a tiny house whose value nosedives the instant you buy it!

That’s not even counting the opportunity cost of throwing that money at a car. How much could that cash grow if it were invested or saved?

That’s why you should follow this simple rule for guarding your wealth from a car.

It’s called the 20/4/10 rule, and it’s composed of three parts. Let’s explore them one by one.

Start with at least a 20% downpayment.

Committing a hefty downpayment to a car curbs how much you’ll lose in interest later down the road. It’s always best to cover as much as you can up front with cash.

Finance the car for no more than 4 years.

How long would you want to dump money into an “investment” that doesn’t grow in value? Not long! Keep your financing period short and sweet and then get back to saving for your future.

Dedicate no more than 10% of your income to car expenses.

Your cash flow is a powerful wealth building tool if it keeps, well, flowing. Don’t let a car divert it somewhere else that it won’t grow and won’t build wealth.

Remember, this is not a bulletproof strategy.

You might be facing substantial mortgage or credit card debt obligations that make it difficult to afford the car you want. It’s always a good idea to meet with a licensed financial professional before you commit to buying a new vehicle.

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¹ “Average American Now Spends Nearly $800 A Month On Their Car,” Angel Sergeev, Motor1.com, Sep 13, 2019, https://www.motor1.com/news/370609/average-american-monthly-car-spendings/#:~:text=More%20precisely%20%2D%20%24773.50%20a%20month.&text=According%20to%20the%20AAA%20research,equals%20to%20%24773.50%20a%20month.

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