Are You Wealthy Yet?

Here's a real simple way to become wealthy. 

Marty and his wife live at home with their 2 children. They own 
a 3 bedroom house in a middle class neighborhood and try to live 
within their means. Marty works full time in the Printing 
Industry, while his wife is in charge of the home and looking 
after the children. 
They've accumulated some credit card debt and have 2 years left 
on a car loan. They try to stay out of debt as much as possible 
and together they've managed to contribute a total of $32,000 to 
their own Retirement Fund. It is kept in term deposits receiving 
5% interest annually. 

Two years prior, the couple bought an older house that they 
fixed-up and rent out for $850 a month. After paying the 
mortgage and taxes $300 is left over each month. This goes into 
their savings account each month. 

At Christmas, the family bought themselves a new computer and 
decided to start a home-based business. Things started out 
fairly slowly but after 8 months they were receiving a steady 
check of $400 a month which also goes into their savings 
account. This part-time business will continue to grow with the 
effort they dedicate to it. 

This business also offers them some very lucrative tax savings. 
By taking advantage of these Tax Strategies they are able to 
save an additional $300 a month on tax that was normally 
deducted from Marty's paycheck at work. This monthly income is 
also added to the couple's savings. 

Marty has just begun writing an E-book about his "production 
expertise" at work. His plan is to market this book on the 
internet for profit 

Every Sunday the couple takes a drive to stay familiar with the 
Real Estate market in their area. They're looking for another 
property, a "handyman's special" to fix-up and rent out. They 
have saved enough for a down payment and their credit with the 
bank is well established. 

The family's total monthly expenses are $2000. Now, here's the 
question: 

Does Marty's family have Wealth yet? 

To answer this question properly you first have to understand 
exactly what "wealth" means.You achieve wealth when: *Your 
Passive Income is the same or greater than your Expenses.* So 
what does this mean? 

First, what is Passive Income? 

Passive Income is money that you are paid over and over again 
for work that you only do once. (This excludes using a gun or 
finding cash on the street) Some examples of this would be 
royalties for writing a book or a song, commissions that you 
receive for sales that others make and interest from bank 
savings or dividends on stocks/options that you own. 

Second, what Expenses are we talking about? This one's a little 
easier to understand. Expenses are the total amount it takes to 
run your household and your life. This includes, rent, mortgage 
payments, car insurance, food, credit card and loan payments, 
etc……… 

Let's look at Marty's family a little closer…………. Does Marty 
have any Passive Income? Yes he does. Marty's salary is not 
considered Passive Income. That's because he has to work 40 
hours a week just to get the basic amount. If Marty doesn't go 
to work then he doesn't get paid. His overtime also doesn't 
count as Passive Income. 

The interest from their Retirement Fund does though. It's paid 
to him month after month as long as it's left in that account. 
So, $32,000 at 5% is $1600 a year. Divided by 12 months equals 
$133 a month in interest. Ok…..what else? 

After the mortgage and expenses are paid with the rent money 
they receive on their rental property they are left with $300 
every month. This is Passive Income. Just as long as the tenant 
stays and pays his monthly rent. 

How bout that $400 from the home-based business and the Tax 
savings. Is this Passive Income? Well, Marty's wife made sure 
that she chose a company where she could sign new business 
accounts and get paid commissions on those accounts over and 
over again. They've made a 5 year commitment to build this 
business part-time. So yes, both the $400 and the $300 in Tax 
Savings would apply as Passive Income. Let's add up Marty's 
total Passive Income. 

Interest $166.00 Rental Income $300.00 Home Based 
Business$400.00 Tax Savings $300.00 Total $1166.00 

Not including Marty's salary from work, his family's Passive 
Income is $1166.00. Not bad. Every month this amount flows into 
the family's bank account, regardless of anything else they do. 

We said that Marty's monthly expenses total $2000.00 a month. 
And we also said………… You have Wealth when: *Your Passive Income 
is the same or greater than your Expenses.* 

$2000 Expenses subtract $1166 Passive Income = $834 monthly 
balance needed to have Wealth. 

Marty's Expenses are still more than their Passive Income so 
they're not wealthy just yet. But they're well over half-way 
there. With this kind of knowledge a family can know exactly 
where to focus their financial attention. 

Maybe when Marty writes that ebook he could get some sales and 
royalties from it. Also the new Real Estate and more work on 
their Home-based business would certainly help them to attain 
more Passive Income. Once Marty's Passive Income is more than 
the family's Expenses then Marty could start to have much more 
freedom. He may even choose to quit his job and continue 
developing his Passive Income streams. 

Take a look at your own finances. What are your monthly 
expenses? Do you have more Passive Income than your Expenses? If 
you do Congratulations. You're Wealthy!!! If you don't. It's 
time to get started and start adding Passive Income from other 
areas as soon as possible. 

When you truly understand this principle, you'll be well on your 
way to becoming wealthy