Why Live In Debt

Why Live In Debt: Financial Independence

Financial Independence is when your combined residual and passive income totals exceed your cost of living (COL). As I always say, “why work hard for your money, when your money can work hard for you”; or as my mentor always says “Work Smart”.

For most of my early years I was in the music industry, which meant I was broke. I always had too much month at the end of my money. One day I grew up, and realized I was not going to be the next Van Halen, went to school, got a degree, and got a job (nope, I did not cut my hair, well until I started looking like Michael Bolton in my late 30s). That first job was for a major defense contractor in the Silicon Valley, and I was making $12.44 per hour. I was so excited to have a job after years of getting paid a six pack of beer to play a whole night at some night club on the sunset strip; or paying to play in most cases.

I did the math, $12.44 x 40 hours = $497.60, OMG that was more money than I had ever made in a month let alone a week (I was 25 at the time). And all I had to do was spend one hour commuting to work, eight hours working in an air conditioned lab, and one hour home. I soon realized I was trading time for money. I was about to wet myself when the office manager came out to the lab two weeks later to hand out our checks; two weeks’ pay that’s $995.20. I ripped open that envelope and sunk into the floor when I saw the number. I don’t remember the number but it was way less than $995.20 – I HAD BEEN ROBBED. Before the office manager could get out the door I yelled, “WTF!? Where is the rest of my money?”. All the old timers on the floor started laughing at me and said, “go ask Uncle Sam”.

To that point in my life, I had never had a real job. I was in the music biz, everything was cash. So, you can imagine my shock when my buddy sat me down and explained taxes, health care, and union fees to me. Even now, 25 years later every check is just as much a shock as that one was way back then.

From that day I got that first check, I vowed to find a way to be financially independent so the taxes did not hurt as much, and I’m almost there. You may be asking “what took you so long. Well, it is a thing called life, job, wife, kids, divorce, college, and a million other excuses, but mostly fear. So, let’s start at the beginning.

To me the word job is really an acronym that stands for Just Over Broke (J.O.B). Most of us are trading hours for money, and we don’t have many hours left to trade. It is time for all of us that want to be financial independent to work smarter, or as one of my mentors always say “make a plan and work the plan”. Let’s start putting the tools in place for you to make and work a plan to find Financial Freedom.

According to the 2015 American Household Credit Card Debt study, household income has grown by 26% in the past 12 years, but the cost of living has gone up 29% in that time period. And some of the largest expenses for consumers — like medical care, food and housing — have significantly outpaced income growth.


As you can see from the study, it is getting harder to make ends meet. If the cost of living is going up faster than income, it makes it harder to meet your monthly obligations. When cost of living out paces income, debt increases. And with the current state of politics in America, I don’t see this getting better any time soon. It will be up to us to find ways to increase our income so that it out paces our cost of living, and staying at your current income is not going to work.

So, let’s get educated. Here are some terms we must know to get started.

Financial Stability: When your income equals or exceeds your monthly expenditures. When you add up all your living expenses and other financial obligations and your income easily meets these obligations.

Linear Income: In most cases this is the one you will be most familiar with, this is where you trade time for money or what you call a job. You go to work for X number of hours and get paid an agreed salary. When you stop working for this employer, you stop getting paid.

Residual Income: This is an income that comes in on a regular basis such as month to month, on a product or service that was sold once and is providing income on an ongoing bassis This would be like renting out a home; you rent it once to the tenant and month after month they pay you for the use of the home.

Passive Income: This kind of income is like buying stock that pays a regular dividend. You buy the stock and you don’t have to do anything but collect the checks.

Multiple Streams of Income (MSI): Creating more than one method of producing residual or passive income, outside of the income you make from your job. Having multiple streams of income not only increases your financial stability, but also protects you from the ups and downs of the market cycles. MSI does not mean getting a second or third job. We are not looking to trade more hours for money, we are looking to make passive or residual income. This could be something like writing an e-book on a subject you know well and selling it on Amazon, or creating an e-bay store but not another job.

In future blogs I will write more about how to produce passive and residual income, but for now it is time to get your financial house in order and start getting your debt and expenses under control.

Let me and my team help you to help yourself become financial free, by taking our on-line, video-on-demand, step-by-step course Bread Crumbs to Financial Freedom. Don’t be scared to ask and seek out help, and imagine the possibilities of getting out of debt, building wealth and changing the way you live, work and play.

I look forward to working with each and everyone one of you in the near future, and remember, each new day is another chance to change your life – you just have to find the right path.





P.S. Please don’t forget to browse to http://whyliveindebt.com/first100 and sign up for our newsletter, and the first 100 people to sign up for the newsletter will get $15 off our exciting new on-line video-on-demand course, Bread Crumbs to Financial Freedom: 12 Easy Steps to get out of debt and build wealth.

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