If an investor puts $500,000 into a candy store with the agreement that the owners would pay the investor a percentage of earnings, that would be considered passive income as long as the investor does not participate in the operation of the business in any meaningful way other than placing the investment. The IRS states, however, that if the investor did help manage the company with the owners, the investor's income could be seen as active since the investor provided "material participation." 

I was fortunate enough to have two friends who I’ve known for quite some time who are financially free and have been since their mid-twenties. I gravitated towards them and learned from them how they make income besides running their business and where they put their money to work. We still talk about investment opportunities, real estate, and various ways to make money.


As a private lender, you can lend to anyone in your social circle. For example, many home rehabbers need access to a source of capital they can tap into very quickly in order to fund the initial purchase of their properties. You can partner with a rehabber who uses your capital for a short-term in exchange for an interest rate that is mutually agreed upon.
This might be one of the most important tips when it comes to financial success. Find a mentor or mentors and really pay attention to everything they do. Even if you are unsure if they will work with you, reach out and ask as many questions as you can. You will likely be really surprised by how much older experienced people are willing to teach and help you.

Even though I passed the point where my savings could cover my essential expenses quite a while ago, I’ve decided to keep working and pad my balances a bit more. Since I’ll likely have plenty of buffer by the time I actually pull the plug on work, I plan to just maintain my current portfolio, which consists primarily of low-cost, stock market index funds. Since I could always work again if necessary, I’m happy to take on a bit more risk for higher potential returns.

financial freedom university


22. Advertising – This is definitely the most old-school way of earning money with a blog. It’s also starting to become the least common way. You can sell advertising spots directly on your site or you can sign up with a company like Google AdSense or Media.net. Either way, you won’t see a whole lot of money from ads until your views are well into the thousands each day.
Like talking to people and helping walk them through problems? You can bring in extra income as a contract customer support superstar for companies all over the world. Due to the 24/7 nature of online businesses, companies are looking for people in different time zones to help deal with issues that their users are having. Better yet, if you have experience in service or retail you’ll be perfectly suited. Check out indeed or the other remote job boards I listed earlier to find opportunities.
Get samples. When you first start out as a freelance writer, it can be hard to get work without any published samples. However, it is possible to get quality samples if you are willing to do some writing for free. First, you can publish content on your own blog or website. Also, you can write guest posts for someone else’s blog. Finally, you can write blog posts for free in exchange for a byline.[20]

Vital Pieces Of Financial Freedom


Financial Freedom is a step-by-step path to make more money in less time, so you have more time for the things you love. It challenges the accepted narrative of spending decades working a traditional 9 to 5 job, pinching pennies, and finally earning the right to retirement at age 65, and instead offers readers an alternative: forget everything you’ve ever learned about money so that you can actually live the life you want.
If you find yourself in this group, financial freedom should be your highest priority. If you truly hate your job, you should be willing to make sacrifices to escape. That might include cutting unnecessary expenses, working a side-job, building your human capital, or moving somewhere with a much lower cost of living. You should be saving as much money as possible so that you can change careers as quickly as possible.
The music industry might not be as strong as it was in the 80s, but there are still plenty of ways to make money online as a musician. Sites like SoundBetter let you sell your services as a songwriter, producer, or session musician to thousands of customers a month. While Musicbed, Music Vine, Marmoset, and SongFreedom are perfect for licensing your music to TV shows, movies, and web series.
As for Sam’s levels, this is the reason I started to pursue more sources of passive income. I wanted to at least partially break the chain of being tied totally to a market return. I am nowhere near Sam’s league in terms of assets or passive income but it now represents a decent amount of our total income. I worry less about market returns and more about the viability of the income stream persisting. I use 3 fintech platforms for real estate which represents about 12% of my overall portfolio, a closed end fund designed for income, a high quality MLP and at this time a boatload of cash since I think bonds represent a bad value.
You are suggesting that because the risk free rate of return is 2.5% anybody who is not obtaining that return is not invested “properly”. However, risk is a real thing and it affects investment returns, and everybody invests with different objectives in mind. I would argue that anybody pursuing financial independence that is 100% invested in ten year bonds is not properly invested because the return from that portfolio will likely only keep up with inflation (if that). Whereas somebody who is pursuing financial independence would be better served in a balanced portfolio including stocks, bonds and maybe other asset classes. This portfolio is more than likely to return less than 2.5% in any given year, but is a more “proper” asset allocation to meet his objectives than is investing 100% of the portfolio in 10 year bonds.
Living in the moment often brings financial woes because the long-term goals of saving takes thought about tomorrow. I have seen people who just had the knack for putting $$$’s away. A friend of mine has a son who started taking his lunch when in school and saving that lunch money. He put it in a sock, when he graduated from high school he had saved all of the sock money which included birthday gifts, and etc. that amounted to about 20g. His mom was a banker. LOL However, today, he has his own business, has real estate he has… Read more »
The tradeoff in this scenario is clear. You can continue working to build a bigger pool of savings, which will provide additional income and flexibility for the remainder of your life. Or, you can leave your job as soon as possible and hope that a smaller portfolio will provide sufficient income. It’s all about finding the right balance given your personal situation.

financial freedom baby steps


Geographic Arbitrage – As I mentioned in The Perfect Life article, I also plan on using geographical arbitrage to bring my FI date even closer. By living somewhere like Thailand for a portion of the year, the income from my United States investments and businesses will go much further than if I lived in the States. Renting will allow us to easily move to cheaper places, as needed or desired.
Thanks for the post. Not to be negative, but want to stress importance of not “waiting” for FI. My parents have a passive income of about 500K/year and have had some health issues popping up recently. My dad lost his hearing in one ear and my mom is having a lot of trouble with her vision. Although having $$ makes dealing with some of these issues easier, it is important to remember how valuable your health is, because suddenly money doesn’t seem so important.
If you have specialized knowledge in a certain topic, you can put together an online course to teach others. For example, if you have experience in real estate investing, you can create an online course “Real Estate Investing 101”. The benefit of an online course is that once you create the course material, you can sell it to as many people as you want.

In 2010, 24-year old Grant Sabatier woke up to find he had $2.26 in his bank account. Five years later, he had a net worth of over $1.25 million, and CNBC began calling him "the Millennial Millionaire." By age 30, he had reached financial independence. Along the way he uncovered that most of the accepted wisdom about money, work, and retirement is either incorrect, incomplete, or so old-school it's obsolete.


Roofstock is a marketplace where you can buy leased rental property (single family homes) online with only 20% down. They also connect you with a network of vetted property management, lending and insurance companies to help make the transition seamless, it's a way to generate passive income in rental property from day one. It's free to join and review the available properties.
You know those top-down cooking or craft videos you just can’t seem to get away from these days? There are people out there making a living from them. 78% of B2C companies depend on user-generated content, like those videos, for their marketing campaigns. You can sign up as a creator on a site like Darby Smart and potentially work with brands like Nordstrom, Mattel, and BarkBox. Or, learn how to master PPC advertising and you can use the content to build your YouTube following and monetize through ads and views.
More and more companies and startups especially are embracing remote work—where you use online collaboration and communication tools to do your work from wherever you want. And you don’t have to be a 20-something hotshot designer or coder to reap the benefits of working remotely. Many remote positions are for customer support positions or other customer-facing positions that don’t require specialized skill sets.
Now, it’s time to plan out your show. If you’re doing an interview-style show, you’ll now want to start getting some guests involved. You can use your existing social network to reach out to people you already know or are connected with on Twitter or Facebook. You can also head to Medium or Amazon to find authors or experts on topics specific to your niche.

What means time freedom


In economics, net worth refers to the value of assets owned minus the value of liabilities owed at a point in time.[8] Wealth can be categorized into three principal categories: personal property, including homes or automobiles; monetary savings, such as the accumulation of past income; and the capital wealth of income producing assets, including real estate, stocks, bonds, and businesses.[citation needed] All these delineations make wealth an especially important part of social stratification. Wealth provides a type of individual safety net of protection against an unforeseen decline in one's living standard in the event of job loss or other emergency and can be transformed into home ownership, business ownership, or even a college education.[citation needed] 

How do I get financial independence


Oh I had a question you seem to be the tax guru for FI so. Can you tell me what the tax implications are if you invest in a regular stock account. So non retirement. My husband wants to know if you get taxes when you pull it out since you already get taxed on the gains. My thought was yes because it will be considered income but can you clarify. Thanks
Just because you have money does not mean you have financial freedom. In my book, It’s Rising Time, I talk about how people like Ed McMahon from The Tonight Show and Nicole Murphy, the ex-wife of actor Eddie Murphy, had millions of dollars and lost it all. Nicole Murphy spent her $15-million divorce settlement in less than four years. And toward the end of his life, Ed McMahon faced foreclosure on his Beverly Hills home and owed $747,000 in credit-card debt.
Studies show that people have a hard time comprehending large numbers, and for me personally, the thought of saving $1 million was overwhelming. I found it a lot easier to take it one day at a time and break out my target into into daily, weekly, and annual savings goals. While it was initially difficult for me to reach my daily savings goal, it got easier over time.
This is probably the most exclusive level of financial freedom. Hopefully, your financial freedom plan will allow you to outlive your money. Having more money than you expected to spend is great. Building enough wealth so that you could not possibly spend all of it is another. This group will likely be filled with people who either won the lottery, inherited a fortune or are founders of companies – think Bill Gates or Warren Buffet. Even if they went on a spending spree buying planes, yachts and automobiles; they would still have a hard time spending all of it. I should note that both Gates and Buffet have pledged to give away a vast majority of their wealth when they pass. I would be unfair to count that as “spending all their money.”
Online business is how I’ve made a living since 2003 and what has helped me retire early.  I make over $40,000 a month through my blog. You can create your own blog here with my easy 15-minute step-by-step tutorial.  You can start a blog for as little as $2.95 a month (less than a cup of coffee!).  Create a blog and leverage it into affiliate sales or product endorsement deals. Consider topics like:

financial freedom amount


The 4% rule has a failure rate based on overall market movement and time in the market. If you need to cover 20 years the 4% rule is extremely safe. If you need to cover 40-50-60 years because of early FI it starts to get riskier. Why not arrange your investments so you achieve a 4% yield, then you will never need to sell shares and can live an infinite amount of time without working? To boot, invest in some dividend growth stocks and you will get an inflation-busting 6% average annual raise on your income as well!

How Much Do You Charge For Financial Freedom


Nice One, I would like to add another (and very important tip, for my opinion) idea for a passive income. Annuities. you can create yourself a Lifetime Incom Plan. it’s like a privet pensions if you do it the right way. you need to find one that is safe and affordable because lots of them are NOT GOOD (to say the least). the good ones will give you a guaranteed income for life.
22. Advertising – This is definitely the most old-school way of earning money with a blog. It’s also starting to become the least common way. You can sell advertising spots directly on your site or you can sign up with a company like Google AdSense or Media.net. Either way, you won’t see a whole lot of money from ads until your views are well into the thousands each day.

Learn Exactly How I Improved Financial Freedom In 7 Days


If you’re already contributing 15% of your income to retirement and you want to start saving for your kids’ college fund, you can start by investing in an Education Savings Account (ESA). Like a Roth IRA, the money you contribute to an ESA grows tax-free, which means you won’t pay taxes on it when it’s used to cover college expenses. Currently you can contribute up to $2,000 per year for each child in an ESA. Income limits do apply, and your investing pro can help you know if those impact you.(1)
Wow! What an awesome list Jeff! My favorite is the stock photography as I love photography. I have some success there, particularly with one photo I make some decent income from. I think the key with stock photography is finding a shot that is high demand then find a new unique way to frame that shot. This is the reason my St. Louis Arch photo is a top 10 on both of the platforms you mentioned above. Thanks for the awesome ideas above!
If you’ve got experience and expertise in a specific area of business, there are hundreds if not thousands of business owners who would love to jump on a phone call and pick your brain. This can be an easy way to make extra money online and to hone your skills to use in your consulting or freelance business. Sites like Clarity.fm let you create a profile where entrepreneurs and business owners can pre-pay to book a phone call with you for a set amount of time. Whether you’re an expert in raising money for startups, building apps, or running a restaurant, you can make extra money selling a few minutes of your time to people in need.

You might call it the time-money paradox. Most Americans trade the majority of their available time for a paycheck, and then spend the majority of each paycheck on depreciating material possessions. As the spending snowballs, many individuals desire a larger paycheck, which requires even longer hours and more responsibilities at work, leaving even less time to enjoy the income or possessions. It’s a vicious cycle that often continues in perpetuity until retirement or death.
No matter what method you choose to make money online, understand that you might be able to make some money fast, but for the sizable returns, you'll need significant sweat equity. However, a year from now, you'll be happy you started today. Remember, time is far more valuable than money. Focus on creating passive income streams that will free up your time so that you can quit the rat race and focus on the things that matter. 
In Western civilization, wealth is connected with a quantitative type of thought, invented in the ancient Greek "revolution of rationality", involving for instance the quantitative analysis of nature, the rationalization of warfare, and measurement in economics.[11][12] The invention of coined money and banking was particularly important. Aristotle describes the basic function of money as a universal instrument of quantitative measurement – “for it measures all things […]” – making things alike and comparable due to a social "agreement" of acceptance.[25] In that way, money also enables a new type of economic society and the definition of wealth in measurable quantities. In the Roman Empire, just as in modern colonialism, the main force behind the conquest of countries was the exploitation and accumulation of wealth in quantitative values like gold and money. Modern philosophers like Nietzsche criticized the fixation on measurable wealth: "Unsere ‘Reichen' – das sind die Ärmsten! Der eigentliche Zweck alles Reichtums ist vergessen!" (“Our 'rich people' – those are the poorest! The real purpose of all wealth has been forgotten!”)[26]

I started small, about 10% each paycheck would be taken out for my savings accounts. Half would go to my Vanguard retirement account and the other half to my savings. Then, I kept increasing it and diversifying where the money went. Anytime I go a raise or made side hustle income, I would do the exact same thing as soon as it cleared in my bank account. Now, I’m on track to save 30% this year of my overall income, which I would like to increase to 40% by next year.
Therefore, they have no idea what it takes to achieve financial independence and buy into the great myth that good students go further in life. They pitifully measure analytical intelligence only and not the creative intelligence that is responsible for sparking innovations, societal advancements and the opportunity to craft solutions in niche markets that everyone else misses.
I was fortunate enough to have two friends who I’ve known for quite some time who are financially free and have been since their mid-twenties. I gravitated towards them and learned from them how they make income besides running their business and where they put their money to work. We still talk about investment opportunities, real estate, and various ways to make money.
Take a look at where you think you fall on the aforementioned levels of financial freedom. Use it as motivation to keep moving towards your most important financial goals. While I love what I do, and plan to help people with financial planning forever, I take comfort knowing that it will be a choice to continue working in my golden years. Although I am still decades away from full retirement age, I am right between bare bones retirement, if I stayed in Los Angeles, and retiring comfortably if I was willing to leave California. Who knows what the future holds and how far up the chain of financial freedom my household will climb? Where are you at, and where do you want to be in five, 10 or 15 years?
Passive income differs from active income which is defined as any earned income including all the taxable income and wages the earner get from working. Linear active income refers to one constantly needed to stay active to maintain the stream of income, and once an individual chooses to stop working the income will also stop, examples of active income include wages, self-employment income, material participation in an s corp, or a partnership.[4] portfolio income is derived from investments and includes capital gains, interest, dividends, and royalties.[5]
If you are self-employed, that just means you have a lot of “bosses” that you serve. So, periodically ask those “bosses/clients” how you can better serve them. I have done this in the past through simple surveys. I simply ask what challenges they are facing and how I can better serve them. The better you can serve people, the more value you bring to the table, the more it helps you become a higher earner.
Manage Your Money In One Place: Sign up for Personal Capital, the web’s #1 free wealth management tool to get a better handle on your finances. In addition to better money oversight, run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.
If you find the profession that gives you that feeling, and you are disciplined in your management of the business side of it by controlling costs, you have a huge advantage over your competition because you may continue to work 10, 15, 18 hours a day or 2, 4, or 10 years longer, not because you need to, but because you love the process and product itself. 
I want to be solidly in the middle – i.e. comfort zone, in the next 5 years. Right now I could hit the frugal FI button likely in the next year or so, but would not be happy there. I like the idea of the continuum. My in-laws are shooting for blockbuster FI, but they both own tech businesses that are doing well…so their reality differs slightly from mine.
I just lost my job and given my age I don’t know when or if I’ll get another job. I can’t collect unemployment because I worked for a religious institution. It would help me out tremendously to be able to make about $800 a week as you do. Can you please help me and give me some straight up and complete information on how I can do this? Thanks, and God Bless! 

Death Financial Freedom And Taxes


I guess I’m in the Blockbuster Category, but living in the Midwest I’d have a hard time figuring out how to spend $300k/year even though the math says it is not a problem. I think the reality is most people who are super savers are going to get to Blockbuster eventually assuming they don’t inflate their lifestyle along the way. There is a lot of truth to more money not bringing you more happiness…I spend less in “retirement” than I did while working and I’m exponentially happier. I checked my taxable account for the first time this year and it in the first 11 days it is up more than I’ll spend this year, interesting times indeed.

To me, financial independence is being able to live how I want without worrying (too much) about money. It isn’t just about meeting X times my annual expenses and riding off into the FI sunset. Things always come up. A new roof, new septic system, etc. Also, I want my kids to go to whatever college they want and not be burdened with student loans. I want them to follow their dream careers, not be cajoled into a career because of the earnings potential. While I have a plan to retire early, I’m already struggling with the question “will that figure be enough?” If I’m being honest with myself, I won’t be able to fully retire and be completely happy and mindfully secure until I reach Blockbuster FI.
In economics, net worth refers to the value of assets owned minus the value of liabilities owed at a point in time.[8] Wealth can be categorized into three principal categories: personal property, including homes or automobiles; monetary savings, such as the accumulation of past income; and the capital wealth of income producing assets, including real estate, stocks, bonds, and businesses.[citation needed] All these delineations make wealth an especially important part of social stratification. Wealth provides a type of individual safety net of protection against an unforeseen decline in one's living standard in the event of job loss or other emergency and can be transformed into home ownership, business ownership, or even a college education.[citation needed]

How do I get financial independence


@Palmetto - Thanks for the feedback. As far as making a pivot in my career, I just knew I needed to boost my credibility and change the path I was going on. Being in the computer science field, I was already technology driven and knew how important it would continue to be. I just looked into jobs that seem to be hiring the most and closely matched my interests, then looked at what I need to learn to be able to get that job. It wasn't too difficult because I already knew what I wanted to switch too and enjoy about some of my previous work. For other fields, I'm sure it might be more difficult to figure it out. But keep at it. Advice, really just do your research, make lists of what you enjoy/don't enjoy, what you'd like to learn more of and just dive in. Creating my own music blog was a huge stepping stone and opened more career choices. @Mrs Picky Pincher - Thanks for your point! I see where you are coming from. Agree, you shouldn't spend all your waking hours working, chasing the almighty dollar. However, I choose side hustles that are only a few hours a week or projects I know that won't consume my entire life. The reason I advocate for side gigs is because your full-time is never guaranteed. Sure you may be able to survive on some savings, but if anything were to happen to that job, you're in more of "what am I going to do" mode. I'm not in a panic for work because I have some supplement income still coming in while I continue to find the next gig. Just adds a bit less stress. And no, def don't want to think negatively about your future job, but something to always be mindful of. @Cody - Thanks! Hoping to contribute more to MM!

financial freedom by 40


Categories. Identify what’s truly necessary by identifying all of your monthly expenses based on the past six months, and then divide your expenses into three categories: Essentials, Nonessentials, and Junk. Write down every expense (food, housing, utilities, insurance, cars, gas, transportation, clothes, credit cards, phones, Internet, pets, entertainment, etc.); triple-check the list with your significant other or a friend; and then use your Essentials, Nonessentials, and Junk categories to prioritize and cut wherever you can. The stricter you are, the sooner you’ll be free.

×