Personal Finance

You may be surprised to know this but there are different kinds of income and not all income is treated the same. There is earned income, profit, interest, dividends, rental income, and capital gains to name a few. One important distinction of how you make the income, whether it is received from trading time for income or whether the income does not depend on hours worked. The only thing more scarce than sound money is your time because you cannot…

There are only two things a person can do with currency either a person can buy things or lend currency out to others. If buying things with it is the chosen route hopefully assets are purchased. Check out my post on the importance of assets. However, if you want to lend it out, what should a person keep in mind? There are a few factors that can make a huge difference in how an investment turns out. If something happens…

In previous posts, I have mentioned that owning assets is a must for building wealth. An asset is something that puts money in your account. Assets are so important that, in my opinion, it is the only thing you should spend earned income on. I thought by sharing a short story it might help to drown out all the noise and provide a simple example of how buying assets can increase wealth. A long time ago in a small village…

In order to reach financial independence, you must improve cash flow. Most people increase their cash flow by cutting expenses because it is the easiest thing to do. However, you can only decrease your expenses so much. Eventually, you start decreasing your productivity and the things you enjoy. Instead, it is a great idea to focus on increasing income. The great part about increasing income is that you can do it infinitely as there is no cap on the amount…

You may have heard the saying pay yourself first. So that is exactly what the purpose of the wealth account is. So the objective is to make sure that you are saving a budgeted amount every month and generating a sizable return on that savings. A great way to do this is to set up a completely separate account. I like using crypto.com as there is the potential to earn high interest on your savings. In recent years the Federal…

Most Americans get up and go to work in order to pay the bills. Most of the time these bills are necessities such as rent, mortgage, healthcare,  insurance, utilities, etc. As soon as most people have the ability to, they buy a nice car or truck using an auto loan. This auto loan is a liability. The automobile purchase is also a liability as it requires gas, maintenance, and insurance. A liability is something that takes money out of your…

There are many metrics in finance that pundits tout as being important. The most important metric to secure your financial independence is your savings rate. This is because it is the leading metric in growing your wealth. So, what is your savings rate anyway? Your savings rate is the amount of currency you saving as a percentage of you’re overall (gross) income. Total savings/Gross income = Savings rate. Why is your savings rate the most important metric for your financial…

Step 1: Know your current financial situation. If you are like many, you may not know how much you spend and what your net income is every month. It’s time to change that. Take some time and pull up your bank statements for the last 6 months and get an idea of how much you bring in and how much you spend in an average month. There are apps out there that can help you automate this process. Step 2:…

So to stop being low or middle class, a mindset shift needs to occur. The first thing that Americans typically think of when you talk about money is the US dollar. However, the US dollar is not money. The US dollar has none of the traits of sound money. Why does this matter? As long as you believe that the US dollar is a store of value your decision-making process will remain flawed. For instance, if you constantly try and…