You can amass a fortune by simply increasing your income and spending less than you make...that is - save money.
At least that was the conventional wisdom before the government went on a drunken borrowing and spending binge that would make a division of sailors blush. Now the equation is not as straight forward. It is close, but with a twist that will most likely make the hair on the back of your neck stand up.
Saving money for retirement is a game you cannot win, as discussed before. Unless of course you save every extra penny you make for your entire life and never spend a dime of it, as a wage earner, you will never ever get ahead.
Unless, you substantially increase your income using borrowed money as much as possible. Yes, borrowed money. See credit in and of itself is not bad. Misuse of credit is bad. If you use credit to buy or create an income producing asset that more than covers the debt service you have used credit wisely. Anything other than this equation looking this way is not the proper use of credit.
For example: an obvious income producing asset would be rental property. You borrow money to finance a building that the tenants pay you rent for every month. If you bought the building right you will have positive cash flow....using credit. This is a GOOD use of credit. You earn more money back than is required to amortize the loan.
A not so good use of credit is again, anything you borrow money for that you yourself have to pay back that you use, but it creates no return on the investment, other than its own use or your enjoyment in that use. Say, like your house. You pay a mortgage payment and build equity in a depreciating asset that is expensive to maintain and live in. Yes you get to use it, but the all in expenses are very high and it does nothing but cost you money from the second you buy it.
I have already touched on how rental real estate is a total pain in the ass to manage on a small scale. So what is a person to do? Well, in the last eight years or so the internet has sprung up these new types of crowd funding and they are very interesting, but they are risky and speculative. Most people are not cut out for speculating but I will get to that in a later essay.
One in particular that interested me and I took action on a couple years back is the Lending Club. I have found a way to combine a small tranche of borrowed money into a rolling income stream that can grow to be enormous in a very short period of time. Basically you borrow an amount of money you can easily afford to pay back with your free cash flow and move it into the Lending Club and lend it out.
Use the income FROM the Lending Club combined with your normal monthly payment to pay off the borrowed money in less than seven months. 29 months of income will still come in from that paid off tranche of money's notes coming in and you have no debt. You just magically turned a liability (the loan to you) into an asset (the lending club notes). Then you borrow another tranche of money and send it over to the Lending Club again.
Only this time you have twice the amount coming in from the Lending Club notes, allowing you to pay off the borrow a month sooner.....
Wash rinse repeat, wash rinse repeat....until you are paying off the borrow every 1-2 months. Then you double your credit limit and then
Wash rinse repeat....Until you reach a monthly passive income that is about 30% or what you decide you want to live on and STOP putting money in out of pocket FOREVER while it continues to GROW exponentially. To illustrate: let's say you want a $5000 per month income. You need to go to about $7500 per month and you can stop.
Then you can take the $5000 every month you wanted OUT and STILL maintain the income and have that income slowly keep growing indefinitely.
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