Stay in credit by building passive income streams

Do you want to stay in the green? Erase all your debts? And never worry about your finances again? The route to the green is through what's known as passive or residual income.

If you want to get rid of debt, quit your job and travel the world, you need to start thinking about building out these passive income streams. Yes it's possible and I'm not trying to sell you anything so you can't a say it's a scam!

What is residual income? 

It's money that you earn without trading your time for it. Most of us trade our time for money. Passive income is earned through cash-flowing assets that produce money.

What's a cash-flowing asset?

Anything that provides a flow of cash to you every month.

This could be a blog, a rental property or a stock investment. Cash-flowing assets provide you with long-term residual income. Most people don't get to enjoy the sweetness of passive income in their lives because they're too caught up in the rate race, or they just aren't aware of the true opportunities available to them.

For example, did you know you can find dozens of passive income ideas, just by doing a google search? You can find 45+ passive income ideas here in one resource.

The reason most people don't earn passive income goes deeper than just being stuck in the rate race. It's all about this thing called mindset. The way people relate to money and business has a direct correlation to the results they achieve financially.

The cash flow quadrants

Robert Kiyosaki put it perfectly when he talked about the four cash flow quadrants. You see, it isn't just about how much you make, it's more about HOW you make your money.

There are four separate sources of income. Each of these are quite different from each other. Identifying which quadrant you fall under is the first step to changing your financial situation for the better.

The cash flow quadrant is split into the following sections:

E = Employee

S = Self-employed

B = Business owner

I = Investor

These quadrants represents how people make their money. For example, the Employee earns money by trading dollars for hours, typically in a corporate office setting. Self-employed people work for themselves which also includes small business owners. A business owner typically owns a larger business that makes money. And finally, an investor uses his own money to generate more money for himself. Which quadrant do you belong to at this point?

The employee quadrant

The vast majority of people live the entirety of their lives in this quadrant. They trade their time for money. Our education system trains us to work in this quadrant. We learn how to work for money, not how to make money work for us.

The world is full of people stuck in this form of slavery. The modus operandi for this quadrant is to get a good education so you can get a degree so you can then land a safe corporate job where you can slowly climb the ladder.

The self-employed quadrant

Driven by the desire for more control over their destiny, many people migrate to the self-employed quadrant. This is typically the first step in the entrepreneurial journey that one takes.

This quadrant has a wide array of earning power, from freelance writer to highly paid private doctor or consultant. But what keeps these people stuck is the time trap. It doesn't matter if a Doctor is earning $500,000 a year from his practice as he still trades his time for money.

Many people assume that they're firing their boss when they move into self-employment but really they've just switched bosses.... they're now their own boss!

The S quadrant can be really tough because you don't get any benefits from the government. A day of holiday is a day without pay so these people typically don't take too much time off.

The business quadrant

This is the place where all the good stuff happens. This is where people create big businesses that enable them live great lives without worrying about their finances.

The key differentiator between a B type business and an S type business is that the B type business works for you, instead of the other way around. These don't have to be large corporates with millions of capital investment. They can be small lifestyle businesses run by one or two people where most of the work is automated.

People living in this quadrant have much more control over their finances. They've learnt how to make money work for them instead of being slaves to time/money trading. It's also powerful because these businesses can be systematised which gives you the time to pursue other businesses and grow your passive income streams.

The investor quadrant

Most of us know what investors do. When it comes to investing in businesses, they supply the cold-hard cash in exchange for an equity stake in the business. This means they own portion of the business and will receive a portion of the profits the business generates. Being an investor is a great position to be in as it requires the least amount of work.

The problem is, most people don't have the money to invest in this fashion when they first start out.