Two types of Income: Know which income most rich people prefer

Most people know only one type of income and they miss out opportunities of a lifetime. It would be good to know about them and to be aware which is more effective. That way, your efforts do not go to waste but will be meaningful.

TWO TYPES OF INCOME

1. Active Income

This income requires physical effort to earn money. Every time you earn this type of income it means YOU WORK FOR MONEY.

Examples would be working as an employee or owning a small business. You need to be physically present to earn. Most people have this type of income.

2. Passive Income (Inactive Income)

Only a few people have this type of income. If you have this it means MONEY WORKS FOR YOU.

Examples would be invesing in stocks, real estate or owning a big business.


Most rich people teach their children to have both types of income. They may start with the first one then have both. When some of them retire, they only have the second one. Some would continue to have both but more on the second.

I have friends who were raised by businessmen and are aware of the two types of income since childhood. While they go to school, they know which type of income they make sure to have. On the other hand, I also have friends who were raised by employees just like me. Some of them are aware but most do not. I am lucky my parents do invest. Most of us go to school and make sure to have active income.

Now you know about the two types of income. This will serve as a guide on how you will spend your time and effort so you get the type of income you want.

Take action by talking to the person who shared this to you.

How to Have Discipline in Getting Control of Your Finances

"Knowing what to do and doing what you know are worlds apart." This was one of the lines that I love when I was under business training. There are things that we know are the right things to do but we find it hard to follow. A perfect example is to save or invest. We tend to spend more on things that we don't need and we feel guilty after reflecting that we shouldn't have done the purchase. Also, if you are a person that already has a discipline of getting control with your finances and you want others like your loved ones and friends to do what you do, you notice that they agree with the idea but find it hard to do. And that makes you frustrated. I would like to share some of the factors that affect behavior and ways that you can do to really do what you know is the right thing to do. This does not only apply to getting control of your finances but to other disciplines as well. Let us begin by defining discipline first before we go deeper.

Discipline and Practices

A discipline is composed of practices that a disciple would undergo to become a master. We sometimes ask,"Are you practicing your profession?" What we are trying to ask is does the person's current job related to the profession that she studied in college. This is the case most of the time. Thus, an engineer first have undergone the discipleship of engineering as a student in a university and know more of the practices of that field.

I've also encountered how some people define true discipline. They said you can observe that when a child is playing. The child is very disciplined because nothing will distract him when he puts his heart in the game - not even his mother trying to make him eat at lunch time. Therefore, it takes extreme desire to create laser focus to be successful in a discipline.

Now that we have defined the context of some important terms, we can now proceed deeper.

What Affects Behavior

1. The Deepness of Purpose. "You need to have a reason that is greater than reality." This is what the author Robert Kiyosaki said in his book Rich Dad Poor Dad if you want to have control with your finances. What is your purpose in getting control of your finances? How deep is it? What would you lose if you don't get control of your finances? If a person doesn't have a purpose, he would really have a hard time to do it. And it's perfectly fine. Sometimes, it really takes a life-turning event before a person will see a purpose of a new discipline. It's the same as to how a child gets motivated in buying a new toy. Either the child saw a commercial or he saw it from his classmate. He wants to have it, too. Now he is focused how he can make his parents buy that toy and he feels deep frustration when he doesn't get what he wants. Therefore, don't feel guilty if there is something that you know you should be doing and you find it hard to do. Since we are in the subject of getting control with your finances, here are a few ways you can consider to trigger your deep purpose in taking action:

• Remember the most painful time you experienced with money like being in debt big time or you wanted to buy something. It would also help to know the same experiences from people closest to you. There is a  degree of truth that pain is a great motivator. It's the same that leaders emerge in critical times.
• If pain motivation will not work for you, the reward system might work. If you don't have painful experiences regarding money, what was the happiest? And if you can increase your standard of living, how will it be? Increasing your expenses will also create deep desire in you to improve your financial situation.

2. The Comfort Level of the Environment. One of my business mentors have observed that when Filipinos are residing abroad they tend to be very competitive and the opposite happens when they come back to our country. He said that there might be something in the air in our country that when our countrymen breathe it they transform into a lax person. It's almost the same with my observation working in Metro Manila versus in Davao City. I tend to have a slow pace when I was in the latter than in the previous. Below are a few suggestions on what you can do:

• You may have the option to reside in very competitive place. If not, you can try a long vacation so that you will have more time to immerse in a fast-paced environment.
• If you have the appetite to be a trend-setter, start a small project that you think would help spark improvements in your local community.

3. The People You are Always With. "Communication fuels action," is what John Maxwell said in his 17 Indisputable Laws of Teamwork. Our words does affect how we act and the people we surround ourselves with contribute as well.

• Give more time to people that you think that would help you grow.
• Find a support group.

There are a lot more things that affects your behavior when you try to start a new discipline like habitual and thinking patterns or the people that you look up to. Those presented above are just enough to stir your awareness. And if you find yourself getting more serious about pursuing a discipline, you will notice you can find your own way in finding the answers that is fit for you. 

Start Your Discipline in Getting Control of Your Finances

For those who are now serious to take their financial situation to another level, the next are a few things you can do: 

1. Find a formula that fits your style. I believe in the saying,"Different strokes for different folks." It would also be good to copy a formula then just improve a few things so it would fit your style better.

2. The Role Model. A mentor or someone successful would be a good role model to look up to. If they have books, read them and try copy their thinking patterns in the challenges that they encountered.

3. Support Group. If you cannot find a support group, at least find someone that would support you with your endeavor.

Business Meeting with a friend. We talked about our
experiences and plans. We both wish to share to family and
friends about getting control with finances either by
investing or starting a business.

Event versus Process

 As you finish this article, you are completing an important event in your life. This may motivate you in taking action but it takes a process to create a result. There will be a process that will happen. It will be either taking action or no action in getting control with your finances. Observe your results and if you don't like it, you can either complain and get stuck or improve better and be happier.

Good day!

Ludwig

PS. "Masters were once disasters."
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The 3 Investment Plans

One of the formulas that I follow in Rich Dad's: Guide to Investing is the 3 investment plans. I follow it because it matches my reasons for investing. They are as follows:

1. Security Plan - Plan to be secure. I'm good with a cashflow of around 20 to 30k per month and feel secure.

2. Comfort Plan -  Or plan to be comfortable. It is true that it's a longer process in deciding what level of comfort you want to have especially if you are used with an environment that is focused on security. It is advised that both secure and comfort plans are no-brainers.

3. To be Rich Plan -  As of the moment the clear picture that I have for this plan is small real estate investing and also my part time business before in network distribution.

At the age of 27 I tried to practice this investment plan. I wrote the plan and followed it. Then something more exciting and challenging came my way. Because I didn't have much experience and education in business and investing before, I tucked the plan and created a new plan. After 4 years of business and investing with the new plan, I realized the original plan was still better. The good news is I grew as a leader and a better businessman and investor. Those years wasn't wasted. And I'm happy that I am more determined to follow my original plan.

Just a few months ago I met some new friends. They also want to start businesses. When I advised them about my mistakes and why having a conservative plan is better, they don't seem that convinced. Then I realized I was also not that convinced with my original plan before. Then I accepted that my friends would be better off gain more experience and education in business and find their own formulas as I have found mine.

"Different strokes for different folks."

Leaders Make It Happen

"You have power when your words become reality."-business mentor

I will never forget those words from my beloved mentor. Sometimes, when failure after failure happens to you, you lose confidence and lose power. I felt so powerless most of the time for the last few months. And I am happy to have regained strength and confidence at present.

"When you hit rock bottom, there's no other way but up."-business mentor

I felt I've hit rock bottom again. I felt lost. I'm not quite sure how I regained balance. I guess I just believed that someday I can recover from depression. I looked for what worked for me before.

"I'm a great leader. I'm a great salesman. I'm a great negotiator."

"I think therefore I am," were the philosopher's words. It worked for me before. It should work for me again. And I'm very much happy that it really did.

At present I'm currently working and just got certified. Happy to be earning money and gaining experience and education as well. Also happy to be able to invest again. I planned my way through. Believed in myself. Put everything I got. And got luckier as I work harder. I continue to push myself and take time to be happy with what I do and get motivation and drive from my investments plan for the future. I hope everything are great for you, too!

If we abolish customs in PH

"Why do we have that bureau of customs anyway?"I asked in an aggressive tone. "It's to protect the products of our countrymen. We don't want our people to buy only imported goods. We need to encourage them in buying our own products," answered my good friend. We were in a business meeting and discussing about what new business to start.

Photo by Valine Villanueva

I think it's a very ridiculous reason. If our products are not sold, it's not the fault of the consumers. Simply, our products don't really add value to our consumers. Then why should we buy them? Just to have better tax collections?

If we abolish customs in PH there can be advantages. We can import products with less maintenance and will have better profits and better tax collections. There may be some sector that would be negatively affected and would need to be taken into consideration as well.

The good news is some people in the government are now thinking out of the box. And of course there are still people who react immediately even if it's not implemented. It's also normal as well since we are only humans and most people are programmed that way. It's also good to know that a few of th

Photo by Valine Villanueva

em also are open to the idea. With what happened, I remember one of our practices in a business community before about listing ridiculous ideas just to raise money. It really helps a lot to just to list down everything first whatever comes to mind no matter how stupid ideas are.

Ultimately, having the customs or not only have little effect. It's our practices that would determine the improvement. Also, the wisdom behind this option is yet to be established. Thus, we can never really say if it will work or not unless we try.

The Beauty of a Type 5 Person

Photo by Valine Villanueva

IN EVERY Stage of our lives, we experience either being free or not. There are times when we can do whatever we want to do. And there are also times where we can't do what we love the most. There are many definitions of freedom. Two of them are money and time freedom.

"There is no true freedom if there is no financial freedom." -  Rich Dad

One of my business mentors shared about the beauty of a type 5 person. It was the type he wanted to be when he haven't yet considered himself being financially free. Then he shared all of the types. They are as follows:

Type 1 - No Time with a lot of Money.

These people are the self-employed and professionals. Most doctors, lawyers and small business owners are included in this type of person. My mentor said it's ok to be type 1. Just don't complain of not having time.

Type 2 - A lot of Time with No Money.

Most of these people are bum. Either they are just lazy or didn't have the opportunity that they have been looking for. My mentor said this is better than type 1 since you can do a lot and it's ok to be like this. Still, just don't complain of not having money.

Type 3 - No Time and Money.

These are generally employees. He said that he really respect these people. He joked that they must be really spiritual. They sacrifice so much both time and money.

Type 4 - A lot of Time and Money. They are also Old.

These people are retirees and some of them used to be type 1. He said he might ended up with this type if he didn't look for an alternative aside from his traditional fashion business.

Type 5 - A lot of Time and Money. They are also Young.

These people are either in inventors of today and some of those who are in distributorship business. This was what my mentor wanted really to be.

Now my mentor is enjoying his life of being financially free. He is more than 50 years old but he moves and looks like only 25. He loves dancing and we really enjoy it when he gives presentations and special training. Most of us really attend since we know it's really fun, informative and full of energy.

It is ok to be whatever type of person you want to be. Nobody should decide for you. It's your decision and people should respect it. Also, being type 5 is not instant. You will undergo being type 1, 3 or both. It takes a process. Even if you are type 4, there is a way to be type 5. I hope this message gave you a beautiful insight today.

Cheers!

Why Aim for Promotion

When I decided to be full time in business, I didn't have the chance to be promoted. I was young in business. I was arrogant. I believed I can do whatever I set my mind to. "I don't need to be promoted," I always say to myself. After 4 years of solid business endeavors, I realized the beauty of achieving it. There were moments of regret and pain. True failure only happens when you learn nothing. Knowing what is missing in the formula is like the rainbow after the rain.

"The world only listens to results," our mentors always say. I strived for results in my MLM business. When I got the track record, my leadership influence increased. When people hear that I have sold over a million worth of products my words begin to matter. It is true that people listens to those who have achievements. Even I experienced in listening only to someone who had results.

Why aim for promotion? Why bother think about it? In my world, only a few strive for promotion. Though I observed a lot get envious when somebody gets it. If you haven't thought about getting promotion, it's perfectly fine. If you did get a bit jealous with your colleague who got promoted, it is normal. Humans will always have competitive nature. If getting a promotion will benefit you today or your plans for tomorrow, consider planning for it. Consider the following reasons of getting promotion of other people if they match yours:

1. SELF-WORTH

Some people will only feel appreciated when they get promoted. This is good for someone who gets positive vibes by being acknowledged.

2. INCREASED INCOME

Usually, this is the first motivation of most people. They think of buying new things or need more money for expenses.

3. CONTROL

People can have more control when they are in higher positions. Some of this people are sick of the current management and believes if they are in the position, they can create better change.

4. EXPERIENCE

This is one of my reasons why I want to be promoted. I would like to have more experience in handling people.

5. TRACK RECORD

Hanging out with friends in Manila. Most of them
are promoted in their jobs at present. July 2012

And this is the second of the main reasons that motivate me. I wanted to build more businesses in the future. Having a better track record would be easier to get the right partners and investors.

Whatever reason you have to get promoted, always check if it is in sync with your plans. I also believe to what a previous client said to us in a business meeting: "Don't believe in everything that other people say. Just listen to them and check if what they say would improve your plan. Stick to your plans. Don't sway away from it." Check your plans today if this suggestion can help you!

Earning more in Sari-sari(Small Retailing) Store

My mother has a small retailing store. It sells different consumer commodities. The sales was great yesterday. That is why I was thinking how to earn more.

I noticed today the chips still didn't sell. I was thinking of giving promo or discounts. How can we sell them more quickly. Cash is still king. No matter how big the mark up is but if it doesn't sell fast, it doesn't matter.

The other day, mother posted a poster that says cigarettes are now available. I noticed sales did great. That's when I was thinking if we could get more attention by posting different promos. I think it's OK to cut prices as long as consumers buy continuously. The goal is to hasten the return.

My recommendation, therefore, is add some strategies in marketing. Other things that I also thought about is giving tokens of appreciation to frequent customers. It would be great to know what happen if we implement them.

Japan will support PH

It's great to know that Japan's Foreign Minister Fumio Kishida that his country will have deeper relationship with the Philippines. Great things can happen when nations work together.

Japan will also help in strengthening marine capabilities in our country. It's nice to have a friend country. I also notice a lot of Koreans in the country. It would be great if they will be our close friend as well.

We can look forward for more progress in our country.

Learning from Steve Jobs Quote - Let People Decide

"Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations." - Steve Jobs

Maybe you experienced one time in your life saying"If only my boss would let me decide in my work, the company would be more productive." Or are you the kind of person who is afraid of deciding on your own? You may have also experienced in your life of being afraid to make a mistake. Why is it that sometimes we are afraid to decide?

Most people really love to give advises. A lot are not aware that some people hate receiving unsolicited advises. I know some people who do not have the confidence in deciding for themselves. It's as if they are scared of being accountable of their decisions. They are scared of being blamed, screwing things, getting fired or getting scold. While these things are normal, the problem is they may have undesirable consequences if an individual develops more hesitancy and accumulate fear of failure. The worst is people develop self-doubt and lose confidence.

The reasons above make me feel that we need to be aware of our contributions in developing self-doubt to the people around us. Here are a few guidelines that I follow:

1. Ask and listen instead of giving unsolicited advise - When somebody asks me for advise, I first ask them what is the most important thing to them. I'm very cautious right now in giving advises. My experience is people get to be too dependent when you give them advises and solutions always. I prefer in helping them find the solution that they want to do and they confidently feel would work for them.

2. Only work with the willing - Most especially if you do not have a lot of experience in leading and managing people. We love to change people. You can save yourself heartaches if you only work with the willing.

3. Delegate decision making - To delegate tasks is necessary. But be sure to have people that you will be delegating decision making. You will burn yourself out if you do not upgrade yourself in delegating decision making. It's easier to have partners that can decide than partners that will remain followers forever.

The guidelines above is not for everybody though. There are prerequisites before they become authentic and efficient. The prerequisite is experiencing that doing the opposite of those guidelines is less efficient. When a person have not yet experienced that, he will not understand the importance of the above guidelines. If you haven't yet experienced this inefficiency, don't worry. Being aware about this is already a great leap. Just be sure to notice this in your surrounding and try something. Do not try this if making a mistake has too much at stake. Only make small mistakes first. So only develop experience with easy tasks. Aim high, but start small.

If you are not very confident with yourself as of the moment especially if you do not have experience, always have a buddy. The important thing is take action.

Ludwig

Photo by Valine Villanueva