In looking at your assets or your family’s assets, you can see what are income producing and which are not. The goal in this 4th step is to produce more income producing assets, thus providing more cash flow and asset growth.
Some people have cash to invest. However, the majority of people do not have cash sitting around doing nothing. We have to free up money and generate passive income to start wealth accumulation.
Here are some of the places you can find money to free up:
Home Equity - When your are planning to free up money from your home, you should make sure that the investment that you are going to put the money into is as secure as your home is. You have to feel comfortable with that guarantee as you feel with your home or land. You also need to know how much equity you have:
Equity = Value of your Home - Mortgage
There are three ways to free up money from home equity:
1. Second Mortgages work for people that do not have good credit.
2. Line of Credit on your home equity; with a line of credit you pay interest only with no principle, or you can pay as much principle as you’d like, anytime with no penalty.
3. Adjustable Mortgage is a mortgage and a line of credit all attached in one. This has a locked in portion and a line of credit portion. If you are worried about interest rates, you still have a regular mortgage locked in and a line of credit that fluctuates with prime rate. So every time you pay principle on your mortgage, your line of credit lending goes up. So you do not have to re-evaluate your house every time you need money.
More place to find money to free up on my next blog!
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