Financial Independence Strategies: Linear Vs. Non-liner Income

If you are seeking financial independence and real financial security for you and your family

, it's important to focus on generating passive, non-linear income vs. active, linear income. Non-linear income leads to financial freedom.

The best definition of financial freedom I've ever heard was in a workshop I attended called "The Millionaire Mind" conducted by T. Harv Eker. He said:

"Financial freedom is being able to buy the things you want and live the lifestyle you desire without having work for it or rely on anyone else for money."

Non-linear income involves getting paid over and over and over again for work you do one time. It allows you to go on vacation, sleep late, take a week off and just do nothing. It allows you go to the beach and get paid whether you go to work or not.

I'm not talking about working hard for your money. I'm not talking about working smarter for your money. I'm not talking about working for your money at all, because non-linear income is 100% passive, residual income. It comes in whether you work or not!

LINEAR vs. NON-LINEAR INCOME

Active, linear income requires your involvement in producing the money either by some kind of work you do, a service you provide, or maybe something you sell or distribute.

You do the work, provide the service, or sell the product and you are then paid whatever was the agreed on fee. If you stop working, providing the service or selling the product the income stops as well.

On the other hand, with passive, non-linear income you work once and are then paid over and over again.

A great example of this is Elton John. He composes a song, sells it to a CD label company where he gets paid for his work. But that's not where he makes his money.

Every time the CD is sold he gets a royalty (a percentage of the sale). Every time his song is played on the radio or TV he gets a small payment. And the best part it that this will continue for the rest of his life, even if he should decide to never compose and record another song!

Network marketing is another good example of non-linear income. Let's say you've joined a company that sells health and wellness products. You recruit just 5 people to be part of your team. You are paid a commission for recruiting and training them.

But again that's not where the real money is made. The passive, non-linear income happens when each of the 5 you recruited also recruits 5 to be on their respective teams. You receive another commission now for the 25 people that your team recruited.

Now just think about what happens when those 25 also recruit 5 to be on their team. Now you're getting commissioned on the work of 125 people, AND it just keeps on compounding from there!

Owning mortgages creates non-linear income. "Mortgage notes" are most often created in "for sale by owner" situations. When the seller of a property agrees to finance part of the purchase price for the buyer, a mortgage note is generated.

When you buy one of these notes, the passive income is the monthly interest someone pays you on the note.

Still another example of a business venture that creates non-linear income is owning an ATM or a vending machine.

Once you've purchased the machine and have it set up in an appropriate place all you've got to do is make sure you have a reliable supplier to keep it stocked. You get a portion of any ATM transaction or anything sold via a vending machine.

I think you probably see the power of creating non-linear sources of income. Your income grows exponentially even if you're vacationing in the Bahamas!

by: David Lazear

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