Step 1 - Anchor Your Financial Position
Module 4: Compound Interest and Asset Categories
Now this is what I like to humorously call the eighth wonder of the world. This is a concept called the miracle of compound interest and the power of compound interest. If you take a look at this graph, compound interest is like a snowball that is rolling downhill and with each turn that snowball gets greater momentum and gets bigger. Unfortunately, if you’re running from the snowball in other words if it is debt and the compound interest is working against you, you are working for the bank and that is a very uncomfortable situation. That’s the problem that we have to fix here. The goal of new success path is to help you develop a cash flow engine so that you can move from a place where you’re running from the snowball to where you are behind the snowball pushing it downhill. That’s a very comforting place to be.
In my five-year path of getting on the right side of the snowball, pushing is definitely “where it’s at”. There’s a lot less stress and a lot more peace, so the concept that were trying to get you to embrace and trying to get you to get excited about is taking a cash flow engine and getting rid of the debt getting the pressure off. So you can start pushing the snowball and use that cash flow engine to start aquiring income producing assets. It includes helping you push the snowball faster downhill. Now there are several categories of the cash flow type of income producing assets that are available to you and I know it may seem like that you’re never going to get there and that you will be using your engine to get yourself out of debt forever, but that’s really not true. Even though you still have consumer debt that you’re trying to erase with the cash flow engine you can still be planning for what you are going to do once the debt is gone. You will have the extra cash flow to get those income producing assets.
The next graph talks about three categories of status in getting your income producing assets on line. The first and by far the largest is employee status. Almost all of us are in employee status. I was in employee status until I was 47 years old. It was only then that I moved into the small business/business investor category. So when we talk about income producing assets for employees there are going to be separate modules on the site that are designed primarily for employee assets where you can actually continue your job and develop these income producing assets.
The second category deals with a small business and self-employed. With small business and self-employed of course one of the main assets that you are building is your small business itself. By being in business there are certain advantages and ways to develop additional streams of income over above your regular profession.
The third category has to do with the business owner and investor. In that category you have a wide range of income producing assets to pick from anywhere from the business itself to the business needing to rent space in an office that you own. Additionally you can develop office building property or apartment complexes. There are lots of potential assets available when you get into the business owner and investor category.