Financial Freedom

Financial freedom may be defined as having enough passive income to cover all your living expenses indefinitely. Passive income is the money we obtain irrespective of whether we work or not. There may be many sources of passive income and these include rental income from real estate owned by you, insurance, dividends from stocks, network marketing and interest on loans made by you.

There is considerable difference between passive and active income. Active income is when you get paid for the work you do, either as an hourly wage or as salary. The problem with active income is that irrespective of the fact that you may be either working for minimum wages or for $500 per hour, the moment you stop work you stop getting paid. Moreover if you take leave your wages will be cut. This means that if you take one month's leave your annual income will be reduced by one-twelfth.

The advantage of passive income is that it comes in irrespective of what you do. The rent is paid to the landlord every month on the scheduled date. It doesn't matter what the landlord is doing, the amount is credited in his account. To achieve financial freedom you need to calculate how much money is needed for your monthly expenses which include mortgage, groceries, utilities, traveling etc. You can arrive at a number that would suffice to meet all your expenses.

Once you estimate the amount required per month for you to have absolute financial freedom then what remains is to find ways and means to reach that goal. You need to formulate methods to reach those levels of passive income. Rental real estate is one of the best options that need to be considered to increase your passive income. By doing proper research you would be able to find properties for sale across the country which would be able to generate a cash-flow of $200 per month for you. You have to study the different rental markets across the country to gather valuable information that will help you in increasing your cash flow through rental real estate.

In order to increase your passive income you also need to look out for options such as dividend paying stocks, oil and gas or some other businesses. The key to achieving financial freedom is to have your passive income above your expenses. Most people fail to achieve financial freedom as they keep on waiting doing nothing till they retire. The choice of achieving financial freedom or not rests with you and it is you who need to make the decision.

Ajith Aravindakshan

Hi-Tech Editorial Division