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    You are here: Investing : Articles : Achieving Financial Freedom

    The Power of Income Layers
    By Matthew Chan
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    Every day someone enters a retail store to buy a snazzy big-screen television, a bank approves a loan for someone to buy a house, or a car dealer approves a new lease on a new car for someone to drive. In these cases, people understand the power of borrowing and credit - where you receive the product today but pay over time.

    The power comes from allowing you, as an individual, to buy something that is worth more than what you currently have access to. In essence, you are buying something today with tomorrow’s income … wherever that income may come from. You accomplish this by making smaller monthly payments to a lender.

    I wonder how many people actually stop to think about why large companies are so willing to accept small monthly payments from so many people year after year? And yet, why is it that individuals always seem to want ALL their money at once instead of small streaming payments?

    The answer is because companies are focused on ongoing business and cash flow by creating huge numbers of streaming income from their customers! These companies understand the power of financing. They will receive more money over a span of time rather than if they tried to get all of the money from you at once. And there is definitely no shortage of people willing to pay more than the purchase price for the privilege of paying over time!

    Once a sale is made, the company continues to make money off of you for many months … and even years to come. Done on a grander scale, this equates to a massive accumulation of thousands and millions of income layers that will forever sustain the company.

    For example, America Online has thirty million subscribers in its network. This equates to nearly thirty million income layers, at $22+ per subscriber. America Online does not try to collect an annual subscriber fee. They are much more content with receiving the small $22 per month from you. They know that more people are willing to pay $22 per month rather than coughing up a lump sum payment of $264 each year. You can do the math to see how much they receive per month … it’s staggering!

    My cell phone company charges a monthly fee instead of an annual fee, despite the fact that I have agreed to a one-year contract. My rent is collected on a monthly basis and not a yearly basis. These one-year commitments allow the companies to create a strong likelihood to receive a predetermined amount of dollars per year from me while they make it financially easier for me by only asking me to pay once a month.

    I mentioned that people understand the power of borrowing and credit because it allows them to get something today by using tomorrow’s income. The power comes in making it affordable through their monthly payment to the financing company.

    It should be noted that one person’s expense is another person’s income.

    Person A Expense >>>> Person B Income

    The more expenses you have, the more income you are providing to someone else. That is the essence of how an economy works … whether it is the local, national, or world economy.

    Conversely, to increase your income, you have to encourage others to spend money on your products and services while providing good value.

    What keeps most employees grinding away are the things they focus on. Most employees can see the value of having expense layers to get what they want today. However, they cannot see the power and value of having income layers to get what they want in the near future.

    - Using expense layers to get what you want reduces your personal wealth and freedom.

    - Using income layers to get what you want increases your personal wealth and freedom.

    Instead of looking for ways to create income layers to get what they need to improve their lifestyles, most employees look for ways to create expense layers!

    Escaping the Daily Grind

    Because my parents were owners of a restaurant when I was young, and I often helped out behind the scenes by washing dishes, folding napkins, or wiping silverware, I was exposed to many types of people early on. There were the employees who came through … as well as the customers. As I grew up, I began to notice many different things about people.

    People of different ages seemed to pursue a life full of work and were constantly busy. In fact, there was all this talk of having a young man like myself looking forward to a life of going to school, then going to work in a career I would have to wisely decide on at an early age.

    This message came through loud and clear … repeatedly! Imagine my surprise several years later when I learned that people don’t often work in the professions they studied for in school … and not to mention that many of the courses taken by college students are frequently not used in the “real world.”

    What really disheartened me was the fact that so many people enrolled into a life of hard work, and they were continuously working in jobs they disliked until the age of retirement. When I glimpsed the future by watching the elderly, I actually saw a few who had in fact “made it.” However, there were many more who lived diminished lives full of regret and fear of the remaining years they had left. These people discovered that the advice and the path they followed in their younger years did not work for them.

    This created an early sense of unrest within me … and it is partially why I spent most of my 20’s driven to achieve and break the cycle of the future. Some people referred to their predicament as the “rat race of life” … where people continue to run throughout their life. For me, I had a much more melodramatic view of it all. Today, I refer to it not as “running in the rat race” … but as “grinding your life away” … mentally, physically, emotionally, and spiritually. Sometimes people refer to their daily tasks as part of their “daily grind.” However, I refer to the lifestyle of unhappily working until old age to sustain your existence in society as the “grinding lifestyle.”

    The reason I refer to it as “grinding” is because of the long-term toll I have seen in people of all ages. It could be the single mother in her 20’s toiling day in and day out to support her two children. It could be parents in their 40’s who have created a lavish lifestyle that requires such heavy financial, physical, and psychological maintenance that they are tired and trapped inside … but are afraid to let anyone know about it. Or it could be the elderly person who continues to work because their retirement is insufficient to support themselves - much less their medical needs.

    Both the young and old grind away year in and year out until they become only a mere husk of the inner youthfulness that we all have within. The innocence is long gone … and all that is left is a cynical person - a broken person full of regret and total lack of purpose.

    Instead of working to create personal freedom and wealth for themselves and others, people continue to follow the old programming to work for a living, work to maintain their lifestyle of “looking good” to impress everyone … and they sacrifice their futures along the way.

    As I write this, it does not mean that I don’t work. It does not mean I don’t want to look good. However, what I am conscious of is that what I have built and continue to build allows for me to have a good amount of personal freedom … where I can choose what I want to do and when I want to do it. Occasionally, I face the occasional grinding task, but I don’t spend any more than two hours feeling strapped to any particular job or task. But I do have the freedom to break away or change what I want or need to at a moment’s notice.

    I am opposed to people spending their lives grinding away because I think all of us have the potential to become so much more than that. Most people have no time or wealth to possibly think about anything else … yet they look forward to the next weekend where they can have a beer and watch a football or basketball game on television.

    One of the biggest things I see with people trying to leave the daily grind is that they give the best time and energy that is available to their job. What happens is that they use any leftover energy and time in order to escape the daily grind.

    I have transitioned from one career to another many times in my life. But during those times, I was able to use my spare time to successfully do so.

    However, the leap from employee to self-employed or leaving one business to go into another business required me to take different measures. I used my spare time to do what I could to prepare myself for the transition.

    Some people thought I worked too much. Well … I called it “good planning.”


    Buy It Now:

    The Intrepid Way by Matthew S. Chan

    The Intrepid Way (Paperback)

    How to Create the Freedom You Need to Live the Life You Want!


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