Feb, 2024

Win At Wealth! Expert Teaches Financial Terms & Formulas

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Do you want to win at wealth, but find all of that financial lingo confusing? Learn the glossary of money words from wealthy real estate investor Rob Rowsell. Sit under Rob’s learning tree! Find out how to make smart investments with your money by applying these financial terms and formulas.

Financial Terms You Should Know For Wealth Wins

Rob jumps right in by explaining a few key financial terms every investor should know. Then, he outlines his wealth glossary. The definitions, as well as a few useful formulas, are outlined below.

Your Net Worth Defined

When we simply put it on paper, your Net Worth is the measure of everything you own, minus everything you owe. What is the net worth formula, then? Your assets minus your liabilities equal your net worth.

Income: Active And Passive Categories

Rob groups Income into just two main categories: Active Income and Passive Income. He defines each of them as follows:

What Does Active Income Mean?

W2 Income, 1099 Income, and Active Business Income are three specific types of Active Income. Basically, if you work directly in order to earn that money, we classify it as Active Income.

Passive Income Defined

Rob then defines the category of Passive Income as money that you earn, even though you did not directly work for it. If you received Capital Gains income from the sale of one of your real estate assets, that is one example. Appreciation of one of your assets will also count as falling in the passive income category.

What Is Passive Residual Income?

Some property investment experts refer to this income category as Horizontal Income. Passive Residual Income could possibly refer to your dividends earned from investments, the rent paid from your properties’ tenants, or royalties you have earned from your own Intellectual Property. Regardless of where the money came from, this can be an outstanding income source. Everyone should seek it out, since it is literally mailbox money that arrives regularly in your bank account.

Financial Terms Continued: Vitality Factor

Rob then fills us in on a financial formula he calls the Vitality Factor. This calculation is hugely important to know if you really want to understand the nuances of the financial world. A specific formula must be used in order to arrive at your Vitality Factor. You must add your own Personal Expenses to your Deductible Business Expenses. These factors will add up together to produce your TRUE Cost of Living, before you subtract your taxes and your charity contributions.

An example of deductible business expenses Rob has written off in the past is auto repair. Years ago, when Rob owned several independent auto repair shop locations, he could write off his own automotive repair expenses. That is to say, if he had to get his oil changed or install new tires, it counted as a write-off when one of his shops performed the task. However, he sold all of the automotive shop businesses, so those expenses are solely personal ones. He can no longer write off those expenses.

How Do You Calculate The Horizontal Income Score?

We talked about the concept Passive Residual Income earlier, which is also called Horizontal Income. The Horizontal Income Score is a formula that we use to best measure your ability over time to convert your Net Worth to your ultimate goal, Horizontal Income. When you divide your Horizontal Income amount by your Net Worth, then you will arrive on your Horizontal Income Score.

Do you want an example? Here it goes. Let’s say that you currently have a Horizontal Income that adds up to exactly $100,000. Your Net Worth, on the other hand, is an even $1 Million. When you divide those numbers, you will then arrive at a score of 10. That is a great score. In fact, it is twice the average score! The higher the number the Horizontal Income Score totals up to, the better. Remember this: if you do your homework and you exercise your advantages, then you will reach your ultimate retirement scenario, which is Passive Residual Income.

What Is The Nest Egg Theory? Financial Terms Part 1 Concluded

Rob talks about the Nest Egg Theory a lot in his videos. This financial approach powers the most common retirement plan that people subscribe to. This defines freedom as a number, specifically a big bag of money that we are filling up via our 401k’s and other conventional retirement plans. Rob reminds us that there is a very real fear hiding behind this theory. What if we live long enough that the money will run out, and then we will have to return to the work force and earn w2 Active Income in our old age. This is why we should work over time in order to invest our Active Income gains into sources that will generate passive mailbox money in our twilight years.

Join Our Financial Discussion Community

Do you own multi-family rental properties? If not, do you aspire to do so one day? Then you should definitely consider joining our online discussion group, the ATL Inner Circle Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It is not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate. A successful guide in your corner like Rob is a must have! Sign up today!

Dec, 2023

Winning the Money Game, Act 1: Earning Active Income

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In this 4-part mini-series “Winning the Money Game”, Rob Rowsell details the start of the journey: earning active income, so you can then start investing said income. It’s all about you! Learn how to maximize your personal earnings, reduce your taxes (legally!), and control your personal expenses, and you’re on your way to winning the money game.

Earning Active Income – The First Step to Winning the Money Game

Rob kicks off the Money Game discussion by laying out three components to earning active income. These include maximizing your personal earnings, reducing taxes, and controlling personal expenses. When you all all of these factors up, they equal a surplus of cash to invest.

Maximize Personal Earnings

On your way to winning the money game, it’s no secret that you need to start small. Remember what your grandparents told you when you got our first job? It’s not what you make, it’s what you save! Well, it can often seem impossible to save and invest when you’re not making much. This is a tough economy, but there are many strategies to maximize your personal earnings in order to invest more. Whether you own a business or earn a W2, you are earning a regular check and can find ways to save a portion of it.

Legally Reduce Your Taxes from Earning Active Income

Money saved on taxes is an income stream! There are many legal ways to reduce your taxes owed, whether through deductions, business expenses, or other expert methods. If you’re not regularly meeting with your CPA, start now. Maybe you have reached the level where your CPA is no longer helping you, and you’ve outgrown them. Investing in a CPA who specializes in high income business owners will pay back dividends when they implement these strategies. Rob has learned firsthand in the real estate sales industry how to take advantage of tax benefits most business owners don’t know about.

Control Your Own Personal Expenses

Another phrase seemingly lost to time with our elders is live within your values. Capitalism is so refined in 2023. Every screen you turn to sings a siren song to you. Buy this, it’ll make you happier. You deserve it. When you have climbed the income ladder to the point where you can actually afford those things, it’s easy to give in. Living within your values is another income stream. If your truck is still running great at 150,000 miles, it will probably still run great at 200,000 miles. Trade secret: you’re happier with a vehicle when it’s paid off! This goes for appliances and mortgages, too!

The End Goal of Earning Active Income: Surplus Cash To Invest

Act 1 of winning the money game may be the hardest. Earning active income from a W2 or business owner wages may not yield enough on it’s own. If that is the case, you must explore your tax advantages and tighten your spending belt. You won’t regret the dividends you earn years down the line if you invest the surplus cash it generates.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the ATL Inner Circle Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Sign up today!

Jan, 2023

Bathtub Analogy – Income Streams Ideas For Business Owners

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Rob paints a picture of a bathtub for our group members. The faucet has several income streams ideas coming from it. Rob lays out several examples of passive and active income. The “nest egg” plan of the IRA isn’t the best retirement investment plan. If you combine regular passive income and other investment strategies, along with your 401k, then you have a solid plan.

Income Analogy – Passive and Active Income Streams

Once the attendees draw up the bathtub running the income streams, Rob has them make blanks below with “active income” and “expenses” headings. He then lays out several categories of income sources by how they are taxed. W2, rental, capital gains are all different examples.

Active Income

Rob starts the discussion on active income by clarifying that the term could have different meanings to different real estate investors. To him, active income streams are defined by investing more than ten hours per month into them.

Active income streams obviously include conventional 9-5 jobs taxed with a W2 tax form. If you invest in rental properties, and do not employ a property manager, this investment is likely qualified as active income.

Passive Income Streams

In Rob’s businesses, spending less than ten hours per month on an investment qualifies it as passive income. For example, you could buy a plot of land, do nothing with it for over a year, then sell it. Whatever profit you make is passive income, since you put no work into clearing the land or building a property.

Passive Residual Income

Finally, Rob details passive residual income. He provides the example of investing in a single family home or apartment complex. The owner may not spend much time on maintaining the property, but it is a consistent, passive source of income.

Passive Residual Income Streams For Retirement

Rob goes on discuss passive residual income streams as part of a retirement strategy. Most of us contribute to an IRA account for our retirement plan. Ideally, you sock away enough money to live off of during your golden years, drawing a necessary amount each month.

He does not subscribe to this “nest egg” theory. The passive residual income streams of his properties, as well as interest from his retirement investments pile up to cover his living expenses. In the end, the main goal is passive income streaming in each month to provide security when he can’t, or just doesn’t wish to, work full time hours anymore.

Lastly, Rob provides the example of a business owner who owns a successful laundromat. It does much more business than its competitors. Rather than using the extra cash to educate himself and create passive income streams, he just spends it on a more lavish lifestyle. When he feels ready to quit, he sells the laundromat, and has a bag of money to retire on. This may or may not suffice to maintain the lifestyle he is used to. Without the passive residual income to supplement the money from the sale, his future is uncertain. He could outlast the nest egg and be a burden on his loved ones.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!