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Why Is The Euro Falling? Here Are Four Factors Driving The Currency’s Slide

The four factors written by Jessica Menton will probably help investors to make a reasonable decision in trading hedge funds.


The euro tumbled to a 12-year low against the U.S. dollar this week, and expectations for a hike in U.S. interest rates could push the euro down to parity against the dollar, a level not seen since 2002. Reuters/Heinz-Peter Bader

The euro is approaching parity with the U.S. dollar, something the world hasn’t seen since 2002. The eurozone’s official currency has tumbled 12 percent since the start of 2015, hitting a 12-year low of $1.0495 against the greenback Thursday.

Here are the four main factors driving the euro’s steep decline this week:

 1. The ECB’s QE Launch

The European Central Bank launched its massive quantitative easing program Monday. The effort will pump 1 trillion euros ($1.1 trillion) into Europe’s economy. That means 60 billion euros ($66.3 billion) will be injected each month over the next 18 months in an effort to restore the inflation rate to a targeted level of 2 percent and help boost economic growth in the troubled region. The ECB expects the bond-buying program to end in September 2016.

The QE will continue to have a significant effect on the euro as the ECB pumps more money into Europe’s economy, said Lennon Sweeting, corporate dealer at USForex Inc. By increasing the money supply, the ECB will weaken the euro against other major currencies. That will then help boost the continent’s exports and inflation. A cheaper euro can boost its economy by making it easier for it to sell goods to other countries.

The QE program includes buying government bonds in order to push down their yields. With interest rates at record lows, investors are looking to move cash overseas into places such as the United States, where they are likely to get a better return. As money flows out of Europe, the euro is depreciating.

2. Looming Rate Hikes From U.S. Fed

The divergence of global central bank monetary policies is also hurting the euro. At the same time that the ECB is taking steps that weaken the euro, the U.S. Federal Reserve is adhering to policies that boost the dollar. The Fed is considering tightening its monetary policy by raising interest rates in 2015. Speculation over the timing of the Fed’s action is adding to the volatility in the euro this week as the U.S. dollar continues to surge on the prospect of  higher rates.

There was a similar depreciation in the U.S. dollar when the Fed started its own QE program following the 2007-2009 financial crisis. During the first year of the Fed’s 17-month initial round of QE, which began in November 2008, the dollar declined 16 percent against the euro. The greenback remained weak up until the Fed’s asset-purchasing program ended in October. Since the Fed ended QE, the U.S. dollar has gained 20 percent against the euro.

Daily Exchange Rate (USD:EUR) Since October 2014 | FindTheData

3. ECB’s Record-Low Interest Rates 

A third factor economists attribute to the euro’s decline is Europe’s record-low interest rates. The ECB cut rates to a historic low of 0.05 percent in September as a way to fight the eurozone’s creeping deflation.

Daily Exchange Rate (EUR:USD) Since September 2014 | FindTheData

One of the main goals of the ECB’s policy is to encourage eurozone banks and lenders to make more funds available to business and household borrowers at lower interest rates, aiming to boost private spending by lifting investment and consumption. But because the ECB policy reduces eurozone interest rates compared with interest rates in the U.S., it also increases the relative attractiveness of holding higher-interest dollar-denominated debt as opposed to lower-interest euro-denominated debt, said Gary Burtless, senior fellow and labor economist for the Brookings Institution.

When market participants sell their euro-denominated assets in order to buy the now-more-attractive dollar-denominated assets they must buy U.S. dollars to complete the purchases, increasing the value of the dollar compared with the euro because the demand for dollars has increased compared with the demand for euros, Burtless explained.

This helps achieve a second goal of the ECB policy, which is to boost the demand for goods and services produced in the eurozone. The lower value of the euro helps European exporters become more competitive by making goods less expensive for overseas customers.

4. Greece Crisis Adds To Euro Volatility 

Eurozone finance ministers granted Greece’s government a four-month extension to the country’s bailout program last month amid its ongoing debt negotiations. But as Greece creeps back into the headlines, reigniting concerns about its possible exit from the eurozone, it adds more downward pressure on the euro.


Source: http://www.ibtimes.com/why-euro-falling-here-are-four-factors-driving-currencys-slide-1844334

Eating Well on a Small Budget

On very important aspect of success is understanding the idea of opportunity cost.
Opportunity cost refers to the opportunities you give up when you make a specific choice. For example, when you make a $10 purchase, your $10 is spent. Opportunity cost would be the other things you could have used your money on if you had not made that purchase. It doesn’t just refer to money – if you spend three and a half hours watching TV, the opportunity cost would be that those are three hours you can’t spend doing certain other things.

If you keep this in mind, you can focus your resources (time, money, etc.) on what you really want. By using your resources efficiently, you can cut out waste and use money that would have been wasted to meet your other needs, enhance your lifestyle, invest, or help other people.

efficient-food-successFood is an area where there are huge amounts of money wasted, and once you eat it, it’s gone. Other than the nutrients that are hopefully helping your health, it’s no longer benefiting you in the way that investments or something more lasting might. But at the same time, good food is one of the basic enjoyments of life. Especially if you are working a lot of hours and aren’t able to spend very much on comforts and luxuries of life, food is something that can really enhance your quality of life.

With that in mind, there are many techniques to get good and abundant food. One great thing to do is get a group of people with different techniques and resources, and each help the group in obtaining food. A group of reliable, creative people could do a lot!

If I were putting such a group together, here’s how it might look:

One or more people might be gardeners. Gardeners often have more vegetables than they can use. They also have very useful skills, so if other people in the group have yards or balconies, the gardeners can give good advice on how to start a garden or grow some plants in containers. Gardeners also often have extra plants or seeds to give away. Many cities rent inexpensive garden plots where people in apartments can have a garden. If you are working a lot of hours, you may not have time to do this, but with a group of people, each person would only need to put in a little bit of time.fruit-vegetables-success

One or more people might have berry bushes, or nut or fruit trees. Fruit trees often produce more fruit that can be used, which can be a problem if it rots on the lawn. Extra fruit could be contributed to the group, with group members picking the fruit from the trees or off the lawn.

restaurant-group-successOne or more people might work at a restaurant. Frequently restaurant workers are able to bring home free food, but they may not want to eat the same thing every day, so they would offer what they don’t need to someone in the group. Even better if they are a cook, because cooking skills could be something other people in the group could learn. They may also be able to get other free items, like bananas that aren’t perfect, but are still good enough for banana bread or people who don’t care what they look like. Another resource they may have is access to a membership card to a restaurant supply store where cases of meat, fish, and various other items can be bought at wholesale prices.

Someone else might be a grocery store or health food store employee. Especially with independent stores that are not part of large corporate chains, they may have a lot of items they would normally throw away at the end of the day, especially produce and dairy products, that can still be used before they spoil.

grocery-store-successMaybe a couple of people are excellent coupon-users. While not my favorite technique because the time involved would be more profitable for other things in a lot of circumstances (again, opportunity cost), many people seem to have efficient systems and can obtain large amounts of items at low cost or free. This is particularly true if there are grocery stores in your area that offer double value for coupons used. This is also a skill that can be learned by other people in the group if they are interested. If several people in the group are not couponers, but get newspapers that have coupons, they could give their coupon inserts to the couponer for his or her part.

One person might have a van or pickup truck. This would allow pickup of large items like cases of produce, meat, etc. It might also be helpful for anyone with a yard who wants to add fruit trees, berry bushes, or large garden plants. Sometimes people outside your group might offer free fruit if you come and pick it, in which case, you can use the pickup truck to haul it. At the end of farming season, once the machines have picked the crop, there are often large numbers of vegetables that were missed by the machines. Some farmers allow “gleaners” to come for free and take what they like. A farm near me had tens of thousands of pounds of potatoes left over. You might be able to take several people from your group and fill a pickup truck.

farmers-fruit-successThe farmers market is a good place to get vegetables. At the end of the day, sellers have to decide what to take home and what will not last until they can sell it again (but might be fine to eat within a few days). If you come when they are getting ready to load, you can often get reduced price or free items. However, you want to be open to what’s available and not give them a hard time. If you ask them for a price to take several cases, they are probably more likely to deal with you than if you want a low price on just a couple of things that have to be in perfect condition. Expect to pick through some bruised apples, etc. to make this kind of deal. You may want someone from the group who is good at negotiating to take this on.

Maybe you know someone with a Costco or Sam’s Club card who can get discount rates on things that everybody is interested in.

If you live in the city it might be a stretch (but it is possible) to find someone who raises chickens or bees and can provide eggs or honey.

bakery-bread-successMaybe one person is a bakery employer, or can be available to check local bakeries for discounted items at the end of the day. A bakery near me sells the best French bread in the city at $1 a loaf at the end of the day before closing. If you have a letter that you work for a charity, they will give you bags full of free bread.

You could also look in your area for surplus grocery stores, which have seriously discounted items. One person could check regularly for good deals.

Also consider people with good skills, like someone who knows how to can or dry food so whatever can’t be used right away can still be used in the future.
Or someone who has the time and ability to bake and can change your brownish bananas, eggs, and walnuts from your tree into banana bread, etc.

Personally, if it were me, I would also think about involving someone with excellent barbequeing skills so you can have great get-togethers with your group and enhance the flavor of what you’ve put together.

You might also want to discuss who has useful equipment or get some items at a second hand store. For example, if you have a lot of fresh fruit, maybe someone has a juicer.

money-changing-handsI would make this pretty informal, without a lot of money changing hands. You would need to coordinate somewhat so you don’t have people buying a lot of the same items that spoil quickly from different sources, etc. You might need to work out a few things along the way. You could certainly start with just a few people and grow from there so things are not too complex when you are getting started.

There are lots of resources when it comes to food, and finding creative people interested in working together this way can be a great opportunity for friendships and as a starting point for saving money in lots of other ways.

What other ideas do you have for finding low-cost food or working as a group to achieve your goals?


Obama Announces Major Immigration Overhaul

The overhauling of US immigration is a good news to both US citizens and immigrants. “According to the new plan, undocumented immigrants who came to the U.S. before Jan. 1, 2010, and who have lived in America for five or more years, can apply for work permits, if they don’t have a criminal record. About 4 million people would be affected by this part of the plan.” says COLIN DAILEDA of Mashable.com

Source: >>http://mashable.com/2014/11/20/obama-immigration-overhaul/<<


President Barack Obama announced a series of executive actions on Thursday night that will overhaul the United States’ immigration system.

The actions will protect millions of undocumented immigrants from deportation, allowing them to obtain permits to work in the United States, though they won’t be eligible for government health insurance.

In total, around five million undocumented immigrants—out of the nation’s estimated 11.2 million—will be directly affected by the president’s executive actions.

“Our tradition of welcoming immigrants from around the world has given us a tremendous advantage over other nations,” Obama said during his speech. “But today, our immigration system is broken, and everybody knows it.”

According to the new plan, undocumented immigrants who came to the U.S. before Jan. 1, 2010, and who have lived in America for five or more years, can apply for work permits, if they don’t have a criminal record. About 4 million people would be affected by this part of the plan.

Other undocumented immigrants can apply under the “Dreamers” program, which protects undocumented immigrants who came to the U.S. when they were younger than 16 and not yet 31 years when they applied to the program. Under the new plan, there is no upper age limit. However, the plan won’t extend to parents of “Dreamers.” White House officials said they had considered including parents of these younger immigrants but had decided there was no legal authority to do so.

“There has to be some legal limit to the actions that the president can take,” a senior administration official said on a conference call with reporters before the president’s speech on Thursday. “It’s a very difficult line to draw, but one that ultimately had to be drawn.”

Obama’s executive order doesn’t include the provision of healthcare for undocumented immigrants. And the plan doesn’t specifically address the much-debated issue of what will happen to hundreds of thousands of undocumented immigrant farm workers.

In recent weeks, Republicans have attacked Obama on the issue of immigration, saying he is acting beyond his presidential mandate. The president acknowledged those lawmakers, and responded with a simple message.

“Pass a bill,” Obama said. “I want to work with both parties to pass a more permanent legislative solution.”

Just as Republicans did not wait until the end of Obama’s speech to criticize it, protesters did not wait to start their rallies. Some, who seem to be in favor of Obama’s plan, led a “Yes we can” chant outside the White House.

Twitter conversation on immigration during the Obama speech went through the roof at 8 pm, and sustained well after the speech had ended. This heatmap released by Twitter’s government team shows the volume of conversation on Twitter around the speech.

The White House
You can read the White House’s fact sheet about the executive actions, below.

The White House

Source: >>http://mashable.com/2014/11/20/obama-immigration-overhaul/<<

Save Money Calling Abroad With VoIP

voip.immigrantsuccessonlineVoice over Internet Protocol (VoIP) is a way of sending communication over Internet Protocol (IP) networks like the internet.  VoIP calling uses these networks instead of traditional phone lines. This can cut the cost of international calling.

VoIP phone service providers like Skype have their own closed networks.  This allows them to offer free calling to other people using their service through their network.  To do this they send sound signals (of the people on the call talking) through internet processesI. Many services allow video calling and text messages.

These networks allow the services to control more of the calling process, so they don’t have to pay to connect to traditional phone networks. This is especially true of long distance and international calls.  Because of this, their costs are lower than traditional phone companies and they can generally offer callers a better price than going through a traditional phone company.

If you live in the US, you can normally call anyone with a US phone number for free, even if they live in a different state. When calling outside the US to someone who doesn’t have internet calling, usually you can call their number and talk to them, but in that case you may have to pay for the service. This is usually handled by a monthly fee for unlimited calling or a specific number of minutes for a set rate, depending on the country you want to call.   There are a few countries other than the United States that do not allow VoIP calling, so your service may not offer service to that country in that case.

Service is available on desk top and laptop computers, some smart phones, and other specialized devices. All of these devices depend on internet service in order to work. What you see on your screen when you  use the service depends on the company you use, but in many cases you will be able to see an accurate account of the number of minutes you have used.  This can be a big advantage over using international phone cards.  If you have a computer at home or a smart phone, you might save time buying phone cards as well, since you can just call using your device.

Typically you would sign up online with a VoIP service.   At that time you would provide your payment information and select from the calling plans offered.  Sometimes there are plan differences depending on whether you are calling people with cell (mobile) phones or landlines (the type of phone that plugs into the wall).  If you plan to call your family in another country, keep in mind what kind of telephone they have.  Once you sign up for your plan, you can usually use the service right away.  If you sign up for a certain number of minutes at a set price per month, it’s good to check into what happens to any unused minutes at the end of the month.  Skype, for example, saves your minutes so you can use them at a later time..

One thing to keep in mind is that it’s good to also have a phone in your house that you can use if there is a power outage or no internet service.  In the US, in most places dialing 9-1-1 will connect regular phones to emergency service for police, fire department, or ambulance. Behind the scenes there is a network in place with information about your location. This allows your call to go through to the emergency help for YOUR city.   If you are unable to speak or have a hard time communicating, normally your address can be determined through this network and help will come to you.  With VoIP service, you are not connected to the emergency network, and if you are using it on a computer, you might have to start your computer and internet before you can make an emergency call.  For this reason, it’s best to also have a regular phone for emergencies.

Depending on the country you are calling, you can save a lot of money over time by using a VoIP service.  More to come soon on this website about different service providers.


Go to College for Free: Tuition Free Colleges & Universites

Did you know that there are colleges and universities in the United States that are tuition-free?  Check out this article from worksavelive.com

With college costs sky-rocketing over the past decade and outpacing inflation faster than most industries in the country, it’s hard to imagine that you can actually go to college for free! A few of these schools offer free tuition without any strings attached, however many of them require students to work a part-time job throughout their 4-year education.

See on worksavelive.com

Computer Skills Lead to Success

computer skills leads immigrant to succsess.As a new immigrant to the United States, there are many things to learn in order to manage everyday life. It can seem overwhelming. One helpful strategy is to identify and invest your time in key skills that can improve several areas of your life. Good English skills can help take many of your other skills to a new level. You can effectively communicate your knowledge, as well as more easily access information in your new environment. Computer skills are area worth pursuing. If you plan to work for someone else, familiarity with computers can help in several ways. Many jobs require basic computer experience. What does this include?

  • Knowledge of the names of the parts of the computer (Example: mouse, keyboard, monitor, etc.)
  • Knowing how to use Microsoft Office Applications, such as Word, Excel, Powerpoint and Access
  • Being able to create, edit, delete and move documents
  • Ability to find documents saved in file folders or directories
  • Ability to use storage devices such as USB flash-drives, CD’s and DVD’s
  • Ability to use the internet using the web browsers like Internet Explorer, Firefox or Chrome
  • Knowing how to use email (Example: G-mail or Yahoo mail)
  • Knowing how to use the search engines like google.com, yahoo.com, or ask.com to find websites
  • Knowing how to use the social media websites (is an advantage if you plan to build your own business)

If you have your own business, or would like to, computer know-how offers several advantages. If your business is internet-based, it can be open 24 hours a day, seven days a week. Internet businesses allow you to work from home and avoid expensive office or shop space. Additionally, the internet provides the opportunity to reach customers virtually anywhere – not just where you are live. With an internet-based business, you may be able to travel for extended periods of time, including visiting your home country, while still keeping your business running using a laptop. Even if you have a more traditional business, a website can be useful for advertising. Social media like Facebook can also be used. Computers can also be used to automate tasks such as paying bills or doing taxes. Computers and the internet can also help you in your personal life. For example, the internet can help you easily network with other people. This can help you find a job or a place to live, share knowledge or easily connect with people who have skills that complement your own. (For example, technical website building skills if your skills are more business oriented.) This can help you move ahead quickly with your goals without needing to learn every skill yourself. If you are outside of the U.S. and plan to move here, social media sites such as LinkedIn and Facebook may help you connect to others with a similar background in your new city, even before you leave home. Youtube.com offers a vast array of online videos, including how-to’s pertaining to immigration and other helpful topics. There are also online services such as Skype that allow you to make free international phone calls. Monster.com and other websites can be helpful in finding jobs without going to a lot of business to ask for work. One final service worth mentioning is online translators. Using a translator such as Google Translator, you can type in text in one language and get an instant translation into another language. Google also has the capability to translate full websites so that you can easily look up almost any information in your original language even if it’s not English. All in all, computer skills are one of the most useful skills you can invest in.

Knowledge of the Names of the Parts of Computer

Knowing the names of the parts of computer is a requisite for your success in both having a new job or having your own business. Without this knowledge it is obviously difficult for you to work with computers. The illustration below will help you familiarize the names of the parts of computer:

system unit or cpu monitor desktop keyboard
System Unit Monitor Keyboard
computer mouse computer power cord usb flash drive
Mouse Power Cord USB Flashdrive
printer Headset pc speakers
Printer Headset PC Speakers

Your Public Library: A Shortcut to Success

pulic library is open for immigrantsOne of the great tools for advancement available in the United States is public libraries that are open to anyone.

Public libraries are located all over the United States. Because they are operated by local governments, not all libraries are the same. Most large cities have several libraries. Smaller cities and towns may have one library. If there’s no library in your town, you can try to find another nearby town. Usually if the library is in the county where you live you will be able to get a library card. You do not need to be a citizen.

Libraries offer a wide variety of books, magazines, and newspapers to read onsite, even if you don’t have a library card. Books can be borrowed for a specified time. You can find all sorts of books, including books on business ideas, finding a job, home repairs, tax information, cookbooks, health, family life, entertainment, college textbooks and many others. If you are looking for new skills, the library is a great place to start.

Libraries also provide reference books. Sometimes these can only be used at the library and can not be borrowed because many library patrons need to use them regularly. These may includes foreign language dictionaries.

One of the goals of libraries is to encourage young people to read, so most libraries have an extremely wide variety of children’s books and other educational materials like DVD’ s of educational programs, and CD’ s children can listen to.

Libraries often offer foreign language books and DVD’ s for kids and adults. They sometimes carry books for adults to practice reading basic English. Sometimes they carry ESL (English as a Second Language) tapes or CD’ s you can borrow. If your library does not carry the items you need, or if you want more of a variety of items in your native language, librarians can get you items from other libraries around the country or the world through the ILL (Inter-Library Loan) program. Libraries can also be a good source of free electronic ebooks you can borrow if you have an electronic reading device.

Because libraries are also a primary community gathering place, many events are held there, such as children’s programs, computer classes, free or low-cost entertainment, tutoring programs, tax preparation, and English classes.or practice groups. Frequently resume writing assistance or other help to find a job is offered.

If you are stuck trying to locate information you need, often your llocal reference librarian can point you in the right direction.

Libraries also have computers that can be used by people.who don’t have one at home.

Although libraries vary from place to place around the country, they are a fantastic resource for immigrants and their families. I encourage you to check yours out!

Getting Out of Debt – Why Every Penny Counts

I don’t recommend taking out loans with interest, including credit cards.
If you’re already involved in interest, here’s some important information about paying off your debt.

Every Penny Counts

Scott Bilker Scott Bilker is the founder of DebtSmart.com and author of the best-selling books, Talk Your Way Out of Credit Card DebtCredit Card and Debt Management, and How to be more Credit Card and Debt Smart. Receive the 5-Year Loan Spreadsheet when you subscribe to his email newsletter.

It sure does–especially when you’re paying back debt.

How many times have you walked out into the parking lot of a supermarket and spotted a penny on the ground? Plenty of times no doubt. You might bend over to pick one up if you see Lincoln staring at you, but for the most part you just keep walking by.

I mean, after all, with the cost of inflation over the years, what is a penny worth? It really isn’t worth that much as far as buying something tangible like a television, is it? What’s a penny going to add toward that purchase (besides one cent)?

I remember when, for a penny, you could get a gumball. My father can remember going to the movies for pennies. Now people leave their pennies at the counter of the convenience store to help the next person balance their transaction. And why? So they don’t have to get any pennies in their change! My point is that the penny doesn’t seem to have much value, but it certainly has value when you’re dealing with your loans.

When it comes to paying back your debt, a penny can mean a lot. Applying one extra cent to each payment can make a significant difference in how much you repay over time. Let’s walk through an example that clearly demonstrates exactly how valuable the penny can be.

The example loan is $10,000 at 18% and you’re making monthly payments of $150.
Question: How long does it take to repay this loan?

Answer: You can never repay that loan by making payments of $150 per month. No matter how many payments you make, you will always owe $10,000-forever! Why? The amount of monthly interest is exactly equal to how much you’re paying. That monthly interest fee is $150 ($10,000 x 0.18¸12). You’ll never owe any more than $10,000, but you’ll never be able to pay off the loan.

Next question: What happens if you add just one penny to that payment? Just one cent? That’s right, now the payment becomes a big $150.01. Now how long will it take to pay back that loan?

Answer: It takes 53 years, 10 months! Okay, that’s a lifetime for some people, or at least half a lifetime. Now, because of that one penny, instead of paying $150 for eternity, the loan is eventually paid off.

Okay, so you don’t want to be in debt for almost 54 years. What can you do?

You guessed it. Add another penny. So here’s the next question:
Question: How much do you save by making payments of $150.02?

Answer: It now takes exactly 50 years to pay back the loan! That extra penny knocked almost 4 years off the payback time of the loan. How much money did that extra penny save? Let’s see. The out-of-pocket cost of the first loan is $150.01 for 53 years, 10 months. That comes to a total repayment of $96,884.72 (the last payment is less than $150.01).

With the extra penny, payments of $150.02 for 50 years, it costs a total of $89,907.69. That’s a savings of $6,977.03! Quite a bit saved just for adding a single penny.

Think about this…by increasing the payment from $150.01 to $150.02, you are adding one cent for 50 years. Well, 50 years is 600 months (600 extra pennies) or an out-of-pocket increase of just $6 over the course of that time in order to save $6,977.03 in the end. Pretty neat-I think.

Okay, I hear the arguments mounting. “But Scott, that’s a crazy example, who’s really going to get a loan for 54 years?”

My answer is that many people are doing it right now! How? By making the minimum payment each month. If you charge $8,000 on a credit card at 19.8% APR (annual percentage rate) and continuously make the minimum payment, it takes 54 years to pay it back!

Remember, the bottom line is the more you can pay back, early on, the more you can save in the end. So the next time you see a penny laying in the road somewhere, you may want to think twice before passing it by.

This entry was posted in Credit Cards, Financial Planning, Free Content Library. Bookmark the permalink. Read more articles by Scott Bilker. (Also see articles by all authors and articles in all categories.)

Are You Building Passive Income?

What does success mean to you?

success-meaning-immigrantSuccess can mean a lot of things: a happy family, freedom to live life as you choose, a nice place to live, safety, good health, a job you like, and having the material things you want are some.

For me,  good people in my life, freedom, and being able to constantly learn and grow are pretty high on the list.  Having work I like is very important to me.  Material things come further down the list.  Having the basic material things are important, but having the latest and greatest of everything is very far down my list of priorities.

It’s hard to argue though, that having extra money put aside can help create more flexibility and opportunity to pursue whatever you consider to be success.  As author Marcus Arce writes, “Money is a tool we use to build a meaningful life – money empowers us to achieve our dreams.”

Trading time for money

trading-time-for-money-immigrant-successThe problem for a lot of us is that we trade our time for money.  We go to work and get paid by the hour, or on salary based more or less on how much we work.  This is okay, but it seems that a lot of us are always short on the time or money we need to achieve our goals.  And the amount of time we can work is limited.  At most, we can only work about 16 hours a day.  On top of that, at some point a lot of us end up spending money to try to “buy back” our time- for example buying microwave meals to save time because we work too much, when the non-microwave meals are considerably cheaper.  You can start to feel like you’re in an endless cycle and can’t get ahead.

Why passive income matters

passive-incomeFinancial experts tell us that to get out of this cycle, we should spend less than we earn and use the savings to buy assets that produce income.  For example, rental properties or stocks. You would save a percentage of all your income, and eventually, they tell us, you would use the money from your assets to replace your earnings from your work and be able to retire.

This income is called passive income, because it is not directly tied to the number of hours of work you do.  This also means that the income you can make is not tied to the number of hours you are physically able to work in a day.  It also means you can have more than one source of passive income active at the same time.

Although most people think of this as something that would give you more free time after you save all of the money and retire, in reality it can lead to more freedom and flexible income in the short term.  This is especially true if you work more than one job.

Some examples of assets that can make  you passive income are rental properties – or anything you can rent to other people, stocks, vending machines, a laundromat.  Many immigrants work in the US and buy homes back home that they can rent out for passive income.

Although financial experts think primarily in terms of buying assets that can bring passive income, another way to get these assets is to build them yourself.   For example, passive income can come from any business that your employees can do without your involvement. Finders’ fees and referral bonuses can also be relatively passive income, depending on how you go about it.  If you sell a product and get paid a commission based on the ongoing sales of those people who you helped get set up to sell with the same company, most of that income would  be passive.  Internet businesses also provide huge opportunities for passive income. More on that in an upcoming post.

Building passive income assets can take a lot of time and work up front, especially if you have to learn as you go.  However, once you have the knowledge, you can continue to duplicate the process, getting faster and faster.  Once the initial setup work is done, you just need to do minimal maintenance to keep what you have set up profitable. The rest of the time, your earnings from that project are almost like “free money”.  This money can free your time so that you can continue to build more passive income assets.

This passive income can greatly improve your quality of life, making you less dependent on a job, and allowing you to do things important to you, like going to college or traveling.

Regardless of whether you buy or build passive income assets, I encourage you to look at whether some of the money you earn or some of the time you spend working can be invested in passive income sources.