Jesse Meijers

How do they do it? Those people who have tons of money, yet seem to be working hardly if at all. Their secret is that they have found a source of automatic income. Money flowing in, without spending as much as a minute on making it. But, how is that possible? Surely there is no such thing as getting rich while doing nothing? Think again. And you can do it too.

Normal income

If you are like most other people in the world, you earn normal income. Whether you’re a small-business owner, CEO of a big corporation or an employee at the local supermarket, basically you work for money. You have some sort of hourly rate that you receive and if you stop working, the money stops flowing in.

So the typical person making a normal income goes to work in the morning, works for 8 hours and then drives home. The 8 hours of work equal 8 times the hourly rate in income. So if you earn $25,- per hour, you have made $200,-. But you don’t make money in the evening by sitting on the couch, while watching your favorite TV series or playing a board game with friends.

This type of normal income, I call linear income. It is linear because in order to earn twice as much, you need to work twice the time.

Are you rich?

Mind you that my definition of rich is probably not the same as yours. You see, you probably think that being rich means having a lot of money. Well, I don’t. That’s right, I don’t think that being rich means having a lot of money.

Let me explain by means of an example. Imagine a poor person. Let’s take your definition of a poor person first, and I will explain my definition later. This poor person wears raggy clothes, has scruffy hair, hasn’t got much to eat, and is begging for an income. Now imagine that this person has just found a winning lottery ticket, by going through some persons garbage, of $10.000.000,-. He goes to cash in the cheque. He  still can’t believe it … he’s RICH!

So the poor person buys a house. And a car. I mean, why not, there’s plenty to go around, he’s RICHafter all isn’t he? So now our poor person looks and acts like a rich person. Dining in the finest restaurants, wearing the nicest clothes money can afford. This person is definitely rich, I hear you thinking: Jesse must be stupid, how in the world can this person be poor?

But after a couple of months, or maybe even years, the money starts to run out. The house however, still costs money in insurance. The electricity, water and gas for the car still need to be paid. But there is no more money. Well, wait, what if our poor person was smart and had gotten a job to cover for these costs? Sure, then the inevitable would maybe have been postponed a little bit. A year, maybe two. But ultimately this person is poor because of the way he acts, not because he has a lot of money.

This brings us to my definition of a poor person. My definition of poor people includes CEOs of big companies, almost all small-business owners, dentists, lawyers, attorneys, doctors, surgeons. You name a person in your direct surroundings who you thought was rich, and there is a larger than 90% chance that I think he’s POOR.

These people you call rich, I call poor because, and this is extremely important: their income is linear and their spending habits match their income. Remember that these people need to also work twice the number of hours in order to make twice the money. Most importantly, if they stop working, their stream of income dries up. And the second part is equally important; these people tend to spend as much money as they earn. If they earn more, they spend more.

So, poor people can be identified by:

1. Having linear income only
2. Spending everything (or more!) than they earn

Rich people on the other hand can be identified by:

1. Having residual income (we’ll talk about this in a second)
2. Spending less than they earn

Residual income (rich people ONLY!)

This is the type of income that only rich people have. If you are reading this, and wondering whether you can make residual income, don’t worry. You can. Anyone can. You just need to know how residual income works, and what the right types of residual income are. These are the so-called secrets of the rich. And to be quite honest, they’re not all that secret.

So, if linear income is income that is related to how many hours you spend working, then residual incomeis income that is generated regardless of how many hours you put in. Again, the difference is best served by an example.

Imagine a quaint little village. Let’s call it Nothingborough. It is a small village, where about 1000 people live. The people who live there have always been almost self-sustained. But in recent years, due to climate changes, the water supply especially, is becoming hard. So the village decides to issue a contract to deliver fresh drinking water to the town.

After a screening of different people being interested in the contract, the mayor of the village decides to give the contract to two people. He hopes that some competition will arise, which will keep the price for water at a fair level. The contract is given to Bill and Jack.

Bill immediately runs to the hardware store, buys two buckets and starts hauling water from the nearby lake to the village water reservoir. Hour on hour he works, bringing in fresh drinking water. The contract pays per liter of drinking water and thus Bill works long hours to make as much as he can. Jack, in the meantime, has disappeared. No one has seen or heard from him. This suits Bill, because that means there is no competition, and he can make more money.

After a couple of months, Jack returns. He brings with him a construction company with a fantastic engineer. The construction company starts to work on a pipeline from the lake to the water reservoir. After two months of labor the work is done and the first liters of fresh drinking water start to flow through the pipeline.

Jack announces to the village that he will charge 25% of the price that Bill charges per liter. Immediately Bill runs to the hardware store and buys two more buckets. He gets Will and Jill, his nephew and niece, to join his little business. Now they haul in water even faster. Bill lowers his prices with 75%, to match Jack’s price.

But people have been complaining about the quality of Bill’s drinking water. It is not always very fresh. So Bill decides to buy lids to put on the buckets while moving them. He makes longer days, anything to match Jack’s price and service.

Meanwhile Jack has figured that if Nothingborough needs fresh drinking water, there are probably other villages that also need fresh drinking water. He sets out to find other villages with the same problem. In the meantime, the money keeps flowing in. Bill, on the other hand, cannot leave the village for even a day without the money stopping to flow in.

This is the main difference between linear and residual income. I sometimes call residual income walk away income, because you can walk away from it, but it still flows in.

Multiple streams of income

In our example, Jack has set out to create multiple streams of income. He has figured that instead of depending on one village to provide his stream of residual income, he will create many streams of residual income. This is where residual income shines. It frees your hands to find other sources of residual income. Isn’t that great?

So what are streams of residual income that you can get in to? Well, there are plenty, and here is a short list of options. There is an option for every kind of person, it doesn’t matter whether you’re a dentist or a cleaner or a CEO of a big company. Residual income is open for all:

1. Stocks, bonds
2. Rental income from real-estate
3. Licence income from intellectual property you own
4. Royalties on a book or music that you own

The list goes on and on. I will go into detail on these in other posts, but right now I want to make clear that residual income is the way to be rich. It isn’t about how much you have, but how much comes in without you having to work for it that defines how rich you are.

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