Thoughts From My Life

Advice from someone who does not know everything.

Category: Finance

Vehicle Bill of Sale

A few years back I was purchasing a vehicle for my wife. It was a good exercise in the process of buying a used car through a private sale. There a a number of issue to take care of and I developed my own little process. You can read about it in my article Negotiating a Private Sale on a Car.This article provides an example of a Bill of Sale or what I call a Purchase Agreement. You should always, always, always have one of these. It defines the actual agreement that you have come to with the seller. You will need it to insure and register your vehicle.Feel free to use this template. I am sick of not being able to find a decent one for free. I have underlined and italicized the sections you will want to fill in yourself. You can copy and paste it into a text editor or try downloading a template:

I would keep the overall sections there, but you can add criteria to each one as you see fit. There might be more or less conditions as well.

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Negotiating A Private Sale on a Car

I have learned a lot about negotiating and due diligence on a car when buying privately. This is from my own experiences and talking to other people that have purchased used vehicles and what they feel is important. If you don’t think you need to do any of these items, then feel free not to.I just whipped this article up from my recent experiences and I will continue to add to it over the next few weeks.

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The Wealth Ratio

This was a very useful metric I found a couple years ago. It tells you how “wealthy” you are. This is a bit of a biased look. Wealth by the wealth ratio, means how easily you can provide for yourself using passive and portfolio income and not have to work. If you don’t know what passive income is, read my article Passive Income – What Is It. Portfolio income is money you make from your stocks and mutual fund investments.

In a nutshell, passive income is money you earn without having to actively work for it (like a job).

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How To Analyze an Investment Property

When you are looking at properties it is often hard to decide what to look for. Establishing your own set of criteria is the best bet. No worries, its not set in stone. You can adjust them however you need as you learn more. But to determine if it is good or not you have to also know whats bad. You can do this by comparing to other ones that are bad.

When my wife and I were looking for our first house we had the following criteria:

  • It must have a suite for rental income
  • Seperate laundries (a demand from the wife)
  • Enough available parking
  • Suitable interior in both living spaces
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Passive Income – What Is It

If you have ever been to a finance seminar, “how to get rich” conference, or read a Rich Dad,Poor Dad book, you will have heard this term. “Passive Income” gets thrown around a lot and has become overrused in my opinion. Nonetheless, it is an idealistic concept that is important to know. It can change your outlook on how you make your money.

In A Nutshell

Passive income is money you make from rental property, corporation, or enterprise that you are not actively involved in. Sounds nice, doesn’t it.

Active income is the opposite. This is for most of us, our job. We have to be at work by 9, leave at 5, collect our paycheck, and do it again. If we don’t show up for work anymore, we don’t get paid anymore.

Portfolio income is the other option. These are investments or anything else you could put in an investment portfolio.

Finance Conferences and Workshops Keyword

All the books and seminars love this word. It is the ideal situation everyone would like to be in. Have all their money come from passive income. It is an achievable goal, believe me, but it takes a lot of work and for most people, having a mix of passive/active income is the most likely scenario.

Why You Should Want It?

A few reasons.

  1. Earn more money without having to do that much more work.If you work for an hourly wage, you have to work twice as hard to double your income. Passive income sources require work up front and maintenance work down the road, but they are rarely require twice the effort. If they do, get out of them.
  2. You become less dependent on your job.If you quit your job or get let go, you will still have some income to cover expenses. Softens the blow. If you want to take a leave of absence from your work, passive income can pay those monthly bills as well.
  3. Eventually, you can be free of needing a job.This is when you can have enough passive income to cover your expenses. This takes time, but people have done it.
  4. Investing time/money in passive income sources will generally give you more assets and a greater net worth. You can sell the source if you needed money in the future. It is kind of like putting money into a savings account.

Examples of Passive Income

Passive income can be a variety of sources. They aren’t all 100% passive. You will need to watch them and invest some time into them on occasion, but they aren’t a active job you are doing.

  • Royalties from copyrighted material (books,music,video,educational materials).
  • Rental income from real estate (this can be a job if you make it that way).
  • Royalties from patents and inventions.
  • Advertising from web site content.

I know. You can argue that some of these are jobs, but I can argue that some of them aren’t as well. The point I’m interested in, is that there are things out there that if you invest some time in them at the beginning, they will not require as much work later to continue paying you back.

Rental Example

My wife and I purchased an up/down duplex in Calgary. We don’t need a big house at this time, so we were interested in having a rental opportunity. We bought the house, fixed up whatever needed fixing, and then put an ad in the paper. Our renters pay us every month and we can put that money in the bank. We get a few tax-writeoffs for our house expenses and still have to pay tax on the rent money.

Now we still have to do work. Make sure the tenants are happy. When they leave, go repair anything thats needs fixing, pay for any advertising, be around to show the place to people looking, and the list goes on. There are a lot of responsibilities. But you know what, that is what they are. Reponsibilities. If you are responsible to make sure things are in order, then everything runs smoothly.

If I added up my time and how much we have made from it, it pays a way better hourly rate than my current job. I can go months without doing anything and then work a Saturday to do some minor repair and inspect things. I can also have someone else to look after the place when I’m gone for a month. I can’t do that with my normal job.

Other Examples

Royalties from books, patents, and music is a tough one. These require a lot of upfront work and some talent. They also will need some marketing after the fact, but once they get rolling, can provide royalty payments for years to come. It is these types of passive income that can really shoot your income up.

Advertising on web sites is another one that is very popular right now. This takes work though. It is what this website is about. Google Adsense and a lot of other ad programs will help you get ads on your page and pay you for it.

If you write an article two years ago and people still view it today, you still have a potential revenue source without having to do any upkeep on it. This still takes a lot of time to build the site and market it. There is the added flexibility of being able to maintain it anywhere there is an internet connection.