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Episode 40: 8 Streams of Income with Phillip Ramsey and Bryan Dewhurst
570 Plays6 years ago
When most people think of income, they stop at earned income – the money you make in a paycheck from a job. We want people to think way beyond that in order to pay off debt, put a reserve of savings aside, and get your money to really work for you.
In our latest episode, we outline 8 unique streams of income. Big companies like Apple are earning money every minute. That might be a mind-bender but think about payday in your home. Does that happen once a month? Twice?
Imagine bringing money into your household every week. It has been said that an extra $500-$1000 a month would make an enormous difference for most families. It would truly be game-changing.
Listen in as we help you explore ways of doing just that.
what you will learn in this episode:- 7 ways beyond your paycheck that you can create streams of income
- The difference between passive and residual income
- How to create streams of income while you still have a day job
- How to leverage your money to create streams of income now instead of waiting for retirement
- Why you should look for ways to create streams of income based on your interests
- How to create scale on different streams of income
- How to think about ways you could gain income on weeks when you don’t get a paycheck
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Transcript
Introduction to Living an Uncommon Life
00:00:02
Speaker
Everyone dreams about living an uncommon life, but how we define that dream is very different for each of us. And for most, it's a lifelong pursuit. Welcome to the Uncommon Life Project podcast. We're going to introduce you to people who are living that life or enjoying the journey to get there. We're going to also give you some tools, tricks, and tips for starting or accelerating your own efforts to live an uncommon life.
00:00:27
Speaker
A life worth celebrating and savoring.
Meet the Hosts: Philip Ramsey and Brian Dewhurst
00:00:30
Speaker
Please welcome your hosts, Brian Dewhurst and Philip Ramsey. Hello and welcome everybody to another episode of The Uncommon Life Project. I'm your host, Philip Ramsey. And I am Brian Dewhurst. Thanks for tuning in to yet another episode of The Uncommon Life where we give you tips and tricks to try to figure out how you can get on this uncommon life for yourself.
Exploring Various Income Sources
00:00:52
Speaker
This one is a duo cast with Brian and myself. Today we are talking about income sources, I should say. Income streams and income sources. We're going to weave it together and I am jacked up. Nice. So first.
00:01:09
Speaker
This is a public service. You got to do a review. We love to read. All right. And I think this may be Phillip's mom or dad. So shame was plugged, but they're one of our biggest supporters. So, but I thought this review was timely for our podcast today.
00:01:23
Speaker
And again, I apologize. My pop filter is off my mic, so I might be a little pop, pop, pop, pop today. All right. Thank you for giving control back to people in an industry trying to take away control from the average person. And when you talk about residual income, you talk about multiple income streams.
00:01:43
Speaker
That is what we're trying to give people control back with their money. Stop giving your money to other people unless you really know the purpose of what you're doing and why you're doing it. So thank you for that awesome review. Let's jump into it.
Eight Types of Income Streams
00:01:58
Speaker
Okay. So the whole premise of this is the eight income streams, which is different than seven in like residual income sources. So there's that.
00:02:06
Speaker
So let's just go through each, like let's just name them off so you kind of understand where we're going with this. And then we're going to dive in on each one of them and kind of tie them to the seven sources. All right, the first one is earned income. The second one is interest income. The third one is dividends. The fourth is capital gains income.
00:02:29
Speaker
The fifth is profit income and then residual income and then royalty income. And we're doing this because Brian saw something off of Pinterest or... It was Pinterest. It is my favorite social media outlet. Really? Interesting. There is so many social media outlets, I feel completely like left behind, but whatever. All right, so let's jump into it because I need to start our timer.
00:02:56
Speaker
I'm going to say 23 minutes. We're probably two minutes into it. Can we get it done? Challenge starts now. I give you 24. Oh, and we totally forgot. Sorry. That was seven rental income. Oh, great. All right. When do you want? That's a good one. That's a huge one actually. Yeah, it's huge. So I apologize. We're trying to get this synced up. So there are eight and the last one's rental income. Okay. Let's go. All right.
Four Steps to Building Wealth
00:03:20
Speaker
So we wanted to set these up in the way that we're trying to present them with the seven sources of residual income and in the context of our four-step process to building wealth, which is budgeting, trying to get a monthly profit, taking that profit and going into savings. Then you're going to save to get your emergency fund. And then once you have your emergency fund stuffed, then you're going to start investing
00:03:42
Speaker
trying to get residual income to cover your monthly expenses or your monthly net as we call it and then achieving thus time freedom or financial freedom.
Interest Income and Dividends Explained
00:03:51
Speaker
Those are the four steps. So earned income, this is kind of where you start as you kind of get out of like financial
00:03:58
Speaker
dependency from your parents, you start getting a job and you earn income. Also, if you own a business like Philip and I pay ourselves a salary, that's earned income. So earned income is W2 wages or 1099 income if you're like a contractor or consultant, is how you make money. So that's the primary one we all know. And then I think from there, what we're talking about with this podcast and our website and everything we're doing,
00:04:27
Speaker
is then what do you do? Got that nailed. Then how do I make money on my money?
00:04:32
Speaker
Yep, that's where we're gonna go. So in that, you're earning income, we're telling you, you need to have a budget and then you're gonna spend less than you make so that at the end of that month from earning income, you have a profit. You're gonna take that profit and put it into savings. Savings is different from investing. Savings doesn't have principal risk of your money, meaning you can't lose it from a volatility. You're not investing it in something that can go up or down, you're saving it.
00:05:00
Speaker
So, savings typically historically has generated what we call interest income, where the bank pays you interest on your deposits. That no longer is that simple. And so bonds, also, if you look at investing, bonds pay interest.
00:05:17
Speaker
It's a little bit different than dividends. But for the most part, for what we're talking about today, we want you to think interest in terms of savings and getting money on your savings.
Capital Gains from Stocks and Real Estate
00:05:30
Speaker
That's where our strategy, uncommon banking comes in with life insurance. They actually do call those dividends, so that confuses things. But from our standpoint, interest income is the money you earn on the money you have in savings, which is kind of like your emergency fund.
00:05:47
Speaker
From there, now we're saying in our situation, you have your emergency fund funded and you're starting to invest. Well, one of the best ways to invest and earn income off of the stock market historically has been dividends. Dividends are paid as a portion of profits from a profitable company. And so a life insurance contract that is mutually owned can pay dividends and that dividend is a profit
00:06:15
Speaker
from a private business. And so vice versa, you know, if a stock pays a dividend, like I think Microsoft pays a dividend, Apple now pays a dividend, I think it's like 1.8% or something like that. Those are dividends.
00:06:30
Speaker
And that is- But you're not gonna be getting dividends unless you own something. Let's be really clear. And I would say too, we're talking about getting dividends and residual income in the context of like an after-tax account, not like an IRA or a Roth IRA, because if you're not 60 years old, you can't really take that money as income. So looking at it kind of in the distinction of if you wanna retire pre-60, you gotta invest in those types of things outside of your retirement plan.
Rental Income vs. Stock Dividends
00:07:01
Speaker
So, the next one is capital gains, and this is where it dovetails. So, the first source of residual income is banking or earning money on your savings. That's the interest income one. The second one is real estate, and so this one has two forms of income.
00:07:18
Speaker
If you watch these home shows or whatever, like the flipping one, the next one is capital gains. That's where you're getting a profit from buying and selling. If you buy a house for $70,000 and you put $40,000 into it, so now you're in at $110,000 and you can sell it for $150,000 and you make that $40,000 gain, that's a capital gain.
00:07:43
Speaker
Vice versa, you can get that in the stock market as well. If you buy a stock at $10 a share in yourself, $20 a share, that's a capital gain. And again, that's in an after tax account, or now money as we call it, not a retirement account, because in a retirement account, there are no real, I mean, you have cost basis and you can have gains and things like that, but you're not really, it's not counted as like a capital gain because it's all, if you take the money out, it's all earned income.
00:08:12
Speaker
You're not taxable on the gain in the years that you've gained it. Yep. So capital gain kind of goes both ways between real estate investments and the sale of the stock. Yep. I think it'd be good to go to rental income. Yeah. So this is the one where I think we spend more of our time where you're doing a rental property, you put the down payment down, you got a renter in there and they're paying you rental income on a monthly basis.
00:08:39
Speaker
And so one of the other things I kind of wanted to weave into this, maybe this is too much, but if you think about Apple, the company, they make money every second. And so one of the things we kind of tell people is the faster your income comes in from all these multiple sources, the less risk you have because the more cashflow you have and just makes things safer. And so if you think about Apple,
00:09:01
Speaker
in their app store and all that or their iTunes, someone is buying something from Apple in every corner of the world at every second. And so as you look at these eight income streams that we're covering today, and as it relates to the seven income sources, or the seven sources of residual income, how can you structure these to get paid faster or more often, as opposed to getting paid like once a month from earning income at a job?
00:09:25
Speaker
And so typically, interest income, you know, pays you monthly at the bank, they used to at least. Dividends, a lot of stocks and stuff pay you quarterly. A lot of new ETFs and stuff are paying monthly to attract kind of older investors and people that want to get paid on a monthly basis, which I think is neat. And capital gains, like, you know, if you bought a stock or you flipped a house, I mean, you could conceivably do that, you know, year round. So that type of income could happen often.
00:09:52
Speaker
Then rental income, let's get back to that, most people pay their rent on a monthly basis. Philip, you've been exploring Airbnb and having people stay basically based on days and you could get paid theoretically almost every day of the year through Airbnb and that type of rental income.
00:10:12
Speaker
Uh, and so yeah, rental income, um, that's kind of the advantage of having multiple units and multiple, multiple properties. You have multiple people paying you monthly, um, further reducing your
Profit from Sales and Residual Income
00:10:22
Speaker
risk. So that's kind of that one specific to real estate, which is the reason why I think that, yeah, we really like real estate. And the reason why is because it tends to, and there's obviously,
00:10:34
Speaker
reasons why it doesn't but the tends to provide more of an income that if you put your money in the market and getting dividends that's a different risk profile but the other day it seems like one could get more income from a rental portfolio than they could get from a portfolio in the market if they have the exact same number they're investing.
00:10:52
Speaker
You could also leverage with the bank. Now, obviously, we want to do that tactfully and safely for your risk tolerance, but you can normally get more of an income stream, more income from a rental property. Now, granted, there are risks involved. Yeah. And you just typically, unless you're in Vegas or the coast or Miami, you don't have as much price fluctuation
00:11:17
Speaker
in real estate as you can in the stock market. And so that's kind of the downside of the stock market. You can leverage into the stock market, get dividend income, same principle as real estate. The difference is the value of your underlying principle can go up or down on a daily basis and you can get that one called. Okay. So next one is kind of like capital gains and it's profit income.
00:11:39
Speaker
Yeah, this list, and I've seen a couple lists like this and that's what I wanted to cover. I thought it was really synergistic with what we're talking about, but they broke out profit income, which is just the profit from buying and selling. That to me is capital gains, but I think it's in the context of like, if you're
00:11:57
Speaker
You know we got a guy who he likes buying vacuum cleaners off of you know like craigslist or facebook swap all that stuff he only buys like two brands and help buy them very cheap because people are done with them and he knows how to fix them and then he will resell them at you know four to five times the price that he's paying for them.
00:12:17
Speaker
That to me is more like profit income. You're probably not disclosing that in your tax return. These are types of things like if you're doing that with, you know, you're fixing up cars and you're selling them for more than you paid for them. That type of stuff. I think profit income and capital gains are pretty similar. I think it's just the scale and the instrument with which you're buying and selling. Totally. That's kind of how we're breaking that out.
00:12:40
Speaker
These eight income streams doesn't necessarily constitute a different place on your tax return when you file them. Right. They're only really going into three or four. And we don't, we're not tax guys, so caveat that, asterisk, insert disclaimer. But this is not tax advice.
00:12:59
Speaker
This is not tax advice yet. These eight income streams are different, I would say streams, but they don't go in different spaces on your tax return. Right.
Royalty Income and Diversifying Streams
00:13:09
Speaker
I think before they used to have more of a distinction on your tax return, but as a lot of these changes are taking place, the government
00:13:17
Speaker
is trying to get away from all these different nuances of income. So everything's just taxed at a higher rate, because they need our money. So that's the extent we're going to get into this from a tax perspective on this podcast, but wanted to caveat that. Good. Okay, so next one is residual, which is residual income when you continue to get paid after the work is done.
00:13:38
Speaker
Right. So we would lump this into kind of like owning a business. Like if you could own a business and then be on a beach and still get a portion of those profits, but you're not there. That's kind of the holy grail. And if you're looking at Robert Kiyosaki's type content and that type of thing, for our seven sources, that would be owning a business or kind of like this subscription model or affiliate income. You know, if you build up a following and you're getting paid based on people buying the stuff you're recommending, that type of thing.
00:14:09
Speaker
I think to some degree, network marketing is a function of earned income because you got to keep working it, but also can have a residual income effect to it as well. Yeah. The residual income always sounds great and we always push people for it, but man, you have to work hard before it gets to that residual area. And even when it's there, chances are you're not going to step away from it completely. Right.
00:14:36
Speaker
It takes work. I think we get residual income to an extent in our business, but we got to work it every day. We got to stay after and stay hungry and serve people. I think that's in any business. You'll get rental income can be considered residual income, but you got to maintain your properties. You got to collect the rents. You got to pay your taxes. You got to mow the lawns. All this stuff
00:14:58
Speaker
takes constant attention. And so I think this idea of like totally passive residual income really boils down to one or two sources. And that's this final one, and that's royalty income. That's kind of why we didn't lump royalty income in with residual income because it's its own category. And for us, royalty income in the seven sources has its own category, which is royalties. So this one is totally synergistic to ours.
00:15:25
Speaker
with royalty income and that's like books, music, e-courses, where you're producing a piece of content once and able to monetize it multiple, multiple times, inventions, patents, potentially trademarks, those types of things are all different forms of royalty income.
00:15:45
Speaker
So, those are the eight forms or the eight income streams, if you will, and then we with our kind of philosophy have laid out the seven sources of income and kind of how you would generate these. And so, I thought this was just a super cool way to kind of dovetail into what we've been talking about.
00:16:07
Speaker
And I think in terms of residual income, I want to go backwards or let's go to profit income, like buying and selling, like go back to the vacuum cleaner in the context. I would also say we got a client that sells appliances, buys and sells. It was really good at it. Yeah. And when you're in that context of buying and selling stuff, you could be theoretically doing that every day. Uh, so you could earn income, you know, all the time.
00:16:30
Speaker
And then in terms of residual income, you know, setting up a business or affiliate income, subscription model income, you could theoretically get paid on that every day. So again, kind of weave in this context of like Apple, how do you get paid more often, especially if you're in your day job? You know, we hear a lot of people in the statistics show that, you know, most Americans, if they got an extra $500 to $1,000 a month income, it would like substantially change their life.
00:16:55
Speaker
Well, these are the different ways. This is how you could go get this income. If you can get your budget in place, if you can save your emergency funding, you can put your money to work and your passions and your expertise to work. These are the different forms or different ways you can start generating that extra income. And so from royalty income, you could get paid on that every day. You know, I'm sure people like
00:17:17
Speaker
you know Madonna or you know Elvis Presley or you know the artist formerly known as Prince. I mean they were getting paid every day type thing. Not even Michael Jackson in there. Disappointing. I know your affinity for Michael.
00:17:33
Speaker
So yeah, and this is how we want to start structuring and talking with you and having you understand that there are so many different ways you can get paid and put your money and your expertise to work so that you're getting paid multiple different ways, multiple different streams. And there's different models and different sources to generate revenue.
Increase Income Frequency
00:17:54
Speaker
And that's why we're so excited. And that's why we wanted to start the podcast is just highlight
00:17:58
Speaker
all these different ways to get paid and think outside the box and really monetize what makes you passionate and common. Yeah, and I think just being purposeful with your earned income. If you are making income currently, trying to set up a plan that you can somehow use the profit either to
00:18:16
Speaker
profit each month in your monthly budget to either obviously have that emergency fund, but then investing it in sources that will happen to give you more income now versus later, it gives people a different sense of accomplishment that they go to their day job because it's doing something for them that they can see traction on and they know eventually
00:18:40
Speaker
whatever they put their money and will start to replace the job that they currently have usually faster than the proverbial fifty nine and a half the retirement number.
00:18:51
Speaker
And then they go to their work and know that every month when I get paid, it's a portion of that is going to this next thing that's helping me with streams of income. So, but it all kind of boils down to like, what are the seven sources do you want to start? What are you passionate about? Because something that I think Brian and I would say, and we've been saying it more, is people like, well, I want rental property income. Well, do you? Because it doesn't seem like any part of your
00:19:18
Speaker
past or history is real estate, and now you wanna jump into it. Like, let's really think through this if this is the wisest thing for you. Because we would say, not to just jump into something because you want the income, it's because you actually enjoy it. That's the difference. It's not just about the income, because if somebody makes money and they hate what they do, like, that doesn't help. Like, you're just jumping into things. Yeah. And I think one of the things we talk about too with people is like, don't diversify
00:19:46
Speaker
Having a stock and bond portfolio doesn't mean you're diversified. The adage is that the average millionaire has seven to eight different sources or streams of income. If you're passionate about real estate, and we've written several articles on our website about this, then go get four or five properties
00:20:06
Speaker
You know, everything is kind of about scale and in terms of this. And so, you know, we see people get like one property and it's like, well, I'm not making that much money and it was a ton of work. And it was like, yeah, it was some work upfront, but you're getting two to $300 a month and you're paying down the debt on your mortgage from somebody else and the house can appreciate. That's three different ways to make money.
00:20:29
Speaker
And you're not living there you're not doing that forty hours a week and i think if you look at the context of what you are trading forty hours a week fifty weeks of the year for putting your effort into some of the stuff on a smaller scale.
00:20:46
Speaker
But then getting that residual income or getting that rental income or giving that dividend income is like double down on that. Just go kind of all in on one of these strategies and get it to a point where it's paying you $1,000, $2,000, $3,000, $4,000 a month.
00:21:03
Speaker
and then pull your head up. Dabbling in all these different things isn't going to get you there. At the end of the road, you might have a majority of these income streams, but focus on one or two of these out of the gate to really get that monthly traction, get that other source of income coming in, and get that expertise in that. Then that's how you can actually make money a lot faster.
00:21:28
Speaker
Totally. So this is more of a weighty, I would say, conversation. So hopefully this gives you a couple ideas of what you can do and how you can make money in different streams that you can now earn income, interest, dividends, capital gains, profit, residual, rental income, royalty income. There's many ways, like Brian and I say, it's just trying to figure out which one's the best for you.
00:21:51
Speaker
And we just want to implore you that you can do it, right? Like you can figure out one that you get excited about, you and your wife, you and your spouse, that you can kind of start thinking more about that would get you to a point where, man, if I did this for the rest of my life, I wouldn't feel like I was working at all. That's a fun thing to think through.
00:22:13
Speaker
What other talk about it i think this is a huge one to help people just kind of scale their brain a little bit i think does tell well i think to the thing to go back to the point about apple getting paid every second i think that's lofty to a lot of people and you really challenge me of like you know it's great to say that but like how do our listeners practically achieve that right.
00:22:34
Speaker
And I think the thing to practically try to achieve as you're looking at residual income or the seven sources or time freedom, financial freedom, is getting paid weekly. I think rental income does a great job of getting you paid monthly. And that's a great place to start. But how can you then get paid every week? Because I think with our business, that was my goal of like,
00:23:01
Speaker
Every week, we get paid somehow. I don't care how it comes in, but we get paid every week in our business. That was a big challenge
Assess and Boost Your Income Frequency
00:23:11
Speaker
for us. And I think if we look back over the last 12 months, we have gotten paid every week. But it's just the start of that. If you're getting paid once a month from your employer, challenge yourself to get paid. How could I get paid every two weeks? I think a lot of people are getting paid twice a month. Right. So if you're getting paid twice a month,
00:23:30
Speaker
Like how could you get paid every week? Yeah. Yeah. So then the next thing is like, okay, I get paid twice a month. How can I get paid on one of the weeks that I don't get paid on my work? I think that's a fun thing to do. And it does scale people's head of like, Hmm, that's interesting to think through.
00:23:46
Speaker
Yeah. So yeah, I think just take inventory of where you're at between you and your spouse or in your family, or if it's just you, how often do you get paid? And then how could you step into the next frequency? So if you're monthly, twice a month, if you're twice a month, then weekly, if you're weekly, then daily, if you're daily, then hourly, hourly, then
00:24:05
Speaker
Every minute, you get it. So anyways, challenge yourself in that context and with these different eight streams and our seven sources. And again, that's where we want to help people with is think this way.
Conclusion and Call to Action
00:24:16
Speaker
So you can find us at www.uncommonwealth.com and you can schedule a free 15 minute call. But yeah, thanks for listening. I had a, this is one of my favorite topics.
00:24:27
Speaker
Yeah. So you've been listening to the Uncommon Life Project. Please rate and give us a review. We'll read it on our next show. And so you've been listening to the Uncommon Life Project. My name is Philip. And I'm Brian Dewhurst. Until next time, be in common. Thanks.
00:24:45
Speaker
That's all for this episode of The Uncommon Life Project, brought to you by Uncommon Wealth Partners. Be sure to visit uncommonwealth.com to learn more about our services. Don't miss an episode as we introduce you to inspiring people who are actively pursuing an uncommon life.