A mortgage refinance loan is any new loan incurred to pay off the original mortgage loan. Whenever there is low rate refinance advertisements, many home owners rush to these lenders to obtain refinancing. Usually, these refinance mortgages include some fees that are high sometimes. If a lender is not charging any fee, then there must be some other way the lender is making money. The mortgage refinance is a business and the mortgage broker has to make money. If low interest rates are available, should you refinance? Read further to find out.

Adjustable Mortgage Rates (ARM)

ARMs are affected by the federal rates. Specifically, the ARMs are affected by Treasury bill rates and federal rates. Why do people still go after ARMs? If your plan is to stay in your house for short term, then you can get low Adjustable rates which maybe lower than the fixed rates. Also, first time home buyers and people with average or poor credit typically do not qualify for fixed rates so that is why ARMs are popular. If you have an ARM, then refinancing can be very advantageous.

Fixed Rate Mortgages

For fixed rate mortgages, the drop in interest rates by the Federal government does not result in lower rates or money savings for fixed rates. For a fixed rate, the bond rates guide the fixed mortgage rates so the fluctuations in federal rates will not affect the fixed rate mortgages. If you can get the best interest rate for a fixed rate mortgage, then it is best to lock in your rate for a 30-year mortgage. At least you will not have to worry about the interest rate fluctuations.

Home Equity

These are affected by the federal interest rate so when interest rates are low, then it is a good idea to obtain a home equity loan.

Advantages

1. Money in Your Pockets: In many cases, the borrower receives cash that can be used to invest in higher returns.

2. Reduced Payments: Since the monthly interest rates are lower, the total payment is reduced provided you stay in that house longer.

3. More money to invest: Since your monthly amount is reduced, the extra money left over from the principal of every month can be invested in some other place for a better return.

4. Reduced amortization period: Since your total amount is reduced, you could pay more every month and reduce the term of your payment.

Disadvantages

1. Higher mortgage amount: If you opt for cash-out refinance (you get cash), the total loan amount will be more. Also, if you add the costs incurred in obtaining the refinance mortgage, your total mortgage amount could be higher.

2. Refinance cost: If you are paying a huge amount of fees to obtain the refinance loan, then that itself could add to the total mortgage payment. Always, add the loan fees to the refinance amount and this will give you the total. Now, determine whether the old mortgage or new refinance loan is better.

In conclusion – after weighing in all the advantages and disadvantage of a refinance loan, if you decide to refinance, then contact your current lender for a better rate or waive off some fees. Chances are you could get a better rate from your current lender and so you do not have to go through the trouble of researching refinance lenders. Remember it is always better to work out various options to reduce your payments and save some money. If cannot get a better payment plan, rate or fee waivers from you current lender, then start researching online for refinance mortgage brokers. The advantage of online mortgage broker is that you have many options - you can apply online and have the brokers contact you. The mortgage brokers who contact you already have some basic information about you and know that you may qualify for a loan, so you can be confident that your chances of approval for a refinance mortgage is higher.

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Most Debt Settlement (also known as Debt Reduction) companies follow a similar process in qualifying and enrolling their clients into the program. I will break this down into 5 steps:

1. Initial Contact: Many customers will find a list of “Debt Help” companies by typing phrases into search engines such as Credit Card Debt, Get out of Debt, or Debt Relief. The initial contact will be initiated by filling out a form or calling the company directly. This first call will give you the most clues on what kind of business you are dealing with. The most important thing to remember is that Debt Settlement does not work for everybody. If a Debt Consultant makes the program sound like everyone gets accepted, you do not want to go with that organization. The only way a company can successfully reduce your debt is if you are in a financial hardship. Basically, if you don’t need the help, the program will not work because the creditors will have no reason to lower your debt amounts. If you’re current on the bills you still might qualify for debt reduction but only if you are struggling to make the minimum payments. If a Debt Consultant neglects to ask about your state of affairs and pushes you to send in your credit card statements, hang up and call a firm that cares about your specific predicament. An ethical Debt Consultant representing a reputable firm will discuss all the aspects of Debt Settlement, both positive and negative. Remember If it sounds too good to be true, it is. If the initial phone conversation is going well and you have a general understanding of how Debt Settlement works, then it is time to have the company review your credit card/loan statements or a credit report.

2. Submission of Credit Report or Statements: If a company approves you without reviewing your statements, this is a bad sign. Reputable Debt Reduction services will want to review your statements or a credit report to do a comparative analysis. Having the company review your information is part of the approval process and in no way should commit you to anything. This part of the process is crucial because the specific creditors that you are indebted to historically settle at different amounts. The amount by which a creditor will reduce your debt will vary depending on the debt settlement company, financial hardship, creditor collection practices, and credit card delinquency. The job of the Debt Reduction Company is to take everything into account and give you the most accurate quote possible. If you speak with a Debt Relief company and this step is missing, I would not recommend taking the process any further.

3. Underwriting: The underwriting (also known as approval, qualification) process is designed to ensure that only qualified applicants are being approved for the program. This is an extremely important step to a reputable Debt Settlement firm because it’s a system intended to help ensure that approved applicants make the transition to satisfied clients with the highest rate of success possible. If a company is letting everyone in the door, chances are many of these clients are getting settlements rejected by their creditors because they are not qualified to have a Debt Reduction.

4. Approval: If you are approved for a Debt Settlement program the consultant will be able to tell you how much your monthly payment is and for roughly how long it will take for you to be debt free. In the field of Debt Settlement the successful programs are usually not more that 3-4 years in length. Every creditor has a window of opportunity when they are willing to accept settlements and the vast majority will be approved within 3 and 42 months. If a company says that they can reduce your debt by fifty percent and offers you a 5 year program, be cautious. In Debt Settlement the creditors will be paid off one at a time and the possibility of legal action from the creditor increases as the debt becomes more delinquent.

5. Agreement: If the approval is within range and you would like to move forward the next step is to look at the agreement. The agreement should clearly state your monthly payment and fee schedule. Make sure to read the entire document and write down any extra questions that come up. You should be able to cancel the Debt Settlement mid-program if needed, without being responsible for future monthly payments. Of course nobody enters a Debt Settlement Program intending to cancel 10 months down the road but if something unexpected happens to your income, you need to be able to sever the relationship. If you read the agreement and it seems the opposite of what your Debt Consultant explained to you, it is not a wise idea to sign up with that company.

Now that you have found the best company for your needs focus on your new monthly payment. If you ever can afford to pay above your minimum monthly, I highly recommend doing so. Remember, the goal is to pay off this debt as fast as possible. Stay in communication with the customer service department and refer communication from your creditors to the Debt Relief Company. Before you know it the debt will be showing $0 balances and you will be on the road to financial freedom. If you ever get discouraged in the program and the anticipated 2-3 years to pay off the debt, just remember the alternative of making minimum monthly payments or the financial position you were in before the program started.

Article Source: http://www.articlesbase.com/debt-consolidation-articles/choosing-the-right-debt-settlement-company-388767.html

About the Author:
Adam Jasa is the Founder of Select Debt Relief www.selectdebtrelief.com . He has years of experience working in the finance and real estate fields, most recently with the Freedom Financial Network in their Financial Consulting Department. He is an expert in the different options available to consumers with unmanageable debt burdens. His company, Select Debt Relief is a member of Debt Resolution Partners which currently manages over $900 million of consumer debt.

Of all the financial plans available for people dealing with overwhelming debt, debt consolidation is probably the most valuable and the least understood. In fact, you may already believe some of these common myths about debt consolidation. Find out the truth!

Myth #1 Debt consolidation is the same or similar to debt management, debt settlement, and bankruptcy.

Truth Debt consolidation is nothing like those other programs. In truth, it is not so much a “program” (you can even do it on your own, if you know enough) but more of a strategic approach.

In debt consolidation, you lump all of your debts together and repackage them. Debt settlement and debt management typically involve dealing with a company or counselor and the object is to reduce the amount you owe. Bankruptcy is a legal proceeding that involves a date with a judge.

Myth #2 Debt consolidation reduces your debt.

Truth No, it doesn’t. If you owe a total of $80,000 on several credit cards and loans and you consolidate that debt, you still owe $80,000.

Debt consolidation does not re-negotiate, settle, write off, or reduce any of your debt. What possible advantage is re-organizing your debt like that?

If you have a lot of loans at high interest rates, repackaging those higher-interest debts into one larger loan at a lower rate reduces your interest and the amount you have to pay. This means you can either pay less a month or (even better) pay the same amount but get the debt paid off sooner.

Myth #3 Debt consolidation will hurt my credit score.

Truth Done properly, debt consolidation will not impact your credit score or credit report negatively. In fact, debt consolidation may even improve your credit score! That’s because you’ll be paying off a bunch of smaller loans and any time a loan is paid in full, that helps your credit score.

Myth #4 Debt consolidation requires getting help from an outside agency or a lawyer.

Truth While there are companies that specialize in debt consolidation programs, you do not have to use them to consolidate your debt.

Of course, if you want to consolidate your debt on your own, you have to know a bit about how to do it and what the options are. But it can definitely be a do-it-yourself project for people good with money (or who are willing to learn enough to get good with money).

Debt consolidation is also not necessarily visible to outsiders. Your bank, the credit bureau, and other parties may not even be aware that you have consolidated debt.

Myth #5 Debt consolidation is something for financial losers and lightweights, not for people who know how to manage money.

Truth This is the most far-out myth about debt consolidation. Debt consolidation is a principle that is used in business and by the super-wealthy all of the time.  It is a way of organizing and structuring your debts in a way that is most advantageous to you.

Myth #6 Debt consolidation is just robbing Peter to pay Paul; you’re just getting more debt!

Truth Debt consolidation is indeed a way for you to pay off one debt by getting another debt. But not all debts are equal.

As an example, let’s say that you owe $10,000 and the loan is set up so that you have to pay 22% interest.  For example, let’s suppose that I go to my credit union and work out a deal to borrow $10,000 at 12% interest. While both debts are still in the amount of $10,000, the debt at 12% interest is a better deal for me. I won’t have to pay as much per month or, if I make the biggest payments I can, I can pay it off sooner.

Myth #7 Debt consolidation requires you to be a homeowner.

Truth There is a grain of truth to this, in that owning a home definitely offers an advantage to anyone who wants to consolidate debt. (It doesn’t matter if your home is paid for or not, but you do need some home equity.) However, you can consolidate debt without owning a home, too.

Myth #8 Debt consolidation will make it harder for me to get future loans.

Truth In most cases, it is unlikely that anyone but a forensic accountant could figure out that you consolidated your debt (unless you go through a debt consolidation companythat might leave a paper trail).

If you borrow money in one loan and then take out another, more advantageous loan to pay off the first one, you’re more likely to leave a paper trail of somebody who pays off debt responsibly. It is more likely to make you a desirable creditor.

Myth #9 People who consolidate debt just wind up digging themselves in deeper in debt!

Truth It is absolutely possible to consolidate your debt and then keep spending and get yourself in a big mess.  That’s why you need good information and a plan to pay off your existing debt, manage your finances now, and start planning for your financial future.

There is no reason that debt consolidation cannot work to get you out of debt for good, but you have to have a plan.

Myth #10 Debt consolidation will allow me to write off some of my debts and it will stop bill collectors from calling.

Truth Let’s take these one at a time.

Unlike bankruptcy, debt consolidation will not allow you to write off any of your debtnot a penny of it. Whatever you owed as a debt before debt consolidation is the amount you’ll owe after debt consolidation.

The advantage is just that you structure it in a more favorable loan. You do not get existing debts cancelled or decreased! Now it’s true you can work that out in other debt management solutions (debt settlement lets you reduce debt, bankruptcy will let you write some debt off) but they come at a very high price. Both of these approaches will have a negative impact on your credit score, will make it hard for you to get future loans, and stay on your record for quite a while. Bankruptcy, in particular, is an extreme solution that involves an actual court proceeding and a judge who has the authority to make certain decisions about your financial situation (including forcing you to sell some items to pay off debts).

Debt consolidation can only stop bill collectors indirectly. Here’s how: let’s say you have six debts and you’re getting calls all of the time. If you consolidate your six debts into one large debt consolidation loan at more favorable terms, you’ll pay off all of those debts. Bye-bye, bill collectors!

However, if you don’t pay off your new debt consolidaiton loan on time, the bill collectors will start calling again.

Article Source: http://www.articlesbase.com/finance-articles/do-you-believe-any-of-these-top-10-myths-about-debt-consolidation-412633.html

About the Author:
For thorough and objective information about debt consolidation options, click on   http://www.MyDebtConsolidationAnswers.com   .

And to pull it off, you have to start with a definite desire, a goal of how much money you’d like to earn. First, think of the amount you want, and then write it down. Second, read this financial goal daily until it becomes a burning desire.

The root meaning of the word desire is “of the father.” It is your Father’s pleasure to give you the keys to the kingdom, but you do have to ask for it.

You can even consider the word “ask” as an acronym. When you A.S.K., you ASK so that it will be given to you, you SEEK so that you will find, and you KNOCK so that the door will be opened.

The purpose of your life is to express yourself constructively, not destructively.

You will express yourself constructively by setting up clear financial goals for your life.

And you will express yourself destructively by default, by drifting. When you drift the law of entropy will put you into a position of scarcity, and it is out of desperation that you may do destructive things.

Setting up a financial goal is to make a choice. Out of the infinite possibilities, you are choosing what you want.

Deepak Chopra, who came to America as a poor medical doctor from India and who now makes 20 million dollars a year, made the sage comment that you would not have a desire if you did not have the means to fulfill it.

Of course, at first blush it does not look this way at all. Your desires do seem out of reach and you have no idea how to fulfill them.

However, when you do create a financial goal, your mind then becomes active in finding ways to fulfill it, and through a process of trial and error, you eventually find out what you need to do to move closer to fulfilling your desire.

Emma Curtis Hopkins, a great writer at the turn of the 18th century, once advised, “Sit down at a certain time every day and write down on paper what your ideas of good are. You will find that such a practice will pin your mind down to the truth, and you will demonstrate results.”

If your financial goals are not clear in your mind, you will simply drift along, moving into the future without any decision or definite purpose. Only clear and definite financial desires have a chance of showing up for you. Without them, you will simply become subject to the dominating personalities around you.

A vague desire to get rich is not enough to be prosperous. You have to have a definite figure in mind. Of course, you can always expand on this figure once you reach it, but you do have to start with a solid number.

The ways and the means for you will then become increasingly clear.

Figure out “how much” first before you work on “how.” This is how your journey to wealth will begin.

The vision of a “golden life” varies with each person. How essentially simple life is, and how we complicate it. Have you ever wondered how to make major changes in your life? Action assumes importance as you contemplate making changes. Most of what you have encountered in your life, so far, is the result of your beliefs. There are two great blessings in man’s life, thoughts and action. To change your life you must start by changing your habits of thought. “Impossible” and “can’t” must be removed from your thought processes. Science has proven that when you think you can do something that your mind will find a way to do it. Once the mind has found a way to accomplish what you desire, then action is required. Where there is action, there is life and creation. One of the turning points in your life will be when you discover the power of action, your power of action. Life has an amazing way of working out when you choose not to give up, but to harness your power of action.

Do you want to have a wildly successful business? For maximum effectiveness in life, love or business, it helps to have the right habits. Wisdom with the power of action is the true secret to wealth in life as an entrepreneur.

One of the laws of success is that the universe rewards those who take action. Action is the foundation of success. You are programming yourself for greatness and success when you take action on your goals and ideas. Acting on your goals will bring success into YOUR life. There can be no success without it.

Awaken your potential knowing that the power of action is within you. The power of action is just like dropping a stone into a pond. The ripples continue outward affecting everything around you. Education is great. Knowledge is great. Experience is great. Planning is great. Ideas are great. But the power of action is gigantic. Without it the rest is useless. You must take action to get what you want.

Dateline paying is a simple method of paying oldest bills first, based on the due date. The dateline tells you how far back in time your past due bills go. And yes, credit card debt should be treated just like any other past due bill. There are a few simple steps to this strategy that anyone can do.

1 – Make a list of all your past due bills and credit card debt. Use a report from your accounting program or a spreadsheet of some kind so you can sort them by due date. Be sure and put in a bill for more than the minimum payment for each credit card or line of credit.

Make the credit card bill for the amount you want to try to pay over the few weeks before the payment is actually due. For example, if your minimum payment is running at $400, put a bill in for $600.

2 – At the end of each business week, carve off 15% of the income to use to pay past due bills and debt. Use the remaining 85% to pay current operating expenses to keep the doors open, the lights on and the telephone ringing to get in more income.

Be sure and use some of the 85% for promoting your products and services to keep customers buying, and set a bit aside as a cushion to handle emergencies.

3 – Use the 15% to pay the debt by dateline – oldest bills first. Always use a portion of it to pay suppliers and part to pay credit card debt.

4 - Pay a bit against credit card debt each week using on-line paying.

Why? Because you stop the daily interest compounding on the amount that you paid. This can save you a lot of money in unnecessary interest charges over time. It also keeps you from being late on your payments and avoiding the late payment charges. In addition, it eliminates the scrambling to come up with a big chunk of cash to pay the credit debt on the week the statement says the payment is due.

5 – Pay past due bills from suppliers – oldest bill first. The only exception is a supplier who refuses to ship more product that you need in order to produce more income, or one who is threatening legal action. Those are dangerous situations that must be handled immediately.

6 – Work out how to raise your income so that you have an increasing amount of money to use to work this debt relief strategy.

Systematically working at paying both ends of the dateline, 15% to past due bills and 85% to current operating expenses, gradually moves the dateline forward to present time until you are current on your bills and out of debt.

You can easily see this dateline paying strategy working for you if you make a graph of the total debt you owe and plot the figure each week so you can see the amount of debt coming down. Not only does it help you confront the debt you created, it validates the actions you are taking to get that situation handled.

Sandra Simmons, President of Money Management Solutions has years of experience helping business owners and individuals manage their money to achieve financial freedom. Claim your FREE REPORT “7 Fatal Money Management Mistakes Business Owners Make”

Before we go any further lets define what a debt collector is?  A debt collector is anyone who regularly collects debts owed to others.  This may include attorneys or debt collection companies that collect debt regularly.
Debt collectors use a lot of tactics to get uncollected money from indebted individuals.  Some may be scare tactics or harassment.  But many may ask can debt collectors contact you?  Yes, debt collectors can contact you.  They can contact you by mail, in person, fax, telegram, or telephone.  But they must not harass you.  The collection companies also have to adhere to a strict federal code that states that the debtor can request by letter that the collection company not contact them anymore.  Once that is said the collection company cannot contact you anymore except as to inform you of some action.  After that they are only allow to contact your lawyer.  Please note that this kind of action does not make the debt go away.  You will still owe the debt.

What other practices are prohibited?

1. Harassment - debt collectors may not threaten with the use of violence, publish a list of consumers who refuse to pay their debts or use profane language and use the phone to annoy the debtor.

2. False statement - debt collectors can’t pretend to be something that they are not for example a attorney.  They may not imply that you are committing a crime, may not misquote your debt commitment, not indicate the legal forms are being sent when they are not and say that they are not sending legal forms to you when the form are legal in nature.

Debtor is protected by many laws that are meant to protect the public from collection companies that are not on the up and up.  It is just our task to know these laws and use them to our advantage when dealing with paying off debt.

Once you know what your assets are, and you know what your liabilities are, then you can calculate your Owner’s Equity. Then you can develop a financial plan to reduce your debt and achieve your financial goals.

Here is the Generally Accepted Accounting Principles (GAAP) accounting equation:

Assets = Liabilities + Owner’s Equity

Let’s start with the right side of the equation. First, you must calculate the amount of your outstanding liabilities. This means you write down in a list exactly how much you owe right now on your mortgage, credit cards, and any other bills or loans.

Next, let’s go back over to the left side of the equation where the assets are. Make a list of every asset you own. Examples would be your cars, home and cash you have in the bank. List all of your major assets.

Now we will determine your Owner’s Equity. Simply use this variation of the preceding equation to arrive at your present Owner’s Equity (how much you really own):

Assets - Liabilities = Owner’s Equity

If you want to increase your Owner’s Equity you must pay down your liabilities and avoid borrowing more money to buy more assets. Responsible saving, investing and proper paying down of your debts is crucial to your financial success.

Most experts agree that you need to allocate money every month for all these areas of your financial plan. It is not enough to just save some money in the bank. Because if you are carrying a credit card balance at the same time, you are losing all the benefits of the interest coming from your savings account.

Here is an example of a good financial plan:

1. Take the money that you are presently putting in your savings account every month or investing in other places and divide the total amount by 3.

Then,

2. Pay down your outstanding debts with one third of this money every month.

3. Take one third of this monthly allocation and simply place it in your savings account at your bank. This will be the pool of money you can use to balance out your monthly needs. As this money grows over time you can use it to finance your family’s future needs or apply it to the goals of your financial plan.

4. Use another one third of this money and buy 1-5 year Certificates of Deposit. It is best to save up enough money to buy a CD of $1000.00 every time you invest. A good rule of thumb is to buy one CD every three months to six months. Remember to keep enough cash in your checking and passbook savings for any emergency.

By adhering to these tips you will pay off your liabilities in a timely manner. When you invest in 1-5 year CDs you will be earning interest and compounding your money by purchasing more CDs at specific intervals.

The biggest roadblock to financial success is accumulating a large credit card debt and not paying it off as fast as possible.

It is also recommended that when you have enough money saved up in your regular savings account, you begin to accelerate your mortgage payments every month. Check with your mortgage lender to see if your mortgage allows you to pay more per month than your regular payment. If so, start to pay more every month on your mortgage than you are required to. You will build equity in your home faster, save on interest charges and retire the mortgage much sooner.

By using a proven financial strategy such as this one you can reduce your debt faster, and build wealth for your family quickly. The above steps are by no means the only way to build wealth. These principles are basic and necessary though. Your family can be on the way to a brighter financial future when you prioritize your spending, saving and investing habits. After all, it’s your money; why not put it to its best use!

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We are surrounded by abundance. Nature is lavish, even wasteful in its abundance. Anyone caring to look will find an abundance of love, joy, money, and health is readily available to everyone willing to accept them. If there is any lack in our lives it’s not because there is not enough, but rather, because we are limiting our intake. What we receive in life is controlled by the limits we place on our emotions, behaviors, thoughts and actions.

There are many factors involved in why it is so hard for us to open the valve controlling the flow of abundance in our lives. By the time we become aware of the fact that we create our own limits, the beliefs and habits we’ve developed that produce these limits are so ingrained they are very difficult to change.

Society also has its role to play. Since most of the world’s governments have become capitalistic societies, it’s in their best interest to promote conditions and belief systems that produce large numbers of have-nots. Simple economics tells us that in order for capitalism to thrive, there must be a large supply meeting a large demand and you must have people who are in debt to create a large enough demand to consume that large supply.

The simple reality is that the governments of the world make their money from our poor health, debt, and our struggle to “just get by.” Their abundance is dependant on our lack.

But this does not mean we have to accept these limits. While it’s true that most people will never take advantage of it, information about attracting wealth and prosperity is freely available to anyone caring to look. And the law of attraction says that the more you look, the more information you will attract. What fills your life is what you focus on.

Learning to create abundance in your life is about much more than simply creating material wealth, it is about enriching your Self as a whole. When you begin to understand the principles and laws that govern Abundance, you begin to understand that you are not constrained by the conditions of the economy or the amount of your present income.

Your ability to increase your wealth, live in abundance, and have financial freedom is all based on your understanding of the universal laws that govern the flow of energy controlling your ability to turn potential into reality.

Yet there is more to creating abundance than simply placing an order and then sitting back to wait for its delivery. You have to be giving something of value, adding to the flow, in order to make this work. When this is the case people are more than willing to pay for your contribution.

Wealth, money, success, love, and health are all forms of energy. Being part of the flow means that you are a participating member. Once you understand how to operate in the flow of that energy, you learn to work with the Source of energy and actively create your reality instead of simply letting random thoughts create a chaotic existence for you.

Abundance is about living a healthy, vibrant life with a purpose and experiencing the joy that comes from possessing a strong sense of Self.

In the vast majority of cases, it’s to escape the income trap a normal worker-boss relationship perpetuates - i.e. if you stay a “worker” then you stay in this one-to-one relationship that exists between worker and boss, where you exchange your skills and effort in return for a fixed wage every week.

The only way you can get money is to come back and do the same things all over again next week… or maybe do a little more work to get a little more pay.

This linear relationship - you work, and then get paid - fixes your income. It commits you to a life of “more of the same” week in and week out, and never really provides the extra needed to escape this cycle.

Now since the “boss” appears to be the winner here, the theory is that becoming your own boss is the first step on the road to wealth.

But is it really?

When you think of someone who is self-employed, whom do you think of?

Do you think of trades people like a plumber or mechanic? Perhaps you think of a shopkeeper or take-away shop owner?

Have these self-employed people escaped the linear income trap and put themselves on the road to wealth?

No! They are still earning a linear income, because they only make money once from each person they sell or provide a service to.

While they can maybe earn more than they could as a worker, it does come with the added costs of working longer hours, extra responsibility, and financial liability. And their income potential is still limited because they can only work for a fixed number of hours.

When seeking out self-employment opportunities, avoid those that revolve around linear income where you repeatedly do the same tasks in order to earn an income.

Instead, locate those opportunities that allow you to build residual (or passive) income.

While these do take some effort to set up initially, only a little maintenance is needed once underway to keep the income flowing in.

And what are you doing while it’s earning money?

If you are smart, you are looking to find and build another opportunity to generate recurring, long-term income for you, while you sleep, when you are on holiday, or even after you’ve retired!

Whatever you do as a self employed person; you will have to work hard at it to make it work.

But think smarter as well…

Chase passive, residual income, and wealth is a lot easier to build.