Residual Income That Just Keeps Coming In
Having residual income in your bank account is a great feeling. This is the income that is left over after all the bills are paid each month. The mortgage payment is made. The utilities and the tuition is paid. After all the accounts payable are taken care of the residual, or passive income as it is often known, is the nice bit of money leftover.
If you need $1500 in your budget for monthly expenses and you earn $1900 a month, that extra $400 is your residual income. You haven’t done anything other than go to work and put your best day to the job you do. The $400 left over from your earned income is now residual income.
Residual income, in most instances, comes on a monthly schedule. When you open your bank statement, you will see the interest you have earned on your checking account. This assumes you have an interest-bearing checking account. If you own stock in a company, you may not see your dividends until a quarterly statement. Any income that comes to you due to an original action on your part, is a residual income. Even pension checks are considered to be residual income.
If you have a mortgage on your home or the home you rent out, upon the complete payment of that mortgage, the funds you use to pay to the mortgage company is no longer needed there so it becomes residual income. It’s like there is now an empty space where money is no longer needed. You can stash that money away as residual or replace the mortgage payment with a boat payment. It’s up to you.
The amount of residual income you can show a bank when applying for a loan is paramount in the bank’s decision to lend you the money. It shows them that you have enough funds to assume the responsibility to repay the loan. With the loan money in hand, you assume a payment plan and may be paying less interest on the loan than you would have lost by dipping into a great stock that provides steady residual income.
Income of all sorts pay needs to pay income tax. Pensions are dealt with on a state to state basis. The tax on the residual income doesn’t outweigh the benefits of getting that income. Residual income is a terrific way to supplement your finances. It could be your nest egg!
It is important to keep track of all the financial dealings you undertake. If you are still working and do not have time to file taxes, then go to an accountant and have him take care of filing so that you avoid the wrath of the IRS. All your receipts for everything to do with your finances and residual income are important. Be a good bookkeeper. Have good habits,, it will help.
Residual income by its definition is money that you make from some prior action. It may be an old school documentary that you sold and it is still being used. The royalties come directly to you as residual income. You may be earning lifetime commissions for a sale made long ago. Wherever the extra income’s source, put it in the bank or invest it wisely. Make sure that all personal bills are paid in order to view this income as residual. Residual income is great. It just keeps rolling in and no matter the amount, it is more than you need today.