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Understanding The Three Income Types

Aug 17, 2007
For most people, achieving success in a home based business means a lot more than just earning more money. It also means more time freedom, more relationship freedom, and a better lifestyle. It means paying off the bills, getting out of debt, and having more peace of mind. It also means having money flow into your bank account every single month, whether you work or not.

It does not mean having to wake up to an alarm clock every morning, jumping out of bed and trading your time for dollars, only to rush off and make someone else rich.

So in order to achieve great success working from home, you must first understand the difference between Linear Income, Leveraged Income & Passive Residual Income.

Let's take a look:

Income Type #1 or Linear Income, is income generated by working at a job. When you work, you get paid. When you do not work, you do not get paid. This is how most people live their lives and why those who only work for Linear Income, can never stop working.

Income Type #2 or Leveraged Income, is a little better than Linear Income, but still not that great, because your income is based on the efforts of those who earn linear income. This is where you can get paid from the work of others, like being a small business owner or a manager, however, leveraged income does not offer real security, because linear income employees, can quit, find a higher paying job or start their own competing business.

Income Type #3 or Passive Residual Income is the income that pays on the efforts of others, but comes from the repeat purchases of consumable products or services, which people order month after month for years, and often times even decades. This is income that you work for once and get paid forever! This type of income is most commonly created in the MLM (Mulit-Level Marketing) or Network Marketing industry. Network Marketing allows ordinary people to achieve extraordinary success in a home based business because every distributor has the same exact opportunity to gain. This means that anyone, regardless of where they live, how old they are, or what their experience is, can earn as much or as little as they like, based on their own commitment and effort.

Passive residual income is also the kind of income that grows more each month and allows people to live without financial limits. Imagine doing what you want, with whom you want, for as long as you want. Wouldn't this be the best type of income?
About the Author
Tom Childs holds an MBA from the University at Buffalo, and is involved with several highly successful internet businesses.
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