Residual Income That Just Keeps Coming In

Who doesn’t want income that just keeps coming in? Your residual income is all the extra money after all the personal debts are paid during a month. Having the residual income can make a big difference in your financial portfolio.

The income that you have not put into the budget is the residual income that varies month to month. This residual income is obtained from sources over which you often do not direct control. The salary you earn is earned income. You make x number of dollars an hour or a year and you are there at work, putting in your hours on a regular basis. Residual income is different.

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.

Banks lend money faster to individuals who have residual income of some sort. The borrower looks like a good risk and the bank can then have a better guarantee that the loan will be paid. Residual income is definitely a plus. If the interest on the loan is low, you are better off making the loan rather than cashing in a bond that pays a higher interest rate.

Income is taxable. Except, pension checks are taxed differently in different states. Other residual income is taxed and you should file accordingly after talking with your accountant. The residual income can add up and it can be very helpful in many financial situations even if it is taxed.

As with any earnings, you should make sure you keep accurate books. Sloppy bookkeeping can run you into trouble with the IRS. If you are still employed and have several rental properties, stocks, bonds and other residual income ventures, you might need help from an accountant. You need to make sure that you save receipts for ease in doing your taxes.

Look beyond today when you choose the money makers of tomorrow. Set up and put in place some sources that will provide you with residual income in the years to come. Be aware of how to plan for the future and how to use that planning to promote some residual income. The financial little extra can become your ticket for the future.

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