“The Four Stages of Building Wealth” by H.J. Cammas guides us through the stages of living on earned income to living on “unearned” income entirely. At this point, we will be considered financially free.
Unearned income is money that our investments produce, otherwise known as passive income. Passive income is one of my favorite topics, and this book walks us through the process of building unearned income.
This book is unique because it focuses on building a portfolio of income-producing assets while you have a job. This is how I choose to build my base of assets so that I can relate to the words of the author. Let’s take a look at the four stages of wealth.
1) Where am I? Have a deep look at where you stand financially. Do you have the things you want? Are you in debt?
2) Why am I there? What circumstances or choices placed you where you are today? What can you do about your situation?
3) Where do I want to be? What things do you want? Do you want a better job, money in the bank, or a spouse and family?
4) How do I get there? Finally, how do you change your situation or circumstances? How do you change course and achieve your goals?
5) In most cases, learning to invest for passive income and income-producing assets can help you achieve your goals. Once you have financial security, you can focus on other aspects of your life.
My favorite takeaway from the books is about good debt. The author says, “You will become at least as rich as the amount of good debt you take on in life.” This quote makes a lot of sense.
If you buy rental properties and tenants are paying them off, you’ll accumulate that wealth as your own. You can also invest in good debt to grow a business. I take it to mean you need to take on some risk to accelerate your mission towards financial freedom.
This book is a great, quick read that makes you think about living on passive income. Buying income-producing assets can change your life quickly, and I understand this change first-hand. If you are ready to change your life, this is an excellent place to start.
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