Linear Income Vs. Residual Income

I would like to start by discussing the most powerful way that I have found to secure ones financial future. The key to doing this is to understand the difference between linear and residual income. I promise you that as you read this article it could very well change not only the way you think but your entire life.

The First thing I want to do is to invite you to be an ‘open-minded skeptic’. What I mean by this is open-minded enough to want to learn and grow with this new knowledge, however be skeptical enough to try to get the facts before you make any decisions. I’m going to start by simply sharing a few vital statistics that just may have you rethink about what you do to earn a living. And just to get started on the right note. It’s not my purpose to bore you with all these details however I think they are very important for the purpose of this discussion. So here we go! Did you know that 95% of our population is retiring broke? Did you know that today only 1 of 10 college graduates works in the field they studied? Did you also know that the average person in this country is only two paychecks away from bankruptcy! And, last but not least, did you know that the average household in this country has two full-time and one part-time job just to pay their bills. Does this describe you or somebody you know?

Have you ever taken the time to engineer (plan) your financial future? As you can see from the statistics above most of us don’t! Do you anticipate your financial future with certainty or with uncertainty? Where do you see yourself in 10 years or 20 years, or better yet, at retirement? Do you do what you do to earn a living - because you love it, Or because you need to make money to pay the bills? Do you find yourself just making enough money so you don’t quit and working just hard enough so you don’t get fired? How do you feel most people would answer this question? Does your job allow you to make a positive difference in people’s lives?

The answer for me 13 years ago was, “No”! You see, 13 years ago I found I had very little of what I expected of myself when it came to money and I didn’t feel that I was making much of a difference in peoples lives. I don’t ever remember much appreciation from any of my employers. My life has had many divergent pathways in trying to create that self worth and to secure my financial future for my family. I started this future in the Insurance Industry. However after six months the company I worked for felt our state was unprofitable and pulled out. Many of us were left unemployed and looking for work.

In order to earn a living I got a job with a national hotel chain I lived paycheck to paycheck. I took every opportunity to work overtime so I’d have those little extras. But I knew that if I continued doing what I was doing, financial pain was almost certain in my near future. So I started looking for options for personal growth and security. The reason you are reading this article today is because I found one of the only options in these very difficult economic times for an average person to change the quality of his or her life forever! I can say this boldly because I am now living the Perfect Life and enjoy it with my lovely wife Jill and also my 5 wonderful children.

Before I mention it, let’s look and document our current economic system. No matter how far we feel we’ve progressed, business remains a political game. It is influenced by your education, sex, color, physical appearance, nationality, health, religion; the list goes on and on.

In truth, would your life really be better if you spent many years reaching the highest level of your company? Sure, you’d have more money and prestige. But at what cost? You’ve heard about the hours, the pressures. And those people’s real wealth isn’t really that much greater because their expenses went up with their status. Companies operate on sales revenues less expenses; fewer expenses mean more profits. Your paycheck is an expense. Smart businesses keep their expenses small. Your job is to get them to increase their expenses - that is, to give you a raise. After your company has paid you for your time, how much money do they actually owe you? Zero! If you work for the company for fifteen years, after they’ve paid you for that final week, the company still owes you zero. You have been paid.

What if you were to work five years and the company would pay you ongoing income from then on? Not a half-pay retirement plan.

If I were to give you a choice, which sounds better? Working 40 hours a week for 40 years or 20 hours a week for 5 years. Spending your day at your job doing what they tell you to do; or doing what you want to do, when you want to do it! Getting your paycheck and hoping you’ll have something left over after you pay your bills - or having more money then you could spend. Can you choose now or should I get back to you on these decisions?!

Here’s your choice - increase your income, or reduce your spending. Work overtime. Get a second job. Cut your current standard of living. You know, you could put your spouse to work. Oh, you’re already a two-income family? Have kids? You can put them to work. Here’s one for you. Do you realize that raising one child from birth through college is now estimated to cost over $200,000?

We have one of the lowest-saving ratios among all countries. We earn but don’t save and invest the way we should. Why? Two reasons: 1- because we simply don’t have the disposable income. And secondly, I’m not sure that most of us have the discipline either. We find ourselves charging more and more - so we can have things now! We don’t think about what it’s doing to our financial futures, or to us as a nation.

You are constantly hearing of the growing gap between the rich and the poor. And I don’t see it improving any time soon. In order to be more competitive, many companies continue to eliminate expensive employees and to replace them with new technology and lower paid employees. There is a risk factor of job insecurity that should really concern you. I know I was concerned enough about it that I was considering other ways to earn income.

With only a little study it was obvious that I would be smart to leverage my time and efforts. Think of an author, or songwriter. They write something once and they receive payments for many years. Insurance agents often sell a policy and earn renewal fees for many years to come. This is known as residual income!

Currently, you’re probably exchanging units of time for units of dollars. This is working the 40/40 plan. 40 hours per week, for 40 years - which equals approximately 83,000 working hours in one’s lifetime for an average $1000 per month retirement. It’s been true for 95% of the people in this country. This is known as linear income.

You know some of you may get excited about the possibility to choose to work very hard for 2 to 5 years for lets say 20 to 40 hours a week and have a real chance to secure your financial future. Would it surprise you to know that a business exists today that could pay you as much as $100,000 per year for a few years of hard work? It even gets better, it could pay you this amount over and over again for your lifetime ! All for the efforts of today.

Which source of Income makes more sense to you? The difficulty is that you and I are used to getting paychecks every week. We’ve grown up in the conventional system, which says: Get a good education, find a job, work hard, and improve your position...and someday you’ll retire and the company will take care of you. If you haven’t figure it out yet it just doesn’t work.

So what is this perfect business that I’m talking about? Well first of all lets clarify what the perfect business should have! Lets start with equity in your own company with no liability or employees. No pay-role or bookkeeping and you get to be in control. Last it must pay you residual income. Is there a business today that can do all of that? There is and it’s called Network Marketing. And yes I know how some of you may feel about this business concept –it hasn’t worked for you. And you know what? I felt the same way a few years ago. But you know what I did too! (Make a million and it will change your mind!) But, now, having been educated on the whole concept and getting all the facts about the network marketing industry. I now believe it to be the most powerful way of doing business today. The first thing you should try to understand is that we’re in a new era of network marketing. Some people call it the business of the 21st century. Let me say it is now accepted today as a mainstream business in most countries around the world. This industry has made many improvements since its pioneering stage - 60 years ago. In fact, just in the last five years network marketing has made its biggest movement in assuring that everybody has an equal playing field. Many of these new innovations require us to re-think much of what we’ve thought about network marketing. One of the most promising changes is the way that compensation is distributed to its representatives. Network Marketing has come a long way to assure its strong existence in the 21st century. There is a concept in business called a paradigm shift – thinking outside the box. And that’s what is happening in the network marketing industry. It’s simply the best and smartest way to do business in the future.

One of the biggest changes we will see in the next few years is that of distribution. We are now moving into an era of buying from people we know and trust drawing from the strength of our relationships. This is so powerful that the traditional form of marketing can NOT compete.

Now lets examine network marketing. What it is, why it works, if it’s for you and if so - what it takes for you to succeed. And you need to know that I’m not trying to convince you. My objective is to educate and inform, so you can make an intelligent decision. You need the real facts to help you decide...not the hype. I’ll explain how hard it is, how rewarding it is, why most people fail, and how many have made it really big! And I’ll also show you why our changing retail economy is driving more and more people toward this system - and the lifestyle it affords.

You may know that United States has become the biggest debtor nation on earth. We had almost no debt in 1950 except cars and houses. By 1951 there were 50,000 credit cards. Today there are more than 800,000,000 credit cards in the United States alone. When workers demanded more money to help them pay off their credit, defined as money that’s not yet been earned, our businesses raised their prices - meaning the cost of living rose, so workers needed more money. But they wanted more goods; thus they charged more. To give them raises companies borrowed more, prices rose, and the cycle continues to this day. The only way out of this crisis is to change the way we do business.

So, here’s how we do business now. Traditionally, a manufacturing company makes a product. Typically it then will be shipped to a national distribution center then to a regional distributor then to a local distributor and finally to the retail stores. This is where we the consumer typically purchase the product. Now, following this flow chart of goods it’s interesting to find out where the cost of the product is incurred. You will find that typically 25% of this cost is incurred at the manufacture and the other 75% for the necessity of the different means of distribution. What if we were to restructure the way we traditionally do business and reallocate that 75% to satisfied customers. Who better to advertise then a satisfied customer? Say a manufacturer ships the product to the consumer directly. And what if this manufacturing company paid the customers commissions for their word of mouth advertising, each part getting a percentage of everything that is sold because of the initial referral. This is called network marketing.

It’s called network marketing because if you get involved and you believe in the products or services, you naturally tell other people. In other words you’re networking. Some of your customers will tell their family, friends and business colleagues. You make a small percentage on the people you directly told, and the people who buy from them and so on. Remember, the company is happy to share with you a little of the profits because without your efforts they wouldn’t have these customers. Everyone knows that word of mouth, people telling people, is the best advertising. Every month when your customers buy - and those that came in due to your team’s efforts - you earn an On-going, residual income.

Now, here’s the difference between the traditional system and network marketing. Traditional retailers will never pay you residual income. If you send someone to a movie, restaurant, good book, auto dealership, cleaners or any other traditional business - there’s no compensation. At best, they’ll reward your loyalty by giving you a frequent buyer bonus. But they won’t pay you for referral business.

Under the traditional system you’ll labor 40 years. You work a week and get paid for that week. If you don’t work, you don’t get paid. If you reach retirement, the traditional system will give you 50 to 60% of what you struggle to live on now. The problem is that the traditional system is trying to get rid of people before they reach retirement because it can no longer afford to pay people for work they are no longer doing. I have heard a shocking statistic that only 2% of us are now expected to reach our full pension.

Many of you know the story of the doubling penny. Network Marketing is like this. Say you consult with me on a business deal that will put you to work for me for 31 days and I’m willing to give you a choice on payment. One million dollars, OR, I will give you a penny that will double each and every day after day one. Now which would you pick? Most people would pick the one million dollars. That’s traditional thinking. Network marketing thinking shows a slow, steady growth. But in the beginning, it is a lot of hard work for very little.

Day 1 .01
Day 2 .02
Day 3 .04
Day 4 .08
Day 5 .16
Day 6 .32
Day 7 .64
Day 8 1.28
Day 9 2.56
Day 10 5.12
Day 11 10.00
Day 12 20.00

If you persisted, on Day 31 you would get a check for almost ten million dollars.
Now reminder you did the same work.

The only difference is traditional versus non- traditional thinking.

Let me give you another example. If you represent a product that makes you $3 per month per person in your organization, and if you work real hard you could probably get one person in a month that would use your product.

At the end of the month you would have:
1 person = 3 buck

Now if you work real hard and you teach your customer to go out and find one customer for himself or herself and you find another customer for yourself. At the end of the second month you have:
Your first customer and their customer plus your new customer, you have
3 people, thus $9.

You do it again next month. You teach your people to teach and recruit. Another month passes. Your three have become six and you added one more.
7 people, $21

Month four. 14 plus 1 is 15 people, you made $45.

Month five. Work REAL HARD. 15 become 30 plus your new customer. You have
31 people and $93.
Now most people drop out here. It’s too bad. Its too much work - compared to the traditional system.
Month six, 65 people. Month seven, 130 people. Month eight, 260. Month nine, 520. Month ten, 1040. Month eleven is 2,080 and month twelve you have:

5,020 people making you an extra $15,060 per month - part time!

Now you understand the power of network marketing. It never works out that smoothly in reality. But you get the concept. Leverage duplicated by time creates wealth. Some of your people in your organization are going to drop out. Some will do nothing. And some may break records and sponsor 20 people personally. The key is. If you persist and you don’t quit, you will succeed.

The two biggest objections are usually time or money. The irony is that the people that are short of either time or money should be the best candidates for this business. I have heard every excuse why not to do a business like this, but the thing is, you REALLY only need ONE (1) reason why YOU SHOULD. Let me ask you a question. What are you doing so great in your life that you couldn’t do a business like this? I really want you to think about that!

Look at this: If you work a 50-hour week, 40 hours on your full-time job – 10 hours on a
Part-time, and you eventually add 100 people who are doing 10 hours per week, reaching their dreams through your networking business, you are in effect working 1,050 hours per week! Now, isn’t that a better use of your time? Imagine what that would mean for you monetarily.

“I’d rather have 1% of the efforts of 100 men, than 100% of my own efforts”
J. Paul Getty, multi-millionaire

“But, I don’t have enough money to get started.” So, who needs this business more than you do?! Retail a few products. Someone will want what you have to sell. Get a check. Buy the products. Put that money back into your business for supplies, CD’s or literature. Build slowly. Build solid. The tragedy is that the traditional system creates a shortage of money. It never gives you residual income. Network marketing creates an abundance of money. The traditional retirement dies when you die. Your network marketing business is inheritable. The traditional economy pushes workers to use credit. Network marketing gives them the means to buy with cash.

You can make money in the traditional system. But why not start your own business? Build equity in yourself and not someone else’s company. You may already own a business. Or, it may really own you? Here are the five main reasons why people say they don’t start their own:

Money. Traditional businesses cost a fortune to start. People want to start them because they want more money. Who wouldn’t like to benefit from owning a Burger King or a Wal-Mart, a phone company, Movie Theater, car dealership, a bank, an insurance company, etcetera? People want the rewards, so some do invest. But the majority of people can’t afford that kind of investment. Plus, if you start your own business, there is often no profit for two to five years. With network marketing, start-up is usually under $500 and you have the potential to pick up a paycheck larger than many Fortune 500 CEOs.

Time. Owning your own business often requires 40 to 80 hours a week, with most owners reporting the high end of that scale. Multi-level marketing requires 6 to 20 hours per week and can be started part-time.

Risk. With a traditional business, you place a great deal of your time and money at risk. With networking, you risk small amounts of money and can begin part-time until you double or triple your current salary.

Don’t know how to run a business. With a traditional company, that is the second major reason for failure (second only to lack of investment capital needed to survive until the profits roll in). If you don’t know how to run a business, you shouldn’t start one. With a referral marketing business, the main company does the major bookkeeping, has a legal staff, manufactures products, does the shipping, provides customer service, warehouses inventory and does research and development. You just refer people to them and you train your people to do the same.

If you still think network marketing is something strange or illegal, you’d be wise to do some quick study. The concept of network marketing is 60 years old and is attracting companies like Coca-Cola, Remington, Gillette, MCI, Sprint, NBTY, Colgate-Palmolive, and many, many more. It is taught in major colleges and universities. There have been favorable articles in the Wall Street Journal, Success Magazine, and more. Just recently while staring on the David Letterman show. Donald Trump was asked this question. If you lost all of your money what would you do? He simply replied, “network marketing”. Direct sales have now passed $100 billion and there is an estimated 5.7 million Americans in network marketing today. It’s growing at 30% per year. By the year 2005, network marketing is expected to surpass franchising.

Here’s the real test of whether network marketing is for you: Wouldn’t you rather work harder for a short period of time so you would eventually never work hard again? If this describes your ideal situation, then network marketing is just what you’ve been looking for. And on the other hand for those of you that have not warmed up to the concept of network marketing. If you keep doing what you’re now doing, do you honestly feel your situation is ever going to change? You know I once heard somebody tell me the definition of insanity is doing the same thing over and over expecting a different result.

Ask people who’ve been successful in network marketing and almost every one of them will tell you that they didn’t want to do it at first. They had to warm up to the idea. Some tried it and wanted to quit. Some even quit two or three times. But in the long run, they realized that there was nothing out there that would offer them the advantages that network marketing did.

So, what’s your choice? If you need more time or money - overtime? Hey, it may not be available. A second job, which doesn’t pay you as well as your first. Both of these eat up your time, and don’t build residual income, offer little chance for recognition or promotion, and provide poor opportunities to be with other people who are looking to advance themselves.

Ok, so those are a few examples of why the traditional economic system is no longer working and, in truth, you’re already in network marketing - every time you talk about books, movies, restaurants or other things you find valuable - I’ve recommended all of these. My friends have used them. They’ve recommended those to their friends. But I never got a nickel!

So find a Network Marketing company with products or services you believe in. I did! The rest is simple. Just don’t quit. That’s it. Buy your products, tell your story, and don’t give up. Its simple - but its not easy. This won’t happen overnight. If you look at your checks after six months, you may want to quit. It is a sad irony - people who make it through these difficult periods and reach the top often tell of magnificent people who helped them that were signed up by someone who quit. Had those people stuck it out, they would have reached the top also.

So why do people quit? Unrealistic expectations. Too many people think network marketing equals Get Rich Quick. It doesn’t. The thing I’ve seen most often is that people get excited, sign up, the excitement turns into a lack of understanding and they do nothing and they quit often blaming the company rather than admitting to their own poor performance.

Let me sum this up for you. In a recent survey over 85% of the people interviewed didn’t like their jobs and approximately 80% of Americans don’t make $30,000 a year.

If you think you can become financially independent someone else you’re deceiving yourself. It doesn’t happen to people often enough to even be a significant statistical probability. There’s almost no chance.
I perceive the worst problem with Network marketing is “easy in, easy out”. It’s just too easy to quit because of the low start-up cost. If people had to invest a half a million dollars to get in, quitting would never be an option. Failing is not an option. Wouldn’t it be something if you only had to invest a few hundred dollars to get started but treated it as if you would lose a million! Would you quit then so easily? There are only two reasons why people fail in this business. They don’t do anything, and they quit.

There’s a famous story of an airline pilot. He got into network marketing, just so he could buy the products at the wholesale cost. He refused to try to get people involved. He felt it was undignified for a person in his position to recruit. Occasionally, someone would find out that he was buying wholesale. They’d have to beg and plead to make him tell them how. Reluctantly, he would tell them. Well, 20 years later, when he retired as a pilot, he was making more from his Network marketing business than he was from his retirement.

You see, people are like the old hound. A man asked the owner, “Why is your dog lying there moaning and groaning?” The man stopped his whittling and looked down. Cause he’s laying on a nail. “Oh, well, why doesn’t he move?” asked the observer. Cause it doesn’t hurt enough to move. It’s just uncomfortable enough to make him whine.

Is that you? Are you uncomfortable enough to complain about your life? Or are you realizing that its time for you to take action. If you’re ready, network marketing is an answer. The system is in place. The worldwide acceptance is growing.

Most of us live in denial, pretending that it’s going to get better next year. And I don’t care if you’re a doctor, lawyer, CPA, pilot, engineer, CEO, or anyone else who now makes $100,000 a year. You’ll live with the same percentages.

See, most people are going broke slowly and they just don’t notice it. They put in all those years in school, or all those years building a traditional business. It’s hard for them to admit that there might be something better. One measure? If you can’t do it in 40 hours a week - you’re doing it wrong!

A network-marketing executive told this story. She saw an old friend one-day. She’d tried to recruit him years before. But he’d made fun of her. Even this day, he laughed. “You still in network marketing?” She called out in disbelief, “Are you still working?” He walked away stunned.

This is the most misunderstood business in history. But make no apologies for joining this industry. Listen carefully to these benefits:

* Low start-up, so anyone can get in - unlike McDonald’s, Subway, KFC or any traditional business.
* Unlimited income. There is no ceiling.
* Income security if you’ve built a solid residual income.
* If you pass away, your family inherits it.
* No favorites. Each person is truly equal. Sex, color, religion or nationality is not important.
* There’s personal and business recognition. An average person can rise to management.
* There are several ways to build the business.
* There’s no educational requirement. Top executives are all people who have all worked the business.
* There’s no forced retirement.
* Equal pay for men and women. Absolute equality.
* Companies provide complete training.
* Husbands and wives are encouraged to work together.
* There are no set hours.
* It’s a cash business. No credit for you to worry about.
* No territorial limits. Travel the world building the business.
* Government regulations, legal, research & development and quality control are handled by the parent company.

Free market economies feed themselves better than any other system on earth. Companies tend to be financially strong because it is a cash business. Ever heard of a strike in the MLM industry? There could be shared advertising. You’ll associate with a caring and giving group of mostly up-beat people. Buy your products wholesale. Have Fun! Think of it as a no boss, or you’re-the-boss, business. Rewards are based on what you do. Work when you want. Vacation when you want. Serve other people by helping them improve their circumstances. Meet new people and like-minded people. Work with whom you want and teach these people to feel good about themselves.

When the economy gets bad, this business often picks up because ambitious people are always looking for ways to make more money. Network Marketing is a low-risk, yet time and money-leveraged business. Networking friends become an extended family. Networking is a self-improvement business. Everyone gets better if they stay in. People who make more money and enjoy more free time tend to be less shy, speak publicly more easily, and you’ll quite often hear people say that they are more confident.

Most successful people in this business are positive and motivated. Some are lazy, but persistent. It makes no difference what your basic personality is, it only requires activity. Having a good attitude may help, but is not enough to make you successful – TAKING ACTION WILL!


Currently, your traditional business tells you who to work with, what you can make, when you can take your vacations and your lunches, when you have to be at work, when you can leave. Your business actually tells you what you can or can’t buy because of your salary.

Or, now you can choose network marketing. The bottom line there is freedom. Free to get up when you want, go where you want, buy what you want, do what you want, when you want. Stay as long as you want, save as much as you want, work when you want, leave when you want, and vacation when you want, spend more time with your children if you want. Spend as much money as you want, buy the home that you want, spend as much time and money on your hobbies as you want. Spend time with whom you want. You can contribute generously to your favorite charities. Freedom to pay off your debts and pay cash for everything else from now on.

Now let me share some simply truths about network marketing that will help you select the right company. Here they are! First, pick a product that isn’t gender biased. What I mean by this is there are products that only excite women and on the flip side there are products that only excite men. Find a product that is marketable to everybody. Don’t limit yourself to who will buy your product. Second, you must market small ticket consumable products. You will depend on the re-orders for your long-term success. Third, Brand Loyalty is the most important element of your product line. Is your product unique enough and does it promote quality factors that people can trust. Fourth, stay away from pricing wars, someone will always under cut your prices.

The absolute most important ‘character quality’ to succeed in network marketing is persistence. If you give up, it’s over. If you’re committed, no matter how long it takes, you will succeed. It does take time, and work. Hold to the thought that you can do it. Know that there will be ups and downs. DON’T GIVE UP!

Here’s the last word. Do you want to stay only in a traditional business? Or, do you want to get paid for doing network marketing? Do you want to keep doing things the way things always have been, or can you see the way things could be. Honestly, doesn’t it seem that the traditional system is not meeting people’s needs? In this industry, you cannot fail. You can quit – but you cannot fail.

Buy your products, tell your story, stay active - and you’ll feel great as you are improving your lifestyle. Network marketing was the answer for me, do you think maybe it’s the answer for you to. Take this information and find the right company that gets you excited and stick with it and will see you at the top.