Black Friday is a crazy day. We get up extremely early, we wait in crazy long lines and then we wrestle products away from other shoppers…all to save 20 or 30% off the purchase price. The crazy part about this one day is you can actually arrange every purchase to get it for FREE any day of the week without having to go through Black Friday!
To show you how to get things you purchase for free, let’s say you want to buy a new computer. You jump in the car and head over to Best Buy. When you get there, the salesperson presents you with the following two purchase options:
1. Pay $10,000 for the computer today and you’ll get a 100% rebate on the purchase price of your new computer within the next 12 months.
2. Pay $1,000 for the new computer today without any future rebate. Because you only pay $1,000 out of pocket, you won’t get any of this purchase price back in a future rebate.
Which choice would you make? Would you pay ten times more in order to get 100% of your money back? Or would you save the large upfront expense and pay $1,000 now?
The choice you make is critically important for your future.
In our first choice, the computer is technically free because you’ll get your money back over time when the rebate is received. You forgo the use of $10,000 but your computer purchase becomes free when the rebates arrive. In our second choice, the new computer costs you $1,000 out of pocket. You’ll pay $1,000 and never see a penny of this $1,000 again.
Believe it or not, we have this same choice with everything we pay for in life. You can structure every purchase so that it becomes free to you by acquiring income producing assets that provide the income you need to buy the things you want. Here’s the secret…
Never to pay for anything directly out of your pocket. Instead use your dollars to buy income producing assets. Then use the income from these assets to pay for things you want to buy. Funnel all of your expenses through income producing assets.
Using your money out of pocket to pay for anything is extremely expensive no matter what price you pay. It doesn’t matter if you pay full price, or get the deal of the century at 70% off.
This is because every dollar you use to pay for something directly is a dollar that you’ll never be able to use again. It is gone forever. Your dollar is sitting in the thing you purchase. It is trapped. 🙁
You can get this new computer for free if you use your money to buy an income producing asset and then use the income produced by this asset to pay for your computer. Invest $10,000 into American Realty Capital Properties Inc. (ARCP). This is a REIT which pays a current dividend of 10.80% annually. Your $10,000 investment into this income producing asset would provide $1,080 of income to you in the next 12 months. Wait 12 months and use the $1,080 of dividend income from this income producing asset to buy your new computer.
When you pay for things out of your pocket directly, you pay 100%.
When you use real estate and income-producing assets to pay for things on your behalf, you pay 0% because the purchase price comes back to you and you’ll be able to use your dollars again. Your money isn’t trapped in the things you buy.
If you follow this approach, you’ll be able to buy another new computer the following year, too. Your $10,000 investment will actually provide a new computer every single year going forward as the asset continues to generate income for you. You can get a new computer every year for free!
The only challenge is we have to plan in advance in order to be able to use the income from the asset to pay for the things we want to buy. We can’t go buy $10,000 of American Realty Capital Properties today and collect the $1,080 tomorrow. We have to buy the shares today and wait 12 months letting the dividend income build up for your new computer.
This concept applies to everything you buy.
Want to go on a nice vacation that will cost $2,500? Pay for this out of pocket and you’ll never get a penny back. Or buy an income-producing asset and use $2,500 of income from this asset to pay for your vacation. You’ll get 100% of the value of the income-producing asset back anytime you want making your vacation free. Plus, this income producing asset will also pay for vacations every year going forward, too.
Want to buy a car? Pay for this out of pocket and you’ll get pennies on the dollar back when you sell the car. Or buy an income-producing asset and use the income from this asset to pay for the car. You’ll be able to sell income producing anytime you want to collect your money back.
The main question to ask yourself is:
What Income-Producing Asset Can I Acquire to Pay for This?
You’ll be surprised what you find when you begin to think this way. There are hundreds, if not thousands, of income producing assets available at various price points. These various income producing assets include stocks, REITs, mutual funds, bonds, promissory notes, lending money to others (lendingclub.com, etc.), real estate, mobile homes, and more.
One idea you might consider to use this strategy is to look for income producing assets in the same industry as the item you want to use the money to buy.
Free Utilities for Life! – Want to generate income to pay for your gas, electric, and water bill? Look for a quality utility stock paying an attractive dividend and acquire these shares. Use the dividend income from this utility stock to pay your utility bills throughout the year. You can always sell the stock and recapture your investment making your utilities free. Ideas for high-quality dividend stocks might be Empire District Electric Co (EDE) which pays a 3.7% annual dividend, or Northeast Utilities (NU) offering a 3.10% annual dividend.
Free Phone, Cable & Internet for Life! – Believe it or not AT&T stock currently pays an annual stock dividend of 5.40%. Why not buy shares of AT&T stock and use the income to pay for your monthly phone, cable and internet bills? Don’t like AT&T? Verizon pays a 4.50% dividend annually.
Free Food for Life! – There are several quality blue-chip dividends stocks you could purchase as income producing assets. The income from these assets can be used to help pay for your monthly groceries. A few ideas might be General Mills (GIS) offering a 3.10% annual dividend, or Kraft Foods (KRFT) offering a 3.70% annual dividend.
Free Medical Insurance for Life! – Johnson and Johnson offers a broad range of health care related products. Even better, the company pays a 2.6% annual dividend. Why not buy shares of Johnson and Johnson and use this income to offset your medical insurance premiums?
Free Gasoline for Life! – Why not buy BP stock and use the annual 5.90% dividend to pay for your car’s gas? Don’t like BP, try Chevron’s 3.80% dividend.
Free Debt for Life! – Do you have student loans, credit card balances, or a car loan? Check out lendingclub.com and loan money to others to create interest income to pay for your monthly loan payments. Depending on the types of loans you make, you can earn interest ranging from 7.71% to 24.63% annually.
Free Dinners Out for Life! – You may not be a fan of cigarettes or booze, but you can use the 4.60% annual dividend of Phillips Morris, or the 2.2% dividend of Anhuesuer-Busch to help pay for your dinners out with your family.
Unfortunately most people don’t think this way. They use their money to buy the things they want directly and struggle from year-to-year. They struggle because their money is trapped in the things they buy. A better approach is to buy assets and use the income from the assets to buy things for your family. You’ll be able to sell your assets anytime you want unlocking your dollars allowing them to flow back to you.
The bad news is…
Investing carries risk. You could lose money on your income producing assets if (and when) they drop in value. All investments lose value at different points in time. It is best to think long-term and not worry about fluctuations in the value of your assets. Let the income from your assets continue buying things for your family.
The good news is…
You won’t have to worry about Black Friday sales! You won’t have to wake up at 3 am and wait in long lines to buy your income producing assets!