The Psychology of Passive Income
Posted: Sunday, June 21, 2009
by Mary Lloyd
Mining Silver LLC
Most of us spend our careers looking forward to the day when we don't have to actively work to have money. The pension. Our Social Security checks. Investment dividends we've worked so hard to set up. Passive income--money that comes without the daily grind--is the brass ring. Just a nice steady income stream whether we spend the week at the beach or working on a Habitat house or helping the oldest grandchild move into a new apartment half way across the county.
Because it is...well....PASSIVE.
Since what we do isn't tied to what it does, there's not a whole lot of room to make it go in a better direction when the current one is downright dire. Learning how to deal with the emotional impact of this lack of control can make a big difference in how well you weather the inevitable ups and downs of the investment market. Otherwise, you'll find yourself looking for feasible spots under the bridge every time the economy hiccups and denying yourself small luxuries even with plenty of money in reserve.
Right now a lot of us are afraid to spend money on ANYTHING because the value of our passive sources of income is so wobbly-and so contracted. This is not comfortable, and that's important to admit. If we are aware that this possibility is part of the range of performance for passive income, we can build in ways to help ourselves cope when we get to these bumpy parts of the road in the future.
We especially need to know this little secret about passive income as we plan what we want to do with the last third of our lives. So this downturn has given us an unexpected gift--the chance to feel really deeply the helplessness of not being able to get our money to do a better job. And to help us build ourselves some escape routes from here on.
For some of us, it will be a matter of looking for a way to earn again. For some of us, it's teaching ourselves to stay calm in the midst of the economic cacophony. For some of us, it will be refocusing on what' s important and finding ways to keep going on that with a leaner budget. And for some of us, it's just plain an adventure in how to cut costs.
You think I'm kidding on that last one, right? Nope. If the passive income situation is leaving you anxious, the most important thing you can do is act. Taking action to cut the amount of money you need to live on is a good thing to do occasionally, just to make sure you're focused on your authentic needs. A downturn is a good time to do that.
Notice I did not suggest you suck way in and not do things. I said evaluate. I said find a cheaper way to get what you want. But just plain retreating? Bad idea. Why?
Not spending any money on anything makes you feel deprived as well as afraid. And that's an invitation to depression and poor health. The down part of the economic cycle will always be a test of our mettle, individually and as a culture. The better we are at acknowledging the scary feelings and doing something to improve our situation, the better we will be at dealing with it the next time.
In a nutshell?
* Be honest with yourself about your financial situation. If you need to cut back for a while, do it in ways that help you feel "competent" rather than "poor." If you still have plenty of money, SPEND SOME.
* See if what you are spending money on is really you at this point. A downturn gives you an easy opportunity to stop memberships you don't use or participate in or to redirect where you spend your time-and, as a result, your money.
* Remember "This too shall pass." It will. Really. But until the clouds part and the economic sun comes back, you have to help yourself stay positive and calm. KNOWING that is half the battle.
Having your retirement nest egg lose value is awful. Letting that fact intimidate you into not living your life is worse.
Copyright (c) 2009 Mary Lloyd
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Mary Lloyd is the author of Supercharged Retirement: Ditch the Rocking Chair, Trash the Remote, and Do What You Love. She offers seminars on how you can create a meaningful retirement for yourself and consults to help your business attract and use retired talent well. She is also available as a speaker. For more insights on how to live well in any economic climate go to => http://www.mining-silver.com .
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