Residual Income In Your Bank Account

Having residual income in your bank account is a great feeling. This is the income that is left over after all the bills are paid each month. The mortgage payment is made. The utilities and the tuition is paid. After all the accounts payable are taken care of the residual, or passive income as it is often known, is the nice bit of money leftover.

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.

Other forms of residual income result from interest-bearing checking accounts, dividends from stocks and even money received from rental properties. Residual income comes to you as the result of a prior purchase or savings plan. The work you did before retirement counts toward your payment of a pension. The pension check is now 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.

The amount of residual income you can show a bank when applying for a loan is paramount in the bank’s decision to lend you the money. It shows them that you have enough funds to assume the responsibility to repay the loan. With the loan money in hand, you assume a payment plan and may be paying less interest on the loan than you would have lost by dipping into a great stock that provides steady residual income.

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.

It is important to keep track of all the financial dealings you undertake. If you are still working and do not have time to file taxes, then go to an accountant and have him take care of filing so that you avoid the wrath of the IRS. All your receipts for everything to do with your finances and residual income are important. Be a good bookkeeper. Have good habits,, it will help.

Residual income by its definition is money that you make from some prior action. It may be an old school documentary that you sold and it is still being used. The royalties come directly to you as residual income. You may be earning lifetime commissions for a sale made long ago. Wherever the extra income’s source, put it in the bank or invest it wisely. Make sure that all personal bills are paid in order to view this income as residual. Residual income is great. It just keeps rolling in and no matter the amount, it is more than you need today.

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