The movies say, “I’ll entertain you, but you must buy a ticket first.”

The restaurant asks, “Eat here but you have to pay the bill.”

The insurance company offers to insure you, “But the premiums must be met.”

The ball club says, “You’ll see a good game, but you must have the price of admission.”

The golf course says, “Play here but first pay the green fees.”

The lake ranger says the fish are biting, “But you have to buy a license.”

Then the Lord says, “In My church you will find spiritual food, fellowship, assurance of eternal life, consolation in time of trouble, spiritual blessings beyond measure and opportunities to do good to others and there is no specific charge. Pay as you are willing.” And everybody tries to get by as cheaply as possible!

Can you tell me why?

But we haven’t always been debt free. And we haven’t always been able to afford that kind of freedom. So when it came traveling, we had think of creative ways to make our excursions more affordable. Last weekend we took a trip to South Dakota for my cousin’s graduation. This was the culmination of several months of planning. Back when we started planning this trip we were still in debt but we wanted to make the most out of the trip. Our goal was to cover as many states as we could in the short time that we had – for as little money as possible.

With that challenge in mind, it made us think outside the box. We had put our credit cards on ice for months because we were trying to get out of debt. But after dusting them off, we realized we had quite a bit of rewards points that had built up. Some of them were about to expire. Use ‘em or lose ‘em!

Turned out we had enough Sky miles for 2 tickets from LAX to Omaha, NE; we had enough Star alliance points for 2 tickets from Omaha to LAX; and we had enough Chase points for a rental car for two days and a hotel stay. So we got to bookin’.

We knew that the trip would be a serious driving expedition so we brought along our other cousin who’s a night shift nurse. She’d be well suited to drive through the late night/early morning hours. Here’s the details of how our trip turned out:

Thursday 5/3/2012

• Depart from LAX, Los Angeles, California at 4:30 PM
• Layover in Salt Lake City, Utah till 7:00 PM
• Arrived in Omaha, Nebraska at 11:30 PM

Friday 5/4/2012

• Rented car at 12:00 AM
• Drove through downtown Kansas City, Kansas 3:00 AM
• Saw the Arch and ate breakfast in St. Louis, Missouri 7:00 AM
• Toured the Abraham Lincoln Presidential Museum in Springfield, Illinois 10:00 AM
• Picked up dinner in Madison, Wisconsin 5:00 PM
• Sleepy… found a hotel in Fairmont, Minnesota 11:00 PM

Saturday 5/5/2012

• Drove through our first hail storm in Sioux Falls, South Dakota 12:00 PM
• Attended the graduation in Mitchell, South Dakota 1:00 PM
• Dinner in town at 4:30 PM
• Back on the road to at 7:30 PM
• Dropped off rental car at 11:15 PM
• Shuttle to hotel in Council Bluffs, Iowa at 11:30 PM

Sunday 5/6/2012

• Wake up at 3:00 AM
• Catch our flight out of Omaha, Nebraska at 5:30 AM
• Layover and delay in Phoenix, Arizona at till 12:00 PM
• Back in Los Angeles, California at 1:00 PM

Here’s what the road trip portion looks like:

I bet when the car rental company gave us an “unlimited” deal they didn’t think we were going to rack up 1,600 miles in two days!

If we take into account the air travel…

Summary of Trip

• About 5,000 total  miles traveled
• 3,400 miles traveled by plane
• 1,600 miles driven
• 11 states hit
• 68.5 hours of travel

Cost of Trip

That’s a $1,200 savings! So why an I telling you all this?  Traveling is rewarding and fulfilling. But if you’re like us and didn’t have very much money available to blow on a big trip, you should know that there are ways to travel on the cheap. Just because you don’t have very much money doesn’t mean that you can’t see the world. You shouldn’t skimp out on experiences in life.

Figure out creative ways to travel cheaply or for free! For us, it was cashing in on miles and points that were getting ready to expire. But there are dozens of ways to travel without spending a ton of money.

Now it’s your turn! Tell us about some of your cheap travel experiences. Or share your best tips on traveling. We’d love to here from you in the comments below!

The rich man was very anxious to see what ideas all these things would arouse in the mind of the minister. He confidently expected a faltering compliment. Instead the preacher said, “Ah, David, David, these are the things which make a death bed terrible.” The ministers cryptic message had a dual fold meaning.

First, he wanted to point out that the man’s riches are a burden. Not only does he have to worry about maintain and preserving them during his lifetime. But when he comes to his death bed, these are the things that he’ll have to worry about. The rich man will have to worry about how to divide his estate. He’ll have to worry about how and to whom to bequeath all his personal possessions.

Second, the minister alludes to the notion that the riches and splendor of worldly possessions can be taken to you when you die. The Bible puts it this way, “Wealth is worthless in the day of wrath.”  Proverbs 11:4 NIV In other words, none of these things matter in the long run.

When you’re on your death bed do you want to be surrounded by the assets that you’ve worked so hard to build up all your life? Or would you rather be surrounded by all the loved ones and the relationships that you worked so hard to build up all your life. Is it the things that are valuable in your life? Or is it the people that you value? If you’re answer is like mine, then maybe it’s time to realign your priorities. Spend less of your time and resources working yourself to the bone trying to become rich. Spend more of your time and resources on building up the people and the relationships in your life.

Happy Sabbath!

If you’re a returning visitor to this blog – skip ahead to the reports. If you’re a first time visitor – here’s some background. My wife and I started the Zero Passive Income Experiment back in January 2011. We sat down and took the time to really analyze our financial situation. We were newly weds and we made decent incomes. But somehow we were in pretty bad financial shape. We were broke, in debt, living from paycheck to paycheck, and had zero passive income.

That’s when we decided to do something about it. We made some serious changes in our spending habits. We cut back on almost every expense we could, got intense about paying off debt, and started building lasting streams of passive income. This blog isn’t to brag or solicit charity. It’s about holding ourselves accountable by documenting our progress. And hopefully, it’ll help others going through the same sort of journey. We’re not doing anything extraordinary – just following basic Biblical principles of money, frugal living, and hard work.

16 months of frugal and responsible living has gotten us to this point. Check out where were at the end of April 2012

What is Passive Income? - Passive income is money that you receive without materially participating in any activity to earn it. It’s like renting a house or receiving royalties on intellectual property. Building up passive income streams is a great way to afford financially security. With enough passive income coming in, you’ll be able to weather almost any financial storm. On the other hand. earned income is what you make for working your 9-5 job. For most people, this is their only form of income. But what happens if you loose your job or can’t work for some reason? How would you pay your bills? We realized early on that this was a problem for us. So we decided to build lasting streams of passive income to supplement our earned income. For us, building passive income streams isn’t about getting rich rich or early retirement, it’s about being financially prepared to withstand any hardship life may throw our way.

Other Earned Income - The month of April brought the end of tax season! With my extra time, on Sundays I put in a few hours at the tax firm where I interned during college to bring in some extra income. Between some tips I’ve received40and the extra hours I put in, I pulled in a extra $740 this month. Also I landed an SEO (search engine optimization) consulting contract and I received a $3,000 retainer. Woohoo!

Google AdSense - This month we earned $144.47 Last month we earned $125.85 (a small up tick yay!) . As I always say, AdSense isn’t really passive income (it’s actually residual income). It requires that you put up time and work before you start making any kind of money. But once you invest the time to set up a high quality system, it requires virtually no maintenance. (For more information about how I make money with AdSense check out my adsense story and my niche site update)

Real Estate Partnership Income – All three of the real estate partnerships above are now on “auto-pilot”. Because I’ve got a great property management company, my partners and I don’t ever have to deal with the hassles of being landlords. Income is automatically deposited into my appropriate accounts, and the expenses are scheduled to draft automatically every month. The figures I post for income represent 50% of net income after expenses (EBITDA) on each property. Now that’s passive income!

Net Worth -  Because I’ve seen too many high wage earners that are flat broke,  we don’t only measure or wealth by income. We also measure wealth with net worth. After all, building wealth is not about how much you make – it’s about how much you keep. When we started this experiment in January 2011 we had negative net worth because we owed more than we owned. We made sacrifices, set goals, and focused our efforts on both on building passive income streams to amass net worth.

We are officiall hundredthousandaires =) Our net worth is +$100,000. More accurately, we have a net worth of $107,362.40 (an increase of $12,155.54 over March). It’s a long way from the negative net worth we had back in December of 2010. How did we do it? And what did we do? Net worth is made up of assets and debts (or liabilities) below is a break down of our assets and debts and what we did with them over the month of March.

Assets – First off, you should know that not all assets are the same. Not all assets are good either. Before diving into investing you should know What Kind of Assets Should I Buy?

Various Store Credit - We have a whole bunch of return credits, gift certificates, and gift cards that we had lying around – the amount was staggering. We had been accumulating a lot of various store credit all over the place. Try it yourself! Rummage through those dusty drawers and fish out those gift cards and gift certificates. You’ll be surprised at just how much money you’re leaving around.

Sure, I can’t really cash these out, but they do have value and are a cash equivalent asset. We spent a few of the gift cards this month. But it’s still hard to believe that we have $430 of store credit and gift cards just sitting around.

Managed Traditional IRA – In February we transferred $3,000 from our checking account to open a managed traditional IRA. This tax strategy saved us around $1,000 of taxes but as it stands now, I’m not happy with it. The Chase investment advisor put put us into a fund with a 4.5% front loaded fee. That was like losing $135 right off the bat. And it hasn’t been performing as well as our other investments. Again, we don’t mind in the long run because we don’t intend to use it any time soon. But I know that I could be getting a better return on my investment somewhere else.

Notes Receivable - We have accounts with LendingClub.com and with Kiva.org These are two services that allow you to make loans or “notes” that become payable to you over the next few years. It looks like the loans that I funded are giving me about 12% annual return. So I recently deposited another $250 into Lending Club and have yet to lend it out. With Kiva.org these notes are for needy people all over the world and you collect no interest on them. We like the idea of this service and we’re now up to Our 3rd Kiva Loan. Also we encouraged people to become Kiva member’s and offered a FREE $25 Kiva Trial Loan for any new members.

Timeshare - I’m growing to hate this thing. Even though it’s paid off we still have to pay ”annual dues”. Bah-humbug! This month I looked into selling our time share again. I was in for another unpleasant surprise. This timeshare would sell for about $1.00 per point, or $3,500. I’ve adjusted it’s value on our list of assets to reflect that. =(

Los Angeles Duplex - If you’ve been keep track of our blog, you’ll know that we tried to buy a duplex in the past and for several reasons we decided to walk away from the deal. Well we’ve set our sights on a new duplex here in LA and we’ve put down $3,000 as a earnest money deposit. We’ll keep you posted more on this as the deal progresses.

Depreciating Assets – Assets like cars, scooters, boats, etc. are not a good place to put your money. They loose value and depreciate over time and between maintenance and repairs, they take money out of your pocket every month. I call these “parasitic assets“. You’ll see that the value of our scooter and Jeep are adjusted every month to show that they’re loosing value. Instead of trying to save up for that new car or latest designer purse, try concentrating your efforts on investing in things that appreciate and will generate cash flow like real estate, businesses, stocks, and bonds.  Student Loan 4 - Early this month we thought that we had Student Loan 4 Paid Off but that only left us Almost Debt Free… we still owed $0.60. We eventually figured the whole thing off and paid this loan in full. With this loan paid off we’re officially debt free (except for the mortgage). That frees up a lot of cash every month to be able to really start saving and investing to a degree that we’ve never done before because we were so burdened with debt. We’re super excited to see what the next few months have in store for us.

Goals Completed This Month

I publish all our goals here. These are the goals that we completed this month:

• Be Debt Free! (except the mortgage)
• Have more than $360,000 in total assets (completed 4/31/2012)
• Pay off all student loan debt (completed 4/20/2012)
• Pay off all unsecured debt (completed 4/24/2012)
• Reduce loan primary residence to less than $255,000 (completed (4/01/2012)
• Reduce total debt to less than $255,000 (completed 4/30/2012)
• Have more than $100,000 of positive net worth
• Have an Alexa Ranking of than <240,000 (completed 10/8/2011)

This Month’s Lessons

Set Incremental Goals and Stay Accountable. We paid off $50,000 in 16 months. But it wasn’t easy. There was a lot of sacrifice and hard work that was put into achieving that goal. I think that the two most important things that helped us finally succeed and become debt free was setting incremental goals and staying accountable.

By setting incremental goals you break down a big project into manageable tasks that you can systematically “knock out”. Doing this not only keeps you on track but also gives you motivation. It’s creating a system so that you can put down wins on your score card. For me, it’s extremely satisfying to see how many goals and milestones we’ve reached.

Staying accountable is another big thing that helped us get to where we are. Jill and I make sure to talk about our finances regularly and stay accountable to each other. But we also get a sense of accountability from you. Because we’re so transparent about our finances and post them up on the Internet for anyone to see it feels like the whole world auditing us. It gives us a lot of motivation to do things right and stay on task. So a big thank you to you!

Try it for yourself. Set incremental goals and find creative ways to stay accountable to them. You’ll find success isn’t as far away as you thought.

Goals are decisions to action. Goals are maps which give the routes to distant ports in life. Goals help a person know where he is going and how he is going to get there. A goal is more than a dream; it is a dream being acted upon. It is more than an “Oh, I wish I could.” A goal is a clear statement of “This is what I am going to do.” Goals are not fanciful doubts; they are declarations of faith.

If you haven’t already, take some time to assess your goals. What goals do you have:

• Professionally
• Educationally
• Mentally
• Physically
• Socially
• Financially
• Spiritually

If you’ve already set goals in the aforementioned aspects of your life. Take some time reevaluate those goals. Have you accomplished what you wanted to accomplish? Have you made the progress that you wanted to? What’s holding you back?

The Bible teaches us the principle of setting goals:

“The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.” Proverbs 21:5 ESV

Setting goals in your life will help you move forward and help you become the person that you want to be. Set incremental goals to help you get to where you want to be – like incremental destinations in a long journey. When you’re goals are aligned with God’s plans, you’ll be diligently planning for a life of abundance.

Happy Sabbath!

So for those of you who have been keeping track of our progress – Thank you! Thank you for all the support, encouragement, and accountability. We couldn’t have done it without you guys.

Our Last Payment:
Here’s the last payment that finally won us our debt free-freedom. It was a $0.60 payment that posted on 4/24/2012. Why just $0.60?

Well, long story short, about a week ago we thought that we paid of student loan 4 but that left us only “almost debt free“. Because of some interest pay off calculations we owed 1 day worth of interest. Boo! Boo! Foul play! I could have protested and had it written off. But we sucked it up and paid the $0.60 so we could just get rid of the debt and finally be debt free!

How Much Did We Pay Off?
When we started the Zero Passive Income experiment here’s what our debt looked like:

December 2010 – Start of the Zero Passive Income Experiment

This was way back in December 2010 (adjusted for the personal loan taken out in November 2011). We were chugging along paying off debt. But we didnt’ have a system and paying off debt wasn’t a priority.

How Did We Do It?
Back then, we were more concerned with increasing the amount of our passive income than we were with paying off debt. The fact was, we had only paid off about $10,000 of debt in the nine months following December 2010. But throughout that time we realized that despite making more money, we were still slaves to these debt payments every month. We wanted to build real lasting wealth. But because of the amount of debt we had the only people getting rich were our bankers. So on September 23, 2011 we got gazelle intense by starting Dave Ramsey’s Total Money Makeover.

By the time we started our Total Money Makeover, here’s what our consumer debts looked like:

September 2011 – Start of our Total Money Makeover

By the way, we’ve got to take some time to give big accolades to Dave Ramsey, his team, and his system for becoming debt free. It is by far the best and most effective system for tackling debt and getting financial peace that I’ve ever seen. I highly recommend grabbing Dave’s book The Total Money Makeover and listening to his syndicated radio show. No, I’m not getting paid to endorse him or his products. I just believe in them that much.

When we combined The Total Money Makeover with the accountability that our Zero Passive Income Experiment brings – we did some amazing things that surprised even me. No, this victory didn’t come easy. We don’t believe in taking hand outs or short cuts. This took a lot of old fashioned self-sacrifice, hard work, frugal living, and responsibility. We had to learn to cut back and live below our means. We transformed practically everything about our spending habits and followed Biblical principles of money. And we worked together and encouraged each other to stick through it. These are the things that made the difference.

How Long Did it Take?
It took us a total of 16 months to pay off the $48,119.90 total. But we really only got intense on paying off these debts after starting the Total Money Makeover. It took only 7 months to pay off $39,575.93.

Here’s a recap:

• September 23, 2011- We started Our Total Money Makeover
• September 28, 2011 - Student Loan 2 Paid Off!
• September 30, 2011 – Big Payment to the Timeshare Loan
• October 26, 2011 – Another Payment to the Timeshare
• October 31, 2011 – Timeshare Paid Off!
• November 16, 2011 – No More Car Payments!
• November 22, 2011 – Rain and Tires (unbudgeted expense alert)
• November 27, 2011 – Confirmation Letter of Student Loan 2 Payoff
• November 28, 2011 – Our Third Real Estate Partnership (TMM on hold)
• November 29, 2011 – Deeper In Debt But Building Wealth (was it the right decision?)
• January 17, 2012 – 1 Year Round Up (of the Zero Passive Income experiment)
• January 22, 2012 – Student Loan 3 Paid Off!
• March 8, 2012 – Personal Loan 1 Paid Off!
• March 22, 2012 – Big Payment to the Student Loan 4
• April 16, 2012 – Another Big Payment to the Student Loan 4
• April 20, 2012 – Student Loan 4 Paid Off! (not quite)
• April 23, 2012 – Almost Debt Free…
• April 24, 2012 – Last payment of $0.60 made. We’re debt free!

What Now?
Life has a sweetness known to those who are debt free that those who remain slaves to debt will never understand. It’s hard to explain the sense of freedom, peace, and accomplishment you get when you set your mind to it, work together with your spouse, and knock out your debts completely.

A lot of people have chided us about our decision to be debt free.

“Why not buy some income producing assets?” they said. “You could have invested your money and gotten a better return.”

Despite these criticisms we stayed on course and are now debt free. Sure we might have gotten some capital appreciation, interest, or dividends if we had invested. But we would have still had those big liabilities on our personal balance sheet as well. Right now this is what our liabilities look like:

What paying off our debt means is that we bought peace of mind. The only payment we have now is our mortgage (which we can cover with our passive income). We have the security to know that if anything happens in the future. We don’t have to worry about where we’ll get the money to pay our creditors. There’s a lot of economic uncertainty in our world, so for me, that peace of mind is priceless.

The next step in our plan is to build up 6 months of expenses as cash reserves so that we’ll be able to weather out most any storm. Now that we’re debt free we’re in a great position to save and invest on our terms – not on our banks terms. We’re free to use our money the way we want, instead of having to pour money into those debts.

If you’re struggling with debt – I hope our story has inspired you to get out. We’re an average newly wed couple. We’re not special. That’s why I know that if you the same principles, you can do exactly what we’ve done. Learn to work together, be frugal, and live below your means. I won’t sugar coat it. The battle to become debt free is excruciating. It’s exhausting. But it’s worth it.

What the?! I still owe $0.60? That can’t be.

I was Mad.

So I got on the phone and called.

I needed to get to the bottom of this.

When I got in touch with one of the representatives, I explained the scenario and my question as to why my account still reflects that I owe $0.60 cents.

The young man on the other side of the phone explained that the outstanding balance that I paid did not take into account the interest charges between 4/19 and 4/20. He explained that instead of using the amount listed on the “outstanding balance” I should have used the “View Payoff Details” to properly calculate the pay off amount.

“Great… so I still owe $0.60 then?”, I asked.

“Weeeeelllll…” the voice said, “technically this amount of interest would be written off.”

“How long would it take for my account to reflect $0″, I replied

“I couldn’t say with any certainty, but I would anticipate 4-6 weeks.” said the young man.

The thought of having $0.60 cents of debt sitting out there and troubled me. I knew that something like that would haunt me at night – knowing that I was $0.60 from being debt free. So I decided I had to pay it then and there. I made sure that the representative on the other end of the line made a notation that the pay off amount was $0.60 ONLY and that the full$0.60 was being paid today… as in RIGHT NOW.

I hit “Make a Payment “, filled out the info, and just like that it was done. I’ll wait unto this is all said and done before writing our “We’re Debt Free” post.

Lesson Learned:

Banks and lending institutions aren’t your friends. They’re in this game to make as much money as they possibly can. They’ll will squeeze you for every dime they can get they’re grimey little fingers on. When dealing with banks make sure you get the information regarding your pay off before making your final payment – or you could end up like me and have it kick you from the rear in the end.

This illustration make really makes you think about what’s important in your life and where you should devote your time and resources.

I encourage everyone to share these words of wisdom with their loved ones. They’re worth their weight in gold to their friends.

“Imagine life as a game in which you are juggling some five balls in the air. They are – Work, Family, Health, Friends and Spirit and you’re keeping all of these in the air.

You will soon understand that work is a rubber ball. If you drop it, it will bounce back. But the other four balls – Family, Health, Friends and Spirit – are made of glass. If you drop one of these; they will be irrevocably scuffed, marked, nicked, damaged or even shattered. They will never be the same. You must understand that and strive for it.

Work efficiently during office hours and leave on time. Give the required time to your family, friends and have proper rest.

Value has a value only if its value is valued.”

The winter that followed was cold and harsh. Their home was already riddled with holes. The windows were missing or broken. The entire structure was so weathered and worn that it would bend at with strong winter gusts. In the depth of winter they were nearly frozen. In an attempt to shelter herself and her children the mother took the cellar door off the hinges and set it up in front of the corner where they crouched down to sleep so that some of the draft and cold might be kept from them. One of the children whispered to her, “Mother, what do those poor children do who have no cellar door to put up in front of them?”

The economy has taken it’s toll on many of us. Many of us have lost our homes, our jobs, our retirements, and our dignity. Like the mother and her children, many of us have been left with very little. The last few years have been rough on us all. Leaving many of us struggling to provide for our families and put money on the table. It feels like the dreams and futures that we had been building for ourselves and our posterity for so many years are now riddled with holes broken.  What’s more, it’s just getting harder as the days go by.

If you’re enduring financial hardships, it’s hard to think about anyone else but yourself. It’s hard to see beyond the dark circumstances that you’re in now. Maybe you’ve been looking for a job for the past several months to no avail. Maybe you’re one of the fortunate ones who found a job but aren’t getting paid nearly as much as you used to. Despite whatever it is you’re going through there’s a light at the end of the tunnel. There’s hope and you’re not alone. But I encourage you to look beyond yourself. Think of those who have less than you.

Think of those who go without a home. Think of those who go hungry for lack of food. Think of those who go thirsty for lack of clean water. Think of those who suffer for lack of proper medical attention. Think of those who have less than you. What you’ll find is that instead of dwelling on what you don’t have, you’ll end up being thankful for what you do have. Those feelings of pressure and inadequacy will be replaced by feelings of contentment.

The bible says, “…I have learned, in whatsoever state I am, therewith to be content.” Philippians 4:11-13 It encourages us to learn to be content in any circumstance that we may be in. Contentment replaces uncertainty with peace. So today, take some time to think of those who have less than you.

Happy Sabbath!

We’ve been on Step 2 of our Total Money Makeover for the last 7 months now (big shout out to Dave Ramsey), so knocking out this last loan means we can finally breath a sigh of relief because all our consumer debt is finally gone (all $48,120 of it). Landing an SEO Consulting Gig had a big part to play in us being able to pay this off early this month. It also means that between this payment and the Other Big Payment to the Student Loan 4 that we made earlier this month, we’ve paid over +$6,500 this month to knock out this debt for good.

First off, big thanks for everyone for keeping us accountable. If it wasn’t for you readers, it would have been super hard for us to stay on track. Buy we’ve been criticised in the past for making this “look so easy” because we “make so much money”. You should know that it’s been an uphill battle throughout. The honest truth is, we don’t make that much money for what we do, especially after taxes (Where Does All Your Money Go?). Honestly, for the amount that we work and the level of education and experience that we have, We’re Below Average. To get here, we had to put in long hours and took on extra jobs. While our friends were having fun, we were at working. The only way that we’ve come this far is by living frugally, following Biblical principles of stewardship, and leaving the rest in God’s hands. We had to learn to scale back, sacrifice, and be content. It wasn’t easy.

It’s only by God’s grace that we’re here. But I hope that as we document our journey, it shows that it is possible for average middle class American’s to do what we’ve done and get ahead. It takes discipline, commitment, and responsibility. You can do it too. Wishing you all the best!