Nelson’s note: This is a guest post by Arthur Garcia from The Buy and Hold Guys. Arthur demonstrates, via his blog, how he’s building up a passive income stream using real estate. Yes kids, he’s using leverage to get ahead. Anyway, go check out his blog. It gets a personal Financial Uproar thumbs up, which is probably the greatest compliment of all time. Take it away Arthur:

Have you ever wondered what affect your friends have on your finances? Have you ever thought about how your self-worth affects your income? If so, then I think this post will resonate with you. I’m going to share a genuine example of how expanding my network and peer group increased my wealth – all without spending a dime . . .

Upon college graduation, my two closest friends and I hit the pavement interviewing for jobs. After several months and countless interviews, Sal was the first of us to receive a job offer at $38K a year!

Now, you’re probably rolling your eyes and saying to yourself, that’s not a lot of money, big deal. But to us, it was a very big deal. To truly appreciate this situation, you need a little more context. Sal’s mother only made $20K as a housemaid while his father made about $30K a year in customer service.

My father made about $35K a year as a warehouse foreman while my mother (the breadwinner) made a whopping $42K as a recreational coordinator for the city. Our other friend, Joey, had a similar story: his father made $44K as a public school teacher while his mother made $15K as a teacher’s aide.

What impressed Joey and I about Sal’s job offer was that, at 21-years-old, he would be making the same or more than our parents!

A few weeks passed and Joey received a job offer at $29K, but then something interesting happened: he didn’t take it. That same week, I received a job offer at $28K and I too passed on it. To make a long story short, after a few more weeks of interviews, I landed a job earning $36K while Joey accepted an offer of $43K.

What’s the moral of this story? My point is that, just like in the scenario above, people tend to look to their social reference group when making lifestyle choices. As I’ve gotten older, this concept has only become more apparent.

Stop for a moment and consider your closest friends’ annual incomes. Is it a coincidence that they earn similar salaries? The reality is this: the people we spend the most time with become our measuring stick for financial success.

Meeting Tony

After a few years of living in the real world, I (like most of you) learned that $36K is not a lot of money, at least not for the lifestyle I aspired to. It wasn’t until I met someone with a high net worth, a customer named Tony whom I got to know through my day job, that my perspective on money and investing was transformed.

Over the course of two years, we got to know each other rather well. During that time, we had many conversations on life, business and of course, money. He enjoyed talking about his interests in rental property and passive income. Up until that point in my life, I never really considered earning income outside of my day job. And although my parents gave me as many opportunities in life as they could, they didn’t know much about investments or passive income, unless you counted the lotto.

On the contrary, the advice I received growing up was fairly common for a middle-class kid: get a good job and work hard. This left me with only two feasible options: get a promotion or work more hours to increase my salary.

Over the course of many conversations I had with Tony, I started to develop an interest in buying rental property. After sharing this epiphany with Tony, he insisted that I speak with his friend, Ronnie. Several weeks passed and a meeting was set.

The big meeting finally arrived and I spent the better part of two hours picking Ronnie’s brain. He talked

to me about everything from buying his first property, to selling half of his portfolio and becoming a multi-millionaire. I wish I could sum up the conversation with one key take-away, but there really wasn’t any one thing. The only thing I could definitively say is that Ronnie was an average guy, and that after leaving from our meeting, I no longer felt that attaining his level of wealth was out of my grasp.

This leads me to the main point of today’s post: the way to increase your net worth without spending a dime is to broaden your social network. As I mentioned before, the people around you influence your decisions and moreover, your perception of what you think is possible.

Ask yourself, who do I surround myself with? Are these individuals going to help you attain the next level of wealth you desire? Of course, I’m not suggesting that you rank your contacts solely on what they can offer you; however, you do need people capable of educating you in areas that you may not be familiar with in order to grow.

So if you agree that you stand to benefit from expanding your social network, you’re probably wondering, how do I do that? Especially since, as adults, most of us don’t meet people as frequently as we did in high school or college. While there are countless books and tips on networking, I’m going to outline three genuine tips that have worked for me and should be simple to apply to you daily life as well.

1. Search the outer rims of your personal network – Chances are the people closest to you won’t be able to introduce you to the people you need to meet. Why? Most likely, you know nearly everyone in their immediate sphere of influence. Therefore, the people with the highest probability of introducing you to new contacts exist in the outer edges of your friendship circles, such as:

* Acquaintances: Co-workers, church congregation, gym members and extended family relatives.

* Professional contacts: Real estate agents, lawyers, accountants, financial planners, mortgage lenders and people you are servicing (like Tony).

* Friends: Relatives, co-workers and roommates of close friends.

The goal is to let these individuals know what you are trying to accomplish. If you want to learn more about investing in rental property or starting a blog for instance, ask people if they know anyone who has successfully done this. Then, see if they can put you in touch with someone they know. You’ll be surprised by how willing people are to assist you once they know what you are looking for.

2. Go where they go: Where do the people you are trying to meet spend their time? If you are trying to learn how to develop another income stream via blogging, then you need to spend time where the pros are spending time. What seminars and classes do they take? What social clubs are they apart of? What websites and online forums do they browse?

Your goal should be to meet them in their natural habitat (both online and on-ground) and make connections. Get their contact information, offer to take them out to lunch or get them to agree to give you a 10-minute phone call. Prepare a set of questions in advance and don’t waste their time. Successful people love to pay it forward when they feel that the information won’t be wasted effort.

3. Be Sticky: Lastly, stay in touch. If you are going to all the trouble of making a new contact, find an effective way to stay in touch with them, such as:

*Cards: send a thank-you card following  your conversation; maybe include a $5 Starbucks card. Trust me, this goes a long way. You can also do this with holidays and birthdays.

*Sending resources: This is an easy way to add value and stay on their radar. If you see an article or a book that may be of interest to them, send it their way with a friendly “hello”. Of course, don’t bombard them with something every week, but every other month is not a bad idea.

*Phone calls: Get in touch every so often and let them know how you’re applying what you’ve learned and ask for more applicable advice (tactfully, of course).

Closing Thoughts

Since meeting both Ronnie and Tony, I’ve gone on to purchase multiple rental properties over the past two years; and while I’m not yet in a position to walk away from my full-time job, I’ve started to build a sizeable monthly income from the positive cash flow.

I’ve kept in touch with both Ronnie and Tony over the years (as they continue to be valuable mentors), but having applied the above networking tips, I’ve also been able to meet other quality contacts who havecontributed to my personal success and overall well-being.

What about you? What are going to do to expand your network in 2012? Do you have anyone like Tonyor Ronnie in your life? What do you do to stay in touch with these folks?

Tell everyone, yo!