This year I have been to so many meet ups and spoken in front of different groups of women and men and in every session, they ask “what is your word for 2020?” I hear a lot of “intentional,”“focus” and other similar words. I’m not quite sure what everybody is deciding they want to be “focused” on or they want to be “intentional” about, but if you ask me everybody is looking to create freedom or the ability to do whatever they want.
I think this is because people want to focus on being strong or succeeding at one thing in order to see massive results in that area. Most of the people I hang around are business professionals, so the thing they’re focused on is being massively successful and increasing their income. Follow me here…
So, imagine right now that you are somebody who is an engineer, a doctor, an executive, the top sales rep at your company, a successful lawyer, a dentist with your own practice,a fund manager, a house flipper working on a large-scale, a homebuilder, or any successful individual who owns her own business and is self-employed. You have to show up every single day and do some sort of action to be able to make money. This is called active income and this is the type of income the government taxes you the most on.
Even if you drop everything that you’re passionate about and completely focused for 2020 on earning massive income in your specialty, the government will still take its chunk of what you make. I’m really not a fan of working my butt off have somebody take the income I make.
All this time you’ve been trading time for money, almost like an employee. The trade-off of time versus money is much greater in these professions, so instead of making $15 an hour you’re making $500 or $2,000 an hour. But just like an employee,depending on your tax bracket, the government is still going to take say 30% of your income. Think about it this way, that means 30% of the time that you were working to create that income, and using your focus and energy, was literally wasted.
If you could give yourself time back that 30% of your time, instead of giving it away, making income wouldn’t you do that?
It isn’t about how much money you make, it’s how much you keep. So, I want to challenge you, instead of focusing on doing one thing in your career all day long or specializing in one thing so that all the money comes from that thing, I want you to focus on how much of your income you are keeping.
Think about it this way, if you make $100,000, and it’s totally tax free, you get to keep $100,000! But in a high tax bracket,you’re only going to keep $70,000. And that is before expenses. One of the easiest ways that you can save yourself taxes on earned income is to start making passive income.
K-1 income saves you a massive amount of taxes. And it’s easy as hell because you’re not having to show up every day to earnit! If you earn a decent income in your career, you need to be leveraging it to multiply your income while you sleep, vacation,have family-time, and pursue whatever it is that your passionate about.
It’s sad to think of people wasting 30% of their lives – that could be up to 30 years of their life! My focus is on pursuing what matters to me, which right now is making every daycount like it’s my last.
If I’m forced to give away 30% of my life to the government, I’m not going to be able to be at the hospital for my grandma, or be at my kids’ recital, or be able to chase butterflies in the field, backpack the mountains, or take a week or two off for vacation.
When you choose to make passive income, even when there is a capital gain event (government wants their money from your hard work) like a sale of an investment, you still get the benefit of being taxed at the lower capital gains rate which is less still than earned income!
If you’re invested passively in the stock market via governmentsponsored investment accounts like a Roth IRA or 401(k), you do not get the benefit of the lower capital gains tax rate (you can only benefit from this if your gains are coming from real property). But you can benefit from a 1031 “like kind exchange” to defer capital gains taxes…. However, this only increases your net worth for the value of your investment and continues to circulate your money. This does not allow you to withdraw your gains to use for whatever you see fit.
When you invest in real property you can do a 1031 exchange or like kind exchange your gains AND you can choose to cash out your tax at the lower capital gains rate. There are also ways around this capital gains event tax by rolling your government sponsored savings accounts into self-directed accounts. Ask me how I know. There are many other ways that passive income can also help you to offset your other active income or your spouse’sactive income… more to come on that later!
Let’s start thinking about focusing our energy in 2020 on creating passive income. The faster and younger you can do this,the more freedom of time you’ll have and the more money you will make over your lifetime. As in the Rich Dad, Poor Dadseries, everything you own is either an asset or a liability. If it is making you cash flow (not trading time for money) it is an asset,if it is not creating cash flow it is a liability. So, ask yourself, is your car, home, and expenses a liability or an asset? There’re certain necessary expenses. But if you can offset those expenses with assets that cash flow and live a net zero life, meaning you’re not in debt but everything you need is completely paid for and you don’t owe taxes, wouldn’t you be happy?
Think about it and really try to simplify your life.
The government wants you to believe that any excess income should be put away into accounts which will compound annualized into large accounts. The idea being that it will cover our expenses in retirement, when we no longer have tax deductions.
Instead, consider this… If everything you own cash flows, you can retire whenever you want! And you’ll be in a low tax bracket because your income will be passive. Let us teach you how to make passive income today you can retire when you want and pursue the things that are important you. I have a monthly meet up in Dallas, Texas where we discuss opportunities for free passive cashflow.
And coming soon I will be starting a woman-only fund. It will be the first of its kind in the entire world to help women become investors, make passive income, do what she wants with her time, and create independence. If you have a wife, sister, daughter, anyone women in your life that you care about- this is for her. It is an account that gives passive returns to anyone who puts money into it.
If you want more information on how to get involved and learn more about how to invest, reach out to me.