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Monday, May 26, 2008

50% Money

If you're like most Americans the way to get ahead in life is to go to college, get a good job and in time get pay raises and bonuses. There are some problems with that strategy. Have you noticed that most people don't stay at their job for 20-30 yrs anymore? In fact, many businesses startup and go out of business within 10 yrs. We are in a very different age these days and the old ways our parents taught us regarding money just don't work! For our parents growing up in the industrial age it worked fine to go to school, get a job, work for the same employer for a long, long time and then retire. These days, in the information age, we clearly have to look out for ourselves and our own retirements. Nobody, including the government, is going to take care of us.

If we are going to make a solid plan for our financial future then we have to better understand our own finances. You earn money in at least one of four quadrants; employee, small business owner, big business owner or investor. If you are like most of us you earn 100% of your money as an employee. This is where the 50% money comes in. You see, if you think about it, the government taxes you on your money before you even get your hands on it. It is taxed before you have a chance to pay yourself or pay your bills. Right off the top, taxed. Federal tax, state tax, Medicare, social security, etc. After you get your net income, after tax money, you pay your bills and if you have any left over you might try to save some. Now as if you weren't taxed enough any money that you managed to save you are taxed on the earnings. If you put money into a 401k you are taxed when you withdraw it at retirement. There is gift tax, death tax and the list goes on. What it boils down to is the employee is the most heavily taxed of all the quadrants and this income is considered 50% money because that is about all your going to see of it in the end. It is very hard to get ahead with 50% money.

Now wealthy people have this figured out and that is why they earn their money as big business owners and investors. Small business owners are still getting earned income and all they have done is create a job for themselves instead of an employer doing that for them. A big part of the strategy to go from being broke to being wealthy is figuring out the tax system. Think of it this way; employee 50% money, self employed 50% money, big business owner 20% money, investor 20% and in many cases 0%. Yep, in many cases they pay zero taxes and it is so much easier to get ahead financially if you don't have to pay out 20-50% in taxes!! Also the nice thing about earning money in a business is that the government doesn't tax you on your gross income but on your net income. So you are able to deduct all of your business expenses, and they are many, and then the government taxes you on what's left. Pretty good deal eh?

So really the objective should be to go from the employee quadrant to the business owner and investor quadrants. It's a different mindset and will likely take years but remember "A journey of a thousand miles begins with a single step."

Sunday, May 25, 2008

Tired Of The Rat Race?

If you are like most of us you are caught up in the daily grind of work with little or no chance of getting ahead financially. Ever wonder if there is something you can do to fix that? There is ... financial literacy. Financial literacy can be gained in many ways and it is an on-going process. I highly recommend a computer game that will illustrate the process and ultimately help you get out of the Rat Race and on to the Fast Track. The game is called Cashflow 101 the eGame and I'm here to tell you it is worth every penny. I personally play this daily and sometimes for several hours in a day. Why the heck would I put so much time and effort into a computer game??? Like most things, you learn a lot from immersion. You are consistently presented with an income statement and balance sheet and by playing the game you constantly see where to place items within and take items out of their respective areas on the balance sheet. It may sounds a little boring but far from it. I like the eGame because it is at your own pace and you can learn a lot from it. And fundamentally the way you play the game is also the way you need to be doing it in real life. It parallels real life strategies and formulas. And the very basic formula is what we learned as kids playing Monopoly. Buy 4 green houses and trade it in for 1 red hotel.

So if you want to build passive/portfolio income and actually retire one day then this is a must have item! It will change the way you look at money if you play it enough and learn the lessons built into the game. Good luck and have fun !!!

Handmade? What's That??

If you're like most of us when we need something we run to Walmart and buy it. I use Walmart all the time; low cost, always open.. oh yeah. But occasionally, when I actually plan ahead, I prefer to have something that's actually made by hand with a personal touch. My dad used to make a lot of things by hand including knives, wood projects, spurs, leather items, etc.

I recommend checking out Paula's Etsy site. She is a childhood friend and I knew her family when I was growing up. Very good people and believe me when I say a lot of personal time and care goes into these products. Her store has low cost items although the products are labor intensive. Why does she do it then? Because she really, really enjoys it!!

So for items you just can't buy at Walmart you might want to have a look.

Killing Me Softly

I have heard for years that diet drinks are really not all that good for you. But, did you know that it is much worse than that? I personally have been drinking diet coke for a long, long time. I believe for at least 18 yrs. And I get days where I drink a lot of it.

Apparently the real culprit is aspartame. When this artificial sweetener reaches 86 degrees F the wood alcohol in aspartame converts to formaldehyde and then to formic acid. This in turn causes metabolic acidosis or increase in total body acid. The formic acid is a poison that can be found in the sting of fire ants!

So it would seem I personally am running a high and unnecessary risk. I drink this stuff every day and often many cans a day. Yuck!! In fact, I have one sitting in front of me right now that I've been drinking. So if you are one of many that consumes drinks with aspartame you may want to reconsider. I sure as hell am!!

Saturday, May 24, 2008

Bionic Man

Yeah, ok, not as impressive as the 6 million dollar man or the bionic woman but still pretty damn cool. Five individually powered fingers, the i-Limb hand is produced by a Scotland firm. Designed to take impulses from the muscles but I believe an implant in the skull is in the works that would relay a signal from the brain. After this war we are going to need solutions for all of the maimed soldiers. I am not sure who is a good candidate for this prosthesis but it looks like a step in the right direction. Any thoughts?

Which Is Which?

Can you tell that only one of these men are human? The other is an android. The day of the robot is coming folks. Three independent articles indicated that within approx. 15 yrs from now 50% of the U.S. households will have a robot in their home. Just as most people scoffed at the computer in the 80's ... here comes the robot.

How Much Does It Cost to be an Airline Pilot

The cost varies a lot but I would figure right at 80k for your degree and all of your flight training. I have personally been to many flight schools both touring them as well as training at many of them. They are not all created equal and by far the better choice is ATP (Airline Transport Professionals). If you are serious about flying for a living then go to ATP. Borrow the money needed and fly your butt off for 5 months. If you don't have a degree yet don't worry about it. ATP will charge you around 46-50k for training and will get you right seat in a jet quick!! The training is tough and full immersion is necessary but you will make it in record time. This is coming from a guy that has been in the industry for 18 yrs now. Believe me I have been suckered by a few but when I discovered ATP that was it!! Good luck to you and let us know how your training is going or any questions you may have.