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4 Things That Keep You Poor
Death, Taxes, and a Home Business
4 Things That Keep You Poor
In today’s economic environment there are four things that keep most people poor.
Are you aware of what to do in the coming financial crisis to protect your assets, wealth and retirement funds?
This article will identify those four things and will also suggest ways on how to escape the “poor” attitude that is keeping you from achieving financial freedom and success.
Here they are:
We will look at how each of these factors affect your financial health and what you can do to minimize the negative impacts that will affect you sooner than later.
Taxes are a necessary evil of modern society and we all must pay our fair share. However, there are things that you can do to legally reduce your tax bill. Did you know that by re-arranging your financial and tax affairs that you can significantly reduce the tax you pay? For example, being able to change the kind of income you receive, generate or earn can drastically alter your tax situation for the better. Starting a home based business allows you to deduct expenses incurred in the operation of that business, thereby reducing your tax bill instantly.
If you have an existing business, changing the way you receive income from salary to dividends will result in an immediate lowering of your tax bill due to the favourable tax treatment that dividends receive. Review all ways you can change the way you receive income and you will find ways to reduce your tax bill on several fronts. The extra money you now find in your pocket can be re-invested back into your business for expansion, automation, or any other profitable purpose.
Debt is the number 1 reason why most people become and stay poor. There are good debts and there are “bad” debts that people carry. Bad debts are things that you pay monthly for credit cards and other non-deductible expenses such as loose spending habits, past sins and conspicuous consumption. This type of debt is “bad” debt in the sense that you cannot deduct it from your income and save taxes. It is a draw or a drag on your cash flow. Good debts, however, can help you out of the poor house and while also generating tax refunds in the process. Good debts are debts that you incur to purchase any income producing asset such as a rental property, stocks or bonds, or an annuity. These types of debts are tax deductible and in effect, the IRS will actually subsidize your purchase of that asset through the tax deductibility of the transaction.
The moral of the story? Eliminate all of your bad debts and replace them with good debts to the greatest extent possible. By doing this, you will re-organize your financial affairs in a manner that will increase your cash flow immediately, and your net worth in the long run.
Inflation is the worst enemy to pensioners and those others on fixed incomes. When the cost of living is increasing, their incomes in the short term are fixed and cannot increase thereby requiring them to skimp on essentials of life. They are doomed to stay in the poor house if their pension or their salary is their only source of income. For business owners, however, they can absorb the added costs and pass them on to their clients thereby minimizing the impact on their financial situation. Business owners are also likely those who have other sources of income and can cope with the effects of inflation. Buying gold or silver is another hedge on inflation. Moving your money from savings accounts that are in effect paying you a negative interest rate after taxes into gold and silver will be a good hedge for you when the economy falters further. Learning how to buy gold could save your wealth.
Retirement is the ultimate factor that keeps people in the poor house. People work 40 hours a week for 40 years of their life only to look forward to a retirement on 40% of their income!
That is called the “40-40-40 club” and the majority of people are members. Many people cannot survive on 100% of their income at retirement, let alone 40% and retirement is the ultimate wake up call for many when they realize that their entire life has passed them by and they still are searching for financial freedom. Learning how to profit your retirement funds is paramount as you get older.
Don’t realize too late in your life that you could be one of them. Take action today while there is still time to effect a major change for the better in your life. Get out of the 40-40-40 club for good.