Ten Cents and Your Bachelors Degree Will Get You a Cup of Coffee: How to Avoid Financial Trouble
Posted: Tuesday, March 18, 2008
by Jeff Brown
Inner Projection
Never mind that because of the influx of community colleges over the years, grades have inflated creating an influx of unmotivated students putting a downward pressure on academic standards. Never mind that most jobs don't even require a degree, that it is more of a demarcation point for human resources. Never mind all that . . . and more.
It used to be that with one job you could buy a house, a couple cars, and provide the essentials for your family. Now with both parents working in 70% of U.S. homes, it still doesn't provide financial security. Like the get-a-college-degree-job-security myth that many still feed in to, even with both parents working the safety-in-numbers myth provides little security as well.
Why?
Consider this, the top three reasons why there are over two million foreclosures in the U.S. are divorce, job loss, and illness. Regardless that it was a 40-year low in interest rates that got most there, outside of this there lies another, more deep-seeded problem. One income cannot do it anymore. Even two are struggling to get by. Here's a sobering report from Elizabeth Warren, author of "The Middle Class on the Precipice" (Harvard Magazine, Jan. / Feb 2006).
"By 2004, the family budget looks very different. As noted earlier, although a man is making nearly $800 less than his counterpart a generation ago, his wife's paycheck brings the family to a combined income that is $73,770-a 75 percent increase. But higher expenses have more than eroded that apparent financial advantage. Their annual mortgage payments are more than $10,500. If they have a child in elementary school who goes to daycare after school and in the summers, the family will spend $5,660. If their second child is a preschooler, the cost is even higher-$6,920 a year. With both people in the workforce, the family spends more than $8,000 a year on its two vehicles. Health insurance costs the family $1,970, and taxes now take 30 percent [ it's actually 42 to 50%] of its money. The bottom line: today's median-earning, median-spending middle-class family sends two people into the workforce, but at the end of the day they have about $1,500 less for discretionary spending than their one-income counterparts of a generation ago."
More and more middle-class citizens are falling into the lower class, many by way of foreclosure. I was watching the news last night with my wife at a friend's house. A man and woman had just lost their home and were sitting outside their new trailer home with transplanted lawn jockey, pots, and planters. Through teared-up sobs, the man explained how disheartening it was to work so hard for a dream only to see it lost with little chance of recovery.
What is the solution? Well, instead of going to a job factory (university / college) to learn a craft or skill only to end up working for the government (40 to 50% taken in taxes), banks, and credit card companies (average American owes $10,000) our students should be learning about finances, more specifically, how to own a business and invest.
Time and time and time again, I have gone to wealth seminars and heard former mortgage brokers, insurance agents, Kentucky Fried Chicken managers, teachers, the homeless (sometime the same--I know!), talk about dire times, skimming for nickels and dimes in the change jar to pay for groceries. It is a sad state of affairs, and some, like Hillary, feel that the government needs to do something about it. Well, if you know how the government moves, I'm not waiting. So what do we do?
Instead of working for a company, one which tells you when to come, when to go, how much your worth, and whether or not you'll be working; instead of never even seeing 45% of your income; instead of being caught in the education matrix; instead of relying on the pain of scrimp and save to no safe solution; the only alternative is to let your money and the government work for you. Here's how.
Consider the following trend. Most micro-business owners represent:
99% of all employers
50% of all employees
44% of all payroll dollars
70% of all net new jobs
Today, one out of six people that you meet are taking matters into their own hands and have joined the ranks of the "better-off," if not secure.
If you want to get your taxes down to single digits, start a business. It can even be a part-time online business selling knitting techniques. Really! The tax write offs alone are worth it. Here's a few examples:
Home Office Deduction: You no longer have any non-deductible commute. All of your mileage is now business related.
Pay your child up to $5000 to help you run your business and pay no taxes (fica, fed., state) and get $2500 back from Uncle Sam.
Convert other medical expenses from itemized deductions to business expenses. Convert limited health insurance deductions into fully deductible business expenses. You save not only on federal income taxes but reduce self employment taxes as well. Save up to 45% by deducting payments that you are already making.
For retirement, up to $45,000 / year can be deferred. Invest in your future and the IRS will reward you with lower taxes.
Why let your Bad Uncle take your money when your Good Uncle is only a business idea away?
How else can you win the money game? Real estate . The government wants you to do two things: start a business to create jobs and feed the economy and to provide affordable housing. And you don't have to be "The Don" when it comes to real estate. But keep in mind that 7 out of 10 millionaires own real estate. It's the safest and most profitable way to make passive or leveraged income. And by the way, the government is dying to give away money, provide the down payment, even forgive loans (yes, there are forgivable loans that don't have to be paid back; hell, they're forgiven!).
Need a home? Here's a possibility. Try the 203 (b). It's the purchase of a four-plex, where you move in to manage for a year before selling or keeping as an investment. And the good part? You live for free as you build equity.
Bottom line, the government wants you to help out, and if you do, they'll help you, in a big way . There's many ways of getting ahead. The limit is only in your ability to imagine.
So even though there's a lot of bad news out there (foreclosures, job loss, cost of living increase), if you keep your eyes open there's always a way out. With a little shift in thinking, a willingness to change, you can not only get back on top but rise higher than before. Good luck and God bless.
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Top-level comments on this article: (4 total)Jeff-Great points! I am one of those people still paying for my degree that I really do not use so I could easily relate with your article! Thanks for all the tax advice as well! Great timing!
Laura, As a teacher (former college professor, current private consultant) I've always desired to let people know the truth, but I only really talk about what I practice. I only talk about stuff I've experienced, along with researched, so that I get as close to the truth as possible. I hate seeing people go under or suffer unnecessarily, like the millions who have gone into foreclosure. There is a way to beat the system, get a house, make good money without killing yourself (financial leverage, money working hard not you) not see the kids (parents see them an average of 48 minutes / day). And I desire as many as possible to live their dream. Thanks Laura.
I received my degree and I still do not have enough for a cup of coffee!Join the club. My mission is to dubunk the mis-thruths thrown about in regards to education equals the American dream. Yeah, right. Thanks for dropping by.
Instead of spending the Taxpayers money in Afganistan, Vietnam, Korea, and Iraq ,the Govt would have spent the same in providing FREE medical fecilities to the needy people who cannot afford to take Medical Insurance. Free Education to all the needy under privileged children, should be given by the Govt. by opening Govt Colleges, upto undergraduate Level from the Taxes collected from the rich people, like Millionares and Billionares. Regarding a House for poor and Middle class people Govt can construct multistoried Flats and Sell at subsidized rates – payment by installments spread over a Long term of 20 Years.I like the taxpayers money staying here idea. Many would agree. Getting the rich to pay more taxes, they of single-digit tax rates, not so good or easy. After all, they write the codes. Who do politicians cater to? Thanks for dropping by and leaving a comment. God bless.
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