In Friday’s blog, I talked about you how Richard & I are planning for retirement and massive changes in the US economy and job market.
One of the easiest ways to improve your passive income to monthly expense ratio is to change your monthly expenses.
Sure, part of that is frugality. Do you REALLY need that (whatever it is) or could the money instead be put away for future investments? More on that in a sec.
Also, a big part of reducing expenses is paying off your debt. Consumer debt is WAY more expensive than any of us want to admit. If you pay the minimum amount due on your credit cards, it can take over 30 years to pay it off! That’s right. That credit card debt will be around longer than a home mortgage would be.
I am going to be talking about in future emails and blogs.
Today, though, let’s look at how you can transform that expense TODAY so you have more money in your pocket.
Instead of paying for things personally, look for hidden business deductions and pay for them through the business. Remember business expenses are paid with before tax dollars and personal expenses are paid with after tax dollars.
In order to take a business deduction, the expense needs to be “ordinary” and “necessary” to the production of income. Just about everything you spend money on COULD be a deduction in the right circumstances.
Where do you spend money now? What kind of business would have that kind of expense as an ordinary and necessary business expense?
Wine expense? A wine, travel or lifestyle business.
Travel expense? Travel or lifestyle business.
Dog rescue? Dog rescue charity.
Medical expense? Medical Expense Reimbursement Plan through a Schedule C that employs your spouse or through a C Corp.
In the right circumstances, just about ANYTHING could be a legal, legitimate deduction.
And, let me let you in on a little secret.
Chances are the places that you spend your money now indicate the things that you care about. Have you spent a lifetime perfecting that hobby or personal interest? If that’s you, you have a unique advantage for beginning a business around that.
Start a business to market to the people who want to hear from you.
Step one for paying less tax, is to find your hidden business deductions.
The second step is to relook at all your expenses in general. Instead of being an expense, view it like an investment. What is the return you get on that investment?
If you hire my firm for tax strategies and tax preparation, you may very well pay more for the services than you do now.
On the surface of it, hiring me is a stupid idea.
But what if I could tell you that you get a RETURN on that investment?
Would you rather spend $500 and throw it away or spend $1,000 and get a return of $5,000, year after year?
Is the $500 expense a better investment than the $1,000 expanse? It costs less, after all.
If that’s all you look at, then yes. But if you are looking at this like a business owner or investor, you know the cost doesn’t mean a thing.
It’s really the return on investment is what matters.
The return on $500 expense is 0. The return on $1,000 expense is a steady stream of income, now and into the future
NOW, which is the better investment?
That’s how to look at numbers like an investor. What is the return? If there is none, then find a way to write it off.
The absolute last choice is to have personal expenses that don’t return any income and aren’t deductible.
Want a better future? Look at your money differently.
Are you ready to schedule a consultation with me to build out a personal, customized strategy? Give Richard a call at 888-592-4769 or drop him a note at Richard@USTaxAid.com.
INVEST, don’t just spend money.