Un-lesson #1

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I am calling this "Un-lesson #1" because (believe it or not) one of the most important things to learn is that most of what you think you know about money is what is keeping you from financial independence.

You are where you are financially for a host of very good reasons (because of what you THINK). You will not appreciably change your financial situation until you change the way you think.

To change your financial situation, you must FIRST change the way you think.
To change your financial situation, you must FIRST change the way you think.
To change your financial situation, you must FIRST change the way you think.

The first un-lesson is the word "Rich."

Rich is a word I rarely use because everyone THINKS they know what "rich" means, yet when you really pin them down, everyone has a different definition.

Moreover, peoples' definition of the word "Rich" changes constantly.

When I was a teenager, I thought "rich" was someone who made at least $30K per year.

When I eventually got to where I made $30K, I realized that "rich" was really a term used for people who made at least $60K per year.

Once I actually made $60K per year, I realized that "rich" really referred to those who made over $100K per year.

Once I got there, I realize that to be "rich" you had to make at least $250K per year.

Then, after reaching that sum, I saw that to be "rich" you had to make at least $400K per year.

Once I made that much I realized I WOULD NEVER BE RICH!

"Rich" is a term that refers to someone who makes MORE MONEY THAN YOU DO. The more you make, the more "rich" is. It's an idea that's ALWAYS MOVING!

YOU WILL NEVER BE RICH! As you grow, your mind grows faster. You can't catch it!

Stop and consider this for a moment. When you hear politicians referring to "the rich," who are they talking about when they speak to a large group?

They're talking about SOMEONE ELSE! They're using a term that everyone thinks they understand, yet few really do.

It's a term politicians love to use when promising to put YOUR PROBLEMS on someone else.

They promise to tax the "rich." Nobody thinks of THEMSELVES as "rich" so who could possibly oppose it?

Stop and think of your definition of the word "rich."

I hear different definitions all the time. People say, "Those that make ten gazillion dollars a year are rich!" That's a perfect example of what I am talking about.

I have heard people say, "My idea of rich is a happy family." Many times, people who say that have given up all hope of reaching financial independence, so they reach for "rich" in other ways.

Do you think the politicians are going to shift the burden of paying for expensive social welfare programs to those who have happy families?

I suggest that you listen for the word "rich." When you hear people say that word, what are they really saying? There is a lot of meaning BEHIND the use of that word and I suggest you start listening for the true message.

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When politicians say "rich" they mean those with the most "earned income." (that's another reason I hate the word "rich")

Earned income shows up on the W-2.

Here is how wealthy people avoid taxes.

This is the basic financial model for a W-2 earner (employee):

EARN - PAY TAX - SPEND

However, businesses live by an entirely different set of rules under the tax code.

Businesses: EARN - SPEND - and if there's anything left - PAY TAX on that amount.

Changing the order of when you pay tax means EVERYTHING.

When I left my W-2 behind, I also left behind a system where the government gets paid FIRST.

If I choose to live my life as a business, the government gets paid LAST (if at all).

Wealthy people know this. Wealthy people can choose to have NO EARNED INCOME whatsoever. As a business owner you choose how much to pay yourself and WHEN to do it.

What are the taxes due if you have no (or little) reportable income? ZERO.

There is a lot to this (more than I can get in to here), but when the politicians say they are going to raise taxes on the "rich" they really mean the upper middle class.

It's very likely that Bill Gates, Donald Trump and Rush Limbaugh have no earned income whatsoever. They get their money in other ways (legally). Their taxes might not go up at all.

Their companies own their cars, planes, etc and those bills are paid with company income BEFORE taxes are taken out.

It is absolutely legal to live your life under a different section of the code than the average employee does. It's the middle class employees who work hard for that big promotion (thinking that a high salary is a good deal) that pay for the social welfare programs. The wealthy are nearly invisible to the IRS because the system is set up to hit people with earned income the hardest.

Wealthy people can avoid earned income.

The next time you hear a politician say they will tax the rich, start laughing! It doesn't work that way and it never will.

Striving for a high earned income is a loser's game.

You cannot play that game and expect to win. The game is fixed to KEEP YOU in the working middle class. The government wins and laughs all the way to the bank.

If you want to get wealthy, you FIRST have to start thinking like a wealthy person thinks and start playing by a different set of rules.

If you bust your ass at work (pick up lots of overtime), so you can buy toys with after tax income and keep up with the Jones, you will fuck your future.

THAT LINE OF THINKING WILL KEEP YOU WORKING UNTIL THE DAY YOU DIE.