It's Not About What You Make Its About What You Keep

Hey Jessavvy investors

Earlier this week I spoke about how we should celebrate and opely share ways to reduce ones tax burden, any capital we allowed to keep reduces government overreach, provides capital that can benefit you and your local economy and gives citizens back more power. Many people today put far too much pressure on their salaries to support all their habits, wants and needs they have now and the ones they plan to have in the future.

Have you ever looked at your monthly balance sheet? Look at the withdrawals versus the amount of deposits. Most people will probably have 1 large deposit their salary and the rest would be wtihdawls.

So how are you going to save, invest, create multiple sources of income if you have one central point of failure which is a single income.

I don't earn a big income by any stretch of the imagination, in fact I'm actively trying to earn less as it forces me to spend less. Sounds weird doesn't it? Well the less I earn, the less of a tax burden I can be, so I don't lose that opportunity costs, I shift it around, but that is a story for a other time.

Making your single point of failure a systematic failure

I know a fair few people who earn 2,3, 6 even 10 times more than my monthly income, yet I am in a better financial position then they are because of bad habits and poor understanding. The rat race for many is about increasing their salary, but an increase in salary means an increase in your tax burden.

Yet a lot of people still feel this is the best way to get ahead. In simple math and nominal terms, more salary is better, of course, but it's not about what you earn, its about what you keep.

On top of having a bigger tax responsiblut, many of these peers I've noticed will try to live exponentially higher than their salaries.

So you earn an income, you can by a VW Polo which is fine, but now that you have a greater income, you require a BMW so in fact you're not earning more, you're actually in the same spot, and in many cases you're worse off, if you run the numbers.

Having a single income and using it to buy things that don't generate an income makes no sense to me, but this has been normalised to the point where my point of view is seen as psychotic.

Stack up your deducatables

In my case, I try to keep my income as low as possible. In some cases, I will even take money out of my credit card, place it in a tax free account and then use that investmetn as a deducatble and then pay back my credit card before the interest kicks in.

There are way to work the system, if you do the research ad can help you keep more of your income. Then what you can do is use that additional income to reinvest into things that provide you with a return and you keep repeating this over and over.

For example, the points I get on my credit card, instead of buying something dumb with it, I use it to invest in ETFs and generate a return from my credit card points.

Any returns are reinvested, so I never take the capital gains, I never realise a return, in fact I've always got losses lined up to offset any income I make.

Start small to dream big

Like I said I don't earn big bucks, far from it, I just feel you need to learn how to work with small amounts if you have the ambition to manage large amounts in the future.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

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