I used to think one checking account and one savings account is all anyone ever needed. Then I met Tai and Talaat from His and Her Money who have a whooping 13 bank accounts!!!
I started to ask myself would it be helpful to have more than 2 bank accounts and over time I realized that it would.
Now I have 8 accounts,
I found it so helpful when it came to managing my money to have a designated account per purpose. That way I’m not keeping all kinds of mental math in my head of what money is for what in my one account. I can just move it around how I see fit.
Maybe you should consider multiple accounts too. Here’s more about Tai and Talaat and their 13 bank accounts, I don’t need 13 and you probably don’t either, but there right number may definitely be more than 1 or 2.
Looking for some tried and true shopping rules before you hit the mall? Check out today’s info graphic with 5 quick rules you should follow before you hit the mall this weekend
A few years ago, a writer at LearnVest introduced the 50/20/30 guideline for budgeting and it’s a pretty simple yet effective concept.
50% of your income goes to fixed expenses like rent, utilities & groceries.
20% of your income goes to savings goals
30% of your income goes to lifestyle choices like shopping, vacations, brunch and drinks.
At the time I completely jumped on board with this theory and implemented it as my own budget guideline. Over time I felt that the 20 and the 30 should be flipped so I wrote more about it for Black Enterprise this past summer.
In that article I still recommended allocating 50% of your income for living expenses like rent and utilities; but instead of 30% for lifestyle choices I allocated 30% for debt payoff, savings, and investments.
Raising the percentage to 30% was to help readers understand the role debt should play in their overall financial picture. In an ideal financial world, you would owe no debt, but if your debt is 10%, 15% or 20-25% of your income there is still hope for you.
With this new 30% savings, debt and investing model it gives you the incentive no matter what percentage of your income your savings are today to keep paying down all your debts, while gradually increasing your savings contributions until they represent a full robust 30% of your budget.
One of first mental barriers that need to come down to fully embrace this mindset and develop good saving habits is start looking at your savings like another bill you have to pay monthly, a bill you pay to yourself. This will help keep you stay committed month after month and brings some reality to the concept of paying yourself first.
After a while I even started challenging my living expenses reducing them from 50% to 35%. I kept my lifestyle choices at only 20%, debt at 10% and increased my savings to 35%.
Setting budget percentages is just a parameter, a starting point; but after you master the habit, celebrate your financial victories as your savings start to add up and debt goes down. You will start to crave even more ways to save and challenge yourself even more.
You hear a lot of groaning when it comes to paying income taxes, that is until Monday night during the Presidential debate. Hilary Clinton suggests Trump avoids paying federal income tax to which Donald Trump responded “That makes me smart”
Of course that lit the internet ablaze and prompted a lot of gasping questions.
The level of extreme shock across the net that Trump has somehow been able to legally get away with avoiding taxes while others have been imprisoned is something I want to address today and show you that it’s pure ignorance and misinformation that keeps us at odds, rich from poor, black from white, not politics.
You know who wasn’t shocked by Trump’s, “I’m smart” statement, anyone with a business that is structured properly and a good accountant. That group of people, myself included, know that with those two things, anyone can avoid paying significant federal income tax too. Let me show you guys.
In May 2016 Trump was quoted on ABC News saying he works hard to pay “as little tax as possible”
Here’s how it works, if he’s smart.
Trump is a business man, with a BUSINESS man. He can filter a large portion of his expenses to be paid through his business revenues, there is a laundry list of allowable expenses from mortgage payments to car notes even cell phones, and restaurant tabs are allowable. Travel, continuing education classes, certifications the list goes on and on, in some cases even gym memberships are allowable. It all depends on your business type and has to be considered customary and necessary for the business to function. So if I’m in sales and need a delivery truck it’s allowable, if I buy a Bentley or private jet and say I am using it to drive back and forth to client meetings, that too my friends is allowable.
Then all a business owner would do is take no salary draws from the business or the bare minimum if he is forced to draw something (a minimum salary draw is only suggested after the business reaches a certain revenue level). Basically spending as much from their business account as possible.
Why? Business revenues/income belong to the business not the owner and you don’t need to draw a salary, and definitely not a high one if the business is paying the majority of your expenses for you.
Is Trump an overachiever in the tax avoidance category? Probably.
In 1975 he only reported income of $76,000. $24,000 in 1976, and $118,000 in 1977. From 1991 to 1993 it was reported by Politico.com that Trump paid no federal income tax at all to which he responded, “Welcome to the real estate business”
Then when it’s tax time complete your businesses balance sheet deduct all of your business expenses from your revenue before you pay your taxes. That’s called net income, it’s what your business has left after it pays all the bills. Then complete your schedule C or schedule K-1 for your business taxes prior to your 1040 tax return.
Sounds unfair to anyone in the working world since the government has ultimate control over your money taking its cut straight off the top of your paycheck. Then you pay your bills with whatever is left.
Plus you still have to pay property tax, sales tax, capital gains tax, and all other types of tax, Trump probably does too, but he’s dodging the federal tax bullet. I feel like there is an expectation that he should not claim all of his business expenses as allowed but instead draw a salary and face higher tax burden to pay what Hillary calls his fair share, or just voluntarily pay more taxes.
Until the government forces businesses to pay taxes on revenues instead of net income (which they will never do) this will always be a easy tax avoidance loophole for business owners, but let me ask you a question, what would you do?
To take it a step even further, when a business has huge profits that would typically increase a person like Trump’s personal tax liability, however business owners will often still look for ways to shelter those profits from federal taxes. Even when there are losses in the business (when the business is spending more that it earned) that can still be used in an advantageous way to offset the business owners own personal tax liability.
Wish there were a loophole like that for you? For the average American, spending more than you earn is simply called debt. See how the system is gaming you?
This is all simple accounting, tax code standards and all legal on both ends.
In other words, even when you are high paid, you still aren’t PAID, you’re PAYING, unless you are a business owner. Like Jay Z said, “Til you OWN your own you can’t be free”
Now how does this compare to tax evasion cases like Lauren Hill, Wesley Snipes and Fat Joe? They didn’t go to prison for tax evasion simply because they were black you guys. They went to prison because business structure and tax rules weren’t followed.
Snipes failed to file taxes at all on over $40 million in income he received that was paid to him personally.. You cannot personally earn that kind of money in your own name then give the IRS the middle finger.
He was misinformed by his tax advisors who told him because he earned his income domestically he didn’t have to file a tax return and he believed them and didn’t file. (Which is complete BS, no wonder they both went to prison as well)
Trump doesn’t personally receive the millions he claims to be worth, his businesses do and scroll up for the reminder. Revenues received by a business belong to the business not to you.
Like Snipes, Lauren Hill failed to file a tax return as well on more than $1.8 million in income which is why she served 3 months in a Connecticut prison even after admitting to a judge she was planning to pay.
There are enough legal ways to minimize your tax burden without doing anything that can land you in the slammer and a few due diligence items that need to be handled on your part.
Snipes was just foolish for his ignorance. You are earning $40 million but didn’t take the time to learn anything about what’s required for your income level? You also didn’t take the time to figure out if you had legit tax advisors? Where was your accountant? Why wouldn’t they telling you to choose someone else because these guys were bogus?
The advantages far outweigh the costs
Lastly, a follower of mine on instagram said, “This may be true and great for business owners, but Trumps caviler delivery is like a slap in the face to hardworking American families who pay dearly in taxes then still have to come out of pocket for doctor visits or are under served by local schools”
I get it, trust me I do, but the moral of the story here is you don’t have to sit back and pay dearly indefinitely, you have choices. It’s ignorance that causes anger instead of the action to change something.
#youmad change something!
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