Wage Slave

Just as debt makes you a slave to the bank, wages make you a slave to the government.

Remember my previous post about how much you have to earn just to be able to pay for that plasma TV.

The big problem with being a wage slave is that you earn your money, then the government takes their cut, then you're allowed to spend what's left. Don't forget the fact that you still have to pay sales tax with those after tax dollars - further depleting your purchasing power. Most people's answer to this problem is to get a better paying job. However, a better paying job only increases your tax burden and and makes what you purchase even more expensive.

Another wrong solution is to just to refuse to pay your taxes. Even though the people who advocate this do have some legitimate points and concerns - I guarantee you the end result of this will be jail and massive fines. Which doesn't help your situation at all.

Fortunately, the government does offer us all a very legitimate and legal way to get out from under this wage trap. The solution is to start your own small business. Here's why, when you are a small businessperson you earn your money, THEN YOU DEDUCT YOUR BUSINESS EXPENSES, then you pay taxes on what's left.

That means all your legitimate business expenses are 100% exempt from all income and payroll taxes!!!! Also, any sales tax you pay on legitimate business expenses are deducted pre tax from your income, not after tax like most wage slaves.

When I was in my 20s, I liked to spend my money on music, computers and my car. I started a mobile disc jockey service because it allowed me to deduct most of what I spent on these three items. Over the course of the 10+ years that I performed as a moble DJ, I deducted thousands of dollars from my income on things that I probably would have bought anyway.

Here's another benefit. I always have had a home office. Having a home office allowed me to deduct a portion of what I paid in rent/mortgage, utilities and telephone expenses (basically whatever percentage of your home is dedicated as a home office is the percentage of your home expenses that you can deduct - so if your office is 10% of your home, then 10% of your rent, gas, electric, phone, water, sewer, property taxes, insurance, etc are deductable from your income).

My wife and I run a fitness studio now and here are some of the things that we deduct from our income and, therefore, don't have to pay taxes on:

video equipment

laptop computers

cell phone service

home office expenses

music CDs and itunes

auto mileage when we run errands (currently $0.485/mile)

internet connection

travel expenses

Please note, I am not advocating anything illegal. You have to make sure that whatever you are deducting has a legitimate business purpose. For instance, we have our own website so that allows us to deduct the internet connection.

So, the end result is our taxable income is probably much lower than many of my wage slave colleagues, yet my standard of living is at least equivalent, or sometimes greater, due to the fact that many of the things we both pay for cost much less for me because I buy them income tax free!

So, you have the second tool to help you become a true financial judo master. Find yourself a small business that will allow you to start writing off what you spend your money on!