Joe Withrow's Blog, page 24

What I Learned From a Saturday in the ER

I spent all day in the emergency room (ER) last Saturday. 

Not for myself. A family member endured a stroke, and I wanted to be there for moral support.

As anyone who has been through such an experience knows, there are lots of lessons hidden in this type of thing. I’m still working through some of them.

Today I want to share with you what jumped out at me very quickly in the ER. It isn’t pretty. But I think there’s a valuable insight we can take away from this.

To set the stage, there aren’t actual rooms in the ER. Patients have their own spaces separated by shower curtains. 

So you hear everything going on around you. And when you’re there for over six hours, you pick up on quite a bit. Here’s what jumped out at me…

There’s a big underbelly out there.

By that, I mean there’s a part of our society that is just scraping along – day by day. I suspect they don’t have vision. Or aspirations. They probably lack hope.

I don’t say this to be judgmental. It’s just a hunch based on my observations.

Whenever a new patient enters the ER, a healthcare worker asks them as series of questions. One of those questions is, “do you use recreational drugs?”. And if the answer is yes, they ask for specifics.

I overheard four or five of these conversations last Saturday. All but one of them answered “yes” to this question. And heroin was the hard drug of choice.

What’s more, the healthcare workers seemed to expect this. At least, as best as I could tell.

And I couldn’t help but wonder – how does one get to that point? The point at which you are in and out of the ER because excessive drug use is destroying your health…

Of course, this is a very nuanced problem. But I think at least part of it is economic in nature.

The government school systems are silent around the subjects of money and finance. 

Public school students spend twelve years trapped in the classroom… yet, they learn absolutely nothing about the one subject that’s critical to building a self-sufficient life. A life in which we are in control of our time, our decisions, and our destiny.

That’s why we created our newly updated Finance for Freedom course. It’s the financial education that every high school and college student should have received.

And I mean that. 

We have put together a program that will help anybody master their finances in thirty days, regardless of their current situation. 

It all starts with learning the secrets of money. We work up to basic personal finance. Then we take a deep dive into asset allocation, specific investments, and the principles of building monthly cash flow.

And in honor of all those people who make up the underbelly of our society, we’re going to offer the course for just $21 this week. That’s 30% off the normal price.

Just go right here if you would like to check out our offering: https://membership.phoenicianleague.com/courses/finance-for-freedom

Please use coupon code “ER” at the checkout page to get the 30% discount.

I firmly believe that many of our problems today are rooted in economics. Let’s help spread financial literacy far and wide.

The post What I Learned From a Saturday in the ER first appeared on Zenconomics.

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How I Came to Love Debt and Taxes: Part IX

When we left off yesterday, we were talking about how to find properties that match our investment criteria. And we discussed the need to plug into an established investment network.

Here’s why…

The network’s job is to bring vetted properties to us. Vetted being the key word. 

That means we have all the pictures and financial projections for each property. This includes market rents, estimated principal and interest payments based on current interest rates, estimated taxes and insurance, as well as property management fees.

These numbers demonstrate very quickly whether a property is likely to match our criteria or not. Then we need to do our own due diligence to verify the numbers. That’s the only way we can know for sure.

In addition, we’ll have a single point of contact in the network. That person can answer any questions we may have about any property available.

To paint you a picture of what this looks like, our network down in Dallas operates via email and phone calls.

When we get allocation to a new construction development, our contact emails us all the information on the properties that will be available. Then we do our individual due diligence and determine if we would like to reserve one or more of the properties under construction.

It may be simple. But this approach works just fine when you work with professionals you can trust.

I also invest through a larger network. It has a presence in more than a handful of major cities.

This network maintains an online investment portal for investment properties. We can simply hop online any time to see what properties are available. And we have all the financials and the pictures right there to go through.

So what we’re talking about here is really deal flow. We want the deals coming to us.

But it doesn’t stop there.

These investment networks also connect us to every professional we need to execute our wealth strategy. This is the “Who Not How” principle.

It starts with vetted lenders in a given market – both conventional and asset-based. When we decide to move on a property, our network will line us up with the best lender for our circumstances.

Our networks also connect us to insurance agents who focus on rental properties. My larger network even maintains a master insurance policy with our insurance provider of choice. This gives us access to materially cheaper insurance coverage.

Then there are property managers. This is the big one.

Remember, we’re not taking phone calls or handling maintenance requests for our properties. In fact, most of the time we shouldn’t even be buying properties in our own area. Not unless they match our criteria.

Instead, we hire professional property management companies to do everything for us. 

They screen and place our tenants. They collect our rent. They take all phone calls and handle all repair requests. 

In short, our property managers take care of our properties and make sure that they operate optimally as an investment.

In exchange, we pay them a small percentage of gross rents. It’s 6-8% in most markets.

So plugging into existing real estate networks takes all the guess work and the grunt work out of it. It provides deal flow. And it connects us to the professionals who can make everything happen.

This makes building monthly cash flow as simple as sending a few emails. No kidding. We can go from start to finish with each property without ever leaving our home. Then the monthly rent starts showing up in our bank account at the first of every month.

And we always have a point of contact within the network who can help us with anything. That makes the income we’re building about as passive as it can be.

This is how we systematize our wealth strategy. And it’s how we can juggle so many moving pieces without too much headache.

Leveraging existing networks like this puts us on the fast track to $10,000 a month or more in passive income. But we’re not quite done.

We also need to implement a tax strategy that will work hand-in-hand with our wealth strategy. Remember, debt and taxes is the name of the game.

For this, we’ll need to find a CPA who specializes in real estate. And again, the best way to do this is to get references from an existing real estate network. Easy as that.

So the only question that remains then is this: how do we go about plugging into existing networks?

And the answer is The Phoenician League.

Our new membership provides both the core training and the connections we need to go from zero to $10,000 a month in passive income. 

We can provide personal introductions to CPAs, LLC strategists, and asset protection attorneys. And we can get members plugged into existing real estate networks to make building cash flow simple. Who, not how.

For more information, please see our video workshop right here: https://phoenicianleague.com/workshop

The post How I Came to Love Debt and Taxes: Part IX first appeared on Zenconomics.

The post How I Came to Love Debt and Taxes: Part IX appeared first on Zenconomics.

How I Came to Love Debt and Taxes: Part VIII

Yesterday we talked about our why. 

Today we are going to talk about the how. How do we become financially independent as quickly as possible?

It all starts with having a wealth strategy and specific investment criteria in place.

Think about horse racing for a minute here. I’m not big on the sport, but my old man was. I only know enough to know that when people race horses, they put blinders on them. 

The blinders restrict the horses’ vision so they can only see what’s in front of them. What’s in their lane.

You know why they do that? 

Because if the horse has full range of vision, it might start paying attention to what the horse in the next lane is doing. And if it does that, it runs the risk of drifting. It might even wipe out, taking a bunch of other horses down with it.

Our wealth strategy and our investment criteria do the exact same thing. They keep us focused on our own plan. 

My wealth strategy is simple. I use rental real estate to build monthly cash flow. And I set specific cash flow goals each year. Those goals keep me focused on the plan.

That said, I’m not running around looking at every possible rental property I can find. Instead, I only consider properties that fit my investment criteria. 

Each year I’m focused on specific markets. At first it was Dallas. Then I moved into Birmingham. Then Kansas City… and so on. 

My point is this: Our investment criteria keeps us focused. That’s its purpose.

And it goes a step further. 

I only consider specific properties in my target markets. In Dallas and Kansas City, I was only interested in new construction homes. In Birmingham, I focused on smaller homes that had just been rehabbed and renovated.

And there’s one more element to our investment criteria. How much do we want to make?

I require a minimum cash on cash return for any investment I consider. This also keeps me focused. If a property doesn’t meet my minimum return criteria, I don’t consider it. 

It doesn’t matter how pretty it is. Or how great the neighborhood might be. I stick to my criteria no matter what.

This is how we take the entire universe of real estate investments out there and narrow it down into a streamlined analysis process.

Of course, this begs the question – where do we find these properties? 

Do we spend hours on Zillow? Are we calling realtors all the time?

Nope. 

To systematize everything, we need to plug into an investment network. We’ll wrap up our series on that note tomorrow.

Until then, time is running out to check out our launch workshop for The Phoenician League.

You can find it right here: https://phoenicianleague.com/workshop

The post How I Came to Love Debt and Taxes: Part VIII first appeared on Zenconomics.

The post How I Came to Love Debt and Taxes: Part VIII appeared first on Zenconomics.

How I Came to Love Debt and Taxes: Part VII

When we left off yesterday, we closed the loop on how debt and taxes are the key to financial freedom. 

It’s all about monthly cash flow and creating a “snowball” effect. That is, we need our income to far outrun our expenses.

At the same time, this approach requires us to handle quite a few moving pieces. That’s not difficult to do. But it requires a little extra time and thought. Nothing happens without effort.

So today, let’s talk about why any of this is worth doing. Why should we strive for financial independence?

Well, the answer is easy if we are stuck working a job we hate. 

I’ve been in that position. I started out in the corporate banking arena. It was soul-crushing. I just wanted out. I thought about that every day.

I am sure most people have been in that position at some point. But if we need the paycheck to pay the bills, what options do we have?

Well, not many.

But if we can start generating income from other sources, our options increase rapidly. We need the paycheck less and less as our monthly cash flow goes up.

And with the right system in place, it doesn’t take very long to build substantial cash flow. Not if our focus is on a tried and true asset like rental real estate.

Think about it this way…

Yesterday I mentioned that our real estate network is currently bringing us properties that each produce up to $900 a month in cash flow. If we work up to five properties, that’s $4,500 a month in extra income. 

And look at what happens if we work up to twelve of these properties… That’s over $10,000 a month. Buy two a year and we’re there in six years.

That’s how simple it is to hit our $10,000 a month target.

And for those who implement a complimentary tax strategy, everything goes exponential at a certain point. The tax benefits we accrue make it easier and easier to acquire new properties. 

That’s the power of debt and taxes.

And with $10,000 a month coming in from real estate, how many of us need to work a job anymore? 

As long as we live within our means, that should be more than enough to cover all our expenses and then some.

But again, what’s the point? Why walk this path?

I don’t presume to speak for anyone else here. But for me it’s all about pursuing a higher purpose.

The late Gary North used to talk about the difference between a job and a calling. 

A job puts food on the table and pays the bills. A calling is that one productive thing each of us can do better than nearly everyone else on the planet.

I’m paraphrasing a little bit here, but that’s the gist of it.

The thing is, for most of us, our calling needs to be self-funded. At least partially. 

And that’s what financial independence enables. If we can build $10,000 a month or more in passive income, we can spend our time doing exactly what we want to do, with whom we want to do it. Every day.

To me, this is about becoming a good steward of civilization. 

Speaking from an American perspective, we have been conditioned to be the ultimate consumers. We are encouraged to make as much money as we can so we can buy stuff and go on trips.

And I’m not knocking that… not entirely. 

This has led to an explosion of products and services that have made our lives incredibly convenient. And it’s generated a mountain of wealth for plenty of companies and their investors.

But my sincere belief is that we are here to be much more than consumers. We each have the ability to bless the world in ways that no one else can… if only we have time to focus on our calling.

That’s what this is all about.

From my perspective, we’ve been stuck on a treadmill. And my observations suggest that most of us don’t like being on the treadmill.

So I think it’s time we got off. 

And that’s what our new membership, The Phoenician League, is all about. 

The Phoenician League provides a road map to financial independence. To $10,000 a month in extra income.

It all starts with our Seven-Part Success Path to Financial Independence. This is our core training program. It’s designed to help people go from wherever they happen to be financially right now, to securing their finances, building an asset base, and generating $10,000 or more in passive income.

And here’s the best part – it’s just a process. We’re going to walk you through it step by step.

We are also building a vibrant community within The Phoenician League. 

We have the back-end infrastructure in place so that we can communicate with each other in real time. This enables members to ask any question they may have on our core training program and get a specific answer right away.

In addition, members can share ideas and strategies with one another. And we can discuss what we are seeing on the ground and in the markets in real time. 

This creates a powerful network effect. And it gives us greater insight than we would have if we were going it alone.

We also provide members with monthly and weekly updates around money, finance, investments, and macroeconomic conditions. This helps keep everybody informed and in the loop.

And finally, we help members with investment deal flow and personal access to professionals and specialists. This includes CPAs, asset protection attorneys, and all the real estate professionals we need to make $10,000 a month in passive income a reality.

For more information on The Phoenician League, including how to join as a founding member, check out our video workshop right here: https://phoenicianleague.com/workshop

The post How I Came to Love Debt and Taxes: Part VII first appeared on Zenconomics.

The post How I Came to Love Debt and Taxes: Part VII appeared first on Zenconomics.

How I Came to Love Debt and Taxes: Part VI

When we left off yesterday, we had determined that we could use debt to acquire new assets in a tax-advantaged way. 

And if those assets are rental real estate, they will produce monthly cash flow to pay off our debt. Plus, the real estate will provide even greater tax benefits for us.

This is why “getting into debt” is actually a solution… presuming the debt is used to buy assets that throw off cash flow.

Today we have to talk about the final nuance. Using debt to acquire cash flowing assets is just half the story. 

Debt also puts the power of inflation to work for us, rather than against us. Never before in modern history has this been so important.

The term “inflation” is thrown around quite a bit today. 

If you ask somebody what it means, they will probably tell you rising prices. But if you ask them what causes inflation, can they give you a meaningful answer? I’m not so sure.

I am sympathetic to the definition put forth by the Austrian School of Economics. Inflation is the expansion of the money supply. It is the act of creating new money and injecting it into the economy.

If we speak from a dollar-centric point of view, inflation occurs when the Federal Reserve (the Fed) and the U.S. Treasury pump new dollars into the system. 

These dollars have to go somewhere. And wherever they go, we are likely to see rising prices follow. It’s just supply and demand economics.

From this perspective, rising prices are the result of inflation. They are not inflation itself.

What’s really happening here is that the dollar is losing its purchasing power. This happens constantly.

In fact, the U.S. dollar has lost over 87% of its purchasing power just since 1970. That’s not my guess. That’s based on the Fed’s own data.

This means that, generally speaking, thirteen cents in 1970 could buy what one dollar buys today. This is why nominal costs for nearly everything have gone up so much over time.

Now, the financial media tries to mask this by comparing the dollar to other national currencies. If the dollar suddenly can buy more Euros or Yen, the media will go around talking about how strong the dollar is.

But that’s only the case if we are in the market for Euros or Yen. It’s a whole different story if we’re looking for groceries or a new car.

What the media is really doing here is comparing how fast each currency is falling in relation to the other. They are basically timing the race to the bottom… which isn’t helpful to any of us.

Here’s the point…

As the dollar’s purchasing power falls, the real value of all debt denominated in dollars also falls.

In other words, our debt burden shrinks over time. That’s simply because we can pay the debt back with devalued dollars. Dollars that can buy less than they used to.

And this is why locking in fixed mortgage payments on rental real estate is so powerful.

When we take out a 30-year fixed mortgage, the principal and interest payment never changes. 

Yet, our monthly rent is likely to rise over time. Rents have consistently risen with inflation over the last forty years. 

Of course, there’s no guarantee that will continue. But if it does, it makes our mortgage even easier to pay over time.

And then there’s the “income snowball” effect.

We have our active income, and then we add more and more income with each new rental property we acquire. This creates a “snowball” effect where our income grows larger and larger… especially if inflation drives rents higher.

Yet our mortgage payments stay the same. And inflation eats away at our debt burden over the years.

It’s an incredibly powerful dynamic.

That said, there are quite a few moving pieces at work here. And to manage everything correctly, we need to have a system in place. 

That’s what our new membership is all about. It’s called The Phoenician League.

Our new program provides training on every aspect of managing a rental real estate portfolio. It walks you through everything from ‘A’ to ‘Z’.

The training covers everything from establishing investment criteria and analyzing properties to setting up an LLC structure, financing options, and proper bookkeeping. We even provide members with a bookkeeping template that they can download and begin using immediately.

The training program also takes a deep dive into the tax strategies that go hand-in-hand with rental real estate. And it goes over tried-and-true asset protection techniques as well. They become increasingly more important as our portfolio grows.

In short, our program provides all the knowledge and information members need to build a portfolio that generates $10,000 a month or more in extra income.

And it doesn’t stop there.

The Phoenician League will also help members get plugged in to existing real estate networks. These are networks that already have established infrastructure in top-tier U.S. markets.

These networks provide us with deal flow. They bring us new construction and recently renovated properties that each generate anywhere from $300 to $900 in cash flow every month.

What’s more, these networks connect us with lenders, master insurance policies, and property managers. These are the professionals who help us make everything happen.

With these connections, managing a rental portfolio is as simple as sending a few emails from time to time.

And finally, The Phoenician League will provide members with personal introductions to CPA’s, asset protection attorneys, and LLC specialists. These are professionals who specialize in working with real estate investors.

For more information on our program, including how to become a Founding Member, please see our video workshop right here: https://phoenicianleague.com/workshop

But please don’t delay. Our Founding Member offer closes at midnight on Saturday.

And thanks very much for sticking with me on our debt & taxes series this week. Tomorrow we are going to talk about the vision.

That starts with asking some fundamental questions: What’s the point? Why bother with any of this?

We’ll pick it up there tomorrow.

-Joe Withrow

The post How I Came to Love Debt and Taxes: Part VI first appeared on Zenconomics.

The post How I Came to Love Debt and Taxes: Part VI appeared first on Zenconomics.

How I Came to Love Debt and Taxes: Part V

When we left off yesterday, we were borrowing dollars against our Bitcoin to buy real estate. 

By doing this, we didn’t have to pay taxes on our capital gains. We could leverage their entire value into acquiring assets that produce monthly cash flow. 

That’s the key. The cash flow has to pay off the debt.

This is just one way in which debt and taxes go hand-in-hand. And as I mentioned yesterday, real estate is an incredibly tax-advantaged asset.

The way the tax code is structured, we should never have to pay taxes on our rental income. No kidding. 

What’s more, there’s a way to generate massive paper losses for tax purposes using rental real estate. By paper losses, I mean non-cash losses. They go on the tax return, but you didn’t actually lose money. In fact, you made money.

Think about what that could look like…

Imagine writing off $100,000 against your active income. That means whatever the gross income number at the top of your tax return is, you subtract $100k from it. Then you pay taxes on whatever’s left.

That’s the power of rental real estate, if done correctly. 

Now, this requires a good CPA and advanced tax planning to do. It’s not something that happens automatically. 

But as long as you go by the book, this is 100% legal. It’s all right there in the tax code.

So really what we’ve done here is we have used debt to buy assets that reduce our tax liability even more. Debt and taxes.

Now, I know some people will hear this and think – that’s not fair! Shouldn’t everybody have to pay the same taxes on their income?

Not if we want to be financially independent.

Here’s the thing – the tax code is really just a set of incentives. This is why real estate is tax-advantaged. We need people willing to buy houses and rent them out to those who can’t or don’t want to buy them. 

That’s because real estate investors take on all the risk. When something gets damaged, they have to fix it. If the HVAC unit blows out, they have to replace it.

What’s more, real estate is a major economic driver in the United States. A lot of people derive their income from real estate. 

Real estate agents, mortgage brokers, title companies, insurance companies, appraisers – they all get paid every time somebody buys a house. 

My point is this… the tax code is 100% fair. 

If you follow the rules, you get the designated result. No matter who you are. It doesn’t matter what your net worth is. It doesn’t matter what your political beliefs are. The tax code is the same for everybody.

Now sure, there are plenty of things about the tax code that I would rather be different. 

For one, W2 wage earners absolutely get the short end of the stick. And that’s most people. 

This is a big reason why so many people are stuck in the rat race. Every time our W2 income goes up, so do our taxes. That makes it incredibly hard to break free.

But there’s nothing we can do about that. We can’t change the tax code. All we can do is play by the rules as they exist.

And yes, there’s always a chance that the current system could change drastically at some point. Life isn’t risk-free. It’s all a journey. 

And this is why we better have hard assets and Bitcoin on hand. If everything falls apart one day, we better be ready.

But until that day comes, all we have to go by are the current rules. And they say that we can use debt to reduce our taxes tremendously. 

That’s why debt and taxes is the name of the game. And there’s one more important nuance to all this.  We’ll bring it home tomorrow…

Until then, don’t forget to check out our new video workshop: Finance for Freedom. It’s all about adopting a system that pairs a cash flow wealth strategy with a comprehensive tax strategy.

The goal?

$10,000 a month in extra income, tax free. That’s what financial independence looks like.

For more information, you can access the video workshop right here: https://phoenicianleague.com/workshop

The post How I Came to Love Debt and Taxes: Part V first appeared on Zenconomics.

The post How I Came to Love Debt and Taxes: Part V appeared first on Zenconomics.

How I Came to Love Debt and Taxes: Part IV

When we left off yesterday, we came to the realization that the “nest egg” approach to retirement was a scam. That’s because it puts us in a fragile situation unnecessarily.

Plus, it takes a really long time… with no guarantees.

Fortunately, there is a better way. It’s an approach that puts us in a much stronger financial position. And it does so in a far shorter period of time.

It’s the monthly cash flow approach. Instead of focusing on capital gains, we focus on building monthly income streams.

But wait a minute. 

Readers may be wondering, what does any of this have to do with debt and taxes? Isn’t that what we are supposed to be talking about?

Well, dear reader. Stay with me. We’re building up to that crescendo right now.

If you recall from Part I, I learned a single overarching principle from my experiences as an investor. Focusing on monthly cash flow is part of it. But only part.

The secret is much more nuanced. I’ll explain by getting back to my Bitcoin conundrum.

So I’m sitting there looking at my Bitcoin stash, and it’s a large number. At least large for me.

And my problem was – how do I access this value without getting hammered in taxes? It’s a big number now, but after taxes it will be substantially smaller.

Then I discovered the solution. It was debt.

Specifically, I began collateralizing my bitcoins to borrow dollars against them. 

Then I used the funds to acquire rental real estate in top-tier U.S. markets. Essentially, I used the value I had accrued in Bitcoin to build passive income streams. 

And here’s the beauty of this approach…

Going into debt is not a taxable event. The money I borrowed was completely tax-free.

Sure, I had to pay interest on the loan. But that interest paled in comparison to what I would have paid in capital gains taxes had I sold the Bitcoin.

Plus, the real estate income paid for the Bitcoin debt. 

So instead of selling my Bitcoin, paying taxes, and buying the real estate… I kept the Bitcoin, paid no taxes, and got the real estate. And the monthly cash flow that comes with it.

The lesson: debt is a powerful financial tool if used wisely. 

And it doesn’t stop there. Real estate happens to be an asset that can eradicate our tax bill. We’ll talk about that more tomorrow. 

In the meantime, don’t forget to set aside some time for our Finance for Freedom video workshop this week. It details a step-by-step process for building $10,000 a month in extra income using rental real estate.

What’s more, we are building an investment membership around this system. The membership will get investors plugged into existing real estate networks. These networks do two things for us.

First, they provide us with deal flow. They give us access to vetted rental properties in a handful of top-tier U.S. markets. And these properties generate anywhere from $300 to $900 a month in cash flow.

Second, these networks connect us with all the professionals we need to build a business around rental real estate. 

Brokers… lenders… insurance agents… property managers… CPAs… asset protection attorneys… Working up to $10,000 a month in passive income requires us to develop relationships with trustworthy people in each of these areas.

And that’s where our real estate networks come in. They get us matched up with fantastic professionals who can help accelerate our journey to financial independence.

We’re calling our new membership The Phoenician League. And it’s designed to provide members with both the knowledge and the connections they need to make it all happen.

And we are building a community inside the membership as well. It’s a place for like-minded people to discuss ideas, strategies, and insights. And of course, members can get specific answers to any financial questions they may have on our training program.

For more information on the membership, check out our video workshop at: https://phoenicianleague.com/workshop

Our program is open to Founding Members through Saturday, October 8th.

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How I Came to Love Debt and Taxes: Part III

When we left off yesterday, we were pondering a conundrum. What do you do when you have large investment gains on paper, but you know that you’ll have to pay a massive tax on them if you sell?

After all, the whole point of investing is to become financially independent. But if you constantly lose 15-30% of everything you make to taxes, it’s very hard to break out. You lose the power of uninterrupted compounding.

In my case, I had some large gains in Bitcoin. And as I watched my Bitcoin holdings appreciate in value, I started to realize that we had been going about it all wrong.

We have been conditioned to think that the key to getting out of the rat race lies in building a big “nest egg”. That’s been financial planning 101 for decades now.

As such, we are taught to chase capital gains. That’s why investors obsess over portfolio returns. 

It’s dated now, but I remember Dave Ramsey telling people to slog their money away in mutual funds that would grow their wealth 7-8% a year. That’s the nest egg mindset.

Then you get things like the “Rule of 72” and other slogans that further pushed the capital gains approach. It’s all been a scam. I’m not mincing my words on that.

The reason is twofold.

First, there’s a massive industry that exists to extract 401(k) fees, actively-managed fund fees, assets under management (AUM) fees, and trading fees.

And these days every online brokerage makes money by selling order flow to the hedge funds. The hedge funds pay for the ability to front-run every trade that we make. 

Front-running is where they get to see our order. If we are trying to buy something, they buy it first. Then they sell it to us at a slightly higher price. It’s risk-free profit.

This happens all the time now. It’s the only way trades can be commission-free.

Okay, here’s the second reason the nest egg approach is a scam… There are only two possible outcomes with it.

The most likely scenario is that we slog our money away in financial assets – stocks and funds – and we watch our portfolio go through a roller coaster of booms and busts over the next twenty, thirty, maybe forty years. 

Then we hope whatever is there in the end will fund a decent retirement after the taxman claims his lot. And with inflation baked into the cake, there’s no guarantee it will.

The less likely scenario is that we hit it big with some investments and we work up to our nest egg “number” in less than twenty years. Then we start to think about retirement… and we realize just how fragile our situation is.

For one, we’ve got the tax issue. The number we see on paper isn’t our actual number. Not after the taxman gets ahold of it when we sell.

And then we have to come to grips with the fact that if we do retire, the only way we’ll have money to live on is if we sell off our assets. This requires us to gradually deplete the nest egg we worked so hard to build. 

The more we deplete our assets, the more uncertain our future is. And the less we have to pass on to our kids and grandkids.

And that brings us to the logical conclusion. The nest egg approach forces us to choose between income and assets. If we want our income to go up, our assets have to go down.

That’s the scam. 

If we want to achieve financial independence, this is exactly what we shouldn’t do.

Fortunately, there is a solution. There’s a better way. More on that tomorrow.

Until then, don’t forget to check out our new video workshop. It’s only available until October 8th at midnight.

The workshop details exactly why the “nest egg” approach doesn’t work. Then it presents the driving ideas behind our new project The Phoenician League.

As I mentioned a few days ago, The Phoenician League is our new membership designed to make building monthly cash flow as simple as sending some emails. I’m serious about that.

That’s because the membership connects people to professional investment networks… and to each other. It’s the “Who Not How” principle in action.

What’s more, The Phoenician League provides a tried-and-true system for working up to $10,000 a month in investment income in potentially six years or less. 

It’s just a process that anybody can follow… especially when they have direct access to the professionals they need to make it all happen.

For more information, you can access the workshop right here: https://phoenicianleague.com/workshop

As always, we have a transcript available for those who may not have time to go through the entire video.

Just remember, access closes on October 8. Please give it a look before then.

-Joe Withrow

The post How I Came to Love Debt and Taxes: Part III first appeared on Zenconomics.

The post How I Came to Love Debt and Taxes: Part III appeared first on Zenconomics.

How I Came to Love Debt and Taxes: Part II

When we left off yesterday, I had just been burned by my first investment strategy –  buy the stocks Merrill Lynch says to buy. 

In fact, one of those stocks went bankrupt not long after Merrill touted it. That was my wake up call. 

After reflecting upon this, I pivoted to a “hard assets only” strategy. This entailed making some big changes I had been wanting to make anyway.

First, I bought a five acre property way up in the mountains. And then I bought a bunch of gold, tools, provisions, and stored food. The idea was to become as self-sufficient as possible.

This one was hard to explain at the time. But it sure came in handy when the Covid regime launched its attack on us in 2020. 

And our provisions remain an asset today. They will come in handy with supply chain disruptions and the manufactured food shortage potentially heading our way in the coming months.

But the problem with the hard assets only approach is that it only goes so far. You only need so many tools and provisions. Then what?

For me, the answer was Bitcoin. 

Bitcoin clicked for me in 2014 when I read The Book of Satoshi by Phil Champagne. After that I bought my first bitcoin for around $850. 

Then I watched the price plunge to about $220 over the next twelve months. My holdings fell 74% in dollar terms.

But I didn’t care one bit.

That’s because Bitcoin isn’t just another financial asset. I don’t even consider it an investment.

Bitcoin is a superior form of money. It’s digital gold that can be sent from one corner of the world to the other with just a click of the button. 

Except it’s far more scarce than gold. Here’s why…

Only twenty-one million bitcoins will ever exist. And as I write over 90% of them are already here. 

Yet we won’t mine the last bitcoin until the year 2140. 

That means the small percentage of bitcoins still out there will gradually enter circulation over the next century. It’s amazing to think about.

And that’s why I didn’t care when the value of my first bitcoins fell by 74% right out of the gate. I knew that when the world caught on to what this thing really was, the price would have no choice but to go bananas. It’s simple supply-demand economics.

But this dynamic brings with it some first world problems. What do you do when your Bitcoin value goes up 27X?

Sure, it’s nice to look at a big number sitting in your hardware wallet. But now the taxman is staring you right in the face. If you sell to harvest your gains, he’s going to rip off a huge portion of your profits.

What’s more, if you’re an American, the taxman claims the right to his portion even if you buy something using Bitcoin as the currency. Per IRS guidance, exchanging bitcoins for any good or service is treated as a sale.

So you can see the conundrum here. You may have a nice chunk of change locked up in your hardware wallet… but you can’t access that value without getting hit with a massive tax bill. 

And at the same time, Bitcoin provides no yield. It’s not working for you while it sits there. You aren’t receiving a check each month to help you pay the bills.

So what do you do?

Well, it turns out the answer is very simple. You do exactly what Dave Ramsey tells you not to. 

You go into debt. 

We’ll talk a lot more about that tomorrow. Until then, don’t forget to check out our new video workshop Finance for Freedom. You can find it right here: https://phoenicianleague.com/workshop

The workshop outlines a robust investment system for creating financial independence. In it, we explain how anybody can go from zero to $10,000 a month in passive income every single month. It’s all about following a process. Step by step. That’s it.

And the best part is, it really doesn’t take that long.

In fact, I think some people can work up to $10,000 a month in six years or less. That’s how powerful this system is.

So please give the video a shot when you can. And if you don’t have the time, feel free to browse the transcript at your leisure. It’s all right here: https://phoenicianleague.com/workshop

But please don’t delay. Access closes at midnight on October 8.

The post How I Came to Love Debt and Taxes: Part II first appeared on Zenconomics.

The post How I Came to Love Debt and Taxes: Part II appeared first on Zenconomics.

How I Came to Love Debt and Taxes: Part I

I’ve experimented with four distinct investment strategies over the last fourteen years. And as one would expect, I learned a few valuable lessons from each strategy. That’s always nice.

But far more importantly, I learned one single overarching principle. Perhaps secret is a better term. 

What I stumbled upon is something the financial press desperately doesn’t want us to know. CNBC would go the way of CNN+ tomorrow if this got out.

The more I think about it, the more I think we’ve been spinning our wheels unnecessarily. As a society and as individuals.

Simply put, the way we’ve been told to go about things is wrong. If our goal is financial independence – financial freedom – there’s a better way. 

I’ll explain with a little context. It starts at the beginning of my financial journey…

My first investment strategy was simple. I bought whatever stock Merrill Lynch’s free research reports said to buy. 

The beauty of this approach was in its simplicity. Every time my paycheck hit, I went online to find out what Merrill was touting to its low-dollar clientele. Then I punched in the ticker and pressed buy.

This is how I found the most valuable investment I ever made. The company was called A123 Systems. It was developing lithium-ion batteries for hybrid electric vehicles.

A123 received $249 million from the U.S. Department of Energy (DoE) in August 2009. I believe this was part of Obama’s “clean energy” initiative.

And management leveraged the notoriety that followed to go public at a valuation of $1.3 billion. That was September 2009. The company’s ticker was AONE.

Three years later A123 filed for bankruptcy. It ended up getting acquired by a China-based firm for less than what the DoE put into it: $225 million.

That represents a loss of 83% from AONE’s IPO price. This turned every $1,000 invested in AONE into $170. Ouch.

And that’s when I learned two very important lessons. 

Lesson One: Don’t invest based on free information.

Lesson Two: Don’t invest in anything the banks are touting. They work for somebody else.

Equipped with these lessons, I pivoted to a “hard assets only” strategy. We’ll talk about it a lot more tomorrow. 

In the mean-time, please set aside some time to check out our new video workshop. I’m calling it Finance for Freedom.

In the workshop, we talk about where the traditional financial planning model goes wrong… and what we can do about it. 

More specifically, we detail a tried-and-true system for working up to $10,000 a month in investment income. That’s how we break out of the rat race and ensure ourselves a comfortable retirement… if retirement is our goal.

You can access the video workshop right here: https://phoenicianleague.com/workshop

And don’t worry, there’s a transcript available if you don’t have time to watch the entire video. 

But please don’t delay. Access closes on October 8th at midnight.

The post How I Came to Love Debt and Taxes: Part I first appeared on Zenconomics.

The post How I Came to Love Debt and Taxes: Part I appeared first on Zenconomics.