These 2 factors will cost you.

Disclaimer: I am not a tax professional, I only play one on television… but anything that I write about here can be confirmed by your local CPA or tax attorney.

There are 2 financial curses that weigh down folks in the American middle class.

If both earners in a 2 income family work in a typical W-2 job their greatest expense will not be their mortgage, but the wage taxes that are taken out of their weekly paycheck.

This tax rate for W-2 wage earners starts at about 25% and goes up from there based on income. The more you earn in a JOB the higher your tax rate climbs!

A business owner (or sole proprietor) earning a similar gross wage pays an average tax rate of only 13.3%. Middle class folks pay most of the income tax in this country.

Wage taxes are the FIRST CURSE of the middle class.

Most middle class people are aspirational and tend to buy homes rather than rent. The typical $200,000 home, paid for over a 30 year mortgage at a low interest rate will still COST over $400,000 in total payments.

If you own a home take out a calculator and do some simple math based on your mortgage statement. My $157,000 home will cost me $396,000 if I wait until I’m 59 years old to pay it off!

My goal is to pay off my home by next year.

In addition to mortgage interest most middle class families also pay interest on car loans, credit card balances and student loans.

Interest payments are the SECOND CURSE of the middle class!

You can’t escape taxes, and we all need a place to live, right?


Here is my super simple idea, a way to reduce these financial curses.

Do you and your spouse both work in W-2 jobs, and your home is NOT paid off yet?

Start a modest side business, something you can get into for less than $500.

Right away your taxes will decrease because you can claim expenses like mileage, meals and your cell phone bill.

Becoming a business owner this year might save you $5K this year in taxes, or it might save you much more, talk to an accountant about your particular situation.

The tax savings ALONE will probably offset the costs of starting your new venture.

Use the new income from your side business to PAY DOWN your debt.

You’ll still have to pay taxes, but if your business deductions reduce your taxes by $10,000 per year this adds up to $100,000 per decade that you get to keep in your pocket.

If you pay off your home in 10 to 15 years instead of the usual 30 you will save another $100,000 in interest payments.

Start a business with a low cost of entry.

Grow your income in your business to $1,000 per month.

Pay off your cars, your credit cards, then your home.


But what kind of business is low risk for a modest investment?

It can be anything from a lawn service to a consulting business to a home based direct sales business like Mary Kay or Life Leadership.

I started Balloon Distractions while I still held a full time sales job.

There are many ways you can start a small side business and grow it to profitability.

Don’t make the mistake of going into further debt to buy a franchise for $100,000. This is a mistake, especially if you still have a full time job.

It took me a few months to get my Life business up to $1,000 per month in net profit, and I’m glad that I took that leap. Anyone could do what I did, even if they worked 40 hours a week. I built my Life business on nights and weekends.

You don’t have to spend your entire life paying a big chunk of your income to the banks and the IRS, you can avoid the 2 curses of the middle class!


The other side benefit to operating a small business is not just the tax reduction and the additional income, but the skills that you will learn in taking the leap from being an employee to becoming an entrepreneur.

I haven’t been an employee since 2003, and this has given me tremendous freedom and options that I never would have had trading time for money and working for a boss.

I hope that gives you something to think about!

Benjamin T. Alexander

August 30, 2016

Going Debt free is SIMPLE!

In the last 2 years my wife and I have paid off over $150,000 in personal and business debt. I was first influenced by the Dave Ramsey books, but the final straw was listening to the Financial Fitness CDs from Life Leadership.

The CDs fundamentally changed our philosophy about debt, for many years my spending had been more emotional than logical. After studying the Life Leadership material I began to look at my income and debt in a radically different way.

Before the CDs I had no idea what my total debt number was, but the audio training led me to focus on our overall debt number. I started writing down our monthly debt totals. We can only change what we measure, right?


For twenty years I would replace a perfectly fine car just because it had 130,000 miles on it, I would justify this by telling myself “It’s just a $300 per month payment, that’s better than paying for repairs.”

I used to finance $15K for a nice used car, but it seemed that I always had a car payment.

My (paid off) Toyota Avalon has over 175,000 miles on it now, but I diligently maintain it. I’m trying to drive it to 300,000 miles, but I’d be  happy to reach the 250,000 mark. This is the first time that my wife and I have 2 paid off cars in the driveway, it feels great.

My next car will be paid for CASH, probably a modest used Honda or Toyota for 6 to 7K. I don’t care if the car is a little older, just as long as the air conditioning works!


Eating out is another budget killer.

We used to go out to eat when there was food at home in the fridge. Eating out is a budget killer. The cost of one meal in a restaurant buys you enough groceries for 3 meals at home. If we are on the road traveling we might get a sandwich at Subway, but we no longer eat out at higher-end places. Not worth it.

When our house is paid off, and we have 100K in savings we’ll eat out more, but until then we’re focused on a very specific goal.


Another factor for us was getting rid of credit cards. Now I use either cash or a debit card. The debit card is tied to a business operations account, I know exactly how much is in that account, if I spend more than the balance I’m whacked with a $35 overage charge.

The simple elegance of this is that I can only spend cash for (less than) the total amount in my operations account, no more. This forces me to plan a little better, it also places 100% of my business expenses flowing through one account.

At the end of each month I open a spreadsheet and enter all the amounts from my operations account into an excell spreadsheet, this then goes to my CPA for our corporate taxes. Online banking is perfect for this type of thing. I use that same operations account to process monthly bonuses out to my Balloon Distractions crew, so all my business expenses are in one place.

I still save receipts and paperwork, but my accounting is vastly simplified by running all my business expenses through the same account. If I lose a receipt for an expense it is still recorded on my bank statement.

Of course, the one deduction not recorded in my bank account is mileage, for this I save the oil change receipt for all our vehicles. When I was audited by Uncle Sam back in 2007 the government challenged me on the amount of mileage we were claiming. When I produced oil change receipts the IRS no longer questioned the deduction.

There is a tremendous sense of satisfaction that I get every time I pay off another debt item. This represents action and progress towards being totally debt free.

When I was mired in debt 2 years ago it felt like I was slowly choking, now that we’ve taken action and set a plan in place I can clearly see the day when we will pay off our  home!

We will be one of the very few families in our neighborhood with a PAID OFF home!

I’m not sure of the precise date when our home will be paid off, it might be 2 years from now, or it might be three… but I will still be one of the youngest people in my neighborhood (and the youngest person in my family) to accomplish this.

The crazy thing about it is that we don’t feel like our life is that constrained or different just because we eat out less and drive older cars.

If anything my marriage is BETTER because we both have more peace of mind in regard to our finances. Having less stress improves your health and your overall quality of life.

Drive used cars.

Eat out less.

If you own a business cut up your credit cards and run your expenses on a debit card!

Go Debt free!

Benjamin T. Alexander

August 2016