Saturday, October 15, 2016

Finance Basics - Lesson 5.2

It's Friday night and I'm writing to you from Peter Piper Pizza, waiting for the pizza I've ordered for Mom and I.

I'll be gathering some items for my City's Home Hazardous Waste dumping day tomorrow morning, then gathering the stuff that is still good to take to donation in the late morning.  Because of where I donate, I can get a receipt towards a tax deduction.

A few pieces of pizza later, I'm now home.

In the book, The Millionaire Next Door, it starts off describing who the typical millionaire is.  They live on an average of 7% of their wealth and pay an average of around 12% of their wealth in taxes.

Part of their strategy is to not only make a decent income, but to live in such a way that they are able to save, save, save.  The more you save, the less amount of your total wealth is subject to income tax. Why?  Because besides what income is actually generated from a paycheck, even more is generated in investments that do not pay taxes until the money actually gets spent.  In other words, the more you spend, the more of your money will be subject to taxes.

So now that we have spent a few weeks talking about how you are spending your money, what can you do to reallocate that money towards getting out of debt?




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