The Deception About Your Money

Are you one of the many people who go to work daily, receive a “decent” paycheck, not spend extravagantly, but still not have any money? Do you do all that you know how to “Keep Your Money Yours,” but in the end are just left wondering where your money goes? If you know anyone like this (hint, hint), please consider this.

Like the average American, I make and spend money. But as a financial professional, I study money and its comings and goings, causes and effects. It is as a student of money that I have observed a few covert contradictions within our monetary system. For instance, I have a friend who has a master’s degree and makes $32,000 a year using it. But her student loans totaled over $65,000. Oh, I know that it is said that those with a college degree make more money over their career, but that same source doesn’t tell us how exactly how much this education costs. And from my experience, I have found that it indeed does cost a pretty penny.

It seems to me that our current monetary system has structured itself to make money at every turn. Let’s ask the opening questions again - are you going to work daily, making what you refer to as a decent income, and still feeling broke? Are you wondering where all your money goes? Even if you have taken “control” and run a monthly budget for your household, are you still coming up short? Are you puzzled, confused and left wondering where your money goes? From my training and experience as a financial advisor, I can see a culprit possibly guilty of causing our plight…….taxes! Those insidious, pervasive, siphoning vampires that erode all of our money each time we generate it.

Think about your dollar. Let’s just run this example together for fun. Pull out your W-2 that you took to your accountant (or heaven forbid, H&R Block). Look at it closely. Say your annual income from your employer is $50,000. The average federal withholding is 15%. So already your bring home is down $7,500. Social Security (FICA) withholds 6.2%. At $50,000 you lose another $3,100. Medicare? That is an additional 1.45% that results in a loss of $725. Let’s not forget the state (if your state doesn’t tax your income, count yourself lucky.) At an average state withholding rate of 4%, another $2000 is out the window. Columbus? Whitehall? Dublin? These greedy tax monsters gobble away $1000 (2%) from your plate. So you made $50,000 right? In the words of Wayne and Garth, NOT!

Please recognize that these amounts all come from the same amount of money - the taxable amount isn’t reduced by the last entity's tax take. But, you ask, isn’t that double taxation? Yessiree! I believe the phrase “quadruple taxation” is more appropriate. Breaking this down (or adding this up) leaves you with only $35,675.

Lest we forget, we must include sales taxes that are imposed on the remaining dollars, along with telephone taxes, cable taxes, electricity taxes, mandated licenses and registrations that we pay regularly. (One of my favorites is speed traps! Wouldn’t it be nice to just stop random people (or in some cases, targeted people) and demand, oh $80 from each of them? And how about causing them inflation (in the form of higher insurance premiums) in the meantime?)

Oh, but you say, at the end of the year, you do your taxes and get a refund. How comforting.

Throughout the year the average person is thinking he/she makes $50k per year and is correspondingly spending that amount. Spending how much? Yes, spending the amount he/she is told he/she makes - - $50k. I am sure we can all agree that while spending $50k when there is only $35k available is not healthy, it can be done. How, you ask? Well, Grassphoppa, it is called credit. (Off the topic trivia - - did you know that the word 'credit' comes from the Latin word 'crede, credere' which means to believe? We get the words credential and credible from this root word. Hence "The Incredible Hulk" -- his existence is hard to believe. Thus when you receive credit, it is believed that you will repay." Hmmmmm. How interesting. Now, back to our story.) While debt itself isn’t necessarily bad, continually spending more than what is available causes what is known as a deficit. Over time this accumulated debt erodes the power of the current money.

This is the proverbial "rest of the story" as to why many people have no money and googobs of debt! Kind of quiet erosion, don’t you think?

The result of this is that the average person (aren’t we all?) goes to school, gets a little job, spends his money on nice clothes, a little car, pays insurance, graduates, goes to college, begins accumulating more debt, gets a school loan, graduates, get a job with an annual income about 75% of his total student loan balance, moves back in with parents while he saves money, gets an apartment, tries to save money and pay off debt, spends like he makes the full annual salary he receives, goes further in debt, is dazed and confused, seeks escape through buying those aforementioned affordable items (entertainment, material goods and clothing) telling himself he "deserves it", goes further in debt, never quite understands what is going on, becomes more frustrated, hates his job, becomes depressed (obsessed, violent, or any other of the myriad of human responses that come from confusion), loses his drive to excel, sees no way out, forfeits his dreams and ultimately dies an unfulfilled person. All the while this quiet erosion is effective at this person's expense! I am sure we have all heard of a saga like that.

You ask, “What can I do about it?” Educate yourself on the principles of money and utilize them. Set up an objective financial program and plan for your future. Time does sneak up on us quickly and the best we can do is plan for tomorrow. (And we know how difficult it is to plan.)

I hope you have a different idea about the average American’s situation and are empowered with the knowledge of what is going with his/her money. And as they say, “Knowing is half the battle!”

Until then, in everything you do, strive to "Keep Your Money Yours!"

Always committed to you,

Uncle Izzy

Uncle Izzy is a financial professional who, for over ten years, has been training his clients how to optimally utilize their money. A published author, tax and business consultant and public speaker, Izzy is committed to educating everyone on the prudent applications of money.

Fixing the economy

I don’t think the economy is that hard to fix. I am in the financial services industry and have been for about 13 years. I say that to say that it seems the "professionals" keep doing the same ineffective stuff and thus getting the same ineffective results. The market is 80% perception and the lack of trust in the market is really a lack of trust in those who make it move. And those who make it move aren't the little guys - they are those "Professionals." The market can be fixed in six months by doing three things –

1) Make personal interest deductible again. Give it a maximum of $10-15k per year. If personal interest (interest on loans, cars, credit cards, payday loan places) was deductible, the rate would fall as the government wouldn't want to subsidize the profits of big business. (The subsidy being the write off.) Bankruptcies would fall, more loans would be taken out and the prime rate would be a real number that positively benefited the little guy rather than just big business. Besides, with all the tax programs and incentives given to big business or foreign entities that are stacked on the backs of the taxpayer, it is about time that he is the beneficiary of one.

2) Impose a hefty tax or tariff on foreign imports while making Social Security and Medicare voluntary. Although fair trade increases competition, the tax would level the playing field in costs of goods in relation to inexpensive foreign labor vs. costly domestic labor. In addition, making SS and MC voluntary could lower the cost of labor for employers for those employees who opt out. This would bring home manufacturers and would create a disincentive for outsourcing and moving plants, offices and services overseas.

3) Raise the business mileage to $1.50 for companies and businesses with gross income of less than $5million. Since a significant part of the price of oil is speculative and big business is profiting from it while severely affecting small businesses, give small business owners a break. This will ease the effect for small businesses while not making the government subsidize all businesses.

Implement these three changes and the economy will bounce back immediately. If economists are serious in saying that the consumer and mom and pop businesses drive the economy, then give the consumer and mom and pop the break they really need to drive the economy. If the economists don't do this, then be prepared for an eternal financial purgatorial limbo.

Stay tuned for my solution to the mortgage crisis.

..after bit of thinking...

Hey there!

If you know me, you know me as a fun loving guy who is friendly and helpful and oftentimes, insightful. Those who know me well know me as a thinker and philosopher and studier of self and others. By being this way and doing these things, I learn things about myself and others rather quickly. One particular thing about this is that although I tend to learn things rather quickly, it still doesn’t help to know that if I had known (or paid attention to) information earlier, I could be experiencing something different now.

One of the themes I have focused on for the past three months has been leadership. As a former soldier in the Army, I have experienced excellent leadership and very poor leadership. I have been the leader of a few and of many. I like to think that I was a good leader but alas, I have found that I am a mediocre leader at best.

Why do I make such an assessment about myself? Because I have found that one (major) component of leadership is follow-through. To get to where I am in my business and career, I studied hard to learn concepts, financial principals and human behavior. But as much as I learned about others and myself, there were still major things I neglected to learn and apply about myself! In the meantime, I assumed and imposed my own capabilities and capacities onto others and have judged them by these; which is a big nasty no-no. In doing all of this, I have alienated, hurt, lost and discouraged people I have met on my journey and in turn hurt myself.

What makes me identify this? I am a successful person, and successful people don’t do this, and can’t have this in their past, right? Yes they can; at least I can. I say this because after studying the definition of success, I find that I am far from successful. I am driven and I have acquired many things, most of all which are knowledge, understanding and wisdom. And yes, I am a published author, a licensed stockbroker, real estate agent and have had a tax business for over 12 years. But those are trivial accomplishments because what matters most and what the true definition of success is, I don’t have and I haven’t done. I don’t have the relationships that I could’ve had; and those, my friend, are the foundation to all success.

Each of the things that I accomplished took only one thing and that thing I have plenty of – self discipline. If what needs to get done only requires the effort of me, then count me in. Especially if there is little risk. But if it requires the assistance of others or in some way puts me at risk, then I may just bail out. Please know that I have discovered the origin of this and it is being rectified even as I type this.

How did I find come upon this insightful new self discovery? Well, I was pondering how I got to be where I am in my career and my life and what I need to do to get to the next level. Not saying that I am not at a great place, but maybe, just maybe I could be ahead by two or three steps. I found that the old adage, “I would prefer to have 1% effort from 100 people than 100% effort from myself” to be extremely applicable to me. Meaning, I am the one who did the exact opposite and worked all day everyday utilizing the greatest efforts of myself while collaborating, partnering, bridging, leveraging or utilizing no one else’s energy or resources. I say that I am dedicated to helping others learn and apply prudent financial principles. How many more could I have reached and helped if only I had partnered and followed through with those who I already knew? Unfortunately, I consider that answer to be my greatest failure and loss.

But alas, all failures are the breeding ground for success. So now that I know this new information, I am working on a new goal for myself for the benefit of my family, friends and clients; to transfer from being a studier of self to a server of others. I saw Tavis Smiley speak a few weeks ago downtown and he said, “You can’t lead without loving and you can’t save without serving.” What a statement. And my older brother told me, “Give the people what they want and they will come to you for what they need.” Wow. With that, I now want to focus on people with the purpose of feeling them rather than my old focus of learning them. I want to feel what they feel rather than know what they say and mean. I foresee this as a lifelong goal for me as it will be the undoing of 25 years of habits and the implementation of a new ideology.

Wilferd Peterson in his essay, The Art of Leadership, says - -

“The leader is a great servant. The Master of Men expressed the ideal of leadership in a democracy when he said “And whosoever will be chief among you, let him be your servant.”

The leader sees things through the eyes of his followers. He puts himself in their shoes and helps them make their dreams come true.”

I am not the brightest person on the planet, but I know when I am my own obstacle. Leadership and change are difficult tasks and challenging undertakings.

But I believe Mr. Peterson - - “The leader can be led. He is not interested in having his own way, but in finding the best way. He has an open mind.”

If you are one on my path whom I have hurt or damaged, I ask for your forgiveness. I ask for you to contact me so we can discuss how I can make amends with you. Please know that change is as much a process as it is a behavior so it won’t happen overnight. But I promise you that it is in the works.

I have lived my life under the sage advice, Learn, Grow, Teach™; I am now really learning that learning is as constant as change. But I guess it does say, “Grow”. That is what I am doing now. And I still look forward to teaching; I guess that can be the reason why I am writing this letter. All in all, it must be true – “1% of 100 is better than 100% of 1 - this is my 1%. I only hope it comes around for the benefit of us all.

Love you much,

With you,

Israel C. Wright, RFC, AAMS

Good ol' Katrina

economists be damned!

i am sure we have all heard the experts talking about the housing bubble and how it may or may not occur. Mr. Greenspan is the only one really talking about it as a true future occurance while the others are trying to talk it down so as to continue sucking money out of the machine.

well, i am here to talk a little about it. let's begin by what discussing what has been and is currently going on in the economy in general and the housing market in particular. we will begin with a little background.

First, the economical definition of inflation is "too many dollars chasing too few goods." Second, all inflation is caused by government programs. This isnt taught in school. But here is why that is true. think about what you know about government programs and how people respond to them. think about how most people see any government program or government dollar as "free money." this is how inflation is caused. if you are a business owner who sells widgets and the market rate is $4.00 per widget and your cost per widget is $2.40, you profit $1.60 per widget. all of a sudden you have a major purchaser who is willing to pay $12.00 per widget indiscrimately and indefinately, you will redirect, reduce, limit and/or eliminate all sales to any other purchaser to just this major purchaser. in turn, in order to get any widget from you, every other purchaser must now make it worth your time; in other words, they have to pay you at least $12.00 per widget-the same amount as the major purchaser. this is inflation to every other person in the chain and his/her subsequent downline. so hopefully this is a clear illustration for you to see how government programs cause inflation. (this is very similar to the Wal-mart effect and we will discuss the differences in a later posting.)

what has been happening in the housing market is available dollars. unless a person has absolutely terrible credit and no source of income, mortgages have been created to match just about every situation. so the money has been made available. and with the available money, demand has been up. and with the demand being up and the three componets of commerce existing (need, willingness and capacity to pay), housing prices have been skyrocketing.

only now have people began to realize that their mortgages are straining their budgets. and with outstanding debt, rising daily expenses (utilities, day care, etc) and stagnate (or in some cases, falling) incomes, most citizens (i hate the word CONSUMERS) are recognizing their difficult financial plights.

the mortgages that people are purchasing are funding the building spree across the country. and those purchasing existing homes are paying top dollar for homes that need updated. in both cases, they are funding the home item purchases from home depot, lowes, bed bath and beyond and the like.

california is ripe for the soon coming real estate devastation. follow this scenario....

a person purchases a 1000 sq ft home in california for $240,000 and carries a monthly mortgage of $2,400. this includes taxes and insurance. an additional payment of $132 is made monthly for the pmi. this is a monthly home expense of $2,532 or an fixed annual payment of $30,384. wow. if the lender's calculations are correct and living expenses accounts for 30% of a household's gross income, then that household grosses $91,152. by the way, after a collective tax rate of 40%, that net income is $54,691. subtract the living expenses of $30,384 and the household net income is $24,307. this is only$2,025. and this monthly amount must pay for debt, gasoline, day care, food, dining out, clothing, utilities, leisure and everything else. as i am sure you gather, this monthly amount to live on is nearly impossible. hey, the assumed income is nearly impossible!

now that the stage is set, anyone can see the pending doom. one can use any catalyst to begin the fall; increasing debt load, stagnate income, loss of job, increased medical expenses, increased property taxes, increased purchases. only by selling the house at a profit can one wash this away. and if the house IS sold, it must be considered that someone else has PURCHASED it. and can one assume the new owner is better off than the previous owner?

all one needs to begin the fall of the masses is to consider what IS and has the possibility of happening such as increased fuel costs, increased taxes, increased unemployment and the like. and as soon as it happens in a major state, it will snowball to the rest of the country. and as soon as any decrease in come and increase in expenses begins, imagine the first thing to go will be leisure spending (dining out, movies, theater, sport venues, music venues). as a result, leisure jobs will be eliminated. what follows is major spending such as appliances and entertainment equipment will decrease. layoffs from those producing industries occur. fear will cause a slowdown in housing purchases and debt accumulation (debt based spending as the usual mall runs are). more income will go to local taxes and utilities as they raise their rates to make up for the decrease in spending based taxes.

where does katrina fit into california? with the devastation of louisana, the production has been ceased. the economy of that area has taken a critcal blow and must transfer (remove) resources from other areas to be rebuilt and revived. so the builders and resources will cease activity from the profitable california and other hot real estate areas to the super profitable louisana area. profitable to superprofitable? let's say every builder in california made a profit of $14 per square foot because that is what the market could bear. all of a sudden federal funding allowed the builder to increase his profit (for just barely over his current effort, i.e. logistics, regulations, manpower, other associated costs) to $44 per square foot. now california and las vegas have a decrease in available builders to meet the demand. thus the remaining builders can (and probably will) increase prices due to the decrease in competition. also, the remaining builders have increased costs because the necessary resources are being demanded by the louisiana area. so instead of prices falling or even staying the same, prices have increased in the regions where demand has fallen. oops...

louisana will experience an increased economy. money for its rebuilding will be transferred from the government and insurance companies to the builders while the people who lost their jobs, livelihoods and homes have not been fully restituted. the average home insurance policy does not cover flood or water damage and even if the government creates a program to pay those affected, it will have to be created, developed, implemented and activated all of which takes time. until those affected receive their funds (which may or may not happen), they still have financial obligations and no place to live.

overall, it is all about money. count on the building other associated industries to exploit the situation and drain all the money from the people and government they can. this will increase inflation, prep the housing bubble and further exaberate the fuel crisis.

like dave chappelle told carson daly when dave had the future cam, "hey dude, save your money."

Coming Soon

Men are from dark, empty, cold, dangerous caves....and women are from carefree, blossoming, beautiful praries...

Observations about money

hmmmm..

i am a financial advisor trained and experienced in all things money. i am not a typical 'financial advisor' or some primerica type wannabe. i am not just a investment advisor or an average 'financial planner' or cfp. i KNOW money. i know how it works. i know what it does. i know its nature.

my observation is that the nature of money runs in direct contrast with the human nature. and it is because of this conflict that we incur so much grief and pain in our lives. how so?

generally human beings want to love and be loved, help others and be fulfilled in our contribution to mankind. i believe the monetary system takes these natural characteristics and exploits them ot its own advantage.

what do you think ADVERTISING is all about. it is designed to get people to do things they themselves wouldnt ordinarily do. be envied? who wants to be envied at the expense of peace?

i believe that the system creates a false motivation in each of us and that unrealized internal conflict that we turn to alcohol, drugs and medicines. this conflict is the source of unhealthy eating, violence, promisicuity and other self damaging activities. these damaging activities themselves are marketed as pleasing or rewarding but have 'after the fact' costs that most cannot and are unable to recover from.

is it really about money? it is now. money for everything. whatever happened to sustaining one's self and counting on your neighbor for those things one lacked? again, something that has been done away with to exploit the masses and make money for the few.

i know money. and i know this is true. this observation has been compiled after intense discussions with those with money as well as those without. it is known; not necessarily acknowledged.

is there a solution? how ironic that the only way to obtain any source of liberty from it is to possess a lot of money.

Welcome, Israel. (Well thank you. Glad to be here.) I look forward to the thinking and resulting revelations that are yet to come. This is going to be one wild ride!