UNITED STATES—It’s a four letter word that most of us fear. Something that we’ll always have as long as we live: debt. What is it about debt that causes us to get tangled in so much financial mess? We don’t know how to manage it. The focus of this piece is on the issue of paying your taxes. It’s a question I find myself pondering every single year. Why is it that the filthy rich have such a difficult time paying their taxes, yet an everyday citizen like myself assures that mine is paid?
I cannot tell you how many celebrities or public figures I’ve heard about in the past year that is in financial ruins with Uncle Sam. My first thought is well you’re making millions so it can’t be that difficult to pay your taxes can it? Then I had to take a step back and re-evaluate things. The rich do intend to live lavish lifestyles which don’t come cheap; I think a lot are not paying attention to the massive amounts of income spent on certain amenities that can take a huge chunk of income.
Furthermore, for those of us who are independent contractors i.e. our own bosses, taxes are not regularly taken out of our paychecks, which means we have to be held accountable for all the income we’ve taken in. Even more frustrating is the fact that taxes have to be paid on that income that has been earned throughout the year. It adds up really quickly. To make matters worse, you might be gripping out multiple mortgages or bank loans that are being paid on for multiple properties you own.
I’ve always thought about having 4-5 residences as I got older, now that I reflect back on it 1-2 is just right. There is no need in paying massive tax bills on a property that you rarely stay in. Its good to own property, but if the property isn’t drawing you income on a monthly basis its something you can afford to lose, especially if it affects your overall budget.
Let’s not forget about those pesky student loans. The cost of going to college nowadays is unbelievable. Its somewhere about $100,000 for a public university when you factor in all expenses, if you’re thinking about graduate school that another $30,000-$75,000 depending on the institution you attend, and for all those doctorate degrees to be chased, you’re looking at $200,000 plus easily. When it’s all said and done you could be paying back your student loans for 10-30 years after finishing school, with interest I might add. Yeah, a $20,000 loan has easily amounted to about $30,000 or more when interest is factored in.
So why are the rich not able to manage their money better? Some are frivolously spending without thinking about the fact that money tends to slow down at some point. You won’t always make $20 million per movie or receive a $50 million cosmetic deal. With age the career spirals to some degree for some. So prepare today for the future, keep that safe cushion of income that can be used to pay down that pesky debt that seems to never go away. As human beings we’ll be chasing debt until it puts us in our graves.
By Trevor Roberts