Tax Strategies

Diane Kennedy: Tax Loopholes

Hi Friend:

We’ve had an interesting past few days at TaxLoopholes.  Our VPN (Virtual Private Network) finally reached capacity and said “no more!”  Of course, we’ve known that was going to happen for the past 6 months, but it was always a case of “just a little longer.”  

We finally got the new server installed and all is well.  But the downtime created some confusion with emails on our end.  If you’ve gotten multiple emails from us or had your emails delayed, please accept my apologies.

This past week I’ve seen a lot of foreclosure stories on the news.  It seems like the country is full of people losing their homes due to the loans they had.  Now, here’s the interesting part.  Were they bad loans?  No.  In fact some very smart people like Federal Reserve Bank Chairman Alan Greenspan said in 2004 that an Option ARM was the best type of loan to get.  In fact, he had one.

The problem is that it’s a sophisticated mortgage product and some people got them who didn’t understand them.  It’s a prime example of leverage working for you.  If leverage is used in the right circumstances, it works, but if it is used in the wrong circumstances, it doesn’t work.

Leverage with a solid financial plan and good skills can make you richer must faster.  But, if you have had problems in the past with your finances, leverage can make it even worse.  I remember hearing once that the problem for most people who were looking for “no money down” real estate was the fact that they had “no money.” 

 It’s like pouring gasoline on a fire.  If you’ve got a little problem, it’ll turn into a big problem with the added accelerate of gasoline, or in this case, leverage.

Leveraging money without basic financial literacy is like pouring gasoline on a fire.

That’s the leverage of money.  There is also the leverage of time.  That’s what I am personally most concerned with.  I don’t want to work more to make more money.  I want to create multiple streams of passive income from my business to have more money come to me, in a way that highly leverages my time.

But, there can be a risk with leverage of time as well.  Years ago I made the mistake of walking away from the day to day operation of my CPA firm too quickly.  I had to work even more hours then I did before, just teaching, reviewing and correcting other people’s work.   In the end, I just stopped doing personal strategies because I didn’t have the systems in place to make it run seamlessly.   Thank goodness I’m back doing them and this time I’m doing them with great systems so it works and is fun!

The biggest mistake business owners make with the leverage of time is letting go too quickly.

Another type of leverage is the “leverage of relationships.”  My first impulse is that this sounds a bit like “Exploit Your Friends For Fun & Profit.”  By the way, I’m not planning on using that title.   It’s yours if you want it. 

Just like with the leverage of money and time, you can use the leverage of relationships in a way that helps you or in a way that hurts you.  For example, I had a meeting this past week with the best selling business author of all time and was asked to join in on a new venture.  It’s based on a long-term relationship of trust and mutual respect. It’s not because I went into the relationship years ago with the idea of  “how can I befriend this person to take advantage of them?”   

I’m the same with people who meet me.  If they come to the table with an open attitude of “How can I help you?” or better yet, “How can I get to know you?” , I’ve got all the time in the world.  But, if the point of the relationship is simply to find a way to take my contacts, knowledge, ability, money or staff, then “no thanks!”

The problem with actively working to “leverage your relationships” is that it too often turns into “Exploit Your Friends For Fun  & Profit.” Examine your motives.

David Finkel is doing a seminar entitled “Leverage:  How to Get More with Less” this next week in San Diego at the Town & Country Hotel.  It’s $500 for two days on April 10^th and 11^th. 

If you buy a ticket by dropping us an email at thunder@TaxLoopholes.com, 100% of the gross sales amount will go directly to support Thunder Mission, a charity that takes US high school students to work with and befriend orphans in Juarez, Mexico.  The charity was started by my son David when he was just 16.  Now, one year later, it has grown by leaps and bounds.  David’s motto is “Why change one life when you can change two?”  That’s because the lives of the teenagers who spend a few days in Juarez are changed forever.  They bond with the other US teenagers and discover a world beyond the shell that they’ve lived in.  

And, on the topic of leverage, keep watching TaxLoopholes for exciting new programs.   I’m focusing on how I can leverage my own business and business assets to create multiple streams of passive income.  I hope you join me on the journey!

Warmly,

Diane Kennedy

P.S.  The final registration day for David Finkel’s Leverage seminar is April 7, so please don’t wait to get signed up.  Drop us an email at thunder@taxloopholes.com or give us a call at 602.258.0700 and we can get you signed up today.

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