How America Keeps You Poor [Rich vs Poor]

hey everyone meet Kevin here on this

video we're going to talk about how

America keeps you poor and we're going

to start with point zero which is

obviously that America doesn't teach you

about this that's because even though I

ran for it when I ran for governor in

California and ran for the idea that we

should have Financial education in

schools we don't so Point number one is

don't feel bad as to why America keeps

you poor it's the way the game has been

raked it's been designed to keep you

uninformed for ways to either build your

wealth or to maximize the money that you

have left over so let's talk about in

this video at least five principles that

you should be really incorporating into

your life I would almost recommend all

of these I have to be careful when I say

the word recommend because even though

I'm a licensed financial advisor this

video is obviously not personalized

Financial advice for you but these are

principles that I think everybody should

value incorporating into their lives so

number one has to do with taxes let me

give you a trick and then I'll show you

one that's applicable to pretty much

everyone but I invested about 4 000

bucks into many years ago into this

thing called an HSA a health savings

account and that let me prevent paying

income taxes on any of that gain it's

kind of like a retirement account right

that account grew to about ninety

thousand dollars with that ninety

thousand dollars we're now able to pay

for a surrogate who's carrying two of

our children now what's amazing is

while I took a tax deduction going into

that account usually you have to pay

taxes when you take money out of a

retirement account right

now with the health savings account the

health savings account I'm able to

withdraw that ninety thousand dollars

almost all of it being gains and not pay

taxes again that's a really Niche

example of how to play the game you

could learn more about hsas you have to

have a high deductible Health Plan by

going to bed kevin.com HSA but it's just

an example that's a paid sponsorship by

the way that's just an example now

here's one that's much more practical

that pretty much everybody can take

advantage of

many of us will spend money on Christmas

gifts for ourselves or holiday trips or

tools that'll make our lives more

productive some of those tools could be

things like Apple headphones these are

quite expensive they're about 4.99 plus

taxes but let's go with the idea that

these are 499 dollars and just ignore

sales taxes for a moment just to keep

math simple we'll call it 500 bucks well

if you generally pay an average of 30

percent in income taxes in order for you

to afford these 500 headphones you would

have to earn about

713 dollars to have 500 left to buy

those headphones

however if you're an entrepreneur even

if you're also employed somewhere and

you have a reasonable expectation to

make money in your business your side

hustle then you could buy these for five

hundred dollars and it only costs you

five hundred dollars that's because you

are able to write off this product as

potentially a business expense as long

as it seemed necessary and ordinary that

makes you more productive at your job as

long as that job you're writing it off

for is not a hobby and has a reasonable

expectation of profits in the future you

can now write off things that maybe

otherwise you wouldn't have been able to

write off which could be a computer that

you use for work but maybe you game on

at night maybe it's headphones to keep

you more productive maybe it's a new

laptop or an iPad so that way when

you're on the go and you want to watch

movies or Netflix that you've downloaded

or whatever on a plane you can do that

but you also use it for work hey if your

primary purpose is work a lot of people

say great necessary and ordinary

business expense the trick it's not even

really a trick it's just knowing about

it it's totally legitimate is making

sure that you have some kind of business

that you could write off expenses

against generally the IRS wants to see

that you're actually able to earn money

from this business so what do a lot of

people do well a lot of people they

might have their full-time job and they

become a real estate agent and even if

they just sell one property every couple

years could be to their friends their

family or whatever they're able to to

write off potentially tens of thousands

of dollars in additional expenses they

wouldn't have otherwise been able to

write off what's another example of a

relatively simple license that you could

get study hardcore that you can get

would be a registered investment advisor

license hey maybe you provide Financial

advisory services to some friends or

family you collect some revenue and even

if you're losing money you're able to

write off business expenses as long as

you have an expectation of profit from

that business the big differentiation is

is that a hobby or are you doing it for

work the cool thing now is you could be

an employee and let's say you're an

employee at Apple making 200 000 a year

you want to go buy a five thousand

dollar gaming laptop you're not able to

write that off now if that laptop

happens to primarily be used for your

side Hustle real estate agent business

and you happen to game on it later in

the day there's a potential argument to

be made that that laptop was necessary

and ordinary for your business and you

on the side happen to also use it for

playing games but now that laptop maybe

cost you 30 to 40 percent less because

now when you pay that five thousand

dollars you're actually basically paying

30 to 40 percent less in taxes which

could be around fifteen hundred to two

thousand dollars less

obviously every time we talk about taxes

it's important to consult your CPA now

you can go extreme with these sort of

tax write-offs if you happen to be a

real estate agent who's deemed to be a

real estate professional you can

actually do something known as costs

segregate your properties you could buy

a three million dollar building and take

a one million dollar potentially

write-off in the first year of your

ownership as a real estate professional

now those are specific and more Niche

tax deductions but the point is they're

all around you why do you think some

folks like to get larger Sprinter vans

or a heavier electric vehicles like the

EV Hummer or larger Tesla electric

vehicles Like the Model X well a lot of

these have bonus depreciation that allow

you to accelerate your depreciation

basically take more write-offs after you

purchase them the big purpose of saying

all of this is the more you open your

eyes to huh okay as an employee maybe

I'm not going to get all the tax

benefits I'm as I could or that I could

but if I had a side hustle even if it

was just a side hustle I was making a

few thousand bucks I'm now able to

unlock writing off all the other things

I might want to buy that I could use in

my business and otherwise as well that's

great that unlocks massive opportunity

for you to minimize your tax burden and

this is something we don't learn about

in school hey do you want more

perspective from me take a look at this

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this personalized this really for

everyone and of course our real estate

startup at househack.com while this

isn't meant to be a comprehensive guide

I'd really encourage you start looking

into business expense deductions and

keep in mind you don't even have to over

complicate this people hear this and

they think oh but then I have to create

an LLC and I have to create trademarks

no you actually don't have to do any of

that on your regular tax return is a

section for self-employment income you

don't need an LLC you don't need a

partnership generally what I recommend

is get insurance for your business call

it a day so for example if you're a real

estate agent call up or go to hiscox.com

not sponsor go to his Cox get like a

three or four hundred dollar insurance

policy there you go don't need an LLC

don't need anything obviously talk to an

attorney and CPA about some of the

benefits of that but really the key here

is what can you do to keep more money in

your pocket and if you're going to be

buying 500 headphones anyway would you

rather spend 500 or spend seven hundred

dollars that's the way to look at it and

that's really important and there are

two ways to look at that one is you have

to earn 700 to have 500 left to spend

500 that's the employee direction if

you're self-employed most self-employed

people do the math a little different

they say oh that's 500 cool well after

my tax benefit it's only like 350

dollars

five basically the same thing just done

in a different way so what are again

some things that you can do real estate

agent aside investment advisor on the

side lender on the side heck you could

do a coding startup AI is all the rage

obviously right now uh it'll now start

segmenting all of those expenses your

travel your Ubers potentially 50 of your

meals and entertainment your tools

Electronics computers uh some portion of

your utility bills it was a fantastic

opportunity there now number two a big

thing that keeps a lot of folks poor in

America in my opinion is the news cycle

the news cycle especially if we just

watch CNN or fox or the mainstream media

is generally designed to sell us fear

and that's unfortunate and I know that

as a YouTuber as well I know that

fearful titles get way more views than

not fearful titles well what I always

try to do in my content is look at

realism what's the most realistic

trajectory of the American economy do

you want to bet against the American

economy and most people are just always

obsessed with where the next recession

is where the next big crash is where the

next big failure is where the next

Scandal is and most of the time we

should be focused on what can we do to

increase our top funnel and how what can

we do to increase how much money we have

coming in what can we do to maximize how

much of that we have left and then how

many assets can we control that's going

to be our stocks our bonds and our real

estate stocks also being a pseudonym for

business ownership the more businesses

you own the more stocks you own the more

real estate you own generally the better

off you will be in building your wealth

in the long run just consider that the

average net worth of a homeowner

somewhere at 180 000 whereas the average

net worth of a tenant somewhere around

five thousand five hundred dollars this

is why I encourage everyone around me

soon as practically possible leverage

your W-2 your salary by real estate

that's actually the beautiful thing

about being employed this is not a video

about oh you should always be

self-employed because they're definitely

big failure points of being

self-employed that's why I think one of

the best things to do is be employed and

have a side hustle a self-employment gig

so you get the benefits without

necessarily all that downside risk

so that negative news cycle I think is

one other way that America keeps you

poor it keeps you from investing in that

new business idea in that real estate or

in those stocks those are things that

historically have always led to Building

Wealth over the long run milk on wood

that it stays that way the third thing

and Third Way America keeps you poor is

what I call the savings trap so we're

generally taught that you should save

money but Harvard did a fantastic study

on this and money that is sitting in a

savings account is statistically 100

likely to be spent

whereas money that you have transferred

out of your savings account and into a

stock brokerage account even if it's not

spent on stocks it's just in the

brokerage account or in the retirement

account and just sitting there as cash

even if it's just transferred over is

nearly 100

not likely to be spent in other words

the more money we have in our bank

account the richery feel now this is why

psychologically it's really important to

when you look at your bank account feel

poor in fact one of the things that I

like to do and I have a lot of different

bank accounts it's a lot of money

juggling

I like to take any excess Capital that I

have and move it into businesses or

brokerage accounts as soon as possible I

would rather see my personal account go

negative and have Lauren my wife text me

going like hey why is the personal

account negative 50 bucks or whatever

I'd be like oh let me transfer somebody

over I'd rather that than have this big

cushy feeling of of excess cash there

because the more you have excess cash

sitting the more you're likely to spend

it on things that you don't actually

need whereas surprise surprise when

Lauren's like oh no their personal

account just got overdrafted we must be

poor it's like exactly and guess what we

tend to spend less money even though we

secretly have that money it's out of

sight out of mind and that's a beautiful

psychological trick listen to Harvard

you'll study on it you don't even have

to listen to me but how does America

keep you poor convinces you to keep

money in a savings account or better yet

are you savings account whatever you'd

actually be better off moving money into

a brokerage account that's offering you

yields and keeping that money sitting at

your bank you can consider a wealth

front a Robin Hood none of these are

sponsored you could go uh put your money

into treasurydirect.gov and invest

directly into T bills if you wanted to

Shorter term treasury uh bonds

anyway keep those things in mind and

avoid the savings trap

number four

a lot of folks feel that a landlord is

going to be your opportunity to have a

concierge service in real estate oh I

want to be a tenant because if something

breaks the landlord will come fix it let

me put it this way it's having a peak

owned about 25 different rental

properties and transitioning to a real

estate startup where we're going to own

hundreds of rental properties but

personally peaking at 25 rental

properties

I have found that the amount of money

that I have to spend on rental

properties every year as a landlord is

relatively low I usually think if I have

to replace a stove once a year big deal

cost me six or seven hundred bucks call

it 800 bucks with some inflation and

it's not that big of a deal we're

looking at less than a hundred dollars

per month in my usual budget for Arizona

property it's around 200 per month now

generally my properties were more

upgraded than potentially other rental

properties on the market but this idea

that the landlord's going to come fix

everything for you to the standard that

you want and replace light bulbs I think

it's a misnomer I think most tenants

who've been tenants for a while realize

that most landlords won't even go as far

as I did in being a landlord I tried my

best to be a great landlord and really

take care of the customer which is the

tenant but most landlords aren't your

concierge they're doing everything

possible to minimize their monthly

expenditures

so the idea that you're getting a

concierge by being a tenant is nonsense

you're much better off getting into

owning real estate even if that means

leveraging your job and putting down

three to five percent don't need to save

for 20 down people get worried about

this mortgage insurance you can get rid

of your mortgage insurance once you're

at 20 Equity usually within three to

five years for folks or you can

refinance the property in the future now

keep in mind you don't want to go in

betting that you're always going to be

able to refinance especially as rates

are high now you know we're hoping that

rates will be lower in the future but

there are no guarantees but as long as

you go in qualifying on a 30-year fixed

rate mortgage that you can afford a

property doesn't really matter how much

you put down as long as you maintain

your job what's more important is that

you focus on getting into real estate

because now you have the benefits of

depreciation

when especially when you turn the

property into a rental property you have

the tax benefit of living in the

property for a homeowner for two uh to

three years if you want and potentially

selling it with no capital gains at all

that's a rule it's called the homeowners

exemption when you live in a property

for two out of the last five years you

pay no income taxes on the gains for the

first two hundred fifty thousand dollars

if you're single finer than okay if

you're married a lot of people actually

flip personal rental properties and

never pay taxes with that strategy to

buy a place

build equity in it after renovating it

live in it for a couple years sell it do

it all over again without paying taxes

on those gains there's some incredible

ways to build wealth and real estate

just make sure you're not over improving

your real estate that's the biggest way

that America keeps you poor when it

comes to owning real estate people over

improve they think well it's mine oh

well I'm living it treat it like it's a

rental imagine you're your own landlord

are you really going to put in that

wainscoting in that white picket fence

maybe but you shouldn't it's a waste of

money should really upgrade to the

minimum that the entire Market Bears

which would be about your average rental

property grade of a renovation you're

going to want to make it sound like

minimum in the sense of oh you want to

be a slum Lord you want to upgrade to

the minimum of this is reasonable it's

safe maybe it's a little bit even above

minimum that's great but don't over

improve that's a great way to waste

money on real estate and that is the

number one way people burn the invest

spent money they have available say buy

a home and then they spend all their

money renovating it that is a bad way to

build wealth with real estate so look at

what the rentals in the area are doing

and act like you're your own tenant best

way to invest in property last one

number five try to do whatever you can

to minimize time wasters in your life

everybody's looking for more free time

yet we'll spend hours going to different

grocery stores to get the best prices

and use the best coupons I used to do

that all the time I used to go to

Ralph's but then grapes were on sale at

Vons so I jump over there and the nuts

were cheaper at Trader Joe's all of a

sudden three hours of my day was gone

now and I'm not sponsored by them but I

think it's great you go to something

like a Walmart Plus or whatever where

you can get free delivery for your

groceries buy what you need online at

Walmart Plus have it delivered to you

for free once you meet that minimum work

quantity which isn't that high it's like

30 or 40 bucks

and now sudden you're not being enticed

by all of the other discretionary items

that you could be tempted to buy if you

actually went in the store you're just

buying what you need have it delivered

you minimize your time outlet and all of

a sudden you could focus on your side

hustle or otherwise being more

productive so in my opinion these are

five great ways to avoid falling into

the Trap of how America keeps you poor

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