Hey guys, Toby Mathis here. And today we're going to talk about
how they keep us poor. What I say, how they keep us poor. I don't mean
like there's a world conspiracy, but there are folks out there that are willing to take advantage
of other people and their systems in place that need to have folks
that take advantage. All you have to do is look at capitalism. And to the extent that they can,
they're going to they're going to get done whatever they need to get done with the least amount of cost,
which puts them at a competing interest. So if you're an employee, for example,
your employer's going to pay you
as much as it takes to get the job done. But they're probably not going to give you
a big chunk of the profit and say, hey, you know what,
you did such a great job. I'm just going to give you all the profit.
Not there. Usually they have a fiduciary duty
to their shareholders. They're supposed
to be giving the profit to them. Now, there are benevolent folks out there that like to share
with their staff and everything, but the goal is to pay the least amount
to get the work done so that they can maximize profit
that capitalism's all about. Once you realize that, then you can see
what other systems are like that. Well, the American system,
for our tax system, for example, there's an incentive to get you
to pay the highest amount in tax. And I'll explain that in a second. How do they keep you poor? They keep you working in an area
like if I had two choices, hey, you could make a dollar in eight
or you can make a dollar. Maybe if you make a dollar in a year,
you get to keep the whole dollar. If you make a dollar in B, you only keep $0.70 and I keep 30. If you're the government,
you want people working in B. And unfortunately, that's where most of us
go, is right over to B, and we're going to we're going to end up working for that $0.70 on the dollar
as opposed to the dollar. Now, the rich people,
where do you think they go? Do you think they're going
straight to that $0.70 or do you think they're
going over to the dollar? So I'll lay this all out for you here
in just a second. We're going to get into taxation
and we're going to use it as a guide, and it's going to explain to us
a lot of what we need to do. But first off. 10,000 foot view. How do they keep us poor? As simple as they screw up our minds? There were statutes back in the day
when the horrible chapter in the United States history
right when we had slavery. But those statutes are actually pretty,
pretty glaring, because what it would say is, even if you're a free person,
you cannot teach. It's a crime to teach a non free person
how to read, write, do arithmetic other than like
they would have exceptions. Like unless you're working with crops
or something stupid like that, right? Absolutely ridiculous. But what it was was got to keep them dumb
in order to control us. They have to keep us jobs. Like if I let's just lay this out
in its simplest format. Freedom equals education and knowledge
doesn't mean going to school. It means being a student your whole life. Every successful person I ever met, people that I would want to be like, the mentors that I've had in my life,
they were students. They always took it. They were curious. They were always learning new skills. It's kind of like people that go out there
say, I want to learn the stock market. Fantastic. I was going to learn real estate,
but I decided to focus on one thing you could do both in your skill sets,
play off of each other. So like if you go in
and you learn something like music and you learn philosophy
and you learn mathematics, and then you can
you take all those things. They impact
what you might be doing for your living. Maybe you're an accountant. Maybe you're a computer engineer. Whatever the case,
all of those activities, all of that learning plays itself
pretty well. The best example I can think of
is Steve Jobs, right? Some of you guys
have probably heard his story. If you haven't watched some of his speeches, he does a great speech,
I think, at Stanford's commencement or graduating class. And he's talking and he's talking about
is when he left college. Before he left college, he
he decided he was going to burn a semester or a quarter or whatever it was,
and he took a calligraphy class. Well, here's a guy who ends up engineering some of the
greatest technological products ever. Life changing, world changing in fonts came from the fact that he decided to take
a detour and learn about calligraphy. In other words, if somebody ever says,
you can only do one thing, just focus on that one thing, tell him no. I can have experiences. I can I can be well-rounded. I can go out and I can learn about things. If you want to get even micro,
let's say we're talking about real estate. Learn about flipping,
learn about wholesaling. Learn about tax links. Learn about buy and hold. Learn about self-storage,
learn about multifamily. Learn about commercial. It doesn't mean you have to invest in it
all, but you're going to get skills. Learn about the stock market. One of my favorite things
about the stock market is because I spent so much time in real estate
and I love cash flow property so much. I said, What can what can I apply there? Hey, let's do be a stock market landlord because you don't buy a house as a rental and leave it vacant. That's bad. So why would you buy a stock and leave it
vacant and not make money on that stock? Why would I buy a stock and just go,
oh, please go up. Oh, I hope you go up. No, you need to have dividends coming in. You need to do covered calls. We do something called the wheel strategy
where we're doing a classic. You couldn't even get into the position. You're making money sometimes three different ways,
regardless of what the stock's doing. And then if it goes up, that's gravy. I would never have thought
about that stuff unless I was involved in real estate, because real estate's
pretty straightforward. If I buy it and there's an expense of holding it,
I better make more off that property. So I'm getting paid. There's an old, old saying, it's
not my drinkin that's got me stinking. It's my stinking thinking
that's got me drinking. Right? They mess with your brain and
then all these bad things start happening. Bad habits coming out. Probably the worst one that I see is they convince us to bypass
opportunities to buy assets. And when I say that,
I'm going to use Monopoly as an example. Anybody who's played Monopoly a few times,
if you've never played it, go play it and you'll see what I'm talking about. The first few times around the board,
you land on something Baltic Avenue, Connecticut,
whatever it is, Park Avenue by right,
you're buying everything that you can. That's
going to be an income producing asset. Hey, it's going to make me money. I land on a utility land and a railroad,
buy it because somebody else might buy it. And then you're going to be paying them
rent. If you want to win that game,
you have to accumulate assets and you have to have other people
paying you to use those assets in real life. Somehow they convinced us not to do that. The first thing we do
when we graduate from high school is go out there
and go get some liabilities. Let's go get ourselves into so much debt
we can barely breathe anymore. And then once we get that,
we get into a job. Let's go buy a really expensive house,
a big liability, and get so much debt that if we could breathe now, it's
choking the rest out of us. And then you got to keep up
with the Joneses over there. So you get some credit cards, too,
and they're just slowly choking us out
and we just keep getting more liabilities. You're going around the monopoly board in your view, and every time you like
how I'm only going to buy liabilities, I'm only going to buy it
if I have to pay you to have it. It doesn't even exist in Monopoly, right? It's ridiculous, but it exists in reality. Here's the deal. They'd have you convinced that if you go around the monopoly board
and you stay out of jail and you pass, go and get your 200 bucks,
that somehow that's going to be a victory. I have no assets. But you stayed out of jail. That's a good one. And you're making money
every time you pass go. Which is silly, right?
You'll never win at Monopoly. You'll never live it life or win it life. If you live with that mentality,
you have to buy assets. And what they've done
is they've disguised liability to use like cars
and your big house, your big fancy house. But they they've disguised their boats,
all these things. And they say their assets
list them on your net worth. You know, it's not an asset,
it's a liability. How do I know? Because it costs me money every month. Assets put money in your pockets. Liabilities
take money out of your pockets. That's how you put my house is my biggest asset. It's not an asset. You might have a living expense. I would suggest that you use 25% of your take home pay
and say that's my living expense and then decide, you know, and watch
how they how they manipulate that. When you're getting a mortgage,
you can afford more house. You can choke yourself out
a little bit slower, like, hey, we're going to get you some more debt
so you can suffer more, right? So the first thing is understand that if you're going to win in life,
you got to buy assets. And why is that? Because there's only so much time. There's only so much time for you to work. And if you're trading your time or money, eventually you're going to run out of time
or you're going to get tired. I think Warren Buffett used to say
if you don't figure out how to make money while you're sleeping,
you're going to work till you die. And this is the principle. You got to buy assets. So you're making money
while you're sleeping. If all you're doing is trading
time for money, you're in that. Hey, I get to keep $0.70 of every dollar. How do I know? Because the tax code tells us that. So I'm going to talk about
three different types of income. There's active income,
which is ordinary income, like you wouldn't sweat a year, bro. Trading your time for money
is going to be active income. There's something called portfolio income,
but I'm really just going to narrow on one type as we're going to look at like capital gains,
we're going to call it the stock market, and then there's real estate rents. So that's passive income. So there's there's
active portfolio in passive. But I'm just
I'm not going to dove into those. I just want you to think
working stocks in real estate, because if you want to get out of here,
you're going to work, but you're going to shift that money over
into these other two. You got to have the the stock
and you got to have the real estate. In my opinion, some people are going
to say Bitcoin Bitcoin's not an asset. Gold. Gold, not an asset
doesn't pay you on a monthly basis. Well, stocks
don't if you buy the right ones dividends and you sell covered calls,
you could do those weekly. You could have money
coming in all the time as well. But real estate is so expensive,
get cash flow, real estate, understand what a cap rate is
and get positive cash flow properties. They're all over the place right? They're always going to try
to find a reason why you shouldn't do. It's in your best interest. They're going
to try to talk you out of it. Case in point, by the way,
we went through this this COVID crisis. Right. Do you remember just Google these guys getting on the on the TV and saying
the stock market was going to crash? Oh, Hilton's going to go to zero. Meanwhile, they're short. No, that precise situation occurred where a hedge fund manager was. Oh, I had a dream. And it was it was chaos. And the markets went to zero. You shorted the market.
So he's getting everybody to freak out. So and meanwhile, what are they doing
their profiting off of your selling? There was a great one on Twitter
not that long ago. I won't I won't age this, but I'll just
say somebody was like, sell everything. Meanwhile, they were buying. Why? Because you start dumping everything. Now it's a buyer's market. They're just tricking you. So we have three types of income. And let me just talk
from a tax standpoint. If you have earned income,
they tax you at your ordinary tax rate. Your federal rates go from 0 to 37%. In addition,
they hit you with old age disability and survivors and Medicare. It's an extra payroll tax. So not only do you pay income tax on the federal level,
you could also be paying it on your state. But you also pay this employment tax. And I'm just going to stick to
the federal side just to keep it simple. I'm paying up to 37% and I'm paying what's actually 15.3%. There's a little bit of a phase out on it. But I'm just going to say ordinary,
average Americans get hit with both and they lose about $0.30 on the dollar. That's on average
according to the Tax Foundation. It's funny
because when you look at the employment taxes, it's almost as much collection
as federal income taxes. But we never talk about it. We always talk about, oh,
the federal income tax, half the people don't pay those. Half the people are probably paying all
of the big chunk of the employment taxes. So quick, quick, quick play in that. That's just called class warfare,
getting us to divide against each other so that they can can continue to control
us, don't fall for it. So active income
gets hit with two types of taxes, ordinary and employment taxes. Stocks in real estate,
you get hit with neither or you get hit with the ordinary tax. In the case of rents on stocks,
it could be some ordinary some of what's called long term
capital gains. But neither one gets hit
with the Social Security tax. Neither one gets fixed. Neither one gets the old age
disability and survivors and Medicare. Just think about that for a second. Right. In one case, I like again, ABC. Let's just do ABC a is me
working my butt off and getting $0.70 on the dollar be is maybe I'm doing stocks. Worst case scenario, I'm paying I'm paying just the ordinary tax and paying at a fraction of of the amount
that I would normally be paying. I'm paying only one of the two. I'm paying just my ordinary bracket. I don't have any any Social Security taxes
and I'm three. I'm not paying any Social Security taxes. Worst case scenario, I'm paying ordinary. But I'm going to show you some of the tax
benefits. This is where it gets weird. So if you're in a regular tax bracket,
like let's say you're just an average American
making somewhere around 60, $70,000 a year, your long term
capital gain rate is 15%. A lot of it is at zero. Actually, if you're married and you're
making 70 grand a year, you're at zero for the long term capital gains rate. Why is that important? Because that's how dividends are taxed. Qualified dividends from companies
like Coca-Cola, Procter Gamble, three, Wal-Mart, they come out and they are taxed as long term
capital gains. Your tax bracket on that might be zero. So remember, I make a dollar over here,
I get to keep $0.70. I make a dollar here,
I get to keep the full dollar. That's a full dollar. I'm not being taxed on it. In addition, when you have a stock and it goes up in value,
you can borrow against that stock. A lot of people don't realize that there's something called a security back
line of credit. I can literally borrow against that stock
and go out and buy even more assets. I could buy real estate
borrowing against my stock portfolio. But wait a second. You have to pay interest, though. Yeah, it's really low, actually. Like even now, it's a fraction
of what your mortgage rate is and I'm able to generate
like if it's positive cash flow, I'm using that in my calculation. I say it's costing me 4% to get money in. I have 8% coming in free. I made an extra 4%. I made enough to pay it off
and keep an additional profit. And I still get the growth in my stock and I can still sell covered
calls against it. Now maybe some
bells are going off like were you how much did you pay taxes
when you borrowed the money? So let's say I bought stocks. It's paying me a dividend. Say it's paying me. We start off at 2% a year. Dividends get increased
every year on good companies. Like like Coca-Cola has been increasing,
I think, at 60 years now and they average around 10% a year. So let's just say that. What would that be
every year? Seven, seven years. That means it doubles. So let's say that it's you buy it for
50 bucks is paying you a buck. Seven years later
it's paying you two bucks every month. And the stock went up to 100. Okay, so I can borrow $50 out the original
50 bucks plus I'm getting paid tax free money and I go take that 50 bucks
and I buy or buy something else. That's an income producing asset. Now you see how it works and you pay zero tax when you borrow money. So remember a I'm paying,
I'm getting $0.70 on the dollar be whoa, I'm getting the full dollar, but I might be getting more
than just a dollar. I might be getting a dollar and a half
because I can take the other half dollar and invest it in more assets. And then those assets from doing
this right are also paying a dividend enough to cover the the expense
if I have to borrow, borrow it. But it's also growing. On average,
the S&P is growth is about 10% a year. So let's just say it's ten. I'm netting six on just the growth
plus I have dividend plus I have covered calls. I guess the S&P is 10%,
including the dividend. So let's just say it's 10%. We ignore the dividend, but we have
the covered call income coming in too. So maybe we get an extra five
or 6% a year. Whatever the case, I'm like, those are compounders in ten or 20 years. That's a substantial difference. Remember a I'm getting $0.70 in the dollar
and I'm trying to live off of it and they're selling me liabilities
to tell it. I'm going crazy. Option B, I'm able to compound it
and I'm getting not only do you get the dollar,
but I get other benefits as well. Now, this is really
going to trip your head. Now let's go to real estate. Real estate.
You get something called depreciation on. So unlike stocks
or if I buy a share of stock for 100 bucks, I can't write it off unless you go into like an IRA
or something that I'm writing off the money
that I'm using to buy the stock. But we won't get that deep. I don't get to write it off
like I just me individually. I buy a share stock. I'm not depreciate it.
I don't get any deduction. I buy real estate. I might get a deduction. Wait a sec. I might not have to pay rent
or tax on the rents that I generate. Let's say that I buy a house,
know let's say I buy a couple hundred thousand dollar houses,
make a 10,000 bucks a year. I'm taking the depreciation
off that house, the the value of the little box there,
even if I financed it and I'm going to
use that to offset the rent so I'm not paying tax on the full amount. So not only am I
so let's say I'm making a dollar, there's a good chance
I'm getting the full dollar. And if you're savvy
and you're really smart investor, you might be buying things
for also the tax benefit. So if you are a true real estate professional like you get in there
and you understand what that means. Like you are in real estate,
that's where you spend most of your time or half of your time is in real estate,
more than 70 or 50 hours in maturely participating
in your real estate. Then you could actually create losses
from the real estate. The offset, and go back over to that. Remember that we get $0.70 on the dollar. What if we could
get you back up to a dollar? I spend a dollar over here and
it allows me to keep my $0.30 over here. That's that's precisely the scenario. If you know how to do real estate
investing, it'll literally go over there
and get you back some of that money. That's
if you're a real estate professional, that's if somebody you make your living,
your real estate agent, your broker, your construction, your management company,
or you have your own holdings and you're spending more in 17, 50 hours
and more time than you spend anything else. And by the way,
only one spouse has to qualify for that is called a real estate
professional village. You guys want to fact checked
me? It's 26 U.S.C. 460 9c7. It's the passive activity loss rules. And then there's a rig
that's also triggered about material participation
on your real estate. But you could see it right there. It's actually plain
as day two, two requirements. So all of a sudden that dollar you're spending in real estate
may be getting you back $0.30 in that freaky. How many people told you about this? How many people said, by the way, if
you invest in all these different things, there's a good chance that it's actually
going to get you back some of your your dollars that you spent in taxes. Well, what's your proof, Toby? How about our past? President Trump,
remember when they said, hey, you got $90 million back and you paid taxes
and you got it all back? How do you think he did that? Precisely what I'm telling you,
they actually had a carryback provision there that they've enacted twice in
the last ten years, I think, or 15 years. Obama enacted one
where you could carry back your loss. So not only did you get your $0.30
from this year, you go back for the last two years
where you paid $0.30 on the dollar for the last 2 to 3 years,
and we'll get those two. So then that was also under the CARES Act. When, when, when COVID hit, they allowed
us to carry back for three years. So there's people going out
and buying lots of real estate and they would finance
it because money was cheap and they would get back their $0.30 they paid on on their dollars
over here on the active income. Yes, it's true. Just open your mind
and learn these things. And it's very, very clear
what you should be doing. Work your butt off, put the money
into these passive income generators, both in the realm of stock market
and the realm of real estate. And you're going to be super successful. They're doing
the opposite is how they keep us poor. You may as well be going around
the monopoly board. And again, you're excited
when you don't land on the income tax. You're excited when you don't land in jail
and you're excited when you go past go and you get that 200 bucks
and you're so sight don't live like that. Buy assets. Buy assets so that you're working that the where they take
the $0.70 on the dollar is voluntary. You can choose to do it or not,
but you don't want to be in servitude. You don't want to have so much debt
that you feel like you're choking. You don't want to be one of those people that's,
you know, in their sixties or something. And you feel like you're going
to have to work forever. We don't want that. I don't want that for you. I don't think you want it for yourself. If you like this type of information, please share it with others
and like and subscribe. Always put out videos
to try to help you guys. Why? Because we're in this together
and there's plenty for everybody. We want you to be successful. And I want you. I want everybody to be successful.
There's. There's more than enough. But what they do is they trap us into some stinking thinking
and they get us into a bad situation. When people are bad situations, it's
hard to be happy. And if you're happy, then every misery loves company
it makes makes everybody unhappy. So in a weird way, if you want to be
happy, find that freedom. Find that freedom
by opening up your mind and educating it so that you realize
that there's tons of possibilities and tons of options
out there for you to take advantage. If that's you love,
you subscribe and I'll talk to you later.
