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What to do? What to do?
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Rank: Copper
Joined: 7/25/2005
Posts: 14
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I am currently in Iraq on a military contract the pay is substantial because this country is not exactly on any tourists to do list. I been debating on what to do with this income. I will be here for a minimum of 12 months I want to go no longer than 18 months.
What I have been debating is one of three options.
A) pay off my bills which is a car note and student loans totaling around 35K.
B) paying off just one of these bills
C) Paying off neither and invest in a small piece of real estate or other investment option.
I currently have a business that is a MLM that I have started to work on more while I am here. How much can using that business protect me from being taxed heavily? or reduce my taxes? My goal is to protect as much of the money I make here from being taxed to death when I file. Any advice or other options is always well appreciated.
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Rank: Silver
Joined: 9/7/2004
Posts: 82
Location: McKinney, TX
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I actually think you can find the answer when you play Cashflow 101. In case you haven't noticed, you can now play online for free. Check it out on the Rich Dad homepage.
When you play you will see that being in debt is not necessarily a bad thing. What your debt is doing is raising your monthly expenses which means you'll need more monthly passive income to cover that debt payment. If your interest rate on these loans is low enough then perhaps it would be better to invest that money. If, for example, your total monthly debt obligation is $600 and with the 35K you could buy investment property which provides $750 per month then it is a no brainer. It is unlikely, however, that you'll get $750 from that amount of investment but you can see the math. What if you owe $600/mo. but your passive income from your investment is only $300 so you're losing $300 each month? Some people would take this deal because they believe the Real Estate will appreciate. They're losing $3,600 per year to keep the investment but they believe that in 5 years the property will be worth at least $50,000 more than today so to them it is worth it.
I think the best thing for you do to right now is to play that game several times over. You'll see the different deals and how they affect your cashflow. Your financial goal in life should be to have your passive income greater than your expenses. You will see that being in debt does not have to stop you from achieving your goal. But just like in the game, sometimes it makes sense to pay off your debts now.
Once you've mastered Cashflow 101 you will see that the hardest part is not figuring out whether to pay off debt or buy an investment. The hardest part is finding good investments. But you say you've already got an MLM. Maybe you could use your money to build that business instead of learning the Real Estate business right now.
You seem to be a little too concerned about paying taxes. I'm not sure what that is all about but I think you need to focus a little more on making more money than trying to keep what you've got. Don't worry so much about the taxes. The taxes are just another thing to add to the expense column of your income statement. Focus on increasing your cashflow. Hire an accountant (another expense) and let him worry about protecting your money from the government while you focus on generating more income.
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Rank: Gold
Joined: 4/19/2010
Posts: 142
Location: New Zealand
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I'm in the same situation as you.
I have about $30k student loan and about $15k savings in the bank. I've considered paying off my debt, but have since decided to continue to save up for a rental property first.
Depends what the interest rate is on the loans. If they are quite high (like 10-20%) or something then probably best to pay them off first.
If the interest on the loans is only like 5% instead, then better to invest it IMO. If you don't know what you are doing with investing just yet, pay off your loans, it's the best risk free "investment" you will be able to make if your not educated on investing.
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Rank: Rhodium
Joined: 5/8/2006
Posts: 2,958
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Have you thoght of using MLM as a learning experience?
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Rank: Copper
Joined: 7/25/2005
Posts: 14
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Thanks everyone for the great advice
My interests on these loans is not high at all. On my student loans its at 5% and on my car is 6.09%. Which is great from what I have seen out in the market. My MLM is not making much money if any at all right now.
It more of a tax shelter because of the expenses I have incured. So my thinking was to invest in MLM more. Is there something else I could invest in? Especially for a novice investor like myself.
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Rank: Gold
Joined: 4/19/2010
Posts: 142
Location: New Zealand
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dragon21100 wrote:Is there something else I could invest in? Especially for a novice investor like myself. Stocks, property, commodities, forex, business. There are millions of ways to make money. Choose 1-2 of them and learn all you can.
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Rank: Copper
Joined: 7/11/2010
Posts: 4
Location: Staffordhsire, UK
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dragon21100 wrote:Thanks everyone for the great advice
My interests on these loans is not high at all. On my student loans its at 5% and on my car is 6.09%. Which is great from what I have seen out in the market. My MLM is not making much money if any at all right now.
It more of a tax shelter because of the expenses I have incured. So my thinking was to invest in MLM more. Is there something else I could invest in? Especially for a novice investor like myself. Hi dragon21100, I take it that by choosing to get involved in MLM in the first place, you were attracted to the internet as a viable way to increase your income, with a view to providing you with long term security? There are various models you could use online to build something solid for yourself, other than MLM. If you have struggled to make a significant profit using MLM so far, I would suggest that this is because you have not received the training to be able to effectively market your product or opportunity online. Either that, or the training you have received is ineffective, or you have not been following the training provided. If using the internet to leverage a long-term income is still of interest to you, I would invest in an internet business that includes comprehensive training as it's main focus to allow you to succeed. Hope this helps, Ed
Ed Hodgson Internet Marketer & Online Income Coach Who is this guy?
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Rank: Copper
Joined: 8/5/2004
Posts: 14
Location: United States
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Yeah I'm in afghanistan myself.
Contractors make alot more than we do.
I'd find a advisor to help me form a corporation for investing when I got home.
Join a private network of investors or something.
Use the corporation to invest in deals.
Build the companies credit lines and asset column.
maybe that helps
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