Taxes (Defining Moment #2) Part 4

These two defining moments we have discussed so far – Your money will never be worth more than it is today and This may be the lowest tax bracket you will ever be in – are unique because they will have a direct impact on all the remaining conversations and even our videos (coming soon to YouTube – update: now on YouTube).

They certainly present a very clear challenge to our thought process. When combined together they confront head on some of the traditional thinking that has been branded into all of us.

If your money will never be worth more than it is today, due to inflation, and this may be the lowest tax bracket you will ever be in due to the demographics and government spending (my next set of blog posts – don’t miss these), then why is traditional thinking telling you to take as much of today’s money as you can and throw it as far as you can into the future, where it will have less buying power and be taxed the most?

That is such a strong question. I recommend you read it again.  Once you do, ask yourself, is that the thought-process or type of planning you want to pursue?

When you begin to apply these two Defining Moments to your everyday lives you may begin to process things a little differently. Like this: if you purchase a car which is a depreciating asset anyway, do you want to use as many of today’s dollars that have the most buying power and pay that car off as fast as you can?  Maybe not.

You may also think about the way you are approaching your retirement dollars. In qualified plans, such as IRA’s, 401K’s, one thing is very clear, the government controls the pen which gives them the ability…and the authorization…to change the rules at any point.

So you must then be able to answer this question:

who’s future are you financing, your’s or the government’s?

You must consider that whatever you have left after taxes, what will the buying power be of your money at that time? Understanding this may open your eyes to ideas other than what you’re hearing on TV or read in the financial magazines, and certainly today’s traditional thinking.

That’s what we do…we help you re-consider.  It’s Financial Caffeine.

Kelly O’Connor –


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2 Responses to Taxes (Defining Moment #2) Part 4

  1. Nhu Nguyen says:

    Will this paying off morgage concept apply to the Texas promise fund, which is the prepaid tuition program that I plan to purchase for my child when he attends college. Or should I use the money to invest in rental properties instead, that way, I have tax-advantage and also the income that it would generate (speaking money buying power)?

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