Want money advice that you can actually understand? So much money advice ignores who we are, our background, our values, and our emotions. I’ll show you how to be in better control of your money every week, even if you’re just starting out.
🤯 We can't reconcile all the ways our systems are flawed
Howdy,
Many folks believe that the U.S. tax code is rigged rich vs poor. And in a sense, it absolutely is. Folks and organizations with the most money can lobby to keep or change the parts of our tax code that benefit them the most — like how the mortgage interest deduction is a subsidy for property owners, to the tune of “a hundred and ninety-three billion dollars in 2020 — far exceeding the fifty-three billion dollars in direct housing assistance that the government gave to low-income families.”
So, while it may be rigged rich vs poor, it’s built that way by favoring asset owners — folks who own businesses and property. Another way to look at this unfair advantage is that employers (including the self-employed and business owners) can leverage the tax code in ways that employees cannot. This sort of leverage is one reason I am a proponent of business ownership, although I know it’s not right for everyone.
If you work for yourself, leveraging the tax code doesn’t necessarily mean employing intricate, esoteric tax planning methods to avoid paying taxes altogether. Chances are, if you’re a subscriber to this email, instead of aggressively finding ways to avoid your taxes, you’re more than likely paying your share (or more).
Take this example of one of our bookkeeping clients, Sam. Sam is a business owner. He pays his taxes, but lately, with inflation and higher costs, Sam asked us to help him find ways he “could be smarter” with his money. We uncovered that Sam was paying for a lot of his company expenses through his personal accounts.
When we asked him why he’d chosen to do so, we discovered that Sam didn’t quite understand what tax-deductible business expenses are or how they impact his finances. So, we started by educating Sam on the topic of tax deductibility through articles like this and this (and this).
Then, with his accountant's blessing, we advised him to shift tax-deductible business expenses from his personal accounts to his business accountants. This small shift helped him save more on his tax bill, which was money he used to reinvest into his business, which centers around building community, cultivating creative expression, and helping artists make money on their craft.
Even though we cannot reconcile all the ways our systems are flawed, it’s crucial to understand how it all works so we can choose how we’ll engage in these systems and find opportunities to be resourceful and effective with our money. (And, of course, it’s essential to talk about these lopsided benefits because knowing is the first step in building a more equitable future).
If you work for yourself or own a business, take this as a gentle reminder to take time to reflect on how you can be more effective with your resources so you can reinvest in the things that you value and add value to our world. And if you need help with the keeping-track-of-things part, please consider Hell Yeah, Bookkeeping. You can reach out by replying to this email or by completing this form.
Your friend,
1. 🧑🏽💼 Reimagining Our Relationship to Work and Ambition with Amina AITai (Weird Finance) In this episode of Weird Finance, our host Paco delves into a conversation with Amina AlTai (@aminaaltai) about reimagining our relationship to work.
2. 🪟Why Rich People Don’t Cover Their Windows (The Atlantic) An unexpected status symbol has become a fixture of high-end homes.
3. 🚸 Living in a One-Bedroom With Kids — by Choice (Curbed) These parents love their pricey neighborhoods more than having privacy from their children.
4. 🤓 A bookkeeping thing - How to Catch Up on Your Bookkeeping. (HYG Original)
5. 👛 The Era of Easy Money Is Over. That's a Good Thing. (The Atlantic) The end of artificially cheap money should herald a fairer, more sustainable economy. Americans just have to survive the transition.
6. 🥚 Welcome to the World of Fertility Financing (Marie Claire) “It’s crazy that we could buy insurance online for a Peloton, a car or vacation, but there’s no financial protection for going through the process of egg freezing and IVF.”
7. 🤔 Is What’s Good for Taylor Tomlinson’s Career Bad for Her Life? (The New York Times) This profile struck me because it seems like an honest reporting on the challenges a creative deals with in the face of huge, public success. It’s refreshing and reflects the current moment where young people are questioning why we’ve all been taught that so much of our worth should be wrapped up in our work.
8. 🤯 Think the millennials have it tough? For Generation K life’s even harsher (The Guardian) “This generation does not believe that life is a meritocracy. In fact, not one teenager surveyed agrees with the statement that ‘society is fair and everyone has an equal chance”’. Instead, they believe that it’s the colour of their skin, their sex, their parents’ economic status and their social standing that will determine their future. Depressingly, the data bears this out.”
If you have a question you’d like me to answer on the Weird Finance podcast, you can leave me a voicemail at 1-833-ASK-PACO. You can also email me your question by replying to this email or emailing us at weirdfinancepod@gmail.com.
The Nerdletter by Paco de Leon
Want money advice that you can actually understand? So much money advice ignores who we are, our background, our values, and our emotions. I’ll show you how to be in better control of your money every week, even if you’re just starting out.
Hi there, Last week, I learned that before Regan popularized “trickle-down economics”, it was known as the Horse and Sparrow theory: “If you feed the horse enough oats, some will pass through to the road for the sparrows.” In other words, sparrows benefit when horses are overfed since eventually, they’ll shit some undigested oats. Stumbling across this reminds me of when I learned that the phrase “pull yourself up by your bootstraps” was originally a joke because it’s absurd and physically...
Hi friend, Welcome to the 350th issue of the Nerdletter! Regardless of how long you've been reading, thank you for being part of our journey to 350 issues. The most significant insight I've gained from publishing 350 issues of this newsletter is the unpredictable yet potent force of consistency. I’ve learned that consistent, small actions, like sending a simple email, can be more impactful than inconsistent, big actions. But often, the hardest part of remaining consistent is believing that...
Hey, All of our regular habits create neural pathways in our brains. The more frequent the habit, the deeper the groove. Habits can be a thought, like “I’m just not good with money.” They can be an action, like impulse spending. And you can also be habitually avoidant of something, like investing your money. The most ingrained neural pathways are like the Grand Canyon in our brains. Changing the path is like shoveling the Grand Canyon. Changing our habits is difficult because it takes a lot...