Here’s the note that prompted today’s episode:
Double income medium- to high-earning couples frequently ask me how to lower their taxes (the second income is at a higher rate of >28%, plus state 3.75% and social security 7.65 or 40% all in).
I don’t have a lot to tell them:
-calculate whether it’s worth it for second spouse to work (‘Money or Your Life’ style-after tax/child care/gas income per hour of total time spent at job (commuting and working)
-weigh the qualitative factors
-invest in real estate
I’m assuming I’m missing things. What do you have to say on the subject?
One reason my wife doesn’t work is that its not worth it.
Today’s episode includes my response and advice for how couples can approach this conundrum!
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[0:00:01.0] JS: Today on the show we tackle this question; “How can dual income, high earning couples lower their income taxes?” And I’m going to give you a litany of ideas, I’m going to give you an overall framework for how to think about this problem. Then I’m going to systematically go through a bunch of credits, deductions, itemized options for you that you might be able to use to lower your income taxes if this describes you.
[0:00:44.6] JS: Welcome to the Radical Personal finance podcast. My name is Joshua Sheats and I’m your host, thank you so much for being with me today. Thrilled to bring you this question and today’s show is a special Q&A show, comes just going to handle this one question but this question comes from a patron of the show. One of the benefits of patronage at the $200 a month level is that you get to pick the topic of the show and today, this is a special request Q&A from Joshua.
If you haven’t been over to the patron page recently then feel free to go over there but you’ll see as you march up, you can support the show, radicalpersonalfinance.com/patron and there on that page, I’ve got a bunch of bribes for you. You contribute as little as a buck a month or even up as high as a couple hundred dollars a month.
There are a number of supporters of the show who send me a couple of hundred dollars a month. And in exchange for that, there are a number of different benefits. That program by the way is sold out right now though you can still send me money and I would greatly appreciate it, but the benefits are sold out. But there are a number of benefits at that level of support gets.
One of them is a monthly mastermind. Another one of those benefits however is that you get to pick the show topic and so this question comes in from a listener. This listener, here is the question that he emailed me:
[0:02:02.6] J: “Joshua, doubled income, medium to high earning couples frequently ask me how to lower their taxes. The second income is at a higher rate of over 28% plus a state tax of 3.75%, a social security of 7.65% or total of 40% all in, and I really don’t have a lot to tell them. I suggested them that they calculate whether it’s worth it for the second spouse to work.
For example you can do a “your money or your lifestyle after tax, after child care, after gas expenses income per hour of total time spent at the job, commuting and working”. I tell them the way the qualitative factors, I tell them to max their 401(k) and to invest in real estate. But I’m assuming I’m missing things. So even if you’re not able to do a complete podcast in the subject, maybe you could have some ideas? Thanks.”
[0:02:47.6] JS: And he goes on to say:
[0:00:49.6] J: “One reason my wife doesn’t work is because it’s simply not worth it for her to work.”
[0:02:54.6] JS: So we’re going to tackle this question and I’m going to give you the framework for it and I’m going to try to give a number of specific suggestions that will at least inspire some creativity, that’s my hope. Before we do that, I got a couple of quick announcements and I’m going to go ahead and talk about sponsors at the beginning of today’s show.
Announcement number one first, for patrons, if you are a patron, you should have gotten an email from me in the last couple of days and that email is important because in it I announced a Q&A conference call with me. That conference call will be on Thursday October 15 at 1 o’clock PM Eastern standard time. If you did not get that notification, check your email for the call in number but that is for anybody who is a patron of the show.
I was been slowed last two months due to all the changes in my personal life, I haven’t been able to get the last two months of Q&A calls, the monthly Q&A calls done and so as a thank you for sticking with me, even though I didn’t deliver those, I’m doing a long conference call when I intend to answer as many questions as possible.
So if you want to get a live question, answer to your question on that conference call, check the patron page. If you’re not a patron, go to radicalpersonalfinance.com/patron and you’ll find all the details there and if you do that before Thursday at 1 o’clock PM, you’ll be able to participate in that call at any level of patronage.
Number two, benefit for patrons is because I’ve missed those last couple of months of Q&A calls, I’ve decided for the next eight weeks to do a weekly Q&A call with patrons who are at $10 and up rather than a monthly Q&A call. For the next eight weeks, each week I’m doing a Q&A call at a certain day and a certain time.
Those details are also on the patron page, if you would like to get access to those Q&A calls, just go to radicalpersonalfinance.com/patron, sign up for supporting the show at $10 a month and greater and you will quickly be able to have access, you’ll immediately be able to have access to that and you can have access to those Q&A calls each week going forward for the next eight weeks.
Sponsors of the day, number one is Paladin registry. Paladin, if you’re not familiar, if you haven’t listened to it, go to listen to Episode 248 where we launched Paladin Registry but in essence, if you are looking for a financial adviser, I would recommend that you start by going to radicalpersonalfinance.com/paladin. Listen to episode 248 of the show for a one hour discussion with the founder of that website but it’s a financial adviser referral service and I’d like you to check it out and see, and start your search there as you search for a good financial adviser.
I’m starting to receive, I received one email from a listener who has gone ahead and started that, started interviewing financial advisers through that system. If you have done that or if you are doing it, I would love to collect your feedback on that, on their service. Remember the sponsors are here to serve you.
But if you’re looking for a good financial adviser, go to radicalpersonalfinance.com/paladin. Put in your information and start interviewing the advisers that the system is there to carefully curate it and vetted and hopefully that will help you to get a good one.
Sponsor of the day number two is You Need a Budget. Budgeting software. This is the budgeting software that I now use to run my family’s budgeting and it is fantastic. For details on that, listen to Episode 246 for an extensive review of the software and interview with the founder of the show. You can download a free 30 day free trial at Radicalpersonalfinance.com/ynab — YNAB, stands for You Need a Budget.
Go to radicalpersonalfinance.com/ynab. Download the free software, it’s a free 30 day trial, put in some information, I recommend you just keep it very simple, do one bank account, do your personal checking account and just work with it for 30 days, take the free classes that they offer and see if you like it. I personally love it and I think everybody should be budgeting with this software as a starting place, it’s fantastic.
So announcements and sponsors done, let’s go on to the major points. Let’s talk about tax planning. This question of how can, specifically how it’s stated, how can a dual income, high earning household lower their taxes? This is a thorny one, because from the perspective of taxes, this is the absolute worst place to be. Households that are made up of two employees, both working outside the house, both earning high incomes are screwed by the US tax code.
Now, the level of your “screwedness” depends on where you live, how much you earn, what you do, what kind of company you work for, those kinds of things. But this is absolutely the worst place to be. This is why the political gamesters get away with talking about how the rich aren’t taxed enough. Most famously, when Warren Buffett a couple of years ago made all the news when he was trotting around, talking about how, “My secretary pays more in taxes.”
Which is a lie, it’s stupid because a secretary doesn’t pay more in taxes. But as expressed to the ratio of income, it’s absolutely true, because a secretary is earning an income and is paying taxes on her earned income and so she’s going to be taxed on earned income, wages and salaries at a higher rate than Buffett’s income, which is all structured in the form of dividend payments.
Now this is an intentional plan behind the tax code but what it just illustrates and stark contrast is how employees are screwed basically. Now, in order to reduce your income tax, you must reduce your income. It’s absolutely as simple as that. The higher the income that you earn, number one, the higher the total tax amount that you will pay and number two, the higher the total rate that you pay.
So the only way to reduce your income tax is to reduce your income, this is why the system that we have of progressive taxation is so stupid, you’re always dis-incentivized for making more money unless you have a really compelling reason to do it because the more money you make, the more total tax you’re going to pay and the higher rate of tax you’re going to pay.
So the simple answer to the question of “how do I reduce my income tax” is simply, how can I reduce my income? Now, many of you sitting there shaking your heads saying, well how can Joshua say I can reduce my income, I thought he was going to give you something intelligent. Well that’s where we get in to the major question that you’re asking, which is, “Is there a way that I can reduce my income on paper without actually reducing my income in reality?”
Or is there a way that I can play some kind of trick to reduce my income without actually reducing my lifestyle? Is there some fancy trick, some fancy deduction, some fancy credit, some little thing that I can use to allow me to spend the same amount of money but pay less in taxes. The answer to that question is, “Maybe.”
You might be able to play some tricks on paper with your income and with your deductions and with everything like that if you’re willing to jump through hoops and if you’re not consuming all of your income. If you have a high income, and you consume all or most of that income, then there’s not going to be anything that you can do to affect your taxation. Every single tax planning strategy that I know of is going to involve some level of change in your level of consumption.
The best example I could use with this would be making a 401(k) contribution. This would be the first place that any employee would start, make a 401(k) contribution. Well as I’ll go over it a moment, this is an income timing strategy and basically what you’re doing is saying, ‘well I don’t need to consume this income now so I’m going to put it into a 401(k) account and then later I’ll consume it at a lower tax rate.”
That’s the whole gist of the strategy, it’s an income timing strategy. But that assumes that you’re not going to spend the money. You might think I’m blabbering a point and I am, most of you listening aren’t living up to your income but many couples are. The simple reality is that the high earning couple that’s also the high consumption couple is the ideal — this is the ideal household from the perspective of US tax policy because you are absolutely going to pay the highest amount of taxes.
You must be able to be somewhat flexible with your consumption patterns if you’re going to implement any strategies around taxes. Now, it’s up to you to try to figure out the reason why this is the case, I have my own opinions on it, are they right? Are they wrong? I don’t’ know. Personally I think the system that results in this being the fact that high income earning households from wages and salaries, high consumption houses are the most heavily taxed, personally I think it’s stupid.
It’s a stupid lifestyle for most people and there are much smarter, more intelligent lifestyles, the ways that you can achieve better results without paying and living in this high tax lifestyle. But everything is oriented around this type of lifestyle and our modern American society. We’re trained from the beginning to be consumers, we’re taught to be homogenous society so that we’re easily marketed to your class is going to determine for most people your level of consumption.
The neighborhood that you live in will be determined by the type of job that you have, the type of job that you have will determine what type of car you should wear, what type of clothes you should wear. We become a very homogenous system and this leaves to a need for high levels of income and high levels of consumption. You’ve got to be a little bit countercultural in order to go against that and save money and your taxes.
So it’s up to you to figure out why. I’d say, just simply look at your lifestyle straight ahead and then think about it intentionally. Create your life and your lifestyle intentionally. If you’re willing to think about your lifestyle and create it intentionally, figure out what’s really important to you and if you’re willing to adjust your consumption patterns so that there’s some flexibility in your budget then you can design a much more efficient lifestyle for yourself.
Now, let me give you the framework for tax planning and this is very important that you understand. There are only three major tax planning strategies that I’m aware of. And all of the little tips and tricks fit in to these strategies. These include, number one, income timing strategies or let’s just go with, we’ll call them timing strategies which a timing strategy is when do we recognize the income. Do we bring it forward or do we defer it out? Do we push it to the future or bring it forward to today?
Any type of timing strategy will involve when do we actually recognize the income or it will involve when do we recognize the expense or the deduction? Do we push the deduction forward or do we bring it forward to today? If this is your first time understanding or hearing about the concept of timing strategies, don’t worry, I’ll explain it more in a moment when we go through some specific ideas that could be applied to a dual income household. Or go back and listen to episode 36 of radical personal finance wherein I talk in detail about this as a framework.
The second of the three strategies would involve income shifting. This is where we are shifting the income that we have from a high rate tax payer to a low rate tax payer or from moving an expense from pretax expense or from post-tax expense to a pretax expense by shifting it among an entity. The third strategy would be a conversion strategy where we’re converting income from a high tax rate activity to as low tax rate activity.
This is the framework that you need to apply. So if you understand the framework then you can look at your own situation and understand what is the best way for me to apply it, again, go listen to Episode 36 and Episode 41 of Radical Personal Finance for an in depth discussion on it. By starting with goals, you’ll be able to figure out how can I achieve my actual goals and apply the appropriate strategy to lower my taxation.
So begin with what is my ideal life, “What is my ideal lifestyle, what is my ideal day, what do I want the meaning of my life to be? At my funeral, what do I want the meaning of my life to be?” Good journaling exercise for you if you’ve never done it, sit down and write your eulogy. Find yourself a quiet place, get a cup of coffee, sit down with a journal and a pen that you like writing with or whatever your preferred way writing is, maybe your computer and write your eulogy as you would like your best friend to deliver it for you at your funeral.
Then look at that eulogy and figure out, “Well what do I need to do to make this eulogy true so my friends don’t have to lie about me on my funeral?” If you start there, what you’ll start to get closer to is what is the overall impact and meaning of your life? That might include what you’re doing at your job or it might include something different. By starting with that as a perspective, then you can efficiently design the financial plan, the tax plan to help you to accomplish that.
Here would be a simple example. Let’s say that you are a dual income household like so many people are. That means that when we put the aggregate of your taxes together, we’ll talk about the different taxes you’re paying in a moment. When you put the aggregate of your taxes together, then the second income is being taxed at an aggregate rate of about 40-ish percent.
Now, assume that you’re in a situation like so many families are where you have children at home and you have also aging parents and perhaps you have an aging parent who need care of some kind. Well, there are a couple of ways that you can do this. Number one, you can keep on working at your job and you can continue to earn money, you can use that money to pay with number one, you got to pay 40% on every dollar.
You can turn around and use that money, you can hide, use it to hire a caregiver for your parents, you can use it to hire caregivers for your kids. All of which are extremely expensive activities so you’re going to earn a dollar, pay 40 cents in tax to the government and then use some of the 60 cents that’s left over to pay for the caregiver and pay for your kids, which is all nondeductible activities.
Well if you’re goal of your eulogy is to be a corporate titan and you are proud that your best friend talks about your business acumen and how high you rose in the ranks of the corporate life, that would be inappropriate strategy. But perhaps your eulogy involves something like, “Joshua was the most loving person I know, he always had time for the people that were close to him. He built strong family relationships, his family always knew that no matter what he loved and cared about them.”
I’m not saying that you can’t maintain that as an accurate reality through hiring caregivers for your children, for your parents but if you were facing a situation like that, it might be much more efficient for you to simply say, “Why don’t we stop paying this 40% marginal tax rates, drop back, cut our income, cut our taxes and I’ll go ahead and be the caregiver for parents and kids?” It’s up to you what you do, I’m not telling you how to live your life but that would explain an example of how your long term values would impact what you actually did and the type of strategy that you chose to pursue. It’s up to you to figure out how to actually implement it.
So begin with what are your actual goals for your life and your lifestyle and then design around those goals, an intentional plan. Good way to think about this is, pretend that you’re hired as a consultant to a business, the business of “You Inc.”, so Joshua Sheats Incorporated. So if I were hired as a consultant to Joshua Sheats Incorporated and I were hired to run Joshua Sheat’s life, what would I do?
Well, I would start with saying, what is the mission and purpose of this company? Why does this company exist? Get very clear on that Bring that back to your life, why do you exist? Get very clear on that. That’s number one. Number two, I would do an audit to find out where are we with regard to fulfilling our mission? What’s the current status? Is Joshua Sheats on track to fulfill the mission for why he exists? Is he ahead of the game, is he behind the game? Where are we with regard to that mission?
Next, number three if I were coaching Joshua Sheats Inc., I would say, “All right, we’ve got a clear mission and purpose, what tools and equipment and personnel are going to be required for us to achieve our mission? Is this mission the type of thing that will be achieved with a small number of employees or a large number of employees? Minimal equipment, lots of work, maximum equipment, minimal work?” All goes back to the mission and purpose.
Then, I would go to the financials and say, “Where are we with regard to our financials, what income do we have, what assets do we have?” We’d take a look at a balance sheet, we’d create a balance sheet. Then I would say, “where are we with regard to our cash flow, our income and our outgo. That’s where our cash flow statement works in. Search the archives for balance sheet and cash flow statement and you’ll see how those things drive everything in the financial plan.
So you start with a big picture and then you go to the line by line item analysis. You’ve got to have both the big picture and the line by line item analysis in order to do effective tax planning. Because tax planning is not one big thing, it’s many little things applied in a specific local situation. If you’re a corporate executive living in New York City paying in excess of 50% taxes and you find out that your mission statement, your purpose statement, actually involves you rescuing Mustang ponies in Wyoming.
You’d be a fool to continue paying 50% of your income in taxes when you can got and take $100,000 and buy yourself a ranch and start rescuing Mustang ponies in Wyoming in a state that has no state income tax and you drop your total tax burden to under 10%. That would be the big win. But if on the other hand your mission is to transform New York City and bring it into a global leader as a city. Well, sitting on your horse ranch in Wyoming isn’t a very good way to do that.
So first you make sure the big things are there by talking about mission, purpose, strategy, then you go to the line by line item and whether you’re running a horse ranch in Wyoming or whether you’re running the city government in New York City, you go line by line through the budget, through the balance sheet and you make sure that you’re approaching things efficiently. What happens though is people get these things wrong.
I’m laboring on this point, hopefully I’m not “be-laboring” it but I’m laboring on this point because this is what I see throughout the world that people get wrong. The basics of tax advice is, “Start a 401(k).” Well, a 401(k) might be a useful tool for you or it might not. I regret some of my 401(k) contributions at this point in my financial life because I wasn’t clear enough on my mission and purpose and what I want in my life to look like when I was making those contributions.
How many times have you seen this happen where somebody diligently labors to put money on their 401(k) then they decide they want to pursue another course of action and now they have no access to the money that’s in their 401(k) because they took that deal of giving up access to it, thinking that that was what they needed to do to reduce their taxes.
In some circumstances it would’ve been much better for them to put the money in a bank account, pay the tax now so that they could fulfill their larger purpose and their larger mission. We get these things wrong, we get them backwards by focusing first on the strategy and the tactic instead of focusing first on the mission and the purpose. The strategy and the tactic is important but it must be subjugated to its proper place in our planning approach.
If you’re not clear on the mission purpose and vision for what you’re trying to accomplish, you don’t know whether you should build warships, airplanes, or intercontinental ballistic missiles, or order a bunch of rifles for your soldiers. If you’re fighting a global super power, and you want to have a way to destroy their major airbase facilities, an intercontinental ballistic missiles are useful tool.
If you’re fighting a guerrilla warfare in the streets of a far flung city, you need rifles and well trained people, not intercontinental ballistic missiles. I’m mixing about a dozen metaphors in this show and I’m going to move on but don’t miss the point. Get clear on the big picture and then craft the plan to that. Don’t start with this prescribed, predetermined lifestyle that is marketed from the pages of every financial magazine, from the advertisement of a page of every media communication that you get.
Create your own lifestyle, choose yourself based upon your personal mission, your personal values, design it intentionally. That’s the most efficient process for you to build a good tax plan. If you’ve got that message loud and clear, now let’s dig in to the specifics. So back the analysis. We need to begin with some basic financial statements, balanced sheet, cash flow statement, and we need to do an analysis of where we are with regard to the total taxes paid over the previous, let’s go with a year, whatever the accounting period is that you’re going to look, let’s go with a year.
This will be where most couples, if you’re helping somebody with tax planning or if you’re doing it yourself, this would be where most people will absolutely fail. Because most people do not have any kind of financial records, they don’t have any kind of transaction record, they don’t have any ability or knowledge of what they’re actually paying in taxes.
You can get some of this info directly from the tax return, a good place to start if you’re doing this for yourself is learn how to read your tax return, take a look through, they’re not that complicated especially for employees, just go through and read it. What you want to do is you want to figure out how much total tax did I pay? Here you’ll see the first reason why you need a complete cash flow statement.
There are many kinds of taxes and federal income tax is only one type of tax. As my listener who ask the question astutely stated, there are other types of taxes including state income taxes, also including employment taxes. And as an employee, employment taxes will be a major factor in your planning. Remember that the employment taxes that you pay as a W2 employee, salaried employee, are going to be always 7.65% of the first $118,500 that you earn.
So for the first $118,500 that you earn, you’re going to pay $9,065 of employment taxes. That’s what $118,500 is, a 2015 social security wage base. Then you’re going to pay an additional 1.45% Medicare taxes on every dollar in excess of that and you need to look to see if you’re going to pay the additional Medicare/Obama care taxes on investment earnings and it gets a little more complicated but it’s less apt, you do need to look through that.
That may or may not be a big number for you. For every $120 grand, you’re going to pay $9,000 bucks of employment taxes, you need to be aware of that. I need you to factor that in, and here is where scale of income becomes a big deal. You’ve got to look and understand, what is the scale of your income, what is high income actually mean? If you have a $100,000 income, you can do a lot to save taxes with simple retirement accounts and deferral of income.
If you have a million dollar income, a 401(k) deferral is practically useless to you. Just consider that if you make a maximum 401(k) deferral amount in 2015 of $18,000, if you’re earning $100,000 a year. That will allow you to save 18% of your income. That will be useful for you. If you’re making a million dollars a year, then the 401(k) account will allow you to save 1.8% of your income. Not that big of a deal.
You’ve got to look to figure out what are my big taxes that I’m facing and what are going to be the strategies that are going to get me there? Back to that $100,000 and million dollar number, if you’re making $100,000 a year, your federal income taxes are not going to be very, very substantial. Especially is compared to things like your employment taxes.
Your employment taxes are going to be a big number for you. $9,000 bucks-ish on $120,000. That’s going to be a big number and it’s going to become comparable in many ways to your federal income taxes that you’re paying. If you’re making a million bucks, then the employment taxes are going to be relatively insignificant. But the federal income taxes are going to be extremely significant.
So you’ve got to always keep in mind that your scale here is a big deal. That’s why you look at your actual cash flow statement and on that cash flow statement, you start with gross income, your total income prior to any taxation and then you have a line item for every single category of expense and every single category of income.
You know where is your income coming from and what is every expense including all of the different types of taxes that you’re paying. Based upon which of those tax line items is the largest and we’ll keep it simple. Employment taxes, federal income taxes and state income taxes. That’s going to adjust your strategy. But you also want to look at your other taxes.
Property taxes, sales taxes, miscellaneous consumption taxes, used taxes et cetera. Figure out which of those is going to be the biggest deal to you. Most people simply will not either have the capacity or make the time to create good data, to create for themselves good statements but if you have it, it should show you the big wins. Example, you are a dual income, high income earning, this goes back to my listeners point about calculate the actual costs of working.
Let’s say that you’re a dual income, high income earning household. One of you has a corporate job where you work in one office location, the other of you has a corporate job where you’re on the road lot — sales. Okay, I just was up in Asheville, North Carolina. Spoke with a bunch of sales people, it’s a big financial hub — excuse me, not Asheville. Charlotte, North Carolina. Big financial hub for sales guys.
They spend most of their week on an airplane. It doesn’t really matter where they live, they pick Charlotte because it’s good cost of living and it has easy access through the airport. Now, two households working, a couple, both people working, living in New Jersey. You can dicker around and get a child and dependent care tax credit if you qualify based upon the income limitations but your maximum tax credit here is $1,200. That’s the most that you’re going to be able to get for dependent and childcare credit, $1,200 bucks.
You might look down however and notice that you’re paying $10,000 to $12,000 a year of property taxes to live in New Jersey. You realize that, “Well if we just made a simple shift and move from New Jersey to a state with lower property taxes which is pretty easy to find, then all of a sudden, we could kiss say $8,000 a year of this property taxes goodbye.”
And if the employment situation works out where one of the spouse can negotiate a work from home scenario for a part time pay, living in a different state and the other spouse is on an airplane anyway, you might find the big win. A lot easier to just simply change property taxes by changing states than it is to try to figure out how can I maximize my dependent care credit? If you’re eligible for it, take it. But stay focused on the big wins first.
When you start looking and saying, “Oh my state income tax, I can change that and my property tax level.” Now all of a sudden, you open up more wins for yourself. At this point of my knowledge and understanding of tax planning, I am convinced that the big wins of tax planning are all going to be major lifestyle changes. They’re not going to be found in lists of deductions and credits.
I’m going to give you a list of deductions and credits but the big wins, I’m convinced they’re not going to be there. I could be wrong, if you can prove me wrong, tell me. I’ve never really found somebody who does a good job and can say, “Look, here Joshua is your pro,” so I’ve made this up from synthesizing information. But I’m convinced they’re major lifestyle changes. By starting with the vision, mission, purpose, then focusing on the aggregate of all the different types of taxes, starting there, that’s going to be the major wins before we get to the minor wins.
Now, to keep this continued to be practical with that as your backdrop. Now let’s dig in to what can you actually do to lower income taxes? I’m going to stay focused on federal income taxes. The strategy is for changing employment taxes or going to involve changing who you work for and how you work. That will, that’s a different show for another day.
The strategies of state income taxes are going to involve a very small number of credits and changing states, that should be something you should seriously consider but that’s also a show for another day. Let’s stay focused on federal income taxes. Let me give some examples of how we could approach this problem with the backdrop I’ve given you for young couples.
Here is the stereotypical case study I’m going to use and here is why I say that the basic situation, that the high income, dual income house hold is a disaster from attacks perspective. Pretend I have two attorneys that are married to each other. Each of them makes $150,000 a year as employees of a large law firm. So you’ve got $300,000 of total gross income.
Well, that kind of a lifestyle for most people is going to lead to a certain consumption pattern, it would be an unusual attorney who would drive around 1998 Toyota Corolla, like I do. In general, if you’re going to be an attorney, you need to maintain your image, you need to signal the proper amount of competence for your clients. That’s going to involve your purchasing a BMW or a Mercedes.
Can you avoid that? Well, I’m not sure I would because it is important, you have to market the appropriate thing, you have to put forth that signal and you have to signal how you want to be perceived and you need to be perceived as successful in your career in order to attract clients. That’s just the way you make partner where you go from $150,000 to a million five per year, which is the basic function.
What that means is that early in your career, you are purchasing an expensive car, let’s say you find a good deal or you’re still $20,000 bucks, well, you’re going to incur sales tax on $20,000 car. Big sales tax. You’re going to incur depreciation, $20,000 car. And this is about as conservative as I can conceive even with talking about a $20,000 car. But big depreciation, it’s $20,000 car. Worse of all, all of this expenses are after tax expenses.
As an employee and as an employed attorney at a large law firm, you’re going to have a minimal ability to deduct any personal transportation expenses. What else is associated with it? Well, you got to have a certain level of clothes, I mean it’s going to mean, nice suits. Well those clothes are entirely nondeductible, the only type of work clothes that are deductible are specialized work clothes that are needed for a specialized occupation. A nice suit for an attorney doesn’t count.
You’re going to, based upon your social status as a working professional, you’re going to be expected to live a certain lifestyle, which means you need a moderately fancy house or apartment or condo. Not much you can do there as far as say tax savings. You’re going to be expected to engage in certain lifestyle. Drinks after hours, dinners out, a certain level of entertainment, most of which is going to be relatively expensive and all after taxes.
As a junior, considering here a young couple just starting out, as a junior level attorney, you’re not going to have a substantially padded expense account for you to easily be able to move that entertainment over and deal with that on the corporate credit card. So what you have here is you have a relatively high gross income with very few deductions. And all of the income is going to be front loaded and most of your expenses are nondeductible. So you have heavy tax across the board and every one of your tax categories is heavy.
You’re paying high employment taxes because your income is salaried. You’re paying high income taxes because you have a high household income. You have very few deductions that you can put against that, you have all of your income as structured as salary so you’re not able to take advantage of any capital gains tax rates or dividend tax rates. This is the problem that employed dual income household face. Now, I said, the big wins are going to be major lifestyle changes, not just a list of deduction to credits.
Here would be the example. Compare that scenario to the millionaire next door is outlined in Tom Stanley’s books. Let’s assume that instead of being a young attorney, I decide I’m going to be a young house flipper. Well, all of a sudden, I don’t need to drive a BMW or a Mercedes, I can drive a six or $8,000 Ford F150. That Ford F150 is going to be an important part of my business, and so as part of that business, now it is either a depreciable asset or a deductible expense asset. So I can deduct the cost of it, right off of my profit.
Now I don’t need to setup a high cost office in a class A office space, I can setup a home office. Because of the nature of my work, most of my driving now goes from instead of me commenting to my inner city attorney office, now most of my driving is going to be have some business association to it. When I’m driving my pickup truck, I might be going to look at a house, I might be going to meet with a contractor, I might be going to deal with something like that.
I can wear a pair of work boots and blue jeans which cost me $8 at the local — $4 at the local Goodwill. I can live I a middle class type of neighborhood instead of having to live in the upper class posh neighborhood with all the fancy people because I’m not trying to get my neighbors as my clients and joining the local country club so I can meet perspective legal clients rather I’m simply trying to find people who need to rent houses and I can have the most comfortable house in my lower middle class or middle class neighborhood instead of having the aspirational house in my aspirational neighborhood.
Because I wear blue jeans and drive an F150, I can enjoy a Friday night out at the local high school football game with a six dollar beer and a four dollar hotdog instead of having to go out to the fancy country club. Even if I made the same net, let’s say that I grossed $150,000 — even the structure of my company where the structure that I can put in place with my simple house flipping company is going to be much more advantageous from the structure of my income, versus the W2 attorney income.
So even if I just gross the same amount, $150,000 from a legal job as a junior attorney or $150,000 as a house flipper, there’s going to be a dramatic difference in lifestyle and taxes based upon that. That’s why I talk about the big win is going to be major lifestyle changes. Hope that’s helpful. Next, let’s go on to applying those strategies. And the order of this show, in case it’s unclear, focusing on the things that have the biggest impact first.
Now we’re moving on to the things that are going to have the medium impact and we’ll finish with the list of credits and deductions, they’re going to have the least impact. Rather than starting with all the noise of credits and deductions that has a small impact. So medium impact, let’s apply these timing strategies, shifting strategies and conversion strategies to employees. How could we implement this?
Well first, timing strategies. Any kind of timing where we are either deferring or accelerating taxable income or deferring or accelerating tax deductions in order to take advantage of the lowest tax rates. With regard to your income, one of the things that you should think very carefully about is how could we — when do we want to actually recognize the income? Let’s start with 401(k)’s.
401(k), major place to start. I can put $18,000 in a 401(k), but what you’re doing is you’re deferring the recognition of the $18,000 of income from today to a future date. The only reason that you would do this is if you expect to be in a lower tax bracket in the future at retirement than you do today. Probably that’s a reasonable expectation. Now, could you do that with a heavy focus early in your career?
What most people aren’t doing if they’re early in their career as employees is focusing first on savings. Most people are focusing first on getting their consumption established. Back to my stereotypical dual attorneys in a household, as a simple example, both of them we’re going to get our cars, we’re out of college now, we’re tired of being broke students, we’re going to get our house setup, we’re going to get our cars setup. We’re going to get all of our things setup, we’re going to have our fancy vacations.
And so what most of those people are doing is a start by focusing on the lifestyle expenditures and they don’t focus first on the savings and investments. What often ends up happening is, kids come along and after a while, when kids come along, one of the spouses will switch to either a part time or switch to staying at home. This is often what happens. Even if both spouses don’t switch to doing that, there are going to be other expenses and because you start to have kids, there might be some deductions that are associated with that.
What I would love to see people do is substantially reduce their income in the early years by investing the maximum and the 401(k) and then as their kids come along and perhaps they pull back a little bit from the career track, perhaps they have child credits and things like that are slightly helpful. Then go ahead and pull back on the 401(k) contributions and save less in the 401(k). That could be a timing strategy; front load your retirement plan contributions.
If you have — back to the big picture vision — if you don’t always intend to be employees and most people don’t always intend to be employees. Usually, in most families that I’ve worked with, there is some kind of self-employment career transition that people want to do, do that early. So instead of both people trying to work in a full time jobs where now you’re paying high marginal tax rates on the top levels of income and then at some point in time we’re going to have kids and now mom or dad is going to transition to the next job, the building the business, that can be the part time business from home, switching from being the employed attorney to being the self-employed attorney.
Why don’t you do that early? Take that lower income that it requires to setup a business earlier in life when the marginal tax rate is the highest and adjust the timing and bring that reduction of income forward, instead of trying to do it when you got a two year old in the house and you’re going to have lower tax rates because of that transition. So use those high earning years and think like a family unit instead of as business partners.
When you don’t have many deductions to use, renting an apartment perhaps, you don’t have mortgage interest deductions, things like that, why not just keep your income low and your expenses low and build the business then? You can do the same thing with your investments even if you’re not using retirement plans and even if you’re not investing in business.
If you’re going to invest in something that’s going to require a capital expenditure, do that early so that you can use your upfront depreciation expenses, which are going to be higher in the beginning stages to offset some of your higher earned income. This is back to the strategy that my listener mentioned of real estate.
One of the major advantages of real estate is you can enjoy the higher upfront depreciation and that depreciation can count against your income from the investment and also potentially against the income from your job. So do that early, buy those investments early using that upfront depreciation to offset the high income so that over time you can pivot and instead of needing to live on the high earned income, you can live off the income from your investments.
Working a high income job can be an awesome strategy, that young attorney can — those young attorneys can do a really amazing job with that $300,000 income. If they just switch from buying BMW’s, fancy aspirational upper middle class housing, all of the fancy deals and they focus on buying investments, and all of a sudden, you take five years of focused effort and they come out the other end with five to 10 rental houses, that’s going to make a massive difference in their overall lifetime wealth as compared to the kind of scuzzy looking vehicles, worn out suits, etcetera.
Now obviously you got to figure out a way to meet the minimum requirements and that’s up to you. But as a concept, that can be a useful scenario. Timing of your expenses or your deductible incomes obviously we talked about funding the retirement accounts early from a tax perspective, rather see those retirement accounts funded to the max from an early perspective if you’re going to use retirement accounts.
Consider funding all of the accounts that you have, can you fund 529 plans early when you can take the deductions, if you’re going to use 529 plans. If you’re going to be able to get a deduction state income taxes. Can you fund your health savings accounts? Fund those early, maximize all of your expenses and deductions. As an employee, most of your deductions are going to be the freebies, the retirement plans and things like that.
Those all have problems associated with them, they’re locking up the money, that’s a show for another day, there aren’t many deductions that you can really capitalize on. That’s what’s so limiting about being an employee as compared to a business owner. Shifting strategies. Shifting strategies always involve how can we shift income from a high rate tax payer to a low rate tax payer? Here, there’s not much you can do as an employee.
You can’t assign the income from your job to your eight year old daughter, just not going to work. You could focus on the state that you live in, that’s a big deal, that would be one way of shifting from one high tax rate jurisdiction to a low tax rate jurisdiction. This would be especially useful to you if you live on an airplane or if you work remotely or if your company has multiple locations. Sometimes this can be an easier type of transfer to make, shift from the high tax rate state to the low tax rate state. Look for that or the high tax rate account to low tax rate county.
On expenses, you just want to look to see, are there any expenses that you could shift from personal expenses over to the company? Simple examples come to mind here. Phone, do you pay for a personal phone and you have business on it or does your employer pay for it? The IRS is pretty loose with simple things like an iPhone, iPads, things like that. Get your employer at least to pay for that phone so that you don’t’ have to pay for it completely yourself.
Is that going to make a big difference if you’re making $300,000 a year? No, but again, tax planning is all about little things. As many little things as possible. Can you arrange and negotiate a company car? Sales reps, things like that. That company car if you’re in the service business, even if you’re an employee, that company car can be a big benefit for you.
Your employer, by law, is required to track your personal use and your business use and to disallow any deductions for any personal use. But still, many businesses can be arranged in such a way that you are traveling from your home to the job site and therefore the business car is part of your business use. Look for any way to shift any personal expenses from your bank account over to the company’s bank account.
Finally, conversion of strategies, conversion strategies are all about where we can try and convert income from a high tax rate activity to a low tax rate activity to a low tax rate activity. First thing is can you convert from salary into ownership? Could you participate in some sort of bonus programs, stock option program, executive compensation program and rather than recognizing your salary immediately, can you start to transition to the ownership perspective? That’s going to be a big savings.
For your expenses, can you switch out some of your expenses and possibly transfer anything over to the company checkbook? For example, if you’d like to go out to fancy dinners, then go ahead and sign up to be part of the client entertainment team and do your fancy dinners out with clients, you can take your spouse along if your client’s spouses are present, the IRS rules on that are that if your spouse’s attendance is necessary in order to be appropriate for the situation because the people that you’re entertaining for business purpose also have their spouses along, then that’s an okay scenario.
If not, you would need to pay for your spouse out of pocket and that would be a disallowed business expense. Can you just switch some of your entertainment over and turn it from personal entertainment into business entertainment? Why not do the fancy dinners out, why not do the baseball games with clients, things like that. It can be perfectly enjoyable, can help you to move it over to your expense account.
Make sure you get all the little ones, take all the tax free money you can get, take the tax free airline points. Take the tax free airlines miles, all of those types of things are a big deal. If you’re paid per diem allowance on business travel, underspend your per diem that can be tax free money that flows into your pocket. Should look for whatever is appropriate to your situation.
Now, let’s go through some specific employee benefits, deductions, credit things like that, always look for all the tax free money that you can get, for example, maximize the tax free health insurance premiums that your company is paying for you. Get your $50,000 of group term life insurance premium for the company, that’s tax free money. Get any kind of health plans that you can that are going to may be a benefit to you. Look for the tax free merchandise that’s distributed to the employer. Make sure that you carefully track all of the appropriate expenses of your employer.
Simple one, make sure you get your cab fares tracked, make sure that you get your supper money. If you can arrange to work as an employee, if you can arrange to work from 11 AM to 7 PM instead of 9 AM to 5 PM and your employer agrees to pay you supper money because of your work hours, then those otherwise personal supper expenses are converted into nontaxable income. Simple change could be something that could accumulate over time. Again, make sure you get all those benefits that you can with personal phones, computers et cetera.
Take advantage of any meals and lodgings that your employer provides. If your employer provides, for example, lunch on the premises so that they minimize the time the employees are away, that’s a nontaxable fringe benefit. If your employer doesn’t do that, consider investigating that and asking them to do it. You have to make sure that it’s done for the convenience of the employers so it follows the rules but that can be a substantial win. Maybe you can start a corporate program like that and that can be substantial.
How substantial? Well, consider this as an example, I’ll do some math here to show you what I mean, little things add up. Let’s assume that you’re in the habit of spending $15 a day for lunch, eating out each day on personal expenses. Ignore the concept of brown bagging for less, just assume you’re in the habit of doing this, going out every day with your coworkers. Well $15 per lunch per day, times what? Let’s use 220 days worked. That comes out to be $3,300 per year that you’re spending on lunches.
Because you’re going out with coworkers and you just simply going out for personal lunches, you have to pay for those lunch expenditures with after tax dollars. That means if you’re in a 40% tax bracket with that higher income, take $3,300 divide that by 0.6 and you wind up with $5,500. You have to earn $5,500 just to pay for your lunches out every day.
Now assume you go to your employer and you ask your employer to go ahead and institute some sort of employee lunch program where for the convenience of your employer, your employer serves lunch to all the employees every day. That’s a valuable fringe benefit which can be fully deductible to the employer and allows you to save the $15 a day. That’s $5,500 that you don’t have to earn to put towards that.
Simple, small, but actually powerful in the aggregate. You could apply the same thing to coffee. A lot of people want to have a fancy coffee. Well, a couple of dollars a day for a fancy coffee, what about going to your employer and asking them to install the equipment for a coffee bar for the employees? Even if you don’t have a barista, what about just getting the equipment? Many employers might be willing to spend a few thousand dollars on fancy equipment.
Go ahead get fancy equipment, you can have fancy coffee and ask your employer or negotiate if you’re in a leadership position. Arrange for a beautiful break place, a nice little outdoor patio seating where employees can go and have fancy coffee together. That’s a material benefit which allows you to minimize your expenditures that are after taxes and move them over even as an employee to the business balance sheet. Get creative with that.
Now, make sure you maximize any type of flexible spending accounts or cafeteria plans that are established, perhaps you can encourage and persuade your employer to establish a dependent care assistance program. The benefits received under that type of program can be substantial to you. Maximize your employer educational assistance opportunities if they provide for you any type of tuition payment things like that, that can be extremely valuable.
Shop for employer’s carefully based upon that if nothing else. Simple example, if you wanted to be an attorney — I’ll continue to pick on my attorneys. Maybe you get a job at a law firm that provides reimbursement for law school expenses and you get a job there as a paralegal and you work through and you take advantage of their program. That would be a deductible expense for the employer and that’s tax free money for you, the employee.
If many of your compatriots have to earn, let’s say law school cost $100,000, if many other people have to earn money at a 40% tax rate, so $100,000 divided by 0.6 will be a $166,000. So your friends have to earn $166,000, pay to get the $100,000 out that they can then use to pay for school and you can get that as tax free as a tax free benefit by working for a firm as a paralegal and then allowing that firm to pay for law school. That could be a useful thing for you to be involved with.
Maximize any of your employee reward programs, get the gold watch, get the pen, set up those programs as part of your employer so that they can benefit you. Try to take advantage of any scholarships or awards that you can find. Take advantage of any other fringe benefits that your employer provides. For example, sometimes you might be able to find a system where your employer will move you and will pay a moving allowance as part of your contract.
Well if you can negotiate that moving allowance and also involve that as something where you are purchasing real estate, you could theoretically put together a couple of those things to create tax free income for yourself. If you’re moving allowance offsets some of the cost of your moving and you take advantage of the section 121 tax free income from the sale of your house, you might be able to put those together to enrich yourself.
If you need to drive to work, put together a carpool association with some of your coworkers. Charge them money, those carpool receipts coming to you are tax free income. As you can see, most of this ideas are things that will involve — many of this ideas, are things that will involve negotiation with your employer.
Something as simple as this, let’s say that you travel a lot for business and whenever you travel for business, you have to get two spouses, husband who travels — husband’s the one who works at a job that doesn’t involve travel, wife is traveling for business, husband’s job involves a long commute. So what happens is the wife’s job involves a short commute. She is able to take care of the dogs when she’s home.
But the husband’s job has a long commute. On the times when the wife is out traveling, that means that she has to put the dogs in the kennel during the day and pay for doggy day care. Doggy day care rates in your area are a total of $20 per day. This happens a total of 40 days per year, 40 times 20 equals $800 per year that you spend in doggy daycare.
So you’re going through that cashless statement, you’re asking yourself, “Is there a way that I could change this expense from a taxable expense and shift it over to a nontaxable expense?” Well, you look at that and say that’s $800 we’re spending and the reason we’re spending it is because it is part of the travel expenditures.
Well it’s not going to work to get your employer necessarily to pay you extra for the doggy day care, although check it out. But maybe you could convince your husband at his company to lobby for dog friendly work environment so that he can just simply take the dog with him to work. Well, $800 that otherwise was an after tax expenditure, that meant that you had to earn $1,033 pre-taxes at a 40% aggregate rate to pay for that expense.
Well just simply him going in and asking to change the company into a dog friendly environment where he could take the dog to work is going to make a big difference, that’s $1,033 that you don’t have to earn in order to cover that expense. Now, you can go through more and more lists of all the deductions, above the line deductions, below the line deductions, your child independent care tax credits, moving expenses, you can go through the list of those but from here, all of those deductions are all going to be equally applicable to business owners or employees.
Hopefully you see at least the process that you can apply to personal tax planning. It’s a lot but it’s also just a system of little things. But I’m going to close with reiterating the thing that my listener mentioned even in the comment. Well two things actually that my listener mentioned even in the comment. Number one, you heard me at the beginning when reading his email, talk about calculating, is it worth it for the second spouse to work.
I would challenge you, any of you listening, whether you’re married, whether you’re not, whether there’s one income, whether there’s multiple incomes, go through the income calculations and figure out the true income per hour. Figure out what it actually costs you to work. If you compare the expenditures that I went through as an example with my attorney example. The young, aggressive attorney’s working through these things.
If you were to go through those list of expenses, of what it actually costs to be a young attorney and all of those lifestyle expenses associated with it, the long hours, the billable hours, things like that. You would find that the actual rate per hour, if you take the gross income, pull out the costs of working the costs of lunches, the cost of the BMW, et cetera. If you pull out the rate per hour, it’s actually much lower than it seems at first glance.
Many of you listening would love that lifestyle, for me I would hate it, I’d rather do what I’m doing now, which is work in a pair of shorts and the T-shirt every day and drive a $500 car. Because I enjoy this type of lifestyle much more than I would enjoy the other. It’s a free world sort of, you do what you want. But recognize the cost and if you run those calculations and you actually sit down and figure out what is the incremental tax rate? You might find the opportunity to do something different.
I’m going to read here in closing one of my favorite emails that I have ever gotten from a listener of the show. This email says this:
[1:00:25.7] LISTENER: “I’ve been meaning to tell you Joshua about some exciting changes in our family, much due to the inspiration from your show. After the inspiration, to track expenses, cash flow, taxes et cetera and after reading the book you recommended, How to Pay Zero Taxes. I realized that my wife did not need to be working.
She put in her notice one month ago and will begin as a stay at home mom on Monday. She is thrilled. Through tax savings credits and reductions in income based payments to student loans. I discovered nearly $30,000 in savings right away for her not working. In addition, we can enjoy more home cooking, slow living and hopefully less stressful purchasing.
Some example, savings: previous work expenses for $5,000 per year of the cost of actually working. Pay as you earn student loan payments, $6,000, taxes, $7,000, saver’s credit, we now can get an additional $2,000 tax credit because of the lower income and an IRA contribution for both of us, saves us $3,000 of additional tax.
Long story short, I discovered savings of nearly $30,000 for her not working. Now, instead of 3 hours of getting the family ready, sitting in traffic and getting to work late, I can wake up at 5 AM, get on the express bus and be at work by 6 AM, getting home much earlier all while they sleep in, have a casual breakfast and enjoy life.
Thank you for the inspiration and your shows on stay at home parenting, it’s made a great difference in our lives.”
[1:01:42.7] JS: That is one of my favorite emails that I have ever gotten from the show. Because I see this as a very doable thing for many people. The reason that I close with this email is to demonstrate to you that the major savings and the major lifestyle improvements are not found on the list of IRS form 1040 deductions and credits. I hammer that point home throughout the show by starting with the things that are most impactful, moving to less impactful and moving to least impactful which are deductions and credits.
In short, consider your lifestyle. The modern US American lifestyle for many people, especially many people in this situation, flat out sucks. It’s well characterized by that Facebook meme that goes around of picture of massive gridlock on the highway. “I’m sitting in traffic in a car that I don’t own, driving on my way to work at a job that I don’t like, to pay for a house that I don’t get to live in because I’m sitting in this car in traffic, on the high way going along the way.”
“I got to do this so that I can pay for,” — you bring it to dual income households and you say, “I’ve got to do this so that my spouse can be doing the same thing and we’ve got to get up early to take our kids to daycare so that we can pay with after tax money, someone else take care of our kids or so that we can pay our property taxes so that we can hire people to babysit our kids,” it sucks. The lifestyle sucks.
Whoever sold us a bill of goods that you should determine your self-worth based upon the amount of your income as measured in dollars, sorry, I don’t buy it anymore. The whole concept of work, work, work, work, work so that you can spend, spend, spend so that you can save a little bit of money, hopefully someday, maybe you’ll be able to retire and play golf every day is stupid. I’m not playing that game.
Now, it’s not either or, it’s not, you got to be broke and poor and make $10,000 a year just so you can be happy, I fully intend to make millions of dollars a year. That’s the plan, I got the business plan for it. But that business plan is built out of mission, purpose, values, what I started with the show. And then it’s built on lifestyle then it goes finally to tactics. If you’re in the right place so that you’re able to actually make these things happen, go for it.
But consider as you’re looking at saving taxes, “Is it really worth it? Should I make some big change or should I make the little changes?” And then do both of them? That would be how I would answer the question. Hope this content is useful to you, I’ve had a little bit off of my game and a little bit off my timing. I think I’ve done so many interview shows lately, it’s been tough for me to get back on my timing but I’m working on it. If this show is a little bit flat, let me know. I am working on it.
A couple of things as we go, a couple of announcements. Number one, that email that I received from that listener, if Radical Personal Finance has helped you, would you do me a favor and just email me and let me know? It’s so helpful and especially helpful, I am launching the details of the coaching program that I’m starting, personal coaching. I’ll go over that in a future date but I’d really love to have more emails like that to just simply share with people as part of testimonials that I can show.
I will clear your name from it, I’ll redact your name so that it’s private or something like that. But if you’re okay with my sharing your name, that would be helpful too. But I’d love to get some emails from you guys. Joshua@radicalpersonalfinance.com if any of the content in the show has been helpful or of course you can leave the iTunes reviews, those are super useful and helpful as well.
Remember that if you are a patron of the show, on Thursday, what did I say? At 1 oclock, where’s my calendar? Yeah, Thursday at 1 o’clock PM eastern, there is a conference call for all patrons of the show, I have two hours blocked on my calendar, I intend to answer as many questions as possible and have a conference call. You can dial into that, there’s no video feed, I’ve cut out the video feed because the video feed was just a pain. We’re just going to do this with phone calls and actually get it done quickly.
Also remember for the next eight weeks, I am doing a Q&A each week for Patrons of the show at $10 and up. Feel free to go to radicalpersonalfinance.com/patron and sign up to support the show there. Also, make sure to remember our sponsors of the day, Paladin Registry and YNAB. If you need a financial adviser, start by going to radicalpersonalfinance.com/paladin. Interview the advisers there, see if anything is good for you.
I don’t get paid based upon your choosing in any of those advisers, I get paid based upon your interviewing those advisers. So no harm, no foul, feel free not to choose them and if you have gone through that process, please give me feedback. Also, budgeting software, go to radicalpersonalfinance.com/ynab. If you’re not using, You Need a Budget — YNAB — then check it out, try it, free 30 day trial at radicalpersonalfinance.com/ynab and see if can be useful to you.
Peace out you all, be back soon.