There is about $7.5 trillion circulating in the American economy alone. So what is the problem? Why can't you make all the money you want in life? Well, maybe its because you don't understand the players and the financial tools they use for making money. Either you simply don't know how to become a particular player or you don't know how to use the proper financial tools for accumulating wealth. The four players of money and business are employees or “Workers", self-employed or “Hustlers", business owners or “Ballers" and, investors or “Capitalists. " The financial tools each of them use to make money are job employment for the worker, self-employment for the hustler, business system for the Baller and capital for the Capitalist.
Employees or “Workers":
The majority of America's labor force are “workers" who sell their labor for wages or salaries. Those in this category, roughly 140 million use what is called a job to make money or earned income. A job is simply an agreement between you and an employer to perform a specific task on certain days for a fixed salary or wage and sometimes additional benefits like discounted health care, paid vacation and sick time.
Most workers think they have job security, but just ask the 80,000 people who were laid-off in 2007 due to the sub-prime mortgage melt-down. Those people just received a free lesson in job security 101: THERE IS NONE. If a company's business model or means of making a profit no longer works, then they will change it and that change often involves reducing labor cost or lay-offs. On average, employees or workers generally make about $35,000 (before taxes) a year and have a net worth less than $25,000. The question is why are so many people using this financial tool to make money? If asked many workers will likely respond: financial stability, discounted health benefits, paid vacation, and sick time.
Besides the benefits listed above, the only stability or security is your paycheck not your job itself. And if you have no job then you have no paycheck. Now lets discuss this paycheck. When you work for an employer, you agreed to perform specific tasks for a FIXED wage or salary. This means that your employer has a large amount of leverage over you.
I remember when I worked in Corporate America I was involved with an accounting team who saved the company hundreds of thousands of dollars in cost. What did we get? A free lunch, and a pat on the back from our boss and the vice president of the company. I thought to myself, we should receive at least a small percentage of the savings. My co-workers thought I was insane for wanting to ask, but you see, I was young, ambitious and fresh out of college. Besides, my employer had no legal obligation to compensate me for the savings simply because I had agreed to do all that extra work for my fixed salary.
Employers expect you to perform at 100%. Well, I was performing all my normal analytical and data entry tasks, however I put in longer than normal hours and took work home to generate those savings, so therefore I concluded I exceeded my 100% work capacity and should be compensated accordingly. Instead, I got a positive review on my job performance evaluation for that area. Wow! Now I can take that $35,000 (before taxes) salary, merit increase and performance bonus and buy my dream house right? Keep dreaming.
A simple wealth formula is to increase income and decrease expenses. However, who wants to decrease their standard of living from $35,000 (before taxes)? That means living in the projects or some drug-infested crime area where my life may be at risk. The only other option is to increase income. But wait, remember you agreed to a fixed salary or wage to get that job and unless you decide to get a degree (if they pay for it of course), you are stuck under your supervisor and the only raise you will receive is that 3% yearly merit increase. Let's just hope you are that lucky and your company has the funds to include merit increases in the annual budget for that year. Sound hopeless? Maybe you should consider becoming a different kind of player in the game of Capitalism, perhaps a self-employed “hustler?"
Self-Employed or “Hustlers":
The self-employed “hustlers" are the 10.5 million unincorporated business professionals who sell products or services to make money. These are your doctors, convenient-store owners, lawyers, Mary-Kay salespersons, accountants, and farmers. “Hustlers" generally earn about $50,000 (before taxes) and have a net worth of $25,000 to $500,000. However, the IRS reported that about half of them under-report their real income to minimize paying taxes, therefore that $50,000 earnings estimate is understated. The IRS revealed in February 2007 that self employed “hustlers" underreported about $150 billion worth of income.
Self-employed “hustlers" don't have to worry about job security because they create it for themselves. If one business is not profitable they simply start another business. The main advantages of being a hustler is increased income capacity, you become the boss, pay less in taxes and acquire valuable business development skills. The hustlers sell products or services so their income is based on how many products they sell or services they provide to customers.
For example, assume you start selling Sean John jeans directly from your car and make a $10 profit off each pair. If you sell 12 pairs of jeans a day you have made $120, which amounts to $15 per hour. Unlike a regular employee or the “worker", a “hustler" can increase their wage of $15 per hour to $25 per hour, simply by finding a way to sell only 8 more pairs of Sean John jeans. You could go from making $2,400 per month to making $4,000 per month (assuming a five day workweek). Now that's a hustle! The more products sold, the more money made and since hustlers are the boss no one can tell them otherwise. The only catch is that you must physically go out everyday to see enough people to sell those Sean John jeans, but you can only work so many hours in a day.
So in conclusion, if you are a self-employed “hustler" you can increase your income up to the point where you just can't or it doesn't make sense to work anymore. That's why you hear about the horrors of being self-employed, the long 60 hour work weeks, and the 9 out of 10 businesses fail lecture. Regardless, as a self-employed “hustler" you can make money doing something you enjoy, without having to answer to a moody supervisor and develop the business skills to graduate to the next level of business owner or “baller. "
Business owners or “Ballers":
The Business owner, or “ballers" are about 6.5 million strong and unlike the self-employed “hustlers" they are true business owners. The ballers don't have to participate directly in the operation of the business because they actually own the business system that provides jobs to the employees or “workers. "
"Ballers" own the apartment complexes, the McDonalds restaurants, and the car dealerships. They reportedly make about $75,000 (before taxes), but like the self-employed “hustlers" limit their earned income to minimize paying taxes. “Ballers" protect most of their money by purchasing assets like corporate stocks and real estate. They generally have a net worth of $500,000 to $1,000,000. The advantages of being a “baller" are no active participation in running the business, unlimited income potential, and leverage.
Most “ballers" were self-employed “hustlers" who developed their businesses into systems by hiring employees or “workers" to sell products or services for them. For example, remember those Sean John jeans we were selling? Once you realize that it has become to difficult to sell to everyone by yourself you simply train someone to do what you do by employing them to sell jeans for you. And as profits increase, you can then employ someone else in another city, then another state and on and on. This is called leverage, when you use someone else's time, money or efforts to benefit you. As you can see the income potential is unlimited.
If you had three people each selling 20 pairs of Sean Johns a day and decided to pay them half the profits of $5 for each pair of jeans they sold, you would make $6,000 per month, about $72,000 per year. As a “baller", your main job is to write checks, collect checks and make executive decisions as needed. Does it get any better than this? Yes, the successful “baller" has the opportunity to become the ultimate business player, the “Capitalist. "
Investors or “Capitalists":
The investor or “Capitalist" is the ultimate business player and has proved to be so proficient in the art of making money and running businesses that they no longer need to work for a living. They are called capitalists because they use excess money or capital to make more money The 9 million “capitalists" put money to work by investing in securities like stocks and bonds of corporations. However, they could simply park their capital in a bank and receive interest income to pay for their living expenses. The capitalist's earned income is only about $200,000 a year, but their net worth is $1,000,000 or more.
The capitalist does not want a higher salary like a regular employee or “worker" because they will have to pay higher taxes. The government, through the IRS and all employers automatically collects taxes from “workers" paychecks. However, the IRS allows entrepreneurs like the “hustlers", “ballers" and “capitalists" to pay the government last after paying all of their other business expenses.
To further minimize paying taxes most “capitalists" earn their income from assets like corporate stock and real estate, and only pay taxes on their capital gains, which are often lower than their personal income tax rates. For example, last year billionaire investor, Warren Buffet's tax rate was only 17.7% on $46 million, yet his secretary's tax rate was 30% on $60,000. You've always repeated the cliché, the rich get richer and the poor get poorer, well now you can explain why!
Create Wealth, Enjoy Life!
James “Bird" Guess
James “Bird" Guess graduated college with dreams of climbing the corporate ladder and becoming a prominent financial executive. But after only working a year in “Corporate America", James grew bitter of the politics and bureaucracy associated and decided to venture out on his own to become a full-time entrepreneur.
With a repossession and other unpaid debts on his credit, James had a negative net worth. Starting with only $1,000 saved from college, he single-handedly built a quarter million dollar apparel business from the trunk of his car. Shortly thereafter, his business model would transition from retailer to wholesaler of apparel, which generated $750,000 dollars in revenue.
James could now take one step closer toward financial freedom. As an entrepreneur, he has bought and sold over $1.5 million of apparel. He now uses his financial acumen to help individuals, entrepreneurs, businesses and investors create wealth in their lives! James is now the President & Founder of BlacBird Investments LLC. http://www.BlacBirds.com & http://www.theblackeconomy.com Create Wealth! & Enjoy Life!