Mark and Joyce* came to Money Mastery for help at the height of an emotional power struggle over their family finances. Both were in their mid-30s, raising two children in northern Idaho, and struggling to deal with their financial situation. Their “discussions” on money had evolved into arguments and were becoming more frequent. Both Mark and Joyce worked and made similar incomes. Mark was a pharmaceutical rep, working a fairly new territory in Idaho and Oregon. Joyce was a dental hygienist. Both made more than enough money to support the family, yet they knew they were out of control. They couldn’t understand why.
TEAMFLY Team-Fly ® Money Mastery 10 Principles That Will Change Your Financial Life Forever by ALAN M. WILLIAMS PETER R. JEPPSON SANFORD C. BOTKIN Franklin Lakes, NJ Copyright © 2002 by Alan Williams, Peter Jeppson, Sanford Botkin All rights reserved under the Pan-American and International Copy- right Conventions. This book may not be reproduced, in whole or in part, in any form or by any means electronic or mechanical, including photocopy- ing, recording, or by any information storage and retrieval system now known or hereafter invented, without written permission from the publisher, The Career Press. Money Mastery Copy edited by Dianna Walsh Typeset by John J. O’Sullivan Cover design by Design Concept Printed in the U.S.A. by Book-mart Press To order this title, please call toll-free 1-800-CAREER-1 (NJ and Canada: 201-848-0310) to order using VISA or MasterCard, or for further information on books from Career Press. The Career Press, Inc., 3 Tice Road, PO Box 687 Franklin Lakes, NJ 07417 careerpress.com Library of Congress Cataloging-in-Publication Data Williams, Alan M. Money mastery : 10 principles that will change your financial life forever / by Alan M. Williams, Peter R. Jeppson, Sanford C. Botkin. p. cm. Includes index. ISBN 1-56414-610-3 (pbk.) R. II. Botkin, Sanford C. III. Title. HG179 .W5336 2002 332.024—dc21 2001058427 oney Mastery is a work of the ages. Its ideas, principles, and methods are the accumulated time-value works of the finan- cially secure from ancient to modern times. It is precisely for this reason that Money Mastery cannot be considered the work of just a few and to recognize all that have contributed to this book would be impossible—it is truly the work of many. However, the authors wish to acknowledge those individuals who have been instrumental in the creation of this work and who have inspired and enlightened us as we have sought to bring the power of the Money Mastery ideas to you, the reader. We must first acknowledge George S. Clason’s ageless compilation of The Richest Man in Babylon as the wonderful philosophical basis for the Money Mastery principles. The essence of paying oneself, dealing forthrightly with debt, and seeking financial mentors is what this book is built upon. To Larry Adamson, a friend and partner, we express thanks for his tech- nical expertise and inspiration in helping create a total financial management system that helps people make the most of the money they already have and aids them in finding additional wealth they never dreamed possible. We wish to acknowledge Suzanne Kimball, the managing editor of this book, for her expert skills in the creative direction, composition, and over- all tone of the work. This book would not have been possible without her capable management of the project from start to finish, and her understand- ing of the greater purpose and impact of the Money Mastery principles in people’s lives. Suzanne has immersed herself in those principles, and lives the work. The book could not have been written without her. Acknowledgments M We express appreciation to Gary Weinberg, the CEO of National Semi- nars, whose life’s work has been to educate hundreds of thousands of people about how to have a better and more effective life, and who encouraged us to bring the Money Mastery concept to the masses. A special thanks goes to Tom Murphy, author and writer, who saw the need for a good “how to” publication on financial management and who encouraged us to write this book. His experienced perspective has guided its development. To Financial Health Educators’ formative partners, Glen Willardson and Lyle Shamo, we give thanks for their long pursuit of a satisfactory means to convey their spending and debt management ideas. We will always be grateful for their friendship. We acknowledge Jim Christensen and Clint Coombs, the authors of Rich On Any Income, who have contributed to the Money Mastery program with class and dignity. Their sincere help and support of our complete develop- ment and presentation of the tracking systems is greatly appreciated. We will always be grateful for their inspiration. We especially wish to thank the thousands of clients and seminar par- ticipants who have personally validated the principles and concepts presented in this book. Almost every strategy found within has come from observing these participants’ financial lives. Without our clients, these strategies would be mere thoughts, but from their experience we have seen the absolute le- gitimacy and inspiration of the Money Mastery principles and Tax Strate- gies taught herein. Not the least of those to be acknowledged are our family and friends who have contributed to, made suggestions for, and lived the Money Mas- tery and Tax Strategies systems and tested them to the maximum. Your patience and love has been empowering. Finally, we express our thanks to you, the reader, for taking the time to seek out this book. You are our purpose. Alan Williams Peter Jeppson Sandy Botkin Foreword 7 Introduction: Why You Should Read This Book . 9 Part I: The Money Mastery Principles . 23 Chapter 1: Money Is Emotional . 25 Chapter 2: Track It! Control It! . 34 Chapter 3: No Such Thing As “Savings” . 46 Chapter 4: Power Down Your Debt 60 Chapter 5: Know the Rules of the Game 76 Chapter 6: The Rules Are Always Changing 93 Chapter 7: Look at the Big Picture 107 Chapter 8: Organize Your Wealth . 126 Chapter 9: Understanding Taxation 143 Chapter 10: Put Your Money in Motion . 162 Contents Part II: Tax Strategies . 177 Chapter 11 Why You Should Start a Home-Based Business 179 Chapter 12 To Incorporate or Not . 189 Chapter 13 You’re in Business, So Act Like It! 201 Chapter 14 Your Home Office: A Tax-Saving Resource . 213 Chapter 15 Deducting Meals, Entertainment, Car, and Travel With Confidence 225 Chapter 16 Income Shifting: Tax Secret of the Wealthy 261 In Conclusion 277 Appendicies . 280 Notes 289 Index 301 About the Authors 311 7 Foreword Foreword I met Peter Jeppson and Alan Williams more than seven years ago when they flew into Kansas City to discuss with National Seminars Group the development of a Money Mastery audio cassette series and seminar. I had reviewed the Money Mastery program, but only had talked to Peter and Alan a few times before meeting them. Our previous conversations had focused on the marketing potential of the program and they were now try- ing to get me to understand why Money Mastery was different from all the other boring budgeting systems on the market—systems that people don’t use. I have to admit, I was a little skeptical about our ability to market an- other “budgeting” program and their ability to deliver on their promises. Boy, was I surprised when I finally learned what Money Mastery was all about. Money Mastery is not just another “budgeting” program. It shares fi- nancial success secrets in such a powerful way that it can, and does, change lives. If you will take the time to read this book and do what it says, it will change your life. “More marketing hype,” you may be saying. . .well, read on only if you want to be financially independent. Otherwise, close this book and go buy a novel. Here’s a sneak peak at some of Money Mastery’s secrets: • Money budgeting has a reputation for being boring and tedious, requiring you to do something about what you spent last month after you’ve already spent it. With the Money Mastery system, every time you spend a dime, you know exactly what you’ve spent, where you’ve spent it, and how much you have left to spend for the rest of the month. It’s not a system that makes you 8 Money Mastery go back and look at the past—it helps you track instantly what you’ve spent and gives you information about your life when you need it. What is tracked is controlled, giving you immediate decision-making ability. And Money Mastery will even show you how to find a significant amount of money in what you now think is a tight budget. • Not only does Money Mastery teach you how to control your spending, it teaches you how to eliminate your debt. Too good to be true? With the “Power Down” approach, Money Mastery will show you how to get rid of debt, including your mortgage, in as little as nine years. • Money Mastery also teaches you how to reduce your tax load. The key to investment success is your net return after taxes. This program can show you how to get the largest net return on all the money that will become available to you through following all the other Money Mastery techniques. Before I met Peter and Alan and really understood the program, I felt the way you might be feeling now: skeptical that it can really make a differ- ence. But you see, we all have to break through old paradigms. I can tell you that if you want to change your life, if you are tired of the status quo, if you want a program that deals with your realities and your problems, then Money Mastery is your ticket to financial success. I hope when you are done read- ing this book and applying the principles found in it, you will write me and tell me what it did for you. I would like to add your name to the list of testimonials from people just like me who are living their lives in a much more satisfying way because of Money Mastery. —Gary Weinberg Chief Operating Officer Rockhurst University Continuing Education Center, Inc. 9 Introduction: Why You Should Read This Book Introduction Why You Should Read This Book T his book is unlike any other you’ll ever read about money and its management. That’s because it isn’t really about money; it’s about the emotional hold money has over you and how those emotions affect how you spend, borrow, and save. This book is also a message of hope. Its primary purpose is to help you more deeply understand your emotional perceptions about money and to give you a complete system for managing your personal finances that will totally change your life. It can teach you how to: • Get out of debt, including your mortgage, in nine years or less. • Gain immediate control of your personal finances. • Improve your relationship with your spouse and never argue about money again. • Understand how to legally pay up to 50 percent less taxes every year. • Save 10 percent of your gross income and be able to predict how much money you will need to retire. Within the pages of this book you will begin to learn a system that will help you get on the road to personal financial freedom and greater self- esteem. You will also be lead down an emotional path, one that will help you more clearly see yourself and the way you look at money. Counter to what you may have learned over the years: Money is emotional, not mathematical. In our seminars and coaching sessions, we ask people to respond to the fol- lowing searching questions. Take a moment to note the answers for yourself: [...]... arteries The idea that your accountant can magically clean up your tax life is just as preposterous If you don’t know the rules for good “tax health,” you can’t expect your accountant to save you thousands of dollars in taxes at the end of each year If you believe that your accountant takes care of your taxes, you will pay more to the government than even it requires! Only you can keep your tax 17 Money... to forecast the dollars you will need for retirement and how to maximize that retirement money • Learn how to spend your way to financial freedom • Never argue with your spouse or yourself again about money • Find an extra $300 a month • Learn how to begin saving at least one percent of your gross income and work your way up to 10 percent or more • Double and even triple your retirement income Best... forces in your life, but it’s unlikely you realize just how much it is affecting your long-term financial well-being If you do realize its impact in your life, you may feel you have little power to control it Most Americans believe a myriad of tax myths that keep them perpetually yoked to a relentless tax machine that marches forward, with precision and intimidation to seize what it believes will be... institutions that control them Are you being deceived by the false notion that debt is a normal and expected part of life and that there’s no other way to live other than as a slave to those with money to lend? If so, it’s time to free yourself! Excessive Taxation: Allowing Ourselves to Be Sheared by the Tax System A third force at work today that can have a powerful effect on your emotions and lifestyle... ironic that in an age of relative prosperity and unbelievable opportunity, a majority of Americans are suffering financially due to overspending and excessive debt An additional few, while not burdened with debt, worry constantly that their savings and investments will not be secure, that they will experience a loss in income due to reduced interest rates on their savings programs, and that taxes will. .. of their spending is something that fits their financial priorities or not We encourage you to think deeply about the first Money Mastery principle by looking at how you emotionally spend your money Take the challenge to complete the following short assignment before going on to Chapter 2 It will help you go further in your commitment to make important changes to your life Go ahead! Take the challenge!... We will give you the tools you need to get your emotions and your money under control Meet other struggling couples like Mark and Joyce, and see how these people overcame their own ignorance and inability to deal with the emotions surrounding their money Read how they learned to take the emotion out of their financial decisions and how this totally changed their lives Make a commitment to change your. .. you stay with the book, “definitely committing yourself,” as Murray puts it, you’ll learn a system of financial success and happiness that will open you to all the following possibilities: • Understand how to get out of debt, including your mortgage, in nine years or less • Gain immediate control of your finances • Learn immediately how to live within your income • Understand how to prioritize money... had during a significant event in your life that involved money This exercise should have helped you determine how emotions affect the way you spend your money Understanding why you spend will help you become more aware of how and where you spend This leads to the second Money Mastery principle: Principle #2: When you track your money, you control it Have you ever taken your car for a tune-up and received... to change your own Decide now to remove yourself from the cycle of failure that has kept you in a pattern of unhappiness Read as if you know nothing about money because from an emotional perspective you may not! To help you get enthused about making that commitment, we invite you to consider one of the most powerful arguments for committing yourself to change that has ever been recorded: Until one is