Move slowlane ideas towards the fastlane

[ricerocket63]

So, I have been reading/listening to some financial info that seems mostly slowlane, save 10% or more into 401k, save money for a rainy day fund, pay off your mortgage early, etc, etc. Some concepts I think cross both Slowlane | Fastlane thinking so I try now to see how I can think 'fastlane' about different things..

So, I am in the slowlane now, but want out, so in my planning I was thinking about how I can tax defer money from my current slowlane job to help when I get to move to the Fastlane..

1 Idea:
I can contribute up to the max 15,500 into my 401k currently per year, that's pretax dollars. If my plan calls for me to leave my job in 2-3 years, I can contribute 30-45k into my 401k over that timespan. When I then leave, I could roll that into a Self Directed IRA, without incurring a tax incident. (For you tax\financial guru's, is that last statement correct?) I then have 30-45k of Tax deferred funds to put into an investment vehicle that fits the criteria for the self directed IRA, which I would look to Real Estate for, maybe, say out of state apartment buildings...

Now, it may sound like a lot to try and contribute 15,500 per year into an retirement account, but when you think about the tax savings, based on trying to do the same with after tax dollars, your probably really only putting in the equivalent of 11-12k per year of your available income. (Anyone got a calculator to figure out exact pre|post tax consequences of saving money?)

Over the course of a couple of years, those couple thousand dollars of difference between pre|post tax dollars starts to make me get excited to look at doing this.

Anyone ever tried something like that? or have other fastlane applications of slowlane concepts that they want to share?

 

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[fanocks2003]

In short: What fastlane means is "growing your monthly earning power and also, preferably, decrease work load". That is my definition of fastlane. It is not about finding ways of paying less taxes or finding a new clever way of saving the same amount of money you always earn. The tax system will take it's cut sooner or later if you want it or not. It is like the plague, impossible to get rid of. You can treat yourself against it, but it will always bug you. It will come back for a new fight.

So find ways of making a bunch of money every month without working more. That is fastlane. And yes, you should be able to do it in 12 months or less. Otherwise it is not really fastlane.

From my viewpoint you can make a hell of a lot of money from starting a company around a hot demand and then leverage that demand so that you are still in business in 5 years from now (products and services grow old and needs to be replaced so you need to find new ways of solving peoples new problems all the time. That is my point).

But if you are not a dynamic person, starting a company might be the wrong vehicle though. Just a slight suggestion from me.

 

[kimberland]

It is not about finding ways of paying less taxes or finding a new clever way of saving the same amount of money you always earn.

Wow.
Where are you living?
'Cause here I can lose half of my return to taxes
so if I don't keep an eye on that beast...

Business building, real estate investing, paper investing
all have a huge tax happiness component to it.
You don't pay tax on your built up capital
until you cash out
(and then, you will have looked into ways of sheltering it).
Man, that helps, believe me.

I'll give you a Canadian example
('cause Cdns like RichKid always think
they're getting the short end of the stick).

We have RRSPs.
Basically any earned money we put towards it
(salary, etc),
we don't pay tax on.
Some folks think of it as a retirement program.
It isn't.
It is an income smoothing program.

So when I was making my 6 figures
and the tax man wanted his 50%,
I put money in.

When I take time off,
I take my money out
at a lower tax rate (30% or less).

A 20% bonus for investing my own money
(RRSP's can be invested in anything).
Is that slowlane?
Yeah, but it is SO easy to do
so what do I care about the label?

 

[fanocks2003]

Wow.
Where are you living?
'Cause here I can lose half of my return to taxes
so if I don't keep an eye on that beast...

Business building, real estate investing, paper investing
all have a huge tax happiness component to it.
You don't pay tax on your built up capital
until you cash out
(and then, you will have looked into ways of sheltering it).
Man, that helps, believe me.

I'll give you a Canadian example
('cause Cdns like RichKid always think
they're getting the short end of the stick).

We have RRSPs.
Basically any earned money we put towards it
(salary, etc),
we don't pay tax on.
Some folks think of it as a retirement program.
It isn't.
It is an income smoothing program.

So when I was making my 6 figures
and the tax man wanted his 50%,
I put money in.

When I take time off,
I take my money out
at a lower tax rate (30% or less).

A 20% bonus for investing my own money
(RRSP's can be invested in anything).
Is that slowlane?
Yeah, but it is SO easy to do
so what do I care about the label?

I am pretty certain Swedish people pay more taxes percentage wise on their salaries, capital gains etc than most americans do, mainly because we have a free school system (we get paid to go to school to be accurate), free medicare etc over here. The money that makes this possible is taken out through taxes. A lot of taxes.

What I am saying is that earning more with less work involved is a prerequisite to live more expensively. I don't say "don't shell your earnings agains taxes" (please do, by all means) I am just saying "It is a dead beat cause in the end, because you will need to pay for that money squeezing sooner or later". The taxman will get it's cut sooner or later, so why invest so much time AND money in shielding it? Just pay the damn thing and have it over with.

I can understand the whole concept about shielding money and other assets in private foundations etc against potential, future creditors and people who like to make you miserable for the fun of it. But trying to come up with smart strategies against not paying taxes just beats you in the end. Try it, taxes is here to stay. And it will find every way of getting it's share. Late shares (old shielded money that should be in the taxmans pockets) or recent shares (money you are supposed to pay now). You know it, I know it.

What can I say, taxes are like a plague. You can try to treat yourself against it, but the plague will sooner later break you. Look at cancer. I think you could do a very similar comparison between taxes and cancer. They both have an uncanny ability to survive, thrive and win.

Sorry to sound like a boring guy with the bad news. But see it at the bright side.....

 

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[msa1]

Ricerocket,

Why involve a 401k? Have you read Rich Dad Poor Dad? I have to agree with RK about mutual funds. I think they are a good investment vehicle for the uninformed investor. I ony have one left and I hate that I cant access that money and I have no control over it. The MF company takes off the top for their expenses and they call all the shots.

I would maybe consider another route to amass your wealth.

Having said that, i'm not there yet either so take my advice with a grain of salt.