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In today’s Q&A, we talk about why we still have debt, but make thousands of dollars online.
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Resources Mentioned in this Episode:
- Podcast 11 – How Online Business is Helping us Pay Off Bills
- Podcast 13 – Answering all your online business accounting questions
- The Everybody Loves Raymond episode I’m referring to
- Have a Question? Ask it here!
Let’s dive into this week’s question!
JOCELYN: Hey y’all, you’re listening to Q&A with S&J.
SHANE: Welcome to the Flipped Lifestyle Podcast, where life always comes before work. We’re your hosts, Shane and Jocelyn Sams. Join us each week as we teach you how to flip your lifestyle upside down by selling stuff online. Are you ready for something different? All right, let’s get started.
JOCELYN: Hey guys, welcome to today’s Q&A with S&J. Today’s question is from Scott. We really like this question, Scott. He said:
“Just listened to your episode about your duct taped car. You guys are making so much money online, why don’t you just buy a new car? How can you possibly have debt and a crappy car if you’re making thousands of dollars online?”
SHANE: That is a good question, Scott. One we asked ourselves for many months after we’ve started making a lot of money online. The good news is since that episode where we were talking about our goals, we wanted to share a few things that we wanted to do in our life, goals that we set when we first started out online.
I think some people confused that episode. They thought those were our current goals but we were just reviewing the goals that we set before we made it online to let people know what we wanted to accomplish. That car actually no longer has duct tape on it. It was fixed and I actually gave that car to my nephew. He just turned 17, I think, and he’s now driving. He did not have a car so we gave him that car.
We bought a new car. We bought a brand new 2015 Town and Country. It was like $35,000. We paid cash for that so we actually are spending the money that we’re making now and we have upgraded our vehicle very much so. It’s an awesome car. The kids love it. So we have already taken care of that, but we do still have some debt and we do make a lot of money.
What’s important to remember, and I think a lot of people kind of get disillusioned about online marketers because they are like, “Wow, that person made $100,000. They are rich” or whatever. But what people don’t’ realize is that the government takes a lot of your money. If you make $100,000 and you live in the United States of America, you’re going to pay 30% of that off the top not counting anything else like sales tax and things like that that comes out of your money. Just because you’re making hundreds of thousands of dollars, which we have done this year, that doesn’t mean you get to keep every single penny of it.
JOCELYN: Yeah, a lot of people have that in their mind because they are used to like a typical paycheck. When you receive a paycheck from an employer, all of the deductions have already been taken out like your federal income tax, your state income tax, social security, all those types of things. When you work for yourself, you have to take all those things out yourself and it is a pretty large chunk of money.
This is actually, 2014 was our first year of being an LLC, Limited Liability Company. We’re just kind of waiting to see how everything shakes out this year, making sure that we have enough to cover our taxes and the liabilities that we have to the government and things that we can get in trouble for if we don’t pay.
SHANE: We don’t want to jail basically so like we’re hoarding our money. We’re not paying off our house yet. We’re not writing that check for all that debt because there’s an awesome episode. Do you all remember the show, Everybody Loves Raymond? Remember that show, Jocelyn?
JOCELYN: It wasn’t that long ago.
SHANE: It wasn’t that long ago but there was a show one time, it was an awesome show called Everybody Loves Raymond. Raymond was a dumb husband so I related to Raymond a lot and Debra was a smart wife so Jocelyn kind of like…
JOCELYN: Yes, yes of course.
SHANE: You like that. Anyway, so one time, Raymond started arguing with Debra and he said, “Oh it’s so easy to pay the bills. I can keep the light on. I can do this. I can pay the credit card. I can keep up with it” and she said, “Fine, here you go big boy” and she handed him the checkbook. Raymond is a moronic idiot who was like, “Oh we’ve got a couple of thousand dollars of credit card debt. I’ll just pay it off. I’ll just pay this and pay that and they are done. Everything is done.” All of a sudden, the lights started going out, the water stopped running because he was stupid and he just paid all of his money and he got rid of all his money. He started bouncing checks and we swore to ourselves that if we made it online, we would not be dumb with our money.
We would not just go out and write checks and be crazy. We would always take a slow precautionary look at everything and have our finances in order because most people when they get a lot of money, you hear a lottery winners all the time, they go broke. Well, we didn’t want to be that way so we have all of our money that we made, we did hit it big, we’ve done a good job with our money. It’s all in one place and we are slowly watching all of these tax liabilities.
We’re slowly looking at everything that we owe and we want to pay it off in a nice, slow sequential order because we don’t want to get to the end of the year, pay everything off, and then owe the government money because they are going to get a lot of it, unfortunately. That is, in a nutshell, why we still were driving a crappy car until about two weeks ago and we have not gone ahead and paid up our house and things like that yet.
JOCELYN: We just want to remind you guys that if you are making money online, if you’ve just started making money online, you do need to hold some of that out to pay for the taxes. It does get expensive.
You know when you start looking at the tax bill that you don’t see when you’re being employed by someone else, it can kind of hurt you. So just be aware of that and just make sure you’re saving that so you don’t have any surprises at the end of the year.
That’s basically the reason why we’ve done everything the way that we’ve done it so far. We do have some big goals and we are working toward those goals but sometimes, it’s not something you can just flip a light switch on. Even when you do have 5, 6 figure months, it doesn’t mean that everything is just perfect.
SHANE: Write a check, it’s all gone basically. A big tip that we have we are going to close the show up with is this, if you make $1 online, if you make $100,000, when your online business does take off and you start seeing a little bit of that money coming in especially for those of you who live in the United States, make sure you’re paying your taxes first. Take 30-35% of your money and put it in a bank account, out of sight, out of mind so when you get to the end of the year, you’re not messing up.
Don’t be like Raymond. Don’t just be like, “Hey, I made $1,000. I’ve got $1,000 debt. I wrote a check for $1,000 and then at the end of the year, the government is going to come looking for $300 of it. You are not going to have it and you’re going to be in trouble.
When you do start making money online, don’t spend it all. Be smart. Put it in a bank. Keep it safe. Slowly reach your goals. Slow and steady wins the race and you’ll make sure that you’ll be able to start doing some of those things like we’re doing now, remodeling our house. Done, we just got done painting recently, just got our new floors put in, awesome. Buy a new car. Get rid of the duct-taped vehicle, both of those done, check.
Now we can move on to our other goals and still meet the tax liabilities and our obligations to society that we have in the country that we live in. I hope that answered your question, Scott, great question. We do not dive a crappy car anymore. We will post a picture somewhere online of our new van and let you all check that out. Thank you guys so much for all of your questions.
JOCELYN: See you later. Bye.
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