Retire Faster And Pay No Taxes
Now, according to Bloomberg, you need about $3 million to actually retire. I was reading an article and that’s what it said. Now I have some news for you guys. I have nowhere near that amount of money and technically right now, if I wanted to retire and not work anymore, I could actually do that. Why don’t you do that? I like what I do. What am I gonna do with all my time? Am I gonna spend it, for example, in a golf course? I don’t even know how to bat a ball. See, just said the wrong
thing there. But that’s the idea, guys, okay? I enjoy my work and my work to me is not a burden. I actually enjoy helping people. So that’s why I don’t retire, but I work a lot less than I could be because I also like doing other things, okay? So it’s like a freedom you actually have. But you don’t need to have $3 million. You don’t need to have a million dollars. You don’t even need to have a half million dollars because by the end of this video, I’ll show you the key to early retirement and
I’ll show you the key to not paying any taxes whatsoever. Are these two things legal? The answer is absolutely legal, okay? Absolutely. You’ll know by the end of this video, if you
means to finish something before the determined time it was expected to be finished. So if I have a paper due in 30 days and I finished it in 29 days, you might say, that’s not early. By definition, it is early. Now, why am I defining this term and I’m taking so much time to actually do it? Because when I say early retirement, you have to remember the average person retires by the age of 64. Let’s be honest, most people keep working beyond that. Now, if you start work at age 25, that means 25 minus 64,
that’s about 39 years of work. And I believe that with this entire idea and this plan, you’re actually able to retire between 10 to 20 years. And you might say, that’s a long time. But again, it is still massively early compared to 39 years. And let’s be even more honest, a lot of people, they work beyond 64 years. And a lot of folks start work a lot early. I started working like standard, like at the age of 19, I think. So if I did what the average person did, for example, that’s about like what, like
46 years of actually working. It’s a long time. It’s a long, long time. It’s not what people usually think. People work for a long time. So if you’re able to do it in 10 to 20 years, you’re actually winning. So what is the key to early retirement? The key is not going to be the amount of money you have in your investment account. The key is not going to be how much money you make from your job. The key is not going to be getting an inheritance from your family. None of those things are the
key. Although media and the world would actually tell you that. But the key is actually going to be your cost of living. The amount of money you actually make. Well, the amount of money you actually need to live. A lot of people never retire because they never adjust their expectations. People say, “So for me to retire, “I need to be earning at least 5,000 to $10,000 “every so month in passive income.” And that’s exactly why you’re never going to retire. And if you do, by the time you retire, it’s going to basically not be worth
it. You’re probably going to be like a little pruned, a little raisin because you’re so old and your retirement money is probably going to be spent in a hospital. That’s not what you want, okay? So the key to early retirement is going to be to control your cost of living. Now, Tommy, how do I do this and what does this look like? Well, I want you guys to entertain me for a second and I want you to follow along with this. Now, if you want, you could actually write this down or if you want, you
could just do it in your head and just say it out loud. If you’re at work right now and you have headphones on, don’t start talking by yourself, just say it in your head. Now, here’s what I want you to do. I’m going to label some cost of living expensive the standard person actually has and I want you to tell me how much money you’re spending on this and I’ll tell you exactly how much money I spent on this and by the end of this, I’ll tell you exactly how much money I make from passive
income and how this is a lot more than I need to cover everything absolutely, okay? It’s how you control your cost of living, okay? Now, number one guys, okay, ready? It’s going to be consumer debt. How much do you spend on consumer debt? I’m talking about credit cards and student loans and all that other stuff. How much do you spend on that? For me, it is $0. I don’t spend a single dollar on debt because I don’t have a single dollar in debt. Number two is by the way, feel free to pause this video if
I’m going too fast. Number two is going to be car payment. How much do you spend on car payment? Most folks spend $500 to $700. I spend $0, $0. When I had a car, it was paid off. Right now, I’m carless because I don’t need a car. When I get another car, I’ll pay cash for it. It’s going to be $0. How much do you spend on shelter? If you have a mortgage or if you rent? Right now, I have, for example, a house that was actually paid off in cash. So I was spending just
insurance, which was about like $60 a month, something like that. Not that much money at all. With like some maintenance costs, you know? No tax because I got like an exoneration. But the idea is I rent right now and I spend about $160 in rent, but I have a budget for $200K to buy a house in cash. So for me, it’s going to be $0 eventually when I buy a house in cash, but right now it’s only $160 because I am renting right now in the Dominican Republic. Do you need to be here to do
this? The answer is no, but keep watching and you’ll find out more. Number four is going to be controlled expenses. How much do you spend on your essentials? That is shelter, utilities, groceries, transportation. I already included shelter costs, but between utilities, groceries, and transportation, which basically means gas, although I don’t have a physical car that belongs to me, I do drive my friend’s car. And I also drive, for example, my mom’s car. And I have to put into these cars, like gas, and I have to do some maintenance every now and then. That’s why I
don’t really need a car because I have easy access to cars right now at this moment. Now, I spent about $904.25 in total here on my essentials. Now, this basically means once you add up the total, I’m spending every single month about $1,064.25. Now, can you guess how much money I actually make in passive income? The answer is about $2,025. It is not $5,000. It is not $10,000. It is not $100,000 per month. It is just $2,025. Now, the reason this money is enough is because my cost of living is so low. Now, before you
say that’s easy because your cost of living is so low, the answer is, remember, what is easy is was actually able to be accomplished. But it doesn’t mean it didn’t take a lot of work to actually do it. Here are some examples, okay? To be debt free, it took me about six years to actually accomplish it. It takes time to do that. To be actually able to afford a house and cash, it took me about eight years to be able to save up all that money. It takes time to be able to do these things.
And I also needed to adjust my expectations. I want a house that costs 700K, then it was like 500K, then it was like 340K, and now it’s like 200K. You adjust your expectations. Now, do you need to buy a house as cheap as mine? The answer is no. You can buy a 350K house, but it all is going to be determined by your income and also what you need. That’s the idea. But it’s not going to be determined by your wants, because if you do it that way, you’re not going to be able to accomplish
what you actually say you want, because what you’re doing does not associate with what you’re saying, all right? There are two different things. I want to be wealthy. I want to spend all my money on trash. You’re never going to get there. That’s the idea. And then lastly, to be able to adjust my expenses, it took me years, because it takes a long time to change your habits. These things are all possible, but these things all take time. Same thing with a car. I have money in the side to actually be able to buy a
car. That’s only because I saved up to be able to buy a car. And I adjusted my expectations. I initially wanted a Lexus. It was like $40, $50,000. Then I wanted Mazda CX-5. It was like 20, $25,000. And then I bought a Toyota Prius for like $9,000. And now I’m probably going to buy a Next, like a minivan, because I want to have kids, you know? And that’s probably going to be the best utility car and the best bang for my buck. I told you, I’m weird. But these are the things you have to do.
You think about utility. You don’t think about what other people think. Those things aren’t important. Now, what people think is important, because people can help you. But if you’re making decisions that are based on vanity, just because people have an opinion about what do you drive? Where do you live? Those things, you’re not good. Those things do not matter in this sense. Now, what is the key going to be when it comes to paying no taxes? Now, do I believe the IRS is going to come after me because of this video? The answer is absolutely
not. But they will come after me if I try to evade taxes, which I’m not going to do. But the idea is, if you don’t want to pay taxes, there are ways to do it. But it all starts at the first level, which I just told you about, which is basically control your cost of living so you need less money to actually live. So this way, you can actually get away without earning that much money. Now, there is something called a standard deduction in our country. And what that basically means is there is a certain
threshold where the government is not going to charge you any taxes. They’re going to deduct that from your income, which you actually earned. And if you actually earn below that point, you don’t pay any taxes, if you earn above that point, you only pay taxes on the money above that money. So the standard deduction for a single person is going to be about $13,850. So if I actually earn below that, I won’t pay any taxes, which is actually pretty awesome at the federal level at least. Now, if I earn $15,000, then I don’t pay taxes
in the $13,850, but I do pay taxes on the money above that. That is the idea. And I think it’s around 10% or so, which is not going to be that much money at all. If you’re married, you’re going to have a standard deduction of about $27,700, which is actually a lot more. So if you earn $20,000 or $25,000 or $27,000 and you’re married, you don’t have to pay any taxes on that. Again, this doesn’t seem like that much money. But if your cost of living is so low because you work so hard on paying
things off and not having debts and having a paid off home and not having that much cost of living, guess what? You can get away with this much money because you don’t need that much money. That is the idea. Now, let’s say you say, OK, I’m going to do this. It sounds great. I’m going to have a job where I don’t earn more than the standard deduction. This way, you don’t pay any taxes. Now, how do I supplement my other needs, the other money I actually need? The answer is going to be from your investments,
from your long-term capital gains investments. Now, let’s use an example. Yes, I have a job. And by the way, this example is not real. These are made up numbers because obviously, I want to protect my privacy. This is actually very important to me. So basically, I’m pretty transparent, honestly. But I want to use the example right here. Now, let’s say I earn about $13,000 every single year. Automatically– and by the way, I’m single– I don’t pay any taxes. Now, I also have $500,000 invested, OK? And I take 5% of my investment out every single year.
That’s about $25,000. Now, that’s going to be long-term capital gains tax because I basically held my investments for more than one year and one day. Now, what does this mean? It means that when you actually run the numbers and you calculate your long-term capital gain taxes due, based on the amount of money you actually say you’re making, the answer is you’re going to be paying about 0%. So all of a sudden, I have $13,000 here and $20,000 here, meaning my combined income is about $38,000, right? But again, you have ordinary income, which is just $13,000.
The long-term capital tax is not actually going to increase your ordinary income. So you’re still going to stay in the same tax bracket. So you’re still paying 0% here. But over here, because you’re still below the standard of, I think, it’s like $44,000, you’re still subject to paying about $0, $0, all right? Which is actually pretty awesome. I have an income, $35,000, which is a bunch of money, because I don’t have any real expenses because I paid everything, which means, hey, now, I don’t pay any taxes. Now, what if you actually have $1 million invested
and you take 5%? Well, now that’s $50,000. That is above the threshold, right? Because it’s about $44,000 on the long-term capital gains tax. But if you run the calculator, if you’re single, you’ll only be paying about $3,000 to $4,000 in taxes. It’s actually amazing. It’s not that much money at all. And if you’re married, you don’t pay any taxes whatsoever. That’s the cool thing, OK? So the key to retiring early and not paying any taxes is going to be first on the retirement side is controlling your expenses. This takes years for some folks decades to
actually have no debt, to have a fully funded emergency account, to build up their investments by investing 10% to 20% consistently, and to then pay off a home and buy it the right way. If you buy a home the right way where there’s no more than a third of your monthly income net on a 15-year mortgage, you’re going to be done in about 15 years. If you pay extra in about 10 years, that takes a long time. So in 20 years, potentially, you’re eradicated your cost of living, your biggest cost of living, and you have
a bunch of money invested, which is actually awesome, and you’re still earning some cash. But now, if you want, you can go partial work and earn just a little bit below that to pay no taxes. But again, if you want to work a normal job and pay some taxes, that’s fine. But the idea is that most of your money is not going to be subject to taxes, and your cost of living is going to be so low where you don’t require that much money to live. So you do a lot of the work up front.
So this way, you’re not saying, I need $5,000 to $10,000 a month. It’s not because that’s how much money you need. It’s because your cost of living is that high, and you did not run the numbers the correct way. So yes, that is how I’m able to basically live on about $2,025 and still save a bunch of money because I don’t need to spend any money whatsoever above $1,300 to $1,600. By the way, you might say, I always hear this. I always do. And I want to address it here. People tell me all the time,
tell me, but what happens when you have kids and you have a wife? The answer is I ran the numbers. By myself, I can live off $1,200. With a wife, I’m probably going to be living off of $1,600. You want to marry someone with the same values as you. Very important. Again, my necessity. That’s what I’m talking about here. If I have kids, I might increase it by maybe $1,800. Kids are not as expensive as the media, as parents that are irresponsible have told you they are. They’re not like that. Kids are usually going to
eat a little bit more than you do. OK? Just you pay a little bit more extra money to buy milk at first or to buy certain foods. But you don’t need to buy a crate where you put the kids that cost $300. You don’t need to buy a $600 stroller. You don’t need to spend $1,000 in baby clothes. None of those things are necessary. You can buy normal clothes for the baby. You can take care of the baby by giving it good food. And that’s basically it for the most part. What a kid is going
to take up is not going to be your money if you’re not a dummy. What they’re going to take up is going to be your time. And that’s awesome. It’s a great way to spend your time raising up a child. To me, that is a great honor God has given. OK? So that is it, guys. Thanks for watching this video. If you want to watch more, here is more. And subscribe to this channel. And as always, peace.
