Discover more from BowTied Bull
When $5,000 isn't the same as $5,000 and Income Alpha
Level 1 - NGMI
Welcome Avatar! Jungle revs are still increasing (surprise, surprise) during a period where things have been rough to say the least (See prior post). While most are still searching for magic pills by chasing people flexing lambos and watches on TikTok (or even suggesting that “fraud” is a real business - source) we like to focus on what actually works.
This usually keeps the bottom half of the IQ curve off this side of the internet.
So. Today, we’ll explain the many ways in which $5,000 isn’t $5,000.
Part 1: $5,000 a Month
The jungle has an extra 20 people (year to date) generating ~$5,000 a month. A few crossed into the $10,000+ marker but they don’t count since they started last year.
What is the first trend you notice? EVERY ONE SAYS THEY WISH THEY STARTED SOONER!
There is a simple reason for this. Once you see the truth: 1) it is possible to do and 2) you realize all the scam courses about $1,000,000 to $10,000,000 in a year are BS… a sense of calmness sets in.
You sit down and file your taxes and realize $5,000 is not $5,000.
$5,000 So What? This is likely worth a $80,000 a year salary, not $60,000. Why? Simple. You pay expenses before you pay your taxes.
Now you can say “ohh this sounds dangerous” but it is not. If you run an online business you can deduct: 1) cell phone - good luck having an online business without one, 2) computers, 3) internet and 4) separate office space. This is just a starting point and you should look into all the rules for your specific business.
You know those Real Estate guys who show “no income” well now you know how they are doing it, it goes far beyond Depreciation deductions.
Why This Matters: Look at the *Fixed Cost* in your life. That is right. If you don’t have anything online, explain how you are going to live without internet, a cell phone, a computer or a living situation with 1 bedroom for the rest of your life. Hopefully you can see how big of a joke this is since there is no shot you’re doing any of that. You will need all of those things quickly, so why would you want to pay on your *Net* earnings instead of your *Gross* earnings.
Just 100% Normal Expenses? Twenty Three Percent
Note: Rent deduction usually means you take 1 room in the 2 bedroom place and that is the office. As an example, speak to an accountant.
Well. Look at that. By earning your money “differently” you are now able to save 23% more than your friend who shows up to happy hour every Friday getting drunk and playing pool for political clout. Need to get that “5% raise!”.
Now Add Taxation: While most are not at the level where they can move to a tax haven, Dubai, Caymans, Puerto Rico etc. You can certainly move states.
If you look closely at the numbers, the estimates were generated assuming you were in New York City.
We can go ahead and assume that you are mobile which is why you started an online business in the first place. This means your tax rate would be lower by at least $250 a month in this situation. Once again these are the rough numbers.
Yikes! Now you’re 35% ahead of the cubicle guy collecting spread sheet information to fill out government forms all day. Looking at you accountants!
This is a massive amount. Say that both of them are able to save the exact same amount. The Net, Net number. This means the difference is $8,538.
Getting ugly isn’t it. Going to be tough to argue that this is a small amount of money when people were obsessing over their 401K’s being a vehicle to get rich (it isn’t - Source)
Pause and Think: While you should NEVER tell anyone you work with about your plans to escape the prison… If you accidentally let it slip to someone you “trust” then be sure to smile, nod and agree.
They will somehow claim that the ~$9,000 amount isn’t important but then complain that their 401K match is only $5,000/year. The mental gymnastics are incredible to reach that conclusion. Simply incredible. Smile Nod and Agree.
Part 2: Income Alpha
Hopefully you see the light at this point. Income is not the same. Gross income is not net income. Gross income is not net income. Gross income is not net income. Gross income is not net income. Gross income is not net income.
If you can’t use it, it doesn’t exist.
Now we move into some more intangible benefits/draw backs of income.
The main benefit here is the perceived stability. If you try to get a mortgage with your $100,000 salary, it is a lot easier than if you generate $100,000 in profit from an online business. Unlike other places, we do point out the benefits.
Benefits of W-2: The W-2 basically allows you to: 1) get easier mortgage debt, 2) maintain an income stream with little work - no sitting at your cube waiting for the red pen markup on the slide isn’t work and 3) it’s quite easy to remain employed once you have 3-5 years of experience in a decent industry: Tech, Sales and Wall Street.
Main Issues: The main problems with a W-2: 1) you do not work for yourself, you are being watched by layers of management causing limited autonomy, 2) you *don’t* get paid what you are worth since everyone above you needs to generate a profit. The Company goes out of business if they hire a bunch of unprofitable employees and 3) if you ever get moved into a non-revenue generating part of the firm you’re crushed in terms of upward mobility. Income barely keeps up with inflation in a huge number of industries.
Now before moving on, remember that a W-2 is not safer. You can be cut at any time. Taking zero risk just ensures you live a boring life of coffee, avoiding HR and laughing at awful jokes that are not funny made by upper management.
This is where most people should focus. Have no problem helping people build an audience because that’s the hardest part. Anyone smart knows that distribution is a billion times harder than making the perfect product.
The perfect product doesn’t sell anything if no one hears about it. It would be similar to having a $10M diamond buried 100 feet below your house. Just because it exists doesn’t mean it has value. You have to find it to monetize value.
Benefits of Online Income: 1) you work alone for the most part, 2) you have limited operating expenses - limited overhead, 3) you can move the income anywhere and 4) no face to face human interaction - alright that last one is just a benefit for anti-social autists like us.
Main Issues: 1) it requires actual work. If you are in a non-revenue generating role like investment banking analyst/associate this will be a massive wake up call. No sales = no money. Period, 2) you see no results at the beginning - some rockstars pop in the first year but generally speaking when you get to year 3 you have line of sight to winning. Note: the people who pop in the first year typically make the mistake of making short term decisions that kill LTV of the customer and 3) big hurdles and inflections. Since you are starting from zero it’s pretty easy to get to $5K a month then there is a huge wall before you jump to the next level.
This is normal because your base salary at a company usually reflects the “distribution” the company has. Making you a replaceable cog. If you can’t even replace your base salary online it means you are overpaid.
The last item everyone should think about is downside risk. If you make $5,000 a month and it’s all online, your worst case scenarios are living in SE Asia, South America or Eastern Europe. Any of those places and you can still live off a modest income.
Before anyone says all those options are terrible, Argentina is currently worth a look!
At this point you either get it or you don’t: 1) tax benefits, 2) mobility benefits, 3) expense benefits and more.
Instead? Most will just go back to looking at videos about lambos and other get rich scams. All those hours consuming videos could be spent making basic youtube videos about anything and you’d be better off.
Once you’re making a few grand, the answer is clear as day.
As long as you know the path, the game is just slowly picking up speed.
BowTied Bull is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber.
Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are *opinions* written by an anonymous group of Ex-Wall Street Tech Bankers and software engineers who moved into affiliate marketing and e-commerce. We’re an advisor for Synapse Protocol 2022-2024E.
Old Books: Are available by clicking here for paid subs. Don’t support scammers selling our old stuff
Crypto: The DeFi Team built a full course on crypto that will get you up to speed (Click Here)
Security: How to protect and store Crypto correctly (Click Here)