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Avoiding The Volatile Market: Where To Put Some Of Your Dollars Away
How awesome is it that we live in our country? How awesome is it that we’re going to celebrate the 243rd birthday of America? I’ll give you a little history about July 4th. This is from Military.com, “On July 4th, 1776, the thirteen colonies claimed their independence from England, an event which eventually led to the formation of the United States. Each year on the 4th of July, also known as Independence Day, Americans celebrate this historic event. The conflict between the colonies and England was already a year old when the colonies convened a Continental Congress in Philadelphia in the summer of 1776. In a June 7th session in the Pennsylvania State House, later Independence Hall, Richard Henry Lee of Virginia presented a resolution with the famous words, ‘Resolved, that these United Colonies are, and of right ought to be, free and independent States, that they are absolved from all allegiance to the British Crown, and that all political connection between them and the State of Great Britain is, and ought to be, totally dissolved.’”
“Lee’s words were the impetus for the drafting of a formal Declaration of Independence, although the resolution was not followed up on immediately. On June 11th, consideration of the resolution was postponed by a vote of seven colonies to five, with New York abstaining. However, a Committee of Five was appointed to draft a statement presenting to the world the colonies’ case for independence. Members of the Committee included John Adams of Massachusetts, Roger Sherman of Connecticut, Benjamin Franklin of Pennsylvania, Robert R Livingston of New York and Thomas Jefferson of Virginia. The task of drafting the actual document fell on Jefferson. On July 1st, 1776, the Continental Congress reconvened. On the following day, the Lee Resolution for independence was adopted by twelve of the thirteen colonies, New York not voting.” Even back then, New York was not doing things the right way.
The last paragraph says, “Why do we celebrate the 4th of July? Discussions of Jefferson’s Declaration of Independence resulted in some minor changes, but the spirit of the document was unchanged. The process of revision continued through all of July 3rd and into the late afternoon of July 4th, when the Declaration was officially adopted. Of the thirteen colonies, nine voted in favor of the Declaration, two, Pennsylvania and South Carolina, voted no, Delaware was undecided and New York abstained. John Hancock, President of the Continental Congress, signed the Declaration of Independence. It is said that John Hancock signed his name ‘with a great flourish, so England’s King George can read that without spectacles.’ Today, the original copy of the Declaration is housed in the National Archives in Washington, DC. July 4th has been designated a national holiday to commemorate the day the United States laid down its claim to be a free and independent nation.”There were other ways for your money to make money than Wall Street. Click To Tweet
The Biggest Ponzi Scheme Ever
I’ll talk a little politics here. I couldn’t watch the radical lunatic debates. Everything is free. I can’t deal with free. Free healthcare, free education and free student loans, what about my free house? What about free private school tuition? It can’t happen. People get caught up in the Democrats and Republicans. Both parties are corrupt. Both are terrible at managing money. Why in the world do we want to give them more control over us? I don’t understand it. I’m baffled. I wish someone could explain to me their point of view why they believe in big government. The government has proven that they can’t manage money. The government is running the biggest Ponzi scheme ever. It’s the textbook definition. If you looked at the word Ponzi scheme, it should have a link to the Social Security administration because that is what a Ponzi scheme is. My parents are proof of that.
We have people that want more government control. I want less government control. What’s so great about this country is we all have our opinion. I can debate someone with manners, professionalism, shake hands, hug after if they’re a friend of mine and still go fishing with them or still go hunting with them. For some people, you can’t do that. I’m all about freedom and choice. I want to get government out of my life. I believe we should pay taxes. We need policeman, firemen and roads. We need a government and law, but it’s gotten too big. We have too many employees on the government payroll. It needs to shrink some. Regardless of all that, it will be the 4th of July. There will be lots of people on the water. I encourage you to stay safe and be cautious of what’s going on around you.
Intangible Drilling Cost
Let’s get on to what the show is about. It is finances and taxes. I love showing people how they can lower their taxable income. There are several ways to lower your taxable income. If you receive money from an S corp, C corp or an LLC, if that’s how you’re paid, we need to have a conversation because I can show you a strategy that’s been around for a while. I was exposed to it before I even started talking about it on the show. I had to learn about it. I went and met the guy who put a patent on it or has a patent pending on it. It’s a strategy that’s guaranteed. This is not an oil and gas strategy because oil and gas are not guaranteed. There’s risk involved in that. This is not oil and gas. This is a guaranteed strategy where you can contribute money. The only bad thing is that the minimum is $50,000, but you can contribute and get a deduction for the full amount and take the money out almost tax-free. You pay very minimal taxes on that money. This is not an annuity. 99.99% of annuities are garbage.
Over this strategy, over a 30-year period, it averages out. It looks a little bit better than an 8% return every year in the market. It takes a long time to get there, but the tax deduction is phenomenal. Business owners, S corp, C corp and LLCs, this is a phenomenal place. We’ll have a 30-minute conversation to see if it could benefit you. We’ll lower your tax burden. This is for your safe money. If you’re working and you have a high income or you got a bonus and you want to see how to lower the tax burden of your taxable income, there are some things that you can look at. I was having a conversation with a guy about conservation easements. I know a little bit about those. I don’t deal with those, but I know people that have and people that have put money in that. They usually don’t end up turning out to be as good as what they thought, but you can get involved with those. You can get involved with an oil and gas investment strategy where you are contributing your cash to a project where we drill for oil. We use the current tax code of dealing with Internal Revenue Code Section 263(c) 59(e). That is intangible drilling costs.
Intangible drilling costs are awesome. This is the way that we are able to deduct money. The government allows and encourages us. It encourages oil and gas. If you listen to some of the organic lunatic’s talk on TV, you would think oil and gas are Lucifer. That’s the thing. They’re so hypocritical, which most politicians. They’re not just the Democrats. They like to tell us the rules and want society to live by a certain set of rules, but they do their own thing. That’s why socialism and communism societies don’t work. Show me a socialist or a communist society that has lasted for a while. Maybe we can start implementing some of those rules, but they don’t work. I was very fortunate to meet a man who called me from the show. He has a phenomenal story of how he came to the United States when he was 21 years old. He should write a book. He’s a retired attorney. He fled his country because of the same things that some of these people want to implement. He goes, “These young people don’t realize what it will do.” These are crazy people talking about 70% tax rates.
The pendulum is going to swing. It does often. Go back and look at history. That’s what Republicans and Democrats do. They’re both terrible at spending money. Both parties have no clue how to manage money. Both parties spend every year more than the tax revenue coming in. The Republicans are big hypocrites on that because they talk about being fiscal hawks and all that. There are a couple of guys in there. Rand Paul is one of them. I like his stance on that, but it can’t. It’s like a big crack at it. The government is too scared to cut the programs. They’re too scared to cut spending. They keep spending more than we’re taking in. It’s very easy to implement and to understand, but that’s how the Republicans are hypocrites. The Democrats want 70%. They’re out there saying, “We’re going to tax the middle class.” Bernie Sanders even said that some people would love to pay more taxes. He’s a certified organic lunatic idiot moron to make a comment like that. If he believes that, he should be given 70% of his paycheck.There's a risk in the market. We can all agree that the market is volatile. Click To Tweet
What I like to do on the show is to go over topics on how to reduce taxable income. I have a phenomenal wife and four awesome healthy kids. I’m loving life. I love the moment we’re in our organized, chaotic life with sports and practices. It’s a lot of fun. I think I would be a tax lawyer. I love reading the tax code. There are ways that some of the ultra-wealthy have found strategies to decrease their taxable income. Those strategies are also available to us in the middle class. You don’t have to be ultra-wealthy to do that. We’ll just scale down the income on what we do. Does that interest you learning about Internal Revenue Code Section 611, 613 and 613(c)(6)? I encourage you to learn about it. See if it could fit you. In the Passive Activity Loss rule, Internal Revenue Code Section 469(c)(3), there are ways to accelerate the depletion allowance in oil and gas. A person could invest in oil and gas and receive a deduction for the full amount that they put in, which is very similar to the first strategy I talked about.
Risks Involved In Oil And Gas
There is risk involved in oil and gas. There’s no risk involved in the first strategy. It’s guaranteed. Oil and gas are NOT guaranteed. I was talking to a guy. He asked me what I did. I was telling him about the land, how we lease land before we drill and there’s a way to earn a fixed interest rate of 8%, 8.5%, 9.23% or 10.28% depending on if you want money per month. He goes, “Can you guarantee that?” I said, “I can’t guarantee that you’re going to be alive when you get home. You may die in a car wreck. I can’t guarantee that.” He was telling me that he’s up 14% so far in the market. I said, “Can you guarantee that you’re going to be at 14% when the year ends?” He said, “No.” I said, “We can’t guarantee it.” I am passionate about how solid the financials are in our company, what we do and how we do it. We have a very good track record, but it’s not guaranteed. There’s risk involved. I do think the risk has been mitigated very low, but there’s risk involved. You have to understand that. You have to get comfortable with that.
There’s a risk in the market. Every person that’s ever called me on the show has lost money in the market. People lost money when it took a little dive, but it came back up. We can all agree that the market is volatile. If you want to see a way to earn a fixed interest rate, call me. It’s all about being educated and knowing what your options are and the alternatives. There are other ways for your money to make money than Wall Street. You have to be directly affiliated with a private equity company like this. It’s a great alternative to put some money that’s going to earn a simple rate. What’s your lazy money earning right now? I’ve met people that have an old 401(k) from this job that’s worth $40,000 or a 401(k) from this job that’s worth $35,000. You can combine those together and put them in an IRA and earn a fixed rate of return.
Show me somewhere where if you commit your money to three years, you’re going to earn 10.28% a year for three years. Show me somewhere where you know for sure that if you put up $100,000, at the end of the three years, it’s going to be worth $30,864 in interest. Show me another place where you can put up $150,000 and, if you want to put your money for one year and get compounding returns, you’re going to get $12,499 back at the end of the first year and get your $150,000 back in your basis. If you want monthly income, you put up $150,000 for one year. It’s $12,000 a year to $1,000 a month. That’s not eating into your basis and into your principal. There are probably other places like that. People are saying, “9% is not great.” I understand that. I think it’s solid, but I know there are other places to get more than that. It probably comes with a little bit more risk. There’s risk involved in this, but it’s mitigated. We do a good job of decreasing it as low as we can.
Does that interest you, learning about a way to get into a business loan by Pari Passu Security Interest or a UCC Financing Statement? It’s commonly held by the secretary of each state we’re in and were mostly in Texas right now. Most of the wells that we have are in the Permian Basin. That’s because that’s where the oil is. I could sit here and read your stats on the Permian Basin and what’s going on below the earth’s surface. If you want to hit oil, what do you have to do? Go where oil is. The Permian Basin is one of the hottest places. There’s the East and West Feliciana Parish in St. Helena and the Southern parts of Wilkinson and Amite counties, and even the Pointe Coupee Parish, even Northern East Baton Rouge Parish. There are some companies like EOG, Marathon, and ConocoPhillips that are targeting the Austin Chalk formation. Google it and do some research. They’ve been saying there are about nine billion barrels of oil down there and there’s a lot of activity going on.
Investing In Wells
We’re going to know some things on these wells that came there. I’m not an investor in those. I just read about them. My family owns 400 acres that are not leased yet up there in Ethel, Louisiana. I am an investor in the wells of the company that I work for. You have to put your money where your mouth is. I always encourage people that whoever is selling you that annuity, ask them if they have their parents’ money and their own money in it. Most people don’t. Who wants to lock their money up for fourteen years? That’s a long time to lock your money up. I like to be liquid. I have my own personal cash in these wells. The monthly income is not consistent in the wells because we’re going to hit oil, the price of oil per barrel and how many barrels of oil per day.We’re unnecessarily and unknowingly pay in taxes on Social Security. Click To Tweet
In the leasing side, it is consistent. There are no tax advantages for that. There are no tax deductions when you lend them your money when we go lease the land. The tax deductions only occur in the oil and gas wells. We’re taking advantage of certain parts of the tax code that deal with deductions for oil and gas. It’s the intangible drilling cost, Internal Revenue Code Section 263(c) and 59(e). I love IDCs, Intangible Drilling Costs. It lowers my taxable income every year to Uncle Sam. Plus, the first 15% of oil and gas revenue every year and the perpetuity to a well is tax-free. Sometimes I get on here and get pumped up. It’s like getting a drink from a fire hydrant. I’ve heard that from my friend Mike one time. I’m spewing facts and information for the audience of this awesome alternative financial show.
Coming here and talking about alternative ways for your money to make money, there are so many strategies out there other than what Wall Street wants you to know about. I am convinced that the government loves people like my parents, Hollis and June Day. My dad was a very proud 1960 graduate of Istrouma High School. My mom was a 1970 graduate of Central High School. They were nine years apart in age. My mother and father are a textbook definition of middle-class, a textbook definition of two hardworking parents sacrificing. We went to the little private school over there in Port Allen, the Holy Family. It’s a great little school. We came over here to Baton Rouge for high school. My sister went to St. Joseph’s and I went to Catholic High. My parents didn’t pay all that money for that education. It could have gone for a retirement vehicle. That could have gone towards a retirement vehicle that they could have spent or passed down. My parents worked hard like most people do or have done. For 35 to 40 years at your place of employment and you retire, what is the whole purpose of retirement? What is the whole purpose of saving that money to spend in retirement, to have money so you don’t have to work?
Uncle Sam And Social Security
I believe Uncle Sam gives me and my wife the middle finger every paycheck. Every paycheck, I had to put in Social Security. That’s what I feel like. My parents did the same thing their whole lives. My mother passed away at 54 years old of ovarian cancer in June of 2006. She was four months shy of being able to qualify for Social Security disability to try to get some of that money that she put in. Isn’t that a fraud? It’s a racket to think that my mother put in all those years of Social Security with no choice. There’s no choice because the government is saying, “Screw you, June. You’re terrible at managing money so we’re going to take your money. We’re going to call it Social Security. We’re going to give it back to you if you live long enough.” My mother didn’t live long enough. She wasn’t disabled long enough from the cancer treatments to get any of her money. My mother never got a penny from Social Security.
How is it fair that the government takes money that you don’t want to give them because it’s not a tax? I can deal with taxes. The government takes your money and says, “We think you’re terrible at managing money so we’re going to give it back to you a little bit per month when you get a certain age. If you die and your kids are over eighteen, nobody gets it.” That’s what happened to us. My dad received a $255 check from the Social Security Administration when my mother passed away to help her burial expenses. I don’t think that covered the big flowers on her casket. My dad passed away seventeen months later, very unexpectedly. He had pulmonary embolism at 64 years old. My dad had yet to turn on his Social Security faucet. My dad had yet to start receiving Social Security. Where is the money that the government stole from my parents that never paid them anything?
Do you see how they would have done better putting money in an IRA where, at least, if they would have passed away, the spouse could have used it? I know there are certain rules for when a spouse dies and if there’s a child under eighteen. They’re not doing any favors. Let’s get that clear. The government is not doing anybody a favor of giving that child the money of a deceased parent. That’s money that the worker put in. They’ll never get back all that was taken from them. They’re not doing them a favor. The government has gotten too big. 99% of politicians are elitist. That word means that they truly believe they are better than us. What kind of person would sit there and bash oil and gas and then talk about climate change? A hypocrite will bash oil, gas and fossil fuels but then take their private jet across the country. That’s an elitist. An elitist is someone who votes in Social Security and who passes social security for the masses but then had their own retirement plan up there in DC. That’s what an elitist piece of trash is.
That’s why I like finding legal ways to decrease my taxable income. When you start receiving Social Security, if you have other income, depending on if you’re married, you’re going to pay a double tax on Social Security. If you want to see how to avoid that, call me. The government tried to pull a fast one on us and they call it provisional income. If you are getting close to retirement, I would love to have the conversation with you. If you don’t call me, do your own research. That’s what this show is about. I’m just spitting facts out there. I’m providing facts for you to go back and do your own research and your own reading because most people don’t know about this. I believe the government should have billboards instead of 148 trial billboards. Maybe the government could buy at least some of this stuff and educate people on the double taxation called provisional income.Oil and gas is a great place to be, but it’s not a place for all of your money. Click To Tweet
When the government forces you to put money in Social Security, that money has been taxed. If you have provisional income or other income like rental property or dividends that you’re taking out $45,000 a year to live on from your retirement account, the government found another way to screw us on Social Security. They’re going to tax 85% of the amount you receive at whatever income tax bracket you’re in. There are ways to avoid paying taxes on Social Security. Where your money sits in a SEP-IRA or 401(k), they’re going to hammer you in taxes in Social Security because of where your money sits. You can move that money to different places, not coming up with new money, just moving it. You have to pay the taxes on that money one day. Sooner or later, you’re going to owe the taxes. There is a way to avoid paying taxes that I’ve learned from some folks smarter than me, unnecessarily and unknowingly paying taxes on Social Security. There are ways around it. I have people that take their RMD every year and then put it in an oil well package because they have to pay taxes on them.
There are ways you can get down and figure out what your CPA to the penny and where’s a wash. Instead of giving the money back to the government, you’re going to pay taxes and take it out. You can contribute to an oil well package and get ownership. There’s going to be monthly income. The monthly income is not consistent on an oil package. It depends where we’re going to hit oil, the price of oil per barrel per day or how many barrels a day are being pumped. I follow the price of oil per barrel closely. I look at it every day. I’ve gotten pretty good. I can almost tell you what it is at the pump. I can almost tell you what the price of oil per barrel is when I look at the price of the pump in Baton Rouge anyway because gas is a bit more expensive as you get further north. Right now, the price of oil per barrel is hovering around $56, $56.88, $57 a barrel and we’re paying $2.25 at the pump. It’s not bad. I wish it would be about $65 a barrel. It’s where the sweet spot is for our company. Our breakeven point is around $19 a barrel.
Oil and gas is a great place to be. It’s not a place for all of your money. There’s no strategy out there to place for all your money. If you’re tired of the volatility and sick and tired of watching your account go up and down, call me. Let me show you a place where you can get a fixed rate of return. Before we drill these wells, we go lease the land and pay lenders who lend us money. We pay them a fixed rate of return. There’s a way to get monthly income that does not decrease your principle. It’s 8% for one year, 8.5% for two years, 9% for three years. If you are willing to lock your money up for 36 months, you’re going to receive 9% a year for three years, paid monthly to you. It’s 9% a month over the course of a year for three years. If you put $100,000 in for three years, you’re going to receive $27,000 over the course of the three years. Do the math on that.
That’s 9% a year paid monthly and not decreasing your principal. It’s a great place for IRA money. Most people do the compounding interest if it’s IRA or SEP money or 401(k) money. You can’t do this with annuities. With the annuity, you have to factor in the fake bonus money you get. You’ve got to factor that in and you don’t know what the market’s going to be. We don’t know what the market’s going to be. This rate of return does not factor in with the market. It doesn’t factor with the price of oil per barrel. This is a business loan. You’re lending your money to a company that was going to lease some land, work over some wells and then they have a separate investment for an oil and gas well. It’s not guaranteed. It’s a lower risk in the market. That’s why it’s not a place for all your money. If you’re looking to get diversified, this is a private equity opportunity.
You could go right now and contribute $100,000 in ExxonMobil stock and into ConocoPhillips stock if you want to. Somebody will say, “Why do they need money? Why does ConocoPhillips need money?” A good company is consistently seeking ways to raise capital and consistently seeking ways to reduce cost. That’s what we do. We are a small company. We’ve grown so much over the last few years. I’ve been with them for about eight years. We’re still small relative to the Marathon and we don’t own our own refinery, but we extract oil and gas from the ground. We put it in trucks and go sell it. It’s very cool to be a part of. Show me something else out there that can show you what you’re going to make per month, per year, free to two years or three years.
If you want to lock your money up for three years and get nothing for three years, but at the end of the 36 months, it’s a 10.28% rate of return. If you put up $100,000 for three years, at the end of the 36 months, you’re going to get your basis of $100,000 back plus $30,864. If you want to do it for two years, at the end of two years, you’re going to get back $18,459. If you want to do it for one year on $100,000, you’re going to get $8,299. This is not the ultimate place. It is a place for maybe a small portion of what you’re looking for. If you’re looking for monthly income, this is the place. If you’re just looking to grow your money, this is the place. We have a couple of different options here. I love the tax deductions in the oil well package. There are no tax benefits. There are no tax deductions for this. It’s not guaranteed. The oil wells are not guaranteed. Anytime you put a drill bit in the ground at 4,000 feet deep, something can go wrong. That is the point of being in more than one oil well. We drill multiple wells. We’re taking advantage of the current tax code, the Internal Revenue Code Section 263(c) 59(e), intangible drilling cost.
Go to IRS.gov and there are some publications. There’s an oil and gas section on the Internal Revenue Service website. We’d come up, lease land and drill. Our outlook on oil and gas is solid. There’s always going to be volatility in oil and gas depending on what’s going on in foreign countries. This country is independent of foreign oil because of small companies like us. The government got something right in the ‘80s. They implemented these phenomenal tax deductions that very few people know about when you invest in oil and gas. They’re still on the books. Trump made it a little bit sweeter. You can now accelerate the depletion allowance. You could potentially deduct 100% of the investment you put in. It depends on your investment and when the wells are drilled. That’s not going to work out for every person, but potentially you could. Worst case scenario, you’re deducted around 80%. We’re talking about the drop on you from one tax bracket to another, which means less money to corrupt Uncle Sam. Let’s face it.
Pollution And Climate Change
Uncle Sam is corrupt. I love Uncle Sam. I love this country, but he is a corrupt uncle. He’s probably an alcoholic. The show focuses on alternative ways for your money to make money and alternative ways for decreasing your taxable income to reportable taxable income. If you do invest in oil and gas, you will have to file an extension on your taxes. It’s not a big deal. It freaked me out the first year. It’s just not a big deal. I do it every year. I file an extension. Oil and gas are not going anywhere anytime soon. I do think we have a responsibility to try to make our alignment better. When you go by the refinery, you see the gas being produced. The pollution is not good for the environment. We needed to live and our country is leading the world in being more environment-friendly. I’m not scared of climate change. I believe that the climate has been changing for hundreds of years. I don’t think it’s manmade. Anybody who thinks tornadoes happen because of climate change is a moron.
Hurricanes are not called by climate change. Hurricanes have been happening for hundreds of years. They’ve been happening since before we were even documenting they were happening. It’s common sense and you believe that. I do. I’ve been blessed with a little common sense even though I walk in my closet and I go, “Why do I walk in here for?” I’m forgetting stuff. I go to my desk and like, “I came here to pick up something.” I’m looking at my desk and like, “What am I supposed to pick up?” At 42 years old, I shouldn’t be forgetting like that. I’m going to start taking some Alpha Brain. I ordered some Alpha Brain to help with some memory and focus to eliminate this brain fog I have sometimes. It could just be my four kids and their schedules and our chaotic fun life. We’re so blessed. It’s my wife and I with our four healthy kids and our health. It’s awesome to live in this country and to be able to access the doctors we have. In this country, we have so many luxuries, conveniences and opportunities. If we can just go jump at a hot shower if we want to, we can do that. I hope you enjoyed this fantastic show. Call me at 202-SAGE. That’s 202-7243. You can go to the website at SageMoneyRadio.com. You can send me an email from there.