July 6, 2019

Student Loans And Lowering Tax Burdens

SMR 36 | Student Loans


It is a fact that there are over 44 million Americans who owe student loans. A lot of these students graduate with heaps of financial demise on their shoulders, making it hard for them to get jobs to pay for it. In this episode, Timothy Bush gives clarity on how these loans have gotten out of hand and how America is spoiling its people. He backtracks on what the 2007 bubble has produced, how loans got sky high, and how the government paid those debts. Educating people on ways to lower taxable income, Timothy shares a couple of investing strategies for more income.

Listen to the podcast here:

Student Loans And Lowering Tax Burdens

Spoiling The People

We have some serious things going on in our economy right now. We have these career and idiotic politicians. They love to tell us how to live. They’d love for us to live by the rules they make and then they don’t live by those rules. One of the big issues I have that’s affecting us, and I’ve talked about it often. I probably brought it up five or six times, is the student loan debt. I don’t know what your thoughts are on that. I’m going to tell you my thoughts. The fact that we have people lobbying for the forgiveness of student loans, first of all, the government should not be in the student loan business. If you go back to 2008, you see nothing’s changed. If you remember 2008, the housing crisis, it was tough for folks to get a loan or a mortgage for the next couple of years after because the industry tightened up the ship. They tightened a lot of loose ends and it was harder to get a loan. That’s why a lot of mortgage companies went out of business.

We’re back to doing the same things we were before, 0% down. Move in, it’s a high note. If we forget student loan debt, are we going to forgive mortgage debt? Are we going to forgive auto loan debt? Where does it stop? Where does it end? It doesn’t. It doesn’t end with these radical, lunatic, tax everything politicians. They think the answer to most things is, “Let’s throw more money at the issue. Let’s just raise taxes.” That’s why I’ll never ever vote for a tax increase. Our society, from the local municipalities to the state, to the federal government, we have boatloads of cash. We have money coming from tax revenue. We have a lot of tax-paying citizens. You have the idiotic socialist mayor of New York City saying that there’s a lot of wealth, but it’s in the wrong hands. That’s what an elitist does. An elitist tells you they’re smarter than you, they’re better than you, that the money’s in the wrong hands. There were no lessons learned in 2008, 2009. The government came in and bailed everybody out.

The Government Is Not The Answer

Hopefully you don’t have a child, but maybe you did that was a niece or a nephew or you’ve seen a friend raise their kids where they bailed them out of trouble every time, that kid grows to be an irresponsible adult. That’s what our politicians are. That’s how they handle our money. Nobody reading this could run their household the way the politicians run the government, as in they’re spending more money than they are taking. The Republicans are liars too. They lie. They talk about being fiscally conservative. They’re not, and they just don’t want to come out and tax. They spend more money they bring. At least the Democrats are going to come out and tell you. They pretty much tell you, “We believe in a 70% tax rate. We’re socialists. We believe in free healthcare for all. We believe everything should be free.” At least they’re telling you that. Republicans are a little sneakier about it. They brag about being fiscal hawks and they’re not. Where does it end?

The person who’s making good money, has a household combined income of $150,000 with his wife and worked full-time. They’ve got a couple of kids. They know if they get a mortgage, and God forbid the wife loses the job or the husband loses a job, at that point in time you have towards, you get to sell your house. You have to go ask family members for help. Ask friends for help. You get out of the house, file bankruptcy, try to fight and you have to move, find another job. The government is not the answer. I have a lot of nurse anesthetist clients and almost every one of those CRNAs graduated with a ton of debt. I know one guy has got $300,000 in student loan debt and he’s a nurse anesthetist. He’ll tell you, “It was my choice and I’m going to be paying money for a long time, but I’m making good money and I just accepted it.” The government should not be in the role, but that’s what happens.

Anyway, I have an article here and I’m saying all this because it’s going to affect our tax dollars. It’s going to affect your retirement accounts. After this article, I’m going to completely trash and beat up on the 401(k). I’m going to tell you, I’m going to read another article about it and tell you why it’s the worst place to put money because the 401(k) was created in an environment where we had high tax rates. Do you know right now we are in the lowest tax rates ever in the history of our government, except for when the sixteenth amendment first ratified? We were in a very low tax environment. After that, right after that World War I started, and we’ve been high ever since, we’re in some of the lowest tax brackets ever in our history. Why are we still deferring taxes?

Millennials are much poorer and indebted than previous generations. Click To Tweet

Let me read this article right here. This is from December 31st, 2018 from the Sovereign Man, Your Tax Dollars At Work: Government Officially Forgiving Student Debt. “When all the tribes of Israel still lived in their Holy Land, they practiced something called the Jubilee. According to the Book of Leviticus, the Jubilee existed because the Israel land belonged to their God Yahweh and the current owners were just borrowing it. It sounds like land ownership now. Try not paying your property taxes and see who really owns your land. Every 49 years, the Israelites would celebrate by freeing slaves, redistributing property, forgiving debts.

The Jubilee

A 49-year cycle where debt is forgiven and the land is returned to previous owners is ridiculous. Markets cannot function under this system. Imagine buying a piece of land and not knowing if you have to give it back down the road or lending someone money with the possibility that those debts just disappear and you get nothing back for the risk you took. The Jubilee originated sometime around 1406 BC, so you wouldn’t think it’s ancient history.

Why Stop Student Loans?

Fast forward 3,500 years, the US government is a record $21 trillion in debt and running $1 trillion annual deficits.” This article was written in December of 2018. We’re $22 trillion in debt now as a government. US corporations have a record $9 trillion in debt, with nearly half of that debt maturing in the next few years. Meaning the businesses either have to roll that debt into a new loan or pay it back. Consumer debt, which includes credit card debt, auto loans, and student debt is already at a record high and should pass $4 trillion in 2019. What I don’t understand about Pocahontas and Chuck Schumer, this radical, crazy lunatic, what I call organic lunatic politicians, textbook hypocrites. Why are they just stopping the student loan? Why aren’t they going credit card debt, auto loan debt, mortgages? Why is it just student loan?

Back to the article, “The largest portion of consumer debt is student debt. Yes, Americans have borrowed $1.5 trillion to earn degrees of questionable use. As I wrote in previous notes, according to the latest stats, the average student loan debt is nearly $40,000, but that’s just average. There are more than two million former students in the land of the free with more than $100,000 of debt, around 415,000 people who have more than $200,000 of student debt. The US Department of Education guarantees 90% of that debt, which means you, me, the taxpayer guarantees that debt. If the borrower defaults, you’re on the hook. What are the chances Millennials will make good on the debt? I don’t think it’s very good. It’s not great. According to a Fed study, Millennials are much poorer and indebted than previous generations. Even if they are financially able to repay student loans, you then have to question their will to do so when you can do so many other cool things with that money. Like this YouTube bro who made a video bragging about using his financial aid money to take his girlfriend on a trip to Thailand. Already we’re seeing student loan defaults creep up. Loans issued in 2012 are defaulting at a faster rate than ever before. Interest rates are only rising.

Over 44 million Americans owe student loans. According to the Federal Reserve, 11.2% of them are delinquent, at least 90 days late or in default. It’s hard enough to pay back your loans if you study medicine to become a doctor or something else that could lead to a relatively high-paying career. Now 22-year-olds are graduating with $200,000 of debt and all they have to show for it is an undergraduate degree in underwater basket weaving. No direction, no plan, just a useless degree. There are adults who are still swimming in student debt. There were even almost two million Americans over the age of 62 who still owe a combined $62 billion in student loans. That’s over $32,000 per borrow over 62. I don’t think Social Security is going to cover that, even if by some miracle does stay solvent. That’s another conversation.

Given these headwinds, we’ve been wondering how on Earth is crushing student debt or loan will ever be paid back? I think we just got our answer. Secretary of Education, Betsy DeVos, agreed to forgive $150 million worth of student debt. It’s a mini Jubilee. Here’s the thing, Betsy DeVos did not want to forgive this debt. She fought to change the rules. In the Obama era, the forgiveness policy was enforced by the courts. If one of the meanest women in government can’t stop this debt from being forgiven, just imagine if we had someone like Bernie Sanders or Kamala Harris steering the ship. Who do you think is going to come after Trump? Trump was America’s first response to Obama. The next pin on the swing will be even greater to the left.

SMR 36 | Student Loans

Student Loans: Betsy DeVos did not want to forgive the $150 million worth of student debt. She fought to change the rules.


We just saw the first $150 million and there’s another $1.465 trillion to go in debt Jubilee. If you ever wondered why I think it’s a moral obligation to pay as little as taxes, this is it. If you want to give the government your dollars to fund YouTube bro to go to Thailand, go ahead. I’ll be in Puerto Rico paying 4% corporate tax and 0% capital gains.” I was just reading an article. Maybe Puerto Rico doesn’t sound too bad. My whole thing, my whole purpose of this is to educate you on ways to lower your taxable income to the government, to tell you about a couple of strategies than I am waist deep and I’m seriously convicted, believe in and that’s the purpose of this. To educate you, tell you what I’m doing with my money. I don’t have it all figured out, but I think I have it pretty closely figured out. I made some mistakes years ago, that’s how you live and learn.

I’ve been very fortunate, very blessed to be with some mentors, some very wealthy men that have shown me because I’ve asked, “What are you doing with your money?” I just scaled it down to my income. We have no moral obligation to pay any more in taxes and what we already do. My belief, it’s my opinion, and that dollar bill I don’t know if they’d even get you a cup of coffee nowadays. Maybe a cheap cup from the race track, which there is nothing wrong with race track coffee. I like it. Things are higher now. It’s my opinion and we are taxed enough. I want to lower my tax burden to the government. There’s a saying, I can’t remember who said it. The quote is, “The difference between tax evasion and tax deferment is the print is the thickness of a prison wall.” We’re not evading taxes. I want to lower my tax burden to the government. I want to pay what I owe. I want to follow the tax code and pay what I owe. That’s it. I don’t want to pay more. The thing about these radical lunatic politicians and we have him on both sides. It’s just I think the far right might be a little bit smarter because you don’t see them on TV as much as the far left. It’s just that everything is free. It blows my mind. Everything should be free. Nothing’s free.

Everything Cannot Be Free

Our salvation in Christ wasn’t free. Our Lord hung on the cross. That wasn’t free. He paid for that. Everything has a cost. We can’t do this as a country being free. Everything can’t be free. The taxpayers pay the money to the government. These politicians who make these rules and laws and legislature and they legislate, it’s not their money. One thing about when you were a kid, when I was a kid, I was probably a little bit more irresponsible with money that was given to me because I didn’t earn it. It’s the same thing. They’re just buffoons, they’re idiots. I don’t trust them. My faith is not in the government. I want the government in my life a little as possible. If you want to pay more in taxes, if you don’t think we’re paying enough, don’t call me because this conversation can’t go very far. My goal is to educate you, to show you how to lower your tax burden, to show you how to avoid paying taxes on Social Security. Very few people even know that you’re going to pay taxes on Social Security. It’s straight-up double taxation and the government tried to trick us and call it provisional income. It’s straight-up double taxation on Social Security. Let me talk about the worst place to put money in my opinion. The worst way to put money is 401(k).

401 (K)

Here’s an article from September 26, 2016, MarketWatch.com, The Inventor of the 401(k) Says He Created a Monster. What environment was the 401(k) created? It was created back in 1978 because of high tax brackets. We’re in much lower tax brackets now. Here’s another article. The inventor of the 401(k) thinks it has gone awry. The best thing about the 401(k) according to the author is that it makes you save. I don’t need someone making me save. I can save on my own. I don’t need a government to make me pay the Social Security. We’re talking about 401(k), not Social Security. If we’re talking about the 401(k), why would you put your money somewhere where you can’t access it until you’re 59-and-a-half? They make you access it when you’re 70-and-a-half. It’s only for about eleven years you have access to your own money without penalty. It’s ludicrous.

In my opinion, you’d only contribute money to a 401(k) if they think taxes are going to be lower in the future. Do you believe that? I understand people work for a company and they match. If you’re doing that, that was it. If I was advising my sister, I would say, “Only contribute the minimal amount to get the match. If you’re doing anything more than that, call me. Let me show you what I’m doing. Since you’re not used to seeing that money anyway, let’s put it in something else. Let’s get to grow with uninterrupted compound interest and you’re going to access it. Life happens.”

The US government wants to minimize our dependence on foreign oil and maximize our energy independence. Click To Tweet

I have a couple of articles here. I talked about the dirty little secret with 401(k)s. Some charge ridiculous fees. It’s not pretty. Bennett said, “My biggest disappointment with 401(k) plans is how the financial community is getting grossly overpaid to manage these plans. 401(k) fees are largely hidden. You have to look for them sometimes in complicated plan documents. There can be layers of fees.” First underlying mutual funds, you invest in carrying fees. Next, there might also be fees levied by the plaintiff administrator. When local business hired Bennett to look at his to look at its 401(k). He noted employers are paying 2.75% annually in fees. The employer paid additional fees, enough employees complained that and Bennett moved the plan to another provider that charges just 0.15% annually. Check your plan’s documents. He’s sitting here saying that the best thing about the 401(k), “It helps turn spenders into savers.” We all shouldn’t suffer for the bad. That’s my choice. I don’t put into a 401(k), but what if you’re working somewhere? The match has to go into the 401(k). There are other things you can do with your money.

If you’re open-minded, call me and I will show you something a little bit different. I will show you what I have asked and what I learned years ago, what the ultra-wealthy are doing, but you don’t have to be ultra-wealthy to do it. You scale it down to your own income. For people that have money already in the 401(k), the tax is making that money one day when you take it out. The taxes do. Let’s round up. If you have $500,000 in your 401(k) account, your CEP, your IRA, whatever it is, you’re probably paying a fee to your financial guy to manage that money. If you’re in the 25% tax bracket, that means one-fourth of that account’s not yours. If you have $400,000, $125,000 of that account is not your money. It is owed to the government. I think tax rates are going to be higher in the future, in another ten or fifteen years. That’s my crystal ball. I think tax rates will be higher, so it may be higher than that. Thinking about that, you have $500,000 on a 401(k), one-fourth of it is not yours but you’re paying a fee on the full $500,000. You’re paying a fee for someone to manage a fourth of your portfolio that is not even yours. You’re managing for the government because they’re going to get a fourth of it or maybe higher if you’re in a higher tax bracket than that. It seems a little weird that you’re managing money for someone else to get. It’s something to look into.

If someone’s telling you will be in a lower tax bracket when you retire, run, or better yet, ask that person. I don’t think a CPA would do that, but I know these traditional financial strip mall planners will tell you-you’ll be in a lower tax bracket when you retire. See if they’ll sign and date and put on their letterhead. See if they’ll back it up with that confidence. They won’t because I can’t even tell you what tax brackets are going to be in the future. I believe they’re going to be higher because of the debt that this country is growing every nanosecond, but I can’t guarantee that. Plus, very few people are in a lower tax bracket when they retire anyway. Think about it. Your mortgage is probably paid. Your children are out of the house. You don’t have anything to deduct anymore. You’re making less money, so you’re probably giving less to charities in your church. Anyway, that’s a myth. I think some people already have a lower tax bracket, but it’s definitely not a broad stroke to paint.

Lowering Your Tax Burden

In the second segment, I’m going to talk about some answers. We’ve talked about some problems in this first segment. I’m talking about some answers in a way to lower your tax burden to fat Uncle Sam. We say grace and we say ma’am. We definitely do at my house. I’m going to tell you. Bragging on my kids. I try to stay humble with my kids. I get complimented often from my kids, friends, parents, or how well-mannered my kids are. They say, “Yes, ma’am. No, ma’am. Yes, sir. No, sir.” In fact, my kids tell me, “Dad, did you hear him? He didn’t say, ‘Yes, ma’am’ to his mom.” I’ll say, “That’s correct. We don’t do that at our house.” We have four pretty good athletes at our house. My wife and I call it organized chaos because she’s a school teacher. She’s phenomenal and she’s very well-organized. Our schedules are just crazy with our kids and practices and games, but it’s a lot of fun. It doesn’t often happen where we get to sit down and have supper together. When we do, we hold hands, say grace, thank the Lord for our blessings and we talk about what’s going on at school, what’s going on at practice.

I like to ask my kid questions and I ask the same question over and over again, but they still give me the good answer. Something that is definitely dying by the wayside is, “Yes, ma’am. No, ma’am. Yes, sir and no, sir.” I always tell my kids when they go to someone’s house, “Remember, Molly, yes, ma’am. No, ma’am. Yes, sir. No, sir.” “I know, dad.” “Molly, what’s the correct answer?” “Yes, sir.” “Good job. Have fun.” The days back in Mayberry were definitely easier and simpler, and I wish I would’ve been alive back then. I’m not a big high-tech guy, but technology is cool sometimes. I’m not good at working on it. I just need it to work with. I need email to work. I need a computer to work. If it doesn’t work, I’m in a bind because I don’t know how to make it work. The first segment, I didn’t mean for it to be all doom and gloomy. I have addressed some issues we have and I can tell you what I’m doing with my own money. I can tell you what I’m doing to lower my tax burden every year. There are certain parts of the tax code that do that. It’s Internal Revenue Code Section 263(c) 59(e). Internal Revenue Code Section 611, 613, 613(c)6, and then Internal Revenue Code Section 469(c)3 that is dealing with ways to receive deductions for investing your money, contributing your money to an active oil and gas well exploration package.

SMR 36 | Student Loans

Student Loans: Even with efforts to encourage oil and gas investments, the government has set a few deduction limits, hence the Alternative Minimum Tax or AMT.


Investing In Oil And Gas

Few people know about this. Few people know of them. I don’t know of another place where you can contribute money and receive a deduction like this. I do but you have to be a business. You have to be a business owner for that and you have to receive income from a C corp, S corp LLC. This is for your ordinary, hardworking citizen right here who wants to pay Uncle Sam less money. It’s all because of the tax code that was made years ago. In America, life as we know, still largely runs on hydrocarbons. The oil, coal, and natural gas that warms our homes, powers our businesses and keeps our cars on the road account for 81% for our nation’s total energy consumption. According to the National Academy of Sciences, while we see an increase in more sustainable alternatives, the largest of this hydropower only accounts for only about 7% of the energy produced in the US. Meanwhile, our appetite for energy is still growing, with the US Energy Information Administration projecting a 48% increase in rural energy consumption by 2040.

The US government wants to minimize our dependence on foreign oil and maximize our energy independence. Therefore, it offers significant tax benefits for investing in our domestic oil and gas industry. What you have to realize is there’s a risk in this. I think our company does a great job of mitigating the risk. There’s a risk in this and the income in this is not consistent. The goal is to be monthly income, but when you start drilling, there are costs. You have to get the wells online. There are a couple of months of the cost before you start receiving income. The income is based on what? The price of oil per barrel, how many barrels of oil per day. Some of the domestic tax benefits have been in place for 100 years, such as the ability to write off 100% of intangible drilling costs. Others have only recently come into play with the passing of the Tax Cuts and Jobs Act of 2017, most notably the reduction of the corporate tax rate from 35% to 21%. It will serve as a tremendous boon to oil and gas companies in particular, as far as investments go, all signs point to now as a particularly good time to invest in domestic oil and gas.

I’m reading from a website that you can get access to. All we’re doing, we’re just quoting tax code that’s there. We’ve gathered parts of the Internal Revenue Code and put it together to see this. The upfront costs for an oil well is substantial. Millions of dollars are invested before each well produces oil, if it produces any at all. Energy is a capital-intensive sector. To reward investors for taking the risk to get projects off the ground, the government allows 100% of these initial costs to be expensed. This tax benefit referred to in the IRS Oil and Gas Handbook. Did you know that the IRS has an Oil and Gas Handbook? They do, as intangible drilling and development costs are unique to the oil and gas industry. To claim these benefits, an investor must have what is known as a working interest in an oil and gas property. Simply put, it means that the investor’s risk exposure is not limited or protected in any way. Under these circumstances an investor may offset this investment against other forms of income such as wages, interest, and capital gains.

In the US tax code, startup costs known as intangible drilling cost include wages, fuel payers, hauling supplies. IDCs also includes many other items necessary for the preparation and drilling of wells to produce oil and gas. This is what Trump did. Thankful that his administration did this. Importantly, under the 2017 tax reform, investors are permitted to deduct these capital expenditures as a current business expense in the year paid. The soft costs offer no salvage value regardless of whether the well produces oil or is declared dry. However, costs incurred in one year will not be able to offset 100% of the taxable income in the next year due to the elimination of carrybacks as part of the new tax law. An investor can write off 100% of intensive drilling costs, which typically represent 60% to 80% of the overall well. This longstanding tax benefit was put in place a century ago and remains intact under president Trump’s tax reform. There are certain parts of the tax code that I quote. I’m in the process of writing a book and all I’m doing is educating you on the current tax code, things that you’re probably not going to hear about from your traditional financial planner, even the certified ones.

You have to get off the grid a little bit of learning about these things. The ultra-wealthy are doing and have been doing for years. You don’t have to be ultra-wealthy to do them. Call me 202-SAGE. That’s 202-7243. You can go to the website, SageMoneyRadio.com. You can send me an email from there. The US code 7702, 1018, 101(g)(1), 72(e), 72(e)(5). Certain parts of the tax code that deal with deductions, deal with tax-free income on the way that you see or recognize income. There’s another strategy that when you receive income, there’s no place to even put it on 1040. That’s a different subject than what I’m talking about. I’m just telling you there’s a way to receive income and not put it on the 1040 and it takes years to get it going. It’s not an annuity. Remember, I deal with annuities. This is not an annuity. The alternative minimum tax liability. Even with efforts to encourage oil and gas investments, the government has set a few deduction limits, hence the Alternative Minimum Tax, AMT. As its name implies, the alternative minimum tax puts limits on how much you can deduct in the year to ensure the government received a minimum amount of tax revenue.

There were no lessons learned in 2008 to 2009. The government came in and bailed everybody out. Click To Tweet

When the AMT is triggered, an investor no longer gets the full benefit of all the possible deductions. That’s why you have to give the company who knows what they’re doing. Let’s talk about tangible drilling costs. Tangible drilling costs, in addition to offsetting intangible costs, the tax code offers attractive benefits for offsetting the tangible cost of operating oil and gas properties, specifically through equipment. This includes things like tanks, tubes, casings, pumps. I’m just encouraging you to get educated. What else is out there besides your traditional mutual funds, stocks, bonds, CDs? There are other things for you to make money than what Wall Street wants you to know about. You have to go directly to a company. I’m a salaried employee for this company. You have to go directly to a company to learn about this. The depletion allowance. Oil and gas are not renewable resources. Every time you drill, you’re depleting the reserves because you are forever reducing the oil you have access to. The tax code grants certain oil and gas producers a depletion allowance of 15% on the gross income earned on the average daily production of up to 1,000 barrels of oil or six million cubic feet of gas. That’s Internal Revenue Code Section 613(a)(c). This allowance does not apply to oil producers who refine more than 50,000 barrels per day or oil producers whose average daily were finally runs exceed 75,000 barrels or retail producers of oil.

Investing in Exxon, you don’t get these benefits. Exxon is a publicly traded company. We are not. We are a private equity company. For instance, if an oil producer generates 800 barrels of oil each day out $100 a barrel, it will not be taxed at $100 a barrel, but rather $85. Large companies with extensive holdings like Exxon Mobil do not receive this benefit. Does that interest you? I went to step two before step one. Before we even drill for oil, and most of our wells in the Permian Basin, we have to do what? We have to lock up the lease. We borrow money from lenders/investors for that. What I just went over, there are great tax benefits for investing directly in oil and gas. The income is going to be monthly, but it’s not consistent because the price of oil per barrel changes every nanosecond. It does every day. The barrels of oil per day on this well maybe 80 barrels now might be 62 tomorrow. Things change. Will they shut the well down for maintenance? When you invest in the land, when you lend us your money in the land, we give you a fixed rate of return, and it’s not guaranteed. If anybody ever talks about the word guaranteed in oil and gas, run because it’s not. We pay you a nice rate of return and there’s risk involved. I think the risks are very mitigated.

Each business loan is secured by pari passu security interest in project loan documents via a UCC financing statement. For taking on a little risk, we pay people, pay lenders one year, so there are two ways to invest. Basically, simple interest and compounding interest. Obviously, the simple interest is paid monthly. The compounding is paid at the end of one year, at the end of two years or the end of three years like a CD. If you put your money up for one year and you want monthly income, you’re going to receive 8% a year and then divide that by. I’m just throwing some numbers out there. If you have $100,000 and you want to do the one-year simple interest, you’re going to receive $8,000 back divided by twelve over the course of that year. If you don’t want the monthly income, you’ll receive a little bit more interest to compounding. You’ll receive $8,299. It’s one of the great things about this investment. Show me another investment we can dictate exactly to the $0.01 how much you’re going to receive.

You put $150,000 up in a one-year simple interest, you’ll receive $12,000. That’s $1,000 a month. At the end of the twelve months, you’ll receive $12,000. Now you have your basis back. Now you have your principal, which was not dipped into. If you want the compounding interest, you’ll receive $12,499. You get roughly an extra $500 by not receiving the monthly income. We’ve got simple interests, compounding interests. You have one-year, two-year and three-year options. The one-year for simple interest is 8%, the two years is 8.5%, and the three years is 9%. There’s a place where you can put your money up for three years and receive 9% a year paid monthly. If you have lazy money sitting around, maybe an IRA here, 401(k) here, you can put that money in a self-directed IRA and receive compounding. If you don’t need the money right now, if you just want to compound, the one-year compound yields 8.3%, the two years 9.23%, and the three years 10.28%. There’s a place where you can receive 10.28% a year for three years. There’s a risk involved, but it’s low. You have to get educated and familiarize yourself and see if you’re comfortable with it.

Show me another place where you can go put money up and they can tell you exactly what you’re going to receive at the end of the three years. Few things out there that I know of that are like this. I think maybe some real estate. If you have some smart people in some real estate, you could do something like that. It’s just some numbers here. $100,000 on a three-year, 10.28% compounding yield per year is going to give you $30,864 at the end of the 36th month. You would receive your basis back of $100,000 plus $30,864 in interest. If you did the compounding for two years, you’d receive $18,459. Compounding for one year is $8,299. That’s $100,000 investment. Remember, $50,000 is the minimum. $150,000 for three years is going to give you $46,296 at the end of the three-year compounding. That’s solid. I refer to sometimes this. I refer to a lot of things in baseball terminology, even around my house with my kids. I think that’s a solid double. I don’t deal with anything that deals with the home run, the potential for a home run. I have friends. I have sat down with people and they have said, “Hollis, 10% is not a great return.” “Nice to meet you. Enjoy the cup of coffee. Good luck to you.” Nothing personal, but this is a great place or could be a great place for your portion. It’s a small portion of what you’re doing with your own money.

SMR 36 | Student Loans

Student Loans: Oil and gas are not guaranteed. It’s real estate.


A lot of people I meet call me from the show or managing their own money or they have access to their financial guy and they direct him on what to do. This is not a place to sell the form, put everything, there’s nothing in there. This is for a small place. You’re looking for monthly income. If you have cash, you’re looking for monthly income. This is a great place to receive monthly income where you can receive decent interest, a decent rate of return. We even have a real estate option. I went and I walked the land. I have stepped foot on this ground in Truckee, California. We are developing a 22-unit townhome and the first phase is $8 million. We are paying lenders who loan money. You act as the bank. This is a little bit of a lower interest rate because the risk is a little bit lower, and it’s a three, four, five-year deal. What I love about the oil and gases on the lending side, on the land side, you’re locking your money up for either one, two or three years. That’s it. The liquidity, I love it. Even on the direct participation, our goal to be in and out of the project in three to five years. We want to turn it over. We want to drill the wells, prove the reserves, get out. Sell the package.

There are a lot of oil and gas companies who do not drill. They only buy existing, producing, flowing oil wells. I’ve already been a part of two of the sales, fantastic rate of returns. I just took that money and applied it next year for my taxes to lower that burden to that hit to Uncle Sam because Uncle Sam was very irresponsible with money. Would anybody disagree with that? Would anybody disagree that Uncle Sam is terrible managing our money? I’m taking it to a level of reducing my tax burden to Uncle Sam, at the same time becoming an owner in direct participation oil well package. The real estate side, there’s also a three, four and five-year deal. You can do the three-year simple interest. Monthly income, three years, 6.75%. You’d be locking your money up for 36 months and you’ll receive 6.75% per year paid monthly. The four-year deal, 7.25%. The five-year deal is 7.75%. It’s not bad.

For example, $100,000 on the five-year term at 7.75% per year is going to pay you $645 per month. That’s a total of $38,750. Lock your money, lock in $100,000 up for five years, receiving monthly income, you’ll receive $38,750. You could do the growth where you don’t need the monthly income, you just want to grow and compound. The five-year note is going to pay 9.42%. Example, $100,000 on the five-year, 9.42% per year means you get nothing for five years. At the end of the 60th month, you get your basis back of $100,000 plus $47,145. Does that interest you? A portion of your money is a great place for the compounding on the lending side of the land and this is great for IRA money. It doesn’t matter your age. I know I just beat up bad the 401(k) in the first segment, but if you already have money there and you are tired of the volatility of the market, it’s a great pleasure.

Remember, I don’t deal with stocks, bonds, mutual fund, CDs, annuities. I don’t play in the fake fandom bonus money of annuities. I don’t play in that. That’s not my lane. I like to deal with alternative ways for your money to make money, ways from my money to make money. I eat my home cooking. I have money on the things I talk about. That’s what this is about. I’m just telling you where I have found success putting some of my dollars. I’m completely changing gears here. If you’re a business owner, there is a way to contribute money to something. $50,000 a minimum per year. $50,000 contribution. Get a deduction for $50,000. It’s a five-year commitment, so you’re looking at a $250,000 commitment over five years. We’re talking about guaranteed income. Your money has to come from an S corp, C corp or LLC. I know a lot of physicians have money coming from an S corp. It’s a fantastic way. It has nothing to do with oil and gas. It is a guaranteed strategy and it is great. I just discovered it. It’s been around for twenty-something years. It’s guaranteed.

Remember, oil and gas are not guaranteed. It’s real estate here. Some of you people have probably been skiing up there to North Star in Truckee, California. It’s a beautiful place. I even got to go to the factory in September of 2018. I went to Lake Tahoe in September. It was awesome compared to skiing. The skiing was awesome too. I encourage you to get educated. I encourage you to learn about other places for your money to make money other than Wall Street. Call me, 202-SAGE. It’s 202-7243. Go to the website and you can send me an email from there when setting up a meeting for a hot cup of coffee, SageMoneyRadio.com. You can send me an email from there.

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