Wealth Building Wisdom: Staying in the Black with Tariq Collins

Tariq Collins, also known as Dr. Black Wealth, shares his transition from military service to becoming a champion of financial literacy. We dive into how his military discipline and education fueled his passion for empowering people with financial knowledge, particularly in the black community. We also tackle the daunting world of taxes with tips from his company Eagle Financial Group, simplifying everything from filing extensions to navigating IRS audits. Rounding out our discussion, Tariq offers essential insights on leveraging credit to achieve significant life goals, providing practical advice to improve your financial health and bridge the generational wealth gap. This episode is a must-listen for anyone eager to take control of their financial future.

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Transcript

Speaker 1: 0:25

Welcome back to the Money Focus Podcast. I'm your host, moses the Mentor, and on this episode I'm bringing you guys Tyreek Collins, also known as Dr Black Wealth. He's here to talk us through his entrepreneurial journey, give us some insight into his business and really offer some great tips in financial education to help spearhead your financial future. So sit back, learn, grow and pay it forward. Let's go. Thank you for joining Money Focus Podcast. Really appreciate you taking time out of your busy schedule to come talk to me. The first thing I always like to ask my guests is to walk us through your career journey or your professional journey and ultimately, how you started your business. So the floor is yours.

Speaker 2: 1:11

Yeah for sure, man. First of all, it's my pleasure to join you and your audience and I want to appreciate you. Thank you for hosting me. My career journey interesting, so I guess a quick synopsis of it will be.

Speaker 2: 1:29

My career started military. I went military right out of high school, did about four years in the service with the army. When I got out of that I did some government, some government work, but it landed me from doing government work and then jumping into going to college at Regis. I ended up landing a job at Northwestern Mutual, and so how I got in finance today was through from me starting at Northwestern Mutual, of which I met a recruiter. I drank the corporate Kool-Aid, of course. You know I was out in Colorado Springs. Love the company, love the model of every. I was hyped about every single thing about the company. Right, did the internship because I was in a non-traditional college student at Regis, and then and then we went, and then I went full time. So I quit working at the government and went full time contract with Northwestern in 2018. I did the internship in 2017, full time contract 2018.

Speaker 1: 2:37

And you know, dr Black Wealth is what you go by these days and you started your company. So talk to us about how you, you know, got that name and what spurred you to, you know, name yourself that and how it actually aligns to your mission, with your company.

Speaker 2: 2:55

For sure. So it's funny. It's so funny because I think the name came to me. I think me and my wife was just kind of battling. I was trying to figure out what's a good name to take my Instagram, to change up my Instagram name.

Speaker 2: 3:11

I really want to put the accolades to her. She was like ooh, we could go with Dr Blackwell, one of my friends or associates, on his handle, I think he had Mr mr wealth coach or something like that, and I was like yo, that wealth is sounding real good. And I think she came up with like dr black well, and it's funny that we just like came up with that because we, I'm talking wealth right, of course, I'm black, right. But then when you look it up from a financial perspective, basically for what we're doing now, um, black is good, that's good, profits, right. So we in the financial sector, being in the black is your books having good profit right, we make a profit, we're not in the red, we're not in the hole, we're not digging out. So when you put that thing together, it's like black wealth, right, we profitable, we getting wealthy. And then it just aligns with what it is that I talk about, based off how I started my business from my, from the backgrounds that I had.

Speaker 1: 4:13

That's nice. Yeah, definitely being in the black is a good thing, so in being black is a good thing too. Yeah, exactly, it's all good across the board.

Speaker 2: 4:35

So it's all? Yeah, exactly, it's all good across the board. Sure, so do you. How do you? Do you address any of the financial challenges or impacts to the African platform for educating, like, if you look on Instagram and everywhere else that we are. We also started a podcast. We're on YouTube with the videos called Minding your Biz. It's really all dedicated toward the poor Right and so, in particular, inside that poor is black people is black people.

Speaker 2: 5:08

So when I, when I started with Northwestern Mutual, I remember being excited about it because I was learning a whole bunch about finance of things I've never heard in my life. I mean, I never heard of. I talk about life insurance. I never heard anybody talk about, like wealthy income. I never heard anybody talk about retirement accounts. Right, I knew about business because I always knew, like my dad and my granddad was business owners, but I still never understood, like to the extent, what what they was doing. Was they successful, was they? You know what that looks like and, for that matter, eventually my uncle too. But, um, when I started Northwestern, I'm like yo, this is going to be dope, because now I get to educate our people. That was my first mindset going in there. I get to educate our people. Ain't nobody having life insurance conversations at the table, stuff like that, right.

Speaker 2: 5:58

And then I got hit with like a rude awakening because I had to make sure that basically in order for me to eat or live through Northwestern, we had to sell life insurance. Most of our people wasn't equipped, especially then. That this was, you know, maybe a little bit more now it's a little bit more educational and a little bit more trendy to talk about it, but 17, 18, it wasn't really that trendy still. You know what I mean. It's like if you was black and had life insurance and was just had a, had a certain type of financial acumen, you just, you just was somebody who was in that group and that was it Right. Like if you knew, you knew that was the type of thing I always ran across.

Speaker 2: 6:39

So I had a mentor who was like listen man, you know, you got to go after the AAA market, right, a fluent African-American market, all that other stuff you're trying to do and save. You're going to have to basically like it's like charity, work, build a, you know, build a library for them or something like that, because you got to get paid, of course. So that always kind of stuck with me, but I always was like man, it's's got to be a way we can educate our people. So when I started my business it was a good like bridge your gap.

Speaker 2: 7:08

So not that our clientele are low income or not, but we do educate on that space because, outside of just being black, poor people, period, just have a lack of understanding about money, business, wealth, and so our platform pushed to educate. We got diverse clients, not just black. So I just make sure that we kind of you know we educate in that arena. But I do for sure, one hundred percent agree, our people is nobody's talking to our people about finance. Well, even as as as trendy as it is today, there are still some nuances that most people don't understand, you know, yeah.

Speaker 1: 7:46

Yeah, that's, that's part of the reason why I started the show.

Speaker 1: 7:49

Um, you know, we talked before we start recording and my background is rental property investing right, but not everybody wants to own a rental property right and it's so many different ways you can make money, so many ways you can invest in real estate, and what I wanted to do with the podcast is spotlight people like yourself and other people who have their expertise in their area to really kind of showcase hey, you can learn about a million different ways how to make money.

Speaker 1: 8:19

You know, you can get little tidbits of education from each guest and say, wow, man, I want to know what Tariq is doing, I want to learn about life insurance, or you can talk to my next guest who's talking about mobile homes. It really doesn't make a difference. So it's really about putting easy to understand concepts in front of people. Now, what they do with the information is up to them, but I want to make it really palatable for people when they watch the show. So what would you say is one thing that, foundationally, every person that's listening to this episode should know about money and finances.

Speaker 2: 9:01

If I was to choose one thing, I think everybody should be clear on their own personal finance or business finance. And what I mean by that like is understand, like, how you're making money, how often you're making money, how much money you're making, and understand where you're spending money, right, we I mean even I still a little bit challenged, have challenges with it and even I still a little bit challenged, have challenges with it. But there, there really should be no dollar that's leaving your account that you didn't assign, right, so there shouldn't be, like, no unexpected bills that pop up. There shouldn't be like, oh, let me go, you know, spend the bag this weekend. You really don't know how much you really got to spend. You just hoping that, even if you're getting paid regularly on every week, every two weeks, once a month, whatever that looks like.

Speaker 2: 9:47

If I was to give somebody one thing is to really understand your own finances, because once you do, the ability to make decisions just dramatically increase, right.

Speaker 2: 9:58

So if, if on the personal side, like if I just work a job, I'm getting paid first in the 15th, right, let's say, I get five grand a month, right.

Speaker 2: 10:10

If I understand that rent is twenty five hundred, right, that's half my money right there. You know what I'm saying, right, and so understanding that helps you make better decisions on like, listen, where are you going to live? That's one how fast you should be growing a family intentionally, doing stuff like that, right, and these are things that I never even took in consideration, you know, when I had my family. Also, it could be an assessment of how, how much time do you work to make this type of money and what do you want to do to increase your revenue to make this type of money, and what do you want to do to increase your revenue, and whether that's spending more time at school, getting another degree, or spending enough time like asking somebody learning how to do a trade or a specific skill and then figuring out that time it takes you to, you know, implement it to make more money. But if we all can get really clear on our financials business and personal it makes for better decision making for everything.

Speaker 1: 11:39

It sounds like you're saying, hey, once you identify that you got to also live, but live within your means. You know me, because the moment you know what you have, it might be, you know, a wake up call. You know, because you can't live like Tyreek Keep balling. You know what I'm saying. You can't live like it, yeah. And if you want to, if you want to, you're going to have to do a few things, whether it's a certification, whether it's a degree, whether it's paying for some mentorship, something to get you in a position to grow your income, or you're going to have to really buckle down and say, all right, well, I really can't afford that. I just need to cut some expenses.

Speaker 1: 12:26

You know you gave the great example of and it sounds harsh, but that's realistic A lot of people spend half of their income, take home income, on housing. You know which is nuts. You know it's something that really puts you on a bind when you have that large chunk going toward housing and these apartment complexes and rental. You know companies they don't care, they're approving you based off your gross income, not your net income, which is absurd, and most of the time I always tell people. I always tell people, hey, don't do anything based off gross yeah.

Speaker 2: 13:07

So that's simple yeah, what would you know? I agree, and I was about to say you know most of that Now out of 10, you typically need two, three times income to even qualify for rent. Or you know, I'm saying you definitely need a substantial amount of income to qualify for a mortgage, right, and we still don't take those things into consideration. And when you look at it, I think the median income is not even at 50 grand a month. Look at it, I think the median income is not even at 50 grand a month. I'm at 50 grand a year. So when you think about that, like how many people really can afford to live in a place where they and that's not even considered where they want, but where they need to live, based on and that's why I say we understand our finances it helps you because, while you having more kids right, because now it's increasing your household and we haven't even got a handle on our money, right, and so and I'm not coming from a place of bashing, because I've been that person, I am that you know what I mean Like we, we just frivolously live life, and I think if we start to be more intentional about everything, then the first thing we need to be more intentional about is our money, because I think it drives the direction of where we go next, right, if you like. Listen, we ain't making no money or we don't come from money.

Speaker 2: 14:17

What is it that I want to do If I go to school? Let me make it be worth my while. Do I want to become a doctor? Do I want to become an engineer? Right. Do I want to become something that's going to specifically get me into a high income, trade or revenue right? Or do I want to produce a skill that's going to get me there right?

Speaker 2: 14:33

I'm not the first to believe in cutting expenses, right, because nine out of 10, the stuff that you're purchasing and buying and using, you mostly need it versus, like, necessarily wanting it. However, that's not saying you need to trim the fat on unnecessary, frivolous spending. Like you know, subscriptions, you know you ain't using cut that stuff out, right, and so that's not saying you need to trim the fat on unnecessary frivolous spending. Like you know, subscriptions, you know you ain't using cut that stuff out, right, and so that's kind of my take on it. I always be like you know, it's not a this or that, it's a both, and we need to increase income and we need to monitor our expenses, because monitoring expenses could be like let me call Comcast and negotiate how much this bill is. Listen, how much do we really maximize the Internet? Do we need high speed? Do we need low speed? You know, based off users, whatever that look like to chop the bill down still, stuff like that.

Speaker 1: 15:25

So tell us the name of your company and also the services that you currently offer, and also the services that you currently offer.

Speaker 2: 15:36

So Eagle Financial Group. Eagle Financial Group is a financial firm. The services we offer are things from tax preparation, bookkeeping, accounting services, CFO services, payroll services and tax planning services. That's what we currently offer right now. So annually we take in an influx of annual tax clients and we also have our, our book of monthly clients where we service in their books monthly. We're doing advisory service on them or CFO services with them, and so that's what we do.

Speaker 1: 16:04

Yeah, so it's April, what 23rd? So you probably were slam within the last week or so. So are you still slam? Are you still slam People doing what you?

Speaker 2: 16:12

probably were slammed within the last week or so. Right Still slammed.

Speaker 1: 16:14

Are you still slammed? People doing what extensions?

Speaker 2: 16:17

and stuff like that. Yeah, people doing extensions, gotcha Getting some of our monthly clients done because I did extensions on them. So just people last minute filing, big influx on people not filing. So we are a full-fledged firm, so we work throughout the year. So, yeah, and just on that note, right, just because this past April 15th doesn't mean that you can't file, right. So if you typically, if you owe, there are penalties associated with not putting extension in and on. So that's kind of where those penalties and penalties will accumulate. But if you know that typically you get a refund or there's a possibility you can get a refund, you can file anytime throughout the year, all the way up until November, really for the past current tax year.

Speaker 1: 17:04

Do people mostly, you know, file extension. Is it truly a strategy or is it more? People just really got a lot going on. They might have not received all their tax documents because you know I try to file as fast as possible. So when I always hear people waiting to the 15th, just curious, like in your experience, what is typically the reasons behind that?

Speaker 2: 17:28

So it could be a couple of things. One of them is so I typically do it now for strategy process right for clients, especially our business clients and monthly clients, because typically what happens is we got to look at it like this process. Most people who file late or running up on a deadline are typically people who owe, most people who get refunds. They file and they try to file soon as the IRS open January who's it? What's it? Date that they open? People who know they get refunds get refunds consistently. They're trying to file fast, quick as possible. People who typically waiting be people who you know know that they owe high income or, if they have businesses going, multiple businesses We've got to pull K-1s from year to year to year. Right, they understand what that game is. So it just be a little bit of delay to get all paperwork in.

Speaker 2: 18:22

But from a strategic standpoint, typically April 15th is a deadline. We've got to have a deadline for a couple of reasons. Right, as far as we know, america, the government, runs like a business, right, so income tax is the income that the government receives America receives. So, based on us, having a deadline is what puts us in a position to where Congress can set the budget for the year because they know what actually came in. They get a projection about what they look in the spin and based off money that they came in. Now, of course, if you look, we are trillions of dollars in debt. However, we still got the deadline to ensure that we got income coming in and plan out our spending budget for the year.

Speaker 2: 19:04

Right, and so typically the audit process is done on a random basis. Right, they say random, on a random basis. So typically, people who file their taxes on time, you be in that number of that random basis, most people who do extensions because the IRS already met their quota. Right, you are less likely to get audited. I'm not saying that you won't get audited, but sometimes you're less likely to get audited because they hit a numbers quota already. So that's the strategic play behind it Gotcha Always.

Speaker 1: 20:26

you know, obviously well, maybe more people know than me, but I always figure you know an audit would be based on like certain thresholds. You know that a return would meet, like if you're trying to wipe out all of your income, that would be a red flag or something like that. But you're saying in your experience is truly a random process, or yes?

Speaker 2: 20:55

For sure. So it's certain things that can trigger all this for sure. Like if you just kind of constantly underreported income or trying to drop income, stuff like that, but just based off the IRS giving out credits and then business owners taking deductions Right, anybody can get hit with an audit anytime. So like being, let's say, somebody, single with kids, typically they like to file ahead of household Well, because that's a credit. With kids, typically they like to file head of household. Well, because that's a credit, you could be hit with an audit to prove that you are actually head of household by meeting the qualifications to get that credit. Do you have children? Are you the sole provider? Are you the you know, the head of that house in particular, right, do you meet the income qualifications to be considered head of household? Right, for a business, they're getting audited. They could get audited. It won't necessarily be because they wrote stuff down, but it will be an audit to explain and prove expenses that they have.

Speaker 2: 21:49

And because that language is so broad, right? So the IRS, the tax code says that a business can write off ordinary and necessary expenses. Well, the way I like to describe it is the IRS don't tell you what's ordinary and necessary you do because you're the only one who knows your business, right. And so, from an ordinary expense, like if we all have accountant firms or we all in real estate, some ordinary expenses for real estate might be things like what are the mortgage we don't get to write that out, but like property taxes that we pay in on the property every year, the mortgage interest if we have a mortgage on the property, right, those are ordinary expenses across the board. But what might be something that might be necessary to you, that might not be necessary for me if we're both in real estate? Well, my property I might do real estate related to tax deeds, so my necessary expense might be something like county fees or register with this with the county. To you know what those fees look like versus yours might be something different, same with every firm, and so I like to look at necessary as like a branding standpoint, right? So, like I'm Dr Blackwell, you're not. So if I write something off that tags me to say Dr Blackwell, that's a necessary expense for me because it's associated with my brand. When people think of Dr Blackwell, they don't think about Tariq Collins, right? So everybody's not like that, right, that's trademarked. So everybody's not like that. That's a necessary expense for me.

Speaker 2: 23:14

So the IRS is saying hey, you wrote off $50,000 in office expenses. Like, prove this deduction. So we'll have to go through P&Ls to make sure that we can itemize what we spend. Sometimes they'll go through bank statements to make sure we match the record and sometimes it's just, it's just automatic.

Speaker 2: 23:32

So most of those guys that work at, those guys and girls that work at the IRS, they don't really know business and stuff like that. They're just following the guy, the employee, so they follow a guideline hey, tariq, you got audited for this. We need to see proof of this. Send it to us. And as soon as you send it, it goes away. Right, because it's just basically them asking so. And I like to explain it that way, because most of us get triggered from anything we get from the IRS. We get triggered for we get oh, I don't want the people on my, but it's just a part of the money process. And this is where I say right. You asked me what's the one thing? Get clear on money. Irs is one of those things to get clear on money about.

Speaker 1: 24:11

Well, yeah, you broke that down because I was definitely going to ask you how important it is to understand, you know, tax strategy and things like that. So, but let me follow up with this because I remember I think it was last year or maybe the year before I know that the IRS had kind of proof of funding to hire more agents. Yeah, but is it effective this tax year? Do you know?

Speaker 2: 24:38

about that. It went through. I don't remember if that bill actually passed, but they did Right and so they're looking for agents. But those. So when they look for agents, those tax agents, they carry in weapons. You gotta be authorized to carry weapons and stuff like that.

Speaker 2: 24:57

We talk a millionaire, like multimillionaire, a billionaire type of client. So these will be people who would necessarily, like you know your household name, government know your household name. So these will be people like I remember Tyler Perry explained the story like this Right, he was like listen, we have, it was the IRS. People was following him because they were saying that they was trying to make him owe taxes and then, upon him looking at his taxes, from going through the audit process, he found out the IRS owed them money, right? So those tax agents, those would be the people who will be following you like yo, you owe money, you like evading taxes, things of that nature.

Speaker 1: 25:33

So yeah, ok, ok. So it's worse than I even thought. Yeah, these are some, this is a tax enforcement. Physically, okay, all right, gotcha, um. So what are some strategies though? Um, because I mean kind of, just use me as an example. Uh, you know, I'm from brooklyn, right, and I remember you know, uh, you know, being thinking about corporate careers and thinking about what I want to make, and you know, when I got to the point, I'm like, wow, I'm making this amount. The biggest thing, the biggest disappointment, was that now you go into a different tax bracket. So it's like man, they just start taking taxes left and right. So that's what kind of also started me and my wife to start looking to real estate to kind of offset some of our taxes because, effectively, our tax rate drops because of the write-offs that we're able to take off in our real estate business. So what would you say for people? What is some advice to help people overall, as a standard, to help them pay less money in taxes? What are some good best practices?

Speaker 2: 26:47

Sure, I say you start a business, right. So as specifically in that arena, like if you, so it depends on the type of person you are. First of all, let's understand business in the IRS context and its definition and what they got on there, right? So one of my sayings I like to say is everybody's a business owner. The reason why is because all income according to the IRS is reportable. So let's say we work in for Amazon, we make a hundred thousand dollars a year, right. If we work in for Amazon, we make $100,000 a year, right.

Speaker 2: 27:21

But on the side, if I sell something, get income from doing some little play, whatever that looks like by law or IRS tax code, I'm supposed to report that income. Well, when it comes to doing taxes, the only way to report said income is to report is for you to put it on a form called a Schedule C. Now, when you look at the Schedule C form, it's called Schedule C, so that's sole proprietor form. That's the same form that if you are a sole proprietor or a single member LLC, that's the form you use to file your taxes, which makes you automatically a business owner. Even if I'm a 1099 contractor, right, if I get a 1099 from Uber, lyft, right, or any type of side, instacart, all that stuff. That 1099 is reported on that form. So in my mind I'm like, listen, you already a business owner, so now you get to what's the tax plate? Now you kind of get the expense your life out, right, because now, if I have a business, now I can take advantage of home office deduction. I got a, I got an office inside my home, I need my cell phone for business use, right. So now my cell phone becomes a deduction. With the home office deduction you automatically write off a percentage of mortgage or rent utilities, things of that nature. And so then now you now see what I'm saying. Now you start to to to improve that play.

Speaker 2: 28:46

Now, if I'm a high income earner, let's just say I don't want to start a complete business that I'm doing from scratch and got to do ABC, x, y and Z. I'm just a high income earner making anywhere from six to multi, six to seven figure W2 income. The thing I would tell you to do is start investing for one be in stocks, right, so you can start diversifying your income, because number one that income you can't do nothing with that income that you're getting from your employer, meaning pass it down to anybody. So I would start investing on stocks and bonds and all those things to make sure that we are diversifying our money. And the second thing I would do would be real estate. Why? Because real estate is the ultimate, is one of the highest tax plays that you can do.

Speaker 2: 29:33

Because the IRS says, hey, I can buy a piece of property, I can buy a residential property. We know that the property is going to appreciate in value because that's how we base, that's how the state based a property tax off of right, so we understand that that's going to happen. I understand that you still got to get a loan from the, from the banks, for you to even mortgage out this property, to own this property or or to, um, to purchase this property. But the iris do something that's called a useful life. They understand that if a residential property is in play over the time span of for 27 and a half years, automatically. So the more and more homes that I'm adding on, those are expenses that the IRS is called phantom expense.

Speaker 2: 30:34

So let's say you're like well, it's going to make me lose income. How can I get loans? Well, what the lending people will do is add that money back to your taxes so that you're in, so that your income goes back up, right. But for tax purposes, on paper, you lose money, and so that's kind of the best thing that you can do. And so typically people are like, hey, I don't want to do that.

Speaker 2: 30:56

Well, if you don't want to manage it, you can easily hire a property manager, because typically people who are in that high income, you typically have good jobs, you typically show good income, typically worked on good credit, right. And so to get approved is nothing Right. If you don't want to do a partner with somebody who can do it. Now you've got a 1065 partnership taxes. Let's say you don't want to do that. Well, invest your money outside of stocks. Invest your money with people who are in real estate that can do syndicate deals. So now you guys are going after commercial properties, apartment complexes, more than one unit, dwelling, places where you invest in money. That's giving you a return, right, but it's giving you a deduction off your tax return and it's benefiting you long term. So that's kind of some of the stuff. If you're a business owner, of course there's plenty of different tax studies already.

Speaker 1: 31:47

You broke down so many different options. I wanted to just touch on the syndication part. I mean you get all the benefits without being an active investor. With that, You're printing your money to good use, getting the real estate deductions, but you're not buying the properties, managing the properties, dealing with the day-to-day. So when people say, oh, I don't want to do real estate, I don't want to be involved, that's because they're not taking the time to educate themselves on the different levels of engagement that you can play with different types of real estate investments 100%.

Speaker 2: 32:21

Those syndicate deals work and typically if somebody is a real real estate investor at a certain level, they start looking for people because they those are. Those are, those are funding a private fund and lending options that people have available, which are people's, you know, own 401ks that they can cash out, own money that's sitting in there that you're not using right, Because any dollar that you're not actively using, or impregnating in a sense, you lose in value on the money by letting it sit into an account. So why not put it somewhere where we can make some money long-term and we get a tax benefit at the same time and you still enjoy the work that you're currently doing?

Speaker 1: 33:07

Now for me, you know, just ask some questions. So right now, I guess you know I would fall into a high income earner. I have a great corporate job but my plan is to leave that job at some point within the next few years. From a tax standpoint, when I go from having W-2 wages alongside my business income, what impact should I be kind of looking out for once, that W-2 income is gone and I'm solely like a business owner?

Speaker 2: 33:44

Sure. So the impact is a lifestyle change. So the first thing we got to get clear on is how our business is making money Right. So I know that you have the real estate going on Right, and so sometimes, depending on how efficient we are with the real estate, is really hard for most real estate people to find cash inside the business right, unless we're going after really good deals or we're doing fix and flip properties to where we get in a huge influx of cash.

Speaker 2: 34:12

But one of the biggest things that we have to consider is the fact that you're not going to be on W-2,. You're all in on your income. So the first thing we got to do is get clear on the income, get clear on the money so that we can separate our business expense from our personal expense and realize that the money in the business account is the business account money and the business money and not your personal money. So, for personal reasons, we need to segment out how much money you want to transfer yourself. Depending on when you exit the job and how successful the business is will determine what entity we might need to be in to, just in case you can put yourself on payroll and issue yourself a W-2 for your business, right From a tax perspective.

Speaker 2: 34:54

If we're LLCs, you're still on file 1040, you're still on file a joint return. If you're married, those types of things won't change other than the fact that you're not paying taxes on W-2 earned income. So the other part about that too is depending on the type of entity we are. So let's say we're not an LLC but we go S-corp to put ourselves on payroll. S-corp now becomes passive income, so it's not considered active income, right. And so those are kind of like the biggest things we want to kind of make sure that we pay attention to when we do the transition.

Speaker 1: 35:28

Yeah, those are the things that I'm educating myself on now, because you know keeping a job is important, because you know you remain bankable and that's important when I you know, when I'm going from financing and things like that. So preserving that W-2 income looks good on paper. Personally, we live way below our means to make sure that we can continually invest and when we make the transition to full-time entrepreneurship, we'll be able to survive. But I want to talk about credit, because my wife has flawless credit. When I went into this marriage I thought my credit was up, good or whatever, but it blew my mind.

Speaker 1: 36:12

When you have excellent credit, excellent credit is another level where you're able to go in and they're throwing products at you. They want to hand you the bank and when I seen that I said, whoa, like people don't understand how important it is to have A1 credit. In a lot of ways, I used to feel so discouraged because I'm like man, I make good money and they still wouldn't give it to me. They that FICO was more important than the income I was making, more than people, what was coming in there, half of what I was making, and they was leaving with with loans. So talk to us about your experience, about you know making sure you have great credit and managing your debt effectively.

Speaker 2: 36:59

Effectively Sure.

Speaker 2: 37:00

Credit is. Credit is powerful, right? So most people don't understand credit and so we never was, just, we just never was taught about how to use credit, how to build credit and why credit is important. And you're right, most of us fall in that aspect of where it's like we don't use cash and a lot of that is generational, right? Grandma and them just use cash. They had the mattress in there. We just, you know, we pay. If we couldn't pay for it, we didn't do it, or we was on a payment plan, or we did the layaway or we did the renting. You know the rent situation. So we just wasn't on credit.

Speaker 2: 37:32

And most times from our community we dealing with credit is maybe our parents putting some stuff in our names because we got to get approval for lights and necessities of life, right and so. But credit is very important because credit Teaches the bank and you, but more so the banks or whoever you look to the banks. Because if we're going after cars, we're dealing with a bank and we're going after mortgage loans, we're dealing with a bank. And we're going after business loans, we're dealing with a bank. Bank. If we're going after business laws, we're dealing with a bank. It teaches the bank how reliable you are on paying bills and how, not only on paying bills on time, but how you can manage the money that you're given right. So we treat credit like it's not extra money and it's our money, with the ability to pay it back right. That's how the banks is looking for it and it's our money, with the ability to pay it back Right. That's how the banks is looking for. So it's very, very important, and to build that, I think the easiest thing that we can start doing is, once we get approved for credit cards, start paying necessity bills on those credit cards and then just pay the credit card balance when it's due.

Speaker 2: 38:38

We got to understand that game too, because typically some credit cards have a due date and then they have what's called a report date. So the due date will be when the credit card is due. We got to either pay the balance or the minimum balance that they sent Right. Then the report date be when they report to the credit bureaus on your balance. So when you find that out now you know how to play your game. Now you know how to manage and spend and pay off money.

Speaker 2: 39:05

So let's say, for instance, your credit card is due on the 10th but the report date to the credit bureaus is the 15th. So we want to make sure we pay the bill on time for the 10th to be satisfied and in good company with the credit card company. But then by the 15th we want to make sure we get that balance down to 30, under 30%, you know, maximize it at that 10%. So when it reports it's reporting on our credit as high as high credit limits, no late payments and no over 30% limits. So our credit report maximizes high.

Speaker 2: 39:41

And then it's the different types of different types of lending we put on our credit report. So revolving accounts, we credit cards, installment loans will be like almost like you know everyday personal loans or your mortgage. You know laws that just kind of steady, with the same rate, don't change, and that you consistently can pay it and pay it on time. And so it's very important for us to understand and at the same time that we build money, build business or build our economics up financially, start making more money. We also need to be more intentional about really be as intentional about building our credit and making sure we maintain good credit.

Speaker 1: 40:23

That's an excellent point. Thanks for the breakdown Because I just want people to understand that. You know, even if you're making a lot of money, that credit is huge and unless you have a partner I was fortunate enough, my partner is my wife but even if you have a partner within your team, you know saying to you you come to have a partnership, having someone who just has that credit score I believe probably 750 and FICO true FICO, not credit karma Right, right, right Not credit karma.

Speaker 1: 40:57

Not credit karma, right, you know that'll get you in trouble. Someone with a 750 FICO or higher. If you have that person on the team. I had a video on YouTube I did last year. I said that person don't have to do nothing Like seriously, that person could just sit there when it's time to earn credit.

Speaker 1: 41:14

That person is just as valuable as the person doing you know like the dirty work you know what I'm saying that schoolwork. You need to preserve it because it makes such a big difference, because your cash flow that spread is huge and when you're dealing with you know interest rates going from. You know two, three hundred basis points difference potentially based off your credit score. That person who has great excellent credit not great excellent credit is so valuable. So it's true. So I appreciate everything you broke down for us. I wanted to give you the floor and kind of share your final thoughts or final advice for the audience and also break down you know how to contact you, your website, any call to actions and social media that you want to share. So the floor is yours.

Speaker 2: 42:06

And for sure. So I mean final thoughts would be listen, we got to get serious about our money, right? I'm going to be you going on my page. I'm always talking about money. You might be like why? Because money is the thing that revolves everything. The more clear we are with money, the more clear we are with life. Right, and you think about it. Coming from places where we lack that type of understanding, the less money we have dictate our circumstances and our choices around what we did. It kept us in trouble, it kept us in low life stuff. So the more we can get clear about raising our income level, the better quality of life we'll have. And so our firm is here.

Speaker 2: 42:45

We work with businesses in all 50 states. We work with individuals in all 50 states, whether we do annual taxes or we do on monthly services. We also do consults. You guys can reach us out. So reach me on Instagram at Dr Blackwell, dr Blackwell on Instagram, and we'll we'll be sure to reach out and make sure we set up an appointment. Y'all can let me know Y'all came from the Money Focus podcast and we'll give you a free of a free initial like console interview. We'll go through a quick little discovery for you with no charge. We also got the podcast Minding your Biz on YouTube and that's also all those links is in my bio on Instagram. So you know, reach me on there, instagram or TikTok, dr Blackwell, and let's make sure we mind in our business, minding the bills that pay us and minding our families, because that's how we change and bridge the generational wealth gap.

Speaker 1: 43:42

Perfect, and I'll make sure to include all that information in the show notes. Thank you so much, Tyreek man. It was a pleasure talking to you and we out All right man, Appreciate it you.