Taxes and Credit Debts

All over the world, taxes are rising steadily. Because the social demands in return for the tax charge require an increase in the value of wealth, income and sales taxes. Higher incomes cause taxpayers to enter even higher tax brackets. Thus, tax rates increase gradually to meet social services. Today, governments face serious problems with social service programs such as Social Security and State Health Insurance for the elderly. As a result, they cannot pay their debts.

For most people, taxes are the biggest expense item. Most people consider these taxes are income taxes. However, for most developed countries like America, the highest tax is the premium paid to social security. Employees pay roughly 7-8% tax on social security contributions and health care. However, this rate is actually 15% since the employer pays the social insurances to complement this rate. This is the amount that the employer cannot pay the worker. Moreover, the employee also pays the income tax of social security contributions deducted from her salary. In fact, this is an income that she never received since it goes directly to social insurances.

Let’s explain this subject with a simple example. Imagine a newly married couple. This educated young couple rented a small flat. They start making some restrictions to make a living. After a while, they realize that they are spending as little as they did before they got married. So, they save some money.

But one day, the flat they rented starts to seem too small for them.

They want to buy a bigger house to have children. Now, they want to save more money. They start working more.

Their income gradually increases.

As their income increases, so does their expenses.

When they think they have enough money, they buy their dream house. Meanwhile, they learn about a new tax called property tax. Over time, they buy furniture for their new home. They also buy a new car . They suddenly realize that their column of passive funds is now filled with mortgage debt and credit card debt.

They finally have a child. The couple work harder. The same process repeats. The more they earn, the more taxes they pay. They get new credit cards. Their debt increases gradually and becomes equal to the value of their homes.

A company that provide loans to the couple recommends “debt consolidation” while the couple’s credit ratings are high. The company also states that the best thing to do is to pay off their credit card debts and high interest consumer loan debts. Besides, interest on home loan will be deducted from tax. They accept and pay high interest credit card debts. They feel a little relieved. Credit card debts are over. Now they have added their consumer loan debt to the house mortgage debt. Loan installments decreased because they extended the repayment for another 30 years.

Discounts begin in various stores and markets. The couple do not intend to buy anything, they just want to go and walk around. But they also take their credit cards in case they see something necessary…

We often meet this young couple. Their names are different, but their financial dilemmas are the same. They all look for an answer to “How can I make more money?” question.

The real reason for their financial problems is that they don’t know how to spend their money. They don’t have financial knowledge; they do not understand the difference between active and passive funds.

Let me say it again: Earning more money is often not the solution to financial problems. The solution is to act wisely. There is a famous quote for those floating in debt:

“If you find yourself in a hole, stop digging.”

Will Rogers

We must be aware of three powers: The power of the sword, the jewel, and the mirror. The sword symbolizes the power of weapons. America has reached this position by spending millions of dollars on weapons. Jewelry is the power of money. Whoever has money sets the rules. The mirror symbolizes the power of self-knowledge. Self-knowledge is the most valuable of these three, according to Japanese legend.

The lower and middle classes are willing to let the power of money control them. They shoot theirselves in the foot by getting out of bed and working hard, not asking themselves what they are doing. Many who do not understand money, surrender to the power of money. The power of money is used against them…

You can continue reading with THE ROBIN HOOD IDEAL.

You may also be interested in:

My latest posts:

The First Rule of Getting Rich

In the previous post, it is explained that the first step to getting rich is to have accounting knowledge. In this article, I will tell you the first rule of simple accounting.

The first and foremost rule to get rich is to always invest money in active funds.

If we really want to get rich, this information is enough for us. This rule may sound very simple. It is so simple that it is often overlooked. Most people live without realizing how important this is. They always suffer financially because they don’t know the difference between active and passive investing.

If we adopt this rule, we will have a financial plan and will not suffer economically throughout our lives.

Now we must know the difference between active and passive.

While active funds make us money, passives take the money away from us. That’s all. If we want to get rich, we must buy actives for our lifetime. Thus, we can increase our wealth exponentially. If we want to be from the middle or poor class, we must constantly invest our money in passives.

The major cause of financial suffering in the world is due to not knowing the difference between these actives and passives.

Lack of knowledge is the main reason for financial confusion. Whether ignorance is about words or numbers. If people are in financial difficulties, there is something they cannot read about words or numbers. There must be something they cannot understand. The rich people get rich because they know how to manage their money. If we want to get rich and increase our wealth, we have to learn financial knowledge. In the language of both words and numbers.

Numbers alone may not make much sense. So are words. The important thing is the story of these together. This is the story of where the cash flows. We read that story in financial statements. The histories of four-fifths of families tell us that their financial history is hard work. It is not because these families work hard that they cannot earn money. They had to work hard all the time because they invested in passives.

It is not enough to have money. The point is not to get rich, but to sustain wealth. Therefore, we need to ask “How to maintain wealth?” question rather than asking “How to get rich?”.

It is obvious that, getting the money doesn’t solve the financial problems we have. Even it complicates the existing problems. Money often reveals our flaws. It reveals our unfamiliar sides.

Generally, the person who gets unexpected money gets relief for a short time, but soon starts to have financial difficulties again. Sometimes they even have worse financial difficulties. If the person with increased income tends to invest in passives, his expenses will also increase.

As we mentioned in previous posts, we take education to learn professional knowledge. We earn money thanks to our profession. But we don’t get financial skills at school. Therefore, our education cannot guarantee us a prosperous life. Even if we are very successful in our profession, we may have to deal with financial difficulties. Working more can’t solve this problem. Because the knowledge of how to spend the money in our education is lacking.

In fact, learning to manage money is more effective in getting rich than choosing a high-income profession.

Knowing how to manage money is a financial skill. People generally do not know the root cause of their financial problems. Because they do not know the cash flow and do not have financial skills. In this case, people cannot operate the money for their own benefit and they work too much and get tired.

Shortly, the active and passive investment issue is actually much simpler than it seems, and everyone should know about it. Cash flow is the story of how people use money. Active funds gradually make us money, and passive funds take the money out of our pockets.

You can also read on:

Latest posts:

All categories

Why Accounting Knowledge Is Needed

In 1923, a group of great leaders and wealthiest businessmen held a meeting at the Edgewater Beach Hotel in Chicago. Head of the largest steel company Charles Schwab, president of the world’s largest utility company Samuel Insull, president of the world’s largest gas distribution company Howard Hopson, chairman of the board of International Match Company Ivar Kreuger, president of the Bank of International Settlements Leon Fraizer, president of the New York Stock Exchange Richard Whitney, also two prominent stock market speculators Arthur Cotton and Jesse Livermore, and lastly Albert Fall who is a member of the President Harding cabinet were among the participants.

In twenty-five years, these nine participants somehow came to an end. Schwab died penniless after five years of debt. Insull passed away totally broke, somewhere far from his homeland. Hopson lost his mind and eventually went mad. Whitney and Albert Fall had just gotten out of prison. Fraizer and Livermore committed suicide.

Does anyone know what really happened to these guys? The conditions that prepared the Great Depression and the collapse of the markets must have disastrously affected the lives of these people. However nowadays, we are going through much greater and faster changes. Probably 20-25 years from now, we will see explosions and ruptures parallel to their ups and downs. The real wealth is education, not money. Unfortunately, many people focus on money instead. If these people were open to learning, their wealth would gradually increase as long as they were informed and open to innovations. It is always knowledge that produces money. Money flies away without financial knowledge.

What matters is not how much is earned, but how much money is kept. Most people fail to understand this. Sometimes we hear that a poor person suddenly becomes rich when he wins the lottery, but soon he returns to his poor days. He has millions of dollars, but after a while he returns where he started. Or let’s look at the life stories of professional athletes. Some make millions of dollars in a year by the age of twenty-four. However, when they reach their thirties, we read that they sleep under the bridges.

There is a story of a football player at social media these days. He was making millions of dollars until a few years ago. Now, his friends, wife, lawyer and accountant allegedly took all of his assets. He is living in the basement of an old friend’s house. He is only thirty-seven. He asked help from his old clubs, then his story was featured in media.

In the late 1990s, many people suddenly became rich. Just like the 1920s. People are getting richer, and as they get richer, their greed increases. On the other hand, the poor live more and more miserable.

We hear these questions often: “Where do we start?” or “How can I get rich in a short time?”. Instead of looking for answers to these questions, people should have financial knowledge or basic accounting knowledge to get rich.

If we’re going to build the Empire State Building, the first thing we need to do is dig a deep hole and lay a strong foundation. If we are going to build a house, a 15 cm thick foundation will be sufficient. While most people are on their way to getting rich, they try to build the Empire State Building with 15 cm thick concrete.

Our school system argues that there may still be house construction without foundations. That’s why the floors of the houses are still soil. Hence, when students graduate from school, they lack financial basis. Finally, living paycheck to paycheck, they decide that the only way to find a solution to their financial problems is to get rich as soon as possible.

Skyscraper construction begins. Construction progresses rapidly. Soon a curved tower appears, not the Empire State Building. Sleepless nights come back then.

Accounting is perhaps the world’s most boring subject. It can also be called very confusing. However, if we want to get rich and keep it for a long time, the most important issue is accounting. The point is how to learn this boring and confusing topic. The answer is that; with simplifying.

You may also want to read on:

All categories:

Latest posts:

Seize The Power of Money

Today, we all have a duty to manage the money wisely in our pocket. Of course there is no need to get a bachelor’s degree in economics to have this skill. In today’s world, what is taught in schools leads people to be slaves of money. But what we need to learn is to seize the power of money. Unfortunately, they don’t teach this in economics departments.

A university diploma cannot be a remedy for financial difficulties. Graduation is actually a beginning rather than an end. For sure, we need universities for being productive members of the society. However, these institutions do not teach people to manage money or control their economic fears. Therefore, they cannot guarantee economic satisfaction after graduation.


In fact, we are all “workers”. Let’s not waste our time trying to learn how to make bundles of money or thinking about it. What we need to do is keep control of our budget. When it comes to money, we shouldn’t be trapped by our fears or desires. No matter how much we earn, if we haven’t learned to cope with our fears and desires, then we actually live as high-wage slaves.

We must learn to use our fears and desires to our advantage. We must not let these emotions hurt us. What trapping people is their own negative emotions and ignorance. It is the biggest and most fundamental cause of poverty and financial difficulties. In other words, who are responsible for poverty is not the economy, the state or the rich.

What we need to do is learn to take advantage of our emotions and understand their influence on our thoughts. 

When our boss increases our hourly wages, our desires grow and we succumb to our emotions. Many people look forward to a pay day, a raise or authorization. There is no end to these expectations.

Our desires for what to buy will never end. A better phone, clothes, the latest model car or a bigger house… As our income increases, our desires increase and we always need more money.

Desire calls us, fear takes us out of the door, and we walk away without realizing it. This is the trap.

If we can see, we won’t get caught in the traps. If we keep our eyes open on the road, we will not fall into a trap. Being awake, aware, and conscious keeps us safe from many desires and fears. We have to be honest in determining what we really need. We must always continue our effort to know and understand ourselves. When we want to own something, we must try to find out why we really want that thing. These questions can save us from falling prey to our negative emotions.

Check out these if you are interested:

My latest posts:

“Lacking of Money” Fear

What exactly is our relationship with money? Do we really want to earn money to fulfill our desires or do we work so hard because of our fears? What is the effect of money on solving problems?

It is natural that we always want to have better and more. In this case, we see money as a tool to achieve our desires. We think that the more money we have, the more pleasure we can achieve. This is partially true. However, we forget that: The pleasant times we create thanks to money actually do not offer solutions to our problems in our lives. We only keep busy and entertain ourselves in the short term.

Moreover, in this case, we tend to want more and more: more enjoyment, more pleasure, more comfort, more prosperity, more security… This is what drives us to work “more”. We hope to soothe our souls by earning more. However, this calming never happens. This psychology can be found in everyone, from the poorest to the richest in the world.

In fact, many rich people get rich because of their fear, not their desire.

As the world’s population ages and more people move closer to retirement, fear is reported to be more about money. Fifty percent of those who were afraid, stated that they were afraid of running out of money in their “golden years”. These people continue to live in fear of lack of money in their daily lives. Millions of them even suffer from insomnia with anxiety disorders. They hope that working and earning relieves them of their worries, but the opposite happens. As they earn more, their fear of being broke grows. So, these people are trapped in a cycle. They are possessed by worries of lack of money. However, they don’t admit it. They try to believe they are getting better.

Believing that earning more will save them from fear of poverty, people start hoarding money. They aim to get richer when they are rich, stack more as they stack, and save more as they save. This is an absolutely unhealthy psychology. And, it gets worse and worse. The more they increase their work and earnings, the more their anxiety increases. They are afraid of losing all their savings. The decline in their standards, well-being, or socioeconomic status has become more frightening for them.

We can find this type of person all over the world. These people believe that they can solve all their problems simply by earning more. The main thing is to see the fallacy of this belief. Because actually not all problems can be solved with money nor wealth is enough for a good life.

Here we can talk more briefly about another group of people. “Money is none of my business.” those who say. This group is those who run away from money. However, they still cannot stop themselves from working. Because these people are not those who do not care about money, but those who deny the importance of money. In fact, this psychology can be worse than having a fear of lack of money.

So what to do?

Our emotions are what make us who we are. Our emotions make us real. We have to face our feelings. We shouldn’t suppress or ignore them. Instead, we must observe, explore, understand, and resolve our anxieties. If we know how to direct our emotions, we will make our lives more livable. Obviously, what shapes our thoughts is basically our emotions. Ultimately, we must learn to use our emotions and thoughts for our own benefit.

You can also read SEIZE THE POWER OF MONEY if you are interested in. 

Check out these posts:

Latest posts:

You can access all my categories here: