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Stop Living Check-to-Check

Making and saving more money is easier than you think; you just have to commit to a plan.

June 16, 2017  |  by Adam Doran

Photo via Getty Images.
Photo via Getty Images.
Do you ever just get tired of being broke and waiting on the next payday all the time? Has it really depressed you, or even pissed you off, that your annual raise didn't even keep up with inflation? Have you found yourself wishing you could give more to a friend in need, or your church, but you're struggling to pay your own bills?

More than half, and some sources say as much as 76% of us, are living paycheck-to-paycheck. So if you've thought, "I really need a raise," you're absolutely right. And if you would like to learn three ways you can give yourself that raise this year, then read on.

Take Back 33%

I remember not too long ago wondering where I'd gone so wrong with my finances. Every year, I'd tell the kids we couldn't afford the vacation we wanted or season passes to the amusement park. The few vacations we took, I resorted to financing most of the trip with credit cards. If one of the cars broke down too close to Christmas, it was the same program: Whip out the MasterCard. A few years of that had me facing a credit card judgment, which led to a wage garnishment, and then a foreclosure when I couldn't pay my mortgage.

The average American spends more than one-third of his or her income making interest payments. If you've been using credit cards or any other form of borrowing to pay for stuff you don't already have the money for, stop it.

You work hard for your money. You already paid for it once, when you worked for it. When you use credit cards, you are literally purchasing money from the banks because you don't have your own. Then you pay the banks extraordinarily high interest month after month, to give them back their money plus a whole lot of yours. See the problem? You're digging an ever-deeper hole.

So if you want to give yourself an instant raise this year, stop borrowing and paying to use money you don't have. Get on a written budget, designate a line item for savings, and don't allow yourself to spend beyond your paycheck.

Start a Side Business

There are great tax benefits to starting a business on the side such as renting space, driving commercially, or making home repairs. Photo via Getty Images.
There are great tax benefits to starting a business on the side such as renting space, driving commercially, or making home repairs. Photo via Getty Images.
I know from experience that it's difficult — really difficult — to raise a family on a cop's income from the job alone. Overtime can be helpful, but isn't consistent, and you can only work so much before the amount you're taxed on your paycheck goes up and it doesn't even seem worth it. When you start a business, however, you immediately qualify yourself for a plethora of tax breaks you don't get as a W-2 employee. So rather than work overtime, find a way to work for yourself.

Are you interested in starting a business, but not sure where to start? First, understand that in the open marketplace, we make money by providing value to others. Here are 10 quick business ideas, a few of which I do
personally:

  • Rent living space in your home
  • Network marketing
  • Affiliate marketing
  • Wholesaling real estate
  • Coaching and consulting
  • Driving for Uber or Lyft
  • Courier/delivery driver
  • House cleaning, painting, window washing, and other odd jobs
  • Sell stuff at a flea market or farmer's market
  • Freelance writing and blogging

There are many other ways to create income in your life. These are just 10 that happen to be extremely practical, effective, and involve a low startup investment.

After you've brainstormed on what you could do, get started, and qualify yourself for the itemized tax deductions available only to business owners.

There are great tax benefits to starting a business on the side such as renting space, driving commercially, or making home repairs. Photo via Getty Images.
There are great tax benefits to starting a business on the side such as renting space, driving commercially, or making home repairs. Photo via Getty Images.
I want to emphasize that it is important to pay your taxes. We need to share the burden for funding common interests, like infrastructure, defense, and public safety. However, if you don't own a business, you are simply ignoring tax benefits that the government has made readily available to you.

Why do you think the tax code is built to favor businesses? Businesses create more flow of money and drive the economy. As a business, when you create more money, you're able to save more (good for banks), invest more (good for financial markets and real estate), spend more (more sales tax), give more (stronger social structure through charity), and create more jobs (AKA more taxpayers to share the burden).

To learn more about small business deductions, Google IRS Publication 334 Tax Guide for Small Business and IRS Publication 535 Business Expenses as a starting point. This is some great bedtime reading for when you need to fall asleep, or you can do what I suggest in the next section.

Call for Backup

All right, officer. Remember what they taught you in the academy? When you need assistance, ask for it.

There are great tax benefits to starting a business on the side such as renting space, driving commercially, or making home repairs. Photo via Getty Images.
There are great tax benefits to starting a business on the side such as renting space, driving commercially, or making home repairs. Photo via Getty Images.
If you're currently doing your taxes on your own, please understand a few things. First, it's a total time and energy drain on you, and probably your spouse as well. If your life gets stressful at tax time, that's a clue. You're not saving money and you're definitely wasting precious time you'll never get back. Here's the deal: you wouldn't call a school teacher for a barricade or a search warrant, would you?

No. You'd call SWAT.

Why? Because it's what they do. They're specialists.

So why in the hell for a few weeks every spring are you trying to be a CPA? You're a cop. Taxes aren't what you do. Call for assistance and let your CPA do their thing.

Now if you're thinking, "I use a cheap tax service," you're still not off the hook. Those joints in the strip malls that show up three months out of every year work OK for a standard W-2 employee with no side business or itemized deductions. But you're starting a side enterprise for more income, right? You're going to have deductions, right?

Quit doing your own taxes, quit hiring the cheap-o tax services, and get a good CPA. The first one I hired went over my last few years' returns when I had been doing them myself and got me more than $500 in refunds where I had overpaid.

When you find your CPA, build a relationship. Refer clients and your CPA will keep you high on the firm's priority list. Also, if you ever do get audited, you'll have an advocate who is experienced in dealing with the IRS. I meet with my CPA every quarter. We talk about life and business, and make adjustments to my personal tax plan so I can keep more of the money I earn. We also plan so there aren't any surprises at the end of the year.

There you go. Three simple and practical ways to give yourself a raise this year, and you can put them into action right now. Did you get value from this? Do you have questions? You can email me: [email protected] and I will personally respond. It's my mission to help my law enforcement family master their money and enjoy life more.

Adam Doran is a 15-year veteran police officer from the Kansas City area. One day, in the middle of a divorce, foreclosure, and judgment that garnished his wages, he got tired of living like many cops: paycheck to paycheck and flat broke. He made a decision to master his finances, sought an education, and developed new habits. Adam now owns a profitable part-time business, multiple investments, and his credit is recovering. He drives a car that's paid for, has money saved, travels frequently, and gets to spend more time with his family, all while maintaining his full-time police career. You can connect with Adam through his website, www.copfinance.com, or e-mail him directly at [email protected].


Comments (4)

Displaying 1 - 4 of 4

Retired Mike @ 6/20/2017 8:59 PM

Good advice. As a debt free retiree, life is good. For additional help, find Dave Ramsey's Financial Peace University program in your area. Easy steps to mastering your finances and becoming debt free

Adam Doran @ 7/20/2017 12:02 AM

Thank you for reading and commenting, Retired Mike! Congratulations on a debt-free retirement!

Adam Doran @ 7/20/2017 12:03 AM

Thank you for reading and commenting! Congratulations on a debt-free retirement!

Jake @ 7/21/2017 12:07 PM

Thanks Adam for the great article. Very inspirational and appreciate you sharing your experience...with the right focus and mindset, anything and everything is possible.

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