Photos
Dr. Kalinda Rose Stevenson
Quantum Leaps and Kaizen Actions
“It doesn’t matter which side of the fence you get off on sometimes. What matters most is getting off. You cannot make progress without making decisions.”
Jim Rohn
In my coaching conversation yesterday, my coach and I talked briefly about electrons and the quantum leap, and how that concept applies to the transition between being an employee and being an entrepreneur. My coach said, “It is an all or nothing decision.”
“If quantum mechanics hasn’t profoundly shocked you, you haven’t understood it yet.”
Niels Bohr
That brief discussion about electrons and quantum leaps reminded me of the first time I ever learned about quantum mechanics. Years ago, I earned a chemistry degree. In my two-semester physical chemistry class, we spent several weeks on the physical chemistry of light. I still remember the day that the professor first introduced the concept of the quantum leap. I was so amazed at what I heard that I put down my pen and sat in awe for the rest of the class.
The simplest way to think about the quantum leap is to imagine two water glasses. One glass is full of water. The second glass is empty. Now imagine that all of the water suddenly materializes in the second glass. And there is not even the slightest fraction of a second when the water is between the two. At one moment, every molecule is in glass one and at the next nanosecond, every molecule is in glass two.
This is what happens to energy in the phenomenon knows as “the quantum leap.” An electron in orbit around the nucleus of an atom suddenly jumps to a higher orbit without passing through the distance from one orbital level to the higher orbital level. This isn’t what happens when you pour water from one glass to another. No matter how fast you pour, you can see the water passing between the two glasses. The quantum leap of electrons has amazed, baffled, and thrilled scientists for a hundred years. How can the electron do this?
The simple answer is that the electron is not a thing. It is not a little object whizzing around the nucleus of the atom the way the moon orbits the earth. In fact the electron itself doesn’t jump, because the electron is not a thing. The electron is a charge of energy. And when it receives a burst of energy, suddenly there is another charge of energy operating at a different level. And what is even more interesting, the electron receives this burst of energy as a single unit, the quantum. It really is an “all or nothing” phenomenon.
Thinking about quantum leaps and “all or nothing” decisions also reminds me of a man I once knew who could not make decisions. We were partners in the same group at a Tony Robbins seminar. The participants were encouraged to maintain contact with their partners, and so my seminar partner and I agreed to have weekly phone calls, and continued to have our conversations for more than two years. I’ll call my phone partner Fred.
“The risk of a wrong decision is preferable to the terror of indecision.”
Maimonides
When we first talked, Fred talked about his dream of creating his own sales and marketing company. He had years of sales and marketing experience and claimed that he had a unique perspective and that companies needed his services. Fred had been fired from his last job and needed income. So he talked each week about whether it would be better to get another job or to concentrate on creating his business.
This same question came up every week. He would send out resumes for jobs because he thought he should get a job before starting his business and he also made some efforts toward creating his own business. By the time our phone calls ended, he was stocking shelves in grocery stores.
After weeks and months of hearing him raise the same questions about whether he should concentrate on getting a job or concentrate on starting this business, I said to him, “It’s time to decide whether you are going to get a job or start a business. You’re like a person on one side of a creek who wants to get to the other side. The only way you are going to get there is to jump across.”
“High achievers spot rich opportunities swiftly, make big decisions quickly and move into action immediately. Follow these principles and you can make your dreams come true.”
Robert H. Schuller
After hearing him go over the same questions again and again, I realized how much his whole life was ruled by indecision, about just about everything in his life. For about six months, I heard him talk about how he needed a new toaster. He liked to eat toast with peanut butter for breakfast each morning, but he couldn’t because his toaster was broken. But Fred did not go out and buy a new toaster. Fred shopped for a toaster. He kept searching for exactly the right toaster, a “prestige” toaster.
Fred called himself a “high achiever” and insisted that high achievers require only the very best of everything. Six months later, Fred was still lamenting that he couldn’t eat his toast with peanut butter every morning because he had not found exactly the right toaster.
I must admit, my patience was wearing thin. I have no idea what a prestige toaster is. I was tired of talking with a man who could not make a firm decision about anything from buying a toaster to making the necessary jump to create a business.
We had already cut the calls to twice a month, at my request. I was feeling stuck between wanting to find a way out of the calls and not wanting to hurt his acutely sensitive feelings. In other words, I didn’t have the courage to say out loud what I needed to say. “This is not working for me.” And so I took the coward’s way out and suggested that we cut our calls to once a month. He agreed, but was obviously hurt. I have never heard from him again, and he never responded to any email, birthday card, or Christmas card I sent him.
What I learned from Fred was that real change means taking a quantum leap. It really is an “all or nothing” decision. For the electron, it means absorbing a quantum of energy so that it suddenly operates at a higher frequency on a different level. It has moved from one orbit to another. For you and for me, it means risking the quantum leap, moving from one reality to another.
In one of my favorite movies, the utterly silly and profound Joe Versus the Volcano, Joe frees himself from his own inertia by agreeing to jump into a volcano. This is not at all subtle. Joe creates a new life for himself by taking his own quantum leap.
But taking the quantum leap, whatever that means for you, is not the end of the story. After the decision to leap from where you are to where you choose to be, real success requires what the Japanese call “kaizen.” Kaizen refers to small, consistent actions taken over time.
“Kaizen (Japanese, improvement) is an approach to productivity originating in applications of the work of American experts such as Frederick Winslow Taylor and Frank Bunker Gilbreth by post WW II Japanese manufacturers. The development of Kaizen went hand-in-hand with that of quality control, but it was not limited to quality assurance — the goals of kaizen include the elimination of waste, Just In Time delivery, production load leveling of amount and types, standardized work, paced moving lines, right-sized equipment, and others. A closer definition of the Japanese meaning of Kaizen is “to take it apart and put back together in a better way.” What is taken apart is usually a process, system, product, or service…
Kaizen often takes place one small step at a time, hence the English translation: “continuous improvement,” or “continual improvement.”
http://en.wikipedia.org/wiki/Kaizen
Real success involves both the quantum leap and kaizen, in that order.
Unfortunately, unsuccessful people, people such as Fred, get the order wrong. They attempt to do kaizen without taking the quantum leap first. Little changes on the wrong side of the creek won’t get you where you want to go. You really do need to jump first.
The other misunderstanding is that people make the jump and then expect immediate success without taking the small and consistent steps involved in kaizen.
Since it is World Series time, I will use a baseball analogy. I watched an interview with Tony LaRussa several years ago, when he was still the manager of the Oakland As. The As had won the National League pennant and LaRussa was saying that they won the league championship through base hits rather than homeruns.
That is kaizen. The homeruns will get the TV coverage but the base hits will keep the team in the game and in position to score. That is what kaizen will do for you. It will keep you in your game and in position to score your own homerun.
“A real decision is measured by the fact that you’ve taken a new action. If there’s no action, you haven’t truly decided.”
Anthony Robbins
If your dreams require you to make a decision, learn from Fred, the “high achiever” who could not achieve because of indecision. Indecision can only keep you stuck where you don’t want to be, with only pipe dreams instead of success. If you have a dream, take the risk. Make the quantum jump. And then be prepared to take the consistent, small actions of kaizen to accomplish your dreams.
This article was originally published October 25, 2005.
http://www.abundantlyalivenow.com/archive/AANN-2005-10-25.htm.
WARNING: BEFORE YOU INVEST IN REAL ESTATE… FREE “No Money Limits Consumer Guide to Real Estate Investor Training.” www.nomoneylimits.com
© 2005 Kalinda Rose Stevenson, Ph.D.
Debt or Alive, Inc.
2248 Meridian Blvd. Suite H Minden, NV 89423
Sphere: Related ContentNo tags for this post.
What Are The Limits To Your Generosity?
“We’ve been generous in the past, and we hope to be generous in the future,” [Linda] Lacy said, “but we can’t save the world. I don’t know where our limits are. We have a budget, too.”
Mark Bixler
The Atlanta Journal-Constitution
The tsunami in Asia, hurricanes in the Gulf Coast, earthquakes in Pakistan, mudslides in Guatemala. In recent months, we have seen catastrophe after catastrophe of human suffering, loss, and devastation.
Recent disasters in our world have opened the floodgates of donations. Yet, as the catastrophes continue, the donations are decreasing. Not only that, news coverage of far-away disasters has slowed down, as we grow numb to endless tragedies. The devastating mudslides in Guatemala have barely made a dent in our collective consciousness.
The charities now report growing “donor fatigue.”
“After donating about $1.3 billion to help the victims of the devastating Southeast Asia tsunami and then contributing $1.7 billion to support relief efforts after Hurricane Katrina, many donors appear to be running out of steam.”
Jacqueline L. Salmon
Washington Post Staff Writer
At the same time, our economy is entering a period of “stagflation.” One cause is the destruction to oil production caused by the hurricanes in the Gulf of Mexico.
“Inflation by itself is usually accompanied by brisk business conditions and an all-too-healthy economy. Stagflation describes a world in which prices are going up but people can’t afford the increased prices.”
Steve Butler
Contra Costa Times
So, as the need for help increases, the demands on our own budgets increase. When do any of us we reach the point of saying, “Enough! I can’t give anymore.” My question is, In the face of overwhelming need, what are the limits to our generosity?
I don’t pretend to have the answer to this question. I do have some observations about the limits of responsibility for finite human beings.
In some respects, the question itself is a sign of our times. The internet and television have shrunk our world to the size of electrons. Not so long ago, news was local. Before instant communication, the rest of the world would not know about a tsunami in Indonesia, or a hurricane in Louisiana, or an earthquake in Pakistan, or a mudslide in Guatemala for days or weeks or months or years afterwards, if ever. Now, with the speed of electrons, as soon as tragedy strikes anywhere, we know about it everywhere.
While l was teaching in a theological seminary, I had a conversation one day with two of my students. One was a young man from Puerto Rico. The other was a young man who was a refugee from El Salvador, whose entire family had been murdered by government thugs. The refugee was lamenting the fact that Americans didn’t care about the suffering of his country. And the young Puerto Rican chimed in with the statement that he was glad he wasn’t an American because Americans are so selfish.
At that point, I felt the need to respond to these two comments by pointing out that each one was expecting all Amerians to care about his cause as much as he did. At the same time, other aggrieved and/or suffering people expected Americans to care about Korea and South Africa, saving the whales and the redwoods and the spotted owls, protecting the rights of farm workers, and a laundry list of other oppressed people and worthy causes. I pointed out that finite people cannot do everything. The best any of us can do is to choose one area of need and do our best to help in that area.
This conversation with two young seminarians, both foreign students, brings to the surface a range of conflicting emotions, attitudes, and beliefs about human responsibility. The root meaning of “responsibility” is the ability to respond. The question is, How much can any of us respond to the needs we see around us, both within our own communities and around the world?
Underneath the question itself is another word, which I decided long ago was the most unhelpful word in the English language. I am very careful about language, both in my own writing and speech. I am also very conscious of the words that other people use. And there is one word that I work very hard to avoid, both in what I say to myself and what I say to others. It is the word, “should.”
”Should” carries with it an amazing arrogance. “Should” claims that the speaker knows better than you do what is best for your life. “Should” is also a word chock-a-block full of judgment about what is right or wrong about your actions.
I made a decision years ago, as a seminary student, that I would never use the word “should” any time I preached a sermon. I have heard too many sermons that were nothing more than lectures telling people what was wrong with them and what they “should” do or “should not” do.
I am confident that I never used the word “should” in a sermon. In my preaching years, I always assumed that my task was to tell people what was right with them rather than what was wrong with them. In my vocabulary, “should” can never accomplish that function.
I have made the same decision about my writing. I am very careful never to tell you what I think you “should” or “should not” do. I intend never to use the word in any article or book I write. I will not tell you what you “should” do, ever.
And this brings me back to the problem of donor fatigue. At the same time that technology has made us more and more aware of catastrophic human need, many of us also carry deep guilt about our responsibility to give to anyone who asks. Every time we see more pictures of human suffering, many of us feel the incessant demand, “You should do something!”
This is particularly true for people who have grown up in religious institutions that have taught that it is better to give away money than to have it. I grew up in a church that taught poverty rather than abundance. One example we heard about often was the story of the poor widow who gave away all she had to live on. We heard about this story as the prime example of what God wanted us to do.
My husband and I used to attend a church in San Francisco. In urban San Francisco, homeless people are everywhere. We could count on the fact that someone would be standing outside the church on Sunday demanding money for something. We would hear the story about how the car broke down and they needed money to get back to Oregon. (For some reason, they always had to get back to Oregon.) And if they didn’t get money, they would start to proclaim very loudly, “And you call yourselves Christians. You’re supposed to help.”
In other words, if you have money, you “should” give it to others. For those of us who learned that being good meant being poor, we can easily feel guilty for having money when others don’t. Each time the media assaults us with gut-wrenching images of human suffering, the word “should” romps around in our consciousness, telling us that we “should” do something.
And for Americans, there is the added burden of being the world’s superpower, supercop, and superfixer. If it happens anywhere, much of the rest of the world will tell us that Americans are both collectively and personally responsible to fix it.
In his book, The 7 Habits Of Highly Effective People, Stephen Covey makes a significant distinction between Circles of Influence and Circles of Concern. Circles of Influence are those things you can do something about. Circles of Concern are those things you care about but cannot change.
“Proactive people focus their efforts in the Circle of Influence. They work on the things they can do something about.
Reactive people, on the other hand, focus their efforts in the Circle of Concern. They focus on the weakness of other people, the problems in the environment, and circumstances over which they have no control. “
Stephen Covey
My student from El Salvador focused everything through the lens of the horrors and grief of his own losses. He could not understand why the whole world was not rising up in anger and outrage. What he could not see at that moment was that there are more than six billion of us in the world, and no one can take on the sufferings of everyone else. We would all collapse under the burden.
“For donors like Linda Lacy of Atlanta, who said she gives 10 percent to her church, First Baptist Church of Atlanta, and an additional 10 percent to charities such as the Boy Scouts, Samaritan’s Purse, the American Red Cross and the American Heart Association, the string of disasters underscores something she already knew.
“There is such need in the world,” she said.
She has traveled to Brazil on church mission trips, she said, and her husband has helped build churches in Montana and Pennsylvania. He just got back from several days feeding storm victims in Mississippi on a trip coordinated by the Southern Baptist Convention’s North American Mission Board, based in metro Atlanta. Members of her Sunday School class traveled to Iran after an earthquake killed thousands there in December 2003.”
“We’ve been generous in the past, and we hope to be generous in the future,” Lacy said, “but we can’t save the world. I don’t know where our limits are. We have a budget, too.”
Mark Bixler
The Atlanta Journal-Constitution
I return to the comment by Linda Lacy, which ends with these words: “I don’t know where our limits are. We have a budget, too.”
Even abundance has limits. No matter how much money you have, you do have a budget. You are one person, living in one place, with your own limitations. You are not infinite, omnipotent, omnipresent. In other words, you are not God. And if you notice, even God doesn’t make all the suffering go away.
My own personal challenge always comes back to my tendency to get caught up in overwhelm. Seeing too much, attempting to do too much, the feeling that I “should” be doing more. I can think of no combination better suited to fill life with frustration, anxiety, and lack of accomplishment than this.
As Covey makes clear, there is a difference between being concerned and being effective. Whatever your personal challenges, you simply cannot do everything. The key is to choose something within your own Circle of Influence.
The choice again comes down to focus. Among all of the needs you see before you, and with the limitations of your own time, money, and energy, it is up to you to choose how you will respond, not because you “should” but because you can.
This article was originally published October 18, 2005.
http://www.abundantlyalivenow.com/archive/AANN-2005-10-18.htm.
WARNING: BEFORE YOU INVEST IN REAL ESTATE… FREE “No Money Limits Consumer Guide to Real Estate Investor Training.” www.nomoneylimits.com
© 2005 Kalinda Rose Stevenson, Ph.D.
Debt or Alive, Inc.
2248 Meridian Blvd. Suite H Minden, NV 89423
Sphere: Related ContentNo tags for this post.
Clearing Your Internal Registry To Create Abundance
To become different from what we are, we must have some awareness of what we are.
Eric Hoffer
Last night, after spending hours trying to resolve problems with my computer system, I bought a software program. Recently, my once fast computer has been extremely slow and hangs up repeatedly. I regularly clear out temporary and deleted files and run the disk defragmenter. I knew I needed something else.
So, I bought a program that scans the registry to find and delete invalid entries. By the time the program finished the scan, it had found 468 problems. I read through the list of problems and then hit the repair button, which cleared away all 468 items. My husband has also been having a series of computer problems and so he also bought a copy and installed the program on his computer. The scan found 964 problems on his computer.
And today, I went out and spent over two hundred dollars for additional memory for my computer. I am trusting that clearing the registry and adding additional memory will resolve chronic problems with my machine.
All of this time and trouble with my computer leads to me two questions. The first is, How do fast computers turn sluggish and unstable? The second is, What does any of this have to do with creating abundance?
Fast computers turn into unreliable electronic slugs primarily because the registry becomes corrupted. What is the registry? This is Microsoft’s description.
A central hierarchical database used in Microsoft Windows 9x, Windows CE, Windows NT, and Windows 2000 used to store information necessary to configure the system for one or more users, applications and hardware devices.
The Registry contains information that Windows continually references during operation, such as profiles for each user, the applications installed on the computer and the types of documents that each can create, property sheet settings for folders and application icons, what hardware exists on the system, and the ports that are being used.
The Microsoft Computer Dictionary, Fifth Editionhttp://support.microsoft.com/default.aspx?scid=kb;EN-US;256986
In other words, the registry is the master control of any computer with a Microsoft operating system. It is a catalog of all the programs and processes on your computer. Without the registry, the computer doesn’t know where anything is, or what to do with anything on your computer. Anytime the registry is fouled up, you are going to have problems with your computer.
What fouls up the registry? Consider what happens every time you uninstall a program. You think that you are removing all traces of the program from your computer. In reality, the uninstall feature leaves behind fragments of the uninstalled program. The result is that your registry is left with pointers to a program that no longer exists on your computer. The longer you use your computer, the more you have errors, links to nowhere, and fragments of code in your machine. Over time, the performance of your computer suffers.
With regular use, most PCs develop large numbers of registry errors that degrade performance and cause crashes. The Windows registry is the database used by Windows to keep track of the settings for the operating system and all installed programs
ZoneLabs
This leads me to my second question. What do problems with the registry have to do with abundance?
Every human has four endowments- self awareness, conscience, independent will and creative imagination. These give us the ultimate human freedom… The power to choose, to respond, to change.
Stephen R. Covey
The computer registry is a metaphor for whatever it is within us that is the master controller of our ideas, beliefs, memories, and emotions. Without the internal registry, we would not know who we are. Yet, the longer we live, the more “stuff” builds up in our internal master control. And the more stuff that builds up, the more it negatively affects our lives.
One key concept of naturopathic medicine is that we age because our bodies become progressively toxic over time because they cannot clear out the residues of metabolic processes and environmental toxins fast enough. The slowing down of older people as their bodies become congested with uncleared debris is much the same as the slowing down of computer systems as they become clogged with uncleared bits of programs.
The mind’s first step to self-awareness must be through the body.
George Sheehan
All of us carry painful memories and unfinished business. What experiences have left traces in your life that keep getting in your way? What remnants of old and useless ideas linger inside your consciousness? What unresolved emotions continue to lurk within you?
Consider your own beliefs. What kind of fragments of beliefs do you still have left from early childhood conditioning? All of us carry ideas that no longer serve us.
What if the same kind of process happens with our emotional experiences? Some of my most enduring questions concern memory. How and where do we store our memories? Why does an event trigger old feelings? Why is it so hard to liberate ourselves from our stuck emotions?
What if you are being stopped by old fragments of ideas, emotions, memories, and beliefs that you no longer want in your life?
The question is, How do you uninstall these unwanted remnants so that they can no longer interfere with your efforts to create abundance in your life?
Imagine if you had some sort of registry scanner that could recognize the invalid fragments, the loose links to hurtful memories, the traces of emotional experiences both remembered and forgotten? With a simple process, you could find anything in your own internal registry that gets in the way of your current goals, dreams, and plans, and hit the delete button.
What is necessary to change a person is to change his awareness of himself.
Abraham Maslow
In fact, you do have such a registry scanner. Your own internal registry scanner is called awareness. Awareness allows you to pay attention to the areas in your life which don’t work very well. You pay attention to what you are feeling and thinking. You pay attention to the memories that bubble to the surface. You monitor your thoughts, your feelings, your attitudes, your words, and continually ask if they are serving you, or if they are simply slowly you down or causing your system to crash.
Computers can recover from errors in the registry and so can you. The process is not as simple as buying a piece of software for $29.95 and hitting the button. Fundamentally, it means that you are your own master controller and you use awareness to clear out your own internal registry of anything that stops you from living an “Abundantly Alive Now!” life.
For Your Abundance,
Kalinda Rose Stevenson
This article was originally published September 13, 2005.
http://www.abundantlyalivenow.com/archive/AANN-2005-09-13.htm
To Sign Up For This Newsletter
Please visit http://www.abundantlyalivenow.com
WARNING: BEFORE YOU INVEST IN REAL ESTATE…
FREE “No Money Limits Consumer Guide to Real Estate Investor Training.”
www.nomoneylimits.com
© 2005 Kalinda Rose Stevenson, Ph.D.
Debt or Alive, Inc.
2248 Meridian Blvd. Suite H
Minden, NV 89423, 2005.
http://www.abundantlyalivenow.com/archive/AANN-2005-08-23.htm
To Sign Up For This Newsletter
Please visit http://www.abundantlyalivenow.com
WARNING: BEFORE YOU INVEST IN REAL ESTATE…
FREE “No Money Limits Consumer Guide to Real Estate Investor Training.”
www.nomoneylimits.com
© 2005 Kalinda Rose Stevenson, Ph.D.
Debt or Alive, Inc.
2248 Meridian Blvd. Suite H
Minden, NV 89423
No tags for this post.
Using The Tax Code To Create Abundance
Anyone may so arrange his affairs so that his taxes shall be as low as possible. He is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes.
Learned Hand
1872 – 1961
U.S. Federal Court judge
You know that old riddle. “Which came first, the chicken or the egg?” I have my own version of the riddle. “Which comes first? Taxes or expenses?”
Unlike the chicken or egg conundrum, this riddle has a clear answer. And the answer is, “It depends on whether you are paying taxes as an individual or as a corporation.”
We hear a lot of talk these days about the inherent unfairness of the tax system. The claim is that “the rich” get tax breaks while middle and lower class taxpayers pay far more than their fair share.
What gets lost in these comments is an even more fundamental imbalance in the tax system. The tax system favors corporations vastly more than it favors individuals.
The crucial difference between corporate taxes and personal taxes is the point at which taxes are calculated. If you are taxed as an individual, your taxes come off the top of your income. If you are taxed as a corporation, your taxes are calculated after expenses.
You don’t pay taxes – they take taxes.
Chris Rock
Consider how the taxation system works. If you are an employee, you collect a paycheck. Before you ever get your paycheck, there will be deductions. Federal tax, FICA, maybe state tax, maybe medical insurance. You will be left with your “take home pay.” Interesting concept, isn’t it? What you “take home” will be less than what you earned.
In other words, you get to use whatever is left over of your salary or wages after taxes. Food, housing, clothing, transportation, medical, dental, recreation. You need to pay for all of these expenses with your “after tax” money.
Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
Benjamin Franklin
As one example, let’s consider medical costs. Who pays your medical expenses if you are an employee? Medical insurance in the United States is an unwieldy and expensive mess. Maybe you are covered by your employer, maybe not. What we do know is that medical costs are rising exponentially, and most striking unions cite increasing medical costs to employees as their primary grievance. Even if you have medical insurance, you will have to pay deductibles. And you will pay these expenses with after tax dollars.
And when you finally come to calculate your taxes on your 1040 form, you will find that you cannot claim medical costs as deductions on your tax return unless medical expenses exceed 3% of your income.
The avoidance of taxes is the only intellectual pursuit that still carries any reward.
John Maynard Keynes
What happens if you set up a corporation? You are the founder of a corporation and hire yourself as the employee of the corporation. As the founder of the corporation, you are able to set up a health insurance plan with pretax dollars. If there are insurance deductibles, you, as the founder, can write a resolution and put it in your corporate book. Your generous corporation will cover all of the costs of medical care for its employees (that means you,) including deductibles, and any medical costs that most insurance policies will not cover.
After all, as the founder of the corporation, you are free to set up any medical reimbursement plan you wish, as long as you put it in writing in your corporate resolutions. And before you figure out how much tax the corporation owes, you first calculate all of the medical expenses paid by your corporation and then calculate the tax after expenses.
That means, instead of filling out a 1040 form for personal taxes, with your non-deductible medical expenses, you file an 1120 corporate form. If you are an employee of your own corporation, your corporation can pay for your medical insurance. And if there are deductibles, your corporation can file a resolution to cover all uninsured medical costs. Do you grasp how significant this distinction is for your economic well-being?
This distinction is particularly meaningful for me. I have a chronic health condition that my former medical insurance company considers “high risk.” The insurance company agreed to continue to insure me, but at a cost that was exorbitantly high, and would have come out of my personal after-tax income. For me, this was not only a matter of money. It was a matter of being able to get any kind of medical insurance. Many people with chronic health problems become “uninsurable” at any price.
However, since I am the CEO of the corporation I founded, I was able to set up a health insurance program through the corporation, at a significantly lower rate than the one offered by my prior insurance company. The corporation now pays the health insurance premiums with pre-tax dollars. And as the founder of the corporation, I have written a resolution that the corporation will pay any deductible costs, and any other costs related to my medical care. Only after all of my medical costs are paid, the corporation will calculate the taxes it owes.
I could give other examples. Your corporation can provide generous pensions, annuities, life insurance policies, and other benefits to you as an employee. It can even donate generously to nonprofit corporations, schools, and churches, if it chooses. And after it has paid all of these expenses, and made all of these charitable donations, it can then calculate tax on the wee bit of profit left over. Or maybe the corporation will not have any profit at all, and then it will not pay taxes at all.
I feel compelled to point out that it has not always been this way. Corporate America used to pay a much higher portion of taxes than it pays now. This is the real unfairness of the tax system. The discrepancy between tax rules for corporations and tax rules for individuals means that the tax burden has shifted from corporations to individuals.
We don’t pay taxes. Only the little people pay taxes.
Leona Helmsley
Why are “the rich” getting richer? At the heart of the matter, “the rich” understand the tax system and know how to set up corporate entities to make the most of the favorable tax laws available.
Is it fair? Is it just? Can you or I change the system? For myself, this is a bigger challenge than I am willing undertake. It is the way it is.
Unless you want to play David against Goliath, or Don Quixote tilting at windmills, you would do well to understand the inherent imbalance in the system, so that you can use the system for your own benefit. This means that the fastest route to keeping more of your own money and creating wealth is to set up a corporation and pay taxes as a corporation rather than an individual.
You know, gentlemen, that I do not owe any personal income tax. But nevertheless, I send a small check, now and then, to the Internal Revenue Service out of the kindness of my heart.
David Rockefeller
My point is that setting up a corporation allows you to use your income to provide benefits you cannot afford with your after-tax dollars. The corporate tax code allows you to create wealth in ways that you will never be able to accomplish as long as your taxes come off the top of your income. In addition, corporate tax rates are lower than personal tax rates.
If you have not set up a corporation, I encourage you to consider doing so. People are afraid that incorporating means a lot of extra work and trouble. Yes, incorporating involves time, effort, and expense. And keeping your corporate records up to date also takes time, effort, and expense. You will also need to have increased knowledge of taxes and accounting. The reward for this extra work and effort is that you will be able to use corporate tax rules for your own benefit, and the benefit of those you choose to support with your money.
We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.
Winston Churchill
To answer my own riddle, “Which comes first? Taxes or expenses?” If you are paying taxes as an individual, the taxes come first. If you are paying as a corporation, the expenses come first.
This difference is enormous. When you understand this distinction, you have one of the most powerful means to transform your economic life from struggle to abundance.
Knowing how to use the corporate tax code legally and ethically will allow you to create an abundant life far beyond anything you will be able to create with the personal tax code.
For Your Abundance,
Kalinda Rose Stevenson
This article was originally published October 4, 2005.
http://www.abundantlyalivenow.com/archive/AANN-2005-10-04.htm
To Sign Up For This Newsletter
Please visit http://www.abundantlyalivenow.com
WARNING: BEFORE YOU INVEST IN REAL ESTATE…
FREE “No Money Limits Consumer Guide to Real Estate Investor Training.”
www.nomoneylimits.com
© 2005 Kalinda Rose Stevenson, Ph.D.
Debt or Alive, Inc.
2248 Meridian Blvd. Suite H
Minden, NV 89423
No tags for this post.
Syndicate
Subscribe to this site's RSS feed.
-
