By Rick Hopkins, Co-Founder

Black Income Shifters, LLC

W2 employees, particularly those who work in the social and public sectors, such as teachers, nurses, fire fighters, law enforcement officers and other local, state and federal government employees often struggle to survive financially. As a group, they are among the most underpaid, highest taxed, and most in-debt segments of our country’s workforce. This could partly explain why lose so many of our best public servants to other, arguably less fulfilling careers that just happen to pay a more money. You can hardly blame someone for trying to do better themselves financially. If it were within my power to raise the wages and salaries of all hard working employees, I certainly would. Obviously, I can’t do that… but what I can do is show underpaid, overtaxed employees how improve their finances by creating more cashflow from the money they already make.

When you find yourself in need of a little extra income, what typically comes to mind? Should you put in a few more hours at work, get a second job or perhaps swallow your pride and ask your boss for a raise? If none of these work, then you might find yourself changing jobs or careers from something you love to something that would have you dreading going to work every day… just because it pays better. My recommendation would be “none of the above.” Sometimes it’s not about making more money. Sometimes it’s about making less of the money you already make taxable. Less taxable income puts more money in your pocket to pay bills, lower debt and invest. All it takes is an entrepreneurial mindset and some proven financial strategies.

There are four challenges which, if not properly managed, will prevent you from attaining personal financial success; and if not recognized can lead to imminent financial failure. They apply to everyone from the minimum wage part time staffer to the manager, director or VP making six figures. I call them our Four Financial Enemies. In order to defeat an enemy in the field, you need a well thought out battle plan. Yet, before you can develop a battle plan, you must first know that the enemy exists, his strengths and weaknesses and how they stack up against your own. Sun Tzu, in his famous work on battle strategy THE ART OF WAR states, “Know your enemy and know yourself, and in a hundred battles you will be victorious.” In this article, I will introduce you to these four financial antagonists. However, simply identifying problems is the easy part. I also plan to go a step further and share some proven solutions as well.

TSMC, Ltd. chairman, Morris Chang once said, “Without strategy, execution is aimless. Without execution, strategy is useless.” With this in mind, I offer you a “2-4-3 financial success construct” that will form the foundation upon which your overarching financial strategy will be built. There are two (2) objectivesfour (4) challenges and three (3) solutions that comprise this strategy:



  1. We all desire to live a comfortable lifestyle during our working years. The word “comfortable” means different things to different people; but we all know what it means to us. This is known as your current lifestyle, and ispaid for by your labor.
  2. Someday, you will want to retire without having to lower your standard of living. At that point, your labor will no longer be able to support you. Your future lifestyle will bepaid for by your investments. This means that during your working years, you will need to be able to acquire revenue producing assets to support you financially during retirement.

Achieving both objectives can be difficult, if not impossible, because you may find yourself locked in what I refer to as the Cycle of Pain. The symptoms are easy to recognize: 1) you have no money, 2) you are in debt, and 3) you have no savings or investments. If you are living paycheck to paycheck just to make ends meet, where do you find the money to invest? Read on and all will be made clear.



  1. HIGH TAXES. When I speak to groups on the subject of cashflow management, I will start out by asking one simple question, “What is your largest monthly expense?” Nine out of ten will confidently answer “my mortgage” or “my rent.” And they are wrong! The answer isincome taxes. You lose a third of your income to taxes. Do the math. If you make $50,000 a year, Uncle Sam takes $15,000 right off the top. That hurts! According to the IRS’ own website, 80% of Americans over pay their taxes each year simply because they fill out their W4 Tax Withholding Form incorrectly. This causes their employer to withhold too much tax from their paycheck; $200 to $400 a month on average, or $2,400 to $4,800 annually!
  2. DEBT. You lose another third of your income to debt; usually as a result of attempting to compensate for money lost to taxes by taking out credit cards, car loans and other high interest loans. Thanks to thetax man and the banker, i.e. taxes and debt, you are forced to make ends meet on only the remaining third of your income. No wonder you’re broke all the time! Credit is not your friend. The Bible says that “The borrower is the slave to the lender.” This is as true now as it was then, perhaps even more so. Debt elimination should be a top priority for you. Don’t allow excessive debt to send you off to work each day singing, “I owe, I owe, it’s off to work I go.”
  3. INFLATION. Inflation is simply the increase in the cost of living. Inflation typically rises 2% to 4% a year. Its effects are cumulative, and the rate of inflation doubles every twenty years or so. For example, if you were making $25,000 a year twenty years ago, you would need to be earning at least $50,000 a year today to have kept up with inflation. I call it “death by a thousand cuts.” Inflation just keeps eating away at your income day in and day out, month after month, year after year. It isn’t all bad, though; like when you sell your house for a lot more than you paid for it, or when your product or service becomes more valuable due to low supply and high demand.
  4. INADEQUATE CASHFLOW MANAGEMENT. Cashflow and income are not the same thing. Youearn income. You create cashflow through the decisions you make with the income you earn. It is comprised of money you have earned, saved, leveraged, and invested. Creating cashflow is the secret sauce to building wealth. Creating new cashflow from tax savings and using it to eliminate debt; then taking the savings from both to begin investing and acquiring revenue producing assets is both an art and a science. Once again, it requires financial education combined with the skill Y professionals know best: strategic implementation. Right now, your money is making someone rich; unfortunately, that someone probably isn’t you. You can change that with proper cashflow management.



INCOME SHIFTING. Working longer hours, taking on a second job or changing careers may not be your best option for earning more income. Where W2 job income is concerned, the more you make the more Uncle Sam takes. Imagine if your net pay at work, better known as your take home pay, more closely resembled your gross pay. Could you put that additional third of your income to good use? What if you could free up your current principal and interest payments on credit cards, car notes and other high interest loans and apply them to your current bills and investments? Income Shifting is the financial strategy that shows you how to minimize your taxes, eliminate your debt and build investment income using your own money.

BUSINESS OWNERSHIP. Uncle Sam definitely plays favorites. You can verify this by looking at the tax codes. For example, he prefers homeowners to renters, and business owners to employees. Metaphorically speaking, homeowners and business owners get the elevator; while renters and employees get the shaft. As a W2 employee, you pay the highest possible tax rates and get the fewest allowable tax deductions. Business owners, even homebased business owners, get over 400 tax deductions for everyday expenses that employees have as well. Such as, your home, car, food, travel, meals and entertainment.

I have a good friend who is a manager at a power plant. He is also an excellent artist who paints as a hobby. He established a homebased business and sells his paintings on the internet; while taking full advantage of business write offs like his cell phone, laptop, internet, auto mileage, travel, eating out, painting supplies and also writes off a percentage of his apartment as a home office. For an employee, the combination of having both a job and a homebased business is a winning combination. As a published author with four books and an Amazon #1 Best Seller to my credit, I use this strategy extensively as well.

BUILD INVESTMENT INCOME. Let me be clear. I am not a CPA or licensed financial advisor. I cannot advise you on what to invest in or who to invest with. My goal is only to share financial strategies with you that will enable you to take more control of your own personal economy. Proven strategies such as “cash-asset-cash,” will help you build a foundation for generational wealth in your family where none existed before. Here is how it works. You get some cash, use it to acquire income producing assets, then use the cash generated from assets to acquire more assets… wash, rinse, repeat. It may be a bit of an oversimplification to say that an asset is something that makes you money, while a liability is something that costs you money; but it works for the purposes of this article.

Avoid overspending on liabilities. The thrill of expensive cars, trendy clothes and the latest electronic gadgets soon fades; but investments that appreciate exponentially over time bring a more substantial, long term satisfaction. Prior to beginning an investment program, be sure to minimize your taxes and get yourself debt free. This will provide cashflow to fully fund your work retirement plan and start a basic emergency fund. In a perfect world, your emergency fund should contain six months of living expenses just in case of, you know… emergencies. However, this is not a perfect world; so try to have at least two or three thousand dollars set aside in your emergency fund before beginning an investment program. When the time comes, seek the guidance of professional money managers and advisers. Don’t try to go it alone until you have some experience under your belt. And, this is important, don’t take investment advice from your broke friends! You may have been taught that saving money in a bank is a good idea; but because banks pay you interest lower than the rate of inflation, your money is guaranteed to be worth less when you take it out than when you put it in. You may as well stuff it in your mattress or bury it in the back yard.



It’s not always about making more money; sometimes it’s about making less of the money you already make taxable. Less taxable income means more money in your pocket. For the record; I do not advocate avoiding paying taxes. I believe one should pay every penny one owes in taxes; but not a penny more. High taxes, however, represent the greatest threat to employees who want to build wealth. The system, as designed, will not allow it. The more you make, the more Uncle Sam takes. Incorporating the tax advantages of a home based business to mitigate many of the tax disadvantages associated with W2 job income, allows employees to level the financial playing field. I call this a Sword and Shield Financial Strategy. Imagine yourself a gladiator in ancient times. Your primary weapon was your sword; but you also carried a shield for protection. Your job is like your sword, it pays your bills and feeds, houses and clothes your family. Your home based business is like your shield. It protects your job income from excessive taxation by utilizing tax deductions and other advantages. For w2 employees, a job and a home based business is a formidable combination that allows you to fully participate in capitalism as a producer; rather than just contribute to it as a consumer.

The information I have shared with you is not theory or rhetoric; it is my personal reality. After losing most of my life’s savings in a bitter divorce, I was one who left a career I loved to pursue more income. I am back now; but had I known then what I know about money and how it really works in America, I would not have felt the need to leave. A Chinese proverb says that “When the student is ready a teacher will appear.” At a low point in my life, I was blessed to find that teacher; a financial mentor who took me under his wing and taught me the financial rules of engagement. In return, he asked only that I pay it forward to others as he had done with me. This article is my attempt to fulfill a promise.