What are 11 tips to go from living paycheck to paycheck into true wealth building?

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Welcome to the Ask Ralph Podcast where listening to an experienced financial professional with over 30 years of experience can help you make sense of confusing questions, current headlines and industry trends about taxes, small business, financial decision making, investment strategies, and even the art of proper budgeting. Ask Ralph makes the complex simple by sharing his real world knowledge from a Christian perspective with all things financial.

Now here's your host, Ralph Estep Jr.

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Tonight's show, we've got some great questions to answer, and I'm going to answer your questions as well. But here's a quick preview. Let's meet Sarah. She's a single mom walking a financial tightrope who said to me, every month feels like I'm barely hanging on. As a Christian, I want to be a good steward, but I can't seem to get ahead.

I'm going to share some biblical wisdom and practical steps for single parents facing financial pressure. And then there's Marcus and his wife, who said he's doing everything right, but still feeling stuck and he tells me he says, we're tracking every penny but between our mortgage car payments and daily expenses, we can't seem to build any real wealth. I'm going to talk tonight about why discovering how tracking pennies isn't enough and the three major moves that could revolutionize your finances. And then there's Jennifer. She has the question many Christian business owners wrestle with and that is how can I honor God while building financial security? I'm going to explore some biblical perspective on wealth creation and some practical ways to align profit with purpose. Plus I'm going to break down Delaware's new family paid leave act and settle on the debate between 401ks and real estate investing. And a couple of questions from my friend Mark about self-employment income and social security.

I'm also going to answer your questions in the chat. Well buckle up because we're going full throttle on the show tonight. Well, thank you for joining me. This is your weekly opportunity to get your questions answered. Feel free to ask questions in the chat. Do me a favor. Just put a Q and a colon so I know the questions are seen.

Feel free to comment throughout the show. And I want to remind you, there's just one more week left on the Ask Ralph show survey. It's your opportunity to win a $250 Amazon gift card. And listen, it'll take less than five minutes. Again, that deadline is December the 10th. So you want to make sure you get your survey in right away.

You can go and do that at askralphpodcast.com/survey, and stick around because later in the show, one lucky listener is going to win a hundred-dollar Amazon gift card. That's later in the show. Well, let's start tonight with our Bible verse. I always like to ground things in scripture and Jeff, I see.

Thank you for joining the show. Well, let's start off with Proverbs and that's chapter 21, verse 20. And it's going to kind of play along with exactly what we're talking about on tonight's show. And it says this, "The wise store up choice food and olive oil, but fools gulp theirs down." And think about it for a second.

That verse perfectly captures what we're discussing tonight. And that's the difference between consuming everything we have and wisely building for the future. So let's jump right to our first question. And this question comes to us from Sarah. And Sarah writes this. She says, "Ralph, I'm a single mom with two kids, and every month feels like a financial tightrope walk. Last week, my car needed unexpected repairs, and I had to put groceries on my credit card. I feel ashamed because as a Christian, I want to be a good steward, but I can't seem to get ahead. How do I take those first steps towards stability without feeling overwhelmed?"

Now, let me just tell you, Sarah, that is a tough situation, and you definitely are on that financial tightrope walk and many parents, especially single parents face that same challenge. So I want to tell you first, you are not alone in the struggle. This intersection of faith and finances can be especially complex for single parents.

So let's break this down into some manageable steps. I'm just going to give you a few things. We're going to do a lot of questions tonight. The first thing I'm going to say to you Sarah, is it's time to release the shame. Listen, financial hardship isn't a moral failing. It's just not. In the Bible, we see many faithful people who faced economic challenges, from Ruth cleaning fields to feed her family, to the widow who sought Elisha's help with debt.

Don't live in this shame, break away from that, release that shame. Let's move on to number two option here, I think, and here's something you can do right away, Sarah. Start with small achievable goals. Track every expense that you have for a week just to understand your patterns. If you listen to my daily show, I say this all the time.

What gets measured gets done. So identify one small expense you could reduce and set, maybe you start by setting aside $5 a week for an emergency fund. Number three thing I'm going to tell you to do is consider some practical actions. One of the things you can do. A lot of churches have benevolence funds or financial counseling.

Maybe a great place to go and get some help. Look into local food banks and assistance programs. Another thing I'm going to tell you to do is review your bills and look for those unnecessary subscriptions. I don't know how many clients I've seen who have redundant subscriptions. I had a couple, a couple of weeks ago, husband and wife were both paying for Netflix.

They didn't even realize that they could have been sharing an account. And last but not least, explore some additional income sources that work with your schedule. And then finally, my last idea for you is build some community support. Listen, this is an opportunity to connect with other single parents for resource sharing.

Check to see if your church has childcare sharing options and look for a single parent support group. Those are all great things. And here I'm going to leave you one more piece of scripture, Sarah. The book of Philippians chapter 4:19 says this, "And my God will meet all of your needs according to the riches of his glory in Christ Jesus." And this doesn't mean immediate financial abundance, but it reminds us that seeking help is okay.

Before we get on to the next question, I see that Jeff has asked a question, so let's pull it over here into the thing and it says, Hey Ralph, can you explain the BOI report business owners need to fill out this year? Can we do it ourselves or should we pay a QuickBooks $100 to do it for us? Well, that is a great question, Jeff.

Let's talk about that. So back at the beginning of the year, what this is the beneficial ownership information reporting. Basically, it means that the department of justice is collecting information on the owners of every entity in the United States. So whether you're an LLC, an S corp, a corporation, any of those things, you've got until January 1st of 2025.

That's assuming that your entity was created before 2024 if it was created in 2024, you've only got 90 days. You might've missed that mark. Listen, we're doing this for our clients. We're also charging a hundred dollars because it takes time. What you've got to do is you've got to log into the site, and you've got to answer a bunch of questions.

You're going to need to upload copies of your driver's license. You're going to have to do a list, all the people who are beneficial owners of the company. Is it rocket science? Absolutely not. You can figure it out and it's not complicated, but it does take time. And that's why, like you said, QuickBooks is charging a hundred dollars.

We're charging a hundred dollars for that. But here's the key, Jeff, if you don't listen to anything else I say, get it done one way or another, because come January 1st, they can fine you thousands of dollars for not being registered. See, the whole point of this is they're trying to figure out who owns what companies so that they can say, well, this company is owned by this person.

This company is owned by this person. And what's interesting, it's the Department of Justice who is in charge of this, not the IRS, not the social security administration. So Jeff, that is a great question. And like I said, it depends on your sophistication level. If you can take a picture of the front and back of your driver's license, if you know your EIN number, if you know your home address, I hope you know that.

And if you know your business address, truth be told, you can really do it yourself. And I've had some clients who do it themselves and I've had other kinds of said, Ralph, just take care of it for us. We don't want to be bothered with it. So Jeff, that is a great question. And I thank you immensely for asking that.

So let's move on to our second question. We got this question. This is the one from Marcus and Marcus writes this. He says, Ralph, I've been following Dave Ramsey's advice and I'm tracking every penny in my budget app, but I still feel stuck. My wife and I make decent money, but between our mortgage car payments and daily expenses, we can't seem to build any real wealth.

We're tired of just existing. We want to start thriving. Marcus, let me tell you, I feel the stress, my friend. That is not a fun place to be. And I felt the same way at times. You feel stuck. It's not hard to feel stuck but let me do this. Let me paint a different picture for you tonight. Instead of just tracking those pennies, cause that can get you insanely crazy. Imagine money as water flowing through your house. Just picture this way. It's money. It's water flowing through your house. What's going on right now is most of it's dripping away through various faucets. Those are things like your mortgage, your car payments, those daily expenses.

The real question isn't about tracking those drips better. It's about redesigning the whole plumbing system. And here's what most people miss. Building wealth isn't primarily about saving. Listen to what I'm saying here. Building wealth isn't primarily about saving. It's about restructuring. Let's take a minute and talk about your car payments.

That's not just a monthly expense. If you think about it, it's a wealth activity flowing away from you. Think about this for a second. A $500 monthly payment means you're choosing to be $6,000 poorer every year. That's just a fact. So here are three practical moves to consider. You know, Marcus, I always want to give you things to do because good intentions are great, but they don't get you anywhere.

So let's talk about some things you can do. Number one thing, I'm going to encourage you to do this. Attack the big three. That's housing, transportation, and insurance. Because think about it. These typically eat up 70 percent of most people's budgets. You know, maybe you could consider a house hack by renting out a room in your home.

It might bring some extra income in. Let's be careful who you're running to. Maybe replace one car with a reliable used vehicle. So that's the first thing. Attack those three big things, housing, transportation, insurance, because truthfully, if you look at most people's budgets, that's 70 percent of their budgets.

The second thing, and you're not going to hear this on every show. A lot of people talk about expenses and saving nickels and eating beans and rice and all that stuff. I'm going to take a completely different approach. I want to focus on income growth. See, most people obsess over saving five bucks on coffee while ignoring the potential $10,000 raise they could get at work.

Ask yourself, what skills could you develop to increase your earnings power by 20 percent this year? Take the time to invest in yourself, grow your job, get that raise, build that income side. Listen, when I talk to clients, a lot of business clients come in, they're saying to Ralph, how's my business doing?

I look at the expense side some, but most of the time I look at the revenue side. You can do the same thing in your personal finances, figure out ways to grow your income. And then you don't have to stress so much about the $5 coffees and the nickels and dimes here. Another thing I'm going to encourage you to do.

Number three on my list here, Marcus, is build assets that pay you. Think about this. Every dollar that you have should either protect your future or build your wealth. Maybe it's time to start that small side business. I have a ton of clients who started small businesses. It's not going to be this million-dollar making thing, but it may bring enough income in
to really help you get through those tough times. And then you maybe talk to a broker and do some dividend paying stocks. So Marcus, I hope that really answers your question. So let's move on to question number three. And question number three comes from Jennifer. Jennifer writes this one. This is in this week's mailbag.

Jennifer says, as a Christian business owner of a small retail shop, I struggle daily with balancing profit making and biblical principles. My business is growing, but I feel guilty about wanting to build wealth. How can I honor God while building financial security?" Now listen, Jennifer, this question touches on something that I talk about all the time in the show, and that's that faith and commerce connections.

And you'd be shocked how many business owners wrestle with this. It's tough. You think about it, you say, well, you know, does God really want me to be prosperous? Does God really want me to make all this money? My answer is yes, but here's the thing you got to do. So I'm going to propose to you what I call a balanced perspective.

The Bible doesn't condemn wealth creation. It doesn't. Numerous faithful figures like Abraham, Job, Lydia were successful business people. Here's the key. The key lies in how wealth is acquired and used. That is really the thing. So Jennifer, listen to what I'm saying to you. It's not about building wealth.

It's about how that wealth is acquired and used. So consider these practical approaches. Here's what I'm going to encourage you to do. If you're feeling that way, if you're feeling guilty, look at your business practices. Ask yourself some questions. Do you pay fair wages and treat employees with dignity?

That's a question you can answer. Are you honest in all your transactions and pricing? I'll tell you a crazy story. I had a client in a month or two ago, and he was telling me, Ralph, I just don't understand why my business isn't thriving. And I looked him in the eyes, and I said, but I know how you do business.

You rip people off, dude, why do you think that God is going to honor that? So be honest in your transactions, be honest in your pricings and maintain transparency with your customers. Listen, your customers will expect that you're going to make a profit. That's what feeds your family. That's what keeps the lights on in your business.

But you can maintain transparency with them. And here's a big deal. Honor commitments to your suppliers and partners. If you're doing business to somebody, make sure you pay them. See, this is all the things that I'm talking about. Let's move on to the next thing. And that's financial stewardship. So Jennifer, you're wondering about, you know, should I build that profit?

Should I grow the business? And here's the thing you got to do. You've got to view those profits as a tool for both sustainability and service. And listen, this is one of the ways that you can set aside that wealth that you're growing for charitable giving. I say this on the show all the time. You're never going to bless anyone else until you get your own financial house in order.

So if you're seeing wealth, if God is giving that to you, it's going to open doors to charitable giving, and it could create some employment opportunities in your community. Maybe you can do some investment in your employee's wellbeing, give it back to your employees. And let's look at the final thing.

And that's that wealth perspective. And here's the truth. A lot of people don't want to talk about this in the secular world. You got to remember, you got to consider yourself a steward of what you have rather than an owner of it. We don't have anything. God gives us things. He loans us things with the idea that we're going to steward them, that we're going to take care of them.

We're going to honor Him. So use that and focus on creating value for others through your business. Use that growing success to increase the positive impact to the community and at all costs. Listen, if you hear nothing else I say, Jennifer, maintain humility and maintain gratitude. And listen, I'm going to share something with you.

Many Christian business owners find peace by establishing clear ethical guidelines, practicing regular giving and viewing their business as a ministry opportunity. This is why I do what I do. I am treated very well. God has richly blessed me. And last November, when I decided to relaunch this daily podcast, my goal at that point was this was going to be a ministry for me.

And it's an opportunity to show people how to get ahead. You can do the same thing with your business. Do it with excellent service and ethical leadership. So I know Jennifer, I gave you a lot to consider, but I really think that you got to focus on the positives of what you can do as you grow that wealth.

Now let's take a look here at question number four. All right. Question number four comes from somebody here local to me. It comes from Amie in Middletown, Delaware. And she says this, she says, what are the details about the family paid leave act in Delaware? Now, I've got listeners all over the world, but I'm going to focus on this for just a few minutes because a lot of States are doing this as well.

Now, Delaware has this thing called a paid family and medical leave insurance program. You might hear it called the PFML. Now it's going to go into effect January 1st of 2025. So I want to just take a couple minutes and share with you the details. Now, listen, if you're not in Delaware, there are many other States who are doing this.

So check with your local state and see if they're doing it as well. But in Delaware, this is what it looks like. So the benefits for your employees, it can give up to 12 weeks of paid leave. That's annually. And that's the maximum combined total for all types of leave. Basically what it works out to is up to 80 percent of the average weekly wages capped at $900 per week.

So if you've got, we're going to talk about this in a second, if your business is covered by this, then your employees can basically get $900 a week for up to 12 weeks of paid leave annually. And that includes things like parental leave. Like if you have a birth, if you have an adoption, if you have a child in foster care, it also brings along this medical leave for serious health conditions.

Or maybe you're caring for a family member that needs that. And there's also some military deployment related leave. Now here's what it looks like from eligibility. Employees must work at least 1,250 hours in the past 12 months. Now here's the thing, Amy, this is what you need to understand.

Because a lot of my clients and a lot of people who listen to the show are small businesspeople. In Delaware, it applies to employers with 10 or more employees for parental leave, and it applies to employers with 25 or more employees for other leave types and all state employees are covered. So generally, quick general thing here is if you don't have more than 10 employees, this isn't going to affect you.

Now, if you do, then here's what it's going to look like. Basically the way that it is funded, it's a joint contribution from employers and employees. The total premium is 0.8 percent of their wages, and that cost is split 0.4 percent for the employer and 0.4 percent for the employee. So it's really a win-win.

But like I said, it's only mandated in Delaware. I'm talking about now for those who have 10 or more employees. So Amie, I hope I've given you the answer to the question you're looking for. Now let's move on to question number five. Like I said, we are nailing some questions tonight. Now this one came to us from Anthony and Anthony wrote this.

He said, Hey Ralph, if you're able to cover this topic on a future episode, it would be great. I'd like to know your perspective on utilizing 401k funds for real estate investments. Seems to be a topic that many folks are split on. Positives of long-term real estate holdings would be the monthly cashflow, appreciation to the property, generally three to 5 percent per year, tax advantages in some capacity and not being taxed at an expected higher rate down the road compared to withdrawing funds from the 401k during retirement.

Now, on the other side of the fence, this is what Anthony says. He said, I've heard different talk shows deep dive into the advantages of 401k primarily due to the company match which he calls free money. And I agree with that, Anthony. We'll come back to that in a second and market increase expectation over time.

So you might be wondering, what is Anthony talking about? Here's what Anthony is really talking about. He's asking a very subtle but simple question. And what he is saying is he's saying, Ralph, am I better off to invest money in my 401k or should I go buy investment properties like real estate investing?

So that's really what I'm going to answer. I'm going to break it down in a way that helps everyone make smarter decisions with their money. Here's the first thing I'm going to say. Picture this. I said this on the show the other day. You're walking down the sidewalk, just having a nice afternoon stroll.

You look down on the sidewalk and there's a hundred-dollar bill laying on the sidewalk. The question I have for you is, do you bend over and pick it up or do you just keep walking? Well, think about it in this term. If your employer offers a 401k match, that means if you put money in, they match it. That's an immediate 50 to a hundred percent return on your investment.

And that's something you're not going to find anywhere else. So at a minimum, Anthony, here's my answer to you. At a minimum, bend over and pick up that hundred-dollar bill. Contribute enough to get the full match. Now let's talk a little bit about real estate versus traditional retirement accounts. But like I said, I'm starting off with, if you've got a match, do the match first.

Now here are the advantages to the 401k. It's an immediate tax deduction. So as soon as you put that money, it gets deferred from your paycheck, it's an immediate tax deduction. It reduces your federal taxable income. And a lot of people don't think about this. But let's just say you're in the 24 percent federal tax bracket. And let's say you're in Delaware and you're paying 6 percent state

Well, when you make that 401k deduction from your paycheck, you're getting a 30 percent return on your investment day one. I don't know another investment that does it that quickly. So that is huge. Here's the next thing. All of that money grows tax deferred in your 401k plan. You're not paying taxes on it like dividends or anything else.

It's deferred. Like I said, we mentioned that employer matching. There's usually low maintenance. You basically talk to your HR people. They set it and forget it. It's professionally managed. There's high liquidity. You can cash out if you want. And there's really not a lot of initial capital needed.

I mean, you could put as little as two bucks into the thing if you wanted to. Now, some employers might have. You know, some basic things, but this is something to consider. Now let's talk about the real estate advantages. So we're going to flip the script a little bit. As you said, Anthony, with real estate, yes, you might get that monthly cash flow.

And like you said, that's true. Property may appreciate in value. Right now, I am not a huge fan, especially in the market that I'm in up here of buying real estate, because I think things are just overpriced right now. It is definitely a seller's market. That may change here soon. I hope things don't happen like I expect they're going to happen. But right now I think to get that appreciation, anything that you're talking about that 3 to 5 percent appreciation, I think we're waiting a little bit more on that. So I would maybe wait till you get a little bit farther into that. Another great thing about the real estate advantage is if you have those tax deductions, yes, you can deduct the mortgage interest.

You can deduct the depreciation, the repairs and maintenance. So that's an inflation hedge and truthfully, yes, you're right, Anthony, you've got more control over that investment because it's right there in front of you and you can leverage that and buy other properties. So all of those things are definitely advantages.

Now there are a ton of caveats to that. Depending upon your income, you might not be able to take rental losses. So that's something you want to talk to somebody like me or a local tax person and accountant that's in your area and ask them about that. But here's my take, Anthony, you wanted me to give you an answer, so here's my answer. I'm going to start by saying it isn't either or situation. It's just not. It's not an either-or situation because if you're really smart, you can do both. And like I said, first thing you want to do is pick up that a hundred dollar bill off the sidewalk. So start with your company's 401k match.

If they're matching, you should go up to the match. Once you've done that, then consider real estate as part of your broader portfolio diversification strategy. And remember this though, a lot of people don't have the stomach for this. And I deal with a lot of clients that have real estate. Real estate requires hands-on management.

It's not like an investment that you do in your 401k. It's not like an investment that you park with your broker and the broker calls you occasionally and says, Hey Ralph, this is doing this, and this is doing that. It is a hands-on thing because this is a thing, and people will move out on you in the middle of the night.

People won't take care of it like you take care of it. There's all kinds of issues. And think about this also, Anthony. There is a big upfront capital outlay. You want to buy that house. You got to figure out how you're going to pay for it. Now you can get a mortgage, you can do all kinds of things like that, but you've got to lay out that capital at the front end.

And like Craig's here, AI goes to college. It says a big downside of some real estate investments are the unexpected expenses. And that is just the absolute truth. And a lot of clients get burned on that. So I always say, and thank you AI goes to college. Thank you, Craig. Because that's the truth. A lot of people don't understand what they're getting into, and they think, Oh, you know, my dad was one, he would always say, they're not making any more property, Ralph.

So go buy some rental properties. Well, I think you've got to have the stomach for that. You've really got to understand what you're getting into. So again, Anthony, I hope I've answered your question. I know there's a lot to cover there. Well, let's move on to, listen, I got two questions from Mark. I see Mark's in the chat room.

Mark has got a great podcast. It's called Practical Prepping. You can find that at practicalprepping.info, and I'm going to plug something. Mark just released an online course and I, I'm one of the first people to get it and it is fantastic. So I'm going to encourage you to go to that practicalprepping.info and check out his online course.

But Mark sent me two questions. So let's start with Mark's first question. And Mark said this, he said, how much of my side gig income should I set aside to cover self-employment if I'm not filing quarterly? Well Mark, you're not going to want to hear this, my friend, but I'm going to tell you it anyway.

The IRS expects you to pay as you earn. It sounds good that you can pay on April 15th, but that's not what the IRS is expecting you to do. They're expecting you to pay as you go. Just like when you work a regular job. Your employer handles this year withholding. You get that paycheck every Friday or every other Friday or once a month, your employer is matching your wages or matching your labor to when they're sending in those tax payments.

Well, the IRS wants you to do the same thing if you're doing self-employment. But with self-employment income, this is all on you. So Mark, I'm going to ask, I'm going to answer your question with a little bit of a hedge. Here's what I'm going to tell you. Here's what you definitely need to set aside. The first thing you want to consider is self-employment tax.

Now when you work for somebody else, that's that social security and Medicare, you pay half, and they pay half. But when you work for yourself, guess what? You pay the whole halves. You pay both halves. So that's 12.4 percent for social security. And that's up to that wage base limit. I just recorded a show the other day about the upcoming changes for social security for 2025.

And I talk about some of the changes that are going on there. But right now, that number is about $160,000. So you're going to pay that 12.4 percent until you reach that 167,000. And then you're also paying Medicare, which is 2.9%. And that one has no income limit. And listen, this is not negotiable.

You can't call the IRS and say, listen, guys, I'd really like to not pay both sides of this. Too bad. You're self-employed, you're paying both sides. So that's the self-employment tax, 15.3%. Now Mark, you also have to consider, income tax. Now this is where I'm going to say it depends. And the reason it depends is it depends on what your tax bracket is.

If you're already employed, what you should do is calculate based on your marginal tax rate. You're probably thinking, Ralph, what does that mean? Marginal tax rate basically means that let me back up a step. So the tax system in the United States is a progressive tax. So you pay tax on income and that tax rate goes up as your income goes up, but not all of that income is taxed at that highest rate.

That highest rate is what we call the marginal rate. Let me give you a real simple example. Let's say that you're in the 12 percent tax rate. You make up to let's just throw a number out there, $30,000. So your first $10,000 of income is basically taxed at zero. Then your next 20 to get to 30 is taxed at 12%.

And then once you go over 30, that next batch of income or that next segment of income is taxed at 24%. So that would be your marginal rate. So what I'm saying here is if you've got that W-2 job, or you've got investments, or you've got pension income, if you've got social security, that's a little bit complicated but you're going to be paying tax at what I call the marginal rate. So here's what I'm going to tell you to do. Assume that your marginal rate is 24%, add 5 to 10 percent just to be a buffer. Now last thing. You don't want to forget this either. And that state and local taxes. A lot of people miss this part.

They think, okay, Ralph, I've got to put 15 percent aside for social security tax. I got to put another 24 percent aside for federal taxes. And Ralph said to add a little buffer. So I'm just going to make it 30%. So now I'm at 45%, but then don't forget about those local taxes and state taxes. And listen, it depends on where you live.

Some States like Tennessee have no state income tax. Florida has no state income tax. Some places have state income tax, local income tax, city income tax. That can be anywhere. There are, there are places in Tennessee, even though they don't have a state income tax, that have a local tax that's as high as 13%.

So check your local tax rates. Now Mark, I've thrown a ton of things at you, but here's what I'm going to tell you. At an absolute minimum, minimum, take 25 percent of whatever your gross income is from your side gig, 25%. If you want to be conservative, make that 30 to 35%. And if you've got income over about 50 or $60,000 as a couple or about $50,000 individually, you better make that 40%.

That's what I generally tell clients. I say, look, if you've got a self-employment job, set aside 40%. Now let me talk about some warning signs that you might not be saving enough. Here's the thing, some things to think about. If your side gig makes over a thousand dollars per quarter, you're probably not paying in enough. If you owe more than a thousand dollars in taxes for the year, you're probably not putting in enough. And if you're withholding from other jobs, doesn't cover the additional income, you probably have a problem. So one of the things that a lot of my clients do, if they've got that side business, they might change their withholding on their main job to a higher amount. So it covers that because listen, when we file a tax return, truth be told, the IRS doesn't care what bucket it comes from. They just want their bucket. So here's some smart practices. Mark, I'm going to throw some things that you can do right away. Open up a separate savings account just for taxes and take that 40 percent and put it in that savings account.

And here's another thing I'm going to encourage you to do. Transfer that tax percentage immediately when you get paid. So if you've got a contract, let's say you did a job and you're getting, let's say you're a contractor and you did a job and you get paid for that, as you deposit that money in your business checking account or your checking account, take that 40 percent and put it in that savings account.

But here's the deal. When you go to get your taxes done, you might get some of that back, but then it's found money. The next thing you want to do, this is absolutely critical because I've been talking about gross income, but you don't pay taxes on your gross income. You pay it on the net income. So this is where you want to keep detailed records of your income and expenses.

Because if you come to somebody like me, you bring me a shoe box. I'm not going to be happy with you. You're not going to be happy with it either, because I'm going to charge you a lot. So keep track of your income, keep track of your expenses. And this is not rocket science. You're coming to me. Here's what I want to know.

How much did you make in income? You know, what was the money that was deposited into your bank account for sales? And then I want you to tell me your expenses and it doesn't have to be complicated. What did you spend on this? What did you, so just categorize those things and last but not least, save receipts for business related deductions, because you don't want that little knock at the door from the IRS that says, Hey Mark, guess what?

It's your friends from the IRS and we're here to audit you. Keep receipts, keep detailed records. And I'm just going to say one more thing, Mark. Not filing quarterly can result in penalties. That's why if you go to an accountant, they might give you these little nasty things called quarterly estimated tax payments.

That's because the IRS will charge you a penalty if you don't pay as you go, or if you have that underpayment at the end of the year. And I'm going to call it an interest charge because it's exactly what it has. Now I've got some clients. They don't care. They're like, Ralph, the IRS can stick it. I'll pay them when I want to pay them, but just be prepared that you may get hit with a penalty.

If you want to avoid those penalties, you can make quarterly estimated tax payments or like I said, increase your withholding on your other job to cover that. And listen. Last but not least, Mark on this question, consider working with a tax professional, especially in your first year of significant side income.

I'm going to tell you right now, the cost of service is tax deductible. And by working with somebody like me, you could save money in the long run. This is not the place for that DIY, do it yourself project. So hopefully, Mark, I've answered your question and Mark, I'm going to move on to your next question.

That's question number seven here tonight. And this is a great question, Mark. No one's ever asked me this. So I actually had to do some digging and prepare for tonight's show. I'm glad you sent it over ahead of time, or you might've stumped me on the live show. And this is what Mark asked. He said, will paying taxes and social security on part time jobs or self-employment tax on small business income ever increase the social security I already receive?

Wow, that's a great question Mark. So I came up with an explanation. So here's the good news. The good news is there's nothing you need to do. From what I understand, I've done some research on this this afternoon. Social security, the administration will automatically review your earnings record annually.

There's new reporting. There's new earnings are reported like, let's see what I got a W-2 job. That will be added. Or maybe when you file that tax return and you pay that self employment tax, that would be put into that as well. And what they tell me is recalculations happen automatically each year and any increases appear in December payments for the following year.

But here's what I'm going to encourage you to do. You can double check their math. How do you do that? You review your earnings record online. So if you don't have an account, go to ssa.gov and create an account and go see what they have for your earnings. And then what you want to do is verify those recent earnings appearing correctly, make sure they're there.

And if you find that they missed, gather the proof of that and call the social security administration or you can file online with them I'll give you the number for social security if you want to wait on hold. I think online is better, but the number is 800-772-1213. Again the social security administration number go to ssa.gov and get an account but if you're old school when you want to call, go to 800-772-1213. And then you also can schedule an appointment with your local office. Now here's the thing. For self-employment, this is what you're really asking about. Earnings are recorded after you file your tax return, and it may take a while for them to appear.

So keep good records of those net earnings. So the answer to your question, Mark, big picture is that usually this is what you're going to look for. Usually current year earnings show up by September of the next year. So if you're filing your tax return for 2024 and you've got substantial self-employment income, don't expect to see that on your record until 2025 September.

And then if there's going to be an increase, that's going to start with your December payment and that first increase arrives in January. Now here's the downside Mark. I don't think this is what you wanted to hear, but if you've already had all of those high earnings years, it's really not going to make an impact.

So that's just the bottom line. So let's move on to the next question. I see we've got a question here in the chat and let me see what we got here. So I'm coming from AI goes to college. It says the self-employment tax should count towards your number of quarters, assuming there's some potential income, right?

Yes, correct. That is absolutely right. That's exactly what they say in their documentation. So if that self-employment income is a greater amount than one of the other quarters or one of the things they mentioned in their documentation was, let's say that you didn't have all of the quarters so that you were penalized and your, your benefits were a little less.

What they tell me is that these self-employment income dollars should add to that. So that's one of the things I'm going to encourage you to do. So check that out. Great question. I appreciate you sending that question over. So let's take a look here and see if I see any more questions here in the chat.

I'm going to grab a quick drink here because I've been talking for about 41 minutes straight and you know, sometimes I just need to take a break there. And if you got a question, feel free to post it right there in the chat. I'm happy to answer it. We're going to launch our giveaway tonight. But before we get to that, I'm going to ask you this question.

It's almost Christmas time. A lot of people this time of year is stressful for them. So let me ask you this. Are you losing sleep wondering how you're going to afford everything on your holiday list? Are you tired of starting every new year buried under a mountain of holiday debt? Do you want to create magical Christmas memories without the financial stress that usually comes with them?

I've got a guide for you. I'm going to give you some peace of mind. I wrote a guide. It's called Surviving the Holidays Without Going Broke. Hey, we all want to do that. And in that guide, I'm going to give you a proven budget system that actually works. If you follow it, it will help you. I'm going to share some smart shopping strategies to slash your costs.

I'm going to show you ways to create magical memories without maxing out those credit cards, because here's the dirty little trick. Nobody remembers what you bought them. It's all about those memories. It's those experiences. Also part of the guide, I'm going to help you teach your kids and grandkids some gratitude.

And I say, you know, gratitude in this give me more world. And the central component of this is how to keep your faith and family at the center of your celebration, because that's really what we're celebrating. So here's what I say. Don't let January's credit card bill steal your holiday joy. Download your free guide.

It's really simple to get it. You go to askralphpodcast.com/christmas and listen, make this your most meaningful and dare I say affordable holiday season yet. Your stress free holiday season starts here. Again, that's at askralphpodcast.com/drawing. Now what everybody's been waiting for.

This is the hundred-dollar gift card giveaway. Let me get to this. Let me make sure I can get this to work. The first week we struggled, Ralph struggled. I should say that's a better way to say it. So let's go ahead and hit start here. All right, cool. So now what you're going to do, if you're interested in entering the contest, all you've got to do is go into the chat and type in #askralph.

Once you do that, you should see that your name should appear in the little box on the screen. And while we're doing that, if anybody has any other questions, we can go, you can go ahead and answer, ask them if you want. So it doesn't look like anybody yet has typed in #askralph. If you don't type it in, you can't win the Amazon gift card.

So I'm going to encourage you to type it in, just type in #askralph. And then we'll get started with this contest. So I want you to do that because this is what I'm trying to do. Mark, I appreciate what you said. Let me see what Mark put this over. Here we go. Somebody's entered. So now the clock ticking starts.

So Mark just made a comment and Mark says, great answers in the past. My W-2 and income covered enough of the self-employment tax, but no longer that, you no longer have that W-2. That's exactly right, Mark. That's the whole point. Exactly what I'm saying. Now, if you type it in, make sure you type in #askralph with no space.

So it's got to be exactly #askralph. So you're absolutely right, Mark. And that's what happens. A lot of people, they have that W-2 and maybe they have that side business. And that's cool. But like you said, then what happens is when you don't have that side business anymore, you come in to see somebody like me.
[00:40:47] Ralph Estep, Jr.: And all of a sudden, it's like, Shazam, you get whaled by the tax man. You don't know how many people Mark I've had that have dealt with that. It is really difficult. Again, put in #askralph. Don't put in any space, just #askralph. And you should see your picture, or your icon pop up.

Looks like we've got five people entered in there so far. So the good news is the technology is working. I'm learning how to use this technology, which is great. And like I said, again, you know, we're going to be doing this every week. If we get more viewers to come on, here's my commitment to you for every additional 10 viewers, I'm going to add another $25 to the gift card.

So if we get 20 viewers, we'll go up to 125. Listen, my whole goal here is to help people grow their finances and grow their faith at the same time, because listen, not everybody has the answers. I've been blessed to be given some knowledge. I've been blessed to deal with people who have gone through these things that all of us face.

All of us face these things. We all fall short. We all make mistakes. So that's why I really appreciate your questions and Mark, thank you for the comment because that is absolutely correct. That is absolutely correct. And I just want to thank everybody who turned out tonight and, and I encourage, you know, come each week if you can make it.

I'm here to answer your questions. You're not going to get a bill from me. In fact, if you win the gift card, I know the lady who won last week, she was ecstatic. She happened to be a person that goes to our church. She came up to me at church. She goes Ralph, I was so excited. She said I never win anything. So she was just flabbergasted and happy and that made me feel good too because listen, God has richly blessed me and my goal, like I said, my mission field is to help people grow their finances and grow in their faith because the two things really do go hand in hand.

So anybody else have any questions here as this countdown goes, we've got another two and a half minutes. If anybody else is in the room, there are people that in the room that haven't signed up for the giveaway. I'm going to encourage you to do that. Just go #askralph. And then once this is done, I'll get your email address, and you will get a hundred-dollar Amazon gift card.

If you're the lucky winner tonight, so don't forget to enter. Like I said, there's, there's more people in the chat room that haven't entered. So make sure you've entered. It looks like Jeff has entered, Mark has entered, let's see, Salty Waters has entered, AI Goes to College has entered, PokémonGuy3309 has entered. I like the Dallas Cowboys thing. I'm a Dallas Cowboy fan as well. I'm betting Jeff might be as well. I know Jeff is down in that area too. So, and thank you. Thank you, Craig. I appreciate what you said there is. Great advice as always. You know advice here is free Craig. I appreciate your comment though.

That's really good to hear. You know when you do podcasting and there's a couple of other podcasters in the room here say, you know I didn't start this live show till about seven or eight weeks ago and it's so cool because you get feedback. You know, every day when I record my podcast and if you didn't know that I do a daily show, and you can get that by going to askralph.com.

Hey, there we go. Somebody else has just joined the contest here, but you know, when you do your normal podcast, you don't do it live. You're just talking into a camera; you're talking into a microphone, and you don't get that feedback. And it's really cool in a live show. We get feedback, we get to have that community.

So I'm going to encourage you, continue to come out on Tuesday nights. If you know somebody that could benefit from that, if they've got financial or faith questions, the two things match together, encourage them. It's really simple. Just go to askralph.com, or excuse me, askralphpodcast.com/live. And you see what we do.

We answer questions. We got some questions that were sent in, and I appreciate anybody that did that. We get questions that are asked in the chat. We got 38 seconds left. And then this thing is going to give somebody a hundred-dollar gift card. So if you haven't entered so far, I would really appreciate it.

And Jeff, I thank you for your comment there. That really feels good to me, Jeff, for you to say that. So, and I want to thank Jeff too. Jeff really helped me with the technology that goes behind this. He helped me put these slides together and I know I'm probably not looking into the camera all the time, Jeff, but trying to run the stream deck and run the camera and run the contest and watch everybody's comments is fun.

So, but thank you, Jeff. I truly do appreciate that. Okay. It looks like we've got about five, four, three, two, one. Okay. Now the magic of the app is going to shuffle these things together and it's going to automatically give us a winner here in a second. There we go. Let's see who the winner is tonight.

It's doing the magic of selecting. Let's see who the big winner is tonight.

Right. It's doing it. Let's see. And the winner is Mark Lawley. Fantastic, Mark. You've won the hundred-dollar Amazon gift card. So Mark, again, thank you for tuning in tonight. And I'm sure that'll go a little bit ways to getting a little extra money for the Christmas season. So, and Jeff, I agree with you.

I'm over to place on my live show. I hear that brother. All right. Well, let me just say a couple more things. Like I said, if you have questions and you didn't have a chance to get them answered tonight, you can go to justaskralph.com, submit your questions. I would really appreciate it. And listen, I'm going to ask you for one more favor before we close out tonight.

I'm really trying to grow the show because I want to reach more people. One of the best ways you can do that is you can share the show with others who will benefit from the information I present. Like I said, I do this every day. And it's real simple. Here's a simple way to do it. Just send him an email with a link, send them askralph.com and tell him, listen, I listened to this crazy guy, Ralph. He's lost his mind. He talks all over the place and I'm just kidding, but just tell him, listen, this show has helped me. Maybe it's given you some ideas. Maybe it's given you some faith. Maybe it's given you some feeling like you're not alone on this journey because here's the thing about podcasting.

Here's the thing about YouTube and shows and Rumble and all that stuff. Word of mouth is the key. And if you can share this with your friends and family, I know we can grow this and we'll see even more people. So thank you for joining me today. Again, every Tuesday evening at 7 PM Eastern time, share the show with friends.

And here's what I want to leave you. As I always end my show, my passion is to help you achieve financial success. That's why I do what I do. That's why I turn on this microphone. I turn on this camera. I plan these episodes out because I want to see you achieve financial success. I want to see you live out your dreams at the same time, grow in your faith.

And I know working together when you join the show, when you subscribe to the show, we can master your finances from that Christian perspective. So as I always end the show, I want to say this. Stay financially savvy out there and may God bless you abundantly. Again, thanks for joining me tonight. I truly do appreciate it.

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00:47:56

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