RPF0638-Asset_Protection_Planning_for_Mere_Mortals_-_Part_11_-_Wage_Exemption_Planning
00:00:00.000 | - Big Boyz Comedy Kings is coming to Yamaha Resort and Casino
00:00:03.200 | Saturday, December 9th with D.L. Hughley.
00:00:05.840 | - That sweater so tight, it look like a snap between the legs.
00:00:08.240 | - Cedric the Entertainer.
00:00:09.540 | - Once we stop running, I'll find out what it was we was running about.
00:00:13.080 | - And Paul Rodriguez.
00:00:14.340 | - What is it about old Mexican men?
00:00:15.980 | They could be missing a leg, they still want to get into a fight.
00:00:18.480 | - Hosted by my man Eric Blake and a special performance by Mario.
00:00:21.880 | Big Boyz Comedy Kings, December 9th at Yamaha Resort and Casino.
00:00:25.320 | Tickets can be purchased at AXS.com.
00:00:27.920 | This is a 21 and over event.
00:00:30.860 | Welcome to Radical Personal Finance, a show dedicated to providing you with the
00:00:33.440 | knowledge, skills, insight, and encouragement you need to live a rich and
00:00:36.940 | meaningful life now while building a plan for financial freedom in 10 years or less.
00:00:41.780 | Today, we pick up our Asset Protection Planning for Mere Mortals series.
00:00:46.220 | Back to some technical financial planning in today's show.
00:00:49.680 | This is part 11 of the series wherein we discuss wage exemption planning.
00:00:55.480 | This episode will not be the last in this series, but this is the last of the
00:01:00.620 | exemptions that we need to cover.
00:01:03.360 | The concept behind this Asset Protection Planning for Mere Mortals series is to
00:01:07.800 | give ordinary people who are engaged in fairly ordinary lifestyles some
00:01:13.240 | information on how you can set yourself up to be protected, to have your assets
00:01:18.080 | protected in case you face some kind of significant legal threat.
00:01:22.540 | And so we're dealing with the very basics.
00:01:24.620 | Basics number one is exemption planning.
00:01:26.640 | Today, we round out exemption planning.
00:01:28.820 | I think we'll talk a little bit about asset titling.
00:01:30.860 | We'll talk a little bit about some basic business structures.
00:01:34.060 | And I think I'll leave this series alone with those basics.
00:01:37.320 | I'm not going to get into any advanced concepts, any trusts, any offshore
00:01:41.860 | planning, et cetera, in this particular series.
00:01:45.440 | But today, I want to talk about wage exemption planning.
00:01:47.760 | Now, wage exemption planning is one of those funny little ones because it's very
00:01:52.400 | different than some of the other things that we've talked about.
00:01:54.300 | With all the other exemption planning ideas that we have discussed, we've
00:01:58.580 | talked about how do you protect an asset.
00:02:01.540 | But today, we're talking about how do you protect your income against wage
00:02:07.020 | garnishment.
00:02:07.980 | Well, why would your wages be garnished?
00:02:10.460 | Most of the reasons why your wages would be garnished are not related to some of
00:02:15.800 | the legal threats that we've largely focused on in this particular series.
00:02:20.760 | It is the case that your wages could be garnished as a result of a judgment being
00:02:27.900 | entered against you in a court.
00:02:29.700 | You are sued by somebody.
00:02:31.140 | That person wins the lawsuit.
00:02:33.180 | You submit to the debtors examination, to your judgment creditors, and you don't
00:02:39.620 | have any money.
00:02:40.420 | And so they say, "Well, we've got this judgment against you.
00:02:42.920 | You don't have any money.
00:02:44.420 | You don't have any assets that we can take."
00:02:46.360 | And so they can, in some circumstances, go ahead and say, "Well, we're going to
00:02:50.660 | garnish your wages."
00:02:51.860 | And wage garnishment simply means that some of your paycheck is going to be sent
00:02:57.600 | directly to your creditors rather than being given to you.
00:03:02.100 | The way the process actually works is you lose the lawsuit, the judgment is entered
00:03:08.580 | against you, the person, the attorney who wins the lawsuit against you will take a
00:03:12.620 | copy of the court order to the local sheriff, and then the local sheriff will
00:03:17.820 | bring that to your employer.
00:03:19.660 | Your employer will then notify you that your wages are going to be garnished, and
00:03:24.360 | your employer will have the responsibility of withholding part of your wages, and
00:03:29.500 | they will send that money directly to your creditor.
00:03:33.200 | So the idea is you'll be working, but somebody else will be receiving some or
00:03:37.940 | much of your paycheck.
00:03:40.180 | Most of the time, the reasons that wages are garnished are more related to things
00:03:44.580 | like child support or back taxes or sometimes things like student loans,
00:03:50.220 | because the pathway to wage garnishment is fairly direct for child support, student
00:03:55.180 | loans, and back taxes.
00:03:56.660 | The tax agencies, they don't have to sue you.
00:03:58.260 | They don't have to go through the long process.
00:04:00.860 | And so those are each unique risks that in some cases can be simply avoided,
00:04:04.820 | unlike the major legal risks that we've talked about throughout this series.
00:04:09.960 | If you don't ever take out a student loan, you don't face the risk of your wages
00:04:14.100 | being garnished by a student loan company.
00:04:17.300 | That's why I recommend not taking out student loans.
00:04:19.700 | They're extremely dangerous.
00:04:20.980 | There are much better ways to finance your educational expenses than student loans.
00:04:27.500 | Similarly, if you don't owe child support or you're not divorced,
00:04:31.820 | you don't owe child support, then your wages aren't going to be garnished.
00:04:35.660 | And then taxes, if you can keep up on your taxes,
00:04:38.420 | then you aren't going to have your wages garnished.
00:04:41.100 | And wage garnishment seems to be more likely used many times
00:04:45.420 | by state tax agencies, not necessarily against the IRS.
00:04:50.220 | Now, I don't know that to be a fact.
00:04:51.820 | That's just my guess as I survey the information that
00:04:56.180 | comes through, comes past my eyeballs.
00:04:58.980 | So that's different than the legal risks that we've talked about,
00:05:01.980 | you're being sued and then having that court judgment.
00:05:05.660 | So for those other risks, we have to do some other planning.
00:05:10.780 | For example, child support is very, very difficult.
00:05:14.660 | Many, many wages are subject, are garnished because of child support
00:05:20.740 | obligations.
00:05:21.900 | In fact, since the late '80s, all child support orders
00:05:25.700 | include an automatic wage withholding order.
00:05:30.020 | And so once that's in place, it makes it very easy for your wages
00:05:34.620 | to be garnished.
00:05:35.700 | And in fact, there are actually higher limits in many states
00:05:40.980 | as to the amount of your pay that can be garnished
00:05:43.100 | if you have child support obligations as compared to just simply owing
00:05:47.660 | some other type of creditor.
00:05:49.740 | So it can be a real challenge.
00:05:51.300 | It's a real burden.
00:05:55.020 | The strategies that are effective for discharging your child support
00:05:58.420 | obligations almost all have to be done prior
00:06:01.380 | to the finalization of a divorce decree.
00:06:04.580 | Because the government is deeply committed to making sure
00:06:10.180 | that child support gets paid, deeply, deeply committed.
00:06:13.220 | I mean, there's all kinds of crazy stuff.
00:06:14.940 | First of all, at the end result, there's
00:06:17.060 | all kinds of shaming things.
00:06:18.380 | Many states publish the names and photos of people
00:06:21.740 | who are behind on child support obligations
00:06:24.540 | to engage in public shaming operations.
00:06:26.860 | Many states-- there are many people in prison for many people
00:06:32.620 | who simply haven't paid child support, and they're in prison
00:06:34.700 | because they're held in civil contempt of court.
00:06:37.540 | And so most of your strategies for child support obligations
00:06:40.340 | have to occur before the divorce decree.
00:06:43.060 | That's a subject for another day.
00:06:45.940 | Never known if I want to do that show or not.
00:06:47.900 | But it doesn't help.
00:06:49.460 | It doesn't help with wage garnishment.
00:06:51.340 | Student loans are interesting, but they're fairly simple to get forward.
00:06:55.260 | If you will just talk to them and you'll keep it going,
00:06:57.500 | you can oftentimes get out of the student loan
00:06:59.500 | garnishment and taxing agencies.
00:07:01.020 | You can deal with them.
00:07:02.300 | But what do you do if you do face wage garnishment?
00:07:07.580 | First, there are wage exemptions that are in place.
00:07:14.100 | And in fact, all states have some formula
00:07:18.540 | that discusses wage exemptions.
00:07:21.460 | Now, the states vary in terms of how much of the wages
00:07:26.300 | that they protect.
00:07:28.860 | The federal wage garnishment exemptions
00:07:32.460 | limit the ability of a judgment creditor in their garnishment
00:07:36.700 | to these numbers.
00:07:37.780 | Either they can garnish the lesser of--
00:07:42.180 | they can garnish the lesser of either 25%
00:07:45.820 | of your disposable earnings or your weekly disposable earnings
00:07:52.300 | less 30 times the federal minimum wage, which is currently $7.25 an hour.
00:07:57.580 | So let's define the terms.
00:07:58.980 | What are your disposable earnings?
00:08:01.780 | Well, your disposable earnings are your gross pay minus taxes
00:08:08.020 | and mandatory deductions.
00:08:10.340 | Mandatory deductions is any deduction that your employer is legally
00:08:14.140 | required to withhold from your paycheck, things
00:08:17.100 | like Social Security and the federal, state, and local taxes.
00:08:21.580 | The mandatory deductions does not include any kind of savings.
00:08:24.700 | It doesn't include your insurance contributions or your 401(k)
00:08:28.620 | contributions or anything that's not required by law.
00:08:32.180 | It's only those things that are required by law, mainly taxes
00:08:35.300 | and federal income taxes and employment taxes.
00:08:39.420 | So to figure out the numbers, you can first
00:08:43.340 | start by calculating what 30 times the federal minimum wage is,
00:08:47.060 | basically 30 hours of work at $7.25 per hour.
00:08:50.780 | That number comes out to $217.50.
00:08:55.140 | If you make less than $217.50 per week, then your wages
00:09:02.860 | can't be garnished under the federal guidelines
00:09:04.900 | because you just make too little.
00:09:07.340 | So if you make a higher number-- so for example,
00:09:09.540 | let's say that you make $500 per week--
00:09:11.980 | then either the garnisher can garnish the lesser of 25%
00:09:19.300 | of that number, which would be $125 if we just
00:09:23.300 | go with the percentage, or $282.50, which is $500,
00:09:29.660 | the weekly wages, minus that 30 times the minimum wage, $217.50.
00:09:36.380 | So in that case, the creditor would
00:09:38.140 | be limited to the total, which was 25% would be $125 per week.
00:09:45.540 | That's how much that they could garnish.
00:09:47.180 | Now, there are other limits and things
00:09:49.140 | that are imposed depending on it.
00:09:51.500 | And you can look it up, the individual rules
00:09:53.420 | for your state.
00:09:54.660 | Each state has their own individual limitations
00:09:57.500 | and rules.
00:09:59.700 | So you need to look that up and understand
00:10:01.340 | what they are for your state.
00:10:02.580 | But let's get right to the strategies for how do
00:10:05.620 | you cover your exempt wages.
00:10:07.820 | Well, the first strategy that you have
00:10:09.380 | is simply to move to a state that protects wages.
00:10:12.820 | So just like with every other exemption
00:10:15.100 | that we have discussed, each state treats wages differently.
00:10:18.620 | And there, in this case, are a handful
00:10:20.580 | of states that either provide significant exemptions
00:10:25.740 | or they provide for no wage attachment whatsoever.
00:10:31.020 | Let's deal with the ones that are--
00:10:33.380 | let's do them in alphabetical order.
00:10:35.380 | In first place, we have Florida.
00:10:37.740 | So like with many other things, Florida
00:10:40.420 | has an excellent ability to protect wages
00:10:43.700 | if you can file as the head of a household.
00:10:47.420 | So if you can file as a head of household, a head of family,
00:10:51.380 | then Florida will not allow wage garnishment,
00:10:55.300 | which is extremely helpful.
00:10:58.060 | The way that you qualify as a head of household
00:11:00.940 | is by providing more than one half of the support
00:11:04.660 | of another person.
00:11:06.780 | So it doesn't matter whether you are married, divorced, never
00:11:10.260 | married, widowed, anything, just living alone even.
00:11:13.300 | If you provide more than one half of the support
00:11:17.020 | for another person, even if that person doesn't live with you,
00:11:21.140 | then you can qualify as a head of household, a head of family,
00:11:24.860 | which is very, very helpful.
00:11:26.460 | Because with that, all of your wages
00:11:28.820 | can be protected from wage garnishment.
00:11:32.580 | Now remember, way, way back in the series,
00:11:35.260 | I said one of the basic strategies to always keep
00:11:37.420 | in mind is move to Florida.
00:11:39.340 | And we've talked through again and again why.
00:11:42.060 | Because of Florida's generous provisions
00:11:44.540 | for their homestead laws, Florida's generous provisions
00:11:47.740 | for protecting 401(k)s, IRAs, Roth IRAs, college savings
00:11:53.100 | accounts, et cetera.
00:11:54.540 | And now in this case, we kind of round out
00:11:56.460 | the reason why one of the things you should keep in mind
00:11:59.420 | is, well, move to Florida.
00:12:01.140 | Now the only place where Florida is weak
00:12:03.140 | when it comes to bankruptcy and creditor protection laws
00:12:05.820 | is with regard to personal property.
00:12:09.340 | Florida does not have generous personal property exemptions.
00:12:13.140 | Now in this case, thankfully, Florida is not alone.
00:12:15.540 | There are three other states, at least, that I'm aware of,
00:12:18.020 | that don't allow wage attachment at all.
00:12:21.340 | And Florida only works if you can
00:12:23.060 | file as head of household.
00:12:24.340 | So if you are a single individual not providing
00:12:27.620 | support for at least 50% of the support for a dependent,
00:12:31.140 | then the Florida strategy in this case for wage exemption
00:12:34.260 | doesn't work.
00:12:34.980 | But in your case, you should consider Pennsylvania, South
00:12:37.980 | Dakota, or-- sorry, South Carolina, not South Dakota.
00:12:40.540 | Pennsylvania, South Carolina, or Texas.
00:12:43.340 | Pennsylvania provides no wage attachment except for taxes
00:12:47.820 | and child support.
00:12:49.500 | So that can be helpful.
00:12:50.700 | South Carolina, in South Carolina,
00:12:52.900 | wage attachment is prohibited.
00:12:55.020 | And in Texas, wages cannot be attached or garnished
00:12:59.180 | except for child support.
00:13:00.980 | Again, that's why I tried to point out to you,
00:13:02.900 | child support is a very, very challenging proposition.
00:13:06.740 | More than anything else that I'm aware of,
00:13:09.780 | it is just the states and the federal government
00:13:12.700 | are very, very serious about enforcing child support
00:13:16.340 | judgments.
00:13:17.700 | So the idea is, if you move to one of those states,
00:13:22.740 | there is a strong chance, at least that I'm aware of,
00:13:25.900 | there's a very strong chance that you can live in those
00:13:29.380 | states and that you can protect your income.
00:13:33.820 | Now, the only thing that I'm aware of
00:13:36.700 | is I think that if you live in Texas,
00:13:41.180 | there's one lawsuit somewhere.
00:13:44.100 | If you live in Texas and yet your employer
00:13:46.900 | pays you from another state location, then in that case,
00:13:50.900 | you may still be subject to the claims of another state.
00:13:54.420 | So just be careful about that, making sure
00:13:57.260 | that if you're going to live in Texas
00:13:59.220 | that you are actually getting your wages from Texas
00:14:03.300 | so that your creditor can't go to the state
00:14:07.060 | where your company is located and then file the wage
00:14:10.140 | garnishment there.
00:14:11.140 | So make sure that you're protected there.
00:14:13.220 | So it's best if you're working in Florida, Texas, South
00:14:15.820 | Carolina, et cetera, make sure you're
00:14:16.820 | working for a company in there.
00:14:18.420 | But I want you to think about this.
00:14:20.020 | If wage garnishment is causing you major, major problems,
00:14:23.980 | if you can simply move to a state that protects those
00:14:27.100 | wages, you may be able to rebuild your life
00:14:30.100 | and put your life back together, which
00:14:32.020 | is the whole goal of some of these ideas.
00:14:37.180 | As I try to deal with in episode two of this series
00:14:39.300 | where we talked about the ethics and the morality of this,
00:14:42.340 | I want you to pay your debts, debts
00:14:44.580 | that you are morally obligated to pay,
00:14:46.860 | I want you to pay those.
00:14:48.580 | And debts that you are legally obligated to pay,
00:14:50.660 | whether you are morally responsible or not,
00:14:52.580 | unless you are taking a moral stand by willfully not paying
00:14:57.580 | something that is legally imposed on you because
00:15:00.260 | the imposition of that debt is immoral, in general,
00:15:03.060 | you're going to need to pay the legal debts,
00:15:04.900 | because your life just becomes difficult if you don't pay
00:15:07.700 | them.
00:15:08.180 | So you've got to pay the debts.
00:15:09.300 | You owe them morally for the debts
00:15:10.820 | that you're morally responsible for.
00:15:12.580 | And then legally, you generally need to clear them.
00:15:15.020 | The problem is, how do you fight?
00:15:17.700 | How do you make it happen?
00:15:19.340 | And sometimes, if you're just simply
00:15:21.100 | having all your money sucked out,
00:15:22.540 | your bank accounts are sucked dry,
00:15:24.380 | your income is sucked up, you can't rebuild.
00:15:27.180 | And this is especially the case if you owe a lot of money.
00:15:32.340 | Example, if you owe $5,000, and you're working,
00:15:36.020 | and your wages are being garnished to the tune of $200
00:15:39.500 | per month, well, I don't think it's worth it for you
00:15:42.220 | to move states over just a measly $200 a month wage
00:15:46.180 | garnishment.
00:15:47.220 | Just let that sit there.
00:15:48.540 | And in a couple of years, you'll have that debt paid off.
00:15:51.260 | And once the debt is fully satisfied,
00:15:54.140 | the wage garnishment stops.
00:15:55.640 | And if you're just working a job and making money,
00:15:58.700 | then it probably just simply makes
00:16:00.620 | your life easy to have it go directly from your paycheck
00:16:03.460 | to the creditor.
00:16:04.140 | It helps you not to accidentally spend the money.
00:16:06.660 | But that's very different than somebody who
00:16:08.780 | might owe a huge amount of money.
00:16:11.060 | Let's say that I have $100,000 judgment that
00:16:15.500 | is entered against me.
00:16:16.940 | Well, and let's say that I'm supporting a family,
00:16:19.460 | I've got financial responsibilities.
00:16:22.460 | How am I going to pay off $100,000 judgment
00:16:25.760 | just in a short amount of time with wage garnishment?
00:16:29.000 | It's not going to happen.
00:16:30.360 | And so in that situation, I'm going
00:16:31.960 | to need to be doing something dramatic to generate
00:16:35.160 | the $100,000 so that I can pay off the debt that I own.
00:16:38.360 | Oh, and in those cases, if my wages are being consumed
00:16:41.960 | by supporting my family, and then my wages need
00:16:44.960 | to be available for me to invest the money
00:16:46.880 | and go for some big win where I can generate $100,000 of profit,
00:16:51.440 | it may be very, very burdensome for me
00:16:53.260 | to have that wage garnishment.
00:16:54.620 | And in that case, moving to a state
00:16:56.540 | wherein my wages are protected could very well
00:16:59.740 | serve me and allow me to be protected
00:17:02.620 | so that I can invest the money into something that's
00:17:05.060 | going to grow.
00:17:05.940 | And then once it grows, then I can go ahead and simply pay off
00:17:10.820 | the debt in a lump sum.
00:17:12.460 | So having your wages protected can be extremely important.
00:17:18.340 | That's the basic strategy here.
00:17:19.780 | And that's why it is helpful.
00:17:21.740 | If you think that if the wage garnishment is just
00:17:24.240 | a matter of fact, and it'll work out,
00:17:26.640 | and you'll have enough wages that you can live on,
00:17:28.800 | you'll have enough wages that you
00:17:29.880 | can handle the things that you need to handle,
00:17:31.960 | and then it'll clear off this creditor,
00:17:33.280 | probably just let the wage garnishment sit there
00:17:35.400 | until you can clear out the creditor.
00:17:37.000 | But if it's burdensome to you, then you
00:17:38.840 | need these strategies in your back pocket.
00:17:42.280 | Now, if you don't want to move, or can't move,
00:17:44.800 | or just have decided not to move,
00:17:46.600 | you should look into the specific head of household
00:17:49.040 | exemptions for your specific state.
00:17:51.820 | Most states will have some kind of head of household exemption.
00:17:56.420 | And sometimes, like I said, in Florida,
00:17:58.740 | it'll exempt 100% of your wages.
00:18:01.500 | In some states, it'll protect some larger amount,
00:18:05.980 | but not 100%.
00:18:07.700 | I know Missouri provides a 90% exemption,
00:18:10.180 | which means that no more than 10% of your disposable income
00:18:13.820 | will be garnished.
00:18:15.200 | And then some states, it's based upon a formula of an amount
00:18:17.860 | that is necessary for the care and support of your family.
00:18:20.660 | Now, remember, you generally will need to file an exemption
00:18:23.180 | with the court.
00:18:24.700 | So when the garnishment is issued,
00:18:26.460 | you'll need to contest it in court and claim an exemption.
00:18:28.940 | And in general, you'll need to provide proof of your claims,
00:18:32.500 | proof of your dependents.
00:18:34.340 | You'll need to provide financial information
00:18:36.600 | about your expenses, et cetera, in order
00:18:38.380 | to get that document taken care of.
00:18:40.020 | But you can protect that.
00:18:42.340 | Now, in thinking, I want you to notice a couple of--
00:18:46.180 | as we move on to a couple of strategies,
00:18:47.880 | I want you to notice the importance of that word "wages."
00:18:52.020 | Wages.
00:18:53.980 | There could come a time that you're subject to a wage
00:18:56.260 | garnishment, and yet you face a situation where you've
00:19:01.300 | got to protect your income.
00:19:03.300 | Maybe you're making a moral stand.
00:19:04.760 | You're choosing not to pay something that is immoral,
00:19:07.100 | but you still have to support your family
00:19:08.800 | and figure out how to keep on going.
00:19:11.140 | So in that situation, remember that word "wages."
00:19:14.740 | In general, if a state-- in my understanding,
00:19:17.260 | if a state protects wages, it does not
00:19:22.380 | care how much those wages are.
00:19:25.580 | So what that means is there are potentially
00:19:29.020 | strategies where you could adjust the way
00:19:31.380 | that your income is earned so that you maximize your wages,
00:19:36.500 | and then you keep your wages as a separate account
00:19:40.700 | from your other assets so that you can maintain that money.
00:19:45.380 | Example would be this.
00:19:46.700 | Let's say that I were facing a major scenario.
00:19:49.420 | Well, I run a business.
00:19:50.740 | And let's say that if I run a business,
00:19:53.220 | often I might want to, for the sake of tax efficiency,
00:19:56.120 | keep my wages relatively low and keep
00:19:59.020 | my profits of my business higher because that's
00:20:01.660 | a more tax-efficient way.
00:20:03.540 | But what if I'm now subject to a wage garnishment?
00:20:05.900 | And what I find is that my wages are protected
00:20:09.860 | from the claims of my creditors.
00:20:11.220 | They're protected from garnishment.
00:20:12.780 | But my profits are not because as soon
00:20:14.980 | as I deposit the profits from my business in a bank account,
00:20:18.060 | that creditor can take their judgment
00:20:19.820 | that they've taken out against me.
00:20:21.280 | They can take it to my bank, and they
00:20:22.820 | can have that money distributed out from my bank account.
00:20:26.540 | But if my wages are protected, if I
00:20:29.340 | have the ability to change my compensation structure
00:20:32.340 | and simply have a higher wage going to me,
00:20:35.420 | yes, I'll pay more taxes.
00:20:36.620 | I'll pay more employment taxes, et cetera.
00:20:38.820 | I'll pay higher income taxes because I'm not
00:20:41.420 | taking out dividends.
00:20:42.580 | But I can protect those wages.
00:20:45.020 | And just like with almost everything else,
00:20:46.780 | the key here would be to segregate assets.
00:20:49.140 | So if I were facing a situation like this,
00:20:50.940 | and if I were facing a wage exemption fight,
00:20:54.300 | I would have a separate bank account that
00:20:56.740 | had no interest on it, non-interest-bearing bank
00:20:59.580 | account.
00:21:00.260 | And I would exclusively deposit my wages
00:21:02.900 | in that account and nothing else, not a dime else,
00:21:06.020 | because I'm depending on the segregated account
00:21:09.060 | to provide me with the practical protection.
00:21:11.260 | Because my savings accounts are going
00:21:12.840 | to be wiped out by my creditor.
00:21:14.500 | Anything else that I have that's not an exempt account
00:21:17.020 | is going to be wiped out.
00:21:18.220 | But if I can protect wages, and I can put those wages in a bank
00:21:21.140 | account and keep them separate, keep them identified as wages
00:21:24.540 | and not have them commingled with anything else,
00:21:26.980 | then I can protect that exemption.
00:21:29.380 | So you can use that term "wages" to your benefit.
00:21:34.140 | Another strategy to fight against a wage garnishment
00:21:36.300 | is simply this.
00:21:38.580 | Don't earn wages.
00:21:40.580 | Instead, generate income in some other way.
00:21:43.140 | So make profits instead of wages.
00:21:46.460 | The wage garnishment structure really only
00:21:50.420 | works well as a collection tool for a creditor
00:21:55.500 | if you have a job and they can go to your employer
00:21:59.700 | and file that writ of garnishment with them.
00:22:01.500 | That's the only place that it works.
00:22:03.500 | It doesn't work if you don't have an employer.
00:22:06.820 | It doesn't work if you don't earn wages.
00:22:09.900 | Let's say that somebody makes their living by buying
00:22:12.100 | and selling houses.
00:22:13.980 | Well, it's possible that if they own a house,
00:22:16.980 | that the creditor can try to impose on that house.
00:22:21.700 | But there are other ways you could probably
00:22:24.860 | protect against that.
00:22:25.740 | The point is, if you can generate profit
00:22:27.400 | from the sale of an investment or profit from your business
00:22:30.660 | activity, then you don't have wages.
00:22:34.660 | Let's say that I go out, and my way of supporting myself
00:22:37.380 | and my family is by selling hot dogs.
00:22:40.140 | And so I have a hot dog cart.
00:22:41.660 | And I go down on the street and I sell hot dogs all day.
00:22:44.380 | At the end of the day, I have profits.
00:22:46.740 | I have money that I've generated from my customers.
00:22:50.980 | There's no practical way for a creditor
00:22:53.260 | to take that profit that was generated
00:22:55.280 | by my selling hot dogs.
00:22:56.780 | Or maybe I run a pressure cleaning business,
00:22:58.780 | and I go and pressure clean people's houses.
00:23:00.260 | People give me a check at the end of the day.
00:23:02.620 | I take that check.
00:23:03.780 | I ask them for cash and get cash instead of a check.
00:23:07.840 | If they don't want to do that, I take that check
00:23:09.740 | at the end of the day.
00:23:10.580 | I only accept checks on local bank accounts.
00:23:12.540 | I go to the local bank.
00:23:14.100 | I cash the check at the bank.
00:23:15.660 | And now I have cash.
00:23:16.820 | There's no way in that transaction for a creditor
00:23:19.880 | to actually physically get their hands on that money.
00:23:24.060 | Now, they'll still have their judgment taken out against me.
00:23:28.300 | But they're not going to be able to take my income.
00:23:31.220 | So if you can't protect your wages using a wage exemption,
00:23:34.700 | then don't earn wages.
00:23:35.860 | Stop earning wages.
00:23:36.860 | Make profits instead.
00:23:38.700 | And depending on how you structure it,
00:23:40.420 | you may have to readjust your business activities.
00:23:43.020 | For example, let's say that I were that real estate investor.
00:23:46.620 | Let's say that now I would face a major risk
00:23:48.900 | if I were to purchase a house,
00:23:50.740 | because now I might have the risk of my creditor
00:23:53.460 | foreclosing on that house
00:23:56.620 | and trying to take that actual house that I purchased.
00:23:58.540 | That's not going to work.
00:23:59.820 | So now I might try to make all my income
00:24:02.020 | based on assignment fees,
00:24:03.220 | assigning contracts or something like that,
00:24:05.740 | until I can earn enough money
00:24:07.240 | from my real estate investment activities
00:24:09.680 | to generate enough profit
00:24:11.620 | that's not going to be subject to garnishment,
00:24:13.220 | generate enough profit that I can then take that profit
00:24:16.740 | and I can pay off the judgment.
00:24:18.860 | So don't earn wages.
00:24:20.500 | Make profits.
00:24:21.640 | Remember also, when you are looking at things,
00:24:24.100 | that depending on how your income is coming in,
00:24:27.540 | it may or may not be even accessible in the first place.
00:24:30.260 | For example, debt is not income.
00:24:32.580 | Indebtedness is not income.
00:24:35.500 | And so if I need income, but I have an exempt asset
00:24:39.220 | that I can in debt, or I can take out a loan against,
00:24:44.220 | then now I can generate,
00:24:46.020 | I can free up money from that asset
00:24:48.860 | without actually selling the asset
00:24:50.740 | and running the risk of having that money
00:24:53.300 | made subject to the claims of my creditors.
00:24:55.820 | So if I own a house,
00:24:57.800 | and the house is protected by the Homestead Exemption,
00:25:00.620 | if I take out a mortgage on the house,
00:25:02.500 | I can use that money for other things,
00:25:04.660 | but that's not income.
00:25:05.900 | And as long as I'm very careful to make sure
00:25:07.660 | that I never put that money into a bank account
00:25:09.540 | where the creditor can go to the bank
00:25:11.540 | and try to take it in that way,
00:25:13.260 | I can protect that money.
00:25:14.820 | So consider that.
00:25:16.800 | As we also continue,
00:25:17.820 | remember that not all income is wages.
00:25:19.940 | And in fact, some income is by its nature exempt.
00:25:23.580 | There are forms of exempt income.
00:25:26.100 | So you can sometimes exempt wages.
00:25:29.020 | But in general, there are other forms of income
00:25:32.100 | that are just flat out statutorily exempt
00:25:34.620 | from the claims of creditors.
00:25:35.580 | Social security income, very, very importantly.
00:25:38.540 | If you're receiving social security income,
00:25:40.740 | be it disability or be it retirement income,
00:25:44.180 | that income stream cannot be attached
00:25:46.900 | by the claims of your creditors.
00:25:49.580 | So this is one of the reasons why I'm teaching this stuff
00:25:53.620 | is because I've seen so many elderly people
00:25:56.340 | be abused by credit collectors
00:25:58.780 | when really they should tell the credit collector,
00:26:00.940 | listen, I'm judgment-proof.
00:26:02.580 | You can't get a dime from me.
00:26:03.980 | All I have is social security income and a 401(k).
00:26:07.020 | You can't touch either of those things.
00:26:08.720 | Take a hike.
00:26:09.900 | So social security income is exempt
00:26:11.780 | from the claims of creditors.
00:26:13.980 | Disability income, be it whether it come from social security,
00:26:18.320 | whether it come from a private insurance policy,
00:26:20.620 | like a disability income insurance policy,
00:26:22.820 | or if it's some other form of disability payment,
00:26:25.580 | is generally exempt from the claims of creditors.
00:26:28.620 | Most retirement income streams are exempt
00:26:30.980 | from the claims of creditors
00:26:32.120 | because they flow from an asset that is often protected.
00:26:36.260 | So if you're receiving a retirement distribution
00:26:38.520 | from a 401(k) payout,
00:26:40.420 | well, the 401(k) is exempt from the claims of creditors,
00:26:42.700 | so your income from that is also exempt.
00:26:45.440 | If you're receiving a retirement income
00:26:47.060 | from a defined benefit plan,
00:26:48.420 | let's say you are a municipal employee,
00:26:50.620 | a firefighter of some kind,
00:26:51.900 | and you're receiving a paycheck every month
00:26:54.260 | from your pension,
00:26:55.500 | because the pension is protected, it's an exempt asset,
00:26:59.820 | the pension payment is also an exempt asset.
00:27:02.780 | Now, I would be very careful, again,
00:27:04.400 | to maintain the segregated account,
00:27:07.060 | and I would not commingle it.
00:27:08.860 | So if I were subject to some kind of,
00:27:15.840 | if I were subject to some kind of judgment,
00:27:18.840 | and I had a pension income coming in,
00:27:21.320 | I would have a separate account set up for that.
00:27:24.180 | I would exclusively put the pension income in it,
00:27:26.820 | nothing else, not even any interest,
00:27:29.140 | I'd make it a non-interest bearing account,
00:27:30.920 | and then not make any payments out of the account,
00:27:33.480 | just simply make a transfer,
00:27:34.880 | write one check from that account
00:27:36.280 | over to my other checking account from time to time
00:27:38.680 | for my actual bill paying, but segregate the asset.
00:27:42.020 | Similarly, if you are receiving child support payments,
00:27:45.000 | child support payments are an exempt income source,
00:27:47.960 | as is alimony.
00:27:49.520 | So if you are on the receiving end
00:27:51.360 | of child support payments or alimony income,
00:27:53.660 | those payments are not available for creditors,
00:27:57.560 | they are exempt.
00:27:59.000 | So you should additionally take the step
00:28:00.880 | of making sure that that is segregated to protect yourself,
00:28:04.020 | and to make sure that your other assets are protected.
00:28:07.040 | So those are solutions so far.
00:28:10.400 | Now, what else can you do?
00:28:12.280 | Well, you can simply try to hide.
00:28:14.800 | You can try to protect and do your work in secret.
00:28:19.520 | Now, this is much easier done with business
00:28:22.960 | than it is with jobs.
00:28:25.200 | The problem with jobs is that there are extensive
00:28:29.600 | registry systems that track people.
00:28:32.360 | The most onerous of these is the systems
00:28:34.960 | that work for people, that track parents
00:28:36.500 | who owe child support.
00:28:38.120 | So when there are large national and state-level databases
00:28:43.880 | that track parents who own child support,
00:28:45.920 | and there's massive amounts of information sharing
00:28:48.340 | between all the states and the federal government,
00:28:51.120 | the only place that you could really go
00:28:53.640 | would be to go abroad, which is why,
00:28:55.280 | if you owe more than $2,500 of child support,
00:28:58.220 | then the Department of State will revoke your passport.
00:29:02.480 | And so you won't even be able to leave the state
00:29:05.440 | and the country in that situation,
00:29:09.000 | unless you can arrange to surreptitiously cross the border,
00:29:11.440 | unless you have a second passport established
00:29:14.480 | with another nation.
00:29:15.720 | So, but if you're in the United States,
00:29:18.800 | anytime you get a job, your new employer
00:29:22.080 | is required to report all new hires
00:29:25.080 | to their state's child support enforcement agency.
00:29:28.440 | And then that agency forwards the information
00:29:30.760 | to the National Directory of New Hires,
00:29:32.960 | and then that National Directory of New Hires
00:29:35.400 | works to match up any names and social security numbers
00:29:38.300 | of anybody who owes child support.
00:29:40.640 | And then they go ahead and bring over the garnishment.
00:29:44.280 | That's why everything is tracked
00:29:46.480 | by your social security number.
00:29:47.760 | When you have a child,
00:29:48.960 | your child is automatically associated,
00:29:51.400 | their social security number is associated
00:29:53.000 | with your social security numbers, with your spouse.
00:29:55.600 | That's why everything is tracked on you
00:29:57.320 | with your social security number.
00:29:59.040 | That's a major problem.
00:30:00.400 | Now, would it be possible for you to get a job
00:30:02.780 | that does not go in that system?
00:30:04.240 | Of course.
00:30:05.080 | There are tons and tons of people
00:30:07.480 | who get jobs all day long
00:30:09.200 | where they're not with large employers
00:30:10.720 | who are following all of the database rules.
00:30:13.460 | The key is, if you get one of these jobs,
00:30:17.920 | millions of people every day, they take jobs,
00:30:20.320 | and they stick out their hand,
00:30:22.320 | they shake a hand with their employer,
00:30:24.680 | employer says show up at eight, they show up at eight,
00:30:26.600 | the end of the week, they get a check.
00:30:28.000 | And no one else knows about it except the two of them.
00:30:30.840 | But when you're getting a job,
00:30:32.120 | the key is you better make sure that you cover your track
00:30:36.080 | so that even that job does not get exposed
00:30:38.980 | with the information.
00:30:40.560 | Even if you can successfully avoid the database systems,
00:30:43.680 | you will have to be on your guard
00:30:46.120 | to make sure that your banking transactions,
00:30:48.720 | your bank records, et cetera,
00:30:50.320 | don't demonstrate the fact that you have gotten this job,
00:30:53.300 | lest your creditors now be able to come,
00:30:56.280 | identify your employer, and find that.
00:30:59.600 | And in many cases, it may even come down
00:31:02.120 | to learning how to successfully conceal your activities
00:31:06.440 | from a private investigator.
00:31:07.700 | Now, we get into some pretty tough stuff in that situation.
00:31:11.680 | If you are facing a creditor that is determined enough
00:31:14.420 | to hire a private investigator
00:31:15.840 | who will sit outside your house for day after day,
00:31:19.200 | figure out where you go,
00:31:21.320 | you can do some surveillance detection routes
00:31:23.400 | and cover your tracks and figure out how to drop a tail,
00:31:27.720 | check your car for GPS locator beacons
00:31:30.040 | and figure out how to make sure
00:31:31.400 | that you're not in the license plate databases
00:31:34.120 | and registries.
00:31:34.960 | I mean, there are ways that could be done.
00:31:36.600 | It's not like it's impossible,
00:31:37.900 | but certainly that would require a higher level
00:31:39.700 | of dedication than many people would possess.
00:31:42.120 | At the very least, go back and listen to episode 503
00:31:46.700 | of this podcast called "Tools and Principles
00:31:49.020 | to Help You Fight Nasty with Your Creditors and Win,"
00:31:51.840 | so that you can at least cover your financial tracks.
00:31:55.340 | Make sure that you never deposit employer checks
00:31:57.880 | into a bank account.
00:31:59.020 | Make sure that you minimize your banking footprint
00:32:01.440 | as much as possible.
00:32:02.680 | Deal in cash, cash your checks at the bank
00:32:05.380 | that they're drawn on, et cetera,
00:32:06.840 | so that you can minimize any kind of trail
00:32:11.360 | that is easily exploited by a creditor.
00:32:14.020 | That will help you to be able to hang on to your money
00:32:16.740 | until you can figure out how to get it
00:32:18.940 | so that we can, so they can pay it back.
00:32:20.820 | So jobs are difficult, but not entirely insurmountable.
00:32:24.300 | Just by simply working in secret.
00:32:26.140 | Don't update your LinkedIn database and LinkedIn profile
00:32:29.920 | and tell everyone where you just got a new job
00:32:32.020 | if you don't want your creditor filing the writ of garnishment
00:32:34.360 | with that new employer.
00:32:36.260 | Your better solution here, of course, would be business.
00:32:38.660 | So running some kind of business.
00:32:40.300 | And what I would recommend is in general,
00:32:42.140 | probably the simplest thing to do is to have a job,
00:32:45.180 | and with that job, you go ahead and have the garnishment,
00:32:49.980 | deal with that, but then run a weekend business,
00:32:52.700 | run a side hustle, run other businesses
00:32:55.440 | that will allow you to generate the income
00:32:57.280 | that you need to live on,
00:32:58.900 | and that will allow you to generate the income
00:33:01.540 | that you need to pay off the debt.
00:33:03.380 | That's going to be a much more productive use of your time.
00:33:06.840 | If you maintain a job, so let's say that you can keep a job
00:33:09.960 | that's several days a week, the garnishment is there,
00:33:12.640 | your creditor's probably gonna leave you alone
00:33:14.560 | if they have a wage garnishment, they're receiving payments,
00:33:17.000 | they're not gonna be chasing you all the time.
00:33:19.460 | But then spend your weekend, I don't know,
00:33:21.600 | build birdhouses and sell 'em at the green market,
00:33:24.120 | or whatever business things that you've come up with,
00:33:26.640 | spend your weekends and your off time doing that.
00:33:29.320 | Get money directly from your customers,
00:33:31.680 | and then that money from your customers
00:33:33.200 | can be used to invest, that money from your customers,
00:33:36.640 | you can stack it up until you can afford
00:33:38.740 | to pay off the judgment,
00:33:39.940 | or if you're not paying off the judgment,
00:33:41.320 | just keep it to yourself and keep it
00:33:42.720 | out of the banking system.
00:33:44.120 | And there's a decent chance that as long as
00:33:46.000 | your wage garnishment is tricking along
00:33:50.300 | and they're getting payments, maybe you can just simply
00:33:52.640 | avoid having to submit to another debtors examination,
00:33:55.060 | and then you don't have to, you know,
00:33:57.480 | then once everything's paid off,
00:33:58.640 | you're good to go and restart.
00:34:00.480 | So business is going to be your friend
00:34:02.280 | when it comes to generating income,
00:34:04.040 | where your creditor's fingers are not literally
00:34:06.840 | there taking money out of your wages.
00:34:10.040 | And then finally, I would just say, remember this,
00:34:12.160 | you can always stop wage garnishment with bankruptcy.
00:34:15.640 | So bankruptcy really works well to stop garnishments,
00:34:20.480 | and it may work well to just terminate even the claim,
00:34:24.360 | the judgment that's against you.
00:34:25.840 | And that's why, as I've emphasized again and again
00:34:29.260 | through this series, you must think bankruptcy protection
00:34:34.260 | as you're thinking asset protection all along the way.
00:34:37.320 | You've got to keep those two things together.
00:34:39.880 | Now, I'm not competent enough to give advice
00:34:42.940 | as to any specific thing here,
00:34:45.420 | as far as if you can vacate your judgment
00:34:49.460 | that's taken out against you with a bankruptcy filing.
00:34:52.540 | But I do know that you can stop
00:34:53.660 | the wage garnishment with bankruptcy.
00:34:55.960 | It'll stop it, you'll give a stay,
00:34:57.320 | just like with everything else with bankruptcy,
00:34:59.140 | you will have a stay on all collections,
00:35:01.860 | on all debt collections when you file for bankruptcy.
00:35:05.120 | And if you have positioned yourself and your assets
00:35:09.040 | effectively so that you focused on assets
00:35:11.860 | that are exempt in bankruptcy court,
00:35:15.580 | then there's a very decent chance
00:35:17.280 | that you may be able to use bankruptcy itself
00:35:20.400 | to terminate the judgment
00:35:22.100 | and still emerge the other side to rebuild.
00:35:25.180 | And I think that's ultimately,
00:35:26.420 | you always have to keep that in mind.
00:35:28.540 | You should recognize that in the worst case scenario,
00:35:33.540 | you could be forced into an involuntary bankruptcy,
00:35:36.060 | plan accordingly, and you should always think
00:35:38.460 | in terms of a worst case scenario,
00:35:40.660 | how would I get out?
00:35:41.820 | Bankruptcy.
00:35:42.640 | Bankruptcy court is your friend.
00:35:45.040 | Understand the rules of bankruptcy.
00:35:48.180 | Always imagine what would happen
00:35:50.100 | if you were forced to declare bankruptcy.
00:35:52.660 | Position and adjust your affairs
00:35:54.900 | so that you maximize that protection.
00:35:57.120 | And you'll have then the best case,
00:36:00.020 | the best protection ultimately against most threats,
00:36:04.020 | most creditor threats,
00:36:05.100 | and even against something as difficult as wage garnishment.
00:36:09.180 | With these strategies, you should have enough information
00:36:12.480 | to protect your wages
00:36:13.660 | if you are subject to wage garnishment.
00:36:15.740 | I would ask you just,
00:36:16.780 | this was probably not you.
00:36:19.300 | The average listener of Radical Personal Finance
00:36:21.940 | is not concerned about wage garnishment.
00:36:25.100 | It is obviously a threat, but it's just not,
00:36:28.800 | I've never received a single email question
00:36:30.640 | from a listener on wage garnishment.
00:36:33.120 | My biggest thing I want you to do
00:36:34.200 | is I want you to just think about this,
00:36:35.880 | and if you know somebody whose wages are being garnished,
00:36:38.940 | try to help them with some of the information.
00:36:41.020 | And again, in general,
00:36:42.080 | probably the best thing to do is just leave it alone
00:36:44.000 | and have their debts paid off
00:36:45.760 | and make a little income on the side
00:36:47.600 | to make up the difference and leave it alone.
00:36:49.760 | But if you need this information, you need it.
00:36:53.000 | And so remember, you can maximize
00:36:55.700 | your head of household exemptions.
00:36:57.780 | You can move to a state that protects your wages.
00:37:01.300 | Florida, Pennsylvania, South Carolina, and Texas
00:37:03.740 | here are your friends.
00:37:05.420 | Make sure that you don't earn wages.
00:37:07.460 | So then maximize your wages or don't earn wages.
00:37:11.660 | Make profits instead.
00:37:13.420 | Focus on making sure that you protect
00:37:15.020 | any exempt income that you have.
00:37:16.940 | Work privately, engage in private work for others,
00:37:19.940 | and/or engage in private business
00:37:22.600 | so that you can accumulate the assets to pay off the debt
00:37:26.260 | or to simply accumulate the assets
00:37:27.540 | if you're not willing to pay the debt,
00:37:28.780 | and then stop wage garnishment with a bankruptcy filing.
00:37:32.680 | This will conclude the exemptions,
00:37:35.780 | but if you listen to this series,
00:37:38.440 | if you've maximized this, if you've understood,
00:37:40.500 | if you've researched your state laws,
00:37:42.260 | you have the information to protect your assets.
00:37:45.900 | This is incredibly valuable, and you've got to use it.
00:37:50.200 | I want to emphasize how important this is in the modern age.
00:37:54.020 | You can use the laws to protect what you own,
00:37:57.860 | and you can do so legally and ethically and morally,
00:38:02.140 | and that's incredible.
00:38:04.300 | There are vast amounts of protection available for you
00:38:08.160 | if you will maximize that.
00:38:10.300 | So don't get caught 10 years from now
00:38:12.920 | just listening to everything that I've discussed
00:38:15.500 | in this show.
00:38:16.460 | If you listen to it and don't do anything, you're sunk.
00:38:20.320 | 10 years from now.
00:38:21.680 | But if you will listen and simply adjust your affairs
00:38:25.200 | so that you maximize these exemptions that we've discussed
00:38:28.240 | in a way that makes sense, 10 years from now,
00:38:30.360 | if you ever need this stuff,
00:38:31.920 | you will have put it into place.
00:38:33.960 | You cannot do this kind of planning last minute.
00:38:37.100 | There are a handful of techniques.
00:38:41.420 | I discussed briefly in the annuity show.
00:38:43.720 | If you want one of the few that I've ever been able
00:38:46.960 | to come across and research and find out,
00:38:49.360 | there are a handful of techniques available to you
00:38:51.720 | if you have never done any planning whatsoever
00:38:54.920 | and you're hit with a big bill.
00:38:56.960 | You can leave.
00:38:58.280 | You can always leave the country that you're in.
00:38:59.920 | You can fly to the other side of the world,
00:39:01.780 | and unless you're a very high-profile criminal,
00:39:05.440 | in which case criminality makes basically
00:39:07.400 | all the stuff go out the window.
00:39:09.000 | Unless you're a very high-profile criminal,
00:39:12.920 | you can be fine just by leaving the country.
00:39:16.480 | But you may not leave with any money
00:39:17.680 | if you didn't pre-position assets abroad,
00:39:19.760 | which you should take my
00:39:20.960 | How to Survive and Thrive During Economic Crisis course
00:39:24.560 | for the discussion on that.
00:39:26.600 | But if you were to simply position yourself
00:39:28.280 | and use these exempt assets to your benefit,
00:39:30.440 | you can be well-protected
00:39:31.960 | from the vast majority of conceivable risks.
00:39:35.340 | A good financial defense plan is built in layers.
00:39:40.080 | So you have layer upon layer after layer.
00:39:42.680 | And think of it like watertight compartments.
00:39:45.120 | If this watertight compartment fails on a ship,
00:39:47.040 | okay, we've got others.
00:39:48.160 | We've got layers.
00:39:49.480 | And that's the basis of good asset protection planning.
00:39:53.880 | Even, I wasn't sure to go into it.
00:39:57.160 | All right, this show's called
00:39:58.040 | Radical Personal Finance for a reason.
00:39:59.880 | Let me give you just one last strategy
00:40:01.440 | to deal with wage garnishment and wage exemptions.
00:40:04.340 | Just recognize the fact that no one can force you to work.
00:40:08.120 | Now, the only thing that doesn't work,
00:40:10.000 | where this doesn't work,
00:40:11.140 | is if you are dealing with child support obligations.
00:40:14.260 | And if you didn't figure out how to do good planning
00:40:16.200 | before the divorce decree,
00:40:17.920 | and you're dealing with child support obligations,
00:40:20.040 | a judge will throw you in prison
00:40:21.920 | if you just prove yourself to be completely obstinate.
00:40:25.000 | And you will sit in prison
00:40:26.080 | as thousands and thousands of primarily men are today.
00:40:30.240 | So this is dangerous with child support obligations.
00:40:33.320 | But for many other judgments and things,
00:40:36.840 | recognize this, no one can force you to work.
00:40:39.200 | And I think you should have to work.
00:40:43.080 | I think if a man doesn't work,
00:40:44.200 | I don't think he should eat.
00:40:45.160 | So I think you should work.
00:40:47.200 | But no one can force you to work.
00:40:48.860 | While ago, I thought about doing a whole series of shows
00:40:53.000 | on how to live on welfare, and live well on welfare.
00:40:56.440 | And I went and started researching all of the states
00:40:58.480 | and all the welfare programs.
00:41:00.080 | I don't think I'm ever gonna do the show,
00:41:01.680 | 'cause it's just so hard for me, ethically, to do that.
00:41:05.080 | But I'll tell you what,
00:41:06.780 | you're probably a pretty decently smart person.
00:41:09.920 | And if you ever had your back up against the wall,
00:41:13.240 | I would bet that you could probably take
00:41:16.000 | the same stick-to-itiveness that you've demonstrated
00:41:18.920 | in listening now to 41 minutes of this podcast,
00:41:22.320 | and probably listening to about 10 hours
00:41:24.380 | of other podcasts that I've done,
00:41:26.000 | and I would bet that you could probably figure out
00:41:29.260 | how to live extremely well,
00:41:32.040 | doing nothing but suckling at the government tit.
00:41:35.640 | But that's about the only thing that you could do.
00:41:37.720 | If that was what you focused on, I bet you could do it.
00:41:40.520 | You're as smart as I am, you could probably do it.
00:41:43.400 | And so, one of the reasons why all this stuff flows together,
00:41:47.000 | why should you be skillful in order to live
00:41:49.260 | on low amounts of income, if you ever wanted to,
00:41:52.120 | if you ever had to?
00:41:53.560 | Why should you be skillful about that?
00:41:56.760 | Well, you might need it someday.
00:41:59.940 | I could live like a king on 500 to $1,000 a month,
00:42:06.600 | especially if I were using all of the welfare programs
00:42:11.600 | that are available.
00:42:15.640 | I would follow every single rule and live extremely well.
00:42:20.680 | And you could too.
00:42:21.660 | Now, you say, "Well, where am I gonna live?"
00:42:24.000 | Well, just recognize the sheer vast number
00:42:27.240 | of things that are available.
00:42:28.880 | I mean, let's say that I'm a homeless person.
00:42:33.480 | I would be spending my days,
00:42:35.380 | one of the things I've always wanted to do,
00:42:38.000 | I've always wanted to take a couple of months
00:42:40.400 | and go to Washington, D.C. and do nothing
00:42:42.320 | but go to all the museums.
00:42:43.640 | I have never been able to spend enough time there
00:42:45.400 | to go to all the museums that I've wanted to.
00:42:47.680 | I would be a professional museum-goer.
00:42:50.380 | I would be a professional reader.
00:42:51.840 | I have thousands of pages of reading
00:42:53.760 | that I would love to do that I can't do.
00:42:55.840 | The libraries are filled with this.
00:42:57.240 | Whenever I go to the library, I always talk to this bunch
00:42:59.280 | of homeless guys that use the library as their place.
00:43:02.440 | I got free internet connection in the library.
00:43:05.080 | The libraries aren't allowed to discriminate against me
00:43:07.000 | no matter how smelly I am.
00:43:09.000 | You take it and run with it.
00:43:11.160 | But the point is this, you never have to earn wages.
00:43:14.600 | You can eat for free, you can sleep for free,
00:43:17.740 | you can be entertained for free.
00:43:19.540 | If you can have just a few hundred dollars here and there,
00:43:24.180 | which is from your 401k or whatever,
00:43:28.000 | you can do extremely well.
00:43:29.360 | Most welfare programs are not means-tested.
00:43:32.320 | There's no requirement for you to fill out a questionnaire
00:43:34.800 | of what assets you have.
00:43:35.760 | There's generally only a requirement
00:43:37.480 | for you to fill out what income you have.
00:43:40.640 | And I would imagine that you could figure out a way
00:43:42.520 | to do a few things here and there and earn enough.
00:43:45.640 | And that's basically your ultimate backstop,
00:43:48.240 | your ultimate fallback defense.
00:43:50.720 | If exemptions didn't work, if bankruptcy didn't work,
00:43:54.220 | well, you might not work either.
00:43:56.260 | Now, I don't like that line of argumentation
00:43:59.840 | because I believe that you must work.
00:44:02.280 | I believe that work is a moral duty
00:44:04.480 | that we face to support ourselves.
00:44:06.680 | But I think that you can satisfy that moral duty to work
00:44:09.800 | without having to earn wages.
00:44:12.080 | I don't think you have to be paid for your work.
00:44:13.600 | You can give all your work away.
00:44:15.280 | And you can be paid with meals in the houses of people,
00:44:18.720 | and you can be paid with a bed.
00:44:21.200 | And that stuff can't be foreclosed on.
00:44:23.280 | That stuff can't be garnished.
00:44:24.800 | And what I consider to be incredibly amazing
00:44:28.440 | about the modern era is I think that even if you were
00:44:31.840 | in that kind of situation, it doesn't mean
00:44:34.920 | that you wouldn't even be able to exercise influence.
00:44:37.980 | You know, I've got a long list of things
00:44:41.240 | I've always wanted to spend my time advocating for
00:44:44.000 | and whatnot.
00:44:44.840 | It's just not feasible for me, given my responsibilities,
00:44:49.160 | to spend all my time being a political activist
00:44:52.920 | or something like that.
00:44:54.760 | Generally, guys like me don't make great political activists
00:44:57.520 | because we have responsibilities.
00:45:00.000 | Political activists tend to be people
00:45:02.720 | with fewer responsibilities.
00:45:04.800 | But the amazing thing about it is,
00:45:07.240 | if you had your back up against the wall,
00:45:08.880 | and all of a sudden you couldn't work for wages,
00:45:11.440 | you could figure out a way to live well,
00:45:15.080 | work for your support, you know, work for food and shelter.
00:45:19.240 | And with the incredible ability and the cheapness
00:45:22.320 | that we have to access to publishing platforms,
00:45:27.060 | you could still get your message out.
00:45:29.480 | You could still do your activist work.
00:45:31.380 | You could have somebody give you a free computer,
00:45:35.320 | somebody donates their Wi-Fi password to you,
00:45:38.800 | you could still be incredibly productive
00:45:41.880 | even in something like that.
00:45:43.640 | We live in an amazing time.
00:45:45.440 | I guess that's the point.
00:45:46.640 | We live in an amazing time.
00:45:49.000 | And so let's use it, and let's be diligent to make sure
00:45:53.000 | that you never have to wind up in that worst case scenario.
00:45:56.280 | But I think it's really valuable
00:45:57.540 | to test some of those things.
00:46:00.460 | Last year, my family and I spent about six months
00:46:03.460 | traveling around the United States in an RV.
00:46:05.900 | We had a number of goals.
00:46:07.460 | One of my personal goals was I wanted to do that trip
00:46:10.020 | on the cheap.
00:46:10.860 | I've not talked as much about that trip
00:46:12.600 | as I probably should have.
00:46:13.920 | But one of the things that I wanted to test
00:46:15.420 | is I always wanted to test full-time RV living.
00:46:18.100 | And I wanted to prove that it could be done on the cheap.
00:46:20.660 | Now, I don't know that, we weren't uncomfortable,
00:46:24.580 | but if I were doing it over again,
00:46:26.220 | I would spend more money than I did.
00:46:28.540 | But I wanted to prove that you don't have to have
00:46:32.180 | a lot of money to go travel the country.
00:46:34.220 | You don't have to have a lot of money to buy a great RV.
00:46:36.980 | You don't have to have a lot of money.
00:46:39.260 | You don't need millions of dollars.
00:46:41.500 | And part of it is just always,
00:46:43.500 | well, if I were ever stripped of everything,
00:46:45.980 | I went bankrupt, well, at least I could do that.
00:46:49.180 | And I know that I could be extremely happy,
00:46:52.360 | satisfied, and contented doing that.
00:46:54.940 | I know I could provide a warm, safe, loving environment
00:46:58.660 | for my children and support them.
00:47:00.540 | Even if I had no house, had no place to lay my head,
00:47:04.660 | I could do the RV thing, and you could too.
00:47:06.780 | And there are dozens more strategies than that.
00:47:08.820 | So just always remember that.
00:47:09.840 | If you've got your back up against the wall,
00:47:11.740 | you're dealing with some kind of wage garnishment,
00:47:13.980 | you're dealing with something where
00:47:15.380 | just everything's stripped away from you,
00:47:17.580 | if you simplify your desires, and you can do well.
00:47:22.620 | And if you just embrace a different lifestyle,
00:47:24.980 | if you've got an internet connection,
00:47:26.620 | you've got access to something that the kings of the world
00:47:29.100 | did not have 50 years ago.
00:47:31.400 | Never had as much unlimited options for entertainment,
00:47:34.540 | and influence, and education as anything else.
00:47:38.580 | So think about that.
00:47:39.900 | And if you're wealthy, like I am,
00:47:42.740 | where you don't think that that's ever realistic,
00:47:45.140 | at least from time to time, put yourself in situations
00:47:48.740 | where you're not, don't be a slave to comfort.
00:47:53.740 | Toughen up, and then that way,
00:47:57.300 | figure out how you would live well,
00:47:59.020 | if you're in that situation.
00:48:00.420 | That is it for my wage exemption show,
00:48:03.380 | and that is it for the exemptions in this particular series.
00:48:07.260 | I would, as I close here, as I want to encourage you
00:48:10.540 | to go by my store at radicalpersonalfinance.com/store,
00:48:14.300 | I just take a moment and talk with you
00:48:16.380 | about my how to survive and thrive
00:48:18.620 | during the coming economic crisis course.
00:48:23.620 | One of the most incredible benefits that you could do,
00:48:27.940 | and that course is very much focused
00:48:30.180 | on how to survive and thrive during a crisis,
00:48:34.120 | but I cover it from multiple ways,
00:48:36.020 | and I do a couple things pretty extensively.
00:48:38.380 | Number one, I talk a lot about how to protect yourself,
00:48:42.140 | how to set yourself up so that you can be protected
00:48:46.660 | in an economic crisis if the economy fails
00:48:49.300 | and you didn't leave.
00:48:50.700 | But then the second thing I talk a lot about
00:48:52.540 | is how to leave and how to run away,
00:48:54.540 | with a special focus on how to run away internationally,
00:48:59.540 | how to leave a problem, because I'm convinced
00:49:02.820 | one of the more effective ways
00:49:04.500 | to deal with a massive crisis,
00:49:06.420 | unlikely, it's the least likely of the scenarios,
00:49:08.500 | but unlike a massive national-level crisis,
00:49:11.820 | is simply go from where things are bad
00:49:14.180 | and go to where they're good.
00:49:16.060 | You see this happening all over the world right now,
00:49:18.260 | thousands and thousands and thousands of people,
00:49:22.740 | refugees fleeing from Syria,
00:49:25.740 | thousands of refugees fleeing from Venezuela,
00:49:28.700 | thousands of refugees fleeing from Nicaragua.
00:49:32.020 | Anytime that there's a major problem in a place,
00:49:36.180 | you see that people find life is untenable here.
00:49:39.700 | But if they can just get from where things
00:49:42.220 | are simply unlivable to a functional place,
00:49:46.540 | they can figure it out again,
00:49:48.140 | even if people, if they have nothing.
00:49:51.540 | Last couple of days, I've been watching a friend of mine
00:49:55.260 | who's been doing some work in Venezuela,
00:49:57.500 | and I've seen some videos,
00:49:59.460 | I mean, you don't see this stuff on the news.
00:50:00.860 | If you work hard, you can find some of it online,
00:50:03.620 | but just personal, my personal connections,
00:50:07.080 | looking at videos of people who have nothing,
00:50:12.180 | and it was just one video of a family,
00:50:13.860 | five children sleeping on the ground,
00:50:16.780 | on nothing more than a sheet laid out on the ground
00:50:19.500 | and a blanket over the seven of them,
00:50:21.460 | mom, dad, and five kids, and that's it, they got nothing.
00:50:24.520 | And yet it was so bad for them in Venezuela
00:50:29.740 | that they left, they had to leave having nothing.
00:50:34.340 | And just as a father, it breaks your heart
00:50:38.020 | to just imagine the desperation of that mom and dad
00:50:42.180 | of how things are so bad that they're reduced
00:50:46.420 | to a sheet spread out on the ground,
00:50:50.180 | no pillows, no comfort, no thermo rest, no aerobed,
00:50:55.140 | a sheet spread on the dirt,
00:50:57.900 | and a family of seven curled up together with a blanket.
00:51:01.240 | It's brutal.
00:51:03.400 | Now just imagine how bad life is
00:51:05.540 | for when you're gonna run when you've got that,
00:51:08.540 | crossing a border illegally,
00:51:10.260 | taking refuge in another place.
00:51:12.720 | Forgive me, it was just a big deal for me
00:51:15.700 | to have the personal contact and have that information,
00:51:18.460 | but just imagine how bad that is.
00:51:20.460 | Now, back to where we all live, most of us,
00:51:24.380 | getting across an international border, if you can do it,
00:51:29.260 | can solve a lot of problems,
00:51:30.700 | and you can even solve problems in things like this.
00:51:33.580 | So if you've got that backup plan,
00:51:35.340 | if all your money, if all your assets are frozen
00:51:37.460 | because you've become, you're identified with the terrorists
00:51:41.340 | or you're identified with the hate group or whatever,
00:51:43.260 | and now all your stuff is frozen,
00:51:44.940 | and you're under, sometimes you gotta leave.
00:51:47.340 | And so that's a big component of it.
00:51:48.940 | Now, those are radical things.
00:51:50.660 | The course is good, but it's not just focused
00:51:53.220 | on tin hat stuff, tin foil hat stuff.
00:51:55.540 | But come on by radicalpersonalfinance.com/store.
00:51:57.860 | Check out my How to Survive and Thrive
00:51:59.500 | During the Coming Economic Crisis course.
00:52:01.180 | I'm really proud of it.
00:52:02.700 | It's really, really good.
00:52:04.060 | And I have heard nothing,
00:52:06.300 | I have yet to receive any negative feedback.
00:52:09.180 | Not a single one of my students, of many, many students,
00:52:12.540 | not a single one of my students
00:52:13.820 | has said anything negative about it.
00:52:16.340 | The feedback has been overwhelmingly positive.
00:52:20.060 | So I invite you to come by radicalpersonalfinance.com/store
00:52:23.220 | and check out that resource.
00:52:25.420 | I would, I thank you.
00:52:26.700 | Thank you for your business.
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