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 goldThis article is how to get rich being a contractor. Anyone can earn a living as a contractor, but only some get rich doing it. Here are my 5 unbreakable rules for getting rich as a contractor.

#1 Work for Yourself

No, I don’t mean own a business, I mean think about numero uno first…yourself! What are your plans? Where would you like to live? What kind of car do you want to drive? Set goals and work toward those goals. I see many contractors who are working to make their customers rich! Building and maintaining buildings that their customers are selling or leasing at a profit.  Yes, you need to keep your customer happy and handle their needs, but that income is the means to an end, and not an end in itself. Focus on building your buildings, your business, and your life.

#2 Stocks, Bonds, Etc. Aren’t All They are Cracked Up to Be

What is a stock, or a bond, or anything else sold by financial institutions? It’s a receipt. It’s a place in line that you can sell to somebody else someday. It’s not tangible or useful in any other way. But guess what’s even more alarming? These investments rarely pay off! Confused? Then keep reading…

stocks

Click on the above image and take a look around 1980. See how the stock market started soaring out of control? There is a simple reason for that. The dollar was no longer pegged to gold and the government was inflating them faster and faster. Stocks are worth the same but it’s taking more and more worthless dollars to buy them. Secondly, in the early 80’s, the 401k was invented. Now everyone was investing in stocks and more people were “herded” into buying stocks. Let me make this last point perfectly clear.

I will keep this simple… So imagine a stock market with 100 shares of stock total that are worth $10 each or $1,000 total in the entire market. Now imagine the 401k law is passed and all of a sudden everyone in America is sending money to the stock market and there is $10,000.00 of cash available to buy those same 100 shares. So now the shares are all selling at $100 a piece. Now ask yourself this: Did the value of those stock shares go up because the company is profitable and you will see a return on your investment? Or did you pay $100 for a piece of stock hoping that the guy behind you will pay $110 for it?

Government bonds are the same thing. Most governments can’t repay any bonds, and so they borrow more money this year to pay their bills for last year. I know many households who pay off one credit card with another as well and I don’t plan on loaning them any money either. This is the same scenario as stocks. These instruments are only valuable if someone is waiting next in line to buy them from you.

Also, remember that you will pay a variety of trading fees and taxes. Think of all the people on Wall Street and in Washington D.C. who earn a living off of your hard work. You send them your hard earned money with which they turn around and then hire you to come to work for them with. What?! Oh, that’s right! You may make some money in the stock market and get rich as long as new people with additional money are willing to buy in. Wait… Isn’t that a pyramid scheme?

Now let talk about local prices otherwise known as that stuff you and your neighbors own.  They are low because nobody is investing in these items. Instead, we are diving into the Wall Street shark tank.  My argument is simple. If you don’t understand stocks or bonds, then you are the sucker and should run, not walk, away from financial markets.

#3 Exiting the Economy WILL MAKE YOU RICH

Every .70 cents  saved is worth a $1 earned.

Let’s look at Joe Blow, our anti-hero. He earns a living as a construction tradesman. Joe earns $25 an hour and $20 an hour after taxes.  His car breaks down and the mechanic will charge $50 for parts and $160 for labor. For Joe to pay that mechanic $160 he needs to work for 8 hours. 8 hours x $20 after tax wages = $160. Joe will have actually earned $200 before taxes as his salary is $25 dollars an hour. By simply exiting the economy Joe could have installed the part at home in 4 hours. That 4 hours of work could have saved poor Joe $200 which translates to $50 an hour or twice his hourly wage. Joe should only enter the economy on very specific purchases. As a general rule,”If it’s made in a factory, buy it. If it’s made to order locally, then do it yourself.

 

#4 Build Common Sense Investments

Consider Joe Blow, our anti-hero, again. Joe Blow’s boss charges $55 an hour and earns a living between the difference he spends employing Joe and what the $55hr he charges the customer. The employer pays $32 an hour to employ Joe including wages, insurance, and overhead etc. Joe Blow earns $25 an hour, and after taxes earns about $20 an hour. He then goes to the store and pays sales tax of 10% or another $1.6 deduction from his hourly pay. Forget the taxes on buying gas, cigarettes, or other high tax goods. His production cost is $32 an hour and he is spending $18.40 after the government is done with him. Poor Joe is getting royally screwed as his hard earned money is being eaten up by taxes and regulations.

Now lets look at John Q. John decided to take the summer off and build a house on his property. Remember, Joe Blow’s employer charges $55 an hour for construction labor. So john is earning $55 an hour self employed. Not in actual money, but the product he is creating can be sold for that amount of money. John works all summer, and at a rate of $55 an hour earns a potential profit of $26,400.00 before taxes. John, being a smart guy, decides to lease the house to a friend for $500 a month.

Let’s look at how these two people will fare over the next 10 years from this investment. John vs. Joe

Joe made $20 an hour over the three months and earned $9,600.00 He invested that money on the stock market and earned 10% annual returns. Joe will have $24,899.00 in stocks.  Despite the fact Joe still has to pay taxes or the fact he took great risk of loosing his money in the stock market, Joe has done well for himself.

John had invested his labor into a building and leased the building out. I’m not even going to count his rental income. Let’s assume he has bad tenants. Unlike Joe, John’s money was never taxed when he earned it. That $55 dollars an hour is locked safely away and his property also grew at 10% a year. John started out with $26,400 because unlike Joe, John’s money was never destroyed in the economy. And after 10 years of earning 10% appreciation, he has $68,474.00. John has also never put his money at risk and his house will always have value. Now John can allow his children to move in so they can continue saving their income.

In these two examples, one person created something that would help human civilization grow and prosper. He secured a future and was able to make a tidy profit from it. One person let the government suck their time and resources down the drain, and their only investment option was gambling in the stock market.

Who do you want to be?

 

#5 Hoarding Goods in a Market that is Rigged

The international banking cartel and governments of many nations actively work together to manipulate the financial markets. This used to be common knowledge, but it isn’t so much anymore. In fact, people may call you a conspiracy theorist if you claim the government manipulates the prices of investments. They have forgotten that it is normal practice throughout history for government to “fix” their currency to the price of precious metal or food supplies. The United States government has been doing this openly for many years under the gold standard, the Bretton Woods system, and now through the future’s market.

Why is this information relevant? Because by manipulating the economy they have caused many problems. But for the savvy investors, this is an opportunity to show foresight and leadership. If you invest well, people will rely on you when the old system is failing allowing you to choose to leverage your assets for further profit.

It’s my opinion that in the good times everybody gets richer, but in the bad times, some people suffer greatly and others ease right along without much delay. I think the big picture is not how to get rich, because in a good economy anyone can get rich through hard work. In a rigged economy, the real success stories are the people who, play by play, avoid the pitfalls and hangups many people encounter.

I understand how this article could be taken with a survivalist tone, but I will try and steer away from that because most people aren’t interested in such things. I will focus on supply and demand of common goods and how you can leverage a volatility of the economic supply by providing things that are in short supply at steep prices for profit.

There are 2 consequences of a rigged market that will make investors suffer:

1) Asset prices will fluctuate wildly at times as the supply is too much or too little.

2) Large market participants will rob the “little guy” when it’s convenient. We call this robbery “taxes,” or in another form, “selling bad investments to clueless buyers.”

 

Let’s examine these issues closer…

1) Asset prices will fluctuate wildly at times as the supply is too much or too little. 

Remember 2006 when money was flowing like booze into the economy and everyone was drunk on riches? Then by 2008 there was no money to be found?  Cash was cheap in 2006 and  some people began hoarding it. They had a strategy of buy low 2006 (cheap cash) and sell high (expensive cash) in 2008. The properties being bought and sold hadn’t changed one bit, but the money supply did. Those brave investors were fools for hoarding “worthless cash” before the crash, but they got the last laugh by offering liquidity to an un-liquid market afterward. On the contrary, residential real estate was slightly overbuilt in 2008. Nobody wanted it and you could buy it for cheap because the supply was overwhelming.

 

2) Large market participants will rob the “little guy” when it’s convenient. We call this robbery “taxes,” or in another form, “selling bad investments to clueless buyers.”

The tiny nation of Cyprus was on the verge of collapse and the government “taxed” bank account 6.7%. This is the perfect example of screwing the “little guy.” This is about to happen in the United States and Europe. People will be taxed or forced to buy government debt with the promise of investment return which will never materialize.  The obvious advantage is that you can’t be taxed things you have stockpiled at home. The government can’t confiscate them, and if you ever need them, they are right there waiting.

 

Let’s wrap this up with some quick tangible investments.

Precious metals – Obviously choice #1. They have and will outpace the stock market. They are non-taxable or steal-able and will maintain value forever.

Real Estate (Non leveraged) – Real estate can be confiscated, although it’s unlikely. Its value as an asset is very great, and you can always rent space to others or conduct your own life/business securely. Highly leveraged real estate can be a liability when you can’t make the payment, though.

Cash – not bank deposits. Not treasury notes. Cold, hard, in your hands cash. When the markets fluctuate or new laws are imposed you will be able to bypass these hurdles with ease.

Crypto-Currency – These are more of a gamble at this stage, but they show tons of promise. It couldn’t hurt if you have some spare cash to buy bitcoins or litecoins. Every other crypto-currency is trash at this stage (for the average investor).

Long Term Storage of Household Items – Believe it or not, the government suppresses food prices and other household goods prices. Food prices are the #1 most manipulated market in the entire world because food prices are the flash point for 99% of social unrest. When you see a good deal on shoes why not buy 5 pairs? It’s better than money in the bank.

Art, Diamonds, and Liquor – These timeless luxuries will always have a market. You may be sitting on them for many years until you find an opportunity to sell, but their rare or unique value will never go away. In a depression they would be worthless, but after the recovery you can once again sell them at full price.