Demystifying Money, Assets & Debt

a difference? And things like leasing why would you do a Carly's versus buying the car, purchasing financing the car. These are, you know, really important concepts that can change your whole life and has changed mind. But no one's taught to you any of this stuff. Now somebody's going to say to you. I was talking to a guy who is in the music business and he bought his real estate for cash, and he's very proud of that, and he should be proud that he was able to

do that. So I'm not hating on him for being able to do that. He made the money and he wanted to control this real estate. But the question is is that the smart thing to do well? It's a safe thing to do as long as you can afford to do it. You pay your property taxes and all that stuff, but you're not getting proper leverage on your money. There's not a billionaire in existence that did not use good debt to become a billionaire. All right, So that's

another podcast episode for another time. By the way, I'm not encouraging you to go into debt. I'm telling you there's good debt and there's bad debt, just like this, good people and bad people. Right, there's good capitalism and his bad capitalism. So let me start off by saying, there's no shame in this game. The only stupid question is the one you don't ask. So I want you to. I want you to be committed to asking questions right and not being embarrassed. I asked Quincy Jones, who's a

big brother and a mentor and a friend. Man, how'd you get so smart? He said, John, I'm just nosy as hell. I want to know everything about everything. I want you nosy. This young lady approached me and asked me a very wise question, although I think she felt unintelligent when she said it, but I'm so proud of her. That she felt comfortable enough around me to ask the question. She's about twenty four at the time that she asked

me this question. She was a friend of a friend is a friend of a friend, and we had spent a little bit of time together, and I guess she felt comfortable enough to ask me in a moment when just she and I were standing together alone, John, what's equity? Like what's the stock? And I was so proud of her because it's what you don't know that you don't know. This is killing you, but you think you know. And everybody around her in her generation probably doesn't know the

answer to that either. Young afric American female not raised in a household that deals with investment, and she wanted to be the first one in her family, I believe, who wanted to break out of that mode and to become an investor. Not just black lives matter, but black capitalist matter. Can I get an amen? So I was proud of her, and we sat there and demystified these terms for a minute. So equity literally is, you know, ownership, It is the net value of something. So if you own,

I make this simple, you own a house. And the house is a praise for two hundred thousand dollars, and you owe one hundred thousand dollars on that house in hopefully good debt. That house has a net equity of one hundred thousand dollars. You owe the the home appraised with an independent appraiser, not your cousin pooky them. Not so why trying to hook you up and do your favor? An independent appraiser appraise the house for two hundred thousand dollars,

and you have debt of one hundred thousand dollars. In this example, you have net equity of one hundred thousand dollars. That is what you own. That is your net value of net of the debt. Can equity be something other than a house? Yes, you have equity all parts of your life, in all parts of your life. You can't have equity in all parts of your life. Is a

stock a form of equity? It can be absolutely if you own that stock free and clear, and if that stock has some value, actually, even if it doesn't have any value to the external world, or if you bought that stock, you own that stock. You have equity in that company. Now the market will determine whether equity is value. I'm going off on another tangent. I want to do a whole podcast dedicated to just investment, So put that

aside for the moment. I'm going to just do a tree top sort of seminar, a masterclass on these demystifying these terms so that you have a basic understanding of how to play in this world, because it is what you don't know, that you don't know is killing you. But you think you know, and no one taught you. So it's not like you're dumb or you're stupid. No one gave you the memo. That was my I think my fifth book. And this goes back to the Freedman's

Bank of eighteen sixty five. Abram Lincoln created a bank to teach free slaves about money, and he was assassinated the next month. No one ever taught you about money. No one taught you how this free enterprise system works, right, So how would you know the rules of this game unless somebody takes time to teach you. And you're smart, and as soon as you get the memo, you'll use it and you'll amplify it. So let's break this stuff down. There are assets in their liabilities, right, and then good

debt and bad debt. Right, and then I'm gonna deal with one last piece in this podcast on leasing, when to do it, when not to do it. Get all your folks around the kitchen, table, around the get you know, around the barbecue. Get your posse together, get your book cup together. You're hopefully once some day your investment club together. Get your girls together, get your boys together. Let's have

a weekly conversation. This is my ministry of finance. This is my poolpit right every Thursday, breaking this down for you in a simple, explainable way, not using twenty words, when two will do I've been here before. I'm telling you stuff I would have wanted to have known, and unfortunately, in most cases, learned the hard way, messing up, tow up from the flow up, losing a lot of money, and sometimes being just taking advantage of just being pumped.

All right, So here you go, assets versus liabilities. Well, first of all, your assets cannot be on your You figure that out. And I don't know the age of people watching this and want this to be family friendly, so you'll figure that out. But your assets cannot be worn on your body. Where they can be worn your body, but that's not typically where you're going to find your assets, right? Are close assets? I guess you value them. They look

good on you. But that's not a traditional asset. It's something you own, right, So that's not really what we're talking about here. But a lot of people think that clothes are assets, and they use bad debt to finance non assets, which makes a bad situation worse. I'll get to that in a minute. So what are some examples of assets. Home ownership is an example of an asset. People say wrongly, Oh, I don't own that home the bank does. Why am I paying on that home? Well,

you only not own the home. You only do not own the home. If you don't pay the bill, then yes, the bank can foreclose on you and the bank will own the home as it should be. I might say, you don't pay me, I'm going to own your home if I loan you money, right. And if you loan somebody some money in your family to buy a home and they don't pay you back, you want your money back. Don't need to get emotional about stuff like this, it's

just business. And if the bank loans you money and you beg the bank or ask a bank to loan you money and You got it on a good terms. You went through Operation Shops credit counseling program. You got your credit score up, got your debt down, your savings up, got you pre qualified for a prime loan. You got that loan, and a year or two down the road, your situation changes. You screwed up. You didn't call the lender they foreclosed. Don't curse the lender out, the linder

doing that job right. Don't get an attitude when they want the house back and start calling them a bunch of names. Reality is, it just didn't work out. Is an experiment that didn't work out, and when your outflow exees you're inflow than your overhead, it'll be your downfall. And be thankful the lender gave you access to credit.

Explain which your situation is, try to find an orderly way to get the house back to them, and hopefully you sustain that relationship, because relationship really is a form of capital. Relationship capital it is, in my opinion, in my life, an asset, and you can go back to that bank at another time and try again. So home ownership is the easiest way to build wealth. In my opinion, family is an asset. This is a non traditional asset. And I'm going to do a whole piece on marriage.

But if you're in a relationship and two plus two does not equal six, eight or ten, then you're probably in the wrong relationship. You should be better together. Your children are assets, not traditional assets. You're not gonna get a loan on your children, but you're investing in them and hopefully that investment's going to pay off. Now, are kids also a liability? Yes? They are. Actually, this is one situation where a child can be a liability and

an asset. They're probably a physical liability until they're eighteen that you're literally liable for them. They are literally a liability and they're spiritually an asset. Now you say, with John, stop messing around. Give me some stuff that's real that I can put my hands on. Okay, stand by home ownership. We talked about that. Family, We talked about that, and I mean, if you don't see your family your mate as an asset, you need to reevaluate who's your mate. Right.

If you don't, your children are growing up to be assets. You need to reevaluate how you're raising your children and how your children are responding to your family wearing experience that's a conversation between you and them. But you need to evaluate that on the regular I'd rather you respect me and learn to like me than like me and never respect me. Another podcast for another time. Bonds, investments, stocks, These are assets business ownership. This is an asset. I'm

giving you five examples. Here's one accessible to everybody. Education is an asset. Literally, the more education you get, the better you do in your life. If you apply it, you earn seven figures more having a college education than you will having a high school education over the course of your life. It's always better to be more educated. I'm obsessed with education. I think we need to make smart sexy again, and you need to shove as much education down your throat as you can manage. It is

a buffer against poverty. Education is the ultimate poverty radication project. You cannot get enough of it. So here are five easy assets. I could probably list twenty five, but I gave you five to start. Here are five liabilities. I've already mentioned your kids. That's a literal liability until they are legal age. They are literally reliant upon you. And also the government says that they are a liability of yours. You can write them off literally on your taxes, and

what they do is on your dime in your responsibility. Cars, most cars are a liability. They are a depreciating asset. So you have appreciating assets and you have depreciating assets. And I'll get to this in a minute, really deeply in the debt conversation, a car is typically a depreciating asset. Credit cards are liabilities. That's not cash. Okay. When I was growing up, the joke was, I can't be broke. I still have checks left. We used to float checks

back in the day. Act don't act like you don't know what I'm talking about, my age. You know what I'm talking about. You wrote that check and you maybe forgot accidentally intentionally not to put a stamp on the envelope. Have said this before, and but you could tell it the one eight hundred number I sent the check. I sent the bill in and wait for them to snail smail for them to receive the payment and process it and all that stuff. It maybe bought you a week to ten days to get the cash to put in

the bank before the check cleared. Today things are digital. Money's digital things are almost instantaneous, and before the checks you had cash, and you know when you're paying in cash, you know that money's leaving your hands. Right. I remember giving somebody a tip earlier night for twenty bucks, I remember, but I don't remember the last time I swiped twenty bucks when I went to the paper parking. I don't remember that, but I remember that cash I gave. Right, So,

young people, it's not emotional, it's not. It doesn't tug on you. People actually think that credit cards is cash. Is not. People say, you know, most people don't have forty dollars for an unplanned event. This reporter was like, no, John, you're wrong. People have credit cards again, Hello, that's not your money. So you have credit cards, that's a liability. Charge cards are a liability. Charge cards are different from credit cards. Charge card like an American Express you can

charge on it. You get to pay it in thirty days. Credit card you can pay it over a term. You have department store cards. These are almost the biggest ripoff because many of them hitting. They're really beautiful and shiny whatever hitting twenty six twenty eight percent interest rate. My guys like nosebleed stuff. And by the way, I used to have these cards. I used to have department store cards is the only way I could finance my business. When I was coming up, I had had a pet

Boys card for my auto repairs. I had a Sears card, Yes I'm dating myself for clothes. I had a Macy's card. I had a I mean, I have these different credit cards as secure credit card. And that was my capital. Because I didn't have a trust fund, I didn't have financial card, I didn't have inherited so I had to you know, I had to make do with what I had. Black folks have been doing so much with so little for so long. We can almost do anything with nothing.

There's no shame in that game, lots of pride. But then we have to graduate to new ways of doing things. Now talk about So I listed five assets as examples, in five liabilities as examples. These are easy ones. Right. Let me now talk about good debt and bad debt. Is there such a thing? Absolutely, just like there's good capitalism and bad capitalism. So good capitalism is where I benefit and you benefit more. Bad capitalism is where I

benefit and you pay a price for it. So slavery was bad capitalism, all right, robbing somebody and then selling what you robbed is bad capitalism. Creating a comb as an entrepreneur to manage hair, happy hair or tough hair, and somebody paying you for the value that. So it costs you two dollars to make it, you're selling it for ten dollars. You're making a profit minus manufacturing of

two dollars, whatever your profit margin is. And somebody buying that finds that valuable for them is worth one hundred dollars for them, may be invaluable for them to comb their hair. So fair change is no robbery. To quote my friend Rod mcgroo, fair exchange is no robbery. I benefit you benefited more. Good debt and bad debt. Now listen to me, Please write this down. Good debt is tied to a asset that might appreciate. Bad debt is

financing an asset that will depreciate, will certainly depreciate. Stupid assets that you financed with bad debt are stupid things that people finance with bad debt are things like jewelry. And I don't mean a symbolic thing like an engagement ring or a wedding ring. I don't mean something where you're saving your money up but you just can't accumulate enough cash for that special moment. You want to get married, you want to get engaged, something that will last forever.

This is actually an emotional asset. This is that family thing I talked about earlier tyings all together. So you might have in this example an example where you're financing a depreciating app but because it's tied to what you're building your family, it's actually a spiritual asset that makes it worthwhile for you and maybe gives you more energy to go out there and conquer in the world. So I'm not hating on your decisions. I'm just explaining it.

When you buy jewelry, most jewelry, right, I don't care where you buy it from. The likelihood is it will depreciate in value. It will go down. Financing a car is a depreciating asset. Okay, So John, you're making not making any sense. Now You're saying that you're calling a car depreciating asset. And you own cars, John, what's the thing. Do you own your car cash? Well? I own some

cars or cash, but I'd like to finance cars. It's a good use of my cash to keep it in my pocket and pay a lender for the use of that automobile while I own it time use of money. But that car is making me money, allow me to build wealth. It's taking me to a meeting. Hello, it's taking me to a conference, it's taking me to my office. So it's facilitating a money making or wealth building activity. So it is not the asset, but it is a gateway to an asset, in which case that's me right,

and it's allowing me to go and flow. But I understand when I buy that car that it's going to go down in value. Now. I just had an experience where I bought a car and kept it for a couple of years, drove it, and sold it. It was an exotic automobile, a rare one. Not a rare one, but a highly prized brand, and I actually made a profit on that car. I didn't buy it to make a profit. It just so happens I did. And then I took the profits of that car and another car

sold that lost value. I actually thought the car that lost value would sell for more. I thought the car that sold for more would sell for less. It was actually the opposite what I thought, but they canceled out

each other. The one I lost value on was washed out by the one I made money on, and I was able to purchase replacement vehicles that were newer without harming my cash flow because I have good credit score, and I was able to take the proceeds from the sale and buy down the balance on the new purchases, and I was able to get warranties for the new cars. They did not have warranties for the old cars. There was a lot of reasons why upgrading was the right time.

Is a non emotional decision. I'd say, oh, I'm not selling this car. I'm emotionally connected to it. Whatever you make it an emotional decision is going to be a bad decision. Please listen to me. Whenever you make an emotional decision, it's going to be a bad decision. People are financing sports tickets. Not you hear about these folks, middle class folks, paying two thousand dollars five thousand dollars eight hundred dollars for a single ticket to a game.

What are you thinking? How are they doing it? Debt? They're financing it and paying for that over time, and most people get paymentized, they ask, well, just what's the payment? Never ask what just the payment is? When there's an interest rate in terms attached. You want to know how much you're paying for the for that momentary value of going to that game. And that game is gonna come, it's gonna go, it's gonna be two three, four hours.

You're gonna you know, have an experience and it's done, right, like going to Las Vegas. It's done. Do you want to be paying for that for the next five years? Because that's the likelihood. I know folks who finance a car rental, and I'm not picking on a company a single car rental. People are financing that. People are financing again, game tickets, financing vacations. Oh my god, you go to a vacation, may not even like the person you went

on the vacation with. You have an argument, whatever it is, end up coming up in a funk, and you have financed this whole thing. I'm gonna pay for that for the next two, three, four, five years. But you're financing one thousand dollars, but you're spending four to five thousand dollars to finance it over time or even double that twenty twenty five hundred. Aren't you offended? So just you know,

I'm not telling you what to do. I'm explaining. I'm saying you want to finance appreciating assets, not depreciating assets, things like a good mortgage, a prime mortgage. Operation. Hope can help show you how to do that for a home, like buying a business or starting a business, you know, like I believe, Okay, I don't mind financing an education. I prefer you didn't, but I don't mind it because

it will pay a dividend. It's a return on assets. Because, as I said earlier, if you get a college of education in not in basket weaving or some miscellaneous thing, I mean something that has gainful employment tied to it, a career path and specificity of return on investment. In

other words, there are people. If you get a computer engineering degree, you know, if you want to make sure you never go broke, get an engineering degree on anything, computer engineering, mechanical engineering, I mean, any kind of engineering. You will have a job for life right and be

gainfully employed, is my guess. And so that education, going to get an engineering degree will in all likelihood provide a return that is unequal to mostly anything else that you do with the same amount of money that you'd make an investment on. So I've given you example of assets and liabilities. I've given you examples of good debt and bad debt. Bad debt again, is financing a depreciating asset,

Financing shoes, financing clothes. They will depreciate before you walk, you know, financing a car before you leave the car lot, you've lost ten percent. If you finance a car, leave the lot, dry down the street, turn back around, come back, sell the car back to the dealership. They will buy it for ten percent less than you just bought it for. An hour before I do a whole podcast just on

the automotive industry. I'm going to break down a lot of different industries and show you how this stuff works, how these businesses actually make their money, how are they in business, and how does the economics work. And if you have a topic that you want me to talk about, just leave a comment wherever you find me on social media or the podcast, and me and my team will float those up to be included either in me answering a question or as a topic in the actual podcast. So,

depreciating assets are things that will go down. Are likely not likely to go down in value, they will go down in value. Many of them have no value at the time as you're financing them. Do you know that, like jewelry, I was picking on jewelry earlier, but why because the marketable on that is is it's just crazy. Uh you know, I just buy precious jewels and and there's different types of diamonds and different types of metals

and mixed metals and all. You can't outsmart a jeweler and it's sparkly, and it's got your eyes twinkling, and oh my god, you're gotten all emotional about the thing. And I mean, you just can't win, or you just can't win. Do you know that Las Vegas keeps getting bigger? If you notice that you can't win against the house, the house always wins. Jewelry maker will always win. You buy something for one thousand dollars or five thousand dollars of jewelry, you financing it, You're going to sell that

same thousand dollars whatever it is, ring necklace. If you can get two hundred and fifty or five hundred dollars for it in the future, call yourself lucky. And the financing cost is going to go up while the value will go down, meaning because you're going to finance it, and now you own interest which is compounding on that. Okay, now let me talk about one last thing, which is car leasing auto leasing. No one explains this to anybody

like you know. Here's the basics. Again. If you have a depreciating asset, then you probably want to lease it. If you have an appreciating asset, then you don't mind of financing it. By the way, that's not a great example. But if you're buying high end vehicles this example, brand new, high end vehicles, and you're not going to keep it

for a long time. People are listening now who make six figures now, and you like high end vehicles and you have a business that you can write the vehicle off to, then you are a prime target to lease because unlike somebody you buys a car and may keep it for three, five, eight years, you're gonna probably keep that car you lease in this example for eighteen months, twenty four months, and then you're gonna roll that into another car and into another lease, is my example. In

a likelihood. Well, the way they finance and you're gonna get you're able to write off if you do it properly. The cost of a lease where you cannot write off the cost of a purchase, at least not easily. Leasing is just designed for business people more easily. Payments on a lease are going to be less than a payment if you finance the car. Here's why, and this is for any car. Now you take a car that costs

one hundred thousand dollars. I'm just roundings up. Maybe the car is fifty thousand dollars, Maybe it's ten thousand dollars, it doesn't matter. But let's say just for round numbers, it's one hundred thousand dollars car. And the financing company that's behind the leasing company, because oftentimes behind a leasing company is a bank or a financier. Right, So you're dealing with XYZ leasing company, but there's a financing vehicle

behind that, and they have underwritten. They have measured the risk of not only you as a borrower, but the underlying asset, the vehicle. They have come to conclusion that that car that you're buying for one hundred thousand in three years, which is the term of your lease, will be worth in this example, fifty thousand dollars, so it'll be worth half. You're now going to have a lease

payment over three years. That's going to spread out the fifty dollars of lost value in those three years on payments. Let me give you a better example where it makes more sense. This mostly applies to high end vehicles. But if you're buying a Ferrari or you're buying whatever. Again, I'm not telling you by these cars. I'm just giving

you a real clear example. And you're buying a Ferrari for you know, two hundred and fifty thousand dollars whatever, the number is right, and the residual value of that car, that car is projected to hold his value. The residual value that car in three to five years is projected to be you know, one hundred and seventy five to two hundred thousand dollars, let's say one hundred and seventy

five thousand dollars. You're buying it for two hundred and fifty thousand dollars, so you're going to lose seventy five thousand dollars of value over five years in that lease.

This is a good deal for you because now you just have payments that are spread out over the term of that least three to five years on that seventy five thousand dollars versus the whole two hundred and fifty thousand dollars, and you have a balloon payment at the end of the lease, or you can pick up, or you can buy the car for the remaining balance plus any fees you owed, as long as you've maintained the

terms of the lease. Now you're renting that car with the lease where you buy when you buy the car, as long as you again, there's no different than a mortgage. As long as you adhere to the terms with your lender, you own that car. So if you own the if you're leasing the car, you got to check with the owner the leasing company before you make some moves about the car. You can't send that car to Peru or Africa or someplace. But if you finance that car, you

you own that car. As long as you make those payments, you own the equity the car minus the debt. And within reason, unless there's some restrictive covenants in the loan agreement. The covenant is an agreement within the agreement. Unless is there restrictive covenant in the loan agreement, you can do as you like. Okay, I hope that that was that that confused me. I hope that that was somewhat clear.

I just unpacked the magic of leasing recently because I was considering doing a lease myself for something a car lease myself. I' found a lot of benefits to it. You got to check with your tax pro for yourself. But I found a lot of business busefits to auto leasing from my business. But I decided in the example that I was looking at, not to lease. It did not make sense for me. But I went through all

the numbers. I would have had a slightly lower monthly payment, but out of the terms of the agreement just were not economically. It wasn't all that attractive in the long run, and they put a lot of restrictions on what I

could do with the car. And I mean, look, they own it in an example, I don't, and I'm a control free and I want to own my stuff and do as I like, right, So I decided I'd rather put money down and buy the car, so I have equity in the car, and I'll own the car in a short period of time as long as I keep the terms, which I will. Okay, So I hope this has been good for you. Demystifying some terms that maybe you thought about and we're curious about, but too embarrassed

to ask somebody. People don't want to admit they don't know what the heck's in the Wall Street Journal. They have no idea what all these terms mean. They're afraid to ask somebody what the fdi C means, Federal Deposit Insurance Corporation, the SEC Securities Exchange Commission, all these the OCC Office of the Comptroller of the Currency, which regulates on national banks, all these different terms. The Federal Reserve

system versus the Federal Reserve banks. There are twelve Federal Reserve banks in different regions of the country because in the old world we used to use move money and even gold around anyway, and that's you know they now

it sets monetary policy and does some other things. It is very important, which you have the Federal Reserve Board system in Washington, d C. Which has a board of governors, so you the Federal Reserve Chairman is who you listen to, who sets interest rates, aided by the vice chairman and vice chairwomen of the board and the Reserve Board of Governors, which are voting members on the FED system that set's

interest rate. So you hear about you hear from the FED chairman, but there's a board that votes on all that stuff. You just don't hear from the different Federal Reserve Board of Governor members so often. And then you have Federal Reserve banks and bank presidents around the country, all of which are ballers. They're very, very powerful. That's the government. But these are terms. I can go on forever with all these different terms that nobody explains to

you that I'm going to overtime demystify. Okay, I'm tired of hearing myself talking. Okay, this is John O'Brien. This is the trending topic of the week, and I just I don't understand some of the stuff. This is on a brilliant actor named Terrence Howard. Let me read this piece on Terrence from the Philadelphia Inquirer. Terrence Howard found liable for one million dollars in back taxes. He says

it's immoral to tax descendants of slaves. Per a report from the Philadelphia Inquirer, the Empire actor is being ordered to pay nearly one million dollars in back taxes, interests, and penalties following his alleged threat to a Justice Department lawyer. By the way, I'm just reading this. There's no editorial,

so don't be mad at me. I'm just telling you what's in the paper, which I believe is documented, stating it was quote immoral for the United States you government to charge taxes to the descendants of slaves end quote. I would love to be positive about this. I'd love to find some silver lining. I'd love to say I understand. I don't, I really don't. This is a brilliant actor. I'm going to give him his flowers first. I've seen Hish some of his shows. I've seen at least one

of his series. I binge watched the whole season of it. I think too much like one of his characters. He's getting bad advice and he's making the worst kind of decision, which is an emotional one. This is not a play in a movie. This is not a part in the movie. This is not going to end well. You never make an emotional decision. Whenever you make an emotional decision, it is going to be a bad one. Mister Howard, if you're watching this, please know I mean you the best.

I am not trying to get any kind of floss or credit or whatever. On your name. I'm trying to put some respect on your name by giving you good knowledge. And it doesn't appear that you've got good advice. Whoever is your advisors, you need to fire them or replace them or whatever. They're giving you bad advice. I'm happy to talk to you for free if you like. I don't want anything. If you're doing a little research on me, you know that I'm qualified to sit here and talk

to you. I've made it legitimately, and I pay my taxes. So my brother has been in several tax situations before this. This is not a new one. He seems to just not like paying taxes. If you read the story that we will put, you know we'll reference it in at least the video version of this you'll be able to find online, but for podcasts purposes. Just research this on your own and you'll find that there are other situations

where mister Howard has argued with taxing authorities. This particular argument is the worst argument because it's with the federal government. I'd rather owe my mama some money God rest her soul went he the smith, than owe the irs. Let me tell you something. Al Capone was a bad brother as a gangster and he it appears, literally got away with murder and they couldn't make anything stick on this man.

But they got him on tax evasion and put him away for what ultimately became life because I think he died in prison. They got him on taxivation and he didn't take it seriously. He blew it off. The irs was like, look, we don't know where you're making your money, and the folks, we think it's illegal. But they can't make that case stick on you. But you've got to at least pay taxes on whatever money you're making. Where you make it is another situation that's up for law

enforcement to figure out. But it appears you have an incredible lifestyle and you can't seem to justify that lifestyle with legal purpose. Again, the government can't seem to make that stick. But you have admitted that you're making this money and you've not paid your portion of taxes and you got to pay the piper. You can't drive on public streets, which is provided by the government. You cannot

use street lights, which is provided by the government. You cannot go to public schools, send your kids in public schools, which is divided provided by the government, and taxpayers. You cannot use public transportation, you cannot use public facilities. You cannot go and use the courts. You cannot use the law, you cannot use the apparatus of the Argumentably, the best legal framework for country in the world was the United

States of America for free. If this environment has helped you facilitate your aspirationial success, then you got to pay the piper and hear the numbers before you make a dime. Here's what the ratios and the scales are. If you don't like that, don't make any money, or go move to Argentina, or move to Egypt, or move go to Africa, or go to Europe, or go to Asia, someplace where you think it's a better deal, and go make some money over there. Don't do business here, but you're going

to do business here. Here are the rules, and we all sort of know what we sign up to before we sign up. I do. I had one of my biggest tax bills almost fell out my chair in twenty twenty one, twenty two three what year it was. But I also I didn't curse. I was like, thank God, I've got this tax bill. Means I'm making some money and building some wealth, So I wouldn't have had the tax bill unless I'm producing an income. So it depends how is the glass half full or is the class

half empty? Depends who's looking at the glass. Whether you

believe you can or you believe you can't. You're right, okay, So let me get to the Terrence Howard thing, because you probably guys are probably tired of me already, which was sounding like preaching here, But I have personal experience with this because I've had the franchise tax board at my front door when I didn't pay them when I started Operation Hope in nineteen ninety two, and I used my private company to fund the payrolls for my nonprofit

employees who were then operating out of my office. When I started Operation Hope after the Rodney King riots, I figured, because I was doing the right thing and doing a nice thing and doing something for society, the least that the government could do would be to give me a break on paying franchise tax, meaning the portion of the paycheck that goes to the State of California in this particular example from the payroll payroll taxes and at the

State of California was like blunt that you're paying payroll, we want our portion of it. And that's the law, nonprofit or for profit. And they showed up at my front doorstep. I ignored the letters to my own peril. They showed up my front doorstep and put a cashier at my front doorstep of my office in my reception area, and went opened every piece of mail until they were paid. And I learned my lesson and I've had in my early life. I was running so fast. I wasn't trying

to avoid the taxman. I was running so fast. At one year merged into the other and I didn't do taxes for four or five, six, seven years, and I had to go back and redo all those taxes. And I helped my I was like holding my breath, Please let me get to the taxman. Before the taxman gets to me again. I'd rather owe my mama than ohe the taxman that the penalties and interest from the irs are worse than any gangster or any mafia that you've

ever experienced. It's unbelievably harsh because they're not trying to be your lender. They want to be the lender of last resort. They want to encourage you to pay your bill and get the heck out, and they don't want to long term credit agreements or short term credit agreements for that matter. And I had to pay the penalties. I found all my tax returns, paid the penalty and was thank and was thankful to get the irs out

of my hair. And mister Howard did the opposite. He ignored it, bluffed it, and on this one situation with his a federal These are federal taxes. Again, state is bad enough, Federal property taxes is something, is another thing, and these are all these are all bad. But when you flubbed the government on income tax, they come down to you heart and they don't care that you were a celebrity. And this man's claim was that this was enslavement or something, or that the country was O's black

people because we were a slave. Brother, you're making millions of dollars. We're not talking about pooking them. We're not talking about a descendant's claim of three generations of slavery or five generations or ten generations of slavery, which may have some legitimacy and maybe a proper case at a proper time. I mean, linc Abraham Lincoln actually gave plantation owners a payment or a way to get themselves out of slavery by releasing their slaves by giving them a payment.

There could be some argument that there's some legal base, but that is not what we're talking about here, and that's not this. You were an actor in a highly paid show. You took the money, You took the money, and you spend it, and you knew that there was part of that they had to go to Texas. So how can the back end be slavery and enslave in our abuse of the front end? Wasn't slavery and abuse? Were you enslave when you I'm not Jamin up Terrence

Howard here. Please, I love the brother. I want him to do right, but I've had to be people to tell me straight. John, knock it off. And I'm saying, mister Howard, knock it off. This is going to end badly. Please call the IRS and cut a deal. Please apologize for your statements. Because these IRS agents have are all powerful. They're worse than judges. They don't have to do it what they're doing in the public. They can just simply

come in on in a bad day. And if you cursing them out and I heard you left several voicemails for this iras agent. MEMBERY. This is the person making forty fifty sixty thousand dollars a year and may not be happy at home and may and may resent you. Maybe don't let them be racist, but I mean let them. They may just resent your success and they don't want you talk and mess with them on top of that,

and they may just throw the book at you. The book at you is going to be very very, very very bad, and this interest is going to keep compounding. As a former president, it's about to deal with the power of compounding interest in the opposite direction, which is he thinks that that eighty three million dollars pen a check that he had to write, or the three hundred fifty million dollars check that the court said he had to write in New York was bad. Wait, you see

interests on that. I think it's already started growing at some crazy amount a day. If the number I read was correct, he may have forty million dollars of interest a year a year, just an interest if he doesn't pay that thing off. So, mister Howard, you need to pay this off. You need to cut a deal. Put your ego in the drawer. Stop to leave your speeches for your scripts. If Bassior Andrew Young said that men and women fail for three reasons arrogance, pride, and greed,

put the pride aside, please and cut a deal. You were not enslaved. It's not about slavery. You're not oppressed. You sign on this deal, these contracts you were paid, You spent the money, you had a good time. You are a celebrity living a great life. Pay your share so that poor kids can go to school, and then we can all get you know, work on drive, on freeways, at work. This is not the government ripping you off. This is the government. Money comes from us. Hello, Hello,

Hello everybody. The government's money comes from us. Things don't just work on their own. They work because we America has someone in the worst infrastructure in the world. It's a whole other conversation. But if we don't have good infrastructure, we can continue continue to be a leading economy, the leading economy in the world. We have to reinvest and taxation is a form of that reinvestment. Yes, we need to make sure that they're smart taxation, but that is

not this conversation. Pay your taxes and then go use the powers the taxpayer again, go argue about where your taxpayer money is going. We have two street lights off about two miles from my house, turn signals versus one because I wrote letters as a taxpayer and they and that one was easy. Wrote one letter, and the state of Georgia just installed the second turn lane, which has changed every time I turn. I feel good. Everybody else

has less frustration because the traffic's moving. But there's potholes right near my house, and your whole wheell would fall off if you went over these potholes. It's like six of them and anybody can see it's you know, nobody would fix it. No. I wrote a letter, and then two, then six. Then I start copying everybody that I wrote a letter to everybody. Are you going to avoid this,

mister mayor? It was a black mayor too, and I was told he was like he was just a He was like, who's John Bryant to tell me what to do? I'm a taxpayer, That's who I am. And after I paid that tax bill, I was really I was really hot. Hey man, you know how much money I paid in state taxes, in local taxes and property taxes. You'd be hot like me too, So yeah, fix the potholes man. Well, that brother, by the way, had some all kind of

trouble after that. Wait, by the way, they fixed the potholes, and thank God, and I said, and thank you note when they did. But that man, because God don't like ugly, end up having a lot of bad karma. And he his life has not ended up very nicely because he's not a nice person. God don't like ugly. Okay, that's a different topic. And this is not related to Terrence Howard. He's a brilliant man in where I started. Brilliant man,

brand actor. But doesn't mean you're as briant businessman. Get yourself. Some better advisors are call me for free Love and Light. John O'Brien, I'm out hey, Hey, John O'Brien, and this is money and Wealth. We have a fan question from make Mogo Moves two s's from Instagram again make Mogo moves from Instagram, and he asks, are you familiar with discharging debt? John? And do you use this avenue or approach?

I am familiar with discharging debt. It's called bankruptcy. The most common form of discharging a debt is a Chapter seven or a Chapter thirteen. Well one is a liquidation one is a reorganization. In both situations, if you have an the courts think that you have an overwhelming obligation, they will allow you to discharge your debts release them. The hit will be on your credit report, your credit score, your credit rating, your ability to go and get financing

again from a reputable lender. The word credit comes from the Latin root word credit tooe, which means credibility, So your credibility to get credit would be significantly diminished if you file for bankruptcy. I have had situations many over the course of my years as an entrepreneur where bankruptcy, unfortunately was an option. When I was homeless when I was eighteen years of age for six months of my life and lived in my Montero jeep that was being

hunted down by the leasing company. I wasn't paying in Costa Mesa, and I'm sure that my credit was toe up from the flow up, and I had little option, but I would communicate with the creditor and tell them I'd pay them. Eventually, they were still looking for the jeep and I was still trying to avoid them and then when I could pay them, I did pay them. I could have found bankruptcy. I was clearly upside down financially, but I knew it would haunt me forever. And also,

these folks lent me money. I asked them to lend me the money. They didn't force it on me. It was not a bad situation. It was actually a pretty good situation. I just ran out of money, ran out of a running room, ran out of cash, ran rend out of cheese, right, And you know, I made a bet and didn't work out. And that was not the lenders fault. That was my fault. And the monthly payments were due and I couldn't make it. And there were other monthly payments that were due and I couldn't make it.

And my credit score a beat that time had to be three or four hundred. It's eight hundred now. So no, I just fought through it, and it was toe up for a time, and I worked my way back, and I cut deals with each of my creditors, and over time I paid them back. I did not discharge the debts. I ultimately settle them, sometimes for a fraction of what the face balance was. But that was an agreement between me and the lender that we both said yes to.

So you can discourage debt, discharge debt, and if you do decide to discharge the debt through bankruptcy, know that some debts don't discharge, so you look to make sure you talk to a legal representative, talk to an accountant to see the tax ramifications. But you definitely want to talk to a bankruptcy attorney. I'm not encouraging to file bankruptcy,

by the way, but talk. If you're going to do it, talk to a bankruptcy attorney because I hate you to go through all this stuff to try to get out of a debt only to find out that it is not dischargeable. All right, this is John O'Briant, and this is money and wealth. I hope you found this valuable. Tell your friends to subscribe to follow h Let's start a conversation. Let's unpack all of this mystery and replace it with knowledge and insight. Let's make smart sexy again.

We've been making dumb sexy of a way too long. We've dumbed down and celebrated. It is time to make smart sexy again. John O'Brien, this is money and Wealth. I'm out Money and Wealth with John O'Brien is a production of the Black Effect Podcast Network. For more podcasts from the Black Effect Podcast Network, visit the iHeartRadio app, Apple Podcasts, or wherever you listen to your favorite shows. The top t