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financial coaching money management personal finance podcasts Aug 18, 2022

Lance joins Tiffany this week to discuss strategies everyone should adopt in order to save money on taxes.

About Our Guest

Throughout his two decade career as a Financial Advisor, Lance has defined “or fine-tuned” his PURPOSE. Which is developing lifelong relationships with his clients and providing them financial confidence and clarity of how they are going to accomplish their goals. Lance prides himself in being able to explain all the details and complex issues in a clear language that his clients can understand.

Lance's philosophy in life is to follow 3 simply rules; God, Family, Work. Growing up in Lamar, Missouri, his parents instilled in him the values that he strives to live by each and every day. He strongly believes in the power of community service and reaching out to those in need. Lance and his wife and three children reside in Fayetteville and they try to instill those same values in their children. He also enjoys spending time golfing, hunting, snow skiing, water skiing, and Crossfit.

Connect with Lance



Email: [email protected]


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Facebook: Money Talk With Tiff
Twitter: @moneytalkwitht
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LinkedIn: Tiffany 


[00:00:00] Voiceover: You know what it is. That's right. It's time to talk money with your money nerd and financial coach. Now tighten those purse strings in open those ears. It's the money talk with TIF podcast.

[00:00:14] Tiffany Grant: Hey everyone. And welcome to another episode of the money. Talk with TIF podcast today. I have Lance Beline on the line.

Now, Lance is a certified financial planner who has been helping individuals and families take control of their. For over 20 years throughout much of his career, as a CFP lances, did what most financial advisors do. Develop plans, help clients stay on track and make sure clients are adequately insured.

However, after 15 years he decided to break the mold and instead of just helping people reach their financial goals, he wanted to help them truly thrive. And how do you do that? By reducing or eliminating the amount of wealth you pay to the IRS. Okay. Since Lance's career pivot, he has been dedicated to educating people on strategies [00:01:00] for reducing or flat out eliminating the amount of taxes they have to pay to their biggest financial drain the IRS.

So I am super honored to have Lance on the line today to discuss some tax saving strategies. Hey Lance. Hello.

[00:01:15] Lance Belline: So happy to be on your show. Tiffany.

[00:01:17] Tiffany Grant: Awesome. So glad that you're here. So let's just dive right in because I know people are like, oh my gosh, how do I do this? So first and foremost, we wanna set the stage, right?

When it comes to saving money on taxes, people are thinking one year to the next year, pretty much on a yearly thing. But your thing is you should think about paying less taxes over your lifetime. .

[00:01:41] Lance Belline: Yeah. It's a, have a bigger picture approach. So when I call it two phases of life, when a person's in the accumulation phase, when they're working, making money, generally speaking, people are working and making money. They're trying to make as much as possible, right. Is, and the tax code is set. So that when [00:02:00] you have a, either a W2 income or self-employment income and your, the more money you make, the higher, the tax rate you pay, and it's hard, harder to decrease the amount of taxes you pay during your accumulation mode, but during your distribution mode, when you finally get to that golden retirement age at 55 or 60 or 65, that's.

If you have accumulated your wealth strategically, you can dramatically decrease the amount that you pay to uncle. awesome.

[00:02:33] Tiffany Grant: Awesome. So let's dive into that a little bit more. So when you say strategically, so like for instance let's say we have people that are millennials, gen Z gen X cuz that's typically my audience.

What are some things that we should be doing now? To make sure that our tax burden isn't so great later.

[00:02:54] Lance Belline: yeah. I want you to take think in three buckets. So there's three categories or in my [00:03:00] book, I have it in buckets so that you will, can save and accumulate wealth in. So the first bucket is what I call your pre-tax bucket.

That is, if I said the term, an IRA or a 401k that is most common used vehicle and what that ha, what we do with that is when your money goes in, it lower, it goes in pretax. So before uncle Sam taxed it, and then it grows tax deferred. So we never pay taxes when it's growing, but when we take it out. So when we get to.

59 and a half or 60 that's when uncle Sam gets to tax that as income, then the second bucket is I call your after tax bucket. And this is money that is excess. So it didn't go into the pretax bucket or, and. through our work or through the through the IRA. And then it's a little excess income, and then we have purchased an investment with it, like real estate or a [00:04:00] stock or a bond or mutual fund.

This is the money that. We get those 10 90 nines from, when we have to pay interest to uncle Sam every year. And if we make a game, I we buy an investment for, let's say $10 and we sell it for $12. Then we have to pay a capital gain tax rate. So this is your after tax bucket. The good thing about that bucket is it's not very tax friendly, but it's liquid, right?

We don't have to wait until 60 to. And then the third bucket and final bucket is why I call your tax free bucket. And it's BEC it's opposite of bucket once. So money goes in after tax and then it comes out though tax free and that would be vehicles like a Roth IRA or a Roth 401k health savings accounts also can be contributed to that.

But those are your three buckets. So you have your pretax. You're after tax and you're tax free. And so we want individuals [00:05:00] listening to be saving and contributing to each of these buckets. And if they contribute generally speaking, I would say the more they contribute to buckets two and buckets three, the more they're going to decrease the amount of income that's taxable in their retirement.

[00:05:17] Tiffany Grant: Okay. Gotcha. Cause that was gonna be my next question, cuz I know I've gotten questions where people are like, okay, I know that I there's traditional 401ks and IRAs and Roth 401ks and IRAs, what should I be investing in which one? And then also, should I do both all those types of questions.

So you answered that you wanna have money in each of those buckets, right?

[00:05:40] Lance Belline: Yeah. And if I, again if you had. If I'm new and accumulating wealth, I would probably err or want to have more, a higher percentage in bucket three because that's tax free when I retire and it's tax free to my children when they inherit it.

And then bucket two and then bucket [00:06:00] one. So I'd probably either you're gonna have money in each. The higher percentage you have in buckets two and three would be would be ideal. And it's because you have to think about a. The end in mind a again, the distribution. So when I have accumulated wealth and I want to stop working, I think that's everybody's goal, eventually, we would like to be able to have enough money accumulated. So we choose at least whether we're working or not. And so the bucket strategy is laid out is allows individuals. Let's say they could live up to, or have income up to 120,000. That's, it could be. But up to, and I can give example how they could only pay $1,410 to uncle Sam, which is less than one point a half percent.

If they again, have their money accumulated strategically.

[00:06:50] Tiffany Grant: Let's go ahead and get into that real quick. Because that sounds really juicy and I'm sure my audience is like, how the heck do you do that?

[00:06:57] Lance Belline: And not go to jail, right?

[00:06:58] Tiffany Grant: Exactly. [00:07:00] I don't wanna go to jail off of Tiffany's podcast.

No. So how would people. Do that strike. So give us an example. What does that strategy look like? Cuz you know, you hear a lot of personal finance people out there oh my gosh, you need a million, you need this before you retire and blah, blah, blah. And so to hear someone say, a hundred and something thousand it's refreshing, for people and it gives people some hope.

What are some strategies around that? How do we lower that tax bill later? .

[00:07:28] Lance Belline: Yeah. So in, in simplicity, which the tax code's never, SU super simple, but there's that people there's income tax rates on one side of the table and there's seven tax rates over there starting at 10 that's the lowest.

And it goes up to 37%. And then, so there's five brackets in between. And then on the other side of the table there's, what's called the capital gains and dividend tax. And there's three tax rates over there, and those are determined by where you fell on the income [00:08:00] tax side. Okay. And there's a 0% tax rate, a 15% tax rate and a 20% tax rate.

So if a person is fortunate enough to be in the 37% income tax rate, their income is over $650,000. They should be very. They are in the 20% tax rate over on the right side with if they sell an investment for a gain and an individual that is in the 12% income bracket or below, which means they have income of 83,000 $83,850, then they qualify for the 0% tax rate.

So we, what we wanna do is qualify for the 0% tax rate, not necessarily during our accumulation. Because, but we definitely wanna try to qualify it in the distribution years. So let's just, fast forward and say, the person has accumulated their wealth. They're ready to stop working. And they're going to withdraw, [00:09:00] let's say $40,000 from each of their buckets.

And so remember you no longer are working, so you don't have a W2 or any self-employment income. Uncle Sam allows every taxpayer to lower the amount of taxes they pay by. What's called a standard deduction. and that's $25,900 this year. So if I take 40,000 from my bucket, one that is taxable, right?

That's my new w two in retirement. I get to lower the amount that is taxed by the standard deduction. So 40,000 minus 25,900 equals $14,100. that is what uncle Sam says is my taxable income. Now that is less than the $83,550 limit, which is the top of the 12% income bracket. So because I'm now under that, I qualify for a 0% tax rate on my bucket to money.

So [00:10:00] if I take 40,000 from my bucket two, I used to be getting taxed at 15 or 20% on that during my accumulation years. But now I qualify for the 0% tax rate. So 40,000 times zero is zero. And then if I get 20,000 from my bucket, three money that's tax free. so I get the $120,000, but I'm only taxed on my $14,100.

And that's how we get to that, less than one and a half percent tax rate during your retirement year. So it's manipulating our income so that to uncle Sam, we look very. They're going, they if it, they only see $14,100 that's taxable. And so they allow us to benefit from that 0% tax rate.

And so that's why we want to accumulate our wealth in the three categories so that we can, I would say, take advantage of the tax rates and how the tax code works in our retirement. gotcha.

[00:10:58] Tiffany Grant: Gotcha. And I [00:11:00] just put two and two together. As you were talking when we're looking at the buckets, right?

So one, two and three when we're in the accumulation phase, we wanna go reverse orders. So 3, 2, 1, in general. And then when we get to retirement, we wanna go the opposite way. 1, 2, 3. So that way we can lower our taxable income. So that was just. Easy way that I was like, putting it in my head and hopefully that helps listeners too that have questions about how to put in and then subsequently how to take out just think 3, 2, 1, 1, 2, 3.

[00:11:33] Lance Belline: I love that. I actually never thought of that. So I'm gonna borrow that idea and start communicating that to my clients.

[00:11:38] Tiffany Grant: Yeah, absolutely. Yeah, I just put that together and I was like, ah, genius. Perfect. So anyway, let's get into cuz that was great. That was so many gyms. And honestly I think that is plenty for people to think about, but I wanna hit on one more thing.

You also have in your book, that's coming out in November 15th. You talk about a $10,000 Coke, and I [00:12:00] thought that was interesting. So if you can just break down what that means to our audience, for those that think that they don't have enough to invest right now, maybe, they're like, oh my gosh, you're talking about something so long term and investing and I don't have the money for that.

I'm. Put food on the table type thing. What does that $10,000 Coke mean?

[00:12:20] Lance Belline: Yeah, it's I have a person that works for me and she's brings brings her lunch to work every day instead of going out. And she uses that money and to save. And I was thinking about that, cuz if you think about.

$10. If you go to lunch today, it's 10 to 12, $15 pretty easily, right? If you eat out, but even more simply we all generally speaking sometimes stop at the convenience store or we'll stop by Starbucks or something on the way and we'll purchase a Coke. And, I used, let's say $2 as the cost of a Coke.

So let's say a person's pH. I just do not feel I have enough money. I don't have any [00:13:00] excess money to invest. I think we all generally spend money frivolously. In some way, shape or form, so let's just break it down. What if we avoid purchasing one Coke a day? So it's $2 a day that we do not we go without, I don't think anybody would feel that would be a major sacrifice.

And then if you take that times five days, That's $10, right? A week times, four weeks, that's $40 a month. And if they would then invest that $40 over 10 years, that would be worth over $10,000. And I don't think they would miss it. You mean, I bet 10 years from now when they have that money in their account, they would go.

I wish I would've bought that Coke every day. I don't think they'll do that. They'll be like, this is awesome. So I think everybody in some way, shape or form can just think about what could I not spend money on a daily or weekly basis just by be being a little smarter, or what if we pack our, think about it and on Sunday start prepping our meals.

So [00:14:00] we're not eating out every day. We're only eating out maybe once or twice a week. That's the way people can save and accumulate.

[00:14:06] Tiffany Grant: absolutely. Absolutely. Like I'm over here thinking about like the 30, $40 I've spent actually just yesterday, like when we, me and my kids ate out fast food. Now mind you is one adult, two kids, and I spent about $30 or so just on fast food.

So you know that amount of money. And if you multiply that by every day, if people are eating out every day, that money can be accumulated pretty quickly See, and also, if you budget, you can look at your budget and say, I've had that happen personally, where I'm like, dang, I didn't realize I spent that much.

And if even just a portion of that money went to. Saving up for retirement or investing or so on and so forth, it could make big changes in your future. So thank you so much, Lance, for coming on the show today. And I wanted to give the audience, if you all enjoyed [00:15:00] these tips because we had some great ones in here.

Where can people find you get your book, all that good stuff. Give us all the T .

[00:15:09] Lance Belline: Yeah, you bet. My website for the book that I think in a pre-order if they'd like is just my name, Lance Beline B E L I N And. They can go through and then I have resources on there that they can download if they'd like to help them as far as identifying, for example how much money do I currently have in each bucket?

How much do I have in bucket one bucket two bucket three currently, and based on how I'm currently saving what will be my future, account values in each. So that's something that can be very helpful. And then also an expense planning worksheet. If somebody wants to get a grasp on where their money is going I can, yeah, there's an expense planning worksheet, so they can enter that in and identify areas that they could, decrease what they're spending money on so they can save more and a lot of information on the tax code system.

So website. [00:16:00] My company website, if anybody wanted to reach out there is my company is lighthouse financial and that website is LH

[00:16:10] Tiffany Grant: awesome. Awesome. And if you all did not catch any of that, like your multitasking, like most people do when they listen to podcasts, I will definitely have both of those links in the show notes.

And also Lance, we never mentioned the name of the book. What's the name

[00:16:24] Lance Belline: of the book? Ah, yeah. It is more wealth, less taxes.

[00:16:28] Tiffany Grant: Perfect. Perfect. So look out for more wealth, less taxes coming out November 15th. And Lance said you can find all the information you need on his website and I will definitely be tuning in because I thought that this was very helpful myself.

So thank you so much, Lance, for coming on the show and I'm so glad that you decided to share with our audience. You bet. Thank you for having. Absolutely. Bye.

[00:16:55] Voiceover: Thank you for listening, joining, and being a part of the money. Talk with T podcast [00:17:00] this week, you can check, tip out every Thursday for a new money talk podcast, but if you just can't wait until next week, you can listen to previous.

Podcast episodes money, talk with or follow TIFF on all social media platforms at money. Talk with T until next time spend wise by spending less than you make a word to the money wise is always sufficient.



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