It was too good to be true. The idea that someone could be hired in San Fransico, accept the job, and then move to Iowa. A technique like this could generate a lot of wealth. You essentially would be receiving top pay from San Francisco and living in a low cost of living area. It’s the American dream, at least for some of us.
Recently, I woke up and saw an article that would start to disrupt this method. Companies want to limit, or control, the ability to remote work in separate areas than the parent company. There are tax implications, of course, but something else as well.
These mega-corporations are starting to do the math. Why would they pay you California wages to work in Iowa? They can just pay you Iowa income. Some companies will go so far as to track your IP address and adjust your pay and taxes accordingly.
Mentorship is Dead
Why is this pay and tax situation so serious? The remote work situation was a boon for many tech workers. They were getting all the benefits of working in a corporation but living in a quiet, rural area. Millennials started a massive departure from major cities. Things were going to change.
But, not so fast. Companies are telling us that we can live in rural areas but have to live on rural pay. What will people pick? Their current job may work out well, but what if they have to transition to another job? Will workers need to relocate?
What will be an excellent way to prevent this pay trap? Ahhh, now I get to jump on my pedestal. Diversify your income, create multiple cash flow streams, live below your means, and invest your money. These words represent my company motto and my personal mantra.
As remote workers deal with the slow removal of their pay and benefits, diversifying their income is a sure-fire way to prevent a “pay trap”. Since workers are working from home, finding a business to start from home will be a perfect way to complement these tech jobs. Here are a few suggestions.
Taxes 103: Real Estate for the Win!!
Contract work. Since remote workers have jobs, they should (in theory) have job skills. Making yourself a contractor is a great way to supplement income, start gaining traction with an audience and increase job proficiency.
Company of One. If you have the skills, the audience, and the knowledge- you can create your own business based on your job skills. I recommend keeping your day job until everything pans out. Working from home gives you those extra hours that you would have been commuting.
Content creation. You have job skills and started a business. With those two things, you have more than enough to create content. Your content can focus on building skills, mentorship, and career progression. Then you can transition to how to start a business, entertain your audience, and grow your client list.
Is Saving Money Bad?
I like to stress to everyone that you don’t have to start or run the biggest business in the world. You can keep enough clients to pay for your expenses. Most people think of business as a vast network of buildings, each with meetings, conference calls, travel, and employees. Your company does not have to be anything like that. The main reason is that it is YOUR company.
A quick scenario could play out like this. You are living in Florida but getting paid New York money. Your company starts to screw around with your pay and reduces it to Florida’s cost of living wage. Luckily you started a small LLC and have ten clients on the side. Your pay from the LLC is enough to cover the difference between the two wages. When it is time to grow your business, you already have clients, procedures, and contracts in place.
These companies are not your friends. Remember that their only purpose in life is to make shareholders money. All of the accredited investors made their money before the company went public- leaving the rest of us with small gains. Wall Street is happy when profit margins are kept high. The cost of resources and expenses can only be kept so low. What is the one thing that they can control? Personnel. They can control how many workers they have and how much they pay each worker. You are that worker. Do you want to be controlled by something that views you as just a number?
Our core principles are retirement planning, investing, collecting real estate, and building businesses. Luckily you can do all of these things from the comfort of your own home. Think about the long term and do not fall into the remote work “pay trap”. Good Luck.
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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