My current income is 2K per month after all deductions and I have a (B.S+M.S) degree in Computer Science. I hear from the people I have talked to that the area where I live and work(Tallahassee,FL,U.S.A) has an average household salary of 200K(for people without a high school diploma) and mine is low as I work for the govt.
My agency sent me to a training class for something basic(basic SQL) and the instructor there told me he works as a contractor for training and earns 5K per week. I can believe that as my agency is spending
1600 just for me and there are 10 students in the class. So, effectively the training peope are getting 16K and deducting salesman and other charges the instructor could be getting 5K for a 1 week class. Sometimes he has employment for 4 weeks per month and sometimes 1 week per month but he gets work about 2 weeks per month in a year(or 10k per month) approximately. This gets him about 120K. Then his spouse does the same job and together they build up approx. 240K(excluding their investments and other sources). I asked him how does he get a lot after taxes, health insurance and 401k. He explained that he hires a proper accountant and shows his household income as 40K instead of 240K. So, the funds he evades in tax payments are used for his health insurance and 401K. He works about 40-50 hours per week as he is teaching since 2-3 years so he does not have to revise daily. He has a B.S in finance and his wife took some training classes and they both became an instructor.As I am new to this area I had to get cable hooked up. I called comcast who sent a contractor. He also told me he gets 125$ per job and he does 4-5 jobs per day which is 500 per day. Over a week it is
2500 and for a year 120K. He told me he did not finish middle school. Each of his job takes 1-1.5 hours as he has to go to a customer's place, remove the filters and do some basic wire connectivity. I asked him and he also told me that his spouse also does the same job for Comcast. So, their net household income is 240K. I asked him too how does he get a lot after taxes, health insurance and 401k. He explained that he hires a proper accountant and shows his household income as 40K instead of 240K. So, the funds he evades in tax payments go for his health insurance and 401K.When I talked to a cab driver in this area he told me he earns 50K. So, net household income for his family was 100K(not including tips) as his spouse was doing the same job. He told me most contractors and self employed people use the tax evasion and get their health insurance and 401K. A truck driver told me he was earning 75K per year(he was single) after his fuel taxes, truck insurance and other dues.
All these people told me because they have no job security their salaries are quite high. When I asked them if they were not worried about not getting contracts they told me they are generally fine and if they are surviving till now they have hopes for future too. They told me they have some investment cost like getting a cab, fuel charges etc. but the rewards by far outweigh the expenses. They also told me most contractors, self employed people, businesses use the same trick for evading taxes. They told me IRS does not have time to chase each and every person so a lot of people do that.
My landlord became a multi millionaire at 33 working 15-20 hours week just by starting real estate at 23. He laughingly told me that people like you who rent an apartment from him make him wealthy at our expense. I asked him about set up charges. He told that he borrowed money from bank, purchased apartments, rented out to people, paid the mortgage and used the remaining for his income. The bank was willing to lend him as if he defaulted they could recover their expense by getting hold of the apartment.
I understand the people I talked to might be fabricating but I think they would not gain anything by fibbing to a nobody like me. Obviously, I could be wrong because I might be talking to people who are seldom in soceity than others.
I am a fresh graduate(although too slow as I understand most people have finished their doctrate by 25) so don't know much about income proration and would appreciate the advice of people in this group.
I am single, considered too old at 25 as don't have 5+ years of I.T actual world experience but only academic experience obtained while pursuing degrees. But, I understand for my age group 200K for a household income is achieved by many households.
Can anybody please advise if it is proper to quit a govt. job and go as a contractor or go into real estate?
I am a newbie so apologize if there are any slip-ups in my post.
Thanks a lot.
P.S. I got a few tips from people in another group but would appreciate the advice of more people.