Ask Sherry: What do I do to make so much money?

You asked, and I am answering every Friday once I have enough questions!

You can ask any question using the form here.

I just bumped into your blog. What do you do for a living that allows you to save that much? Just curious.

This is the million-dollar question, isn’t it?

I should change it to “Ask Sherry (Almost) Anything“! 🙂

All I will say, is that I work in STEM – Science, Tech, Engineering, Math, and I am an independent consultant, meaning I work for myself, and not for a company as an employee.

Let’s talk about how I can save so much money, which I can be a little more open about.

I am tax-savvy in that pay myself in dividends, and only take out what I need to live on that year, and leave everything in the company.

I pay taxes once under the corporation at around 19%, then when I withdraw my retained earnings, I pay personal taxes on the dividends again.

See, as I don’t pay myself a salary, and as a result, when I do make bank, I continue to take out the minimal amount of money (thereby, reducing any taxes paid), instead of like my other colleagues who take out the full amount and pay 50% taxes on it right off the bat.

I always pay the 19% corporate tax, but save on the personal tax.

The downside is I don’t get any RRSP (pension) contribution room, and cannot save any money there in a tax-deferred plan, but that’s all right because if you over save in that plan, the government claws back any kind of benefits that you have paid into your entire life and may have been entitled to because you saved so much money that you don’t need it, so they give it to someone else.

I don’t have much in my RRSPs to be frank, right now it is around $157,000. I won’t be contributing any more into that plan, as I don’t plan on taking a salary any time soon.

Another downside I also do not get any kind of employment insurance or sick benefits (I do not pay into the employment insurance plan because once you opt in you can never opt out), and I’d rather just not earn any money if I don’t work, and double down on the savings when I do.

I keep my spending pretty low-key compared to what I earn as well, which is a key part of it. There are people I know who make as much or more than I do, and spend every penny.

The upside of all of the above is everything else – working half my career and taking 2 year breaks in between, having lots of money saved, only having 40-hour workweeks when I DO work unlike people who make my salary but bust their butts doing 80-hour weeks, and making good money in a job I love.

What is your ethnicity?

See above. I am staying Anonymous, so I don’t answer these questions. Thanks for understanding.

Still have a burning question?

You can ask any question using the form here and all of my previous Ask Sherry posts are here.