Jun 072017
 

Most people live out their lives and never buy any assets. I think this may be attributed to people getting their basic costs of living needs met with a job and saving some money, such as in pension fund. A house in which you live is not an asset, but a house that you own and rent out to a tenant can be an asset. If managed properly, it will pay you a regular income, that is an asset. Your car is not an asset, but a collection of antique cars that people pay admission to come and see may be an asset, or a fleet of taxis that you lease out to taxi drivers may be an asset. Just because you can sell something does not make it an asset. An asset provides regular income for the asset holder, hopefully it is positive income (profit). By implication, everything else is a liability.

Example

Yes, that work of art you bought at the auction for $7,500 and had appraised for $10,000 is still a liability because it’s not generating regular cash flow, good job on buying low however. Owning assets or the rights to cash flow from assets is how you acquire and build a net worth. While most people know how to acquire long term debts for college, homes and cars, they have no clue about buying assets. If you create a scale on buying assets, the best assets are those for which you have no liabilities for ownership, but derive the benefits from the cash flow, and make infinite returns. That means none of your own “cash in”, but you get “cash out”, profit. These are the kinds of deals I like the best and it’s becoming easier and easier as we have developments such as the Internet and blockchain and cryptographic currency. That’s at one end of the scale.

At the other end would be something like, you get an option on a commercial real estate site, and draw in capital from investors, develop some retail space and begin making 7% on your money in about 5 years. It’s still an asset, and might be worth more cash than the infinite returns deal, or maybe not. Every deal is different. But how would the average person who has never bought an asset or never really considered this subject until now, go about “acquiring” assets?

First, you need a way to own the asset, or manage the cash flow, or hold title to whatever it is you want to buy. I’ll start with something that most of us can relate to, let’s buy that coin operated car wash in our town. That is very close to a commercial real estate deal, but without the commercial lease agreement, presumably, and without employees, these are my specifications for this example, especially if you are just getting started. The car wash is actually a real estate deal and those have publicly recorded titles, so you would use a corporation to receive the conveyance of the title as part of the sale.

Second, if you don’t already know what you want, you have to go shopping. Either you can do this yourself, or through a broker or some other agent that can help you find the deal or deals you want, where you want them.

Third, you need to be able to make an offer, it should be in writing, but this is not required.

Financing

Fourth, you should always look for financing, even if you pay cash, you will still want financing at some point so you can make the best returns on your money. Here is where many people run into a brick wall. They either believe they don’t have enough money or cannot get the financing because of their personal credit score. What most people don’t know is that most of these types of deals for example (the car wash) are not usually done with personal credit or lots of cash.

Imagine buying an asset, such as retail zoned real estate in your town, on credit and with little or no cash of your own. Yes, it can be done, and once you see how this works, you will want to do this all the time even if you have enough cash to just buy the property without any financing. Always risk the least amount of your own cash on a new deal.

Let’s take a closer look at financing the purchase of an asset. First of all, you are buying an asset on credit, much easier than buying a liability based upon the fact that you have a job (such as your home). The first consideration for lending should always be with the seller. Ask yourself, if the seller is selling his asset, something that is paying him on a regular basis, why is he doing that? This information comes from a discussion with the actual seller, not his agent. Let’s say he has a good reason for selling, and that the asset is really a good deal, the seller should be willing to “bet on himself” or the “profitability of what he’s wanting to sell you” by financing it to you. But maybe there are so many buyers that he won’t consider it, this is an important consideration.

The second consideration in getting financing is to understand that the collateral for the financing is the asset you are buying, it should be paying for itself. It’s not like you are buying a house and your ability to make payments depends upon you keeping your job. It’s a much better financing situation to buy a business than to buy a home. Remember that I explained previously, an asset can be owning the thing that pays you, or it can be the actual cash flow coming from the asset, whether or not you hold the title. In fact, it makes more sense to buy a business or two and use that money to offset the purchase of a home or finance a liability.

Let’s say our car wash generates $50,000 of gross income annually, and let’s say that a fair asking price is $50,000, the asset’s annual income, and this assumes that the real estate comes with the business, same owner (doesn’t have to be though). You may never find a deal like this, but I’m only using this as an example. Estimate your financing based upon a short term debt, such as 3 to 7 years. And let’s just be optimistic that the seller is so excited about financing this deal that he’ll be jumping for joy upon receiving your offer.

It’s already generating a monthly income of $50,000 / 12. You will want your monthly payments to be a fraction of this amount, after all, you want positive cash flow and you still have to factor in operating costs (taxes, insurance, materials, supplies, maintenance, etc.) If your monthly gross is $4,166, structure your financing for one-third of this, or $1,388 and get a three year note. You’ll have some wiggle room for the interest rate by doing it this way.

There are several ways of managing the title during this transaction, the easiest one is likely to be with an exclusive options contract where the seller gives you (or sells you) an option to buy (take the title) at some point during the life of the note, or upon full payment of the note. Let’s say the seller of your local car wash agrees to sell you his car wash, under the provisions of an options contract in which you take the title after the note is paid in full, three years from now. Within 30 days of the closing, you will be keeping about 2/3 of the $4,166 or $2,777. This will be your new income, and you didn’t have to go begging to the bank or use your personal credit. Instead, you would have probably had to show the seller that you had solvency in a company, which only takes a few months to establish.

I’ve just described a very simple and boring transaction that created nearly $3,000 a month in new income for you. Let’s step back for a moment and talk to all of you who believe you would never get “owner financing” for a moment. If the seller won’t carry a note, maybe there are others whose business it is to only carry notes? Yes, of course there are. You would then need to find a third party lender, and in some cases you might prefer this. If the seller insists on doing it this way, then he will need to transfer the title at the closing. Or, maybe the seller will finance it (second position) if your lender contributes 25% to 50% of the purchase price, there are many options.

In this case, the title holder will be your company, that will have shown its solvency to the eventual note holder or lender. You don’t want to be the personal guarantor on this, where your personal credit is being used. These deals can always be done using the company’s credit, even if this is the first asset being acquired by the company.

Who would hold a note on commercial real estate with a history of positive annual cash flow of $50,000? You will find many lenders for this. I would suggest that your best options do not include any traditional banking organizations. You want to look for cash or hard money lenders, let those organizations source the lender for the loan they are giving you, that’s how it works. Where would you find these? I would start with a business broker, maybe it’s the same broker who helped you find the deal. He or she can probably connect you with real loan money, hard money, again, not bank “funny money”. I use the term “funny money” because you don’t want to get tied up in loan contracts with the evil banking system since you are not in that business, let someone else do that, you get a hard money loan and let that lender deal with financing of his loan portfolio.

You might also find equity financing, that is, someone with cash who doesn’t want to be a lender, but wants a share in the business, in the equity of the deal. These are also very good ways to get financing, just write your contract so that your equity partner has a clear exit strategy or includes a buy-out clause so the deal has the most flexibility for everyone. I would not suggest selling actual shares or even advertising for the sale of shares; rather, I would look for a partner who brings cash to the table and his rights and interests are expressed in an operating agreement and or a joint venture contract. You don’t want to be under the purview of selling securities; however, once you become a little more sophisticated, you may want to look into “Reg D financing”, I’ll save that for another article.

Notice that so far, I haven’t mentioned anything about writing a business plan or a marketing plan, or even a financing plan. These are important and you should have them, but don’t let not having them prevent you from moving forward. Like I’ve explained, you want to show solvency in the business. You can do this with a balance sheet and income statement. Once you form the company, have a bookkeeper create your balance sheet and income statement, even if you show only the $100 you used to open its bank account, that is where you begin. The next step may simply be you depositing an additional $100 a week or month into the business bank account as a contribution for your interest in the company. This creates a record of regular cash flow, it doesn’t have to be millions of dollars, just regular.

Consider additional ways to create funding, such as grant money. I would start with finding a grant writer to prepare a grant application and then shop it around for a grant. It doesn’t have to be substantial, just get one grant and it will do wonders for your future ability to attract more capital. Along with finding a grant writer, contact the Small Business Administration to review what is required for a grant application, just so that you know, even though your grant writer will be working you through that process. The SBA is not the only place to get grants, that’s why I suggest starting with the grant writer, and a grant broker, but only use the SBA as just one possible source and a way to learn about the process.

Grants.gov is also good place to start when looking for grants. There are professional grant services such as eCivis, Inc. This one provides a suite of Web-based software applications, along with grant-writing and grant-management services. Grants.gov is the federal government’s e-portal for 26 grant-making agencies. The website is a central storehouse for information on more than 1,000 grant programs and provides access to approximately $500 billion in annual awards. You may also want to get a copy of Grant Writing for Dummies, 4th Edition (John Wiley & Sons, 2011).

You may also find that getting a short term loan from the SBA would be beneficial in getting your venture going faster. Remember that you want the business to get the financing, not you personally, never disclose your personal credit information for a business loan, but before you look at getting a business loan from the SBA or bank, you will need to create, not only a balance sheet and income statement, but a real business credit file with Dunn & Bradstreet. There are many services that can help you do this, even some that guarantee a certain amount of unsecured credit within a short period, such as six months. That should be one of the things you do in the first year, and before you submit any traditional loan applications. I’ll discuss this along with business brokers in more detail.

The SBA is a good source, but don’t overlook state and local sources for grants. It will be useful to consider the economic development office of the state, county and city in which your business operates. These grants are often less restrictive than federal government grants and it is likely there is less competition.

Another good source for small business loans would be a company called Start Up Nation, at https://startupnation.com/. Let’s review the process of setting up business credit before we go any further. I didn’t want you to think that your only financing source depends upon a high credit score, I’d rather you think of it as just another tool. I’ve done many lucrative projects with no credit whatsoever, so don’t let this prevent you from getting the assets you want.

Business Credit

Once you have a corporation registered, you want to be sure it has a business location as its address, maybe it’s a virtual office space or maybe it’s your barber shop because your friend works there and his boss doesn’t care if you use his address as yours for a short time, or you really do have a business location for the company address, not just a mail box. You can also use a mail box, but your main address should be a business location. The next step is to get that business information listed in the 411 directory, this can be done online and there are specific instructions to help you.

You’ll want to review http://www.ehow.com/how_5828088_business-listed-411-directory.html. Keep in mind there are services that will charge you a fee or monthly to list your business, and some of them may be really useful, but I’ve found that it’s enough to list your business yourself, for free.

If you can be patient, you should receive a letter from Dunn & Bradstreet within about 60 days of registering on the 411 directory, welcoming you to the service and giving you an account number. The objective here is to sell you business services, and these are not required in order to get a business credit file, even though you might find some useful. I don’t recommend turning down D&B offers for services, instead, just explain that you have to discuss them with your partner and ask for additional information and explain you will call back. In the meantime, you will have a D&B account with no credit score. D&B is actively looking for new businesses and once you get on its radar, it will create an account for you. The next move is yours, as you will eventually need a credit score. That takes a little more planning and you have to understand some basic concepts.

You will need four “net 30” accounts, there are were you buy supplies for example, on store credit and pay the bill when it arrives. You don’t need 5 or 6 and 2 or 3 would not be enough. The trick is to buy things you already need, such as office supplies, and be sure that the retailer reports to your business credit file and never use your personal credit information to obtain the store credit with the retailer. Sometimes you have to call a different office or search online to get the actual business application that does not require any personal guarantee, never settle for being the guarantor, ever. Next, pay the bill immediately, don’t wait for the full term, in fact, you may want to call in advance of receiving the bill and pay within 5 days of using the credit. This will result in a D&B creating an actual credit score for your business’s use of credit. The scores range from 0 to 100, and your first score may be above 90. A higher score is not better. You want a score that shows you are able to use debt and manage the business properly, so that score would be around 75 – 80. The more debt you have and the better your balance is, the more creditworthy your company becomes. It’s because your company is using debt to increase it’s net worth. People can’t do this because typically consumer loans are based upon limited income, wages, and those don’t go up with more debt.

The next step is to take unsecured loans for about $20,000 to $50,000 within the first six months of starting your business credit profile. It’s important that the lender reports these accounts to your D&B file, you must confirm each time, do not assume. Once you do that, it’s then just a matter of managing your company, but again, you should be able to obtain financing just by thinking through a deal and not be totally dependent upon asking an institution or bank per se.

Business Broker

I mentioned a business broker earlier. What can a business broker do for you? If you are new to this “business” of buying assets, it’s best to start with a business broker. Tell him what you want, what you are looking for and ask what will be needed in terms of your company’s financial records, in order for the seller to even consider your offer. This will be such a great education, better than taking on huge student loans to get your MBA.

I talked with an MBA student one time. She said she was studying how Star Bucks runs its business, so I asked her how it does. She could not answer me. What’s more, I asked her the general question, how would she create a corporation, the main tool of business. She couldn’t tell me. So I suggested that if she really wanted to know how a business operated, including Star Bucks for example, that she get together with her classmates and form a corporation and then get into a licensing deal with Star Bucks (which is how that works by the way, no franchises). I think she was mortified at the thought, but this is my point, it’s not difficult and if you’re going to study it, you should do it, that’s the best way. I remember presenting a thesis to my college professor about how it would be a good business to teach elementary school children how to do high school algebra. I thought I was so smart, so I was surprised when she wasn’t that impressed after reading it and suggested that I actually go out and do it. So I did, and I made lots of money, and then she was impressed.

Business brokers will help you with pricing the business with a professional valuation and then drafting an offering summary, sometimes called a confidential business review. This piece becomes one of the most important marketing tools for the offering, and is provided to prospects only after they have signed a confidentiality agreement and been qualified by the broker.

Marketing the business to the widest possible audience while maintaining strict confidentiality. This is one of the important distinguishing differences between business brokers and real estate agents. Real estate agents put a sign in front of their properties and typically without the need for confidentiality, advertise widely the specific location. Business brokers are trained to maintain strict confidentiality. When you contact the broker, he will research his database for the deal that works for what you want.

Your broker will also facilitate meetings between you and the seller. When it’s time, he can also writing an offer to purchase the business and be involved in negotiating between both parties. Your broker can work for and represent only you, or work for both parties, it depends on the contract. Either way, he can also facilitated the due diligence investigation, as most offers to purchase are made contingent upon a due diligence finding. And as I’ve mentioned earlier in this article, your broker can assist you in obtaining financing. He may not be as creative as what I’ve described in this article, but that is your job after all. Your broker can help you through the entire deal, even scheduling and facilitating the closing of the transaction. This article would not be complete with at least a brief review of crowd funding.

Crowd Funding

This is a way to get funding from a large number of people who like your idea, but may not necessarily know much about business or being a lender for profit. Crowd funding allows the average person to benefit from your ideas with low risk and avoids the need to sell securities or do any public offering.

While you may have planned a marketing and advertising campaign for selling your actual product, you will need a marketing and advertising campaigning to raise money through crowd funding. The idea of “its not what you do, but why you do it,” really hits home here. By focusing on a bigger purpose, the driving force behind a brand, project creators will be able to create a unique community of like-minded individuals. Each campaign is set for a goal amount of money and a fixed number of days. Once the project is launched, each day will be counted down and the money raised will be tallied up for visitors to follow its success.

Instead of traditional investors, crowdfunding campaigns are funded by the general public. Typically, most successful startup fundraising efforts receive about 25-40% of their revenue from their first, second and third degree of connections. This could include friends, family, work acquaintances, or anyone that the owner is connected to, including their second and third degree connections. Once a project has seen some traction, unrelated consumers start coming out of the woodwork to support campaigns they believe in, but you must have a story that appeals to people, such as for the car wash, your business is involved in developing the community (sounds lame, but you get the idea). You may want to launch the campaign with pre-arranged contributions that are made immediately with the launch.

Here is a list of the top 25 crowd funding services, http://fitsmallbusiness.com/best-crowdfunding-sites/

This is a very cursory review of how to buy assets, but the references should really help you get a better view of how it’s done and hopefully, why you should buy assets, at least one new asset a year.

Jun 072017
 

Over the last 25 years I’ve been providing clients, friends, partners and subscribers with little pieces of the whole picture on how to live well without using any social security number. Now I realize that some of you are committed by having disclosed or associated a social security number with, at least, a driver license or professional license. The same is true of myself; however, I’m going to show you how to live well without associating a social security number that was assigned to your legal name. This will especially apply to my anticipated following of the “GenZ” or “iGen” demographic, people born between 2000 and possibly 2025. I know this time period may change somewhat, won’t matter. Let’s understand a few things about this social security number scheme. It’s a Nazi system of numbering people, it was described in the Bible, and so what. It was dredged up into our legal system by Eleanor Roosevelt, FDR’s wife, during his term as president. If you read your history well enough, you’ll discover that FDR was responsible for “The New Deal”. It was a collection of congressional acts, executive orders and federal regulations that re-organized the bankruptcy of the United States under Title 5 USC §552(a), otherwise known by two names, The Government Reorganization Plan or by the Administrative Procedures Act. I’ll leave the why and how for a later time, let’s focus on this numbering scheme.

First, no law requires anyone to obtain or use a social security number as a condition of living, working or even voting in any of the fifty states or the United States. If I can believe my congressman’s written word, I have a list of many letters from congressman over the last thirty years who have so stated.

Secondly, even if you have one, you are not required to disclose it, even on a tax return. This is very clear in 26 CFR Part 301.6109-1(c) “Identifying Numbers”. It states that only someone paying you must ask for the number. How many times have you been asked for a social security number when you are paying the one requesting? Federal regulations apply to federal agencies, not people, but this regulation only requires an officer, employee or elected official of the federal agency to request the number. It does not require anyone to actually disclose a social security number, even you are asking for federal benefits (Privacy Act of 1974). If the employee is going to pay you and you refuse to give the number, the regulation requires the employee to lie to you and tell you that disclosure is required. If you still refuse, the employee is then required to submit an affidavit so stating along with whatever forms on which your social security number was going to be reported.

Third, the social security number applies to officers, employees and elected officials of the United States; however, some of the states’ legislatures passed laws requiring the disclosure of the number for state privileges such as getting a driver license. I’m not sure if the Supreme Court would have upheld this or if anyone has ever challenged it, but it is not embedded into our society. Its use has become so pervasive that to stop using it literally requires a series of lifestyle changes, the degree of which depends on how much you want to rid yourself and your life of this fraudulent scheme. Let me tell you a bit more, just to get the blood pressure up if it’s not already. The fact that you are using this government number and associating with what you do throughout your life, allows a handful of elite individuals and organizations to move billions of dollars in the form of securities through your social security account everyday, and enables bond holders to name you as the guarantor and collateral on debts and security they create for their own profit. Yes, you are a slave if you are associating this tax number with what you do throughout your lifetime and if you got your children a social security number and claim them as a deduction on your tax return, you’ve done the same to them before they were even of legal age. It’s a form of human trafficking.

The number itself is 9 digits; therefore, there are 10 combinations per digit, for a total of 10 to the 9th exponent of combinations, or 1,000,000,0000 (a billion) combinations. The program began in 1933 or 1934 and apparently, no number is permitted to be issued more than once. We now have one-third of a billion people living in the United States and easily that many social security numbers being used by everyone, except a few people like myself. Go back 40 years and that’s another one-third of a billion numbers being used. Then consider how many 9 digit tax numbers have been assigned to illegal aliens, trusts, corporations, estates, etc. We are well beyond over a billion numbers in use, not to mention that blocks of them cannot be used as they are reserved for government purposes.

The way the IRS and Social Security Administration avoid confusing files as they are indexed by social security or EIN or TINs, is to use the first four letters of a taxpayer’s last name and concatenate them onto the end of his SSN. For example, William B. Smith’s SSN is 666-00-1234, so his individual master file at the IRS would be 666-00-1234SMIT, a total number of combinations equal to 10 to the 9th power times 26 to the 4th power, problem solved.

I believe the best way to explain how to live well without a social security number is to give you actual case examples of how I’ve done it and how I’ve helped others do it. In my case, it’s plenary, including every aspect of my life. Like I said, it is a lifestyle change, and I can’t expect everyone to simply adopt all of it overnight, so I only focus on one immediate situation.

At Birth

The first example is how to bring your children into this world, with a traditional birth at a hospital, without a birth certificate and without any social security number. I did this five times for my family. I even brought my wife here from Europe, legally of course, and she was never forced to get a social security number. Here’s how you do it. We all know it’s an exciting time, having a child. We get over nine months to prepare and in that time we get to decide on a name. Remember that a name is what you call yourself, not necessary a series of letters on a birth certificate or government document. The last time I checked, we still have the right to freedom of expression, even without the Constitution. In any case, after that wonderful moment when you’ve given birth to your new baby, and all of the nurses and doctors congratulate you, a short time after, you will receive an uninvited visitor from the Department of Health. Let’s call her the tax collector.

The tax collector can only collect taxes on the new child with the help of an informant. Who is the informant? It’s your mother. But you don’t have to be an informant because your child is not a new taxpayer, and he is not collateral for the national debt, nor is he an article of commerce. But I prefer to be kind and courteous. So when the tax collector comes into the room, uninvited, with that fake smile and a clipboard, and asks the informant to inform by telling the name of the new baby, you simply respond by saying something like this, “You know, we just cannot agree on any name at this point, not sure when we will.” and just leave it at that, until that awkward feeling comes and then continue to hold, and watch the tax collector simply leave. Now the tax collector may try to get you to come up with a name right then, like I said, leave it at that, change the subject, ask her to leave because you’re tired, etc. And say it with a smile.

The trick here is to never use the baby’s name at any time during your stay. I would say it’s best not to use your legal name when you check into the hospital in the first place, but that would be very difficult for many people, especially with insurance, etc., and it’s not necessary. The tax collector will either not prepare any birth certificate, or will prepare one with the first name being “Baby” and if it’s a girl, middle initial will be “G.” and a boy “B.”, and then use the mother’s last name as the last name on the birth certificate. That’s okay, remember, it’s not yours or your baby’s, unless you claim it someday and use it for something. The reason we claim ours is to get passports but I have discovered that this was not necessary. We are just talking about the social security number though. Because you did not give a name, inform, the tax collector will not file an SS-4 in your child’s behalf. This is illegal, or it should be, but the trend over the last 20 years is for the tax collector who prepares the birth certificate to also submit an SSN application.

Whenever you’re asked for a social security number for your child, or given a form, use 000-00-0000 in place of any number. Do not use all nines or anything but these zeroes. If anyone asks, explain that he or she has no number and no law requires you to get a number for your child. You can also cite the regulation from earlier in this article, I’ve never had any problem with this and it usually makes for an interesting conversation.

Mobile Phone

Next I’m going to show you how you can get a credit file without a social security number, but keep in mind that you may want to do as many things as you can even without a credit file. On the mobile phone, apply for a two year contract with no credit file and no social security number. Use all zeroes on the application. There is a chance you will get the contract, or maybe you’ll have to make a large deposit, like 25% in order to establish a file with the carrier, but once you do, it’s good for as long as you pay the bill timely. If this is a problem, don’t get a two-year contract, use a month-to-month service and buy the phone, there are many options. Many people believe they can’t do this before they have even tried. Try getting a mobile phone contract or the service you want using the zeroes on your application, see if that works or if you need a larger deposit or to pay for the phone, the deal can be made, and don’t get frustrated in the process, it can be done. I’ve done it many different ways and many people I have helped always get what they want.

Renting a House

Renting a house is probably easier than renting an apartment and over the next few years it will become easier to find all kinds of rental deals and owner financing and lease options, without using a social security number, but more importantly, without using a credit score. Some markets are more difficult than others, but for the most part, you will be able to find a house you like and sign a lease agreement without a social security number. The difficult ones are usually property managers or corporate owners, they have strict policies that the employees will not be willing to dodge in order to get you into the lease. This becomes a numbers game, instead of looking at four deals and choosing one like most slaves with good credit, you might need to look at 20 deals before you choose one.

You want to talk with the owner, show him your bank statements or whatever will make him satisfied that you can pay and will pay the rent on time. Come with written references from previous landlords or employers or neighbors. Offer to pay two or three months’ rent at signing, plus deposit. We did this in a hot market, but my wife showed up the minute the first showing began and spoke with the owner. After a very nice conversation about nothing really important, the owner told my wife that she seemed like a nice person and that she wanted to offer her the lease, and that was with about four other prospects standing next to her. We discussed it over the phone for a few minutes and then accepted, and when it came to time to sign, the owner didn’t even care if I signed the lease. That was over a year ago and we’re still here on month-to-month terms. This is one example of fifty or sixty we’ve done over the years.

Buying A House

Would you believe that renting an apartment without a social security number or a credit check is more difficult than buying a house the same way?

You’re not going to get a traditional bank loan and I don’t recommend that as the best form of financing. Instead, you’ll want to seek financing from the seller using an owner financing deal or more specifically, a lease with an option to buy contract. I’ve done this many times and worked with people in many situations to do this. It does help to determine what the seller needs (not wants) before you make your offer. Maybe he just really needs $10,000 now and can live with that and give you short term financing. In the next few years, you will find this deal to be trending, but many investors have used it as a staple over the last thirty years, at least from what I’ve seen.

Agents and attorneys are usually the type of people that don’t know how to market themselves and rely on their professional status alone, as a substitution for competence, in other works, they usually screw up deals. Get around them, get them out of the way, or just minimize their involvement. You want to talk with the seller, find out what he needs. Maybe you will need to make a larger down payment, or ask for a short term owner financing deal, or include an options contract. Maybe you can find someone to match your funds with the down payment and then buy him out later. And you don’t do this because you have bad credit or no credit, or don’t want to use a social security number; you want to do this because it’s the way we are supposed to make deals, without interference from our government or other creditors or the corporate system. Set up the deal so that everyone’s interests are protected and you will get it. Yes, it will be more difficult in a popular market, where listing are short term, but the trend is a deflating market, so your time is coming.

Another really good reason to avoid putting your name on the title to real estate, and use an options contract for this purpose, is so you don’t “go down with the ship” when the market tanks. You can exercise your option for the fair market value when the seller is screaming for you to heal his pain as he watches the market dive down each week.

Credit

How do you get credit without a social security number? I decided to explain this to you now, it will become very useful, but I’m going to caution you not to replace your addiction to personal credit with this new understanding.

The social security number has a certain format and the manner in which the numbers were generated including groups being assigned by state, and then in sequence. The algorithm was developed by the Navy, but it’s not important that you understand the details here. Basically, because no law requires anyone to have a social security number, and establishing credit does not require a social security number, you simply need a nine digit number to be associated with your name and address and manage it in a way so that it will not be merged with your previous file that has a social security number, or anyone else’s for that matter. Sometimes this happens, so you just have to know how to correct it and manage that file just like you manage any other financial matter. You can do this because it’s legal and because you are not cheating or defrauding anyone. Keep in mind however that if you use this technique to cheat someone, or commit a crime, using this type of number for your credit may be considered an element of the crime.

You would not be using someone else’s number intentionally, as everyone’s number is already being used by someone or something else, at least once. So again, just be sure that the person who was issued the number you are using for your credit cannot have his credit file merged with yours, and this is easily fixed if it ever happens. It can simply be disputed for accuracy. You will never need to show a social security card to do this, and if anyone asks, you can show other records proving that your name is what you say it is and by implication, this is your correct credit file number.

Credit Cards

The most common way I’ve done this over the years is to simply create a new credit file without the assigned social security number, build the credit and then use it just like you did the first time. It’s then very easy to get unsecured credit cards, just like you did when you first started getting offers in the mail.

Bank Account

Once you have a credit file without a social security number, and have verified that the number has not been reported to the death index, you will be able to open a bank account with yourself as a signer. You just won’t be able to show a social security card with your name and that number, and don’t try to make a fake one. If this is a deal breaker for the bank, find another bank.

A more sophisticated, and slightly more costly, way of getting access to a bank account is to have an attorney on annual retainer where he signs for you as trustee for a trust he’s written for your banking purposes. Explain to the attorney you don’t use an SSN and are frequently out of the country and you need “someone you can trust” to sign on the account. Some attorneys will not be willing to do this, but some of them provide this as part of their service, you’ll have to shop around. And, no, you cannot trust any attorney; however, they are bonded and you can require additional bonding and avoid giving them access to much money at any one time and you should be fine.

Buying A Car

Most of the situations I’ve solved were for people who needed a car for practical reasons, driving to work, grocery shopping and school. In nearly every case I’ve recommended simply saving the cash and paying yourself regular payments until you have more than half of what you need for a car. Buy a reliable used car from a local dealership. See if you can pay for it with the cash you’ve saved and then a short term loan, say 24 months, and drive today. There are many variations of this, but we are heading into a time when there is an enormous glut, especially in the used car market, and many dealers will take this deal. Don’t be desperate, there is a deal somewhere, if you are not comfortable with one, just walk away. But you can buy a car without a social security number and without credit. My mother did something like this once time, she bought a Toyota Camry, and her credit was the worst, but because she made the payments on time, the dealer sold her one or two more of the newer models over the years.

Utilities

I like to open utility accounts in several different ways. I’ve had to figure this out over the years in order to solve specific problems, such as people needing to hide for fear of their lives, or who were the target of an unfair collection that precluded them from getting a utility account like most people.

If you are not going to give your credit file information, the utility company will try to coerce you into disclosing it, but ultimately, you will simply have to make a larger deposit. That’s the simple example. But let’s take this a step further, what if you wanted a utility account in a fictitious name? It’s about the same, larger deposit, and either avoid producing a copy of your government identification, or use an acceptable form of identification that you can create and will not be considered a “phony ID”, such as a “W-2 statement” or an International Driving Permit” (IDP). You’ll have to ask me about this because it’s not common to find a service that will provide those without a driver license from some government. Another legal way to make it appear as if your name is something other than what appears on your driver license, birth certificate or old credit file, is to set up a corporate (I prefer an LLC) bank account with a “dba” in that fictitious name, and then get a debt card with only that fictitious name on it, as the business name. For example, XYZ Company, LLC dba “Bill Smith”, and Bill Smith shows on your debit card for the account.

Car Insurance

The insurance company will act like a bank, so if you can open a bank account with no SSN, you can get car insurance in the same way; however, I like to take it a step further. It’s not for everyone though, as I’ve said before, you can have your privacy, if you have the stomach for it. I prefer to carry my own car insurance. I set up a company and created a balance sheet for it along with an annual insurance card that I print each year. This is known as “self insurance” and in Florida it has a code “11111”, so that appears on my card and both my wife and I are covered under it. Assuming that statutes apply to people for a moment (don’t want to get too far off topic), the law does not require you to have insurance and pay an insurance company regular premiums and then be liable for whatever someone can sue you for; not at all, the law only requires that you carry with you, “proof of financial responsibility”. And while you really should have the ability to pay if you are responsible for damage and injury, no police officer on the scene is going to audit your balance sheet. He’s just going to accept your insurance card at face value and do his job.

But this is very basic, only comes into play if one of us is found to have injured someone and has to pay. We have enough liquidity on the balance sheet that we could pay, but we would never pay $1,000,000 for example. We only have enough to pay up to the statutory requirement, $40,000. And if we did that, we’d have to replenish the balance sheet to be considered having “financial responsibility” once again. Additionally, if someone scratches your car, steals it and it’s never recovered, or you total it yourself, your company is liable, cash out of pocket. I’ve done this for twenty years without any problem, and I’m a careful driver and so is my wife. I’m betting that if I’m in a wreck, it’s going to be the other guy’s fault and his insurance will pay. You still have one more serious concern however.

What happens if you get into a crash, it’s clearly the other guy’s fault and either he doesn’t have insurance or his policy won’t cover your injuries and you are out of work and in the hospital for months? Getting an auto policy for this reason alone would defeat the purpose and what I call the benefits of being self-insured. You will want to research this for yourself as you might be able to get a homeowners policy or some other type of risk management to offset such a risk. You might also be able to get the type of automobile policy that someone who doesn’t own a car could get, someone who is in town only intermittently and rents a car. It’s one of the areas I haven’t explored very much, but worth the time because this is a serious matter, we’re not trying to trick the system, but only wanting to avoid being exploited by the social security number and banking system.

Doctor Visits

Whenever you visit the doctor, chiropractor, dentist, acupuncturist, hospital and these types of health car professionals, you are not only asked for a social security number, but proof of your identity using a “government photo ID”. This is just plain and simple surveillance, but the doctor does need to know your age, within a certain number of weeks at least. Remember that for most of you reading this, you will have used a social security number to get a driver license and you will use that for identification. If you are using a driver license for anything other than a traffic stop, you need an IDP or passport or something without any connection to your DMV, via your DL number. I’m saying it this way because it’s your DL number and/or the magnetic stripe on the back of the card that gives merchants access to your entire DMV file, trust me, you don’t want to know what’s there or you’ll really be angry (think Nazi surveillance state).

In any case, if you’re not yet using a passport, either a United States passport or one from another country, or an IDP, and the service insists on you providing a government issued photo ID, use a color photocopy of your DL. Make this copy before you go to the doctor or have a few copies handy in your car or a paper file in your home. Make a color copy, then use a black marker to redact the DL number and your date of birth. Then make a color photocopy of this redacted version and be sure this information is not visible. Use that as your ID.

If the office gives you a difficult time, use this explanation. I’ve been a victim of identify theft in the past and my attorney told me never to use my driver license for ID except at a traffic stop. He said if anyone insists on seeing my original DL, that I should ask for his data retention policy and a written explanation of what liabilities and insurance coverage the requesting party has for securing my records. Once I get this information, he said I should call him and come to his office to show him how my information is going to be protected by the service that’s requesting it.

You are actually saying, my attorney wants to know how you are going to indemnify my client against any misuse or unauthorized access to his information. Sometimes these people get smart and ask to speak to your attorney directly. Explain this, he said if you are asked to speak to me directly, explain that our retainer agreement doesn’t cover this type of involvement and that his hourly rate is $350 to answer questions and please make an appointment.

You should never have a problem. Sometimes I don’t even do these things. If someone asks for proof of my identity, I just explain that I am who I say I am, do you suspect I’m lying? I also pay for visits with cash, sometimes a credit card, but it should be no problem to use your insurance carrier as well, same scenario.

Remember, I said to redact your date of birth? But the doctor needs to know your age in order to give you medical advice or treat you in many cases. He doesn’t need to know your actual date of birth. So change your date of birth by a few weeks or months, and remember what date you did you with that physician’s office. In some cases, your social security number can be obtained simply with your full legal name and date of birth and some companies will get that information. Yeah, it’s probably illegal, but this system is so broken that even illegal things like surveillance of private citizens by anyone, government, companies, etc. has become an acceptable practice.

This is another reason I use an alias with these services, and I either get around showing ID, or I use an IDP, a debit card or other means to establish that the name I’m using is my name. Most of the time, when asked for a DL or ID, I explain that I didn’t bring it, or it’s in the car. Sometimes, whoever is asking for it, will ask me to go get it. Sometimes I say I don’t have it at all, even if it’s obvious that I drove, then explain I’ll be sure to bring it next time. Sometimes the office forgets to ask me again, and sometimes we have the same conversation, and then sometimes, I don’t need to continue visiting that office because I’m usually in good health. I didn’t give you all the answers here, just plenty of means and references to think through these situations.

Passport

If you already used an SSN to get a United States passport, you’re stuck with it, just like with the DMV records and the DL; however, if you have not, now is the time to get a U.S. Passport with no SSN. Just use 000-00-0000 on the application. Yes, there is a notice that you could be subject to a fine for not disclosing one. Keep this in mind, no one using an SSN actually “owns” or “has” an SSN. It’s a government number, that’s why it cannot be revoked or surrendered, it’s not yours, it’s the government’s. Also, the use of the number was never assigned to you, a human being. It was assigned to a security, or evidence of a security, known as a birth certificate and the common label on that certificate which looks just like your name, but it’s in all capital letters. This is not your name, anymore than someone who shares your name is not using your name, it’s his or hers because it’s being used to identify he or she but not you.

In any case, a new federal law was passed in the last days of Obama’s term that required employees of a federal agency known as the Surface Transportation Board to disclose a social security number with a passport application if the IRS had served notice on the agency of the employee’s tax liability that was in excess of $50,000. The Department of State is now trying to use this law to preclude anyone from renewing or getting a U.S. Passport who does not disclose a social security number. Assuming there is a legal mandate, which there is not, as I’ll explain, it only applies to employees of the Surface Transportation Board if their agency has received a notice of the assessment of an unpaid tax liability from the IRS in excess of $50,000.

I’m going to save you the legal research, just understand this. I have found no implementing regulation for this law, meaning even though there might be a statute for this, there is no agency regulation that makes it binding for the employees. And remember, it’s only for agency employees where their employer has been served notice of an assessed and unpaid federal income tax liability exceeding $50,000. Assuming it even applies to them, it certainly does not apply to people who are not employees of this agency. Additionally, this is a due process and right to travel issue. The government cannot restrain or impede your right to travel because “you don’t have” a tax number, or because you didn’t pay a certain tax. In fact, you can travel internationally without a passport, to and from the United States, but that is another subject. If you renew your passport via mail and are denied because of this issue, applying in person should resolve it, just explain that you don’t have a social security number and are not required to go get one. One that thing that is very important, DO NOT sign any additional documents, such as an affidavit stating that you don’t have a social security number. The passport application is already made under penalties of perjury and you are not required to sign additional affidavits, especially those you didn’t write in your own words, restating the same things you stated on your original application. If you sign such a document, after having already submitted a correct and complete passport application, the agency will impose whatever ad hoc rules it wants and you will have no legal defense or protections. Again, I’ll spare you the legal memorandum.

It’s important to remember that if you truly want to do things without a social security number, remember these basic principles, and that with some organizations or individuals, it’s enough to disclose your legal name and actual date of birth, and this can be used to obtain your SSN. Of course it’s not legal, but again, you’re dealing with people that usually thing anything the government does is okay and why should you care if you’re not doing anything illegal.