Here's a kind of funny article on a guy who tried to beat the IRS and when the IRS came after him escaped relatively unscathed. Basically he paid his employees in gold coins that are supposed to be legal tender but are worth far more than face value.
This article makes a very interesting (to me anyway) digression from it's look at mortgages and foreclosures around Pittsburgh:
"The everyday working guy is not educated on this type of situation," said Pauline Skeriotis, who was among a group of about 10 local Acorn clients who recently shared stories about their troubles. "You think you are educated and you're really not."Why aren't we edcating our people? I remember sitting in math class bored out of my mind and arguing with the teacher when they said we would need to know the crap they were teaching later on in life.
I was right and the teachers proably knew it. It doesn't have to be this way for future generations though. Call it math and financial awareness. Include stuff like mortgages, interest rates, extra fees, etc. Why not?
This article has an important message to people in their 20s: save for retirement now. They recommend 8% a month. 8% might not be ideal for everyone but it's better than nothing (much better actually).
Here's an interesting article with some good advice and some that's a bit questionable. They say that young people shouldn't have 6 months worth of cash on hand. I have no trouble with this advice (as long as it's for young people) although as we age having cash makes sense. Once you hit 30, you probably earn enough to put some cash aside without messing up your retirement plans and the like.
I also don't mind the don't buy a big house and don't buy more life insurance than your family needs advice. My big issue is with the 60% stocks and 40% bonds advice. Sure they say switch to 90% stocks after a couple of years but this seems strange to me.
Here's an article on consumer spending, commercial real estate, and residential real estate. It basically says that commercial and residential real estate are entertwined so if Americans stop spending too much (they are in debt) the real estate market could change.
Speaking of real estate, here's an article on several areas in and around Philadlephia. The Manayunk, East Falls, and Roxborough areas of Philadelphia are worth watching for me.
I thought that this page on IRAs was very interesting. They have a lot of information on rollovers and things but what I really liked were the examples (find them at the bottom of the page I linked to). These downloadable PDF files show what would happen to a 55-year-old with a million dollars in a taxable retirement account (that person would run out of money at 84).
Considering that many people live longer these days (my grandfather is 95) it's no wonder people can't retire at 55. From watching my grandfather, I think I've realized that a good retirement comes from stocks going up, real estate (rental income and appreciation), and not spending money. The last one of course is the hardest for someone who likes to travel as I do.
Anyway, this link above comes from a retirement planning company. I've never tried their services, but I do like their informative website.
And I want to add that you can own real estate in your IRA - it's recommended, especially if you can make the purchase without taking out a mortgage thanks to some complicated laws from the IRS (who would've guessed that the IRS would make our retirement planning more complicated?).
The article says that real estate works particularly well in a Roth IRA thanks to the way the Roth IRA avoids taxes. So you could have rental income (not taxed) and sell the real estate any time (no capital gains tax).
This is an interesting article that argues a 6% mortgage is really like paying 4.5% interst due to tax breaks. Instead of paying off that loan some (but not all) people are better off investing the money. This is especially true for people who have to choose between maxing out a 401k and making extra mortgage payments.
A friend of mine had always been a pro-banker type guy, but recently, he had some problems with his financial brokers:
Some things have really, really left a bad taste in my mouth with these brokers (Merill Lynch, Morgan Stanley, etc..) First, a supposed friend from high school puts my money in a stock. He then begins moving the money to different stocks without my consent, I assuming to make himself fees. He also told me the account had no penalty for withdrawing the money, but that wasn't true.A Smith barney employee responed:Then these other two guys from PNC told us that these annuities would make 4.5% or something like that, and they ended up getting 2.5%. They switched to another company because they say Allstate told them it would be 4.5% and then felt lied to. Then they give us these proposals to move from PNC to their new company, none of which makes sense for us at all. Finally, they almost admit that they don't have a better deal but want us to move the money to keep the relationship with them? You just told us 4.5% and got us 2.5% on a lot of money, and now we should move our money to you to keep our great relationship?
Then my Dad's boss dies, the widow doesn't know what is going on, and some financial guy churns her account for tons of money.
Some of these financial guys will buy you dinner, give you tickets to see your sports team play, and be the nicest guys in the world to you..until you have to move money out of their account. As soon as you question something they did or tell them you need money out, they spaz and put intense pressure on you to stay with them. Then their real personality comes out, and boy was it nasty today. Personally for my accounts, just give me ING Direct and give me 4.5% and leave me the heck alone.
Sorry to hear about your situation. There are accounts that brokers offer, in Smith Barney they are called PM accounts, where the broker gets your permission to buy and sell stocks up front. He can then make trades but they are done commisson free as you are paying a quarterly fee depending on size of the the account and the amount of discount the broker offers. Some give none but most these days realize you have to discount in order to compete. I am not sure why they are trying to sell you a fixed annuity in this market. It again depends on the size of your portfolio and what you are looking to do with the money.I believe you need to sit with the manager in the current office you are in and explain your level of frustration. Not all of us are bad guys - just seems you have ran into a few who have not helped the reputation for the rest of us in the industry. Good Luck in the future. I always tell my clients never buy anything from me unless you understand it completely. Good Luck in the future. Don't let a few guys get you sorry you were ever in the market. Still the best place to be for you over the long haul.
I graduated college in 1999, went to work, and started investing in the stock market. As the market went down I kept thinking wow I bought Sun Microsystems for $70/share and now their down to (insert sickeningly low number here) I need to buy more stock. I invested so much money in stocks that I ran up some credit card debt. What saved me was 0% introductory interest rates. Apply for a new card, get the low balance transfer rate, repeat. It's the same advice I found in this article on paying back credit cards. It's not ideal, but it's better than paying 19% a year.
Luckily I've recovered from my investing stupidity and am now a responsible adult. However, I still purchase as much as I can on credit. I just make sure I can pay it back immediately. The same Credit cards & loans site that published the article I linked to above has lists of reward cards. To me it just doesn't make sense to pay cash when you pay the same price for credit and get rewards.
I have a friend who used an auto rewards card for years and when he cashed in got $5,000 more off a new car. Had he used cash, he would basically have spent an extra 5 grand. On the page I'm linking to they have Subaru and various gas reward cards.
They also have my personal favorite, travel rewards cards. In Korea I use a card that gets me miles with Korean Air and I've taken several domestic flights with these miles, saving me a few hundred bucks. In America, I use a card that gets me points towards cruises (free or upgraded cabins).
This site also has a section on loans, tools like mortgage calculators, and more good articles. I think it's worth checking out.
Here's a question someone I know asked recently about getting fired and advice from a couple of friends about lawyering up:
After 15 months of a very expensive custody battle and coming out on top, I thought everything was golden. Until 10 of 5:00 PM EST.
My boss, who is a complete idiot- She uses words like boughten it, instead of bought or purchased, ain't none left etc, she has little computer knowledge, including asking me to find the columns on a spreadsheet that she "lost" somehow... Anyway, she has been pissed off at me for using my vacation time for my court hearings and appoints for my kids, so she began blasting me to the VP of Sales, saying I was always out and without notice.
When you say "Can I have Friday the 10th of August off?", you are asking for permission and giving notice. But anyway, we were scheduled to have this sales conference this coming week, starting with a dinner Sunday night. The problem for me is that my wife is being sent to California for work, all week and I have all 3 kids (one of which just turned 1 August 17th). So I said I wouldn't be able to make the after hours stuff (dinner Sunday and Boat Cruise Monday night) but would be at all the daily functions during the work week. Wow, one day later, BOOM---- Fired!
Advice from person #1: He can get an initial opinion for free. If his case has merit, he can get a very very good lawyer to take it on contingency. In any case, he will know up front how the fee structure will work. That's by law. Under any circumstances he should go to a lawyer...even if he doesn't have much of a case letting his employer know he is getting representation can influence the size of the severance agreement substantially. He should not sign a severance agreement, no matter how tempting until he has seen a lawyer...and understands just how much he potentially could get in comparison to what is offered. Thats what anyone in the same situation should do to protect themselves and their family.
Any reputable employment atty would gladly interview you. The lawyer would want you to bring any paper work you have (1) describing the conditions of your employment (2)anything in writing from the employer describing this special weekend sales meeting (3) payroll records.
Now, was anyone at a comparable work level excused from the weekend meeting? If so, why? If you are a white male, you are not a member of a protected group. More importantly, in the absence of a contract of employment, you can be terminated for good cause, bad cause, or no cause at all.
Someone may mention the FMLA. I haven't looked at in lately, but typically it requires that you or a family member have a serious health condition or for the birth or care of a newborn. I doubt sitting for your 1 yr old meets the test for " care of a newborn" but it might. That would take 10 minutes to research.
But, there are severance pay, vacation time,COBRA and other issues where you might need some guidance. Most of that wouldn't be handled on a contingency fee basis.You can probably handle those matters on your own.
I don't know what state you live in, so maybe there is some labor laws that create a wrongful termination action that I'm unaware of. That term--wrongful termination--is truly over-used.It typically exists on a very limited basis. Firing someone for pursuing or reporting a work comp injury...whistleblower cases. But, absent a contract of employment, the law is very heavily in favor of an employer having the right to run his shop as he wants, provided the practices don't violate federal discrimination laws.
Obviously we all wish this single-father the best of luck finding a new job and hope that his investment strategy left him with emergency funds.
Michelle Singletary of The Washington Post has an interesting article which covers financial decisions made by couples. The first part is about a manipulative fiancee who won't marry his betrothed unless she agrees to empty out her 401k and spend it on his daughter's education (and buy her a new car). Of course, that's crap - big decisions like emptying out a 401k need to be unanimous.
Life insurance question from a college senior: My buddy is trying to get me to consider purchasing whole life insurance as a vehicle to build cash value. Anyone have any experience with this? I'm heading into my last year in school, so i'm thinking about saving responsibly while i'm young...so i've already started a Roth IRA, and purchased term insurance that is worth $250,000.
Answers: Whole Life as an investment vehicle is a poor performer and usually not very liquid. If you're looking to start saving money and being responsible, there are much better ways to do it.
If You Are Just Graduating School and do not have any dependents, avoid life insurance all together - you do not need it. When you start working, max out your 401k and if you have the resources, start putting money into a mutual fund. Once you obtain greater liquidity you can start doing more sophisticated investing.
Whole Life Insurance is a very expensive way to save with the most popular policy available being Northwest Mutual Life. They catch people by promising a minimum return of I think 4%ish. The also try to sell you on the cash surrender value. It only begins to make sense at very large dollars and as a supplemental savings plan.
Term insurance is not saving. It pays money to your beneficiary if you die during its term. Hence the name. Unless you are worried about your benficiary really needing the money, cancel it. Put the money you have saved into an index fund with a very low expense ratio.
Insurance is not an investment. At least its a lousy one. If you need insurance (do you??), then level term insurance is the way to go. You determine how long you expect to need coverage for - 10, 20, 30 years or whatever, and buy a level term policy of that length. You're guarunteed a fixed price on the premium for that amount of time. For investing, stick with real investments (mutual funds, stocks, bonds). Max your 401K contributions if you can.
Does someone rely on you for financial needs right now? People often assume they need insurance. in many cases they do. But as a student, is someone depending on your income at the moment? the only thing your term insurance will do today... is provide a death benefit to your beneficiary. Putting your investment dollars into a Roth IRA is a great start as the growth you experience within your Roth will not be taxable at retirement. So putting money into this, the earlier the better is often wise. also, your investment choices in your Roth are important as well. of your overall portfolio, your more aggressive investment choices should be within your Roth, as they will benefit the most re: taxes.
keep in mind, while you are young, liquidity is often a concern as well. be aware of the costs associated with accessing monies you may put into a Roth (or any retirement type money) or insurances. Plus, I assume you're in your 20s. Figure you get married in 3-5 years. Until then, you are wasting money on insurance you don't need. Your 10 yearr term policy's only going to be good from another 5-7 yrs then anyhow.
Some people also consider pet insurance to be a good investment; if you have a pet medical insurance plan you don't have to worry about sudden emergencies since the pet insurance will cover it, so by going online to buy pet insurance you can make sure you can afford an emergency vet trip when needed.
My friends recently paid $6500 for a slipped disk in their 1-year-old dog. My 12-year-old recently cost me $1500 when he developed a bladder stone. You want to be prepared for these events if you're a pet owner.
Here's an interesting article from the Washington Post about how important it is to save enough for retirement. One big issue is learning how to invest:
If you have $50,000 in savings, and you earn 5 percent a year on that money, you'll run out of money in 14 years if you withdraw $400 a month. If you can earn 10 percent a year on that money, you can withdraw $400 a month forever.Another suggestion is to have a source of income ready for retirement, like a business. If you own a home you can factor in using your home equity in retirement. You can either sell your house (and get a cheaper place) or get a reverse mortgage.
Anyway, it's an interesting article and worth the read.
Bloomberg.com tells us that Massachusetts' legislature has approved the bill requiring all residents to have health insurance. Governor Mitt Romney said he will sign.
Under the bill, "Residents who can afford insurance and don't purchase it would face income tax penalties after July 2007."
Well I've blogged about planning for medical disaster and health insurance and saving for health insurance once or twice before, and I think health insurance is necessary. I am concerned that low-income people not considered poor by the state will suffer. I remember being a poor college graduate with only a part-time job and no health insurance. Of course, I had money for a car, dates, etc. But not health insurance. I guess making it a priority isn't a bad diea.
This great article from Yahoo Finance lists in some detail 10 great ways to get rich. From buying classic cars to buying real estate in Prague, these ideas really are fun. Plus they have been extremely profitable in the past:
A flat near the centre of Prague, a 15-minute walk from the castle.One stock does get a mention, Niko Resources, a Canadian oil and gas exploration company. was worth C$0.34 (US $0.29) a share 10 years ago. It's now at C$49.50 (US $42.22) a share.What was it worth 10 years ago?
Between Kc18,000 (US $754) and Kc25,000 (US $1,048) per square metre.What's it worth now?
Between Kc50,000 (US $2,095) and Kc60,000 (US $2,515) per square metre.
Real estate in Prague sounds like the most fun to me.
If you have a bad history with the company I’m not sure I can help, but here is how I got MBNA to cancel (they say adjust) my late fee:
Tell them what you want. The customer service people have a job to do: make customers happy. Clearly tell them: I’m a loyal customer who just missed a payment by a few hours after 8 years of paying 2 MBNA cards on time. Don’t start off with a threat. “If you charge a late fee I’m canceling all my cards” doesn’t leave much room for discussion.
Get them to check your account history. Tell them that you’ve never missed a payment before (assuming that’s true). Tell them that if they check your account history, they’ll see that you’re a good, reliable customer.
Remind them that loyalty deserves loyalty. If you really have been paying on time it shouldn’t come to this. However, if they give you a hard time try something like: “I know I’m asking for special treatment, but I’ve been a loyal customer for 8 years.”
Well that’s the theory. Today I put it into practice: I ran home form work because I realized that I had to make a payment on my MBNA Norwegian Cruise Line MasterCard. I was a few hours late and even the express online payment option (which costs 12.00) wouldn’t save me.
I called up customer service and asked what I could do to avoid the late fee.
“There’s no way to avoid the late fee.”
“There’s nothing I can do?”
“No, you’re late.”
“So there’s nothing you can do to help me?”
“There’s no way I can remove the late fee sir.”
I did a quick search online and found this on MSN money: If you’re charged a late fee, call the card issuer and protest. Many are willing to remove the fee if you’re a good customer and not habitually tardy.
I’ve been with MBNA for 8 years and never been late before and that accusatory “You’re late” really irked me (as a linguist I know it’s better to say “the payment is late” than “you did this” or “you did that”). I called back. I explained my situation and said I wanted a 24-hour grace period.
“There is no 24 grace period.”
“What do you do for loyal customers who are never late?”
“Hold on while I check the account history.”
“Sure, I’ve been with MBNA for 8 years and I don’t think I’ve ever missed a payment.”
“OK sir, we can adjust that late fee for you. Just be sure to get those payments in on time. This is a one-time thing.”
“I certainly will. Thank you.”
Even if you're a small investor, you probably want to make sure you contribute to your IRA. This is just a quick reminder that you can still contribute for 2005, but not for long. You ahve until the April tax-filing deadline - April 17, 2006. For a refresher on IRA rules, this Yahoo Finance article explains pretty much everything and is easy to read.
As Robert T. Kiyosaki tries to redefine an active investor as someone who lives off of investments, I'll stick with the more usual view - someone who actively chooses investment vehicles instead of following indexes.
Nevertheless there is some useful information in his article:
The sad thing is: Many people think they're investors when they're not. Lots of people think their 401(k)s and IRAs, which have stock, bond, or mutual fund holdings, are investments, but I consider them savings plans. People with such retirement plans are what I call passive investors. They're simply "saving" for retirement.I love his idea of investing for cash flow first and capital gains second, but as usual he only has some vague advice about real estate to offer. In his book Cashflow Quadrant, he argues that rich investors buy into IPOs, large real estate projects, and businesses while middle class investors go for mutual funds, blue chip stocks, condos, houses, and duplexes.
Similarly, if you own your home and live in it, I don't consider it an investment. Without cash inflow monthly (and with money going out each month for mortgage payments, utilities, property taxes, insurance, and maintenance), your house is a liability, not an asset. It might become as asset -- if you rent it out for income each month that exceeds your expenses on it, or when you sell it and realize a capital gain.
Before one can become a rich investor, one first needs to become a long-term investor with an approach recommended by Peter Lynch or Warren Buffet. So far so good, but here the advice gets confusing. On page 89 he says these investors "are actively involved in their own investment decisions." On page 90 he cautions "Don't try to outsmart the market," and suggests the Vanguard 500 fund. At least we have one piece of specific advice from Robert T. Kiyosaki.
Here's a scary article for you. And the widow's story is even worse.
"My mother always told me to get a good job with insurance. For what? It hasn't done anything," Julie Pierce said. Julie Pierce watched Tracy Pierce, her 37-year-old husband, die from cancer while their insurance company denied every doctor recommendation, from treatments for his kidey cancer to morphime to ease the pain after the untreated cancer had pretty much killed him.
First-Health Coventry deemed the treatments were either not a medical necessity or experimental. To me this indicates the importance of having enough savings and investments to take care fo yourself in case of an emergency. Perhaps that's why I take few risks with my investments.
Refinancing question: Any advice with re-financing my home morgage would be appricated: First, a little background.
We found a very good townhouse in a great neighborhood for $275,000. The owners wanted to close quickly and we didn't want to lose out on it. So I took on a bad interest only morgages. One for $219,000 at 5.5% for 5 years but the killer is $55,000 on the second interest only morgage at prime rate, so it's been increasing every month.
I've managed to pay off all my other debt, car payments and credit card and my credit score is pretty good in the 740-750 range. So I want to refinance to one fixed morgage and this is where I need some help with people more experiance at it...
I was given an offer of a fixed 30 year morgage at 5.85% for a monthly payment of $1,678(not including insurance and tax which is ruffly $2,000 per year). I asked if there was a way to lower the per month payment and they also offered a fixed 40 year morgage at 6% for a monthly payment of $1,578 (not including insurance and tax which is ruffly $2,000 per year).
Do you know if these are good rates? I've gone to 5 different lenders/brokers and this has been the best offer. Any help or feedback would be appricated.
Answer: The rates are decent but to check, put a query out on Lendingtree.com. I'd go with a 30 year mortgage max, however.
And don't be afraid to bargain. If you find a lower rate on LendingTree, take it back to the brokers and see if they will match. Also, look carefully at the closing costs. Some places have a low rate but then load you up on closing costs. Make sure you get a firm quote on that - otherwise you may get to the closing table and find $400 for doc prep and $100 for Fedex added. Closing costs are also highly negotiable, if you get down to 2 lenders with the same rate, see which will go lower on closing costs.
Here's a market Watch article with advice on dealing with credit card debt now that new bankruptcy laws make it more difficult for people to start over.
Basically, people can try to deal directly with creditors, use a credit-counseling agency, or work with a debt-settlement company. From the article, none of these 3 options sounds appealing as each has major drawbacks. I still say it's shameful that the new laws punish people who have fallen on hard times due to illness and subsequent job loss.
Really it just goes to show you that having a job is rarely the way to financial freedom. For most people losing their job means losing their way of life. For business owners and investors, a job isn't necessary. For example my main business is network marketing and I am a professor at Cathoic University. I do this because i believe I can help students, not because I ned the money.
When the university decided to replace all non-tenure track professors who had been with the university more than 3 years in order to save money, several of my colleagues realized they were in trouble. I felt bad for the students since the university is saving money at their expense but I'm not worried about my own situation.
Anyway, my point is that employees are not well looked after in America or in most other countries and when hard times come it's the employees who suffer. The business owners and the investors tend to come out all right so why not join us?
Carefully picking the right credit cards for your personal needs, by picking from the various credit card offers out there, can help keep you out of debt by making sure you have the best credit cards you can get.
Tax free health savings accounts in America sound like a good idea - you need money put aside in case you or a loved one becomes ill. These tax-free accounts, which must be coupled with high-deductible health insurance policies, are now held by about 1 million Americans. Money in the accounts can be used to pay for medical expenses today or saved to cover medical expenses in retirement. By next year, the accounts are expected to be offered in almost every state and by 25% of big employers.
However there are issues, primarily with the higher deductible:
Health insurers are among those who say that educating Americans to be better consumers of health care will help control costs. Such efforts focus largely on allowing tax-free health savings accounts to be coupled with high-deductible policies. By paying more, the theory goes, workers will use health care more judiciously. Such plans come with at least a $1,000 annual deductible for individuals and $2,000 for families, meaning patients must themselves pay for care until reaching those limits.(quotes from USA Today).A growing percentage of employers say they will consider them, but health savings accounts remain less popular than insurance with smaller deductibles. The USA TODAY/Kaiser/Harvard poll found that 61% of people who have insurance through their jobs would rather pay $50 to $100 a month more to keep their current coverage than switch to a high-deductible policy.
Critics of health savings accounts say they won't really save much money and could mean that people, especially those with chronic illnesses, will put off needed medical care. The USA TODAY/Kaiser/Harvard poll found that households where someone had a chronic illness are far more likely to report being unable to pay a medical bill in the past year than those without.