All Things Money – Roundup

Some interesting things this week:

Budgets are Sexy has another installment of “Would you rather”. This time on the interesting topic of fame vs. fortune.

This has to be the coolest idea I have seen in awhile from the PF blogosphere. I have an idea for a documentary I have been kicking around for awhile as w I look forward to this one!

Wise Bread on How not to be a wage slave, how to git-r-done on an airplane and college fund tips. All great articles (as usual)

Get Rich Slowly has an interesting reader story about the relationship between nosy family members and personal finance

Financial Samurai has an article on How To Always Feel At Home While On Vacation

Don’t Do This!!! (but if you have to read this article first) How to borrow from your 401(k)

 

Be Well

-WR

The Hero’s Journey to Financial Independence [Kindle Edition] is free for 24 hours

If you own a Kindle (and even if you don’t) don’t hesitate to grab a free copy of the new book The Hero’s Journey to Financial Independence:

Free for 24 hours!

 

This small book offers a unique approach to the subject of personal finance. The Hero's Journey to Financial Independence takes the reader through the steps necessary to develop strong, enduring money habits and to avoid the pitfalls many of us face. My intention was to create a fun, easy to read volume full of rock-solid financial wisdom and real-world advice. It is based in part on Joseph Campbell's monomyth as described in his book The Hero with a Thousand Faces.

The hero’s journey has been an inspiration to writers for over half a century. The Matrix, Lion King and Harry Potter all use a form of this framework. Most notably, it inspired George Lucas to envision Star Wars as a mythological hero tale.

 

-WR

 

 

 

 

 

Do What You Hate (so you can do what you love)

Comfort Zone.

A phrase so overused it has become synonymous with the word ‘apathy’. There are good reasons for this. We have become accustomed to viewing our world and our place in it as sort of a reality show of strengths and weaknesses. If we are good at something, it is said, we should pursue it. Encourage it! Put our best foot forward.

Sometimes our best foot is the wrong foot.

When we focus only on our strengths we can refine them. A world class ballerina, bodybuilder or bowler must focus on little else than his or her craft in order to attain such greatness. These are narrow niches. If you want to be the best swimmer in a well defined pool you have to have talent, strength and focus.

However, when the challenge becomes more complex, the answer becomes more nuanced. The line between art and science becomes muddled. You can no longer focus on a well-defined discipline and hope to achieve greatness as those before you. What you need, usually, is a healthy dose of balance.

Pity the artist who does not understand business.

Pity the businessman who does not contemplate art.

Pity the athlete who does not read.

Pity the bookworm who does not sweat.

There is great value in the embracing the parade of opposites, doing that which you simply don’t do, embracing things you do not like. This is life. In order to fully understand art you must know business. On a more basic level, in order to fully appreciate joy you must, unfortunately, experience sorrow. These are the pairs of opposites that drive our lives.

Start by defining your passions, the things you love to do. List your talents, desires and skills.

Then ask,”What is the opposite of this?”

This will most likely be your hate list.

By doing what you hate, you actually liberate yourself to do what yo love, to do what you are.

Are you a wordsmith, unencumbered by numerical or financial idiosyncrasies? Watch a Khan Academy course on Algebra. Take an accounting class. Do Sudoku. This will not erase your love of language but rather enhance your ability to share it with the world.

Are you a technologist, A pure engineer kind of  fearful of pursuing social relationships or speaking in front of groups? Join a local Toastmasters International club and become friends with a group of people who are eminently respectful and interested in your success as a leader and public speaker. This will not inhibit your technological talent but rather enable you to share your gift with the world.

The examples are too numerous, the challenge is yours.

Do what you hate and you can do what you love.

-WR

Personal Finance Roundup

Here are some interesting tidbits from around the web-o-sphere. Regardless of your political persuasion, this is a powerful video:

And here are a few excellent personal finance posts:

The Simple Dollar has Ten Pieces of Inspiration

Money Saving Mom shows us how to Tweet and get 5 bucks worth of Amazon Video

What Can Harry Potter teach us about personal finance? Wise Bread has the scoop.

Worthwild Financial Snapshot: Cinco de Mayo Edition

Happy Cinco de Mayo!

First, Let me dazzle you with my Margarita Recipe:

2 Ounces of  freshly Squeezed lime juice (Pulpy is good)
1 oz triple sec
2 oz tequila ( Get a bottle of Dos Gusanos, or Two Worm Tequila and share with a friend)

Ice, Kosher salt and a few wide rimmed glasses.

Ok, Now that’s better. Let’s do a Worthwild Roundup. Here are a few stories and articles I found worthwild this week:

1. SCORE blog: Successful Entrepreneurs Share Stories.

My favorite line: Self-employed individuals have a certain entrepreneurial spirit that’s hard to describe. But, you can see it in his or her facial expressions and hear it in their voices. Once you catch the bug, it is hard to think of anything other than launching your business. How true

2. Budgets Are Sexy: Help a Reader- pay off student loans or start saving

My Advice?: Get moving on building an (at least) 6 month contingency fund. This is not a matter of current need, local situation or any other fleeting reason. It is a matter of philosophy. Building and maintaining a contingency fund forces you to make tough value choices and build enormously powerful lifelong habits. You’ll realize that having this critical safety net allows you to make better choices about almost everything else in your financial life. Try to refinance your student loans to lower rates + longer term. One thing different about student loan debt than most other forms is that *hopefully* your earning power will climb over time.

3. Consumerist: I am so glad to see an American company be so profitable, Wait! What? http://con.st/10018507

4. Deal Seeking Mom: Lots of coupons going on!

5. Get Rich Slowly: Pack Smart To Save Money

Great article. My personal tips are to pack sandwiches, water and a bag of veggies for long road trips and picnic instead of restaurant. You get on the road quicker and can spend the time walking and stretching your legs (instead of sitting in a booth at a Shoneys). You save a ton of cash, too!

 

I posited my opinion on who should get the Bin Laden bounty

 

Let me know what you think.

SCORE!

Are you an Entrepreneur? Have you been bitten by the bug of free enterprise?

The official statistics about your chances in a new business venture can seem daunting. 90% of new businesses fail in the first year, right?

Not true. According to the Census Bureau new ventures have a 70% chance of survival for their first 2 years and a 50% are still be operating at 5 years. Quite a different picture than I was shown years ago.

There are tons of factors relating to the success or failure of a seedling enterprise. The Entrepreneurs Spirit, defined loosely as ones drive to succeed at just about any cost is a major factor. You need a lot of tenacity to overcome the obstacles inherent in starting ans running a small business. Carving your own way is not easy.

A major contributing factor in the success of any business is the quality of the coaching the principal players receive. To that end there is one resource that is available to all yet utilized by a relative few.

Have you ever eaten a Jelly Belly? Do you have a Vera Bradley? (If confused by this question ask your wife and/or daughter to translate)

Did you even know that there were Sears franchises?

What all 3 of these small businesses have in common is the fact that they reached out to SCORE for help.

SCORE, Counselors to Americas Small Business, offers free and confidential small business advice for entrepreneurs. They offer advice and guidance from hundreds of offices nationwide. The volunteers bring with them many years of experience and wisdom that budding entrepreneurs can learn quite a bit from.

From the upcoming launch of score’s new website I found a perfect example of SCORE’s mission and what working with them can mean to entrepreneurs:

“To respond proactively and positively to the current economic crisis, SCORE has challenged itself to achieve a stretch goal of harnessing America’s entrepreneurial spirit to help grow a million small businesses in the next five years, one business at a time.”

Want to know more? Check out what can SCORE do for me?

If you have volunteered for SCORE or have utilized the resources they  have to offer, please share with a comment.

-WR

The Wisdom of Warren Buffet

Warren Buffet is amazing. He is one part folksy, one part frugal and all parts genius. Anyone interested in achieving financial independence would benefit from his sage advice. Anyone interested in investing their lot successfully would benefit from reading a book he considers to be the best treatise on investing ever written The Intelligent Investor

Anyone who would like an annual insight into his methods, successes and failures would do very well by reading his annual letter to the stockholders of his company, Berkshire Hathaway.

I never, ever read stuff like this. Annual report to shareholders? ugh. Like reading the instruction manual for a microwave. (Why do they even have these. Should say, “If you do not know how to use a microwave, please return it to the store or ask someone to help you”.)

This one is different. Buffet’s annual letter to shareholder’s is the investment world’s Steve Jobs Keynote. Instead of dropping the cloth from this years i-Thingy, It is a look into the thoughts and philosophy of the worlds greatest investor. It is an anomaly. A shareholder letter should not be easy to read and funny. These literary vessels are supposed to obfuscate performance and hide the CEO’s mistakes, right? Instead, Buffet’s letter is clever, open and even whimsical. Full of interesting ideas and quotes with impact.

In his discussion of  Clayton Homes, Builder of manufactured homes (Trailers), Buffet discusses the plight of the American homes industry. In just a few paragraphs he sums up the conundrum. While Fannie, Freddie and the morally bankrupt mortgage industry were populating their stick-built homes with warm bodies (only to dice up the loans and resell them as commodities) , Clayton was in the unenviable position of selling and mortgaging small affordable dwellings without the help of the big government backed organizations. Why bother helping a working class family into a starter home they could readily afford when we could lure them into a McMansion and profit twice! First when the loan is sold and again when the home is eventually seized. The collusion and corruption we saw in the entire real estate sector (including the U.S. government involvement) is legendary. We will be reading about this era as a warning for a long time to come.

Buffet offers an unorthodox and outstanding solution:

“Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.”

Well said. My wife and I started off in a starter home, not a manufactured one but a structure 75 years old and small enough to be called a shed if looked at with squinted eyes. This was during the boom times and every lender I spoke to ridiculed me for not leveraging more. We bought that home (still own it as a rental) for a little over what I earned in 1 year. I used an online calculator that told me a conservative choice would be in the 400-420k range. I knew that was crazy. We found a home for 100k, drove used cars and worked hard to make it just right and never looked back. I am not suggesting that I made no mistakes (ask me about my WorldCom investments) but I do assert that your big choices need to be made using your own wisdom, intuition and clarity. A Bank and a Real Estate Agent will not have your best interest in mind when telling you what you can afford.

He is just as wise in summing up the subsequent credit crunch:

“Borrowers then learn that credit is like oxygen. When either is abundant, its presence goes unnoticed. When either is missing, that’s all that is noticed.”

We should all have cash in our portfolio. This is not just a contingency fund that waits for us to make mistakes, it also awaits our moment to seize a unique opportunity. To Zig when everyone else is screaming “ZAG!”.

“By being so cautious in respect to leverage, we penalize our returns by a minor amount. Having loads of liquidity, though, lets us sleep well.”

In short, Buffet runs his enterprise just as one should run his or her home and life. Keep an eye on value, be frugal, be optimistic in spite of the naysayers around you.

Here is the link to the letter: http://www.berkshirehathaway.com/letters/2010ltr.pdf

Let me know what you think.

-WR

Lower Your Taxes – Big Time 2011-2012 Edition Review

Book Review

Lower Your Taxes: Big Time 2011-2012

There are two tax codes at work in America. One tax code for the workers and another for the business owners.

Can you guess which one is better?

I had the pleasure to see Sandy Botkin speak live several years ago. At the time, several of the tax strategies he advised were not useful to me. I earned so little from my job that my tax burden was almost nil. Additionally, I was just starting out in business and could not see the value in fussing over taxes so much. Taxes were something I would deal with later, after I made my money.

Sanford Botkin once trained IRS agents and it was during his employ at the IRS that he discovered that most people were overpaying their taxes. This is not surprising. The fear of retribution from the feds coupled with the incomprehensible tax code creates a toxic soup no sane person is willing to sip. This is Sandy’s battle-cry. Don’t let the IRS’s policies bully you into overpaying. Pay what you owe but no more.

He founded the Tax Reduction Institute in Maryland and started to teach these strategies to business people and real estate professionals. I saw him speak  at a  Seminar in Washington D.C. General  Norman Schwartzkopf and Sanford Botkin were the ones I truly remember from that day. Schwarzkopf because he was a magnificent speaker and inspiring leader. Botkin because he was funny, smart and what he said made sense. I left the seminar and promptly forgot about the whole matter. My meager income incurred so little tax it was not even worth the hassle. Taxes would just have to take a back seat to the other more pressing things in my life. (like rent, food and other niceties)

A few years later I picked up the first edition of “Lower Your Taxes: Big Time” and started to put the ideas into play. It makes a difference.

I think everyone should consider starting and operating their own business. Tax benefits aside, the act of crystallizing my own ideas into a product or service that is 100%  my own holds it own value. Entrepreneurial activities and pursuits help me understand the marketplace, business, law and taxes even more. Even if it is expanding a passion or hobby into a legitimate business that occupies your life only on weekends, there is value in this process. The key word here is legitimate. In Chapter 8 “How to Shield yourself from the IRS weapon of Classifying a Business as a Hobby”, Sandy describes strategies for making sure the IRS sees your activities as a business. For instance, the act of forming an LLC, keeping excellent records and ensuring your business activities are separate from your personal activities is a good start. Proving that you are in fact striving to make a profit at this point is much easier.

I recommend this book. It is well written and informative. I have picked up each annual edition for the past several years. This might not be necessary for each edition, that depends more on how drastic tax law changes from year to year. The greatest value of this book for me are lasting ones:

1. Understanding the ‘real’ value of choosing the proper business structure.

2. Understanding and developing good habits of record-keeping. This includes automobile, business related activities, meeting attendees, etc. Having a Tax Diary and keeping it up to date will alleviate 90% oftax stress. Knowing that you have excellent documentation is key. Having excellent documentation actually helps you grow your business and succeed.

3. The importance of running my business as a business,  keeping a firewall between my business and personal finances, has benefits beyond dealing with the IRS. Running a ‘real’ business is empowering and a fantastic education on how things work.

If you are in business or considering one, pick up a copy of this book.

-WR

please comment…

Auld Lang Syne and A Financially Independent New Year!

Happy New Year!

This day tends to force us to reflect on the past and as a result, there is no shortage of top ten lists out there. We have instant access to the top 10 movies, games, news items, victories, blunders,the sexiest, the ugliest, the best dressed, etc…

I wanted to take a different tack and focus much more on the coming year. In that vein I have chosen one area of reflection and several more items to help plan for an amazing 2011. I hope you find these ideas useful.

The Past:

Consumerist has a tidy list of their most read stories of 2010. Since I got a Best Buy gift card for xmas, this article popped out as one of my favorites. They are all good as there are few things more satisfying than hearing about a little guy beating a corporate Goliath. As their tag-line reads: shoppers bite back.

OK, enough about the past…

The Future:

J.Money at Budgets are Sexy posted a great looking forward article.

Entrepreneurship:

Is this the year you are going to get that business started?

Now would be a great time to visit SCORE.

What is SCORE you ask?

SCORE, Counselors to America’s small business, is a nonprofit association dedicated to educating entrepreneurs and helping small business start, grow and succeed nationwide. SCORE is a resource partner with the U.S. Small Business Administration (SBA).

As I mentioned in The Hero with a Million Dollars, SCORE is all about finding a mentor to help you with your business.

Should you incorporate? Form a multi-member LLC? Go in as a Sole Proprietor? Should I set up in my home state or in Nevada? Delaware?

These are questions every potential entrepreneur faces from day one.I have 2 things that helped me and could serve as the launching point for your great idea:

1. Get a copy of Limited Liability Companies for Dummies by Jennifer Reuting and (after you read it) head over to her site: MyLLC to set yours up.

2. Don’t be afraid to Ask the Business Lawyer about specific issues related to your chosen endeavor. Nina Kaufman has tons of excellent articles, a free E-zine and if you are considering a partnership of any kind, you absolutely need to check out The Entrepreneurs Prenup.

Investing:

1. Open an account with Vanguard (Disclaimer: I have zero affiliation with Vanguard other than some excellent investments). They have the best low fee mutual funds in the industry. Whether you are starting a Traditional IRA, Roth IRA or a Tax advantaged Bond fund, you should be working with Vanguard. Do you want to learn about ETF’s? Check this out. It is the single best overview of ETF’s I could find anywhere.

2. Do you already have an IRA? Don’t worry, you still have until April 15th, 2011 to max out your 2010 contributions. Nice!

3. Pick up a copy of The Richest Man in Babylon and check out my review of The Elements of Investing. Both of these small, easy to read books should be on your bookshelf.

Taxes:

1. Get a copy of Sandy Botkin’s Lower Your Taxes: Big Time. It is an eye opener and will pay for itself in the first chapter.

Frugality:

1. Check out inexspensively.com and clean out your cupboards already!

Giving Back:

I believe giving should start at home, in your neighborhood and in your community. Give to your church, your school, your firehouse. Buy local when possible and help employ one of your neighbors. The following organizations are amazing in their creativity and cause. Give till it hurts then give some more, you will never regret it! Here are my favorite charitable groups:

1. There is nothing quite like Operation Homefront. Helping out those who bravely and tirelessly defend our freedoms is possibly the best kind of giving back.

2. The Giving Effect:

from The Giving Effect’s about page: Most of us have lives filled with things we don’t use — shoes, food, clothes, computers, and more. At the same time, thousands of non-profits and civic-minded people are struggling to get basic items to people in their communities. We see an opportunity to connect these groups together.

What a great concept!!!

3. LoveDrop:

You’ve heard of micro-transactions right? Small amounts of money from a large enough pool of people can add up to some huge results. Well, Love Drop is a micro-charity concept. With as little as $1 a month, you assist the love drop team in helping one person or family a month.

-WR

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