Category Archives: Reviews

Worthwild Financial Snapshot: Cinco de Mayo Edition

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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.

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Lower Your Taxes – Big Time 2011-2012 Edition Review

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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

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Auld Lang Syne and A Financially Independent New Year!

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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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Book Review: The Elements of Investing by Burton Malkiel and Charles D. Ellis

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I have to say right off the bat that I am a big fan of Burton Malkiel’s A Random Walk Guide to Investing. I have applied his recommended strategy very successfully in my own portfolio. It was not always that way for me though. When I was forming my investment philosophy I naturally gravitated to the top selling books. I figured the best sellers list was where all the good knowledge was. If I just read the top 3 or 4, I would have everything I needed.

Timing, Value, Hyperactive Vs. Passive, Day Trading Vs. Let it Ride, Secret Formula after Secret Formula. There was no shortage of answers. The only problem was that none of the strategies espoused in these wonderfully marketed books actually worked in a predictable way. I tried a few stock-picking strategies with the little money I had to invest and lost most of it. It turned out that the timing was right for  A Random Walk Down Wall Street to be my eye-opener. Keep in mind that this excellent book was originally written in 1973 and is more of an academic treatise on market efficiency than a what to do with your money guide. At 400 pages it is a daunting read but worth it if you need convincing that trying to beat the street is probably not  for you. A Random Walk Guide to Investing is the cookbook version that has a more pragmatic slant but could still be considered a bit wordy for a nuts and bolts investment guide. That is where The Elements of Investing comes in. The Hardcover is only 176 pages, the dimensions of a trade paperback and typeset with a large, easy to read font. It distills the intelligence of A Random Walk Down Wall Street and A Random Walk Guide to Investing with a few additional years of wisdom and validation.

Malkiel is a proponent of the Efficient-Market Hypothesis. The idea is that markets have in them all the information they need to perform efficiently and an individual investor will not be able to outperform them consistently. This flies in the face of the CNBC money gurus who seem to make their money by helping you lose yours:

“If I had only followed CNBCs advice I’d have a million dollars today…provided I started with 100 million dollars”

-Jon Stewart  – The Daily Show

I read The Elements of Investing in PDF format for this review. It was a few days later at the bookstore that I really had a chance to appreciate one of its greatest assets. Elements is a small, light, easy to read book that is packed with everything you need to make excellent investment decisions. There is little theory, no filler and no unnecessary self-gratifying gibberish that defaces many otherwise good finance books. It’s as if the authors are saying, “it’s the information, stupid” instead of preaching from a high pulpit. These authors indeed do not waste our time with self promotion for they seem to be genuinely interested in providing us sound financial advice.

The book is divided into 5 simple concepts that form the basis of an excellent investment strategy:

1. Save regularly and start early.

2. Take advantage of tax efficient retirement investment vehicles.

3. Diversify broadly: Own the whole market.

4. Rebalance annually to stay within your target asset allocation.

5. Stay the course, ignore market ups and downs. Focus on the long term.

These ideas and strategies are not new. They are the proven strategies we have been told about for years, scattered among the rocks and hidden in plain sight. It is the laser-like focus that this tiny book provides that makes it so valuable. It needs to be on our shelf in a glass case with a little hammer adorned with the words “in case of severe market correction; break glass”. It is in these gut wrenching moments when we need this sort of wisdom.

There are a few minor changes from previous works here as well. There is more of an emphasis on global investments and the author’s share with us some stock-picking stories perhaps to remind us that they too, are human and get caught up in market timing from time to time.

Having Malkiel on your bookshelf and in your portfolio could be the smartest financial move you ever make. It certainly was mine.

The Elements of Investing by Burton Malkiel and Charles D. Ellis is available on Amazon.com

Have you read this book? What did you think?

-WR

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