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

 

 

 

 

 

Thinking Outside the Box : Debt Ceiling Edition

Welcome to this edition of “Thinking Outside the Box”.

I have solved the debt ceiling problem and frankly I am surprised that the Tea Party and the White House have not contacted me yet.

Here are a few of my best ideas (yes, there were worse ones):

1. Sell Nebraska, Iowa, Kansas and Missouri to China for 5 Trillion dollars. This new Chinese province situated right in the center of the continental U.S. could be the grand hub for all of our Chinese needs. They could open a Foxconn factory, hire the native population and make Ipads and sell them from fake Apple stores.

2. Hire obese people to hand deliver tweets. Tweets would be printed out on fortune cookie paper, given to a tweet-walker (or tweet-biker) who would use human power to deliver the 140 character (or less) message throughout a nationwide network (except of course, the big new China in the middle, no social media goes in there). This would dramatically reduce healthcare costs and put millions of people to work.

3. Sell the National Parks to Disney. It’s a small world, after all.

4. Open a string of Government Run Social Security Casinos. Require seniors to pick up their S.S. money on site in the form of chips. Odds are always on the house!

Do you have any ideas?

Who owns the U.S. Debt?

In an interesting story over at Business Insider, the owners of the U.S. treasuries are enumerated. I had always assumed that China was the number one purchaser of U.S bonds. It turns out that Uncle Sam is the majority holder. This is just like Japan who owns a majority of Japanese public debt. I learned of the Japanese holding in much the same way I learned of the U.S. percentages, In a time of crisis. The Japanese nuclear disaster highlighted their domestic vulnerability much like the U.S. debt ceiling crisis is shining a bright light on our vulnerability.

While China, Japan and the U.S. make up the top 3 creditors, we hold a lions share of U.S. debt:

The U.S. owes the U.S most

 

Here is a breakdown of all of the creditors to the U.S. :

Who we owe

source: Business Insider

 

The Wall Street Journal has a live blog of the debt debate that is worth checking out.

Question: What changes have you made in your personal finances as a result of the ongoing debt debate?

I have reduced my exposure to equities recently and have increased cash. I could miss out on some gain and dividends but the market uncertainty leading up to the artificial debt deadline could precipitate a big correction or crash. Nobody knows.

I do hope they sort this out soon, though, it is really a dangerous political sideshow that is doing grave harm to our reputation around the world.

-WR

Who? How Much?
Hong Kong 121.9
Caribbean banking centers 148.3
Taiwan 153.4
Brazil 211.4
OPEC 229.8
Mutual funds 300.5
Commercial banks 301.8
State, local and federal retirement funds 320.9
Money market mutual funds 337.7
United Kingdom 346.5
Private pension funds 504.7
State and local governments 506.1
Japan 912.4
U.S. households 959.4
China 1160
The U.S. Treasury 1630
Social Security trust fund 2670

What Is A U.S. Company?

 

As we head into the final furlong of the debt debate it may be perplexing that our economy seems to be doing so poorly in terms of housing, joblessness, consumer confidence and myriad other ‘coal mine canaries’. I thought it would be interesting to understand why the stock market seems to be riding so high.

What do the following organizations have in common?

3M
Alcoa
American Express
AT&T
Bank of America
Boeing
Caterpillar
Chevron Corporation
Cisco Systems
Coca-Cola
DuPont
ExxonMobil
General Electric
Hewlett-Packard
The Home Depot
Intel
IBM
Johnson & Johnson
JPMorgan Chase
Kraft Foods
McDonald’s
Merck
Microsoft
Pfizer
Procter & Gamble
Travelers
United Technologies Corporation
Verizon Communications
Wal-Mart
Walt Disney

If you answered that they are all American companies you’d be right, technically. There is a slight problem with these companies in particular though. They happen to be the 30 companies that make up the Dow Jones Industrial Average. When newsies say “The Dow is up” or “The Dow is down” what they are saying is the average price of these 30 companies stock has gone up or down. (The actual calculation is slightly more complicated, it is the sum of the prices of all 30 stocks divided by the ‘Dow Divisor‘, a magic number used to take into account company changes such as stock splits or spinoff companies but the effect is the same.)

So what’s the problem?

When you read or hear something like this: “U.S. blue-chip stocks are riding high and the Dow Jones Industrial Average finished its best month of the year.” You’d be inclined to infer that the health of the U.S. Economy is somehow tied to the Dow. You’d be wrong. While all of the companies are technically American organizations, many of them are actually multinationals with a majority of employees and sales abroad.

Things that make you say MMM

When a company such as 3M (Originally called the Minnesota Mining and Manufacturing company. You can’t get more apple pie and baseball than that) has only 34% of sales in the U.S you could say, “Hey, great. They are selling stuff on the global market.” When you come to find out that only 33% of their employees are in the U.S. then you might start to wonder if they should really qualify as an American company at all, much less be listed prominently on the DOW.

 

Caution:Rant

Perhaps this is why the DOW is sky high yet people can’t find jobs or buy houses around the country. Incidentally, how does the U.S. Federal Reserve lending $45 billion to european banks help U.S. citizens? Many bankers and the people inside our own Fed are increasingly proving to be dirty, despicable people. Banks got a big bailout yet won’t lend to small businesses or American people. Maybe we shoulda let them fail.

/Rant

Which other companies on that list should perhaps not be there?

What should we use instead to measure the overall health of American enterprise?

When Tim Geithner says “We’re almost out of runway” it might be time to be very concerned.

 

please let me know what you think.

 

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

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…