As part of my annual financial checkup, I have updated my “Money Design” for financial freedom. This is my plan to one day automate my income rather than rely solely on employment income. My plan can be summarized by the flow chart below:
My wife and I just returned from a short vacation to a local casino. We went there to see our favorite comedian and decided to make an overnight trip out of it. This included hitting the casino floor to test our luck. We had a great time and surprisingly won back almost all the money we started with.
More than once I heard skeptics compare investing to gambling. “What’s the point? I might lose all my hard-earned money!”
Yes, it is true that you could put all your money on one stock and lose it all. But that would also be a ridiculous and non-advised investment strategy. Taking a more common approach and investing in an index fund would have quite different odds.
You see gambling is much different than investing in many ways:
I was almost the victim of identify theft.
On the evening of Dec 23, I received a call from the Chase Freedom Visa Card Fraud Protection alerting me that someone had tried to buy almost $500 worth of goods from a Macy’s in California. Because I live in Michigan, the purchase was quickly red-flagged and denied. Fortunately, I was spared.
The phone call with Chase was quick and painless. They asked me which transactions I’d like to dispute, closed my old account, and told me I’d have a new card with a new number within a matter of days.
Merry Christmas everyone! I’d like to thank all my readers and visitors for making this a very encouraging first year of blogging. I wish everyone the best in health and happiness!
Saving money can be a real challenge. You know you should, but some months it feels like you’re barely making ends meet. And no matter how much you actually make, it never feels like enough.
Fortunately, there are some painless steps you can take to get your savings back on track. Below are a few of my favorite tips for ways you can save more money:
If you’re doing a good job of saving up for retirement and looking at the possibility of meeting your goals sooner than later, one of the next biggest hurdles you’ll have to overcome is how to physically get your money out of your retirement accounts.
For most personal accounts such as a 401(k), 403(b), or IRA, you have to wait until age 59-1/2 or get slapped with a hefty 10% penalty fee. There are special exceptions to the 401(k) and 403(b) that may allow you to access your money without penalty by age 55. But even still, what if you are able to retire even sooner than that?
Fortunately, this is where a 72(t) comes in.
A 72(t) is a little-known tax code within the IRS laws that allows an individual under the age of 59-1/2 to take their retirement income out of their retirement account through a series of Substantially Equal Periodic Payments (also called SEPP).
Throw everything you know about business planning out the window.
Jason Fried and David Heinemeier Hansson offer a simpler approach: Ignore traditional business conventionalism and create the type of business you want. Period.
Rework is a collection of advice from the blog “Signal vs. Noise” by the authors’ company “37signals”. In it, the authors trash almost every common corporate practice such as meetings, business plans, projections, marketing, hiring practices, etc. to the credit of their own success. Although 37signals is a small, Internet based company, their products are widely used and the blog has thousands of readers.
The end is near! The end of the year that is … And with that, December is a good time to get you finances in order and get ready to settle with the tax man. Here are some tips to get yourself ready for another year:
Set Your Budget for Next Year: Remember, a budget is simple:
• Money In – Money Out > 0 = Success.
The best way to do this is to create a table with 12 columns; one for each month. Start by listing your income towards the top. Then list all your bills and expenses. This strategy is usually a little more effective than just doing one generic monthly budget because it captures expenses that don’t occur every month or are seasonal (like Christmas expenses). This also lets you see how you’re doing throughout the entire year and if you will run into any problem areas.
Contribute: Before you file your income taxes, you’ll want to make sure you’ve maxed out your tax-deferred investments. This would include:
• 529 College Savings Plans
Have you ever wondered why some ads were simply more appealing to you than others? Why you throw away most of your junk mail but stop to read others? Why you skim over some headlines but stop to read some?
In his book “CA$HVERTISING: How to Use More than 100 Secrets of Ad-Agency Psychology to Make Big Money Selling Anything to Anyone”, author Drew Eric Whitman explores all of these questions and dozens of other advertising tricks and techniques to show you how you can do a better job of marketing.
One of the central themes of CA$HVERTISING is that anyone could use the strategies presented in this book and they would be more affective than most ad agencies out there. The unfortunate fact, Whitman states, is that most advertising is garbage because it fails to appeal to our basic needs and interests.
Do you think it’s possible to save too much for retirement? That was the headline in an article from Yahoo Finance that seemed to think that you might. In it, the author was pointing the finger at the popular “80% rule” that suggests that retirement income planning is as simple as just estimating 80% of your gross (pre-tax) income.
Their criticism was that some academics think this commonly accepted retirement income planning tool may inadvertently cause some people to save for far more than they need. Consequently, this would cause those people to short-change themselves in the present.