From Rick Kahler
Most people with Individual Retirement Accounts open them with a bank or brokerage firm (the custodian) that limits what investments can go into the account. These custodians typically limit your investments to stocks, bonds, and mutual funds with whom they have distribution agreements.
A little-known option that allows owners of an IRA to have unlimited control of the investments they can hold is the self-directed IRA. Assets permitted in self-directed IRAs include real estate, promissory notes, mortgages, tax lien certificates, US gold coins, and private placement securities.
Tags: Investing, Retirement
From Rick Kahler
Jannie Wu wanted a better life.
I met Jannie on a recent trip to China. After earning an undergraduate degree in English, she took a teaching job paying 1000 Renminbi, or RMB, ($150) per month. In China, obtaining a student loan is not an option. Her parents funded her education, which cost 40,000 RMB ($6,500), and one of her goals was to pay them back.
Jannie’s lifestyle didn’t include eating out much, going to movies, or buying the latest clothes. “My rent was 300 RMB, my food was 300 RMB, I spent 100 RMB on other necessities and a few pleasures, so I was able to save the rest.” That was 300 RMB a month or $45. Still, repaying her parents would take about seven years. Jannie found a better way, moving 100 miles from her small village to Beijing and becoming a tourist guide. While it was hard leaving her family and the move ended her relationship with the man she was dating, it was worth it to her.
Tags: Economy, Financial Planning, Travel
From Kathleen Fox
Delayed gratification. Even the name sounds pompous. It carries a whiff of religious rules or psychological jargon, probably having something to do with toilet training or giving up the bottle—either the baby formula kind or the alcoholic kind.
Whatever you want to call it, though, delayed gratification is one of the most important concepts you can ever teach your kids about money. It’s a simple idea, but a crucial one.
Actually, all it means is “save dessert for last.” Finish your chores before you play. Eat your vegetables before you have ice cream. Save part of your allowance now, so you can buy that video game you want and enjoy it later.
Or wait a while before you eat the marshmallow.
Tags: Financial Goals, Money and Kids
From Rick Kahler
After all the Christmas giving and end-of-year donations, January might come as a welcome breath of fresh, cold air. We can take advantage of the break from charitable solicitations and appeals.
Or maybe we can take advantage of the opportunity to consider ways to give more consciously and deliberately in the coming year. One organization that is a strong example of conscious giving is Black Hills Area Habit for Humanity.
Tags: Conscious Giving, Financial Goals
From Kathleen Fox
A great way to save money on food is to cook simple meals at home instead of eating out. Not only is the original meal cheaper, but you get a huge secondary benefit—leftovers. They’re the frugal food that keeps on saving.
Maybe I’m weird, but I love leftovers. Reheated spaghetti, with a little grated cheese on top of the sauce? Comfort food at its best. A sandwich made with leftover meatloaf? One of the best lunches ever. And soup, of course, always seems to taste better the second time around.
With leftovers, you can do some of your food shopping in your own refrigerator. Reheat that extra piece of quiche for a quick breakfast. Take the rest of last night’s chicken casserole or rice and veggies for lunch. Grill a couple of extra chicken breasts when you cook dinner one night, then make them into soup or use them in salad a couple days later.
Tags: Food and Frugality
From Rick Kahler
On my recent tour of Southeast Asia, I was taken by the vibrancy of the economies in Hong Kong and Singapore. I knew the 2011 Index of Economic Freedom rated those two countries the first and second most free economies in the world, but experiencing it made a big impact on me.
The index ranks each country on 10 different components including government spending, corruption, labor, and business. While the U.S. is behind Hong Kong and Singapore in most of the categories, our ninth place ranking in the world is largely due to our being far behind in two categories: fiscal freedom (the tax burden) and government spending.
The top tax bracket is 15% in Hong Kong and 20% in Singapore. Since these are city-states, that is equivalent to our local, state, and federal taxes. Read the rest of this entry »
From Kathleen Fox
For a freelancer, security is having plenty of work. Plenty of work for an editor, though, means plenty of computer time. My shoulders, back, and knees were all starting to complain about the hours I was spending in front of my laptop.
Okay, it was time to think about ergonomics. I bought a cute little baby keyboard that fit on the keyboard tray and left plenty of room for my mouse. That helped; my shoulders appreciated it.
But my back still wasn’t happy with the time it was spending in my aging office chair. My next ergonomic strategy was to prop a thick pillow behind my back. It made the chair more comfortable, except that it kept slipping sideways, and every time I left my desk for a minute I’d have to reposition it. Periodically, if I was in my office but not in my chair, the pillow would give a little sigh, tip slowly forward, and collapse onto the floor like a fainting Victorian lady whose corset was too tight.
Tags: Conscious Spending
From Rick Kahler
Here’s a new twist on an old New Year’s Resolution: If you want to give yourself the security of financial independence, try budgeting the way many wealth accumulators do.
The secret? They don’t budget.
Your first reaction might be, “Of course these people don’t budget! They have so much money, they don’t need to.”
That may be true for some of those who have money today, but I’m referring to people who want to remain wealthy or those who are “wealth accumulators.” These are people who don’t start out with money, but who build up significant wealth over time.
Tags: Budgeting, Financial Goals, money management
From Kathleen Fox
One of life’s inconvenient little coincidences is having Christmas come so close to the end of the year. Much of our attention is focused on the holidays: shopping, baking, getting ready for family get-togethers, possibly traveling. We’re also trying to pay attention to day-to-day stuff like, oh, our jobs.
Meanwhile, the poor little accountant elf somewhere in the back of our brain is jumping up and down, trying to get our attention, shouting in his squeaky little voice, “Remember end-of-the year tax stuff!”
Oh behalf of that elf, this is just a quick reminder. There’s still a week between Christmas and New Year’s. That’s time for a few last-minute transactions that could make a difference in your taxes if you got them done before the end of the year. Things like contributing to a college fund or retirement plan (though for IRA’s, you have till April 15), making charitable donations, or buying supplies or equipment for a small business.
Maybe, on Monday or Tuesday, while you’re sitting around recovering from holiday events and all that wonderful food, it would be a good idea to go through your financial records for the year. Make sure you haven’t missed any financial matters that need to be done before December 31.
The accountant elf would be grateful.
Tags: money management, Taxes
From Rick Kahler
Salvation Army bell ringers. Angel trees. Appeals in the mail from charities, churches, and community organizations. Office and club gift exchanges. The family Christmas list that expands year by year.
This time of year, the spirit of giving gets a serious workout. For some of us, it can quickly turn into a spirit of frustration as we feel overwhelmed by requests and obligations.
Maybe one answer to make the season more manageable is to become more conscious about your giving by creating a “giving portfolio.”
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