When the modern definition of retirement planning came of age in the United States there were two main accounts that were used to give Americans the opportunity to retire with income. These accounts were Social Security which was signed into law during Franklin Roosevelt’s administration in 1935 and a pension which has its roots as far back as 1776 and was originally designed for soldiers of the Military (http://www.ssa.gov/history/briefhistory3.html)
Since their inception, these plans have had many changes on the way to their modern-day forms. Both of these programs provide income to people who get older and/or become sick or disabled and lose the ability to create their own income via their own labor. A pool of money is created from contribution or taxation of many people to form a large amount of money that in theory will grow over time and then as the contributors begin to stop working full-time “retire” or become disabled, they can start to draw a monthly income to pay their bills and maintain a decent lifestyle.
There will come a time for almost all people where they will exit the full-time workforce and enter the non-working class or the part-time workforce. When this happens their income will usually dramatically decrease. So during their working lifetime, they will contribute (mandatory) to social security (most professions contribute but not all are required to contribute to social security) and many will contribute to a pension or now the much more popular 401k or IRA and other similar qualified accounts. There are other types of qualified accounts and the qualifications are governed by Uncle Sam. Many times the name of the account references the section of the IRS code that covers the rules and qualifications for these types of plans ex: 401k and the 403b.
Most of these accounts give the contributor the ability to set aside a certain amount of money annually into these qualified plans and offer tax-advantaged status. With traditional qualified plans, you put money inside of the account and can defer your tax on that contribution and any growth that account may or may not have until the money is withdrawn voluntarily or at mandatory ages. The newer Roth accounts don’t qualify for the tax deferral on the contribution but all growth of the account is tax-free for life and withdrawals are tax-free as well.
These qualified accounts have taken over as the main retirement vehicles for American workers and replaced a traditional pension. Companies have embraced these accounts and run away from traditional pensions. In doing so, they have shifted the risk of retirement from the company over to the employee. The Old Style Traditional PensionWhen I speak to people about retirement planning, many of them long for the old days of the pension plan. This type of plan is called a defined benefit program which simply means the pension fund and the employer guarantee the retiree a certain amount of income every month regardless of the pension.
The Old Style Traditional Pension
When I speak to people about retirement planning, many of them long for the old days of the pension plan. This type of plan is called a defined benefit program which simply means the pension fund and the employer guarantee the retiree a certain amount of income every month regardless of the pension funds performance over time. So it might look like this: Joe works for ABC Company, ABC union, or ABC municipality for 25 years and contributes from every check along with his employer into the pension fund. He is promised that when he retires he will be paid $3,000 per month every month for the rest of his life (and usually his spouse’s life but not always it will depend on options the plan administrator offer and what options you take) from the pension fund.
If the pension fund does not perform well in the market or other investments during those 25 years it does not affect Joe’s income because his benefit is guaranteed. This guarantee is only solid if the overall pension fund remains viable. One of the big financial stories a couple years ago was the municipal bankruptcy of Detroit where a portion of those pension payments are in jeopardy. (http://www.latimes.com/nation/la-na-detroit-bankruptcy-20140222,0,3941443.story#axzz2w34XwofH) If the funds don’t perform as projected then it is up to the plan sponsor to put in more of their money into the plan to keep it funded properly. When you hear the term underfunded pensions it usually does not mean that the proper money was not put in the account but rather the contributions did not grow as planned thus creating a shortfall in total pension funds to be able to pay retirees. Sounds good for the worker but they have some serious flaws such as:
1) Workers are usually not qualified to receive income until after many years of working for the same company, union or municipality. If they leave and go elsewhere that pension and the amount they contributed are generally not portable and transferable. A real downside for the modern “free agent economy”.
2) The worker’s ability to get the actual cash before retirement is very limited and impossible for some accounts. This will depend on the plan administrator and how the account was set up at inception. 3) The employee does not control the cash generating the income but rather the pension fund has all the control. So if you and your spouse pass away relatively early then the pension income stops and your estate receives no cash from the pension fund In 1981 the 401k and other qualified plans were born and even the man who is widely credited with their invention says they are failing most Americans. (http://www.marketplace.org/topics/sustainability/consumed/father-modern-401k-says-it-fails-many-americans) These plans are referred to defined contribution plans. In these
3) The employee does not control the cash generating the income but rather the pension fund has all the control. So if you and your spouse pass away relatively early then the pension income stops and your estate receives no cash from the pension fund.
In 1981 the 401k and other qualified plans were born and even the man who is widely credited with their invention says they are failing most Americans. (http://www.marketplace.org/topics/sustainability/consumed/father-modern-401k-says-it-fails-many-americans) These plans are referred to defined contribution plans. In these plans, the worker contributes to these accounts on a voluntary basis as does the employer also on a voluntary basis. The growth of these accounts are not guaranteed. The eventual incomes from those accounts are not guaranteed as they are with the traditional pension. So retirement income is totally in the hands of the account owner and how they allocate those funds. The income is very much dependant on how the stock market performs for most workers because the stock market is where the lion’s share of all the money in those funds is invested. So if you withdraw money as income and pay your required taxes (in the case of traditional accounts) the balance is left for you to spend to live your life. If your money remains in the market during retirement and the market goes bear then you must sell more shares of your investment to achieve your desired income.
Many people are familiar with dollar cost averaging during their working years but almost nobody is familiar with the dirty little secret of reverse dollar cost averaging. Reverse dollar cost averaging will cannibalize your retirement (click here for more information on both dollar cost averaging and reverse dollar cost averaging) and must be handled to have a successful retirement. One of the best ways to combat dollar cost averaging and set up your own stable income stream for life is to set up your own “private pension” by utilizing your old 401K or existing IRA.
This can be done by the proper rolling over of those accounts from risky market accounts to a properly designed annuity contract. As with any financial product, there are always upsides and downsides. Purchasing an annuity is no different. We will cover the benefits and pitfalls of annuities next week in part two of this article. For now, understand that there are 3 basic structures of annuities:
1) Fixed Annuities
2) Variable Annuities
3) Fixed Indexed Annuities
These 3 types of annuities have the same basic name but have wide variations of how they work. Then once you know how each work there are many different varieties and terms offered and by a wide range of providers. The fees will also vary based on product and provider.
One of the biggest benefits of many annuities is the ability to structure the contract for guaranteed lifelong income once purchased. Also, you can use qualified funds such as IRA’s and 401k’s to purchase the annuity and accomplish this via a tax-free rollover in most cases.
One of the biggest downsides of annuities is the non liquidity of the money beyond a certain percentage of the total account. Most annuity contracts come with steep penalties for early withdrawals beyond a certain amount (usually around 10%) of money withdrawn out of the account during a certain period of time.
Please read my next article when we will discuss in more depth how to successfully turn your IRA and 401k into a paycheck machine for life while at the same time avoiding the costly pitfalls.
As I write this article the stock market has had a fantastic rebound from its last serious downturn and most investors seem to have a little more bounce in their step than several years ago. It seems that the market is hitting new all-time highs every other day. I am happy that people’s investments and retirement accounts are doing better and I hope they continue to do so in the future. However, as we all know the stock market goes up and goes down and the timing of your entrance and exit on certain investments can have a huge effect on your actual gains and losses. (never forget 1999,2001, 2008 just in recent history)
The stock market and all the emphasis put on it by almost everybody can act like a giant Magic show where you are paying attention to what the market is doing in the left hand but totally oblivious to what your overall financial picture is doing in all other parts of your life. The traditional media’s focus on stock market investing almost to the exclusion of everything else has made most Americans singularly focused on that one part of their financial life while not paying attention to where most of their wealth is being eaten up systematically month after month and year after year. This cannibalization of wealth happens no matter if the stock market is up or in the tank. I call these massive wealth drains and there are 4 huge ones (along with several other smaller ones) we will cover briefly in this article.
The first and biggest expense people have over their lifetime are income and other taxes. Even with that fact most people really have no clue how the tax system operates and that is by design by our old Uncle Sam. Books have been written on how to reduce taxes but since our time is limited take a couple of points away from this article. Since taxes are such a huge expense maybe you should spend some time studying one of those many books by a credible tested source and figure out how to reduce your taxes. The only thing I have time for today is to give you this huge general idea. The tax system is set up to penalize hourly and salaried workers while rewarding entrepreneurs and business owners. Salaried workers pay taxes based on that they gross while business owners pay taxes based on what they net for income. When that statement is made most people think of the fortune 400 companies getting something over on the little guys. Keep in mind you don’t have to be a massive business to get great tax advantages. Even the little businesses and start-up businesses get huge tax benefits. So since that is the case, rather than complain about it and say “oh well I guess I am out of luck because I have a normal job” dig a little deeper and realize that everyone should have a small business even if you run it from your home office or kitchen table. To qualify for tax deductions in that business The IRS says that you have to have the intent to make a profit and work in that business for a reasonable amount of time (he never defines reasonable). When that standard is met you automatically qualify for dozens of tax deductions that you don’t get to take as an individual. If you have losses and start-up expenses much of them can be written off against your other income from your job (limits apply so get a good business CPA to work with you) Realize that nobody (even your CPA or tax preparer) cares how much you are paying in taxes and if you don’t take time to know how it works and use it effectively you will cost yourself tens and hundreds of thousands of dollars in lost income over your lifetime plus the compounded growth that lost money would have given you over time.
Another huge wealth drain is market losses on any investment capital that you control. So when the stock market or a piece of real estate drops significantly in value it could take years for your money just to get back to even and of course, there are certainly no guarantees that it will come back during your investment lifetime. Compound interest is an amazing beast that even Einstein had trouble grasping so I will keep it brief. If the compounding curve of your money is broken by market losses or premature withdrawals it has a massive effect on your final pool of wealth. Just for fun, if you were offered a job that only lasted 36 days and you had two choices on the pay plan which one would you take? First, you could be paid $5,000 per day at the end of every day for 36 days for a total of $180,000 of income. Not bad for just over a month’s work! The second option is you would be paid one cent starting on day one but that one cent would be compounded by 100% daily and payable at the end of those 36 days. Well if you jumped at the $180,000 you missed the power of true compounding of money. If your coworker doing the same job chose the compounding penny they would not be a millionaire…………….they would be a stinking filthy rich multi-millionaire with a check of $343,597,384! Do the math and then tell me when you want to break your compounding curve with big losses or withdrawals. (did you know you can have money invested tracking the market without it being subject to any market losses?)
Next massive wealth drain is interest and fees paid to banks or finance companies over your lifetime. Loaning of money (financing) has been around in some form for thousands of years. Since the time you could pull your ox into the temple you could get a loan on it if you paid more back than you borrowed and left the ox as collateral. Any business model that has been around that long is a winner! However, when you’re on the borrower side of the transaction it is a wealth drain especially if most of your borrowed money is on depreciating assets such as cars, boats, equipment and any other item that goes down in value. Now people will tell you that if you can borrow money cheap and invest in something that makes more money than you pay in interest back to the bank then you are using leverage properly. That theory can be true but it comes with many caveats and other lessons we cannot cover here this week. Do a simple exercise and add up all the money you have paid out over your lifetime in monthly payments on everything. Then compare that number to the amount of money you have saved for retirement and tell me which one is bigger. Leave your results in the comment section. Then decide you should know more about how to be the lender and not the borrower.
Last massive wealth loss is depreciation (money lost) on items such as cars, boats, equipment, appliances and almost any other large asset we buy over our lifetimes. Almost nobody discusses this (except me of course) and yet did you know that most people will lose more money on just their cars during their lifetime than they can ever save for retirement let alone all the other depreciation? Do your own math on your life and find out the truth.
Think of your financial life as a big pie and as such it has many pieces to the entire pie. Don’t fall for the magic trick of only paying attention to what is happening to your one slice of pie, which are your investment gains or losses. Pay attention to the entire pie and start to slow down and stop your 4 massive wealth drains.
John Jamieson is the #1 Bestselling author of two books “The Perpetual Wealth System” and “Wealth Without Stocks or Mutual Funds” as well as a nationwide wealth strategist with clients in dozens of states. Contact him at buy clomid and metformin online or visit his site at buy clomid and hcg
Part two of three part series.
Last week I wrote an article talking about how to save boat loads of money by purchasing the car of your dreams but only after it is two to three years old. For that article go here buy cheap clomid pills This week I want to talk about how leasing a car really works and some tips to save you more money on that next car purchase or lease.
What is a lease? A lease is an agreement you enter into to rent your car for a predetermined length of time (usually 24 to 36 months) for a predetermined monthly payment, and for a set number of miles. These payments are always less than the payment would be if you purchased the same car on the same day. The lower payment means that the car looks more affordable on the surface but inside of that lease agreement are all kinds of terms that can cost you far more than just the lease payments.
To begin with, why is the payment less expensive with a lease than with a loan for the same car? When you lease you are only paying for the estimated depreciation during the length of that lease rather than the entire loan balance you would pay back during that same time frame. As an example, you borrow $25,000 and sign a 36 month loan agreement at 5% giving you a payment of $749.00 which is a very hefty car payment by today’s standards and for many people that payment is not an option based on their income and budget. However, if you could swing that payment for those 36 months you now have a free and clear car with a lot of life left in it and if you were smart and disciplined you would continue to make that big payment but now into a tax-free account. (More on this in next week’s part 3)
In contrast, when you sign a lease on that same car for 36 months your payment might only be $300.00 for a 36 month lease which is much easier on your pocketbook. However, after the 36 month lease, you still have a balance to pay off if you want to own the car. This balance is called the residual value and must be paid off either by cash or with a new loan. Most people will not have the cash to pay off the car and so if they decide to own the car they now take on another loan for several more years to actually get the car paid off. Most people do neither of the above but turn the car in and get the next newest model and take another lease payment and so on and so on until they are old and gray.
In essence, a lease allows you to extend your payments on a car for 6 to 8 years paying far more in payments and interest (yes there is a hidden interest rate with a lease) for the same car. You have less of a monthly payment, but way more of them totaling more money out of your bank account. So how about we actually have a strategy for our next car purchase instead of just winging it? If you can’t afford the 3-year payment then how about committing to no more than a 5-year note on your car? Can’t afford that payment either? Then the truth is you really can’t afford that car. Shop for something less expensive and possibly a model year or two older buy cheap clomid pills Now make a commitment and plan that after you pay off the car you will not buy another one for just two more years but you will continue to make a car payment to yourself into a tax-free account. According to where can i purchase clomid over the counter the average length of time people hang on to a car is almost 6 years so you will go one extra year for good reason.
It will look like this in real numbers. You borrow $25,000 at 5% for 5 years on your next car creating a $470.00 payment which you pay for 5 years. Now you own the car free and clear but what will you do with the payment you were making? Blow it on junk if you’re like most people but you are not like most people. You have a plan that you are working. So now you still write that payment from your checking account every month but now the money goes to a bank (or pool of money) that you control. You will do this for the next 24 months accumulating $11,322 plus the growth on that money (guaranteed and tax-free if we do it right) which would put you at a total of about $13,000 you have saved for yourself and your family. That $13,000 in a tax-free account that just gets 5% compound interest will be over $35,000 for you in 20 years. Could you do that on every car you and your spouse ever own? If you will do it you will have a couple hundred thousand dollars more for your family! According to The Employee Benefit Research Institute buy cheap clomid online uk the average American only has $56,000 in savings by the time they are 65 years old. So by mastering this car strategy, you could have 4 or 5 times that amount over your lifetime depending on when you start.
Yes, John but why do I need to make a payment back to myself instead of just letting the unused money sit in m checking account? Simple, human nature will not allow you to truly “save” your car payments unless you get the money out of your day to day cash flow and super easy access. Money is only saved if it is focused and not frittered away on other things we really don’t want or need.
Focused cash flow is the key to wealth and the disposition and growth of that cash flow are critical if you want to get ahead and have more options later in life. Did you ever “save” money on a big item? Where are those savings now? Precisely! Get in the habit of taking “savings” and truly making them savings by taking them out of your cash flow account and into a separate tax-free account.
Automobile ownership is a luxurious necessity in this fast paced world (in most places) and is a source of pride in owning a nice automobile. However, the dollars at stake here are massive over time and you need a strategy on how to stop the wealth drains of depreciation and interest on these purchases.
Next week we will show you a proven system on how to actually make money on every car you ever own which is a game changing piece of information. You can also get a jump on next week by watching a video on this very topic. Make sure you sign up for my Youtube page when you’re there watching this video!buy cheap clomid uk
This time of year many people’s fancy turn to owning a new shiny car during the upcoming New Year. Dealers will need to liquidate their current year inventories to clear space for the new models. They will be pulling out all the stops including colorful free brochures, demonstrations, and pitches by beautiful ladies telling you all about the New Year models. Be careful not to get sucked into these sweet offers. A new automobile is one of the biggest wealth drains for you and your family. However, that being said a car is very close to mandatory to survive and thrive in most areas of the country. Let’s talk about some tips on how to save a fortune on every car you ever own over your lifetime. Many families own at least two cars which means you are getting robbed twice as fast. Use these simple yet powerful tips to take control of this expensive item.
- Buy the car you want but only after it is at least two years old and three years old would be better. When you choose this option you automatically will save yourself hundreds of thousands of dollars over your lifetime. A very real life example of this comes from my own life. When I was 23 years old I decided I wanted to buy a nice 4 door sedan and I was drawn to the Cadillac STS model and began doing some research. The brand new model year of that car was stickered at over $50,000 and with any kind of little extras the sticker was almost $55,000. I was very fortunate to be doing very well financially at a young age but I was not doing that well to blow 50 grand on a new car. I was thumbing through my local paper (yes this was before the internet changed everything) and saw an ad for a 2 ½ year old Cadillac STS for $19,500. The car had less than 40,000 miles on it and came with an extended warranty to 90,000 miles. It was gorgeous, shiny, and just serviced. Of course it seemed too good to be true but then someone shared with me the secrets of buying automobiles. The largest depreciation losses on cars occur in the first three years. According to buy clomid cheap uk the average car will lose 11% of its value the second you roll it off the lot and additional 15 to 20% the first year you own the vehicle. That makes your first year loss of value 30%! The second year depreciation (loss) is another 15% for a total first two year loss of at least 45%!
It is important to keep in mind that the depreciation is usually calculated off of the base price and does not take into account all the extras you pay for when the car is new. This could be the sport package that raises the price $10,000 but only gives you $2,000 back after the first year or two. So it is very possible to find beautiful cars with manufacturer warranties still in place and pay 35 to 50% less than the first owner did when purchased new. Since the biggest percentage of depreciation occurs in the first three years, let someone else eat the depreciation and buy it used (or pre-owned as the car dealers like to say) after the second or third year.
I was able to drive a gorgeous car with a warranty for far less than it would have cost me new and I drove that car for 4 years and still sold it for $3,500 and had very little repairs during my ownership that came out of my pocket. This strategy works with exotic cars as well. When I was a young man one of the dream cars then was a Ferrari Testarossa and its price tag was around $200,000. You can buy one now for right around $50,000 and most don’t have that many miles on them because they are babied by the owners.
- Another way to save a lot of money is to try and keep your term for your loan (assuming you finance through a bank or finance company) for no more than 36 months to build equity in the car faster and save on additional interest. This will be the most difficult suggestion for most people to utilize because of that seemingly large payment if you finance it for 3 years instead of 6 or instead of just leasing the car new for less money per month. If you finance $25,000 with a bank at 5% interest for 3 years your payment will be $749.27. If you extend that loan out to 6 years your payment drops to $402.62 which seems much more reasonable and affordable. It may be more affordable monthly but will cost you much more in interest and less loan buy down. You could also lease a newer model of the car for even less monthly (read part two of this article to see why you might not want to do that even though on the surface it looks attractive)
If you pay over 6 years you will pay out $28,989 vs. $26,974 for a difference of $2,015 more out of your pocket to own the car. In addition, by financing it for the 6 years your loan pay down is going at a much slower pace than the depreciation on the vehicle creating an “underwater situation” on the car almost from the initial purchase date. (Assuming you buy the car with a small down payment) During the 3 year program you are paying down the car faster than it is depreciating giving you options if you should have to sell the vehicle. If you truly can’t afford that 3 year payment take out the 5 year option and try to send a little extra every month toward the principle to pay it off sooner.
There are several other ways to save loads of money when purchasing an automobile that we will discuss in part two of this article next week.
Big Tax Deductions and a Secure Retirement for Business Owners using a Restricted Property Trust
How successful business owners are putting more money away for Retirement than they ever could with a Traditional Retirement Account
Trusts as a wealth building and wealth preservation tool have been around for centuries. Every specific trust has a specific purpose for why it is set up and how it is utilized. There is one that is designed for high income business owners to be able to put away more money for retirement than they possibly could with a traditional retirement plan. This trust will also allow the business owner to do this on a tax deductible basis.
This also allows the business owner to legally “discriminate” against their current employees or co owners so if they choose; the owner can be the only one who participates in the plan. This is very different from traditional retirement accounts where most full time employees must be given the opportunity to participate in the retirement plan.
The name of this trust is a “Restricted Property Trust” and is a very powerful tool for the right business owner. It basically works like this:
- A successful business owner is allowed to fund from $50,000 (minimum) to millions of dollars per year for at least 5 years into a restricted property trust. We will use $100,000 contributions for our examples
- Most of this contribution will be tax deductible to the business owner because of the nature of the Restricted Property Trust
- That contribution will be used to fund a Whole life insurance policy creating cash value and an instant death benefit for the business owner’s estate. If the business owner should die during the initial 5 year period (or subsequent 5 year blocks of time in which the trust operates 10,15, or 20 years) the death benefit finishes off the funding of the trust commitment and the balance of the death benefit goes to the business owners family
- The business owner makes a firm commitment to fund the trust for those 5 years with $100,000 per year and if the business owner fails to make that contribution they forfeit all previous contributions to a charity. This creates a chance of loss necessary to make most of these contributions tax deductible. Needless to say the business owner who sets this up is confident in their income for the trust period and/or they have significant assets in other places they could easily draw on to make these contributions.
- Depending on the situation about $70,000 of the $100,000 contribution will be tax deductible every year the contribution is made into the trust. Over 10 years this would create $700,000 worth of tax deductions directly off of your businesses income putting hundreds of thousands of dollars in your bank account (depending on your effective tax rate)
- Also at the end of the 10 years (in this example) you will have more money in your plan in the form of cash value than you put into the plan. Let’s assume you have put in $1,000,000 into the plan over 10 years, you now might have $1,200,000 in cash value inside the plan and the life insurance policy. The trust is dissolved and you now own the life policy personally along with all the cash and death benefit. You have also pocketed hundreds of thousands in dollars of cash that you would have paid to Uncle Sam without this unique and powerful structure.
There are some taxes to be paid out of the cash value at the end but the balance of the cash value is all tax free and can be an entirely new tax free income stream for the business owner.
This is not simply a deferred comp plan or is it a traditional retirement account. It is much more high level than either one of those programs. Now let’s answer some of the most common questions we receive about this program.
Q: I already have other retirement accounts I am funding, can I still fund this trust in addition to my other accounts?
A: Yes you can.
Q: Can I be a partial owner of my business with partners? If yes, do my partners have to participate in the program as well?
A: Yes you can be a partial owner of the business and no your partners don’t have to agree to the plan (but don’t be surprised if they want to set this up for themselves as well) and your employees do not share in this benefit at all
Q: How much money do I have to make to be able to qualify for this trust?
A: There is not a specific income level but the minimum contribution to the trust is $50,000 annually for 5 year increments.
Q: if I have the resources can I put in $300,000 or even more a year into the program?
A: Yes, but that contribution amount will be dictated by how much your business is worth and how much of a death benefit the business owner can qualify for based on that business value.
Q: What happens if I can’t make the contribution during that 5 year term?
A: You contributions will be forfeited to a qualified charity
Q: Why is life insurance a part of this plan?
A: For various tax and trust reasons a properly structured whole life policy is a must for this program to be implemented
Q: If I should die during one of the 5 year trust periods, who gets the death benefit from the life insurance policy?
A: Your estate collects the death benefit during the trust periods and after the trust periods when you take control of the policy after the trust is dissolved
Q: Can I have access to the cash value in the life policy during the trust period?
A: No there is no access to the cash value during the trust period.
Q: I am a salaried employee who makes big income but am issued just a W2 at the end of the year. Do I qualify to participate in this program?
A: Unfortunately this type of trust is just for business owners or partial business owners. It is possible to receive a W2 as a salary and own the business as well. You must own a part of the business to be eligible to participate in this plan.
Q: Because life insurance is included in this plan do I have to qualify physically as well as financially for this program?
A: Yes there will be a physical required to qualify for the underlying life insurance policy. Most people who use this program are in their 50’s or 60’s and the vast majority get approved physically for the policy.
In closing, a restricted property trust can be a great benefit for the right established business owner with disposable income and/or other assets they can draw upon to fund the trust. It is not meant for spotty incomes or low asset business owners. If the business owner is stable and confident in their ability to fund the trust during the trust periods it can be a great tool.
If you would like more information on this program, please visit can you buy clomid over the counter in america for a brief presentation and the information on how you can set up a personal consultation to see if this is a fit for your business.
And You Don’t Even Know It
The first and biggest “wealth drain” is taxes.
Our tax system is designed to penalize hourly and salaried workers while rewarding entrepreneurs and business owners. Salaried workers pay taxes based on what they gross, while business owners pay taxes based on what they net. To that end, most people think Fortune 500 companies getting something over on little guys. Keep in mind, you don’t have to be a big business to get great tax advantages. Even startups get huge tax benefits. So rather than complain, maybe you should run a business from your kitchen table
To qualify for tax deductions in that business, the IRS says you must intend to make a profit. When that standard is met, you automatically qualify for dozens of tax deductions that you don’t get as an individual. Most losses and startup expenses can be written off against other income from your job (limits apply, so get a good business CPA to work with you). Realize that nobody else (not even your CPA or tax preparer) cares how much you pay in taxes, so it’s your job to understand how the system work and how to use it effectively.
Losing the Chance at Compound Growth
Another set of huge wealth drains are market losses on investment capital that you control. When a stock or a piece of real estate drops significantly in value, it could take years for you to get back to even. And, of course, there are no guarantees that it will come back during your investment lifetime. The less capital you have invested, the less you can benefit from the power of compounding growth.
If the compounding curve of your money is broken by market losses or premature withdrawals, it has a massive effect on your final pool of wealth. For example, if you were offered a job that lasted only 36 days and you had two choices on the pay plan, which one would you take? (A) You could be paid $5,000 per day at the end of every day, for a total of $180,000. (2) Your second option is to be paid one cent starting on Day One, but your pay would double each day — be compounded by 100 percent — and payable at the end of those 36 days.
If you jumped at the $180,000, you missed the power of true compounding of money. If your coworker doing the same job chose the compounding penny, he wouldn’t be a millionaire. After 36 days … he’d be a filthy rich multimillionaire with a final check of $343,597,384. Obviously, your investments won’t experience such rapid (or consistent) compound growth, but do the math —
the power of the compounding curve is strong over time — if you don’t break it with big losses (which you can’t always control) or withdrawals (which you can).
Money Lost in Fees and Interest to Banks and Financial Companies
The next massive wealth drains we face are interest and fees paid to banks or finance companies. Money-lending has been around for thousands of years, and any business model that’s lasted that long is a winner — for the business. But when you’re on the borrowing side of the transaction, it’s a wealth drain, especially if most of your borrowed money is spent on depreciating assets
Now, people will tell you that if you can borrow money cheap and invest it in something that has a higher rate of return than the interest rate you’re paying, then you’re using leverage properly. That can be true, but those attempting such a move should be aware of the caveats. Try this simple exercise: Add up all the money you’ve paid out over your lifetime in monthly payments. Then compare that total to the amount of money you have saved for retirement and see which one’s bigger. (If you’re willing, we’d love to hear about your results in the comments section below.) Then think about how to be a lender, and not a borrower.
Depreciation of Vehicles and Other Large Assets
Another massive wealth drain comes from the depreciation of cars, boats, equipment, appliances and most other large assets we buy. Most people will lose more money on cars during their lifetimes than they’ll ever save for retirement, let alone all the other depreciating assets they’ll buy. But there’s can i buy clomid online uk.
Think of your financial life as a big pie. Don’t fall for the old magic trick and focus only on what’s happening to your one slice of the pie (i.e., your investment gains or losses). Instead, pay attention to the whole pie and put a stop to your massive wealth drains.
A new car is one of the biggest wealth drains for you and your family. Use these two simple yet powerful tips to take control of this expensive item.
Think in the Long Term (for Models)
Buy the car you want — but only after it is at least two years old, and three would be better. By doing this, you automatically save hundreds of thousands of dollars over your lifetime.
When I was 23, I wanted to buy a nice four-door sedan, and I was drawn to the Cadillac STS. The new model had a base price of more $50,000, and with any kind of little extras the sticker was almost $55,000. I was doing very well at a young age, but I wasn’t doing that well to blow 50 grand on a new car.
I was thumbing through my local paper (yes, this was before the Internet changed everything) and saw an ad for a 2½ year old Cadillac STS for $19,500. The car had less than 40,000 miles on it and came with an extended warranty to 90,000 miles. It was gorgeous, shiny and just serviced.
It was an attractive price since the first owner was eating the depreciation.
According to buy clomid at gnc, the average car will lose 11 percent of its value the second you roll it off the lot and an additional 15 percent to 20 percent the first year you own it. The second-year depreciation (loss) is another 15 percent, for a loss of at least 45 percent over the first two years.
Depreciation is usually calculated off of the base price, not the extras. This could be the sport package that raises the price $10,000 but only gives you $2,000 back after the first year or two. So it’s quite possible to find beautiful cars with manufacturer warranties still in place and pay 35 percent to 50 percent less than the first owner did when purchased new.
I drove that car for four years, had very few out-of-pocket repairs, and sold it for $3,500.
So what kind of deal could you get today? When I was young, one of the dream cars was a Ferrari Testarossa, and its price was around $200,000. You can buy one now for around $50,000, and most don’t have that many miles on them because they’re babied by the owners.
Think in the Short Term (for Loans)
If you finance your auto purchase, you can save a lot of money by keeping the term to no more than 36 months. This builds equity in the car faster and saves on interest.
This might be difficult because the monthly payment is higher than if you finance over six years, and it’s higher than a monthly lease. If you finance $25,000 at 5 percent interest for three years, your monthly payment will be $749.27, and your total payout will be $26,974. If you extend that loan out to six years, your monthly payment drops to $402.62, but your total payout rises to $28,989. That’s $2,015 more out of your pocket to own the car.
Assuming you buy the car with a small down payment, by financing it for six years, your loan pay-down is going at a much slower pace than the depreciation on the vehicle, creating an “underwater” situation on the car almost from the get-go. During the three-year program, you’re paying down the car faster than it’s depreciating, giving you options if you have to sell the vehicle.
If you truly can’t afford that three-year payment, take out a five-year option and send a little extra every month toward the principal to pay it off sooner.
Leasing a newer model looks attractive because the monthly payment is less, but you might not want to do that. I’ll explain why next post, when I offer several other ways to save loads of money when purchasing an automobile.
Believe it or not you might be better off buying your own car rather than funding your 401k or IRA! Learn more at buy clomid at cvs