“Real World” Personal Strategy Blog

Thanks for nothing

“Be miserable. Or motivate yourself. Whatever has to be done, it’s always your choice.”
- Wayne Dyer

Alright, I don’t really mean that. And it’s not some gimmick to get you to read this blog post.

No, as your family’s Personal Financial Guide, I’ve got some words to say about your peace-of-mind–and what leads to TRUE wealth. THIS week–this happy week–I want to point you higher, and to what keeps regular families rich.

You see, “rich” is a state-of-mind. And many families that YOU might consider very wealthy are (frankly) miserable. I’ve got first-hand testimony to that, as I deal with a wide variety of people on every point of the economic spectrum.

But before I go into all of what I mean, let’s get some pertinent news items for you to munch on, shall we?

So…we’ve got this:
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=200911201556dowjonesdjonline000589 (some tax deductions are being extended, it seems). And we’ve got this: http://taxprof.typepad.com/taxprof_blog/2009/11/17-tax-increases.html (tax increases in the Senate Health Care bill).

What’s a regular family to do, to keep their head from swiveling like crazy with all of these competing events? Well, the simple answer, of course, is to walk with a competent guide. As these proposals actually turn into law…we’ll keep you updated.

Next, we’ve had news of hundreds of thousands of college parents inaccurately claiming deductions. They’re in for a nasty surprise, unfortunately.
(http://www.usatoday.com/money/perfi/taxes/2009-11-19-college-credit_N.htm )

Again…it quite literally pays to have someone in your corner to manage these items for you. Now is the time to ensure you’re protected during next tax season.

Now, to my Strategy Note for the week…would love your feedback, as I read every email that comes my way!

“Real World” Personal Strategy
Why Thanks-Giving Matters

First, a short history of this week’s holiday…

According to scholars, the first known Thanksgiving took place on September 8, 1565 in Saint Augustine, Florida when Spanish settlers held a Mass of Thanksgiving after arriving safely in the New World. English settlers in the Virginia Colony held a similar day of thanks in 1619. Two years after that, the colonists at Plymouth Plantation celebrated the most famous Thanksgiving, during 1621.

It wasn’t until October 3, 1789, that it actually became a holiday, when then President George Washington proclaimed a day of Thanksgiving…but just for that year. In 1795, Washington again proclaimed a day of Thanksgiving, and President John Adams also declared Thanksgivings in 1798 and 1799. After a decade and a half without the celebration taking place at all, President James Madison renewed the tradition in 1814, and even went so far as to declare the holiday twice in 1815! In 1863, President Abraham Lincoln finally proclaimed the last Thursday of November as a national day of Thanksgiving that should take place every year.

Now…President Lincoln struck on something very important. You may have noticed the date–the country was mired in civil war, and the national mood was bleak. But President Lincoln understood that the mindset of a nation (and a family) is to be protected at all costs. Yes, it may have *seemed* a ceremonial gesture, but I can assure you that if a war-torn nation can turn its eyes upward–so can you and your family.

And, herein lies the wealth secret of Thanksgiving: When you walk in gratitude, you never feel poor.

I told you that I’ve worked with families with seven, eight figures in their bottom line…but some of them are flat-out miserable. Why? They’ve forgotten gratitude, and they can never get enough. Yes, they may *seem* wealthy, but they sure ain’t rich.

“Rich” is a state-of-mind–and it’s tied into gratitude. It can affect how you see savings, retirement and investment. And, of course, gratitude is the enemy of fear. It’s like an opposite magnet for it–walk in gratitude, and fear just melts away.

So, here’s my advice for this week: Whatever financial situation you happen to find yourself in, be thankful. There are hidden blessings in any adversity…and hidden fear-traps in any windfall. Find them, savor the blessings…and watch your family thrive.

How to stay poor

“Carpe diem! Rejoice while you are alive; enjoy the day; live life to the fullest; make the most of what you have. It is later than you think.”
- Horace

Can you feel the holiday “crunch” beginning? In our house, the calendar is beginning to fill up with parties, family activities and much more. Around this time of year, my family sort of begins to brace itself–I’m rather busy once January hits (as you might imagine).

As for the country, well the good news for the economy continues to sort of trickle in…we just found out that retail spending in October was up about 1.4% (driven mostly by some recovery in the auto industry) and, if you’re curious, you can get the full details here:
http://www.bloomberg.com/apps/news?pid=20601103&sid=aSkgY5qdX7B4

And the stock market seems to be moving in a good direction, and that’s always a nice thing for the national psyche (though not always indicative of real economic health, as we have learned).

“Real World” Personal Strategy
Behavior & Attitude Traits of the Poor

In my line of work, I get to conduct a real-time analysis of what creates wealth in the lives of regular families…and what drives it away. I’ve written in the past about some of the commonalities found in the financially secure…and I thought it might be useful to now focus on what I see in those who can’t ever seem to crack those ranks.

And this year is proving to be no exception, as the calendar here at the business is also filling rapidly–end-of-year appointments, tax planning consultations, etc. Do make sure that you contact us to guarantee that we can help you keep your tax bill down for 2009, while there’s still time!

But no matter how much things turn around in the national picture, regular families can continue to wallow in debt and struggle–and sometimes it’s their fault.

Now, the last thing I want to do is shame my clients and friends about the kind of behavior which leads to this situation…so, instead, I’d like to address it in my Personal Strategy Note for the week. That way, you can hold it up as a “mirror” to your own family’s financial habits and make the changes necessary.

As always, making change away from these habits can be difficult–but we’re here to HELP, not make you feel badly about it. So call or email us, and let us know what we can do to walk more closely alongside you in the road to financial recovery…

In my experience, the financially-strapped typically…

* Spend money on things they don’t need: I’m sure we’ve all got one of those friends who just loves to spend money, and buy things just to say they have them. The newest iPhone just came out? They buy it even though they already have an older version. A new TV came out with a higher refresh rate than their current one? They buy one so they can say they have the newest and latest technology.
* Don’t know where their money is going: Far too often people who are broke find themselves short because they’ve never tracked their monthly cash flow and their small expenses are adding up to consume everything they bring in. They really need to track their expenses for a month or two so that they can set up a plan.
* Like to blame their problems on outside forces: People don’t like to see themselves as the source of their problems. While people certainly have problems that aren’t caused by something they’ve done, far too often they will also try to shift blame when they should be looking at themselves. They blame their friends, family and the government. They believe that “the little guy just can’t get ahead”.
* They would rather have others think they are wealthy, than actually be wealthy: People who are always broke like to be seen as wealthy and successful, even if looking that way to others means that they’re actually forfeiting the possibility of being wealthy in reality.
* They don’t plan ahead: Money is short because they haven’t set up a family budget and a saving and spending plan. If you set up a monthly cash flow forecast, and know exactly what you’re going to spend in what categories -they’ll do much better. If you fail to plan you can plan to fail.
* They use credit habitually for “lifestyle” purchases: Delayed gratification isn’t something that they’ve heard of, and if they want something they just put in on credit. After all – it’s at a 0% interest rate for the first 3 months! One purchase leads to another, and before they know it they’ve got thousands in credit card debt!
* Always pay more than they have to: Often people who are broke have gotten there because they don’t know how to shop for a deal, negotiate or ask for a discount. You can get a discount on just about anything – from electronics to health care. Never pay more than you have to!
* Fall prey to lifestyle inflation and “keeping up with the Joneses”: Often people with higher incomes have problems with staying ahead in their budget as well because they fall prey to lifestyle inflation. Instead of banking and saving raises, they raise their standard of living – buying a bigger better house, a new car and a new wardrobe. They feel like they have to keep up appearances with everyone in their neighborhood.
* They rely on others to fix their problems: We’ve probably all known someone who is always going to their parents, family or friends to bail them out. They create a pile of debt, and then rely on the kindness of others to get them out of their bind.
* They forfeit future gains for fun today: These people often have a hard time visualizing how saving and hard work will pay off down the road, and instead live for the fun and pleasures of today. They don’t realize how saving for tomorrow can improve their quality of life today!

Obviously, I’d like to help you move past these behaviors. You may not carry every one of these traits, but just one or two can get you into hot water. If you feel that you’re slipping into any of these traps, please do let us know…we’re here to help as your Family’s Personal Financial Guide.

You get the credit

“The income tax has made more liars out of the American people than golf has.”
-Will Rogers

Your family’s Personal Financial Guide is here, and we’ve got some bad news to start the week…as well as some good news for many from the past weekend.

(Btw, I’m not referring to the healthcare bill passing the House, as I’m not going to wade in to that debate right now–I’ll save my advice for when we finish the legislative process. I’ll just say for now that I’m glad attention is being paid to the issue and leave it there for now. Feel free to send questions, but know that we won’t have any details until a bill is signed by the President, if one makes it through.)

Before I get to the good news, some links and commentary about what it all could mean for your family:

Unemployment hit the not-so-magic 10% threshold last month:
http://www.usatoday.com/money/economy/2009-11-06-jobs-october_N.htm
For many, this is just more noise–and that’s how it should be. It does NOT profit you to fix your eyes on what you cannot control, *especially* when it’s bad news. Keep your head focused on what YOU need to do in order to grow in your job or business…and let the politicians worry about how to respond.

Don’t fall into the trap of letting malaise settle into your heart because of outside factors.

(If YOU are among that 10+%–my heart goes out to you.)

A nice article about year-end tax moves to make sure your 2009 taxes aren’t higher than they should be: http://money.cnn.com/2009/10/27/pf/taxes/year_end_tax_moves.moneymag/index.htm?section=magazines_moneymag
I won’t go into my specific advice for YOU from that, as we’d really need to meet in person for that–so my MAIN advice from this is to give us a call and set up an appointment before year-end.

Our calendar is RAPIDLY filling, so don’t delay on that…it could make hundreds or even thousands of dollars of difference in your bottom line.

So…this week’s Strategy Note is about another bill which was actually passed into law, and something I’ve been talking about for a few weeks. Read on and leave your comments:

“Real World” Personal Strategy
Breaking Down the New HomeBuyer Tax Credit

Last week, a new Homebuyers Tax Credit bill was actually signed into law. The new bill extends the tax credit for first-time homebuyers (FTHBs), as well as opens it up to current homeowners who are looking to buy. And even if you aren’t looking to purchase – pass on this article to anyone you think might be in the market to do so. This is information that might benefit them greatly, and I’ll be happy to be of service to them.

So, here’s what you need to know about the new bill…

NEW Tax Credit for Current Homeowners
This is what’s new and special about this. The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Call us to see if you qualify–it might be the right time to finally make the move you’ve been thinking about…we’ll help you determine if it’s a smart move–or not.

Tax Credit for First-Time Homebuyers
FTHBs (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Deadlines For The New Credits
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010. Those in the military do have some special extensions on the timelines available. Again, we’re here to help.

Credit Vs. Deduction
The benefit of a tax credit is that it’s a dollar-for-dollar benefit, rather than a “tax deduction”, or reduction in a tax liability. If it were simply a deduction, it would only save you $1,000 to $1,500 when all was said and done.

This credit DIRECTLY “pays” your taxes for you. For instance, if a first-time homebuyer who qualified for the entire benefit were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little or no income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

So, it really is like money in your pocket.

Now, there are some income caps, as well as some purchase price caps ($800,000 to be specific).

But if you have any questions…I’m here to help as your Family’s Personal Financial Guide.

Are things looking up?

“The past does not define you, the present does.”
- Jillian Michaels

Phew! I’m feeling rested this week–how about you?

Sure was nice to wake up Sunday morning with an “extra” hour of sleep, thanks to Daylight Savings–well, Daylight “Losings” in this case.

And I’ve got some insight about the current economy–as well as a special offer for you at the end of the email– but I wanted to share some stuff I found about some interesting history with Daylight Savings/Losings…but rather than re-hash its origins (like all of the media), I found these stories about how different people have used it to their advantage…or not:

* A man was actually able to avoid the draft for the Vietnam War using a Daylight Saving Time loophole. When he was born, it was just after midnight, DST. When he was drafted, he successfully argued that in his home state of Delaware, standard time – not DST – was the official time for recording births. So he was technically born on the previous date–which had a much higher draft lottery number – and he was able to avoid being drafted.

* In September 1999, the West Bank was on Daylight Saving Time, while Israel had switched back to standard time. A group of West Bank terrorists prepared some timed bombs – but misunderstood the time change – and the bombs exploded early, killing the terrorists themselves, rather than the intended victims – two busloads of innocent citizens.

* In the 1950s and 60s, each state and locality was permitted to choose start and end DST dates as they desired. During 1965, Minneapolis and St. Paul – which are considered one metropolitan area – didn’t agree on start dates, and for a period of time, these Twin Cities had a one hour time change between them. And on one Ohio to Virginia bus route, passengers technically had to change their watches seven times in 35 miles!

* To keep to their published timetables, Amtrak trains cannot leave a station before the scheduled time. So when the clocks “fall back” in the fall, all trains that are running on time actually stop at 2 am – the official time of DST change – and wait one hour before resuming their routes. In the spring, the routes instantaneously become one hour behind schedule, but they just keep going and do their best to make up the time.

It’s a funny little world we live in, right?

So…this week’s Strategy Note is about some good news we’re starting to see, and what it might mean for you. As usual–we’re here to help with your situation.

“Real World” Personal Strategy
Eye On The Economy

The U.S. Department of Commerce estimated a 3.5 percent jump in annualized GDP growth for the third quarter of 2009, a strong signal that we may be nearing the end, or even be out of, the recession. But this good news is not all it’s cracked up to be.

First, a 3.5 percent jump is a huge rebound from the earlier 6.4 percent and 0.7 percent declines. If anything, the new positive numbers suggest this is a very volatile and uncertain time for the economy.

Second, some of that boost in spending is largely a paper increase because it reflected spending from the Cash for Clunkers program which did little (if anything) to boost long-term economic growth. Consumer spending was simply advanced into the third quarter. While some manufacturing inventories have increased (a good sign) the economy will need to build on sustainable consumer buying power and increased efficiency. We haven’t seen that yet.

Third, uncertainty still hangs over whether the U.S. can manage the debt it’s taken on to bail out the financial sector and the economy. Consumers and businesses are still pessimistic, and talk in Washington of adding more to our debt with a second stimulus isn’t settling any nerves about the long-term prospects of the economy.

We need to remember it took the National Bureau of Economic Research 12 months to officially declare that the economy was in recession because the data was so hard to read. It’s no different now.

As a result, we will need to wait at least until Fourth Quarter GDP results are in before we can even make reasonable speculations about the economy’s health.

I hope this helps!