Financial Advice From Millionaires?

I just finished reading this article where Paul Sullivan, a columnist for the NY Times, meets with an investment group of self-made millionaires called Tiger 21 and they go through all of his finances and then proceed to challenge, or grill, him on what he is doing and why.  There is some sound advice in the article, and I would recommend reading it.  I've linked the article here.

While the advice is good, I have to say I found myself wanting more.  In the article, at the very end, Mr. Sullivan states that the group mostly made their money from having high paying jobs and investing well, or from starting businesses and building them up.  While in the meeting, he makes no mention of whether or not Mr. Sullivan's portfolio is in line with his retirement goals or if he is taking advantage of the investment opportunities that come his way.  In this article, I kept reading about how they were in good financial shape because they save money, but nowhere in the article does it talk about investing wisely and making your money work well for you.  I suppose you can only ask for so much free advise from a group of millionaires.  If you want to join their ranks, you're going to have to learn to think like them and play by their rules.

Good Luck and God Bless!

Getting Paid More From Your Job - Good Luck

So I just read this article on yahoo! finance about how to approach your boss and ask for a raise.  They advise assessing what you are worth inside and outside of the company, using websites that list average salary information for your position, and formulating your request by possibly asking for other non-monetary perks, such as extra vacation time or having them pay for conferences, etc.  It seems that the days of being a top performer and being able to walk into your boss's office and ask for a raise and have an open conversation about it are long over.  I've gone through professional negotiation training in the past, so I'm pretty comfortable negotiating in just about any situation, but when it comes to your salary, as an employee, your power is pretty limited, especially here in Texas.  The only leverage you have is you can leave at anytime (for most employees, the at-will law in Texas holds legal precedence over anything).  However, your employer can also terminate you at any time with or without cause.  You have no additional leverage in your job (short of threatening to leave) unless your employer is nice and feels like you deserve more money.  Here is the link to the article.

Rather than having to go to a boss and asking for a raise, wouldn't it be much more empowering to first strengthen your financial education and then build your own passive cash flow outside of your employment?  That way, if you want a raise, you can find an opportunity out there and build it yourself.  There are many ways that people can strengthen their financial education.  If you would like some guidance on first or next steps, please feel free to send me an email and I will be happy to help.

Good Luck!
Jacob

Finding A Job Versus Finding Cashflow Opportunities

So I have been looking for a new job for almost 3 months now.  In that time, I have viewed hundreds of job postings, submitted a few hundred applications, received a few dozen responses, and had over a dozen interviews.  This has taken hundreds of hours of work to complete.  Once I have a job and know that my family and I can be taken care of for a while, I feel if I take this same hunger and approach and apply it to finding opportunities to increase my passive cashflow, then that will take me even closer to retiring quicker.  Something that has stuck out to me is how methodical finding a job really is.  Even when you utilize your network and reach out to them, it still takes time and effort.  If I am willing to put this much time and effort into finding a job that I do not plan on doing all my life, then how much time and effort should I be putting into finding good strong cashflow opportunities that could potentially set my entire family up for generations of wealth and success?

Is It Better to Save Wisely or Spend Wisely?

So it's been a few months since I've posted to this blog.  A lot of things have been going on, but I'm still happily pressing forward and looking for new ways to retire faster.  Being unemployed right now has given me a slight preview of what retirement could be like, so I know one thing: I won't be the person that just retires and then does nothing.  It's just way too boring.

What prompted me to post a new entry was a couple of articles: one discussed how people can save money in their normal everyday lives, and the other discussed the changes that the wealthy have made in their spending habits in the past few years.  What piqued my interest is how the articles pointed out a very obvious point: almost everyone was hit hard by the recession, yet it seems that the habits that people are trying to change are different based on income.  People that make more money (according to the article) have transitioned to being more cautious about their purchases and finding more value in what they buy, where the article that was targeted for the lower to middle class listed 22 tips to save $100 / week.

Now I could spend my time going through every item on this list and trying as hard as I can to save $100 / week, or I could take that time and effort and either put it into something that may put well more $ than that in my pocket.  Or I could take that time and effort and reinvest it into the things that really matter most, like my family or my education.

Will Your 401(k) Be Enough?

I came across this article today on Yahoo, and the title is enough to make anyone nervous.  "Retiring Boomers Find 401(k) Plans Fall Short".  The first graphic in the article shows that for the median household headed by a 60-62 year old person, they will ultimately fall short of their needed retirement income (85% of current income) by about $30K ($4K if you have a pension).  They ask a financial advisor in the article what his recommendations have been, and for some, it's go work a part time job into your 70's to make up the difference.  I'm only picking and choosing parts of the article to mention here.  I highly recommend reading this article.  But I challenge you to ask questions while you're reading the article.  I've listed just a few here that came to mind.

Why are so many people falling short?
Didn't financial advisors give them good advice?
What can I do with my money to make sure I won't wind up in the same place when I retire?
Is getting a part time job the best way to make money in retirement years?
If pension and 401(k) isn't enough, how else can I invest money to make money?

If anyone comes up with any more questions, please feel free to comment or send me an email with the questions.  I am planning to do a short series of posts here over the course of the next week or two outlining the different asset classes (investments) that exist and what some of the pro's and con's are.

Good Luck!
Jacob Short

What To Do With My Tax Return?

Well now that I've filed my tax return, the next logical step in my thought process is what should I do with the money I'm going to get back soon?  Buy a new TV, video games, maybe some furniture, do some remodeling, new wardrobe for the wife?  There are so many options out there when you're about to receive a large sum of money, and so many companies out there ready to take advantage of the weak-willed.  There are companies ready to give you a loan today based on your expected return, in case you can't wait the 2 weeks for the direct deposit or 3-4 weeks for the check to arrive.  Car dealerships start offering incentives to double your tax return if you put it towards a down payment on a new car.  The best piece of advise I can give you is to plan out what to do with the money you're going to receive from your tax return (if you're due a refund) BEFORE you actually file.  That way you will be less tempted (not completely free, we all have the little devil on our shoulder sometime) to watch that money go away.  In the game of retirement, controlling frivolous spending is as important, if not more important, than making good decisions about investments.  If you're someone that struggles with money discipline, like myself, then I challenge you to decide what to do with your tax refund before filing for your taxes, and sticking with that plan once you actually have the money in your hand.  If you can accomplish that goal, you're one step closer to achieving your financial dreams.

Good Luck!

Jacob

The Wonderful World of Taxes

So I just finished filing my 2010 Tax Return, and am due to get a significant return on my taxes.  There's not really anything I can do to reduce my tax liability during the year because in sales, your commissions are withheld at the highest tax rate.  I've never heard a sufficient answer from any company where I've worked as to why this must be the case, but I suppose it is one way that the IRS can use your money for up to a year until you file your return to get it back.

One of the main reasons why I'm trying to get out of the Rat Race and retire is so I don't have to pay as much taxes.  Percentage wise, the rich have a much smaller tax liability than the poor, and that's because they literally wrote the book on tax law.  I've included a link here to an article that compares 4 of the most common tax prep solutions available, so for those who haven't started filing their taxes and plan to do it themselves, it would be worth a look.

Good luck to everyone getting your hard earned money back from the IRS this tax season!  If you're one of the few that actually gets close to even on their tax return, or winds up owing less than $500, I tip my hat to you.

Jacob