Archive for the ‘retirement’ Category

Tax Liens Earning 16% WOW!

Wednesday, March 9th, 2011

I have been interested in tax liens for years now and have been on and off learning about them as well. The real estate gurus claim that there are so many liens that go unbidden for and can be picked up easily and earning are so much higher than any bank is playing and much safer because they have real estate backing them up. That is not entirely true in my opinion.

I am an occassional dabbler in tax liens and last year I attended “virtually” a tax lien auction held by Maricopa AZ county. I was able to purchase a couple tax liens and locked in earnings from 12% up to 16%. I was hoping for property but over 90% of all liens in Maricopa as most other counties pay off the liens for property especially since the value of the liens is typically a very low percentage of the value of the property. Even in these times of real estate as the lowest values in years! At the tax sale most of the liens went for 0% which is something I would understand if the purchaser is thinking they have a higher chance of getting the property. Otherwise, why would anyone want to tie up their money for 0%??

Well it’s been a year and all the liens have paid off. So for a year my money earned from 12 to 16 percent interest. Pretty good I think. I also am planning on continue to dabble in the tax lien process and think this will be a nice way for us to spend some time during our retirement. Picture this – us in our diesel RV traveling around the US visiting friends and family and beautiful sights. Everyonce in a while we hit a county near it’s auction time and do a bit of online research and filtering then visit some important properties and bid at the auction. Then we can keep rolling a portion of our invested money into higher interest bearing investment devices. Plus we will be visiting a place with a purpose and the trip will then be tax deductable! Whippee!!

I have a great guide on “Tax Lien Reality Not Fluff” that is available to you. Please contact us on the Contact page and we’ll get you the info.

How many people do you know that have actually purchased a tax lien? Do you see it as a good investment vehicle?

Financial Freedom = Financial Sucess?

Monday, October 11th, 2010

Most people think that financial success is a very visual thing with a high paying job, house in an expensive area, driving expensive cars and spending lavishly on vacations, parties and anything and everything else. But really, does SPENDING money like that mean financial sucess?

Most often not. We have seen this over the last few years. Those people who were on the “top” of the neighborhood silently disappear after the economic downturn and they somehow were not able to hold on to some of their assets. Some lost their homes in foreclosure and short sales and some had to move to lesser digs so that they could then unload their heavy chains of debt loading them down. These folks didn’t do what almost all financial advice says to do as one of the first or second steps. Build up several months of emergency funds to pay for all expenses in case the money stops coming in. Well when times are tough you must have savings to lean on.

Also with real estate I found it very troubling that all the real estate seminars promising that if you follow their directions (and buy into their courses, programs or plans) then you can’t help but get rich. But real estate must be treated differently than any other more liquid investment. If you can’t find a renter and the market values tumble then you have to have that holding emergency source of cash to stay with the long term plan for the long term. It’s also no time to then listen to those gurus telling you that you should have listened to them and gotten out. I believe real estate is a long term investment. I never really bought into the short term get rich real estate methods. That was just too risky because you have to have the staying power if you can’t get out when you wanted to. So since you have to plan for the long term why not work the plan into your nest building?! So take this lesson deeply into heart – real estate is a major investment and you must have a lot of emergency money set aside just for each property.

I love the book the Millionaire Next Door.

In this book you find out and based on research that the average millionaire is someone you don’t think is a millionaire. They don’t waste money on those visual things that most people associate with being wealthy. They buy used cars and drive them ten years, they don’t waste money on super fancy clothing with star studded name brands, and they make it their first priority to pay them selves first! This means that for every dollar they earn they put aside a percentage (at least 10%) into their investments. They learn to live on much less than they earn and this is the real difference. The more you save and invest the faster you will get to financial freedom.

As for Financial Freedom, what does that mean to you? To me it means that you have been investing and have passive income coming in that is equal to or more than your expenses. See this as math problem PassiveIncome minus Expense equals Success
So when Passive income equals Expenses you no longer have to work although you probably still want to do the work that you love. But you get to choose. The second term expenses you want to keep at a minimum, expecially fixed expenses since those can’t be changed as easily. In the Millionaire book you find that Millionaires are somewhat “cheap” (an outdated term if there ever was one) meaning they don’t want to part with even a dollar unless it makes sense. Looking at the math term above if you can keep expenses low then the passive income needed for your financial freedom is that much lower and more easily attainable! Isn’t that reason for doing that?

Bottom line, our country needs to change their perception of financial success, learn about passive income and make saving and investing in our future the number ONE priority!

What do you think? Do you agree or disagree? Please comment and share. Thank you.

Extra Money? What’s better – save more for retirement or pay off your mortgage?

Wednesday, March 18th, 2009

Is your Mortgage longer than your Career?

So you think you are doing fine, you have extra money each month, you are saving pre-tax 401K money for retirement and you are making your mortgage payments and every once in a while putting more into the principle.  The question comes up – what to do with the extra money,  should you put more into your mortgage or should you put more away for retirement.  I would say that most people think they should be putting more into savings but oftentimes that is incorrect.  The fear is more real because remember no one is going to give you a loan for your retirement and with what we keep hearing about social security going bankrupt at some point in the future the fear that we will have to live with the kids and eat top ramen each day surfaces.

One of my clients had that same question and we ran an E-Trades Retirement Quickplanner and came up with this interesting scenario.  Carol (name changed) earned about 90K in salary, has about $220K in retirement and savings.  She has 26 years left on her mortgage but is 13 years away from retiring.  She has about $500 each month to decide what to do with.  She is already putting about $500 a month into her 401K.

In this first picture if she spends the $500 and doesn’t save any of it then she will have a shortage of retirement funds in the amount of $193K



Scary, I know.  Let’s say she decides to plow $500 more dollars into her retirement accounts each month.  What will that do to that shortage?  Well the shortage drops to $99K.  Better but not good enough.


Okay, let’s back up a bit and put that extra $500 into paying the mortgage off.  With United First Financial’s MMA system that 25.6 year mortgage will be paid off in less than 13 years so Carol will go into retirement without her $1500 mortgage payment (expenses lowered to $3250).  Look at that!!  Carol no longer has a shortage but now she has a surplus of $110K

 This was so clear for Carol’s situation (I’m not saying this is what everyone should do).  Using the UFirst MMA her mortgage will be paid off before she enters retirement and so her largest expense will be eliminated and her retirement savings will be able to stretch and cover that much more.  Carol is a firm believer now that she is on the MMA.