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Jeremy Schalf

About Build and Maintain Financial Wealth

Spend less than you earn

I have seen people who earn $100,000 a year and spend $110,000. They will never build wealth. I have seen people worth over $5 million spend much, much more than they earn and lose everything.

I have seen people earn $60,000 a year, but save $10,000 a year. They are on the path to building wealth (although at an admittedly slow pace.)

Give the IRS as little as possible

Utilize all tax saving techniques available. This is difficult, because most accountants are not familiar with unique tax saving strategies like cash balance plans, K plans, and dash plans, which substantially reduce income taxes while building money for the future.

Many frustrated taxpayers have expressed the opinion accountants are working for the IRS. Most accountants deny this and would argue they represent their clients and are not servants of the IRS.

However, the government has been relentlessly extending varied tax penalty provisions applicable to accountants and advisors to the point where advisors and accountants are caught in a dilemma.

Overly aggressive representation of clients can easily put an accountant or advisor into a position where they can be subject to varied penalties, which might even result in the loss of their license to practice law or accounting in addition to some significant financial penalties.

Invest

Develop and follow a sound long-term investment strategy. Too many people invest based on what they have read or who they have talked to recently.

They often sell out of the stock market after it has dropped. They purchase real estate after the market has gone up for years. They invest in the latest get-rich-quick strategy they saw on an infomercial.

Find ways to reduce taxes and insurance costs with health savings accounts and the insurance swapout process IM. Investigate senior settlements as a way to sell existing life insurance policies and make a substantial profit.

Once you have acquired wealth, pass it to the next generation with trust-owned premium-financed life insurance; A great way to pay for substantial amounts of life insurance at a huge discount.

A 70-year-old male in average health can purchase $2,000,000 of permanent cash value life insurance with an approximate out-of-pocket outlay of about $10,000 per year. If done properly, the proceeds are income and estate tax free.

Psychology of Money

Money messages – your earliest memories about money, often passed down by your parents – influence your financial perspective in an extremely powerful way. For instance, one of my clients has a strong memory of his father putting change in a huge container in the living room every evening, explaining that when it was full, they’d be able to go on a vacation… and teaching the value of saving for a goal. This client uses the same tactic with his kids, tweaking it slightly so they realize that when their containers are full, they can exchange the coins for bills.

Those who were raised to believe that money equates to power, freedom and control are going to behave much differently than those who were taught that money isn’t a good thing. Among the money messages some people learned as a child are:

  • You have to work hard and suffer to earn money.
  • Having a lot of money isn’t “spiritual.”
  • Money is too hard to manage.
  • You’ll never be rich.

If you were brought up with these beliefs, you can actually sabotage yourself as an adult with respect to making financial decisions. Your upbringing will also have a lot to do with whether you’re a prosperity thinker or a poverty thinker.

Those who focus on prosperity believe money is for pleasure, and they derive joy from spending it; money gives them a sense of abundance and optimism, and they believe they’ll always make more. On the other hand, poverty thinkers have a mistrust of money and negative feelings about it; they operate out of pessimism and fear. They’re reluctant to spend money and never feel secure or as if they have “enough,” regardless of the truth about their finances -and their feelings aren’t necessarily based on reality.

Living at either extreme can be a problem; those focused on prosperity need to ensure they’re not living above their means, and those more worried about poverty can look like they are not generous, even to their own family members. As you might imagine, mixed monetary philosophies in marriages can result in significant tension over finances.

Save Money While Avoiding Debt

Debt can cause stress, unhappiness in one’s life, and anxiety. Having too many debts can limit and restrict a person’s options. Having too many debts can also ruin families’ relationships and cause someone to work longer hours and further contribute to all types of health issues.

One reason to avoid debt is that it limits your options. Debts can force you to work long hours in a job you don’t like and limit the amount of quality time you spend with your family. Debts and too many of them can lead to divorce. In fact, expert agrees that the number one reason for divorce is too much debt. Another reason to avoid personal debts is the stringing interest banks are charging you. Too much debt can lead you to file bankruptcy.

Strain of debt usually results in breakups or divorces. In fact, experts cite debt as the number one cause of divorce today. Another reason why we should avoid debt is that it can send us in a never-ending debt cycle that is complicated to get out off. Any type of debt or credit option is stringed with an interest increasing at high rates. If you are unable to act immediately, your finances will be engulfed for long-term, which may result in bankruptcy.

The solution to debts is to save money and do it fast. Another solution is to earn money while saving. You can save money by cutting down on expenses, live within or below your means, and managing a budget. The third solution to debt is avoid personal loans altogether because they come with high interest rates and don’t appreciate in value. If you don’t need that new car, boat, sofas, or furnitures then don’t buy it. If you must purchase then use cash.

Payday Loan Debt

In such cases, the intelligent thing is to opt for a settlement and not sitting and thinking what to do as with every single day, the problem is going to intensify. A short summary of the procedure of payday loan settlement has been listed below.

Firstly, tell the lender that you are presently not in a place to clear the payments. Unfortunately, with this notification, your account will be sent to some collection agency for verification.

Next, ask the collection agency to contact you only through writing. If they refuse, let them know that you are full aware of the consumer rights and as par the national Federal laws, the agency is bound to follow a legal procedure in making transactions.

Inform the agency that you are willing to settle your payday debts. The agencies might try to threat you with necessary legal actions but does not panic as agencies generally never turn to the courts simply because it is not worth neither money nor time.

Hire a payday loan settlement company to negotiate with the collection agency. Hiring experts will not only make the task simpler for you but at the same time speed up the process.

Everyone who has borrowed money at some point of time is certain to realize pretty quickly that it is much easier to borrow but far more than difficult in clearing the debts. With the upcoming of the modern-day debit and credit cards, company’s tries to convince clients to spend more and more using the cards but with the high percent of interest that is charged on these cards, the job of repaying becomes increasingly difficult with time, which often leads to a lifetime burden. Take a look at some of the basic points following which will certainly help to drop credit card debt related issues.

Role Of Debt Negotiation Companies- There is several agencies specialized in debt management that offer competent services related to clearing the dues within a limited span of time. The agencies will take the responsibility to sit with the creditor on behalf of the debtor and convince the creditor to settle for an amount that the defaulter can manage to afford. This way, a part of the dues can be saved which is definitely profitable for the defaulters.

Monthly Payments On Monthly Bills- If you find yourself to be in a messy financial situation,, apart from planning the way out to this problem, another thing you need to do is to try to pay a little more as monthly bills for the cards.

Debt Management Companies

This makes the first logical question that someone dealing with this issue would ask and it would be something along the lines of why they should in fact pay for a service they can get for free? Obviously the free choice on the surface appears to be the way to go and it then simply becomes a matter of locating the particular charity that one will be working with.

The fact of the matter is though that in the UK there are still over four hundred of these debt management companies doing business for profit. This fact should raise the next question which should be how are they maintaining their business when others are giving away the service for nothing? There has to be some sort of viable explanation explaining this. Exactly what are the specific differences that separate these two different potential options?

Let’s try to take a look at both and see if the answer to this question can be discovered. The charity debt management companies offer online at no charge their anonymous advice. The counselling they offer is truly impartial. In many cases for those that feel they require even additional assistance there is often a telephone number provided which they can call. One of the problems with this is that anytime a call is made to that number provided the odds are in favour of the fact that it will be a different person the one calling will be speaking with.

Dealing with a different person every time one calls for further advice and direction complicates the efforts to gain debt negotiation and management resolutions. This is probably the biggest differential between the commercial debt management company and the non-profit charity. The services one is actually paying for are more personalised for exactly that reason. One is assigned to a specific debt counsellor and unless there is some sort of conflict preventing them from getting along well they will stay exclusively with that same person as they work through the entire process.

Although most of the people working for the non-profit charities are well qualified and caring individuals, the fact of the matter is there are also some who lack total knowledge of how to properly deal with the issues. This is not something that happens regularly but it certainly is a consideration to be reckoned with.

It is vital that the final plan arrived at be one that all involved are comfortable working with and in total agreement on continuing. These matters are going to go on for some time and it is important one is totally at ease with that which will eventually lead to a positive conclusion. It is a big decision and only you can make it, as choosing a debt management company can make or break your financial future.

Debt Settlement Companies

Now, how do the debt settlement companies work? These companies work in close collaboration with the banks and financial institutions. Once you approach them they will let you know about their debt settlement help services, which starts with debt counseling. If you are not in favor of this then they go for negotiation with the banks where you have a loan or own a credit card. You may be paying the credit card bills for a quite a long time now but your debt has not decreased due to the high rate of interest. In all such scenario, the amount of time you are paying the due is taken into consideration. If you are paying the card dues for more than 10 years you may possibly get a discount of 50 t0 60 percent of the amount that is remaining and will be able to pay the due within 12 to 60 months in easy EMI and low interest rates.

When choosing a debt settlement company the most important thing is to check for the fees that they are offering. There are many companies that will promise you a service but will fail to deliver. It is best to choose a company that has good experience in this field or gives you a service guarantee.

Debt. This four-letter word can ruin your peace of mind when it becomes bad and takes away all your income and comfort. Debt can arise from many situations such as a divorce in the family, medical expenses, or a legal problem in the family. It can also result from over spending using the credit cards. But when it starts hampering your life, you look for debt relief help, which is the only way out when you want to lead your normal life again.

Debt relief can be attained in many ways from debt consolidation, debt negotiation and reduction to bankruptcy. There are many agencies that will tell you to go for bankruptcy but you need to remember that this is the last option that you may take. Though it may seem the easiest option, the frustration and humiliation that it may bring is not possible for everyone to bear. The good debt relief companies will rather make you go for debt consolidation and credit card debt negotiation.

The debt consolidation measure taken by debt relief companies includes consolidating the debt into one single account with low rate of interest or asking you to take a loan that can repay all the debts. If that does not help you get relief of the debts then you can even go for credit card debt negotiation that can even save 50 percent of the money that you needed to pay to the credit card companies. This is possible only when you have paid the credit card companies for quite a lot of time. You need to pay the remaining due within maximum 60 months in easy installments. The last option is bankruptcy but for that, there are certain processes to follow. The fee company charges depend on the service and you may need to pay them only when you get the benefit.

Levels to Win Financial Freedom

Level I – Handle all bad debt

Bad debt is distinguished by it being used for consumption rather than production. Bad debt typically does not have beneficial tax treatment like good debt does. By getting rid of all bad debt, you’ve established you can budget and you can produce more than you consume. These habits are critical to achieve financial success. In addition, these habits must be learned before anything else can be accomplished.

Level II – Start a Retirement Account and add 10% per year

Retirement is the first goal you should tackle after handling your bad debt because you want to add small amounts of money over a long period of time. You need your money to have a chance to compound over time. So, you need to start a retirement account as early as you can, preferably in your 20’s. I like the automatic investing approach provided by “robo-advisors” such as Wealthfront, Betterment and Personal Capital. The earlier you start, the more time your money has to compound and the easier it will be to retire with enough money.

Level III – Create a Savings Account with three months of expenses

This is an important step and many people try and skip this step. I did. Everything goes fine with your investment account (#4) until it doesn’t. Inevitably, something comes up in life. If you don’t have a cushion built up, all your investments come crashing down at the worst time possible when you have to cash out. Needing to cash out investments early, with bad timing and losses, destroys wealth. Before you can invest, you need a savings cushion of ~three months of expenses, minimum.

Level IV – Start an Investment account (taxable brokerage account)

Your first goal may be to build income for a home payment. Setting up an investment account could go several ways. You could set up a Wealthfront account and use passive index investments like retirement. Or you could open a TD Ameritrade account and invest in particular stocks or ETFs that usually generate a higher return. What determines this is how much time you’re willing to spend on active investment. It’s important to be able to generate consistent returns based on outlined risk.

Level V – Buy a house

Once you are able to generate some return from your investment account and you saved up enough money, the next goal is to buy a house. Buying a house allows anybody to fix the second highest expense, rent as well as creating a forced savings plan. The house is an asset and has the chance for capital appreciation. An additional benefit of real estate is that you can use leverage, in the form of a mortgage, to help boost your returns. Mortgage interest can also be tax-deductible, which makes it favored tax treatment and a good path to increasing annual net income by reducing taxes. A home is an important part of successful financial plans.

Level VI – Build multiple streams of income

Start building income-generating assets. These could include REITs (real estate investment trusts), LPs (limited partnerships), Equity Income Accounts and Fixed Income Accounts, such as municipal bonds and annuities. Now that you’ve finished Level 5 and you’re on Level 6, you’re onto the more advanced aspects of the game. Deferred annuities can be one method. Real estate, in the form of REITs, can be another method. The goal is to invest in income generating assets and start to pay attention to the income and cash flow they generate more than the principal value. There is an investing shift that’s going on where you are less interested in capital appreciation and more interested in cash flow. Buying partial businesses in the form of stocks for equity income, or REITs to invest in real estate, and generate yield, all represent early stage vehicles for cash flow investing. The goal is to build this up to a semi significant amount so that a portion of your expenses are now offset by your newly found cash flow income.

Level VII – Buy cashflow businesses or income-generating real estate

This is the critical level to work on until you can passively produce more income than expenses. OR, build your own growth start-up company you can sell for millions. I distinguish this final stage from the previous stage in that you’re buying “whole” businesses or real estate investments. At the previous stage, you’re buying “portions” of investments in the form of stocks, units of companies or limited partnerships. The final step in the financial game of life is to be able to buy cash flow businesses or income generating real estate in enough quantity that your income is higher than your monthly living expenses. Once you can do that you have won the financial game of life. You are financially free.

Advanced Tax Strategies

Farming has changed from when I was a kid, 60 years ago, growing up on the outskirts of rural Joliet and Kankakee Illinois. Then, many small-time farmers could support their families with a 160-320 acre farm and a part-time job during the winter. Today, farms are huge enterprises and some of the folks I met farm 3,000-10,000 acres. Machinery is costly, with combines costing $300,000 or more. So, one needs a lot of acres to amortize the high cost of machinery.

In the past 5 years, there have been record crop prices, reaching as high as $7 per bushel corn; $16 per bushel soybeans; and $10 per bushel wheat. With high crop prices and large farms operated, net profit form farming is no longer small potatoes. A number of the farmers have net profits of $250,000 to $1,500,000 in a good year. So, they now have more cashflow than ever and therefore tax problems. They also have the cash to do things for the family that were previously unheard of. Let me cover their concerns as well as advanced strategies that are solutions:

I have big profits and want to save income tax: Earlier in 2013, a big farmer came to one of my Mesa, AZ seminars, as he’s a snowbird with a house in Mesa. He’s had as much as $1 million taxable income in the past. The solution was to establish a 401(k) plan and defined benefit pension plan. We added his wife to the payroll and the combined contributions to his July 1, 2012 to June 30, 2013 fiscal year was just under $300,000. This will save him close to $100,000 of tax not just in year 1, but every year that he makes this tax-deductible contribution. As a side benefit, this will also provide a retirement income for the two brothers (non-family) who are his employees and are now currently in their 30’s. For the farmer, his future annual retirement income will exceed $100,000.

None of my kids or grandkids wants to work the farm and I want to provide lifetime income to them: The solution is the Multi-Generational IRA with the Roth IRA conversion strategy. Here’s how it could work for a farmer with 3 daughters and 4 grandkids. None of my client’s 3 daughters (or their husbands) wants to work the farm. In fact, they have moved out-of-state. The 4 grandkids are too young to work the farm and since they won’t grow up in the farm area, they won’t know how to work it once they become adults. Suppose the farmer has $770,000 between his and his wife’s traditional IRA. Suppose the average age of the 4 grandkids is 9. This strategy will create slightly above $8 million of tax-free income over the life of the 4 grandkids. After the farmer and his wife, currently in their late 60’s, die, here’s the projected income to each of the 4 grandkids: $7,000 at age 25; $11,000 at age 35; $17,000 at age 45; $27,000 at age 55; $43,000 at age 65; $69,000 at age 75; and $90,000 at age 80.

Negative Aspects of Consolidating Debt

Finding a debt consolidator company right for you

When you are in the market of consolidating your debt, the number of companies available is not the problem that you have to worry about. Finding the right consolidator for you is what will become the major task.

It will be in your best interest if you compare and contrast multiple companies before making a final decision. The interest rates in which you will have to pay can vary depending on the debt consolidator. What you want is the lowest interest rate possible. If you rush too soon you may miss out on a great opportunity to not only pay back your debt, but save money in the long run.

High interest Rates Can Increase

Unfortunately, it seems that high interest rates are justification of the risk of helping your business. However false this assumption may be, if you miss a payment and do not consult with your debt company or agent specifically to set an alternative payment date, the interest rates could skyrocket even more. This is not a situation you want to be in as you are trying to pay off debt, so make sure that your monthly payments are manageable. In the worse case scenario, call your company and inform them of the situation at the moment.

Possibility of spending more money than you should

Once you begin to re-build your credit after the consolidated debt the improvements in your score will occur. A top-notch credit score may seem like a number you can get more credit with, but it is important you do not get too comfortable. If you end up spending more money than you are putting towards your debt, then you will simply set yourself up for disaster financially and in regards to your credit score.

About Auto Bill of Sale

Seller Pitfalls

The seller usually assumes that once they receive the funds associated with the transaction, they do not need to worry anymore. This is correct as long as the bill of sale is proper and contains an odometer disclosure form. The odometer disclosure form specifics the number mileage on the vehicle the date the ownership is transferred to the seller. This is important down the line in many scenarios that include:

  • The buyer in turn sells the vehicle and alters the mileage on the car in order to obtain a higher price. The new buyer discovers that the mileage was altered and reports the fraud. Without the odometer disclosure form, it is very hard to ascertain if the fraud was committed by the original owner or the second owner. Therefore, a proper bill of sale would ensure the original owner is free from any unforeseen developments.
  • The buyer alters the odometer reading in order get repairs under warranty. As outlined above, again it is almost very difficult to determine who committed the fraud. The last thing the original owner wants is to be liable for something they did not do.

Additionally, a proper auto bill of sale may indicate that the vehicle was sold ‘as is’. This absolves the seller from any misrepresentation demands down the line.

Buyer Pitfalls

The buyer needs to ensure that what they were sold was as promised verbally. A proper auto bill of sale would indicate the particular of the car namely: make, model, vin, mileage, color, body type. Also detailed are the owner’s particulars.

As outlined in the seller section above, the odometer disclosure form would protect they buyer from any fraud committed as a result of changing the mileage on the vehicle.