Category Archives: Finance

Financial Year End Strategy

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Well it’s almost the conclusion of a long, stressful year and now is the time for me to start on my “year end financial strategy and actions”.

This is the optimal time time of the year (mid December) that I find works for me and my financial year-end strategy and for starting my financial strategy for next year.  By starting to close my financial year end work now, I’m better able to plan my strategy and actions for financially attacking next year.  The idea is to wrap up all of my financial loose-ends for the current year and to place a clean setting for next year’s activities.

So what kind of Year End Financial Planning do I do?

Father Time

Closing Work for My Financial Year End

  1. My first step is to sell my stock losses in my regular brokerage account.  I try to offset as much of the capital gains and other incomes that I have realized so that my tax consequence is minimized as much as possible.  This is a tough one this year, because it might be better to wait until next year when the dividend tax rates are higher, to cash out of these losses (if you have any).  I have side income to take the losses against, so I’m better off taking the losses this year since I didn’t make any estimated payments in advance.  It is important to sell these losses now because it is the settling date of the actually stock trade which is important for tax purposes, and that can take a few days.
  2. Retirement Rebalancing (mostly my 401k) – I don’t always rebalance my portfolio at year end, but with the fiscal cliff coming up quickly, I’m considering the pros and cons of rebalancing now.
  3. I like to pay any bills outstanding online so that I start the new year as stress free as possible.  This enables me to drift a bit at the beginning of the year.  I don’t why, but I like to start the new year this way.
  4. Medical expenses need to be addressed if possible.  Actually, this is my downfall, my son had a serious wound earlier in the year, and if I was thinking better financially, I should have lumped in a lot of medical work that needed done, but since I was sick (vertigo), my mind wasn’t all there.  Kind of ironic actually, when I need the work done and it makes the most financial sense, my mind wasn’t working at that level so I missed the cost saving opportunity.
  5. Tax planning.  Yep, now is the time to think about where I could have improved my tax strategy for this past year, and to make a plan to improve on it next year.

I know that working on your financial year end work seems like it would totally suck, but actually think of it as a positive activity.  Doing it now enables you to create a plan for success instead of letting life give you want it wants.  Of course, even the best thought-out plans may vary from the goal, but not planning at all is the worst plan!

Happy Holidays,

Don

 

Smart People Are Not Always Financially Savvy People

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Smart people don’t always makes the best financial decisions.  Sometimes smart people are not always financially savvy people!  I’m going to illustrate a few stories below of my personal experiences of such people that I respect that you would think are financially clever, but their past history proves otherwise.

As I’ve mentioned in the past, I use to work in the  construction industry during my college days in the summer.  It was good money and actually fun but hard work.  During many a summer, I would work with a John.  This is the guy that I mentioned previously in the article called “Frugally Saving Money By Taking Advantage of an Unusual Opportunity“, in the article I talk about how he threw a deer in the back of his truck that was roadkill, and put in in a freezer at home (after he dressed it…).  Obviously, he was clever and didn’t miss that opportunity that was presented to him.

Plastic Penny

Plastic Penny

Well, the same person had this tendency to go to lunch and have a few beers bought at at bars (along with food to of course).  I was always amazed at how much the bill would be for this (what I considered) huge expenditure for lunch.  Another splurge would be that ever year he’d by the most fancy truck around.  With each year’s truck getting nicer and nicer, to a poor college age student (me), it was mind-boggling!

Now at the same time, every time he would find change on the ground he’d pick it up!  The dichotomy of his financial behavior always had me guessing.  He was a very “fun to be around” person, but also kind of tough.  The other constructions workers would follow the same patterns and the head construction guy.  Each guying newer trucks every other year, and buying the same meals at lunch.  Now a lot of it had to do with the respect of the head guy, but it was a costly respect, at least in my option.

I thoroughly enjoyed my experiences with John the head construction guy at the construction company that I worked at!

My next story is a bit different.  She was an extremely frugal woman and did a great job of saving money, but I don’t think she understood the effects of either inflation nor the principles of compound interest.  While she would look for the best bargains at multiple stores for grocery items, she never accounted for her traveling expenses.  Instead of investing her money in mutual funds, she would hid her money at home, and I believe even under her mattress (only a few thousand under the mattress though).  Some times if you had a keen eye, you’d see the corner of a dollar bill sticking out of a hiding place.

While she was a great saver, and definitely had some money, it will never be as much as she could have had is she had invested that money in money making assets and investments.  She definitely had part of the equation down, and should have more money in the long run than John “the head construction guy”, but she will never have as much as she could have had if she made her money work harder be investing that money in safe investments.

Both individual above, while not college education are very smart people.  If you met them, it’s pretty obvious, but without understanding basic financial principle they both will never have as much as they could have had if they had a basic financial education (or read pf bloggers).

I hope you found my stories interesting, if you has any story you’d like to share in the comments, please do!

Bests,

Don

 

Are Laptops and Smart Devices Worth It?

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By now, if you read my site, you know that I’m about acquiring assets that make money!  But one grey area that I think it worth considering is electronics!  My question is:  Are laptops and smart devices money losers?

In my particular case, I own a laptop that has enabled me to do work in places that I wouldn’t have though that it would be possible!  For example, I was able to crank out a few posts at my local drive-in!  During the movie “Ice Age something”, I was able to crank out articles while the family enjoyed the movie!  Normally, that would be a waste of my time, but with my handy laptop, I was able to pretty much ignore the movie and get my work done!  Actually, my laptop has made me both a more versatile and mobile person!  I’ve written many an article at libraries, coffee shops and while being inconvenienced while waiting from something (like doctor visits).

Apple iPhone

Smart devices make it possible

I find it very refreshing that I’m productive while at these locations (especially the doctor’s office).  Time is valuable, so why waste it!

So in my case, I think my laptop has more than paid for itself, and even though it will be obsolete in a few years, I think it was definitely worth the cost!  I’m very satisfied with my purchase.

Now onto smart phones…  I currently don’t have one (other than the one provided by work), but they are probably similar to my laptop.  In fact, I’m positive that I would use my phone for tweeting and other forms of socialization!  That said, I sure I wouldn’t be able to do the in-depth type of work I can do with my laptop, so I’m not 100% sure that a cell phone would be worth the costs (especially the monthly charge).  One could make the case that it would be cheaper to buy a smart device and use a wireless router for talking at home or common hot points.  Then buy a cheap phone for actually talking (or IMing).

Another problem about smart phones is that the technology is obsolete much more quickly than my laptop.  It seems like smart phones have a life span of about 1.5 years, and they cost as much as my laptop!  Still I see that they can have value, but not near as much as my laptop does!

Do you think that my justification is flawed?  Are they making you money or wasting your time?

Bests,

Don

 

 

Are You Always Ready To Fight Financially?

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In many ways, we are at war on the personal finance front.  We are continually getting bombarded with spending opportunities (really traps and tricks), both from TV and peers.  We need to be ready to fight financially to get the best deals and protect our financial health.

Technology is continually being improved which means that what you buy today is already obsolete and you’ll have to buy something new iPhone X or some other new cool gizmo next year (if not next month).  And both fortunately and unfortunately, those devices really do add value versus the devices of just a few years ago (I consider those devices toys).  I’ve even heard that many are buying smart devices (iPhones, etc) over cars.  So the young people of today would rather have a smart phone than a car!  Wow, that’s a dramatic change from when I was a kid.

Photo by jannoon028

Okay, I went off topic!  The point is that there are so many things and way to buy those things that we, the financially prudent, are in a constant state of battle trying to become wealthy by saving and increasing our money.  It’s not an easy fight to avoid, especially with ourselves!

Tricks & ways that I fight spending consist of not spending on expensive things on the same day that I’ve seen them.  I purposely take my time and think about my purchases rather than just do it.  Ha, the slogan “Just Do It” doesn’t apply to financial intelligence and wealth accumulation, and in fact, it might seriously harm your financial base!

Often with just a little effort and thought, you can find ways to do something cheaper or buy something for a better price.  It’s just a matter of looking for them!  This is why lottery winners lose their wealth so quickly, they don’t have fight a good fight on the financial front!

So don’t “Just Do It”, instead keep your guard up and look for bargains!

Fight hard to win!

Don