About Aunty

Aunty is a new senior citizen and loving this phase of her life. Less responsibilities, less fear of being weird, able to do more of the things that I want to do! Older, yes, slower, yes, but life is even more wonderful in my golden years and I look forward to even goldener ones.

2 Rules for Wealth

2013-04-14_16-16-25Mark Ford writes for the Palm Beach Newsletter.  He recently wrote an article about “Breaking the Chains of Financial Slavery.”  Here are his key points:

Acquiring wealth through some short-term investment strategies is possible, but not probable.

However, in a relatively short period of time, anyone can achieve freedom from financial slavery in just a few years.  It does not have to be a lifelong process.

 

If you are in a financial slavery situation , here are five wealth-building strategies to get you out and moving in the opposite direction.
First of all though, what does financial slavery mean?  Most commonly it means two things:

You earn less than you spend.

You owe more than you own.

 

If you earn less than you spend, you are in a constant state of stress. You must put off or partially pay your bills. You must appease creditors. And all the while, your debt is mounting.
If you owe more than you own, then you can’t buy a house or lease a car or get a loan from anyone other than your parents. (And what if they are dead or tired of helping you…or don’t have the money?)
Because you are in so much trouble, you can’t even think about taking nice vacations or retiring someday. Instead, you have to worry about losing your job. So you keep working and reading investment newsletters. But as each month passes, your financial situation gets worse.
It’s a miserable existence. But it doesn’t have to last. You can break the chains you feel attached to by simply recognizing and reversing the two “facts” mentioned above.
Problem #1: You earn less than you spend.
Solution (Rule #1): Spend less and earn more.

Spend Less
You can’t break the chains of slavery without hitting them hard with a big mallet. You won’t be able to gain the independence you want in a few years or less by cutting $10 here and $50 there.
The recommendation is to cut your expenses by 30% to 50%.
That sounds crazy. And it may be impossible in your case. But don’t dismiss the idea until you understand the concept. The primary factor in how much you spend every month is the neighborhood you live in. Your neighborhood creates the financial culture that presents the spending choices you make. If you live in a community of million-dollar homes, you will be looking at new BMWs and Audis when it comes to buying or leasing a car. When you go out to dinner, chances are, you’ll be spending more than a hundred dollars per couple.
Unless you live in a working-class neighborhood now, you can radically reduce your spending by moving into one.
We all know people (maybe even friends and relatives) that live in expensive homes in beautiful neighborhoods and drive luxury cars, but the reality is they are broke and getting poorer every month. They refuse to even consider the idea of downsizing because they are simply too ashamed to do so. What they don’t realize is every month they try to “hold on,” it is making them poorer.
Moving to a less expensive neighborhood would be the quickest, biggest, and surest way to bring their spending down by 30% to 50%.
Earn More
The other thing you must do to improve your situation is to earn more money. You should take immediate steps to increase your income by 20% to 50%. That seems radical, but if you want a “short-term” solution out of financial slavery, this is just as important as radically cutting expenses.
There are dozens of ways to increase your income.  Take some time to figure out what those ways can be for yourself.  [For Aunty, it might be network marketing a truly great product that I believe in.  Or, cashflow from real estate investments.  Or selling my “valuable” clutter on eBay and Amazon.]
Problem #2: You owe more than you own.
Solution (Rule #2): Start owing less and owning more.

Owe Less
If you have accumulated a lot of debt, it means that you don’t see debt as financially dangerous. You must accept the fact that most debt you have is bad for you. There are only a few exceptions: mortgage debt when interest rates are low, and business debt when the business is sound and you are not personally liable.
The first step towards debt management is to get rid of every credit card you have, as well as any credit you have with your bankers. Use cash or debit cards for your shopping. Yes, that means there will be lots of things you can’t buy every month. That’s a good thing, not a bad thing. [True, that.  But Aunty loves her Hawaiian Miles VISA cards because of the miles – but I make sure I don’t charge too much and I always pay off the balance in full to avoid any finance charges.]
If you have a lot of existing credit card debt, you need to consolidate it. Then work with a professional to pay it off at reasonable interest rates.
If you are lucky enough to have equity in your home, then trading it for a cheaper one (see above) will accomplish two important goals: it will reduce your monthly expenses, and it will give you a chunk of cash that you can use to pay off debt or put aside as savings.
Own More
You must increase what you own. And by that, I do NOT mean cars or boats or furniture or toys. I mean tangible assets that are likely to appreciate such as gold coins, income-producing real estate, dividend producing stocks, etc.
Every extra after-tax dollar you make by taking on extra work or starting a side business should be devoted to increasing your ownership of such assets. None of it should be spent.
Being financially independent is not about having a big house or driving new cars or taking fancy vacations. There are tens of thousands of Americans in that situation today who are financial slaves just like you. They are in chains because they spend more than they make and owe more than they own. Their stress is just as great as yours, even though they may make more money or have more toys.
Being financially independent means having more income than you need and owing far less than you own.
It means knowing that you won’t be harassed by bill collectors or embarrassed at the supermarket. It means you have money put aside to take care of any emergencies that come up, and it means a savings account that gets substantially bigger every year.
Becoming a multimillionaire takes years. But breaking the chains of financial slavery can be done relatively quickly. The hardest part is recognizing the chains that are binding you—earning less than you spend and owing more than you own—and deciding to do something serious about them.

Donna Kato and Polymer Clay

In my stumbling around using different art mediums, I have had the privilege of meeting and learning from some of the finest artists in their field.

Polymer clay (some call it Fimo the way you say Kleenex instead of tissues) is instant gratification.  What you work with is what you get.

My absolute favorite teacher of the medium is Donna Kato.  She calls me kiddo!  LOL!  Actually I think she calls almost everyone kiddo even though she is the same age as me.  She sure doesn’t look it!

She even has a clay named after her – Kato Polyclay by Van Aken.  How cool is that!  It also happens to be the BEST polymer clay on the planet – easy to condition, holds firm in canes, is super strong after firing, least toxic of the clays.  I have given away my other clays because I am now too spoiled with how wonderful Kato Polyclay is now.

When I grow up, I’m going to play even more with polymer clay.  It will be my reward during our retirement years of leisure.

Beauty tips

2013-04-01_15-35-37This is a page dedicated to all of us non-beauty queens who just want to look a bit better than usual with the least amount of effort.

First of all, smile.  Nothing makes your face look better than a genuine smile.

I also firmly believe in brushing my teeth with toothpaste after I drink my morning coffee.  Keeps my teeth white rather than brown and yellow.  I know this is hard if you work in an office but do what you can to get the coffee off your teeth.

To prevent those sun spots and skin discolorations in the first place, use a good sunscreen (I use Neutrogena spf 70 that I get at the Nordstrom Rack or Costco) and wear a hat or visor whenever you go out in the sun.  For some reason, young folk don’t have this problem, but one day, all of a sudden, they will have the sun spots too – take it from Aunty.  At that time they will wish they wore hats and sunscreen.

Aunty latest and greatest find is NeriumAD.  This is a night cream that is amazing in its science, results, and business opportunity.  After the first 2 weeks, Uncle said my face was glowing – and so was his!  I have Elaine of the Green Valley Ranch Spa keeping tabs on my rather dark sun spots since I see her about once every month or two.  At my last treatment, she said the spots are beginning to break up – which is great!  Aunty has tried almost everything and was about to try Obagi – the very complex (5 step process 2x a day for 2 months), very invasive (your skin actually peels off and leaves skin looking raw), very scary (some people have permanent sunburn damage if they do not take care during the treatment) through a dermatologist since this is a prescription based product and treatment.  Aunty is very glad to be introduced to NeriumAD – the product and the company, and Aunty is now a distributor of this excellent age defying night cream at aunty.nerium.com, and did a review of the business on a Review page.

Although facials could be classified as doodads, they become a worthwhile expense because of the benefits and how good it makes Aunty feel (and look)!  I make it a point to get a facial whenever I travel to Vegas (Elaine at the Green Valley Ranch Spa) because of how Aunty feels like her skin shrivels up and dries over there.

To have beautiful clean hair, use Neuma shampoos and conditioners.  I buy mine at BOSS Beauty Outlet Supply on Nimitz next to the AAA Hawaii store.  I love the Neuma Volume products – it has the added bonus of smelling wonderful!  [Update – now Aunty uses Aveda’s Volumizing Shampoo with its Conditioner thanks to pal Patricia.  It almost seems to make my hair feel tangled when shampooing, and really does give volume and boost to Aunty’s locks.]

Master Hong says to eat 7 dates a day to maintain beauty.  I got the big tub from Costco, and ate 4 a day until I ran out.  Not sure if it made a difference, but it was quite nice and delicious to eat with my morning cereal.

Eat a good diet, exercise, and get your sleep.  Simple and real.  If you don’t eat that well, make sure you take supplements.  I take one or two capsules of Super Food 100 daily from the American Botanical Company. I also take a capsule of Intestinal Correctional #1 (from American Botanical) every evening with dinner.  A potty a day is good for you.

For the last 10 months, Aunty has taken Protandim by LifeVantage.  Aunty’s review of it in on a Review Page of the products and the company.  Protandim is a wonderful daily supplement and has helped my energy levels, joint strength, and brain fog.  I feel less stressed in general, and I will take this little yellow tablet forever.

Facial yoga for double chins:  Put your fist under your chin with your mouth closed.  Giving slight resistance with your fist, open and close your mouth slowly.  I suppose you could do this while standing in line at the bank, but you might look a bit strange.  Aunty just got the PY Neckline Slimmer for herself.  Possibly working, easy to use.  Buy it from Amazon.com or eBay.com, sometimes you get free shipping.  Also, when no one is looking, do “EEEEE”s to help jowls look less saggy.  If you do those in public, you will look scary.

While standing in line, do your kegels.  This is when you squeeze or contract your pelvic muscle.  Makes your butt firmer, and has other benefits.  Five seconds at a time should do it.

Master Hong says that the perineum muscle (area between anus and the other stuff) is the base of your body pyramid.  He teaches several exercises on a slant board for health and beauty benefits.  One of the easiest to describe and do is to stand straight with arms to your side, and place both feet together on a slant board (with your toes higher than your heels).  Contract your perineum as you inhale through your nose.  As you contract and inhale, let the energy from the perineum rise up your back through your spinal cord, up to the top of your head, and then release your breath through your mouth, relax your contraction, and let the energy go down through the front side of your body.  The higher the slant of the board, the more your body will respond and need correction (i.e. crooked stance or head tilted to one side).  Although this exercise works best on the slant board, it also works just standing in the bank line.

To combat dry hands and feet, vaseline can be your best friend.  Just before bedtime, put a good layer of vaseline on your hands and then put on a pair of old cotton gloves.  You can use latex gloves but you will get sweaty hands and the latex will start to disintegrate.  For your dry feet, slather on some vaseline, and put your feet in socks, then go to sleep.  When you wake up in the morning, your hands and feet will be soft and moisturized.

Attended a facial massage class at the Kapiolani Women’s Medical Center recently.  It is well worth the few dollars to attend, but Aunty found it to be a lot of work gently pushing on pressure points.  Much more luxurious and wonderful is to have a fantastic whole body shiatsu by Dick Murakami at Hikari Shiatsu.

For us more mature gracious ladies (i.e. older), Aunty wrote a new page Just for Aunties.  We need a bit more help than young people in order to look decent.

Please leave a comment below if you have any tips for beauty to share.  Mahalo in advance!

Love and Marriage

2013-04-01_13-19-54The single most important decision to make in life is to marry a good person, if you plan to be married, that is.

We are all attracted to the good looking ones, but as Uncle says, it is the heart that counts.  I lucked out because I was attracted to Uncle who is a real hunk, but he also has a heart of gold with a smattering of local yokel rowdiness.  Uncle and I have a really great marriage.  He cherishes me, even with all my faults, grey hair, clutter, and idiosyncrasies.  That is love.

As his wife, I use the “Tuesday” rule (when I remember) since I can be a pain in the butt and don’t want to be a nag.  If Uncle does something I don’t like – like leaving his fishing pole in the way or not putting the cover on the toothpaste, I ask myself, “Will this matter next Tuesday?”  If it will matter, I bitch away (I AM trying to say things more diplomatically nowadays).  If it won’t matter, I just suck it up and don’t say anything.  It’s not worth the sour taste if it’s not that important.  [update:  I have never, ever regretted using the Tuesday rule.  Uncle is obliviously happy and I might have some teeth marks on my lower lip because of the effort needed to hold in my comments not mattering in the Tuesday test, but it has been worth it.  For sure enough, Tuesday comes and goes, and whatever it was that bugged me the week before, it really didn’t matter worth squat a week later.]

Menopause is something else.  It is the worst period in a woman’s life but even worse for husband and family.  It is also a period of power and some never get over it.  I think it is the test of a marriage.  If you’ve passed the test, congratulations.

Also, advice from Alice Kong (girlfriend’s mom) – always wear lipstick.  It makes a difference in how you look, and you should always try to look half way decent in front of the most important person in your life.  Please check out Aunty’s pages on Beauty when you have time.

That’s another thing.  Your spouse is the most important person in your life.  That is who you chose, and they chose you.

At a recent Wealth Summit here in Honolulu, Ian Plummer, a color expert, gave a brief summary of using color to help people in their relationships.  I was very impressed and thought I knew what color I was as he described the traits, especially the not so good stuff.  Here is an Aunty page on the theory, although I suggest you go to the website and take the test.

I feel that being able to understand the other person’s core motivation can be used to enhance any relationship.

Back in college we were given the Briggs Myers personality test, and I was an INTP (Introvert, iNtuitive, Thinker, Perceiver) type.  It is rather fun to know and be “typed”.  Just this year, I took the same type of test, called the Jung Typology test, and I was still an INTP.  I believe Uncle is the exact opposite of me – an ESFJ.  This may be why we get along so well.

For a good marriage, respect is paramount.  With respect, comes trust and actually liking your spouse.

Aunty constantly looks at a quote from the Dalai Lama:  “Be kind whenever possible….. It is always possible.”  It applies to everyone for everything.  It makes for peace, goodwill, and a very happy Uncle – when Aunty remembers.

Supplements

IMG_0769Aunty will share what she currently takes and when Protandim comes up, it will sound like a sales pitch, so sorry in advance, but it is worth pitching, imo.

Uncle swears by Super Food from American Botanical.  It is all the best green food stuff compressed into a green tablet.  Everyday, Uncle takes about 4 of them.  I take 2 if I remember.  This is a very good nutritional supplement especially since I don’t eat enough vegetables.  Dark green leafy vegetables, spirulina, blue green wheat grass, etc. are easier for Aunty in a tablet form so it works for now.  I just wish it looked, tasted, and felt like a crispy fried piece of bacon – one of Aunty’s absolute favorite bad foods.

Strontium is more acceptable because of its properties and lack of side effects for bone building than calcium supplements.  Aunty’s once every 5 year (I know I’d better go more often) checkup revealed low bone density so this is what Aunty takes, one a day.  Good friend and nutritional UH professor Alan Titchenal sent over the info and here is the page on it.

One a day Protandim by LifeVantage is really something.  Aunty has more energy throughout the day, wakes up refreshed and clear eyed, feels mentally sharp again, and also sexier.  Fingernails are stronger, stiffness and pain in the hands have diminished drastically, and I think I am handling stress a bit better (but Uncle and the kids would know more definitely.)  Aunty has a page on Protandim for more blow by blow under the Review pages.  If you sign up as a preferred customer on monthly autoship and you continue for 6 months, you will get a FREE bottle of TrueScience Anti-Aging creme – that’s a good deal since the creme is rather expensive – $70!  If you do sign up to be a distributor (possible to make good commissions) or preferred customer, Aunty does get a nice commission the very first month.  The company provides each distributor with their own business website, and Aunty’s website is mylifevantage.com/aunty.

Another product that Aunty takes once a day forever is Dr. Schulze’s Intestinal Correctional Formula #1 from the American Botanical Company.  With it, Aunty “goes” in the morning, guarans ball barans.  That is very important for good health.  Each person needs to find the right dosage, and happily Aunty has been able to decrease her daily dosage to one a day.  Like the Dalai Lama, Aunty also smiles in the bathroom.

Of course eating a healthy gatherer/hunter diet is the ideal as well as doing daily exercise, but for now Aunty is being lazy and having supplements as I slowly (very slowly) transition to the healthier choices and lifestyle is a blessing and a regime that I can easily stick to.

Nattokinese is denatured natto (the stinky slimy stuff made from soybeans that is great for the health) and because one of the properties of natto is blasting away clots in the blood, Aunty takes it whenever she has a headache – just in case it is blockage.  It always works for Aunty, so this is one of the “must haves” in the pill arsenal that is always kept on hand.

I have recently been introduced to Kyani (yup, Aunty signed up, lol)).  Not sure how well it works yet, but will post a review when the results come in.  [note:  Uncle’s papa likes Kyani – he has diabetes and his black looking leg has gotten better, or so he says.  As for Aunty, I think the juice tastes good, especially the one in the packet, and I keep a little bottle of the Nitro Extreme in the purse and take squirts from time to time, but I really cannot say if it works or not.]

What do you use for your good health/beauty/happiness?

Be wary, Be careful

This was sent by concerned friends/family and is worth reprinting here.  Bad people preying on other people’s kindness is becoming a dangerous and repulsive ploy.  Like the police sargeant in that New York Blues police show (forgot the name) would say just prior to releasing his group after briefing, “Hey!  Be careful out there..”

Want to let you all know of a true story.  Sherri’s (Aunty JoAnne’s daughter) friend’s mother was at Walmart on Keeaumoku St. and was walking to her car in the parking garage when she passed a car and saw an old lady slouched down between two cars and moaning .  She was ready to go and help this lady but was also a bit scared because of a lot of bad things that seem to happen when you offer assistance.  She stood for a few seconds then walked passed the car and called 911.  She thought it was odd that the moaning from that old looking lady was not as loud so when she walked back to see this lady but from a distance, the moaning started to be loud again.  Well, she said that HPD came so fast and when she waved them down, one of three HPD cars stopped right where she was.  This old lady got up and started to run.  She was apprehended by several HPD officers that responded and store security.  Turned out that this lady was a man and he had a big blade knife in his duster that he tried using to fight off the officers.  He was apprehended.  Sherri said if it were her mother-in-law who saw this guy dressed like an old lady, she would have immediately gone over to help and could have gotten seriously injured or killed (her mother-in-law likes to help seniors).

Sherri shared this story with us when we were at dinner one night and said she always receive emails with similar stories but was never sure if they were true.  She said this is so true and her friend’s mom was so shaken up when she realized that she could have been in danger.  I guess we must all be very cautious in parking lots, public restrooms, parks, stores and even on roadways.  I still remember the young lady driving on the Pali highway many years ago who pulled over when a car in the back of her put on his blue light.  She was never found after that.  The thing is, this guy’s blue light was in his car grill.  Cops never have blue lights in their grills.

Anyway, be safe and be aware of your surroundings as you walk, get in your car, strap in children, etc.  Be careful getting in your car especially when parked next to a van.

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Here’s a tip about your car’s GPS from friend Cynthia of M&H’s kitchen:

“Don’t program your home’s exact location into your GPS.  Incidents are occuring where GPS are stolen from cars and all they have to do is hit home on your GPS and instantly they are at your house when you are not.
Program a commercial place nearby that you can get home from, such as your local police station, a bar or the pharmacy as your home. Be careful when naming your other contacts such as your parents house, better to say police, shoe store, soccer game and such.
I learned this from a fellow RE/MAX Agent at our retreat. He said it’s happening at Yankee games. The thieves know where you will be for the next 4 hours. I thought it was brilliant when he said he programmed the 22nd Precinct to his. Tell all your friends to do the same.”

Checkbook IRA for investing

2013-04-15_08-37-55Why use retirement funds for real estate investing?

The self directed IRA is possibly the absolute best way to buy investment real estate because of its tax advantages and asset protection, with full control by you as the manager or administrator.  When you are 59 1/2 years old, distributions can be made without penalty, giving you so many options to invest with full access to funds if you need them for your daily expenses or possible splurges.

Is it legal?

Almost every financial institute has self directed IRAs.  In order to invest in real estate with a self directed IRA, many traditional financial institutions do not allow it and might tell you that you can’t.

If they tell you “no”, please know that you can.  You just need to find the institutions that will work with you in the proper way to get it done.

Who to use?

In the past, we had a PENSCO account for our self directed IRA, because they allowed real estate investing.  PENSCO’s customer service is good – I was assigned an agent who was willing and able to answer my questions.  It is one of the bigger companies, similar to Entrust.  However, bigger companies charge bigger fees.  I usually don’t mind paying fees especially if I am not sure about what I am doing, but this time, I wanted to limit administrative expenses and have a more hands-on approach to actually buying investments that make sense to me.  It would mean understanding how to invest the proper and legal way so I could repeat the process by myself.  I knew that the first one has the biggest learning hurdle.

Through Jeff Brown of BawldGuy.com, I found John Park of PGI Agency.  John knew the ins and outs of investing with IRAs, and his flat, initial, one time fee is reasonable.  I figured that the savings I would have NOT using PENSCO or Entrust with their $500 per year fee (charged quarterly) and transaction charges would pay for John’s fee in no time, especially since he gave Uncle and I a discount deal which was very sweet of him.

Currently, we are recommending using Jordan Sheppard of CheckbookIRA.com because of their larger support staff, great blog and expert timely answers to our questions.

Find a good facilitator (i.e. the folks at CheckbookIRA.com).  They are worth gold, especially in the beginning when you know the least.  The facilitator can be your agent.  You do need an agent to file for your LLC(s).

Step 1 – Opening the account with IRA Services Trust

Our facilitator filled out the IRA Services Trust application form found on their website, IRAservices.com.  Name on the account is your name, address, social security number, etc.  These are individual accounts, so I had one and Uncle had one.  IRA Services Trust will be the custodian of the self directed account and will hold the money initially.  Uncle and I are the individual owners of the IRA accounts.

The reason we switched to IRA Services Trust from PENSCO is because of their low annual fees – $108 annually, $160 to start, which includes the 1st year’s fees.  This was a big difference to Uncle and I because we will have 2 accounts – one for each of us, so instead of $1000 ($500 x 2) per year, every year, we pay $216 ($108 x 2) per year.   If you have gazillions in your account, then low fees don’t matter much.  However, if you are starting out and only have a few thousand in your account, low fees are important – otherwise your principal balance is eaten away with rather big bites by quarterly, annual, or transactional fees.

Our facilitator,  John Park, was designated as a “representative” who is able to talk to them about our account.  You will not be giving up control of the account.  Rather, a facilitator can hold your hand and set up accounts, entities, etc. on your behalf.  A facilitator is optional, but highly recommended.  John Park filled out our forms and signed on as our representative.

In order to convert and/or invest in a self-directed IRA, you must hire a custodian (in our case it is IRA Services Trust).  By law, an IRS custodian cannot offer investment advice to its clients.  The custodian will also be signing your LLC’s operating agreement.

IRA Services Trust acts as our passive custodian – monitoring how much we put in and how much we take out, as well as reporting everything to the IRS at the end of the year for tax purposes.

So step one is to find a facilitator and have them set up the self directed IRA with a custodian, the right way.

Step 2 – Funding the account

PENSCO was gracious as we had them transfer the all of our PENSCO funds outta there into our new IRA Services Trust account.  The PENSCO account was then automatically closed (though you should make sure after the dust settles.)  We also had a few dollars in a retirement account with Ameritrade that we transferred in after the IRA Services Trust account was opened.  Transfer funding forms are located in the “Forms” menu, then “Funding Your Account”, then “Transfer Authorization.”  Be sure to read and follow the instructions.  A copy of the latest statement and a wet signature is required.  These are to be mailed to IRA Services address on the form.

If you are opening an account with “new” money, i.e. making a deposit, fill out the “Deposit Information” form.  You will specify the type of IRA as well as the year for which it applies.

*Aunty will write another page about using banks and/or Ameritrade to rollover funds.

Step 3 – Setting up the LLC, by an agent

Our agent facilitator filed for our LLCs with the State of Hawaii (you choose the State in which you will do business).  You get to choose a name that you will be happy with.  You can check to see if that name is already taken by visiting the Hawaii.gov website, going to “Business Name Search” and entering the name you are considering using.

The business name can be registered online by your agent.  The Hawaii fees are $25 + $50 for registering an LLC.  After that, the Hawaii licensing renewal is $12.50 per year – which is REALLY low compared to States like California or even Nevada (where rates have increased).  These fees can be paid with personal funds, the agent’s funds, or with corporate funds.  They can be paid with the IRA funds, but that can be cumbersome trying to get the custodian (IRA Services Trust) to send over a check made out to the State of Hawaii DCCA for $25.  Fees are one of the items that can be paid for personally and it makes a lot more sense to do this rather than taking it out of your precious IRA funds.

When registering your business, it will be as a manager managed LLC (you will be the manager and have control).  This LLC will be the vehicle in which you will conduct real estate transactions.  Your IRA will be “buying” the LLC.

After John successfully applied for our LLC business name and registration and the entity (LLC) was approved, he contacted the IRS for its EIN number (employer’s identification number even if you have no employees).  This number becomes the entity’s identification number – the way your Social Security number is your own personal identification number.  I like dealing with EINs rather than Social Security numbers because it put me at less risk personally – especially for preventing identity theft.  Each LLC will have its own EIN number and Operating Agreement.

Make sure the agent you hire is knowledgeable in setting up checkbook IRAs.  They are few and far between so please do not settle for a financial advisor who really does not normally do these.

You can have more than one LLC for your IRA.  If so, use an agent to file for the LLC business registration and open separate checking accounts for each LLC.

Step 4 – Opening a business checking account for the LLC

After I received the LLC’s Articles of Organization, proof of registration from the State, and the IRS letter with EIN number, I opened a business checking account with our local bank – Bank of Hawaii with my favorite “nephews” Davin and Israel.  You will need to have these documents to show to the bank in order to open your business checking account.

The initial deposit was a check from IRA Services (custodian) from our retirement account.  Do NOT fund any part of the account with personal funds.  Remember, like a mantra, “Your IRA cannot benefit from you personally, and you cannot benefit from the IRA personally”.

It is VERY important that all deposits, funding and payouts are strictly done with the IRA account monies.  Do NOT use personal funds to fund this account – even upon start up.  Your banker might tell you different, but insist that the initial deposit to open the account is from your IRA account, not from any other account or cash from your pocket.

To do this, we sent in an  IRA Services Trust form, “investment authorization form”.  It specified that $x from the IRA account be used to purchase the LLC.  A check was then sent to us, made out to the LLC.  This is what we took to the bank and used as the opening deposit.  All subsequent deposits are done the same way.

The most important mantra you can use is one that the IRS will use:  Your IRA cannot benefit from you personally, and you cannot benefit from the IRA personally.  If you do not pass this test, you may be subject to fees associated with early withdrawals and disbursements, or worse.

*note – you will have to pay an annual State filing renewal fee, so be careful of which State your entity is filed.  as of 2011, Texas is $300 initial year, $150 annual renewal.  Nevada is $300 (? not sure) initially, $400 annually.  Hawaii is really cheap – $25 + around $50 initially, then $12.50 annually (!)  Such a deal, but you do NOT have the anonymity and/or the business friendly courts of Nevada or Texas.

Step 5 – Buying real estate with your LLC (that is owned by your IRA)

Now comes the fun part – go shopping.  Look for properties that will cash flow or that you believe will flip profitably.  You can go all cash into the deals, and use your new business checking account for all offers, expenses, fees, etc.  All income or proceeds from the sale must either get deposited into the LLC business account or directly to IRA Services (our custodian).

Make offers in the name of the LLC, with you as the administrator.  The LLC will own the property, 100% and all profits, expenses flow to and from the LLC without personal funds comingling – ever.

If your IRA does not have enough to fully fund the deal and all the expenses, the IRA can be come a part owner in the investment.  Income and expenses are split according to the percentage of ownership, and the titling would reflect the custodian account with your name, IRA, and percentage (XYZ Trust Company, custodian FBO Your Name, IRA, 50% undivided interest).  Your IRA will not own the property in the entirety and whoever you partner with should think the way you do in order for a mutually beneficial partnership and business venture.  Be careful that the other part owner is not you, your close relatives, or any other business entity that you are part of.  (remember the mantra…Your IRA cannot benefit from you personally, and you cannot benefit from the IRA personally.)

If your IRA/LLC has limited funds, a non-recourse loan from a non-recourse lender can be the means to acquire cash flow property.  The IRA/LLC would be providing a down payment and responsible for all other fees in the transaction, and the balance would be provided by a mortgage lender.  The property is owned by and titled to the LLC, of which your IRA is the owner manager, and the note is owned by the bank.

The beauty of these loans is that the loan is strictly based on the property and NOT on your credit worthiness or outstanding loans or your personal debt to income ratios.  Hallelujah for that!   This is a great strategy for small accounts or people with bad credit history.

North American Savings Bank is the largest lender for this type of loan.  NASB will loan different percentages of LTV for single family homes in the depending on where.  At the current writing of this article, NASB does not write loans at all for Las Vegas, and 60% LTV loans for Hawaii properties.

However, investing with a loan will make the investment income/sale subject to UBIT – unrelated business income tax.  It sounds complicated with many formulas for this and that so we would rather buy the all-in way just to avoid the complications and tax consequences.   This does limit how much we can buy, but slow and steady wins the race, in Aunty’s opinion.  Please do your own research on UBIT.  For now, Aunty is just staying away from that.

Congratulations, now your LLC is the owner of a property!

Step 6 – Hands off except for writing checks

Find a great property manager and rehabber.  You cannot manage the property, stay in the property, allow family to stay there, or physically benefit from owning the property in any way.  (remember the mantra…)  That also means you can’t be the cheap labor and paint, fix up, rehab the property and pay for expenses, or get paid for services.  ALL rehab and subsequent expenses must come from the IRA/LLC, period.

It is not worth saving a few bucks to get into the IRS’s cross hairs – so hire professionals and write them the checks for jobs well done from your IRA/LLC checking account.

You will always need a cushion in your IRA/LLC account – especially in the first few months when your cash flow is $zero and your expenses come in.  All of these expenses must be paid with your IRA/LLC funds.  Sorry to be redundant, but remember the mantra, remember the mantra…..  Because it is a checkbook IRA, you cannot just deposit personal funds into the account to cover expenses.

Mixing personal funds and/or time and/or benefits will get you into trouble and your entire investment may be deemed to be a disbursement.

Step 7 – Tadaaaa!!!  Reap and sow and watch it grow

At this point you will start to feel on familiar ground if you have cash flow rentals or done flip deals.  Income in, expenses out.  Buy low, sell higher.

The difference in investing with your IRA properly is that you now have ZERO tax consequences.  ZERO!!!  Except on the roulette table, zero is now my favorite number!

Tax filing?  ZERO!  Taxes to pay?  ZERO!  Flip a property and make a huge profit?  ZERO taxes!  Getting good net returns from the rental income?  ZERO taxes!

So long as you follow the rules and remember the mantra, you now own the golden pot that keeps on giving.

Expenses of real estate owned by the IRA

Be careful and remember the mantra “Your IRA cannot benefit from you personally, and you cannot benefit from the IRA personally”.

Many agents, sales people, financial consultants, bankers, etc. do not understand or know about the importance of this mantra.  Once you have established an IRA, all expenses, profits, fees, commisions, payments, must be made to or by the IRA either directly from the custodian or the LLC.

Insurance

Aunty almost got tripped up recently when securing a quote from our AAA homeowners insurance agent.  AAA does not write policies for companies, only to individuals (though a company or entity can be named as the additional insured).  After conferring with John Park, I needed to find an insurance company that does write homeowner policies for companies.  The reason is that if a claim is made and paid out to the owner of the policy (the individual), the IRS can deem that as a benefit to the individual because the check is written to the individual.  Even if that individual were to sign the check over to and deposit it into the LLC or IRA account, it might raise a red flag because it isn’t really a contribution to the IRA and to have to explain the situation would be an unneccesary headache that can be avoided by having the check written to the LLC or the IRA custodian FBO “your name”.

If the property is bought with a non recourse loan, the bank will require that it is insured, so please make sure that the property’s policy is written for the LLC, and NOT you personally.  Even if you buy a property with 100% cash, the owner of the policy must be the LLC.  These are called commercial policies.

Since AAA does not write commercial policies, we are using American Family for the LLC’s policies.  Ron Cornell is currently our agent of choice.
Property owner fees

HOA (homeowner association fees), property management, utilities, property taxes, improvement taxes, assessments, etc. must all be paid by the IRA/LLC.  We set up auto deductions from the checkbook IRA/LLC to make it easy shmeasy.

Custodial and registration fees

These are the only types of fee that you can pay for personally.  If your IRA custodian charges high annual fees, that can take quite a bite from your precious IRA funds every year.  Since capitol and income gains are not taxed in a IRA, neither are losses or expenses able to be captured, so we avoid high fees (unless, you have ukubillions in the account and fees are such a small small percentage of your portfolio value.)

A personal check can be written to the custodian to cover those fees, and the custodian will classify that as re-imbursed.

Fees incurred while forming or maintaining your LLC or IRA, such as State fees or renewal costs can be paid for with personal funds without affecting the mantra.

Payments to hire a facilitator are also out of the scope of the mantra and can be paid for with personal funds.

Realtor fees

Hire an agent, even if you are a real estate professional.  It might irk you to know that you will not benefit from the 3% as buyer or seller agent of your own property, but take the irk so you avoid the pain of the IRS on your back because you ignored the mantra.  This agent should be an arms length away, and not in your payroll or connected to your business in any way.

Be anal

If you are not sure what the IRA/LLC needs to pay and what you personally can pay, check with an expert that specializes in checkbook IRAs.  If in doubt, go with what will benefit you the least.  Be strict on yourself.

Notes from some experts:

UBIT = Unrelated Business Income Tax = file, pay, and rest easier.  In Matt Allen’s book “Leverage your IRA”, the UBIT was discussed.  From what I gather, the portion of real estate that is leveraged (borrowed money) is subject to income tax – and the IRA’s LLC must file a tax return if the income is over $1000.  However, I am not clear on whether or not Roth IRAs are still liable for taxes for rental income as well as profit from the sale of the properties.

Your tax accountant should know more about this subject.  If they don’t find one that does.  This is one of the ways that your IRA is taxed, so tread carefully and file correctly.

Paul Haarman Elevation Group webinar:

People feel like their IRA money is in jail because they can’t utilize it.

Put it in a self directed account, i.e. Sterling Trust (Aunty uses IRA Services Trust).

Get into gold and silver – control and possession are the problems in an IRA.  Asset Exchange Strategies is a company with A+ rating, 4 published books on self directed structures and investing, survived multiple audits,

Precious metals – Culving – restrictions on quantities.  Use approved companies only.

Unlock the funds in your IRA:

Roll over your IRA funds into a custodian account who is accountable for the IRA.  A custodian is a non interested 3rd party who facilitates moving the funds and at the end of the year, reports to the IRS the balance of your account.  The custodian will ask you total value, which you tell them – basically on good faith.

Create an LLC which is owner managed fully or partially owned by the IRA.  Since the self directed IRA owns the LLC, IRA funds can be legally transferred to it in exchange for member units (shares) of the LLC.  After this funding, investments can be bought, managed, and sold within the LLC.  This gives you checkbook control and you as the LLC manager, are in control of the investments that you want to make on behalf of the IRA.  You control everything.  You handle all investments without custodian involvement.  You get approval for your investments through a requirement-free process.

This is your Owner Managed IRA which allows you to directly invest in gold, silver, real estate.

Income and tax deferral for all growth on investments for regular IRAs.   Roth IRAs are not income deductible (after tax dollars) but are tax free on growth AND distributions after age 59 1/2.

If gold or silver does what is anticipated (10x current value), all future earnings and gains are tax free.

Having your LLC gives you anonymity – so don’t put your name in it.  This will reduce the litigation threats and provide protection of your investments within the LLC.  This is done by isolating the investments within the IRA’s owner managed LLC and separate and away from other holdings you may have.

What if the gov forces you to liquidate?  Anything is possible, but having your IRA assets in an LLC which you have control will allow you to take action and make decisions to keep more of what you own.

No need to do a 1031 exchange on sales because it will not be subject to income tax when the properties sell.

[another facilitator – One time set up fee by Asset Exchange Strategies – $2500 – $3000.  discount to $1950 for Elevation Group members.  866-472-2454  www.MyRealEstateIRA.com]

Other custodians will charge an annual fee of $500, but they clip you on your portfolio value on top of that, and charge for any and all transactions, i.e. cutting checks,

Take possession of gold and silver – without penalty or early distribution.  Other non traditional assets your self directed IRA can invest in are tax liens, trust deeds, private mortgages, managed futures, currency trading, hedge funds, and of course, investment real estate.

You can also invest in a business with 49% or less ownership.

Asset Exchange Strategies does:

File LLC and Federal EIN – in your State or where you will do business

Tax Attorneys draft IRS Compliant Operating Agreement

Set up custodian account

Set up bank account correctly

Will be there for audits

Open account with a custodian that will allow your IRA to own an LLC.  (IRA Services)  transfer funds  Custodian signs LLC’s operating agreement

You cannot form the LLC.  Agent does.  They can pay the fees to form your LLC.  So can you.  One of the few times that you can pay for something personally.

Aunty’s Caveats

Remember the mantra, Your IRA cannot benefit from you personally, and you cannot benefit from the IRA personally.

This has saved me a couple of times – especially when dealing with professionals who are not familiar with setting up these types of accounts.  Make sure ALL deposits into your checkbook IRA/LLC are written to the LLC and not you personally.  This includes your initial opening deposit.

If you are not able to open your checking account without an opening deposit, then wait until you have your check written to your LLC from your custodian first, and then open your LLC account.

Sorry if Aunty sounds like she is beating out the same message, but this was one of the times that Aunty almost made a big booboo and was tempted to just put $50 cash from pocket in to get the checkbook LLC account opened.  Good thing I checked with John Park first.

If you make a mistake, there may not be a way to fix it, so do it right the first time, and every time after that.

If you break the rules or benefit from or to your IRA LLC, the whole pile and caboodle can be deemed to be a disbursement.  Disbursement, if not intentionally done, can be one of the ugliest 12 letter words you ever encounter.  (you counted, just to check, didn’t you?)

Avoid getting disbursement status for your IRA investment(s).  Once they are out of the IRA, you lose all those tax deferred advantages of IRAs.

The IRS is sharp, and tenacious.  If they don’t catch it this year, they might catch it 5 years from now, and it all becomes retroactively disallowed, taxed, penalized, etc.

Do it right, every time.

Good stuff for a happy ending

IRAs do not have the esteem and emphasis that they deserve.  As soon as one starts to earn income, get an IRA and fund it as much as you can.  That should be a course on Wealth 101 and taught to every high school student and shouted from the rooftops.

Aunty’s IRA flavor of ultimate choice is the Roth IRA.  Believe me, when you are old and ready to retire, you will be glad you opened, funded, and invested well in one.  The Roth IRA can be the golden goose that keeps on laying golden eggs.

If you are employed and your company has a retirement plan for you, fine and well, but STILL, open and fund an individual retirement account of your own that you have control over.  Sacrifice today in order to truly be able to retire later.

If you are old and grey already, it isn’t too late.  Start with $5,000 in a checkbook IRA and invest in cheap stuff like tax liens, tax deeds, or become a hard money lender and earn great interest rates and return.

Because of the non taxed aspect of an IRA, the more money your IRA makes, the more money your IRA gets to keep.  $5,000 can easily double in a few years.  Add to that each year and get into bigger deals, partnerships, and growth.

Scared because you think that it is risky?  Risky to Aunty is having someone else in control in a down market.  Risky to Aunty is less than 1% return annually in a bank that makes money on our own money in an economy of inflation and the threat of hyper inflation, recession, or worse.  Risky is counting on a company’s retirement for life and/or social security.

If you are scared, then please get educated.   Aunty started by going to a Rich Dad seminar and paying way too much for classes that were not very beneficial or realistic.  However, that was the pushing point, introducing me to a world of investing and possibilities, so in retrospect, it was a good thing.

Jeff Olson’s caveat and hope is one of the truest and sagest.  “The price of neglect is far greater than the price of discipline.”  In doing what we need to do to prepare for our retirement and have a great lifestyle, these words are truth to the highest degree.

So Aunty is now disciplined.  At age 56, Aunty finally put on the hat of focus, determination, and stopped fooling around in order to be able to fool around when she and Uncle are really old (lol).  We began investing and learning, Aunty stopped spending money on doodads, and even started to de-access by selling on ebay, Craigslist, and Amazon.  Four short and speedy years later, we are almost ready for retirement and almost really old. 

The best and latest strategy is the checkbook IRA 

It has been less than a year since we have set up our checkbook IRAs in order to invest in real estate, buying cheap condos in Vegas that cash flow and doing hard money loans paying great interest rates.

It was a bit difficult to start those checkbook IRAs because it was really a big black unknown and uncharted (risky?) territory, but after the first few hurdles of actually finding a facilitator and learning about the process and then understanding what to do, it almost seems like a no-brainer.  I only wish we had done it earlier.

However, it is never to late to start

Set your goal of what your ideal life will be, and take the steps to get there.  The price of discipline is worth paying if it will get you what you want.  The price of neglect is not what anyone would want to pay.

Start today, for a better tomorrow.

 

Savings Main page

2013-04-01_14-19-38We all have rainy days.  Having a little pot of savings is like always having an umbrella in your car.  Not only that – Ben Franklin was absolutely spot on when he said, “A penny saved is a penny earned.”  Those saved pennies can be used for investments that can grow into wealth.

My friend Larry is a financial guru.  He believes in putting aside some money in a savings account for spending before any other bi-weekly expenses or expenditures.  That way, if something comes up that his son or wife wants, they take a look at the balance of that account, and many times he can say, not yet.  We used to say, “Bum bye” (= laters).  Sometimes laters never comes, or you change your mind and find something else you want.  It’s good discipline and different from the instant gratification of credit cards going crazy.

Rich Dad also believes in paying yourself first.  Three “piggy banks” – 10% to savings, 10% to investment, 10% to charity, tithing.  Even starting small with $10 in each account, or even 5¢ from the kids’ allowances will improve your life and life long habits.  It is blessed to give, and smart to save, and even smarter to invest.

Another way to save is to spend less.  I have learned mantras that I will use the next time I go in to buy a car.  Below are other ways to spend less.

Zippy’s has a great site that changes every other week for coupon savings off of specials.  (sometimes they do not have coupons)

Are you a “couponer?”  Aunty used to cut out those discount saving coupons from newspapers and magazines in the old days.  Now they are available online.  A great website for finding them is MrsCarrigan.com.

MrMealDeal.com is a great website for discounts at various restaurants in town.  Or, you can pick your own city in the USA.  Print out the coupons and please pay attention to the expiration as well as the specifics of each offer.

Island Burger in Ala Moana, Tuesday kids eat free.  For every adult ordering an entrée 2 kids eat free.  Yes, 2 not just 1!

Show your AAA card at Crocs Stores, and get 20% off!  I love my Crocs!  I now have leopard printed Crocs, but found out that AAA and Crocs no longer have a discount deal together.  Sometimes the nice sales staff will let you get a discount if a special is running.

Groupon is a great way to get daily deals sent to you.  If you are interested in signing up, please use the link on the ads bar on this page.  That way I get $10 credit when you first join.  I have used it to get a $50 Nordstrom Rack certificate for $25 – not too shabby since that is also one of my favorite stores.  I also just purchased a $15 certificate for Kaimuki Grill for $7, more than half off!  [update:  I purchased a hair removal (lol, tmi) certificate that I knew I wouldn’t be able to use before the expiration date, contacted customer service via email, and was immediately refunded so I now have a credit balance in my account!  THAT’S great service and reflects a great company.]  Another great thing about Groupon is that they send you reminder emails to use your coupons – good for someone like me who forgets things more and more.

Speaking of Kaimuki Grill, google search Kaimuki Grill coupon and it will take you to a coupon site, pretty neat place where you can search by categories for places that may have coupons!  Going there with some great friends soon, and we’ll be saving 10%!

If you go to your local USPS post office, ask for their address change packet.  In it you will find a 10% off coupon from Lowe’s, or click here and download a printable coupon.

Get a CVS card (stores are still called Longs Drugs here in Hawaii) and get a credit of 3% when you show the card to the cashier before they begin processing your purchases.  Not quite sure how that works, but every little bit counts!  And have a mainland friend get that pretty green leaf that you attach on a shopping bag so you get credited 25¢ each time you use your own bag for your purchases (limit of 1 credit per day)  Boohoo, CVS does not honor the leaf credit anymore.  Still, the CVS card will get you built up credits and nice discounts from time to time.

Cardpool.com is a great place to get gift cards that are discounted.  Choose your favorites and they will email you when your choices become available.  Aunty likes the Ross gift cards and uses them on senior Tuesdays to get an even bigger discount!

Senior discounts where it pays to be older.  Very nice to be rewarded this way!

More senior discounts, or updated ones for you!

Some mainland discounts for our generation.

Travel saving tips  to share with you.  I feel like a veteran traveler now that I go to Vegas and California at least 3 times a year.  Aunty loves flying on Hawaiian Airlines, and now I am an affiliate of them!  So please use the banner or ad link that you see on this page to book your flight on Hawaiian, and Aunty will make 1.5%!

RR Accounts in jeopardy

2013-04-14_16-08-36Aunty signed up for Oceanic’s Business Class internet service and planned to terminate the residential Oceanic internet service.  However, those plans were put to a screeching halt (have picture of road runner) by the inability to transfer over my hawaii.rr.com email addresses because our Hawaii Time Warner Cable does not own or have anything to do with the rrs.

Yikes.  Really yike, yike.  All 9(!) of Aunty’s schizoid email addresses are hawaii.rr.coms, and for this multiple-hat-wearing-blog-happy-aunty, switching over and finding another good email hoster that has a good and easy suffix is a chore.

So, Aunty is now using aunty@honoluluaunty.com as her primary “aunty” address.  The rr.com accounts will be replaced with gmail accounts, or possibly another email hoster.  The problem with gmail accounts is that most of the names that I want are taken, and they must be at least 6 letters or numbers long, so aunty@gmail.com does not work.  However, Google’s email accounts seem to be the best for now, and the slow conversion from rr.com accounts for Aunty is taking place, resulting in juggling double the number of email accounts for now.

If anyone knows of a good email hosting, please let me know in the comments section below.  Mahalo in advance!

Mantra while buying a car

2012-12-28_10-41-23

Mercedes GLK, Aunty’s potential next car……

From Jason Leister of Early to Rise, I have learned a mantra that I shall incorporate the next time I bargain for our next car.

You see, I am always looking for the next good used car to own.  Since I have yet to find the perfect vehicle, I show up at dealer sales and often times surprise Uncle with “our” new used car in the driveway.  Most of the time, Uncle is not happy with my choices, but since I am the one who will be driving that vehicle the most, he learns to be okay about it.

However, I’ve always felt that I could have done better in the deal (after the fact).  So, when an article by Jason Leister entitled “The Promise” arrived in my email, I found 2 golden nuggets of information to help me deal with those car salesmen.

Here are two mantras for every sales negotiation that Jason has provided.  He says to repeat these to yourself until you feel them. (Generating the feeling is really the key.)

1.  I don’t need the business.

2.  I don’t need the money.

These are great mantras when you are on the other side of the table as the person selling something of value to someone else (called positioning).  However, turn them around when dealing with a person selling you something, and it will look like this:

1.  I don’t need that car.

2.  I don’t need to spend my money today.

If you can really really believe and feel those 2 mantras when you are in negotiation for what you want, you are in control, and 1) will be able to drive out with a great deal, or 2) walk away knowing you did great realizing that there will be other deals out there for you.

This also works with real estate negotiations.  When it is a property that I really really want, I make offers that I shouldn’t.  When I can pull my emotions out of the picture and say to myself that I really don’t have to have that house, and I don’t need to buy it today, I am better able to set a price (and stick to it).  That can make a difference between a great deal vs an okay deal.

I am actually very excited to try this new mindset with my two new mantras when I go looking for our next car.  Hopefully Uncle will be pleased with it the next time I show up in a different car.