Author Archives: Aunty

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.

Robert? It’s me – Aunty Kiyosaki!

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2013-04-17_12-03-06It was a really good day today.  Oceanic Cable sent over a nice young man to change out our ancient cable box.  It took 3 people to change one little box because of the way I had built in the tv gizmos and closed them into the rehabbed cabinet, but now the end result is clean glass shelves, a new cable box, and a clearer picture!

Right after that, Hank Honda of Subaru Hawaii drove over a fully detailed, tanked up 2009 Subaru Outback for me to test out.  THAT is customer service.

After taking it up a couple of hills and liking how it handled and more, the Uncle test kicked in (Uncle kicks the tires), and thankfully was passed.  Hank and I drove back to the Subaru Mapunapuna office, papers were processed and signed, and Aunty drove back very happily and proudly in her “new” car.  It’s not sexy, and kind of an old lady car, but if the shoe fits…

Why a Subaru Outback?

Years ago I test drove a 2000 Outback and loved how it handled and the power behind it.  I didn’t like the price $28K or how I felt squishy in the front.  If only it were bigger feeling, it would have been perfect.  From that first test drive on, I kept an eye on the Outbacks as slight changes occurred from year to year.  In 2010, it became like a SUV.

2 months ago I went into Subaru Mapunapuna to see Hank and test drive the new 2012 Outbacks.  Surprisingly, it was really big – almost too big for me.  They were quite beautiful in style with the same price tag – which was a pleasant surprise.  Hank said he would let me know if a good used one came in.

Why used?

Because I am cheap in that way, and I have always bought used cars.  Orange ones, white ones, red ones, gold ones, green ones, blue ones, silver ones.  Just about every color except for purple and yellow. They cost thousands less than new cars, usually have some kind of warranty that can be bought, and I have had good luck with all of them except for 2 (nightmares).

So what’s the big deal and why am I telling you about my latest car?

This time, I am very proud of myself – not only because I got the vehicle I have wanted for the last decade at a price below blue book – but because of the way I bought it.

In the past, I would plop down all cash to purchase our used cars after trade ins.  For months after I would feel the pinch of maxing out a credit card and clearing out the funds in our savings because of the all cash nature.

In one of Robert Kiyosaki’s Rich Dad books or seminars, Robert talked about making a $500,000 profit on a deal, and wanted to buy a super expensive exotic sexy car.  Kim Kiyosaki, his wife, said “nope”, that he would have to use those funds to get an investment that would buy that car for him.  So, he bought a piece of real estate that kicked off good and constant rental income.  He then went back to the sexy car dealership and bought his car on credit terms.  His monthly rental income covered the monthly car payments.  Is that beautiful, or is that beautiful?!  What makes it even better than that is when his car payments are over, he has a hot car free and clear, and the rental income continues to flow.

Call me Aunty Kiyosaki

So this time, Aunty planned it out.  In June of last year, we purchased a cheap condo in Las Vegas close to the Strip for the price of a car.  We rehabbed it, and rented it with the help of my ace realtor/property manager, Martin Fajardo.  Once the dust settled and the expenses and income became regular and predictable, we were cash flowing $350/mo – this is monthly income after property management, maintenance, association fees, taxes, insurance and all other expenses were deducted from the rental income received.

Aunty figured she could get a car that cost about $20,000 for a 5 year term at 3% per year, or even more if the interest rate was lower.  The trouble was that car dealerships don’t give out loans on used cars, and the new cars that Aunty REALLY liked were over $30,000.

Then the stars aligned

However, just this week, a letter from my Hawaii State Federal Credit Union came in the mail saying that I could get a pre-approved used car loan for $20,000 at 3.9% which would mean a monthly payment of $367.

That alone was good news, but even better was getting the call from Hank Honda letting me know that he was holding a 2009 Subaru Outback for me, and that he would be willing to drive it over to me.

What’s an Aunty to do?

There are times in your life when you just know that you have been handed a bowl of cherries, and/or a straight flush.

When that happens, eat the cherries with gratitude, raise the bet on the table and haul in your chips.

My new 2009 Subaru Outback is wonderful.  It got fatter over the years and thus roomier inside.  It looks like a cute slightly chubby pearl white mini station wagon with attitude and racks. It has 3 more years of power train warranty and a 60 day Subaru Hawaii full warranty.  I had to pay $112.09 from my checking account, and the rest was 100% financed with my Credit Union.  Our Vegas condo cash flow will cover our monthly payment for the car.

Our current 2005 Jeep Liberty will be sold (anyone wanna buy a gas hogging 4×4 red Jeep?) and the funds either used to pay down the car loan or towards another piece of investment.

How long will Aunty love her newest vehicle?  Hopefully for a long time.  The resale value of a Subaru is very high, and maybe one day Aunty will have enough monthly passive cash flow over and above all monthly expenses to buy a brand new car in whatever color I chose, again in the Kiyosaki way.  That’s the way to buy the doodads.

It feels good, it feels fine, how about you?


Please feel free to comment below and share your auto experiences.  Aunty would love to hear from you!

Roll over Roth IRA!

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Roth IRAs are Aunty’s favorite way to save and invest.  We first put tax write-off-able funds into a SEP IRA (or regular IRA) and then converted them into a Roth IRA.

Is it a good idea?

Well, the February 12, 2012 issue of Forbes magazine says it is a great idea and calls it a backdoor Roth.

All IRAs are good because gains (capital long or short term, dividends, interest) are allowed to grow without taxation from Federal or State.  Tax deferred is the description used for regular IRAs.

Roth IRAs are the best because of the tax break on the back end when you draw out the money during retirement years (so you pay zero taxes), withdrawals are not counted as extra income against Social Security benefits, and you don’t have to take withdrawals if you don’t want to – which will allow you to leave the entire account to your heirs and their subsequent tax-free withdrawals after you “go”.

Why doesn’t everyone have a Roth IRA?

To directly contribute to a Roth IRA has limitations.  Contribution limits are only $5,000 per year ($6,000 if you are 50 or older) per person.  When your income exceeds annual limits for your tax filing status, you become ineligible to contribute to a Roth IRA.  In the case of most Roth IRAs, the funding of these accounts is made with after tax dollars – so you don’t get a tax break from the deduction from income the way you do with a regular IRA or 401(k).

Regular IRAs (SEP, SIMPLE) do not have as restricted a contribution limit – so that, and the fact that contributions are tax deductible make this a popular choice for many individuals.  However, when you are older and ready to take distributions (forced to take at 70 1/2), these distributions will be taxed at your regular income tax rate at the time.  : (

So what can you do to boost your Roth using your regular IRA?

Take advantage of the generosity of the IRS’s new rule which began in 2010.  Regardless of your AGI (adjusted gross income), you can convert your regular IRA funds into a Roth IRA account.  The caveat here is that you must pay income tax on the entire conversion amount – it is considered to be income when you convert because prior to, in the regular IRA, you were able to deduct the contribution from your income for tax purposes.

It is also VERY important that you do not “touch” the funds as they transfer – bank to bank or institution within the established accounts is the way to do it – so that it is not considered a distribution to you in any way, shape, or form.

Even better?

The February 2012 Forbes article entitled “Roths for The Rich” walked readers through the process of “dancing a little two-step through the Roth’s back door”.  It is called a “roll-in” and consists of rolling your regular IRA funds into your workplace 401(k) to limit your conversion tax hit.

Once the transfer is complete, make new aftertax contributions for 2011 and 2012, and then convert at little or no tax cost.

For each tax year that you make a nondeductible (aftertax) contribution to an IRA, you must file a Form 8606 with your 1040.  Any contribution you make for 2011 gets reported on form 8606 for 2011 – even if you make the contribution in 2012 (before April 17).

Any 401(k) roll-in or Roth conversion you do in 2012 is reported on this form also, but filed on your 1040 for 2012.  During that tax filing in 2012, you will need to include as “IRA distributions” the amount you rolled into your 401(k) as well as the amount you converted to a Roth.  If this is done correctly, you can write “0” as the taxable share of those distributions.

What does that mean?

To tell you the truth, Aunty doesn’t really get it (so ask your CPA or retirement specialist).  All I know is that IRAs are good, Roth IRAs are best.

What does Aunty and Uncle do?

We convert our SEP IRA funds into Roth IRA accounts and pay the taxes due for that year.  To offset that tax hit, we contribute to our SEP IRA an amount equal to the converted amount.  The result is a tax hit in and a tax hit out, which means we pay our regular tax for the year without benefit of deduction or additional taxes for conversion.  In this way, the $5,000 ($6,000 for us because we are older) limits for Roth contributions are nullified because our SEP IRA contributions can be whatever max allowed based on income, and the conversion has no dollar limit rules.

What about young people?

Open a Roth IRA account today.  Most banks, brokerages, trust companies, credit unions and other financial institutions have Roth IRAs.  A good one for people who like the control of trading stocks and options is a self directed Ameritrade account.

Even if you start with the minimum of $2000 in your new Roth Ameritrade account, it is a good start.  Linking your bank account will allow you to transfer money into the Roth IRA, and Ameritrade is very good at providing the status of your contribution by current year and how much more you can contribute.

If you don’t want a self directed IRA for stocks and options trading, then any bank or financial institution will do – just be sure you check their fees and such.

If you know you want to invest your IRA funds for real estate, gold and/or silver coins, or other investment choices, then IRA Services Trust is a good one – low annual fees, little or zero fees for transaction.  I will be updating with a “how to” set up and use your IRA for real estate investing as soon as we complete one this year.

In short, any time you invest in a retirement account, you will be grateful in your golden years when your eyes can feast on the grown tax deferred assets in your retirement portfolio statements.

Here’s to your continuous good health and wealth!

 

 

 

 

 

What would you do for GOOD health?

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Good friend Starley Barley sent me this video on Dr. Terry Wahl and our eating habits.

Aunty is a takeout and convenience queen when it comes to feeding the family.  We look like the “typical” family’s weekly diet on the video.  Sad thing is that I always knew it wasn’t the best way to eat.

Please take some time to learn about health and nutrition from a woman doctor who left the brink of disability to good functioning health (thanks Starles!):

(almost) Death of Seller Financing

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In some cases, seller financing is what is necessary and beneficial for both the buyer and seller to come to an agreement and successful sale.

In this webinar, Clint Coons explains the SAFE Act as well as the implications of the Dodd Frank Act that will affect us.  Lease option agreements are not affected (good!) but there are changes that will come about that we all need to be aware of.

Here are some notes I took:

SAFE Act addresses seller financing on a temporary basis.

The SAFE Act was designed to keep people in their homes, and is controlled by HUD (Federal Housing and Urban Development).

Basically, the loan originator must be licensed if they benefit from the sale, and if the sale is to an owner occupant (homeowner).  Lease options are okay to do – so long as it doesn’t “look” like a mortgage, i.e. balloon payment, x% interest, etc.

If you are selling your own residence or inherited property, you are exempt from the SAFE Act, and can do seller financing.

Investors are exempt from the SAFE Act unless they do seller financing as a commercial venture, or have “habitualness” of the activity of seller financing.

If seller financing is the majority of the investor’s real estate plan, then should get licensed or use a licensed loan originator (mortgage broker) to facilitate the loans.

The Dodd Frank Wall Street Reform Act was enacted after the SAFE Act, dealing with the same issue but taking it away from HUD and putting into the Consumer Finance Protection Bureau jurisdiction effective January 21, 2013.

Applies to sale of ALL property (even your own personal residence) if the buyer will use the house as their residence.  Does not apply to commercial or investor buyers.

It is a stricter broader Act affecting us as real estate investors with the following rules:

no more than 3 transactions per year
seller did not construct the home
must be fully amortized at market rate
on effective date of 1/21/13, will pick up on existing or old loan agreements when the current term of the existing loan expires

This Act can be changed at any time.  Severe penalties if Act is violated.  Up to $1 million per day, non-compliance is a felony.  The message seems to be – become licensed, or use the services of a loan originator.

One solution Clint mentioned is hold the property in an LLC, and then sell the buyer the LLC. Or have the buyer form a LLC and they buy the property in the name of the entity.  This makes it more of a business transaction to prove the buyer is not using the property as his personal residence.

Notes from January 19 Boardroom event with Robert Kiyosaki

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2013-04-17_11-16-15This event was okay, but not fantastic.  Aunty pays $9.95 to listen and watch.  I always get way more than $9.95 worth of insights – and usually from Robert or one of his advisors.

There was a lot of bashing of politicians and wannabe presidents, governments, middle class, media coverage, etc.  I picked through to find out what Robert invests in, and why.

He is investing in America – because America controls the world’s currency, military, and will bail people out.  Our tax laws are written for businesses and investors.  He says Brazil, Russia, India and China are what others are touting, but he doesn’t want to invest in socialist or communist countries, or capitalist dictatorships like Singapore.

He calls California a communist republic because of their social programs, tax laws, etc (i.e. liberal).  Instead, he invests in Nevada, North Dakota, Oklahoma, Texas, Louisiana, and Arizona – because these States are very pro capitalistic.  He also says to invest in what and where you know.

Robert Helms (from Real Estate Guys) talked about having always been in real estate and this period is what he and other investors have been waiting for all their lives.  Plentiful cheap properties, and super low interest rates.

Kiyosaki said he is actively investing in the Bakken in North Dakota – this is where they have tons of shale oil, enough to allow us to be 0% (currently at 40%) dependent upon foreign oil. [In fact, Ken Wade’s market charting group had Bismarck, ND as entering into the green light phase of real estate investing.]

Your view of the world is your view on the world.  How you view the situation is YOUR choice.  He predicts a LOT of volatility, and those counting on old ways (get a job, social security being there forever, 401K plans being there, the government will take care, kids will get a good job because they go to college, etc.) will get hammered.

Kim Kiyosaki (wife of Robert) says it is not going to be comfortable – there will be mental, physical and emotional stress but it must be faced.  Get out of your comfort zone in order to grow.

The webinar ended on a positive note with the Kiyosakis talking about agreeing to disagree – by someone else’s different point of view, one grows.

Get your credit score for free, forever!

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Thanks to my latest “find” – KungFuFinance.com – I learned about a company that will give you your credit score for free, without having to input a credit card.  Most other offers are “free” but only for the first 30 days, and then you start getting a charge on your credit card that you must call to cancel.

The company is called CreditKarma.com.  Great site.  You do need to put in your real information such as legal name, street address, date of birth, and the last 4 numbers of your social security number.  You also set up your user name, password, etc.  If a user name is taken, you have to choose another one, and if anything is out of whack with your user inputs, you will know and have to correct along the way.

After that, you are good to go and check out your credit score.  I found that the score they gave me was on the low side – maybe because Aunty likes to dabble with finding out best rates, getting my Hawaiian Miles credit cards, and investing to near max – or maybe they have a different system from FICO.  Regardless, it was also more than just a credit score.  If there is an area that you need to pay attention to, you will be able to pinpoint what that is and take action so your score can improve.

Spend time on that site once you are up and running.  It is full of hints and explanations.

One final Aunty note:  I have friends that have the most beautiful credit scores – 840, 820 – way up there.  I could have that kind of score too if I didn’t do much more than have 1 or 2 loans and not push the limits of our borrowing power.  Once you start to invest, your credit score will get lower – because you will be using more credit and have more inquiries from banks and institutions.  You can choose to have a beautiful credit score and protect it like a big shiny bauble, or you can choose to invest by shattering that big bauble into chunks of cash flowing nuggets.

Leap of Faith

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CIMG1472Today I attended a YWCA meeting and Cash Flow game – because Robert Kiyosaki’s sister Tenzin Kacho was present.  I read Rich Brother, Rich Sister and was fascinated by the intertwining of 2 very different lives of siblings growing up in Hawaii – one pursuing financial wealth, the other pursuing spiritual growth.

Robert Kiyosaki is a powerhouse of investing and building businesses.  I hope to meet him one day, to shake his hand, and say thank you for waking me up enough to invest, take charge, become secure.

Emi Kiyosaki (Tenzin Kacho) took a different path, a flower child that gave up her regular (albeit hippy) life and followed the Dalai Lama’s teachings, becoming an ordained nun.

I expected a monk-like female – a monkette.  I thought she would be almost silent, like the sound of one hand clapping.  Or someone with a gentle stare that could read all the good and bad in my soul.

Instead, with her orange robes and perky demeanor, she was just like a friend – with a shaven head.

Her lifework is that of a Buddhist nun, but she is also a hospice chaplain in California.  Rather than disdain financial gains, she has her feet on the ground and realizes that the world will not take care of her – and it is her responsibility to take care of herself.  She admires what her brother does, and is willing to learn and take action.

The few minutes I spent with her were full of surprises.  She is not a vegetarian, she plays the Cash Flow game to win, and she carries the Bible at times.  She doesn’t go around bowing and chanting – she shakes hands, does small chit chat, and participates in discussions as if in a PTA meeting.

Her talk during lunch was inspiring.  The key point for me was doing what you feel driven to do.  Fulfillment of life now – because we will all die one day, guaranteed.

She will be speaking at the Unity Church of Hawaii (3608 Diamond Head Circle in Honolulu) on Sunday November 13 from 6-8 pm on “What is Life Presenting You?”   Go, if you can.

One of my favorite quotes of the Dalai Lama’s is:  “People take different roads seeking fulfillment and happiness.  Just because they’re not on your road doesn’t mean they’ve gotten lost.”

Tenzin Kacho is full of grace and acceptance and I feel blessed to have crossed roads with her today.

*Update, Tenzin Kacho has left the nun hood – I suppose she will now go with her given name, Emi Kiyosaki.  Nun or not, Aunty really likes her.  With that, Aunty leaves you with one of her hoarded cards:

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Anyone hear of Roger Hamilton?

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I know – sounds like the name of a movie star – that 007 actor Roger something.

Roger Hamilton is a life guru.  Very wealthy, very wise, very spot on.  Would love for him to be our son-in-law.

Anywho, thanks to Raymond Aaron’s subscription, I have access to this really great interview on 8 ways to create wealth.  Download to listen or read, and grow:  Roger Hamilton interview. I usually download, import into iTunes, and then burn it on a CD so I can listen in the car or at my leisure.

It IS worth listening to, please leave a comment below on what you think of it.

More travel tips

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I felt unprepared for our trip to Los Angeles recently – but the fault usually lies with me since I tend to wait until the last day to pack.

I took some notes and hope it helps.  Please also check out my other pages on travel.

Hawaiian Airlines now has fixed air conditioning vents that hit the seated passenger.  This constant airflow on my head causes my eyes to dry out more than normal and I get travel red-eye at my Mainland destination for several days.  Continue reading →