Aunty really likes getting daily mentor minutes from Raymond Aaron and from time to time likes to share them with good friends. Here’s a great one:
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Category Archives: Wealth
Ross is like dessert
One of the best known discounts to mankind is senior discount Tuesdays at Ross Stores. Anyone over the age of 55 gets 10% off on all their purchases. (See Aunty’s discount pages for more discounts.)
This past week, Aunty had to kill about an hour of time in Downtown, so I headed over to the Ross Store next to Long’s Drugs near Fort Street Mall. It seemed almost everything Aunty touched was what Aunty needed or wanted! Shopper’s delight. The store was clean, lots of open space, and not at all crowded.
The whipped cream on the jello was a gift card that I had purchased on Cardpool.com. Aunty found out about his site from pal JW who commented on one of Aunty’s discount pages. JW wrote:
One site that has been good is http://www.cardpool.com
Advantages: 1- Great discounts
2- No Fees
3- No expiration date
4- No sales tax
5- Free shipping
6- No age restrictions
Click on “buy gift cards” and all of them appear alphabetically. These cards are like cash so you can take advantage of store sales discounts, along with the card discount. My favorite, using the 20% discounted Ross card on Tuesdays( Senior discount) to get a whopping 30 % off total, along with their normally marked down prices.
This discount card site has been very reliable and fair, so far.
So Aunty’s jello was the senior Tuesday 10% discount, and the whipped cream was the 20% discounted Ross gift card purchased at Cardpool.com! [Note: the Ross gift cards are now sold for a discount of 13%. Not as good as before, but still, a savings especially if using them on senior Tuesdays!]
Aunty now has new duds that were inexpensive to begin with, and got cheaper with age and a discount card. Very sweet, very sweet indeed!
Happy Independence Day!
What does INDEPENDENCE mean to you? First thing that pops into Aunty’s mind is a scene from the movie “Independence Day” as Will Smith walks away from his burning jet plane after pulverizing an alien, then shrugs with a cocky lilt to his step. Heeeee yah!
Next to pop into mind is financial freedom.
What is financial freedom to you? What if money were no object because you had enough to do whatever it is you want to do – what would you do?
Aunty would make art, play in the garden, and create without having to cook, clean, or be bogged down with chores and responsibilities – except for eating and shopping.
How to get financial freedom? Many, many, many ways. All you need to do is to find the way or ways that will do it for you.
2 weeks ago (seems like eons), Aunty posted about NeriumAD and how excited she was – in tempo with the Pointer Sisters. The excitement is still there – Aunty truly believes this is the ride to independence, with investing as the end game. Sweet chickens!
No matter what you decide is your ride, a CD enclosed in the Nerium training materials entitled “Building Your Network Marketing Business” by Jim Rohn was SO full of wisdom and great stuff, Aunty just wants to share an insight with you.
Okay, no gagging or bailing out – because this is good stuff.
Profits are better than wages. This is the single most important and simple law of financial freedom, period. For Jim, this was a revelation (for Aunty too!)
Jim worked full time in his job, and then started part time in a business (in his case it was network marketing) to make a profit. His goal was to make as much in profit as he did in wages. This he achieved in less than 6 months. His second goal was to make twice as much in his part time profit venture as he did in wages. This he did in less than a year. It was a no-brainer after awhile to quit his job.
Wages make you a living, which is fine. Profits make you a fortune, which is super and finer.
How would it feel to get up in the morning and realize that you are starting off a new day to make your fortune versus realizing that you are starting off your day to go to work?
Aunty wishes each of you a fortunate and wonderful Independence Day and Life. Have a cigar (gag gag, cough cough) or kick some alien butt.
Namaste,
Aunty
To Your Wealth, Kung Fu Style
Aunty is so thrilled to have one of Kung Fu Girl’s awesome posts here. Aunty “met” her while cruising on the internet looking for real & good financial advice and wisdom, and I now consider her a dear friend, sight unseen as yet. Please welcome and enjoy my new young friend with one of her latest posts, and get a taste of her delightful expertise and spot on analysis. Take it away, KFG!
Here at Kung Fu Finance I endeavor to expose the truth of how wealth-building really works (and how falling prey to hype such as “buy this ONE stock and make 300% in 6 months!” really doesn’t work).
Today is one such occasion, and I would like to expose a dirty little secret of wealth-building…
A few weeks ago I talked about the #1 predictor to your future wealth (your wealth chest or net investible income, commonly referred to as your “savings”) and I specifically discussed why I dislike the word “savings” so much when it’s used to describe that magic and important number — because it focuses on only half of the equation:
What you produce – what you consume = Savings “your wealth chest”
or
Earning – Spending = Savings “your wealth chest”
Now don’t get me wrong—saving is an important part of building wealth. If you spend away every cent you earn, you will quickly find yourself flat broke, or worse, deep in debt (believe me, I’ve been there!).
Learning to “save”, therefore (which really means “not spend”) is a crucial part of basic money management— many famous Hollywood stars have earned millions upon millions of dollars but have still declared bankruptcy because they couldn’t master that skill and instead spent every cent they took in:
Ergo, saving (“the art of not spending”) is very important.
And a million and one websites and resources attempt to show you “how to save”, or more accurately “how to not spend too much money” on the things and experiences you desire (believe me, I’ve perused them all in my pre-accredited-investor life…but more on that in a moment!).
These range from coupon sites to wholesale-membership-type companies like Costco or Sam’s Club to daily deal websites or “Groupons”…there are sites for specific types of people who want to get the best deal on “stuff” (FrugalMom, FrugalDad, MoneySavingMama, etc…) and sites that profess to get you the best deal on money (“zero interest for 6 months!”).
And yes, this “not spending” (e.g. being frugal and “saving”) is vitally important in learning to build wealth and grow your wealth chest.
But, if you look at the inputs to the equation, you can see that spending (or its inverse, “not spending”, so commonly referred to as “saving”) is only half of the equation…it’s only one of the inputs:
Earning – Spending = “your wealth chest”
And this is my beef with calling the net result “savings”, because by calling that magic number “savings”, as is so commonly done around the world, we neglect the other equally important half of the input to the equation:
What you produce (Your “Earnings”)
And I think you’ll agree with me that earning is a pretty important piece of the puzzle!
In fact, it is one of the ways I was able to go from being $10,000 in debt to a bonafide “accredited investor” in under ten years. (I know, it’s not 6 months like the sexy-yet-hype-y hot stock tip I mentioned earlier, but it’s real, and will work for you if you let it!).
This is one of the dirty little secrets of the wealth-building industry (and sadly it’s just one…there are many other dirty little secrets, too): if your spending remains constant, then the more you earn, the more potential you have to build your wealth.
(Duh. It sounds so obvious, right?)
But before you click to close this email and unsubscribe thinking, “I KNEW it! Kung Fu Girl just made millions of dollars per year at some job or business to get out of debt and become wealthy and I’ll never be able to do that!” please hear me out…
That is not the case at all and in fact for several of those years I earned just barely above the poverty line—Kung Fu Guy and I started a business in 2000 called “IdeaWave Systems” and our JOINT revenue our first year was a whopping $50,000 ($25,000 each).
(Now, depending on where you live, this may sound like a decent amount of money…but I assure you, in San Francisco it was NOT. It was barely above the poverty line, which was $27,682 for a single person in 2009 according to the Center for Community Economic Development).
We struggled that first year. (And the next).
We were MASTER cheapskates and could have written the book on “not spending” (saving)—rinsing out plastic baggies and reusing them so we didn’t have to buy more, clipping coupons and eating primarily vegetarian as our grocery budget didn’t allow for steak or salmon or chicken (heck, we barely ate hamburger!), and oh yes, we lived in the ghetto—on 8th and Minna St. affectionately known as “SOMA” (South of Market) which at the time was NOT trendy and cool, not even “up and coming”…just slummy.
We were awakened nightly by riotous street people fighting over abandoned shopping carts and neighbors screaming out of their windows, “Shut up down there!” and the street people shouting back, “No YOU shut up!”. We slept with earplugs and wondered why our parents never came to visit.
We got an A+ in “not spending” that first year…but at most a D- in earning (and that’s being generous). We had so many new skills to learn—as first-time business owners and former engineers we knew how to “do” the work (luckily quite well), but had no idea how to “get” the work.
Marketing? Sales? Not a clue…
It took three long years of consistent execution and under-promising / over-delivering until we built up enough word-of-mouth recommendations to overcome our abysmal lack of marketing and sales expertise, allowing us to finally surpass our pre-business income. Whew.
Though those years were difficult, they were an amazing learning experience.
For in those years, we learned the essence of earning, that crucial second half of the magical wealth equation that is so overlooked by most of society (and all of Wall St.):
Earning = Creating Value for Other People
Because if you hold your spending constant (say you’ve already cut it to the bone and are rinsing out ZipLoc baggies like yours truly…) then the only way to increase your magic number, your wealth chest, is to earn more money.
And the more money you can put into your wealth chest, the more money you will have to invest. It’s that simple (but again, not easy by any means!).
So how on earth do you do that?
This is one of those things that is simple in principle, but extremely difficult in practice…(otherwise we would all be making millions of dollars per year!).
We learned quickly in our business…we earned more money by solving more and more customers’ problems. The more problems we solved, the more value we created for our customers. And the more value we created, the more they paid us.
This is the only true way to earn more money—to create value for other people.
To be clear, customers didn’t care if we made our solutions “fancy” or used the latest slick new programming language or structure to complete their project.
They had one care and one care only—did it solve their problem (for the agreed-upon price that we quoted them)? If it did, and we finished it on time, we had happy customers who were then more than happy to hire us again and tell all of their friends and contacts how wonderful we were, thus giving us that elusive word of mouth marketing.
This is true whether you have a job or a business. In your job, you are working to solve your employer’s problems, and in your business, you are working to solve your customers’ problems.
I wish there was more ink (news, media, etc.) devoted to “how to earn more money” and “how to solve problems” (entrepreneurialism) than there is devoted to “how not to spend money” and “how to be frugal”. While both are important, your earning potential is UNLIMITED, while your “not spending” potential is limited by your basic necessities of life. You have much more opportunity to earn more money than you do to “not spend” money, and yet most people spend hours upon hours clipping coupons and perusing daily deal sites instead of brainstorming how to earn more money and solve people’s problems.
So there you have it…just one more dirty little secret of wealth building!
I encourage you to spend some time this week thinking about how you can earn more money to add to your growing wealth chest! You have so much unique value to share with the world (and be rewarded for!).
To your financial success,
— Kung Fu Girl
Aunty’s note: Wasn’t that awesome! Kung Fu Girl has the gift of breaking down complex financial jargon into stuff even a cave aunty can understand!
Wisdom from a man who changes names
Mark Ford (fka Michael Masterson) is a wonderful writer who might have a shady past, or not. I don’t know and I really don’t care because his articles are usually excellent. His latest one is about fear.
I do think fear holds us back in order to keep us safe. However, many times it holds us back from going forward.
Aunty invests. Is it scary? You betcha. But I would do it again and again because it is what will bring us wealth in the long term and when Uncle and I are old(er) and grey(er) we will look back and pat ourselves on the back.
Anywho, here is “Making Friends with Your Financial Fears.” Read, enjoy, conquer.
Robert? It’s me – Aunty Kiyosaki!
It 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!
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!
Get your credit score for free, forever!
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.
Anyone hear of Roger Hamilton?
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.
Good one for achieving what you want
Craig Ballantine took over the reins of Early to Rise from Michael Masterson. I thought that there was no way anyone could fill the void – but I am so pleasantly surprised to find that Craig is as good and sometimes even better at sharing and mentoring.
Here is a link to a video Craig has just made about achieving your goals. It starts off the same as most goal setting advice – write down your 10 year goal – be specific – i.e. own 20 cash flow properties and be retired with all expenses paid for with the rental income, living in Waimanalo close or on the beach in a decent 3 bedroom house with separate cottage, have a little condo in town to spend time in Honolulu. (That is Aunty’s goal and I am sharing it for the first time!)
Then, instead of breaking it down into 1 year, 2 year, 5 year goals, he said to forget about that, and instead, do a 90 day plan – identify your #1 priority for the next 3 months that will bring you closer to your 10 year goal, make that your 90 day goal, and focus on doing the things you need to do to achieve it. Aunty’s 90 day goal/plan is to get our house, office, papers in order. I have been putting out the little fires of clutter forever, and now it is time to really get it all organized. On almost all of my to do lists, “clean this” or “clear this” or “find this” has been a constant and a problem which limits my ability to do the things I really need to do to get financially fit and fulfill my big goals.
So simple, so do-able. Check out the video of Craig’s complete presentation. It isn’t too long, and it is just right!