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Monday, 23 September 2013

5 Financial Disasters to Avoid



A comfortable retirement without money worries is a goal everyone strives for sooner or later. But even if you don't quite have the motivation to save aggressively for retirement yet, do yourself a favor and don't damage your path to financial independence too severely. Here are a few disasters you need to avoid, which will make your life much easier when you are interested in preparing for your future:

Marrying a spendthrift. Marrying a spendthrift is a big no-no if you ever want to amass a solid nest egg. It's incredibly difficult, if not impossible, to save enough for a comfortable retirement unless both you and your significant other are on the same page. In fact, money problems always rank high in the reasons why people get divorced.

Getting into credit card debt. Don't swipe your credit cards without thinking it through. Credit card debt can creep up on you, and before you know it you will amass a huge balance. A purchase here, a swipe there and you'll be paying so much interest you'll need to work significantly more to achieve the same goal one day. That's why even credit cards with 0 percent interest for over a year can be dangerous. Many people end up racking up a huge balance they cannot pay off, which results in even more credit card debt when the rates reset higher.

Failing to develop a savings habit. You may not feel like saving aggressively, but at least put something away. Even a dollar every paycheck is a good start. If you have a 401(k) at work, strongly consider taking full advantage of the match. Also consider tucking some after-tax dollars into a Roth IRA to get some tax-free growth. Eventually, you'll want to increase your savings, and it's much easier to increase the amount later than to start a completely new habit.

Worrying too much about others. There's always going to be an urge to keep up with appearances, but all you're really doing with those purchases is strengthening your chain to your job. The worst side affect of increased consumption is that lowering it back down once you get used to it is much harder. The choice is yours: Would you rather buy more stuff or have the freedom to choose who you work for and when you need to work?

Having no idea where the paycheck went each month. Many people don't track how much they spend, but it's easy to cut out expenses that add no value to your life when you know where each dollar is going. And even if you don't want to put it all in savings, you can spend more on areas that actually make you happy. When you are less stressed you could become more productive at work and end up making more money, a bonus that keeps on giving.

Tuesday, 5 March 2013

Take Note of These 5 Frugal Habits of the Rich


A fat salary isn't the only way someone can strike it rich. Regardless of one's income level, people who live below their means, invest wisely, and live modestly are on the path to real wealth. Here are five frugal habits that many of the upper class have adopted to build long-lasting wealth and financial independence:
Drive a modest car. Your car should only serve the purpose of getting you safely and comfortably from point A to point B--nothing more. When you pull up to a stoplight in an expensive car, you might impress a stranger. However, don't let the price tag of your car define your character or image, because at the end of the day most people could care less what type of car you drive. Let Facebook founder Mark Zuckerberg, who drives a modest $30,000 Acura TSX entry-level sedan, be your role model on this one.
Buy a modest house. Warren Buffett famously still lives in the Omaha, Neb., home he bought back in 1958 for $31,500. Take Buffett's cue and don't overwhelm yourself with a large monthly mortgage payment. Buy a modest and comfortable home and use the money you save to build your savings and retirement fund.
Don't carry wads of possible. Try to avoid traveling with a wallet packed with cash. According to Bankrate.com, 86 percent of people who spend cash on luxuries like expensive cars, jewelry, and electronics are non-millionaires trying to act the part by purchasing luxury brands. Instead, follow the example of oil mogul T. Boone Pickens, who famously shops with a grocery list and only carries the amount of cash he needs to make purchases.
Don't pay full price. A great way to keep more of your money is by not paying full price on anything. Hilary Swank, who has an estimated net worth of $40 million, is commonly seen using coupons at the grocery store. Michelle Obama often opts to shop at Target or H&M rather than high-end department stores. A great way to build wealth is to have a frugal mindset and use the money you save on consumer goods to build your investments and savings accounts.
Have an action mentality. Almost all self-made millionaires have one thing in common: They are people of action. They don't sit around feeling sorry for themselves waiting for something good to happen to them, as opposed to the people who I would say have the "lottery mentality." People of action take appropriate risks, are constantly looking to improve themselves, and are addicted to knowledge, as it is the best way to gain a competitive advantage in life's financial endeavors.
Truly rich people are those who take their income and turn it into wealth by investing wisely, saving, and living frugally. People who take their income and try to use it to support an unsustainable lifestyle are those who end up in debt and are unable to retire on their terms. When it comes to money and finances, it all boils down to choices and personal responsibility. Which road are you going to take?

Sunday, 3 February 2013

Dow Will Hit New Highs Before Crashing 50%: Kee



There's an old axiom that claims you get what you pay for, meaning value does not come cheaply. This is particularly poignant at a time when traders are on watch for the Dow (^DJI) and S&P 500 (^GSPC) to set new closing highs and investors seem immune to existing signs of caution. Even the worst GDP figure in 3 1/2 years didn't do much to slow the market's ascent.

Even the most optimistic investors are getting a bit antsy these days, wondering how and when it's all going to end. For Tom Kee, president & CEO of Stock Traders Daily, the answer to that question is 'not well.'
"I'm looking for another high in this market, then I am looking for a turn down," Kee says in the attached video, adding that he believes it is "going to come relatively soon."

By downturn, however, what Kee real means is a crash to the tune of ''50 to 60%," which would bring the Dow Jones under 6,000.

A plunge of that size, over a span of weeks and months, is not unheard of. In fact, Kee says, the last time the Dow peaked in 2007 we saw it crash by that amount, just as it did following its previous high in 2000.
Kee says he came to this dire conclusion using a number of technical and fundamental analytical tools, including an earnings per share growth rate for the Dow that he calculates at 1.18%. It's a sluggish pace that he says "just isn't enough to justify the growth in the Dow's actual price."

Similar treachery lies ahead for the S&P 500, he predicts. Although its normalized growth rate, excluding such outliers as Goldman Sachs (GS), is roughly 4%, he argues that is still does not warrant a multiple of 15 to 16 time earnings.

Saturday, 5 January 2013

HDB Flat and the ONE

Courtesy of a male friend on FB :)

Agree that the flat does play a big part in rushing the couple towards marriage. But it actually goes deeper into a subconscious need for stability and privacy after marriage. At the same time, there is always the question of "Is he the ONE? Will there be a better ONE out there?" This is where the girl's age may make a difference. No offence to younger girls, but girls nearing thirties or in their thirties should generally have their character, preferences and life experiences more or less formed/settled. The question of "Is he the ONE?" may have lost its relevance somewhat, and the more senior girl would have found contentment (and possibly happiness) in accepting her current partner, rather than seeking a possibly imaginery ONE. This may however appear to be a sad state of resignation from the perspective of the more idealistic girl in her early twenties. Feel free to disagree with my analysis, as I would certainly like to hear more perspectives.

Wednesday, 2 January 2013

8 Important Retirement Money Questions for 201

As 2012 draws to a close, people in or nearing retirement face a stunning set of uncertainties about their finances and even basic health and retirement benefits. Congress has left Washington for the Christmas break without passing any measures to delay or soften the effects of the so-called fiscal cliff. Perhaps it might still act before the end of the year, but don't count on it. Odds are that the new Congress that takes office next year will take action to prevent the very worst outcomes. But after years of gridlock, should we really expect things to get better?

Here are eight pressing money and benefit issues that are barreling down on seniors. All of them are bad news. And while there aren't a lot of places to hide, it's important for anyone trying to build or conserve a retirement nest egg to develop contingency plans.

1. Tax rates. The Bush tax cuts expire December 31. All income tax brackets will shift upward--the 10 percent bracket disappears and the new lowest tax rate will be 15 percent. The 25 percent bracket becomes 28 percent; 28 percent becomes 31 percent; 33 percent moves to 36 percent, and 35 percent will be 39.6 percent. The capital gains tax rate will rise to 20 percent from 15 percent, and dividend taxes will soar, moving from being taxed as capital gains to being treated as ordinary income.


2. The Alternative Minimum Tax. The AMT was aimed at preventing wealthier taxpayers from using deductions and other tax benefits to escape their fair share of taxes. However, the qualifying income levels were not indexed for inflation. Congress has thus had to enact an AMT "patch" each year to help millions of taxpayers avoid extra taxes Congress never intended for them to pay. There is now no patch in place for 2012 income taxes. That's right: the taxes that are due on this year's income. Even if Congress does something soon, tax-filing season likely will be delayed. If Congress does not approve a patch, the number of taxpayers hit by AMT payments will rise from 4 million to 34 million.

3. Social Security COLA. Fiscal-cliff negotiations between the White House and Republicans reportedly included the Obama administration's acceptance of a new formula for setting the annual cost of living adjustment (COLA) for Social Security beneficiaries. Called the chained CPI, it may, as supporters and many economists claim, represent a more accurate cost of living measure than the index now used to set each year's COLA. But it would also cut effective Social Security benefits by more than $20 billion a year after it has been in place for several years. It would also raise income-tax bills by reducing the size of the automatic inflation adjustments the tax brackets use to determine different income tax rates.

4. Estate taxes. Estate and gift tax rules are now unusually generous. Individual estates up to $5.12 million (double that for a couple) avoid all estate taxes, and amounts above these levels are taxed at 35 percent. This is also the rate for gift taxes. Without action by Congress, the estate-tax exclusion will plunge to only $1 million in 2012, and the tax on larger estate values will be 55 percent.

5. Medicare taxes. Medicare taxes will rise on wealthier wage earners in 2013. This change is part of the Affordable Care Act and not part of the fiscal-cliff impasse. Medicare payroll taxes, now set at 1.45 percent of payrolls, will rise another 0.9 percent on wage incomes above $200,000 in 2013 ($250,000 for couples). These same income limits will be used to trigger a 3.8 percent annual tax on net investment income. The proceeds will be used to help fund health-reform changes.

6. State insurance exchanges. When health reform is fully implemented in 2014, older people not yet eligible for Medicare will have guaranteed access to health insurance regardless of any preexisting conditions, at rates that are held down by rules limiting age-based premium hikes. These benefits will be delivered in large measure through new state-based insurance exchanges. These exchanges are supposed to be set up in 2013 so they can be fully operational before the end of the year. However, most states have decided not to build their own exchanges but to let the federal government do it for them. Odds of this work being done in time, let alone being done well, are seen as very small.

7. Medicaid expansion. In 2014, health reform would provide expanded healthcare to currently uninsured, lower-income Americans through a massive expansion of Medicaid at the state level. The federal government would pay all added expenses for three years and states would never pay more than 10 percent of the expenses from the expansion. Still, many states have spurned the act's offer of expanded coverage, saying they do not like the potential for higher state expenses and the rules that come with the expanded services.

8. The doc fix. In a 1997 law, Congress tied Medicare's payments to physicians to the growth of the economy. Medicare cost increases, including physician expenses, regularly exceed overall economic growth. Under the law, Medicare payments to physicians would have to be cut each year were it not for periodic Congressional action to override the cuts. Without another fix, doctors will see a 27 percent cut in their Medicare payments next year, and an unknown number of them would stop taking Medicare patients. Like much else in Washington, the doc fix has become part of the broader fiscal-cliff debate.

5 Ways to Put Extra Cash in Your Pocket in 2013

Now that the President and Congress have reached a tax deal to avert the"fiscal cliff", many Americans are breathing a sigh of relief as most income tax rates will remain in place and certain benefits on which many Americans have depended have been extended or made permanent. Still, one major perk has gone away -- the payroll tax cut for most U.S. workers expired on December 31.

This year, workers will see a two percent increase -- from 4.2 percent to 6.2 percent - in their payroll taxes from 2012 levels. This amounts to a reduction in an annual income of $1,000 for the typical U.S. family earning $50,000 a year.

In addition, those workers who have been laid off in recent months or had work hours cut are certainly feeling a pinch. If you are among them -- or worried that you soon may be -- the start of the New Year is a great time to take the future of your financial situation into your own hands.

Start searching now for ways to make extra cash to simply pay for the increasing expense of just living. These strategies and "side gigs" may help you ease any financial strain:

Cash in gift cards Tired of shopping? Don't need any more gifts? You may be used to holding onto gift cards for months - or years. Maybe you even used gift cards to purchase presents over the holidays. But if you need some extra cash, resale companies are happy to take them off your hands. At CardPool.com, you can get up to 92 percent of the card's value - and you don't have to pay a fee. Also check out PlasticJungle.com, which will also pay you for your gift card, either by check or a deposit into a PayPal account.

Work extra hours at a part-time job SnagaJob.com is just one of the great resources for finding part-time jobs, offering opportunities for work on an hourly basis. Pay generally ranges from $10-$11 an hour. Just because the holidays are over doesn't mean there are not jobs out there, especially in retail. Restaurants and food services, health-care and personal care are other top industries for hourly workers, according to SnagaJob.com.

If you're in a big city, check out TaskRabbit.com to find odd jobs that can help you to earn extra cash. Task Rabbit is a service offered in about a dozen major metropolitan areas that connects people who are willing to pay for jobs with people who have the skills to perform them. Here's how it works: Someone who needs a package hand-delivered posts the task on Task Rabbit. You bid on the job, and if you're the lowest bid, you'll be assigned to to make the delivery. You get paid by the person who hires you, minus a service fee.

Start an online store Turn your hobby, skills or expertise into a part-time business. Set up your own "online store" by selling products on Amazon.com, eBay.com or relative newcomer Etsy.com, an online marketplace for handmade jewelry, crafts and other goods, as well as vintage items. Etsy charges 20 cents to list an item for four months. When your item sells, you'll pay a 3.5 percent transaction fee. You can customize your shop with a banner, profile, shop policies and more. You'll get your own URL for your Etsy shop, based on your username.

Hold a virtual garage sale Post your listings for furniture or whatever you'd like to sell online or on a smartphone mobile app like Geoli.st. Essentially a CraigsList for your mobile phone, Geoli.st. is a free app that offers virtual classified ads on the best deals near your location. Geoli.st deploys a location-based technology so that people in your area will see your product for sale (photo, description and price). Since you're selling to buyers in your area, you can avoid shipping to far away places and get paid in person.
Sell your knowledge. Calling all teachers! Sell your original lesson plans, exams, teaching guides and worksheets. TeachersPayTeachers.com is a website that lets you upload your original files to its catalog and set your own price. Basic membership to join the site is free and you'll get a 60 percent royalty on gross sales, paid to you quarterly through Paypal.

Another way to sell your smarts is to take up tutoring. Peer2Peer (part of AristotleCircle.com), matches students and tutors (ages 16 years old or older). Pay ranges from $12-$15 an hour and, generally, you have to be able to work at least three hours a week.

You can take tutoring and teaching to a whole new level at Udemy.com, a website that lets you post a video of your course and pays you for your offerings. You set the price for your course and keep 70 percent of the sales.

With an audience that has grown from fewer than 100,000 users to over half a million in the past 12 months, it can pay a pretty penny. A course on the art of black and white photography, one of about 6,000 offered, has about 1,000 students and the instructor of the course has made over $30,000, according to Udemy COO Dennis Yang. The instructor for Copy Writing 101 made over $40,000 and "How to become a web developer from scratch" is such a popular course -- with over 5,000 students -- the instructor quit his day job to teach full-time and has made over $300,000.

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