Posted on August 17, 2008 @ 11:10 pm - Written by BawldGuy
Of course I have no empirical evidence of this contention. However, dealin’ with real estate investors for over three decades, I’ve been able to observe certain personality traits repeat themselves. One of these is the so called ‘maverick’ gene. You know, when I was in high school, you either loved the Beatles or the Stones. The ones who didn’t care what others thought, went for the second tier, so called ‘cuz they weren’t the Beatles or the Stones.
I liked the Beatles, but could take or leave most of their stuff. Same with the Stones. ‘Course, they both recorded songs that I still love today. Still, high school buds never tired of laughing at my musical taste — which they said was mostly in my mouth. Not so. I just had what Grandma always said was an eclectic taste in music.
Fast forward to the present, more or less. Unlike the Kingsmen who were almost the poster band for one hit wonders (Louie Louie), These guys have been around for years. Anyway, I like these guys. They do what they think is best and right, and let the chips fall, regardless of what others think. Read the rest of this entry »
Posted on August 15, 2008 @ 11:41 pm - Written by BawldGuy
At a family dinner tonight we had three generations at the table. We were at one of our favorite places, and were enjoying several appetizers. Grandma came up in the conversation as we were talkin’ about the Great Depression. The usual stories were told, but then my daughter asked me to tell her favorite Grandma story.
Here’s some perspective against which you can evaluate our current economic challenges.
In the early parts of the last century, the 1920’s, though history books tell us everyone was in the high cotton, bad times had begun for many areas of the country. We usually hear about the Roaring 20’s with the wild parties, and regular folks makin’ it big time in the stock market.
That’s true as far as it goes. Those in ‘fly over’ country were already gettin’ a preview of what was just around the corner. Grandma was the oldest of eight kids. Think it was like The Waltons? Think again. The story is short, and for Grandma ends up being about, of all things, shoes. But for me? It was always about perspective. Read the rest of this entry »
Posted on August 10, 2008 @ 8:44 pm - Written by BawldGuy
This post was recently published as guest post. Thought I’d also publish it here as Sunday reading.
In my opinion, the all time political football in America has been the middle class. They either don’t make enough at work, are taxed too much or too little (too little?), or have disappeared altogether. None of those arguments are what continually keeps my attention. Not even close. Taxes? Middle class families figure things out and manage to survive the idiots in D.C. and their ‘help’ one way or the other. How ’bout college for the kids? Again, they figure it out.
The #1 concern I’ve always had when it comes to the American middle class is what’s waiting for them at retirement.
In my view, the debates over middle class job income, or even their net worth to a certain extent, misses the target for which they should be primarily aiming. What I’m not saying very well is that saving and investing in and of itself is the very reason the vast majority of our middle class is gonna be living out a life sentence instead of enjoying a wonderfully planned retirement. How so?
They’re listening to folks who apparently haven’t gotten the memo on what’s workin’ and what’s not. What are middle class folks being told these days? Slam as much money into the government’s qualified plans for retirement as possible. They sell this easily by hawking the annual tax savings allowed contributors for each dollar they invest in their qualified plans. The only retirement being enhanced in a major way by most qualified retirement plans is Uncle Sam.
Here’s how.
Take a middle class couple contributing to their 401(k)’s from 30-65 years old. Each year they they save anywhere from $3,000-10,000 in state/federal income taxes. In 35 years let’s say they’ve saved a total of $250,000 in taxes. If after 35 years they’re combined plans have reached $2 Million, and they figure a way to obtain a 6% annual return for their retirement income, they’re potentially in trouble. Their house is no doubt free and clear. They have no tax shelter of any consequence.
In reality, they arrive at retirement with at best, $120,000 a year in income. They’ll most likely be liable for the highest income taxes possible. Let’s say they pay about $35,000 in combined state/federal taxes. This means by the time they’ve been retired 14 years, they’ll have paid just short of twice what they ’saved’ in the previous 35 years. And that’s it ’till death.
Please tell me in what scenario does saving $250,000 in taxes for the privilege of paying out twice that amount in less than half the time, make sense. Why not investigate alternatives allowing you to not only create a far more abundant retirement income, but also keep more of that larger income? Why not also do this while building tax sheltered and tax free income?
Indeed, why not?
Here’s what I’d be pleased for you to take away.
Don’t keep your eye on a few tax dollars saved each year. Keep your eye on the real ball — your retirement income, and it’s after tax safety. Stop allowing Uncle Sam to play ‘hide the pea’ with your retirement plans. That pea is your gold.
Posted on August 2, 2008 @ 10:51 pm - Written by BawldGuy
While havin’ online conversations with RE friends around the country today, I stopped to think about the last 50 years. It’s amazing what we’ve seen in technology, medicine, space travel, communication — the list is long. We don’t hafta do anything more than mention real estate. What it’s been through in the last half century has been just as impressive.
A $5,000 investment made 50 years ago, with no additional capital added over the years, would easily be worth $1.5-5 Million today! (Assuming 1031 tax deferred exchanges etc.) But since I’m one beat puppy tonight, and already had my real estate investment fix during a meeting with some really smart newbies, I’m gonna leave you with 50 years of latin music in three videos.
Posted on July 30, 2008 @ 12:10 am - Written by BawldGuy
This was many moons ago. The client was on in years and wanted to execute a tax deferred exchange to younger, higher cash flowing properties. Oh, and by the way, Jeff, can you exit about $75,000 in cash for me? When asked why, and getting the usual lecture from her about it being none of my $%^# business, I explained how her answer would most likely dictate how I’d design her transaction.
She always allowed me a smile after givin’ me the expected hard way to go. It was a dance we did, at her calling. Turns out, since she was gonna keep the newly acquired property for quite awhile, she wanted the cash way ahead of when she actually needed it. Though semi-retired her income was still six figures yearly, as she owned a long established cash cow cafe. (She hated it when I called it that.) Turns out in three years she was turning over the reins to the cafe, and forgoing the income. This worked out ‘cuz by then her portfolio was already cash flowing, uh, more than adequately. (She had quite the portfolio.) This was probably gonna be her last exchange, and it was mostly due to her wanting younger property with lower long term operating expenses.
My assignment was to get her $75,000 — and time it for three years from the close of this exchange. It would be for a long trip she was gonna take, and frankly, just ‘cuz she wanted a little more spending money for when she turned over the cafe to her son and daughter-in-law.
