Posted on February 17, 2010 @ 4:00 am - Written by BawldGuy
My parents and grandparents, more so with the latter of course, imbued me with a deep respect and understanding of the economic/financial ‘normal’ which permeated their lives. Even when some of the paradigm shifts radically changed the landscape, post WWII, their mindset for the most part wavered not an inch. I’ll confess to being the typical Boomer, in that my early adult years demonstrated a combination of ignorance and a certain self assuredness not supported by either empirical evidence or personal experience.
Put more succinctly, I was the typical 20-something know-it-all whose real life lack of experience, expertise, and knowledge was nearly immeasurable.
Then several ’storms’ converged to enlighten me. Read the rest of this entry »
Posted on January 28, 2010 @ 6:00 pm - Written by BawldGuy
Many aren’t aware of the new rule allowing conversion to a Roth IRA from a traditional IRA. — regardless of either your income tax filing status or your income. Income? Yeah, those makin’ over $100,000 annually used to be restricted from creating Roths. That rule has now been eliminated for good. It became effective the first of the year. You’ll be happy to learn it also allows you to spread the conversion’s tax hit over three years — AND — you’ll be able to skip 2010 totally. This makes it possible to split the tax between 2011 and 2012. This tax split is only available this year. As you might imagine, this bundle of carrots offered to taxpayers has generated a buncha IRA owners to dive into the conversion pool.
Here’re a few other facts you should know about converting to a Roth IRA Read the rest of this entry »
Posted on January 19, 2010 @ 5:31 pm - Written by BawldGuy
Ever wonder about the ‘known fact’ that when you retire, you’ll automatically find yourself with vastly reduced income? Given any thought to what that implies? I have, and for quite some time. Granted, for the small fraction who’re big wage earners, it’s more likely to be true than not. You may agree with me though, that at least the 80/20 rule probably applies. But if you’re in the vast majority of wage earners, it simply doesn’t have to be true, nor should it be.
What the heck am I talkin’ about?
Let’s create a case study of sorts. We’ll construct a typical 35 year old couple. Their goal for retirement is to quit working at 65, sooner if possible. They both work, have a couple kids, and are savings/investment oriented. They gross a combined $95,000 a year — him as the manager of a Costco store meat department and her as a pre-school teacher. Read the rest of this entry »
Posted on December 15, 2009 @ 3:48 pm - Written by BawldGuy
When any particular resourse we have is finite in nature, trading it for something on our menu means, by definition, there’s something for which we didn’t trade. Though we chose ‘A’ over ‘B’, part of the cost of choosing ‘A’ was passin’ on ‘B’. Much of the time we learn what that exact cost was by way of hindsight. Best case scenario is that cost being, more or less, about what we thought in the first place.
This concept is called opportunity cost — the economic consequences of choosing one thing over another. Sometimes the cost isn’t just economic. For example, did you attend college? Did you have a wide choice? Years later, are you happy with the one you chose? Opportunity cost. Read the rest of this entry »
Posted on October 27, 2009 @ 4:22 pm - Written by BawldGuy
When analysts wanna illustrate a point with a little extra gravitas, they’ll often invoke the concept of the vaunted ‘Fundamentals’. Given analysis with them vs without them, we’d all opt to have them well blended into the equation, right? Of course.
Here’s the problem though, especially as it relates to the garbage in/garbage out principle in the form of an axiom.
BawldGuy Axiom: Using most of the required tools to complete a job well ain’t gonna work — and the proof will show up in the results.
Ever been workin’ out in the gym and seen one of those guys who didn’t get the memo about workin’ the body as a whole? They generally look like Ahnold from the waist up and Olive Oil from the waist down. I’ll bet you’ve seen this before. They’re applying the fundamentals of body building through resistance training — but doing it selectively. FAIL. Read the rest of this entry »
Posted on August 20, 2009 @ 10:06 pm - Written by BawldGuy
Just a brief reminder — you very rarely get a second bite at the retirement planning apple. You’re 35? Good on ya. Here’s a bulletin: Time, regardless of how immortal you may feel today, simply isn’t your friend. Don’t believe me, believe those who’re 45 at your company. If they started contributing to their company’s Qualified Plan (401(k) ) when they were 25, by the time they’d passed 40, they were feelin’ like world beaters. Time? They had 15-25 years to grow their already impressive portfolio just a few short years ago.
Wonder what they’re thinkin’ now? The lesson all of us learn as we age is that time, like the tides, come and go regardless of anything else in the universe. We all get caught in the backwash of Black Swans at least once in our lives.
Time can be our best friend or our worst enemy. Read the rest of this entry »
Posted on August 18, 2009 @ 7:53 pm - Written by BawldGuy
Those who’ve been comin’ here quite awhile probably remember my ‘I’ve Seen This Movie’ posts. So far, nobody’s died — and it seems, as I spoiled the probable ending of this current horror flick, we’ll come outa this one bowed but not broken. The American people — um, that’d be you and me — allow ourselves a short period of whining, then we buck up and kick booty. Always have, always will. I’m thinkin’ a little economic review would be in order.
Having begun my career during the 1969 recession, a term I thought had to do with hairlines (Please — don’t say it, it’s far to easy.), I went through over 30 years before seeing a fixed interest rate under 7% — really. My first seven years in the business saw me close exactly zip, nada, zilch, zero transactions using non-government related loans. Sounds crazy now, but absolutely true. Think about it — who had 20% down? Not the folks with whom I dealt. Remember too, I was barely 18 when I started, proud to be shaving more than twice a week. 
After a few years of school and real estate, I went full time. Turns out I seem to attract recessions, as the ‘74-75 recession hit big time. Again, what did I know? Remember, I was still in the housing side of the biz at that point. I’d just started what was called ‘farming’, a new term to me back then, and just plowed through (sorry) my daily farming, oblivious to the national economy swirling around the porcelain fixture. Read the rest of this entry »
Posted on August 10, 2009 @ 9:12 pm - Written by BawldGuy
When I closed my first tax deferred exchange, some time in the late 70’s, I was elated. Next to Neil Armstrong I’d taken mankind another step along the path of evolution. At 27 I thought I’d scaled the mountaintop and was about to plant my personal flag on the summit. What else could I possibly do that was better than that?
Turns out quite a bit, but anyone with a lick of common sense woulda known that. Though that particular 1031 was well advised, and double/triple checked by my client’s tax guy, I soon learned from a few mentors the lesson to be learned before the fact, about doing tax deferred exchanges. In much the same way we became stalkers when it came to ice cream and candy as kids, real estate investors will, more often than not, treat exchanges similarly.
The penalty for the later is infinitely harsher than the former for sure, but usually not discovered as such ’till the barn door has been closed.
Let’s work backwards. Read the rest of this entry »