The Mindset for Saving
September 22, 2006 by HART (1-800-HART)
Filed under ... RETIRE
The Mindset for Saving
By Victor Fam
I still remember back in year 2002, my attitude toward money is like this: “I earn some money, I spend it. I buy nice car, I buy nice electronic gadgets, I spend wherever I like. I don’t worry about the money. I believe that I can use my expenses to stimulate my earning power. The more I spend, the more I will earn.” Every months I hardly saved any money because I spent all of the money.
However there are 2 things that has drastically changed my mindset towards money. First thing that has change my mindset towards money is some incident that happened a few years ago. I believe that most of today’s people know what is organization redundancy exercise. Redundancy exercise basically is an exercise run by an organization when they wanted to reduce their staffs head count. That can be cause by many reasons like downsizing, cut cost or when 2 companies are merging. Basically the company that I worked for are having some downsizing exercise and they are going to lay off about 50% of the staffs. Their target is to get rid of the middle management layer in the company. I was safe at that time because they still need technical people like me. I was lucky. However I witnessed a lot of my colleagues who left. Some of them had been working for years in the company. They got some compensation for their leaving. But the compensation is not really a lot. Most of them had a family to take care of. It is tough for some of them.
The second one is after reading Rich Dad’s Guide to Investing. I finally understand what is wealth. Wealth is not about how much money you earn. Wealth is basically about how long you can sustain after you have lose your main income. Imaging if I lose my job in 2002. How long can I sustain? I would say less than 1 month. But that is still fine for me because at that time I am still young. It is easier for me to find a job. Further more I don’t have any commitment at all. Today if I lose my job, I can survice for around 6 months. I still have some time to look for a new job. I have some house loan commitment and not more than that. What about for a person who need to pay for their car loan, house loan, a few children’s education, family expenses. Do you think that saving is important for them? I would say definitely yes.
I decided that I wanted to improve my financial situation. I wanted to save more money. I don’t want to have further unnecessary debt. Down in the year 2002, I only manage to save around 100 or less per month. It is indeed difficult for me to start to save because my previous mindset had told me to spend all my money. I know I have to start from small and persist from there.
Today I can save at least 1000 per month. My strategy is to keep my expenses at the same level where my extra income will be either go into my saving account or my investment account. I try my best not to increase my expense level. I try my best to invest something that are valuable. I try my best to save a decent amount of emergency fund. I work hard to increase my income. Very fast I will be able to save at least 2000 per month.
I think a right mindset is very important towards your money. To change your mindset, it can be easy. But to undo the financial situation that are created by the wrong mindset may take years. It took 4 years for me to reach from able to save less than 100 to be able to save 1000 per month. Bear in mind that no matter how much you earn, you will have somewhere to spend it. Your expense level will always be able catch up with your income level easily. So be extra careful with your mindset towards your money.
Article Resoure: http://www.victor-fam.com/2006/06/18/the-mindset-for-saving/
Article Source: http://EzineArticles.com/?expert=Victor_Fam
The Money Fight isn’t Necessary
September 21, 2006 by HART (1-800-HART)
Filed under ... RETIRE
The Money Fight isn’t Necessary
By Martin Lukac
Money isn’t that difficult a topic. It is quite simple. It is about one thing — choice.
I understand that it is a hard thing to talk about. So much of who we are is tied up within our finances, or lack of. But to get your finances on the right path, you have to let go of that right now.
Start thinking of money as you would anything else in life. It is all about choices. Just like driving your car. You might choose the wrong road, but you readjust and move on to where you should be going. You have to learn to just accept that you make good and bad choices with your money. It happens to everyone. Just keep on driving.
One of the strangest things I have ever heard comes from a couple that I know personally. They talk as if they are struggling financially; yet, they are constantly spending money for large items. Recently, they purchased a new vehicle. Together. Went to the lot together. Both signed the lines. Both understood what it meant.
And then the husband was upset at the wife because they bought a new car. Okay, on some level, I understand that he may have felt pressured. But it is all about choices. He chose to go along. No blame can be laid anywhere else. They both may have made a poor choice, not just one of them.
When you are in a relationship, there is only one way to succeed financially — through communicating with each other.
It can be surprising how many couples are unable to communicate with each other about financial matters. My goodness, you see each other naked, yet you can’t discuss the spending of paper bills?
I think that part of this is due to couples just wanting to forget about their finances. Things ignored will go away, right? Nope. They just get out of hand.
Many couples have tried and have disagreements and fights. So they no longer want to talk about it with each other. Over half of divorces are due to disagreements over money. That’s what happens when you ignore it.
Why are there money problems in marriages? Because people aren’t talking. And often, they are already blaming themselves for being in financial trouble, so they are easily angered and defensive to begin with.
Lack of communication can run from being blissfully ignorant as to your financial situation to spending money that was being saved by your partner for something else. Perhaps you make an important financial decision without discussing it with your partner. Maybe you spend a lot of money without telling your spouse.
Or it could get worse even. You could have credit cards that your partner doesn’t know about. You could be hiding your shopping. You could be lying about how much money you have.
So what do you do to keep a fight from breaking out when you talk about finances. The first step is to be open. Leave your ego outside the door. You aren’t better than your spouse. You don’t know everything. Your spouse and you are equal partners in this relationship. Both of you must make the decisions.
In my family, I have a strong knowledge of finance. My husband didn’t even know how to balance a checkbook correctly when we were married. I handle the finances. But I never do anything without talking about it with him. We have regular “meetings” to assess where we are and what changes need to be made. I mess up. He messes up. We don’t tear down each other, we encourage each other to reach for the goals we have set.
We all make mistakes. I tend to spend too much money when I am upset. My husband forgets to check to see how much we have before making large purchases. It happens. We try to learn. We support each other.
Sit down and talk openly and honestly about your finances. Promise each other that you will remain calm. It can often help to do this in small doses at first. Thirty minutes every night is often plenty. If you feel that you are getting upset with each other, take a break and think about things. Talk with your spouse as you would a friend, a co-worker or your boss. Be patient, honest and don’t let your ego kill the conversation.
Don’t be scared to talk with your spouse. You have to do it. It is essential to your financial success. And if you can talk about money, you can talk about anything.
Martin Lukac represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate and mortgage rates. We specialize in daily updates, mortgage news, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!
Article Source: http://EzineArticles.com/?expert=Martin_Lukac
Creating Surplus Cash For Savings and Invest
September 20, 2006 by HART (1-800-HART)
Filed under ... RETIRE
Creating Surplus Cash For Savings and Invest
By Richard Kimball
You know you need to be saving money but you never seem to have enough at the end of the month or worse, you are further in debt.
Living below your means is more a matter of self-discipline. A few adjustments here and there could be all it takes to have the necessary funds available for saving and investing.
Some mutual funds can be opened up for as little as $200 with minimum contributions around $50.
Here’s a list of ways to save money by spending less.
*Open up bank accounts that have little or no service fees. Keep a cushion to avoid accidental bounced checks. These can eat you alive. Be sure to maintain your minimum balance to avoid service charges.
*Try to avoid banks that charge you a transaction fee for using their debit cards. If you have no choice, plan how much money you will need in a given period and then withdraw it all at once to avoid too many transaction fees.
*Compare credit cards. Look for the ones that have little or no annual fees. It’s not too hard to find those with no annual fee.
*Avoid specialty store charge cards as they often have interest rates six or seven points higher than major credit cards.
*Never choose a card based solely on incentives or reward programs. These include auto reward points and air travel miles. These cards may lead you to spend more money over time than you can afford.
*Most importantly, avoid unnecessary interest charges by paying off the complete monthly balance. You can avoid hundreds of dollars in interest expenses on an annual basis.
*When you buy a car, consider buying one that is one to three years old. A one-year old car will be about 20% to 30% less than a new car. A three-year old car is a good buy because it could be around half the price of a new car. A car depreciates the most in its first three years. After that the depreciation levels off and it will lose less of its value.
*Another good saving when buying a used car is you will pay less for the insurance.
*When going on vacation, consider staying in your home state instead of long distance trips or even international travel. It’s often cheaper to travel within your own borders, that way, you avoid visa and passport costs, border hassles, currency exchanges, tropical shots, medication, and additional health insurance. Frequently, people travel thousands of miles to see sights not nearly as spectacular as what’s next door.
*You should consider off-season vacations. Travel at a time when everyone else is at work or school, and the staff will actually be glad to see you. You may also save 50% or more on the usual travel expenses.
*Avoid large cities and tourist traps; you’ll save a ton by avoiding these places, where you pay more to eat, drink, sleep, and travel. If you do decide to visit a big city, consider accommodations in a smaller town close by.
*If you have a lot of credit card debt at high rates, look into consolidating your debt at a lower rate.
*Refrain from making impulse purchases. Exercise self-discipline.
*Refinance your mortgage or debt at a lower rate.
*Refinance your car loan at a lower rate.
*Shop around for cheaper car insurance rates. There can be a big difference.
*Lower your phone bill by using self-control on long distance calling.
*Use a phone card for long distance or international calls.
*Use coupons when you shop.
*Don’t buy things just because they are on sale.
*Wait for things to go on sale before buying them. Keep a record of when things go on sale. Some items will seasonally go on sale. Ask stores when certain things will go on sale.
*Buy generic, or non-name brand merchandise. Most times the quality is just as good.
*Stop smoking. This habit is extremely expensive.
*Contribute the maximum each year to your 401K or to an IRA.
*Remember, paying down debt is also a way to save money. If you can make extra payments on your mortgage or go for a 15 year mortgage instead of a 30 year mortgage. The savings are enormous.
*Reduce the number of times you eat out. Oftentimes eating out at a restaurant involves paying a lot of money for over-priced and over-sized meals. For healthy meals and to save money, eat at home.
*Watch videos or DVDs at home instead of going to the movies. Pop your own popcorn instead of paying a lot for theater popcorn.
*Evaluate your entertainment and recreational activities. Many are very expensive to participate in. There are many others that are just as fun and entertaining that are at the fraction of the cost.
*Don’t try to compete with your friends and neighbors. Sometimes, an apparent prosperous lifestyle can be an illusion. Those illusions come with a lot of debt. It’s much better to have peace of mind.
Be alert. There are always ways to save money. Soon you will yourself with money you never knew you had. The key is to put that money to work for you instead of spending it.
Richard Kimball is a successful entrepreneur, artist, and teacher. His latest project is to share the universal principles of success so that others can achieve prosperity and the fulfillment of their dreams.
Website: Building A Successful Life
Article Source: http://EzineArticles.com/?expert=Richard_Kimball
Top 10 Ways to Cut Spending
September 20, 2006 by HART (1-800-HART)
Filed under ... RETIRE
Top 10 Ways to Cut Spending
By Kristine McKinley
Do you run out of money before you run out of month? Do you wonder where your money goes each month? Do you struggle to find money to invest for retirement, emergencies and other financial goals? Here are 10 tips to cut your spending and stretch your dollar to the max:
1. Consider dropping your home telephone line. Your cell phone is probably all you really need, and most likely it has free long distance. You could save $30 or more per month by dropping your “land line”.
2. Cut back on trips to Starbucks or other premium coffee shops. Often called the “latte factor”, spending several dollars per day on luxuries like premium coffee can really add up. For example, if you spend $4 for a cappuccino five times a week for 50 weeks out of the year (you’re on vacation the other two weeks), you would spend $1,000 in a year. Try treating your trip to Starbucks as a treat instead of a habit. You’ll save money and probably lose weight too!
3. Pay your mortgage payment bi-weekly instead of monthly. You’ll pay less interest and pay off your mortgage faster.
4. Carry cash instead of credit cards. Psychologically it’s harder to spend cash than it is to use the credit card. You’ll spend less and save on interest charges.
5. Use the “envelope system” for groceries, dining out, entertainment, and other discretionary spending categories. This will help you track how much you spend in these categories as well as prioritizing your spending.
6. Raise the deductible on your homeowners and auto insurance policies. It’s not wise to file claims for small losses anyway (insurance companies love to raise rates after you file a claim), so a higher deductible will save you money now and in the future.
7. Buy regular gas instead of premium. Most cars don’t need premium gasoline. Also, take public transportation if it’s available in your area. Take advantage of “park and ride” and carpooling options.
8. Plan your purchases to avoid impulse buying. Take a list with you to the grocery store and stick with it. Studies show that impulse buying can add $10-50 to your grocery bill – ouch!
9. Go to the library instead of the bookstore. If you’re an avid reader, give yourself a book budget for books that you will want to keep, and go to the library for everything else.
10. Take a vacation at home. Check out all the local sites and happenings. You’ll rediscover your hometown and save on travel and hotel costs.
These are just a handful of ways you can cut spending and stretch your dollars, but if you follow these tips you’ll discover you have more money at the end of each month to apply to other financial goals, such as saving for college, retirement or just for a rainy day.
About the Author
Kristine A. McKinley, CFP, CPA, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis.
To sign up for free financial planning tips, worksheets, checklists and more, visit http://www.beacon-advisor.com
Article Source: http://EzineArticles.com/?expert=Kristine_McKinley
Key Aspects Of Managing Your Personal Finance
September 19, 2006 by HART (1-800-HART)
Filed under ... RETIRE
Key Aspects Of Managing Your Personal Finance
By James Taylor
Increasing consumerism has given rise to the phenomenon of over expenditure by even an average earner and in turn has resulted in more and more people reeling under debt burden. The problem escalates because people care little about key aspects of personal finance. One can in fact benefit much if finance availing and management aspects of personal finance are especially taken care of.
Both finance availing and management of personal finance goes hand in hand. Main sources of personal finance are credit cards and personal loan. Credit cards have become most popular and easier way of both taking finance and making expenditure. Every item purchased goes to the cardholder’s bill. Lack of cash often encourages consumers to swipe credit card more. This only results in debt accumulation. To minimize credit card debts, take precautions. It would save you lot of money if you use credit card only when there is no other alternative to it because if the dues are not cleared in time the credit card issuing company slaps high penalties. This worsens the debt problem. Also, when applying for credit card, make sure you pick up the company that charges the lowest possible interest rate. Your interest outgo must remain lower so that you save enough for other expenses and rainy days.
Another way to managing Personal Finance is to prefer using debit card. You can spend only up to the amount you have in your account. Thus debit card keeps you away from overspending and resultant unnecessary loss of finance.
Personal loan is an effective source of personal finance. When opting for a personal loan, again, your concern should be to save as much as possible on cost of the loan. Personal loan makes you financially secure and stronger as you use the loan constructively. Avail it at lower interest rate so that you do not feel debt burden. The best way of bargaining for lower interest rate is to opt for secured personal loan. In this type of the loan any of the borrower’s property is placed as collateral with the loan provider. With the loan well secured, lenders are willing to reduce interest rate. Also, greater repayment term is offered so that monthly outgo towards installments is reduced to the comfort of the borrower.
Think of saving money because this habit will help you meet finance in an emergency. Open a wealth account where your money grows into your largest net worth as the money is not spent and invested only. Make all efforts in lessening debt burden. For instance, pay extra principal amount towards car loan or credit card so that you do not accumulate debts and managing finance becomes easier.
Personal finance is all about getting it from right source at low cost and managing it in such a way that any debt burden is avoided and life becomes enjoyable. Credit card and debit card should be used judiciously and personal loan or any source of finance should be given thought in terms of low cost and managing finance
James Taylor holds a Master’s degree in Commerce from JNU. he is working as financial consultant for Chance For Loans. To find a Personal loans, Personal Finance, Debt Consolidation that best suits your needs visit http://www.chanceforloans.co.uk
Article Source: http://EzineArticles.com/?expert=James_Taylor
Are You Afraid Of Budget Prison?
September 19, 2006 by HART (1-800-HART)
Filed under ... RETIRE
Are You Afraid Of Budget Prison?
By Gregory Walding
Do you put living on a budget is the same category as living on a diet? I know most people would rather die than live on a budget. But, did you know, that living without a budget will get you into a lot of trouble.
Before we get started with using a budget, let’s change the way we think about the budget. First, let’s call it a money plan instead of a budget. You know what they say; if you fail to plan then you plan to fail.
What we want to do is plan where our money is going before we get the money. Sounds easy, but don’t let that fool you. How many times during the month have you had unexpected expenses that just wiped out any chance of following a plan? The way to handle those times is to actually plan for them. Looks familiar doesn’t it.
Take any great plan and see what is involved. They have a plan A and a plan B and a plan C and so forth. That means they have planned for all kinds of unexpected events and they have thought about how they were going to handle it when the events occur.
You need to do the same with you money plan (budget). One of the items on the budget should be for unexpected expenses. You should accumulate this money each month and not spend it if no unexpected event occurs. When one does occur, just take the money from this budget item and use it to keep your plan in place.
If you do have an unexpected expense and the money for this item is not large enough to cover it, then it is time for plan B. Plan B would be to prioritize the items in your budget, which you should have done already, in the order that they will be paid. A good order of priority would be (1) food, (2) housing along with utilities, (3) transportation including gasoline, insurance and maintenance and (4) the remaining bills.
The reasoning behind this list is that to be able to bring the income into your home, you need to eat to have the strength to work, you need a place to live to get rest, you need a way to get back and forth to work and then the rest is what you pay for.
Now, looking at this as a plan instead of prison, you can see where this will relieve a lot of stress and headaches for you. It is much easier if you know ahead of time what you are going do if something happens than it is if you have to make decisions all of the time.
And one last thing, if you want your money plan to be something you can actually use, then put an item in it for money to have fun. If you don’t, the plan won’t last long.
To really help out with your money plan, check out some of the information at http://www.extremepersonalfinance.com
Article Source: http://EzineArticles.com/?expert=Gregory_Walding
Financial Planning 101 for Retirement Life
September 18, 2006 by HART (1-800-HART)
Filed under ... RETIRE
Financial Planning 101 for Retirement Life
By Natalie Aranda
After fifty years of working, chances are we crave the day when we can retire. We no longer have to wake up at 5 a.m., sit in rush hour traffic, or stress over unrealistic deadlines. These very factors are just the reason why we count down the days to relaxation. While most of us fantasize, the majority of the baby boomers don’t realize that financial planning doesn’t stop at 65. Retirement planning is crucial, regardless of what stage you are in.
It has always been a common myth that people do not have to save for their retirement until they have sent their children to college and have time to rest. This could not be further from the truth, as it is important to always plan ahead, even if it means starting in your 20’s. Unfortunately, we never know what is going to be around the corner. Due to health problems or other issues, we may have to retire sooner than we think. Thus we must save steadily incase a financial burden is forced upon us.
The first thing you need to do is think of financial planning. Retirement planning is not easy, but it is possible if you create a budget for your living expenses. After all, the more money you save each month, the more luxury you will be able to have once you stop working! You must stay informed and know every alternative that can be offered to you. Most companies offer retirement packages or a certain percentage of salary to go straight into a retirement fund. This is a wonderful opportunity if you can do it, because it helps you build upon your retirement planning package.
If you are doing it on your own, you must make sure that you create realistic goals for yourself. For instance, if your two children are going off to college in a year, and you want to save 50% of your paycheck for retirement, chances are this is not going to happen. You have to make a list of your top priorities and put money aside for each one. Although your children’s college education may require more money for four years, you can assume that you’ll be able to spend the rest of your salary on retirement planning once they have graduated.
Another alternative is life insurance settlements. Many people end up wanting to get rid of these policies due to an illness or a financial burden. Through life settlements, one can actually sell their insurance plan to a third party. By doing this, the person acquires a large amount of money, and they are no longer connected to their life insurance. If you are in need of extra money, many people feel that life insurance settlements are beneficial.
When we start to get older, we automatically get worried about our futures. With no steady income after the age of 65 or 70, it does look frightening. However, as long as you make sure you keep up with your retirement planning, there should be no need for stressing. There are hundreds of alternatives to make money, including life insurance settlements and just simply evenly distributing your salary. It is crucial to set goals and be sure to stay organized. The last thing you want to do is not keep track of your money. If you don’t, in 20 years from now, you sure will be kicking yourself.
Natalie Aranda writes on family and financial planning. Through life settlements, one can actually sell their insurance plan to a third party. By doing this, the person acquires a large amount of money, and they are no longer connected to their life insurance. If you are in need of extra money, many people feel that life insurance settlements are beneficial.
Article Source: http://EzineArticles.com/?expert=Natalie_Aranda
Six Random Links: September 18, 2006
September 18, 2006 by HART (1-800-HART)
Filed under ... RETIRE
Here are six items that I found in my Bloglines .. I thought they are interesting enough to pass along for your perusal! …/ HART
(1) How To .. Personal Finance Edition - AllThingsFinancialBlog.com
(2) Control Impulse Spending With The 30-Day Rule - GetRichSlowly.org
(3) Carnival Of Personal Finance - FreeMoneyFinance.com
(4) In Debt We Trust (Movie Trailer) - inDebtWeTrust.com
(5) Tips For Saving On A Wedding - SoundMoneyTips.com
(6) Retirement Planning For The Soul - YourWayAhead.com
Saving Money and Living Frugally
September 18, 2006 by HART (1-800-HART)
Filed under ... RETIRE
Saving Money and Living Frugally
By Adam Knife
No one wants to be stuck in a situation without enough money, though, many end up in the exact situation. From single parents who have to raise and take care of a young child to the businessman who loses his job, there are hundreds of situations that could leave you strapped for cash. To chop down your expenses, there are some major tips you can take.
The first, and most important, as well as most obvious movement is to cut out non-necessities. Anything which there is a cheaper and equal alternative to, you can replace. You don’t need brand names anymore, you don’t have the money to spend on them right now. Stick to store brands where you can, and make sure you get good use out of your coupons.
The second most effective tip I experienced in my period of frugality, was to call your bill providers. Play the game of customer retention, go through their automated phone system to the point where you’re trying to cancel your subscription: you’ll be connected to a person who’s employed as a “customer retention officer,” their main job is to try to keep you as a client, explain that you “found a better deal elsewhere,” (of course, actually FIND the better deal, even if it doesn’t provide all the services as the one you’re at right now) and that you’re moving on. They won’t be quick to let you go, as soon as they start to open up possibilities, explain that you’re not really excited for the hastle of moving your current system over to a new company, and if they could make you a better offer you’d be glad to stay. All my friends and I have tried this, and usually saved up to FIFTY percent off our bills!
Coupons! The Internet is loaded with coupon code sites, and sites for “trading coupons” for brick-and-mortar stores. Make great use of your coupons and you will notice the savings, some combonations of coupons could get you certain things absolutely free: as you spend more time couponing you’ll be very good at the math and able to calculate your approximate price in your head to make sure you’re finding things that offer amazing deals. Sites like this software coupon library work with the developers of major software to deliver you great deals, better than you’ll find anywhere in the “open.”
Along with coupons is the act of stocking up. When you see a good deal, or have a good coupon for something you will use (if you won’t use it, you’re losing money by buying it, remember), buy lots! Remember that deal may never come around again, and capitalize on it: long term, this will save you huge money.
Being frugal becomes a hobby, a lifestyle even after a while, once you’re back on your feet, there’s still no reason to stop, and chances are you won’t want to. Being frugal usually means you’re more environmentally conscious, and likely doing the world a range of good simply by saving. Good luck with your frugality!
Adam X. Knife is a frugal liver, webmaster, developer, programmer, businessman, and a range of other things. He runs the software coupons library site referenced within the article, as well as a site which reviews cellphones.
Article Source: http://EzineArticles.com/?expert=Adam_Knife
Private Annuity Trusts - Supercharge Your Retirement
September 17, 2006 by HART (1-800-HART)
Filed under ... RETIRE
Private Annuity Trusts - Supercharge Your Retirement
By Paula Straub
You have made some great investments in Real Estate or in a Stock Portfolio. Congratulations! Now you are ready to retire on your gains. But wait. To benefit from your investment appreciation, you’re going to have to sell some or all of those assets.
If you sell your investment property, you will need to pay capital gains tax to the Federal Government, State, and you will also pay recaptured depreciation. If you’re in California, add another 3 1/3% in withholding. That’s a huge chunk of change, and a big blow to your savings.
If you sell your stocks, you’ll be giving up at least 15% to capital gains. There is also no guarantee that the long term capital gains rate will remain at 15% forever. It could increase down the road.
How can you start receiving income but not get hit with huge amounts of tax?
For real property, there is a 1031 exchange into a tenant in common property. This works well for investors that don’t want to manage property anymore, but still enjoy the benefits of real estate ownership. This is a subject covered in many of my previous articles.
There is another powerful concept. It’s called a Private Annuity Trust. These trusts have been around since 1939, but until the last few years have primarily been used for Estate Planning purposes. The Private Annuity Trust also works extremely well for Retirement Planning. It is fairly complex to set up and administrate, so many financial planners, real estate brokers, CPAs and Attorneys still don’t know much about them.
The procedure is basically this.
1. A Private Annuity Trust is established. You, the seller become the annuitant.
2. A fair market appraisal is done to determine property value.
3. The seller can negotiate a sale price at the appraised value.
4. The property is transferred to the trust and the trust is now the seller of the property and retains the proceeds.
5. The proceeds are invested by trustees (not the annuitant) and an arrangement is made to pay the annuitant (and perhaps their spouse) in monthly payments for the remainder of their lives. The capital gains tax is spread out over the course of your lifetime. If you pass away before your estimated average calculated life span, the remainder of the assets pass to the beneficiaries. The balance will be passed free of Estate Tax, Gift Tax, Generation skipping tax, and Transfer tax. Any capital gains tax still due will be paid before disbursement.
6. Other properties or stocks can be added to the trust at a later time, and recieve the same benefits.
As an example, let’s say you have a million dollar gain on a property. You might very well owe 350K in taxes. With a Private Annuity Trust, all one million goes to work for you, and you can receive montyly income for the rest of your life. The exact amount is determined by your age and the time you choose to begin receiving your payments. You have the option to defer receiving payments until the age of 70 1/2. This allows the assets to grow compounding and tax deferred, and allows for greater income in the future.
The trust removes the assets from your estate, as the trust now owns them and the annuitant relinquishes control over how they are invested.
Setting up a Private Annuity Trust can definitely give a turbo boost to your retirement bottom line. Ask yourself, would you rather give a “gift” to the government in a big lump sum, or would you like to pay in small chunks and have the bulk of your profits working for you and earning compounded interest for years to come?
Paula Straub will guide you through the process of keeping your Capital Gains working for you and generating passive income. To receive your invitation to her free teleconference, visit Save Capital Gains Tax
Article Source: http://EzineArticles.com/?expert=Paula_Straub
