Money Blue Book

A few days ago, the legendary and super talented pop icon, Michael Jackson, suddenly and inexplicably passed away at the age of 50 due to cardiac arrest. After a long and glorious (but controversial) entertainment career that spanned 40 years and included the world’s best selling music album of all time – “Thriller”, the self anointed King of Pop was finally laid to rest in peace. Perhaps it was his enormous talent or his seemingly gentle nature, but I have always managed to overlook his eccentricities, the oddness of his perpetually changing skin color, and the lurid details of the tabloid controversies that followed him – particularly the allegations of child molestations and quirky behaviors and activities at his infamous Neverland Ranch. For me, I grew up as an adoring fan – enjoying amazing hits like “Black and White”, “Billie Jean”, “PYT”, “Thriller”, and “Jam”. I will always remember Michael Jackson for his music, his stunning liquid pop locking dance moves, the ground breaking music videos, the moon walking, and his one of a kind “hee hee” falsetto squeals. Inevitably, artists in the future will continue to pay homage to Jackson by attempting to emulate his moves and his songs, but there will never be another one quite like him ever again.

Unfortunately, the story of Michael Jackson is also one of great tragedy. Aside from the eccentricities of his life and the untimeliness of his death, the man was a text book case on how absolutely not to live one’s life. Despite building a massive music empire with an iconic brand unto himself, and despite raking in more than hundreds of millions of dollars as one of the most successful pop music artists of all time, Michael Jackson was more than $500 million in debt at the time of his death, according to The Wall Street Journal. Despite his celebrity fame as a money making machine, a great deal of multi-million dollar financial and legal troubles followed him his entire life. Well known for his insatiable and outrageously lavish shopping sprees for toys and priceless antiques, he leaves behind a mega mountain of debt and an unfinished comeback tour he had hoped would cure his financial troubles once and for all.

Unfortunately, even if Michael Jackson had lived on for many more years and had successfully raked in millions more from his concerts and performances, I still believe he still would have eventually left this Earth utterly in debt and plagued with financial issues. The man was an absolute music god, but a complete failure in the personal finance department. Living to great excess and spending grossly beyond one’s means with no accountability, and perhaps blindly assuming the financial windfalls will never end – are recipes for financial disaster. It’s not just the celebrities either. Even those who suddenly win the lottery and find themselves instant millionaires have the potential to lose it all if they aren’t careful and diligent with their investment strategies, savings, and even income tax responsibilities. Hopefully we can all learn something valuable about the need for proper personal financial management from the tragic life and unfortunate passing of Michael Jackson.

My Current Net Worth and Financial Status Update Compared To Last Month

Tracking My Income and Expenses With Free Budgeting Tools

Working that full time job, and finding ways to generate a steady income stream and make money are important endeavors, but so is finding an efficient and cost effective way to track those expenditures as well. There’s no way any reasonable person can expect to save money for the long haul if he or she is spending more than what he or she makes. You can’t expect to save or plug up those cash leaks if you don’t know where your daily funds are going. While I utilize a wide variety of account aggregator programs like Yodlee-powered Fidelity Full View and free Quicken Online to chart my bank account and credit card balances, I utilize various free budgeting software tools to help me track my spending habits.

Seeking Growth Opportunities In The Stock Market Via ETF’s

Investing in exchange traded funds (ETF’s) is the easiest way to put your money to work in the stock market without the expenses of mutual funds or the volatility risks of individual stock picking. Frankly, I’ve given up trying to buy and invest in individual companies, acknowledging that there is just too much unpredictability and uncertainty with any one particular company’s operations and disclosures. I’ve been burned too often and am finally starting to learn my lesson after all of these years. For now on and indefinitely into the future, I intend to stick solely with broader index funds that track major market indexes and industry sectors.

This month, I’ve finally transferred the vast bulk of my cash and savings account balances into my online brokers in anticipation of imminent index fund trading opportunities. However, I’ve yet to invest the funds and they continue to sit as brokerage cash reserves, waiting for me to pull the buying trigger. Call it market timing if you wish, but I’m just waiting for a good opportunity, or at least until the market settles down a bit more. I think the massive and irrationally exuberant run up in March is due for a significant series of pull backs between now and September.

Checking My Free Credit Reports and Free FICO Credit Score

For many years now I’ve lived in apartment rentals, hopping from one place to another as my various jobs necessitated. However, while I am currently still a renter, I’m gradually contemplating the prospect of becoming a first time home buyer within the next 6-12 months. It’s actually somewhat ironic since only 1-2 years ago, I was griping vehemently that home prices had soared to such ridiculous levels that the American dream of owning a home was starting to fly beyond the reach of most average citizens. It’s interesting how much the housing market has deteriorated (finally approaching rational equilibrium) and how significantly my personal financial balance sheet has improved since then.

With a thriving buyer’s market and home prices at historical lows that continue to drop, I’m in absolutely no rush to buy. While I’m still in the very early stages of interviewing real estate agents and scouting locations, I’m eager to get the ball rolling in anticipation. First thing’s first – I’ll need to know where I stand credit report and credit score-wise. Fortunately, there are a variety of ways to get my three free credit reports from Equifax, Experian, and TransUnion, and obtain my free FICO credit score from myFICO.com via a variety of cancellable trial offers.

Currently, I also utilize myFICO ScoreWatch to track my credit score changes and avoid identity theft. Recently my FICO score dropped down to 791 (scale of 300-850), due to an increased credit utilization on one of my reward credit cards. Hopefully after paying it back in full my FICO will return back into the 800’s. As a prospective home mortgage rate seeker now, I want to boost my credit score as much as possible for the next few months.

Buying A New Home – Detached Single Family Home Or Town House?

As a newbie first time home buyer, I’m still scratching my head and going back and forth between the pros and cons of buying a detached single family home versus buying a town house. I’ve already ruled out condominiums as I feel they make comparably worse investments for the long run with all things being equal – so right now my focus is on free standing houses and townhomes. As a single guy who probably won’t be getting married anytime soon for the next few years, I don’t really need all of the extra space that a detached home could conceivably provide, however I do like the extra privacy and parking conveniences that one affords. This is definitely one decision I’ll be pondering for quite some time as I spend my next few months talking to real estate agents and pouring over listings on real estate sites like Trulia.com and RedFin.com. Advice anyone?

Well it’s that time of the month again. It’s time to calculate my net worth, and update readers with a review of my current financial situation and prospective outlook. So, after spending a few months overseas for personal family reasons, I’ve finally returned home. As the bulk of my online and so-called real life business operations are run and managed over email, instant messaging, and Skype, there was barely a blip on my small business operations while I was away. In fact, despite me not even being in the country to run things for much of the last few months, the month of May still saw a pretty healthy bump up in income (as reflected by the significant increase in total assets), thanks primarily to the acquisition of several new legal clients and online affiliate partners. As my total net income is comprised of several income sources to form a diversified base, I’ve fortunately avoided much of the devastating carnage leveled by this ongoing economic recession. Only time will tell whether this healthy income streak will be able to continue for the foreseeable future at its current rate – however, I remain hopeful despite my cautiously bearish nature of late.

Thus, as far as I can tell based on current projections and observations, the only significantly damaging element that has the foreseeable potential to hurt me financially in a big way – is higher federal and state income taxes. Hopefully President Obama will play nice and leave existing federal tax rates alone and not implement any drastic increases. Yes it’s easy to get all orgasmically gun-ho about fleecing the higher bracket taxpayers to generate tax revenue to pay for aggressive governmental social projects, but let’s not forget that it’s small business owners such as myself who directly stimulate this economy via trickle down effects by generating new jobs, expanding our entrepreneurial expenditures, and purchasing/leasing real estate properties. Taxing small business owners beyond current levels is ultimately counter-productive to achieving economic recovery in my humble opinion. Do we not agree?

My Current Net Worth and Financial Status Update Compared To Last Month

Seeking Out High Interest Alternatives To Savings Accounts and CD Deposits

If you’ve got money in the bank, then you’re likely well aware that both online and brick & mortar savings account rates and CD rates have been plummeting for a while now. Unfortunately for those of us who are aggressive cash savers, things aren’t likely to improve anytime soon. So what’s one to do in our current predicament where high yield savings accounts no longer offer the same high interest rates we’ve come to depend on? While certainly one can opt to spend the extra cash savings towards paying down high interest debt such as outstanding credit card balances, home mortgages, or student loans – persistent rate chasers can always choose to seek out comparably risk free short term savings account and high yielding CD alternatives instead.

A few of the popularly rated short term savings alternatives I’ve been looking to are high yielding peer-to-peer loan investments from online companies like Lending Club, high interest reward checking account offers, and special rate deals from local banks and community based credit unions. All of these underused and under tapped alternatives currently offer APY interest rates that greatly exceed overall market rates and are definitely worth looking into. With average interest rate yields in excess of 9.00% APY (even after accounting for risk factors), P2P social loan investments on sites like Lending Club definitely deserve some extra mainstream attention.

Transferring Funds From Cash Savings To Investment Brokerage Accounts

While I remain unconvinced at the short term sustainability and authenticity of the momentary run up in the Dow Jones, Nasdaq, and S&P 500 Indexes in the last few months, I must admit – the surge has been rather impressive. However, as as investor and trader who believes it’s important to remain vigilantly fearful when others are greedy, I hope to hold out for more positive economic news to back up this bullish stock market run before I make any decisions to start investing again.

For more than a year now, I’ve held back from investing into further positions – hoping to ride out the worst of this economic recession with my cash savings intact. Well so far so good as my savings account funds have been shielded from loss, but I think it may be time to start looking for opportunities again. At the start of this month, I transferred a large chunk of funds from my high yield savings accounts and expired CD deposits into my brokerage accounts. But for now at least, the newly added broker funds will be held in my money market sweep accounts rather than invested into any new stock, index, or mutual fund positions. I want to tread very carefully for the next few months and not make any hasty investment splurges that I’ll regret later.

Making Contributions To My Retirement Accounts (IRA, Roth IRA)

Despite whatever bearish or bullish sentiments I may personally harbor towards market investing at the present time, I still feel that it’s very important to continue contributing to one’s tax deferred retirement accounts (whether they be 401K’s, IRA’s, or Roth IRA accounts). As most investment retirement accounts like the Roth, are use it or lose it arrangements, failing to make the maximum IRA contribution limit for the year (it’s $5,000 for 2009) will only deprive you of future investment funds that could be growing tax-free. At the very least one ought to avail him or herself of the maximum contribution amount as there is no requirement the contributed funds must be invested right away – they can sit as idle cash in the broker account as long as the account holder desires.

My Monthly Credit Card Balances Are High, But I Always Pay Them Off In Full

You may have noticed that my total current credit card balance suddenly surged 4,204 % during the month of May. That’s because I’ve only recently returned home to the states from overseas. While I was away, I stuck with cash purchases exclusively, a practice that differs significantly from my U.S. consumer habits, which primarily revolve around credit card based transactions. However, the moment I returned home, my credit card expenditures reverted back to their pre-existing levels. But despite whatever balances I may carry on my credit cards, I always pay my card balances off in full every month, and have never paid out a single cent in hefty credit card overcharges or late fees, thanks to my pervasive usage of automatic account debit payments and crafty utilization of 0% balance transfer offers.

Speaking of credit cards, one particular cash back program that’s caught my eye recently is the new Charles Schwab Bank Invest First Visa Credit Card (link). Cardholders get 2% cash back on all purchases, with no cash back limits, no minimums, and no annual fees. Plus, for frequent international airline travelers like myself, the Schwab Visa Card impressively waives all foreign exchange transaction fees. The only catch with the Schwab credit card is that you must open or already own a Schwab One brokerage account where the cash back rewards can be deposited into every month. Charles Schwab offers great research tools for hardcore investors, but their trading fees are higher than I’d like.

Well, tax judgment day has come and gone, and after finally paying the federal government its annual tribute, I feel more depleted than ever. Due to my higher income rate during 2008, I winded up in the highest income tax bracket possible, necessitating that I pay out more than 40% of my total annual income to the Man via federal and state income taxes. So sad…..

Looking ahead at the upcoming official federal tax brackets for 2009, it doesn’t look like my taxation plight’s going to get any easier, particularly with tax happy President Obama at the helm. Although his positive approval rating’s through the roof and the man is absolutely oozing with optimism and confidence, I doubt many of his supporters are really comprised of scrutinizing individuals or small business owners like myself who actually pay attention to the potential tax implications of his slight of hand wealth redistribution policies. For the sake of competitive small business owners everywhere, I hope Obama doesn’t go through with his increasingly aggressive crusade to seize the financial proceeds of those who have worked hard to get to where they are today, with his continuous Presidential blurbs of patriotic taxation and “spreading the wealth around”.

My Current Net Worth and Financial Status Update Compared To Last Month

Thinking About Switching Gears From Cash Savings And Back Into Stock Market Investing

While the economy continues to be battered by volatility and investment unpredictability, I am content to cautiously remain on the sidelines, clutching onto my secure and reliable cash savings, currently still saved in online bank accounts reaping what decent interest rate yields are left in this poor interest rate climate. However, I will be honest – looking at how seemingly cheap and reasonably attractive current stock prices are, it’s hard to resist the siren calls of greed and profit. My crazy, irrational side really wants me to go nuts and dump everything into financial stocks like Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC), – and bet big for the future. But then my more rationale and logical self thankfully reminds my more greedy half that stock market investing is all about making wise, long term, and diversified investment decisions for the long haul. It’s not about short time bets or gambling one’s life savings away via a single high risk, high stakes all-in-one basket dice roll. Thankfully, despite my torn emotional conflict between greed and rationality, I have been able to stay the course and not engage in any type of hasty stock purchases or aggressive index fund pickings – thus far at least.

Currently, my cash savings remain stored in several high yield savings accounts and bank CD rate deposits. But I anticipate moving a sizable portion into my brokerage account very soon to better position myself to take advantage of coming opportunities in the near future. I am still very pessimistic and hold a very bearish economic outlook, but things don’t look quite as grim or imminently dire as they once did. Obama is doing a great job of building consumer confidence and keeping the American public sentiment cautiously optimistic for the future. I just hope that this pervasive warm and fuzzy sentiment we are all witnessing at the moment isn’t temporary, and that the feel-good Obama train has enough substance to get the American and global economies back on track.

I Will No Longer Be Tracking Car and Vehicle Value For Net Worth Purposes

One of the big changes you may notice in this month’s net worth report is that I am eliminating the asset value for my car and primary vehicle. After including my vehicle asset value into my net worth for several months, I have finally decided that it no longer warrants such an inclusion. It was a mistake to even have included its value into my net worth calculations to begin with. A single primary vehicle is almost a basic necessity to everyday life and is rarely sold without replacement. Even in the event the vehicle is discarded, traded away, or sold, it is almost always promptly substituted with another one. Thus, its value really shouldn’t be lumped into the same category as that of a long term asset or investment. However, if I were to own multiple vehicles like an extra sports car for personal enjoyment purposes in the future, the secondary vehicle may very well warrant inclusion as a networth asset.

This Month’s Extremely Low Credit Card Usage Was Very Atypical Of Me

I put a whopping $104 on my credit cards the entire month of April. People who know me well may be shocked. It really isn’t like me to suddenly ditch my credit card spending habit in favor of using all cash for purchases. While a pro-cash financial guru like Dave Ramsey may be applauding my historical milestone, the real reason for the sudden and precipitous drop in credit card usage is because since March, I’ve been traveling and living overseas. As I’ve been visiting my overseas-living parents for the past few months to help them out with health related issues they’ve been struggling with, I’ve had to adjust my consumer habits to accommodate the realities of a non-credit card based society for some time now.

While it’s possible to avoid the near ubiquitous foreign currency fees on overseas credit card charges imposed on American credit cards by using a fee-less card option like Capital One or Discover Card, I’ve found that it’s usually better to stick to local paper currency while abroad. Credit card heavy countries like the United States have well developed anti-fraud and identity theft prevent mechanisms in place to instill credit card usage confidence in its consumer infrastructure. Foreign locales on the other hand frequently aren’t as well developed in this department – hence my decision to abandon risky credit card use the last few months and stick to cash exclusively.

Of course, when I return home to the United States in a few weeks, all of that will likely revert back to “normal”. I’m a big reward credit card and balance transfer user and will be resuming my old cash back credit card reward earning ways when I return. People like myself who are able to handle the responsibilities and obligations of credit card usage really lose out when we use cash since we miss out on the potential to rack up credit card spending rewards and lucrative airline credit card miles for our everyday purchases.

March 2009 has turned out to be a pretty routine month for me. As I’m currently traveling overseas for an extended period of time and won’t be returning home to the U.S. for several months, I haven’t had much time to really closely follow the progression of my financial portfolio. However, even while away, I still find time to occasionally glance at my net worth balances periodically to make sure everything is okay. So far, all basic metrics, bank balances, and credit reports indicate that I’m maintaining a pretty stable and healthy financial position – well positioned to keeping growing for the foreseeable future and weather any significant or further downturn in the economy.

While I’ve had to put my part time ambulance chasing legal practice on hold while traveling overseas for family health reasons, my portfolio of online and real world small businesses have continued to churn out a fairly steady income stream while I’ve been away, much of it passively generated without substantial attention on my part. Much of the hard work, mind numbing stress, and financial sacrifices that I made in the past few years in creating semi-self run businesses have finally paid off, allowing me to generate income and make money even when I’m not actively sitting at my home office desk in Maryland working on the computer or making phone calls.

In terms of my profession, I’m very thankful that I’ve been able to successfully make the transition from traditional 9-5 day job worker into a self employed entrepreneur and sole proprietor. The journey to get to this point wasn’t easy and there were many times when I felt demoralized and extremely lonely during my late night extended hour work sessions to the point of wanting to give up, but fortunately, I persisted. Today, I can confidently say that it was all worth it. Without my humble network of work from home based businesses and semi-self-run real life operations, I would not have been able to take 2-3 months off work to visit an overseas ailing parent – a luxury I’m enjoying today. After all, it’s not always the money – but the flexibility to set your own schedule and working pace that is frequently most sought after by many, myself included. Besides, it’s great being my own boss and not having to work for a psychotic, over-worked and under-loved attorney hag anymore (long story – I’ll save it for another day).

Those who have always desired to become their own bosses one day should make a concerted effort to make it happen and not allow idle hands to delay their dreams. There is an element of natural risk and sacrifice when trying to balance the duties of a full time job and a fledgling home office based business – but then nothing in life that is worth pursuing is inherently easy, at least initially. It’s true what they say – no pain, no gain. Anyhow, I’m sure you didn’t come here to just listen to me ramble about dreams and goals. Here’s my net worth update for March 2009.

My Current Net Worth and Financial Status Update Compared To Last Month

Continue Saving Money In Online Savings Accounts Or Start Investing?

For almost a year now, I have refrained from taking on any new stock, index, or mutual fund positions – instead opting to store the vast bulk of my money in the best bank accounts and in certificate of deposits offering the best CD rates. Thus far, in light of current volatile economic conditions, I’ve been cautiously pleased at the modest but predictably stable  rates of return that I’ve been getting from my conservative savings approach.

However, something strange happened during the month of March. The financial and stock markets actually saw a bit of an extended rally. Could we possibly be seeing the early stages of a substantive once-in-a-lifetime bull market – the likes we’ve never experienced before in our short existences? Very unlikely. Sorry to burst everyone’s bullish bubble, but I sense a massive bear market rally at work here. Sure, the market seems to be staging a bit of a rebound, perhaps soaring 20-30% in a matter of weeks, but there is nothing really tangible or economically positive as of yet to support this sudden stock buying resurgence. At this point in time, our investment emotions and sensibilities are still being artificially propped high by nothing more than mere cotton candy pufferey and wishful thinking from the Obama White House. The economy is still in the tank, unemployment rates across all 50 states are still climbing, housing market prices are STILL grossly overvalued (home owners must start selling at these depressed prices or we’ll never get back to market equilibrium), and the major banks are still struggling to deal with toxic mortgage based assets and trying to stave off a widespread federal government take over.

But with all this said, why do I strangely find myself starting to ponder whether this is a good time to start investing in the stock market and buying up real estate properties again? The answer is – because I’m a greedy capitalistic with a lusty dog nose for opportunity and profit.

As a greedy (but not evil) capitalist bent on maximizing my money and growing my financial portfolio, I subscribe to the age old Warren Buffett mantra regarding investment fear and greed – which calls for one to become fearful when others are greedy, and greedy when others are fearful. Because there is so much greed rampant in the economy and financial markets right now, the potential for massive windfalls and financial gains have never been better. Of course, the biggest problem now is timing. The worst thing I can probably do at this point in time is blindly jumping in and getting myself suckered into one of these bear market rallies, or dead cat bounces, as they are often called – only to see my portfolio get beaten into a whimpering pulp a few weeks later.

However, the winds of opportunity are in the air, and in the next few months, I may start shifting my money into online broker accounts again in anticipation of what lies ahead. While my better judgment will likely prevent me from jumping in and making a premature mistake at this very moment, I must admit, my investing trigger finger has grown a bit itchy of late.

Continuing To Invest In My IRA and Roth Retirement Accounts

While my small retirement portfolio has taken quite a beating from this recession, losing almost half of its value thus far, I intend to continue making annual contributions pursuant to my long term (25+ years horizon) investment strategy. Currently, I have a small amount of funds invested in Roth IRA’s and in traditional IRA accounts. I have yet to hit my IRA or Roth IRA contribution limit for 2009, so I will likely add additional funds in the next few weeks. Those who have not yet opened a ROTH or IRA account should really look into doing so. Stock market prices are at ridiculous lifetime lows and if you are a first time investor, now is the time to open an account with a Roth IRA broker and take advantage of cheap prices.

Filing My 2009 Federal and State Taxes Online With TurboTax

Well, after much procrastination, I’ve finally prepared and filed my 2009 taxes. Even though I’m currently overseas, I was able to bring all of my tax statements, 1099’s, and W-2 forms with me and file my taxes online. This year, I decided to file my taxes via the web again with good old TurboTax 2009. The company has always offered me a fairly efficient tax preparation and filing experience and this year was no different. The only change this year was my decision to go with the TurboTax Small Business edition instead of my usual TurboTax Premier version – mostly because of my growing need for extra assistance with business tax deductions.

This year, my taxes were incredibly high, and combing my federal and state income taxes, I paid out more than $140,000 worth of taxes for 2008. Obviously, it’s time I started looking into converting my current sole proprietorship business into a more tax advantaged business entity. So far, it looks like forming an S-Corporation, or a limited liability company (LLC) with election to be taxed as an S-Corporation are my best bets tax-wise.