Archive for February, 2010

Recent graduates are notorious for not having a freakin’ clue where their money goes. If you’re going to thwart financial disaster in the adult world, you need to have a budgeting plan. Seriously, don’t even think about investing until you get a handle on this subject.

It’s not hard. Just do it.

The first part of any budgeting process is to figure out where your money is going right now. Keep track of every penny you spend for a month. Hit Burger King (or the fast food franchise of your choosing) twice a week and you’re coughing up over $500 a year. Toss in a couple of daily sodas from the vending machine and you’re looking at another $300 annually. Geez, you could have taken a modest vacation with that coin. Or maybe began saving for investments.

It doesn’t mean you’re a bad person; just that you have a few bad habits to break. Tracking your expenses for a month will give you an idea of how to handle routine expenses but you can’t ignore the unexpected. It’s a lack of planning for the sudden expense out of left field that will waylay your financial plans.

Here are some items to think about: car repairs, medical costs, holidays and birthdays, weddings and baby showers, emergency travel, office parties, broken appliances, job loss, and much, much more.

In the coming days and months we’ll revisit basic budgeting. It’s that important. For now, get busy with your 30 days of logging expenses.

The Young Wealth Team

The Young Wealth Team on February - 26 - 2010
categories: Blog Articles

In case you missed it on the news, Joseph Stack recently flew his small airplane into an IRS building in Austin, Texas. While this is probably not the preferred solution for handling a tax issue, it is a good opportunity to get into the head of a man able to murder over what he considered to be mistreatment by everyone’s favorite agency.

The entirety of Stack’s suicide note is included below. Good luck finding a point besides, “The world hates me!”

“If you’re reading this, you’re no doubt asking yourself, “Why did this have to happen?” The simple truth is that it is complicated and has been coming for a long time. The writing process, started many months ago, was intended to be therapy in the face of the looming realization that there isn’t enough therapy in the world that can fix what is really broken. Needless to say, this rant could fill volumes with example after example if I would let it. I find the process of writing it frustrating, tedious, and probably pointless… especially given my gross inability to gracefully articulate my thoughts in light of the storm raging in my head. Exactly what is therapeutic about that I’m not sure, but desperate times call for desperate measures.

We are all taught as children that without laws there would be no society, only anarchy. Sadly, starting at early ages we in this country have been brainwashed to believe that, in return for our dedication and service, our government stands for justice for all. We are further brainwashed to believe that there is freedom in this place, and that we should be ready to lay our lives down for the noble principals represented by its founding fathers. Remember? One of these was “no taxation without representation”. I have spent the total years of my adulthood unlearning that crap from only a few years of my childhood. These days anyone who really stands up for that principal is promptly labeled a “crackpot”, traitor and worse.

While very few working people would say they haven’t had their fair share of taxes (as can I), in my lifetime I can say with a great degree of certainty that there has never been a politician cast a vote on any matter with the likes of me or my interests in mind. Nor, for that matter, are they the least bit interested in me or anything I have to say.

Why is it that a handful of thugs and plunderers can commit unthinkable atrocities (and in the case of the GM executives, for scores of years) and when it’s time for their gravy train to crash under the weight of their gluttony and overwhelming stupidity, the force of the full federal government has no difficulty coming to their aid within days if not hours? Yet at the same time, the joke we call the American medical system, including the drug and insurance companies, are murdering tens of thousands of people a year and stealing from the corpses and victims they cripple, and this country’s leaders don’t see this as important as bailing out a few of their vile, rich cronies. Yet, the political “representatives” (thieves, liars, and self-serving scumbags is far more accurate) have endless time to sit around for year after year and debate the state of the “terrible health care problem”. It’s clear they see no crisis as long as the dead people don’t get in the way of their corporate profits rolling in.

And justice? You’ve got to be kidding!

How can any rational individual explain that white elephant conundrum in the middle of our tax system and, indeed, our entire legal system? Here we have a system that is, by far, too complicated for the brightest of the master scholars to understand. Yet, it mercilessly “holds accountable” its victims, claiming that they’re responsible for fully complying with laws not even the experts understand. The law “requires” a signature on the bottom of a tax filing; yet no one can say truthfully that they understand what they are signing; if that’s not “duress” than what is. If this is not the measure of a totalitarian regime, nothing is.

How did I get here?

My introduction to the real American nightmare starts back in the early ‘80s. Unfortunately after more than 16 years of school, somewhere along the line I picked up the absurd, pompous notion that I could read and understand plain English. Some friends introduced me to a group of people who were having ‘tax code’ readings and discussions. In particular, zeroed in on a section relating to the wonderful “exemptions” that make institutions like the vulgar, corrupt Catholic Church so incredibly wealthy. We carefully studied the law (with the help of some of the “best”, high-paid, experienced tax lawyers in the business), and then began to do exactly what the “big boys” were doing (except that we weren’t steeling from our congregation or lying to the government about our massive profits in the name of God). We took a great deal of care to make it all visible, following all of the rules, exactly the way the law said it was to be done.

The intent of this exercise and our efforts was to bring about a much-needed re-evaluation of the laws that allow the monsters of organized religion to make such a mockery of people who earn an honest living. However, this is where I learned that there are two “interpretations” for every law; one for the very rich, and one for the rest of us… Oh, and the monsters are the very ones making and enforcing the laws; the inquisition is still alive and well today in this country.

That little lesson in patriotism cost me $40,000+, 10 years of my life, and set my retirement plans back to 0. It made me realize for the first time that I live in a country with an ideology that is based on a total and complete lie. It also made me realize, not only how naive I had been, but also the incredible stupidity of the American public; that they buy, hook, line, and sinker, the crap about their “freedom”… and that they continue to do so with eyes closed in the face of overwhelming evidence and all that keeps happening in front of them.

Before even having to make a shaky recovery from the sting of the first lesson on what justice really means in this country (around 1984 after making my way through engineering school and still another five years of “paying my dues”), I felt I finally had to take a chance of launching my dream of becoming an independent engineer.

On the subjects of engineers and dreams of independence, I should digress somewhat to say that I’m sure that I inherited the fascination for creative problem solving from my father. I realized this at a very young age.
The significance of independence, however, came much later during my early years of college; at the age of 18 or 19 when I was living on my own as student in an apartment in Harrisburg, Pennsylvania. My neighbor was an elderly retired woman (80+ seemed ancient to me at that age) who was the widowed wife of a retired steel worker. Her husband had worked all his life in the steel mills of central Pennsylvania with promises from big business and the union that, for his 30 years of service, he would have a pension and medical care to look forward to in his retirement. Instead he was one of the thousands who got nothing because the incompetent mill management and corrupt union (not to mention the government) raided their pension funds and stole their retirement. All she had was social security to live on.

In retrospect, the situation was laughable because here I was living on peanut butter and bread (or Ritz crackers when I could afford to splurge) for months at a time. When I got to know this poor figure and heard her story I felt worse for her plight than for my own (I, after all, I thought I had everything to in front of me). I was genuinely appalled at one point, as we exchanged stories and commiserated with each other over our situations, when she in her grandmotherly fashion tried to convince me that I would be “healthier” eating cat food (like her) rather than trying to get all my substance from peanut butter and bread. I couldn’t quite go there, but the impression was made. I decided that I didn’t trust big business to take care of me, and that I would take responsibility for my own future and myself.

Return to the early ‘80s, and here I was off to a terrifying start as a ‘wet-behind-the-ears’ contract software engineer… and two years later, thanks to the fine backroom, midnight effort by the sleazy executives of Arthur Andersen (the very same folks who later brought us Enron and other such calamities) and an equally sleazy New York Senator (Patrick Moynihan), we saw the passage of 1986 tax reform act with its section 1706.

For you who are unfamiliar, here is the core text of the IRS Section 1706, defining the treatment of workers (such as contract engineers) for tax purposes. Visit this link for a conference committee report

(http://www.synergistech.com/1706.shtml#ConferenceCommitteeReport)

regarding the intended interpretation of Section 1706 and the relevant parts of Section 530, as amended. For information on how these laws affect technical services workers and their clients, read our discussion here

(http://www.synergistech.com/ic-taxlaw.shtml).

SEC. 1706. TREATMENT OF CERTAIN TECHNICAL PERSONNEL.

(a) IN GENERAL – Section 530 of the Revenue Act of 1978 is amended by adding at the end thereof the following new subsection:

(d) EXCEPTION. – This section shall not apply in the case of an individual who pursuant to an arrangement between the taxpayer and another person, provides services for such other person as an engineer, designer, drafter, computer programmer, systems analyst, or other similarly skilled worker engaged in a similar line of work.

(b) EFFECTIVE DATE. – The amendment made by this section shall apply to remuneration paid and services rendered after December 31, 1986.
Note:
• “another person” is the client in the traditional job-shop relationship.
• “taxpayer” is the recruiter, broker, agency, or job shop.
• “individual”, “employee”, or “worker” is you.

Admittedly, you need to read the treatment to understand what it is saying but it’s not very complicated. The bottom line is that they may as well have put my name right in the text of section (d). Moreover, they could only have been more blunt if they would have came out and directly declared me a criminal and non-citizen slave. Twenty years later, I still can’t believe my eyes.

During 1987, I spent close to $5000 of my ‘pocket change’, and at least 1000 hours of my time writing, printing, and mailing to any senator, congressman, governor, or slug that might listen; none did, and they universally treated me as if I was wasting their time. I spent countless hours on the L.A. freeways driving to meetings and any and all of the disorganized professional groups who were attempting to mount a campaign against this atrocity. This, only to discover that our efforts were being easily derailed by a few moles from the brokers who were just beginning to enjoy the windfall from the new declaration of their “freedom”. Oh, and don’t forget, for all of the time I was spending on this, I was loosing income that I couldn’t bill clients.

After months of struggling it had clearly gotten to be a futile exercise. The best we could get for all of our trouble is a pronouncement from an IRS mouthpiece that they weren’t going to enforce that provision (read harass engineers and scientists). This immediately proved to be a lie, and the mere existence of the regulation began to have its impact on my bottom line; this, of course, was the intended effect.

Again, rewind my retirement plans back to 0 and shift them into idle. If I had any sense, I clearly should have left abandoned engineering and never looked back.

Instead I got busy working 100-hour workweeks. Then came the L.A. depression of the early 1990s. Our leaders decided that they didn’t need the all of those extra Air Force bases they had in Southern California, so they were closed; just like that. The result was economic devastation in the region that rivaled the widely publicized Texas S&L fiasco. However, because the government caused it, no one gave a shit about all of the young families who lost their homes or street after street of boarded up houses abandoned to the wealthy loan companies who received government funds to “shore up” their windfall. Again, I lost my retirement.

Years later, after weathering a divorce and the constant struggle trying to build some momentum with my business, I find myself once again beginning to finally pick up some speed. Then came the .COM bust and the 911 nightmare. Our leaders decided that all aircraft were grounded for what seemed like an eternity; and long after that, ‘special’ facilities like San Francisco were on security alert for months. This made access to my customers prohibitively expensive. Ironically, after what they had done the Government came to the aid of the airlines with billions of our tax dollars … as usual they left me to rot and die while they bailed out their rich, incompetent cronies WITH MY MONEY! After these events, there went my business but not quite yet all of my retirement and savings.

By this time, I’m thinking that it might be good for a change. Bye to California, I’ll try Austin for a while. So I moved, only to find out that this is a place with a highly inflated sense of self-importance and where damn little real engineering work is done. I’ve never experienced such a hard time finding work. The rates are 1/3 of what I was earning before the crash, because pay rates here are fixed by the three or four large companies in the area who are in collusion to drive down prices and wages… and this happens because the justice department is all on the take and doesn’t give a fuck about serving anyone or anything but themselves and their rich buddies.

To survive, I was forced to cannibalize my savings and retirement, the last of which was a small IRA. This came in a year with mammoth expenses and not a single dollar of income. I filed no return that year thinking that because I didn’t have any income there was no need. The sleazy government decided that they disagreed. But they didn’t notify me in time for me to launch a legal objection so when I attempted to get a protest filed with the court I was told I was no longer entitled to due process because the time to file ran out. Bend over for another $10,000 helping of justice.

So now we come to the present. After my experience with the CPA world, following the business crash I swore that I’d never enter another accountant’s office again. But here I am with a new marriage and a boatload of undocumented income, not to mention an expensive new business asset, a piano, which I had no idea how to handle. After considerable thought I decided that it would be irresponsible NOT to get professional help; a very big mistake.

When we received the forms back I was very optimistic that they were in order. I had taken all of the years information to Bill Ross, and he came back with results very similar to what I was expecting. Except that he had neglected to include the contents of Sheryl’s unreported income; $12,700 worth of it. To make matters worse, Ross knew all along this was missing and I didn’t have a clue until he pointed it out in the middle of the audit. By that time it had become brutally evident that he was representing himself and not me.

This left me stuck in the middle of this disaster trying to defend transactions that have no relationship to anything tax-related (at least the tax-related transactions were poorly documented). Things I never knew anything about and things my wife had no clue would ever matter to anyone. The end result is… well, just look around.

I remember reading about the stock market crash before the “great” depression and how there were wealthy bankers and businessmen jumping out of windows when they realized they screwed up and lost everything. Isn’t it ironic how far we’ve come in 60 years in this country that they now know how to fix that little economic problem; they just steal from the middle class (who doesn’t have any say in it, elections are a joke) to cover their asses and it’s “business-as-usual”. Now when the wealthy fuck up, the poor get to die for the mistakes… isn’t that a clever, tidy solution.

As government agencies go, the FAA is often justifiably referred to as a tombstone agency, though they are hardly alone. The recent presidential puppet GW Bush and his cronies in their eight years certainly reinforced for all of us that this criticism rings equally true for all of the government. Nothing changes unless there is a body count (unless it is in the interest of the wealthy sows at the government trough). In a government full of hypocrites from top to bottom, life is as cheap as their lies and their self-serving laws.
I know I’m hardly the first one to decide I have had all I can stand. It has always been a myth that people have stopped dying for their freedom in this country, and it isn’t limited to the blacks, and poor immigrants. I know there have been countless before me and there are sure to be as many after. But I also know that by not adding my body to the count, I insure nothing will change. I choose to not keep looking over my shoulder at “big brother” while he strips my carcass, I choose not to ignore what is going on all around me, I choose not to pretend that business as usual won’t continue; I have just had enough.

I can only hope that the numbers quickly get too big to be white washed and ignored that the American zombies wake up and revolt; it will take nothing less. I would only hope that by striking a nerve that stimulates the inevitable double standard, knee-jerk government reaction that results in more stupid draconian restrictions people wake up and begin to see the pompous political thugs and their mindless minions for what they are. Sadly, though I spent my entire life trying to believe it wasn’t so, but violence not only is the answer, it is the only answer. The cruel joke is that the really big chunks of shit at the top have known this all along and have been laughing, at and using this awareness against, fools like me all along.

I saw it written once that the definition of insanity is repeating the same process over and over and expecting the outcome to suddenly be different. I am finally ready to stop this insanity. Well, Mr. Big Brother IRS man, let’s try something different; take my pound of flesh and sleep well.

The communist creed: From each according to his ability, to each according to his need.

The capitalist creed: From each according to his gullibility, to each according to his greed.

Joe Stack (1956-2010)”

The Young Wealth Team

The Young Wealth Team on February - 26 - 2010
categories: Blog Articles

On this show, Jason talks with one of his listeners, Damien Bourke, about the challenges of growing up in today’s economy.

Americans like to flaunt real or imaginary social/financial status with cars. To prove this fact of life takes no more effort than a drive through the “other” side of town – chances are you’ll find driveway after driveway displaying tricked out, ramped up, and chromed over examples of vehicles that seem out of touch with the surroundings.

As a newbie to the professional world, get over that silliness now!

Drive the sort of car your budget can afford and no more. Your investments will thank you for it later. Before the economy tanked, budget experts suggested that your total outlay of car expenses, no matter how many you own, should never be more than 20% of your net monthly income.

These days, you might even want to shoot for a more modest number than that. Remember the cost of owning a car doesn’t magically stop at the sticker price. Factor in fuel, repairs, and insurance for a more accurate picture.

When car shopping, consider obtaining a pre-approval letter that you can show to dealers. Put down at least a 15% down payment and the payoff will be a lower monthly payment. These days, house mortgages aren’t the only thing people can get “upside down” on. You don’t want to end up owing more than the car is worth.

Is a new car absolutely necessary? “Used” is not synonymous with “junk.” There are plenty of perfectly snazzy previously owned vehicles across the street from the new car dealer. Take a look at them and save about 30%.

The Young Wealth Team

The Young Wealth Team on February - 24 - 2010
categories: Blog Articles

If you spend much time listening to the bobble-heads on cable television’s business channels, you would think that the only form of investing that exists on this planet involves Wall Street stocks. For reasons we’ll go into later, Wall Street is not your best investment, if you want to consider it an investment at all. To determine why bobble-heads like Jim Cramer continually pump the latest and greatest stock you need only follow the money.

Big Business owns his show. One hand washes the other. He (and others like him) pimp for Big Business. It’s really that simple.

Here are three solid reasons we prefer real estate to the stock market:

1. You might be investing with a crook: Do names like Enron, World Comm, or Global Crossing, or Bernie Madoff ring a bell? They should. Criminal behavior on Wall Street is institutional, entrenched, and devastating to the average investor that gets blindsided by the latest scam.

2. They might be incompetent: It’s not difficult to become a stock broker. Yours might unintentionally cost you a fortune. Maintain control over your investments!

3. Administrative fees: Another reason we say maintain direct control over your investments is you don’t need someone else to manage your deals or make your investments for you. The entire stock market game is built on management fees paid to brokers that come straight out of your profit.

So ignore the hype on television. It’s nothing more than flash and misdirection. Stay tuned and we’ll demonstrate why we love real estate, proven the best investment in history, and why you’re never too young to start.

The Young Wealth Team

The Young Wealth Team on February - 23 - 2010
categories: Blog Articles

While Electronically Traded Funds (ETF) aren’t the best investment in history (look to real estate for that), they are something the beginning investor should be aware of, if for no other reason than beneficial tax consequences when compared to other stock market strategies.

As a collection of investments like stocks, bonds, commodities, or even real estate, an ETF is similar to a mutual fund in that it can be purchased through an investment company or brokerage house. Compared to mutual funds, ETF’s have a lower turnover rate of their holdings which, in turn, reduces your tax burden. Remember, any time a fund buys or sells a holding it triggers:

1. taxes
2. commissions
3. transaction costs

All the above are passed on to the investor so, all other factors being equal, it makes sense to invest where there is little turnover. With a mutual fund, you can normally expect to pay about 1.5% of your total yearly return just for the management fees. An ETF is substantially lower. ETF’s also offer the ability to target certain segments of the economy with your investing.

There is a transaction cost of $10 to $50 every time you buy or sell an ETF, so keep in mind this should be a buy and hold type of investing. Hyperactive traders need to look elsewhere for their gambling fix.

The Young Wealth Team

The Young Wealth Team on February - 23 - 2010
categories: Blog Articles

If you thought that the only benefits to serving in the military were travel to exotic places and running gunfights with the locals, you would be wrong. Your Uncle Sam thinks that enlisted or warrant officer U.S. military personnel should not have to pay federal tax on any income received during any month they are assigned to a combat zone.

You read right.

If you’re getting shot at, you don’t owe Sammy a single cent. While maybe not enough of an incentive to actively seek a combat assignment, if you’re already there or on the way, it could help when you get back. The Iraq, Afghanistan, and Kosovo theaters all apply. Even better, you can use this tax free pay to contribute to your Individual Retirement Account (IRA). Since you don’t have to pay taxes on IRA holdings until withdrawal, it makes a lot of sense to contribute as much tax free dinero as you can today.

There are a few other tax related items to keep in mind when taking shelter behind that Iraqi sand dune. While engaged in combat operations you qualify for up to a 180 day extension to:

1. File your return
2. Pay your taxes
3. Claim a refund
4. Contribute to an IRA

Other tax deductions you should investigate are related to 1) moving expenses 2) transitioning back to civilian life 3) free tax assistance.

The Young Wealth Team

The Young Wealth Team on February - 21 - 2010
categories: Blog Articles

Believe us, we wish we could have lived our entire lives and never made the acquaintance of this bunch of mental midgets but, alas, modern day life in the United States could not go on without the Federal Reserve Banking System – at least that’s what they like to think. You can break the Federal Reserve down into three parts.

1. the Board of Governors
2. the 12 Reserve banks (located around the country)
3. the Federal Open Market Committee

At this point the questions becomes, “Do you want the REAL version of how the Federal Reserve was created or the manipulated one?” You want the manipulated one? Sigh. So boring but here it is.

(Adopted cheery tone) “In 1913 a group of forward thinking and patriotic Americans created the Federal Reserve to insure the United States continued status as the healthiest economy in the world. And we all lived happily ever after.”

If you’re more into reality and want to listen to an excellent interview on the topic, go to www.JasonHartman.com and introduce yourself to The Creating Wealth Show with Jason Hartman. In show #84, he interviews G. Edward Griffin, author of “The Creature from Jekyll Island.” In this book, Griffin defines and describes the banking conspiracy of the early 20th century which put into law an unholy cartel between Big Money and the Federal Government.

The party line is that Reserve Banks conduct continual research on the state of the economy, supervise banks in their region and provide financial services to private banks and the US government. The stated goal of the Federal Reserve System is to manage the nation’s money supply and keep the economy growing at a sustainable rate.

Sounds all well and good, right? A little too good if you ask us. Why not click the link up there and find out the real history of the Federal Reserve?

The Young Wealth Team

The Young Wealth Team on February - 21 - 2010
categories: Blog Articles

Are you still a slave to your hard copy portfolio, lugging binders, folders, and pictures with you on the job interview circuit? Here’s some advice. Stop. In this brave new cyberworld of ours, some companies have turned to online portfolio banks to scout new talent. We don’t suggest you make a beeline for the trashcan to dump all those folders. As with all technology, not everyone is an early or even middle to late term adapter.

But for those eager to make an early and positive impression on potential employers, check out the following websites:

1. Carbonmade
2. Knowledge Genie
3. Jobrary

Carbonmade allows you to post your portfolio/resume by category and skill. Use Photoshop, Illustrator, Flash and more to make yourself stand out in a sea of bland. Knowledge Genie lets you track the users who visit your account and even offers the option for people to buy your work through PayPal, Google Checkout or Amazon.com. Jobrary is a user friendly option that allows easy navigation via preview thumbnails.

These three websites are especially handy for those looking for art or graphic media oriented employment, but anyone in the job market should give it a look. Technology ain’t just for nerds any more.

The Young Wealth Team

The Young Wealth Team on February - 20 - 2010
categories: Blog Articles

No, it’s not Underdog this time. Today we’re going to talk about a simple little financial survival technique that you should get busy on whether a recent grad or still in school. Think you’re too cool for an emergency fund? Think again. Unless overwhelming stress and financial Armageddon are things you crave, listen up to this one.

Every single person on this planet other than Bill Gates and Warren Buffett need an emergency fund. Okay, maybe we can add most professional athletes to this list also but you get the point.

Let’s say you’ve started with the baby step of recording every expense for a solid month to find out where it’s all going. Let’s even say you took that information and came up with an honest-to-goodness budget and you’re even sort of sticking to it.

Congratulations! You’re ahead of most of us. The trouble is, unless you have an emergency fund ($1,000 is a good number), your budget is a ticking time bomb waiting to get blown to smithereens. What happens when you or your car gets sick? Or you have to book a last minute plane ticket to bail your mother out of a Tijuana jail? You gotta do it – get the car fixed, bail her out, whatever IT is.

These count as emergencies. If you have an emergency fund, life goes on. If you don’t, your budget gets destroyed, you have to sell blood plasma for grocery money, and bad luck multiplies.

Don’t be a doofus. Make saving until you have a $1,000 emergency fund a HIGH priority.

The Young Wealth Team

The Young Wealth Team on February - 18 - 2010
categories: Blog Articles