financial zen

So I got a few answers in my educational quest on estate taxes. I talked to an accountant that said if the deceased had paid taxes all ready, than I have nothing to worry about unless it’s property that needs to be sold.

Of course, I used my google-fu to supplement this answer and the always informative bankrate.com has the answer:

*Ohio has no inheritance tax.

*Because federal tax law totally repealed the federal credit allowed for state death taxes for dates of death occurring on or after Jan. 1, 2005, the Ohio Additional Tax on estates is constructively repealed. This change is prospective and applies to decedents’ dates of death occurring on or after July 1, 2005.

So now, once the cash is “in hand” I need to constructively figure out how I’m going to leverage it towards investing it – and doubling it!

The real measure of your wealth is how much you’d be worth if you lost all your money. ~Author Unknown

As I wrote about the fundamentals of personal finance success – and the fundamental truth of saving more than you spend to reach wealth, it’s important to recognize what that exactly means.

You can save all your money, live in your car until your debts are paid off, live at home and mooch – basically you can spend as little as possible now so you can have a lot of money in ten to twenty years, sleeping on a couch, eating ramen, and walking everywhere.

Or you can buy a car, live in an apartment, make your own lunch, buy used, and spend less than you earn. You can still have an occasional night out, party on occasion, go to Europe – it just means being mindful with your money. But how can you do this on a limited income?

Very easily. Cut out the unnecessary expenses. No cable, no memberships, no magazines. Okay, you want cable? Get basic. Skip the DVR package and the “VOD – only $10/month!” ‘deals.’ Go to the library. Read more. Go to the park to jog. Pick up some used weights on ebay or craigslist. The point is – be frugal not cheap. You don’t need a huge house that you can’t afford – I don’t care if you think you can afford it in a few more years, that’s moronic. If you knew tomorrow you were winning the jackpot billionaire lottery – but only made $26,000 a year now, and you were thinking of getting a new car/house/xbox/whatever – treat it as if you only had the $26,000. Oddly enough, I heard someone talking to a friend at an old apartment (back when I made $11/hour as a trainer):

You do not go out and buy a Bentley because you think you deserve one. You do not buy one because you think you can afford it in a year. The car does not make the player! When you are set, you will know you can buy the Bentley outright because you can get it if you want it, not because you need it.

There be wisdom in these walls! The guy who said it made a decent living in a factory, drove a convertible, and lived in off-campus housing. Cheap housing that allowed him to buy the material possessions he wanted. Not necessarily the best move financially, but wiser than buying a bentley, a mansion, and maxing out credit cards to give the illusion of wealth. You earn your lifestyle, you don’t choose it.

No doubt everyone’s heard of the guy who tried to flip houses by lying on his credit applications saying he made more money (which they made no effort to check or clarify, either). Here’s a stripper in 24 million debt because she wanted to quit her life and find a new way – and instead of researching she signed her life away, ruining her credit while the brokerage got to inflate housing prices. Do not be duped by easy money. There is no such thing.

Let’s look at it this way – you want to retire rich? Then set aside some money now.CNNMoney has a useful retirement calculator to help figure out how much money you want to live on and when you want to retire. There are a lot of factors involved, and it’s something you should always be working towards – so don’t think your plan is set from day one – it’ll need constant nurturing, but as you watch your retirement fund grow, you’ll realize it’s worth it. Just don’t put off your life until then – I’ve met many an old couple that says they wished they spent more money when they were younger to travel and do the things they can’t do because of their age – and seldom have I met an old couple that regrets traveling or managing their money for trips.

Just remember – manage your debt, spend less than you make, and focus on your long-term goals while keeping yourself satisfied and happy in the present. A delicate balance, but one that you (your loved ones) will enjoy!

(Read more stories of how other people paid off debt at Chris Pirillo’s blog)

“A failure to plan is a plan for failure”

I don’t know about you, but I fell into the interest of personal finance from getting into reading blogs. The more I read, the more it intrigued me. It reminded me of the past experiences and money mistakes. Perhaps most people are put off by their lack of understanding terms – meaning they need to improve their financial literacy (the knowledge of facts, concepts, principles, and technological tools that are fundamental to being smart about money). This leads to most people learning about personal financial planning and developing and implementing a coordinated and integrated long-range plans to achieve financial success.

In planning, we hold ourselves responsible for our own success, happiness, and establishment of our security and standard of living (in the present and the future). It’s a huge part of our life that many people ignore until it’s too late – and then they learn from their mistakes, but it costs them (potentially) thousands of dollars, or wrecks their credit rating (which can potentially effect your employment, your mortgage, your car purchase… every financial aspect of your life). It’s my goal as I continue my education to get a better understanding and establish a better budget and mind set – I don’t mean miserly, I don’t mean “living like no other today so you can live like no other tomorrow” – I mean being able to save up for vacations without putting it all on credit, buying a car with cash, and using credit card arbitrage to its full potential. It’s a difficult premise, but then again, life isn’t easy.

The Six Steps to Personal Finance Success

1. Financial planning, focusing on establishing and achieving long-term goals through planning and budgeting,
2. Money management, centering on minimizing income taxes and efficient utilization of cash and credit,
3. Managing expenditures, especially for “big ticket” items such as vehicles and housing,
4. Income and asset protection through insurance, so that hard-earned resources and assets are not placed at undue risk,
5. Investment planning, with its focus on selecting the appropriate investment vehicles based on the objectives at hand and the relative levels of investment risk, and
6. Retirement and estate planning, with the ultimate goal of being able to live off of one’s financial nest egg and plan for transfer of assets to heirs.

It’s never just a simple process – fortunately we have trained professionals to assist. Certified Financial Planners can help you plan with these six steps, and Certified Public Accountants can help you get your finances together and straightened out. Over the next few months I’m planning on elaborating on these six points – from an educational stand point, as I am not a CFP, CPA, or any other TLA.