Links to Carnivals from March 23 - 29, 2010

Here are the links to the Carnivals in which My Wealth Builder participated from March 23 to 29, 2010:

Festival of Frugality #221

Road to Financial Independence

Money Hackers Carnival #109

Carnival of Everything Home

Baby Boomers Blog Carnival #32

Carnival of Financial Planning #134

Carnival of Economy and Finances

Tax Carnival #68

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, investment, tax or home repair advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Creating One's Financial Future

"When it comes to the future, there are three kinds of people: those who let it happen, those who make it happen, and those who wonder what happened." ~ John M. Richardson, Jr.

One's financial future is too important to leave to chance. Although it is impossible to predict the future exactly, it is very possible to steer the future towards favorable financial scenarios by the choices made today. Here are some of elements I believe are important for creating one's financial future.

Define the desired outcome. Is it a million or, perhaps, a billion dollars is savings? Retirement at 40? No debt? Vacation homes? Whatever is one's goal, it should be defined in concrete terms. For example, it should be more specific than "being rich."

Identify what can be done to achieve the outcome. When traveling, there are many paths to the same destination. Similarly, there are many approaches to achieve a financial goal. For example, to get $1 million, I could choose to marry someone with a million dollars, win a major lottery prize or save an average of $50,000 for twenty years.

Choose an direction that maximizes the probability of success. In some cases, that may require leveraging one's skills, interests and experiences. In other cases, it may require enlisting the involvement of other's expertise. In all cases, it requires developing a plan.

Execute the plan and measure progress. If the desired outcome is getting closer, keep executing. If there is not sufficient forward movement revise as necessary, starting with the first bullet point.

Of course, taking these steps doesn't necessary guarantee a good financial future. Even the best strategies and plans can sometimes fail. However, using these steps can increase the chances for a favorable financial future, which is better than just hoping and waiting to see what happens.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

I'll Be Back

"I'll be back." Arnold Schwarzenegger in The Terminator

In the past few days, I feel that I have been negligent in posting to My Wealth Builder . Although I am no longer trying to post daily, it has been four days since my last post, the longest span since I started the blog. There isn't any one reason for the lack of posting. For now, I think there are a number of distractions that are taking my mind of this blog. However, I expect most of them to be gone by the beginning of summer and, then, I'll be back. While I don't intend these to be excuses, here are a few of the distractions:

On boarding for two new part time jobs. As I wrote in I'm On a Roll, I have started two new part time jobs, and have five part time jobs concurrently for the next couple months. Getting trained and learning the two new part time jobs has used up some of the energy I usually devote to My Wealth Builder. I've also had to spend additional time managing my schedule in order to put in minimum hours at each job.

This distraction will be over in by the end of May, since my training will be complete and two of my seasonal part time jobs complete in mid April and the end of May.

NCAA basketball tournament. I have been thoroughly enjoying the 2010 NCAA basketball tournament because of the number of underdog wins. I miss the past when underdogs had a chance to upset the favorites. It seems this year's NCAA tournament has brought back the past.

Only a single number 1 seed (Duke) made it to the Final Four. Although the big underdogs, such as Cornell (12 seed) and Washington (11 seed), only made it to third round it was still fun to watch. This distraction will be over on April 6. 2009.

Spring activities. With the coming of warmer weather, it's easy to be distracted by opportunities during nice days, including gardening, sports, and the outdoors. It's hard to sit down at the computer and write when great outdoor activities are an alternative :-)

This is currently my toughest distraction, especially since I am working more hours this spring than in the past. However, once a couple of my jobs end, I will have more than enough hours to enjoy the outdoors and post to this blog.

For the next month, my posting will continue to be sporadic with occasional gaps of four to five days. By the end of May, however, I expect to be back to a high frequency of posting since I will have fewer hours committed to part time work.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Links To Carnivals From March 16 - 22, 2010

Here are the links to the Carnivals in which My Wealth Builder participated from March 16 to 22, 2010:

Money Hackers Carnival #108

Baby Boomers Blog Carnival #31

Carnival of Financial Planning #133

Bobo Carnival of Politics

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, investment, or political advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Company Idea and Discussion Forums

"How's that hope-y, change-y stuff working out for you?" ~ Sarah Palin

To me, company idea and discussion forums have little value. Other than create an impression that management is listening, I think these forums are a waste of resources, time and money. I'd rather see management regularly report how they are eliminating systemic issues, instead of continuously asking for input on changes that should be made. Here are a few reasons I don't see any substantive benefit from these forums.

Many issues have been evident for a long period. Rarely do I read about a new issue or solution in a forum. If I'm aware of a long time issue, I'd think management would be also. So management is either deaf, stupid or doesn't plan on making the change. In my experience, most of management isn't deaf for stupid.

No noticeable positive change happens. I have yet to see a major policy, strategy or business change result from comments shared in a forum. In fact, I have seen changes opposite to request of forum participants.

Extended contributing to or reading of the forum reduces productivity. If people are writing or reading comments in the forum, they are not doing their work for which they are paid. Occasion input or reading isn't an issue. However, there will be those that spend substantial time using the forum.

Instead of an idea and discussion forum, I'd prefer management to create a results and progress dashboard from which I can judge management's and my own performance. Maybe I should submit this solution to a idea and discussion forum :-)

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial, or business advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Independent Contractor versus Employee

When I was working, I used to think that being an independent contractor was an attractive financial option versus being an employee. Since retiring, I've learned more about the pros and cons of being an independent contractor. To me, unless I have a substantial small business (e.g. six figure revenue), I prefer being an employee over being an independent contractor. My reasons are summarized in the table below.

	Employment Status
Category	Independent Contractor	Employee for Company
Payment	An independent contractor is typically paid on a gross basis. No federal, state, Social Security or Medicare taxes are withheld. These taxes must be paid by the independent contractor from the payment received.	An employee is paid on a net basis. Federal, state, Social Security, and Medicare taxes are withheld for the employee. In addition, the employer pays 1/2 of the Social Security and Medicare taxes for the employee.
Expenses	Expenses for supplies, transportation, and materials are often paid by the independent contractor.	Expenses for supplies, transportation and materials of usually covered by the employer.
Taxes	Independent contractors must file Schedule C, Profit or Loss from Business, to determine taxable income. In addition, an independent contractor often needs to pay estimated taxes, document revenue and expenses, and pay sales tax, if required.	Employees generally enter income from a W-2 on the wage line of the tax form. Expense will usually be covered or reimbursed by the employer. If not, the employee would file a form 2106 to claim any deductions.
Benefits	The independent contractor receives no benefits, and needs to provide their own health, liability and auto insurance.	An employee is typically offered benefits and is covered by their employer's liability insurance.

From my experience, while the gross pay appears to be higher, an independent contractor position's net pay (after expenses, taxes, and benefits) is usually less than that of an equivalent employee. Perhaps, that is one reason companies hire independent contractors instead of employees :-)

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial, tax or career advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Links to Carnivals from March 9 -15, 2010

Here are the links to the Carnivals in which My Wealth Builder participated from March 9 to 15, 2010:

Carnival of Financial Planning #132

Carnival of Money Stories XLV

Carnival of Personal Finance #148

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, investment, or political advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Being Prepared for an IRS Audit

With the U.S. deficit growing each year, I expect that the frequency of IRS audits will increase to ensure that tax liability is being properly calculated and paid. While the overall chances of being audited are less than 1%, returns with inconsistencies, certain deductions, or specific credits may have a higher chance of being audited. Here are the things I do to be ready for an audit.

Keep receipts and invoices. I get and keep receipts for every charitable donations. I write down business mileage contemporaneously in a logbook kept in my truck. For my small business, I have invoices and deposits records to show revenue and receipts for expenses. For stock transactions, I use the brokerage gain/loss statements.

I keep the records for three years after the filing date, which is the typical time in which an audit occurs.

Write down the rationale for my tax interpretations. Some parts of the tax return require little interpretation. For example, wages usually are taken from my W-2. However, many other elements require calculations or interpretation to determine the amount to include on the tax return. For example, the effect of IRA recharacterizations on contributions or distributions need interpretation and additional calculations to get the appropriate value to include on the tax return.

Only show related information. I am only required to show information related to the audit topic. Thus, for an audit of charitable contribution receipts, I would only bring the receipts, and nothing else. Bringing all my documentation could open up my return to further audit, since I have given the IRS implicit permission to inspect everything.

Since I don't hire a tax preparer, these are the things that I would do. Of course, if I did use a tax preparer, I would immediately contact him to help me prepare for an audit.

Finally, an audit is not always bad news. I recall reading that 30% of audits results in an additional refund for the taxpayer, showing that the IRS isn't always correct :-)

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Taxing the Rich

There has been a lot of debate on whether taxing the rich can help reduce government deficits. I recall reading that even if the rich were taxed at 100%, the U.S. wouldn't be able to eliminate the deficit. Interestingly, I just found a Summary of Latest Federal Income Tax Data by the Tax Foundation that shows otherwise.

According to the article, the taxpayers with the top 10% of income made $4.2 trillion and paid $0.79 trillion in federal income tax. Since the 2010 budget deficit is about $1.4 trillion, the U.S. could achieve a balanced budget by collecting $2.2 trillion from these taxpayers. This would only be 52% of their income, leaving another 48% that could be collected to pay off the national debt:-)

I can now see why politicians are targeting the rich for higher taxes. However, I expect the rich, working with their accountants, will figure out ways to reduce their taxable income before higher tax rates are enacted.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial, tax or political advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Top Three Things to Like about (Early) Retirement

I took early retirement in my forties almost 2 1/2 years ago, in October, 2007. Even with the economic crisis that ensued, I have no regrets. In fact, I've enjoyed retirement very much so far. Here are my top three things to like about retirement:

Shorter and less stressful commutes. For all of my part time jobs, I drive outside of rush hour times. I no longer experience the routine traffic backups on the highways and major streets, which turned a 12 mile trip into a 45 minute commute.

In addition, for two of the jobs, I commute less than three miles round trip. For another two, I commute less than 10 miles round trip. The fifth job has a twenty mile round trip commute, which may make me regret taking it. However, it has some good perks, and may lead to a similar part time job that is within 5 miles.

Nowadays I can't believe that I used to tolearate about 1 to 1-1/2 hours commuting every day for work.

Trying out new jobs and careers. For 27 years, I invested tremendous effort into being better at what I did, including taking extensive training, creating development plans, and being evaluated annually. As a result, my focus became narrower and narrower.

Since retiring, I've been trying out new careers, in the financial, education and public service fields. It has been a fun experience, and for which I have been paid :-)

More quality time with family. For me the best part of retirement is having the flexibility to spend time with my family. I am, able to attend all of our daughter's events, even those during the school. In addition, I can spend time alone with my spouse at least four to eight times a week, while our daughter is in school or at play dates.

Best of all, I can take a vacation any time and for any length that is convenient for our family. And no working during vacation to minimize the catch up effort when returning.

Of course, there are other things I like about early retirement, including more sleep, more exercise and healthier eating. However, these don't yet rank as high as my top three.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Our Daughter Negotiates a Raise

One of my part-time jobs is teaching first and second graders science in an after school program. Since a benefit is that the children of teacher's can take class for free, our five year old daughter has been attending most sessions. In addition, she has been helping me set up before and clean up after the class. I decided this might be a good opportunity to learn about earning money and offered to pay a quarter per class for her work. She surprised me by immediately asking for "a paper money," which means one dollar, for each class. I countered with "a paper money" for every two classes, since I teach that many classes each week. Our daughter happily agreed.

While the stakes were low in this negotiation, there are some compensation lessons I hope she remembers :-)

Asking for a raise will get consideration. The worst that can happen is the answer is "no." Also, if you don't ask, it is unlikely you will get it. Even if you only get your requests 25% of the time, it still better than the 0% from never asking at all.

Choose a desired target number, not just an achievable number. Our daughter wanted a dollar bill, so she asked for it, not really understanding it was a 300% raise. As a result, I agreed to a 100% raise. In the today's economy, most adults would have asked for a 1-2% raise, because that level is considered acceptable.

Demonstrate worthiness prior to asking. Our daughter had already been helping me set up and clean up for several classes prior to my offering to pay. I knew she could and would do good work.

In this case, the request worked out well for everybody. Our daughter got her "paper money," she's learning about earning wages, and I get a help before and after each class. Although I'm sure not all her salary negotiations will be so easy, she is already experiencing some principles for future compensation discussions.

I'll need to keep these principles in mind as I near the one year anniversary for my part time jobs :-)

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial, negotiating or parenting advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Experts with Whom I like to Consult

Although I have above average financial knowledge, I believe it is important have access to experts to confirm my understanding and to provide additional insight. Here are some examples of financial matters where we consulted with experts, when making decisions.

Investment - We use professional advisors for a portion of our savings. Our financial advisor is our primary expert. He provides guidance on which investment managers to choose for our portfolio. We make the final decision.

We pay a fee of 1% of managed assets for this service, which I consider reasonable because it is comparable to the fees charged by an actively managed mutual fund.

Retirement - Our financial advisor also provides analysis of readiness for retirement, Roth IRA conversions, Social Security and other retirement related financial aspects. This was particularly helpful in answering whether we had saved enough, when considering early retirement in 2007. In addition, they have been helpful in developing Roth IRA conversion strategies.

The cost of this service is included in the 1% fee we pay for our managed accounts.

Tax - With all the constantly change tax laws, it can be difficult to know all the relevant tax benefits when filing a return. That's why I decided to take a seasonal job in the tax preparation field, to educate myself about maximizing my own refund on our tax return. I take about 60 to 100 hours of training each year. In addition, I have access to numerous experts on the tax code.

The cost of accessing experts is free since I work for a company in the tax preparation field.

Real Estate - I keep in touch with the real estate agent that sold our first home and helped us by our second home. Most recently, she provide me with the necessary appraisal information that helped us reduce the property taxes on our home.

No cost, but I do give the agent my business when buying or selling property.

Legal - Some financial matters are also legal matters. For example, when I decide to form a limited liability corporation (LLC), I consulted with a lawyer and had him file the necessary documents. In addition, I asked for and he provided the protocols to ensure the LLC was a valid entity.

At this time, I hire an attorney only on an as needed basis.

Although I am pretty good at assessing most of my financial situations, I still like to get the opinion, guidance and advice of an expert in the field. That way I can confirm what I think I already know, and learn about areas in which I may be unaware.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial, investment, real estate, tax or legal advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Links To Carnivals From March 2 - 8, 2010

Here are the links to the Carnivals in which My Wealth Builder participated from March 2 to 8, 2010:

Money Hacks Carnival #106

Baby Boomers Blog Carnival #29

Carnival of Financial Planning #131

The Bobo Carnival of Politics

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, investment, or political advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

I'm on a Roll

By the beginning of 2009, I had only been offered one part time job, which I had taken at the end of 2007, when I took early retirement. I had been rejected for five other positions to which I had applied. Then, at the end of 2009, I applied for and was offered two new part time jobs, including one for which I had been rejected earlier. Two weeks ago, I applied for three more part time jobs, one from my rejected list and two new ones. Surprisingly, this week I received offers for two jobs, and I accepted.

In the course of a year, I've gone from only having one part time job to having five part time jobs. So what has changed?

Resume compatible with part time jobs. When I retired in 2007, my resume had only one job that I had for 27 years, in one industry, with one company. It was very similar to a resume of a laid off worker looking for a job in the same field. After 2 years, my resume now includes two part time jobs, showing that I am interested mainly doing part time work. I think employers are more willing to hire part time workers who have been successful part time workers.

Smaller applicant pool. In early 2009, it seemed that the recently unemployed were applying for every job opening, including part time positions that were often filled by retirees. Thus, the number of applicants was five to tenfold more than normal. In early 2010, it seems that the applicants for part time jobs has returned closer to typical levels.

Targeted application. In early 2009, I was primarily attending job fairs to look for positions. In 2010, I targeted three organizations to call, inquire about openings, and then apply. It was from two of these organizations that I received interviews and offers.

For reference, the salaries for the five jobs are: $7.50, $8.00, $14.50, $25.00 and $70.00 per hour. Four out of the five jobs offer employees the use of company products/services for no charge. Three out of the five jobs are seasonal, ranging from three months to nine months in duration. Best of all, the five jobs meet the criteria for what I consider great part time jobs for a retiree.

I'm looking forward to starting the new jobs, even though I will be carrying five part time jobs. Fortunately, two of the jobs finish by the end of the school year, and the other three jobs have high flexibility, enabling me to still enjoy a summer vacation.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial, retirement or employment advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

Links To Carnivals From February 23 - March 1, 2010

Here are the links to the Carnivals in which My Wealth Builder participated from February 23 to March 1, 2010:

Carnival of Financial Planning #130

Carnival of Money Stories 2

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, investment, or economic advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC

DIY Home Repairs that Saved Us Money

For the last two years, we've seemed to have home appliance malfunction right around the holidays. Luckily, using just the model number, the Internet can provide immediate access to schematics, assembly diagrams and instructions that previously would have taken much longer to obtain. With such information, the solutions were within my do-it-yourself capabilities and I was able to do the repairs myself, which saved both time and money.

In 2008, just before hosting our first holiday party, we had two malfunctions in our kitchen. First, I knocked over a kettle of water on our gas stove. The water spilled into the appliance and caused a short in the switches for the igniter. As a result, one switch caught fire when I turned on the stove, because I hadn't waited long enough for it to dry. After putting out the flames, it was clear that the wiring and switches had been fried. Second, our garbage disposal became clogged and our sink backed up.

Since I had just completed an electrical wiring course, I decided to attempt fixing the stove myself. To get an idea of the repair solution, I checked an appliance parts website to get a list of the stove parts, and found a detailed wiring diagram. After talking to a customer service representative and a service technician, I was able to determine the parts needed and ordered them. Unfortunately, all the materials could not be delivered until after the holidays. However, based on what I learned in my wiring course, I was able to do a temporary electrical repair, which allowed the three undamaged burners to function. Later, when I received all the parts, I was able to complete the permanent repair.

Although I hadn't taken a plumbing course yet, I was experienced in disassembling drain pipes of sinks since my first house need numerous plumbing repairs. I started by removing the p-trap and found the section completed clogged with food debris from the garbage disposal. The solution was simple. Clean out the p-trap and reattach it. Thus, our sink was working in time for the party.

In 2009, as we were preparing for hosting our second holiday party, I noticed that the dishwasher spray arm was no longer well connected. Apparent the attachment bolt had sheared, leaving the spray arm just resting on the fitting. Again, I consulted with an appliance parts website to find an assembly diagram and part number. A local store had both parts, and I was able to fix the dishwasher by the same afternoon.

In general, I am confident about most doing plumbing repairs, since they are most "mechanical" in nature. My errors usually only result in a small leak that can be fixed relatively easily.

On the other hand, I am much more cautious when doing electrical repairs since an error can be dangerous. If I hadn't taken an electrical wiring course in the fall of 2008, I would not have attempted the temporary stove repair. However, the knowledge from the course gave me confidence I could safely do a temporary fix and eventually do the permanent fix correctly. And since the stove is still working without problems in 2010, I must have done the right repair :-)

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or home repair advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC