2011 in review


The WordPress.com stats helper monkeys prepared a 2011 annual report for this blog.

Here’s an excerpt:

The concert hall at the Syndey Opera House holds 2,700 people. This blog was viewed about 22,000 times in 2011. If it were a concert at Sydney Opera House, it would take about 8 sold-out performances for that many people to see it.

Click here to see the complete report.

New Year’s Resolutions to Make Money and Grow Wealthy in 2012


Probably the second most common New Year’s resolution is to do better with finances (the top one is to lose weight).  If one is looking to lose weight, obviously it is better to get advice from that friend who lost 50 pounds and kept it off than to ask the one who is overweight and keeps going on yo-yo diets.  With making and keeping money, the people to follow are the wealthy who hold onto money – not the friend with the fancy car who is up to debt to his eyeballs.  Unfortunately few of us know many wealthy people since the average person is deep in debt.
Luckily, in his book “The Millionaire Next Door,” Mr. Stanley has given us some tips drawn from actual millionaires.  These are people who became wealthy and stayed that way.  If your resolution is to do better with money, here are some tips from them:
1.  Control your money.  This means having a budget which says what you will do with every dollar you get for the month.  This should include all of your expenses, money directed into savings/investing, and some money to be spent as desired (you need to have some freedom).  If needed, use a system of envelopes and cash with labels like “groceries,” “clothes,” etc… to make sure you stick to your budget for each area.  While it may seem restrictive, you’ll generally find that you have more money than you thought if you stop blowing money on unplanned purchases throughout the month.
2.  Get rid of payments.  Rich people don’t buy things on payments.  If you are paying interest you are paying more for things than they cost and you will never have nay money to save and invest.  Rich people save up and pay cash.
3.  Build your pipelines.  Rich people buy assets  – things that grow in value and pay them money.  Things like stocks, bonds, and real estate.  This means that every month you’ll have more money coming in than simply what you earn from working.  Use some of the money you get from these assets to buy more assets, and you’ll be putting your wealth growth on turbocharging!
4.  Only buy what you need.  Rich people don’t buy lavish houses, relative to their net worth.  While Bill Gates has a multi-million dollar house, his net worth is also many billions.  People with 1-10 million dollars don’t have McMansions in general.  They have solid, well-built houses in established neighborhoods.  They know that too much space means more maintenance and cost.
5.  Spend your time at your profession or with your family.  Rich people don’t fix the car or mow the lawn unless they enjoy doing it or it is the only way to get the job done right.  Rich people would rather spend the hours they would be doing such tasks making more money at their profession and hire professionals with the right tools for such jobs.  Spending extra hours at work can also help you get ahead – spending all day fixing a water heater will not.
6.  Find ways to make money that can multiply your time.  If you rake leaves in yards for $50 per yard, you can only make about $200 per day since you can only rake so many yards. If you hire people to rake leaves, pay them $40 per yard and keep $10, you can make as much money as there are yards to rake.  The easiest way to become wealthy is to do something that can multiply your time.  Write a book.  Start a business with employees.  Invent something.
Everyone can become wealth.  Make it your New Year’s resolution to start on your way.

Please send investment questions to vtsioriginal@yahoo.com or leave them in a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

What You May Not Know About the Payroll Tax Cut (Social Security Funding Decrease)


If you were following the news at all before Christmas you probably know that the Republicans once again put politics before their principles and agreed to a two-month extension of the payroll tax holiday.  As is a Republican tradition, they of course did this only after doing as much damage as possible by saying they would not extend the tax holiday.  They thereby managed to irritate both their base who was calling for an end to the holiday and the general public who wanted the holiday extended.

Here are somethings that were not widely reported about the deal, however:

1.  The “Payroll Tax” is the funding paid by workers and businesses to fund Social Security.  Up until about a year ago, workers and their employers each paid 6.2% of the worker’s salary into the system.  Since the holiday, the worker is paying only 4.2%.  This means that the funding for Social Security has been reduced, increasing the rate of demise of the system.  To protect yourself, all SmallIvy readers should put the $1000 not paid into Social Security this year into an IRA.  You have until April 15th.

2.  The bill also included an extension of unemployment benefits and the “Doc Fix.”  The Doc Fix is a provision that keeps the payment rates from Medicare to doctors from being lowered as is written in the law.  The lower payment rates are often cited as a cost reduction (as they were in the scoring of the Obama Health Care Law, allowing it to appear to reduce costs), but it is widely known that they will never take effect since doing so would cause a lot of doctors to stop seeing Medicare patients.  Each time the lower rates are about to go into effect, a temporary stop is passed.

3.  The bill from the Democratic-controlled Senate to the Republican-controlled House included income level phase-outs.  This meant that those at the higher end of the middle class income spectrum would see some of their income being taxed at the higher 6.2% rate, while those at the lower end would be paying 4.2%.  This would make Social Security more of a welfare program than it currently is since individuals at the lower-end of the income spectrum would be paying less for benefits than those in the upper-middle class.  Note that most wealthy individuals have little payroll income (or realized income at all) compared to their wealth and therefore would be unaffected.  This is a good reason to save and invest to become wealthy rather than working for all of your income.

4.  To pay for the 2% payroll tax extension, an additional charge would be created in the fees charged by Fannie Mae and Freddie Mac to loan originators.  These fees would be passed along to the home buyer, resulting in an increase of about $15 per month in the mortgage payment.  Note that this would be about $180 per year or $5400 over the life of a 30-year loan.  Including interest, a home buyer would pay somewhere north of $10,000 over the life of the loan.

Follow on Twitter to get news about new articles.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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