The media made it sound like the tax relief law passed late last year was designed to make a lot of older, rich taxpayers happy with new tax deductions and more favorable federal tax brackets.

But in reality, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 contained a lot of new and extended tax deductions and benefits for those of us just starting out with our careers and businesses.

For starters, the new law included a payroll tax cut on our federal income tax that will put about $112 billion back into the paychecks of some 155 million workers. Any employee who pays into Social Security will see their portion of FICA federal income tax drop from 6.2 percent to 4.2 percent.

For the average worker, that translates into a monthly pay increase of about $83 a month. If you have been receiving the Making Work Pay tax credit, which expired at the end of 2010, your raise will be more along the lines of $50 a month. If you earn more than $95,000 a year and weren’t eligible for the Making Work Pay credit, you’ll get the full 2 percentage point cut from your federal income tax, or nearly $2,000 over the course of the year.

Helping parents, college students

Another important portion of the law was the extension of emergency unemployment benefits for another 13 months. That alone gives an estimated 7 million workers a little breathing room. These are folks who are struggling to find jobs and were about to lose their benefits altogether.

For those with children, the new law also includes a tax cut for an estimated 10.5 million lower-income families. According to the Internal Revenue Service, the law also extends an earned income tax credit worth, on average, $600 for families with three or more children. It also reduces the so-called “marriage penalty” for working married couples.

The new law also extends for two years the $1,000 child tax credit on your federal income tax.

The bill also extends the American Opportunity Tax Credit, which is a $2,500 per-student, per-year tax deduction that’s been helping many students and their families afford college.

Advantages for small business owners

In addition to the payroll tax cut, the new law keeps federal tax brackets from climbing. The current federal tax brackets range 10 to 35 percent, and were scheduled to jump to 15 to 39.6 percent. But the new law keeps those federal tax brackets at the lower level.

The sprawling tax bill included a variety of changes and tax deductions that could help anyone who is starting a new business. Here are some examples:

• Business can temporarily expense 100 percent of certain investments in 2011, which the government hopes will spur $50 billion in new investments this year and convince companies to hire more people.
• Self-employed workers can deduct health insurance premiums from their net earnings and reduce their self-employment tax, potentially saving up to 15.3 percent on the cost of health insurance.
• The owners of small businesses can deduct up to $500,000, up from $250,000, under Code Section 179. This should be an incentive for many businesses to invest in new equipment. Business owners can also deduct 51 cents per mile in 2011 — up from 50 cents in 2010 — when using their vehicle for company business.
• While workers’ Social Security tax dropped to 4.2 percent from 6.2 percent, the small business owner’s tax decreased from 12.4 percent to 10.4 percent.

Relief from estate taxes

If your parents were fretting about the return of estate taxes — also known as the ‘death tax’ — they can breathe a sigh of relief.

The federal income tax rate on an estate was scheduled to go up to 55 percent, with $1 million allowed to be passed on tax-free. But the new law allows $5 million of a person’s estate to be passed on tax-free and the remaining estate tax rate set at 35 percent. Additionally, widows and widowers can pass along $10 million tax free if their spouse dies.

The new law only extends these estate tax breaks for two year, however, and the federal laws don’t affect state estate or inheritance taxes. So if you or your parents might be affected by these taxes, it might be wise to consult an estate planner and look at bypass or family trusts as a way to avoid heavy inheritance taxes.

Jim Sloan is a free-lance business writer and a higher-education communications specialist. He has worked as a business editor and writer for various newspapers and magazines. He is the author of two books, and his stories have been selected for a number of anthologies. He has a degree in journalism and environmental science from the University of Maine.

Image: renjith krishnan / FreeDigitalPhotos.net

Source URL: Federal tax-relief bill gives many a pay raise

Copyright Protected © 2011 Money Blue Book: Personal Finance Blog. All Rights Reserved.

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By Richard Barrington

Have you ever run a long-distance race?

I find it useful to think of saving money like distance running. If you obsess over the total distance, then each step seems hopelessly insignificant in covering the necessary ground. If instead you just start making those steps, and concentrate on finding a comfortable and consistent pace, you’ll find that before you know it, the distance will take care of itself.

In other words, focus on the next step, because that is what you can most directly control.

In terms of saving money, a great way to make that next step is with a contribution to an IRA — either a traditional or a Roth IRA. To help you make that step, there are a few things you should know about IRAs, including important information on IRA contribution limitations for this year.

1. Traditional and Roth IRA contribution limitations

Both traditional and Roth IRAs have certain tax advantages, which will be discussed below in “Deciding on a traditional vs. a Roth IRA.” However, for anyone considering starting an IRA this year or making continued contributions into an IRA account, it’s critical to know that there are limits on how much you can contribute to IRAs each year.

To start with the simple part, the basic contribution limits for both traditional and Roth IRAs are the same, and are unchanged for 2011. The only difference is that taxpayers who are aged 50 and over are allowed to make higher, “catch-up” contributions.

IRA Contribution Limits

Note that these limits apply to total IRA contributions, so if you have multiple IRAs, including both a traditional and a Roth IRA, any amount you contribute to one reduces the amount you are able to contribute to the other.

Another limitation is that the amount you contribute to an IRA cannot exceed your taxable income for the year. That seems simple enough, but there are complications for higher earners. Depending on your tax status and income bracket, your eligibility to make IRA contributions might be reduced — or eliminated altogether.

2. Income ceilings for traditional and Roth contributions

For both traditional and Roth IRAs, there is an income level at which the amount you can contribute starts to be reduced, and a level at which it is eliminated completely. This is known as a contribution phase-out.

With traditional IRAs, this applies only if you or your spouse were covered by an employer-sponsored retirement plan during the tax year for which you are making the IRA contribution. For Roth IRAs, however, the contribution phase-outs apply to anyone who falls within the applicable income limits.

Income parameters for deduction phase-outs are described in the tables below. In each case, eligible contribution amounts start to be reduced at the lower end of the ranges given, and are eliminated altogether at the upper end of those ranges:

Traditional IRA deduction phase-outs

Roth IRA contribution phase-outs

3. Deciding on a traditional vs. a Roth IRA

So, should you be contributing to a traditional or a Roth IRA? These three key differences can help you decide:

1. Contributions to traditional IRAs are tax-deductible, but distributions from them are taxed, whereas the reverse is true for Roth IRA (as long as distribution guidelines are followed).
2. For traditional IRAs, distributions before you are aged 59 1/2 not only are taxed, but are also subject to a 10 percent penalty, whereas a Roth IRA allows for certain exceptions, such as for buying a first home or in the case of disability.
3. Traditional IRAs require you to start taking distributions after you reach age 70 1/2, whereas you are not required to take distributions from a Roth IRA at any time.

In some ways, this makes a Roth IRA ideal for younger savers who might feel they are in a lower tax bracket now than they will be in when they retire (and thus they would prefer to pay taxes now and get IRA distributions tax-free later). Also, younger savers might like the flexibility of being able to withdraw money from a Roth IRA to buy a home.

Whichever IRA you choose, the important thing is to start contributing to one this year so that you can start harnessing the power of compound interest and make your money work for you. The tax man even gives you a little leeway — IRA contributions for the 2010 tax year don’t have to be made until April 15, 2011. If retirement saving is like a long-distance race, that leeway can help you get a little bit of a head start.

Richard Barrington has earned the CFA designation and is a 20-year veteran of the financial industry, including having previously served for over a dozen years as a member of the Executive Committee of Manning & Napier Advisors, Inc. Richard has written extensively on investment and personal finance topics.

Source URL: 2011 IRA contribution limits: 3 ways to maximize your retirement tax advantages

Copyright Protected © 2010 Money Blue Book: Personal Finance Blog. All Rights Reserved.

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When people ask me if they could be successful at day trading, my first response is, “Do you know what day trading is?”

Most people don’t. You might think day trading is about finding the best online brokerage, grabbing a stack of financial reports, arming yourself with financial blogs and news and then diving in.

What many would-be day traders don’t realize is that success doesn’t come from the uncanny ability to analyze balance sheets and fundamentals like Warren Buffett. And even if you have the ability to interpret charts and price action–the primary skill for day trading–this is secondary to having the strict discipline of adhering to specific rules and guidelines.

Without these rules in place, day trading is like a child playing with a chainsaw.

I’m not judging the merits of day trading. I know both very successful day traders and those who blew themselves up financially with day trading. (For what it’s worth, I know many more of the latter variety.) But if you’re going to succeed at this kind of investing, you’d better understand what it takes.

What it takes to succeed

Here are observations from my experience as both a professional trader and money manager about what it takes to succeed at day trading:

• Hard work. Brains don’t hurt, but day trading is a skill, and that skill needs to be developed by treating this as a business. A lot of people day trade as a side avocation or hobby, maybe because it seems like an easy road to riches. Don’t fall for that mentality. I’ve known people with a gambling mentality who have been drawn to trading, only to be chewed up because they treated the markets as a casino and not a business.
• Discipline. Do you ever see the same people wandering around your gym who have no noticeable changes in their appearance from a year ago? It’s from lack of discipline and goal-setting. Trading is no different. People jump from strategy to strategy, or worse, have no strategy at all. The importance of discipline to day trading can’t be overstated. You may think you have discipline, but the true litmus test is your results.
• A keen grasp of probabilities. The best baseball players–the ones who get paid the most–hit the ball around three times for every 10 at-bats. A guy who hits it four times for every 10 at-bats is the best in the business. Put another way, even the best baseball players in the world achieve an undesirable result most of the times they get up to bat. Great traders are the same. Making money through day trading doesn’t mean you make the right call most of the time. The key is to lose a little when you are wrong (which is often) and make a lot when you are right.
• Letting go of the need to be right. Some people would rather be right than make money (or would rather be right than be happy, but that’s another blog post!). This personality trait makes for lousy day traders. In day trading, you will be wrong more than you are right, but that is not failure, it’s probability.

Defining your day trading personality

On a recent episode of “America’s Got Talent” (I admit it, I somehow got hooked on a summer reality TV show) judge Piers Morgan told one performer that he did not know how to define his act and asked the performer how he would define himself. The entertainer looked completely bewildered, and it’s no surprise that his act fell flat.

Ask 100 people to define their “investment personality,” and you’re going to get 90 blank stares. Lacking a clear description of your investment personality–are you a trader, gambler, investor or saver?–is a common error, one that can make or break your results.

In the broadest sense, everyone’s financial goal in investing is to make money. But that’s not enough. You have to find a strategy and set of rules that you’ll stick to and will keep you from an expensive labyrinth of mistakes.

Spending some time doing a little self-discovery can yield a strategy that is more in sync with your personality type, which may help reduce some of the emotional impulses that often lead people astray.

Still think you have what it takes to be a successful day trader? You’re the only one who can really know. But if you lack any of the key traits or a strong investment personality, don’t be surprised if you’re in for a long grind–or a financial meltdown.

Marc Pearlman is the author of the Positive Money Mindset and host of the popular radio show Your Money Matters! For more about Marc, visit marcpearlman.com or www.Yourmoneymattersradio.com.

Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Marc Pearlman, Representative. Your Money Matters! radio show and the Securities America companies are unaffiliated.

Source URL: Day trading: Do you have what it takes?

Copyright Protected © 2010 Money Blue Book: Personal Finance Blog. All Rights Reserved.

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Source URL: Investing tips for today: Q&A with money expert Saly Glassman

Copyright Protected © 2010 Money Blue Book: Personal Finance Blog. All Rights Reserved.

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Of course, until I find a way to definitively achieve financial independence or acquire a method to ensure a guaranteed passive income stream, I will inevitably have to end my extended vacation and return to my full time job sometime in the next few weeks. Thus I’ll be getting back to my regular full time day job as a self employed attorney and part time gig as a blogger very shortly. Blogging has been an interesting part time job for me for the last two years (bringing in a very steady and rather lucrative income stream), however at some point, the inevitable pangs of writer’s block and declined motivation inevitably creep. Thus it was nice to finally get away and get a multiple month breather after all this time. However, now that I’ve taken my sabbatical, spent time with the family, and pursued other extracurricular activities, I’m almost ready to get back on the horse again and retake the reins.

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

Reliable Passive Online Income Through Blogging

Despite my multiple month absence from my normal blogging duties, I continue to rake in a steady monthly income via my small network on profitable blogs and affiliate websites. While I used to earn a significant portion of my monthly take via my small legal practice as an attorney, I have been undergoing a winding down process in recent months to slowly transition my way out of the whole trading hours for dollars routine that working as an attorney entailed. While the legal work and training has certainly been interesting at times, my heart has never been all that much into it. Pursing the viability of online businesses and trying to harness all that the Internet can provide has always drawn much more appeal for me. The lure of being able to make money online by blogging from the comforts of one’s home is what got me started in this industry years ago.

As my primary online blogs (most notably, the financial blog you are reading now) have grown to the point where their traffic levels are now inherently stable and the sizable income profits they now earn are now very reliably self sustaining, I am at the process of trying to decide where to go from here – call it a fork in the road if you will. Do I sell off a few major sites for instant income now and turn my entrepreneurial attention elsewhere, or do I put in the additional effort now and continue to grow these sites into something inevitably bigger?

While the nature of blogs and Internet businesses can be fickle at times, I truly believe that the future of media and information lies with the adaptive power of Internet. The web is continuously transforming how old and new information is consumed. While it would certainly be great to possibly sell off my most prized websites in terms of traffic levels and income, I am somewhat cautious about cashing out too soon when I think there is still tremendous upside to be had in the coming years. Of course, anything is possible and these things are just a handful of the issues that I’ll be pondering a lot about in the coming months as I slowly get back to my old blogging routine again.

Continue Investing In A Down Stock Market

Not much further needs to be pointed out about the stock markets beyond the truism that big wealth can be made during the worst of times. Markets have certainly been choppy and volatile recently, but given a sufficiently long period of time, they will almost always recover in spades. Despite having rather significant chunks of money invested into various index funds and individual stocks, I barely glanced at my holdings throughout the month. Perhaps it was because I’ve been traveling overseas, but more likely than not it was because I see my investments as appropriately geared for the long haul and I don’t want to be overly bothered by the emotional highs and lows of short term price swings. “Set it and forget it” is how I’ve been investing these past few months.

If you haven’t already opened up an investment account with a discount broker or opened up a retirement account with a Roth IRA broker, now is as good of a time as any.

My New Home Construction Is Nearly Complete

As long time readers may already know, my new house has been under construction since summer 2009. After months of construction activity and suffering through periodic pauses due to severe winter snow, the home is now nearly complete. With construction now projected to conclude by the end of March 2010 and with my home mortgage application paperwork eagerly waiting on the sidelines, I am preparing to close on the house by the end of March. It’s been an interesting ride in terms of my journey to become a first time homeowner. I went through spats of doubt, indecision, and even exuberance during my home purchasing process, so one can’t say that I didn’t fully think my decision through. I had and still have occasional doubts of the timing of my purchase, particularly in light of the reality that the real estate market is still lingering in the doldrums. However, I have faith that in due time, the home prices and sales numbers will recover, as early indicators do seem to be bearing that out. Particularly in the Washington D.C. suburbs of Maryland and Northern Virginia where I live, the housing market has been remarkably resilient. Living close to the epicenter of the federal government, which powers and maintains such a reliable supply of jobs definitely has its positive secondary benefits in terms of ensuring the need of a continuously growing housing supply.

Source URL: February 2010: Net Worth Report and Making Money By Blogging

Copyright Protected © 2010 Money Blue Book: Personal Finance Blog. All Rights Reserved.

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Of course, until I find a way to definitively achieve financial independence or acquire a method to ensure a guaranteed passive income stream, I will inevitably have to end my extended vacation and return to my full time job sometime in the next few weeks. Thus I’ll be getting back to my regular full time day job as a self employed attorney and part time gig as a blogger very shortly. Blogging has been an interesting part time job for me for the last two years (bringing in a very steady and rather lucrative income stream), however at some point, the inevitable pangs of writer’s block and declined motivation inevitably creep. Thus it was nice to finally get away and get a multiple month breather after all this time. However, now that I’ve taken my sabbatical, spent time with the family, and pursued other extracurricular activities, I’m almost ready to get back on the horse again and retake the reins.

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

Reliable Passive Online Income Through Blogging

Despite my multiple month absence from my normal blogging duties, I continue to rake in a steady monthly income via my small network on profitable blogs and affiliate websites. While I used to earn a significant portion of my monthly take via my small legal practice as an attorney, I have been undergoing a winding down process in recent months to slowly transition my way out of the whole trading hours for dollars routine that working as an attorney entailed. While the legal work and training has certainly been interesting at times, my heart has never been all that much into it. Pursing the viability of online businesses and trying to harness all that the Internet can provide has always drawn much more appeal for me. The lure of being able to make money online by blogging from the comforts of one’s home is what got me started in this industry years ago.

As my primary online blogs (most notably, the financial blog you are reading now) have grown to the point where their traffic levels are now inherently stable and the sizable income profits they now earn are now very reliably self sustaining, I am at the process of trying to decide where to go from here – call it a fork in the road if you will. Do I sell off a few major sites for instant income now and turn my entrepreneurial attention elsewhere, or do I put in the additional effort now and continue to grow these sites into something inevitably bigger?

While the nature of blogs and Internet businesses can be fickle at times, I truly believe that the future of media and information lies with the adaptive power of Internet. The web is continuously transforming how old and new information is consumed. While it would certainly be great to possibly sell off my most prized websites in terms of traffic levels and income, I am somewhat cautious about cashing out too soon when I think there is still tremendous upside to be had in the coming years. Of course, anything is possible and these things are just a handful of the issues that I’ll be pondering a lot about in the coming months as I slowly get back to my old blogging routine again.

Continue Investing In A Down Stock Market

Not much further needs to be pointed out about the stock markets beyond the truism that big wealth can be made during the worst of times. Markets have certainly been choppy and volatile recently, but given a sufficiently long period of time, they will almost always recover in spades. Despite having rather significant chunks of money invested into various index funds and individual stocks, I barely glanced at my holdings throughout the month. Perhaps it was because I’ve been traveling overseas, but more likely than not it was because I see my investments as appropriately geared for the long haul and I don’t want to be overly bothered by the emotional highs and lows of short term price swings. “Set it and forget it” is how I’ve been investing these past few months.

If you haven’t already opened up an investment account with a discount broker or opened up a retirement account with a Roth IRA broker, now is as good of a time as any.

My New Home Construction Is Nearly Complete

As long time readers may already know, my new house has been under construction since summer 2009. After months of construction activity and suffering through periodic pauses due to severe winter snow, the home is now nearly complete. With construction now projected to conclude by the end of March 2010 and with my home mortgage application paperwork eagerly waiting on the sidelines, I am preparing to close on the house by the end of March. It’s been an interesting ride in terms of my journey to become a first time homeowner. I went through spats of doubt, indecision, and even exuberance during my home purchasing process, so one can’t say that I didn’t fully think my decision through. I had and still have occasional doubts of the timing of my purchase, particularly in light of the reality that the real estate market is still lingering in the doldrums. However, I have faith that in due time, the home prices and sales numbers will recover, as early indicators do seem to be bearing that out. Particularly in the Washington D.C. suburbs of Maryland and Northern Virginia where I live, the housing market has been remarkably resilient. Living close to the epicenter of the federal government, which powers and maintains such a reliable supply of jobs definitely has its positive secondary benefits in terms of ensuring the need of a continuously growing housing supply.

Source URL: February 2010: Net Worth Report and Making Money By Blogging

Copyright Protected © 2010 Money Blue Book: Personal Finance Blog. All Rights Reserved.

For January 2010, the combined income accumulated from this personal finance blog, the revenue generated by my other online affiliate ventures, and the part time income I earned from my small legal practice as an attorney – all saw slight increases. However, much of the income stats were gobbled up by the hefty estimated tax payments I had to make to the federal and state government during the month. Because I operate my small business and solo legal practice using a cash basis form of accounting, I don’t spread the estimated quarterly tax payments evenly throughout the year, but rather record them on my personal financial balance statements only when they are actually paid out – resulting in these precipitous drops in total net asset value that occur four times a year.

There was one major financial hit however which came from a furious stock market correction that reared its ugly head at the latter half of the month, which pretty much wiped out the hefty gains I would have been on track to record. But as far as the worth of my stock investments go, I don’t generally pay substantial attention to them – as I see them as long term investments that will ultimately pay off years down the road. Month to month dips in stock portfolio value don’t generally rattle me in any significant way (so long as there aren’t serious financial Armageddon type issues lingering in the market). On the whole, so long as I can continue to pull in a steady income with my online website businesses and small legal practice, I am generally content to stay the course. No one ever said becoming a millionaire would be easy, as there are bound to be unexpected bumps on the road. But so long as the rules haven’t changed to any major degree, the economic and financial landscape will inevitably improve in the long run, and such long term investments will ultimately enjoy much success.

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

Paying My Quarterly Estimated Taxes As A Self Employed Taxpayer

For those not familiar with what quarterly estimated taxes are in general, or not sure as to why they took such a big bite out of my networth this month, here’s a quick explanation. Estimated taxes are basically the  income taxes that self employed individuals like myself  pay on income that is not subjected to withholding. This income includes everything  from self employment income, interest, stock dividends, rental income, and gains from the sale of assets, etc. It’s important to pay attention to this obligation, because failure to timely pay the quarterly assessed estimated taxes on time does result in a hefty penalty and associated interest charges, even in those cases where you are ultimately due a refund when you file the tax return.

Most people never have to deal with paying estimated taxes because their employers usually already withhold their federal, state, and social security taxes on their paychecks. But for self employed small business owners like myself, because we don’t have someone else to withhold these types of taxes for us, the Internal Revenue Service (IRS) has mandated that we do so ourselves – requiring us to make four projected pre-payments throughout the year at set intervals on April 15, June 15, September 15, and January 15 of the following year. One of these hefty tax payment dates occurred in January, which is why the vast bulk of the income I generated during the month was siphoned off to pay the Man. But next month, my networth will likely return back to its regularly anticipated upward growth trajectory.

Buy Low, Sell High – And Continue Investing In A Down Stock Market

Some are saying that we are up for another routine market correction after a somewhat furious run up from spring 2009, while others are running around in circles predicting another major collapse again. But once you cut past the rhetoric and emotional hyperboles, you realize that it’s really just business as usual. The economy naturally ebbs and flows and there is always bound to be good stock market days and bad ones as well. But if you are generally optimistic about the distant future as I am and are willing to make your long term investment bets today, I am confident that years from now, your investments will pay off quite handsomely.

While I keep a rather sizable amount stored away in my safe and secure FDIC insured high interest bank accounts for emergency fund purposes, the vast bulk of my savings reside in discount broker accounts – invested into a variety of long range investments. I intend to stay invested for quite a few years – at least 3-5 years before I plan to engage in any significant portfolio reshuffling. I think the market is currently at its low and that all indicators strongly suggest that there is only tremendous upside from hereon. It is certainly possibly for the market to continue getting spooked and experience a pullback, but I don’t think we are in for another financial Armageddon scenario or are on the verge of a serious economic depression – the likes of which were talked about during the early part of last year. We are definitely on the road to economic recovery – however, admittedly, the road is long, and heavily paved with pot holes and obstacles.

Cashing In and Taking Advantage Of Credit Card Rewards and Bonuses

This month I also happened to redeem a rather large chunk of the credit card rewards I’ve accumulated over the last many months – converting my various credit card reward points into usable currency – namely, gift cards. Overwhelmingly, the more lucrative card reward program I use at the present time is the Citi Thank You network, with the American Express Blue Cash program being a close second. Because I used reward credit cards to pay for pretty much everything I purchase, I tend to rack up a substantial amount of reward points in a very short period of time.

The amount of credit card reward points I had accrued after only a year of routine credit card spending was rather enormous (in my opinion) – an amount that exceeded a value of $1,500. Ultimately, I decided to convert the majority of them into gift cards to places like Marshall’s and Macy’s. I don’t go shopping for clothing very often, but I’ll probably go on a small shopping spree in the near future with my new found loot. I had the option to convert my accrued credit card reward points into a cash lump sum, but for those who are familiar with credit card rebates and rewards, the point to cash conversion rate is frequently pretty low – and you tend to lose a big chunk of your points during the conversion process. While pure cash back credit card rewards are more versatile and bypass the hassle of having to manually convert accrued points into usable gifts or rewards, I’ve found that point based reward programs tend to offer a higher purchase rebate percentage. If you don’t mind a little work or putting in a little effort towards micro-managing your points, you’re better off going with a point based reward program.

I know credit cards tend to get a very bad rap with many out there believing them to be the source of all evil as evidenced by the government’s recent crusade to regulate every aspect of how credit card issuers run their businesses. However, I personally feel credit card programs are what you make of them. If you spend responsibly and pay off your balances in full every month, the credit card usage incentives they provide can be extremely lucrative. Even those who persistently carry monthly balances are not without options – there are a variety of 0% balance credit cards and low interest credit card deals out there for the qualified applicants to take advantage of. Keep those FICO credit scores high and monitor them regularly with programs like MyFICO Score Watch like I do, and you’ll ensure that you’ll always have access to the best credit card offers according to your personalized needs.

Source URL: January 2010: Net Worth Update and Paying Estimated Taxes

Copyright Protected © 2010 Money Blue Book: Personal Finance Blog. All Rights Reserved.

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According to most public sentiment surveys I’ve seen thus far, the overwhelming consensus is that 2009 was a particularly terrible year. The economy tanked, retirement savings were largely wiped out, and home equity values were pretty much eviscerated. However, where there’s misery, there always seems to be a smidgen lining of hope. Despite most people’s vastly negative opinion of 2009, the great majority of surveys indicate a very optimistic outlook for 2010. Maybe it’s because this time around, we are no longer staring at the barrel of an imminent financial sector meltdown and hearing the ghastly doomsday warnings of a possible decade-long economic depression, but things certainly feel less dire than the same time 12 months ago.

Most certainly, while we are still languishing under the worst economic recession in decades with depressive unemployment rates continuing to climb, the pace at which the economy continues to worsen has drastically decreased. In other words, while the economy is still deteriorating, it’s worsening at a significantly slower pace than before. This is very good news for the aspiring optimists and opportunists in all of us. Most significantly, there also does appear to be tangible economic metrics emerging to back up the growing optimistic fervor for 2010. While I personally think we are still many months away from a real and sustainable recovery, I think we are decidedly heading in the right direction as punctuated by the fact that I’ve been jumping back into the stock market of late and starting to invest strongly and aggressively in long term positions again – positions that I think will pay off handsomely in the future. Previously during the very early part of spring 2009, I exited and stayed away from the market to protect myself from the effects of the irrational fear and panic that was crippling the American psyche. But with the way things are now, I am pretty confident that the worst case scenario has been averted and all that remains now is for the economy to begin its long and steady natural progression towards recovery. While home prices will almost undoubtedly not return to pre-recession levels anytime soon, home prices will most likely stabilize during 2010, leading to a positive and steady ripple effect across other sectors.

In terms of my New Year’s resolutions for myself in the financial planning and income growth department, I plan to make 2010 a banner year for my bank savings account balances and investment holdings. Now is the most opportunist time to start placing one’s bets for the distant future. Despite the mild market run up since spring 2009, stock market prices on the whole are still lagging and have not returned to pre-recessionary panic levels. If you have cash on the sidelines and have been waiting for the so-called “best time to start investing”, now is the time to start opening up a discount broker account and start investing those excess savings into long term mutual funds, or better yet – into the exchange traded funds (ETF’s) of your choice. I’ve personally chosen to invest heavily into riskier financial and emerging market funds (such as the XLF and EEM funds) to fully maximize the potential of my future gains. However, your personal investment strategy is up to you and dependent on your willingness to assume risk today for a greater payday in the not too distance future.

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

Allocating Cash Savings For The Closing Of My New Home Purchase

Back in August 2009, I signed a contract for the purchase of a brand new construction 4 bedroom, 4 bathroom cottage style single family colonial home. For several months now, I’ve been patiently monitoring the construction progress of my first home purchase ever – swinging by the home lot to take photos of the inside and outside at least once every week. Most recently, the transformation from a pile of dirt to a free standing wood and concrete structure has been nothing been dramatic. With the roof tiles now in place and the windows having been installed, the home is starting to really take shape. While the housing construction is proceeding rapidly and steadily, there have been a few slow downs due in large part to the recent snow storm activity that we’ve been experiencing in the D.C. Baltimore area the last few weeks. Coupled with the time off effects of Christmas and New Year’s, construction work has occasionally stalled – but I expect things to start picking up again briskly when construction starts rolling into January.

Currently, the new home is tentatively scheduled to be completed and delivered sometime early March 2010. As such, I’ve prepared and saved up a sizable cash balance to pay towards my new home mortgage 20% down payment. With the home priced at around $622,000 (this is pretty much average for the D.C. area), I presently have set aside and reserved more than the necessary $125,000 down payment I will need for home mortgage purposes. While there have been several times that I’ve been tempted to allocate this special purpose money into various lucrative stock market investments, I managed to do the right thing and keep the funds safely segregated in their own separate bank accounts.

Funding My IRA and Opening Up A New SEP-IRA Account For Stock Investing

Most people rely on their employer’s 401(k)’s with matching contribution packages for most of their retirement planning needs. But because I am currently fully self employed with my network of online businesses and run my own legal practice from my home office, I have to depend on myself. Fortunately for solo practitioners and self employed folks like myself, the IRS provides a useful mechanism for us to still take full advantage of the tax deferred benefits of individual retirement savings accounts – namely the SEP-IRA. Because I’ve already maxed out my limited Roth IRA and Individual IRA contribution limits and desire to contribute more, I recently, I opened up a SEP IRA account with Fidelity Investments. The greatest benefit of a SEP-IRA account apart from the obvious tax deferred benefits, is that the maximum contribution limit is pretty generous – at 25% of an individual’s compensation, capped at a maximum of $49,000 for both individual tax years 2009 and 2010. Eventually, I may very well open up a few more other SEP-IRA investment accounts with other reputable online discount brokerage firms to test them all out – but for now, I’m going with Fidelity.

Relying On My Passive Online Income Streams For A Living

Unfortunately, due to several notable and rather complicated personal situations during the last few months, I’ve neglected to post on my personal finance blog and other online blogs as frequently as I would have liked to. While I’ve continued to maintain and tend to my online businesses and network of profitable websites on a regular basis, I have not really posted new articles with much regularity. But despite my lack of effort and lack of any substantial headway in the way of content creation, my online income streams continue to remain very stable (with even signs of growth). This brings me to the most powerful and compelling aspect of why I truly believe any person who is strongly self motivated ought to start blogging to make money online and not delay in tapping into the powers and limitless potential of the Internet. Because of all of the effort I had previously put into my online craft for the last 2 and a half years, I’ve built up a very substantial network of online traffic streams that remain solidly consistent despite my lack of present effort. Contrary to what most layman and blogging beginners believe, once you have built up solid search engine traffic and have earned reputational authority in the eyes of major search engines such as Google, Bing, and Yahoo – your keyword rankings pretty much stay consistent indefinitely (and dare I say it, permanently). Once you have this search engine authority built up, it’s very difficult for new blogging and website entrants into the field to supplement your existing position. This probably explains why numerous major media companies have been trying to contact me recently to inquire about potential buyout opportunities or website acquisitions. Frankly, I have very little incentive to entertain such offers as I truly enjoy the significant incomes I generate from the sites that I own, as they require very little effort on my part – but of course, with the right offers, anything is possible I suppose.

For those of you who have always thought about wanting to start blogging online to either share your  interests with the rest of the world or just to make some money on the side or even provide your family an alternative income source during these difficult and unpredictable times – now is the time to start blogging and pursuing your web business aspirations. The more you delay, the more such opportunities will gradually slip away. Carpe diem!

Source URL: December 2009: Net Worth Report and Financial Plans For Year 2010

Copyright Protected © 2009 Money Blue Book: Personal Finance Blog. All Rights Reserved.

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According to most public sentiment surveys I’ve seen thus far, the overwhelming consensus is that 2009 was a particularly terrible year. The economy tanked, retirement savings were largely wiped out, and home equity values were eviscerated. However, where there’s misery, there always seems to be a smidgen lining of hope. Despite most people’s vastly negative opinion of 2009, the great majority of surveys indicate a very optimistic outlook for 2010. Maybe it’s because this time around, we are no longer staring at the barrel of an imminent financial sector meltdown with whispers of a prolonged economic depression to last decades, but things certainly feel less dire than the same time 12 months ago.

Most certainly, while we are still languishing under the worst economic recession in decades with depressive unemployment rates continuing to climb, the pace at which the economy continues to worsen has drastically decreased. In other words, while the economy is still deteriorating, it’s worsening at a significantly slower pace than before. This is very good news for the aspiring optimists and opportunists in all of us. Most significantly, there also does appear to be tangible economic metrics emerging to back up the growing optimistic fervor for 2010. While I personally think we are still many months away from a real and sustainable recovery, I think we are decidedly heading in the right direction as punctuated by the fact that I’ve been jumping back into the stock market of late and starting to invest strongly and aggressively in long term positions again – positions that I think will pay off handsomely in the future. Previously during spring 2009, I exited and stayed away from the market to protect myself from the effects of the irrational fear and panic that that had crippled the markets. But with the way things are now, I am pretty confident that the worst case scenario has been averted and all that remains now is for the economy to begin its long and steady natural progression towards recovery. While home prices will almost undoubtedly not return to pre-recession levels anytime soon, home prices will most likely stabilize during 2010, leading to a positive and steady ripple effect across other sectors.

In terms of my New Year’s resolutions for myself in the financial planning and income growth department, I plan to make 2010 a banner year for my savings account balances and investment holdings. Now is the most opportunist time to start placing one’s bets for the distant future. Despite the mild market run up since spring 2009, stock market prices on the whole are still lagging and have not returned to pre-recessionary panic levels. If you have cash on the sidelines and have been waiting for the so-called “best time to start investing”, now is the time to start opening up a discount broker account and start investing those excess savings into long term mutual funds, or better yet – into the exchange traded funds (ETF’s) of your choice. I’ve personally chosen to invest heavily into riskier financial and emerging market funds (such as the XLF and EEM funds) to fully maximize the potential of my future gains. However, your personal investment strategy is up to you and dependent on your willingness to assume risk today for a greater payday in the not too distance future.

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

Allocating Cash Savings For The Closing Of My New Home Purchase

Back in August 2009, I signed a contract for the purchase of a brand new construction 4 bedroom, 4 bathroom cottage style single family colonial home. For several months now, I’ve been patiently monitoring the construction progress of my first home purchase ever – swinging by the home lot to take photos of the inside and outside at least once every week. Most recently, the transformation from a pile of dirt to a free standing wood and concrete structure has been nothing been dramatic. With the roof tiles now in place and the windows having been installed, the home is starting to really take shape. While the housing construction is proceeding rapidly and steadily, there have been a few slow downs due in large part to the recent snow storm activity that we’ve been experiencing in the D.C. Baltimore area the last few weeks. Coupled with the time off effects of Christmas and New Year’s, construction work has occasionally stalled – but I expect things to start picking up again briskly when construction starts rolling into January.

Currently, the new home is tentatively scheduled to be completed and delivered sometime early March 2010. As such, I’ve prepared and saved up a sizable cash balance to pay towards my new home mortgage 20% down payment. With the home priced at around $622,000 (this is pretty much average for the D.C. area), I presently have set aside and reserved more than the necessary $125,000 down payment I will need for home mortgage purposes. While there have been several times that I’ve been tempted to allocate this special purpose money into various lucrative stock market investments, I managed to do the right thing and keep the funds safely segregated in their own separate bank accounts.

Funding My IRA and Opening Up A New SEP-IRA Account For Stock Investing

Most people rely on their employer’s 401(k)’s with matching contribution packages for most of their retirement planning needs. But because I am currently fully self employed with my network of online businesses and run my own legal practice from my home office, I have to depend on myself. Fortunately for solo practitioners and self employed folks like myself, the IRS provides a useful mechanism for us to still take full advantage of the tax deferred benefits of individual retirement savings accounts – namely the SEP-IRA. Because I’ve already maxed out my limited Roth IRA and Individual IRA contribution limits and desire to contribute more, I recently, I opened up a SEP IRA account with Fidelity Investments. The greatest benefit of a SEP-IRA account apart from the obvious tax deferred benefits, is that the maximum contribution limit is pretty generous – at 25% of an individual’s compensation, capped at a maximum of $49,000 for both individual tax years 2009 and 2010. Eventually, I may very well open up a few more other SEP-IRA accounts with other reputable discount brokerage firms to test them all out – but for now, I’m going with Fidelity.

Relying On My Passive Online Income Streams For A Living

Unfortunately, due to several n0table and rather complicated personal situations during the last few months, I’ve neglected to post on my personal finance blog and other online blogs as frequently as I would have liked to. While I’ve continued to maintain and tend to my online businesses and network of profitable websites on a regular basis, I have not really posted new articles with much regularity. But despite my lack of effort and substantial headway in the way of content creation, my online income streams continue to remain very stable (with even signs of growth). This brings me to the most powerful and compelling aspect of why I truly believe any person who is strongly self motivated ought to start blogging to make money online and not delay in tapping into the powers and limitless potential of the Internet. Because of all of the effort I had previously put into my online craft for the last 2 and a half years, I’ve built up a very substantial network of online traffic streams that remain solidly consistent despite my lack of present effort. Contrary to what most layman and blogging beginners believe, once you have built up solid search engine traffic and have earned reputational authority in the eyes of major search engines such as Google, Bing, and Yahoo – your keyword rankings pretty much stay consistent indefinitely (and dare I say it, permanently). Once you have this search engine authority built up, it’s very difficult for new blogging and website entrants into the field to supplement your existing position. This probably explains why numerous major media companies have been trying to contact me recently to inquire about potential buyout opportunities or website acquisitions. Frankly, I have very little incentive to entertain such offers as I truly enjoy the significant incomes I generate from the sites that I own, as they require very little effort on my part – but of course, with the right offers, anything is possible I suppose.

For those of you who have always thought about wanting to start blogging online to either share your  interests with the rest of the world or just to make some money on the side or even provide your family an alternative income source during these difficult and unpredictable times – now is the time to start blogging and pursuing your web business aspirations. The more you delay, the more such opportunities will gradually slip away. Carpe diem!

Source URL: December 2009: Net Worth Report and Financial Plans For Year 2010

Copyright Protected © 2009 Money Blue Book: Personal Finance Blog. All Rights Reserved.

However, this is not yet the time to start high fiving or fist bumping each other, or be reveling in premature optimism. Rather, this is the time to start placing your financial bets in a strong, but calculated way in anticipation of an eventual economic recovery. There are still a large number of unforeseen factors and worldwide catastrophes that could easily derail the economic momentum train off its tracks. Because we now live in a global economy where all established and developing markets are interlinked and highly inter-dependent with one another, it’s crucial to recognize that there are many worldwide factors beyond our control that still have strong sway on the economic lives of those that live in the states. Certainly we can lower interest rates all we want, issue as many economic stimulus checks as the public demands, or extend unemployment benefits for as long as jobless folks need them – but if other major countries whose high expansion rates and growth we’ve been counting on to boost our own economic markets are not able to successfully salvage their situations and ensure social stability among their populace, we are likely to suffer as well. Let’s hope our federal government can continue to promote the natural worldwide growth of free markets, continue to adopt favorable tax rates, and not resort to protectionist agendas that serve only to stifle the efficient and orderly expansion of the world’s interlinked economies.

As an investor for the long term who anticipates a gradual economic recovery in the coming years, I’m particularly intrigued by the availability of powerful growth prospects overseas, especially in the so-called BRIC nations of Brazil, Russia, India, and China. A great deal of my present stock investments are focused on these developing nations as well as centered on sectors in the United States that have been especially beaten down by the 2008 and 2009 recessions such as the financials and the real estate housing stocks. While many risk averse investors continue to seek out so-called safety stocks by investing in gold, I prefer to bet on the future rather than on the short term. Flee to the safety of gold investments and buy gold bullion holdings if you must, but I’m personally placing my bets for the distant future now, rather than hiding in assets that will only offer short term security. The emerging markets, particularly China (with its ginormous billion strong population and growing appetite) will emerge from this global economic recession as the new focus of worldwide economic growth for many years to come. Whatever qualms we may have about China’s human rights track record and censorship activities are unlikely to detract from the country’s importance in our own future plans for economic prosperity. Strange and surreal as it might be to fathom – but the Communists will ultimately pull all of us out of this capitalist nightmare (who would have thunk it).

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

My Financial Blogging Business Income Continues To Grow

Amidst the backdrop of Thanksgiving, I feel quite fortunate, lucky, and blessed in the income department. While the economy continues to struggle through the worst economic recession we’ve seen in decades brought on by the housing bubble and subprime mortgage crisis, my income has remained fairly steady over this period of time with just a slight bit of retrenchment. I currently generate my monthly income through a small collection of online and so-called real life sources. Only about 4 years ago I was still working a regular full time day job as an associate attorney. Not long thereafter I went through a chaotic period of my life when I jumped from one temporary legal assignment to another as an attorney for hire. There was even one brief but unforgettable period of time when I wound up as the lackey slave for a miserably oppressive female attorney who ran her solo practice like a mafia. With numerous un-fulfilling and miserable stints as a “real attorney” under my belt, about two years ago, I decided to entertain the prospect of running a solo legal practice of my own. Around the same time, I randomly and rather fortuitously stumbled upon blogging and internet marketing as a way to generate passive income online. The rest is history. Years later, I continue to work for myself, running my own small legal practice as well as running a few online based businesses on the side. While I continue to make money online by blogging and generating revenue through a variety of income producing niche sites and by earning fees through online consulting work, my hope one day is to either make everything completely self automated or sell my entire business so I can finally retire from the rat race.

Progress and Status Report Of My New Single Family Home Construction

With a recent CNN report indicating that almost 1 in 4 current homeowners are underwater, meaning that they owe more on their home mortgages than their homes are actually worth – it truly does feel like you’re potentially signing your life away when you become a new homeowner nowadays.

I recently became a first time buyer and owner of a brand new construction 4 bedroom, 4 bath single family home – and thus far, the journey from location scouting, to price negotiation, to pending construction has been a rather disconcerting experience for me. While there have been lots of great highs experienced such as the awesome feeling I felt when I walked through a beautifully constructed model home for the first time, there have been many ongoing lows as well. Lately, I’ve been plagued by a bit of buyer’s remorse, and while I don’t seriously doubt my new home purchase to a critical degree, I do wonder at times if I might have prematurely and hastily locked myself into the largest investment of my life. After all, by purchasing such a pricey home, I’m officially chaining myself to a certain geographical area and lifelong home mortgage contract for many years to come.

As I run my home business and legal practice from my home office, my living location is actually quite flexible as I don’t necessarily need to be located near public subway transportation sites for example. Thus I have occasionally pondered the prospect of living in another state or even living overseas for a short while to experience something different in my life. But now that I’ve locked myself into a new home with monthly mortgage payments to be forthcoming when the new construction home is finally delivered sometime in March 2010, it looks like I’ll be staying in the Washington D.C. suburban area for some time now.

Other persistent issues that continue to nag at me include the home’s somewhat close proximity to electrical powerlines and the home’s location away from the city center. But after having worked through these lingering doubts in my mind, I am ultimately comforted by the fact that I made a good purchase as far as real estate investments go. I purchased the home in the latter half of 2009, at a time when local and national home prices have already plummeted 20-30%, and during a time when mortgage rates are presently at historical lows and free government homebuyer tax credit incentives are abundant. Furthermore, despite what worries I may continue to have, perhaps the very most comforting aspect of owning my own home at this time is the fact that I will now have a place to call home, and can finally put an end to my formerly nomadic lifestyle of moving from rental apartment to another every few years. I will finally have a place to designate as my permanent home base, and a primary residence where no landlord or management office can tell me what I can or cannot do in my own home.

Source URL: November 2009: Net Worth, Real Estate, and Blogging Income

Copyright Protected © 2009 Money Blue Book: Personal Finance Blog. All Rights Reserved.

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