Financial Fitne$$

A collection of financial tips and wisdom

Disclamers

  • I'm not a professional financial planner or adviser
  • Generalized advice (may not apply to everyone)
  • I have not implemented everything
  • Do your own due diligence (Then tell me your findings :)
  • Always use a fee-based fiduciary (be critical of free advice, including this)

Why

  • Why this talk
  • Pending Recession (Debt Cycle)

Everyone has a plan until they get punched in the mouth - Mike Tyson

Money

  • Median Income
  • Inflation (Tax on savers)
  • Difference between assets and liabilities
  • Good vs Bad debt. (good debt is associated with assets)
  • Where does money come from? How it is made?
  • Warren Buffet Rule
  • Velocity Banking, BYOB/IBC, Fire Movement
  • Credit Card Interest (6,500 debit = 70k savings)
  • Simple budgeting techniques (debit cards)
  • Know your net worth
  • Monitor everything
  • Real Cost of Coffee (Income tax, sales tax, opportunity cost)

More Money

  • If you want to spend less, pay with cash
  • Self Mortgage (Auto Pay Yourself)
  • Teach your kids (Nobody else will)
    • 10, 10, 10, Fun Envelopes
      • Giving, Long Term, Short Term, Fun Money

Credit

  • 30% credit utilization
  • Never close a card, spend a little every year.
  • Every year ask for more credit and lower interest
  • Credit Freezes (Not Locks): Free and easy DIY
  • CreditKarma
  • Due Date / Recording Date
  • 2 months of zero balance on due date
  • 90 days of balances matter
  • Disposable credit card numbers
  • Avoid Co-Signing (Even with your spouse) (lawsuits)
  • Hard Pulls when shopping (14 days)
  • Hold Cards with different institutions

Taxes

  • Single biggest life expense
  • Governments incentivize certain behavior with the tax code
  • Kids can make 12k tax free 

Home Buying

  • Look at > 10 houses before buying (preferably more) Fight Fatigue
  • Get your own title company
  • Do the numbers if it would make sense as a rental
  • Primary homes with mortgages can become a rentals in 1-2 years 
  • Locks you into the economy
  • In the US you don't own property, you rent it from the Gov.
  • Homestead Laws & Lawsuit risk (OR 4-50k WA 125k)

Mortgages

  • Death Pledge
  • 10 Loans (per person)
  • 3 mortgage quotes
  • Inflations effect on debt
  • Escrow costs money (Also causes you to pay attention to costs associated with taxes and insurance)
  • No limit to mortgage deductions on investment properties
  • Loan modifications
  • Mortgages are a hedge against the dollar (Shorting) 
  • Debt Cliff
  • 30 year fixed mortgages are rare in the world
  • recoverable non-recoverable << wrong term

Insurance

  • Use high deductibles (Self Insure, rating, credit)
  • Umbrella Coverage is cheap (Why?) (outside of a Home & Car: liable tweets, negative reviews, photo tagging, recording video/audio, dog bites, skiing accidents)
  • Do not disclose your umbrella (1-5 mil)
  • Insurance companies sometimes help the other side
  • Save when paying once a year and autopay

Insurance (Continued)

  • You can be liable
  • Landlord policies do not cover you
  • Landlords can tap your policy

Renter's insurance

Insurance (Continued)

  • Wealth building
  • Diversification
  • Protection from creditors
  • Fund your own loans (Emergency Fund)
  • Seasoned
  • Tax free withdraws for life

Whole Life / IBC

Investing

  • Down markets means cheap buys
  • Dollar Cost Averaging
  • Consider down sides first (Can you withstand a 40% correction, two times?)
  • Pay attention to fee ratios of funds
  • Bid/Ask Spread and Market Makers
  • Bulls & Bears
  • Gambler's Ruin (10>11, 20>25, 50>100 )

Investing (Continued)

  • Limit Orders are fake stop losses
  • Married Puts as insurance (How some Annuities work)
  • All Weather Portfolio / Rebalancing
  • -2.5% inflation -2.5% opportunity costs
  • Roth might be better than college savings plans

401(k) & Fidelity

  • 401(k) a.k.a Salary Reduction Plan
  • Median 55-65 has 60k
  • Taxed at Ordinary Income with capital gains risk
  • Lock Accounts
  • Quick and easy direct institutional transfers (Keeps assets)
  • Auto Rebalancing (Once a year)

401(k) & Fidelity

  • Increase saving with every raise
  • Protected from creditors
  • IRA / Roths can invest in any traded asset
  • Company Match 80-120% ROI

401(k) Loan

  • 50% up to 50k of balance
  • 60 month term $955 payment @5.5%
  • 85 month term $719 payment @5.5%
  • Counts a seasoned funds
  • Not on credit report
  • Pay up when you leave the company
  • Avoid PMI on a mortgage
  • Tax hit
  • Once per 12 month period

Action Items

  • $1000 Emergency Fund (Or mortgage / rent)
  • $2500 Self Insurance Fund
  • Set deductibles to $2500
  • Create debit card sending funds (Food, Clothing, Fund Money, with Auto Pay)
  • Bring credit cards under 30% (boosts credit)
  • Pay of bad debt
    • Use a modified snowball payoff strategy
    • Government Loans first

Action Items (continued)

  • Determine monthly expenses
  • Build Emergency Fund (3 months expenses)
  • Payoff Credit Cards Each month
  • Live on 80% or less 
  • Long Term Savings (Investment Savings with Auto Pay)
  • Increase 401(k) for full match
  • Refinance to lower payment (Cash out??)

Inspirations & Credits

  • Dave Ramsey / Susie Orman (great for starting out financially)
  • Clark Howard (Consumer awareness)
  • Mark Kohler (Legal and Tax advice)
  • Ray Dalio (Investing philosophy)

Topics

  • Money
  • Credit
  • Taxes
  • Home Buying
  • Mortgages
  • Investing
  • Retirement & Fidelity
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