Money Taboos: Why Are People Afraid To Talk About Money?

MONEY. It conjures up all kinds of emotions and responses from people. Some good, some bad, some absurd. Money is one of the subjects that people are so afraid to talk about freely. There are other difficult subjects in life like politics, religion, and sex. But I’ve noticed that people will talk about sports, social media craze, celebrities, politics and even religion (with all the divisiveness that these bring), yet will chicken out when the subject of money is brought up. Why is that? There is a fundamental connection between our daily lives and how we think about and handle money. The Bible And Money The Bible talks so much about money. Why? According to this blog post, money is such an important topic in the Bible that it is the main subject of nearly half of the parables Jesus told. In addition, one in every seven verses in the New Testament deals with this topic. The Bible offers 500 verses on prayer, fewer than 500

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A Heart of Gratitude

There’s no happier person than a truly thankful, content person. -Joyce Meyer Gratitude. A very powerful concept. Are you a grateful person? Do you often say ‘thank you’ when you receive a favor? Are you often reminded of your own mortality and live your life everyday filled with gratitude? Do you consider yourself smart and invincible or do you sometimes feel lucky for the breaks you’ve had in life to get you to the level you are now? If I asked you to write a journal about gratitude, what would you write? What are you grateful for? Just like my blog post on contentment, gratitude is a big part of my life. Money may be the currency of living but gratitude is the currency of life. Actually, there are 3 virtues in life that I’m passionate about. They are Contentment Gratitude Generosity Now thinking about it, may be I should do a separate blog post about generosity. I sure will

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10 Reasons You Should Have A Roth IRA

When it comes to investing for retirement in the U.S, there are several plans that can be used to achieve this. The commonest are the employer-based defined contribution plans like the 401(k), 403(b), 457 or the TSP. For more details on these, check out this article here However, the Roth IRA which is not employer-based, can often be started by almost anyone in the US (you must be a legal resident and have earned income). I sincerely believe that this is the best retirement plan in this country and everybody should have one. Yes, everybody, including you reading this right now. If you have not opened one, it’s time to take action now. Sure, there are income limits to contributing directly to a Roth IRA, but if you are constrained by that, you can still contribute to it legally through the Backdoor Roth IRA strategy. Currently, the annual contribution limit to the Roth IRA is pegged at $5,500. By next year,

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The Ultimate Financial Principle

The world of personal finance can be complicated. Even when I try as hard as I can to keep it simple here. Learning and dealing with terms like passive investing, FIRE, safe withdrawal rates, stretch IRAs, expense ratios, safe harbor rules, HCE rules, tax loss harvesting, capital gains, dividends, escrow, PMIs, ETFs or rebalancing can trigger an eye roll. It really gets old fast. In aggregate the concept of personal finance is to ensure that you influence your net worth in an ever increasing upward trajectory. However, in actual sense, true financial success rests on a basic and ultimate financial principle: CONTENTMENT. I know, I know, it sounds so cliché. But it’s actually true. Contentment is more than a financial principle; it is a mindset which makes all of life better. According to the Urban dictionary, contentment is the state of mind you reach when you look at your life, in all its imperfection, and say, “good enough”. It is

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I Challenged The IRS And …..

Have you ever received a letter from the Internal Revenue Service (IRS) notifying you that you owe more in taxes than you paid? Have you ever been audited by the IRS challenging your tax return? If you have, it is possible the situation spelt doom for you. For the generality of people, a letter from the IRS evokes a panic attack. This is for good reason: the IRS has great powers and can chase you down anywhere you are and can even garnish your wages. Worse still, you can be prosecuted for tax fraud and put in jail if you conceal assets and income. Often the fear of the IRS is the beginning of tax wisdom in the US. Nobody wants to mess with the IRS. When confronted by the IRS, most people just give up and pay up. It’s that simple. Many don’t even want the hassle of challenging them, even if there is a possibility they can win. One of the

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Are You On FIRE?

    The truth is that a number of people have high-pressure jobs that they hate and would rather not go to work everyday, if at all they have to go. Some others prefer to work on their own terms. To yet a few others, they have passions that they want to pursue that may not necessarily bring much income. If you belong to one of those described above, then you need to hear about the term FIRE. The acronym simply means Financial Independence Retire Early. There is a whole new movement of FIRE enthusiasts, most common among millennials. When you think about retirement, most people usually think someone in their late 60’s and this is because this is the norm. The earliest you can start withdrawing from Social Security is age 62 and you can only start withdrawing from most tax-deferred retirement plans without penalty from age 59.5. Early retirement is the literal definition of the FIRE movement, but there’s a much more

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Mechanics of Investing: A Lazy Man’s Guide II

In the part I of this series, we discussed the common retirement accounts (baskets or open boxes, if you will) you can use to do your investing. In this part II, we’ll discuss the investments to put inside of those accounts. Wall street and some financial advisors make you believe that investing is complicated. Nothing can be further from the truth. Investing is simple if you follow a few basic principles: reduce your risk by widely diversifying your investments including a reasonable allocation between stocks and bonds (called a fancy term, Asset Allocation), maximize your returns by minimizing fees and expenses, and stick with your plan long enough to experience the magic of compounding. Like Jack Bogle said once, “Simplicity is the master key to investment success.” However even though investing is simple, it’s not easy. Why? Because it is mostly a behavioral exercise. It requires a lot of patience and contrarian behaviors. How Much Do I Invest? This is one of

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Mechanics of Investing: A Lazy Man’s Guide I

This is going to be a 2-part series. In this first part, I’ll talk about the basics of common retirement accounts and in the second part, I’ll discuss investment choices. As always, I’ll try to keep it simple and easy to follow. One of the greatest concern for most people when it comes to investing is the ability to defer withdrawing their money until retirement. Now, retirement is at different ages for different people. Most people in America consider retirement age to be age 65, which is also the age when one qualifies for Medicare. Most newly settled immigrants to America cannot come to terms with this because for most tax-deferred retirement plans, if you attempt to withdraw your money early (typically before age 59.5 years), you will incur a penalty (typically 10%). The government puts this penalty for a good reason: so you don’t liquidate your nest egg even before you get to your retirement. It’s like helping to

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Common Personal Finance Terms And Their Meanings II

The first part of this series was published last week. You can check it out here. The following terms might help you understand better the world of personal finance. This is by no means exhaustive. Emergency Fund: This is an account for funds (money) set aside in case of the event of a personal financial difficulty, such as loss of a job, a debilitating illness or an unforeseen major repairs to your home. Most financial professionals recommend between 3-6 months of your monthly expenses (not your income) in your emergency fund. So for example, if it takes about $3,000 to run your household in a month, you should keep between $9,000 – $18,000 in a dedicated account (preferably a high-yield online savings or money market account). Personally we use Ally bank and they currently give 1.85% APY in their online savings account. Equity (Home Equity): The fair market value of a home minus the unpaid mortgage principal and liens. You build

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Common Personal Finance Terms And Their Meanings I

This is a long post, so it’s going to run in 2 parts. Part 2 will run next week. This is a young blog and I feel it is right to set some proper foundation. It will not be presumptuous of me to assume that my main target audience for this blog have minimal interest in personal finance. To be fair, the majority of Americans really don’t pay attention to their finances.  But someone who was born and bred in America has probably heard some of the numerous common financial terms often used, even if they don’t know their full meanings. However, to the immigrant, especially one that is still relatively new in this country, most of these financial jargon will inspire confusion. Most just give up even trying to learn and know what these terms mean. People don’t want to read books on personal finance and investing because most are truly boring and some authors already assume some level

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