The Comfortable Lifestyle Business or The Big Payout?

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Over poker one night, we got to talking about what we always talk about: entrepreneurship.   Out of a table of 10, four work at start-ups, three are at Google, one is a high-tech lawyer, one works as a medical correspondent for CNN, and then there’s me, a hybrid.  I had just got done working on Yakezie.com for three hours after working an 11 hour day, and needless to say, I was a little bit tired.

I love going to Friday night poker mainly because I get to bounce ideas off of really smart and incredibly hard working people.  When I hear stories of one start-up player working from 7am to 3am every night for two weeks straight to launch a product offering, I get pumped.  When the Venture Capitalist player recounts his firm rejecting a pitch by Tim Westergren, Pandora’s founder in 2008, I wince, but daydream in amazement.

THE QUESTION


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Myths About Selling a Structured Settlement for Cash

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There’s a whole world out there of financial products I have very little understanding about.  Apparently, there’s a market for buying and selling “structured settlements” for cash after you win big money after a court case.  The following is a guest post by Jason from JG Wentworth which pays people cash now for settlements which are paid over time.  Interesting concept and something which is worth learning about.

When a plaintiff settles a court case and is awarded a large amount of money, it may be decided that the settlement will be paid over time in installments rather than a single lump sum payment.  This type of arrangement is called a “structured settlement”.

The advantage to having a structured settlement is that the money is tax-free if set up properly.  Structured settlements can also be beneficial because they provide a source of income for the recipient well into the future, where as lump sum payments will more likely be spent if the recipient does not manage their money responsibly.

Structured settlement payments can also be a disadvantage, trapping the recipient into periodic payments when they may want cash now.  Many settlement recipients choose to sell their settlement payments for a lump sum of cash to start a business, pay for college tuition, purchase a home or other various financial reasons.

Handling a large lump sum of cash can be exhilarating.  And it can be a little unsettling, too.  Money causes people to worry, and worry spins half-truths or unfounded myths about financial issues at hand. Selling your structured settlement into a lump-sum payment is an opportunity to increase your net worth — not limit it.  All it takes is a little guidance from a reputable structured settlement buyer and a plan of action for your cash to breakthrough any doubts.

Apparently there must be some controversy about structured settlements and Jason is here to help clear the air.

MYTHS ABOUT SELLING A STRUCTURED SETTLEMENT FOR CASH


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View Your 401K Like Social Security And Write It Off

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Every month I contribute $1,375 to my 401K so that by the end of the year, the 401K is maxed out at $16,500. Unfortunately, $16,500 a year is a ridiculously low amount of money to save for retirement if you really do the math. After 10 years, you might have $200,000, and after 30 years you might have $600,000 to $1 million depending on the markets and your employer’s match.  Whatever the case may be, the 401K is simply not enough money to retire on, especially since you need to pay taxes upon distribution.

The government needs to get it together and raise the amount of 401K contribution for those in the later part of their lives.  How is it that a 40 year old executive who makes $250,000 can only contribute the same amount in his 401K as a 23 year old kid out of school making $40,000?  It just doesn’t make sense.  Instead, the government should allow pre-tax contributions to increase by $5,000 every 5 years so that by the time one has served 20 years in the work force for example, s/he can contribute $35,000+ a year to their 401Ks until retirement.

Let’s talk about the pencil geek IRA retirement plan for example.  If you’re one of the fortunate who are allowed to contribute, you can only fund $5,000 a year!  Whoopdeedoo!  $5,000 X 30 years later, assuming you don’t lose it in the market yields $150,000-$300,000 maybe!  Great, just enough to buy me a Honda Accord sedan when I’m grey.  Get it together government and raise that $5,000 contribution amount higher with better tax incentives.  Furthermore, let hard working Americans who make over $120,000 the opportunity to contribute regularly, and not just through odd year loop holes.  Empower people to want to save for their future!

DIFFERENT STROKES


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Buying Blogs, Selling Blogs: How I Built My Blogging Business

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This is a guest post written by Mike, a financial planner / web entrepreneur who is pursuing his dream of running his online business. You can follow his progress at The Financial Blogger (RSS Feed).

3 years ago, I was told by many bloggers: “You will never make money blogging. And if you do, $200/month will be your highest peak ever”.

Three year ago, The Financial Blogger was averaging 500 visits per month and I was ecstatic when I made my first deal of $10 for a link.

Three years later, I now run three financial websites, bought 2 of them and flipped a blog within a year. I am now able to work 1 full day per week on my online business (while I still have to keep my “day job” in the meantime). I really like buying and managing finance blogs as I think it is currently one of the best investing opportunities we can find.

When I asked Sam if I could write a guest post for Financial Samurai, he asked me to include more details on how I appraised blogs and how do I decide or not to send $10K over the wire (or more!) simply to buy a “.com”.

Look at Blogs as a Real Estate Investing Opportunity


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Personal Finance Bloggers Cause US Retail Sales To Plunge!

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May retail sales drop 1.2% or the most in 8 months as more and more people turn to personal finance bloggers for frugality advice!  I’m pretty certain nobody has ever come up with this statement, but think about it for a little bit.  Why is it that the public should take personal finance advice from BusinessWeek, for example?  The articles are written by relatively well-paid writers who are on a mission to report the news.  They do a fine job at that, but perhaps not as fine a job making things visceral like the personal finance community.  What’s more personal than a real person like Jeff delivering pizzas to get out of debt?  Not much!

It’s very hard for the mass media to compete against a team of personal finance bloggers such as the Yakezie.  We’re real life people responding to comments and putting ourselves out there.  There’s a two-way street with us.  If I were Editor in Chief of any mass media publication, I’d go out and hire an bunch of influential personal finance bloggers and put them on my payroll.  $75,000 a year will do or perhaps $150,000 a year if you want us to write an article a month exclusively for you.  By doing so, the Editor will inject new life, new readers, and therefore a wealth of new advertising dollars to the publication.

As evidenced by May’s retail sales figures, we are creating the news with our frugal ways instead of just reporting the news.  There’s a movement underway, can you feel it?  Maybe we’ll band together and talk about how we should never buy new cars again, causing June’s new car sales to dip.  Or maybe we’ll discover how amazing one person’s unsung journey is to fight poverty in Uganda and direct millions of dollars their way.  That counts for something.  Let’s make a palatable difference with the words we write.  Someone is out there listening.

Have a great weekend everyone!

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

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