Your property assessors’ #1 goal is to collect as much property tax from you as possible. Your goal as a homeowner is to make your home look like the dumpiest of dumps to pay the least amount of property tax possible. An asteroid could wipe out your entire city, but if the assessors office survives, they will come for you to collect!
Ever since the downturn, I’ve religiously filed a property tax appeal to get my assessed value lowered. In the midst of the financial crisis I was shocked that the assessors office appraised my primary residence for $100,000 more. If they got away with it, I would have paid roughly $1,200 more in property taxes that year. I ultimately won my appeal three months later and kept my assessed value the same as before.
For the next three years I got more aggressive and managed to lower my assessed value $100,000 below my purchase price. When the world is falling apart, it’s an easy sell to say your property’s value is also going down the tubes. In fact, my goal is to get the city to assess my property as close to $0 as possible.
Now that real estate is roaring back, I’m having a much harder time convincing the city I live in a rundown shack. This post will highlight how I almost got screwed over by the San Francisco property assessor again, and how I fought back and came to a compromise. Just like how every homeowner should be taking action to refinance their mortgage, every homeowner should take action by filing property tax appeals!
A CONVERSATION WITH AN ANGRY PROPERTY ASSESSOR EMPLOYEE Read more…
If I wasn’t whipped so hard during my first job out of college, I never would have saved over 50% of my after-tax income every year for 13 years in a row. I probably would’ve blown the majority of my income on fancy cars, late nights at the clubs with bottle service, and frequent weekend trips to Atlantic City or Vegas.
At age 22, I already had the penchant for the good life having finally landed a plum job in finance. Going from making hardly anything to making a tidy sum very quickly is a very dangerous situation (think lottery winners). When your peers are recklessly spending money every weekend, it’s very hard not to follow. But I didn’t follow because of the jobs I once had.
Getting in at 5:30am and often leaving after 8pm was NO FUN. I gained 15 pounds, was constantly sick, and became a stress case. I also worked most weekends for the first two years because I was a dumbass who needed to learn more about finance if I was to sound remotely intelligent with clients. Each minute I worked past the 12 hour mark was a reminder to keep on saving money. There was no way I could last for more than three years in this cutthroat business I remember telling myself.
Before the post college lashes, there were three other jobs that helped me prepare for the real world. I hope to never do any of these jobs again, but never say never when you’re unemployed. What I realize today is that adversity builds character. The following three jobs helped prepare me to navigate workplace politics, resolve conflicts with employees, endure marathon work hours, produce consistent work and appreciate the value of a hard earned dollar.
CRAPTASTIC JOBS THAT CHANGED MY LIFE FOR THE BETTER Read more…
This past week I decided to convert my 401(k) into a rollover IRA and I’d like to share with you why. As I wrote in a previous article, I took profits in my 401(k) after the S&P 500 reached the 1,551-1,555 range. That’s a 9% gain for the year and inline with my 2013 forecast which now seems conservative with every pundit on the street calling for 1,600+. Where were their calls at the end of last year I don’t know. I guess it’s easy to get bullish after the market has made a strong move!
Given I no longer have earned income, I can no longer contribute to my 401(k). The market is fully valued in my opinion which means I see a greater risk of a pullback during the summer than continued gains. Even though my 401(k) has 40 or so mutual fund choices provided across various sectors, countries, and asset classes it isn’t enough for what I want to do.
THE BENEFITS OF ROLLING OVER TO AN IRA Read more…
We’ve got real estate tycoons and we’ve got stock market tycoons. We’ve even got wealthy bond investors such as PIMCO’s Bill Gross who pulls in over $100 million a year, but let’s forget about bonds for now. Now that everything is heading up, I’d like to have an open discussion on which asset class provides the the most amount of wealth over the long run.
With my net worth split roughly 40/30/30 between real estate, stocks, and CDs, you might assume that I like all three asset classes somewhat equally. The fact of the matter is I would much rather have 60% of my net worth in real estate, 35% in stocks, and 5% in CDs at this present time. Unfortunately, shifting one’s net worth around isn’t as easy as snapping one’s fingers. (See: “Recommended Net Worth Allocation By Age And Work Experience“)
It’s important to realize there are no renter or cash tycoons. The return on rent is always -100% every single month. Meanwhile, the return on cash averages a paltry 0.1% nationwide. You can certainly be a wealthy renter with tons of cash in the bank. But your wealth was accumulated through other means so don’t get confused. Having a money strength grade of F- is no way to go.
In this article I will explain to you why I have a preference for real estate over stocks (equities). Both have proven worthy of building great wealth over time, however real estate is going to provide the most return over the next 10 years in my opinion. I’ll do my best to make the case for both asset classes.
REASONS WHY REAL ESTATE IS BETTER THAN STOCKS Read more…
Ignorance is bliss.
When you don’t know your boss is getting a huge bonus for saving the firm money by screwing your bonus, you’re happy. When you don’t know the reason why you didn’t get into the fellowship program is because the managing director is a woman who hates men with different political ideals, you’re happy. When you have no clue your boyfriend is hooking up with your best friend, you’re happy to carry on!
I’m generally a very happy go lucky type of guy. My facial expression seems to have “smile” as a a default setting. But there is one time a year where I get angry and randomly shout obscenities while no one is looking. The one time of year is during tax season.
As a proud financial masochist, I decided to redo my taxes a second time online just to make sure I didn’t make any errors. I’ve got a five figure tax bill for the first time in my life thanks to AMT, some one off incomes, and retroactive tax law changes in the state of California which I may write about more in the future.
Lo and behold I found a five figure error where I inadvertently inputted my property tax bill instead of my mortgage interest for one of my rental properties. My error makes me wonder what else I’ve done wrong. Despite my mistake, I’m a big proponent of everyone doing their own taxes. This post will highlight four reasons why, as well as five reasons why you’re silly.
THE MAIN REASONS TO DO YOUR OWN TAXES Read more…
I want to get everybody talking about their retirement portfolios because making the proper net worth allocation, deciding on how often to rebalance, and running different growth scenarios matters more over time. Contributing the maximum $17,500 a year to your 401(k) should be standard. If you’re making more than $60,000 a year and not maxing out your 401(k), then you should probably give yourself a timeout to contemplate why you’re slicing off your toes.
As you can tell from my 401(k) by age chart, contributions add up quickly over time. Assuming you receive no company match and suffer no losses, you’ll have at least $100,000 in your 401(k) in six years. In 10 years, you’ll probably sock away over $200,000 and in 30 years you’ll finally reach that magical $1 million dollar mark.
The S&P 500 is up roughly 10% year to date. That’s a healthy $100,000 gain in your million dollar portfolio in three months without having to do much of anything. I’m cautious investing new money now, but the point is once you’ve amassed a sizable nut there’s no longer a need to work in a bull market - unless you are restless like me.
401k CONTRIBUTIONS AS A PERCENTAGE OF YOUR PORTFOLIO Read more…
Financial independence and retirement are used interchangeably, but there are some subtle differences. Financial independence is usually applicable to people across their entire lifespan. Those who cashed out $5 million dollars worth of Facebook stock at the age of 30 are financially independent just like those who saved $5 million in their retirement funds by the age of 65.
Retirement, on the other hand, is a term often used to describe someone in the last quarter of their lives e.g. ages 65 and up. This is why some folks get so hot and bothered if you aren’t in the upper ages but say you are retired. They don’t think you deserve retirement because you’re not old enough! If you don’t want unwanted attention as an early retiree, just say you are unemployed, on sabbatical, or an entrepreneur.
The reality is all of us would rather be financially independent earlier, so we have more time to enjoy our wealth. When the director of admissions at Berkeley asked why I was applying so early (25), I told her it was because I knew what I wanted to do and felt it best to leverage an MBA degree sooner, for a longer period of time. Little did I know I’d be done 10 years later.
The older we get the more we are willing to trade money for time since we have less of it. Given I’ve already described what financial independence feels like, I’d like to now describe what life is like once you no longer have to report for duty. I’ll be as candid as possible so you can get a realistic understanding.
THE CHANGED LIFE OF A RETIRED MAN – THE POSITIVES Read more…