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will76 03-01-2010 10:56 AM

Financial Planning 101 "The Basics" - Protecting Your Assets
 
Financial Planning 101 "The Basics" - Protecting Your Assets


The majority of us here are either self-employed, small business owners or employees. We spend the majority of our time working hard, in an effort to make money and become successful. Our lives are consumed with two main goals: being better than our competition, and trying to handle adversity and avoid pitfalls like stolen content, new laws (2257), visa regulations, lawsuits, etc. What we fail to focus on is what we do with our money AFTER we make it. Many of us have never thought about the "financial" side of things, much less do we have the time to learn what should be done with the money made from our businesses and how to protect it, ourselves, and our family... today and several years from now.

This will be my first of several ?GFY educational series? posts, where I will be sharing my knowledge of financial related matters.

Please note: The information I will be sharing is based on US law. While some of the topics mentioned below may only apply to people living in the US, the general concepts may still be useful to everyone.

There are 3 main components to Financial Success.
1. Protect your assets
2. Plan for retirement
3. Accumulate wealth

For this first post I will be focusing on the first and most important component - protecting your assets. You already know how to make money. I am going to help educate you on making sure you don't lose it.

Protect your assets:

First of all, what are your assets? Obviously the money you have in the bank, your home, your business, any investments you may have, but don't forget the most important asset you have is you!

What good is it to bust your ass to make money just to have something happen to take it all away from you. Before you try to accumulate wealth you need to first put an iron shield around yourself, so all of your efforts are not wasted. If you do not take this first step you are basically playing russian roulette with your wealth / assets.

If you are successful then you have likely put in thousands upon thousands of hours to achieve that level of financial success. However, there are several things that can happen in a matter of seconds that can destroy everything you have worked for. The good news is that you can protect yourself from these disasters. You just need to know what they are and what you need to do to avoid them from happening to you.


#1 Health Insurance:

The most important thing you need is proper health insurance. Do you have health insurance? If you do, do you know what your deductible, co-pay and co-insurance rates are?

Did you know that medical bills from inadequate health insurance coverage (or no coverage at all)is the #1 cause of bankruptcies in the US. Have you ever thought what will happen if you get cancer, have a heart attack, or any other of the thousands of types of illnesses that can land you in the hospital with huge medical bills? And for those of you who say "I am young and in good health nothing will happen to me"... first of all that is very naive. Secondly there are several other things that can happen to you that
can cause you to have 100K's of dollars in medical bills such as getting into a car accident.

Two bad things happen to you when you end up in the hospital. Not only will you incur thousands of dollars in medical bills but you are also unable to work so your income is reduced or goes away all together. If you have accumulated any assets/wealth and you don't have health insurance you are one bad car accident or illness away from watching it all disappear.

Health insurance, relatively speaking is not THAT expensive. The cost will vary from person to person, depending on factors like your age, sex, occupation, current health condition, and coverage selected. Selecting the correct coverage is very important as well. You need to understand what your contribution will be as well as what your max out-of-pocket is in the event something terrible happens.

Also, it is very important that the coverage you select fits you the best so you can get the best bang for your buck. For example, if you are younger and in good health, in many cases it will be most beneficial for you to select a higher deductible since you are less likely to go to the doctor or hospital. A higher deductible will cause you to have a lower
premium (charge) each month. If you are self-employed you could then take what you would be saving each month and set up a Health Savings Account (HSA). HSA's are also tax deductible, so your contributions will become another write off helping you to pay fewer taxes at the end of the year. When you eventually do go to the doctor, hospital, dentist, eye doctor, buy prescription pills, etc. you can use the money from your HSA to pay for it. (I can go into more detail with HSA's later if anyone is interested.)

You ultimately need to talk to a health insurance agent who can look at the whole picture and help set up the best coverage for you. To give you a real life example, I am in good health (preferred status), 33 years old, non smoker, married (no kids) and pay $280 a month for a policy for my wife and I that has a 6K yearly deductible (high deductible), 80/20 co-insurance, with a max out of pocket of 10K. I also have dental insurance included as well. I contribute $200 a month to my health savings account which is basically paying myself (to be used for medical related bills) and taking a tax deduction on it.

#2 Disability Insurance:

Ok, so above I explained only half of the equation of "what happens if I become ill or get into an accident". Proper health insurance will limit your risk and protect your assets by covering the majority of your medical costs. But, what about your income? If you are disabled for a long period of time, or worst permanently disabled, how will you continue to make money?

This leads me to the next thing that everyone should have ? disability insurance. Health insurance protects you from large hospital bills. Disability insurance protects your income if you are unable to work for an extended period of time, or forever depending on the seriousness of your injury/illness. Who is going to run your business if you lose your vision, the use of your hands, or any other injury that will prevent you from working. If
you stopped working today, how long would you be able to survive? How would that affect your family or anyone that relies on you financially?

Let me repeat: health insurance protects you from medical bills. Disability insurance protects your income. Typically you are able to protect about 2/3 of your income, but you can do a lesser amount if you feel that is all you need to live off of. You would also receive the disability proceeds tax free. Disability insurance in most cases is available to age 65 and you can even set up an optional rider for you to get some or all of your money back depending on the claims you made.

Keep in mind disability insurance is not for minor injuries. It is for major injuries where you would no longer be able to work. For example, if you become paralyzed, blind, or confined to a hospital for several months etc... major medical conditions to prevent you from working, disability insurance would kick in to replace your monthly income.

Real life disability insurance example: I just recently changed to a new disability policy for a lower amount of coverage, but added a rider (option) that provides a refund of premiums. I pay $119 a month for $4,000 month coverage till age 65. Since I am 33 years old, if I were to become permanently disabled tomorrow and unable to work, this policy would pay me out a total of $1,536,000 over the next 32 years. For my particular policy, at age 65, i will be refunded all of my premiums minus any distributions I may have received.


#3 Life Insurance:

Life Insurance can be used for many things. It may prove to be beneficial to you both while you are living and after you are gone. For this post I will be focusing only on the benefits of life insurance once you are deceased. The main purpose of life insurance is coverage for premature death. (To protect your family / beneficiaries once your income is gone.)

Health insurance protects your from potentially losing everything due to medical bills if you were to become very ill or have a bad accident. Disability insurance will protect your income if you were to become permanently disabled from that illness or accident. Lastly, Life Insurance will protect your future lost earnings for your family's sake once you are gone.

There are two main types of life insurance: Term and Permanent. Term life insurance is very affordable. It's cost depends on your age, medical condition, etc. In future posts I will explain the differences between term and permanent insurance and the benefits of each. Later on I will also explain benefits you can receive from your own life insurance policy while you are still living.

The younger you are, typically the cheaper life insurance is for you. In some cases you can lock in your premium until you are 65 - 100 years old depending on the type of policy. You are never too young to get life insurance.

"cliff notes"
#1 Health Insurance - protects your assets from medical bills.
#2 Disability Insurance = protects your income if you become disabled and can not work.
#3 Life Insurance protects your family if you die premature, especially if you haven't acquired a lot of wealth for them to live off of for the rest of their lives.

will76 03-01-2010 10:58 AM

Other uses of life insurance:
Life insurance can also be used to protect your estate as well as fund buy-sell agreements between business partners. I'll touch on these two topics briefly now but go into details in future posts. If you die and have acquired a lot of wealth, life insurance can be used to pay the estate taxes your family would be required to pay (estate tax laws are constantly changing). In many cases a child will inherit the family business but have to sell the business because he can not afford to pay the estate taxes on it. One of the other similar types of situations where life insurance becomes very beneficial is when there are multiple owners of a business. You can use life insurance to fund a buy-sell agreement where if one partner dies the life insurance proceeds enable the remaining
partner(s) to buy the deceases partner?s share of the business from his family / beneficiaries.

Putting all of this into perspective and what it means to you... How much do you spend on car insurance every year to protect your car? How much do you spend on insurance for your home? EVERYONE pays car insurance and if you own a home you very likely pay insurance for that as well. Why do you pay money every year to protect material items but not to protect your health or income, or life? Does it make sense to get into a car accident and have insurance to fix the car but have zero insurance to cover your
medical bills or loss of income? Why would someone have insurance to fix a
$35,000 (or more) car, but not have insurance for potentially $100,000's of medical bills and millions of dollars of lost income. Which do you think is more important to insure?

In closing, before you can focus on acquiring wealth and building assets, you need to put the proper protection mechanisms in place to make sure all of your hard work doesn't disappear in the matter of seconds. If you try to build wealth without the proper protection its like owning a store in a bad neighborhood, with no security system or alarm, and leaving the back door unlocked.

Everything I have mentioned above is what I consider the foundation to long term financial success. In case you are wondering I personally have health insurance with an HSA account, disability insurance, and life insurance. Why work so hard, make good money, but not protect it properly?


About the author, his experiences, opinions and services offered:

I started learning about health, life and disability insurance as well as several other retirement options, tax strategies, estate planning, etc. from my financial planner about 8 years ago. This is something that I enjoy learning about and have spent a lot of time educating myself on these topics over the years.

In the coming weeks I will be putting together a website that will provide a lot of valuable information covering everything I have mentioned in the post. I am also able to provide you with coverage for many of those services, if you are interested in getting coverage for yourself. I just recently became licensed to sell health and life Insurance. My business
partner, Ryan, is also licensed and is an attorney as well. If we can't help you I have my personal financial planning who has 25 years of experience to help assist us. Also, I plan on having a section of the website for "preferred partners" listing other professional services that may be of benefit to you.

Our industry needs to be educated more on these matters. From protecting your income, to long term retirement, to tax savings advantages, doing an llc vs. s-corp, buy-sell agreements, I am here to help you free of charge. I am not trying to "sell" you, just educate you so you can make the best decisions for yourself. I also want to make you aware of things you may have never thought about before. Often people do not think about these issues until it is too late and the damage has already been done. Feel free to
work with any financial planner / insurance agent you like. I'm here to share with you everything I have learned and help you if you would like me to assist you further.

Another reason I decided to help other people like myself in the adult industry is because of negative experiences I have had with some local companies in the past due to the nature of my business. I have been denied service by attorneys, accountants, and even a disability insurance company because the nature of my business is adult related. You can obviously feel comfortable speaking with me and know your information is kept strictly
confidential.

There are several other topics I will be covering in future posts. However, if you have any questions in general about any of the material I have touched on above feel free to ask. Please, only serious questions will be responded to. If you have a difference of opinion that is great, I am far from a ?know it all?, but please state your case if you disagree
with something by backing it up with substance, replies like "you are wrong" will be ignored and will not be responded to.

If you read this far I hope you have found this post to be beneficial and it helps you.






The information provided in this post is for informational purposes only.
This information is not intended to be nor should it be viewed as legal advice. Although every effort is made to provide accurate and useful information, Unbiased Services, its owners and/or representatives assume no legal liability for the accuracy, completeness, or usefulness of the information provided here.

Sethseekstruth 03-01-2010 11:03 AM

Nice, I hope we get more stuff like this

Eric 03-01-2010 11:05 AM

Great stuff Will, thanks for doing this!

will76 03-01-2010 11:10 AM

Quote:

Originally Posted by Eric (Post 16911173)
Great stuff Will, thanks for doing this!

no problem, so many people just don't know about this stuff at all or just don't want to think about it.

I'll be back in a couple hours to take any questions.

Kolargol 03-01-2010 12:37 PM

Parts of it are more specific for USA but otherwise it's useful advice for everyone.

myjah 03-01-2010 03:40 PM

Will, thank you for participating! Looking forward to the rest of your articles coming down the pipe line as well! Very useful info and worth the read. :)

TampaToker 03-01-2010 08:37 PM

Interesting read Will some times you don't think about these things :2 cents:

Brujah 03-01-2010 08:42 PM

What are some options for the self-employed who have been turned down for insurance? Some for a pre-existing condition, some for a recent doctor visit or having taken a specific prescription medicine in the past few years. People who can afford to pay and would like to have insurance, but are being turned down.

Barefootsies 03-01-2010 08:52 PM

Nice read sire.
:thumbsup

will76 03-01-2010 10:27 PM

Quote:

Originally Posted by Brujah (Post 16912540)
What are some options for the self-employed who have been turned down for insurance? Some for a pre-existing condition, some for a recent doctor visit or having taken a specific prescription medicine in the past few years. People who can afford to pay and would like to have insurance, but are being turned down.

I'll answer this the best I can now and consult with my colleague tomorrow to make sure I gave you the best answers.

Pre-existing conditions are conditions for which the insured has received diagnosis, advice, care, or treatment during the last 6 - 12 months prior to the application. Time periods vary from state to state and may vary with the type of policy. In individual health insurance policies, these conditions may be excluded or covered after a probationary period.

From my understanding you could do the following:

1. Apply to other companies (if you have only applied to one) to see if the other companies will accept/reject you.
2. Accept coverage with the pre-existing condition as an exclusion.
3. Wait the adequate amount of time from the date of that doctor's visit or when you stopped taking those prescription pills (if it was temporary). Then reapply without having to disclose that information depending upon the time frame set by the state you live in and the type of policy/company you are applying for.

If you were still turned down and couldn't get insurance, then your state should offer health insurance for high risk individuals. In Louisiana we have the Louisiana Health Insurance Association. I found this link (not my site) explaining how this works, for my state at least. http://www.lahealthplan.org/pool_info.html

I haven't dealt with situations like this personally and I am only sharing with you information I learned from the classes I took. I will double check this tomorrow to find out if there is anything else I am missing that might be more helpful.

fatfoo 03-01-2010 10:32 PM

Get a dollar. Don't spend a dollar. You'll have a dollar left tomorrow.

Don't spend a dollar for a week. You'll have a dollar left in a week.

The Heron 03-01-2010 10:32 PM

Some states have an 'insurer of last resort' in michigan it is blue cross blue shield which is a big company to start with. Anyhow they accept everyone so maybe consider moving to a state that has laws that are more flexible and help people. I mean damn you work online, move!

will76 03-01-2010 10:36 PM

Quote:

Originally Posted by fatfoo (Post 16912731)
Get a dollar. Don't spend a dollar. You'll have a dollar left tomorrow.

Don't spend a dollar for a week. You'll have a dollar left in a week.

that is my advice for the casino. Don't spend the money there and you are guaranteed a winner :thumbsup

Brujah 03-01-2010 10:41 PM

In re: Florida state-sponsored risk pool

Florida Comprehensive Health Association (closed to new enrollees since 1991)

will76 03-01-2010 10:57 PM

Quote:

Originally Posted by Brujah (Post 16912753)
In re: Florida state-sponsored risk pool

Florida Comprehensive Health Association (closed to new enrollees since 1991)

I just did a little research, if you are in Florida this should help you. Looks like it is their new program that replaced the one mentioned above.

http://www.coverfloridahealthcare.com/

every state should have something setup for people who can't get insured.

Brujah 03-01-2010 11:09 PM

Quote:

Originally Posted by will76 (Post 16912775)
I just did a little research, if you are in Florida this should help you. Looks like it is their new program that replaced the one mentioned above.

http://www.coverfloridahealthcare.com/

every state should have something setup for people who can't get insured.

I'll check that out, but keep in mind my point was also to highlight how many people don't have insurance because it's not always easy to get, even if they can afford it. It's not just people who are lazy or broke but professionals too, but especially the self-employed and the options are very limited.

Update: I just checked the information, and went through the carriers for my county, and it was the exact same providers that turned me down. There's nothing wrong me either. I'm mostly healthy, non-smoker, not overweight, but I had visited the doctor and had an inconclusive diagnosis. One of the attorneys I know had a similar issue, except he had taken something like lipitor for a year, about 3 or 4 years ago but hasn't needed it since.

will76 03-01-2010 11:34 PM

Quote:

Originally Posted by Brujah (Post 16912795)
I'll check that out, but keep in mind my point was also to highlight how many people don't have insurance because it's not always easy to get, even if they can afford it. It's not just people who are lazy or broke but professionals too, but especially the self-employed and the options are very limited.

Update: I just checked the information, and went through the carriers for my county, and it was the exact same providers that turned me down. There's nothing wrong me either. I'm mostly healthy, non-smoker, not overweight, but I had visited the doctor and had an inconclusive diagnosis. One of the attorneys I know had a similar issue, except he had taken something like lipitor for a year, about 3 or 4 years ago but hasn't needed it since.

I hope I didn't come across as sounding like people don't have insurance because they are lazy or broke (or cheap), thats wasn't my intention. In most cases, I think people in our industry who don't have it just don't think about it or just don't know better, especially the younger guys who think they are healthy so they don't need to have health insurance. In some cases they may rather spend the money on a nice sports car note instead of health insurance. I wouldn't be surprised with some people. But mainly what I was pointing out is how important it is to know what coverage you have and making sure it is best for you. I would bet 9 out of 10 people have no idea what their deductible, co-insurance, co-pay and max out of pocket is etc.

I looked some more into the coverflorida website and from my understanding you may need to let them know that you are applying through the cover florida plan or make some mention of it. From reading the website it sounds like you shouldn't get denied going through their plan.

Quote:

Question: Will I be denied coverage for a pre-existing condition?
Answer: No, Florida applicants with pre-existing health conditions will not be denied enrollment in a Cover Florida plan. However, Cover Florida plans can exclude payment for treatment of a specific pre-existing condition for one year. After one year, the plan must cover for treatment of pre-existing conditions. During the one-year period, however, you are covered for services that are not related to your pre-existing condition.
I can make some phone calls tomorrow for you if you like? Hit me up if you want me to look into this more.

Also, if you think your diagnosis was from something you were taking that you are no longer taking, you can wait and try again as I mentioned in my first reply.

This stuff isn't rocket science but it isn't exactly easy either, especially dealing with how different states do different things. I can personally understand though how confusing it can be to everyday people. I was that person about 8 years ago. I got my health insurance directly from blue cross and was paying a high premium with low deductible, had no idea what anything was because i never used it. Had no clue how any of it worked. I can relate and appreciate how most people feel.

I also took a 40 hour class a couple weeks ago to help educate myself more.

Brujah 03-01-2010 11:46 PM

Appreciate the info, and if I can't find something more out about it after this info already, I'll contact you.

Epistler 03-02-2010 12:35 AM

Really well written Will :thumbsup. Thanks for posting this useful information.

will76 03-02-2010 09:31 AM

Quote:

Originally Posted by Brujah (Post 16912860)
Appreciate the info, and if I can't find something more out about it after this info already, I'll contact you.

No problem, good luck.


Quote:

Originally Posted by Epistler (Post 16912928)
Really well written Will :thumbsup. Thanks for posting this useful information.

thanks, hope some people read it and it helps them. I have a lot more to cover.

will76 03-03-2010 05:05 PM

important stuff here... I hope the lack of replies mean that everyone has already protected themselves. :winkwink: and not busy reading drama threads... priorities people!

If anyone has any questions feel free to post and I will get back to you tonight.

baddog 03-04-2010 01:09 AM

Quote:

Originally Posted by will76 (Post 16911141)
#2 Disability Insurance:

Do you also have SDI?

Pandoras 03-04-2010 08:03 AM

This is really great , thanks for sharing

J. Falcon 03-04-2010 08:09 AM

Great information, thanks.

Zuzana Designs 03-04-2010 08:13 AM

Very well written Will. Thanks

selena 03-04-2010 08:33 AM

Long term disability insurance is something that I definitely need to look into. Health insurance I have, but I do not have life.

For reasons far too long to go into here, I have been turned down for life by more than one company because of something an asswipe doctor put in my records that ended up on my MIB. I had never heard of MIB before this happened. If you are like me, it is a organization/company owned by hundreds of insurance companies. They use the information that they gather to make underwriting decisions.

The report itself falls under the same type of guidelines as a credit bureau report in that you have the right to see them, you can challenge the info on them, and they will give you a free one once a year.

To the best of my knowledge (which is admittedly limited) a MIB will exist on you if you have applied for life or health insurance with one of the insurance companies that is part of the group.

More Info

Nice post, Will. :thumbsup

will76 03-04-2010 11:51 AM

Quote:

Originally Posted by baddog (Post 16918551)
Do you also have SDI?

To be honest I am not familiar with what SDI is, so I looked it up. It appears to be disability insurance offered by the state, " State Disability Insurance " offered in California. Let me know if that is correct or if you are talking about something else.

If so, no I don't have that, I live in Louisiana and I am not aware of any non private (govt) type of disability insurance available here other than social security disability.

will76 03-04-2010 03:57 PM

Quote:

Originally Posted by selena (Post 16919332)
Long term disability insurance is something that I definitely need to look into. Health insurance I have, but I do not have life.

For reasons far too long to go into here, I have been turned down for life by more than one company because of something an asswipe doctor put in my records that ended up on my MIB. I had never heard of MIB before this happened. If you are like me, it is a organization/company owned by hundreds of insurance companies. They use the information that they gather to make underwriting decisions.

The report itself falls under the same type of guidelines as a credit bureau report in that you have the right to see them, you can challenge the info on them, and they will give you a free one once a year.

To the best of my knowledge (which is admittedly limited) a MIB will exist on you if you have applied for life or health insurance with one of the insurance companies that is part of the group.

More Info

Nice post, Will. :thumbsup

You are right about the MIB. All insurance companies use the Medical Information Bureau (MIB) and report to it any adverse information they find out about their clients. Keep that in mind guys if you lie on your app about something that you already made a claim on or something that was documented they will find out about it.

I'm surprised that no one will write you for life insurance especially if you have health insurance. If you want any help contact me and I would be happy to dig into it and see if I can get anywhere with it for you. Disability is a combination of health insurance + income. Its basically like applying for health insurance with proof of your income. Your premium will be determined mainly by your age, job occupation, and health condition, and amount covered. If you are in pretty good health and not trying to cover tens of thousands a month in income, your disability insurance will not cost you a ton of money.

I would be more than happy to help you, just let me know.

atom 03-04-2010 04:06 PM

Good, well written article. My wife, son and I all have medical insurance which we pay out the ass for and it is a 10g deductable. Sucks but if something major happens at least we are only 10g in the hole. Pretty frustrating considering we still pay $429 month for the policy.

I have a few investments along with a life insurance plan, as does my wife. Disability is something I have never looked into. I know its something to be taken seriously but between Health, Life and putting a set amount of money aside into our long term investments. Im not sure we could even afford it.....

will76 03-05-2010 03:59 PM

Quote:

Originally Posted by atom (Post 16921179)
Good, well written article. My wife, son and I all have medical insurance which we pay out the ass for and it is a 10g deductable. Sucks but if something major happens at least we are only 10g in the hole. Pretty frustrating considering we still pay $429 month for the policy.

I have a few investments along with a life insurance plan, as does my wife. Disability is something I have never looked into. I know its something to be taken seriously but between Health, Life and putting a set amount of money aside into our long term investments. Im not sure we could even afford it.....

It is possibly that your health insurance plan qualifies for a HSA account since it is a high deductible plan. If not you can switch it to an HSA approved account. HSAs (Health Savings Account) allow you to put money into a savings account and tax deduct it. It is a great tax write off for self employeed who pay for their own health insurance.

For example, say you put $200 a month into your HSA, that would be $2400 at the end of the year you could use as a tax write off, putting money right back into your pocket depending on your tax bracket. If you are in a 28% tax bracket for example, that is $672 of extra money in your pocket.

Also, the money builds up in your health savings account and in the event that you need to pay towards your deductible, for medication, dental, glasses, or anything medical related, you can take it out of your health savings account and not your personal checking account. Note: once the money is in your HSA it is suppose to just be used for medical related purposes. If used for anything not related to medical expenses you are subject to a penalty. The money is yours, you don't use it or lose it. Whatever the balance is at age 59 1/2 you can withdraw the money if you like and do anything you want with it.

Your premiums aren't that bad. If you went with a low or no deductible plan you could be paying in the $1,000 a month range. If your health is good, you aren't too old, and your occupation is not risky, disability insurance should be pretty inexpensive depending on how much income you are looking to protect.

Do you have a term life policy or whole / universal life ?

heymatty 03-05-2010 10:37 PM

Nicely written article. The health insurance options take quite some time to sort through, we just recently moved to a HSA and high deductible plan.

One thing to add to people getting life insurance, its a good time to write a will. Make sure the money gets distributed exactly how you would want it.

darksoul 03-06-2010 02:02 AM

Isn't this all insurance thing like a big pyramid scheme ?
Sooner or later it will collapse.

wdsguy 03-06-2010 04:49 AM

Nice writeup with alot of good info, what state is your financial planner in btw?

I have everything covered except the disability insurance.

will76 03-06-2010 10:03 AM

Quote:

Originally Posted by wdsguy (Post 16925368)
Nice writeup with alot of good info, what state is your financial planner in btw?

I have everything covered except the disability insurance.

Louisiana is where we/he live and work out of, but he is licensed in several different states. It's not hard to get licensed in different states, it's just typically something you don't do until you have a need to. Providing services on the internet, sooner or later I hope to have a need to get licensed in all 50 states.

Cyber Fucker 03-06-2010 10:28 AM

Good info, thx for sharing! :thumbsup

Shap 03-06-2010 12:10 PM

It's sad to see how many people have pissed away retirement and a great life in exchange for short term gratification. Unfortunately I know more people in this industry who have blown millions than people that have saved millions.

Shap 03-06-2010 12:11 PM

Btw cool of you to take the time to write and post this Will :thumbsup

CDSmith 03-06-2010 01:43 PM

#1. Health insurance
#2. Disability insurance
#3. Life insurance


I am so glad I live in Canada. But that only covers #1, thus I buy extra disability insurance and also life insurance. I realized a long time ago that as a business owner working for myself that no employer would be providing these things for me.

I've always said treat your business like a business. That includes having everything that matters to your financial future properly insured, claim all income, work smart rather than hard, pay your taxes, save and/or invest a % of what's left, and honor your word to those you do business with.

xxweekxx 03-06-2010 03:43 PM

Quote:

Originally Posted by Shap (Post 16926018)
Btw cool of you to take the time to write and post this Will :thumbsup

how do you save your money shap?

will76 03-06-2010 08:55 PM

Quote:

Originally Posted by Shap (Post 16926017)
It's sad to see how many people have pissed away retirement and a great life in exchange for short term gratification. Unfortunately I know more people in this industry who have blown millions than people that have saved millions.

It's mind blowing. Absolutely mind blowing. I've run calculations in situations showing what someone would have ended up with at retirement if they would have put the money into a long term guaranteed investment vs buying a $100,000 sports car. It would make people who bought a garage full of them (who are now broke and sold them off pennies on the dollars) cry if they could see how much that money could have grown into 20,30,40 years from now.

I'll throw some rough numbers out so people can really see what I am saying. If you get a 7.2% growth rate on your money, it will double every 10 years. There are guaranteed long term investments you can do to get a rate like this.
Years Total
0 $100,000
10 $200,000
20 $400,000
30 $800,000
40 $1,600,000

So if you are 30 years old, would you have rather the nice sports car or $800,000 at age 65 ? especially if you stopped making lots of money and had to go get a job, you will never be able to retire, but hey you had a nice sports car for a couple years, and will be able to tell nice stories about it to your grand kids :upsidedow

This is really cool, if you can let the money grow (as shown above) for 40 years. Take someone 25 years old that made lot of money and instead of blowing it, he took $100,000 and invested it as shown. At age 65 (40 years) if he pulled out 6% a year to live on he would have $96,000 a year income. So he puts $100,000 away and 40 years later he will have $100,000 a YEAR for the rest of his life, and the kicker is he never touches the principle, which can continue to grow at 7% since he is only taking out 6%.

Don't get me wrong everyone wants to have fun and blow a little money. But a lot of people in our industry took all of their money and blew it on toys. The little investing that they do is into a restaurant or bar or something very high risk that they wind up getting screwed on. I came up with the saying " do you want to look rich or be rich ". I think we know where a lot of people in our industry fit into that.

Everyone should have a plan for themselves and take a percentage of their money and put it towards short term (some risk) and long term secure investments, to be diversified in different things, if you want to put some in gold, stocks, real-estate etc... as long as you are diversified and put some of it into secure long term investments (plan b) if all else fails you know you will at least be able to retire later in life and enjoy it.


Quote:

Originally Posted by Shap (Post 16926018)
Btw cool of you to take the time to write and post this Will :thumbsup

Thanks.

xxweekxx 03-06-2010 09:38 PM

will, what if you are rich, but save up and stil spend money,

say you make $100k a month, and you put away $80k, then whats wrong in blowing $20k a month on a car payment for say a ferrari plus a mortgage on a $1mil house..

you gotta live a little.. i save a lot but im not flying economy class for a 12 hour trip, if i couldnt afford first class then my long hours and giving up my teenage/early 20's will all mean nothing...

HandballJim 03-07-2010 12:54 AM

some good infomation here, thanks :thumbsup

now I would love for someone to post the steps for filing taxes for an LLC, tips, etc. I went to barnes and noble today and purchased J.K. Lasser's Small business taxes 2010.

Relentless 03-07-2010 07:48 AM

Nice write up.
Two quick additions...

1) When choosing health insurance pay particularly close attention to the cap on coverage. Many plans cap coverage at a million dollars, some at even less. A million dollars isn't much if you or a family member gets very sick or has a catastrophic accident. You'll pay more for insurance with no cap but it is well worth it because that's what prevents bills from bankrupting you.

2) Be very careful which company you buy life insurance from. If all goes well they won't be paying anyone for 20 years or more and YOU won't be around to fight with them when it's time to collect. Pay more if necessary for the same coverage from a solid provider. Choose one that has been around a long time, is highly rated and is well capitalized. Not all life insurance companies are the same.

will76 03-07-2010 08:55 AM

Quote:

Originally Posted by Relentless (Post 16927085)
Nice write up.
Two quick additions...

1) When choosing health insurance pay particularly close attention to the cap on coverage. Many plans cap coverage at a million dollars, some at even less. A million dollars isn't much if you or a family member gets very sick or has a catastrophic accident. You'll pay more for insurance with no cap but it is well worth it because that's what prevents bills from bankrupting you.

2) Be very careful which company you buy life insurance from. If all goes well they won't be paying anyone for 20 years or more and YOU won't be around to fight with them when it's time to collect. Pay more if necessary for the same coverage from a solid provider. Choose one that has been around a long time, is highly rated and is well capitalized. Not all life insurance companies are the same.


1. I only work with all the big national health care providers: Blue Cross, Coventry, Humana, Aetna, etc... In most plans the life time max has been raised in the last couple years to 5 million. You are right it is very important to look for and you want that number to be closer to 5 million than say 1 million.

2. Good points too. You don't want to work with a fly by night type operation or something that is very new. The life insurance companies I work with have been in business for over 100 years.

will76 03-07-2010 09:09 AM

Quote:

Originally Posted by xxweekxx (Post 16926668)
will, what if you are rich, but save up and stil spend money,

say you make $100k a month, and you put away $80k, then whats wrong in blowing $20k a month on a car payment for say a ferrari plus a mortgage on a $1mil house..

you gotta live a little.. i save a lot but im not flying economy class for a 12 hour trip, if i couldnt afford first class then my long hours and giving up my teenage/early 20's will all mean nothing...

Nothing wrong with that at all. I was explaining the same thing in another thread, touched on it in this one but didn't get into details. The main thing is to have a plan, decide what % of the money you make will go to different things, with some of it going to just having fun and blowing it.

The problem with most people is that if they make 100K a month they put $0 of it towards long term retirement. Even if you only took 20K a month and put it towards retirement and took the 80K to spend on other investments like real-estate or spent it on toys and blew it, etc... than you still would be setting yourself up real good for retirement.

In the example above, if you took 20K every month and put that into retirement, after 10 years you would have saved up 3,347,000 (7.2% rate). Now lets say your business failed and you lost everything. If you started pulling 6% from your retirement you would have about 200K a year to live off of.

IMO, since most of us are self employed and majority of us are successful or semi successful (right now), it is important to have a Plan B. Our business and short term investments like real-estate, stocks, gold are Plan A. We have all seen people make and lose fortunes in the last 10 years in both our industry, the stock market, and the real-estate industry. One year you can be making 1M and the next 100K. It is even more important when we are making really good money to take a percentage of it to build plan B to at least insure if all else fails with Plan A in the future, that we can still retire at 65 and not have to work until we die. On the other hand if Plan A never fails, then great you have even more money in Plan B you can play with when you get older, or leave it to children, or give it to charity. Better to be safe than sorry.

xxweekxx 03-07-2010 09:48 AM

where are you getting 7%/yr from?? retirement plans?? cuz i dont know how many investments will yield 7%+ guaranteed a year

will76 03-07-2010 12:57 PM

Quote:

Originally Posted by xxweekxx (Post 16927248)
where are you getting 7%/yr from?? retirement plans?? cuz i dont know how many investments will yield 7%+ guaranteed a year

I am in the process of rolling over my personal IRAs into a ROTH IRA using an equity index annuity. The equity index has a 10 year agreement and you need to put at least $10,000 into it to open it. I am using this for retirement and don't plan on touching it for 30+ more years so no concerns there for me.

Since it is an equity index, it has a min and cap rate. The minimum is 7.2% and the cap is 12%. So if the index makes 15% you make 12%, if the index makes 2% you make 7.2%. The minimum guarantee of 7.2% is only good if you go the whole 10 years. Also if you break it early there is some penalties. Without the guarantee you would then get actual market value. Also this particular company is offering a 8% matching bonus on the initial deposit.

Like with any investment contract read everything and understand all of the terms and conditions.

If you have any specific questions about the equity index annuity I mentioned here feel free to contact me directly and I can help you.

TrainWreckContent 03-07-2010 02:58 PM

really good readd! thanks for the info and i am looking forward to your next lesson...keep up the good work :thumbsup

quiet 03-07-2010 03:04 PM

7.2% guarantee... damn. i wish there was something like that in Canada.


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