Tag Archives: wealth

Dream It, Achieve It!

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I’m sure that by now you’ve heard of the passing of Steve Jobs, Co-founder and CEO of Apple, Inc.  If you haven’t become familiar with his story, I urge you to “Google” him to learn more about his life’s journey.  Recently, a close friend mentioned the commencement speech he gave at Stanford University in 2005.  In his speech, he outlines things that he attributed to his success.  When you get an opportunity, listen to his speech; it’s time well spent.

You might be wondering what Steve Jobs has to do with bridging the wealth gap in the African American community.  While he was an extremely wealthy man, my intent is not to discuss the wealth he accumulated through his business ventures, but more so to discuss his will to achieve against the odds.  Unless you’re familiar with his story, most people would not assume that a first year college drop-out would be as accomplished as he was.

Often times, we have dreams or ideas that we’d like to pursue, but somehow life gets in the way.  Many of us may not have the liberty to pursue our entrepreneurial dream without working a full time job as well.  So how can you keep your “mojo” while navigating life’s twists and turns?  Please note that I am not professing to have all the answers, but I will offer up some lessons that I’ve learned from others that have achieved success in this area.  These are also the characteristics that I am embracing along my own journey.  The following are three key traits that will place you on the path to success:

1.       Be clear on what you want; get laser focused – There will always be competing priorities.  In the spirit of transparency, this is an area I’ve struggled in the most.  As soon as you think you’re set on a path, life will throw you a curve ball that can divert your focus.  People who are successful in pursuing their dreams are somewhat dogmatic when it comes to being laser focused in spite of life’s interruptions.  T. Harv Eker, author of Secrets of the Millionaire Mind, says it best, “The number one reason most people don’t get what they want is that they don’t know what they want.”

2.     Don’t underestimate life’s lessons – Your life will speak to you if you choose to listen.  We are often quick to observe and value someone else’s life lessons, but choose to devalue or minimize our own.  Steve Jobs referred to this as “connecting the dots.”  Take a moment and spend some time recalling your own journey – the successes and failures.  I guarantee you that in the midst of your track down memory lane, a common thread will exist and link you back to your purpose or that dream that once was a flame but may now resemble a flicker of light.  Make no mistake, there’s a lot that we can learn from observing others, but don’t stop there.  Your own life will speak the loudest if you listen.

3.     Simplify your life – Many times we stay stuck in the “rat race” because we are so busy trying to ‘keep up with the Joneses.’  If you really want to pursue your dream, you will be forced to make tough choices.  You may have to wait on the material possessions that you see others acquiring.  Don’t compare yourself to others.  A key to wealth accumulation is maintaining a high credit score, minimizing debt, and investing in assets.  It takes money to pursue most business endeavors, and in the beginning, you may have to invest in yourself before others will invest in your venture.  If you are overextended, you may not be able to see your vision come to fruition.  

Success is often accomplished by travelling the road less travelled.  It requires a confidence in self and a willingness to take risks.  Many of us work very hard in our chosen careers, but can become lukewarm when it comes to pursuing our own personal endeavors.  I have decided that I will no longer stand on the sidelines of life and admire others and their success; I will give my all to my own.  Won’t you join me?

Eliminate Surprises for 2011 Tax Year

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So Monday was Tax Day, and for some of us, it wasn’t a good day.  If you were “surprised” this year, the best thing to do is start planning now for next year.  I am not only equating the “surprise” to the requirement to pay additional taxes.  If you received a huge refund, tax planning can be beneficial to you too.  After all, why should you “loan” the government money at 0% interest? 

Depending on your perspective, one may feel it’s better to receive a refund than to have to write a check.  I once agreed with this philosophy, but my outlook is different now.  Generally, no one wants to pay more taxes, but how is your tax bill different from any other bill?  It’s only a problem when you don’t have the money.  While it doesn’t feel good to write a check to Uncle Sam, I now understand that doing so means that I didn’t “lend” my money interest free.  Ultimately, a goal of breaking-even is a good idea.  Included below are some key considerations that can assist in eliminating surprises for the 2011 Tax Year:

Keep an “Eye” on your Adjusted Gross Income (AGI) – Your AGI is a significant element in determining you taxes.  Your AGI is your income from all sources minus any adjustments to your income.  Adjustments to your income can include, but are not limited to:

  • Certain business expenses (teachers, reservists, etc.)
  • One-half of self-employment tax
  • Alimony Paid
  • Penalties for early withdrawal of savings (i.e., certificate of deposits)
  • Student loan interest
  • Contributions to 401k or Individual Retirement Accounts (IRAs)

The best way to reduce AGI is to contribute to a 401k or retirement account.  The taxes on contributions to retirement accounts are typically deferred – meaning this reduces your taxable income and lowers your taxes.  Typically, you have until the tax deadline to contribute (i.e., Monday, April 18, was the last day to retroactively fund a retirement account for the 2010 tax year.)

Identify Ways to Increase Your Tax Deductions – The two terms that you should be familiar with for deductions are standard and itemized.  Most people can take a standard deduction, but each year, you should assess whether or not you can itemize your deductions.  Itemized deductions include, but are not limited to:

  • Mortgage Interest
  • State Taxes
  • Charitable Donations
  • Personal Property Taxes
  • Tax Prep Fees

Once you’ve identified your itemized deductions, you should use the higher of your standard or itemized deductions.  The key to leveraging this element is to plan!  If you have not been giving charitable donations, doing so can decrease your taxes significantly.

Explore Opportunities to Take Tax Credits – Tax credits directly offset the amount of tax you pay.  There are tax credits for college expenses and adoption.  In recent years, there have also been credits for first time homebuyers, energy efficient upgrades to homes, and certain tax credits for the elderly.  As a part of planning for your tax year, you should speak to your accountant or research tax credits to ensure that you are aware and able to take advantage of any that may be applicable to you.

If you find yourself with the opposite scenario, you are receiving a significant tax refund check each year, you should explore ways to limit the amount of taxes that are being taken out of your wages throughout the year.  This can be accomplished by adjusting your withholdings.  An article by Center for Personal Finance Editors, Adjust Your Withholdings Now for 2011 Tax Year, reported that approximately 100 million Americans overpay their tax bills each year by $2,200.  If you find yourself in this scenario, increase your number of allowances.  To complete this task, you will need to submit a new Form W-4 to your employer.  The IRS has information on their website, www.irs.gov, which can assist you in determining the appropriate amount of allowances for you. 

Filing your taxes does not have to be a stressful event.  With proper planning, you can figure out your tax liability for the year, and plan the best approach for your situation.  For many of us, it becomes stressful because we have to react to activities that occurred throughout the year and have certain tax implications.  A key element to wealth building is tax planning.  You can’t do one without the other.

 

Get Your Credit Straight!

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One of the most important things to remember in wealth creation is your credit rating is important.  If anyone tells you it’s not, it is very likely that they are credit challenged.  The reality is, in spite of well thought out plans and precautionary measures, life happens.  It can be an illness or a leaky roof.  At some point in your life, the unexpected will occur and it will cost you.  Additionally, in today’s society, in order to obtain basic necessities (e.g., job, insurance, etc.), a good credit rating is required.

I know there can be several reasons for impaired credit, and that a poor credit rating does not mean you’re a bad person.  However, many organizations rely on information in your consumer credit report to assess your integrity and how well you honor your commitments.  Today’s job market is very competitive; you don’t want to win the job, but lose out on employment because a consumer credit review revealed poor judgment.

Poor credit is costly.  What’s most alarming is if asked, many of us don’t know our credit rating, and have never reviewed our credit report.  How can you change something when you’re unaware?  You don’t want to sit across the table from an employer or creditor and realize that they have access to information about you that you don’t have.  It can be a very embarrassing experience.  First and foremost, you are responsible for the consumer choices you make.  Your credit reports and scores are merely the result of your choices – your report card.

As a result of the Fair Credit Reporting Act (FACT Act), consumers are eligible to obtain a free credit report from the three major credit bureaus on an annual basis.  To obtain yours, visit www.annualcreditreport.com.  Although your credit reports are free, there is a nominal fee for the related credit scores.  A credit score is a numeric value that ranks you according to the information included in your credit report at a given point in time.  Credit scores typically range from 400-850; the higher, the better.  The table below provides the range for credit scores:

If you’ve obtained your credit reports and scores and are discouraged because of the story yours tells, all is not lost.  Over time, you can improve your credit rating.  The following six steps are essential components of an effective credit restoration plan:

  1. Pay your bills on time.  Do not allow your bills to exceed 30 days past due
  2. Correct false information in your credit report.  A survey conducted by the U.S. Public Interest Research Group (U.S. PIRG) concluded that 79% of all credit reports contain errors  
  3. Settle charge-off accounts, collections, and other past judgments; address most recently reported derogatory information first.  Your credit report will include contact information for your creditors; use it to negotiate terms for paying off outstanding debts.  It is very important that you honor the agreed upon terms
  4. Keep revolving account (credit card) balances below 50% of your credit limit
  5. Contact creditors to add positive information to your credit profile
  6. Do not “lend” your credit to anyone.  In all likelihood, if they need to use your credit, it’s because they’ve ruined their own.  Don’t allow them to ruin yours

Improving your credit rating takes time.  However, it can only be accomplished if you are aware of the problem.  Ultimately, accept responsibility for your choices.  If others have contributed to your negative credit rating, it’s still your responsibility unless you are a victim of identity theft.  To learn more about identity theft, visit www.ftc.gov.  Remember, taking ownership of your future means understanding the impact of decisions from your past.

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