All Forum Posts by: Account Closed

This is a "me too" post where I'm just adding intensity. I did everything mentioned above and saw my net worth accumulate over time. My only regret is that I didn't start 20 years sooner.

When the Cold War ended around 1990, defense-related spending dropped and the California economy went into a tailspin. Homeless shelters and food banks in Silicon Valley were reporting that some of their clients had advanced degrees.

Many people go through life doing everything right and living a responsible, middle-class lifestyle. Then something bad happens unexpectedly (illness, layoff, divorce, whatever) and their world is turned upside down.

People wise up when they see or experience these things themselves ("when your neighbor gets laid off, it's a recession; when you get laid off, it's a depression"). Some of us start looking for ways to build wealth to become more resilient just in case our world turns ugly again.

Luckily, I've never experienced anything that set me back in a major way, but I did have a few close calls. That's when I started wising up and did what I had to do to start building wealth in a serious way. 

I opened a donor-advised fund a few years ago and use it to donate money regularly to worthy causes (501c3 organizations with the IRS). I also donate anonymously so that the charity avoids the expense of having to thank me for my donation (and this keeps me off its mailing list for future donations). The DAF takes care of the IRS-related paperwork.

Another advantage of a DAF is that it can handle illiquid assets such as cars, private stock, and real estate. Donating an income property such as a house or apartment building to a charity, for example, might leave some charities wondering what to do with the gift. A DAF specializes in converting these types of illiquid assets into cash.

From the June 23, 2017 PBS show Wealthtrack.com:  Charitable Giving Hit An All-Time High. How Do You Maximize Your Philanthropy And Tax Deductions?  https://www.youtube.com/watch?v=3pkRj4N_5nk

I had to buy my own health care plan starting in the mid 1990s when I went from working in Corporate America (which provided health care coverage) to working for a small temporary help agency (which did not). I set up a private plan through an insurance broker that specializes in helping entrepreneurs and small businesses with their insurance.

Starting in the mid 2000s, I switched over to a high-deductible health care plan that allowed me to open a Health Savings Account. I paid all uncovered medical expenses out of pocket and let the HSA balance accumulate. My HSA is part of my reserve in case I need long-term care someday (between 25% and 75% of us will, based on which web site I visit).

Most HSAs are in bank accounts that pay a paltry rate of interest. Some HSAs allow investments in mutual funds and other publicly-traded securities. I found out recently that some self-directed IRA custodians also allow self-directed HSA investing. I'll be checking these out for a funding source as part of my due diligence for real estate investing.

I decided to forgo long-term care insurance because too many of these insurance companies went out of business and the policy holders ended up with nothing to show for it (health care inflation is much higher than regular inflation). With an HSA and other retirement-related investments, I'll have the assets if I need them. If I don't need them because I end up not needing long-term care, my heirs will be very happy.

HSAs come with great Federal tax benefits both now and later.  But a small number of states have not aligned their income tax laws with Federal tax laws and the residents in these states do not get the tax-saving benefits.

 I received the following email from AHP Fund in mid March of 2018:

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Two K-1 Schedules for the 2017 tax year will be uploaded to your dashboard by the end of the week:

1. Federal K-1 Schedule – Use the information from this form to prepare your Federal income tax return.

2. State of Illinois K1 - You don’t have to file an Illinois return and we will withhold your Illinois tax liability (equal to 4.35% of your Illinois income) from the April 10 distribution. If you live in a state with its own income tax, you may be allowed to credit your Illinois tax against your own state’s income tax. The Illinois tax can also be claimed as an itemized deduction (if you itemize deductions) on our Federal return.

Please consult with your tax professional with any questions. We do not provide tax advice or recommendations.

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In my case, $3 was paid to the State of Illinois on my behalf and based on my personal tax situation this year, I will not be able to recover any of it. I've mentally written this $3 amount off because it's not worth my time to pursue it further.

I didn't expect the State of Illinois K1 and when I'm ready to deploy more capital to the crowdfund sector, I will think about whether I want to add more to AHP Fund or to other platforms instead. The reason I'm only toe-dipping right now is to find out what kinds of issues like this come out of the woodwork.

The K1 information for my Federal return was easy to enter manually into TurboTax.

To get started, I'm toe-dipping in real estate crowdfunding sites with $1,000 commitments (including AHP Fund).

When I started investing in stocks way back when, I used mutual funds because I got diversification and management for a low commitment of capital. I gave up return and flexibility. But since I didn't know anything about the stock market, I didn't mind the tradeoff. I still use mutual funds and ETFs today, but I started buying individual stocks as my skill and confidence developed.

I'm studying Real Estate Note Investing by Dave Van Horn and if I want to continue down this path of investing, I will consider the AHP video course (AHP's response to my query: "Note Buyer Boot Camp will be offered as a video course of 16 separate sessions. Everyone who attends or joins the live stream will have access to the video course included, or you can buy the video course only after the event.").

I might buy individual notes eventually or I might decide it's not worth my time to pursue this activity.

I agree with this approach. What helped me on my journey was keeping a journal of my thoughts. What was I trying to accomplish? Why did I want this goal? How was I going to make it happen? How would I handle a setback?

I got the idea of a journal from the book Think and Grow Rich by Napoleon Hill, which I discovered by accident when I was in my twenties (pre-Internet) and regularly browsed the personal finance section of the local bookstore.

Where I live, the apartments have individual power meters. I had to establish my account with the power company (the landlord needed the account number) before I could sign the lease.

However, the entire complex of 350 units gets one bill for the sewer, trash, and water. The landlord outsources this information to a utility management company, which then figures out how much is owed by each apartment. This outside agency also tacks on a $4 per month admin charge per apartment. My monthly payment to the landlord includes both the rent and this allocated utility charge.

Since I have no pets, I have no dog in this race.

Last year, a small dog, which had a reputation of being aggressive, bit me (I didn't need medical attention). The landlord documented the incident and then evicted the dog.

My landlord is in Florida and charges a rent of $15/month per pet (cat or dog) with a non-refundable pet fee of $300 for the first pet (and $200 for the second pet). There is a 2-dog limit. Service animals are allowed (contact the leasing office for the policy). Aggressive breed restrictions apply (see below). Tenants much provide documentation that their pets have had the required shots and have been spayed or neutered.

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Florida State Leash law

Reminder: Per Pensacola city’s ordinance, all pets must remain on a leash at ALL TIMES outside your home (unless in the dog park). Continued failure to comply with this state law, will result in loss of pet privileges, monetary fines, and the involvement of animal control.

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REMINDER FOR PET OWNERS!

YOU are responsible for picking up after them! No one wants to see/smell it and it is a health violation. Every violation (and we mean pile) will result in a $25 FINE. Thank you for your cooperation as courteous and clean neighbors!

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BREED RESTRICTION FORM (from the lease)

Special Provisions:

Pets will be limited to domesticated dogs and domesticated cats as well as small, permanently caged animals. Certified law enforcement dogs employed only by a local, state or federal agency with proper supporting documentation are also permitted.

No dogs (with exception of certified law enforcement dogs) will be allowed which have any of the following breeds in their lineage (written proof of breed and lineage from a licensed veterinarian may be required at the expense of the applicant/resident):

Farm and exotic animals are also prohibited.

These restrictions will become effective February 8, 2005.

Individual animals which are known to be aggressive are restricted, regardless of breed. We reserve the right to restrict any animal.

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The new landlord didn't give a reason. The previous landlord didn't have this requirement.

I know the previous landlord purchased the building many years ago at a bankruptcy sale. Through the grapevine I'm told they invested tens of millions of dollars fixing it up before they sold it for a handsome profit earlier this year.

My original purpose for getting renters insurance was to qualify for an umbrella policy. This policy provides additional coverage above and beyond automobile insurance and either homeowners or renters insurance. My renters insurance policy now lists my landlord as the "interested party" that wants to be kept current with confirmation of coverage notices.

When I owned a home before, my homeowners insurance policy listed the lenders that had liens on the property. Whenever I changed lenders, either by refinancing the mortgage or eventually paying it off, I had to let my insurance company know of the change.