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Death by Credit Card

It would be nearly impossible to function in today’s world without using a credit card from time to time.  And so long as we pay the balance off each month – that convenience comes our way free of charge – and who doesn’t like free? But carrying balances on our credit...

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You’re in Control!

Look – debt is nasty stuff.  After the ‘shine’ wears off of the stuff you bought – the payments linger and begin to smell – bad – really bad.  Debt is a financial drag.  It shifts priorities away from the things that are most important (like our families) – to things...

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Houston – We have a Problem

Recently, my daughter and her husband undertook a complete – and expensive – renovation of their kitchen.  It was a long project – and with a toddler running around, the inconvenience of living without a kitchen was – well - a bit trying.  What made it worse was that...

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Have They No Shame!

Let’s face it – in today’s world, it’s nearly impossible to live even a modest life without taking on debt from time to time.  Unfortunately, modest debt has given way to overwhelming debt for many – and the impact, given the fragility of our economy in this Covid...

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An Open Letter to College-Bound Kids

What your parents want you to know – but are too romantic to tell you! Warning: you’re not gonna like what I’m about to share with you – but you need to hear it.  You may be thinking, ‘my parents – romantic?’  In this case – yes – they are.  You see, this message...

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The Bond Myth

Bonds are generally regarded as tax-inefficient because the interest payments are always taxed as ordinary income – the highest rates in the code. Unless of course, you buy tax-free municipal bonds. But it turns out those aren’t so tax-free either.

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Revisiting the College 529 Plan

We are advocates of a plan that is also funded with after-tax dollars, and like the 529 plan, is accessible tax-free. It doesn’t generate a state tax credit, but it also eliminates any FAFSA penalty, and those tend to cancel each other out.

Where our plans really shine is that they are not exposed to market risk, and they can be used for any purpose – college, starting a business, travelling the world, or starting a killer long-term tax-free retirement account.

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The High Cost of ‘Free’ Money

We know – by the rule of 72 – that money growing at 7.2% will double in 10 years. So $100 pre-tax dollars grows to $200 in 10 years; and $75 after-tax dollars grows to $150 in 10 years. That’s their proof.

However, when that $200 is taxed at the same 25% rate, the qualified account ends up with – surprise – $150. There is no mathematical advantage to tax deferral.

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The Paid-Off Home Myth

If I have $1,000,000 in an IRA – the reality is – I really only ‘own’ the after-tax equivalent – say $700,000 if my tax rate is 30%. The rest belongs to Uncle Sam – I’m just ‘holding’ it for him, temporarily. So if my account grows by 10%, my portion of that growth is $70,000, and my deferred tax liability (debt) grows by $30,000.

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The Good, the Bad, and the Solution

If you didn’t know something as seemingly old and boring as life insurance could do all those things, perhaps it’s time to visit with your agent. Especially those of you in your 20s, 30s, and 40s should take a look into Indexed Universal Life – unless of course, you want to be sitting in an audience someday lamenting the fact that nothing good financially – happens to older people.

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Why pay full retail?

Let that sink in a minute – the 30 year cost could easily top a half a million dollars. Worse still – the meter is still running. Thirty years may represent the accumulation phase of our life, but the distribution phase (retirement) can last another 30 years. The math is exponential – meaning that figure can more than double over a lifetime.

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