Taxes Going Up As The Bush Tax Cuts Go Down

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There were two major tax cutting bills enacted during President Bush's administration. They were the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003. These two pieces of legislation are what we call the "Bush Tax Cuts". The bills included across the board tax relief for American taxpayers. They will expire as of December 31, 2010. 
 
Exactly what will the loss of these tax cuts mean to you and me? 
 
Tax Brackets 

Tax brackets that are currently 10%, 15%, 25%, 28%, 33% and 35% will go up to 15%, 28%, 31%, 36% and 39.6%. This means that if you are in the 10% bracket your taxes will increase by half to 15%. What happened to helping the lower and middle class? 
 
Marriage Penalty 
 
Remember when the marriage penalty was such a hot topic in the news, well the Bush Tax Cuts fixed it. But now it's going back to the way it was, when a couple living together was paying less taxes. Married couples will have to pay more than single couples. 
 
Child Tax Credit 
 
The current child tax credit is $1000. This will fall back to $500 in 2011. Also eligible families will decline. 
 
Dividends and Capital Gains 
 
The tax rate on dividends is currently 15%. It will climb to a range of 15% to 39.6%. Capital gains top rate will climb from 15% to 20%. 
 
Estate Tax 
 
In 2010 there is no estate tax. But in 2011 it returns with a exemption of $1,000,000 and a tax bracket of 55% 
 
The Tax Foundation estimated that the median family of four saved about $2,200 in taxes under the present plan. These cuts will vanish with the next tax year. 
 
I can't reconcile any of these tax cuts as unnecessary. They effect all tax payers of every age. I can't see giving the government more of our money when the budget is out of control. When our money is wasted at every turn it unconscionable to allow them more money. Cut the budget 10% and leave us alone. 
 
Not making these tax cuts permanent will be the final nail in the Obama Administration. The damage done will echo for years to come. 

5 Ways To Deal With Co-Workers From Hell

 
Here I am offering 5 tips to make it a little easier to get along with that pain in the @$$ at work. Don't waste energy having a breakdown on account of someone you can't stand. 
 
Dealing with Co-Workers Tip #1: Be prepared for Conflict 

If you have some in the organization who is difficult be prepared for a potential situation. If you don't you may react with anger or some useless childish behavior that will only make the situation worse. 
 
It may help to practice a potential argument in your head to get ready for the situation. Listen to what your saying to see if it comes across as immature or foolish. Also remember to not be wishy-washy, uphold your morals and values. Don't be arrogant but be self-confident. And by all means don't letthe person get under your skin , be ready for cheap shots. 


Your job is already quite stressful with deadlines and difficult bosses. Not getting along with co-workers makes your job ten times more difficult. You have no choice but to try and get along or just change jobs. 


Dealing with Co-Workers Tip #2: Don't fuel the fire. 

If tempted to retaliate, don't. People who cause tension and confrontation also thrive on it. They feel powerful with an exchange of harsh words. Don't get sucked in, you'll only look like the bad guy. Instead react in the opposite way they expect, be nice to them. It drives irrational people crazy. You'll either become friendly with them or drive them away. 
 
Dealing With Difficult Co-Workers Tip #3: Lend a Helping Hand 

It may not work in all situations but difficult people may be just a troubled person or someone with poor social skills. They end up making enemies instead of friends because they have money problems or marriage problems at home. This makes them an actual miserable person to be around. They may not be justified in mistreating you, but at least you know why they act the way they do. 
 
Dealing With Difficult Co-Workers Tip#4: Get a Third Party Involved. 
 
No matter how hard you try you may just not be able to get through to the person. This is when you get a neutral party to help. They can listen to both sides and try to find common ground. 
 
Dealing With Difficult Co-Workers Tip#5: Move On 
 
You tried your best and nothing worked. You will reach a point where it's not going to be resolved. If one of you doesn't move on your going to have to suck it up or quit. If this treatment by the person effects your productivity it could he considered grounds for termination. But before all this occurs be careful in examining your own behavior and if your doing the right things. Most of all don't ignore the situation it will only get worse. 

Kids Need To Work

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One of our duties as good parents is to instill the work ethic in our kids. But how do we do that? In my house both mom and dad go to work everyday to their full time jobs. Teaching by example should be enough but in this world it doesn't even come close, junior is perfectly happy to see others do the work. 
 
Should there be a certain age for your child to look for work? I believe there is. Each family can determine if the child is physically and emotionally ready to go to a job. We found that around the time they got their driving permit was the perfect time. They were mature enough and were self motivated because they needed money for their own life. 
 
Also at this time they wanted to have their own cell phones. We were firm in stating they would be paying their own cell phone or they wouldn't have one. So the job was becoming more of a necessity in their minds. 
 
The amount of money they made was enough to pay the cell phone and give them some money in their pocket. We taught them to save for things they would need in the future. Now all this seems pretty straight forward but with kids there is always some way they mess up. But this exercise is a teaching experience and probably prone to disaster. 
 
Having a job when your young is good for you. Because it teachs many things. For starters, it teaches you to show up somewhere on time. To have an authority over you that's not your parent or teacher. Also that Work = Money. 
 
Now all of our children did not all respond the same, with this wonder plan of the parents. More than half of them learned to work. But some of them just never got on board with the plan. The disgruntled children had to be led kicking and screaming down the road to work. But in the long run it worked out for all. 
 
Everything about work is a lesson in life: 
 
1. Work=Money 
2. Being somewhere on time is a skill that will be used the rest of your life. 
3. You will always have an authority figure over you in some form or another. 
4. Self reliance is the only thing that will never let you down. 
5. Success only comes after many years of work. 
 
Parents devotion to teaching their children is a never ending job. But I'm seeing with the oldest one the fruit of all my teaching. Be prepared to see some bare much fruit and some to bare a little. 

Your Investment Advisor Can Juggle, Too!

Image by jericl cat via FlickrOver at Schwab.com they have a new Investment Adviser survey. It has quite a few details of what your advisor has to go through. The job of your investment advisor is part guide and part handholder. Advising is a person to person business. You must establish trust and build a relationship. We are handing over our money, which is like our children. 
 
One survey reflects the difficulty in achieving a clients goal. The data shows back in July 2007 it was quite easy, only 27% thought it was a problem. It peaked at 84%, January 2009. This shows the good times when everything was fine and money was being made. But when the market tanked, I'm sure your advisor was on the phone all day trying to calm down their clients. 
 
The survey reflects the changing activities of clients. Clients have increased their activities in reducing expenses at home. Also, reducing their spending on discretionary items. Everyone is tightening their belts during these times. 
 
The chart demonstrating the reasons clients leave the advisor, states 62% leave because they have lost trust in the firm. 64% leave because they want more personal service. 33% leave because they have lost money. Which also leads to losing faith in the advisor. When the market pulls back your bottom line is not the only thing that suffers. Your advisor catches alot of the blame. 
 
When ask to pull out their crystal ball and asked for a prediction on which sectors would rise, they said the top 3 sectors to rise are Information Technology, Energy and Health Care. Also 20% of the adviser's revealed they had no view of the future. They are the smartest of the bunch. 
 
I have a healthy respect for financial adviser's, there consul and advice have helped me succeed in investing. It's always good to pay an independent advisor to get a recommendation and learn a little about your investments. It's like your yearly Doctor's visit. Do you take as good care of your money as your body? 

Young Investors Shunning Stocks

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A story over at CNNMoney.com caught my interest. It told of a young man of 18 years, deciding to pull his $25,000 investment in an aggressive mutual fund, out. When he was tired of seeing his money dwindle down during the decline in 2008, he moved it to a certificate of deposit. 
 
While all investors have become more cautious, the biggest change has come from those in the under 35 crowd. The youths have witnessed the decline in the value of their parents portfolios and seen how their parents have decided to delay retirement or even go back to work. The younger investors consider themselves more conservative today than they were a year ago. 
 
If your in your 20s you have seen the market drop 55%, climb 88% and then drop again in a short span of time. During the last decade you seen the stock market return 0%. 
 
This younger generation will probably live to 100 and beyond, because of all the medical breakthroughs now and the ones they will see when they retire. The only way they can afford retirement is through the investing in equities or they will be working way past the time they want to retire for lack of assets. 
 
Like us all, the under 35 crowd is leery about investing in the volatile stock market. History reveals that equities have earned 7% each year after inflation over the last 200 years. It most likely will continue. Has this been the worst market decline? In modern times, yes. But don't forget the early 90's and 1987 decline. If you really want to check out declines, check out the Dow Chart from 1900-2010 at this link. 
 
There have been corrections of 50% or more, over and over again throughout the the stock markets history and there will be again. Why does it shock people, like this has never happened before. If you keep investing in good times and bad you will come out at the end. The fear people feel when their investments go down is unnerving. A great decline like we just went through, makes people afraid and sometimes scares people away from investing. It still is the best way to go if you are in for the long haul.  

Book Review: The Difference

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Jean Chatzky has a new book called "The Difference". It describes the different traits of people who attain financial success and the ones who don't. She claims that in previous times the difference between rich and poor was great. Today the percentage of rich who came up from the middle class is 83 percent. The super rich who usually stay that way give the other 17 percent. Of the rich, their income is derived from 10 percent coming from passive investments and 90 percent coming from active business'. 
 
Ms. Chatzky breaks all of us down into four groups. Wealthy, Comfortable, Paycheck to paycheck and Further in debt. The reasons for someone to end up in one of these categories is our attitudes and behaviors. The four groups our: 
 

• Financial Attitudes and Behaviors 
• Goals 
• Personality 
• Non financial Behaviors 

 
Of course the greater your positive attributes are in these category's the more successful you will be. She says we don't have to be excellent in all these category's but just good. 
 
I have to add that her accent on good personality traits only work if you make a decent living. You spend less than you make. You invest your money so it can work for you in retirement and protect yourself and your finances from disaster. 
 
I admit I have only read the first chapter online at Oprah.com. Yet the book seems to rehash the same concepts of the book "The Millionaire Next Door". I can agree with the author that you have to have the right traits and behaviors to make money and to keep it. If you have the right knowledge you will be able to attain financial success. 
 
This book is well written and can be a good aid in discovering what you could be doing wrong. It has a lot of interesting facts and puts aside a lot of the myths of the rich and how they got there. If you never read other books about how work, good behaviors and a work ethic transfers into wealth, this book will be good for you. 
 
In reading a lot about this subject I believe that after a while all this good advice is just advice. It's all up to you to get up and put the book down and go make some money. 

Happy Birthday Social Security

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Social Security becomes 75 this month and it time for it to retire. You have the baby boomers starting to access benefits and some say this will crash the whole system.  
All my life there has been the doom and gloomers predicting the last breaths of this antiquated system. Crisis of insolvency have been heard around Washington DC for years. With good reason, every year the Social Security Board of Trustees issues it yearly report. The report is usually bad. This year their report states that social security will be broke by the year 2037. According to Kiplinger.com this year costs will exceed revenues. In the year 2037 if benefits are reduced to 75% the money can go all the way to 2084. 
 
The accuracy of these estimates are determined by social security administration. It's probably the only federal institution that plans things out that far. According to the Social Security Administration they have to project out this far so minor adjustments can be made so that payments can continue to flow. 
 
Supposedly they actually have been planning for the retirement of the baby boomers since 1955 when they noticed fertility rates increasing in 1946. They have been watching all these years and waiting. They do lots of preparation as do life insurance company's. They know if Congress doesn't act to fix Social Security they are able to pay benefits in full for the next 27 years and pay benefits of 75% from then on. 
 
The only ideas to fix social security they have, are only ones that are consisting of more taxes. Another is raising the retirement age to 70 years old. Both options would face resistance by the American people. The American people want to keep Social Security the way it is and not be worrying about it. 
 
Other ideas our that retirement age should be raised to 70 years old. Also phase out people 45 years old and younger completely. People 46 years old and up will get complete benefits. Those younger will take their social security contribution and put in a brokerage account like an IRA with mandatory contributions. Supposedly this account would appreciate and produce comparable payouts upon retirement at 70 years old. 
 
A rebooting of Social Security is called for. Many a multi plan solution consisting of many different ideas could be initiated. But the final solution in the years to come would be a total dismantling of it completely. The original safety net has grown unwieldy. We can't afford it and can't manage it.  

The Strangest Secret

Back in 1950's there was a motivational speaker called Earl Nightingale. He was working in the radio industry. He had an insurance company and gave motivational talks. In 1956 he gave his most famous talk. It was recorded on vinyl and won a gold record for 1 million copies sold. It was called "The Strangest Secret".  
It's only a 30 minute recording but carries a lot of good ideas. He talks about the reasons some people have success and some fail. He states out of 100 people only 5 will be financially independent. With people living in a country of abundant opportunity, why is there so much failure? 
 
He says what is the definition of success? It's the "Progressive realization of a worthy ideal". Men fail and they do not know why. They even don't know why they go to work everyday. That by their own choice they conform to what everybody else is doing. There is no success in showing up for a job. A true success is "Doing the job you choose to do deliberately". If you chose a job and educate yourself, you are a success. 
 
He says we live today in a world with a plateau of security. Most everything is available to us, we just have to show up to get it. Just having a job is not success. We have no goals and we don't use are minds and think. 
 
He says the key to success is that "We become what we think". You are what your thoughts are. If you think negatively, you will be negative. If you think good you will be good. You have to believe you will succeed then you will. If you can't find the right circumstances then make them. If you think about frustration, fear and anxiety that's what you will become. If you think about nothing you will have nothing. 
 
The trouble with today's economy is it moves at the speed of it's weakest link. It all up to each individual. We have to use are minds and think. 
 
He states that our minds are the most powerful tool we have. What we put in it is what our lives will become. Our minds are like fertile ground. Our minds like the ground doesn't care what we put in it. It will only return what we put in it. Like the ground, if we plant corn we will get an abundance of corn. If we plant a poisonous plant we will get an abundance of poison. Our minds are the same. He says it a law that we cannot change. 
 
We are the sum total of our thoughts. We have a choice, we can put good things in our mind and live successfully or put bad things in our mind and live in the gutter. 
 
I like a lot of what he has to say. It's interesting that these motivational speakers go back this far and the talks are recorded. I found this on YouTube. 
 
He calls this way of living "The Strangest Secret" because it's been known for thousands of years but very few put it into practice. 
 
I can see if you focus on what your doing and have good goals you will be successful. The most interesting item I thought was when he said if you can't find the right circumstances to succeed then make them. That is very important because we blame the circumstances when we fail at something. We blame other people, place and things. Then we quit and are perfectly happy to say we tried. How many times have you heard that or said that yourself. I have done that myself. Did it occur to anyone to go and make their own circumstances. 
 
Earl Nightingale was a famous motivational speaker in his day and probably helped many people. I'm glad I came across his recordings. He made me think in a different way. Maybe that is the way successful people think. If you ever hear successful people who have built large companies from scratch, this is the way they talk. It's different from the rest of 

us. Earl Nightingale says "You have to act like failure doesn't exist". 

Deep In Debt

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How do you help a friend in who is in financial trouble? A friend had his car repossessed. He works with me, he has a good job and is paid well. But he has a problem with handling money. There have been times he would want me to loan him money. I don't loan money and it kind of upset him. 
 
I would talk to him about how I take care of my finances. I told him what satisfaction and peace I had by being organized. I explained how he could apply it to his life. He listened but never took my advice. I tried to keep our conversation on a pleasant level but it got frustrating when he would never follow thru. 
 
Now with the car repoed this was where my patience became lacking. I told him he had to do something different or it would get worse. I said that I cared about him and his family's problems. I said I see you doing things wrong with money. I don't want to butt in, but you need help. What is it going to take to wake you up?
 
You guessed it, he didn't take it all to well. He was quite angry and defensive. He gave me lots of excuses for his behavior. He said it's so bad he can't do anything about it. That he doesn't have the money to work it out. 
 
He was so adamant and entrenched in his opinion. I was afraid this could end our friendship. This had been going on for many years but now it was coming to a head. I thought who am I to to be telling him what to do. I don't have this money thing down perfectly yet. I make mistakes to and I'm still learning. Maybe I should just back off. But as a parent I am not perfect , yet I still correct my children. 

I can see there is a hopelessness he feels about his situation. A comfort zone that is hard to move out of. When finances should be a matter of arithmetic, its mostly becomes a mix of behavior and emotion. 

I'll keep trying to help him. But he's on a progressively downward slope. It's seems the behavior resembles someone that drinks or is on drugs. They don't admit there is a problem.  Then hopefully someday they admit they have a problem and ask for help. All you can do in a situation like this is be patient. You have to realize their success or failure is in their own hands no yours.

Larry Burkett said,"debt is not the problem; it's the symptom." I believe failures with controlling your money is a behavior problem. You have to change behavior. The behavior that can wreck your finances is lack of planning. Planning for today and the future.

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We Are All Self-Employed

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As we have found out, in today's economy, there is no job security. Large companies like General Motors and Ford can close up. Many companies are going bankrupt and their employees are now looking for employment  elsewhere.  Business are on shaky ground because of the economy. Your are no longer guaranteed your job. You will eventually lose or leave your job.  But was that ever not true? .

  

 When you are employed you think that by doing your job and doing it well you are thinking you have job security. The idea that you work for an employer is an old attitude. You may find out that there is no such thing as a secure job. We are finding out the great autoworker jobs maintained by a strong union are not so secure. Even the Post Office may cut off Saturday delivery to reduce losses. Even the city and county workers in California are living with 15% wage cutbacks. 

You must reexamine the notion of you being an employee.  Don't see yourself as one. You should see yourself as a one person company, providing services to one customer. You are now self-employed. You are your own boss. This entails all the details of running a company. The first is providing a product to sell. That product is you.  The product must work correctly and provide the service need by you customer. If it doesn't fulfill the necessary requirements the customer will not continue to buy the product. You will be fired.

Second you must provide good communication with your customer. A necessary and timely interaction on the quality and delivery of the product. Is your performance in line with whats required for your work.

Third you must provide customer service. This entails follow-up on your products quality. Is it performing up to  advertised specifications. If its not your fired.

If you like you can always stay the employee. But you can also take on new challenges and think like a Boss. There is always time to express your purpose and passion for your life. Cliff Hakim in his book "We Are All Self-Employed" says "Believing that you work for an employer and acting as though by doing your work, your job will be secure - is a relic of an era long past."    

               

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