Intelligent Finance Improvement


Ages, Stages & Wealth Building


Learn how you can achieve financial success regardless of your age or where you now are at in your life stage…


Although started this topic and realized after entering the title that it was done so with the CAP LOCK on, it was decided in humorous fashion to go along with the topic as entered.  Even so it is important that you realize that managing your finances at the various stages in your life is no laughing manner.  It is imperative that you realize that the sooner you get started on your wealth building and money management efforts–the more you can achieve at the various stages throughout your life.


It is important that you have an effective system that allows you to manage your finances regardless of your age or where you are now at in your life stage. 


Over the years many visitors have asked, why don’t you create a book aimed at helping kids understand personal finance better?  Why don’t you create a book addressed to senior citizens?


My answer then, as well as now is that the systems already presented provides just that—as kids and those who are elderly are equipped to learn the systems and approaches on this site and our companion sites in the same manner as others–although they may have to elevate their level of thinking some or look at their finances in a new or better way.


Kids, the elderly and all those in between alike possess the potential inside to elevate their mind to a higher level and achieve the type of success that will put them on a path toward reaching the goals that they truly desire or need to attain.


In this discussion will discuss ways that those who are young and just gaining a knowledge of personal finance as well as the elderly and all of those in between—can learn highly effective ways to better manage their finances in the current economic climate.


In many cases, consumers approach their finances in the wrong manner, regardless of age.


Whether you are young and new to personal finance and wealth building, middle aged or you are elderly and have been managing your finances for years—effective and results oriented success seems to elude far too many.


Regardless of your money management personality and age or where you are in your life stage—you can grasp the material on this site and achieve success at a very high level and you must have the mindset and belief that you can do so.


As far as your teen years go (which we recommend you start your wealth building efforts at) you can put yourself in position to make the right decisions as you start working and making income.  You can decide now that you want to have a money management system that you can use effectively once you get into the job market that allows you to reach your goals more efficiently.


If you are in your 20’s or a college graduate you too must put yourself in position where you will make the right decisions on a consistent basis as it relates to your wealth building and future success in all areas of your life!


Regardless of your age or your life stage you must have an empowering overview of what you can do to make your dreams come true.  You must understand the following four life stages so that you can see your future in clear terms and achieve more during your lifetime.


Stage 1

Formative Years Ages: birth to early 20’s

This is a time for those who may not have a clue about finances and how to effectively comprehend personal finance get a real jump by getting out in front of their finances in a proactive manner.  During this stage it is your parents, your inner drive to learn from various sources,  your school district–and the effort of others–help get you on a positive path to understanding at  least the basics of personal finance and effective money management.


Stage 2

Growth Years Ages: 20 plus to mid 40’s or early 50’s

This is a time that you are working and attempting to strive to reach the goals that you set and at the same time possibly start a family.  This is the stage that you must begin to show real responsibility (even if you did not do so during your formative years) as you must at this stage get an effective and highly beneficial understanding of how credit and finance really works and how you can use that understanding to better serve your interests and that of your family’s.


Stage 3

Conservation/Protection Years Ages:  late 30’s to 40’s up until you retire or scale back on working

Once you have accumulated assets such as cd’s, retirement accounts, insurance policies, personal residence and vehicles etcetera–you must conserve and protect them and not go backward.  If you get this stage right you can put yourself in a highly favorable position as you navigate the next stage.


Stage 4

Gifting Distribution Years Ages:  40 plus, particularly if you have planned right early in your life

You at this stage can truly be a blessing to others as you may have accumulated more than you can utilize during your lifetime.  At this stage you would see your finances outlasting your remaining years on earth.  You could possibly pay for your grandkids education, travel more extravagantly, and help others achieve success in a manner where your living standard would not be diminished.  You would be in position to leave a legacy for your heirs and enjoy your years on earth in a style and manner that you desire.


 Analysis that you must do at one or all of the above stages:


1) Determine where you now stand financially

2) Determine if you have an effective credit management system that you can use at the time of your choosing

3) Determine if you have a comprehensive understanding of your finances and how to make improvements where needed


By doing the above analysis in a “sincere manner” at any stage you can put yourself and your family in a winning position where the success–and goals that you desire will be the ultimate outcome.


Conclusion has seen many visitors to this and our other sites achieve major success by committing their mind to learn and apply the various systems and approaches that can be found on this site–and you can do the same.


Keep in mind that depending on where you are financially and what stage you are in your life you can make the decision to utilize what you feel will work for you to work toward making your dreams come true and achieve at a higher level throughout your lifetime.


It is important that you understand that the  3 steps that you can or have the opportunity to take at the above stage or stagescan put you far ahead of those who procrastinate and those in the general population in general (no pun intended) who fail to address their finances appropriately due to various reasons–mainly excuses.


Always realize that ages and stages overlap and/or you can be in more than one stage at the same time!


Regardless of your age or where you now are at in your life stage it is the desire of that your heart will rage and lead you toward turning a page that will lead to your success that will put you in a new cage (where you really want to take your life) as you utilize a new gauge (a new way to look at your personal finances and life).


Your determination and commitment to attack your finances and your determination to learn how to manage your finances more effectively at an early age will serve as the catalyst for you to achieve more throughout your lifetime.


For those who start late for varying reasons, you too can achieve success if you remain focused and you put in place a realistic plan that can take you to where you need to be.


In the end effective financial management must start within you and it is up to you at this time to decide what age you will start—and what stage you will strive to reach the goals that you desire in a manner where the success that you achieve will never diminish.


You must have the mindset that you are responsible for what happens in your financial life–even though you may be around others on a daily basis who are irresponsible in their financial life.  You must realize that if you “really” want to reach your financial and life goals–you must know deep inside that you “can” do it.


Your financial education at the various ages and stages during your lifetime is key and critical for your continuous success during your lifetime and even after you transition.


The earlier in your life stage that you realize this–the better for your long-term success.  However, you can achieve success at any stage if you make a real commitment to do so.


Be sure to focus on your strength, work on your weaknesses, put yourself out there and make a real commitment to achieve more throughout your lifetime.


All the best to your ageless and life stages success…


Learn whether you have the “mental fortitude” that is needed to achieve success on a daily basis by going to this helpful page…


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Timing & Wealth Building in the Current Economy

Learn why the effective use of your time is critical for your long-term wealth building success…


It is important that you take a sincere look at how you manage your time as it relates to your finances and all areas of your life.


It is also important that you realize that the time aspect of wealth building can be looked at from a number of different angles.  In this discussion will look at a few ways that you can use time to build wealth more efficiently in the current economy.


You cannot waste time daily by not knowing where you stand financially, not understanding how credit affects your overall finances and not having a comprehensive overview of how to manage your finances effectively in all areas!


It is the desire of that this discussion will show you the importance of time management and further direct you toward ways that you can actually use the management of your time to achieve more throughout your lifetime in ways you may have never imagined.


Over the years has seen many who managed their time effectively and also those who did not manage their time effectively.


By managing your time in as effective a manner as possible you can put yourself and your family in position to achieve much more (including goals that you may now feel are impossible to attain) in a more efficient manner.


In the following paragraphs you will learn 3 highly effective ways that will allow you to make better use of your time and achieve more throughout your lifetime.


1)   Manage Your Time Better By Knowing Your Current Financial Condition

If you are at this time serious about the management of your time as you build wealth you must know your current financial condition or your current financial strength (or weakness).


Do you have adequate income at this time that will allow you to achieve your future goals or do you need to get more income and/or cut expenses?


By creating a budget or cash flow statement you can put yourself in position to know what you can do on a monthly basis in “concrete terms” and know what you will have left (discretionary income) to pursue other areas of concern that you may have financially.


Even though it will take time to create and analyze a cash flow statement, you will save far more time in the long run because a budget or cash flow statement will help give you the direction that you can (or need to) go in a much clearer manner.


2)   Manage Your Time Better by Managing Your Credit Optimally

Once you know where you stand financially you must put together a plan to eliminate your debt and particularly your credit card debt (if you have any) to a manageable level or to a level where you are in control—and not keep your balance(s) at a level where creditors control you!


You must also learn how to master the 5 credit factors so that you can control your credit throughout your lifetime.


Even though it may take mental energy and time to learn and effectively apply your mastery of the credit factors—you will put yourself in position to manage your credit throughout your lifetime in a manner that will get you real results in a time-efficient manner and in a manner that can put you on a track to attaining the goals that you desire or need to attain throughout your lifetime and even after you transition.


3)   Manage Your Time Better by Having a Comprehensive Overview of Your Overall Finances

By knowing your current financial condition and having mastery over your credit you are now ready to analyze and approach your finances from all angles!


You are ready to look at your insurance, investments, taxes, emergency fund, education planning, estate planning/wills and retirement planning in a more confident manner.


You are ready to use your time effectively because you know the importance of living your life in a manner where you don’t leave doing what needs to be done for others to do.


You are now seeing your future more vividly and with more focus because you know that you can achieve the goals that you desire if you stick to the plan that you  (or your financial planner) create based on the analysis of your unique financial position that you spent the time to analyze.


At this time you know that achieving financial freedom is your mission and you have no intention on stopping until it is done, or you are in a much better financial position!




The effective management of your time may initially seem very difficult to you and that is not uncommon.


However, once you start applying what you have learned in this discussion on a consistent basis your understanding and application of the process will be made easier and you will eventually save much more time in comparison to the effort that you expend upfront when you look back upon your life!


Even though financial mishaps and correcting mistakes due to carelessness and not knowing what might (or is happening) will occur during your life, they will be reduced, eliminated or made less relevant in your life because you will have an effective system that you carry within your mind throughout your life that allows you to achieve more in less time.


Even though you may have to exert more mental energy than you or your peers are accustomed to on the front end—you will ultimately get to a point where managing your finances and your time becomes second nature to you—if you are sincere in making your dreams come true.


You will become very efficient in managing your finances and you will achieve more throughout your lifetime and it will be due in large part to the commitment that you made at this time to build your wealth in a more engaging way as far as exerting more mental energy on the front end in a real effort to achieve or reach your goal(s) in a timelier manner!


Also, if you are like most visitors to this site, you will want to know the time frame in which you will reach your goals—the answer will vary from person to person and your objective(s) or where you want to go financially.  Your goals and objectives will differ from others as everyone has a unique financial position and goals that differ in all cases.


Let something original work its truth in your life.  Equip your mind for lasting success, do good work that will lead you on a real path toward reaching your goals and use a comprehensive approach to manage your finances that will force you to make better use of your time on a consistent basis!


In this discussion you have learned that the time to start effectively managing your finances is now, the process of achieving your goals will take time and the reaching of your ultimate goals will vary from person to person and family to family and the time factor will be unknown in many cases unless you put in place a written plan based on your unique financial position that will effectively guide you to your destination—if you are willing to follow that written plan in a sincere manner.


By doing so you are equipping yourself for the continuous financial success that you desire and deserve in the current financial and political environment—or any environment—now or in your future.


Your knowledge alone of this discussion is not enough—action toward reaching YOUR GOALS is what really counts at this time.


Those who truly desire success prepare for the consequences or outcomes that they desire in a proactive manner and also have a plan if the outcomes differ from what they desired.  They always respond positively to adversity and have an action-oriented mindset!


Transforming your finances from where they are at this time to where you need (or desire) them to be is normally a process (time is involved) and not an event (I can do it today and I am through) and it is imperative that you prepare your mind for the journey at this time with realistic timelines as the blueprint within your mind and a written plan that will provide you the needed direction!


All the best toward your timely wealth building success…


More on how you can use the time factor to achieve more throughout your lifetime:


How to Use Your Knowledge of the “Types of Income” to Save Time

How to Use “Compounding” to Achieve More Over Time

Learn Why “The Time Length” of Your Credit Accounts Are so Important

Timing & Wealth Building

Timing & Personal Finance

Responsibility & Personal Finance

Financially Alert Mind & Personal Finance

Financially Alert Mind & Financial Success

The 3 Step Structured Approach to Managing Your Finances


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Retirement Cautions & Wealth Building


Learn what you need to know as you approach your retirement years and the taxation of your income that can prevent you from making the wrong moves…


Did you know that there are a number of concerns that you should have as you approach retirement age?


Hopefully you have managed your credit and finances effectively prior to your retirement years and you are in position now (if you are currently retired) to take advantage in ways that will better serve your retirement years.


Whether you are or are not retired be sure to focus in on what can help you achieve more at this time and throughout your lifetime.  By doing so you will put yourself far ahead of those who enter retirement without doing the preparation that is necessary that could guide them toward a more enjoyable retirement journey.


In this discussion will show you ways that you can make your retirement years more enjoyable and put you on path to making the retirement that you desire have less roadblocks for you and your loved ones.


First and foremost you must realize that you want to address your retirement related financial activity in a manner where you will have no surprises as it relates to your taxes as many who retire often have no clue how their tax position will impact their retirement years.


You must be aware of how the taxation of your IRA’s and 401k’s etcetera, social security benefits, w-2 income (if you work part-time during your retirement years), investment income, self-employed income or other pass through income and earned pension income–will all affect your tax position.


If you don’t withhold enough income or pay estimated taxes at the right amount with your IRA’s and 401k’s etcetera, social security benefits, w-2 income (if you work part-time during your retirement years), investment income, self-employed income or other pass through income and earned pension income when you receive those income streams you could be in for an unpleasant tax surprise if you have not planned ahead and gotten at least a cursory overview of how taxes will affect your income streams during your retirement years.


  • IRA’s, 401k’s and other retirement plans

IRA’s, 401k’s and other retirement plans may require that you begin taking distributions at age 70 1/2 even if you have no need for the funds.  You must plan for the tax consequences of these withdrawals at the federal and state level (if applicable) and know where you will fall based on your unique tax position.


  • Social Security benefits

Your social security benefits may or may not be taxable depending on your unique tax position.  However, there is the potential that your taxes could be 85% on your social security income.  You can elect to receive your social security at various times after you turn age 62 and you must determine if taking early payments or waiting is the best move for you and your family from a tax point of view based on your overall finances and future plans.


  • W-2 income

If you work part-time during your retirement years you may find that it will affect the taxation of your IRA’s and other retirement accounts, social security income, investment income and your pension income.


  • Investment Income

Your investment income will also be taxed during your retirement years and you must know the rate that you will pay during your (and your spouse if married) retirement years based on your annual income and filing status.  There are various thresholds and depending where you fall in those thresholds you could pay 0% up to 20% depending on the type of investment, your income and your filing status.


  • Self-employed income and/or other pass through income

If you decide to work for yourself or you receive pass through income from a partnership or S corporation there will be tax consequences and they will vary based on your income from self-employment, other pass through income and all of your other sources of income and your filing status.


  • Earned Pension Income

If you have worked for an employer and they had a pension plan you would receive a 1099R and you would be taxed on that pension income at the Federal level in almost all cases.  The question then becomes did you have enough withholding or did you pay enough in estimated taxes to offset the taxes that you would owe.


At the state level you would also be taxed but the rate varies from state to state and many states offer you the opportunity to exclude certain retirement and other income from your taxes if you meet the states requirement.  In a few states there are no state income taxes at all, and if you live in one of those states that is even better.




It is imperative that you look at the tax consequences of the various income that you will receive during your retirement years.  It might be helpful to get professional projections of the taxes that you may owe under various situations from your CPA or other financial professional(s) so that you can know what to expect during your retirement years.


Did you seriously consider the tax ramifications of receiving income from IRA’s and 401k’s etcetera, social security benefits, w-2 income (if you work part-time during your retirement years), investment income, self-employed income or other pass through income and earned pension income?


It is important to look at this information in isolation and in combination as you plan out your retirement year’s income streams. 


Did you analyze and determine that you will have the income that you need to live at the level that you desire after your retirement years after the payment of taxes from your various sources of income?


These—and more are the types of questions that you must answer prior to retirement so that you don’t enter your retirement years with an unrealistic expectation of how you can enjoy life.


You must fervently pursue your retirement goals, effectively utilize this page and site, make yourself available to learn more about retirement and taxes from other sources and make the right financial moves in a proactive manner throughout your life.


By doing so you will put yourself in position where you won’t have to FEAR your financial or retirement future—whether it be the tax implication or any other concern.


All the best as you work toward your retirement success…


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Bountiful Harvest & Wealth Building

Learn why now is the time to plant your seed (gain a solid financial  foundation) in fertile soil so that you can have a bountiful harvest (achieve your  financial and life goals)…


With April roaring in and many parts of the world  “sowing the ground” in an effort to bring in a bountiful harvest in due time as the goal– thought that the topic of reaping what you sow was an appropriate topic to focus on as far as improving your finances and building wealth was concerned.


Just as those who plant various fruits and vegetables in fertile soil and work the land–so too must you gain a solid foundation and work toward reaching the goals that you desire or the goals that you need to attain.  You must not let unpredictable weather patterns (adversity) negatively affect your output as that should be expected if you are  sincere about reaching your goals.


By planting thoughts of success in your heart and mind (planting seed in fertile soil) and putting together a plan that can get you the results that you desire  you can have a bountiful harvest (reach your financial goals) if you take the right action on a consistent basis along the way.


You must prepare your mind for the financial success that you desire and you must have the mindset that you will reach higher.


• Do I have a “meaningful understanding” of personal financial statements 


You must create a personal cash flow statement to see where you now stand financially.  It is akin to taking a soil sample to see what you are working with as far as the fertility of the ground is concerned.


Are you operating in good soil (visualizing clearly how you handle your income and expenses on a monthly basis) or do you need to amend the soil so that you can have a more bountiful harvest (move closer toward reaching your goals by getting more income, cutting expenses or doing a combination of the two) by having the discretionary income on a monthly basis that you desire to make life more enjoyable and meaningful for you and your family?


Do I fully understand the “factors” that affect my credit scores—including the ratios?


By understanding the factors that affect your credit you are in effect helping to control the weather patterns (so you can sit out in the sun) as opposed to having the weather patterns control you (running you inside your house due to inclement weather).


You must know how a Positive payment history, how you Utilize your credit, the Time length of your credit, the Type of credit that you have and Inquiries affect your credit and ultimately your financial future.


• Do I know all areas of my finances that I “must” address? 


By planting in fertile soil you will begin to see your harvest blossom in ways you never imagined.  Also by seeing your finances in a comprehensive way–you can achieve goals that you may have never thought possible.


You must know that you must address your insurance, investments, taxes, emergency fund, education planning, estate planning/wills and retirement planning in as effective a manner as possible if you desire to achieve more during your lifetime.




When it comes to your finances you must  know where you are now at and where you are going!  You must encourage and inspire your loved ones and others to reach higher as well.  You have the power to change the trajectory of your financial future!  Your application of what you are learning on this page and site must  be balanced with the future goals that you desire or need to achieve.


It is important that you realize that what you “learn, know and apply” empowers you to take more effective action as it relates to reaching your goals.  You can make your road to success easier by applying the right principles at the right time during your life.


You can achieve many of your financial goals that may look impossible at this time if you pause and put together an effective plan that will take you to where you need or desire to be.   Leave your baggage (weeds) that is holding you back behind—turn something old into something new and better.  Do something fresh today–respond to adversity in a strong fashion on a consistent basis. 


Why you must do what needs to be done now–without procrastination…


You can prevent the weeds from growing (avoid making mistakes) so that you won’t have to repair the soil (waste valuable time and money when you could have avoided it).


You must realize that you are challenged and charged (by to do far more than you are doing at this time!


You must stick to it and move your PEN so you can WIN!


Let something original (a new rain cloud followed by unlimited sunshine) work its way into your life.  Equip your mind for lasting success by gaining the skills that are needed to reach your future goals and use a comprehensive approach to manage your finances. 


By doing so you are helping to ensure that you are equipped for the continuous financial success that you desire and deserve. 


Be sure to apply what you learn in your everyday life.  Your goal must be to be–and to do—not just know what to do and let what you know sit idly in your mind.


Your knowledge of the above material alone is not enough—action is what really counts.


By sowing your seed in a fertile environment you are helping to ensure that you do all that you need to do—and more as you move toward your financial goals.  You are helping your financial growth process and at the same time ensuring that a bountiful harvest is in your and your family’s future.  


You are on a real path to reaping what you sow because you have taken the time to gain the preparation and knowledge that can make your future glow–and more importantly put you in the know–as far as putting you on a path to obtaining financial results that will show!


You are on a path toward attaining a Financially Alert Mind (as opposed to just Financial Literacy) that will allow you to weather the elements as you reach toward your goals throughout your lifetime.


Always remember that you will be known not only for the impact that you have in your own life but also the impact that you have on others.  By making a serious commitment today you can have a positive impact on others and also reach the goals that you desire as well!


It is the desire of that you are now in better position to Sow the Financial Future that You Desire and receive a Bountiful Harvest…


Now is the time to plant what you desire in fertile soil so that you can have a bountiful harvest…


All the best to your future success…


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Managing Your Finances & Wealth Building

Learn how you can “Manage Your Finances & Build Your Wealth” in an intelligent, consistent & proactive manner so that you can achieve more throughout your lifetime…


In the current economy it is very important that you have a systematic approach to the management of your finances.  Whether you are a millennial, gen x, gen y or baby boomer effective management of your finances must be a part of your mindset if you desire to achieve more from this point forward.


In this discussion will look at highly effective ways that you can use to move forward in an efficient manner as you manage your finances and build wealth.


Those who manage their finances at an optimal level always seem to have a system that allows them to live within their means and save at a level that allows them to get ahead financially.


You must know how to analyze your cash flow and know what you will have left on a monthly basis after you pay your rent or mortgage, health care, cell phone bills, cable TV and other costs that you have on a monthly basis that allows you to live at the level that you desire.


Although the process of analyzing your finances on a monthly basis may appear daunting–you can do so and also save for your future if you have the right approach and you are committed to putting that approach into action on a consistent basis.


By knowing where your money goes on a monthly basis you will feel more in control of your finances and your future!  Why stress about what you can do in the future when you have the ability to take control of your finances and achieve more during your lifetime?


You must have an understanding of your fixed and variable expenses on a monthly basis so that you will know your “discretionary income” that is available that will allow you to do other things.


You must then look at ways that you can reduce or eliminate the fixed and variable expenses that you can avoid, are not comfortable with or are a drag on your monthly finances.


3 Steps that Will Allow You to Control Your Finances & Financial Future


  • You must budget and plan for your future


It is very important that you create a budget or monthly cash flow statement in order to determine where you are financially.  That will allow you to plan your financial future more effectively.


You will put yourself in position to create a properly funded emergency fund and build your wealth more efficiently.


To gain even more control over your financial future you need to eventually create a personal income statement and balance sheet so that you will know your net worth.


  • You must effectively manage your credit


Whether you are new to credit or you have been managing your credit for years it is imperative that you “understand credit” and you have an effective system that allows you to manage your credit.


You don’t want to put yourself in position where there is confusion (within your mind) or other distractions as it relates to the management of your credit.


  • You must know all areas of your finances that you must address and then you must put a plan in place to address those areas


It is your responsibility to know all areas of finance that you must address during your lifetime.  Another way of stating that is you must have a “comprehensive approach” in the management of your finances if you desire to achieve at an optimal level.


You must know “immediately” and at “all times”  that you have to address your insurance needs, your investment goals, your tax situation, your emergency fund, your education planning, your estate planning/wills and your retirement planning.  By doing so you add “clarity of thought” to your life and your future will take on a new (and brighter) meaning.




You must have an approach to your financial future that “sticks to your mind” and allows you the ability to manage your financial future with clarity.  You must have strategies that you can carry within your mind and that you can apply at the time of “your” choosing.


By gaining a real understanding of the 3 steps mentioned above and applying them on a consistent basis throughout your lifetime you will help insure a more prosperous future for yourself and your family.


You will put yourself in position to set real concrete goals that you can see clearly” rather than “generalize your future” and move toward your goals with an unclear focus.


Keep in mind that you can do the above steps at a pace that you are comfortable with, however they must be done–if your desire to achieve more financially during your lifetime.


What do you value?  Determine what you value most and make it a priority in your life at this time.   Make the decision not to procrastinate at this time!


Will there be setbacks as you move toward your financial goals?  Absolutely, however by applying what you have just learned on a consistent basis you will put yourself in position to rebound from those setbacks and achieve the type of success that you desire throughout your lifetime.


Be sure to use automatic savings tools  where appropriate and maximize your retirement savings in a manner that will allow you to reach your retirement number and live the lifestyle that you desire during your retirement years.


All the best as you apply the “3 steps” toward your success…


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The New Tax Law & Wealth Building

Understanding the New Tax Law & Wealth Building


Learn how you can use the recent United States tax cuts and job act law changes to maximize your 2018 and future tax filings…


With the new tax bill out and anxiety in the air among many taxpayers the creator of had no choice but to review the new tax bill to help alleviate the fears of many and help those who desire greater success build wealth more efficiently in the coming years.


Even the creator of found navigating the bill of several hundred pages to be boring and cumbersome—however key aspects that could possibly benefit you and others were focused on and analyzed.


In the following paragraphs highlights of the bill will be analyzed and presented in a manner that could possibly help you build wealth in 2018 and beyond in a more efficient manner.


Even though the new tax law will reduce the taxes for millions, that does not mean that you will be included among the millions as personal taxes are unique and vary from person to person and family to family.


The good and bad news is that tax rates were lowered across the board but are scheduled to expire in 2025 unless congress decides to make them permanent.


To keep this discussion logical and concise the order of presentation will try to keep the format of the 1040 long format as the blueprint or guideline for discussion.


Personal Exemptions Are Now Gone


You can no longer claim your children or other dependents and get a personal exemption for them—or yourself and your spouse if married.


Those exemptions that you have become accustomed to getting have been replaced with higher standard deductions, lower tax rates, increased child tax credits, and a dependency credit for other dependents of $500.


Whether the new tax changes will be of more benefit to you depends on the age of your dependents, your income level, your family size, your above the line (page 1 of form 1040) and below the line deductions (page 2 of form 1040) ,  your tax withholdings and many other factors that may be unique to you and your family.


Standard Deductions Are Increased Substantially


Standard Deductions are now $12,000 for single up from $6,350, $18,000 for head of household up from $9,350 and $24,000 for  married filing jointly up from $12,700.


Be aware that claiming the higher federal standard deduction may not be a wise move in some cases.   It depends on a number of factors, including the amount of your itemized deductions and your state income tax filing standard deduction (if applicable)–among other factors.


Child Tax Credit Increases


The child tax credit increased from $1,000 to $2,000 so if you have a child under age 17 you would more than likely be eligible for the credit.  The income limits for phaseouts also increased as you can now earn up to $400,000 (AGI–line 37 of form 1040) and still take the credit (up from $110,000 in 2017).  In addition, $1,400 of the credit is refundable meaning even if you owe no taxes you are entitled to the refund.


To claim the credit your child dependent must live with you at least half a year and you must provide over half the cost of support for the child in order for you to claim the child tax credit—similar to when exemptions were claimed in past years.


The EIC or Earned Income Credit remains as well—meaning those with modest income and a family of 4 with kids under 17 could see a possible increase in the amount of the refund they will receive on their 2018 tax filing.


Those over age 17 whom you provide support such as college students, parents and others will provide you the opportunity to claim a $500 tax credit in the filing of your taxes if they meet the guidelines for dependents under the tax law.


The Marriage Penalty is Finally Eliminated or at Least Made Less Relevant for Most


Under the new law the tax bracket for married couples are almost double that of a single person in most instances.  If you have been avoiding matrimony due to the tax code or financial concerns—you can now breathe easier.


If you make $500,000 or more (which is a good problem to have) the marriage penalty again starts to rear its ugly head—If you make over $500,000 and plan on getting married soon—consult your tax professional before making the hitch as there may be ways that you can reduce the tax bite.


Alimony is also affected by the new tax law as you can no longer deduct alimony if you pay alimony and you don’t have to include alimony as income if you receive alimony (must be after December 31, 2018 otherwise old rules apply).


Education Deductions Remain in Place


Although did not initially take the news of eliminating the student loan interest deduction seriously—due in large part to the number of student loans outstanding and the hardship that the payments continue to cause for many—there were serious efforts to eliminate this helpful above the line deduction.


Fortunately, those in congress used their better judgment and the deduction for up to $2,500 worth of interest on student loans remain!


Tuition waivers and discounts by graduate students also remain tax-free.


The AOTC or American Opportunity Tax Credit worth up to $2,500 per undergraduate student (MAGI of $80,000 single and $160,000 married) survived the new tax bill.


The Lifelong Learning Credit also survived the new tax bill and it is worth up to $2,000, or 20 percent of the first $10,000 spent in a year (MAGI of $56,000 single and $112,000 married).


The $2,000 limit is per household with the Lifelong Learning Credit but the American Opportunity Tax Credit applies per student and could be more valuable to you if you have several kids in college.  Your overall credit would be higher, thus your tax bill would be lower or your tax refund would be higher!


529 college savings plans are now eligible to be used for k through 12 grades at private or parochial schools—in addition to colleges and universities.


Coverdell accounts remain although it appears they will be phased out and the cap remains at $2,000 annually, however you can now roll them over into a 529 plan tax free.


Always keep in mind the fact that many states also sweeten the pot—as you can deduct 529 contributions in many states.  And with the limits on property taxes (discussed later) that could be significant for those affected by the limitations.


ABLE accounts now are available for setup for a disabled beneficiary and can be legally rolled over from a 529 plan.  The benefit of doing so includes the tax-free use of funds for a variety of purposes—not just college, private or parochial school.


Assets up to $100,000 don’t count toward the $2,000 limit for SSI benefits.  Contribution limits are capped at $15,000 in 2018 and your rollover from the 529 plan would count toward that cap if you were to roll over a 529 plan into an ABLE account.


Educator expenses continue to be deductible (up to $250) by teachers who come “out of pocket” to purchase classroom material and supplies.


Most Retirement Plans Are Not Affected by the New Law


With the new tax law a change in your withhholdings may occur.  If you are in a strong financial position consider using the additional amount that you may see on your check to save more for retirement to help lower your taxable income and build wealth more efficiently.


IRA to a ROTH  conversions also see limits.  In the past you could undo the conversion and avoid the tax bite by re-characterizing the conversion by October 15 of the following year.   Now once you convert, it is permanent as far as the tax bite is concerned.


However, if you feel that a conversion is more beneficial for you and your family and you have the funds to handle the tax bite that could still be an effective strategy.  In addition, you could convert yearly a certain amount to lessen the tax sting.


Real Estate Takes a Hit with the New Law


Many residents of high cost cities where housing costs are high are crying foul over a number of provisions in the new tax.  The new law limits how much mortgage interest you can deduct.  The limit is now $750,000 (primary and vacation homes) down from 1 million.


Home Equity debt (home equity loan and home equity line of credit) interest is no longer deductible unless the money from the loan is used to improve your home.


Property tax deductions on your schedule A are capped!  The new law limits the amount that you can deduct in state income and property taxes at $10,000.


Like Kind Exchanges under Section 1031 of the Internal Revenue Code are now limited.  Like-kind exchanges of Real Property survived the new tax bill, however like-kind exchanges no longer apply to any other property–including personal property associated with real property.


Capital Gain Tax Rates are Preserved


Capital gain rates remain the same but the calculation formula now differs from using the tax brackets as in the past to using income thresholds.


If your income is less than $38,600 single or $77,200 joint you are at the 0% rate based on your income threshold.


If your income is between $38,600 to $425,800 single or $77,200  to $479,000 joint you are at the 15% rate based on your income threshold.


If you are in the ideal position of having even higher income your capital gains rate would be 20%.


The above capital gain tax rates apply to long-term capital gains (assets held over a year) and if you were to sell capital assets held less than one year you would pay tax at your ordinary income rate.


The “so called” kiddie tax that you would normally pay also has a change in the way that it is calculated.


Charitable Giving May Take a Hit Due to the Higher Standard Deduction Amounts


Charitable organizations were not pleased by the changes in the new tax law.  Even though charitable deductions are still deductible on the 1040 long form the likelihood of many using the long form has decreased due to the elimination of personal exemptions and the increase in the standard deduction.


Although many give generously out of the goodness of their heart, they still enjoyed the knowledge and annual application of a tax break.    That tax break that many have been accustomed to utilizing for years will be eliminated for some taxpayers due to the increased standard deduction which effectively wipes away their ability to itemize and claim their charitable giving.


Self-Employed & Those Who Have Pass Through Income Will See a Benefit


If you are self-employed or make additional income from a side job you could possibly benefit significantly from the new tax bill.  Many self-employed businesses will be allowed to deduct 20% of “qualifying” income from their taxable income.  Even so, there may be limitations depending on your business type and income thresholds.


Qualifying income is what the new law states that it is and can be a gray area, so consult your tax professional.


Entertainment expenses will no longer be deductible,  however meals will continue to be deductible (50% limit).


Medical Deductions Ceiling Reduced From 10% to 7.5%


At least for 2017 and 2018 you can deduct medical expenses on schedule A and have a 7.5% floor as opposed to 10% under the old rules.  The lower the floor the better–as it allows you to deduct more medical expenses on your schedule A.


The ceiling returns to 10% in 2019 so don’t get too excited.  Hopefully congress will make the 7.5% floor permanent or at least extend the deadline as baby boomers will find a real benefit as they age and get out of the employment population and experience increased medical expenses.


2% Miscellaneous Deduction Including Unreimbursed Employee Expenses Take a Major Hit


Moving expenses have been eliminated unless you  are an “active” member of the U.S. armed forces.  Tax preparation, unreimbursed employee expenses (mileage, travel, home office expenses etc.), investment advisory fees and casualty losses other than those declared as a presidential disaster area have all been eliminated.


Look for shockwaves to run through certain industries where they have high “unreimbursed” expenses when they file their 2018 tax return as those who work in the affected industries will in some cases experience a substantial increase in their tax bill.


Corporations & Pass Through Entities Receive the Majority of Windfalls with New Tax Bill


With a major tax rate reduction to 21%–down from 35%–many corporations will receive a significant financial windfall due to the reduction in their tax rates as well as other perks offered in the new tax law.


Depreciation write offs and 179 deductions could possibly be of greater benefit to you if you purchase equipment that qualifies.  However, there are no guarantee that they will continue indefinitely.


However, for the time being many corporations will benefit–and you too may be able to benefit as well if you are proactive and not reactive in looking at ways that you can better utilize the new provisions that are now available to corporations and pass-through entities.


Self-employed businesses, partnerships, S-corporations and C-corporations will all see a reduction in their tax rates and it is up to you to look at ways that you can use this new rate change to your and your family’s advantage by now getting in the game or playing the game more successfully by taking beneficial steps toward your goals at this time.


 W-4 Table for Exemptions No Longer Apply


The withholding based on exemptions are a thing of the past and new tables for withholding are in the process of being created.  It is important that you have your tax professional provide you projections based on your current withhholdings and the new rates and filing status to help plan for your 2018 tax filing in a more intelligent manner.


AMT & Estate Tax Remain


The Alternative Minimum Tax remains.  However, the exemption has been increased to $500,000 for single taxpayers and $1 million for couples.  This change is expected to result in fewer taxpayers being hit by the AMT tax.


The new tax law doubles the estate tax exemption to $11.2 million for single filers and $22.4 million for joint filers. This change will only affect a small percentage of the American population  as effective estate planning and the increased exemption will leave a very small percentage of taxpayers paying this tax.


Affordable Care Act Individual Mandate Gone


In 2019 the tax (individual health mandate penalty tax) that was imposed for healthcare under the Affordable Care Act (often called, “Obamacare”) will be eliminated.




Be sure you understand the difference between a tax credit and a tax deduction as a credit is a dollar-for-dollar reduction and a deduction is based on your tax rate or a percentage of your taxable income.


Even though the new tax bill appears to overwhelmingly benefit corporations and those who are well established financially–you too can benefit!   Be aware that much of the new tax bill was unfunded and will pass the cost on to others in an “irresponsible” way.


However, you can benefit now and in the future if you take the right steps to make the law work better for you and your family.


The new law provides the opportunity for those who are astute and who are willing to pause and take effective steps to use the new law to their advantage by asking and answering the right questions the ability to achieve at a higher level in the coming years.


How can “I” more effectively benefit from the various changes in the law during the various phases in my life?


How can I manage my finances at this time so that I can put myself in position to take advantage of the various changes in the law?


What can I do to avoid changes in the law that will negatively affect me?


These (and more) are the types of questions that you must ask yourself—and answer appropriately if you are one who desire to take advantage of the new changes in the tax law as opposed to having the new changes in the tax law take advantage of you!


It is the desire of that this discussion has at least got you started on a path to doing what you need to do to make the new tax law work better for you.


All the best as you pursue tax success…


Return to Top


More on Taxes…


Return From New Tax Law to Who is the Creator of


Return From the New Tax Law to Understanding the New Tax Brackets


Copyright® 2014-2018 The Wealth Increaser–All Rights Reserved


Financial Security & Wealth Building

Learn why planning, discipline and patience is critical for your financial success…


After recently returning from Las Vegas, Nevada and having a great time, the creator of thought that the topic of not gambling on your future was a timely topic.  Although investing in the financial markets are somewhat of a gamble, it is important that you plan for long-term success or any success in an appropriate manner.


In this discussion will discuss why planning for your future, having the required discipline–and patience are the cornerstone for you to attain financial success in your future.


You Must Plan for Success


You must plan for your future and that includes knowing where you now stand as far as your finances are concerned.  A monthly cash flow statement will put you in position to know just that.  In addition,  you must know how your credit score is calculated whether it is your  FICO score by Fair Isaac & Company or your Vantagescore by the 3 credit bureaus.


Your financial success also depends on you obtaining the financial knowledge and preparation that is needed on the front end–not “after” you encounter financial difficulty.  It is imperative that you obtain a financially alert mind and not just “financial literacy” at this time if you desire to achieve at your highest levels throughout your lifetime.


You Must Have a Disciplined Approach Toward the Success that You Desire


You must understand that it is your responsibility to do what needs to be done financially throughout your lifetime.


By consistently doing what you need to do you will achieve your goals more efficiently and you will be rewarded for your discipline in the future by having your investments grow and also be able to enjoy life on your terms along the way.  You can reach your “retirement number” and achieve other goals along the way as long as you remain focused and disciplined on a consistent basis.


Above All You Must Have Patience


It is important that you realize that many of your goals will not occur overnight as they will often take time to reach.  This is where your patience will come in as you must use the planning stage to determine the time frame on when your various goals will be reached.  Whether you have short-term, intermediate or long-term goals, you must prepare your mind mentally for the time period that it will take to reach your various goals.


You must not do like others who give up to soon, or lack the mental fortitude to stick it out and make their dreams come true.  By having patience and knowing inside that you will truly reach your goals if you stick to your written plan–you bring comfort, peace of mind and joy–inside of your heart and mind.




By planning for your future, showing discipline on a consistent basis and having the needed patience to reach your various goals you put yourself in a much better position for reaching the success that you desire or the success that you need to attain throughout your lifetime.  You are displaying a serious commitment to improve the living conditions for yourself and your family and you are showing that you are accountable for your future.


In short, you are approaching your future with the attitude of a winner and joy will be in your heart in an everlasting way as you will see success in all that you do.  Will there be setbacks? Absolutely!  However, by taking initiative at this time by planning for your future, showing discipline on a consistent basis and having the needed patience to reach your various goals–success lies in the horizon.


By doing so you are gravitating toward the goals that you see as opposed to remaining where you are, moving slowly toward your goals or worse of all–moving away from what you desire.


In the end (and beginning) you must realize that achieving financial security and effectively building wealth in large part depends on your current and future mindset being in the place where success lives.


All the best as you plan for success in a disciplined and highly effective way as you now have the ability to change your mindset (and future) in a highly beneficial way…


Return to Top


Learn how you can achieve credit and financial success in 3 comprehensive steps…


Return From Financial Security & Wealth Building to Who is the creator of


Copyright®  2014-2018—The Wealth Increaser—All Rights Reserved


Coherence & Wealth Building

Learn how you can build wealth in a more coherent and comprehensive manner by having a more logical and consistent approach…


Ambiguous, obscure, unintelligible, confusing, distracted, mesmerized, dizzying—does any of those terms remind you of your approach toward your finances at this time as you build wealth?


As 2018 moves forward the creator of was in a relaxed state of mind, however with inclement weather across much of the country and particularly the southeast and southwest causing hardship for many—the topic of how wealth building could occur for many in a more cohesive and coherent manner came to mind as a timely topic to focus on.


In this discussion will show you ways that you can achieve wealth building success in a more coherent, logical and consistent manner.  You no longer have to approach your wealth building future in an ambiguous, obscure, unintelligible or confusing manner!


The goal of this discussion is to get you to focus on your financial future in a more understandable, rational, congruent, systematic, organized and possibly the most beneficial of all to you—a more comprehensive manner.


You can achieve much more if you get away from looking at your finances in isolation or an incongruent manner!  


Ok—let’s tie your understanding of your finances together in a cohesive manner so that you can achieve cohesive results.


The starting point for building significant wealth is to know where you now stand financially and personal finance statements will help you assess just where you now are financially—in a very timely manner.


By knowing where you now are financially you can plan your future in a manner that can get you better  short and long term results because you will know your discretionary and disposable income and you will know if you currently have the income to reach your future goals (or new goals) that you have in mind.


You will know if you need to get more income, cut expenses or do a combination of the two—to work toward making your dreams come true.


You must know your credit position and whether you are overburdened with credit or if  you are managing your credit at an acceptable or forward moving level.  By knowing where you are financially you can devise payoff or pay down schedules that can put you on path to reaching many or all of your goals.


Finally,  you must be able to effectively analyze and make improvements on your investment choices, your insurance choices, your tax planning, your emergency fund planning, your education planning, your estate planning and your retirement planning.


It is important that you don’t leave your wealth building future up to chance as you no longer have to approach your finances in ways that can accidentally help your movement toward your goals or accidentally hurt your movement toward your goal achievement.


It is important that you are logical and consistent in your approach as you build wealth!


You can now pursue your wealth building efforts in an intentional manner by approaching your finances from a position of “coherency” as opposed to confusion.


All the best as you pursue a coherent path toward success…


Return to Top


Return From Coherency & Wealth Building to Who is the creator of


Other articles that can help you reach your goals in a coherent manner:


Site Map Realty 1 Strategic Advisors


Site Map The Best Atlanta Real Estate Advice


Copyright®  2014-2018—The Wealth Increaser—All Rights Reserved

Financial Ratios & Wealth Building

Learn how you “CAN” use financial ratios to build wealth by taking Conscious Action Now…


In this discussion will look at a myriad of financial ratios that can lead you closer to the success that you desire.  With 2017 coming to an end and a new year only days away, it is the desire of that this page will serve as an inspiration for you to do more in 2018.  OK, here we go–hopefully won’t bore you too much and you can use the following paragraphs to achieve more in 2018 and beyond!


Rule of 72 Ratio:


Dollar Amount Invested/ Interest Rate

1,000 / 7% = 14.3 or just over 14 years to turn $1,000 into $2,000

1,000 / 14% = 7.1 or just over 7 years to turn $1,000 into $2,000




Lets you know what percentage of your assets are liquid (cash, certificates of deposits, money market etc versus stocks, bonds, mutual funds, home equity etc.) so that you can plan your lifestyle accordingly.


Credit Ratio:


Credit Owed / Available Credit or Credit Balance ÷ Credit Limit = Credit Ratio, for example


500/40,000 = .0125 or 1.25% very low ratio–good

30,000 / 40,000 .75 or 75% very high ratio–bad


To further drive it home, if you had a $5,000 credit limit and held a $2,000 balance, your credit ratio would look like this for one creditor:


2,000 ÷ 5,000 = .4, or 40%


If you had a $25,000 credit limit with all of your credit cards and monthly installment payments and held a $12,000 balance, your credit ratio would look like this for all of your creditors:


12,000 ÷ 25,000 = .48 or 48%


Relevance: The lower your credit ratio the better as lenders use the credit ratio to grant you more credit or provide you credit at the best rates based in large part on how you use credit and your payment history.  See the chart below to determine your current risk level!


Credit Ratio                                      Risk      
< 30%                                                Low (ideal)
30-49%                                              Medium
50-75%                                              High
76% or more                                    Very High


The types of credit available include: Revolving Credit, Installment Loans and Open Credit. 


Finance Company Accounts and Mortgage Loans will fall in the above categories, however realize that some lenders categorize them separately as well.


Debt to Income Ratio:


 Total Debt / Total Income


Also called Front End Ratio


Let’s say you have $10,000 in Gross Monthly Income (your income before any taxes or other deductions are taken out – your actual paycheck will likely be much less).


What can you afford as far as your home purchase is concerned?


x / 10,000 = .28

2.800 / 10,000 = .28 which is the maximum debt you could have on the front end (excludes housing payment)

X = 2,800  max on front end


You may not be approved for a mortgage loan in which the PITI payment exceeds $800 per month if you maxed out your front end ratio of 28 percent.  On the flip side, if you had zero outstanding balance you could possibly qualify for a loan up to $3,600 per month!


On the back end your maximum debt would be $3,600 calculated as follows:

x / 10,000

3,600 / 10,000  = .36 which is the maximum debt you could have on the back end (includes housing payment)


If you maxed out your credit on the front end (bills totaling $2,800 per month) you would only have $800 available for housing payment (includes principal, interest, taxes and insurance or PITI).  If you had bills greater than 10 months averaging $400 per month you would qualify for a loan up to $3,200 per month.


What that means in purchasing power or how much home you can afford based on this ratio depends on the current interest rates, the local property tax rate, the amount of your down payment, mortgage insurance, and homeowners insurance.  In other words, how you manage your finances and your particular market are the key factors that can lead to you purchasing the home of your dream.


The amount that you will be approved for will vary over time and across different locations as the market interest and where you are will play a factor.  However, always realize that high debt on the front end will bring down the amount of house you can afford based on the conventional ratio breakdown of 28% on the front end and 36% on the back end.


To further drive it home let’s look at another example, monthly debt in excess of one year divided by gross monthly income is your debt to income ratio or front end ratio!  If you earned 3,600 per month and had credit card and car payment totaling $800 your front end ratio would look like the following:


800/3,600 = .22.22 or 22% on the front end for conventional–good


1,300 / 3,600 = .36 or 36% which only leaves $500 per month available for housing payment on the back end for conventional–probably not enough for quality housing in most markets



The front end and back end ratios provides you the ratio that you need to determine the level of debt that you are carrying in relationship to your monthly income.  You don’t want to overextend yourself with debt and make life more difficult and painful while here on earth.  You must know how to manage your credit wisely and pay your debt in a timely manner.

You also don’t want to put yourself in position where you are house and/or car rich and cash poor–your life will be a bore!  Use these very telling and powerful ratios to make life as enjoyable as possible for you and your family while you are here on planet earth.


Housing and Debt to Income ratio:


Also called the back end ratio


Monthly debt in excess of one year plus expected housing payment (PITI)  divided by gross monthly income, for example


1,200/3,600 = .33 or 33%


To further drive it home, the back end ratio is the total debt to income ratio, which includes your housing debt AND other debt owed for at least the next 10 months or so, by you the borrower.


Back End Ratios may not exceed 36% in most cases.


Some Qualified Mortgages (FHA) may let the Back End Ratio be as high as 43%.


If you the buyer have $1,000 worth of other debt and monthly income of $4,800 (car loan, student loan, credit card, etc.), how much can you afford?

1,000 / 4,800  = 21.7%–Good on the front end ratio for conventional


2,000 / 4,800 = 41.6%–Not good on the back end for conventional but some lenders could possibly still make it happen for you


As far as FHA goes, you would qualify with both the front end  ratio 31% and the back end ratio 43% because both of your ratios are lower than those percentages (21.7% and 41.6% respectively).


When your other debt is taken into consideration, you the buyer(s) can afford a home with a PITI payment of $1,000 using and FHA loan and you would not qualify for a conventional loan according to the financial ratio guidelines.  However, you could possibly qualify for a conventional loan even with those ratios if a conventional lender worked with you to make it happen.


If you are like most buyers, going up to a 36% debt to income ratio is not comfortable!


A 43% back end ratio is even more difficult to handle, even for the most frugal purchaser(s).


However, a better school district and/or being closer to your job or family members may well be worth the trade off!  It all depends on what you value and your ability and willingness to put into place a process that allows you to know your cash flow position up front so that you can better plan for your living conditions in the future.


Do you have an adequate emergency fund and have you planned for your future in a comprehensive way?  By answering these questions you can get on a path toward making the best decision for you and your family.


If you like to eat out, entertain and save abundantly for your future you might determine that a 43% ratio is too high a price to pay at this time and you might postpone your home purchase until you could get more income coming in on a monthly basis or you paid off certain debt.  Your lifestyle and plans for your future will play A LARGE PART IN DETERMINING THE BEST APPROACH TO TAKE.


The temptation may be great and you may want to go for a 43% back end ratio. What would that look like with our current example?


You still would only qualify for a loan of $1,060 (2,160/4,800) unless FHA decided to allow you to go higher or you paid off some debt or increased your monthly income.


NOTE: When you decide to purchase your home where you will seek a loan, remember that Lenders will pull your credit reports and ask for 2-3 months of your past bank statements.


If there is a sudden, large amount of money added to any of your bank accounts, or if your credit card balances or car loan are paid off just prior to applying for a loan, this sends up a red flag and some lenders will be hesitant to offer you a loan without a reasonable explanation of why you took those actions.


Lenders may ask for a gift letter, indicating that the money does not have to be paid back, and may request a larger down payment, such as 10% instead of 3.5% or 5%.


It is wise for any buyer to get their financial accounts in shape “well before” applying for a mortgage loan so that they will not be disappointed! 


The critical back end ratio shows your ability to take on more debt (your new housing payment).


Mortgage lenders generally will not lend more than what would constitute 28% of a person’s monthly gross income before adding their monthly home payment to the back end.


If there is other debt, mortgage lenders will generally not originate a loan that causes a borrower’s total debt to income ratio to exceed 36% (mortgage plus other debt).


Conventional 28% front end and 36% back end, or


FHA 31% front end and 43% back end


Certain circumstances allow lenders to go higher…


Sales Price to List Price Ratio:


Sales price of a home divided by what the property listed for, for example


290,000 / 310,000 = .9355  or 94%



By calculating the ratio of sales price to list price of recent sales in your target market (the area where you plan on buying your home or listing your home for sale) you can get a better feel of what you should offer as purchase price, or if you are selling—the listing price:


Is it 90%? 95%? 103%?


By knowing that ratio you put yourself in position for a more realistic purchase price offer or sales price listing.


Loan to Value Ratio:


Loan amount / purchase price or refinance value


For example,


288,000 / 360,000 = .80 or 80%


You may also see CLTV or combined loan to value which simply means all of your outstanding loans (2nd mortgage, home equity loan etc.) divided by purchase price or refinance value



By knowing your loan to value ratio you understand immediately how much debt you are taking on from a percentage standpoint.  When you get to a certain equity position you may also be able to eliminate PMI or MIP from your monthly housing payment so it is important to know this number.


Investor Ratios


Return on Investment with Appreciation Ratio:


 Cash Flow before Tax + Principal Reduction + Tax Saved + Appreciation  / Cash Invested 

6,000 + 3,000 + 3,500 + 5,000 / 85,000 =  20.59%


Return on Investment without Appreciation Ratio:


Cash Flow before Tax + Principal Reduction + Tax Saved  / Cash Invested

6,000 +3,000 + 3,500 / 85,000 =  14.7%


The following ratios are used to Value Real Estate & the Relative Value Depends on Your Particular Market, therefore what is acceptable in one area may not be acceptable in another area, use with caution in mind.


Capitalization Rate Ratio:


Net Operating Income (from Schedule E or elsewhere) / Purchase Cost

30,000 / 390,000 = 7.7%

 Limitation: does not take into account financing


Cash on Cash Ratio:


Cash Flow before Tax / Cash Invested

6,000 / 85,000 = 7.1%

Is the strongest Method, it does take into account income, expenses and financing


Price per Square Foot Ratio:


Cost / Number of Square Feet = price per square feet

300,000 / 3,000 = $100 per square feet

Limitation: does not take into account income, expenses and financing


Price per Unit Ratio:


Cost / Number of Units = price per unit

300,000 / 4 unit quadplex = $75,000 per unit

Limitation: does not take into account income, expenses and financing


Gross Multiplier Ratio:

Cost / Gross Operating Income

300,000 / 50,000 = 6%

Limitation: does not take into account  expenses and financing


NOTE: the above numbers are rounded for illustrative purposes




For those who invest in rental property it is imperative that they understand the amount of CASH FLOW that they will receive (be sure to look at schedule E of the seller(s) tax return prior to purchase), they estimate the APPRECIATION that is expected or projected, they know the amount of PRINCIPAL REDUCTION that is expected at various intervals of the loan and they know the amount of DEPRECIATION (and how to break down the various elements of depreciation for their greatest benefit).  Always remember that you cannot depreciate land on rental properties.


By properly analyzing the rental property that you plan on purchasing and utilizing the appropriate ratios you CAN get a better appreciation (no pun intended) of the returns that you will or potentially can achieve based off of your purchase.


You can then know in the future if selling your property, refinancing your property, continuing to hold your property or doing a 1031 exchange will serve your best interest.  You also want to have an awareness of the tax implications at the time of purchase or preferably before you purchase so that you will have no future surprises.


Will you be taxed at ordinary income or capital gain rates?  What is your basis and what will you pay taxes on after depreciation.  You must understand that depreciation recapture will occur whether you take the depreciation—or you fail to do so.  Will you plan to avoid taxes in the future or will you just jump into your real estate investing career with no real plan of action as it relates to your tax implications that you will face at the time of your purchase, yearly and when and if you sell in the future?


Do you know about form 3115 and how you could possibly amend your tax return to get the depreciation that you overlooked if you currently own investment property and you failed to claim the depreciation?    By claiming the depreciation that you were entitled to you in essence put cash back in your pocket in a real way!  These are just some of the more pressing questions that you must ask–and answer on the front end if you are to maximize your rental property purchase.


Even if you purchase and quick turn properties for short term gains, you must realize that there will be tax implications (ordinary income rates if sold in less than a year and capital gain rates if sold after a year).  Whether you quick turn for a profit or buy and hold for cash flow and appreciation you must consider the combined tax implications at the federal as well as at the state level.




It is important that you use financial ratios (where and when appropriate) so that you can maximize your returns and minimize your mistakes during your lifetime.  By utilizing the above ratios among others–you can put yourself and your family on a positive path toward building wealth.


Always realize that there are many other financial ratios available at the corporate as well as personal level that may also be of benefit to you and your family.  In short, you don’t want to stop with what you have learned on this page.  Continue to pursue better ways that can lead you toward success in a more timely manner and use financial ratios where appropriate to help along the way.


All the best to applying financial ratios in a manner that will fill up your nest…


By taking Conscious Action Now–this page and site will show you how…


You CAN achieve lasting success–if you at this time make a conscious decision to give it your best…


By using the ratios appropriately you CAN put procrastination to rest…


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Risk Tolerance & Wealth Building

Learn why knowing your “risk-tolerance level” can help you build your wealth more effectively and efficiently in the coming years…


As the year of 2017 comes to an end in what seemed like a very rapid pace, many visitors to this site are contemplating ways that they can reduce their risk and achieve more in the coming year(s).


For those who desire to build wealth more effectively and efficiently it is important that you have a comprehensive view of your future and it is also important that you know the risks that you face in the current marketplace and you know your “risk personality” as you move along in the future and choose from an array of investment choices.


In this discussion will show you areas of concern that you should have in mind as you build wealth.  At the same time don’t let any of the risks paralyze or delay you toward getting started or continuing to move toward your wealth building goals in a way that best serves you and your family.


However, you must be aware that various risks exist—and it is appropriate that you plan in advance to help mitigate the risks or reduce the risks to an acceptable level so that you and your family can achieve more in the coming years.


Identity Theft Risk


With the Equifax breach in the spring of 2017 fresh in your mind, you now fully realize that identity theft is a real concern as over 100 million people in the United States alone was affected with identifying data of various types floating around in the hands of who knows who!


It is important that you know your current credit profile at this time so that you can make corrections and better protect your identity in the future.


You can go to and get all three of your credit reports at once and see if they are accurate and a true reflection of your credit usage at this time as you can get the free report from each agency once per year.


After one year you can use a staggered approach and pull your credit report every four months from TransUnion, Exquifax and Experian to further keep a handle on your credit.


You can also visit to check on your free annual credit report as well.  A free report will normally be received by you through the mail in 5 to 7 days.


If after viewing your credit report(s) you believe you are a victim of identity theft you can:


1)    Visit  (part of the FTC or Federal Trade Commission) to determine the steps that you can take, and

2)    Call the identity theft resource center at 888-400-5530 for free help


You can also take preventive measures to stop or at least slow down potential theft of your identity by signing up for services that “regularly scan” your credit reports and will alert you by text or e-mail when certain changes to your credit report occur.


Keep in mind that some services will only scan one of the three credit bureaus, however you want to choose a company that analyzes all three or at a minimum will notify the other two if certain changes occur!


You have until January 31, 2018 to enroll in Equifax TrustedID Premier product that scans all three credit bureau reports for free for one year or you can choose another company—just realize that there will normally be a monthly fee.


CreditKarma is a free service, however it utilizes TransUnion and Equifaxbut not Experian and you can get account activity and a VantageScore credit score from TransUnion and Equifax if you choose to utilize this service.


Many credit card companies, banks and insurance companies also have services that monitor your credit so keep that in mind as well.  However, they may not monitor your reports from all three credit reporting agencies.


In addition, you can consider a credit freeze (new creditors cannot view your reports to evaluate your eligibility (or shall I say the eligibility of those who desire to commit fraud against you) for a credit card, loan or other product such as insurance that requires a credit check and you are given a PIN number to unfreeze at time of your choosing and the freeze time frame is unlimited but is regulated by your state and a small fee is charged to freeze and unfreeze) or credit lock (bar new creditors from using your reports for as long as you are enrolled in the program.


If you are a victim of identity theft a credit freeze is normally free (police report normally needed).


In addition, “fraud alerts” could be of possible benefit to you.   A “fraud alert” notifies lenders that they should take extra steps to verify your identity, however lenders are under no legal obligation to comply.


You can place a free “initial fraud alert” on your credit report even if you are not a victim of identity theft.  An initial alert lasts just 90 days, so you would have to keep renewing the fraud alert.


If you are an identity theft victim you would qualify for a free extended fraud alert, which lasts seven years!


A credit freeze also prevents others from opening an SSA account online and you can unfreeze “only” your Equifax report to create an online Social Security Administration account online at account.


In addition to traditional lenders, landlords, utility companies, insurance companies and wireless phone companies among others may require a credit check—therefore use caution with who your provide your personal information and verify that they are who you think they are.


Market Risk


Whenever you invest in a particular sector of the economy you will face market risk.  Whether, stocks, bonds, real estate, currencies etcetera, you will have to expect that there will be some risk that you will have to accept—yet you must balance that risk against your personality and your future goals.


Investment Risk


You must know that investment risk will exist whether you invest in stocks, bonds, mutual funds, oil and gas and/or other more exotic type of investments, therefore it is important that you know your investment personality so that you can create an appropriate investment strategy that will take you toward your goals.


  • Conservative (for example 40% cash/money market and rest in market activities)


  • Aggressive (for example 20% cash/money market and rest in market activities)


  • Moderate (for example 60% cash/money market and rest in market activities)


  • Middle of the road (for example 50% cash/money market and rest in market activities— terminology)


Does your investment style represent any of the above or are you unsure if you even have an investment style?


Keep in mind that in this discussion market activity refers to stocks, bonds, mutual funds, real estate including REIT’s and direct investment in rental properties or purchasing real estate to turn a profit, currencies, options,  oil and gas investment and other market investments and activities.


Do you know what you take in and pay out on a monthly basis as far as your income and expenses are concerned?


Do you know how to manage your credit in the best manner possible throughout your lifetime or is it a mystery to you?


Do you have a properly funded emergency fund and have you looked at and planned for your financial future in a comprehensive manner based off of the above analysis?


By doing all of the above you put yourself in position to choose among the options available in a manner that best serves your long-term goals and at the same time you make life more enjoyable along the way.


Political Risk


Which political party best serves your interest as far as your finances are concerned?  Regardless of the party in charge you must balance your future goals against the political risks that you face and know that what is in effect now to your benefit or disadvantage—does not mean that will be the case in the future as there is an ebb and flow in the political arena as it is in all areas of life.


What will affect you and your family at the local, county, state and federal level as it relates to your finances regardless of party or who is in charge and how can you best plan for what will affect you?


Regulatory Risk


How are the markets being regulated in the areas of most concern to you?  Are there environmental concerns, financial market concerns, housing related concerns (and many others) and how will the regulation or lack thereof affect you and your family?


Economic Risk


Is the market rising or headed toward disaster?  No one knows the exact timing of market activity that can be a great help to you and your family or can cause great hardship for you and your family, however you can plan for the uncertainty that lies ahead in the current economy by approaching your finances in an intelligent, consistent and proactive manner so that you can guard against economic uncertainty.


Social Risk


The society in which you live in will also present you with risk.  Even if you are in the same country or state—risk will vary based on how the society in which you live operate as it relates to financial and other activity that you take part in on a daily basis.


Are you in a consumer driven society—or are you in a society in which saving and planning for tomorrow is not only stressed, but also acted upon by the majority of the population.


If you are in a consumer driven society you must be more disciplined and you must know that it is you who must take responsibility of your finances and not let marketing, what others are doing and other societal factors take you in the wrong direction as you move toward making life more enjoyable for you and your family.


Technological Risk


With technology advancements moving along at breakneck speed it can often lead you to wanting to buy the newest and more expensive technology products on the market.


As it relates to risk, technology has hurt as well as helped in the financial arena as time-saving on labor intensive activities have been a major success. 


The signing of contracts and other documents that once took weeks using the postal system can now be done in hours.


On the other end of the spectrum, identity thieves and other unscrupulous players can now perform their activities from a distant and in many cases get away with their mischief.


Be sure you are aware of scammers, identity thieves and others whether by technological means or face to face.


At the same time be sure to use the technological advances to your benefit—keeping security in mind at all times.


Legal Risk


You must be aware of the tax code and how it will affect you and your family.  In addition you must be aware of your rights as a consumer as it relates to credit and all of your financial affairs.


If you are or will be a victim of identity with the filing of your federal tax return the IRS may issue you an IP PIN (Identity Protection Personal Identification Number) that will in most cases protect your from the fraudulent filing of your federal taxes by identity thieves in the future.


If your social security number has been compromised or you suspect that you are a victim of tax related identity theft, there are steps that you can take including the following:


 File a report with local police

 File a complaint with the Federal Trade Commission (FTC) at or

the FTC Identity Theft Hotline at 1‐877‐438‐4338


 Contact one or more of the three major credit bureaus to place a fraud alert on credit  records


o    1‐800‐525‐6285

o   1‐888‐397‐3742

o  1‐800‐680‐7289


 Close any accounts opened fraudulently

 Respond immediately to any IRS notice(s) by calling the number provided

 Complete IRS Form 14039, Identity Theft Affidavit, then mail or fax it according to the  instructions

 Continue to file your return and pay your tax if needed; even if it is necessary to paper‐file returns.


Always keep in mind the fact that:


1) the IRS will never initiate contact with you by email messages to request personal or financial information

2) the IRS will never initiate contact with you by text messages to request personal or financial information


In addition, you must know your legal risks in other areas as you must know your rights to sue, arbitration clauses as opposed to your right to sue that may be found in some agreements, how to use the consumer finance protection bureau and other entities that will allow you to make legal maneuvers that can reduce the risk of loss to you and your family when you are being taken advantage of–or otherwise feel you are being dealt with unfairly!




There are many risks involved along the way as you build wealth.  This discussion has hopefully opened up your mind to some of the risks that may be present as you build wealth.


However, you must not take to heart the risks that lie ahead and not move to action in a manner that takes you toward your wealth building goals.  Your inaction at this time guarantees that nothing or little will happen as you move forward.


Be sure you take precautions against identity thieves by creating strong password for your accounts and consider using password organizers to generate and store passwords as remembering passwords can get out of hand if you have a large number of accounts and online activity.


It is important that you are aware of the risks that you will or might face in the future, however you don’t want to suffer from paralysis of analysis and not take the necessary action that will move you closer toward your future goals.


You must be aware of how you “allocate your investment activity” among the various financial sectors and markets to help reduce your risk.  Or another way of looking at it is you must be properly diversified among the various sectors of the economy and in particular the markets and types of investments that you now make or will make in the coming years.


All the best as you reduce your risk and achieve lasting wealth building success…


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