3 common buyer’s remorse purchases (and how to avoid them)

So you spent a small pile of money on something you THOUGHT you wanted — only to realize later you could have gone without it.

Congrats! You have buyer’s remorse. It’s not fun BUT there are ways to prevent it. I want to show you how.

• What is buyer’s remorse?
  • Big purchase #1: Buying a house
  • Big purchase #2: Buying a car
  • Big purchase #3: Getting a degree
• How do I prevent buyer’s remorse?
• What if I have buyer’s remorse now?
  • Cooling-Off Rule
  • Credit card protection
  • A La Carte Method
• Earn more money for any purchase

What is buyer’s remorse?

Buyer’s remorse is the feeling of regret you get after making a purchase.

Having devoted my life to helping people with personal finance and development, the subject fascinates me to no end. Why do people make purchases that they regret?

So a while back, I posed the question to my followers on Twitter. After reading through all of the responses, I’ve found that buyer’s remorse typically happens after BIG purchases. The most common are:

1. Buying a house
2. Buying a car
3. Getting a degree

That’s why I want to go through each of these purchases with you and show you exactly how you can avoid buyer’s remorse for them. Later, I’ll also show you what to do if you’ve already made a purchase you regret.

Big purchase #1: Buying a house

Aside from things like marriage or having kids, buying a house is the biggest decision an average person will make.

And yet, I’m amazed at how lightly people approach it when they’ll obsess over things like cutting out lattes to save money.

They’ll rush into it without much research or considerations to the alternatives … why? Simple: It’s an invisible script — a guiding belief so deeply ingrained in society and culture that we don’t even realize it’s there.

When the truth is you probably don’t need to buy a house. Don’t believe me? Here are some of the biggest myths surrounding real estate:

• “I’m throwing away my money if I keep renting!” WRONG. People who say things like this don’t take into account the “phantom costs” of owning a home. Those are things like home maintenance and repairs, property taxes, insurance, HOA fees, and utilities that fall on YOUR shoulders to address when you own. Home values may also not rise enough to give you the equity you expect.
• “I can take advantage of the tax savings!” This doesn’t even make any sense. Even if you deduct a good amount of your mortgage interest from your taxes, you’d be deducting money you’d ordinarily never spend.
• “Real estate is a great investment.” False. Yale economist and Nobel laureate Robert Shiller discovered that from 1890 to 1990, the return on residential real estate was about zero after inflation.

You might have been told that you need to buy a house after college or when you get married. The reality is there isn’t a right time that’s good for everyone. There might never be a time for you — and that’s okay.

If you think you really DO want to buy a house though, make sure you check out my articles on how to buy a house and real estate investing myths to make sure you’re making the right decision.

Big purchase #2: Buying a car

One of the biggest reasons buying a car can turn into a HUGE case of buyer’s remorse: People don’t buy for the long haul.

Instead, they get caught up in things like how flashy the car will be and how good it looks. They treat a car as a status symbol rather than a way to get from point A to point B.

If you want to buy a car you need to prioritize getting a reliable car that you’ll be able to drive for at least a decade.

Cars are a long-term purchase. They cost a lot of money. That’s why you’re going to want to get one that lasts a while, since it’s only going to get worse and less valuable over time.

If you want even more information on buying a car, be sure to check out my best articles on the topic below:

• Find out how much car you can afford
• Should you buy a used or a new car?
• The best time of year to buy a car

Also be sure to check out this video where I show you how to buy a car the Ramit way.

Big purchase #3: Getting a degree

Ah college. The time for questionable decisions, all-nighters with unhealthy amounts of energy drinks, and dorm roommates with weird hobbies.

That’s me in 2002 at Stanford — looking suave as usual

It’s also a time where people find themselves with a massive financial albatross known as student loan debt. In fact, the average college graduate leaves school with about $37,000 in debt. It’s even more than that for post-graduate education.

These numbers can seem insurmountable. BUT there’s hope. There’s actually a system to help you pay off your debt painlessly.

How? Pay more each month.

This might seem counterintuitive, but it’s true. Student loans are huge amounts spread over a long period of time. So you can save significant amounts of time AND money by paying off a little each month.

Imagine you have a $10,000 student loan at a 6.8% interest rate with a 10-year repayment period. If you go with the standard monthly payment, you’ll pay around $115 a month. But look at how much you’ll save in interest if you just pay $100 more each month:

MONTHLY PAYMENTS	TOTAL INTEREST PAID	YOU SAVE
$115	$3,810	$0
$215	$1,640	$2,170
$315	$1,056	$2,754
$415	$728	$3,082

From the chart above, if you pay just $100 more a month, you could save $2,170 on your student loans and shave time off of your student loans.

For more insights on paying off your student loans, be sure to check out my video addressing a reader question about just that.

Of course, you can prevent buyer’s remorse for college if you don’t have to pay for it. That’s what I did when I developed a system that helped me earn more than $100,000 in scholarships for Stanford.

How do I prevent buyer’s remorse?

As the adage goes, prevention is better than the cure. And there’s a great solution for if you want to prevent buyer’s remorse: Only spend money on things that you love — and forget the rest.

This is also known as a Conscious Spending Plan, and it can help you save money for the things you love and live your Rich Life.

I have a friend who leverages this to great effect by spending over $21,000 a year partying and going out.

I can already hear some of you screaming from here … but it’s true. Let’s say he goes out just four times a week to dinners and clubs and spends $100 each night (conservative estimate for my friend). That’s $400 a week!

At first glance, this can seem ridiculous. However, what you don’t realize is he makes a healthy six-figure salary. He’s also invested a lot into his 401k and his diversified portfolio of investments.

So say he makes $210,000 a year net. That means his going-out money accounts for about 10% of his income — which is totally reasonable.

If he has the money, and going out makes him happy, why shouldn’t he be able to spend money on it?

That’s the same framework you can use when you create your own Conscious Spending Plan.

Setting up your system is simple too. It’s all about:

1. Automating your finances
2. Knowing where your money goes so you’re in complete control of the situation

Automating your finances allows your system to work for you and passively do the right thing instead of you constantly wondering if you have enough money to spend. Or, getting your credit card bill each month, shrugging, and saying to yourself, “Yeah, I guess I spent that much.”

And it’s simple: at the beginning of the month, when you receive your paycheck, the money is immediately sent to where it needs to go through automatic systems that you have set up already.

Some spending recommendations for your system:

• 50%-60% fixed costs: This includes things like utilities, rent, internet, and debt.
• 10% investments: This includes your Roth IRA and 401k plan.
• 5%-10% savings: This is money that goes towards things like vacations, weddings, home down payments, and unexpected expenses.
• 20-35% guilt-free spending: Fun money! Spend this on anything you want from nice dinners to movies.

Why automatic?

Because as humans we have incredibly limited willpower. It’s so limited in fact that it can render things like paying bills and putting money away in your savings each month a very difficult task.

Automating your finances subverts this by allowing you to save money without ever having to do it yourself.

If you want to find out more on how to automate your finances, check out my 12-minute video explaining it here:

What if I have buyer’s remorse now?

If you bought something and find yourself in the unforgiving throes of buyer’s remorse, that’s okay. There are a few ways you can tackle this:

Cooling-Off Rule

Did you know that the government actually has a law that can help you return items you’re not happy with?

It’s called the “Cooling-Off Rule” and it “gives you a three-day right to cancel a sale made at your home, workplace, or dormitory, or at a seller’s temporary location, like a hotel or motel room, convention center, fairground or restaurant” (according to the Federal Trade Commission).

When you make a purchase during one of the above instances, make sure that your seller gives you a cancellation form for as well as a receipt. That way if you wind up with buyer’s remorse, you can send them the cancellation form within three days.

After which, the seller has 10 days to refund your money.

Of course, this rule is pretty specific and doesn’t apply to big purchases like homes and cars. However, it can come in handy in the above situations.

If Uncle Sam can’t help you out though, you might be able to turn to your own personal credit card army to help you.

Credit card protection

Credit cards get a bad rep — and for good reason. However, if you’re a responsible credit card owner, there are a ton of hidden benefits and perks you can leverage.

One of the best benefits: Credit card protection.

When you make a purchase that you’re not happy with, your credit card will fight for you in order to help get your money back.

For example, I canceled my cell phone plan a while back and got charged a $160 “early cancellation fee” — which was weird because I had already negotiated out of a cancellation fee when I signed the contract.

So I called the customer service rep for the phone company, informed them of this, and they said they wouldn’t charge me … but they did it anyway.

That’s when I decided to call my credit card company and tell them I wanted to dispute the charge. Guess what happened?

Two weeks later, the complaint was resolved in my favor.

Moral of the story: Your credit card company is on your side when it comes to disputes. In fact, the credit card company fights the merchant for you.

A La Carte Method

This is a GREAT method to save money on services for which you have a subscription, like:

• Netflix
• Gym memberships
• Spotify
• Amazon Prime
• Magazines

A conservative estimate shows that we spend over $1,800/year on subscriptions alone.

The convenience is undeniable BUT this is a case where the convenience also works against you.

Take a gym membership for example. Maybe you haven’t been to the gym in a while. So you feel guilty that you’ve been paying money for an expensive membership every month but you still keep the membership because that’s easier than saying you don’t actually use it.

Read that again. It’s the key to cutting your spending through your subscription items you’re probably not getting very much value out of.

Which is why I suggest the A La Carte Method.

The basic idea of this system is to cancel all your discretionary subscriptions — magazines, Spotify, Netflix — and buy what you need a la carte.

• Instead of paying for a ton of movies and shows you’ll never watch on Netflix, buy only the shows you want to watch on Amazon or iTunes for $1.99
• Buy a day pass for the gym each time you go (around $5 – $10)
• Buy songs as you want from Amazon or iTunes for $0.99 each

This FORCES you to be conscious with your spending. By utilizing the same principles that make automating your finances great, you will have to actively think about each charge you make when it comes to buying a song or TV show.

If after about two months, you find yourself spending enough money on these items to justify the subscription, by all means pick it up again. If not, then you’ve saved yourself from some major buyer’s regret.

Earn more money for any purchase

The best antidote to making any purchase without regret is having the money to spend.

That’s why I created something for you that I think you’ll really like: The Ultimate Guide to Making Money. 

In it, I’ve included my best strategies to:

• Create multiple income streams so you always have a consistent source of revenue.
• Start your own business and escape the 9-to-5 for good.
• Increase your income by thousands of dollars a year through side hustles like freelancing.

Download a FREE copy of the Ultimate Guide today by entering your name and email below.

3 common buyer’s remorse purchases (and how to avoid them) is a post from: I Will Teach You To Be Rich.

Via Finance http://www.rssmix.com/

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7 helpful posts from /r/personalfinance

One of my favorite things to read is /r/personalfinance.

Here are seven of my favorite posts from the sub — and what YOU can learn from them.

7 valuable Reddit personal finance posts

1. “Paying rent isn’t throwing away money.”

If I ever go bald, know it’s because I tore my hair out every time I heard people say this.

From the /r/personalfinance thread:

While it is true that when you buy a home a portion of your monthly mortgage payment will be going to principal, and therefore you are paying yourself in some ways, however, the cost of home ownership is significant. Some of the lesser known costs include the lack of flexibility, stress, the risk of home price declines, home maintenance, real estate taxes, and HOA fees.

These are also known as phantom costs — the expenses you don’t normally consider when you buy a house.

OP also offers a great mental reframing of rent, saying, “As human beings, there are several things we need to survive, including food and shelter. Paying money for rent is no more a ‘waste’ of money than paying for food is.”

For more, be sure to check out my article on real estate investing myths and my post on how to buy a house.

2. “Your parents took decades to furnish their house.”

It’s easy to look at someone successful and compare yourselves to them. You start feeling like you aren’t doing enough to reach your own goals and might try to rush things to achieve their level of success.

In reality, the most successful people devoted a lot of time and energy into getting to where they are — and you should do the same.

That’s what’s at the heart of this thread about the importance of patience when it comes to your goals:

If you’re just starting out, remember that it took your parents decades to collect all the furniture, decorations, appliances, etc you are used to having around. It’s easy to forget this because you started remembering things a long while after they started out together, so it feels like that’s how a house should always be.

It’s impossible for most people starting out to get to that level of settled in without burying themselves in debt. So relax, take your time, and embrace the emptiness! You’ll enjoy the house much more if you’re not worried about how to pay for everything all the time.

So whether you’re saving for your wedding or trying to get out of debt, know that these things take time and that’s okay. Once you stop worrying about trying to accomplish your goals quickly, you can focus your mental energy on the things you can control to accomplish your goals.

3. “I found out a coworker with the same job is making twice as much as me.”

A fascinating story about a research assistant who finds out she’s being paid MUCH less than a coworker who joined six months after she got the job.

When she raised the issue to management, her boss tried pulling some corporate trickery that’s common with bad companies:

One week later she called me into her office. She absolutely berated me for thinking I could move into the coordinator position for which I was already doing the work, and complained about my work performance. Last month I had an evaluation, and received very high praise for my performance, and there has not ever been complaints about my performance in the past. All in all, I assume she was making excuses not to increase my pay.

Eventually, she was able to find a job at another place that offered her more than she was currently earning — which led to a bidding war between her old boss and her new employer (aka the best position you could possibly be in as a job seeker).

A few lessons for job seekers from this post:

• Negotiate mercilessly. OP could have just shrugged her shoulders and kept quiet when she found out she could be earning more — BUT she didn’t. She addressed the issue and now has two different companies vying for her work. That’s why it’s always in your best interest to negotiate your salary even if you think you’re earning enough.
• Adopt an abundance mindset. It’s easy to take any job offer that comes your way — especially when money’s tight. OP had two job offers and knew that if one didn’t work out, the other would be there for her. This is also known as an abundance mentality, and it can be a powerful mental shift for the way you approach finances.
• Know your worth. The first step to any salary negotiation is knowing how much you’re worth. While websites like Glassdoor or PayScale can help you get a good sense of this, talking to people in your field about their earnings can give you a sense of what you should be making (like OP did). So don’t be afraid to ask. Top Performers do all they can to know what they’re worth.

Be sure to check out my article on how to negotiate your salary and the Briefcase Technique for more.

4. What to do when a loved one dies.

When tragedy strikes, you find yourself asking questions you’ve never even considered before. This /r/personalfinance thread tries to answer one of those questions: How do I handle my finances when someone I love dies?

While the post deals with money accounts and estate issues beautifully, it also goes into the more lesser known parts of dealing with death, like where to get an urn:

The funeral home won’t tell you this, but you don’t have to buy things like urns and whatnot from them. I chose to, because the prospect of receiving a plastic baggie with my husband’s ashes that I would have to deal with was horrifying. A friend bought an urn for his father’s ashes on Amazon. There are options that are cheaper than the funeral home, but I chose to pay the obscene markup so that I wouldn’t have to deal with the logistics.

Overall, it’s a great read for anyone — even if you haven’t suffered any personal tragedies. It’s an excellent perspective on life, death, and where our finances fit in between it all.

5. “We decided not to buy a bearded dragon.”

For some, a Rich Life means a new car, ordering appetizers at restaurants, or paying off their debt. For others, it’s a desert lizard chilling out in a reptile aquarium in their living room.

Or at least that’s what one Reddit user thought when he got ready to buy a bearded dragon for his son’s birthday. When he ran the numbers though, he realized that the investment he’d be making into the pet would be much more than he bargained for.

[We] learned it needs expensive UV bulbs that last about 6 months and are about $40 each. Also the electricity cost the run this heat 24 hours can be a drain on the electric bill.

Also the beardie needs to go to the vet every 6 months for a checkup. And finally, food. They have a very diverse diet and can eat up to $15 per week in foods. So I did a total cost analysis for a beardie that lives 12 years and it turned out to be a whopping $10,000.

This is a great example of figuring out what fits into your Rich Life. I’m a big believer in spending on the things you truly love and ignoring the rest. So if you believe that a bearded dragon will help you live your Rich Life, by all means buy that lizard!

However, if you find that the benefits of caring for a reptile native to sweltering deserts for a decade aren’t worth the money and energy, don’t worry about it. Your Rich Life is what YOU make of it.

Also LOL at this robotically cold statement from a commenter: “It’s about ROI on the pet. Dogs are more fulfilling companions than a lizard. At least that’s the case with OP.”

6. What to do when you lose everything in a fire.

Sometimes we do all we can to prevent disaster — but it ends up happening anyway. Case in point: Losing everything you own in a fire like this OP.

One former insurance worker offered their incredibly insightful advice on how the insurance company is going to approach the situation and what OP should do to get the most out of his claims.

The biggest takeaway: Use the truth to your advantage. The commenter then used an example of how one guy used his situation to net him a five-figure insurance claim.

I remember one specific customer … he had some old, piece of shit projector (from mid-late 90s) that could stream an equally piece of shit consumer camcorder. Worth like $5 at a scrap yard. It had some oddball fucking resolution it could record at, though — and the guy strongly insisted that we replace with “Like Kind and Quality” (trigger words). Ended up being a $65k replacement, because the only camera on the market happened to be a high-end professional video camera (as in, for shooting actual movies). $65-goddam-thousand-dollars because he knew that loophole, and researched his shit.

This goes to illustrate a big point when it comes to anything insurance related: Do your research. Once you know the rules of the game you’re playing (whether it be taxes, insurance, or salary negotiations), the better positioned you are to win.

7. Explain it like I’m 18/22/30/40.

These threads are the perfect place to start if you’re completely new to the world of personal finance (aside from IWT of course).  

These guides break down important themes for your personal finance journey at different stages of your life. They are:

• ELI18. For when you’re out of the house for the first time and wouldn’t recognize a 401k if it walked up to you and slapped the fidget spinner out of your hand. Great advice on topics like opening bank accounts, applying for a credit card, and even finding a roommate.
• ELI22. So you’ve graduated college and are out in the “real world.” Scary right? This post makes it a little less scary by providing a solid introduction to taxes, contributing to retirement, and paying off your student loans.
• ELI30. When you’re 30, a whole new crop of financial questions start coming up. How do I handle money when I get married? How do I buy a house? I have a dog … that’s like taking care of a baby right? This comprehensive post helps answer a few of those questions.
• ELI40. The name of the game at 40 and beyond is retirement — rather, it’s making sure your investments are best positioned for when you retire. This post is a great primer on planning for the future and beyond.

Why I LOVE /r/PersonalFinance

You probably wouldn’t say anything if a friend or coworker tells you about a money decision you don’t agree with (racking up credit card debt, buying a house with little income, etc.). But if you saw the same issues on Reddit personal finance, you’d let the world know exactly how you feel about their issues and what you’d do instead.

It’s this level of honesty that helps us see how people really use money — and how to use it yourself.

Whether you’re in your forties planning out your retirement or you’re still in high school trying to figure out what to do with your paycheck, I’m glad you’re here.

I want to give you something that can help you take your personal finances to the next level:

The Ultimate Guide to Personal Finance

In it, you’ll learn how to:

• Master your 401k: Take advantage of free money offered to you by your company … and get rich while doing it.
• Manage Roth IRAs: Start saving for retirement in a worthwhile long-term investment account.
• Spend the money you have — guilt-free: By leveraging the systems in this book, you’ll learn exactly how you’ll be able to save money to spend without the guilt.

Enter your info below and get on your way to living a Rich Life today.

7 helpful posts from /r/personalfinance is a post from: I Will Teach You To Be Rich.

Via Finance http://www.rssmix.com/

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Triple-Net Properties: An Ideal Source Of Passive Income

The following is a guest post by Bill Lanting | Vice President, Commercial Debt, RealtyShares. I met Bill over dinner and asked him to share his wisdom about triple-net properties because such investments sound attractive to someone who doesn’t want to do much managing or remodeling. 

Savvy investors seek the most return for the least amount of effort. Therein lies the appeal of triple-net properties, which offer the chance to work with major commercial tenants while at the same time handing off some of the biggest responsibilities any property owner will face.

Triple-net may align with your goals if you’re seeking a quirky, little-known investment type that is better known for reaping rewards than requiring repairs. If this resonates, read on to find out if this is the right asset class for you.

Triple-Net Property Basics

Triple-net properties hold the tenant or lessee responsible for costs on building insurance, maintenance, and real estate taxes in addition to all other typical fees. Long-term leases are the norm here, often running between one and two decades in length. During the great majority of this time, investors can typically sit back and accumulate profits.

The key to a successful triple-net investment lies in two elements: smart lease structure and finding a reliably profitable tenant. Given that triple-net mandates that the tenant shoulders the cost of maintaining the property, this structure presents a relatively low-risk and profitable investment opportunity.

Investors who don’t want to bother with property management while preserving capital and enjoying an assured income stream often opt for triple-net opportunities. Additionally, investors seeking to replace a 1031 Exchange property may find these deals attractive as well given the relative lack of involvement and regular rent payments.

The tax benefits are particularly appealing if you, as the investor, come bearing significant assets such as a business or house along with the intent to sell these for a major gain. Investors of this type are often able to avoid capital gains taxes by using triple-net leases in a 1031 Exchange.

Moreover, triple-net investors are able to use depreciation as a means of lowering their property taxes. Items that can be depreciated include roads, shrubbery, office machinery, appliances, and additions or improvements such as a new roof.

Which Operators and Tenants Opt for Triple Net?

While you will find office and industrial operators amongst the clutch of triple-net tenants out there, the majority of those who choose this lease structure manage retail properties such as convenience stores, fast-food restaurants, big-box stores, grocery stores, and gas stations. Additionally, government entities and agencies have also proven to be good candidates for triple-net leases given their longevity and consistency.

Money-conscious tenants may also choose a triple-net structure since rents tend to be lower. Moreover, depending on your geographic area, triple-net leases may be the norm for commercial properties.

Triple-net leases are popular among the multi-tenant industrial and retail property sets, users whose expenses can vary greatly. Such a lease structure is also beneficial to the landlord as the costs are passed along to the tenant, who then has the incentive to keep costs low since they are footing the bill.

Business operators may find a stronger incentive to lease rather than buy a given property when seeking to develop a triple-net franchise given that build-to-suit is gaining favor. In such a scenario, once the lease is signed, the property owner builds, for example, a Bank of America. Then the business operator can focus on his core strengths—in this case, operating a neighborhood bank branch.

Because it’s triple net, the business operator maintains the building while paying insurance and property taxes. If everything’s going according to plan, they pay their lease and can still take home their business profit. So everybody’s happy.

Source: Calkain Research, Net Lease Company

What is the Value Proposition?

Investors find plenty of value in triple-net leases given that they can offload responsibility for insurance, maintenance, and taxes while pulling in a steady stream of consistent profit on a long-term lease. Moreover, these leases are typically inked with quality tenants and provide strong tax benefits.

For their part, tenants appreciate lower rents in exchange for taking on the responsibility of management duties. Highest-rated tenants tend to encounter a 6 percent cap rate, which goes up to an estimated 8.5 to 9 percent for less creditworthy parties.

Finally, operators find their own value proposition in the fact that they can sell their property to an investor but remain in the business as a long-term triple-net tenant – a tactic known as a sale-leaseback. By doing this, the operator gets a return on an asset that was previously illiquid.

Why might investors sock their money into an existing triple-net deal rather than just buying and/or developing such a property themselves? Simply put, they don’t have the capital; a Church’s Chicken in a second-tier market can easily go for $2.2 million.

Additionally, while triple-net maintenance is minimal relative to other property types, it’s still too much for some prospective investors. As with all properties, the owner is ultimately on the hook for tax reporting and monitoring building condition—and if the tenant is unable to make rent, the owner is left holding the bag.

Convenience stores are more defensive when it comes to e-commerce. Source: Calkain Research, Net Lease Company

How Can Triple-Net Properties Integrate into a Diversified Portfolio?

RealtyShares has underwritten more than 10 triple-net (NNN) loans. These loans are available only to creditworthy franchisees operating stable nationwide franchises such as Taco John’s, Church’s Chicken, Checkers, and Dog Haus.

Generally speaking, Triple-net opportunities are comparatively stable investments. The opportunities RealtyShares has underwritten have had solid return objectives with lower risk to investors, as opposed to commercial equity deals which have higher return objectives with higher risk potential. To date, we have had no defaults on our triple net deals.

Triple-net investments may be a boon to your bottom line for two reasons. First, stability is tantamount to sustainability. Triple-net properties last longer because these business – such as coffee shops and fast food – are not only impermeable to e-commerce competition but are also more recession-resistant. Second, integrating triple-net properties into your portfolio helps you further diversify, which is essential to avoiding market turbulence.

How Can Individual Accredited Investors Take Advantage of These Deals?

Buy-and-hold is the heart of triple-net investing, and its principal value lies in tenants rather than features. As an individual investor, one is well advised to consider a tenant’s financial profile when calculating its potential.

Favorites among this set include blue-chip tenants including major chain franchisees and national credit tenants, which means a tenant given an investment-grade rating for its financial strength and size. Such ratings signal to property owners that tenants can withstand a variety of economies, including turbulent ones.

Can You Benefit from Triple-Net Properties?

When RealtyShares users opt to invest in a triple-net property, they can expect to enjoy a predictable flow of reliable returns given that said returns are funded by tenants’ rent payments.

However, investors are well advised to remember that purchasing at a lower cap rate – particularly if rental increases are either low or nonexistent – will probably not bring high average returns. This is especially true when one considers inflation. Other factors affecting triple-net returns include tax obligations and miscellaneous property-related expenses.

That said, if you’re seeking tax benefits plus monthly income without the need for a large time investment, this asset class may be right up your alley. In taking an armchair approach to ownership, you can enjoy a stable ROI minus the hassle of property management.

With real estate investing in general, think in terms of market cycles. During the initial days of a recovery, concentrate on development; as that recovery becomes more grounded, shift your attention to balance between high-yield core properties, light-value add properties, repositioning/reconfiguring properties, and entitlement/development properties. Ease off the latter once structural vacancy begins to rise nationwide.

Related:

Buy Utility, Rent Luxury When Investing In Real Estate

Ranking The Best Passive Income Investments

Readers, any of you currently invested in triple-net properties? What are some other upsides and downsides to triple-net properties one should be aware of? I currently have $810,000 invested in RealtyShares, and am always looking for ways to earn passive income.

The post Triple-Net Properties: An Ideal Source Of Passive Income appeared first on Financial Samurai.

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How To Tell If You’re Rich Even If You Think You Aren’t

Store Credit Cards That Are Actually Good

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Boost Your Retirement Fund With These Minor Lifestyle Changes

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The Best Frequent-Flyer Programs of 2018

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Here’s When You Know You’re Still Not Rich Yet

Banks Might Be Charging You Fees for Your Paper Statements

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Find out how much car you can afford with 20/40/10 rule

Knowing how much car you can afford is the first step to buying one.

Also, water is wet.

If you’re confused about how much you should spend, don’t worry. Just use this rule-of-thumb: Spend no more than 10% of your gross monthly income on your car expenses. That includes things like the car payment, interest, insurance, and even gas.

Of course, the 10% rule isn’t exactly a one-size-fits-all solution. That’s why I want to take a deeper look at buying a car — and show you tactics to get the most out of your car negotiations.

• 20/4/10 rule for how much car you can afford
• A different look at buying a car
• Dos and Don’ts of car purchases
• How to buy the car you want with conscious spending
• Earn more money for your dream car

Find how much car you can afford with 20/4/10

I love financial back-of-the-napkin tricks. They can help you roughly answer hairy finance questions quickly so you don’t slave over calculations and waste time.

The 20/4/10 is a good example of one. It can help you get solid starting numbers to help your car buying decisions.

Here’s how it works:

• 20% down payment on the car.

• 4-year car loan or less.

• 10% or less of your gross monthly income goes towards car expenses including gas, insurance, DMV fees, repairs, parking/speeding tickets, and interest payments.

Imagine you want to purchase a new car for $30,000 and you earn roughly $50,000 a year. That means you need to put at most a down payment of $6,000 (20% of the cost) and spend no more than $417 a month (10% of your income) on expenses for it.

A different look at buying a car

It’s funny. People make a huge effort to save on things like clothes and eating out — but when it comes to BIG purchases like buying a house or a car, they make awful decisions and erase any savings they’ve made.

How many times have you seen someone sink a bunch of money into a flashy luxury car with with a bunch of unnecessary additions … only for them to end up trying to sell it with a few years?

What they fail to take into consideration is TIME. More specifically, how long you plan to keep the car before you sell it. It doesn’t matter how good of a deal you get on a new car. If you sell it after just a few years of owning it, you’ve lost money.

That’s why it’s important that you pick a reliable car, maintain it, and drive it for as long as humanly possible. It’s only when you finish paying off the car that the real savings start.

Also, by taking good care of your car over the long-term, you save even MORE money on it — and you’ll have a great car. And there are a few solid indicators to what makes a good car:

• Reliability. When I bought my car, above all, I wanted one that wouldn’t break down. I have enough stuff going on in my life, and I want to avoid repair issues that cost time and money as much as possible. Because this was a high priority, I was willing to pay more for it.

• A car you love. Long time readers know I’m a big fan of conscious spending (more on this later). For me, I knew I’d be driving the car for a long time, so I wanted to pick one I really enjoyed driving.

• Resale value. One of my friends bought a $20,000 luxury car, drove it for about seven years, and then sold it for 50% of the price. That means she got a fantastic deal.

• Insurance. The insurance rates for a new and used car can be pretty different. Even if they’re only slightly different (say, $50/month), that can add up over the years.

• Fuel efficiency. Gas prices seem to always be in a state of flux. Consider a fuel-efficient, or even hybrid, car. Gas mileage is an important factor in determining the long-term value of a car.

• Down payment. This is crucial. If you don’t have much money for the down payment, look to getting a used car. If you put down $0, your interest rate will be much higher. Don’t do this.
• Interest rate. The interest rate on your car loan depends on your credit score. That’s why you want to make sure your credit score is in top shape when you finally apply for the loan.

If you truly want to get the best deal out of your car purchase, you’re going to have to negotiate IWT style.

How to negotiate the price of your car

Negotiate mercilessly with dealers. And if you’re not willing to negotiate, learn how to.

I’ve never seen as many people make bad purchasing decisions as when they’re in a car dealer’s office. If you’re NOT there to play hardball, dealers are going to see that and take advantage of you. It’s their job to do that. And they have years of practice before you ever walk in the door.

Luckily, you have one powerful chip in your stack: the dealer’s quotas.

The best time to buy a car is in December. That’s the month when dealers all over the country are desperate to hit their annual quotas.

This gives you an advantage when you come in to negotiate a car in that month.

Here’s another tip: Have the dealers fight over you.

When I decided to get a car in my last year in college, I contacted over a dozen dealerships, told them exactly what kind of car I wanted, and said I’d go with the lowest price offered to me.

And guess what? The offers came in like an AVALANCHE. I remember brewing up a cup of tea, and watching my fax machine (Don’t make fun — this was a while ago!) light up as different car dealerships tried to convince me to buy from them. It resulted in a bidding war that led to me landing a car $2,000 under invoice.

Try that technique out for yourself. Also make sure you practice and study up for the negotiation. Here are some of my best resources about that:

• How to negotiate better than 99% of people

• The best time of year to buy a car

• Cost vs Value: Should you buy a new or a used car?

Also be sure to check out my video on buying a car below.

The dos and don’ts of buying a car

When you start your car buying journey, be sure to keep in mind my four dos and don’ts about buying a car:

DO buy for the long haul

A lot of people want to prioritize how a car looks over anything else. What color is it going to be? Two-door or four? Can a spoiler be too big?

Never.

But you should really prioritize getting a good, reliable car that you’ll be able to drive around for at least 10 years.

Why? Cars are a long-term investment. This isn’t like a pair of shoes you’re going to wear for a year or two before getting a new pair. A car costs a HUGE amount of money. You’re going to want to get one that lasts a why since it’s only going to get worse and less valuable over time.

Here’s a complicated graph explaining this.

DO find deals for graduates

Plenty of dealerships have great programs for recent grads looking for new cars. These often come in the form of rebates or specialty financing.

Two ways to find these deals:

• Google it. This should really be the first step to anything. Do a simple Google search for recent-graduate car incentive program. Actually, I’ll just do it for you. You’ll also want to specify your city to see your local deals.
• Ask the dealer. When you’re negotiating with your dealership, be sure to ask them what they offer in the way of new graduate car incentives.

DON’T think you need a used car

Buying used isn’t the only way to save money on a car. Over the long term, a new car might actually end up saving you money if you:

1. Pick the right new car
2. Negotiate a low price
3. Drive it for a long time

I’d rather you get a new car that’s reliable than purchasing a used car that’ll break down sooner.

DON’T break from your budget

Set a realistic goal budget for your car and don’t go over it. Other expenses will come up — maybe car related, maybe not. You don’t want to end up struggling because you can’t afford your monthly car payment.

You don’t have to worry about stretching, though, if you have one thing in place: A Conscious Spending Plan.

How to save money for a car

You can make sure you have even more money to get the car of your dreams by implementing a Conscious Spending Plan.

The typical way people look at saving money for a big purchase like a car typically goes like this:

• Step 1: Stop purchasing the things we love like lattes to save money.

• Step 2: Spend money anyway on other things.

• Step 3: Go back to buying lattes.
• Step 4: Feel bad. Repeat first step.

That’s where the Conscious Spending Plan comes in. This is the exact same system my friend has used to spend five grand a year on shoes.

I can feel your eye-rolling judgement through the computer screen now. How can anyone in their right mind spend so much on shoes each year?

Well consider this:

1. She makes a healthy salary.
2. She doesn’t spend much on other things.
3. She has a system in place that allows her to know exactly how much she can spend each month.

But most importantly: She just LOVES shoes.

And her system allows her to buy 10 to 15 pairs of shoes each month — each of them costing around $300 – $500 a pair.

After investing in her 401k and paying off her fixed monthly payments like rent and utilities, why wouldn’t she use her money to buy the things she loves?

You can use the same system to buy a car. Imagine being able to walk into the dealer and driving off the lot in the car of your dreams, resting easy in the fact that you were able to pay for it.

That’s why I want to offer you a free chapter of my New York Times best-selling book I Will Teach You To Be Rich.

In it, you’ll find the exact system you can use that’ll help you both earn more money and start saving for an awesome car.

Enter your information below and get the chapter for free today.

Find out how much car you can afford with 20/40/10 rule is a post from: I Will Teach You To Be Rich.

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How Much Money Do You Need to Be Rich?

Living stress-free and spending time with loved ones were cited as the definition of wealth for many people in Charles Schwab’s annual Modern Wealth Index, an online survey of 1,000 people between age 21 and 75. Meanwhile, just 11 percent of people surveyed said their definition was “having lots of money.”

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7 Reasons to Hire a Tax Return Preparer on Maui

Filing taxes is not as easy as a tax return preparer on Maui makes it seem. Although there are many who choose to file a return on their own, there are myriad reasons why it’s wiser to hire a professional instead. Whether you’re a company owner or an individual looking for tax advice, working with …

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What 20-Somethings Need to Know About Getting Their Financial Lives in Order

A new class of college graduates means millions of young people are entering the workforce for the first time. But between building your emergency fund, paying off student loan debt and investing for the first time, there’s still a lot more to learn. So what do you prioritize? That’s what we’re tackling this week.

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How to Pay for College Without Taking Out Parent PLUS Loans

Older Americans have more student loan debt than ever, but in many cases it’s not because of their own higher education costs. The number of Americans aged 60 and older with student loan debt quadrupled from 700,000 to 2.8 million between 2005 and 2015, according to a report from the Consumer Financial Protection…

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Top Jobs Of The Future For Your Million Dollar Education

While doing research on different types of vacation jobs to try once my son starts going to pre-school, I stumbled across a Money Magazine article highlighting the hottest jobs in 2040. My son would be 23 by then, fresh out of college and ready to take on the world. Perfect!

When I graduated from college in 1999, the hottest jobs were in investment banking and management consulting. Even big law was considered in high demand. Now, all those fields are snoozefests. To be able to work at tech companies to feed people’s narcissism is now all the rage.

Given it’s graduation season, I thought it would be great to highlight these wonderful, future jobs and suggest a couple more for good measure. After all, some of you will ignore my advice of attending public school and spend boku bucks attending private grade school and college even though everything can be learned for free nowadays.

Let’s see whether all that time and money spent will be worth it!

The Hottest Jobs Of The Future

Here are some of the hottest jobs in the future according to Money Magazine.

1) Virtual Store Manager – When someone e-mails to ask for their money back after they ate everything in the package, it’s your job to make him happy.

2) Robot Mediator – When the robots start fighting over which one gets to be commander of the revolution, it’s your job to remind them who’s boss.

3) Robot Trainer – When the robot that has replaced hundreds of jobs already needs a software upgrade to replace a hundred more human jobs, it’s your job to ensure it will do so.

4) Drone Traffic Controller – When there are hundreds of drones overhead dropping packages on your head and spying on your every movement, it’s your job to make sure they stop flying after 10pm.

5) Augmented Reality Designer – When housing is so expensive, all you can do is rent a studio and play with your virtual reality girlfriend, it’s your job to get the users excited.

6) Micro Gig Agents – When a 12-year-old prima donna YouTube vlogger asks for only green M&M’s, it’s your job to take them out of the bowl and book her a gig on Financial Samurai’s YouTube channel, which will be created in 2028.

The Hottest Job Of Them All

I don’t know about you, but spending K-12 plus four years of college to do one of these jobs sounds depressing as hell! OK, the Augmented Reality Designer doesn’t sound too bad, but the others do.

If these are the hottest jobs in the future, then I believe the 7th hottest job in 2040 is going to be Psychotherapist for treating all the sad people out there. There will be millions of disenchanted young adults who realize they didn’t have to go to college at all.

The 8th hottest job will then be Physical Therapist for treating all the chronic back, shoulder, butt, and leg pain that goes with being angry at life. If you haven’t experienced any chronic pain yet, you will, especially those who endlessly strive for money and prestige.

We know that automation and artificial intelligence will likely eliminate millions of present-day jobs. We just have to get ahead of the game.

One way is to make as much money as possible now so that you won’t worry about a future job loss or a deadbeat child. Another way is to guide your children towards science and technology because, by definition, science and technology are what will disrupt our future.

But the best way is to build a business with a strong brand that will last throughout our lifetime so you don’t have to rely on too many other people to determine our fate. I’m pretty sure the best job in the future will still be the one where you are your own boss.

There Is Still Hope To Change The Future

According to a forecast from the Institute for the Future (IFTF), 85% of the jobs in 2030 haven’t even been invented yet. Therefore, there’s still time to plan and change the course of time.

The key is to work on universal skills and attributes that are requirements for any job: speech, writing, teamwork, empathy, knowledge, thoughtfulness, and execution. According to the World Economic Forum, the top 10 skills to get a job in 2020 are complex problem solving, critical thinking, creativity, people management, coordinating with others, emotional intelligence, judgement and decision making, service orientation, negotiation, and cognitive flexibility.

For all you parents out there stressing about your children’s grades and getting into the best schools, you can now stop stressing. Except for perhaps becoming a Pyschotherapist, college won’t be necessary to do any of these hottest jobs. You can learn all the job skills you’ll need for free online within three months before the robots take over.

Plenty of well-educated people are doing jobs today that don’t require a college education. For example, Google is famous for hiring the smartest people on Earth to do the most mundane things like selling Adwords to small businesses. Despite dying souls, they stay because the pay and benefits are too great to leave.

It’s absolutely worth finding a job you love to do with your one and only life. Perhaps you’ll never be able to find a perfect match. But at least you should be able to find an organization which employs people you admire and enjoy. Working with great people is half the battle, no matter how crappy the job is.

Time to get excited about the future!

Related:

Would You Accept $1,000,000 To Go To Public School All Your Life?

How To Get Rich: Practice Predicting The Future

Readers, what do you think the hottest jobs of the future will be? If a great job is the end game, doesn’t this list make attending college obsolete? What do you think some great jobs will be in the future? Anybody working at a job that leverages what you learned in college?

The post Top Jobs Of The Future For Your Million Dollar Education appeared first on Financial Samurai.

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Tax Free Profit Exclusion Proration For Long Term Rentals That Turn Into Primary Homes

What Do You Want to Know About Buying a House?

Hello friends. It’s me, your devoted personal finance blogger, back to ask what questions you have about buying a house.

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Where to Check Your Credit Score for Free

With the wealth of personal finance apps, sites and services available, you no longer need to rely on just the free copy of your credit report from each of the three main bureaus that you’re entitled to each year to figure out where your finances stand.

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Moving Back Into A Rental Property To Save On Capital Gains Tax

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Your College's Recommended Student Loan Payment Option Could Put You Even Further in Debt

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401(k) Fees You Need to Know

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Taking A Vacation From Parenthood By Going Back To Work

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What Are Small, Everyday Habits That Have Made a Big Difference in Your Financial Life?

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Reinvestment Ideas From An Expiring CD: Stay Mostly Conservative

Recently a long-term CD of mine expired with a 3% interest rate. Although it would have been much better had I invested the money in the stock market years ago, I’ve always aimed to consistently invest 5% – 10% of my net worth in risk-free to near risk-free investments so I’ll never have a liquidity crunch. Taking advantage of a bull market is what the other 90% – 95% of my net worth is for.

Once you’ve got a nice buffer, you’re more free to take on risks in your investments, career, or business. And sometimes, those big risks pay off in spades. Think about it. What type of moves would you make if you knew you wouldn’t end up in abject poverty thanks to your savings buffer?

Maybe you’d be more willing to negotiate a raise and a promotion without fear of rebuke? Maybe you’d be more willing to join a promising startup for less pay, but more equity upside? Or maybe you’d have more courage to negotiate a severance to start your own business.

In my case, having risk-free investments gave me the courage to leave my job in 2012, buy a 3rd SF property in 2014, and start a family in 2017.

Reinvest Ideas For CD Proceeds

When it comes to investing, it’s important to compartmentalize your money for maximum purpose. After all, if there is no objective, then there’s no reason to delay consumption now instead of waiting for some future greater reward.

The purpose of CD money is so that you can:

* Sleep better

* Have guaranteed money up to $250,000 / $500,000 per individual / married couple

* Keep up with inflation

* Maximize your cash return

* Always have a slug of cash coming in if you set up a CD ladder

* Better cash management for large future expenses e.g. buying a house, paying for college, etc.

Nobody is buying a CD to get rich. Now that we’ve gotten the purpose of CD investing out of the way, let’s discuss some logical reinvestment ideas for your CD proceeds.

1) Online cash savings account. Although savings accounts still are pitifully low and haven’t followed the Fed Funds rate upward, you should be able to earn at minimum a 1% return with an online cash savings account. Online banks provide higher rates than banks that have a massive bricks and mortars presence due to lower overhead costs. There’s always some reputable bank out there that’s looking to build up its deposits by providing higher rates. At the moment, it looks like CIT Bank has one of the highest money market rates at 1.75%.

Interest rate example with $50,000 deposit

Below is a chart of the latest US Fed Funds rate progression. Given the Fed Funds rate is on the shortest part of the duration curve, your online savings rate should mirror the Fed Funds rate. Alas, most banks will delay raising their savings rate so they can earn a higher profit off of their customers. The analogy is akin to a rise in oil prices. Gas stations will raise prices in lock step with a rise in oil prices, but will be much slower in lowering gas prices when oil prices fall.

2) Highly rated municipal bonds. Despite multiple financial crises since 1970, municipal bonds rated A or higher have a 0% – 0.05% default rate. With no federal and state taxes to pay on the coupon, municipal bonds are more attractive to income earners in the highest income tax brackets.

3) US Treasury Bonds. Given the dollar is the world’s currency and the US treasury can alway print more money to pay off debt, US treasury bonds are considered risk-free. If you hold a 10-year Treasury bond for 10 years, you will get your annual coupon and full principal back. Below is the five year historical chart of the 10-year Treasury bond yield. If you buy a 10-year treasury bond today, you will get a 2.96% annual coupon.

4) Another CD. If you don’t indicate you want your CD proceeds to be deposited to another account, the bank will give you a grace period and automatically re-enroll you in the same duration CD at whatever rate they are currently offering. Beware that this is generally a poor choice as the terms are sometimes less favorable given rates have been declining since the 1980s.

When I locked in my CD at 3%, it was USAA that was offering the highest rate. They are one of my favorite companies since I’ve been using them since 1994 when I first got my driver’s license. Now, their 1 year CD rate is only 0.71%, 5 year CD rate is only 2.13%, and 7-year CD rate is only 2.17% despite rates having moved back up to where they were.

Looking at CIT Bank again, they have an interesting 11-month CD rate at 1.85% with no pre-withdrawal penalties after 7 days the money is deposited. That’s so much better than any ~1-year CD rate I’ve found. Just search the web for the best rates from reputable financial institutions.

5) A business arbitrage. Whenever you find an opportunity to spend a dollar and get more than a dollar in return, you should spend until the marginal revenue equals the marginal cost. The most common business arbitrage is hiring an employee for X and having the employee produce X+. No employee would continue to have a job if s/he didn’t produce more than they cost. Another common business arbitrage is advertising online. Due to sophisticated data analytics, it’s very easy to see what type of return you can get from an advertising campaign, especially on fake news platform, Facebook.

Related: The 10 Best Reasons To Start An Online Business

6) Yourself. Given your investments should largely be a pleasant tailwind for your path to financial freedom, the biggest investment you can make is in yourself. Your main source of income is likely from your job or business. Therefore, it behooves you to invest in yourself to become a better employee or entrepreneur.

The best investment someone can make in themselves is to learn how to be a better communicator. Once you become an expert speaker, writer, and presenter, opportunities start flooding in. Intelligence is highly overrated. Learn how to make people feel like they are the only one you are talking to. Learn how to capture the imagination of your listeners. Make people feel like there’s a deep connection so they become your or your product’s greatest advocates.

Related: Emotional Intelligence: The Key To An Easier Life

7) Pay down debt. No matter how low the interest rate, I’ve never regretted paying down debt and neither will you. For example, it feels absolutely wonderful to no longer owe the bank $815,000 after I sold my rental house last year. When I paid off my MBA loans, I felt like a weight was lifted off my young shoulders.

Here’s my FS-DAIR framework if you’re wondering how much of your free cash flow you should use to pay down debt and invest. Any interest rate at 10% or higher is highway robbery and should be paid down with great focus.

Stay Conservative Most Of The time

For a long time, I wondered how I’d reinvest my CDs once they started coming due. Interest rates had fallen drastically over time. Sometimes, you can afford to take more risk.

In early 2014, a $400,000 CD expired and interest rates were still low back then. Hence, I decided to take more risk by investing $250,000 of the proceeds in a fixer that was asking $1,250,000. Taking on leverage to buy a single concentrated asset is certainly not a low risk endeavor. However, I felt strongly that panoramic ocean view homes in San Francisco would rapidly rise in value. Besides, I had two other CDs in the wings, including this one that recently expired to bail me out just in case things went south.

In 2018, I no longer feel strongly about coastal city real estate or the US stock market. My risk-free / low-risk asset allocation has also fallen towards the lower end of my target 5% – 10% net worth allocation. Therefore, I plan to reinvest 50% of this CD’s proceeds in municipal bonds, 20% in an online savings account, 20% to pay down my Lake Tahoe vacation property, and 10% in the stock market if we see another 5% – 10% correction.

Although higher interest rates have created a headwind for riskier investments, those of us who need conservative investments with dependable income should be rejoicing!

Related Posts:

Ranking The Best Passive Income Streams

How Much Savings Should You Have Accumulated By Age

Readers, do you have any CDs? How are you reinvesting the proceeds?

The post Reinvestment Ideas From An Expiring CD: Stay Mostly Conservative appeared first on Financial Samurai.

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Maui Late Tax Return Tips to Minimize the Penalties

Looking for Maui late tax return tips to minimize the penalties? Paying taxes on Maui is a must. But sometimes, whether you’re a business or an individual, certain problems can cause a delay in filing you return on time. The IRS is known to be serious about those who file a Maui late tax return. …

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Reminder: You Can Buy Sunscreen and SPF Moisturizer With Your FSA/HSA Money

It’s 90 degrees in New York, which means people are finally shedding their parkas and drab black winter clothing for slightly-less drab black summer clothing. And with the removal of layers comes an annual reminder to slather on some sunscreen before you head out the door.

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What Happens to Your Debts When You Die

Of the many downsides of death you could name, you might think an upside is that you no longer have to worry about the massive pile of debt you’ve accumulated over your life—almost $62,000, on average, according to a 2017 report from Credit.com—from astronomical health care bills to the mortgage on the house you…

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