Money does talk!

Written by Willard Michlin


Money does talk! By Willard Michlin When buying something, you can buy in one of two markets. The first is buying on terms inrepparttar retail market andrepparttar 112714 second is buying inrepparttar 112715 wholesale cash market. This can be illustrated by referring torepparttar 112716 biggest purchase we all make in our lifetime - Real Estate.

In recent years, when you are buying a house it is easy to get financing ofrepparttar 112717 first mortgage, sorepparttar 112718 seller is not forced to financerepparttar 112719 whole sale. What I mean isrepparttar 112720 seller doesn’t become your first mortgage holder,repparttar 112721 bank lendsrepparttar 112722 money andrepparttar 112723 seller getrepparttar 112724 cash. Moreover, he will most likely make some concessions if he doesn’t have to carry back a second trust deed.

Therefore givingrepparttar 112725 seller all cash, will usually get you a better deal than askingrepparttar 112726 seller to let you buyrepparttar 112727 house with a very low down payment, with him carrying back a sizable trust deed. The big savings come when you are buying real estate that doesn’t have easy institutional financing available. The purchase of vacant land can berepparttar 112728 best example.

My father was interested in buying industrial lots inrepparttar 112729 city of Montebello, just east of downtown Los Angeles. This was duringrepparttar 112730 1960’s. In those days it was common for a buyer to put down 20% andrepparttar 112731 seller to financerepparttar 112732 remaining 80% for 10 years at 8% interest. For example: a $10,000 lot would cost you $2,000 down with $97.06 payments every month. After 10 yearsrepparttar 112733 total ofrepparttar 112734 principal and interest payments would be $13,647.45. If you wanted to build onrepparttar 112735 property you had to pay offrepparttar 112736 land loan, first. The sellers then would not have to waitrepparttar 112737 whole 10 years before getting all their money.

Many property owners sold their property because they wanted money and gettingrepparttar 112738 $2,000 wasn’t much money to them. So, my father would offer $5,000 all cash torepparttar 112739 sellers. More than 1 out of 5 would takerepparttar 112740 cash up front instead of waiting for payments over 10 years. By offeringrepparttar 112741 extra $3,000 cash down, my father saved $8,647.45 onrepparttar 112742 sale ($5,000 onrepparttar 112743 price reduction, plusrepparttar 112744 interest onrepparttar 112745 note). Now that is buying wholesale!!

Buying cars can be donerepparttar 112746 same way. When you pay retail,repparttar 112747 dealer talks monthly payments. If he lowersrepparttar 112748 price, he’ll raiserepparttar 112749 interest rate. When you are buying for cash, he can only talk price. When you are leasing an automobile, they don’t even tell yourepparttar 112750 price!

A Big Tax Loophole Just Got Bigger

Written by Wayne M. Davies


Believe it or not, there are ways to convert taxable income into non-taxable income, without any fear of an IRS audit.

Here's one of my favorites. It's been part of our beloved tax code for over 30 years, yet many still don't take advantage of it.

What am I talking about?

The IRA -- Individual Retirement Account.

Now, before you say, "Oh, I know all about that one; what's so great about an IRA?", give me 10 minutes to explain 3 new benefits torepparttar IRA rules that you may not realize.

BENEFIT #1: How To Avoid Tax Rather Than Postpone Tax

First, did you know that there are now 2 kinds of IRA's available?

The so-called "Traditional IRA" isrepparttar 112713 one that first came out way back inrepparttar 112714 1970's.

But there's a newer incarnation ofrepparttar 112715 IRA that's only a few years old -- it's calledrepparttar 112716 "Roth IRA".

What'srepparttar 112717 difference between a Traditional IRA and a Roth IRA? There's a HUGE difference!

"Traditional" IRA contributions are tax-deductible, andrepparttar 112718 growth of those contributions is also "tax-sheltered" whilerepparttar 112719 funds remain inrepparttar 112720 account.

But eventually all tax-deductible "Traditional" IRA contributions, as well asrepparttar 112721 growth of those contributions, will be subject to income tax whenrepparttar 112722 money is withdrawn fromrepparttar 112723 account.

In other words, Traditional IRA's offerrepparttar 112724 opportunity to POSTPONE taxes. Traditional IRA's enable you to save taxes --- but these tax savings are only TEMPORARY!

This isrepparttar 112725 big difference between Traditional IRA's and Roth IRA's: Traditional IRA's allow you to temporarily POSTPONE taxes. The Roth IRA offersrepparttar 112726 opportunity to permanently AVOID taxes.

With a Roth IRA, you don't take a deduction for your contributions; instead, you make a contribution with "after- tax" dollars.

But whatever you put in not only grows tax-free, but can also be withdrawn tax-free.

Here's an example to illustrate:

If you invest $2,000 per year for 20 years into a Roth IRA, you will have invested a total of $40,000. Now if that Roth IRA earns an average of 10% per year, that $40,000 will grow into $126,005.

Now comesrepparttar 112727 fun part: Assumingrepparttar 112728 IRA has existed for at least 5 years and you are at least 59 ½ years old, you can withdrawrepparttar 112729 entire $126,005 TAX-FREE!

In contrast, if this money had been invested in a Traditional IRA,repparttar 112730 entire $126,005 would be subject to income tax as it is withdrawn.

The $86,005 of growth is magically converted from taxable income to non-taxable income. Assuming you are inrepparttar 112731 15% federal tax bracket, that's a savings of $12,901. Add any state income tax, and you could save well over $15,000 in taxes.

And $15,000 buys a lot of pizza in my house!

BENEFIT #2: Take An Extra 3 ½ Months To Fund Your IRA

Cont'd on page 2 ==>
 
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