Why Real Estate? by Dannielle Fritz-MacDuff

I was having dinner with my parents at our last visit to their home and of course the subject of money and investing came up. (occupational hazard) My youngest sister and her husband asked my what would be the best investment for some money that they are expecting to receive. This is a loaded question, since the best investment strategy for me may not be the best investment strategy for someone else's situation and temperament. So I decided to explain the merits of the different asset classes and what I liked about each. We spent most of our conversation on real estate.
So, why real estate?
Real estate is one of the most tax advantaged investments as well as an investment that gives maximum control to the owner.
Imagine an investment that you can obtain with literally none of your own money, goes up in value, allows you to get your money back with out relinquishing control of the investment, and allows you to put money in your pocket tax free?
These are just a few of the advantages of real estate.
Real Estate can be very profitable. Rental income covers all of your expenses so your tenant pays for your debt and expenses. It is possible to finance 100% of your purchase price ( or even more than 100% of the purchase price and get cash back at closing). Rental income that exceeds all of the expenses lets you get your money back faster than selling the property and puts money into your pocket every month. That's spendable income every month and you still have control over the investment. Can you do that with stocks or bonds or t-bills or a 401k or an IRA? Not really. You can refinance a piece of real estate to provide additional investment capital without giving up control of the investment.
The government give incentives to owners of rental properties. Since real estate investors are providing affordable housing for people who would otherwise not be able to afford a home, the government allows the investor this simplified tax strategy. EARN, SPEND, GET TAXED ON WHAT'S LEFT. The government also gives you a deduction for depreciation on real estate that produces income. Depreciation is an allowance for property that looses value. Real Estate is not known for loosing value, as a mater of fact it is know as an asset that increases in value or appreciates.
So here is how the depreciation allowance works in your favor. You have a property that puts $200 per month in your pocket after all expenses. That is 2400.00 profit(WHAT'S LEFT) on that property per year. $2400.00 that you would have to pay taxes on, right? Nope, the government says that you can take that depreciation credit against that income. After the depreciation deduction, there is actually a loss (negative income) of -$3600.00 for the year. That means that you get to put the original $2400.00 into your pocket tax free and take an additional $3600.00 off of your taxable income, which gives you a total of $5000.00 in tax free income for that year.
If you are in the 15% tax bracket, you have been saved $750.00 in taxes.
So to recap, you get a property that is paying all of the expenses related to the property and puts $2400.00 in your pocket every year, tax free. You get a deduction for depreciation on a property that is really going up in value. That depreciation deduction puts another $3600.00 in your pocket, tax free and reduces your tax bill by $750.00.
So let me ask you, why NOT real estate?

Knowledge Is NOT Power by Dannielle Fritz-MacDuff

I have often wondered why so many people struggle financially in this day of abundant free information. We have resources on the Internet, libraries are offering more and more programs as well as newer books about any subject that you could imagine, all of which are free. So why is it that so many people struggle or complain about struggling when there are so many sources of free knowledge? After all, knowledge is power, right?
Well, not so much.
Knowledge in itself does not hold any power, It is the application of that knowledge that unleashes the unstoppable human spirit.
Think about this; we all know that eating healthier foods and exercising regularly is key to keeping our bodies and minds healthy, however how many of us really take action on that knowledge. We also know (at least on some subconscious level) that investing our money to make money for us instead of working harder for money is a much better way to pay for our living expenses. Yet the majority of us still work very hard to get our selves into debt that requires us to work harder to pay for those debts. We know that what we are doing is not working all that well for us, but we choose to either not learn more about how to make our money work hard for us or to not take action to change our situation.
Knowledge is only the first step to creating wealth, the next step is to take action. So, where do you start? Try the library, you will find free Internet access, books on CD or cassette, videos, DVDs, and of course books, all of which can help you learn more about your money. Next, seek out a professional who specializes in the area in which you are most interested and pick his/her brain, most of the time this can be done for no cost or maybe the cost of lunch. Small price to pay for the knowledge that gives you more options. Finally, TAKE ACTION!! Don't sit around telling your self that you will do something someday. "When I get some extra money" When I have extra time" These scenarios never , and I mean NEVER, happen. There will always be some reason why you can't do something,if you look you will find a reason. If you look a little harder, you will find a reason why and how you can accomplish your dreams.
My Grandmother used to say " Danni, If you dig in the ground, you're bound to find dirt". Why dig in the ground for some reason not to make our futures brighter, when the sky is the limit and the pot of gold really is at the end of your rainbow.

Food For Thought -Putting Your Money Where Your Mouth Is. by Dannielle Fritz-MacDuff

Changing your reality with words will only take you so far. You have to act on those words.
Put your time and money into activities that will bring you closer to your dreams.
Everyday do something to make that dream more of reality.
Work hard today creating and acquiring assets that will ensure that you do not have to work hard tomorrow so that you can enjoy your dreams.

The Fall of Education As We Know It by Dannielle Fritz-MacDuff

So may of our schools are under pressure to perform on standardized state test in order to continue to be funded. Our teachers have the very difficult job of trying to balance teaching our children useful information and getting them prepared to take these standardized test and score well. I often wonder why it is that so much emphasis is placed on these tests. Has an employer ever asked you to provide a copy of your standardized test scores with your resume? No one has ever asked me for those scores. What about your banker? Ever been asked to fill your proficiency test scores on a loan application? Me neither. So why so much emphasis on these test scores? It all comes down to money. Our schools funding is dictated by the percentage of passing scores in a given district and in some cases a given school. So the end result is a school system where more importance is placed on test scores than is placed on really helping the child reach his or her full potential.
My daughter has struggled with reading for a long time. We took her to after school programs, put her in summer tutoring programs and had her tested in the schools for dyslexia and other learning challenges. She was found to have no learning disabilities as defined by the school psychologist and placed in an IEP (Individual Education Program). I agreed to this program with the hope that she would receive the help she needed to boost her confidence level and help her excel. Did that happen? To a small degree, yes, but year after year I am presented with the question " do you want her to have a scribe and assisted reading when taking test?" What the school is really asking ... "we have people who will sit with your daughter and read the test to her and write the answers for her, will you let us do this?" This experience has really opened my eyes to how our school system is letting our children down. How is reading and writing for them helping them to learn and reach their potential? This also explains how a college student can come into my office to apply for a job and not have a firm grasp on the English language or lack basic writing skill that I learned by the time I left the 5th grade. Each year I attend a similar meeting with the IEP director, Principal, Guidance Counselor and School Psychologist where, after four years of the same answer I am still asked this question. As a parent I want my child to be challenged and really learn, not get shuffled through the school system and push out the door with no usable and relevant skill or knowledge.
I once said that our children learn the basic skills they need to know how to function in society by the time they finish the 5th grade. Today I have to retract that statement. Many of our college graduates are not prepared to write a simple resume or small article even though most publications are written on an 8th grade reading level. Our education system is focused far more on irrelevant test scores than the real learning of our children.
So what do we do? Here are 3 things that you can do to encourage your child's genius and help to boost his/her learning experience.

• Learn about your child's learning style. (Learn about your own while you're at it)
  Howard Gardner's theory on multiple learning styles is very helpful. The link is below. Also check out Robert Kiyosaki's Rich Kid Smart Kid for more on our school system's origins and pit falls

www.businessballs.com/howardgardnermultipleintelligences.htm

www.richdad.com

• Encourage your child to participate in activities and projects that teach to your child's particular learning style. Teaching to the learning style of a child enhances the learning experience and boosts the child's self confidence.
• Reinforce the child's learning with everyday activities. this kind of reinforcement show the child how to apply the new knowledge and again, boosts confidence.

Buzz marketing 101 by Dannielle Fritz-MacDuff

I recently had the opportunity to speak with Ron McDaniel author of Buzzoodle Buzz Marketing and to read the book. The ideas in this book are innovative and simplistic at the same time. Ron really spells out the ins and outs of buzz marketing to make it easier for business owners and employees alike to get excited about what their companies are doing and give them the tools to make their goals a reality. I recommend this book to anyone who wants to be successful in any field. you can check out Ron's Blog at http://blog.buzzoodle.com or get his book at www.buzzoodlebuzzmarketing.com

tax saving strategies you may have to ask for.

After nearly 20 years, I am still amazed when new clients walk into my office, and get excited over the questions that my staff and I ask them to help find additional tax deductions for them. Which just goes to show that what I have learned still may not be common knowledge, even if I think that it is. so I thought I would take a moment to post just a few common tax savings tips that many of our clients never knew about.

• Make money with your hobbies- Having a hobby that makes you money may qualify you for several small business deductions on your personal return and open up a rather lenient group of loopholes that someone who only makes money working for someone else would not be able to take. Most of my clients are very surprised to find that some very common personal expenses, under the right circumstances, can be converted to business expenses and used to reduce their tax bill.
• Itemized deduction - nearly everyone knows that medical expenses may be tax deductible, but few people know that personal property taxes and tax preparation fees are tax deductible, just to name a few. The average tax payer under utilizes their personal tax deductions by 67%. That is 67% more of your money that you are allowing the IRS to keep than is required. While I agree that some tax returns may be simple and not require the assistance of a professional, asking a professionals advice will at the very least give you a little insight on what to look for in the coming year. Find a tax professional that will consult with you over the phone, most competent professionals will take 15 or 20 minutes to speak with you over the phone at no charge to answer questions. If you would like to spend some time being proactive about the coming year, then make an appointment to meet face to face and begin planning. The cost of this consultation is usually nominal and well worth the savings that you receive on your tax bill.
• Selective credits - The IRS has passed several new bills and extended several other existing bills to allow a credit for specific expenditures. nearly half of our new clientele this year were able to take the education credits allowed by the government for full and part-time students. More surprising to them was the fact that they had been eligible in the previous years for the same credit. The education credits are available to all students attending at least part time and reduces the tax payers tax bill by up to $2500.00. Residential energy credits are another highly over looked credit available to home owners who upgrade their home structures and specific appliances to qualified energy efficient structures and appliances. If you qualify, this underutilized credit could save you up to $1000 on your tax bill.

I am a firm believer in life long learning, especial developing your financial intellegence, take the time to find as much information as you can about your finances and how to take control of them. Seek out professionals who will go the extra mile to find the most beneficial strategies for you and do your homework.

Your professionals are there to assist you, but ultimtely you make the decisions for your future. Make it the future of which you have always dreamed.

Please email me with your comments on this post, good or bad and visit us again.