Single Dads

As a man with children and an ex, I’m always keeping my eye out for things to help my daughter out (and me) out financially. One important thing that you can do at the end of the year is start planning for your kids future, both financially and educationally, and one way that I’ve done that is by using a 529 plan.

A 529 plan is an investment vehicle for future educational expenses that grows federally and state income tax free that has various rules and regulations based on the state in which you live and the specific plan in which you want to enroll. In Colorado, the plan that I enrolled in was found at CollegeInvest.org, and I can tell you from experience, it definitely pays to shop around for a plan, as fees and past performance can be vastly different. Also, in my plan, my ex has no claim to the money invested and my donation to the plan is state income tax deductible up to $250.00 as long as I donate that amount to my daughter’s plan before year end. Nice. Another bonus is that if your children don’t use the 529 money, you can use it yourself for qualified expenses, and in other cases, for unqualified expenses, although a tax hit would probably occur. If my daughter doesn’t use the plan that I started for her, I’ll buy a boat and give it her name instead. Probably.

Naturally, before you were to invest in such a thing, you definitely want to do your research or talk to a financial planner or another tax or financial professional before you jump. For me, though, it’s perfect. Better, I feel like I’m doing something positive for my daughter, as I suspect that college expenses in the future will be astronomical and I have no indication that my ex is doing any planning for my daughter’s educational future, period.

But now is a great time to look at some sort of educational planning for your kids. Take a look at it.

The news is full of information about the problems in the housing market, but the most interesting thing that I’ve read so far is something that I read in a recent article about the current crisis in foreclosures - that might have an impact on you, gentle and harried adults that you are (or might be):

According to the most recent foreclosure numbers released by the Mortgage Bankers Association (MBA), the U.S. is embroiled in the worst foreclosure crisis in recorded history. More than 14 percent of subprime borrowers are defaulting, and prime borrowers are beginning to follow suit.

MBA Report Summary

 

• The foreclosure rate recorded in the last quarter has increased beyond the highest point seen in the history of the MBA survey, which dates back to 1953.
• 14.82 percent of subprime borrowers are currently behind on their home loans.
• The highest percentage of foreclosures are on homes with 2/28 adjustable rate mortgages.

I found this on Homeguide123.  Shockingly, though, this is not the part that I’m referring to in the title.

These lines are the ones that shocked me.

‘Many blame subprime lending for our current real estate crisis, but rampant speculation, even by those with great credit, played a leading role,’ said O’Toole in a press release. ‘The subprime market took the first hit as those borrowers had the least to lose when they walked away. Now that nearly half of foreclosures represent non-owner occupied properties, it is clear that speculators are walking away too.’

It is true that non-owner occupied properties have been hitting the auction block in record numbers. Of the 9,477 properties auctioned in California last month, 44.3 percent of them were speculator owned properties.

Another shocker: 90.3 percent of the homes were bought or refinanced in 2005 and 2006.

90.3 percent of the homes were bought or refinanced in 2005 or 2006.

I rent.  I’m very glad that I do at this point.

Mid-2008 is sounding like a pretty good time to buy, however.

I haven’t done a post on finances for a while, so I took a look about during a particularly uninteresting television program today and was pleasantly surprised to find this article on cashing out of the rat race early.

NO, IT’S NOTyour imagination: You’re working too hard. Bucking the trend in most developed nations, the American workweek has been growing longer. We put in an average of 1,815 hours a year — longer hours than even the Japanese, who have a word, karoshi, for people who die from overwork. The extra labor often translates into bigger salaries and more-secure retirements, but it also pours fuel on a fire as old as work itself: the dream of cashing out early.

While there’s no way to quantify how many of us are eyeing the exits, evidence suggests that more people are taking the idea seriously. Books about early retirement are steady sellers, and virtual communities of would-be escape artists thrive on the web. Fortunately, it doesn’t take an enormous nest egg to fund a life-changing move. We interviewed financial experts and early retirees to find out how to get out while you’re young.

Credit SmartMoney with the article.

I have a theory.  In the face of the facts that credit has tightened to a size 0 and that in order for people to buy property they need to be prepared to put 20 percent down on property (according to my friends in the real estate industry), and given the fact that my girlfriend and I have several money making gigs between us and still couldn’t afford a decent house in our town (Denver), and then add the fact that property values are shrinking and my homeowner friends are beginning to panic, I’m starting to think that the true American Dream is not to own property.

In fact, the true American Dream is to NOT have to work.

With that in mind, I read the above article with interest.  I would suggest that if you are beginning to think that perhaps getting out of the corporate world and into quality of life is not all that bad of an idea, instead of waiting for some unknown wealthy uncle to die and leave you everything, take a look at the article.

I found it quite interesting.

I’m betting that you will as well.

…yes, that said Financial Quote of the Day.  Believe it or not, I’m not kidding.

Like many who have jobs and kids, I am one of those that actually has a 401(k).  Unlike many that have jobs and very young kids, though, I have taken the bizarre (and poverty inducing) step of actually starting a 529 plan for my little honey’s college education.  (more…)

…and it’s in a Dilbert cartoon.

Want to see it?

Here it is.

‘Unified Theory of Everything Financial’

Quietly hidden in Adams’ groundbreaking work is a financial formula so simple it rivals Einstein’s E=mc2. In its original form Adams’ formula was apparently so heretical and so explosive that no major house would touch it when he proposed publishing it as a one-page book. After initial rejections, he announced sadly that “if God materialized on earth and wrote the secret of the universe on one page, he wouldn’t be able to find a publisher” either.

Fortunately for America’s 95 million investors, Adams’ secret nine-point formula was finally revealed in “Dilbert and the Way of the Weasels.” Notice its simple brilliance in the exact reproduction of his formula:

1. Make a will
2. Pay off your credit cards
3. Get term life insurance if you have a family to support
4. Fund your 401k to the maximum
5. Fund your IRA to the maximum
6. Buy a house if you want to live in a house and can afford it
7. Put six months worth of expenses in a money-market account
8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement
9. If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio

Where?  MarketWatch.

Now, articles like this are the reason that I blog in the first place.  What am I doing of the above?

Well, I *was*doing at least two of these.

However, I will START doing all nine.

People, you know you should bookmark this post.

I’m buying that book.  Quickly.