Taxes and Home Ownership – The mortgage interest deduction is not the only game in town

Two weeks ago I finished the Certified Financial Planner introductory course to personal taxes and learned about a very attractive benefit of home ownership: Internal Revenue Code Section 121. Sec 121 allows the gain on the sale of a residential home to be excluded from income. The exclusion is up to $250,000 for a single person or up to $500,000 for a married couple filing jointly.

That’s a lot of money that can be excluded from taxes. However, there are some caveats if the residence was used as a rental since 2008. Yes, I know these concepts might bore some, but I was deeply intrigued. As a California native I’ve seen the housing market do amazing things. One day I may get to give someone the good news that they get $250k/$500k of income tax free. Or I may even get to benefit from it myself. The specific requirements to qualify for Sec 121 are below.

Continue reading “Taxes and Home Ownership – The mortgage interest deduction is not the only game in town”

12 Month Sabbatical – Update on my Microfinance Adventure

Best advice I ever got was an old friend of mine, a black friend, who said you have to go the way your blood beats. If you don’t live the only life you have, you won’t live some other life, you won’t live any life at all. That’s the only advice you can give anybody. And it’s not advice, it’s an observation.

– James Baldwin quote on Brain Pickings

It’s Actually Happening! Update on my Microfinance Volunteer Adventure

James Baldwin’s observation applies perfectly to the next chapter in my life. As I alluded to in my previous post on Microfinance ($2/day) and on the one announcing my career change (aligning your spending) I am making major changes in my life. Part of my inspiration for this definitely comes from Mo, a good friend who moved to Turkey to become an English teacher and who now lives in Japan. She has documented her travels over at Travels of Mo. The other part of my inspiration is listening to my inner curiosity more closely.

How I Found Costa Rica and Agreed to It

I’m planning on quitting my job and potentially being unemployed for a 12 month sabbatical. I lined up a microfinance institution (MFI) volunteer opportunity in Costa Rica through NGOAbroad and am scheduled to start in October, five months from now. When I first found this opportunity it felt too good to be true. Costa Rica is expat heaven, a tourist destination, and has a great medical system. For a moment I wondered whether I would actually have anything to contribute because the country is doing much better than others in South America. Continue reading “12 Month Sabbatical – Update on my Microfinance Adventure”

Corinna’s Hero’s Journey – Reinventing into Retirement

Our first installment of the Hero’s Journey is Corinna’s reinvention into retirement. Corinna retired as a Secretary seven years ago from City government. Since that time she’s learned a lot about herself and gained a clearer understanding around her relationship with money. Continue reading “Corinna’s Hero’s Journey – Reinventing into Retirement”

Financial Hero’s Journey

Joseph Campbell is a scholar who studied ancient myths and developed the idea of the monomyth – The Hero’s Journey. The three part act of the monomyth is a way to understand how we all can change or improve what’s not working. This arc has been used in many settings, from Harry Potter to Star Wars. It was further publicized by Hollywood screenwriter Christopher Vogler; below is his well-known adaptation. Interestingly, the Hero’s Journey is also a recurrent theme in 12 step recovery shares: What it was like, What Happened, and What It’s Like Now.

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Every one of us has many iterations of this journey in our own life. Sometimes it has to do with a transformation on how we handle addiction (12 Steps), a difficult outside circumstance (Star Wars), or big money changes. In this series of blog posts I will be detailing out the experience of people who now have a flourishing relationship with money. I will treat the main three acts as follows:

  1. Recognition of a problem
  2. Confrontation of said problem
  3. Resolution of problem and triumphant return of hero

I would love to hear your stories for this! If you are interested in sharing your financial hero’s journey please leave a comment below.

To find out about my own Financial Hero’s Journey check out the following posts:

Alyssa Windell, another awesome financial blogger, wrote a great post connecting the hero’s journey and money here.

How Do You Live on $2 a Day? – How the World’s Poor Manage their Finances

According to Portfolios of the Poor written by a leading group of researchers, 40% of the world’s 7 billion people live on less than $2 a day. What makes matters worse is the irregularity of their income. If they knew they were going to earn $2 every day it would be possible to build a budget around it. But they don’t know. During harvest season they may have plenty to eat and even be able to save. At other times they may have to live on one meal a day and borrow to make ends meet. How can someone deal with those massive changes in income? To make things even more dire are expensive emergencies, such as an illness, a burial, or a whole host of other things. Continue reading “How Do You Live on $2 a Day? – How the World’s Poor Manage their Finances”

Existential Money Questions – It’s More than Just the Numbers

I was trying to figure out potential financial topics to write about so I searched online for common financial questions. I found technical questions like the ones below from Investopedia:

  • How do you file IRS Form 709?
  • Are student loans amortized?
  • Am I losing the right to collect spousal Social Security benefits before I collect my own?
  • Is it a good idea to add a reverse mortgage to your retirement strategy?

I found credit related questions answered by a financial planner over at Business Insider:

  • What’s the best way to increase my credit rating so banks are knocking at my door with awesome offers?
  • Any tips on negotiating a lower interest rate?
  • Is it better to pay off your entire monthly balance, just the minimum, or somewhere in between?
  • Is it true you can negotiate a “pay off amount” with your credit card company if you can’t afford to pay down your whole balance?

And here are a few more interesting ones from Fox Business:

  • Should I change from monthly mortgage payments to biweekly mortgage payments?
  • Should I co-sign for a loan, and can I protect myself?
  • If my retirement accounts are fully funded, how should I invest the rest of my cash?

But it was difficult to find questions like the ones I ask about money and finances. I think my questions are probably more like social science research theses than blogging friendly questions. For example, I often wonder about the questions below:

  • How do I reconcile the fact I want more and the fact that by being a citizen of a developed country I have more than 80% of the world’s population?
  • Why would someone tie themselves to a job they dislike with golden handcuffs like a new car every year and a mortgage that keeps them up at night?
  • Is it possible to use capitalism in a way that doesn’t destroy the environment and ourselves in the process? Maybe it’s something along the lines of B Corporations, which aim to benefit the shareholder, employee, customer, and community.
  • Why do women earn less? Why does asking for a review feel more difficult than giving a professional presentation completely naked?
  • How is longstanding wage stagnation related to Trump’s election?

After my quick web search I am happy to say that the internet has space for me. I am here to discuss they many existential money questions I have. In How To Read a Book the authors state that the big questions are not really answerable. The answer lies in the discussion itself. By talking about the issues we can outline where we stand.

So let’s talk about money. Do you have any existential money questions?

Why Hire a Financial Planner?

Although I’ve never hired a financial planner, I have had to hire an expert to help me do something I could potentially have done myself. Earlier this year I switched gyms and the new one had less exercise classes. After two years of either going to a class or doing cardio I had still not started weight lifting. I always had a reason to skip it. The truth was I didn’t know how. After some half-hearted attempts to learn I realized I was not disciplined enough to learn this skill on my own. The routines online confused me and my motivation barely lasted past five minutes.

Shortly after joining the new gym they offered me an introductory personal trainer session. At first I was an adamant no. At the time my main objections were that it’s expensive and it’s something I should be able to figure out on my on. But then I saw that I could afford it and realized that I was probably not going to learn it on my own. So I took the plunge and signed on for a one year contract. I can now happily say I am comfortable with my weight lifting routine. And a positive side effect is that my butt has never looked better!

So what does my personal trainer have to do with a financial planner? Both professions have experts who motivate you through behavioral changes. They have been trained to quickly spot possible problems. Plus the best coaches, either for fitness or finances, are just as excited about your success as you are. If it’s fear that’s holding you back, take a look at this great article by Michael F Kay from Financial Life Focus. Continue reading “Why Hire a Financial Planner?”

Women’s Symposium of Southern California

Next International Women’s Day we will have the second annual Women’s Symposium of Southern California, which will bring together financial experts to answer questions from women in the community. The first symposium was in March of 2016 and it was a great success. It was all put on by Marah Fineberg, CFP and she decided there is a need for an annual event like this in our community.

I am proud to say that I am part of the Partnership Committee. My main job is to let others know about the upcoming Symposium and request involvement from other organizations that share our mission.

I’d love to hear if you have any thoughts on who I should contact. Also, please spread the word to anyone you think may benefit from this event. Our next event will be on March 8, 2017 in Marina Del Rey.

Sufficiency and your True North – Celebrating Enough

The Soul of Money by Lynne Twist is not your typical personal finance book. It does not go into how to get out of debt or where to put your retirement investments. Instead, it is a thoughtful book that reminds us that we already have enough. We have probably all heard that the endless pursuit of more does not lead to an enjoyed life. It only leads to a need for more. The issue for many of us is that we forget this simple idea, especially when we listen too closely to the consumerism in society. Twist shares her transformation away from the mindless pursuit of more towards a more aligned lifestyle for herself and her family. Continue reading “Sufficiency and your True North – Celebrating Enough”

Career Exploration Before Signing on for College Debt

One of my nieces is starting her senior year of high school and is stressed about college. She knows she wants to go to college, but is unsure of what she will study and how she will pay for it. This is very natural, especially for children who are the first ones faced with the luxury/burden of deciding what they will do for money as adults. A few generations ago most people grew up to do what their family did. The children of blacksmiths were blacksmiths. The children of farmers were farmers.

My niece is certain that she wants to attend college because she likes academics. However, college is not the only option. High school graduates can join the military, go to a trade school, start a business or get a job. Most high-paying jobs do require a college degree, especially if you want to move up in a company. But if you go to college just because it’s expected of you, rather than because of your own internal motivation, you may have trouble completing the degree requirements. If academics is not your thing consider trade school; the school requirements are shorter, the cost is lower, and the jobs are unlikely to be outsourced to other countries.
Continue reading “Career Exploration Before Signing on for College Debt”