“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” -Ayn Rand

IRA’s

The acronym IRA means Individual Retirement Account. An IRA acts the same as a savings account but has tax breaks. Within an IRA you can have:

• Stocks,
• Mutual Funds,
• ETF’s ,

along with a few other assets.

Now that you know what an IRA is, you should know about the two different types of IRA’s

• Traditional
• Roth

	Traditional	Roth
Limit on total amount of money you can place in the account	$5,500 ($6,500 if you’re 50+ years old)	$5,500 ($6,500 if you’re 50+ years old)
Able to claim tax deduction on your individual federal income tax return.	Any money deposited into this type of IRA may be tax deductible.   **Deduction may be limited if you are covered by a retirement plan at work.**	Any money placed in this account will NOT be tax deductible.
Age Limit	After reaching age 701/2 no more deposits can be made into this type of IRA.	There is no age limit for deposits into this type of IRA.
Required Minimum Distributions   (Minimum amount of money  you must withdraw when you reach age 701/2)	You must make Required Minimum Distributions on money deposited in this account   **The required minimum distribution for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS’s “Uniform Lifetime Table.”**[i]	You never have to make Required Minimum Distributions on this account.   **Unless account owner dies.**

These are just a few facts about IRA’s. If you have any questions feel free to contact me anytime or do your own research.

BUILD YOUR FINANCIAL LITERACY ONE STEP AT A TIME!!!!

(Investopedia, 2017)

[i] https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds

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“The first step in solving a problem is to recognize that it does exist” – Zig Ziglar

Yesterday, I took my own advice and looked up my credit score with www.creditkarma.com. Although my current credit score is considered “Fair”, I am still unsatisfied. In my opinion, if your score is below 750 you are in bad shape. With a credit score of 750+ your chances for approval on a loan are more than good.

Our goal should be 750+ so that we can all qualify for low rates on things like mortgages, auto-loans, etc. According to the Huffington Post, the average purchase price of an existing home bought in the United States is about $200,000.00. Using Capital One’s mortgage calculator you’ll find that if you managed to put 20% down on a $200,000.00 mortgage ($40,000.00) with my credit score, found in the photo above, I would have an interest rate of around 4.6%. If my credit score was 750 my interest rate would drop to 4.1%. [i]

I understand that may not seem like a significant drop, but it’s the difference between paying around $137,144.00 (4.6% rate) in total interest payments versus about  $119, 158.00 (4.1% rate) in total interest payments. [ii]In this scenario, raising my credit score to 750 can save me about $18,000.00 in interest payments on a mortgage loan.

Back to my story though, after I checked my credit score yesterday I found out the different things that are affecting my score. Turns out, I have several account balances that have been sent to collections. Those debts are having a significant negative impact on my credit score (all medical bills from hospital visits without insurance). The first thing I did was contact the collection agency to find out exactly how much I owed. I will save up until I have a little over half of the total amounts, then I will call back and try to settle for what I have (check out my previous post). The collection agency will negotiate with you on what to settle for, try to stick close to your number or below it.

Take another step towards financial independence today. Find out what you owe and work towards paying it off!

 

[i] https://www.capitalone.com/home-loans/mortgage/calculator

[ii] http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx?loanAmount=160000&years=30.000&terms=360&interestRate=4.125&loanStartDate=12+Jul+2017&email=&lightbox=true&show=true&showRt=false&prods=1&monthlyAdditionalAmount=0&yearlyAdditionalAmount=0&yearlyPaymentMonth=+Jul+&oneTimeAdditionalPayment=0&oneTimeAdditionalPaymentInMY=+Jul+2017&ic_id=mtg_loan_calc_amortization_btn

“We can’t solve problems by using the same kind of thinking we used when we created them” – Albert Einstein

After I dropped out of College at the end of my freshman year at Penn State University I was still a pretty careless teen. At that point in my life I had my first bank account going on a year with Bank of America. When I had the account there would be times when I would mistakenly overdraft my account and pay it back within a few days without issue. So one day I though “What the hell, why not take out a few hundred until my tax return check comes in and just pay it all back plus the overdraft fees?” I wish I could go back and smack the soul out of myself. I ended up over drafting about $600.00 from my personal checking account without batting an eyelash. Approximately two months later I received my tax return check and went to the bank to pay them back. Well, when I get to the bank I find that my account had been terminated, there was an investigation, and I had been sent to collections. Yeah, I was an idiot. So the first thing I did was contact the collection agency and work out a deal to settle the matter. I ended up paying a little over $400.00 to settle the matter and get it removed from my credit report. My credit score jumped about 40-50 points after that debt was taken off of my credit report.

Instead of ducking and dodging debt collectors, how about you make a plan to get rid of them once and for all. Attempt to settle the matter by offering to pay a little over half of what you owe right then and there over the phone. Most of the time, you can work something out with the debt collectors. In my experience I’ve settled all of my past debts and never had to pay any of them in full. This is the only time I would recommend anyone to Settle for Less.  

It’s certainly possible that you have no idea what debt you owe or who you owe it to. In my opinion the only debts you should really be concerned about are the ones that are affecting your credit score (Disclaimer: I am not a financial advisor). So to find out which debts are affecting your credit score, you should log onto any of the websites that offer free credit reports. You know, the ones with ads that interrupt your favorite TV show every night.

If you can’t think of any, here’s a couple of links:

Check your credit score for free at:

https://www.creditkarma.com/

 

1. Find out your current credit scores
2. Find out if you owe anything to anybody, contact those people or agencies and settle (payoff) all of those debts.
3. **Do not make Payment arrangement, this will reopen as if its a new account and will lower your credit score further.**
4. Take some time to review my credit card use strategy (found in July 8, 2017 post on Muzyma.com) then……
5. Get yourself a credit card and start building your credit today

Follow those steps in order.

Contact me with any questions.

 

 

 

“Knowledge is of no value unless you put it into practice” – Anton Chekhov

In my senior year of college, I served as a delegate at the 2015 Hope Global Forum where I got a chance to listen to world renowned speakers such as former president Bill Clinton, John Hope Bryant and much more. While at the forum I served as a scribe in the Equifax panel at the forum. Equifax is one of the three credit bureaus that provide our credit scores in the United States. Although I can’t say that I recall everything discussed at the panel, the answer to “What’s the fastest way to build my credit?” left the largest impression on me.

I’ve been told by some that your credit score is just as important as your social security number in America, and having no credit is just as detrimental as having bad credit. having no credit or bad credit increases your chances of being denied lease agreements or having high rates on mortgage loans, car loans, etc. So you should want to get your credit score as high as you can get it, as quickly as possible.

The fastest way to build your credit score is to purchase a credit card and spend 20-30% and pay the balance in full before the end of each month. Most people are afraid of credit cards because they don’t think they’ll have enough money to pay it off. But, that’s a horrible strategy to be having in your mind anyway. My recommendation is to only spend with the credit card the amount of money that you CURRENTLY have on your bank account. For example, if you’d like to purchase gas for the amount of $20 dollars using your bank debit card, put it away and use the credit card instead. When you get home, go online and make a payment to your credit card from your debit card in the amount of $20 dollars. Do the same with cash (Deposit cash in your bank account then pay off credit card on the same day). Using the credit card in this way will help you to build your credit while not being in debt to the credit card company. I will address the topic of credit in depth in a later post, but for now just use my strategy above to start building your credit today!

In my opinion, bank accounts suck. I personally keep my money with a credit union that doesn’t charge me a monthly fee just to keep my money with them. I suggest that you go to your local credit union and open an account with them and also ask them which credit cards they offer while you’re there. If you don’t feel like doing all of that you can apply with one of the credit card companies online. I got my first credit card when I was 19 with Capital One. I got their Platinum credit card. Here is a link to Capital One’s website that will help you choose the best credit card they offer that will best suit you. Contact me with any questions.

                                                                Get your credit up!!

Click: https://findmycard.capitalone.com/en/PageVersions/LandingPages/LP_ONE_V01.aspx

“Big things have small beginnings”- Prometheus

Back in grade school, I remember stopping at the corner store on the way home with nothing more than one dollar in my pocket. With that dollar, would by two bags of chips for a quarter each along with a fifty cent C&C soda (New Yorkers know). It’s almost impossible to do the same thing today due to inflation. My awareness of the existence of inflation is the reason why I don’t recommend “saving” for retirement (Disclaimer: I am not a financial advisor). $100,000.00 won’t buy you as much today as it would 40 years ago and won’t buy you as much in 40 years as it would today. Facts! Meanwhile, every Index on the NYSE has increased considerably in the last 40 years.

Blue: S&P 500

Red: Nasdaq

Green: Dow

Investing for retirement rather than saving for retirement sounds like a better route in my opinion. It doesn’t have to be stocks, there are other ways to invest such as bonds or real estate and much more (Refer to yesterday’s post for suggested readings), I just want to lean towards stocks in this post. You don’t have to invest in any stocks now before you’re ready, but you can open up a trading account and just deposit funds until you are. With most online brokers there is no monthly fee required for you to keep money in that account. All legitimate online brokerage firms are covered by FDIC, meaning the money that’s not invested cannot be lost and will always be yours.

The online brokerage firm I prefer to use is Sharebuilder.com run by Capital One. The commission is only $6.95 per trade. Go to https://www.capitaloneinvesting.com/a/main and register an account and begin depositing any amount over a dollar today! 

*I can refer other online brokers upon request.

“Read 500 pages like this every day. That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.” –Warren Buffett

One of the first things always said to me when I bring up the topic of investing is “I don’t make enough money and I don’t really know much about it”. All I can do is agree, because if you knew more about investing you would know that it doesn’t take much money to start. When I began to educate myself on investing, I only asked myself one simple question ‘how can I turn this one dollar into two?’ Youtube.com was, of course, my first destination because sometimes I like to see someone explain the information visually. During my search I was most intrigued by a video in which Warren Buffett described his investing strategy and the strategy he recommends for new investors in the stock market. Click: https://www.youtube.com/watch?v=xkH-vR2IR_E

There are several different types of investors and several different types of investment vehicles. Upon Buffett’s recommendation, the first book that gave me a lot of insight was The Intelligent Investor by Benjamin Graham[i]. This book can be purchased for a few bucks on Amazon.com or you can read it on your device for free by downloading the .pdf.

Click: http://www.fxf1.com/english-books/The%20Intelligent%20Investor%20-%20BENJAMIN%20GRAHAM.pdf (Let me know if link is broken)

See: https://missniao.wordpress.com/ for more info about this book.

Another book that I find enlightening is Rich Habits by Thomas Corley. This book is focuses more on how you should invest your time rather than how you should invest your money. It describes the habits that are common among several hundred of the world’s wealthiest people. I have yet to find a pdf link to this one but it can be purchased online for now. If you happen to find a free pdf link let me know and I’ll update this post.

My personal preference is to invest in common stock shares of publicly traded companies. I like to call myself a “value investor”. Most people who buy stock are just looking at numbers and not treating the action like buying a piece of a company. The idea of value investing is to find a great company whose stock price is much less than the actual value of the company, because eventually that price will reach the value and maybe even surpass it bringing it to an overvalued stock price.  For example, in 2005 Google’s stock price was about $88.99 per share[ii]. Today the Google stock price is at $906.88 per share. [iii]Being able to evaluate a company is a big part of learning to invest in the stock market. Currently I am reading Valuation by McKinsey & Company which educates individuals on the best way to measure the  value of a company. I opted to purchase this book online; you can also purchase the workbook separately in order to put what you think you’ve learned into action. But luckily for you I found a pdf link to the 5^th edition. There is a sixth edition but I can’t imagine it’d be much different.

Click: http://www.gsm.pku.edu.cn/resource/uploadfiles/docs/20120710/2012071001255625564651.pdf (Let me know if this link is broken)

This book is a bit more advanced, for those with little to no financial background or experience I do recommend getting Financial Accounting for Dummies prior to tackling Valuation.

I have named just a few of the books that I have encountered throughout my research on the road to financial freedom. Expect me to name more books in the future and attach links to get them for free where I can. I’m sure 99% percent of us will not read all this material in a day but start reading about 10-30 daily and see how much knowledge you begin to accumulate.

 

 

[i] http://www.warrenbuffett.com/warren-buffetts-list-of-14-must-read-books/

[ii] https://www.fool.com/investing/2016/06/30/google-stock-history-where-has-it-been-where-is-it.aspx

[iii] https://finance.yahoo.com/quote/GOOG/

“Our lives are defined by opportunities, even the ones we miss.” ― Eric Roth

In the spring of 2013, I had received a settlement check of just over $4000.00 following a car accident I was involved in several months earlier. I’m far from being the smartest man on earth, but I was intelligent enough to know that I may want to invest a portion of this 4K for a larger return in the future. About a week prior to receiving the check I had started looking at different publicly traded companies of which I would choose the best common stock to purchase. Although I am not an expert today, back then I was even more of a novice. Nonetheless, I still looked for different companies of which to invest in. I was stuck on CNBC, Bloomberg, Fox Business, newspapers, and the internet. One day I came across a company called Tesla Motors while watching CNBC and though “Woah, that’s a great company!!!” (Spoken in an Ebonics dialect of course). The first thing I did was go on finance.yahoo.com and look up the symbol TSLA, the ticker for Tesla Motors. At the time the stock price was around $45.00 per share. I thought that was a great number especially if I had 4K to save I could have ended up with about 88 shares, which doesn’t sound like a large number until I’m almost finished with my story. In the end after debating with myself and letting fear dictate my decision I decided to pass on the purchase. Honestly as I write this, I couldn’t tell you what I did with the money even if my life depended on it. One thing I can say for sure though is that I can remember how disappointed I was three months later. Around September of 2013 I decided to look at the price of the investment I passed on, in just a few months the stock had risen from a measly $45.00 to a whopping $200.00 per share. When I did the math, had I invested the full $4000.00 settlement check I would have had a net balance of almost $18,000.00 in a matter of 3-4 months. That was the day I decided to never miss out on another opportunity, not to let emotions guide my decisions when it comes to investing, and to base my investment decision solely on my valuation of the company.

Recently, Jay-Z just dropped his new album 4:44 and on track two entitled The Story of OJ he hits on this subject matter, the matter of missed investment opportunities. It almost makes me cry when I think about all of the things I could have invested in instead of that new outfit, 420, those new kicks, that unnecessary gadget, etc. Most have been indoctrinated into saying “I don’t have enough money to invest” but copping at least a dub every other day, or spend $4.00 on the lottery every week faithfully, a lottery that you are more than likely never going to win. If that person who plays the lottery every week saved that money for about six months prior to the spring of 2013, they would’ve been able to buy about two shares of TSLA and would have turned $104.00 to about $462.00 in only three short months. SMH

Hopefully this is your first introduction to anything about investing or else my first couple of post may annoy you. Either way, welcome to my blog Muzyma. Here I will share everything I learn about attaining financial freedom so that we can all get there together. It would suck being the only one that’s financially free; who would I have fun with? Let’s take on this journey.